SALON

Friday, Dec 14, 2012 5:00 PM UTC

Tax cuts steal from future

Whether it's the "fiscal cliff" debate or the way we fund education, our selfishness is impeding our future growth

By

Topics: Higher education, Education, Fiscal cliff, Income inequality,

Tax cuts steal from futureFILE - This Nov. 16, 2012 file photo shows President Barack Obama, accompanied by House Speaker John Boehner of Ohio, speaking to reporters in the Roosevelt Room of the White House in Washington. Even if Congress and the White House fail to strike a budget deal by New Year's Day, reality may be a lot less bleak then the scenario that's been spooking employers and investors and slowing the U.S. Economy. The tax increases and spending cuts could be retroactively repealed after Jan. (AP Photo/Carolyn Kaster, File) (Credit: AP)

The central political problem of our time is finding some way to stop the present from stealing from the future. Whether the issue is global warming, cutting taxes or funding higher education, we apparently find it impossible to resist the temptation to spend today what our children will have to pay for (at much increased expense) in some conveniently distant tomorrow.

In each of these cases, we are passing on the costs of our behavior to future generations, in a way that is both economically inefficient and deeply unfair. For example, it would be much cheaper in the long run to take serious steps to cut back on carbon emissions now, but in the long run, as John Maynard Keynes famously observed, “we are all dead.”

So we continue to live ecologically destructive lives because most of the consequences of our irresponsible behavior will be visited on our descendants, who at present have little or no say in the matter.

Similarly, when we vote ourselves tax cuts today we are in effect voting for tax increases — and/or spending cuts — for our children. Combining tax cuts with increased spending is the social equivalent of running up a multi-trillion dollar credit card balance and then mailing the payment notices to the future.

This is why the so-called “fiscal cliff” is a phony metaphor. There is no fiscal cliff — not as long as we can keep putting off the due date for our bills, which we can and will until they’re somebody else’s problem entirely.

Or consider how we have come to fund higher education in this country. I, like so many other members of my generation, went to an excellent public university and an equally excellent public law school for not much more than the opportunity cost of attendance. If I were to attend the same schools today, I would have to pay more than $200,000 in tuition for the privilege.

This helps explain why outstanding student loan debt has grown by a factor of five over the course of the last decade, from around $220 billion to more than one trillion dollars – and it’s rising by a mind-boggling 15 percent per year.

A simple extrapolation of that trend brings to mind two economic aphorisms. The first is Herbert Stein’s observation that “if something cannot go on forever, it will stop.” Equally germane is Michael Hudson’s almost Zen-like insight that “debts that can’t be repaid won’t be.”

Here is one small but telling example of how we’ve gotten into this series of increasingly intractable messes. As recently as 1990, the highest-paid university president in the country was making $275,000, and even the presidents of Harvard and Stanford were making quite a bit less than $200,000 per year (adjusted for inflation, this means they were making around $300,000 in 2012 dollars).

Today, little more than 20 years later, 39 university presidents are making more than $1 million dollars per year, with several making more than or close to double that. In other words, the highest-paid university presidents are making four and five and six times more – in constant, inflation-adjusted dollars — than they were in 1990. And more than 300 university presidents make more today than the highest-paid university president made in 1990. Meanwhile, median household income in America remains almost exactly what it was then.

Now, why should academics be paid salaries that are similar in real dollars to those earned – or at any rate paid to – the chief executive officers of Fortune 500 companies a generation ago? The answer, of course, is that CEOs are now paid 5 and 10 and 20 times more than they were then, so people who go into what is still thought of as public service are far less shy about demanding — and getting — what until recently would have been thought of as obscene compensation packages. (See also this story regarding the enormous debts higher education is racking up and passing on to students as it pursues an increasingly absurd amenities arms race.)

That all of this is being paid for in significant part by educational loans our children will not be able to afford to pay back is a perfect example of the main problem of our age.

Paul Campos is a professor of law at the University of Colorado at Boulder. More Paul Campos.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 6 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations