Yes, We Can Afford Higher Taxes—Here's Why

Neither Obama nor Romney is offering a perfectly plausible vision of America: A stronger safety net and better security paid for with higher taxes on more than the top 2%.

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Barack Obama and Mitt Romney both agree that this is a crucial election. A pivotal one. A battle for the future of America. It isn't true.

I agree that this is an important election. There are profound differences between the candidates (despite what Adam Davidson says), and which one is elected will have a major impact on issues ranging from economic growth to the social safety net to abortion rights to maintaining a sane foreign policy that reduces the risk of war. But on the central economic questions -- the role and "size" of government, the tax system, social insurance and health care, etc. -- this is just the latest stop in a long, strange road trip that conservative Republicans have been taking us on for forty years. The question is whether we pause for a few years or keep on driving.

Since the 1970s, conservative groups and later the entire Republican Party have mounted a sustained campaign to reduce the role and size of government in American society. You may think that's good or bad. The story has been told many times, including in chapter 3 of White House Burning, so I'll just point out a few key elements of that campaign. They include intellectual attacks on Keynesianism, welfare programs, regulation, and affirmative action (among other things); rhetorical demonization of government, when conservatives are in power ("government is the problem") but particularly when they are out of power (recall the frenzy provoked by the elections of Presidents Clinton and Obama); and, perhaps most importantly, the most successful tax revolt in American history.

The huge tax cuts passed under Presidents Reagan and Bush II (surrounding smaller tax increases under Bush I and Clinton), in the short term, contributed to the largest budget deficits in peacetime U.S. history. In the long term, they undermined the federal government's ability to pay for the social insurance programs that make up the largest part of the federal budget: Social Security, Medicare, and Medicaid. But the most remarkable victory of the conservative revolution has been taking tax increases off the policy table, to the point where even letting tax cuts for the very rich expire as scheduled is a non-starter in Washington. Instead, Mitt Romney and Paul Ryan can claim with a straight face that the solution to our long-term national debt problem is to lower taxes.

While next month's presidential election will have a major impact on the lives of hundreds of millions of Americans, it is unlikely to change our long-term political direction. Mitt Romney does not represent anything particularly new -- just another step down in tax rates and another reduction in government programs for the poor and the middle class. Barack Obama represents a pause in the long march, not a reversal of direction; he has largely bought into where we are today. His proposed tax increases would leave the vast majority of the Bush II tax cuts in place, he agrees with the idea that entitlement programs need structural change to reduce spending, and, despite his inaugural address, he cannot bring himself to say much that is good about government.

It doesn't have to be this way. We can continue to pay for our modest social insurance programs, so people who are laid off have time to look for good jobs, poor people can get health care, and the elderly can retire with a minimum of security. It's just a matter of choice.

Presented by

James Kwak, an associate professor at the University of Connecticut School of Law, is co-author of White House Burning: The Founding Fathers, Our National Debt, and Why It Matters to You.
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James Kwak is an associate professor at the University of Connecticut School of Law and the co-author of 13 Bankers: The Wall Street Takeover and the Next Financial Meltdown. He blogs at The Baseline Scenario and tweets at @JamesYKwak.

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