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“Republicans Return To Tax Cut Fantasyland”: Every Argument Republicans Have Made In Last 20 Yrs About Taxes Have Been Wrong

One surprising thing about the campaign Mitt Romney ran in 2012 was that cutting taxes, a theme you might have expected from someone of his profile, wasn’t at the center of it. Perhaps wary of getting painted, even more than he already was, as the representative of the rich, Romney proposed a tax cut plan that was, by Republican standards anyway, rather modest. But those were the bad old days—tax-cut fever is back in the GOP, with a vengeance. From Bloomberg’s Richard Rubin:

The campaign for the Republican nomination for president is poised to become a race to the biggest tax cut.

More than a dozen candidates are vying for attention from donors and the party’s base voters, and they aren’t letting the U.S. budget deficit get in their way.

Senator Marco Rubio of Florida kicked off the competition with his plan to boost economic growth by slashing taxes on investments, wages and business income. Even the plan’s proponents concede it would reduce tax collections by at least $1.7 trillion in the first decade, largely favoring the top 1 percent of Americans over the middle class.

Senator Rand Paul of Kentucky says he will propose the biggest tax cut in U.S. history. Rick Perry and Rick Santorum, both considering repeat presidential campaigns, ran on reducing taxes four years ago and would be expected to do so again.

The shrinking deficit—it’s less than half of what it was four years ago—creates an opening for Republicans to return to the tax-cut politics that propelled Ronald Reagan and George W. Bush into the White House.

“It focuses on the right question at the right time, which is: How will we grow more rapidly?” Douglas Holtz-Eakin, a Republican and former director of the Congressional Budget Office, said of the proposal Rubio released last week with Senator Mike Lee of Utah. Holtz-Eakin acknowledged that the tax cuts require spending reductions to keep the deficit in check.

Holtz-Eakin is not just wrong about that, but wrong in two separate ways. First, how we grow more rapidly is not at all the right question. The question everyone is asking now is how we spread the gains of a growing economy more widely. And second, even if the question were how to grow more, tax cuts would not be the answer.

You have to admire one thing about the Republican perspective on this issue: their unflagging insistence, despite a mountain of evidence to the contrary, that the best and perhaps only way to affect the economy is by adjusting the tax rate paid by wealthy people. Here’s a quick history review of the last two decades: In 1993, Bill Clinton signed a budget that included tax increases. Republicans unanimously said it would bring a “job-killing recession.” It didn’t; in fact, almost 23 million jobs were created during Clinton’s two terms. Then George W. Bush got elected and signed two rounds of enormous tax cuts. Republicans promised these cuts would super-charge the economy. They didn’t; job growth was weak throughout Bush’s term. Then at the end of 2012, the deal ending the “fiscal cliff” allowed the top income tax rate to revert back to what it had been during the Clinton years. Republicans grumbled that this increase would hamper job growth. That didn’t happen either; in the two years since, the economy has created 5 million jobs.

In other words, the Republicans’ essential theory about upper income taxes—increasing them destroys jobs and smothers growth, while cutting them explodes growth and creates huge numbers of jobs—is not just wrong, but demonstrably, obviously, spectacularly wrong. Yet they keep saying it.

The reason isn’t all that difficult to concern. For conservatives, cutting upper-income taxes isn’t a practical imperative, it’s a moral imperative. It’s just the right thing to do. Taxes are an inherent moral evil, and taxes on those who have proved their industriousness and virtue by being rich are the most profound moral evil of all. This is a very different argument from the practical one, which says that if we cut taxes for the wealthy then good things will happen to everyone as a consequence.

Republicans know that the moral argument has appeal to only a very small number of Americans, mainly those would benefit directly from upper-income tax cuts. So the practical argument is the one they must offer, even if it happens to be utterly false.

So here’s the question they ought to be asked: “Every argument Republicans have made in the last 20 years about taxes has turned out to be wrong. Now you’re saying if we cut upper-income taxes, it will produce terrific growth. Why would that be true now when it hasn’t been true before?”


By: Paul Waldman, Senior Writer, The American Prospect, March 13, 2015

March 15, 2015 Posted by | Deficits, Republicans, Tax Cuts | , , , , , , , | Leave a comment

“The Same Supply-Side Ideas”: Republicans Have Known All Along That Their Jobs Plan Wouldn’t Work That Well

If you’ve read my work over the past few months, you’ve probably heard me argue that Republicans don’t have a jobs plan. I’ve said it a few times. Never has that point been clearer than in the New York Times Thursday morning, where economists on both sides of the aisleand even House Speaker John Boehner’s spokesmanadmit that the Republican “jobs” plan wouldn’t actually help the economy very much.

“Some of those things will help,” Matthew J. Slaughter, who served on President George W. Bush’s Council of Economic Advisers, told the Times about Republican economic ideas, “but, it just struck me as sort of a compendium of modest expectations. If you ask me, ‘What’s your ballpark guess for how many jobs are going to be created?,’ it’s just not many.” Douglas Holtz-Eakin, a conservative economist and former director of the Congressional Budget Office said, “I don’t think any of these are particular game changers.”

The traditional Republican ideas to boost the economycutting spending, reducing regulations, and reforming the tax coderepresent a misunderstanding of the underlying problems with the economy. Those are all supply-side policies, intended to boost investment and improve productivity. Those aren’t bad goals, of course, but they don’t solve the demand-side issues that are actually holding back growth.

