Simple Solution: Raise Taxes

by Tom Kando

Regarding the never-ending political crisis in the US: The solution is obvious, but hardly anyone is able to see it, or has the courage to mention it, or is not willfully ignoring it. A combination of imbecility, cowardice and evil.

There are two aspects to the crisis: (1) the government shutdown and (2) the looming default. The second aspect is by far the most serious. It exists because of the government’s insane indebtedness. $17 trillion so far, i.e. 110% of GDP. Worse than Greece.

The growing debt is the PRIMARY CAUSE OF AMERICA’S IMMINENT RUIN. The government spends more on finance charges than on nearly any other budget item. Half as much as the military budget. Imagine what goods and services could be provided with the $400 billion squandered every year on finance charges!

This is a death spiral. Even though the annual deficit has been declining, the problem will grow worse until the government begins to pay back the principal. The last time that this happened - that there was a surplus - was during the Clinton presidency.

And let’s not forget who got us into this mess: First, George W. Bush cut taxes for the rich. Then he started several wars without raising taxes. Then he got us into the worst recession in a century. And it was up to Obama to clean up the mess.

Yet no one, not the politicians, not the media, nobody admits that without raising taxes, America will NEVER, EVER solve its insolvency.

The taboo persists at ALL levels of society: Even Fox’s liberal counterpart MSNBC often fails. Even Ed Schultz, a guy with a good heart, invites moronic right-wingers on his show so as to appear “balanced.” Those imbeciles then dismiss Obamacare by labeling it “Socialist,” as if a label represented an argument (in addition to the fact that socialism is not a bad thing, in the first place). Even MSNBC lets the neo-McCarthyists get away with their idiotic arguments.

The other day, my congressman Ami Bera held a teleconference with his constituents. I tried to call in my two bits worth: What about raising taxes? I was not permitted to do so. Apparently, even a nice Democratic congressman is afraid of breaching the taboo.

The last time it was permissible to talk about increasing revenue without running the risk of being lynched was under Simpson-Bowles (2010): The deficit would be eliminated through a combination of spending cuts AND increased revenue. This was proposed to Congress by a national commission, and then it went nowhere.

This was not a 50-50 solution, mind you. 63% of the debt reduction would consist of spending cuts, and 37% of added revenue. Also, you can bet that the 63% cuts would fall overwhelmingly on the poor. Furthermore, the alleged “added revenue” was supposed to come from tax reform that would lower income and corporate tax rates and “broaden the base by eliminating tax expenditures.” Good luck with that! What was there for Republicans not to like?

At least, Simpson-Bowles had the audacity to mention increased revenue. Today, the silence about that topic is deafening. Instead, the wackos have shut down the government, and they are proposing to shut down the economy as well, by letting the government default, ending the dollar’s status as the world’s reserve currency, causing the stock market to collapse and untold other calamities.

We hear that Obama is about to cave in: Maybe the debt ceiling will be raised before Oct. 17, while the government shut down will continue. It figures. Wall street gets its way, but the people don’t.

Any 9-year old understands that the only way out of our death spiral is to raise taxes, at least temporarily. For now, the government has to be funded at a much higher level, so it can repay its debt and stop squandering hundreds of billions every year on finance charges.

Where is it written that the federal budget should not exceed 19% to 23 % of GDP?  We have to lowest tax rates in the Western world (see graphic). We are also the most conservative country. 

In fact, Americans should hand over about 50% of their income to all levels of government combined. That’s what they do in Scandinavia and other such places. That’s why those countries work well, and ours doesn’t.

California, too, works well. Once again, the Golden State shows the way to the rest of the country. Governor Brown raised taxes. It was a no brainer. Now, California is out of the woods.

Republicans reply that raising taxes stifles economic growth.

First of all, it’s not clear that this is so. It may be a myth, or a deliberate lie. Keynesians like Paul Krugman and Robert Reich would definitely dispute this.

But more importantly, so what? We do not need more growth anyway. When a country already “enjoys” a one-per-capita rate of car ownership, it does not need more cars. An October 10 AP article by Seth Borenstein (See Sacramento Bee) shows that by 2047, most major cities in the world will reach a temperature that permanently exceeds the hottest year on record so far, 2005. The world is already burning too much coal and oil, and it is already manufacturing too many things.

America does not need more growth. It needs the following three things:
1. Fix and clean up the mess the country is in, especially its infrastructure and its public services. Fix the roads, housing, schools, public health, diet, the criminal justice system.
2. Lift the poor, the homeless, the growing underclass out of their misery. Redistribute.
3. Raise taxes. leave comment here

© Tom Kando 2013