Wednesday, April 20, 2011
Democrats have often promised to raise taxes — but only for the rich, and never for the middle class. ... Under the president’s plan, we soak the rich in the short term, and then just keep going deeper into the red.
Does a plan to cut the deficit with middle-class tax increases exist? In a sense, it does. It’s called the “current law baseline” ... Thanks to inflation and bracket creep, its tax code gradually subjects more and more Americans to rates that now fall only on the wealthy. ... Such unprecedented levels of taxation would throw up hurdles to entrepreneurship, family formation and upward mobility.
They could have ugly political consequences as well. Historically, the most successful welfare states (think Scandinavia) have depended on ethnic solidarity to sustain their tax-and-transfer programs. But the working-age America of the future will be far more diverse than the retired cohort it’s laboring to support. Asking a population that’s increasingly brown and beige to accept punishing tax rates while white seniors receive roughly $3 in Medicare benefits for every dollar they paid in (the projected ratio in the 2030s) promises to polarize the country along racial as well as generational lines.
The Republican vision for entitlement reform, President Obama said last week, would lead to “a fundamentally different America” than the one we inhabit today. He’s right: asking the elderly to pay more for their health care, as Paul Ryan proposes to do, would transform the American social contract, and cause no small amount of pain.
But what Obama didn’t acknowledge is that the alternative path could lead to a different country as well — a more stagnant and balkanized society, in which our promise to the elderly crowds out the fundamental promise of America itself.