If Not Now, When?

I read an editorial recently about the incoming administration’s plans to raise gasoline taxes. The editorial contained a caveat that went something like, “of course, the middle of a recession is not the best time to do this…”. Hmm, interesting. Well if increasing the tax rate on an essential commodity is detrimental now (i.e. during tough economic times), when is it a good idea? In other words, what level of prosperity makes it okay to confiscate more of our money?

Forgive the digression, but similar comments have been made about Obama’s plan to cut middle class income taxes. People are asking if this campaign promise will be tabled as well. Why? Well you see, the middle class tax cuts come at a cost to the government (i.e. lower tax revenue – this could be argued, but that’s not the point). That cost would presumably be paid by increasing the tax burden on the rich. Speaking on behalf of Obama’s administration, David Axelrod addressed part 2 of the tax cut, increasing taxes on the rich. On Sunday December 28th’s Meet the Press, he said "the question is on the Bush tax cuts for the very wealthiest Americans and it's something that we plainly can't afford moving forward. And whether it expires or whether we repeal it a little bit early we'll determine later, but it's going to go. It has to go." In other words, they want to cut taxes for the middle class, but they’re not willing to increase taxes on the rich – at least not yet. Huh? Excuse me? Does anyone else see the admission here? Axelrod is implying (though reluctantly) that increasing taxes on the rich will hurt the economy. Duh! Of course it will. I’ve never worked for a poor person, thank you very much. Additionally, he’s implying that the Obama administration does not have a problem with increasing the federal deficit (like the Bush Administration). Anyway, my point was to illustrate the prevalence of this position - tax hikes don’t seem to be a good idea, at least not when you want to grow an economy!

Okay, so let’s get back to gasoline taxes. If in the next 100 days, the White House press secretary utters a single word about higher energy taxes “when things get better”, I’m going to throw up. A logical follow up question would be, “what GDP numbers would make this move palatable?” Of course, the White House press corps will not ask that question.

Mark my words; this will be a matter of discussion in the Obama White House. Recall that in the summer of 2008, Obama’s issue with high gas prices was not how high they were, but in how quickly the prices rose. There is a liberal left ideology which seeks to curb energy consumption and/or drive consumers to certain technologies through higher fuel prices. To what extent President Elect Obama will adopt this ideology is yet to be seen. The answer will have more to do with where the blame for higher prices can be assigned than anything else. Joe Biden will not have the guts to ask all Americans to “be patriotic” and pay higher gas taxes.

Let get down to simple logic folks: if one states that we wait to levy higher taxes because of a poor economy, one must be prepared to define an economic threshold (or set of circumstances) under which said taxes can or should be levied. This will not happen, folks. They will never define the threshold. Doing so would lead to a simpler question: if said tax increase prolong or exacerbate the malaise of a bad economy, wouldn’t it erode or slow a good economy?

So that’s my question, Mr. Axelrod. Please ask President Elect Obama for me when you get a chance… If not now, when?