By William C. Shelton

(The opinions and views expressed in the commentaries of The Somerville News belong solely to the authors of those commentaries and do not reflect the views or opinions of The Somerville News, its staff or publishers.)

I believe that government should not spend money that it doesn’t have, except in times of war and recession. Deficit spending, like burning fossil fuels, burdens future generations. It can promote inflation. And it compromises our moral authority. Our government’s muted response to the world’s largest abuser of human rights can best be understood in light of the trillion dollars of U.S. debt held by China.

At one time these beliefs would make me a fiscal conservative. No more. The current bearers of the “fiscal conservative” banner insist that those who march under it must support weak government and strong corporations.

Government’s only purpose, they say, should be national defense. But even here they want the functions of war, except for the dying, to be conducted by private corporations.

Their current focus is the President’s proposal to allow Bush-era tax cuts to expire for the wealthiest three percent of Americans whose annual incomes are greater than $250,000. The shrill arguments they spew are hypocritical lies.

They say that many taxpayers with annual incomes above $250,000 own small businesses, and restoring the pre-Bush tax rate would impose a hardship, causing them to fire or delay hiring workers.

The vast majority of small businesses would not, in fact, be affected. And those who would be are a tiny fraction of “small” businesses that absorb 44 percent of all small-business profits.

One-quarter of “small-business” earnings go to 15,000 firms whose average revenues are $150 million per year. They are not the struggling mom-and-pop enterprises whose images the demagogues evoke in their anti-tax harangues.

Their owners make an average annual profit of $1.2 million. They would pay no tax increase on their first $250,000. Their average tax increase would be an oppressive four percent on the remaining $950,000, minus their tax deductions. How would they feed their children?

The don’t-burden-small-business argument is the cleverest in the larger taxes-hurt-the-economy myth. History suggests something different.

During the Clinton Administration, the highest tax rate increased from 35 percent to 39.6 percent, the economy created 22 million jobs, and we had two balanced budgets. Bush II reduced the top rate to 33 percent. During his eight years, the country lost 670,000 jobs. The average American’s income shrank by six percent.

During the 1950s and early 60s, the top tax rate was 91 to 92 percent. There followed the greatest economic expansion in the nation’s history.

One reason is that we invested those tax revenues in infrastructure that supported future economic growth—roads, bridges, hydroelectric power, air traffic control systems, and so on.

Today the Department of Transportation rates 700,000 bridges as structurally deficient. The nonpartisan American Society of Civil Engineers agrees. But it rates the state of the nation’s energy, dam, water, hazardous waste, school building, wastewater, road, and transit infrastructures to be even worse.

Another reason why the economy benefits from progressive taxation is that lower-income households spend a greater percentage of their incomes. When working people have higher after-tax take-home pay, they run out and blow it on purchases like food, transportation, and education that stimulate job creation. Whereas the rich “invest” in things like upscale real estate, yachts, art and luxuries that, proportionally, don’t produce jobs or reinvestment.

Tax-cut demagogues argue that after the top tax rate declined from 70 percent to 28 percent during the Reagan years, jobs grew by a net 16 million. In fact, this was the worst job growth of any administration since World War II, except for the Bush era.

Even then, it was achieved only through insane deficit spending that tripled the entire national debt that had accumulated over the previous 213 years. But by the end of the first Bush’s term, that debt was almost five times what it had been when Reagan took office. And it doubled again during the Bush II years.

The Congressional hypocrites who insist on tax cuts for the wealthy also pose as national debt’s greatest foes. But they previously voted to create obscene deficits. And they persecuted fellow legislators who opposed an unnecessary $3 trillion war, financed entirely by debt.

They insist on reducing the size of government, but are unwilling to cut its most wasteful programs. Over the past five years, $100 billion in agricultural subsidies went mostly to large corporate farms, who used them to squeeze out family farmers and buy up their land.

The Republican Secretary of Defense wants to reduce Pentagon spending and focus on real threats. But these hypocrites insist that the nation will be in peril if we don’t buy more useless and expensive weapons systems.

They demand subsidies for fossil fuel industries while branding as “socialist” support for emerging industries that can reduce fossil-fuel dependence or create the next generation of high-tech jobs.

When challenged on reducing taxes for the rich, they accuse critics of fomenting “class war,” though they have been waging class war for decades—against working Americans.

Tax and trade policies have made the richest Americans richer and most Americans poorer. Between 2006 and 2007, for example, almost a quarter of the increase in household incomes went to the 18,000 households that made over $10 million per year. Thirty-six percent of it went to the 300,000 households that made over $1 million per year.

There are Republicans who reject the tax and deficit lies, and Democrats who embrace them. Former Fed Chairman Alan Greenspan wants to repeal all the Bush-era tax cuts. David Stockman, Ronald Reagan’s budget director, blames our current economic distress on fellow Republicans’ “delusion that the economy will outgrow the deficit if plied with enough tax cuts.”

We forget that one of the most powerful advocates for a graduated income tax was Republican Theodore Roosevelt. He argued that the absence of government “restraint on unfair money-getting…has tended to create a small class of enormously wealthy and economically powerful men whose chief object is to hold and increase their power.”

As a partial solution, he called for a steeply progressive income tax and an “inheritance tax on big fortunes, properly safeguarded against evasion, and increasing rapidly in amount with the size of the estate.”

Yep.