Matt Yglesias wrote a good article for the The American Prospect warning leftists that Obama Administration’s ambitious agenda in these bad economic times cannot survive unless more tax revenue is brought in. Indeed, one would have to see an almost miraculous turnaround in the economy by the end of the year and well into 2010 to have the kind of growth rates that will pay for public health insurance, stabilizing the financial system, stimulus packages and of course, our glorious war in Central Asia.
Right now the GOP can’t get anyone excited about top tax rates at 39 percent but they could if they rose to say, 50%. Indeed the Yglesias article basically confirms what many pooh-pooed about the Tea Party protests, i.e. the fear tax rates will have to go up in order to pay for all the spending (unless there’s a death wish about the dollar in an orgy of money making by the Fed). And we know about the current U.S. tax codes, the rich are more than prepared to make sure they don’t pay their fare share through the loopholes they buy politicians with to create for themselves. And if one thinks smokers are still an untapped source of revenue potential, then you need to make yourself familiar with the phrase “black market.” Oh yes, federal gas taxes and spike in oil prices go together like oil and water.
FDR’s New Deal programs did not have to face the kind of massive deficits coming into office that Obama is which is a very complicating factor. Something will have to give. Let’s hope that comes in the foreign and military policy sector, sooner rather than later. The Administration’s Iran policy offers a sign of hope.