John Feehery: Speaking Engagements

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A Policy Wonk Friend of Mine

Posted on December 6, 2012


A policy wonk friend of mine sent this to me.  As readers of the Feehery Theory, you know that I have written about Hegel before.  Here is another twist on it:

The philosopher G.W.F. Hegel came up with a method to explain some of the patterns of behavior in politics and other things. www.dictionary.com defines it this way:
Hegelian dialectic: noun

An interpretive method, originally used to relate specific entities or events to the absolute idea, in which some assertible proposition (thesis) is necessarily opposed by an equally assertible and apparently contradictory proposition (antithesis) the mutual contradiction being reconciled on a higher level of truth by a third proposition(synthesis)

Mr. Norquist and his group, Americans for Tax Reform, have become a symbol of a monolithic power of a clear anti-tax message.  Mr. Norquist has been lionized by anti-tax small government grassroots and establishment conservatives.  For the same reasons, Mr. Norquist has become a piñata for liberal opinion makers and politicians who view taxes as too low.  They believe the federal, state, and local revenue take needs to rise considerably to supply what they view as the minimum necessary governmental services, transfer payments, and benefits.  The New York Times op-ed page expressed this view straight away.  They implicitly or explicitly reject the  premise that the size of government needs to be kept in check. In an editorial, dated October 22, 2007, the lead paragraph stated it clearly. “President Bush considers himself a champion tax cutter, but all the leading Republican presidential candidates are eager to outdo him. Their zeal is misguided. This country’s meager tax take puts its economic prospects at risk and leaves the government ill equipped to face the challenges from globalization.”

The bottom line is the New York Times directly states the left-of-center view of the Democratic Party, and its leader, President Obama. From this perspective, the historical level of taxation, roughly 18% of the economy, is not appropriate as a measure. The New York Times implies that the Federal Government must grow as a percentage of our economy, by at least 5-8 points over its historic average of roughly 20% of the economy.  Under President Obama, America has reached that magical mark and is well on its way to making it a permanent feature of the economy.  As the Feehery Theory posting of last week, entitled “Soak the Rich”, shows, if serious entitlement reform is not pursued, President Obama will run out of higher-income taxpayers to tap for resolving all of our nation’s fiscal problems.  By higher-income, let’s drop below the rigid line of who is rich and who isn’t rich as defined by the President and Congressional Democrats.  For this exercise, let’s define the rich as all taxpayers above the Joint Committee on Taxation threshold of $200,000 of income.  The “Soak the Rich” posting showed that, in 2013, this group accounts for roughly 23% of after-federal tax income.  As noted in the posting, to close the deficit for 2013, roughly half of the after-federal-tax income of taxpayers above $200,000 would need to be claimed.  Alternatively, roughly all of the after-federal-tax income of taxpayers above $500,000 would need to confiscated to close the deficit.

In this context, the key to the dialectic is the existence of a tension between fiscal reality and political appearance.  The political appearance is the winning Obama campaign message that higher-income taxpayers, and only that 2% of the population, can resolve all of our nation’s fiscal issues.  Moreover, the rest of society can look to this 2% to fund new and potentially infinite, though well-intentioned, levels of government services.  The message is buttressed with notions, echoed in many quarters of Washington, that there is little or no economic damage from squeezing ever higher levels of taxes out of the top 2%.  The message is still further reinforced by a narrative, backed by studies, opinion pieces, and campaign messaging.  That reinforced message is that the targeted group, the top 2%, who are disproportionately owners of privately-held businesses and sophisticated investors, are largely automatons who will not react to federal tax burdens of roughly 30%, and more importantly expectations of federal tax burdens that could rise geometrically.  The reality is that, by definition, this is a narrow sector of the population.  Although their income is, on average, considerably higher than the group of taxpayers under $200,000, as a group their after-federal-tax income available for confiscation is 23% of all of the federal after-tax income.

As the political message wins approval, becomes policy and law, it will meet reality.  This is where Mr. Norquist comes into the dialectic.  As long as President Obama and Congressional Democrats’ political appearance is thwarted by Congressional Republicans, the arch anti-tax advocate, Mr. Norquist, can be a very convenient symbol of the Democrats’ political appearance.  That is, Mr. Norquist, in that vein, personalizes, in the Democratic narrative, an irrational barrier to moving resources, via tax increases from the top 2% to fund federal services.  Once the Democratic message becomes economic reality, it will become clear that the inexorable nature of taxing and spending must grow the targeted tax increase class.  It will mean the rising tax burden moves down the income scale bit-by-bit.  As the number of targeted taxpayers grows, Mr. Norquist’s anti-tax message becomes directly relevant to ever larger pieces of the population.  It’s basic arithmetic. The average after-federal-tax income available per taxpayers drops as the tax burden precipitates. And the number of taxpayers grows as the burden goes further and further down the income scale.  Non-partisan fiscal experts readily acknowledge that if Democrats are unwilling to seriously address the exponential growth of federal entitlement spending, then the vicious circle of ever higher spending will require ever higher levels of taxation.  Ever-larger proportions of taxpayers will be targeted for ever larger tax increases.  Mr. Norquist’s basic message about the pressure from taxes and lack of discipline on federal spending, depicted in the Obama campaign’s political appearance as “shared sacrifice” and “balance”, will resonate.  Put another way, this spiral of higher spending leading to higher taxes will empower Mr. Norquist.  In a dialectical sense, the refusal of the President and the Democratic Congress to engage in arresting the fiscal rupture that is arising from unchecked entitlement spending will lead to oppressive widespread levels of taxation.  That trend of expansive taxation will empower the Democratic nemesis, Mr. Norquist.  Surprising results can often arise from dialectical reasoning.

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