• Taxes: A Tale of Two Videos

    by Kelvin Wade

    The nation is $14.2 trillion dollars in debt. Our budget deficit is $1.3 trillion. Every man, woman and child in the United States’ share of the debt is over $128,000.

    I’m no economist. I was never a whiz at math. But I know that when you’re taking in less money than you’re spending, you’re going to run a deficit, run up a debt and eventually it will bankrupt you.

    If the average person finds themselves in this predicament, the first thing they’d do is start cutting expenditures. You’d cut out all those trips to Starbucks for your Double Ristretto Venti Half-Soy Nonfat Decaf whatever drink and scone. You’d consolidate trips or carpool to save gas money. Perhaps you’d move down to basic cable or get rid of cable altogether. Maybe you’d downsize your cell phone plan to a pay as you go phone. And you’d stop eating out. Vacations would be downsized or eliminated.

    Everyone cuts first to deal with deficit spending. Maybe that’s all you’d have to do. But if you’re still deficit spending, then you’re going to have to raise revenue. You’d raise revenue by getting a raise, working more hours or getting a second job.

    That’s how our governments should work. Our leaders should cut nonessential spending. If that’s not enough, they should cut closer to the bone. But if that still isn’t enough, they should raise revenue. The government does this through taxes.

    Yes, I said the T word.

    Somehow the Republican Party went from the low tax party to the no tax party. This mantra that ‘we don’t have a revenue problem, we have a spending problem’ that conservatives have championed poses a huge obstacle to us getting out of debt.

    I trace it back to two videos. The first was the Democratic National Convention in San Francisco in 1984. Nominee Walter Mondale stood onstage and committed political suicide by announcing he’d raise taxes if elected. You can see the video at http://www.youtube.com/watch?v=AJClXb8vQpY.

    The second video was at the 1988 Republican National Convention in New Orleans when nominee George H.W. Bush uttered the infamous, “Read my lips, no new taxes” pledge. You can see it here: http://www.youtube.com/watch?v=CP9_kkzfN-w

    History showed that Mondale was right. President Reagan did indeed raise taxes though for some reason, Republicans who champion the former President don’t seem to remember Reagan’s massive tax increases to deal with the runaway deficit.

    And President George H.W. Bush broke his no new taxes pledge when he raised taxes to once again deal with runaway deficits.

    The videos put us on our current course because the wrong lessons were drawn from them. Mondale learned that honesty in politics isn’t necessarily rewarded. The Republicans hung his tax increase around his neck and it helped burnish their credentials as tax cutters looking out for the little guy.

    The GOP took Bush’s 1990 tax hikes as a betrayal. It pushed them towards a scorched earth position on taxes. Never again would they raise taxes. And not a single Republican voted to raise taxes when President Bill Clinton moved the top rate from 36% to 39% ushering in the largest peacetime economic expansion in the history of the country and eventual budget surpluses.

    With George W. Bush as President, Republicans were back to tax cutting. And since, according to Alan Greenspan and most economics, tax cuts do not pay for themselves, the debt/deficit exploded once again.

    For years Republicans blasted Democrats as tax and spenders. And Democrats earned that reputation with profligate spending. But the policy of spending and tax cuts is lunacy. Try it. Increase your monthly spending and tell your boss you want a reduction in your salary. See where you end up.

    The point is to deal with the budget deficit as grownups in California, as well as the budget deficit in Washington, taxes have to be part of the conversation.

    There is no free lunch.



    • Kelvin, Interesting as always, but I have never dealt with anything as a grownup.
      You must be talking to everybody else.
      Donald


      • Jesse

      • April 17, 2011 at 8:24 pm
      • Reply

      The truth hurts. I am all for taxes returning to Clinton era levels. The sooner, the better. J



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