These days there's lots of talk for the need to reach a so-called "Grand Bargain" regarding amendments to the tax code (to "simplify" it) and government spending (to reduce it, especially in respect of social safety net and earned benefit programs).
But much of that talk is misdirected because it furthers the agenda of the radical, obstructionist right-wing that wants to eliminate or at least privatize the social safety net and to eliminate or at least reduce taxes on the right's corporate and ultra-rich funders.
And it does so in a context of radical globalization and financialization of the economy which has been allowed to create a very few enormously rewarded capitalist "winners" at the direct cost to the vast majority of American laboring workers who are all around "losers", with 2010 incomes having shrunk by about $4000 from the beginning of George W. Bush's presidential term and enactment of the series of "temporary" Bush tax cuts that started our nose-dive into annual deficits.
But because the right is focused only on the economy from the perspective of MNEs and the ultra rich, we find ourselves as a nation debating and negotiating around the right's insistence on so-called "entitlement" reductions and its refusal to increase tax rates or the debt ceiling. They claim that a few changes to tax expenditures will be sufficient to spur economic growth and thus raise whatever revenues we need. (A slight modification of their old "tax cuts always lead to economic growth", but not much of one, since they know that historical experience suggests that any cuts to tax expenditures to the rich can be readily undone with floods of lobbying money.) Their reliance on minimal tax increases from tax expenditure reduction derives from their desire to protect capital, preserve the military-industrial complex, while leaving the social safety net to go begging. Not surprisingly, the most important tax expenditure--the capital gains preference--isn't even on the table. The old, the sick, the homeless, the poor, the victims of the increasing natural disasters from global climate change--those vulnerable Americans should simply rely on the charitable impulses of the very robber barons who have stripped workers of their rightful compensation.
The radical right, in other words, puts the wants of the military-industrial complex, multinational enterprises, and the ultra-rich owners and managers who derive rentier profits from them at the center of what they think the economy is about, amounting to a "workers be damned" view of society.
Americans rejected this view. The personification of it was failed presidential candidate Mitt Romney, with his unlimited arrogance and belief that he had "earned" all of his wealth and thus merited anointment as president. He claimed he "knew" how to save the economy (even though he wasn't willing to share with us one whit about what that knowledge consisted of). And before and after the election he suggested that anybody who likely wouldn't or didn't vote for him were, unlike himself, just moochers who didn't bother to work for a living and didn't merit any sympathy for the dire straits directly caused by his particular market fundamentalism (leveraging businesses to the hilt to suck out profits for those at the top while letting the workers twist in the wind regardless of their productivity). Government policies meant to protect the most vulnerable were just bribes to get votes. (As for those tax subsidies for the natural resources extractive industry, or cattle barons, or big intellectual property giants who offshore their profits, or Big Banks who do the same? No talk from Romney about their lack of merit, of course.)
So let's cut to the chase. The big issues are not:
- the so-called "fiscal cliff'" (an artificial deadline caused by the way the right-wing passed the original Bush tax cuts, intended to reduce the size of government by starving the budget for revenue while ensuring that those at the top--corporate and individual--made out like bandits or
- the artificial "debt ceiling" (an archaic concept clung to by Congress probably because of the opportunities it offers for last minute "deals" between opposing parties allowing one or the other or both to claim a "victory" for their side among their base constituents, when in fact everybody knows that it would be disastrous for the economy--rich and poor alike--for the US to default on its debt, which would be the inevitable outcome of a decision not to raise the debt ceiling to reflect the natural growth in the size of the nation's debt corresponding to the growth in the size of the nation's GDP) or even
- the purported need for tax code "simplification" (which is generally a euphemistic term to cover the creation of even more opportunities for low-or no-taxes paid by profitable multinational enterprises and their wealthy managers and owners, because the Code for 70% of Americans is actually quite simple, permitting a "standard deduction" and "personal exemptions" that cover most of the items that might otherwise have to be itemized).
No. Congress and especially President Obama should be focussing instead on the most important problem. The Big Issue is the costs of globalization and financialization of the economy to the vast majority of America's working middle class and the unprecedented expansion of inequality. That makes a mockery of the "American Dream" that every man can better himself by hard work and commitment to family, community and country.
Eduardo Porter, reporting today in the New York Times, reflects the growing recognition across the blogosphere and activism among nonprofit organizations around this topic. See Eduardo Porter, A Chance to Tackle Inequality, New York Times (Nov. 21, 2012), at B1. He notes that news media is filled with suggestions that Congress "may even achieve the long-sought Grand Bargain to trim $4 trillion from the budget deficit over the next decade" but suggests all should stop to "reflect on what's missing from their conversation", namely "how big a government do we need?" Id. While the middle class has been "buffeted by the relentless tide of globalization and technological change", the richest 1 percent have doubled their take of national income in the last 30 years (the richest 1 percent now take 17.42 percent of national income). Id. Evidence suggests this growing inequality is harmful to all of us: "our vast inequalities may breed instability and blunt the nation's economic growth." Id.
Porter asks us to quite assukming that government should be substantially smaller and ask instead whether the growing inequality may "require the government to be sub stantially bigger--and taxes substantially higher--than we have tolerated in the past." Id. He quotes heavily from economists, including Robert Reich, Lawrence Katz, Robert Frank, Gregory Mankiw, and Bruce Bartlett, all of whom have suggested that the government can and should use its power to support the middle class, including funding education, protecting the income of displaced workers, fostering well-paid jobs (such as through the leverage of Medicare), raising taxes --including on the middle class--to support the social safety net funding that is needed, and protecting--not destroying--the safety net and earned benefit programs like Social Security and Medicare through necessary tax increases. Id.
This is indeed the conversation that the country should be having when it talks about tax reform. Not "how do we cut spending and keep taxes ultra low, as they were artificially reduced through the enormous Bush tax cuts?" but rather "how do establish a tax system that appropriately funds the kinds of government infrastructure, human capital and safety net expenditures that an advanced civilization such as ours should consider fundamental to government's role?"