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Can't tame debt without tax hikes

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Alvin Bessent is a member of the Newsday editorial board.

 

Will somebody please raise my federal taxes?

No, I'm not a masochist. And I'm not so well-heeled that I won't miss the money.

But I like the fact that the American community pools its money to make sure the elderly get health care and income for retirement. I understand the need for a strong national defense. I see the value of medical research, clean air and water, law enforcement, safe food, good highways, bridges that don't fall down, higher education and all the rest.

And I believe you have to pay for what you get.

Paying taxes was once seen as a responsibility of citizenship. But now "tax" has become a four-letter word. And raising taxes has become such political poison that even elected officials who know it has to be done -- if we're going to cut the deficit and live within our means, that is -- won't actually say the words.

They talk about "revenue enhancement." Or "eliminating tax expenditures," code for closing loopholes and ending some deductions in the tax code. President Barack Obama burrowed even deeper down the rabbit hole recently when he talked about "spending reductions in the tax code."

Resorting to euphemisms isn't very courageous, though officials who say such things actually want to act responsibly. But they're politicians and politicians don't succeed these days by telling voters truths they don't want to hear.

Former Federal Reserve chairman Alan Greenspan didn't mince words Sunday when talking about the nation's debt. "This crisis is so imminent and so difficult that I think we have to allow the so-called Bush tax cuts all to expire."

The fact is, unless you're wildly wealthy, times are tough. Jobs are hard to find and wages are stagnant. That's the real problem. If you can't get a raise, a tax cut is the next best thing. And with federal spending at a 65-year high as a percentage of gross domestic product, Washington should economize.

But federal tax revenue, as a percentage of GDP, is lower than it's been in the past 60 years. Given that reality, cutting taxes -- and that includes extending the Bush tax cuts, or worse yet, making them permanent -- is the wrong thing to do. If you were deep in debt and trying to dig out, would you ask your boss for a pay cut?

Once upon a time, the federal budget was in the black. It was 1998 to 2001, courtesy of tax hikes under President Bill Clinton and a booming economy. Then President George W. Bush cut taxes. It was supposed to be good for the economy and working people. It hasn't turned out that way.

Of course other things happened too: a terrorist attack, two wars, a new Medicare drug benefit, a housing bubble, financial crisis, Wall Street bailout and the Great Recession. So spending soared and Washington plunged from a projected multitrillion-dollar surplus and serious talk of completely paying off the national debt, to its deplorable condition this year: $1.6 trillion in the red and $14.3 trillion in debt.

Despite all that, Obama agreed last year to extend the Bush tax cuts. And Senate Republican leader Mitch McConnell (R-Ky.) and House Speaker John Boehner (R-Ohio) insist any deficit-reduction plan that raises taxes is dead on arrival.

Republicans would rather end Medicare's guarantee of health care for the elderly and cut almost all spending other than for Social Security and the military. And even then, for more than 20 years, the federal government would still be spending more each year than it takes in.

If ending the red ink is important, then we have to insist on paying for what we get. And that means hoping somebody in Washington finds the courage to cut spending -- and raise taxes.

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