President Obama's only idea for putting a dent in the deficit is to tax his way out of it. Since he won't cut spending, he pledged to raise taxes -- but only on the rich and on Public Enemy No. 1: bankers, of course.
Again, if a corporate CEO tried to do the equivalent -- by big price hikes on his customers -- he'd soon be out of a job. That's because raising prices arbitrarily can end up reducing revenues if customers balk at buying. And when you lose too many customers, you're out of business.
Raising taxes may not solve the problem for governments either. Wealthy individuals can decide to work less if they're going to keep a smaller portion of what they earn, or they can sometimes find ways to shelter their money so they don't pay taxes on all of it. And with less money being spent by individuals as they choose and more money going into government coffers, the economy can actually lose jobs in the private sector even if it manages to retain them in the public sector. What's more, those public jobs tend to be less productive and more costly. And even politicians have to worry about their "customers," namely taxpayers who can vote them out of office.
President Obama showed himself at his testiest in the State of the Union when alluding to recent gains by Republicans at the polls. "(A)fter last week, it is clear that campaign fever has come even earlier than usual," he said. But instead of offering to change course from the leftward drift that has come to characterize his administration to the center, where the vast majority of the American people are, he chose to largely reiterate an agenda that fewer and fewer Americans support. Not only did his words lack the eloquence that helped propel him onto the national political stage, but he seemed more defensive and irritable than he has in the past. All in all, it was a disappointing performance and one likely to do nothing to reassure a nervous public.
Linda Chavez is chairman of the Center for Equal Opportunity and author of Betrayal: How Union Bosses Shake Down Their Members and Corrupt American Politics .
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