The New Republic

Oops. Intended to stop the italics after "moral."

- timteeter

December 11, 2010 at 10:13am

Robert Powell: "dsimon--"we" haven't been through this unless you read my reply to your comment on Chait's "Rich Man, Poor Man" post of Dec8." I hadn't seen your prior response before posting here. But I don't think it refutes my point that this debate is not about wanting to "punish the rich" more than help the poor as much as it is about fighting for good policy. The response doesn't answer my assertion most people did not consider the Clinton tax rates to be "punishing"-ly high, and that's all we're talking about here. It doesn't answer my point that regardless of the degree of government spending, one still has to figure out a fair apportionment of the cost of running government, so just calling for lower spending does not resolve the tax rate debate. As for your criticism that Republicans have been "cut out of the process," I think the intransigence of just about all members of that party shows that it's hard to compromise with a side that just about always refuses to do so. Again, I think the claim this is about wanting to punish the rich rather than help the poor is refuted by just looking at the deal. To repeat: as a pure policy matter, is the package better or worse without the high income tax cuts? What is the justification for the high income tax cuts? I still haven't heard any real justification; it seems that Republicans are insisting on them just because, well, they're insisting on them. And if there's no good justification (I have yet to hear one, and there's wide agreement that they're not very stimulative and have a significant adverse impact on the deficit), isn't it simply good policy to fight for the better package? So this isn't about wanting to hurt the rich more than help the poor; it's about not giving in to a demand that seems to make no sense. Again, I can see the argument about whether it's better to give in or not (giving in gets a lot of good stuff when the other side seems irrationally intransigent but allows the opposition to repeatedly extract concessions and enact bad policy for no good reason, while holding the line may result in a short-term loss but serves notice that unjustified demands will not be catered to). But neither of those options has anything to do with punishing the rich, and I think that assertion should not be made without real evidence to support it. I think Republicans are wrong, but I don't think they're involved in some nefarious plan to help the wealthy and screw the poor. I think somehow they believe what they're doing is best for the nation, even though in this particular case I can't figure out their reasoning. Most people think they have good motives for doing what they do, even if we disagree with them. And I think one should be wary about attributing bad motives when good motives provide a perfectly plausible explanation.

- dsimon

December 11, 2010 at 10:45am

Next time you find a case where you can "figure out their reasoning," do let us know. "Reason" in the sense of rational thought does not appear to me to have anything whatsoever to do with Republicanism, conservatism, or conservative/libertarianism. And what good motive do you impute to them?

- roidubouloi

December 11, 2010 at 1:07pm

Coming in late as I have I have nonetheless enjoyed reading through the above discussion of tax progressiveness/regressiveness. I don't have anything to add that others haven't already stated more clearly and thoughtfully than I could manage. I just want to say one thing directed to anyone who might read this who falls in timteeter's category of conservative intellectual who has a moral objections to redistributive tax systems: nevermind the extreme slipperiness, in a moral/ethical sense, of the concept of "earnings"--like, do Wall Street gamesters truly earn their millions?--the practical result of a non-redistributive tax system, at least in our imperfect, corruptible society, is a nation that looks like a banana republic with crumbling infrastructure, an uneducated, unhealthy populace, dangerous cities and a wealthy minority who live their lives behind high walls. Every time I come home to America for a visit from Australia, I walk out into the street from the airport and drive to wherever I'm going and looking at the scenery around me I get a similar feeling to what I've had looking out the window in Guatemala or Indonesia or Namibia. The poverty, decay and decrepitude on view is not as extreme as in those places, but it's a lot more extreme than here in Oz.

- AaronW

December 11, 2010 at 2:22pm

I can hear someone say, "What about aboriginal Australians?" And, yes, aboriginals have been excluded from the wealth pool and in some remote areas live in Third-World poverty, but this is a problem with deep historical, cultural and geographical (as in it's hard to get services to people when they live 200 miles from the nearest paved road) factors and should not detract from the observation that generally speaking Aus does netter than the USA at limiting wealth inequality and what's more that this difference shows just walking down the street.

