Because elections have consequences, this month's victories by President Obama and Senate Democrats ensure that avoidance of the looming “fiscal cliff” will and should depend in part on the answer to this question:
What do the rich owe America?
But because Republicans still control the House of Representatives – and because soaking the rich cannot solve the problem – a successful resolution will depend even more on the answer to a question that, for all its obvious importance, is too often considered taboo:
What do the growing number of people dependent upon government programs – including the poor – owe America?
Republican presidential candidate Mitt Romney earned widespread criticism during the campaign when he suggested that the roughly 47 percent of Americans who pay no federal income taxes consider themselves “victims,” but surely those who would exempt millions of Americans from any responsibility for their own well-being or that of their families and country are no less demeaning or paternalistic.
Because failure to reach a deal by January would trigger $671 billion in tax increases and spending cuts members of both parties agree could devastate the nation's fragile economy, some Republicans have expressed willingness to increase taxes for the richest Americans, and some Democrats have appeared to be open to cuts in social programs. Unfortunately, too many on both sides still appear unwilling to compromise – the kind of doctrinaire intransigence that helped create the $16 trillion debt in the first place.
At a certain level, Republicans are on solid ground when they argue that revenues could be increased simply by eliminating deductions, not by raising tax rates.
That's just what happened after President Reagan cut the top federal income tax rate from 70 percent to 50 percent then 28 percent in the 1980s and revenues doubled.
The problem is that President Obama has made it clear he cares more about “fairness” than increased revenues, and polls (not to mention the election) show broad support for making the rich “pay their fair share.”
Just what that is not even Obama seems to know, and the top 1 percent already account for 39 percent of federal income taxes (as of 2009). But with the top rate of 35 percent still low by historic levels – it was 91 percent before falling to 70 percent under Presidents Kennedy and Johnson in the 1960s – a small rate increase at the top end is both economically absorbable and politically necessary.
If the Democrats are willing to compromise, that is.
President Obama has signaled willingness to deal with so-called entitlement spending but many leading Congressional Democrats do not appear ready to guarantee those cuts in exchange for Republican compromises on taxes. Illinois Sen. Richard Durbin, for example, said changes to Medicare, Social Security and other programs should be discussed only after a the fiscal cliff is avoided. It would be deja vu all over again: Taxes would go up, the promised cuts would never materialize, the debt would continue to swell and the bloated federal bureaucracy would consume and redistribute even more of the nation's wealth.
Republicans should reject any pay-now, cut-later offer because, in truth, only spending cuts can address deficits that, sooner or later, will create economic conditions that will hurt the poor most of all.
With the number of Social Security disability recipients growing from 6.7 million in 2000 to 11 million this year, and with 14.7 million people added to food stamp rolls since 2009, it is not unreasonable to suggest that such trends are not only unsustainable but counterproductive. No nation can survive when achievement and excellence is punished through punitive taxation, or when “poverty” becomes too comfortable.
Decades ago President Kennedy implored Americans to ask not what their country could do for them, but what they could do for their country. And so, yes: The rich should pay their taxes. But there would be far less need for the programs those taxes provide if more people stayed in school, deferred having children until they were emotionally and financially prepared, saved some of their money, cared for their families, avoided self-destructive behavior and choices, and possessed the kind of work ethic that finds pride in honest labor and discomfort in handouts.
Would cuts in programs cause hardship for some? Probably. It could also help spur the economy and create jobs. That's what it's like out here in the real world, where “having to live on a fixed income” isn't necessarily a bad thing.
Or we can all refuse to think beyond our own needs and go off the cliff together. And unlike that cartoon coyote, some of us won't get up unscathed.