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Tuesday, October 4, 2011

Deficit Reduction and Tax Breaks: Rhetoric and Priorities

Actions speak louder than words. A tree is known by its fruit. Where your treasure is, therein lies your heart. These three sayings each have at their root a value on integrity or authenticity that cuts through purported assertions designed to manipulate or otherwise mislead. Integrity here is consistency between word and deed.

When members of Congress cry that the sky is falling under the weight of the deficits and accumulated debt of the U.S. Government, one might ask whether the representatives and delegates really view the fiscal imbalances as so dire. If someone calls a friend to say that his house is about to explode but does not act accordingly, such as in running out of the house rather than finishing dinner, it is reasonable to doubt that the homeowner really believes that a blast is imminent. In protecting tax breaks even amid a deficit of over $1 trillion, members of Congress belie their own warnings concerning the American public debt crisis. For a crisis does not admit the luxury of granting the status quo a continuance. In other words, if the elected officials really did view the trajectory of deficits as unsustainable, continuing the tax breaks would be off the table. In protecting constituent interests by them, a member of Congress is saying that the deficit/debt problem is not really a crisis. Similarly, by the way, in insisting that spending but not revenues should be the only avenue, a legislator is saying that the deficit is not so much of a threat that all means should be engaged to reduce it.

So when the U.S. Senate Republican leader, Mitch McConnell said he is open to ending tax breaks for special interests, he undermined his own statement as well as any claim that the deficit must be significantly reduced when he argued that the tax break that he secured in 2008 for the owners of thoroughbred racehorses is essential for the protection of jobs in Kentucky. Of course, the financial interests of racehorse owners are not necessarily in line with—or reduce to—the protection of jobs. So even here, subterfuge may be the name of the game. The same can be said of Senator John Kerry, Democrat of Massachusetts, who claimed to want to eliminate tax breaks except for a proposal for a tax cut for small breweries, such as Samuel Adams in Boston. The deficits must not be such a big problem if we can afford additional tax cuts. The New York Times points out that mega-wealthy “operations like oil refineries, Hollywood productions and hedge funds have all profited.” The tax breaks for industries in general add up to an estimated $123 billion a year—hardly chicken feed.

The New York Times claims that the “disconnect between the lawmakers’ words and deeds reflects the hurdles that Congress and the White House face as they look to cut at least $1.2 trillion from the nation’s debt. Talk of cutting tax breaks to raise money and reduce the debt has become a mantra in Washington, but it threatens sacred ground: such breaks are a favorite tool among both Republicans and Democrats to reward supporters and economic interests in their home states.” Given Fed chief Ben Bernanke's remarks on October 4, 2011 before the Joint Economic Committee of Congress that even reducing the debt by $1.2 trillion would not be enough, talk of protecting favorite tax breaks undercuts any claim that the public debt is a dire problem. To be sure, obviating another recession was also on Congressional minds. However, even as he was urging Congress to act in order to avoid a double-dip recession, Bernanke said of deficit-reduction efforts, "More will be needed to achieve fiscal sustainability." That is to say, the U.S. Government could lose even its AA rating. Risking this by protecting local interests is short-sighted; it is like a biker accelerating down a hill while looking only a few feet ahead. We might save a few deck chairs for weary passengers, but what about that iceberg ahead? Is anybody even looking?

I contend that we, the electorate, ought to accord claims of crisis as valid if sacred ground is given up. “Whether any of [the tax breaks] are scrubbed from the books may ultimately prove how serious Congress is about reducing the debt.” It is the price of admission, as it were, to having a legislator’s claim of a serious problem being recognized as authentic rather than as possibly just hyperbolic, attention-getting rhetoric.

Without a verifiable indication of some actual give on a sacred cow, a legislator should be told, “prove it!” regarding his claim on the “need” to reduce the deficit in order to avert a crisis. If no such sacrifice is proffered and made, then the politician ought to be ignored as if he or she were crying wolf. Otherwise, we enable two-faced Janus behavior that undermines public confidence in the government and misleads us into being too confident that the serious problems are being solved. The American electorates as well as the media companies are perhaps too accustomed to letting our elected legislators off the hook by taking their words at face value as if they were self-validating. In the case of the U.S. Government’s continuing deficits and accumulated debt, the United States can ill-afford other priorities (even in terms of presumed GNP and job increases) coexisting antithetically with the baleful platitudes of crisis if the imbalances truly are unsustainable and a danger to the American union and its republics. That is to say, given the magnitude of the problem, the members of Congress should be held closer to account in terms of deeds matching words. Priorities, the making of which is part of the job of a legislator, should match the rhetoric in front of the cameras.



Sources:

Ron Nixon and Eric Lichtblau, “In Debt Talks, All Tax Breaks Are Not Alike,” New York Times, October 3, 2011. http://www.nytimes.com/2011/10/03/us/lawmakers-want-to-end-tax-breaks-if-they-can-agree-what-they-are.html

Jon Hilsenrath and Luca Di Leo, "Bernanke Issues Warning, Urges Action on Economy, Wall Street Journal, October 5, 2011. http://online.wsj.com/article/SB10001424052970204524604576610712269716064.html