Obama will keep coming back for more.
“So when you put it all together, what you need is a package that keeps taxes where they are for middle-class families; we make some tough spending cuts on things that we don’t need; and then we ask the wealthiest Americans to pay a slightly higher tax rate. And that’s a principle I won’t compromise on, because I’m not going to have a situation where the wealthiest among us, including folks like me, get to keep all our tax breaks, and then we’re asking students to pay higher student loans. Or suddenly, a school doesn’t have schoolbooks because the school district couldn’t afford it. Or some family that has a disabled kid isn’t getting the help that they need through Medicaid.”
— President Obama
Remarks at Daimler Detroit Diesel Plant
December 10, 2012
That’s right, folks. If taxes aren’t increased on the wealthy, schools will suddenly be unable to afford schoolbooks and disabled children will be denied Medicaid. Never mind that President Obama was perfectly happy to cut $110 billion from Medicaid during the fiscal cliff negotiations of 2011.
To hear Obama tell it, if taxes are increased on the wealthy then we would have no problems. It would bring about the end of war, famine and acne in adolescent boys. Of course, if taxing the wealthy is all that it takes to ensure that children aren’t deprived of their textbooks and from disabled children from receiving medical attention, then why doesn’t Obama see fit to impose a 100% tax on the wealthy?
Well, because increasing taxes on the wealthy is about politics, not economics. It is a panacea intended to pacify those who resent the rich. Naturally, it is not in Obama’s interest to pacify this resentment entirely. Hence the reason that Obama says he’s only asking “the wealthiest Americans to pay a slightly higher tax rate.” So when this round of tax increases on the wealthy proves not be enough, then next year Obama will ask the wealthy “to pay a little bit more.” And a little bit more next year and a bit more the year after that and again a bit more. In more ways than one, taxing the wealthy will never be enough.
If Obama were to see fit to tax 100% of the income of the wealthiest people in this country, then people would come to the painful realization that soaking the rich doesn’t work. It is estimated that a 100% levy on the wealthiest Americans would pay for eight days of government spending. And then Obama could no longer blame the rich for the country’s problems. The President isn’t going to deprive himself of his best political target. And what good is a political target to Obama if he can’t hit it?
As it stands, the federal debt is more than $16.3 trillion and the size of it increases on average by nearly $4 billion every single day. So long as Obama is not amenable to compromise when it comes to increasing taxes on the wealthy, these average increases on the federal debt are bound to climb with no end in sight.
Which brings me back to the school kids who Obama insists will be deprived of textbooks if taxes aren’t increased on the wealthy. As it stands, the Department of Education has a budget of $68.1 billion. If $68.1 billion isn’t enough money to pay for the books for every child in the country, then what is? If $68.1 billion isn’t enough money to pay for the books for every child in this country that tells me we don’t have a revenue problem; we have a spending problem. If we doubled the federal education budget next year, I guarantee President Obama would still be speaking of school kids without textbooks and demand the wealthy ante up more.
Given the current divisions in the GOP over the question of tax increases on the wealthy, chances are that President Obama will get his way. Yet perhaps this is what must come to pass. After a decade plus of the Bush tax cuts, it may be that increasing taxes on the wealthy might be the only way to convince Americans it is a bad idea that doesn’t actually work. Alas, it will be a painful lesson.