When the Great Recession struck, households cut back on their spending, forcing businesses to fire workers, who then cut back their own spendingthus, a lack of demand. This creates a nasty cycle of reduced spending and job losses. The government’s role in these situations is to fill the hole in demand by using fiscal or monetary policy. We did both and they were moderately successful. But they weren’t sufficient to fill the entire hole in demand and we’ve had a lackluster recovery as a result, made even worse by a premature turn to austerity.

The most revealing quotation in the Times article came from Kevin Smith, a spokesman for Boehner. When asked about the 46 bills that Boehner has outlined as the Republican jobs packagemost of which would cut regulations and taxesSmith said that the bills were not “a cure-all, but they would be a good start for our economy; we need to do more.” In other words, after six years of critiquing Obama’s economic policies, House Republicans still don’t have an economic agenda to fix the economy’s ills.

In some sense, that’s OK right now. The recovery has taken a step forward this year and we no longer need a big jobs package to save the economy (although more infrastructure spending would help). But during the beginning of the Obama presidency that wasn’t the case. Then, we did need a big jobs plan, but Republicans offered the same supply-side ideas they’re proposing now. Based on Smith’s comments, it seems the GOP was aware of this too.


By: Danny Vinik, The New Republic, October 23, 2014

October 25, 2014 Posted by | Economic Recovery, Economy, Jobs | , , , , , , | Leave a comment

“Arguing In The Alternative”: The Nefarious Conservative Conspiracy To Save Obamacare

Like me, you were probably under the impression that bashing Obamacare was a party-wide Republican obsession and pretty much the GOP’s central talking point for 2014. That made sense not so much because it’s a big general election crowd pleaser, but because it’s proved to be the most effective Republican Establishment prophylactic device for keeping the Tea Folk from wreaking havoc in Congress. You know: “Get out of the way and let Obamacare collapse of its own weight.”

But no, Erick Erickson knows better. Behind all the rhetoric, he perceives a GOP conspiracy to undercut conservative opposition to Obamacare:

Conservative and Republican affiliated groups have started the 2014 assault against Democrats who support Obamacare. At the very same time, it is increasingly clear Republicans are laying the groundwork to abandon their opposition to Obamacare.

The Business Roundtable, which has a great relationship with Republican Leaders, is now listing Obamacare as an entitlement worth preserving.

Douglas Holtz-Eakin, a former economic advisor to John McCain and who opposed passage of Obamacare, has started a think tank premised on keeping, but fixing, Obamacare. Holtz-Eakin has the ear of Republican leaders. In 2009, Mitch McConnell appointed him to the Financial Crisis Inquiry Commission.

The Chamber of Commerce is declaring it will work to fix, not repeal, Obamacare. In fact, just last week the head of the U.S. Chamber of Commerce said, “The administration is obviously committed to keeping the law in place, so the chamber has been working pragmatically to fix those parts of Obamacare that can be fixed.”

Concurrent to this, the Chamber of Commerce has begun funding candidates to beat conservatives in Republican primaries.

I guess Erickson has never heard of the concept of “arguing in the alternative,” by which prudent opponents of a proposition or program develop a fall-back position of accepting it but arguing for a different way of interpreting or implementing it.

It is true that Holtz-Eakin along with Avik Roy penned a column nearly a year ago arguing that Obamacare might actually be an effective platform for achieving larger conservative health policy goals such as the privatization of insurance and service delivery under Medicaid and Medicare. It’s pretty much the mirror image of the belief of many single-payer advocates that the Affordable Care Act (particularly if it had included a strong public option) might pave the way to their own health care nirvana.

Still, the “Plan B” approach to Obamacare is an exotic plant being tended in exotic hothouses of conservative think-tankery. What Erickson’s doing is to insinuate that any business group that in any way resists the intra-Republican power of Obamacare-obsessed groups or individuals is secretly plotting to embed the ACA permanently into the American governing landscape.

The Republican Main Street Partnership, headed by former Congressman LaTourette — who is a friend of Speaker John Boehner — is working with the Chamber and party leaders to target conservatives the party leadership finds troublesome. LaTourette has been parroting talking points from the National Republican Senatorial Committee about the Senate Conservatives Fund, Club for Growth, and others.

Ben Sasse, the conservative candidate in Nebraska on the most recent cover of National Review and who has the backing of the Senate Conservatives Fund, RedState, and others, suddenly finds Mitch McConnell and the NRSC holding fundraisers for his opponent. Sasse, it should be noted, is widely considered a brainiac opponent of Obamacare and healthcare policy expert.

This “anybody in my way supports Obamacare” is reminiscent of the old southern segregationist tactic of accusing all political enemies on any subject of being secret race-mixers. (One corruption-tainted Georgia governor of the 1950s, Marvin Griffin, deployed what a political journalist called the “If You Ain’t For Stealing, You Ain’t For Segregation” argument). It’s the most lethal weapon Erickson can use. But it’s not terribly convincing at a time when Republicans of every hue from coast to coast are grinding away like cicadas at the anti-Obamacare message.


By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animan, January 16, 2014

January 17, 2014 Posted by | Affordable Care Act, Republicans | , , , , , , , | Leave a comment


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