I met with my tax guy the other day. I'm tragically a victim of my own success; this year I will pay enough in taxes to fill the tanks of an F/A-18 with enough Jet-A fuel for a single mission. (And yet the damn Navy won't let me ride along! It's only fair -- I paid for the gas, I should get to ride back seat.) So we go through the whole rigamarole, determining which exclusions and deductions are reasonable and lawful and which are not.
While doing so, I cast my mind back a month or so to a blog post by Edwin Leap, in which he opined that "if we [elect] a Democratic president, that president, he or she, will surely raise taxes. I explained that I was really unhappy with that idea, and that I like the current tax cuts." Well, I can't entirely disagree; I too like low taxes, and my taxes, as a fraction of my overall income, are the lowest they have ever been.
Edwin runs in a different direction with his thoughtful post, and I refer you to read it for yourself. He touches on what most of us would consider a reasonable area of discussion -- whether government should be large or small and how far the scope of government should extend into the private sphere. There's a lot of vibrant debate taking place on these topics at both the national and local levels, and there are valid points on both sides.
What bothers me about the government's policies of the last seven years, and the virulent strain of conservatism, commonly described as "anti-tax activism," is that it conveniently ignores the reality that, once the government we are debating actually exists, once the money is spent, whether for good or for ill, that government must be paid for. "Anti-tax" is not a valid governing philosophy. "Small government" is a valid philosophy, though I don't particularly subscribe to it, but whether the government is big or small, it has to be paid for. The only way to pay for the government is taxes. Taxes today are unpleasant. Deficit spending inevitably results in higher taxes, with compounded interest, to be paid in the future, by us and by our children.
And this is what I find the most reprehensible about the Bush government's policies: they have expended federal entitlements enormously, quadrupled earmarks and pork-barrel spending, and engaged in a very expensive war, while pretending that it simply does not need to be paid for. You probably know that I, like almost two-thirds of Americans, think going into Iraq was misguided. The most recent estimates I have seen indicate that the direct costs of the war exceed $500 Billion. Even though I opposed and oppose the war, I do acknowledge that it has got to be paid for! But not the republicans.
Dick Cheney famously growled that "deficits don't matter. Reagan proved that." Perhaps, in the narrow sense that an administration can max out the national charge card without paying an electoral price; Bush's re-election seems to have confirmed this tenet. But do deficits really matter? Is the dollar's recent collapse in some part related to the national debt? What other real world consequences are there to this debt? There are a lot of really smart economists out there who debate this passionately and in terrible, mind-numbing, boring detail; I'm humble enough to admit that I don't have any claim to expertise or authority in this field. But the common-sense conclusion is inescapable: large structural deficits, escalating over time, are unsustainable in the long term.
In addition to the economic risk of a national debt that exceeds 40% of GDP, there are strategic risks. China's central bank owns about $1.3 Trillion in US Treasury notes, and has threatened to liquidate these, should the US try to impose any sanctions. I don't know about you, but I find it very unsettling that a not-exactly-friendly power like China has, should it choose, the ability to devastate our economy and trigger a collapse in the value of the dollar.
In response to this point, Edwin wondered if we couldn't balance the budget just by cutting spending. Unfortunately, about $2.1 Trillion of the $2.9 Trillion budget is off the table -- national defense, social security, interest on the existing debt, medicare, etc. There doesn't seem to be room in the remaining budget for cuts to offset the $500 Billion-ish annual deficit. Bush has been content to run out the clock on this fiscal catastrophe. McCain disingenuously promises more tax cuts. The Democrats, mindful of Walter Mondale's fate, studiously say nothing.
I think Edwin is right: if we elect a Democrat, taxes will go up. I'm not jazzed about that. On the other hand, I went through some pain to pay off my credit cards and I am glad I did. Now I've got more discretionary income to play with. Bill Clinton stared down the republican congress, raised taxes, and balanced the budget. It can be done, though with some pain. It's necessary -- if any politician has the stones and the maturity to do it. If we put it off, we just hasten the day of reckoning.
Bill Clinton bequeathed to Bush and America a budget that was balanced and solvent. Bush and his enablers in the Republican congress squandered that. I'd be pretty pissed, if I were Clinton, since the balanced budget was his most tangible and important legacy. Of all Bush's many crimes against the American people and the Constitution, his recklessness and irresponsibility with the nation's future may not be the worst, but may ultimately prove to be the most intractable.
The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, lest Rome become bankrupt.
Marcus Tulls Cicero, 63 BC