Hey, Remember the Economy?

Justin Sullivan/Getty Images
Justin Sullivan/Getty Images

(The Root) — Ronald Reagan once said, "The best minds are not in government. If any were, business would steal them away." It's a sentiment that is especially true as we watch government declare a war on profits, a siege on success and a crusade against capitalism.


Of course, such frontal assaults on capitalism are not driving the news. Instead, it's President Obama's tryst with gay marriage and Mitt Romney's bullying of a high school student (now that's a headline — but the story is 50 years old and Romney was himself a teenager). After all, isn't that what the unemployed and just about anyone who has struggled through this economy during the past three years wants to talk about? Certainly, those stories are a hell of lot sexier than the fact that our nation is in the red by more than $15.6 trillion (the interest payments alone on the national debt will climb to a record $800 billion a year by the end of this decade), which means your 2-year-old will owe Uncle Sam 50 grand before she gets to preschool.

Don't like that reality? Then, how about digesting the fact that while federal spending has soared to an annual average of 24 percent of gross domestic product, the ranks of the nation's poor have also increased from 39.8 million Americans in 2008 to 46.2 million in 2010.

Still not feeling reality? Then wait, there's always more:

Unless Congress acts, in 2013, the top marginal tax rate will increase to 39.6 percent, the level at which it was before the 2001 and 2003 "Bush" tax cuts. Also, the Medicare tax will increase by 0.9 percent for upper income taxpayers, to a total of 3.8 percent, pursuant to a provision in the health care bill (for the first time, the Medicare tax will apply to capital gains and dividend income as well). And those itemized deductions you love so much will also phase out — an effective tax surcharge for upper income taxpayers ($200,000 or more in income) equal to 1.2 percent. 

In addition, the tax rate on dividends is scheduled to go up from 15 percent to an effective rate of 44.8 percent, while the top capital gains tax rate will increase to 20 percent (from its current 15 percent).

Oh, and don't plan to leave whatever money you have left to your kids — especially if you are a small business owner. The government plans to reinstate the estate tax with a $1 million exemption and 55 percent top tax rate (it's not enough that the government will tax money that has already been taxed at least once, but they take more than half of it).


At some point all of this sinks in and we have to deal with reality.

One reality that must not change about America and the free enterprise economy is that the root of America's success has always sprung out of the hard labor of its entrepreneurs: the men and women who risk it all on a dream. Government doesn't do that; government can't do that. When a job is created by a small business, that is an investment in people in a way that government can't match. We must preserve the conditions that allow small businesses to thrive.


We can no longer trust the politicians to do this by themselves. Each one of us must be prepared to help set the nation's priorities for the immediate future. We must decide what price we're prepared to pay for a strong national defense and better schools; how much are we truly ready to spend for our children's health care and to secure our nation's borders? Which programs are we prepared to cut in order to get our financial house in order, and by how much? While these are difficult questions, they are not either/or choices, but rather complementary opportunities.

The White House and the Congress need to take a timeout from the silliness of politics and get serious about the short-term and long-term conditions in the market that have resulted in slow job creation by American businesses and investors. Rabid efforts to drown the rich in higher taxes while ignoring the overall impact of runaway entitlement spending or the need for a more comprehensive approach to revenue makes accomplishing anything that much harder.


While the solutions necessary to spark a sustainable economic recovery are vital, it appears the will to act on them is lacking.

But then again, maybe we have already decided that the solutions are too hard and the price, whatever it is, is too high.


After all, it's easier to live with distractions such as what Romney did in high school or Obama's "evolution" on gay marriage) than it is to deal with reality.

Michael Steele is the former chairman of the Republican National Committee and served as lieutenant governor of Maryland from 2003 to 2007. He is currently a political analyst for MSNBC.