Democrats Are the Real Tax Ideologues

Why Democrats are so scared of tax reform

Some of us are old enough to remember when Washington, embroiled in a debt ceiling negotiation crisis, was on the brink of default.

Way back in 2011, newly empowered congressional Republicans (then commonly referred to as "nihilists") attempted to negotiate a dollar-for-dollar deal on the debt. Those who used the good faith and credit of the nation as a cudgel for political gain—or even to try reduced spending—were, we were told, absolutely bonkers.

Barack Obama, Tim Geithner, Nancy Pelosi and a number of other economic patriots concurred with this assessment. And Sen. Charles E. Schumer of New York, the Senate's third-ranking Democrat, head of the Senate Finance Committee, accused Republicans of playing "slash-and-burn" politics, of "purposefully" undermining economic recovery while holding the American people hostage.

Today we speed toward another consequential showdown (of the fiscal cliff variety), and unless the two parties reach an agreement before year's end, the tax bill of 90 percent of Americans will spike. All sides seem to agree that the outcome could hold terrible economic consequences.

So guess what. This week, Sen. Charles E. Schumer of New York—yes, the Senate's third-ranking Democrat and the head of the Senate Finance Committee—held a news conference to pre-emptively oppose any bipartisan deficit reduction deal that would raise revenue by closing deductions, the kind of deal that was floated by the president's own Simpson-Bowles commission.

He wants to raise taxes, period.

The White House also reacted favorably to this impending hostage situation, claiming that Schumer "is making the important point here that the wealthiest must pay their fair share in any balanced approach to reducing our deficit." Obama has made clear numerous times, in fact, that he wouldn't agree to an extension of existing tax rates. Hey, what's more important, averting fiscal collapse or a chance to throw some populist chum to the electorate?

Tax reform "just doesn't fit the times," Schumer explained, because, among other things, "a much larger, more dangerous deficit" faces us now than the most recent time we reformed the tax code. Does anyone really believe that higher taxes will be used to alleviate the deficit problem? A new Public Notice poll finds that the majority of men (61 percent), women (53 percent) and independents (60 percent) believe that the president would use any new revenue to increase spending rather than to cut deficits. Their outlook is bolstered by history.

The Wall Street Journal's Stephen Moore (also an economist) recently noted that the United States is already more dependent on the wealthy than most socialized economies of Europe are, getting "45 percent of its total taxes from the top 10 percent of tax filers, whereas the international average in industrialized nations is 32 percent." Is it worth jeopardizing a wobbly recession over a battle you've already essentially won?

And no, an extension of an existing decadelong tax rate is not a "tax cut for the wealthiest Americans." There is no law of nature or constitutional amendment that dictates that rates must go up every time a temporary tax rate sunsets. And seeing as Washington doesn't have first dibs on your bank account, failing to find new tax revenue that, to this point, only exists as an aspiration of Democratic lawmakers does not "cost" Americans a penny.

So next time you hear about those rigid ideologues, those tax cutter types and their devastating obstructionist tendencies, remember that for many leaders of the present-day Democratic Party, even today's rates are unacceptable.