December 24, 2009

ONE OF THE GREAT THINGS ABOUT THE AMERICAN PUBLIC...:

Economic Reality Drives Agenda (DAVID WESSEL, 12/24/09, WSJ))

Politics is the art of making the impossible inevitable.

Higher taxes on gasoline or another tax on carbon or energy use seem politically impossible today, as well as undesirable in an economy struggling to gain momentum.

But two unrelenting forces are likely to push gasoline or carbon taxes onto the public stage in the next year or two, provided the economy regains its health: the swelling U.S. government budget deficit and global resolve to reduce the risk of catastrophic climate change.

Take the deficit first. Over the past year, U.S. government debt has risen from 41% of the nation's output of goods and services, the gross domestic product, to 53%. Without big changes in taxes or spending, it'll rise to 85% of GDP by 2018, 100% by 2022 and 200% by 2038, the Peterson-Pew Commission on Budget Reform estimated recently in a report the band of deficit fighters dubbed, "Red Ink Rising." That trend is unsustainable. Among other things, it would mean an ever larger share of the federal budget going to pay interest, much of it to foreigners. (The panel recommends stabilizing debt at 60% by 2018. That would take spending cuts or tax increases that sum to about $300 billion in that year.)

History suggests elected politicians eventually will do something politically painful to prevent the U.S. government from becoming the world's largest subprime borrower, either because they decide to care about the next generation or because a financial crisis -- a dollar plunge, perhaps -- forces action. [...]

The bulk of economists embrace higher energy taxes. Many politicians privately see their advantages, but see so much public hostility that they won't praise them audibly. "In a democracy," Mr. Mankiw once mused, "economic policy is set not by economists but by the general public." And that's as it should be. But economic reality has a way of forcing the public and elected politicians to do things they once thought they would never do.


...is that, politically, you can pretend that deficits are a moral issue and use that as a lever for good policy.

Posted by Orrin Judd at December 24, 2009 7:54 AM
blog comments powered by Disqus
« EVEN WHEN A rEALIST SEES THE TRUTH HE CAN'T ACCEPT THE REALITY: | Main | SILVERBELL TOILS FOR YULE: »