The New Republic

What makes Galston's pro-growth progressive agenda so daunting is that there's no reserve for funding the entitlements he wants to cut, the Republicans together with the "pro-growth Democrats" having squandered the entire reserve, in large part to offset the enormous income tax cuts for the wealthy. So now the "pro-growth Democrats" favor, what, cutting entitlements. Jeepers, it's like getting lessons in business ethics from Bernard Madoff.

- rayward

January 22, 2013 at 2:34pm

I think this is Galston at last coming out of the closet as what used to be called a moderate Republican. His distaste at a Democratic agenda emphasizing the core of the Democratic agenda is quite palpable. Can Galston explain how anything that Obama discussed is bad for economic growth? No he can't. He has not a clue about economics, when he was pretending to be a Democrat and now that he no longer is. He has learned certain think-tank jargon, "competitiveness," "growth," blah, blah, blah, and thinks that if he uses all his jargon at one time it means that he has said something meaningful. It doesn't. The money, Mr. Galston, for all the things we need, has to come from the place where the money is, for the same reason that Willie Sutton robbed banks. The money has piled up in the pockets of the top 10% of earners whose income share has increased from 33% in 1980 to nearly 50% today. The other option, of course, is Galston's version of "entitlement reform," another one of those think-tank hobby-horses, which means poverty for retirees and denying people the medical care that they need and cannot pay for. Does Galston really believe that is the way to fund growth? If we want growth, we need full-employment and rising labor income to drive capital-labor substitution and growth in labor productivity. There is one sure-fire way to achieve that: Tax the hell out of the rich to bring their income share down to the level it was in 1980 and spend the money on infrastructure and education and shoring up public finances. Do you think Obama would have a problem doing that if libertarian economic wackos and think tank ignoramuses like Galston would advocate same? Please, please, TNR. Get someone who knows at least a little something about economics to discuss these issues and get rid of the unbearably ignorant Galston.

- roidubouloi

January 22, 2013 at 4:33pm

"For the foreseeable future, the NFIB will remain a building-block of the Republican base and a charter member of the “leave us alone” coalition." Not true. The GOP doesn't care about small business in the slightest. They love big business and monopoly, because that's where the money and power are. Democrats like big business, too, for the same reason, but they don't exclude everybody and everything else, like Republicans do. I understand why small business people don't like the ACA. The bureaucracy cuts into their time, and the cost cuts into their profits. But, as blackton has mentioned several times, it's an economic travesty for employers to have to deal with health insurance. Small business people should be pushing in public for national, single-payer health care. This would lighten their economic burden. But they themselves believe that crap that the GOP cares about them, so all they can do is complain bitterly about Obama, instead of working with other Americans to break the economic stranglehold that the monopolistic health care industry has on us. The GOP doesn't care about them, but it's sure willing to use them to trash Obama. Small business people of America, unite! You have nothing to lose but your health-care chains!

- magboy47.

January 22, 2013 at 5:33pm

Is it a bridge too far to consider the whole idea of "growth?" This includes human population growth. Also, what constitutes "work?" Does work have to be profitable to count? What about teaching, science, art? What about the common good? What about national investments in infrastructure, in key areas of innovation such as green energy? Did we not invest huge sums of money and human capital in aerospace (for example) and hasn't it paid off enormously? Why aren't people as worthy of investment as GM and Lockheed/Martin? Would we even be writing like this without satellite and computer tech (funded by "the people)? Why isn't Galston looking at this and at other non-profit enterprise, or innovations that may not have been immediately profitable (like airplanes) but which revolutionized the world? Why is "business" considered the leader, the most important component of all things economic when in fact the business community is reliant upon all of us? And, what about automation? Automation is enriching the owners of corporations and increasing revenues but it's putting people out of work. Finally, what about "cutting entitlements" makes sense? Any sense whatsoever? Let's leave aside the moral implications of further impoverishing the average senior, poor person or disabled person - how is this good economic sense, good business sense? How on earth will having old people on the street or disabled people dying young, poor people unable to afford any medical care at all help America?

