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Tax reform is necessary, but this is absurd: Paul Heise

Posted 11/22/17

America, as an idea and as a political reality, faces a daunting list of self-created political and economic problems.

The idea of building a nation based on individual rights and …

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Tax reform is necessary, but this is absurd: Paul Heise

Posted

America, as an idea and as a political reality, faces a daunting list of self-created political and economic problems.

The idea of building a nation based on individual rights and responsibilities as promulgated in the Declaration of Independence and the U.S. Constitution is a vision as much as it is a realizable goal. The attempt to sell that dream on a global basis failed and left a list of unsolved problems.

Every time political promises intersected with economic reality, the politicians overpromised. Mistakes were made — an honest pride became hubris, ambition became greed and unintended consequences became collateral damage. In a series of unnecessary wars and political realignments, we as a country lost our way. The consequences could only be ignored for so long.

America took credit for things it had little to do with and should have been embarrassments.

The Korean War, Vietnam, Iraq and Afghanistan were not good wars. Destruction of a nation was dismissed as collateral damage. These wars were based on the exercise of military power and not the goodness of a shared vision of the American dream. The United States became, like the Soviet Union of old, a fearsome military power protecting a deteriorating economy.

America began to fall behind. At first it was Japan and the Asian Tigers but now it is China and India that are rising economically and politically. The petrodollar states redistributed income across the globe but the American dollar remained strong. But then America went politically soft with a series of lackluster presidents.

The country needs leadership and a revolution, a political realignment that seriously threatens the wealthy and makes honest promises to the working class.

The traditional political parties, the conservative Red party and the vaguely liberal Blue party prefer to squabble over the lean pickings of the existing swamp than gamble on a clear win by an informed electorate. Instead of a revolution, Donald Trump became president. He had a chance but went swimming in the swamp with all the rest of the politicians.

The politicians are playing politics. It is the job of the politicians to provide a legal framework that will solve the power problems of the community. Or, more concretely, the politicians decide how the GNP is to be divided in the laws and budgets they produce. They are simply negotiating the distribution of power and resources.

Our Washington reflects a generation and a half of concessions, privileges and the exercise of power. Every law transfers wealth from one party to another and no one is willing to give up their traditional cut. They are continuing the mistakes of times gone past.

The conservatives, in their many shapes and colors, are working out political solutions as they divvy up the trillions of dollars the United States will spend on health care.

The political realignment is being situated in the two most pressing areas of our society, health care and tax reform. These are the areas where the winner is really talking of trillions of dollars. Republicans led the charge against universal health care but they bogged down in the swamp that is controlled by the medical, pharmaceutical and hospital industries. Their politicians were unwilling to give up their share of the swamp in order to give the people a reasonable health care system.

Tax reform is something else again. One cannot talk intelligently about the “tax reform” because logic and reason, needs and fairness have nothing to do with it. The conservatives are using the tax system to enrich further the richest people in the world. They are raising taxes on their political opponents and their unenlightened constituents.

Conservatives claim that cutting taxes on the very rich will lead them to invest, which will in turn raise wages and income in the middle class and ameliorate income inequality. Unfortunately for this analysis, the rich have $1.4 trillion in offshore cash accounts that give no interest. The total value of all offshore accounts, not just Americans and not just cash, was $21 trillion.

If the rich want to invest, they have the money. The conservative argument is absurd on its face.

Paul A. Heise, of Mount Gretna, is a professor emeritus of economics at Lebanon Valley College and a former economist for the federal government.

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