The debt limit crisis is the best thing to happen to liberalism in 30 years. It's a manufactured crisis, of course. Republicans conjured it out of thin air, convinced that it will force a radical -- and permanent -- reduction in the size of government.
But they're wrong. Far from starving the beast, the debt limit debate is just as likely to feed it. By rescuing taxes from the political wilderness, it has given liberals a chance to rebuild the fiscal foundation of progressive government.
A Fake Crisis
As any number of levelheaded commentators have pointed out, the debt ceiling is all about the past, not the future. It's a function of spending and taxing decisions made years ago. (And made by many of the same lawmakers decrying those decisions today.)
By extension, raising the debt limit is really a question of collective accountability. In a democracy, you take responsibility for your government's decisions, even if you didn't like them when they were made and you like them even less today. That's the deal -- you don't get to pick and choose.
Of course, it's possible to transform the debt ceiling into something more than simply a procedural hurdle. If you're suitably rash, you can make it about the future as well as the past. Over the past few months, Republicans in the House have shown us how it's done: Start walking the nation toward the edge of the abyss and threaten to keep on going.
A Real Crisis
But if the short-term crisis over a debt ceiling is fake, the long-term crisis over debt itself is very real. As William Gale and Benjamin Harris asserted in a recent paper for the Tax Policy Center, "The United States faces a large medium-term federal budget deficit and an unsustainable long-term fiscal gap. Left unattended, these shortfalls will hobble and eventually cripple the economy."
Those warnings have been around for years, but politicians have shown scant interest in making the hard decisions that would actually stave off disaster. Politics-as-usual doesn't make room for much in the way of sacrifice.
But the artificial crisis of the debt ceiling debate has recast politics, spurring change in the face of intractable inertia. And in that sense, it's been spectacularly effective. By insisting that payment of past debts be tied to future spending, the House GOP has managed to put entitlements on the table. That's no small feat.
But the debt limit crisis has also put taxes on the table. Sure, Republicans are toeing the Tea Party line against any sort of revenue increase. That hasn't changed, and it isn't likely to change soon. Even their spin on the pending compromise seeks to minimize the likelihood of a tax hike.
But for the first time in many years, Democrats are talking seriously -- and even proudly -- about the need for more tax revenue. In fact, the transformation is even more profound, challenging the antitax politics that have dominated national politics since 1980.
Fake Tax Policy
Now let's be clear: The specific tax proposals coming from the White House are less than serious. Years ago, then-candidate Barack Obama staked out his position on soaking the rich, and as president, he's been sticking to it. His speech July 25 on the debt ceiling impasse was typical:
Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don't get. How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries? How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for?
Jet owners, oil companies, Wall Street, and himself: These are the usual targets Obama offers up for tax increases. If you're serious about solving the nation's long-term fiscal problems, these tax reforms are a sideshow.
Real Tax Policy
But they're a necessary sideshow, at least for anyone committed to serious fiscal reform. Ultimately, solving the long-term fiscal crisis will require both spending cuts and tax increases. Both elements will be broadly regressive, sparing the rich and soaking the poor.
Lower spending will squeeze programs that principally benefit the non-wealthy, including Medicare and Social Security. Meanwhile, tax increases -- at least the kind necessary to make a real dent in the fiscal gap -- will fall on everyone, not just the rich.
The regressive nature of meaningful fiscal reform -- including the likely introduction of a broad-based consumption tax -- militates for compensatory policy. In particular, it underscores the need for higher taxes on the rich. If political leaders are going to ask poor and middle-class Americans for sacrifice, they have an obligation to make sure that rich Americans share the pain.
Taxing corporate jets, of course, won't do that. To right the scales of tax justice, more substantive progressive reform is vital. In particular, lawmakers should eliminate the preferential treatment of capital gains (which would, of course, solve the carried interest issue, too).
There aren't many Democrats willing to make that argument -- at least not yet. But the sideshow reforms currently in play still represent progress for liberals. By insisting that taxes are a necessary part of any balanced approach, they are building the foundation for a broader program of progressive tax reform.
