It is nothing short of breathtaking, the speed and strength of the bi-partisan charge inside the Beltway to quickly shove more of the cost of government to the top few percent of earned income earners, with no serious effort to reduce or even contain government’s growth or expense. Republicans and Democrats alike are pushing proposals to drain as much wealth as they can from high earners to help sustain, rather than cut, government spending.
Republican House Speaker John Boehner jumped immediately after the election with an offer to raise taxes on the top two percent by $800 billion over ten years by shrinking their loopholes. Some conservatives hoped that he was talking about enacting tax reform he assumes would raise the revenue naturally, through economic growth, but he’s not. The day after the election, Boehner offered the tax increase as it’s understood inside the Beltway – that is, the way the CBO scores it, which assumes no growth in its projections.
President Obama countered by demanding to raise tax rates on the top two percent and shrink their loopholes to get $1.6 trillion over the same time, and he wants to exempt Warren Buffet and his other ultra-rich friends by exempting charitable donations from any loophole cap. Their multi-billion deductions are mostly charitable gifts – usually to their own foundations, which employ their family and friends to travel the world on taxpayer-subsidized funds to give away money and gather headlines and glory in the process.
Republicans, who rightly say Medicare is going broke because the average person gets three dollars in benefits for every dollar he pays in Medicare taxes over his lifetime, offered to address that problem by requiring the wealthiest to pay higher premiums for their benefits. Charging the top two or three, or even the top 10 percent more for their Medicare premiums will have a negligible impact on future spending on Medicare, but it will place an even higher burden for the cost of government on the top few percent.
If that were not enough, President Obama and Republican publisher Bill Kristol want to permanently shift a huge part of the cost of Social Security from the flat payroll tax to the progressive income tax. That may be the biggest redistribution of all. The new Kristol/Obama “tax the rich” team would make permanent the temporary two percentage point reduction of the flat Social Security payroll tax. That would underfund Social Security by about 16 percent, forcing the government to shift the cost to high earners now, or those in the future.
Altogether, the combination of Republican and Democrat plans will produce a tectonic shift in the cost of government to the highest earners, all the while accepting the addition of more government entitlements (Obamacare, 50% more permanent food stamp recipients, double or triple unemployment benefits), leaving over-spending not only in place but on steroids, and draining huge amounts of capital from the wealthy, dramatically shrinking capital available to fund private economic growth.
Without robust economic growth, government revenues will fall even farther behind spending, employment will continue to languish, double demand for welfare benefits will be the new normal, and the long term fiscal and economic crisis will grow exponentially until the debt bomb finally explodes.
Democrats have long governed this way, but this is the worst performance by Congressional Republicans since they squandered their opportunity for spending and tax reform under an all-GOP government during part of the George W. Bush era, and used that time instead to expand Medicare and try to central manage local schools.
Granted, the Bush years had a lot of big distractions. They were hampered by the dot.com bust in the beginning, the housing bust at the end, and 9/11, resulting in a permanent war against terrorists. That’s all the more reason Republicans should have refrained from expanding the government and used their power instead in more productive ways, like passing free-market reform of entitlements and taxes - instead of leaving that job to a divided or, worse, all Democrat government in the future.
I thought it next to impossible to be more disappointed by Republicans than I was throughout the Bush years, but I’m now seeing strong competition from today’s Republicans. Their inability and/or disinterest in explaining and promoting the broad-based benefit of conservative economic principles and policy is beyond frustrating – it is either derelict, or corrupt, or both.
Republicans lost the election, and are therefore the opposition party, but they still have one powerful weapon – control of the U.S. House. Their job in Washington is not to participate in looting the producers, but to stand guard against the mob and stop the looters wherever they have the power to do so.
Republicans appear instead to be bent on not only squandering power when the have it but cowering to it when they don’t.
Maybe it really is time for a third party movement.