Friday, September 17, 2010

How Economic Conservatism Leads to Liberal Taxation

How Economic Conservatism Leads to Liberal Taxation
By: Rene Velez Aug. 11th, 2010

As I read the current newspapers I read a lot of dire stories of how local, state and even our federal government is grappling with something most of us do on a daily basis. It’s called living within your means. A more technical jargon reveals the phrase “balanced budget”. Of course if we fail to balance the budget then we have additional financial jargon such as deficits, budget cuts, layoffs, program cuts and reduction of services. Of course on the personal level, when we can’t live within our means we can’t lay off the children but we can choose not to take a vacation, get a new car, we save less, incur debts and we don’t eat out. We may even go as far as to cancel certain services, such as the pool guy or the lawn service. Anything that is not essential. These are often hard choices that no one likes but many families have had to, at one time or another, make tough decisions to move on to better times.

Of course government has a much more difficult time trying to cut their spending. Typically it’s a political hot tamale because the public votes for those who provide a service no for those who cut. In addition bureaucracy has a bad habit of making it a real challenge to cut services because typically they are vital to a community and it’s often next to impossible to cut off funds to a civic service due to laws, mandated commitments, unions and a host of different interests. I believe it was Ronald Reagan that once said, “Once you provide one dollar of funding to a government it’s a dollar you will never be able to take away”, or something like that. Unfortunately, government is also used as a form of policy spending in the hopes of stimulating the economy. It is after all an enormous employer and consumer of goods and services. This too makes cutting back a very difficult choice.

Desperate Measures

The Great Recession has created an abundant need to cover the shortfall of revenues and aside from cost cutting, layoffs and reduction in programs and services we are seeing a number of ways to increase revenues. We are using programs that crawl through various databases to see who has not filed a return, paid for a license or is otherwise not paying taxes which are supposed to be paid by law. In addition we have increased millage rates in order to raise real estate tax revenues that have been downsized due to plummeting home values. Local and state governments have increased fees for services such as renewing your corporation, your auto tag to parking fees and have even invented new fees. It seems at the worst time possible government is exacting more out of its constituents when many are least able to afford it. These are contrary to the typical political stance most elected officials would take, although not unheard of. Why? Simply stated, politicians avoid such decisions because it affects them directly when elections come about. These desperate measures have some very negative under riding forces that have yet to be qualified. But in general, conservative measures to preserve government spending and to balance the budget can lead to liberal thinking and policy shifts that otherwise might not ever become mainstream.


The Tea Leaves

If anyone is paying attention to politics these days you should take notice of the Tea Party Movement. Some call them a splintered group from the GOP, and that may be partly true but the reality is there is no clear consensus. The fact is these Tea Parties are issue based and their issues span the spectrum from far out ideology to regional and local issues that may or may not be mainstream thoughts. One thing does seem clear to me. The activities of the Tea Party movements have more to with a disenchanted assembly of citizens than to any political party. A look at the primaries in many states this year and its simply amazing that some of these candidates have won these primaries. Even more so that they have won against long standing career politicians that are entrenched mainstream incumbents. The idea of replacing everybody who is responsible for all that is wrong in government seems to show itself at the polls. I find it ironic that at a time when conservatism, especially on the financial side of our everyday life, seems to be the order of the day, liberalism seems to be the under toe of what some might call a political uprising. That makes for a very interesting set of possibilities for years to come as big changes occur in the not so distant future.

Finding the Revenues

If by this juncture you are buying into what I am saying, you should see California’s desire to legalize marijuana. Here is yet another attempt to take conservative measures to balance a state budget, continue to provide services to the citizens of this enormous state and yet adopt legislation to legalize and of course tax marijuana consumption. Of course California is hardly exemplary of the rest of the country in thought, politics, law or ideology but, California is not alone. Other states want their share of the marijuana sin tax. A closer look at who is for and against these legalization laws and you will be surprised to see conservative, law abiding, officials who are taking another look at how to make this work.

Blurred Parties and Ideology

Without a doubt there are many changes coming in this country. Some caused by a paradigm shift in demographics as aging baby boomers retire and the new generation take their place. Another because of legacy issues that are all across the spectrum of politics, economics, energy, terror, medical care and everything else that shapes our existence. On any given day, it’s tough to tell who’s a Democrat and who is the Republican. I suspect that just as Charlie Crist of Florida has switched political sides from Republican to Independent this may be a sign of the future. It also speaks loudly to how the issues of the day are driving the points more so than political affiliation. For this very reason, and many others, the trend to more responsible, transparent and conservative business and government will lead us to more liberal ideology. You might say that extreme circumstances to conserve and maintain order generally require us to think liberally in order to adjust our expectations for a conservative future. It’s thinking out of the box on the rails of policy. It’s how innovation comes to bear in the technology sector or in corporate America. In the midst of the cold war, when we were so concerned over big brother watching you, Twitter would have been impossible because, who in their right mind would want the world to know what you were up to. In fact it would be suspicious as many misleading propaganda machines were employed all over the world. Yet today…..my how times have changed.