[The unspoken agreement between the two major parties is to omit
any serious discussion of raising taxes to avoid hitting the debt
ceiling. That omission entails deception. ]
[[link removed]]

THE DEBT CEILING DEBATE IS A MASSIVE DECEPTION OF THE AMERICAN PUBLIC
 
[[link removed]]


 

Richard D. Wolff
May 9, 2023
Independent Media Institute [[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

_ The unspoken agreement between the two major parties is to omit any
serious discussion of raising taxes to avoid hitting the debt ceiling.
That omission entails deception. _

,

 

Future historians will likely look back at the debt ceiling rituals
being reenacted these days with a frustrated shaking of their heads.
That otherwise reasonable people would be so readily deceived raises
the question that will provoke those historians: How could this
happen?

The U.S. Congress has imposed successive ceilings on the national
debt, each one higher than the last. Ceilings were intended to limit
the amount of federal borrowing. But the same U.S. Congress so managed
its taxing and spending that it created ever more excesses of spending
over tax revenues (deficits). Those excesses required borrowing to
cover them. The borrowings accumulated to hit successive ceilings. A
highly political ritual of threats and counterthreats accompanied each
rise of the ceiling required by the need to borrow to finance
deficits.

It is elementary economics to note that if Congress raised more taxes
or cut federal spending—or both—there would be no need to borrow
and thus no ceiling on borrowing to worry about. The ceiling would
become irrelevant or merely symbolic. Further, if taxes were raised
enough and spending cut enough, the existing U.S. national debt could
be reduced. That situation has happened occasionally in U.S. history.

The real issue then is that when borrowing approaches any ceiling, the
policy choices are these three: raise the ceiling (to borrow more),
raise taxes, or cut spending. Of course, combinations of them would
also be possible.

In contrast to this reality, U.S. politics deceives by constricting
its debate. Politicians, the mainstream media, and academics simply
omit—basically by refusing to admit or consider—tax increases. The
GOP demands spending cuts or else it will block raising the ceiling.
The Democrats insist that raising the ceiling is the better choice
than cutting spending. Democrats threaten to blame the GOP for the
consequences of not raising the debt ceiling. They paint those
consequences in lurid colors depicting U.S. bondholders denied
interest or repayment, Social Security recipients denied their
pensions, and government employees denied their wages. The unspoken
agreement between the two major parties is to omit any serious
discussion of raising taxes to avoid hitting the debt ceiling. That
omission entails deception.

Here are some tax increases that could help solve the problem by
avoiding any need to raise the debt ceiling. The social security tax
could be applied to all wage and salary incomes, not only those of
$160,000 or less as is now the case. The social security tax could be
applied to nonwage income such as interest dividends, capital gains,
and rents. The corporate profits tax could be raised back to what it
was a few decades ago: near or above 50 percent versus the current 37
percent rate. A property tax could be levied on property that takes
the form of stocks and bonds. The current property tax in the United
States (levied mostly at the local level) includes land, houses,
automobiles, and business inventories, while it excludes stocks and
bonds. Perhaps that is because the richest 10 percent of Americans own
roughly 80 percent of stocks and bonds. The current property tax
system in the United States is very nice for that 10 percent. Another
logical candidate is the federal estate tax which a few years ago
exempted under $1 million of an estate from the tax, but now exempts
over $12 million per person (over $25 million per couple). That
exemption makes a mockery of the idea that all Americans start or live
their lives on a level playing field where merit counts more than
inheritance. The U.S. could and should go back from that tax giveaway
to the richest. There are many more possible tax increases.

Of course, there are strengths and weaknesses entailed in raising
every tax, positive and negative consequences. But the exact same is
true of raising the debt ceiling and thereby increasing the U.S.
national debt. Likewise cutting spending has its pluses and minuses in
terms of pain and gain. There is no logical or reasonable basis for
excluding tax increases from the national debate and discussion about
raising the debt ceiling and thereby the national debt.

It is rather the shared political commitments of both major parties
that require and motivate the exclusion. There is no reason for U.S.
citizens to accept, tolerate, endorse, or otherwise validate the debt
ceiling deception perpetrated against us.

Nor is the debt ceiling deception alone. The previous national debate
over responding to inflation by having the Federal Reserve raise
interest rates provides another quite parallel example. That debate
proceeded by debating the pros and cons of interest rate increases as
if no other anti-inflationary policy existed or was even worth
mentioning. Once again elementary economics teaches that wage-price
freezes and rationing have been used against inflations in the
past—including in the United States—as alternatives to raising
interest rates or alongside them. U.S. President Nixon in 1971 used
wage-price freezes. U.S. President Roosevelt used rationing during
World War II. But the government, Federal Reserve, major media, and
major academic leaders carried on their recent policy debates as if
those other anti-inflationary tools did not exist or were not worth
including in the debate.

Wage-price freezes and rationing have their strengths and
weaknesses—just as tax increases do—but once again the same
applies to raising interest rates. No justification exists for
proceeding as if alternative options are not there. The U.S. national
debate over fighting inflation was deceptive in the same way that the
debate over the debt ceiling is.

Nor is the deception any less if it is covered by a claim of
“realism.” Those who grasp elementary economics enough to know
that tax increases could “solve” the debt ceiling issue become
complicit in the deception by invoking “realism.” Since the two
major parties are jointly subservient to corporations and the rich,
they rule out tax increases on them. It thus becomes “realistic”
to exclude that option from the debt ceiling debate. What is best for
corporations and the rich thus gets equated to what is
“realistic.” It is worth remembering that throughout history
ruling classes have discovered, to their shock and surprise, that the
ruled can and often do quickly alter what is “realistic.”

The debt ceiling deceptions favor corporations over individuals and
the richest individuals over the rest of us. In our thinking and
speaking too, the nation’s class structure and class struggles
exhibit their influential power. The mainstream debt ceiling debate
deceives by lying by omission rather than commission.

_This article was produced by __Economy for All_
[[link removed]]_, a project
of the Independent Media Institute._

_RICHARD WOLFF is the author of Capitalism Hits the Fan
[[link removed]] and Capitalism’s
Crisis Deepens
[[link removed]].
He is founder of Democracy at Work
[[link removed]]._

* Debt Ceiling
[[link removed]]
* political struggles
[[link removed]]
* tax fairness
[[link removed]]

*
[[link removed]]
*
[[link removed]]
*
*
[[link removed]]

 

 

 

INTERPRET THE WORLD AND CHANGE IT

 

 

Submit via web
[[link removed]]

Submit via email
Frequently asked questions
[[link removed]]

Manage subscription
[[link removed]]

Visit xxxxxx.org
[[link removed]]

Twitter [[link removed]]

Facebook [[link removed]]

 




[link removed]

To unsubscribe, click the following link:
[link removed]