- Sophia

January 22, 2013 at 11:04pm

I always thought if the President was creative he would propose a corporate tax rate cut which would divide the GOP between those (1) who know its a good idea; and (2) who know its a good idea but couldn't vote for it because it would give a preference to C Corps over S Corps (the owners of which, as you note, are the base of the GOP). It would be something Bill Clinton would do. It would drive the GOP nuts. He's not that creative, Professor. You know how when you read a Krugman column you, like everyone who's normal, role your eyes and can't believe that an educated person thinks like that?? This President thinks like that. The only thing businesses are good for, to this President, is to pay taxes for entitlements. Oh, if they can manufacture things and create some unions without actually consuming energy that would be good too. The President has never been in business, he doesn't understand business and his economics guy (including his Treasury secretary) are government lifers. Nice idea, but not in this administration. Sorry.

- bob1239

January 23, 2013 at 1:31am

Gee, bob, you think the president doesn't know that business, the combination of labor and capital, produces most of our economic output? Come to think of it, do you know that? Sorry again, bob, but agree with him or not, the only people who roll their eyes while reading Krugman are ignorant people. They don't think much at all. The merely repeat, repeat, repeat whatever inanity they hear in the echo chamber. Do you know anyone like that? And do really think that the purpose of public policy is to drive the opposing party nuts? Well, I suppose you do, because that is just what the Republican party believes.

- roidubouloi

January 23, 2013 at 2:50am

"The President has never been in business, he doesn't understand business and his economics guys (including his Treasury secretary) are government lifers." And Republican presidents like Bush and Hoover who were in business really know how to create jobs. Yessiree, Bob!

- magboy47.

January 23, 2013 at 3:04am

Corporate suites have a broader view of economic effects than most small business owners, mostly because they see the effects of fiscal and budgetary policies on customer demand across a much larger geographic spread instead of local economy. Demand is their nonpartisan god. Hopefully Gene Sperling can connect to small business owners because they should love the fluidity that the ACA can add to the labor market, making it much easier for these owners to entice away well-trained, seasoned corporate employees that have been the beneficiaries of corporations' investment; now that the golden handcuffs of affordable healthcare is no longer just the purview of corporations. And since most of the professional organizations representing small business owners main complaint is the effect on top tax brackets for individual owners, the economist in me says there may be the ability, if not the desire, to invest more in his/her business, and a little less in owners' pay.

- smabry03

January 23, 2013 at 6:27am

Roid: I don't think the purpose of public policy is to drive the opposition nuts at all. But good and effective Presidents have a knack for presenting issues that unite their own party while dividing the opposition. This President has a knack for uniting the opposition party and dividing his own party. There is a pronounced division between the good government/ work-with-the-markets types like Professor Galston and the whack job left types like "Professor" Krugman. And its only going to get worse as entitlements eat up more of the budget. I'll go back to what I said before -- the greatest act of bi-partisanship in this administration was the opposition to the ACA. And the roll backs of parts of the ACA (like repealing the CLASS Act and the 1099 small business reporting requirement) had strong bi-partisan support and the President signed them reluctantly (even begrudgingly). Other things too (South Korea trade, sanctions on Iran) had strong bi-partisan support until the President got there (late). Repealing the dumb tax on medical devices has strong bi-partisan support -- the President is against it. Gene Sperling is a nice guy and he means well. But he's not going to connect with the business world. He'll finish out this term and then get tenured at some university somewhere. That's today's Democratic party: academia, non-profit folks and government lifers. It just is. --Bob

- bob1239

January 23, 2013 at 10:28am

None-the-less, bob, without making any case that cutting corporate taxes would be good policy, you think it would be smart just to drive Republicans nuts. This is, in my opinion, quite disgraceful, although a typically Republican view -- that bad or even awful public policy is just fine so long as it creates trouble for the opposing party. I am happy to see Obama propose good policy if there is a chance it will succeed, if it will move public opinion in the right direction, or if it would create problems for Republicans in opposition. But there is no place for bad policy, or for opposition to good policy, simply as a political weapon. That is the sort of treasonous, atrocious behavior we get from the Republicans. I hope never to see the Democratic party emulating the Republicans in this respect. Academia, non-profit and government lifers? Really? 51% of the country? And what are Republicans these days? Uneducated rednecks, meth-heads, and pregnant teenagers? Those are after all found in the highest proportions of red states, as we know. Which one are you?

