Campaigning on Tax Increases ?!?

Robert Waldmann

For decades, I have been advising Democrats to focus attention on the progressivity of the tax system. This is an issue where the vast majority of US adults totally disagree with the Republicans and which people care about. My policy proposal and political strategy is to increase progressivity increasing taxes on the rich and cutting taxes on everyone else. This is still too politically effective and sound policy demagogic for many mainstream Democrats – it seems that the Democrats are debating whether to try to do this. However, they have decided to make the Republicans debate extending Bush’s tax cuts for families with income over 250,000 and individuals with income over 200,000. This means they have decided to campaign on tax increases (possibly paired with tax cuts).

I have long claimed that this is not just good policy but also good politics. Polling is clear, most US adults say they support this. The issue is whether the Democrats will get their message across. Simply put, they are proposing a tax increase on the highest income 2%. Will Republicans convince the public that Democrats are increasing their taxes ? The Republicans managed exactly that in 1993 and 4.

To me it looked good so far, and I get to reasons to worry after the jump.

I think a key factor is that prominent journalists and commentators will help the Republicans for two reasons. First, they present a disagreement about basic facts in which one party tells the truth and the other lies as a legitimate debate “opinions on shape of earth differ, both sides have a point.” Second, many of them are rich. I think plain class interest affects their reporting and commentary. In particular, I don’t think they believe that fewer than 2% of families make over $250,000.

So far I have read one article, the article by Lori Montgomery to which I link above. The news about the way the news is presented is not good. Among other things, Montgomery writes

Republicans say the tax cuts are critical to bolstering a feeble economic recovery. And with unemployment at 9.5 percent, even some Democrats are queasy about raising taxes on high earners — a category that includes many small-business owners — when policymakers are trying to encourage them to create jobs.

So she asserts, in her own voice, that taxes would be raised on “many” small-business owners. The word many is vague enough that this claim isn’t false. Are 1,000 many ? However, the claim is false if one interprets “many” as meaning “enough that one can detect the effect of increased taxes on employment at small businesses with owners whose taxes increase in macroeconomic data,” which is her implicit claim. The Republicans are lying (as usual). They have told this lie frequently and have been called on it frequently.

For example, Annenberg Fact Check called a related (but much more specific) claim “bunk”Annenberg Fact Check tries very hard to avoid apparen partisanship, so they try very hard to find roughly as many false claims of fact made by Democrats. I found that link on my first effort at googling

and had to scroll down among the many refutations of Montgomery’s false assertion to get to an impeccably ballancedsource.

Also only in her last paragraph does Montgomery note that some Democrats actually support my proposal and suggest combining permanent elimination of tax cuts for the rich and temporary extension of tax cuts for the middle class. This is better politics than the proposal she headlines and also better policy. Tax cuts for the middle class are a better stimulus than tax cuts for the rich even though sending money to state and local governments is a better stimulus than tax cuts for the middle class.

My guess is that temporary middle class tax cuts will be added along the way. It’s just too obvious that such a proposal dominates temporarily extending tax cuts for the rich as a stimulus (as argued by Kent Conrad and Republicans) both as politics and as policy. I’d say leaving that bit until after the jump is part of being balanced. The Republicans have no argument against it, so it would be unballanced to admit that it is the Democrats proposal before handing the mike over to Republicans.

I think a key difference from 1993 is that there are now independent media (read blogs) who can call the ballanced MSM on letting Republicans get away with lies. The game is on and the ball is in our court.