This morning's column by David Brooks points out that the Founding Fathers split the new country's institutions to reflect the need to balance democracy (the voice of the people) with their belief that a republic needs institutions to improve the character and provide judgment to the people. That the people can run amok and need to be controlled. Or as Irving Kristol is quoted "The common man is not a fool and the proof is that he has such modest faith in himself."
Kristol goes on in that essay to say the phrase "public spirited" has been changed from it original definition of "curbing one's passions and moderating one's opinions in order to achieve a large consensus that will insure domestic tranquillity." Now it tends to mean "someone who has passionate opinions about public matters."
This writer believes good government is necessary to a fair society. People can disagree about where to draw the exact line on where fairness becomes excessive, but unless one wants to dismantle entire functions of the state, there has to be a common element to all arguments about government that we must pay for the government that we want to have.
No discussion of the current federal fiscal position can be "fair" to all government activities without acknowledging that we have yet to pay for the War on Terror and either we do it by slashing government services (and tell the people directly that is what is being done) or we do it by raising revenues. There is certainly spending that this writer would like to see cut. All agricultural subsidies, and corporate tax shelters for a start. On the other hand, I would like to end the double taxation of dividends (once when the company pays taxes and then when the stockholders pay taxes, but that is a point for another blog).
I personally liked the NY Times electronic balance the budget game from 6 or 8 months ago. It showed clearly that unless one wants to slash federal spending on health care or defense and other "discretionary" items, revenues have to be increased. They can be increased by raising taxes or ending tax shelters. The budget deficit commission really focused on the latter with a goal of lowering corporate tax rates in particular.
There are two reasons companies put jobs overseas. One is to be globally competitive in each market (and the growth in this world is in the BRICS) and the other is to manage taxes. The U.S. cannot afford to have a significantly higher corporate tax rate than the rest of the world. But U.S. multinational companies generally do not pay the listed tax rate because of the global structure of taxes. Small companies pay the listed rate and that does cost jobs.
However, we cannot blindly reduce tax rates without paying attention to the tax revenues that are needed to pay for necessary services, including paying for past deficits. Bush I raised taxes and they paid for the Reagan deficits. Bush II spend the inherited budget surplus on tax cuts but then did not pay for the War on Terror. This profligate government spending (and incredibly poor regulation of the financial markets) led directly to the housing boom and bust and our current situation.
The Congress would do us all a big favor if they started the negotiations with the acknowledgment that the U.S. is going to continue to pay for health care, defense, transportation and other things while figuring how what specific spending cuts and revenue increases can achieve the goal of a balanced budget by 2014 or whenever. If you aim for 2012, we will be in an even more severe jobless position then we are now. So practicality is essential for progress and the essence of practicality is that we are a Republic managed by the process of democracy. Both sides should engage the other with respect for, the voters, that through 230 years of existence, have put both parties in charge to generate the government that provides certain things that must be paid for. The mantra that there will be no tax revenue increases is disrespectful to that history. The mantra that there will be no cuts to social services or other "favored" spending is disrespectful to that history also. Spending cuts and revenue increases are necessary and both are compatible with the notion of "public spiritedness".
Elected politicians represent the Republic and need to lead and educate the democracy, not simply follow the wishes of their electorate. Both parties could do this better.
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