Jan
26
By Paolo von Schirach
January 26, 2012
WASHINGTON – It is quite depressing to observe Washington total political paralysis, accompanied by cheap and openly divisive populism. Admittedly, it is difficult to govern when the two parties are so deeply divided. But the president has to try. This is what he was elected to do and what he gets paid for. Whereas president Obama has decided to give up governing and focus instead on his re-election platform focused on a message of “fairness”, as repeated in his State of the Union message to Congress. Yes, in case you have not heard, Warren Buffett’s secretary is taxed at a higher rate than her billionaire boss. And there she was, the secretary, Ms. Debbie Bosanek, in the gallery invited by the president. Charming.
Fairness means redistribution
And so, here is the message: ”America, vote for me and I’ll make sure that you keep all the goodies. In fact I’ll get you some more, because I’ll squeeze the rich, as they should be; and whatever ill gotten money I collect, I’ll spread it around“. In addition to the promise of spreading the wealth by taxing the rich there is the irresponsible promise to maintain all federally funded benefits, and an untouched welfare state. This may be comforting for many who depend on it.
No changes in entitlements
But this stance is myopic, disingenous and dangerous, as it promises to worsen the already horrible fiscal imbalances that at some point will prove to be unsustainable. Surely Obama, just like everybody else in Washington, knows very well that all major entitlement programs need to be overhauled in order to keep them viable for future generations.
But no. The Democratic Party narrative is that they will fight to the bitter end against the mean spirited Republicans who want to throw grandma in the snow and keep poor children hungry, while they party on the expensive boats that they can easily afford because, as we all know, they pay no taxes.
Tax the rich
And what better poster boy of Republican greed than Mitt Romney. He is the richest man even running for president. And, you wouldn’t know, his outrageous wealth is taxed only at a 15% rate. Can you imagine? And this man has the audacity to run for president? Shouldn’t he be ashamed of himself? And after all, how did he make all this money on which he pays no taxes? Through rapacious corporate take over actions. He and his side kicks at Bain Capital went in, stripped companies of all their assets, sold the goodies for huge profits and then let whatever was left wither and die. Some capitalist, this Romney.
No mention of the fact that Romney is taxed at a lower rate not because of clever gimmicks invented by his accountants but because most of his income is from investments taxed by law at a lower rate than salary. No mention of the fact that Romney donates to charity the same amount he pays in taxes. The transparent intent here is to demonize the rich in order to keep the favors of the middle class and the poor, with the hope that this will be the safe ticket to re-election. And this is Obama’s platform. Look, in the end, especially if the economy perks up a bit before November, it may even work. But the damage of a divisive populist campaign would be immense.
A pro-growth America
As Indiana’s Governor Mitch Daniels said in his reply to Obama’s State of the Union message, the real issue at hand is to revitalize the economy, to enact policies that will inspire confidence and new enterprise. If we really want more fairness, let’s get it through comprehensive tax reform that will eliminate favoritism and loopholes. And let’s get serious about spending reform.
This is what America needs. A good, sober pro-growth program accompanied by an honest effort to reform federal spending. Of course there is more to be done. But without growth we shall not do much of anything.
Redistribution would fix nothing
But Obama, by focusing most of his attention on redistribution, is fostering the fanciful and totally misguided belief that America’s problems are mostly about a clique of greedy Wall Street guys, (Romney is one of them), who have rigged the system. They have stolen all the money. No wonder there is not enough for the rest of us, as the Occupy Wall Street people keep saying. But, if you force the scoundrels to cough the loot, there will be plenty to go around for all of us.
As in all populist distortions, there is an element of truth in this characterization. It is true that income inequality has become very acute in America. And this cannot be good. Accumulation of vast wealth in the hands of fewer and fewer people is a distortion that will have to be addressed. But targeting the rich through punitive taxes is just feel good policy. It is a fact that, even by confiscating all the wealth of the super and even moderate rich, we would not fix the budget deficit, nor will we do much to get back to more dynamic growth. Fairness is an appealing goal, if honestly pursued. But fairness without growth will not do you much good.
A Romney inclusive plan?
The hope here is that Romney, assuming he will be the Republican nominee after all, will be able to make a case, not for his wealth, but for the need to recreate a business friendly environment. And this goal will have to be accompanied by a serious rebuilding of a genuine opportunity society in which most people have a fair shot at success. This has to include a welfare state that protects the truly needy. And, most importantly it has too include education reform. You can tax the rich all you want, but without a good education nobody has a good chance in this ultra competitive economy.
If the Republicans could offer an honest vision of fairness, growth and opportunity, just like the one outlined by Governor Mitch Daniels, then they deserve to govern. If they continue to be the party of middle aged, well to do, and mostly white southerners, then they have no chance. Obama will win and, if the Democrats carry the Congress, we shall have four more years of stagnation and high spending.
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