Bad politics trumps good policy, pushing us over the fiscal cliff
The following guest editorial was written by Joe Balyeat and was published on December 21, 2012 in the Missoulian, Bozeman Daily Chronicle, Billings Gazette, and Montana Standard,
“You don’t raise taxes in a recession… (those) economics are right. You don’t raise taxes in a recession.” – August 2009
“I’ll eliminate capital gains, taxes for the small businesses and start-ups that will create the high-wage, high-tech jobs of tomorrow … I’ll cut taxes for 95 percent of all working families, because, in an economy like this, the last thing we should do is raise taxes …” – August 2008
“I am just listening to the consensus among people who know the economy best. And what they will say is that if you … increase taxes … when the economy remains somewhat fragile, that would have a de-stimulative effect and potentially you’d see a lot of folks losing business, more folks potentially losing jobs. That would be a mistake when the economy has not fully taken off.” – Jan. 29, 2010
The above quotes were emphatically repeated by a famous politician – guess who? None other than Barack Obama.
While I rarely agree with him, he had it exactly right. Economists left, right and center agree – you don’t raise taxes in a weak economy. Consider these quotes from a recent economic study done by former Chairman of Obama’s own Council of Economic Advisers, Christina Romer: “Tax increases are highly contractionary.” “… A tax increase of one percent of GDP lowers real GDP by roughly three percent. … Tax increases have a large, rapid, and highly statistically significant negative effect on output. … A tax increase is followed by a large and highly significant rise in the unemployment rate.”
Translated into simple English, her warning is clear: Avoiding all tax increases (even on the rich) is more important to the working man than it is to the wealthy. Why? Because raising ANY taxes has a magnified, negative effect on the private sector economy and jobs. And, to quote Obama himself, this is especially true in a fragile economy. This isn’t about the rich, folks; they’ll do just fine with or without a tax increase. This is about working-class Montana families – will they have a chance to participate in the American Dream in a growing economy? Will those who commit themselves, work hard, and do the heavy lifting have a chance to “move on up”? Or will our children be consigned to listen to sad stories about the great American economy that once was? History’s most powerful economic engine subjected to slow economic suicide by Washington politicians who couldn’t resist allowing class warfare politics to trump “class-blind,” economically proven, good public policy?
Moreover, in addition to the huge middle-class economic hit, the “fiscal cliff” tax increases also directly rob the middle class. Democratic proposals to lower the death tax exclusion from $5 million to $1 million will financially devastate many middle class Americans – not just those who own small businesses and farms – but even those who simply have committed no greater sin than having their own personal home paid off debt-free. And Republican proposals to let the payroll tax cut expire will equally harm working-class families.
Finally, even the so-called “moderate” proposals to trade some tax increases in exchange for budget cuts are nothing but bogus political con-artistry. Not only will the tax increases destroy jobs, but these same budget cuts were already agreed to, and signed into law by Obama himself, back in the Budget Control Act of 2011. The budget cuts were already bargained off by D.C. liberals in exchange for conservative votes to raise the debt limit to $16.3 trillion. Yet, because nobody in Washington apparently has the backbone to carry through with necessary budget cuts which were already agreed to as a 2011 bargaining chip, D.C. politicians of all political persuasions – left, right and center – are perpetrating an enormous hoax on the American people; trying to now re-use the same previously spent bargaining chip as leverage to raise taxes – severely damaging our economy, our jobs and our children’s future all in the name of petty class warfare politics.
I wish they’d all go jump off a cliff.
Joe Balyeat is a national award-winning CPA who formerly served as chairman of the Montana Senate Business, Labor and Economic Affairs Committee. He presently serves as state director for Americans for Prosperity–Montana.