Can't Balance Budget Without Raising Taxes

U.S. Senate Majority Leader John Boehner’s insistence that raising taxes for the rich is “off the table” in the raging budget deficit debate might be politically smart for now, as it would mollify the vociferous Tea Party bloc, but in the long run it’s a recipe for economic disaster. There is no way in the world that the budget deficit can be reduced by cutting costs alone. Eventually taxes for the rich will also have to be raised, and at a rate significantly higher than what it is now. The notion that by lowering taxes for the rich will be induce business to to grow and thereby generate enough taxable revenue to eventually balance the budget is illusory. Recall the failed “Supply Side Economics” scheme of the 1980’s. The then President Ronald Reagan cut the marginal tax wealth of the super-rich from 70% to 30%, gambling on the assumption that it would spur huge investments and boost the economy to instant prosperity. But what Ronald Reagan did instead was trigger the worst recession since the Great Depression.

Though it cost him re-election, his successor, Bush I, prevented further damage by reneging on his promise not to raise taxes. (“Read my lips, no new taxes,” he had imprudently declared at the 1988 GOP Convention.) The next President, Bill Clinton, did one better by raising taxes on the very rich and lowering them for the middle and working classes.

Though it cost him re-election, his successor, Bush I, prevented further damage by reneging on his promise not to raise tax. (“Read my lips, no new taxes,” he had imprudently declared at the 1988 GOP Convention.) The next President, Bill Clinton went one better by raising taxes on the very rich and lowering it for the middle and working class. What followed from it was a decade of economic expansion capped by an unprecedented $236 billion budget surplus. Then along came Bush II and picked up where Ronald Reagan had left off by cutting taxes for the very rich, even as he was embarking on an open-ended two-front war. And after Bush II, it was Barack Obama with his “Good War,” and ever more borrowing to pay for it. The rest is history.

Senator Boehner and the Tea Party firebrands in Congress surely must realize that the only solution to the budget deficit problem is to both cut spending and raise taxes, and not for just the rich but for the middle and working class as well. The math is simple enough. If only they had the political courage to speak the truth.