Last Updated Jul 16, 2010 9:48 AM EDT
There's only so much money to go around, even from the U.S. government, and we can't spend what we don't have. Someone has to sacrifice, and it makes sense that the wealthiest among us, who have benefited the most from the amazing economic prowess of the U.S., should pay to protect and strengthen it.
- The Obama administration succeed in stabilizing the economy and preventing a depression (with the help of the USCC, of course).
- But there has not been enough attention to creating new jobs.
- In fact, we've moved in the wrong direction, by imposing tax increases and regulations, and expanding the size of government. This creates uncertainty for businesspeople, making them less willing to take on new projects.
- But the USCC has a plan: First, leave in place the Bush tax cuts for higher income people, and reduce the corporate tax rate.
- Also cut planned increases in entitlement spending.
- And promote free trade with Colombia, Panama, and South Korea. (The USCC says not only will future jobs not grow with free trade, but that the U.S. economy is at risk to lose 380,000 existing jobs.)
- The group calls for "incentives and legal surety for investment in clean coal technologies, carbon capture systems, and massive expansion of nuclear power," as well as a big program for surface transportation. And they want the government to sell off large amounts of national timber land, and expand oil and gas drilling.
I contacted the USCC to get their estimates of the size and importance of these various proposals; no word yet.
But since the individual income tax rate is at the top of the list, I figure it's the biggest thing. It's also the one that would resonate the most with USCC members.
Update: Alan Greenspan, who backed the Bush tax cuts in 2001, said Thursday that the cuts should be allowed to expire:
Greenspan, in a telephone conversation after his Bloomberg TV interview was taped, said his position is that all the expiring Bush tax cuts should end, for middle-class and high- income families alike.The changes in tax rates on higher income people come to three to four percentage points, as per Reuters:
Ending the cuts "probably will" slow growth, Greenspan, 84, said in the TV interview. The risk posed by inaction on the deficit is greater, he said.
"Unless we start to come to grips with this long-term outlook, we are going to have major problems," said Greenspan, who led the U.S. central bank from 1987 to 2006. "I think we misunderstand the momentum of this deficit going forward."
Without congressional action, current rates will rise for all income groups, to about 28 percent, 31 percent, 36 percent and 39.6 percent from 25 percent, 28 percent, 33 percent, and 35 percent, respectively.How much tax would be raised by letting the Bush cuts lapse? The budget documents I've found from the CBO (that's the nonpartisan budget agency, not the one for the White House), from March, estimate the cost of reversing the entire Bush 2001 and 2003 packages:
Proposals related to modifying and permanently extending provisions of EGTRRA and JGTRRA that are set to expire in 2010 would reduce revenues by $2.2 trillion (or 1.1 percent of GDP) and increase outlays by $311 billion (or 0.2 percent of GDP) over the next 10 years relative to the amounts in CBO's baseline.Specifically, the higher rates on individuals would raise about $67 billion in 2011, and about $100 billion to $130 billion per year from 2012 to 2016.
Here's where to find that CBO document -- see page 4 .
Back to Reuters, for coverage of debates in Congress:
Democrats charge that Bush's tax cuts for the wealthy have been a major factor behind the federal deficits.
With consumer spending losing steam and a stubbornly high unemployment rate, Democratic lawmakers say keeping rates low for the middle class could help boost the economy.I'm not so sure about the claim that the tax cuts were a major deficit factor, so I also called the Senate Finance Committee to get some substantiation. Nothing yet from them either.
[Senator Max] Baucus [D - Montana] sparred with the panel's top Republican, Charles Grassley, who argued that letting the top rates rise would disproportionately hit small business.
"It will affect decisions on whether the business expands or contracts. It will affect whether a business hires or lays off workers," Grassley said.
Baucus and another economist said the small business argument is weak as the category includes partnerships such as big law and accounting firms, and even hedge funds.
"We should make it clear what the facts are here. By and large it's big business in the top two rates," Baucus said.
Some of the USCC ideas I like, for example encouraging the infrastructure spending (part of item 7). I'm not for selling off mineral and timber rights, though: the current energy industry has messed up things enough already.
I also agree on cutting entitlements. The current trajectory is just too high, and the U.S. has to make gradual increases in the normal retirement age and in Medicare. There is plenty of potential for cuts all around.
But on the income tax rate increases: according to the CBO estimates, reversing the Bush tax cuts wouldn't erase the deficit, but $100 billion a year isn't tiny either.
I think the USCC is missing an important point about the uncertainty in the economy. Yes, getting the U.S. government budget in order would help to reduce everyone's doubts. But at this point, things are so distorted that trimming around the edges won't accomplish much.
And of course I realize the USCC membership doesn't want to pay more tax. But the reducing the uncertainty has to start somewhere, and wouldn't be great for the wealthy of this country to step up and say "Yes, we will pay higher taxes, to do what's necessary to support the system that has given us some much."
Consider what John F. Kennedy, Oliver Wendell Homes and Saint Luke -- all guys at the top -- had to say about shared sacrifice:
For unto whomsoever much is given, of him shall be much required: and to whom men have committed much, of him they will ask the more.