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Tax-cut deal gambles with national debt

December 15, 2010
By PETER CROWLEY, Enterprise Managing Editor

If I were in Congress, and thank God I'm not, I wouldn't vote for the tax-cut compromise struck recently between President Obama and the congressional Republicans.

Yes, I know raising taxes in a recession would hurt the economy, at least in the short term. But as scary as that sounds, runaway debt's threat - bankrupting the nation - seems scarier.

This deal puts high-risk, short-term job-creation gambles - trickle-down tax breaks for the rich and another stimulus package - as higher priority than conservative management of federal finances. It would add more than $850 billion to the national debt and shows little will in Washington to do anything serious about deficit reduction for some time.

This is how the nation was run when George W. Bush was president and Republicans ruled Congress, when these tax cuts were adopted in the early 2000s. It seemed like the goal was to keep Americans comfortable and believing that, in the words of Dick Cheney, "deficits don't matter."

That was also a time when Americans ran up credit card debt and bought houses they couldn't afford. They apparently believed we had entered an era when they could have it all, where debt didn't matter.

We have already seen the consequences of these people's personal choices, and of the financial scheming that egged them on.

We have also seen the consequences of what happens when some nations act that way; look at Greece, Ireland and Portugal.

Could it happen to us? Our national credit rating is better than Greece's was, I've been told, but will that continue if our debt-to-GDP ratio keeps rising at its current pace? I wouldn't bet the nation on it. And China and India are rising. We may see our nation slip from the top of the planet's power heap in our lifetimes.

For better or worse, our leaders may be deciding that would be less scary than buckling down on deficits now.

Such a crackdown would require serious sacrifices. We couldn't keep everything we have now: low taxes; funds and tax breaks to spur job creation; a social safety net for the poor, jobless and old; subsidies, tax breaks and contracts for big business; federal funding of schools; health-care guarantees; beefed-up domestic security; and two wars to fight jihadists and spread democracy.

The compromise in Washington sends our nation in the opposite direction of the United Kingdom, where the Conservative-led government is jacking up taxes and slashing services in a war on debt. The people's protests are fierce, though.

I do believe that our Democratic president and the Republicans who will control the House of Representatives for the next two years must compromise, but perhaps I don't believe in it as strongly as Rep. Bill Owens or President Obama. I could have gone for Rep. Owens' proposal to only raise taxes for those making $500,000 or more - the president had proposed $250,000 - but in the end, they agreed to give it to millionaires and billionaires.

They did so out of fear the Republicans would filibuster the Democrats' plan, killing it and resulting in the expiration of the tax cuts for everyone. They also did it to get unemployment benefits extension, another stimulus package, a payroll tax cut and other things they might not get otherwise. That outcome would have been tough but fair, and better than what's now on the table.

Ask yourself, which is better to gamble with: our economy now or our national solvency in the future?

There is also a question of justice to consider: In a time of greater need, should the government be lightening the load on the rich?

Our congressmen in New York's 23rd and 20th districts, Reps. Owens and Scott Murphy, have already announced they will vote for the compromise, as has New York's Sen. Charles Schumer. Our other senator, Kirsten Gillibrand, said she'll vote no.

Meanwhile, we'll have to stop calling these the "Bush tax cuts." They belong to leaders of both parties now. And the debt this deal creates belongs to our children and grandchildren.

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This is Peter Crowley's opinion and not necessarily that of the Enterprise editorial board. You can contact him at 518-891-2600 ext. 22 or pcrowley@adirondackdailyenterprise.com.

 
 

 

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