- AaronW

December 11, 2010 at 5:28pm

I think that the focus is suddenly going to be on deficits due to the flurry of analysis over the reaction of the bond markets to this deal on top of the Fed's QE2. Which should put the spotlight back on the GOP's obsession with extending the millionaire tax cut. The GOP 'argument' has been to conflate the high earners with small business owners. Surely there is/was a way to segregate REAL small business owners from the rest of the high earners. Also, considering the almost $2TRILLION in business cash reserves inside America (not counting the overseas subsidiaries' piles of retained profits), with nowhere to invest, maybe the whole dialog needs to pivot. Probably not to social justice, but to actually dispelling the MYTH that tax rates are inhibiting job creation. Neither party seems to be able to pivot or focus - is that why Bill Clinton took over at the presser on Friday? New WH press secretary?

- K2K

December 11, 2010 at 6:10pm

further to AaronW's point, this reporting by Elizabeth Dwoskin should have been front page of the NYT, not buried in an online blog: http://opinionator.blogs.nytimes.com/2010/12/08/the-worst-bathroom-in-new-york/?hp "...I crisscrossed the Bronx in search of the city’s most distressed buildings and most derelict landlords. Let’s just say this was a hugely depressing assignment. ... ...a pipe had burst last January, gushing enough scalding water to turn the bathroom into a mold-filled, 24-hour steam room. Water damage had wrecked the floors. They were so rotted that you could dip your arm up to your elbow into the floorboard below the toilet. Meanwhile, huge chunks of the ceiling were missing, and you could see into the rafters above. I thought about Justin getting ready for school in the mornings. How did he take a shower? That bathroom was the worst I had ever seen in New York. It looked like a hurricane had hit it (I’m from Florida; I’ve seen a water-logged bathroom after a hurricane, and Lorillard was just as bad). And after I saw it, I was really shaken. My mind was racing: I started to fantasize about taking Mayor Bloomberg to visit that bathroom, and forcing him to explain to me how this could have happened. It felt unacceptable — fundamentally, jarringly so. ..." [K2K adds, One can only hope that someone FORCED Mayor Bloomberg, and former HUD secretary, now NY AG and about to become Governor Andrew Cuomo, to at least read this. This is not the South Bronx. This is the aftermath of the housing meltdown, where HUD housing vouchers were supposed to be an imporvement over public housing]

- K2K

December 11, 2010 at 6:26pm

roid: Correct that when all taxes are considered, our system as a whole much flatter than the federal income tax would suggest. There are charts at http://economix.blogs.nytimes.com/2009/04/13/just-how-progressive-is-the-tax-system/ "And what good motive do you impute to them?" I admit the recent tax debate makes this a tough one, since I haven't seen any evidence to support their position and they haven't really offered any. But I think they really believe, despite all the evidence, that trickle-down works. It's the same thrall to ideology that has people saying that "government-run" health care is inferior despite the actual experiences of our peer countries to the contrary, or Rand Paul's adherence to the libertarian argument that the free market can take care of discrimination despite decades of evidence to the contrary. We all have a tendency to accept data that enforces our beliefs and reject those that don't. I just haven't seen it to this degree before. When I was discussing health care with a conservative who claimed "we have the best health care in the world," I said our peer countries get as good or better results at far lower cost; he said he didn't believe that. When I responded that I had just read a book on the subject with studies showing that we trail in just about every metric one can name (except cost), he again said he didn't believe it. I don't think he wants us to have a bad health care system, or one that works only for those who can afford it; I think his worldview refuses to consider facts that would conflict with his ideology. I know an encounter with one person does not necessarily represent the inner workings of those I disagree with. But it does seem to me that when ideology conflicts with facts, some people are more willing to throw out the facts than adjust their ideology. Both sides should be wary of this practice, but it seems to me to be more predominantly a right-wing phenomenon these days. And it's the best explanation I can come up with for their adamant refusal to let the upper income tax cuts expire. There is a substantial minority (35%) who favor extending the upper income tax cuts, far more than the 2% who would actually benefit. So I don't think it's all self-interest, or that most of them believe in protecting the wealthy at the expense of the overall economy; I think it's more likely that many if not most of them believe the supply side mantras and are immune to evidence to the contrary. So again, I think they're not evil, just horribly mistaken. And for what it's worth, I agree wholeheartedly with timteeter's post.

