Taxation With Representation

This is just a thought: one of the big issues in the fiscal bluff ("a neat pun and probably one we should all start using," as Avedon Carol said) negotiations is whether George W. Bush's tax holiday should end.  Obama says he wants to extend it for the "middle class" while letting it end for the wealthy, and he's indulged in some alarmist rhetoric to make it seem like the Gummint will suddenly take $2000 out of your middle-class wallet on January 2.  (The corporate media, friend to the people that they are, increase the amount to $3,500.)

I'm not middle-class myself, but I'm probably better off than a lot of people who are living a lot closer to financial trouble than I am: I don't have any debt, I don't have any children to put through college, and my health is good.  With those caveats in mind, though, I myself don't necessarily object to having my taxes go back up a bit.  Ever since Obama lowered them, I've felt strange about having lower taxes when the economy was in trouble.  True, until I retired I spent most of the difference, which is good for the economy: we of the 99% spend our money instead of hoarding it.  And I know that the deficit is not as big a problem as the ongoing shortage of jobs.

But I've also been worried about the long-term effects of lowering taxes while increasing spending, especially on the military.  I remember that Lyndon Johnson preferred to pay for the War in Vietnam on credit, as it were, instead of raising taxes; a prudent politician knows how much sacrifice he can ask from the citizenry for a war that most people don't care about very much.  Ditto for Bush, who drove the deficit through the roof to pay for the Afghan and Iraq wars.  (Instead, as we old folks remember, he asked Americans to help defeat the terrorists by going shopping.)

A popular slogan on the Right is that if a family goes into debt, it should cut back on spending.  Leave aside for a moment the fact that a nation is not a family.  Less spending is only one way to cope with a shortage of funds.  Another is to increase income.  That was one reason the top marginal rates went up so much during and after World War II: to pay for the war, both the Good War and the Cold War.  Probably most Americans would have had second thoughts about Bush's wars a lot sooner if they knew they were going to have to pay for them upfront.  So, a return to pre-Bush income tax rates doesn't seem like a bad idea to me on its face.

But only on its face.  Obama, like the Republicans, wouldn't put extra income to good use by paying for important social programs.  He wants to cut them.  It's not enough to have more revenue; you also have to put that revenue to good use, and Obama isn't interested in doing that.  Anyway, he's changed his mind about prolonging the middle-class tax holiday as well as Social Security cuts, so get ready for the fourth Bush term.