Small Steps
Democrats have a long way to go. They are nowhere near breaking the bad tax news to lower- and middle-income Americans. But they finally have a president who is trying to restore the value proposition that lies at the heart of progressive governance.
"We all want a government that lives within its means," Obama said last week. "But there are still things we need to pay for as a country -- things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research."
And there it is: the hoary "price of civilization" argument that Oliver Wendell Holmes made famous and American voters made reality. With taxes, we do buy civilization. But Democrats have been afraid to say so for decades. Finally, they may be starting to speak up.
Follow Joseph J. Thorndike on Twitter: www.twitter.com/jthorndike
Keli Goff: Can Your Congressman Balance a Checkbook? (No Seriously, You Should Ask)
Steven Van Zandt: Debt Ceiling? What Debt Ceiling?
Dean Baker: Will the US Credit Rating Be Downgraded?
Ellen Brown: Forget Compromise: The Debt Ceiling Is Unconstitutional
Debt Ceiling: Tax Increases Have Democrats And Republicans In War ...
Secondary Sources: Fed and Treasurys, Debt Ceiling, Taxes - Real ...
With that additional money we should embark on a re-building of America. New roads, bridges, schools, high speed internet service, advanced transportation technologies, etc. That will put millions to work and increase the revenue and profits of thousands of private businesses. We can call this policy "Trickle Up" economics. Spend money at the bottom and the rich will prosper through more sales and profits. If "Trickle Up" does not work in the long run, at least we will have new schools, roads, bridges and a 21st century communications system to show for it. More than we got from "Trickle Down."
But given Obama's history of compromising away advantages,
I won't hold my breath.
large % of the voting public.
Democrats have been on the defensive since at least the Reagan presidency.
The Republicans have held the high ground from which they preach the gospel
of smaller government.
Any ideas on how we can reframe this debate to make taxes more attractive
to the average voter???
I though Obama was the person who would be able to do so, but he has thus
far been unwilling/unable to control the narrative.
There are about three branches of government that have lost their concern for nation-wide interests and that solely function under corporate influences. Their only goal is to secure the fortunes of the most fortunate.
The middle class has become too expensive for these fortunate ones. They feel the middle class no longer carries its weight. The members of the middle class are underemployed, hence, they don't pay enough taxes nor do they consume enough. The underemployment will continue. More economic pressure will be put on the middle class, Their programs will continue to be cut.
The decline will continue.
If the Government were spending the money they ALREADY collect on those things, rather than the things they ARE spending it on (themselves, lobbysists, etc.) there would be no debt crisis.
I quoted Obama because his speech included an example of the pro-tax rhetoric that I think is necessary. I don't mean to suggest that he is the be all and end all of progressive revival. Democrats more broadly will have to pursue this project. And I think they are starting to get the message.
The reason Obama is now the President is because he took on the manerisms of an effective Presdient prior to 2008. People bought into his act without realizing that this was merely a charade, a con, from a man who lacked the experience and skills needed to be our nations top Chief executive.
The best comparsion to Obama that we have is Warren Harding, another man elected President without anything going for him beyond superfical appearances and he proved to be a disaster too.
While a competent Presdient could exploit the opportunities of the present moment as you suggest, Obama will be doing no such thing because he is not even remotely competent. Instead he will befocusing the bulk of his efforts now on getting reelected.
You must be kidding. What we have is a feckless poll who has pulled off the biggest bait and switch in American history.
Change You Can Believe In. What a sick joke!
Geo W Bush got his tax cuts because of the mystique of Reagan, but those tax cuts did not work, thus giving the lie to the whole idea. Why then do Americans elect Tea Party members who campaign on a platform of government obstruction through tax cuts?
We need jobs, not tax cuts. So long as Americans vote for tax cuts, even while the tax level is so low, it is impossible to balance our federal budget. If we had money to pay for restoring our transportation systems, our schools, social services, and energy and global warming, there would be plenty of jobs. Now is the time to grow, not to cut. The future beckons welcomingly if we can put the boogieman of reaction behind us.