- roidubouloi

January 23, 2013 at 11:50am

Galston wrote this piece based on a gut feeling that Obama isn't reaching out to large corporations and trying to leverage this moment where they are at odds with (mostly) House Republicans. But we're given little evidence that Obama has failed to do this. Galston cites passages in Obama's speech....but 95% of that speech was focused (like ALL inaugurals) on the majesty of our constitution/our democratic system. It seems to me that Big Business (INCLUDING former Mitt Romney partisans) stood up for Obama on the debt ceiling and the fiscal cliff. But it's also not exactly the most opportune time to reach out to them. While many of these folks will trickle over to the Democrats (absent GOP moderation), most are probably awfully annoyed that their taxes are going up.....even the ones who publicly supported the rate hikes as good policy! The fact is, while I support tax hikes, I'm annoyed when my taxes go up. And if I'm rich and it costs me hundreds of thousands, I'm even more annoyed. Even if I support the policies! That's just the way human beings work. I also enjoy that Galston ignores immigration reform as an obvious wedge to bring business over to the Democrats. He even lists it as a distraction from the "pro-growth" agenda of deficit reduction, tax reform, and public investment. Nevermind that Obama has reduced the deficit by an absurd amount, the GOP killed this by refusing a grand bargain on the fiscal cliff and refusing to use tax reform for revenue in their debt ceiling hostage taking initiative, and Obama's made the biggest investment in infrastructure since Eisenhower...

- Virginia Centrist

January 23, 2013 at 11:54am

"I always thought if the President was creative he would propose a corporate tax rate cut which would divide the GOP between those (1) who know its a good idea; and (2) who know its a good idea but couldn't vote for it because it would give a preference to C Corps over S Corps (the owners of which, as you note, are the base of the GOP)." Terrible idea. First of all, Obama has proposed a corporate tax rate cut and a tax reform plan, and he's signed legislation into law that raises taxes on S corps (effectively...through the income tax hikes on the affluent and some of the other tax changes). But why would he needlessly anger folks on the S Corps side and more than they already are? The small business trade federations may support Republicans, but plenty of these folks are Democratic donors...and is there a policy rationale that I'm missing?

- Virginia Centrist

January 23, 2013 at 11:58am

You know how when you read a Krugman column you, like everyone who's normal, role your eyes and can't believe that an educated person thinks like that??" A small point, bob, but if you're going to invoke "everyone who's normal" it might be good to know that they ROLL their eyes. Unless they are just playing the role of normal people, which is likely as plenty of normal people find that Krugman makes a lot of sense.

- ironyroad

January 23, 2013 at 1:42pm

Virginia Centrist: I am not sure if most Dems are happy that a lot of businesses are registered as S Corps and LLCs and I do think that, contrary to the officers and shareholders of large corporations, most small business owners are overwhelmingly conservative fiscally and have become more so during this Presidency. (Prof. Galston overstates in the headline that there is a "civil war," but there is a difference, no doubt). Listen, big businesses have compliance and sophisticated HR personnel to comprehend the regulatory morass coming out of Washington DC these days. Small businesses don't. No one ever started a small business because they wanted to comply with DC taxes and health care regulations. Galston's right -- they really do want to be left alone. Why lower the corporate tax rate? Well, if you do, a lot of those S Corps and LLCs who make money will change to C Corps to take advantage of the lower rate and that will remove a lot of the argument by the GOP that upper income tax hikes effect small businesses (but a lot of small businesses don't make enough to make the change worthwhile). Hate to get all Laffer curve on you guys because it's not in vogue, but I bet a cut in the corporate rate would raise, not drop, revenue. It's a high rate, that's effective rate is much lower. Perfect for cutting. --Bob

