GOLDBERG: The problem isn’t raising taxes, it’s spending, spending, spending

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Confession time: I’m open to raising taxes. As a lifelong conservative, making this case is as easy as defending weak national defense or more United Nations funds.

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So please bear with me as I discuss why I am open to the idea.

One of the most important lessons of the last two decades is that the events of the black swan (game-changing surprises) are not as rare as we would like.

In 2001, a terrorist attack resulted in two decades of military conflict. Adding up the costs of defense, veterinary medical care and other related costs, the price rises to an estimated $ 5.8 billion to $ 8 billion.

In 2007-08, a financial crisis almost ruined the economy. The combined loss of tax revenue and increased expenses put the cost at around $ 2 trillion. A 2018 Federal Reserve Board study estimated the cost for each American at $ 70,000. The social and political costs are still unfolding. Historically, financial crises trigger intense and long-lasting populist revolts. Normal recessions don’t have the same effect. (This is something to keep in mind as the probability of a debt crisis increases.)

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Then there is the pandemic. In November, economists David Cutler and Lawrence Summers estimated that the costs of lost growth, income, life expectancy, etc. exceed $ 16 trillion, roughly 90% of the annual gross domestic product of the US The federal government has spent nearly $ 6 trillion fighting the pandemic.

Much of that spending was necessary or defensible. The government is supposed to respond to extraordinary circumstances with extraordinary measures.

Which brings me to the case of raising taxes.

What happens when the next black swan lands? Do we have the financial bandwidth to handle a new pandemic or financial crisis? How about a Chinese invasion of Taiwan? A nuclear terrorist attack? And remember, the current pandemic is not over yet.

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World War II was a noble and necessary expenditure of national resources. But it was expensive, bringing the national debt to 110% of GDP. Subsequently, there was a broad consensus that we had to pay for it.

Today our debt level is even worse, but to say that there is no similar consensus is an understatement on a par with saying that “America is not in a bipartisan mood.” Sen. Bernie Sanders (I-Vt.) Insists that progressives have already pledged by cutting the desired $ 6 trillion in additional spending on a host of new rights and welfare programs.

Senator Joe Manchin III (DW.Va.) is universally hailed, or demonized, as a “moderate” because he will “only” accept a reconciliation package of $ 1.5 billion to $ 2 billion in addition to the $ 1 billion in traditional infrastructure spending. . Even 10 years ago, favoring so much spending would have marked Manchin as a Bernie Sanders liberal.

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Part of this expense may be for desirable or valuable things. But none of this makes sense given the fact that we are bankrupt, regardless of the possible return of inflation. And the laughable claims of the White House that it will cost nothing only make sense if you believe that raising taxes to pay for new duties is costless.

Yes, Keynesians favor higher spending and lower taxes to get out of a recession by stimulating consumer demand (and yes, we are all Keynesians now). The point is that we are not in a recession and demand is not our problem.

So, in theory, raising (some) taxes to pay for previous spending on previous black swans to prepare for the next one makes sense.

The problem is that we live in meaningless times. Washington has zero appetite for dealing with debt. That’s in part because voters don’t care either, and that’s because they’ve found that politicians never really cared to begin with.

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Republicans squandered their remaining credibility on the issue under President Trump, and Democrats have simply rejected the premise that debt matters at all. Democrats want what they imagine to be a European-style welfare state, but they pale in taxing the middle class at the European level to pay for it, which you would have to do.

One of the benefits of worrying about debt is that it limits the ambitions of politicians. This is how it works in our own lives.

Even for those of us who don’t want to live in a European welfare state, raising taxes to pay for government that Americans may want has one advantage: It should teach us to keep politicians at bay. If Americans thought they would pay for the $ 6 trillion they already borrowed and spent on the pandemic, they would be less likely to support spending trillions more. They might say, “Let’s save that for a rainy day, or a black swan.”

I’m willing to talk about limited tax increases, but not while people are talking about unlimited spending.