Fiscal Conservatism Requires Higher Taxes on the Rich
Fiscal conservatism is largely dead in America’s federal government. It is remarkably dead in the Republican Party. Higher taxes on the rich are necessary to give it life again.
A long time ago, back when Republicans were true Republicans, they embraced fiscal conservatism as a policy with the following components:
- Lower spending during boom economies.
- Therefore, make government smaller.
- Therefore, lower taxes for everyone.
Lower taxes were a consequence of lower spending and smaller government. The GOP’s philosophy of today is:
- Lower taxes on the rich.
- Increase spending faster than inflation.
- Therefore, increase federal deficits.
- Therefore, skyrocket the national debt.
More than lower taxes
Fiscal conservatism isn’t just about low taxes. It’s also about balanced budgets and manageable national debt. Neither are possible with lower taxes and higher spending. They are certainly not possible when billionaires are now paying a lower effective tax rate than the working class, according to the conservative Forbes magazine.
Likewise, Libertarians and Republican extremists are not in touch with reality when they think this country should get to a balanced budget only with spending cuts. A $1 trillion cut in the federal budget will trigger a major economic depression and throw tens if not hundreds of thousands of government employees — especially military members — out of a job.
It’s Not Dead; It’s Just Mostly Dead
Fortunately, fiscal conservatism isn’t entirely dead. To paraphrase Billy Crystal in “Princess Bride”, it’s just mostly dead. It still matters to the social and financial health of the nation. It should matter to liberals and left-leaning moderates for several important reasons. But first, consider three critical facts.
- Under the Trump administration, with the help of a Republican Senate and two years of a Republican House, federal spending increased from $3,982 billion in 2017 to a projected $4,685 billion in 2020, according to the Congressional Budget Office. That’s a 5.9% annual increase from 2017.
- Federal tax revenue during the same period has increased 3.6% per year. As a result, the Trump administration and Congressional Republicans have been increasing spending much faster than expenses, which are increasing the deficit and national debt.
- Interest on the federal debt was budgeted at $376 billion in 2020, but it may exceed $500 billion for the first time because of Covid-19 stimulus programs. This is more than the budgets for the liberal-friendly departments of Education, Housing and Urban Development, and Health and Human Services combined.
Republicans and Democrats alike have responsibility for the current fiscal mess. But a Republican party that claimed it was more fiscally responsible for so many years is displaying a mind-boggling level of hypocrisy. Either it regains the lead or it abdicates that lead to Democratic party leaders who might just see an opportunity to act like true national leaders.
Tax the Rich to Fix the Problem
It’s astonishing that one of the most “conservative” Presidents in history was spending money like a drunken sailor even before Covid-19. If Republican voters are truly Republican, they have sound reasons to support higher taxes on the rich if they sincerely want lower debt and deficits.
Massive debt and deficits are a combination of taxes that are too low and spending that is too high. The solution is simple math: increase taxes and decrease spending. If the GOP is unwilling to cut the bloated military budget — by far the largest discretionary budget and three times larger than the next country on the planet — it must raise taxes on the same people who have benefitted from massive tax cuts. At a time when U.S. income inequality is at a historic high, they can afford it most.
Otherwise, the Republican party can no longer claim to own fiscal conservatism as a policy.
Even Liberals Can Love Fiscal Conservatism
Liberals also have good reason to care about fiscal conservatism. Out-of-control spending wastes money on debt interest payments. As a result, there is less money for social programs, environmental protection, national infrastructure and other national needs. Fiscal conservatism is sound liberal policy when it leads to a better society.
Unfortunately, it smells like a Republican policy to liberals and left-leaning moderates because the Republican party made it a core principle decades ago. But no worries. The GOP has largely given up on it. Just to make sure, the GOP has stomped even harder on its grave in the last four years.
Republicans have often accused Democrats of being the party of “tax and spend”. Democrats have a chance to change their image to “tax and spend wisely”. Then they can be the true fiscal conservatives.