- dsimon

December 11, 2010 at 6:29pm

Eloquent, dsimon. It gives me pause, but I cannot say that I am convinced that they are honest but deluded. True, they believe all sorts of delusional stuff about matters far more scientifically certain than macroeconomics -- that natural selection and anthropogenic climate change are merely speculation. However, when one can switch from descrying deficits and declaring them the enemy of economic recovery to blithely dismissing deficits that fund tax cuts for the upper sliver of the wealthy, while also maintaining that raising tax cuts in a recession is a bad idea (regardless of whose taxes) thereby acknowledging that slack demand has more than a little to do with recession, while objecting to unemployment relief and insisting that it be budget neutral, this seems to me a level of incoherence that is almost impossible to reconcile with honest delusion. If your delusions happen to shift just as necessary to justify the most money on the pockets of the wealthy whom you work for and a screwing for everyone else, that is a bit too convenient. People back the Republican line for a variety of reasons. No doubt some are persuaded by ideological predilection to believe the objective nonsense spun by professional Republican pols and talking heads. They are but dupes. Doesn't say anything about the honesty of the dupers. If lies didn't work, people wouldn't tell them.

- roidubouloi

December 11, 2010 at 9:03pm

Roid, I have been hearing more of the moral argument from the GOP media front. The "Death Tax" is not just a bad policy it is simply immoral. According to the editorial page of the WSJ, it is a world in which millions of people are simply intent on "punishing the successful." It is an act of courage and bravery to stand up for them. I recall Norquist once comparing the plight of the rich to plight of homosexuals fighting for their rights. I don't know if they can grasp that it is not a desire to subsidize laziness or a desire to put the rich in the guillotine, but instead a concern that too much income inequality leads to a major drag on economic growth and that if the income structure is what it is (and constantly getting worse), there is no way to have a responsible budget without a heavily progressive tax. Look at the way they talk of the "Death Tax" as if any estate tax is inherently immoral. Of course, I don't see how if I invented something and made 20 million dollars I should pay at the highest marginal rate on most of that, while someone who did nothing, and his grand-uncle dies and leaves them 20 million in income should get that tax free. I fail to see the morality in this. And once again, here is what you have said. The failure of a Democratic narrative to come up with an alternative to an idiotic argument about the "death tax." In PA, Pat Toomey campaigned on the "death tax." Seniors voted for him by 20 points and gave him is victory. It was interesting that 70 percent of them according to an exit poll thought that the death tax applied to their estates, rather than 1/4 of 1 percent. Where was the pushback nationally on this issue?

- MikeB.

December 12, 2010 at 8:44am

Republicans have some wacky ideas. So do Democrats. It's hard to see how Repubs can deny evolution and the fact that climate change is at least somewhat exaggerated by human activities. Personally I find it hard to reconcile their anti-state, pro-individual liberty principles with the giant expansion of the national security apparat, and moreover their professed loathing of Big Government with their track record of making it bigger at every opportunity. On the other hand, their resistance to higher taxes is entirely congruent with the principle that's been around at least since the Enlightenment that private property rights are the foundation for all other individual rights, and increasing taxes during a shaky recovery in order to fund a level of government that nearly every serious observer agrees is excessively large, wasteful, and unaccountable is a nonsense. Then we have the Democrats, who profess to be the champion of The Little Guy as they increasingly become the party of government bureaucrats, trial lawyers, movie stars, hedge fund managers and university professors, now outraged because the new nearly $900 billion stimulus package allows $114 billion in temporary tax cuts to their hated class enemies with the rest going mostly to "little guys". This from the element of the party that's been bitching non-stop for months about insufficient stimulus. Go figure.

