All this talk of transfer payments has made me thirsty. Hence a refreshing Dr. Pepper, which is not something I drink often but it is good for what ails a tax-and-spending liberal. If we could find such a person in these environs. I’m not, at the moment, debating the existence of such a creature, I’m just saying that your humble opinionator is not one of them. Not only do I realize that there is only so much government can do, I am ready to accept the reality that there is only so much the government can tax. At some point, the tax rate becomes counter-productive. The economic theory behind this is the Laffer Curve which postulates that there comes a point at which a high tax rate means declining revenue because income and productivity fall (interesting historical sidenote, the Laffer Curve is attributed in part to a 14th century Muslim. Chew on that Hannity.) So there is a thing as too much taxing, but the curve also shows that, up to a point, higher taxes do mean higher revenue. Hitting that sweet spot is the key.
So but the point is that I’m not just for raising taxes to pay for a bunch of dang programs, especially not at a time where we want cash to be available in the economy for people to spend on goods so that employment goes up so that people have money to spend on goods. I’m also for seeing if we can’t consolidate and focus some of these programs in order to a) be more efficient and b) eliminate some of the proverbial waste, fraud, and abuse. But if we are going to do all of this to social programs, I would like to see us being more rational with the tax policy. It’s been since the Regan presidency that we have overhauled the tax codes and all sorts of strange rules have worked there way in. The difference between what folks are supposedly going to pay and what they actually pay with the help of a good accountant is astounding. We should tighten that up.
Enter yesterday’s announcement by the Co-Chairs of the Bi-Partisan Panel on Reducing the Debt. They suggest doing both things, as well as cutting some defense spending, adjusting some Social Security and Medicare guidelines, and generally tightening the government’s belt now that the Federal Reserve has taken over the bulk of the economic recovery work. The plan which is proposed by the co-chairs (and we will have to wait and see what the final committee report looks like) has a hell of a lot to recommend it. Most of all, it seems to be a moderate, common sense way to approach the deficit problem. If it includes Pay As You Go budgeting rules, I’ll be ecstatic.
Nancy Pelosi probably won’t. But she should be. Both Pelosi and Senate Majority Leader Harry Reid promised to put the proposals this group develops in front of their chambers for a vote. If they did so during this lame duck session they could protect Social Security from becoming privatized while expanding the benefits of the Health Care bill. More to the political point, they could co-opt the Republican platform by taking away the fiscal responsibility issue. That leaves the GOP to fight with the White House over a host of social issues. Right or wrong, Republicans often look bad making these arguments and could provide no better motivation to the 45 million people who voted in ’08 but not this year to turn out for the Dems in ’12. This version of the proverbial Obama bank shot relies on only one thing: discipline within the Democratic Congressional membership. Which means, of course, that the plan is doomed.