Let’s imagine two extreme economic scenarios: The first is an economy with 3% unemployment, 7% GDP growth, and a tax rate of 0% for those who earn at least a million dollars a year. The second scenario is the reverse of the first: unemployment at 9%, 1% GDP growth, and millionaires pay 100% of their income in taxes. Which would you prefer?
If you are a progressive you will undoubtedly prefer the second — an exaggeration of the Obama economy — to the first, an exaggeration of the Coolidge economy, because the goal of progressivism is not to create or grow wealth but rather to redistribute it in the interest of “fairness.” And, to paraphrase an oft repeated applause line used by Democratic politicians, it is unfair that a millionaire pays a lower tax rate than his or her employees – never mind if that millionaire’s low tax rate allows him or her to afford to give those employees a job.
The progressive vision of an ideal economy is not one with the highest GDP or that produces the most jobs. These things are desirable, especially in order to sell their ideology to the unconvinced, but they are not the primary goal of progressivism. The ideal economy to progressives is one that most adheres to their version of “fairness.”
“Fairness” is paramount. It is the ultimate goal; the necessary end. And if such things as jobs need to be sacrificed in order to achieve “fairness,” so be it.
As an example of this, let’s look at the great act of fairness called Obamacare. Every defense of this act was riddled with the words “fair” or “fairness.” For example, The Baltimore Sun editorialized, regarding the individual mandate, that, “Fairness is the key to the new healthcare law requiring everyone to purchase healthcare insurance.” President Obama argued that it was necessary for the government provide competition to private insurers to order to make sure “Americans are getting a fair shake.” On the Health and Human Services website it states that, “In 2014, the Affordable Care Act requires large employers to pay a shared responsibility fee if they don’t provide affordable coverage…as a matter of fairness.”
Examples are numerous but the point is that “fairness” was, and is, the central argument for Obamacare, as a free-market oriented – and apparently always fundamentally unfair – healthcare system. It was deemed unfair in favor of the fairness of a government run system, regardless of evidence that it has likely stalled private hiring, created death panels, raised the cost of healthcare, and, according to the CBO, will cause the loss of nearly one million jobs. (Nevermind also how companies well connected to Obama or Pelosi managed to get exemptions from Obamacare.)
“Fairness” resonated during the debt ceiling debate as well. While the degree of negative consequences for US default may be debatable, no one would argue it would be pleasant. The Obama Administration, in fact, makes default seem apocalyptic, as this quote from Secretary Geithner demonstrates: “A default on Treasury debt could lead to concerns about the solvency of the investment funds and financial institutions that hold Treasury securities in their portfolios, which could cause a run on money market mutual funds and the broader financial system — similar to what happened in the wake of the collapse of Lehman Brothers. As the recent financial crisis demonstrated, a severe and sudden blow to confidence in the financial markets can spark a panic that threatens the health of our entire global economy and the jobs of millions of Americans.”
Wow! With consequences like this predicted by his own Treasury Secretary, one would think that Obama would do anything and everything to prevent default. Yet Obama, for months, refused to support any debt ceiling deal that did not contain the tax increases he desired. Remarkably, “revenue enhancers” – which is the DNC/MSM word for tax increases, (not to be confused with the enhanced revenue the country typically earns with tax rate reduction), were not desired because they were necessary or even beneficial. The ‘enhancement of revenue’ gained by eliminating the tax breaks for corporate jets is estimated to be only $300 million a year, hardly worth haggling over with financial crisis on the table. The tax increases Obama sought on one of his favorite targets, Big Oil, are also an insignificant sum, about $4 billion a year, at least when one considers that ending this break would cost us 155,000 jobs according to a study by LSU’s Professor Joseph Mason. Yet the President insisted upon them because, he says, “I think it’s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys.”
Again, the argument isn’t that it will create jobs or grow the economy; but rather these taxes are necessary in the interest of fairness.
President Obama made his preference to fairness over economic growth clear to the nation as a presidential candidate. When asked by the moderator if he could support cuts in the capital gains tax if it might actually mean more revenue – essentially the question I began with – Obama said no:
What I’ve said is that I would look at raising the capital gains tax for purposes of fairness. We saw an article today which showed that the top 50 hedge fund managers made $29 billion last year — $29 billion for 50 individuals. And part of what has happened is that those who are able to work the stock market and amass huge fortunes on capital gains are paying a lower tax rate than their secretaries. That’s not fair.
Fairness, quite clearly, takes precedence of gaining additional revenue with the increased economic activity a tax cut would generate.
Are you listening, Coolidge?