- Robert Powell

December 12, 2010 at 11:07am

Private property rights have never been understood to mean freedom from taxation or the duty to contribute toward public goods. No serious observer things the our government is large, wasteful, or unaccountable by amounts that are material relative to the tax holidays demanded by the rich. This is an ideological-driven fiction -- the same old wacko conservative/libertarinut canard about balancing the budget by "cutting waste, fraud, and abuse." We should of course make the effort to be rid of all three, but the notion that they amount to a hill of beans compared to the deficits we are running for the benefit of the wealthiest is absurd, by at least an order of magnitude of 10. As was the case with the first stimulus, far too much of this package consists of wasteful non-stimulative tax cuts. That's why the first stimulus was insufficient, that's why the second is insufficient. Every time the administration tries to do the right thing for the economy, it first has to pay ransom to the Republican party. Then the Republicans, who have no shame at all, complain -- again -- about running about the deficits that they created and keep increasing with even more useless crap.

- roidubouloi

December 12, 2010 at 2:07pm

roi-- You're a clever guy, but it seems to me that lately you've been resorting to gimmicky straw-man and bad-math arguments. No one is suggesting that rich people should be entitled to "freedom from taxation". But there is a legitimate moral objection to the idea that the first, last, and often only response to bad fiscal management by government should be to raise taxes on the top bracket. Everyone benefits from government, the rich generally more than most same as it ever was. But the suggestion that "the national income" as it has increased exponentially over the last few decades has done so as a function of brilliant government policies and that current politicians should therefore be rewarded with higher taxes on the principle authors of this growth is a tough sell even to people like me who aren't rich. In terms of math, the current stimulu/ tax deal "spends" $114 billion by allowing people making over $250k to keep 4.5% more of their money for the next two years (it spends $736 billion on benefits for people in the bottom brackets). We may usefully compare this $114 billion over two years to for example (over the same time), the between $20 and $60 billion distributed by the USDA in farm subsidies (amounts depending on farm prices); the $40 billion spent on construction activities on overseas bases; the $80 billion attributable to Medicare/Medicaid fraud and abuse (although I grant it will be tough to recapture)--and that's not even getting into the effect on long-term deficit projections of telling people in their 30's that they should plan on retiring at 69 or 70 (which should be compared with the 80+ the retirement age would be if indexed to life expectancy gains since 1935), and other entitlements reforms. Not small potatoes. And let's be clear about the charming conceit that Social Security is "paid for by recipients". You know better. This is now a straightforward transfer program between current workers and people who are already retired. For a variety of reasons, much more is taken out than was put in and this gap will continue to accelerate as the ratio of workers to retired plummets. It' is beyond silly to wax apoplectic about the effects on the long-term deficit of $114 billion over two years with realities like that. The nation needs fundamental tax and entitlements reform to re-establish a trajectory to a secure economic future, and it's not going to get it if both Republicans and Democrats resort to the worst kinds of demonization and demagoguery as is the current fashion on both sides of the aisle.

