SANDERS: The King’s English and the economic debate

ANALYSIS/OPINION:

Our brilliant English language, already undermined by primary and secondary educators who have abandoned old forms of teaching grammar and elocution, is taking a further beating during this frenetic political season. Words and definitions get tortured out of shape, further confusing already complicated issues of logic and political choice.

Watching the debates, one wanted to shout for a simple definition of terms. According to the New Oxford Dictionary, a “tax” is a “compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services and transactions;” while “revenue” is “a state’s annual income from which public expenses are met.”

Tax and revenue, therefore, although related, are distinct expressions of wealth. Over and over again in recent political discussions about the depth of our economic malaise and the remedies for pulling the economy out of the morass, politicians have purposely or accidentally conflated and confused these two terms. True, taxes produce revenues, and revenues accrue from taxes, but the terms are not synonymous and misusing them only muddies the debate.

The distinction is fundamental to the principal difference between the two presidential candidates and their programs for curing the economy. Perhaps nothing is as critical as how President Obama and Mitt Romney see the issues of taxes and revenues, for out of them cascade layers of policy formulation.

The Obama administration, following economic theory particularly fashionable during the Great Depression under FDR, argues that in periods of economic downturn — when the business cycle dips, producing unemployment and loss of income for individuals and the country as a whole — the government should “prime the pump.” Government should use its access to credit when overall revenues fall to boost consumption by flooding the economy with “cheap money.”

That, they argue, will inspire investor confidence, produce an uptake of risk-taking and regenerate momentum in the private sector. Critics point out such a program did not, in fact, return America to prosperity before the onset of the massive defense mobilization and the expenditures of World War II.

Another school of thought, represented by the Romney-Ryan ticket, argues that only by reducing public expenditures and lowering taxes to stimulate private-sector investment and risk-taking can the economy be healed. They argue — their evidence disputed by some economists, of course — that such measures were effective in both the Reagan administration and during the Clinton years. Reduced government spending and lower taxation inspire business confidence and regenerate profits, they argue. The economy then produces greater total revenue, permitting a reduction of the crippling public debt and, eventually, allowing for the financing of more government social services.

Virtually all the other arguments dividing the two major parties in this election devolve from this fundamental difference, whether the issue be the level of taxes or the need for revenues. Paralleling the basic argument, of course, is the differing concept of what role government should play in the overall direction of the economy. The Obama administration believes government can and should play a major role not only in enhancing the nation’s infrastructure, but also it should take the lead in determining the course of private development. The Romney-Ryan team believes government’s role in the regulation of the economy, but more importantly in determining “winners and losers,” should be minimal.

Energy, the life blood of the economy, has become a primary battleground for these opposing views. The Obama administration has poured billions of dollars in borrowed capital into an attempt to speed up what it considers the inevitable shift away from the current overwhelming dependence on fossil fuels to so-called alternative sources of energy. The Romney-Ryan team believes only the market can decide the future of energy sources and they take encouragement from new technologies that have produced a new abundance of natural gas and oil from shale deposits, with the potential to revolutionize markets.

In reality, none of these options is all that clear cut or neatly defined, of course. The economy, like life itself, is much more complicated. But choices have to be made and, come November, the voice of the people will be heard, for better or for worse, at a crossroads in the political life of the republic perhaps more important than any since World War II.

• Sol Sanders, a veteran international correspondent, writes weekly on the intersection of politics, business and economics. He can be reached at solsanders@cox.net and blogs at www.yeoldecrabb.wordpress.com.

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