The Obama administration was eager to pump hundreds of billions of dollars in stimulus money into a struggling economy, taking money the government already had taxed and throwing it back at selected targets. Now it wants to suck money out of the economy by allowing the so-called Bush tax cuts to expire.
Two wrongs won't make a right. They will, however, compound problems.
Treasury Secretary Timothy Geithner told ABC's "This Week" on Sunday that raising taxes on the wealthiest Americans would be "the responsible thing to do" and that it would not hamper economic growth.
But Geithner is part of the same team that told us the stimulus, Cash for Clunkers and mortgage incentive programs would get the economy rolling again. All they did, at best, was provide artificial boosts. In the case of the auto industry, they artificially inflated the cost of used cars. With real estate, they kept the market from finding its true bottom, the point from which real recovery could begin. The result has been to prolong the recession and reduce growth.
Now they would have us believe that a tax hike wouldn't hurt. This would "show the world that we're willing as a country now to start to make some progress bringing down our long-term deficits," Geithner said.
The concern with what the world thinks is curious, except of course that the United States needs much of the rest of the world to keep buying its debt. That, of course, is the real long-term problem, and it has more to do with runaway spending than with taxes. Already, Medicare, Medicaid and Social Security eat up all federal tax revenues. The nation can't tax its way back to solvency, and any tax hike right now would hurt the fragile economy. What the nation needs are spending cuts.
A tax on the wealthy would include a tax on business owners, who already are struggling with tight profit margins. That would, in turn, cost jobs.
Geithner said he believes all the Bush tax cuts ought to expire over the next year or two. Just to be clear, this would affect every income tax bracket. Even the bottom rate would go from 10 percent back up to 15 percent. The top rate would go from 35 percent to 39.6 percent.
It may be popular today to attack the rich, or to believe that those in upper tax brackets can afford to pay more. But those are the people whose businesses and investments create jobs, and the economy isn't going to return to prosperity without them.