- Robert Powell

December 12, 2010 at 3:36pm

Of course social security is paid for by recipients. Workers pay in out of earned income and the benefits are paid out to other workers. I could go into a long disquisition about exactly why pay-go is the only rational policy for a national pension retirement income system, but it would take too much time right now. The mere fact that none of this is funded by taxes on unearned income is sufficient to answer your point. That you don't get your own dollar bill back is irrelevant. That there is no investment fund is also irrelevant. The money is invested in the entire US economy, or would have been if we had been using the surpluses to reduce debt instead of sending social security surpluses to line the pockets of the wealthiest. The social security system was in surplus for a long time and is barely out of balance right now. Some little tweaks, taxing unearned income and means-testing or even taxing benefits would suffice to put it on a sound path for at least the next 100 years. The issues for Medicare are completely different, but that has not been funded by income taxes either. You misdescribe Obama's deal. Most of it is tax cuts. Those are poor stimulus even when they are middle class income tax cuts, and certainly as far as estate tax cuts. The business investment incentives are a waste in the current environment. With Republican cooperation, the whole thing might have been a really big stimulus given the size of the addition to the deficit, nearly $900 billion. The Republicans would not only not consider stimulus instead of tax cuts but insisted on making things worse. That Obama extracted extension of unemployment benefits is irrelevant. I guarantee you, that would have happened anyway. Yes, even with "bad fiscal management," taxes should cover the budget in normal times, meaning no structural deficit. The alternative of borrowing to fund bad fiscal management is much worse. Taxes are not a reward to politicians, and the starve the beast strategy plainly doesn't work and has just ended up as a huge distraction from the actual work of eliminating such waste as exists. If the rich were forced to devote their political energies to cutting waste in order to get a cut in their taxes, instead of spending it agitating for unfunded tax cuts, we would probably clean up the messes in a heartbeat. There is simply no policy angle from which underfunding government makes sense. None, with the sole exception of cyclical deficits meant to counter recession. And that money should be spent, not go to tax cuts. The structural deficits are and will be a disaster and expecting to fix it through government efficiency first is a fantasy.

- roidubouloi

December 12, 2010 at 10:46pm

Points of agreement: --"pay-go" is a fine and proven idea. No need to waste time preaching to the choir. Means testing, taxing benefits, and also important in my view--telling people in their 30's that they'll need to plan on retiring at 70--would put SSI on a permanently sustainable path. But let's be clear--current and projected recipients are taking far more in benefits than they put in, and minus the above reforms we are on a glide-path to economy-killing payroll tax increases on the shrinking workers factor in the workers:recipients ratio. --Obama's deal is mostly tax cuts. That's okay, because inefficient stimulus is preferable to none at all at this point, and there's no way this or the next Congress was going to pass the kind of stimulus you would have preferred. I'm particularly interested in those cuts going to the middle class and workers, which are generally agreed to be the most stimulative as well as, along with the UI extension, the most humane. The targeted ones to favored industries are more ideologically difficult, but at this time as Mike Bloomberg has pointed out in support of the deal, the main thing now is restoring confidence. Tax cuts do that, and do it in spades if combined with the sort of medium-to-long term reforms to entitlements, defense, and other spending as may be done after January. --It would be a great idea to formulate policy that would mobilize "the rich...to devote their political energies to cutting waste in order to get a cut in taxes". I think such cuts in wasteful spending might be readily available in the next Congress as the two-year extension winds down, and negotions center on dealing with the medium-to-long term deficit issues as outlined by the various debt commissions--including tax reform. It seems to me self-evident that taxes are a reward, in fact life's blood, to politicians in real-world terms. They all use the revenues channeled through Washington to buy support, and the Republicans have even figured out how to buy votes by by selectively opposing them in addition. I am not suggesting underfunding government/"starve the beast" as a good idea. But as part of a negotiation that includes limiting some of our most egregious structural spending waste, some tax cuts need not lead to underfunding.

