Here they go again.
It took only a couple of weeks, but already the glow has begun to wear off those post-election promises to put ideological and partisan differences aside in order to reach a grand bargain on the budget in time to avoid sending the economy over the “fiscal cliff.”
Steven Pearlstein is a Pulitzer Prize-winning business and economics columnist at The Washington Post.
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It tells you everything you need to know about the intransigence of the political class that has spent much of the past two weeks arguing whether the expiration of tax cuts and the onset of deep and indiscriminate spending cuts constitute a “cliff” or a “slope” or a series of “plateaus.”
Rather than coming up with fresh, concrete approaches for raising revenue or slowing the growth in entitlement spending, the same old partisans are hard at work redrawing the same old lines in the sand, justifying them with the same old exaggerated nonsense about the economic and social calamity that will result from conceding even one inch of sacred policy ground.
The generous view is that this is merely posturing to secure advantage in the inevitable compromise. The more realistic one is that these political Bourbons have learned nothing and care only about winning and protecting their own selfish interests over the common good.
Take the Holy War over what marginal tax rates should be assessed on households with incomes over $250,000. House Republicans insist, above all else, that those rates remain at a Bush-level 35 percent. The President and House Democrats insist, above all else, that rates rise as scheduled Jan. 1 to the Clinton-era 39.5 percent.
You might ask yourself what is so sacred about a 35 percent, or a 39.5 percent, tax rate? Nothing, it would appear, other than the fact that politicians have invested so much ego and political capital in defending them, and the near-certain prospect that numskull commentators and special-interest groups will use them in assessing which “side” won and lost.
If there is need for more federal revenue (as most experts agree there is), and if it is reasonable to ask high-income households that have done well in recent years to assume a larger share of that tax bur den (as most Americans say they prefer), there are lots of ways to raise it without seriously harming the economy.
You could limit in some way the benefit of deductions and credits, or eliminate some of them. Or raise the tax rate on dividends and capital gains from the current level of 15 percent. You could set higher tax rates but only for incomes above $500,000, or $1 million, or $10 million. Or impose a minimum effective tax rate, regardless of the source of the income or how it is spent.
And if some combination of those changes did not raise sufficient revenue, you could even raise the top rates by a percentage point or two while exempting profits of small businesses that are reinvested in the enterprise.
But instead of focusing on such alternatives, the crusaders of the left and right remain stuck in their stale, silly contest to make the other side surrender, as if the future of American capitalism and the American way of life somehow hinges on the outcome.
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