- bob1239

January 23, 2013 at 2:35pm

To the point - imo - the "Civil War" is really between those who think money is people and those of us who beg to differ: http://www.nytimes.com/2013/01/23/opinion/justice-and-prosperity-defined-by-obama-and-roberts.html?hp The "business community" needs to recognize that some are not more equal than others and that money doesn't make a person more or less valuable. The real arguments were beautifully framed by Obama in his speech. The issues of "dependency" are absurd considering the very real dependency of business on government and also of course on labor, however the balance of power has swung drastically to the few and responsibility is exactly zero, apparently, for those who have the ability to crash the economy. In Europe, poor countries are paying for the banks' irresponsibility. Same here - only the banks' irresponsibility is also the evil outcome of voodoo economics, the gradual destruction of American wealth or rather its relocation upwards via bad tax policy and unfunded, endless war whether declared or otherwise, open as in the ME or hidden, as in Latin America and Africa. The social contract is being blamed for having created the problem. But that isn't true. Predatory lending, the loss of middle class jobs to automation, the overpayment of the boss class, vulture capitalism, the intrusion of the partisan SCOTUS into the 2000 election (totally wrong) and the "personhood" of corporations combined with gerrymandering have warped the Republic and also the economy. We need to address these larger issues. As to Krugman - he frames his arguments in terms of the interaction between government, taxation, stimulus and the business community and they make sense. The other way - starving the beast - is destructive. Vesting all the wealth and power of a nation in the hands of just a few threatens the very existence of the American state, the great experiment of open, participatory government. And bad economic policy, favoring only one class, has crashed the economy and isn't enabling it to recover. So, too much power in too few hands, whether in business or in government, argues against sustained prosperity let alone the concept of equality under the law and the whole idea of opportunity, equality of opportunity and social mobility (which is the core of the American dream). "Capitalism" in and of itself is not an answer to all the issues confronting the economy, or people, let alone the planet. The "business community" needs to respect this. Left to its own devices however, the goal of business being to make money, people and resources and entire nations will be completely destroyed without rational and wise government and popular policy and also, the empowerment of labor. And, the redistribution of wealth cannot be in one direction only - from the people and the nation to the hands of the oligarchs and the plutocrats - work and resources don't "belong" to only the powerful few. We can see what's happening in England. "Austerity" hasn't helped matters, it's caused more recession. Entire countries have been harmed in Europe, and hardship is resulting in the rise of far right wing political parties, racism, anti-semitism and xenophobia. We have a pretty crazy far right here too and hard times are making them worse. The NRA's attack ad on the Obama children was completely over the top, but it's only one facet of right wing insanity that has exploded in this past decade, and especially since the crash of 2008 and the election of Obama, worsened by Citizen's United, tax cuts for the prosperous, unending attacks on workers and the poor. Business and prosperity cannot exist in a vacuum. There are examples, alluded to by Obama in his speech, in which prosperity for a few can indeed be created by slavery, and in a marginally less oppressive system when workers are essentially enslaved - which is actually the case today - the few can get very rich. But that isn't a democratic or republican system. So. Let's stop trying to figure out how to drive each other crazy, that is a ridiculous and unworthy goal. Let's figure out instead how we can balance work vs automation, how to stop the accumulation of obscene wealth and power by just a few, how to enable ALL of us to have decent lives - no longer a given. Even the basics of housing, food, health care and education are becoming dangerously out of reach as workers have lost the ability to earn a decent living. That's #1. You can't strip people of the ability to earn a decent living then accuse them of being mooches.

- Sophia

January 23, 2013 at 2:42pm

Why don't you name a few specific things that Krugman said that made you roll your eyes Bob? I'd be curious.

