JONATHAN CHAIT AUGUST 5, 2011
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Yesterday, David Frum posed a question to conservatives:
My conservative friends argue that the policies of Barack Obama are responsible for the horrifying length and depth of the economic crisis.
Question: Which policies?
Obama’s only tax increases – those contained in the Affordable Care Act – do not go into effect until 2014. Personal income tax rates and corporate tax rates are no higher today than they have been for the past decade. The payroll tax has actually been cut by 2 points. Total federal tax collections have dropped by 4 points of GDP since 2007, from 18+% to 14+%, the lowest rate since the Truman administration. ...
We have not seen a major surge in federal regulation, at least by the usual rough metrics: the page count of the Federal Register has risen by less than 5% since George W. Bush’s last year in office. Trade remains as free as it was a decade ago.
While the Affordable Care Act itself will eventually have major economic consequences, most of its provisions remain only impending.
Energy prices have surged, but that’s hardly a response to administration policies.
And here we have Washington Post conservative blogger Jennifer Rubin offering a perfect sample of the thinking he describes. In short, yes, her theory is that the future expiration of the Bush tax cuts and the not-yet-implemented Affordable Care Act have caused a worldwide economic crisis:
Obama’s entirely false assessment of the economy had real policy implications. Recall that Treasury Secretary Tim Geithner a year ago told us that the economy could “withstand” tax hikes. And so he doggedly urged tax increases, rather than cuts. And as we saw in Obama’s Rose Garden speech this week, his anemic program of items like an infrastructure bank and patent reform shows no sign that he connects his uber-regulatory schemes, Obamcare and the threat of ever-higher taxes to the faltering economy.
Rubin is arguing that Obama's overly rosy view had "consequences," as reflected in Geithner's declaration that the economy could withstand tax hikes. He was arguing that the economy could withstand tax hikes on income over $250,000, but the administration gave in on that demand and extended all those tax cuts. So that's her key causal factor -- the administration arguing for a tax increase that it did not actually implement.
7 comments
David Frum is coming with us on the ark. Jennifer Rubin can stay behind, screeching about the evils of an administration that won't just roll over and shred its economic legitimacy by embracing supply side economics. Did you see the jobs report or stock market plunge? It's going to be a nasty flood. The kind that only a large stimulus has a decent chance of getting us out of. I mean, Republicans are lucky they didn't shut down SS to keep taxes on the rich low. But when they have town halls about a balanced budget amendment and people scream about jobs programs, it's going to be a doozy.
- chaitless
August 5, 2011 at 9:02am
I'm beginning to like David Frumm. When someone associated with the Republican brand is supportive of Democrat principles, they always seem reasonable. I used to feel that way about McCain. But when someone, like the President, adopts Rebublican policies, it always seems like they were bludgeoned into it. I'm with Chaitless on what he said and I'm waiting for the town halls.
- Nusholtz
August 5, 2011 at 10:09am
The job-creating rich are very nervous people, Jonathan. The mere hint of tax increases on the rich, even if there is no implementation, can have huge consequences. Look what happened yesterday on Wall Street. So imagine the converse of this, and I am sure that the genius J-Ru will agree. If Barack Obama had promised a fifty percent cut in taxes for the wealthy immediately upon taking office, imagine the explosion of economic activity that would have taken place. Our economy would be growing as fast as China's economy by now.
- liberalref
August 5, 2011 at 10:41am
I hear this right-wing clap trap about "uber-regulatory schemes" quite often May I ask which regulations they're talking about? It sure isn't in food safety. We had another outbreak of tainted food that caused one death in the past few days (ground turkey).
- tmmats
August 5, 2011 at 10:41am
The Apparatchiks at places like Heritage, Freedomworks, must mouth the party line. They are just doing the will of the uber rich who fund them. They have used the all purpose "uncertainty" meme for a while now. Remember Grover Norquist said in 2010 the mere threat of any of the Bush tax cuts expiring was a sledgehammer aimed at job creators' heads. Well the Bush tax cuts were extended and... So the new uncertainty I am hearing increasingly from the appartchicks is that regulatory uncertainty is causing the problem. Again this is sort of a catch all phrase. It seems the "job creators" (party line) are scared to death that Obama might push new regulations. I wonder when we get to a true Ayn Randian paradise what will be the problem then?
- MikeB.
August 5, 2011 at 10:52am
On a related point...Why is David Frum a Republican? Do they have any space in the party for him? I admire his attempt to change it, but it doesn't seem possible.
- MikeB.
August 5, 2011 at 10:55am
I don't see why this is a surprise. Republican ideology is now incompatible with the concept of linear time; Glenn Beck made this clear to me when he went over the timeline of the Arab Spring on his show (complete with graphics of fire spreading) and claimed that the influence of the December 2010 Tunisian revolution back in time to inspire the Summer 2009 protests in Iran. Put more simply, conservative crazy passed that red line a while back.
- janus
August 5, 2011 at 10:58am