By Tom KandoOkay, so August 2 is approaching - Armageddon. Washington fails to raise the debt ceiling. America defaults. It’s the end of America as we know it, the beginning of America as a banana republic. Well, hopefully not.
But whatever happens, here is one thing which I find UNFATHOMABLE: The NEAR TOTAL CONSENSUS - even among most democrats - that raising taxes is a non-starter, because it destroys jobs, especially when the economy is stagnant.
CAN ANYONE EXPLAIN TO ME WHY RAISING TAXES IS ECONOMICALLY UNSOUND, and HOW IT DESTROYS JOBS?
Keynes didn’t think so; President FDR didn’t think so; the IMF, the World Bank, the European Central Bank and the European Community don’t think so, when it comes to ordering Greece and others to RAISE TAXES as part of their recovery!
But the rules applying to the US seem to be different from those that apply to other deeply indebted countries. Why? Greece must raise its taxes, but the US may ABSOLUTELY NOT.
Why?
Where does it say that the government cannot create jobs? The New Deal sure did.
That Socialism doesn’t work? It sure seems to be working fine in China, a country that will soon OWN the United States lock, stock and barrel. It works pretty good in Germany, Holland, Scandinavia, Canada and the other three dozen countries where things are better than in the US.
The rebuilding of our decrepit infrastructure, the building of high speed rail, wind farms, an entire new alternative energy grid, urban renewal, public services from education to medicine to public safety, these do no represent dozens of millions of jobs?
Where is it proven that the federal budget should not exceed 18% of GDP? Why not 50% as it does in some Scandinavian countries? Or how about somewhere between these two absurd numbers?
True, our indebtedness will not be solved without reigning in entitlements. For Social Security, this is easily accomplished:
(1) raise the age when Social Security benefits commence. Makes sense, since we live longer.
(2) means-test benefits, i.e. millionaires don’t need to receive Social Security benefits. They won’t miss that $1200 monthly check very much.
(3) raise contributions for those who can afford it. That is, don’t stop taking out withholdings at $107,000. Continue to do so up the pay scale.
Reigning in Medicare is more complicated, but also feasible. I’ll tell you how in a future post.
All in all, the mantra that “raising taxes damages the economy and destroys jobs, and that socialism doesn’t work” is part of an irrational belief system comparable to that of the Catholic establishment during the 16th century religious wars: Then, the Catholics waged war against Protestant groups such as the Huguenots, heavily supported by Spain’s military might. As the guardian of Catholic doctrine all over the world, Spain ruined and bankrupted itself by defending and hanging on to a waning paradigm, claiming, in effect that “Protestantism doesn’t work.” Boy were they wrong!
We are the Spain of the 21st century. leave comment here