First Principles

Or, An Accidental Admission that “Taxing the Rich” Won’t Help

I listen to lefty talk radio sometimes.  No, not NPR – I gave that up awhile ago.  No, I’m talking about the real deal, the hard core lefties who try to out-Rush Rush.  I tell you what – nothing will reaffirm a guy’s conservatism more quickly than these guys.

Case in point today.  I was listening to the Thom Hartman show, and he had as his guest Illinois Democratic Congresswoman Jan Schakowski.  Ms. Shakowski was plugging a bill she’s introducing that would significantly raise taxes on anyone making over $1 million to at least 45% of their income, with billionaires getting hit with a 49% tax bill.  She bragged that this was the path to solvency and fairness both, and that every year it would raise – wait for it –

$80 Billion.

Now, that’s what I remember her saying on the radio.  I had to look it up to make sure she didn’t mean something that mattered in a world of Trillion dollar annual deficits.  But no, here is the Huffington Post reporting on her magical deficit elimination bill.  And actually, the estimate for 2011 would only be $78.9 billion.

Still a lot of money, though, right?

Well, not really.  I mean, the Earth is huge until you compare it to the Sun.  Consider this.  Federal spending has skyrocketed in the last several years, helped along mostly by folks like Ms. Schakowski who voted for all of this huge spending.  But we don’t actually have the revenue to support all of that spending, so we put the remainder on my grandchildren’s credit card.  In February alone, how much did we put on that card?  How much money that we didn’t have did we spend anyway?

$222.5 Billion.  That’s $7.95 billion (give or take) of NEW debt every single day.

So let’s give her the rounded up number of $80 billion, and assume her bill passes without loopholes or amendments or exceptions, and let’s further assume that every dime of projected revenue is actually obtained.

Her plan only gives us about ten days of deficit reduction.  Ten days.  Ten.

But wait – maybe she doesn’t tax the rich enough!  Let’s double those tax rates.  That’s 90% on $1 million or more, progressively stepping up until you hit the billionaires, who would pay 98% of their wealth to the government.  (We’ll pretend that millionaires and billionaires aren’t really good at legally evading taxes, or that people would even bother with the work required to be “rich” when “rich” means you only actually keep $100,000 per year.)  And let’s once again imagine that every last dime of that projected revenue would be collected.

Woo hoo!  Problem solved!  For twenty whole days!!!

If the government stopped incuring debt immediately, we still owe $14 Trillion, give or take.  And according to the government’s own stats, the interest alone on that debt for February 2011 was a hair under $22 billion.  Let’s round down and call it $20 Billion.

Congresswoman Schakowski’s revenue projections are annual.  So if it passed, the interest on the debt alone would be the only thing we could pay, and then only for 4 months.  We’ve already taxed all the rich people – who do we go after for the other 8 months in every year?

But we’re not stopping the deficit spending that continually adds to the national debt.  We’re not even slowing it down.  And there is absolutely no end in sight.

You know, mathematics is a much more settled science than global warming.  You’d think Congressional Democrats would show some deference to it.

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To be fair, although they blame much of our problems on “the rich” not paying “their fair share,” they at least acknowledge that it’s not the only piece of the pie:

“The middle class is shrinking and deficits are rising because Republicans are giving a pass to special interests who aren’t paying their fair share,” [bill co-sponsor Keith] Ellison [D-MN] said at the press conference. “This bill is part of a plan to level the playing field.” […]

“Yes, we have a spending problem,” said [bill co-sponsor John] Yarmuth [D-KY], “but we also have a revenue problem. We’re only asking that those of us who have done extremely well bear our fair share of the problem.”

This is like saying, “Yes, we have a sucking chest wound problem.  But we also have a stubbed toe problem.  And we should focus on the stubbed toe first, while completely ignoring the additional sucking chest wounds we give ourselves once every few days.”

C’mon, folks.  Get serious.  Or at least hire a math tutor before you beclown yourselves at a press conference.

By the way, that goes double for Republicans who think $10 billion in cuts over 5 weeks is supposed to impress anyone.  (Better than nothing, but still.  $10 billion is about a day’s worth of deficit at current spending levels.  Signing onto bills that “cut” $10 billion over five weeks is actually signing ON to bills that add about $250 billion to the national debt in that time.)

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I oppose trying to “tax the rich” out of our federal, state, and local financial problems for a number of reasons.  I’m against it philosophically, of course – disincentivizing success is just foolish.  But more than that, it just doesn’t work.  The math doesn’t add up. Not even close.  And it’s not hard math to do – you don’t have to be Stephen Hawking to figure this out.

Congresswoman Schakowski brags that a poll shows 81% of Americans support her plan, which may or may not be totally accurate.  But assume it is.  Who cares?  If 81% of Americans told a pollster that the sun ought to start rising in the west, a bill to make it happen would have just as much effect on the earth’s spin as this “Tax the Rich” bill would have on the deficit.

It’s time to get serious, with serious spending cuts.  The National Credit Card is about to get maxed and denied.  Either we take government spending down in a controlled descent now, on our terms, or we can wait for the economic bubble to burst and watch services and entitlements disappear completely in the collapse.

Let’s pick the former.  But maybe we can save a little bit of money in the budgets to send progressive Congress members and radio hosts back to 5th grade for a little remedial arithmetic.