The second installment in a two-part series on U.S. fiscal policy.

Crunching The Numbers: Part II
A Democratic Fiscal Policy For A Democratic Era

Okay, here’s the good stuff. In Crunching The Numbers: Part I (August 24, 2004), I argued against the thoroughly Republican policy of cutting taxes and domestic spending and jacking up useless defense expenditures. So obviously, I’m not going to include any of that in a Democratic fiscal policy for a Democratic era. Indeed, what I argue for is the exact opposite.

Let me start off by explaining that fiscal policy accurately reflects a given vision of government. (Note: For this column, whenever the word “government” appears by itself, assume that I’m referring to the federal government. Though I do think that domestic tasks should be taken care of by government at all levels – federal, state, and local.) My vision for the federal government is an active, efficient and powerful institution that is eager to provide for domestic programs that benefit all Americans and the general welfare of the United States, while respecting the personal rights of individuals and the sovereign rights of foreign countries. I believe that this is the general philosophy of the Democratic Party as a whole.

This means a number of things. First of all, I strongly encourage increases in spending on domestic discretionary programs as well as entitlements. Entitlements are programs whose spending is determined by a certain set of qualifications, and cannot be controlled directly by Congress. (Examples being Social Security, Medicare, and Medicaid) Domestic discretionary programs are programs whose funds are determined directly by Congress and the President. (Examples being housing, medical research, transportation, etc.) I support increases in both because I truly believe that the federal government has both the resources and duty to provide for the common well-being of the country, and increases in spending allow for just that. At the very least, the government should maintain the amount of funding, if increases are not possible due to political or budgetary realities. Granted, throwing money at something isn’t always going to work (which is why I support the federal government getting involved in more ways than money, i.e. guidance, strategy, research, etc.) but, face it, money is the gasoline that fuels the world. Money in itself doesn’t guarantee success, but a lack of money most definitely guarantees failure.

I support healthy funding for just about every federal domestic program. The list includes entitlements like Social Security and Medicare, homeland security, housing, health care, education, job training, anti-poverty programs, transportation, sewage and public health, land and community improvement, energy and the environment, the Postal Service, public media and broadcasting, science and technology, the humanities, culture and the arts, and many other areas and issues I can’t think of right now. The federal government should be responsible for allocating funds to expand and maintain programs for these areas, and even if the United States is doing well in all these areas, the federal government would and should still have to spend a reasonable amount of money to maintain excellence in those areas. Maintenance as well as expansion is the key.

Probably the only area where I don’t like seeing more spending is the Department of Defense. It’s not that I don’t care about protecting this country; indeed, defending the country is one of the most noble and righteous causes the federal government can be asked to take on, and that’s why I support increased funding for the Department of Homeland Security (preferably with funds that would have gone to Defense instead). I don’t like seeing Defense getting more funds because, quite frankly, Defense doesn’t really handle actual defense of this country anymore. Instead, the DOD is charged to go abroad and instigate unnecessary and unprovoked military operations with foreign nations like Vietnam, Grenada, Panama, Kosovo, and of course Iraq. Do I think that there were problems in all these countries that needed to be solved? Of course; I’m just not sure if war was the answer to any of these conflicts. Wars are expensive – and so is the Department of Defense, for that matter. Because all this Defense money is going to unnecessary, expensive wars abroad, I think the money is being wasted and I prefer to see it going into Homeland Security instead.

Finally, after hearing all this talk about spending money, you’re probably thinking what I’m thinking: how are we going to pay for all this? Well, the government doesn’t make a lot of money by itself, so the only answer is through taxes. And that’s why I adamantly oppose tax cuts. Especially of the Bush variety, which disproportionately benefit the rich (see Part I for details). Demand-side tax cuts that go mainly to the lower-income brackets (like the ones advocated by President John F. Kennedy) are okay by me. But I do support the full repeal of the Bush tax cuts (with three exceptions – the expanded 10 percent income tax bracket, the marriage “penalty” compensation, and the child tax credit) so that we can fund programs that help everyone, not just the rich. And yes, I think President Bill Clinton did the right thing when he raised taxes across-the-board to fund domestic programs, lower the deficit, and produce a fabulous period of economic growth.

When we talk about taxes, all the focus tends to be on income taxes, partly because that’s the one where the rich pay the most. Well, there are two other types of tax out there that hurt ordinary people even more and they’re the payroll tax and the sales tax. I support payroll tax cuts on lower- and middle-income brackets (because they’re the ones hurt most by it) and busting the cap that currently keeps upper-middle and wealthy Americans from having to pay any payroll taxes. That’s quite unfair; all Americans should have to pay at least the taxes that fund Social Security and Medicare because those programs are open to all senior citizens, regardless of wealth. And the sales tax discourages consumer spending (which is what drives economic growth) and hurts poor and middle-income people the most. Thank goodness there’s no national sales tax (and I do oppose it) and I would lower it at the state level.

One last note: Small, short-term deficits are necessary from time to time. Big, long-term deficits are bad. I wouldn’t call myself a deficit hawk, but I abhor deficits of the big, long-term (Republican) kind because they divert taxpayer money away from actually providing for the country and render the government impotent and incapable of doing much of anything. I can understand if a deficit results from domestic spending or a national emergency, but the deficits that have run under both Presidents Ronald Reagan and George W. Bush, which result from massive tax cuts and wasteful military spending and unnecessary wars, are completely inexcusable.

I can safely say that most Democrats would agree with just about everything I’ve wrote. At least I hope so. Otherwise, that would mean they’ve drifted more to the right than I’ve imagined. All the facts and my observations say otherwise, though; the tenets behind the basic policies I’ve just outlined have been espoused by Democrats from Franklin Roosevelt to Bill Clinton. I trust that Democrats embrace this philosophy and are happy to run with it. Here’s to a Democratic era of high domestic spending, low defense spending, low deficits, and healthy economic growth and revenue flow. Once we take back the White House and Congress and the people are behind us, this era I speak of will come.

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