Many friends of mine are impressed with the argument, lately touted by President Obama and Democratic senatorial candidate Elizabeth Warren, that every successful person owes a debt to all of those, known and unknown, who helped make their success possible. Warren made the case in an early campaign speech, back in September. ”There is nobody in this country who got rich on his own. Nobody. You built a factory out there — good for you! But I want to be clear. You moved your goods to market on the roads the rest of us paid for. You hired workers the rest of us paid to educate. You were safe in your factory because of police forces and fire forces that the rest of us paid for.” (Technically, “the rest of us” means the one-half of the US population that actually pays federal income taxes, but we will concede her point).
The President made the same claim at a campaign rally in Virginia this week: “Say you’ve got a business — you didn’t build that. Somebody else made that happen. . . . . [W]hen we succeed, we succeed because of our individual initiative, but also because we do things together. . . . We rise or fall together as one nation and as one people, and that’s the reason I’m running for President — because I still believe in that idea. You’re not on your own, we’re in this together.”
Something about this argument moves the communitarian in all of us, because it appeals to a laudable desire to “pay it forward”. Growing up means learning, sooner or later, the enormous debt we owe to our parents and grandparents, to those who helped us along the way, and to those who build the roads, put out the fires, fight the battles, and keep watch in the night.
But as a campaign talking point, this claim suffers from two difficulties. The first difficulty is that it is truer than the President and Prof. Warren realize. The second difficulty is that it is not an adequate answer to the great policy question that prompted it, which concerns tax rates: Should we raise income tax rates on the wealthiest Americans, despite the fact that we are in a recession whose end is nowhere in sight? To that question there is only one responsible answer: No, not unless you want to deepen the recession and put more people out of work. (Hint: Those people won’t be among the notorious One Percent.)
Given the economic facts of life, we should actually be lowering tax rates on everyone, including the rich. Each time we have done this in the past (under Presidents Coolidge, Kennedy, Reagan, and Bush II) the result has been precisely the same: investment capital and consumer income flowed into the economy instead of into the hands of the Congress; the economy grew; more people got jobs and earned income. As total incomes increased, tax revenues went up as well, even at the lower rates, and sometimes dramatically. (After the Bush cuts, corporate and individual tax revenues tripled.) And, incidentally, the share of income tax revenue paid by the wealthiest taxpayers often increased under the lower rates.
As a political talking point, therefore, the “give back to those who helped you” mantra is a classic case of changing the subject. The question is not whether the rich should pay taxes: they already do. Nor is it whether they should pay more taxes than everyone else: they already do that as well. The question is whether they should pay at higher rates than they are paying at the moment, an idea that would make little sense under the best of circumstances, and no sense at all during a recession. Even the President admitted this, as recently as August 2009. But now he would like you to believe that the additional mountain of debt built up during his first term could somehow be made to go away, if only Republicans weren’t determined to help greedy billionaires hang onto the wealth that “the rest of us” helped them earn in the first place. At a minimum, the President and Prof. Warren should be encouraged to show us that they are not really as economically illiterate as they pretend to be, and explain frankly why raising tax rates during a recession is suddenly a good idea instead of a bad one.
Let’s return, though, to the first difficulty. The President and his allies always frame the issue as one that affects businessmen in particular. In fact, it has far more relevance to public officials than it does to business leaders, because while there was no Apple Computer before Steve Jobs, and no Walmart before Sam Walton, there was a United States of America before President Obama. Benjamin Franklin famously described the new government created by the Constitution as “a republic, if you can keep it.” “Keeping it” is the implicit meaning of the officeholder’s promise to “defend the Constitution of the United States.” “Giving back to those who have helped you succeed” means, in constitutional terms, being faithful to the political order created by our ancestors and placed in our care.
Beyond fidelity to the Constitution, there is the broader fidelity to the social, political, and economic order that the Constitution was designed to govern. Here the implicit promise is something like the one made by physicians: “First, do no harm.” Do not harm the economy by throwing away a trillion-dollar stimulus to nowhere, or by vastly increasing the size of an already dangerous national debt. Do not harm the health care system by turning it over, in its entirety, to the Department of Health and Human Services. Do not rend the social order by trying to blame the nation’s problems on those Americans who already carry most of the tax burden, or by deliberately seeking to increase the ranks of those dependent on federal goodies. Do not squander valuable resources on failed energy companies run by your campaign contributors. Do not take a bad situation and make it immeasurably worse with policies that have a proven track record of failure.
Where I live, in mostly blue Massachusetts, “giving back” is a favorite theme of Sunday morning sermons. At this dangerous moment in our history, “don’t screw it all up” might make for a better one.
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