Beale/ NYT room for debate…Extending the tax cuts for the wealthy

by Linda Beale
crossposted with Ataxingmatter

Extending the tax cuts for the wealthy–the discussion continues

The New York Times asked me for my views of Robert Samuelson’s recent argument in the Washington Post that extending the tax cuts for the wealthy made sense because they would otherwise cut back their spending, tax cuts for them will create jobs (770,000, he claims) and not extending the tax cuts would raise taxes on “small” businesses and thus “discourage hiring and expansion.”

The discussion appears in theNew York Times “Room for Debate” forum on the trickle down argument, at Hey Big Spenders: The Trickle-Down Argument, Sept. 27, 2010.

Here at ataxingmatter I’ll add some introductory context, which is somewhat harsher on Samuelson and his claim to question “the ritual of sound-bite economics” than the short form posted at the New York Times.

Robert Samuelson claims to sound a voice of reason, but he is merely part of an increasing cacophony of ideological extremism.

He starts with a distorted sound-bite—that “the left sees salvation only in ever-larger government … [that] threatens long-term economic growth through higher taxes, regulations or budget deficits.” I’d say rather that the left questions the right’s theories behind expanding government intrusions on individual rights and bloating government warmongering rather than relying on the likely more successful and certainly less costly art of diplomacy. On the other hand, the right pushes for deregulation no matter the record of negligence and active harm caused by reliance on so-called industry self-regulation or the harm that ensues from inadequate prudential behavior, which we so amply witnessed in the financial meltdown and broader economic crisis of the Great Recession. Similarly, the right is schizophrenic on budget deficits—favoring them to provide tax cuts for mega-corporations and wealthy Americans who can amply manage without them, but bemoaning even uncertain future deficits from programs benefitting ordinary Americans, such as Social Security.

Samuelson then attacks Obama as “subvert[ing] confidence” because he “fights Wall Street bankers, oil companies, multinational firms, health insurers and others.” These titans of commerce began the fight when they retained all productivity growth for their owners and managers at the expense of ordinary Americans. Health insurers benefited by denying coverage, or delaying payment. Multinationals drained the federal fisc through transfer pricing games, tax credit manipulation and other tax shelters. Oil companies polluted waters and fisheries to save a few bucks on safer deep sea drilling and companies continue in their efforts to stymy legislative action to regulate questionable fracturing procedures to extract natural gas from shale. Wall Street bankers profited immensely from speculation in a casino financial system with interconnected and layered risks at the expense of the non-financial heart of the economy.

Then Samuelson spouts the worn arguments from Reaganomics for letting the rich avoid a fair share of the tax burden, even while they garner an ever increasing share of the nation’s wealth. (Continue to the New York piece, Better Ways to Use $700 Billion.)