Welcome back. From the excitement of national politics, I mean. Pigs, lipstick, massive campaign rallies, historical candidates, Joe the Plumber — we’ve been spoiled. But the election is done, save for a Senate race recount here, a runoff there. The dust has settled to once again reveal the day-to-day set of issues: bus fares, property taxes and city budget deficits. It’s time for a return to good ol’ Wisconsin politics. And, as you’d imagine in an economic downturn, things are a mess.
President-elect Barack Obama and his fellow Democrats now control the White House and both houses of Congress, and they inherit an impressive economic mess. Not to be outdone, Wisconsin Gov. Jim Doyle and his fellow Democrats control the Assembly and the state Senate, and they face an impressive $3 billion budget deficit. Our Democratic Mayor Dave Cieslewicz and his City Council face a budget shortfall of their own.
Policymakers have a number of tools at their disposal to deal with the pervasive debt that plagues our states and cities –decreased spending, tax hikes and prayer.
Obama went with the second option. You remember the whole socialism claim from the last few weeks of the election, and the Joe the Plumber talking points? Obama, hesitant to increase the burden on middle-class families, was hoping to pay for his impressive set of domestic initiatives with increased revenues from Clinton-era tax levels on the rich.
Republicans, as you may have heard, trotted out the “S” card. Socialism.
Let’s not be ashamed of the socialist nature of our tax system. Collecting taxes is inherently socialist, according to the logic used by the opponents of Obama’s tax plan. Our tax system is progressive — that is, as you make more money, the percentage you owe Uncle Sam increases. John McCain’s tax plan is progressive, as is President Bush’s. No matter the party in charge of our government, our tax system will be progressive.
Bush’s tax cuts have been disastrous for our budget. Our economic fortitude has been reliant upon our ability to borrow from other countries. But our ability to borrow from other nations is undermined by the ever-increasing amounts of money we owe ourselves, future generations and other nations. Budget deficits, while unavoidable, are bad. Bush’s tax policy — while bad for the budget deficit — was still progressive. This nature is unavoidable.
If Obama’s rollback of the Bush tax cuts is considered socialism, then perhaps we should take a closer look at socialism. But of course, any political science major will tell you, a progressive tax does not imply socialism, and neither does rolling back disastrous tax cuts that favor the wealthy. No, socialism demands, amongst other things, state control of the means of production and distribution. Obama has never proposed such a socialist system. But that didn’t stop Republicans from calling his policies socialist.
The progressive nature of our tax system is tied closely to our capitalism. Capitalism rewards those with large amounts of money; it’s a perk I hope to someday take advantage of. That’s capitalism. It’s not a good thing, it’s not even a negative. It just is. And it works. I think.
The progressive tax system is an admission to and result of the fact that our capitalist system rewards the wealthy more than its taxes hurts them. Not only is this system just, it is essential.
The problem we find ourselves in is that the mainstays of Wisconsin tax revenue are falling. Corporate taxes revenues are down, sales tax revenues are down and income taxes are down. The Wisconsin State Journal reported that Wisconsin tax revenue was down 4.8 percent in September, and that the state had lost more than 13,000 jobs compared to a year ago.
So, welcome back. If you thought things were looking bad at a national level, and you are looking for something to keep you as energized and organized as you were for change, look no further than the economic crises your city and your state find themselves in.
Gov. Doyle and various government agencies are doing their best to ensure spending is cut. And, in an economic downturn, there’s little higher taxes can do to help, and much they can do to hurt. If you’re hoping I’d have some answers by the end of this, I’m sorry to disappoint you and my editors. Raising taxes is out, cutting spending is doing little and more cutting isn’t much of an option. I guess all Wisconsin has got left is prayer. Unfortunately, that hasn’t done much in the last eight years.
Gerald Cox ([email protected]) is a senior majoring in economics.
