Monday, February 10, 2014


Over at The Washington Post, Ryan Cooper asks, "Should progressives support tax cuts as economic stimulus?" Cooper thinks unemployment is a huge problem that we're not doing enough to solve. (He's right, of course.) He thinks that, under the right circumstances, progressives should be able to embrace tax cuts for the economic stimulus they provide. He thinks a willingness to embrace tax cuts on the part of Democrats could conceivably lead to an agreement with Republicans.

I'm skeptical, to say the least.

Cooper says progressives should be able to support a deal in which "Bush-style tax cuts weighted towards the rich" are "coupled with a big increase in food stamps, unemployment benefits, and a few hundred billion in infrastructure" -- or, failing that, "a sharp cut in the payroll tax," which, as he reminds us, "is disproportionately paid by the non-rich."

On the first proposal: sorry, but I think the chance of Republicans supporting any serious infrastructure spending, or any large increase in the social safety net, is zero, zip, nada, zilch. It's not going to happen even in return for Bush-level tax cuts. Republicans believe spending is bad, period (at least when Democrats are in power). Maybe -- maybe -- Republicans would accept a big payroll tax cut, just because it doesn't involve spending of any kind.

But what would happen after that? Republicans would instantly blame the White House and congressional Democrats for the decreased tax revenues that result from the payeoll tax cut. Specifically, they'd howl about how much more dangerously close to insolvency Social Security and Medicare are. The shortfall in tax money collected would be instant, whereas the stimulative effect of putting more money in workers' pockets would take a while to show up. In the interim, Republicans would just absolve themselves of any responsibility for what they themselves had just agreed to, and would count on the low-information public to just blame the party in the White House. Which is what would happen.

Cooper considers and rejects another objection to his plan from Paul Krugman:
I don't buy it, basically because I believe you need to play the political economy long game. Starve the beast is still out there as a strategy; conservatives still push tax cuts in part because they expect, probably rightly, that this will tilt the balance toward cuts in the safety net the next time the deficit becomes a big issue.
My only disagreement with what Krugman says here is that he's putting it too mildly; "starve the beast" isn't merely "still out there as a strategy," it's the centerpiece of the latest Koch-generated scheme to fundamentally change America in a way that gives the rich more and the rest of us less.

That plan is the drive for a "Convention of the States" that would propose amendments to the Constitution. The ALEC-backed folks behind this want to get 34 states to call for a convention focused primarily on passing a balanced budget amendment (which would mean no deficit spending in recessions unless a probably unattainable supermajority agreed). Tom Coburn just announced that he's fighting to get this done as well. Legislative votes on this have already been held or scheduled in Wisconsin, Florida, Arizona, and Georgia.

The crazies aren't close to where they need to be to get this stuff passed, and even if the convention is held, the amendments that come out of it will need to go back to the states, and be approved by 38 of them. But the fact that the idea is out there tells me that Republican thinking is different now -- in the past, Republicans have whined about deficits and spending until they've gotten into office, at which point they've spent money and busted budget in all the ways they've complained about. But the right is now working the rank-and-file up regarding this issue as never before, and the wingnut billionaires have a lot of money to throw around. I think they're dead serious about this. I think we'll have shocking austerity in 2017 if we get an all-GOP federal government.

So I'm with Krugman. The right still wants to eviscerate the safety net. Don't make this goal any easier to attain.


Victor said...

Here's where I think you're mistaken, Steve.

Republican Presidents, from Ike, to Nixon, to Reagan, to both Bush's, had NO problem with economic stimulus packages that they could take credit for.

And, if the win in 2016, I fully expect one of the first that the new Republican President will do, is ask for a major economic stimulus package.
It'll all be in how they sell the rubes in their base, that this WON'T be a stimulus package.
They'll call it the "Ronald 'Maximus' Reagan, 'Morning in America' - AGAIN - Definitely NOT a Stimulus, Act 0f 2017."

Maybe I'm wrong, but...

aimai said...

Wait, I think I've seen this movie.

Jules said...

Sure. And maybe if you give a pack of rabid hyenas half a cow they won't savage you when you try to pat them.

Unfortunately, there is no way to conduct the Rabid Hyena 1/2 Cow Pat Test that doesn't result in everyone except the hyenas getting their asses bitten off so ... No.

(With apologies to rabid hyenas.)

John Taylor said...

I don't like a payroll tax cut. It will just open the door wider for attacks on Social Security. Fiscally good but politically awful.

Monty said...

I'm also with Krugman on this.
However, I seriously doubt this has anything to do with the right wing's capacity for reason; its more about their honesty (or more specifically, the lack thereof).

aimai said...

The only reason--the ONLY reason-tax cuts were ever on the table is the idea pushed since Reagan that cutting taxes would raise revenue because somehow rich people would invest so much so hard in the economy that the taxes that were left would leave us rolling in dough. That has been disproven over and over. It never happens. Rich people don't invest more money when you let them keep more by lowering their tax rate. They hoard it and gamble with it and sit on it unless they get a guaranteed, untaxed, return. They don't have to put it to work by investing it because--they are keeping so much of it they don't need to worry about working at all, much less making thei rmoney work.

And we've known this since David Stockman ran off the reserveration screaming. We've known it since the beginning. It was all bullshit. So there is no reason, ever, to give tax cuts to the rich if your intention is either to create jobs (since they won't do that with their untaxed lucre) or to raise revenue (since their non working money won't create economic growth and thus tax revenue).

The only reason Obama has had to offer to extend the bush tax cuts is literally to buy off an intransigent right wing which demands, on behalf of its ownership class, extortion and cash in order to participate in the political process. There is no logical reason to offer tax cuts, and no moral case for offering tax cuts and certainly no economic case for doing so.

Joey Blau said...

Payroll tax is a huge mistake.. how many times do we have to hear that SS "contributed to the deficit" because of that stupid rebate?

bump up the earned income tax credit and the standard deduction if you want to cut taxes.