Obama Versus O'Reilly on Tax Policy

Tue, 09 Sep 2008 15:46:25 +0000

I give Senator Obama pretty high marks for his appearance on The O'Reilly Factor. Presidential candidates should spend some time undergoing skeptical cross-examination. Ideally, it would be informed skepticism. In this segment, Obama twice has to duck wild Laffer Curveballs thrown by O'Reilly.

Be that as it may, the best phrase Obama uses when advocating for his tax plan is, "If there's something we've got to pay for ..." How quaint--arguing that the current generation of taxpayers should pay for their expenditures. Rhetorically, it is a winning strategy to cut short all of the "tax cuts pay for themselves" and "the problem is spending" interruptions to simply focus on the increase in the national debt. What's the counterargument? If the debt is going up, then government is passing along the cost of its current purchases to future generations of taxpayers. (Almost) nothing more needs to be said about fiscal responsibility, although what he does say in addition is quite good rhetorically -- that we have taken out a credit card from the Bank of China that our kids will have to pay.

I do have a few of issues with the way Obama argues for a more progressive tax system. First, he seems to think that progressive taxation is necessary to have income redistribution. It is not--as long as the tax burden rises with income more quickly than the benefits of government expenditures, there will be income redistribution. This is more of a technical issue than an ideological issue.

Second, near the end of the segment, he describes higher taxes on those with higher ability to pay as "neighborliness." That's likely to provoke some outrage -- neighborliness involves voluntary choices made by people to provide mutual or charitable assistance to each other. That's not what income taxation is -- income taxation is not voluntary. Viewing progressive taxation as neighborliness sets the wrong tone about more taxation -- presumably, more neighborliness is better than less. I don't agree with that view of taxation. I want a government no bigger than it has to be, with taxes just high enough to pay for it. I recognize ability to pay as a factor in determining the tax schedule, but I do not think the government should go out of its way to redistribute income from one group to another apart from its provision of public goods.

I recall from Obama's acceptance speech that he had a similar description of the role of government (my emphasis added, but quoted in full between interruptions from applause):

What -- what is that American promise? It's a promise that says each of us has the freedom to make of our own lives what we will, but that we also have obligations to treat each other with dignity and respect.

It's a promise that says the market should reward drive and innovation and generate growth, but that businesses should live up to their responsibilities to create American jobs, to look out for American workers, and play by the rules of the road.

Ours -- ours is a promise that says government cannot solve all our problems, but what it should do is that which we cannot do for ourselves: protect us from harm and provide every child a decent education; keep our water clean and our toys safe; invest in new schools, and new roads, and science, and technology.

Our government should work for us, not against us. It should help us, not hurt us. It should ensure opportunity not just for those with the most money and influence, but for every American who's willing to work.

That's the promise of America, the idea that we are responsible for ourselves, but that we also rise or fall as one nation, the fundamental belief that I am my brother's keeper, I am my sister's keeper.

That's the promise we need to keep. That's the change we need right now.

In the O'Reilly interview, he gives other examples of the things the government needs to do -- providing assistance to those trying to afford college, to have health care, to pay the bills -- as well as invest in infrastructure. My third issue with Senator Obama is that I don't agree that all of these things are "that which we cannot do for ourselves" in the absence of federal government involvement. Regulation of natural monopolies, yes. Construction of infrastructure projects that span multiple states, yes. Universal access to health care, yes. Paying our bills for things that benefit us primarily as individuals -- including fuel, college, health insurance, and the like -- not so much. Income redistribution apart from these sorts of purchases, even less.

It remains to be seen, over the course of the next two months, whether these ideological issues will be more or less important than his commitment to paying for the things we purchase in determining my vote.