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    Tuesday, July 16, 2024

    Democrats should drop fear of talking taxes and debt

    Back in the 1992 presidential election, Texas businessman Ross Perot ran the strongest independent candidacy in modern U.S. history. Holding up pie and bar charts, Perot, in folksy half-hour TV segments purchased largely with his own money, expressed alarm with the nation’s growing budget deficits and national debt.

    The approach, and that campaign issue, enabled Perot to capture an impressive 19% of the popular vote and, in the process, helped Democrat Bill Clinton win the election over incumbent Republican President George H.W. Bush.

    Boy, how times have changed.

    The national debt that Perot expressed concern about — $4 trillion that represented 46.8% of the Gross Domestic Product — seems quaint to what the nation now faces. Today’s national debt is $35 trillion, 97% of GDP, amounting to $267,000 per taxpayer. Yet deficit spending and the growing debt have largely disappeared as campaign issues. Polls show that Americans are instead concerned with the economy, and particularly inflation, with the scale of migrants coming across the southern border, and with the nation’s deep political divisions and their implications for our republic.

    Candidates don’t feature the subject in their campaigns. Returning the nation to some sense of fiscal sanity would require painful spending cuts or significant tax increases, and probably both. Suggesting either of those things undoubtedly does not come across well with voter focus groups.

    I visited the campaign websites of the folks those of us in eastern Connecticut will be deciding to send to Congress. Though Congress controls the purse, I could find no references on these candidate pages to deficits or the national debt, or to fiscal policy generally. This was true for U.S. Sen. Chris Murphy, who is seeking a third term, and for his opponent, Republican Gerry Smith, the first selectman of Beacon Falls. The issue was also absent from the campaign webpage of Democratic Congressman Joe Courtney, who has held the Second District seat since his first election in 2006, and from that of his Republican opponent, fiscal conservative Mike France.

    Republicans get worked up about the national debt when Congress is faced periodically with raising the debt ceiling or shutting down the government for failing to do so. But it is all show and no substance, a chance to try to cast all fiscal blame on Democrats.

    During the first two years of Trump’s presidency, the GOP controlled Congress. Republicans had the power to broadly reduce spending. Instead, the Republican majority passed the Tax Cut and Jobs Act, slashing taxes largely for corporations and the wealthy, but with no corresponding spending cuts to pay for it. Predictably, with revenues reduced the deficit and national debt ballooned. The Covid pandemic exacerbated the situation.

    Cutting taxes is the easy part, if you are willing to ignore the ballooning national debt. Finding spending cuts significant enough to matter is the hard part. Exploding Medicare and Medicaid costs are primary drivers of the nation’s debt. Those costs will continue to spike as the nation ages.

    The solution for at least bending the debt the projections in the right direction should be focused primarily on tax increases, particularly targeting corporations and the extremely wealthy. Among developed countries, the United States is among the lowest taxed. Congress got the country to that position dishonestly, by approving spending but not the revenue to pay for it.

    While it is not featured in his campaign, Biden has proposed tax increases to balance the budget. These include boosting the top federal rate on ordinary income from 37% to 39.6%, which was the top rate before the Trump presidency. His budget proposal also included a capital gains rate increase on investors who make at least $1 million a year; a Medicare tax increase for those making more than $400,000 a year; and a minimum wealth tax of 25% for households with net worth exceeding $100 million.

    A key Republican 2024 campaign plank would move in the opposite direction, extending the Trump tax cuts that are set to expire at the end of 2025, and potentially expanding them. That would pour more fuel on the national debt fire, warns the nonpartisan Committee for a Responsible Federal Budget.

    “Extending the individual and estate tax provisions of the TCJA…would add $3.9 trillion ($4.5 trillion with interest) to deficits through FY 2035,” according to the committee. The national debt would grow to between 128.5% and 132.2% of GDP in that time, the committee calculates.

    It is time for Democrats to make the case for tax increases on the well to do, package it as honest budgeting, and expose Republicans for their fiscally fraudulent approach to tax policy. It is a populist message that would appeal to many average Americans if packaged as a way to protect Medicare and other necessary domestic spending, such as national defense.

    The last time the nation had a balanced budget, in 2001, it was a result of President Clinton working with a Republican congressional majority that had tried to remove him from office via impeachment. The fiscal prudence was short lived.

    Deficits and the national debt soared to record levels during the subsequent two terms of Republican President George W. Bush, with the approval of tax cuts that were not offset by spending cuts again largely to blame. That and fighting the Iraq war “off budget.”

    To be fair, some economists make the case that concern about the national debt is overblown. Stock markets don’t appear terribly concerned. Russia’s national debt is only about 20% of its GDP, but no one would want to trade the U.S. economy for that overseen by Moscow and Vladimir Putin. Meanwhile, Japan’s national debt has reached 261% of GDP, yet it still has a vital economy.

    But it would seem to me that at some point there will come a day of reckoning. How many of us live to see that reckoning, or a solution to avoid it, is another matter.

    Paul Choiniere is the former editorial page editor of The Day, now retired. He can be reached at p.choiniere@yahoo.com.

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