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John Petro

A Dearth of Taxes?

On Sunday, New York City Mayor Michael Bloomberg was on "Meet the Press". I was struck by his answer to a question about raising taxes:

...But I think everybody understands we like to have lower taxes. But if we want services, we're going to have to pay for them. And the worst thing we're doing is to do the worst--take the services but not have us pay for them. That's the situation where we're going to lead--leave a terrible world for our children and grandchildren.

On "Face the Nation," Bob Schieffer asked Treasury Secretary Paulson about whether the next administration would need to raise taxes because of the recent and ongoing economic crisis. Secretary Paulson dodged the question:

SCHIEFFER: Is there a chance that the next president is going to have to raise taxes to find the money to run the government?

Mr. PAULSON: Well, the next president is going to have some challenges and--as we have challenges today, because what we're going through is an unprecedented period of time. And there's no doubt that debt issuance by the United States of America is going to go up. And I'm not--I'm not minimizing this, I'm not minimizing it at all, but I want to continually emphasize, because sometimes people get confused, this is different than spending money you know you're never going to get back. This is buying assets, holding assets and then selling assets. And although I can't tell people now what the cost of that process will be, and there is a risk, the ultimate cost will be determined by how quickly the economy is stabilized and what happens in the housing markets.

But if you were to ask John McCain's domestic policy adviser Douglas Holtz-Eakin a similar question, you might get a more definite answer.

Will the next president need to raise taxes? According to Mr. Holtz-Eakin,

"If you do nothing on the spending side, you're going to have to raise taxes whether you're a Republican, a Democrat or a Martian."

But what is to be done on "the spending side"? Mr. Holtz-Eakin acknowledges that "the pressure are there" to increase government spending. Indeed, polls show that Americans support government spending on health care, public works, and programs to assist those that are now struggling.

With the Wall Street bailout about to push our federal deficit over the brink, it is time that Americans and politicians face up to reality and acknowledge the relationship between taxes and the ability of government to protect and strengthen our country. For, as Mayor Bloomberg pointed out, if we don't, what kind of country will we be handing to our children and grandchildren?

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Posted at 9:56 AM, Sep 22, 2008 in Economy | Election 2008 | Federal Budget | Fiscal Responsibility | Tax Policy
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