Except in a handful of wicked American cities, you could not get elected a hundred years ago without being able to talk intelligently about the family farm and commodity markets. Economic dangers and opportunities were immediate and hotly discussed; the stakes were high and, consequently, the voters were economically literate. Is it possible that those times are returning?
This summer, twenty-four hour coverage of the economy and Washington’s finances—and extreme political talk on both—may be doing the economy measurable harm, as well as educating the public. Talk of national bankruptcy has surely had something to do with the decline in consumer confidence, an ever rising savings rate, and now stalling industrial production.
Consumers, investors and employers have been told that the glass in Washington is not just half empty, but half full of poison.
Being unready to accept failure or live for long in pain, the next response by Americans is likely to be higher political participation and, just possibly, less tolerance for Democrat and Republican clichés. Over the next fifteen months, it could get harder and harder to sound stupid and irresponsible.
Already, two fire lines against fresh thinking are in trouble. “No new taxes” and higher taxes on “millionaires and billionaires” are perceptively giving away to calls for tax reform and, yes, some new revenues. The prospect of a more robust tax base would make short-term stimulus more credible and, therefore, more effective.
Singling out too few taxpayers for an income tax increase sounds too convenient. It doesn’t sound statesmanlike, it sounds envious. Alternatively, calling any new tax “socialistic” or a “job killer” is wearing thin. American governments spend like Canadians. Ultimately, they’ll have to pay equivalent taxes too. Most important, there is no credible way to raise serious money without asking more from the rich.
(Okay. Let’s set aside the extraordinary growth in wealth of the top 0.1% of Americans over the last thirty years. It is not demagogic, however, to note that the top 10% of Americans control two-thirds of America’s wealth. The Democrat’s proposed tax increase on those earning over $200,000 is stale, doesn’t raise enough, and doesn’t encourage economic growth. Nevertheless, it is not radically left or substantially different from most conservative and mainstream alternative ideas to modernize the tax code. They all hit those with high incomes and indulgent tax breaks—because that’s where the money is. This isn’t a class-war issue. It’s about ability to pay.)
Clearly, the business community has discovered, albeit, ridiculously late, that brinksmanship, polarization and paralysis in Washington are very bad for business. Also, on his Midwest tour this week, Obama must have noted that his audiences want him to test Congress with new measures immediately, not simply sound reasonable.
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