GIVING THE PEOPLE BACK THEIR OWN MONEY
June, 04 2001By Herman, Edward S.
Edward S. Herman's ZSpace Page
Join ZSpace
One of today's most favored rightwing justifications of a massive tax reduction is the idea that taxes are a form of government theft, which take from individuals the fruits of their labor or rightful ownership, and without reasonable cause. As President Bush put it, the surplus "is not the government's money, it's your money;" New York Republican congressman Thomas Reynolds's version is, "America, this is your money and you know how to spend it best." Exceptions are made for taxes to pay for the police and courts--that is, law and order and the protection of property--national defense, which is protection of domestic property from foreign threats, and the maintenance of global law and order--and to a degree, public works and education. As rightwing ideology has spread more widely and deeply, there has been growing debate over whether the market can't handle public works and schools as well or better than government, at least to the extent of contracting out the work and school operations.
The idea that the government has a responsibility toward people in distress, which peaked during the Great Depression and its World War II aftermath, has also come into increasing disrepute with the growing power of the market. The concept of a "welfare state" was always anathema to business and the rightwing, and with their steady advance over the past several decades it has been under increasing attack. The welfare state took a heavy hit in the Reagan era, and has been in further decline since. The weakening labor movement, globalization, and the fall of the Soviet Union have all contributed to the continuing erosion process. The Bush II call for a new "war on poverty"--by the private sector--while allocating minimal resources from the budget surplus toward that end (even cutting back numerous programs like the "Gear Up" mentoring program for poor kids, and funds for community health centers, job training, and low income housing) is only a step in an ongoing trend. (It is in a direct line from Clinton's post-Personal Responsibility Act "Summit" calling for a new voluntarism to replace federal support, and his well-publicized "poverty tour" in which he expressed much sympathy with "their pain" but again called for a private sector response.)
The intellectual--not to mention moral--base of the new tax reduction rationale is not strong. Contrary to business and rightwing ideology, a good case can be made that government should be increasingly important as a participant and provider of services in the modern economy. This can be argued on the basis of at least three major considerations. One is that a large government role in spending and taxation helps stabilize the economy; a small and weak government and very large and poorly regulated private sector make for instability (and a small and weak government does not regulate well). A second reason is that with increases in income the public's demand shifts more and more to a desire for security, and as illustrated by the effective Social Security and Medicare-Medicaid system (and superior government-managed medical payment systems in Canada and Europe), a dominant government role is essential for the effective organization and provision of such services for the general population. A third consideration is that externalities become increasingly important in an interdependent, densely populated, technologically advanced and chemicalized world. And by definition the market fails to deal with externalities, so that government production or effective regulation is called for in those cases on basic economic reasoning.
Business does not recognize these reasons as legitimate, however, because its members think short-term, their own bottom-line interests come first and virtually exclusively, and they like to externalize their costs. And rightwing intellectual rationales follow in the wake of business interest. This includes the course of development of economic thought, with the prominent Chicago School and its branches managing even to put up a "theoretical" case for the market being able to cope with externalities. But "taxes as excessive impositions" is part of the language of economics more generally (see David George, "The Rhetoric of Economics Texts," Journal of Economic Issues, 1990.)
Business and its rightwing supporters ignore the fact that every business depends on educated workers, an efficient transportation network, and a well developed and properly regulated market and financial system, all of which depend heavily on efficient government service. Furthermore, over the years the government and general taxpaying public have paid enormous sums in corporate welfare: subsidies to businesses of all sorts--from farmers to drug and pharmaceutical firms to computer manufacturers and software providers--underwriting their research bills, absorbing their risks, bailing them out, and helping them sell goods at home and abroad. And if the beneficiaries of this government and taxpayer largesse make large salaries and stock market gains as a result, maybe the public has some claim to those parts of "the people's income."
More broadly, the idea that it is the "people's own money" that the government is taking away fails to recognize the societal base of earning power, which is why an ordinary citizen in this country earns much more than one in Mexico: there is a different level of accumulation of capital, of infrastructure, of technical knowledge, of education and other institutional conditions, that have a long history--and a difference in average output follows that is independent of individual effort and talent. If the society contributes heavily to an individual's productivity and ability to make money, it has an important basis for claiming a share of income as payment for that contribution.
