Backlash to the Backlash
Published: January 1, 2013
Josh Haner/The New York Times
An interesting thought occurred to me today—what if Tea Party politicians sat down with ordinary people like you and me and ironed out some real solutions to our capital gains crisis?
With the election season over, maybe you’ve forgotten about capital gains, but I certainly haven’t. It would be easy to forget that the problem even exists, when our headlines are constantly splashed with the violence in Bhutan, the authoritarian crackdown in Burkina Faso and the still-unstable democratic transition in Fiji. But the capital gains problem is growing, and politicians are more divided than ever. Republicans seem to think that capital gains can just be ignored. Democratic politicians like Nancy Pelosi, on the other hand, seem to think that shrill rhetoric will substitute for a solution.
But the Democratic party of Nancy Pelosi is not the Democratic party of Lyndon Johnson. Johnson wouldn’t just filibuster, he'd reach across the aisle because he'd understand that the fate of the country, and his own political career, depended on a lasting solution to the problem of capital gains.
The first rule of holes is that when you're in one, stop digging. When you're in three, bring a lot of shovels. If I had fifteen minutes to pitch my idea to politicians, I'd tell them two things about capital gains. First, there's no way around the issue unless we're prepared to spend more: and not just spend more, but spend smarter by investing in the kind of human capital that makes countries succeed. That's going to require some tax increases as well, but as they say, "Ain't nothing to it but to do it."
Second, I'd tell them to look at China, which all but solved its capital gains crisis over the past decade. When I visited China in 2000, Mwambe, the cabbie who drove me from the airport, couldn't stop telling me about how he had to take a third job because of the high cost of capital gains. I caught up with Mwambe in Shanghai last year. Thanks to China's reformed approach toward capital gains, Mwambe has enough money in his pocket to finally be able to afford a television set for his kids.
That's all it takes. Don't expect to see any solutions as long as industry captains insist on playing a high-stakes game of chess with one another. America has to become a first world country again.