After the government shutdown there has been talk that both sides must compromise. Of course that will probably happen since the system that balances power has been gamed to make the Republicans in the House more powerful than their real numbers. The Democrats will try to stop the Republicans to win in budget negotiations what that haven’t won at the ballot box.
The Republicans have only 2 ideas today: oppose Obama and keep the tax cuts of the last generation permanent. There is no justification in terms of policy behind the blanket opposition of Obama. He isn’t a socialist. He is not even left of center. Only in the US are corporate oriented politicians like Obama or Clinton regarded as a leftist. In Europe he would be considered right of center. There more justification for keeping the tax cuts. The economy is still weak. Our ‘recovery’ has been a jobless one and many of the jobs that are available are low paid jobs.
In the coverage of the budget crisis, the press has tried to split the difference without considering if both sides hold an equal portion of the truth. The roots of the budget problem arose with the Bush era tax cuts (one can make an argument that they arose during the Reagan administration but I won’t go that far). One practical justification for the tax cuts was to make sure the government didn’t take in too much money in a time of surplus. That surplus was short lived. Once the US went to war in both Afghanistan and Iraq that surplus was over. Normally when one goes to war on increases taxes, lowering them is unheard of. The wars have ended up being one of the largest unfunded mandate we have.
With the last recession, as expected, tax receipts plummeted and short term deficits rose. The GOP has made the quick reduction of the deficits their banner issue but they point their fingers at the wrong culprit. There was a looming issue with the baby boomers reaching retirement but that has nothing to do with the current budget deficit at all. The combined Bush tax cuts, the economic collapse and the underfunded wars must be considered as the prime causes of our budget problem. We need to pay for the mess, not use the mess as a justification to destroy necessary programs.
One Republican idea is that any future tax increase must be even across society. That does seem logical until one realizes that the previous tax cuts weren’t even across society and that income increases in the last generation have been skewed towards the top.
We are now in an era of faith based politics, and I don’t mean religious faith. At all levels of government efforts were made to reduce government spending and reduce associated taxes. The idea was that this reduction would lead to an increased level of tax collections. All of this is based on a misunderstanding of the Kennedy era tax cuts. Taxes in the US were much higher in 1960 than they are today. The reason for those taxes, the high cost of WWII, no longer existed. The boom in the US economy of the 1950’s meant that we could turn down the tax collection spigot. By the 1980’s federal taxes were no longer high and were no longer depressing growth.
In states like MN, where I live, taxes were cut during the Ventura administration mostly by adding rebates. That didn’t lead to an era of higher prosperity and it recent years has lead to difficult budget cuts. In recent years a Democratic governor and legislature has started to reverse that trend, but much damage has been done. Cuts in state aid to towns have forced increases in local property taxes particularly in rural areas. In states like Texas the GOP is still going forward with cuts. Just this year they have decreased business taxes while they are decreasing school funding and road repair (a typical Texas solution has been to convert some paved roads to unpaved status and lower speed limits).
We have had a decade or more of forced government cuts at all levels of society. The magical growth that was supposed to occur has not occurred. We need to re-assess our needs and start rebuilding services where they have been cut and increase taxes to pay for what we need.