Says Krugman :
America’s projected deficits may sound large, yet it would take only a modest tax increase to cover the expected rise in interest payments — and right now American taxes are well below those in most other wealthy countries. The fiscal consequences of the current crisis, in other words, should be manageable.
But that presumes that we’ll be able, as a political matter, to act responsibly. The example of California shows that this is by no means guaranteed. And the political problems that have plagued California for years are now increasingly apparent at a national level.
The ability to implement the liberal model of progressive taxation is weakening, because capital and production are globalized, and easier to move than ever. Meanwhile, governing institutions exist within the framework of the nation, or state, and regions can be played against each other.
Modest tax proposals by Obama have been met with vitriol by the ruling class, most notably Microsoft CEO Steve Balmer :
Ballmer said the world’s largest software company would move some employees offshore if Congress enacts President Barack Obama’s plans to impose higher taxes on U.S. companies’ foreign profits.
“It makes U.S. jobs more expensive,” Ballmer said in an interview. “We’re better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S.”
The United States, like California, is not broke. But the public sector is, and this has traditionally salved the harshness of capitalism. Private capital interests are fully back in control, after a brief moment of disarray last fall. Because of this, I expect Obama's media honeymoon to vanish, as his candidacy was largely an escape valve for the ruling class. Unchecked greed and competitive ruthlessness in the elite, the psychological underpinnings of a capitalistic society, seem poised to present themselves more assertively now that there is a perception systemic crisis has passed. This will mean more forceful attempts to impose austerity onto the backs of workers.
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Traditional Governing Institutions Tottering
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"Out of Money" in California
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