- Robert Powell

December 13, 2010 at 7:25am

The social security system is only very slightly out of balance in the long term. It requires only minor tweaks to get it right. Means-testing and taxing unearned income the same as earned income would suffice. The problem with upping the retirement age is that it misconceives the problem. You do that if you are short of labor relative to total mouths to feed. We are not short of labor. We cannot employ the labor supply we have. Hence, your proposed solution, albeit one that a lot of people think makes sense because they don't understand the difference between the macro-economy and their household budget, makes matters worse. It is possible that in the future we will be short labor, depending on labor productivity growth which is not predictable. If it should turn out that we have a labor shortage THEN we can increase the retirement age. Tax cuts that put us in debt do not restore confidence. Just the reverse. They stress the capital markets and put money in the hands of the wrong people. The idea you are now putting forth is that, if the Republicans make good policy impossible, we should be happy with whatever crumbs they will allow us AND we certainly should not be complaining that their wacko flat-earth economic theories and intransigence make good policy impossible. This is your idea of political realism. I cannot make sense out of these claims. With all the discussion of entitlement reform and tax reform, it is useful to keep in mind the real numbers. In 2010, we have a Federal budget of $3.55 trillion. Of that, $1.05 trillion is for social security and medicare, the "middle class entitlements." $2.5 trillion is everything else, including something north of $0.5 trillion of poverty related spending made necessary by the fact that income in this country is hugely skewed to the richest and there do not exist enough jobs that pay a living wage. Libertarians and conservatives like to blame these macro facts of poverty and the labor market on those who don't earn enough. That is objectively ridiculous. They cannot summon decent jobs into existence. We as a nation think that this huge skewness "incentivizes" work and is good for the economy. Thus, we ask a certain portion of the nation's workers to be poor to make the system run. Indeed, when labor markets get tight, the Fed raises interest rates to increase unemployment and prevent wage growth. Humanely, the Federal government collects some of the income made possible by this skewed system (or so libertarians and conservatives claim) and recycle it to alleviate the effects of poverty, paying the poor after the fact rather than paying them living wages for work. I think it is a hideous and unnecessary system. But, as long as we have it, listening to the wealthiest who benefit the most from a system of enforced cheap labor complain about giving a piece of it back to those at the bottom is nauseating. To me, it brings to mind nothing so much as plutocratic Rome, with thousands of serfs laboring to support a tiny minority of patricians wealthy beyond imagination. Withal, we collect $1.04 trillion of payroll and other regressive taxes, excise and ad valorem. We spend $1.15 on middle class entitlements. That is a shortage of $110 billion. It is not presently the case that middle class entitlements are a major cause of the deficit as regressive taxation just about covers the middle class entitlements. Longer term, social security has a modest deficit that can be readily corrected as described above. Medicare is potentially a huge problem. ACA was the first step to fixing it. If the Republicans had been willing to do sensible things rather than obstruct, it could have gone much further to solving the problem, including eliminating Medicare altogether by making it part of a unified system for which everyone pays, regressively, and those at the bottom get a subsidy so they can afford it. This would put us on the same page as every other advanced industrial economy. But that will take some time as we have Republicans, conservatives, and libertarians who think we are living in the middle ages. Net of the middle class entitlements, we have a Federal budget of $2.5 trillion. We collect $1.4 trillion of income and business taxes. That is a deficit of $1.1 trillion. So, the Republican refusal to finance the operating budget, including some poverty relief, contributes $1.1 trillion to the $1.2 trillion deficit. The entitlements that you complain about currently contribute $0.1 trillion to the deficit. Which is the problem, do you think? Back here on earth, neither entitlement reform, tax reform, nor "cutting waste" is going to solve the current deficit problem. That can only be done by raising rates to a level sufficient to fund the government. There is no policy justification for failing to do so, even if we have some short-term tax relief to fight recession. Entitlements are a problem, but not our current problem. The tax structure is messy and expensive, but tax reform is, almost by definition, revenue neutral. Hence, it is not the answer to the current problem either. While it is realistic to suppose that something on the order of 10% of the federal budget is "waste, fraud, and abuse," getting rid of that is a decades long project, particularly since a lot of that is politically protected (base closings anyone?). That is also not relevant to our current problem. Our current problem is that income tax rates are too low to fund the government we have, and appear to want. Paying too little in taxes now for our current consumption and asking the future to pay it for us is reckless and irresponsible. It is also not the answer to the problem. It makes matters worse. Slogans such as "letting the rich keep more of their money because the Enlightenment said we should" are just that, slogans. They are not addressed to any real problem or any real solution here on earth. Given the fact that income distribution has become vastly more skewed to the wealthy in the last 30 years, due in no small measure to government policies of various kinds, it makes perfect sense to levy additional taxes on the income of the upper quintile to balance our operating budget. That is not "punishing the rich" who would still end up with a higher net income share than they had 30 years ago. The rich want all the money in the country and to see everyone but themselves reduced to wage slavery so that they can be über rich. Even Warren Buffet says we should stop listening to them as they will always claim that the best thing we can do is to make them even richer. You are a smart and articulate fellow, Robert. I really don't understand why you accept their self-serving shtick. It is "truthy" slogans and such. It bears no relationship to economic reality.

