Kevin Drum makes me blow a gasket
Robert Waldmann
can’t help but argue at very great length that one sentence by Kevin Drum is totally utterly completely wrong.
Andrew Sable makes a much better counterargument than mine here.
Mr Drum has fallen for conservative lies. Their actual policies are tax cuts for rich people. Their hero Reagan signed into law a huge tax increase on the non-rich (Greenspan commission proposals). In practice they cut taxes for rich people.
Obama’s proposal has shifted the debate to whether a refundable tax credit is welfare. The Republicans can’t win this one. He has finally used the argument that Republicans can’t answer. Actually Clinton did it too (and was elected remember) but didn’t follow through. Also I think Obama’s proposal is excellent policy. I think Kevin Drum has fallen for the Republican line or decided that popular populist politics is immoral and we should eat our spinach.
I argue both politics and policy at gruesome length after the jump.
The Republican’s favorite trick is to distract people from tax progressivity by pretending that the only choice on taxes is high or low. Obama has shifted the debate to more or less progressive. I have long thought that such an approach to the debate would destroy the Republican party. The evidence from Tuesday is not proof (there were many reasons for the Republicans to lose) but it is still evidence that Obama’s approach to politics works, not just for one election but to change the debate forever. McCain argued “cutting your taxes is welfare. What about all the plubmers who make over $250,000 a year”. This is not (just) because he is nuts. There is no way to convince the American people that they prefer the Republican approach to Obama’s approach.
He was fighting on Republican turf the same way Grant was on confederate turf at Appamatox. With his tax proposal he has stormed their citadel, crushed their army and left them with the choice between surrender and Guerilla warfare (they will chose the second) [earlier historical analogy was the red army was fighting on German turf in the battle of Berlin — it was correctly spelled but politically not ideal).
Drum’s framing is exactly falling for the Republican trick which have made the last 28 years such a political disaster in the USA.
No one but Mondale runs on a platform of raising taxes. Transforming the debate to one about progressivity is more than any reasonable person could hope for from one candidate no matter how brilliant.
Also Obama’s proposal is good policy.
I think the claim is wrong in many ways. First, the Obama tax cuts consist of giving money to non-rich people (at the expense of the rich) and providing incentives for low skilled people to work (setting a good example for their kids).
This approach has been tried at a much much smaller scale by the Clinton administration (the Clinton tax increase included an increase in the earned income tax credit).
Judged crudely the results were spectacular. Of course it was partly luck with investments in information tech finally producing a productivity speed up but the increase in labor force participation, the shift of the Phillips curve etc are exactly what the most extreme advocates of Obama’s policy would have predicted.
In contrast taxing the super rich will, I honestly believe, have good effects totally aside from getting the money (Matt Yglesias has made many eloquent and convincing arguments for this). The super rich are concentrated in finance. This is a big cost as many smart people are not doing other things that are definitely socially useful but don’t make one super rich. The financial geniuses sure seem to have produced something worth less than nothing haven’t they ? Wouldn’t you rather they had been less numerous energetic and creative ?
Causing the financial sector to shrink by taxing the incomes of the top financiers would, I would guess, be excellent policy even if the revenues were wasted (by the way Larry Summers sometimes argues this — one of the issues on which he flip flops).
On the other hand the case for high taxes on low and moderate income is based on … what ?
1) We need money for universal healthcare, anti-poverty programs, green infrastructure investment/subsidies etc etc etc and we can’t get it just by taxing the rich.
A resonable argument (given Obama’s current proposal especially) but not true. The US rich are so rich that there is plenty of money to grab there. The problem is political. Only if people are convinced that taxing the rich has nothing to do with taxing them will it be possible to get the money for the treasury. I had great hopes for Obama’s doughnut FICA increase (which is even more directed at the rich than his income tax plan). I still do even though he de-emphasized it and it might not happen. Then again it might (tax the rich to save social security is the worlds second best slogan after tax the rich and spread it out thin (the current proposal)).
2. It is demagogic populism.
This is true. What’s wrong with that ? If it is good policy, the fact that people support it for selfish reasons or envy of the rich doesn’t make it bad policy.
Here the idea is that politicians prove their virtue by advocating unpopular policies (based on forcing people to face the bitter truth — or in this case the untruth that the US federal government can’t do it’s job and cut taxes for the non-rich).
I don’t want virtuous politicians. I want politicians who win and implement good policies. The fact that something is popular doesn’t mean it is wrong. Look what happened to Mondale.
3 It’s class war. It would be better to unite than to divide.
This is true. So what ? Who said it is always bad to represent the class interests no matter how large the class and how mild the suffering for the tiny class that will be only super rich rather than ultra rich will be.