A dozen years of Republican power, yet if the Democrats perform even the fiscal cleanup reform necessary, they’ll be to blame for any of the pain involved. Consider:
So will the Democratic Congress be any better than the Republican Congress was? A look at half a dozen likely policy proposals makes clear the answer will probably be no:
- Tax Increases…
- Spending Increases…
- Alternative Minimum Tax. A 1969 tax increase that was enacted to soak the rich is suddenly going to seriously soak the middle class. Some 3.5 million taxpayers paid the AMT this year. But unlike the regular tax, the AMT is not indexed to inflation, which means the number of taxpayers the AMT hits is expected to balloon–by some estimates to as many as 23 million in 2007. Less than 5% of families with incomes between $100,000 and $200,000 are now paying the AMT, but more than 80% may pay it in 2008. Almost no families with incomes of $50,000 to $100,000 pays the AMT today; but as many as 35% of such families will in 2008.
To eliminate these very unpopular AMT increases would cost about $750 billion over the next 10 years. What taxes the new Congress will raise to solve this dilemma is unclear, but either AMT or other taxes will have to rise.
- Protectionism…
- Energy…
- Social Security. Just 10 years from now Social Security benefits paid out will exceed taxes paid in, so something will have to be done to fix the system. Individually owned Social Security accounts would help by allowing workers to enjoy bigger returns. But Democrats are dead opposed to the idea of turning millions of Americans into owners of stocks and bonds, which will lead to the liberal solution of raising Social Security taxes and reducing benefits. The forthcoming plan will likely be to raise the cap on earnings subject to Social Security taxes ($97,500 in 2007). That would raise taxes on everyone earning more than this amount, especially the most productive wage earners. If the cap went up to $150,000, for example, it would mean a tax increase of $6,510 on a worker earning that amount.
The Alternative Minimum Tax and Social Security are absolutely problems that must be addressed. The longer we wait, the worse the pain will be. Obviously someone will take the blame. But it’s shameless to acknowledge that the Democrats will have to address the crisis and then blame the unpleasant reality on them.
I don’t seek to absolve the Democrats of any guilt, for they surely must share. Still, I have to come back to the reality that the allegedly fiscally conservative Republicans had six years of complete control over the two branches of government necessary to implement reform on these issues. They did nothing. When the weeds got thick, the party punted in favor of attacking gays and Janet Jackson’s breast.
Both parties are to blame for creating the problem, and I’m certain the Democrats will come up with stupid non-solutions to both. But I know who to blame for letting the problem get this severe.