- roidubouloi

December 13, 2010 at 9:33am

"Net of the middle class entitlements, we have a Federal budget of $2.5 trillion. We collect $1.4 trillion of income and business taxes. That is a deficit of $1.1 trillion". Right. That would suggest that we have three choices: raise taxes; reduce spending; some combination of the two. I'm not prepared to automatically privilege the former over the latter in the inevitable third option solution. The wild card of course is that unlike normal book-keeping, the federal balance sheet doesn't show assets, only income and spending.

- Robert Powell

December 13, 2010 at 12:37pm

The devastatingly simple point that you are unable to abide is that, if you deem spending too high, it is not a solution to keep the spending and cut your revenues so that you are simply borrowing the money to spend rather than raising it from taxes -- unless you believe, as no sane person should, the hogwash supply-side claims that growth will thereby by unleashed. We now have abundant evidence that that is economic nonsense. By all means, let's cut spending, but that is not easy to do because one group of people loves farm subsidies but hates medicaid and another hates defense spending but loves support for education. So, go for it. Shouldn't take more than half a lifetime or so to get decisive results. But while we are waiting for the spending cuts to be figured out and take hold, it still makes absolutely no sense, is reckless and irresponsible, to fail to fund the government we have with adequate tax revenues. Indeed, it makes it harder to cut the spending as people don't think that the spending is costing them anything. The Federal share of output will be the same either way as that is a consequence of the spending decision, not the financing decision. But one way -- running structural deficits and borrowing -- we destabilize our economy. The other way, we stabilize it. You see, tax cuts simply are not the solution to every problem. Indeed, they are not the solution to any problem. They are the reward for good management. But we need to have the good management before we give ourselves the reward. Dinner before dessert. Not the other way around.

- roidubouloi

December 13, 2010 at 3:11pm

"Obama's deal is mostly tax cuts. That's okay, because inefficient stimulus is preferable to none at all at this point" Not necessarily. There comes a point where inefficient stimulus isn't worth the long-term cost. Krugman thinks this deal has reached that point. http://www.nytimes.com/2010/12/13/opinion/13krugman.html One can disagree with his analysis, but it has nothing to do with class envy. "Then we have the Democrats, who profess to be the champion of The Little Guy as they increasingly become the party of government bureaucrats, trial lawyers, movie stars, hedge fund managers and university professors, now outraged because the new nearly $900 billion stimulus package allows $114 billion in temporary tax cuts to their hated class enemies with the rest going mostly to 'little guys'. This from the element of the party that's been bitching non-stop for months about insufficient stimulus." It's not about "hated class enemies"--see above. Also, how can they be the party of hedge fund managers if they object to how the tax deal benefits those very people? But I agree with roid's "smart and articulate" evaluation of the comments, regardless. roi: "Eloquent, dsimon." If I could match your eloquence, I'd be a far better writer. "this seems to me a level of incoherence that is almost impossible to reconcile with honest delusion." I agree it is a tremendous degree of incoherence, which is why I'm finding it increasingly difficult to continue my practice of not attributing bad motives to many of these people. Perhaps I'm naive, but it's still hard for me to think that many people act out of actual malice or disregard to others. I may be wrong. As for coherence, I wrote recently to a friend of mine that those who oppose the health care reforms really ought to have no choice but to oppose Medicare to an even greater degree. If these people are serious about reducing federal expenditures and growth and are philosophically opposed to a "government takeover" of health care, then the Obama reforms don't hold a candle to Medicare which is not only far more expensive but also far more "socialist" since it's single-payer (while the Obama reforms actually set up a market where people can shop for policies). Unfortunately, consistency doesn't seem to earn many points in politics, and essential incoherence doesn't garner any penalty. Perhaps they've become so accustomed to their own incoherence that they don't even realize it anymore.

