Our political leaders in Washington are the biggest bunch of cowards. At every opportunity they weasel out of making any tough decisions. by Kenn Jacobine
(libertarian)
Tuesday, December 14, 2010
Now, you might be thinking that everybody knows that running away from hard choices is what politicians are especially good at, but ours have made it an art form.
Take the whole debate over extending the Bush-era tax cuts for instance. It has turned into a complete joke. In the first place, renewing current tax rates is not a new reduction in taxes for anybody. Only in Washington, is extending tax rates at current levels considered a tax cut.
Then we have Larry Summers, Obama's chief economic advisor, coming out warning that if the tax cuts don't go through we will have a double-dip recession. Then why didn't the Administration extend tax rates a long time ago? They had the entire federal government under their control and could have done it.
Other Washington economists are making outrageous claims that the compromise package between the President and congressional Republicans will actually produce millions of jobs and add 1 percent onto our yearly GDP. This could be believed if Washington was actually cutting income tax rates. But, it's not. The bill would actually cut employees' portion of the Social Security tax from 6.2 percent to 4.2 percent. But, to finance the rate cut Uncle Scam will borrow over $100 billion. This borrowing will be inflationary and will limit the supply of capital available for American business to expand and begin hiring workers again. Thus, any positive effects of the rate cut will be negated by the consequences of government borrowing.
Make no mistake about it, this whole debate on extending the Bush-era tax rates is the epitome of what is wrong with the federal government. It's all about making easy choices and stretching the truth about how those choices are great for the country. In essence, it boils down to another something for nothing failed economic policy.
Look, the Bush-era tax rates should have been renewed a long time ago. This would have eliminated any uncertainty facing business and allowed them to plan long term and perhaps hire workers. Instead, Congress and the President have waited due to political expediency until the 11th hour to act.
The vote should also have been a straight up or down vote with no other measures like extending unemployment benefits and cutting Social Security rates attached. The political games that are played by attaching multiple measures to bills serve no good purpose. It only increases the budget deficit and provides the allusion that Washington can provide everything to all people without costs.
And that is exactly what this entire package is: something for everyone with no worries about the costs. Republicans get tax rate retention for all. They also get a reduction in the Social Security tax rate. Democrats get an extension of unemployment benefits for another 13 months to folks who have already been collecting for close to two years. Of course, both sides will also get dozens of earmarks just to sweeten the pot. How any of this will be paid for has naturally not been discussed. And don't look for the mainstream media to bring up that question. The report of the President's debt commission is not even dry and Congress is contemplating spending an additional $800 billion. One commentator had it right when they labeled the compromise package nothing more than a backdoor stimulus package. Given how unsuccessful the trillions in stimulus money we have already spent has been don't look for this one to produce new jobs or economic growth either.
In terms of the additional measures attached to the tax rate retention bill, namely the cut in Social Security tax rates and <extension of unemployment benefits, one should be done with corresponding cuts in spending while the other shouldn't be done on the grounds it will do more harm than good to the prospects of the unemployed finding a job. To cut funding for a program that faces tens of trillions of dollars in future unfunded obligations is incredibly irresponsible. What's even more irresponsible is to cut funding and not make any alterations to outlays. Given that average life expectancy has risen by ten years since the inception of Social Security Congress could reasonably raise the retirement age for recipients to at least 70 from 65. I mean Americans are going to have to give up some things in order for our financial ruin to be avoided. If Congress and the President don't even have that little bit of courage then we are far worse off than can be imagined.
Perhaps the Republicans and Democrats are fearful that any interruption of federal largess to any one group of Americans could produce riots that have been seen in Greece and more recently in Great Britain. Perhaps they are fearful of doing something to jeopardize their own reelections. Whatever the reason, it doesn't matter. The bipartisan bill to extend the Bush-era tax rates is hardly a compromise. Neither side had to really give up anything. It is the epitome of how the federal government works and why our nation is bankrupt – you can always get something for nothing in Washington.
Kenn Jacobine teaches internationally and maintains a summer residence in North Carolina
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