Mulvaney: Until we agree on some basic facts, addressing the national debt will be tough

The (sadly, only recent) interest in the national debt has prompted some on the left to begin laying the foundation for future tax increases. Even Janet Yellen, who while she served as Fed chair under President Obama couldn’t be bothered with the level of federal deficits, has suggested that it may well be time to have a national debate about our debts.

Of course, the best way to win a debate is to control the language used in it. And, true to form — just as they did with “choice” and “gender affirming care” — the left has been quick to offer self-serving definitions for certain critical terms.

One of those terms is “taxes,” or more specifically, “effective tax rates.”

A recent piece in the New York Times drove that home, and in so doing exposed just how difficult it is going to be to have a meaningful adult conversation about our fiscal situation.

Using language that has become standard for the progressive left, the column opined that “[f]or the first time in the history of the United States, billionaires had a lower effective tax rate than working-class Americans.”

As is so often — and too often — the case in political dialogue in this country, that statement isn’t entirely false. It just isn’t entirely true. Or, better put, it relies on a sort of demagogic manipulation of the language. 

Let me explain. The statement is based on the presumption that the wealthy pay a “smaller percentage of their income in taxes” than do the “working-class,” whatever that latter term means. This is often true, but it has almost nothing to do with income tax rates, or indeed, with how much income tax people actually pay.

And income taxes are a critical part of our deficits. They fund the government.  Everything from the USDA to the FDA to the DoD and the FBI — all of the alphabet soup of Washington — is paid for primarily by individual income taxes. And that spending is where most of our $35 trillion debt has come from. 

The proposition from the left — that the working class pays a higher share of their income in taxes — relies almost entirely on payroll and not income taxes. And although payroll taxes are technically based on income, they have nothing to do with the income tax. This difference is not a semantic word game. Payroll taxes quite literally do not pay for the operation of the government.

Rather, they pay for the entitlement system that includes Social Security and Medicare. This is why, for generations now, both parties have been quick to point out that Social Security is “your money,” not the government’s.

The bottom line is that when you look at income taxes — the funding stream that pays for the federal government — the highest earning percentile of households in this country pays an average tax rate of just under 26 percent. The bottom half pays 3.3 percent.

That is quite different from the left’s talking point.

My point in bringing this up is not to say that there should be no discussion about income tax rates in this country. I am not one of those Republicans who sticks his head in the sand and says that we shouldn’t have any discussion about the debt that includes tax increases. I do believe that raising taxes is a terrible idea, but I also recognize how Washington works. And as much as I subscribe to the truism that Washington has a spending problem, not a revenue problem, I also know that any compromise on deficits will require both spending reductions and tax increases. There is no way Democrats will ever agree to any deal that only decreases spending. And there is also no way that Republicans, as they proved in 2017-2018,  can reduce spending even if given the authority to do so.

The point is that, in order to have such a discussion, we would first need to have some basis for agreeing on the difference between income taxes and “taxes on income,” just as we need to have an understanding that “refundable tax credits” are really just spending and that lower rates of growth in spending are not “cuts.”

The truth is that the top 1 percent pay for almost 46 percent of our federal government’s day-to-day operations. The top 5 percent pay for almost two-thirds. You may think that isn’t a fair share, and that is fine. That is an opinion, and it is fair debate. 

But, as they saying goes, you can have your own opinions, but you cannot have your own facts. And until we can agree on some very basic facts about who pays for what in this country — it is going to be very, very difficult to engage in a meaningful discussion about how to solve our fiscal challenges.

Mick Mulvaney, a former congressman from South Carolina, is a contributor to NewsNation. He served as director of the Office of Management and Budget, acting director of the Consumer Financial Protection Bureau and White House chief of staff under President Donald Trump.