- dsimon

December 13, 2010 at 4:08pm

In the fond hope that we can avoid wasting each others time in the future debating in circular fashion around a point on which we basically agree: I am not opposed to increasing revenues as a part of the solution to our deficit/debt problem. What I have said and will say forever is that in the real world of politics you are not going to get anywhere by relying only on increasing taxes on the top bracket. If that's your opening gambit, the game is over after one move--stalemate. Cuts will be damned hard, as will revenue enhancements. That's why a genuine solution is only going to be possible as part of a Grand Bargain in which everyone has to sacrifice a sacred cow or two. Such a negotiation is going to require common recognition of some basic realities: adding 4.5% to the top bracket isn't going to solve our problems; closing a hundred unnecessary foreign bases won't either; neither will comprehensive tax reform, eliminating farm subsidies, cleaning up fraud in Medicare/Medicaid, or cutting our Homeland Security boondoggle. But all together they probably would. If Krugman is right we will get some additional incentive to do so, but first let's get Obama re-elected, because in my view he's the only national figure available who might be able to pull such a deal together. In the latter regard, getting the current tax deal through is a vital step.

- Robert Powell

December 14, 2010 at 6:48am

Sorry, but you are simply wrong in your understanding of our ability to close the budget deficit with reasonable income tax rates. The Bush tax cuts created the structural deficit. Eliminating them would eliminate most of the structural deficit (not all because the surpluses were at the time being generated in large part by the regressive, entitlement related taxes). What is fanciful is the notion that this problem will be solved by some grand deal. The requirement that everything be solved in order for anything to be solved puts a solution off for a minimum of 100 years. The deficit commission's approach to this so-called bargain is to cut benefits AND reduce taxes for the wealthiest, making the system more regressive. That was the first move of your grand game. That game is now over. Not stalemate. The players just up and walked out of the room.

- roidubouloi

December 14, 2010 at 9:45am

Note as well that Clinton did not require a grand bargain of everything in order to raise taxes from their still ruinous levels under Bush 1. It does take the right political climate and the Democrats have to create that climate in order to be able to do what we know is the right thing for the country. Difficult as it is, creating the necessary political climate is, by at least two orders of magnitude, an easier path than the grand bargain of everything in the course of which Republicans do nothing by try to make the tax system more regressive.

- roidubouloi

December 14, 2010 at 9:47am

Robert, I agree that raising taxes only on the wealthy will not solve our long term fiscal problems--at least that's my conclusion from what I've read, that the numbers simply don't work (though roi may disagree, and I may be wrong). And I agree with many of your other comments. But I don't think that just because one policy change won't solve the problem is an excuse for not doing it. If Republicans had some plausible explanation as to why the high-end tax cuts could be preserved, I'd be more amenable to the a deal even if I disagreed with them. But I still haven't heard a plausible explanation. So why put off something which will help deal with the problem when even its proponents can't really defend keeping things the way they are? Yes, everyone will have to give up some sacred cows. But if Republicans won't even give up this one--for which they have offered really no justification--how can any serious bargain be reached? If they stand by their mantra of no tax hikes at any time for anybody, it will be hard to get anywhere for at least two more years. (And at least some of them consider closing loopholes and eliminating subsidies to be tax hikes, since they do in fact increase some people's tax bills.) If they won't give up their ideological stance here, when will they ever? I don't see the upper income tax issue as an opening gambit for bargaining. I see it as a statement that if you can't justify it, then it shouldn't be a part of the bargaining process in the first place. Otherwise, negotiators open themselves up to all sorts of absurd bargaining positions just because the other side insists on intransigence.

- dsimon

December 14, 2010 at 1:32pm

I think a deal may be possible--not a "fix everything" deal, but a deal that would raise enough revenue and cut enough spending to stabilize the situation and allow us to grow our way out of the hole. Time will tell who's correct.

- Robert Powell

December 14, 2010 at 6:34pm