We are still borrowing more than $1 trillion a year. Barack Obama has added more than $5 trillion to the national debt in his first term alone. Such massive borrowing is unsustainable. Someone somehow at some time has to pay it back.
Obama would agree. He once alleged that George W. Bush’s much smaller deficits were “irresponsible” and “unpatriotic.” Obama himself vowed to cut the budget deficit in half by the end of his first term. Instead, Obama’s annual deficits have never gone below $1 trillion.
Three ways to establish a long-term trajectory toward a balanced budget were under discussion. One was to adopt the proposals of the nonpartisan Simpson-Bowles Commission, appointed by Obama. The commission offered a balanced mix of tax reform and greater revenues, along with cuts in federal spending. But the president was not interested. The commission’s findings now seem stale just two years after they were issued.
Another way would have been to adopt the Bill Clinton–Newt Gingrich compromise formula of the 1990s that balanced the budget through a series of across-the-board tax hikes and spending cuts. But while the administration talked grandly of a return to higher “Clinton-era tax rates,” it never mentioned the necessary second half of the old equation — “Clinton-era spending cuts.” That balanced solution is dead, too.
Finally, we could have just enacted the income-tax rates of the Clinton era now and worked on the spending cuts later. But the administration did not wish to take that third approach either. Instead, it prefers returning to Clinton-era rates only for those who make more than $250,000 a year, while leaving the lower Bush-era income-tax rates — once soundly ridiculed — on all other Americans.
The problem is that such a soak-the-rich move would give the Treasury only about $80 billion a year in new revenue — about 7 to 8 percent of the money needed to make up for the massive annual borrowing. Even with proposed accompanying tax hikes on capital gains and larger estates, we still would fall hundreds of billions of dollars short. There simply are not enough affluent sheep who make more than $250,000 to shear.
Spending is the real problem, but it goes largely unaddressed. Obama’s first-term borrowing of $5 trillion was, in part, designed to stimulate the dormant economy while expanding entitlements to those suffering from the recession. But despite the addition of millions of Americans to those who already were receiving unemployment insurance, disability insurance, or food stamps, and despite massive loans to green industries, the unemployment rate and GDP growth are about where they were four years and $5 trillion ago.
Now the president wants another $50 billion in new borrowing. But why would borrowing another $50 billion jump-start the sluggish economy when 100 times that figure in deficit spending so far has not?
“Pay your fair share” was a winning Obama campaign theme — given that nearly half of all Americans do not pay any federal income tax and receive some sort of federal or state entitlement. Yet if the targeted 5 percent of American taxpayers already pay almost 60 percent of all federal-income-tax revenues, what would the president consider their proper “fair share” — 70 percent, 80 percent, 90 percent, or 100 percent?
We are now entering a rare, revolutionary period in American history. The present administration is not just reexamining the traditional physics of taxing and spending, but the very basis by which Americans are compensated in the workplace.
For Obama, it is inherently unfair that a few — a surgeon, a small-business woman, an investor, or a Lotto winner — should make so much. Thus it is the government’s obligation, along with state and local governments, to take much of it away from the suspect few and redistribute it to far more deserving others.
All the old criteria in a free-market economy that decide how much we are able to make — education levels, hard work, personal responsibility, particular tastes and values, skill sets, self-discipline, or even sheer luck, accidents, relative health, or inheritance — now matter far less.
Instead, Obama’s all-knowing, all-powerful federal government, through higher taxes, more spending, and greater deficits, will set right what the unfair marketplace has so skewed. At last, we learn what Obama really meant when, in unguarded moments, he sermonized about “redistributive change,” the need to “spread the wealth,” knowing the proper time not to profit, and “at a certain point” making too much money.
Do we need to heed any longer the ancient advice — scrimp to leave something behind for your kids; try to get a promotion; make sure your savings account is larger than what you owe — if some inequality results?
There is now only one commandment in the new Kingdom of Fairness: Make less than $250,000, and the government will ensure that you, the deserving, get your fair share; make more than that, and the government will demand that you, the undeserving, pay your fair share.