Raise Taxes Even Higher to Cut Debt

By Lanny Davis – January 21, 2015

President Obama’s State of the Union Address was faithful to the core values of progressive government for which the Democratic Party has long stood — expecting the wealthier taxpayers to finance programs needed by the middle class and the poor. But it failed to address the rising and unsustainable national debt. The only answer is to raise taxes even more on wealthier Americans to pay down the debt.

The president’s proposals Tuesday night would provide needed help to a middle class left behind for years as upper-income Americans prospered. It provided middle-class tax credits on education, child care and retirement benefits, financed by modest tax increases on America’s wealthiest. For example, his proposed 4.2 percentage point increase on capital gains brings that tax back to where it was under President Reagan.

But we can’t afford to ignore our rising national debt, which is about $18 trillion — up from $10.6 trillion when Obama took office. By the time the president leaves office, the national debt will likely pass $20 trillion, meaning it will still pass the total value of all goods and services produced by Americans each year. We need new taxes on the wealthy, with the revenue mandated by Congress to go only to a “Debt Repayment Trust Fund.” Only a supermajority (say 75%) of both chambers could divert it for other purposes. Of course, future congresses could try to change that requirement, but it would be politically difficult until the debt has been substantially reduced.

Why should we care about our national debt now? If it keeps going up at this pace, we will be paying increasing interest to our creditors, foreign and domestic, rather than spending tax dollars on people and on investments in our country’s future.

There is also the moral issue. I have two young sons and six grandchildren. If I went on a trip around the world on my credit card, with first-class airfare, hotels and meals, and then returned home and dumped all my credit card receipts in my sons’ laps, and said “you pay,” well, that would be wrong. But that is exactly what we are doing by borrowing money every day to pay for today’s programs, expecting generations to come to pay the tab.

Bill Clinton proved you could be a progressive president and a fiscally responsible one, too. In eight years, he turned a $300 billion deficit into $560 billion in surpluses (with help from Republicans) and helped create 23 million jobs. President Obama, too, has proved that his progressive policies are working, with substantial job increases since 2009 and an approval rating now at 50%.

But now is the time to reiterate the Clintonian hybrid of progressively financed programs to help the middle class and working families, and fiscal responsibility to respect and invest in our children’s future. It is the right politics. And it is the right thing to do.

Lanny J. Davis is a columnist for The Hill and a former special counsel to President Clinton.