THE BLOG

Let's Make a Deal

01/20/2012 04:44 pm ET | Updated Mar 21, 2012

The following historical nugget appeared today in Paul Krugman's Op-Ed piece in the Times: "In 1997 Mr. Clinton struck a deal with Republicans in Congress in which he cut taxes on the rich in return for creation of the Children's Health Insurance Program." Up to the point of that deal the rich were paying 28% on earned income and capital gains, thanks to Ronald Reagan, who increased taxes to those rates. That's right, 28 % on capital gains, nearly twice the current rate.

When the Clinton/Gore health program for children passed Congress, over five million low and middle income families saw the benefits as their children received subsidized care. The program also provided funds to provide the means of publicizing the new program to increase enrollment.

Since Bill Clinton was dealing with a Republican Congress, the price he had to pay for passage of the bill was a reduction in taxes for the rich, a reduction which became even lower during the Bush presidency.

It's easy to rationalize and say, well, that's the price of compromise under the byzantine system of government which has evolved over the years, mostly in rules changes rather than amendments to the constitution. I refer of course to the so-called super majority, the rule giving the minority more power than the majority, thus stalling passage of legislation.

Consider this case more closely. A program to give five million children health care was passed through a law making the rich even richer. Now we have this political debate raised by Mitt Romney's 15% capital gains tax rate and the lowest earned income rate for the wealthy since before the Great Depression. And the Republican Congress will not budge an inch to increase those taxes in order to create jobs or to reduce the deficit. The rationale? Protect the job creators, a cry which has a hollow ring to it.

It would be cynical to suggest that the Clinton/Gore White House compromised on the Children's Health Care Program in order to gain votes for the 2000 election cycle. It is more accurate to say that the motivation for the compromise was the welfare of children. But it can be suggested that the price for compassion was too high in this case. Many millions of rich people got a hefty tax break in order to benefit five million children.

Now, 15 years later, that compromise doesn't feel so good. What it says is that partisan politics at these extremes is hurting us badly, and there is no end in sight. Common sense suggests that the way to pay for good programs that benefit people is to raise taxes, not lower them, but America doesn't work that way anymore. Let's see. Why not help the unemployed with job training by lowering taxes some more? Let's make a deal!

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