The so-called “Buffett Rule” went down for the count in the Senate on Monday night, on a largely party-line 51-45 vote, with a couple of exceptions: Republican Susan Collins of Maine voted yes, while Democrat Mark Pryor of Arkansas voted no.
Thus ended President Barack Obama’s sole concrete contribution to the cause of resolving his titanic deficits – a measure that would have brought in four billion dollars a year, to a government currently spending over a trillion dollars it doesn’t have, a practice President Obama wants to continue for generations to come. We’ll have to find another way to fill the 0.3 percent of our deficit hole that the Buffett Rule might have aspired to cover.
Senator Pat Toomey (R-PA) lit into this arrant stupidity on the Senate floor, armed with a chart that visually depicted the undetectable difference President Obama’s marquee deficit-fighting initiative would make:
Toomey makes the excellent point that Obama’s class-warfare sideshow act is worse than useless, because it’s wasting America’s valuable time, even as the last fiscal sand runs through our hourglass. Politicians speak of “political capital” in selfish terms, as a pile of chips each party hoards on its side of the poker table, but in truth America has only a finite amount of political capital in total. When time and energy is wasted on pointless distractions, the capital expended – in the form of the public’s attention, and the debates they hold among themselves – cannot easily be regained.
There is an “opportunity cost” associated with the debates we aren’t having, and the valid ideas we’re not considering, when our time is wasted upon nonsense that is useful only to political re-election campaigns. Health care reform is the paramount example of our time, as countless real, workable market-based reforms were obscured by the flaccid bulk of ObamaCare. The Buffett Rule, like all talk of tax increases in the shadow of outrageous government spending, likewise distracts us from the real issues.
Toomey makes this point when he describes the Buffett Rule as “an effort on two fronts”:
“One is to simply engage in class warfare, generate envy and resentment and try to use that for political gain. And, secondly, it’s an effort to distract from the underlying mismanagement of economic policy and fiscal policy that we have seen from this administration.
“Now, I know what the claim is from the other side. We hear that this is all about making sure that the rich pay their fair share. I have to say, I have a little bit of trouble taking lectures on fairness from folks who think that taxpayers ought to be made to put $500 million into a solar energy company that does not have a competitive product, which drives it into bankruptcy at the cost to the taxpayers, from the same folks that want to force taxpayers to continue subsidizing plug-in cars that people don’t want to buy. That kind of crony capitalism and distorting of our economy at the expense of taxpayers doesn’t strike me as fairness, so I have a hard time taking a lecture on fairness from people who advocate those things.”
Another price we pay for allowing ourselves to be dragged into these stagnant intellectual backwaters is the degradation of language itself, which makes rational debate more difficult. Toomey points out that class warfare has drained the word “fairness” of all objective meaning, and essentially transformed it into a slippery synonym for power:
“But let’s look at this tax code. If we want to talk about fairness, that’s fine.
“How about the fact that, according to the Joint Committee on Taxation, almost half of all Americans today pay no income tax at all or actually receive money through the income tax code? The other half pay all of the taxes, and we’re hearing from our friends that that’s not enough, they need to pay still more.
“According to the CBO and my second chart will illustrate this point – according to the CBO, if we look at all federal taxes, the middle quintile, the middle 20 percent of wage earners in America pay about 14 percent as an average tax when you combine all the kinds of federal taxes that are paid. The top 1 percent pay 30 percent. So more than — more than twice as high, 29.5 percent actually. If we look at just the income tax, the disparity is even bigger. If we look at the income tax alone, the middle quintile, the middle class, the middle 20 percent when it comes to income tax – 3 percent as an effective average income tax rate. The top 1 percent pay 19 percent. So on average, almost six times as high.
“The fact is, we have a very progressive tax system. Not just by the historical measures of our own previous tax systems, but look everywhere else in the world. In fact, the United States, according to the OECD, the U.S. has the most progressive tax system in the industrialized world.”
Toomey goes on to explain that the Buffett Rule was really a veiled effort to raise taxes on capital gains and dividends, which would “upend decades of established law with respect to the differentiation that we have put in place with respect to dividend income versus wage income.” Added to our corporate taxes – now the highest in the world! – this would diminish the incentive to make investments… and “it makes other countries more attractive places to invest capital, to invest in a business to try to generate a return.”
Furthermore, like most efforts to soak politically disfavored groups with targeted tax hikes, the Buffett Rule would be likely to harm an entirely different group of people – one with less ability than the Evil Rich to adjust their affairs and avoid the tax. Steve Conover at The American suggests the real victims of capital gains tax hikes are likely to be the elderly, not the wealthy, since the Evil Rich can delay the sale of assets and protect their wealth… unlike “the elderly non-rich, whose plans for retirement income depend on a one-time cashing in of the savings they’ve built up in small businesses, houses, stocks, and bonds during their working lives.”
Some people wonder if we shouldn’t just “let the baby have his bottle” and give the Left its millionaire surtax, so we can end their intransigent resistance to real, effective deficit reduction through spending cuts. Toomey’s fine speech on the Senate floor refutes that notion. The Left will never get serious about spending cuts, no matter how many tax increases we give them. Those tax increases will only make America’s fiscal situation worse, which in turn will fuel more class warfare in the years to come. “Fairness” will never be achieved. Insolvency becomes an irresistible demand for power… in the service of those who created it. Valuable intellectual ground is ceded by pretending to take childish tantrums from statist politicians seriously.
Americans from every walk of life should be glad the Buffett Rule has finally been defeated. They should also be furious that the Democrats just wasted so much of our time on it, when we don’t have any time to waste.