There is also a vast difference between income that is the fruit of work and that from property ownership. The value of property is often very much a function of societal facts and trends, like the growth of cities that causes land values to skyrocket. Henry George's economics and proposal of the "single tax" was rooted in the belief that these increments to wealth were based solely on strategic position, were unearned, and were therefore eminently taxable. Huge incomes from "work" itself are very often correlated with strategic position (e.g., control of a corporation and ability to fix your own salary and options) or anti-social activity (stock market speculation, currency trading, organizing and funding takeovers and buyouts a la Michael Milken).
Milton Friedman once claimed that income inequality was a function of chance: who happens to work real hard, gets the breaks, makes the right decisions, etc. But this rests on a misleading usage of "chance," as it implies an equal chance for each newborn baby, when in fact societal factors like property holdings, connections and position of parents, and race, make for an unlevel playing field on a systematic and structural basis. Progressive taxes and spending oriented to serving those who don't do well would partially compensate for these inequalities of opportunity.
Another line of rightwing argument for tax reduction has been that taxes fund activities that the taxpayer might not agree with, so why should they have to pay for them? The rightwing never allows that this might apply to their own favorite forms of government expenditure, like "defense," although it is a notable fact that except in times of war and international crisis (often artificially stirred up by war managers), most of the public wants less "defense" and more education and other public services (see Steven Kull, "Americans on Defense Spending," School of Public Affairs, University of Maryland, 1996). So the use of tax money to help fund family planning is illegitimate because the rightwing disapproves, but taxes for more police and a fatter and very wasteful military establishment are fine because its members find such spending legitimate. But, in effect, they deny the right of a democratically elected government to spend money for services desired by a majority of the populace. This is covered up by an argument that they apply selectively and that the "liberal media" fail to laugh into oblivion.
One last problem with the "giving people back their money" is that "the people" don't want it back. Polls have regularly shown that the general public does not give tax reduction primacy in its priority schedule on handling the supposed future budget surplus. (In a May 2001 Gallup poll, only 4 percent of the respondents put "taxes" at the top of their economic concerns; a March 2001 ABC/Washington Post poll found that only 22 percent rate tax cuts as more important than spending on health care, education and other civilian programs.) But just as there are worthy and unworthy victims, there are worthy and unworthy citizens and opinions on the budget. In a plutocracy such as we live in, the general public's opinions are unworthy, the opinions of Kenneth Lay of Enron and other major funders and friends of the Bush campaign are worthy and flow into the media and political decision-making process. (This was dramatically evident in the NAFTA debates of 1993 where the public was against the agreement, the elite minority for it, so it became law.)
Clinton and Gore gave heavy weight to worthy opinions in guiding their "moderate" business party, which served business very well but did not give it everything it wanted right away. The "extremist" business party now in power is more inclined to give business everything it wants right now, as far as this can be done without completely discrediting the party as a straightforward agent of business, or actually causing the corporate capitalist ship to founder. For this gang, the short-term perspective of business, grab-and-run, becomes the order of the day. The important people want their own money back, along with anybody else's they can get their hands on, and this business party is trying to help them get it.
Comment On This Commentary | See All Comments (0)
Recent Herman ZNet Articles
- Herman: Poor Marlise
- Herman: Principles of Imperial Order
- Herman: No “War on Terror”
- Herman: Genocide Inflation
- Herman: U.S. Aggression Process
- All ZNet Recent
Recent Herman ZMag Articles
- Herman: Bailout & Sellout
- Herman: Torture Central 04
- Herman: Neoliberal Morality
- Herman: US Nuke Threat
- Herman: Russia & U.S.
- All ZMag Recent
Recent Herman Commentaries
- Herman: Great and Little Satan
- Herman: How Market-Democracy Keeps the Public and "Populism" At Bay
- Herman: Beyond Munich
- Herman: Iraq: The Genocide Option
- Herman: The Liberals Answer Tony Judt's "Useful Idiots" Charge
- All Herman Commentaries