A Winning Team?: Phil Goff and David Cunliffe (with a great deal of help from David Parker) have seized the high moral ground on fiscal policy. The 2011 General Election has finally become a genuine contest.
LABOUR’S TAX POLICY is as much a moral declaration as it is an economic statement. It speaks to our notions of fairness and equal treatment every bit as directly as it addresses the investor’s love affair with real estate.
This re-focusing of the electorate’s attention on the revenue-gathering aspects of fiscal policy is as timely as it is necessary. For far too long politicians of conservative mien have pretended that the only good tax is a dead one. That governments can go on blithely emptying-out the revenue side of the public ledger, (or, as they prefer to characterise it: “putting money back in the tax-payer’s pocket”) with impunity.
Not that they believed a word of their own propaganda. Even the densest conservative politician must have been aware that drastic cuts in revenue would, eventually, have to be balanced by equally drastic cuts in expenditure.
Nor were the more conservative sorts of politicians ever truly averse to a fiscal policy of slash and burn. Indeed, there are many on the Right who regard slashing and burning as the whole point of the exercise.
“MY GOAL”, boasted the far-Right American lobbyist, Grover Norquist, “is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.”
Nor was this idle rhetoric on Norquist’s part.
As anyone who follows American politics knows only too well, Norquist and his corporate sponsors have been as good as their eliminationist word. All over the United States, federal and state expenditures are being slashed, and tens-of-thousands of public servants laid-off.
And, in America, these firings have moved way beyond “the back office”. The United States’ once proud system of public education is being systematically starved of funds while massive sums are being voted to the corporate providers of private education in so-called “charter schools”.
To undercut the inevitable resistance from aggrieved public-sector workers, Republican Party governors have stripped the public-sector unions of the right to organise, strike, or engage in any effective form of collective bargaining.
So crazed has the American Right become since the onset of the global financial crisis, that the Republican majority in the House of Representatives is threatening to pull the plug on the US Government’s ability to pay its bills. Unmoved by the warnings of Wall Street that such a move would cause the United States to default on its debt – plunging the world into a new and exponentially more serious global crisis – the far-right “Tea Party” faction of the Republican Party refuses to be swayed.
Unless President Obama agrees to reduce federal expenditures by more than a trillion dollars, congressional permission for his administration to exceed the “debt ceiling” – i.e. honour America’s debts – will be refused.
That expenditure cuts on this scale would effectively dismantle what remains of the United States’ anaemic social-welfare system, far from restraining the Tea Partiers, explains why they have so far rejected every one of the President’s attempts at reaching a compromise. As one American pundit put it: “The Republicans are refusing to take ‘Yes’ for an answer!”
THIS, THEN, is the logical end-point of the tax-cutting, expenditure-slashing, “austerity” mania currently gripping the Right – not just in the US but also here in New Zealand.
That’s why Labour’s embrace of a Capital Gains Tax is so important. It signals that a line in the sand has been drawn by the Labour caucus.
On one side stand all the democratic achievements of the New Zealand people: the public provision of health, education and welfare services; the State’s active engagement in the provision and maintenance of New Zealand’s basic infrastructure; it’s guardianship of our natural environment; its stewardship of our culture.
On the other side stand all those commercial interests slavering to turn these collective achievements into opportunities for private gain. The ideologues who would drown our state – along with all that it stands for and protects – in Mr Norquist’s bathtub.
The Norquists of this world see the welfare state as an unnecessary evil. But, in its place they would raise something even more malign: plutocracy. A state in which a citizen's worth is measured exclusively by their wealth, and where the only truly punishable crime is poverty.
It was the US Supreme Court Justice, Oliver Wendell Holmes, who said: “Taxes are the price we pay for civilisation.”
This essay was originally published in The Timaru Herald, The Taranaki Daily News, The Otago Daily Times and The Greymouth Star of Friday, 15 July 2011.