- WandreyCer

January 23, 2013 at 4:30pm

BTW Roi, I thought you'd enjoy Boehner's caterwauling today, from his lips...etc! Don't we just hope Obama finally gets it. http://livewire.talkingpointsmemo.com/entry/boehner-obama-wants-to-annihilate-gop?ref=fpa

- WandreyCer

January 23, 2013 at 4:33pm

Yes, for a Democratic president to profess a Democratic agenda is the effort to "annihilate" the Republican party. This is exactly the diseased point of view I was referring to above in response to bob. The Republicans have no problem pressing atrocious policy for political gain, as bob advocates Democrats should do. Hence Republicans cannot even conceive of a Democratic agenda the intention of which is to do good for the country rather than damage to Republicans. And leave us not forget the declaration of McConnell four years ago that the agenda of congressional Republicans was the defeat of Obama. What an execrable lot. And, like all bullies, when someone merely stands up to them, as Obama has now finally begun do, the dissolve into a puddle of whimpering self pity.

- roidubouloi

January 23, 2013 at 5:27pm

Thanks for that wandrey.

- roidubouloi

January 23, 2013 at 5:28pm

fwiw, I have advocated here for the elimination of all corporate taxes in favor of steeply progressive taxes at the shareholder level, zero up to $100,000 and 50% a father that. You do it with 50% withholding at the corporate level. People with less than $100k of income then get a refund if they hold more than six months. Dividends and distributions are not taxed. Simple and can easily be made even more progressive.

- roidubouloi

January 23, 2013 at 5:35pm

50% after that. Hate typing on an I-pad.

- roidubouloi

January 23, 2013 at 5:36pm

I think the Republican plan is to climb into the dustbin of history rather than waiting to be pushed, contra Boehner. It is only for the Democrats to call relentless attention to where the Republicans have lodged themselves.

- roidubouloi

January 23, 2013 at 5:40pm

I think all we have to do is watch.

- WandreyCer

January 23, 2013 at 6:22pm

Roid: i disagree. I think the GOP appears to be regrouping rather quickly and sensibly and seem ready to take advantage of the President's overreach. We got the sequester coming up. President has a choice- trim Social Security benies or big cuts to EPA, Education and all the departments that the various special interest groups which make up today's Democratic party seem to love. Kind of a Sophie's Choice (good movie!). Let's see how it goes.

- bob1239

January 23, 2013 at 9:45pm

The president's overreach? You have just arrived in this universe, bob, and you are already an acolyte of Ann Coulter? You also seem to think that "special interest groups" means everyone who is not old, white, and wealthy. This is exactly why the Republicans are going to climb right into the dustbin of history and will only need the Democrats to herd them a little in that direction. They, the Republicans, consist of people like you who believe preposterous things because it makes them feel good. Tell the truth, bob. You believed until the last minute that Romney was going to win because "all the opinion polls were over-sampling Democrats," right? You are one of those, aren't you? The president has no such choice as you pose. The Republicans cannot force any changes to entitlements. They can allow the sequester to hit, but, so what? That is worse for them than for the Democrats and they will give in quickly with a new continuing resolution as long as the president doesn't gave. Likewise, they can force a government shutdown by not adopting any budget resolution, temporary or permanent. That too won't allow them to force any particular changes any more than it did for Gingrich. Nope, the choices are how much comes from defense, how much comes from other discretionary spending, and how much comes from new revenues. The current operating deficit has nothing to do with entitlements. Obama could offer to bargain about them, as he has in the past, but that was when he thought his legacy depended on a so-called "grand bargain." No that he has his first taste of Republicans turning and running, while squealing like stuck picks, when he takes a tough stance, he may have changed his thinking. I am very obliged to your "quickly regrouping" Republicans for so quickly and thoroughly demonstrating that they are all bluster and have no real balls at all for the fights them claim they want to pick. Just like every other bully that has ever lived. At least if you are going to visit this universe, bob, you should try to follow what is actually occurring here. We will indeed see how it goes, won't we?

- roidubouloi

January 24, 2013 at 11:52am