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Saturday, October 22, 2016

WASHINGTON — To understand the country’s frustration with politics, we shouldn’t focus primarily on “gridlock” and “polarization.” The larger problem is a disconnect between what the nation’s capital is talking about and what most citizens are worried about.

The issues discussed at kitchen tables and over back fences relate to getting and keeping good jobs, better educating our children, improving living standards (or, these days, keeping them from falling), and holding families together. The issues that fixate Washington are abstractions such as tax reform, deficit reduction, and whether small government is better than big government. Call the distance between the two sets of priorities the Reality Gap.

We got another reminder of this with all the attention showered on the tax reform proposal offered last week by Rep. Dave Camp (R-MI), and the widespread mourning over the fact that Camp’s plan is going nowhere this year.

Because meanness is now so much a part of our discourse, it’s worth saying upfront that Camp, the outgoing chair of the Ways and Means Committee, is a serious, thoughtful and decent politician. He deserves kudos for detailing his choices, even if his plan uses gimmicks to disguise the way in which it would almost certainly increase the deficit in the long run.

Some of Camp’s ideas, such as ending the special-interest break for hedge fund operators, are sensible. Others would make things worse. As the Center on Budget and Policy Priorities showed, his changes to the Child Tax Credit and the Earned Income Tax Credit would eventually have the effect of cutting $2,000 from the annual income of a mother with two children who works full time at the current minimum wage. That’s not what tax reform should be about. And by eliminating the tax deduction for state and local taxes, Camp’s plan punishes states that are spending their own money to solve their own problems.

But it’s Camp’s premise that’s wrong: At a time of rising inequality, we do not need fewer, lower tax brackets. The fastest income growth has been in the top 0.1 percent. This points to the need for new, somewhat higher tax rates at the very top. We need to use tax reform to increase revenue, not cut it. The purpose is not to penalize the rich, but to address the widening gaps in income and in opportunities for mobility. These demand a much more aggressive response from government.

When President Obama releases his budget on Tuesday, it should thus be measured by where it lies along the spectrum defined by the Reality Gap — whether it is investing enough to begin returning us to the days when economic growth was broadly shared.

  • Independent1

    EJ brings out some good points, but I guess my only criticism with his article is that the title says it’s a “D.C. Reality Gap” when in reality, it’s a GOP reality gap. From what I’ve read about Obama’s current agenda and what Obama has constantly been drumming about is exactly what EJ says the American people want D.C. to focus on – creating jobs and improving their lives. Last week, that was almost his entire focus. And the reason I see that Obama has occasionally pushed for tax reform, is to allow the government to better pay for what he sees is needed to be able to do all the things that will make our lives better.

    Even the nonsense budget that Dave Camp created was nothing more than a charade. Camp knew full well that what he was proposing wasn’t what the country needed and wouldn’t go anywhere; his budget was just one more GOP stalling tactic to make it look like the GOP was really thinking about doing something; when in fact, all they were doing was creating one more distraction to waste more time between now and the election; when they hope they can stack Congress with more Republicans.

    Camps budget which continued the flawed GOP principle of tax cuts and austerity and if enacted, would have been just one more GOP nail in the coffin for the U.S. economy. Below is the link to an article which shows that the only time when the U.S. economy really prospers is when taxes are high; and that’s because businesses and rich people hoard their money when taxes are low and only really spend and invest their money when hoarding them may increase their tax bites.

    So not only does President Obama need to propose a budget that reduces our current austerity spending, Congress needs to somehow wake up to reality (fat chance) and pass tax reform that increases taxes, not reduces them; in order to reverse our current Economic Stagpression:

  • elw

    The biggest problem with Washington is it is too full of millionaires and has few people that actually live on what most of us do. How in heavens name can you choose realistic issues that actually affect most Americans when you have no personal or real life experience of what it means not to have so much money in the bank that it is hard to spend it all. Is it possible to understand what it means to have to worry about having enough money for food and the rent, let alone unexpected health needs when for you that is never an issue. If you have never had your car break down and did not have the money to fix it, it is easy to call the person that happen to lazy. My very rich sister once asked me to rent a car to come to one of her parties because she did not want her friend to see my 10 year old car sitting in front of her house. Our Country is in the hands of people who live in a very different world than most of the rest of us, I know those kind of people; some are better than others but I can tell you this they will never do anything that might threaten their living standards. This bigger that Republican/Democrat, it more about money and the amount of it takes to get elected and the simple fact that when you have to work in order to live and eat, it is unlikely that you will ever be able to run for office.