At the start of a new year, we should be rooting for taxes to go up and health care costs to go down. Neither will happen before the November election, but we really ought to start preparing now.
First, taxes. The American allergy to taxes, stoked by bloggers, activists, and irresponsible politicians, has reached ridiculous proportions.
The low point – perhaps – came in November, when David Addington, once chief of staff for former Vice President Dick Cheney, blogged for the Heritage Policy Center that President Obama was imposing a “Christmas tree tax” on growers.
What was actually going on was that growers, including many from Maine, had petitioned the Department of Agriculture for a marketing program. It’s similar to the way potatoes and blueberries have long been promoted, and it’s the origin of the “Got Milk?” campaign. Promotions would be funded by a 15-cent-per-tree assessment on growers who produce more than 500 trees – a “tax” of 0.3 percent on a tree retailing for $50.
The growers have noticed that artificial trees’ popularity is booming, for the first time surpassing sales of real trees. Some buyers apparently believe that artificial trees, produced from petroleum-based plastic and made in China, are somehow more environmentally friendly that a Maine balsam fir you can recycle in your backyard. Sounds like a marketing campaign could do some real good.
As Jim Corliss, a Maine grower who’s former president of the National Christmas Tree Association, points out, “This is something that farmers want.” During a comment period, the assessment was favored more than 3-1.
Nevertheless, as soon as the Addington post got picked up by Fox News, the Obama administration withdrew the marketing rule days before it was to take effect. Growers say they believe it will come back in the spring when “Grinch” analogies pack less punch.
But it’s hard to say. This is the same administration that told state transportation officials it has no intention of asking for a gasoline tax increase, even though the existing 18.4 cent per gallon tax, unchanged since 1993, has lost 40 percent of its value since then. At a time when the Interstate Highway System is starting to fall apart, and Maine and New Hampshire were forced to close Memorial Bridge between Portsmouth and Kittery even before construction on its replacement could begin.
It’s no secret why a president running for re-election would want to avoid any hint of raising taxes, but prospects for any tax increases aren’t much better if he wins.
It doesn’t help that one major political party is fanatically opposed to tax increases, and equally opposed to any federal spending on jobs.
The first sliver of Obama’s jobs bill that made it through Congress was a tax credit for hiring veterans. The second was a renewal of the payroll tax cuts that Republicans supported, but nonetheless split on between House and Senate, handing Obama an unexpected political victory when House Republicans had to beat a hasty retreat.
Republicans will support Obama on tax cuts. They’ll oppose him on anything else.
For a little perspective, let’s consult Kent Conrad, a sober-sided Democrat from North Dakota, who’s retiring after 24 years in the Senate, most of it spent on the budget and finance committees. Conrad deploys a New Year’s chart showing that federal tax revenues are now 15.4 percent of the economy – their lowest level in 60 years. Spending, which usually averages 20 percent, has shot up to 24.1 percent as a result of recession-related spending. This leaves an annual deficit of a staggering $1.3 trillion.
As Conrad dryly puts it, “This chart demonstrates that revenue has to be part of the solution to the deficit.” And, he goes on to note, the last four years the federal budget carried a surplus, under Lyndon Johnson and Bill Clinton, revenues averaged 20 percent.
So who’s for higher taxes? No one yet, and with the recovery still jobless, a major tax increase isn’t a good idea. It’s too bad George W. Bush decided to fight two wars and enact an unpaid Medicare drug benefit while pushing major tax cuts, abetted by Congress. But that’s where we find ourselves.
So how do we bridge the yawning chasm in the federal budget? The expiration of the once-renewed Bush tax cuts at the end of 2012 is one possibility. We’ll need more.
For the inexorable rise in health care costs that continues through good times and bad is straining federal and state budgets like never before. More about that next week.
In the meantime, keep an eye on the Christmas tree “tax.” It could be a bellwether.
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