Congress finally broke the impasse over a temporary extension of the payroll tax in 2012, but it remains deadlocked over the big policy changes needed to get our government's finances back on an economically sustainable track. Each side blames the other: Democrats refuse to work with Republicans who are entrenched in a "no new taxes" stance; Republicans counter that Democrats' fondness for "class warfare" policy ideas will kill the economy.
Politicians on the extremes of both sides seem to believe their stubbornness is just what the voters want from them. But they are wrong.
Republicans argue that the federal budget problem is almost entirely a "spending problem" justifying mostly spending-side-only solutions. They claim that any revenue increases, but especially those burdening the richest households, would kill the economy by taking away any incentives for business expansion. The theory is that the "small" businesses owned by millionaire entrepreneurs – labeled by Republicans as the "job creators" of the economy – will reduce hiring if their tax burdens go up.
But National Public Radio's Tamara Keith recently looked for these millionaires who would stop hiring because of higher taxes, and she couldn't locate anyone willing to support that theory – not even when she went to the Republican politicians who are most vocal on that claim.
So NPR hunted down its own millionaire "job creators" and found some who said that even faced with higher taxes, they would still have an incentive to maximize their profits, expand their businesses accordingly, and yes, keep hiring more workers. As one of these millionaires explained:
"Like any other American, especially a business owner, I want to make as much money as I can and I want to keep as much money in my pocket as I can, but I also believe in the greater good," says Deborah Schwarz, who owns LAC Group, an information management firm with offices nationwide and in London.
Hmmm … the "greater good." Could it be that the very people who would be most affected by the Republican-labeled "job killing" policies might actually support these policies (and keep creating jobs) – because they are willing to accept some increase in their own personal burden to avoid the "greater bad" that would occur otherwise?
On the other side, some Democrats insist that Social Security has to remain completely off the deficit-reduction table. That position is encouraged by the AARP lobby, which in an ad campaign threatened politicians on the now-defunct "super committee," saying that those who supported any kind of Social Security reform could lose the support of their 50 million members.
But many AARP members didn't agree with the ad. When my organization, The Concord Coalition, criticized the ad as being "misleading, divisive and an abdication of responsible leadership," we heard from many AARP members who agreed with us and said they were now reconsidering their membership. The "greater good" for them included the economic well-being of their own children and grandchildren.
Thus, the budget battles in Washington seem more to do with the fictional scripts inside politicians' minds than the actual opinions of the voters. When the late Sen. Paul Tsongas helped start The Concord Coalition in 1992, he explained its grass-roots mission this way: "We are better than what we are being asked to be by our leaders." It's clear we still need to keep telling our leaders to live up to their duties – and our ideals.
– Diane Lim Rogers is chief economist of The Concord Coalition, a nonpartisan group advocating fiscal responsibility.