Lessons from the tax cut deal
December 13, 2010 Leave a comment
What can I say, I’m a sucker for lists (and Ezra Klein). I think Ezra’s six lessons from the tax cut deal are a good combination of the two. I’m particularly partial to lessons 4 & 5:
4) Republicans really, really, really care about tax cuts for rich people. Many Democrats had been operating under the theory that Republicans would simply obstruct everything Democrats attempted, as that was the best way to make Obama a one-termer. At least when it comes to tax cuts for very wealthy Americans, that’s not true. Republicans agreed to far more in unemployment insurance and stimulus proposals than anyone expected, and sources who were involved in the negotiations agree that the mistake Democrats made going in was underestimating how much Republicans wanted the tax cuts for the rich extended.
5) It’s still Ronald Reagan’s world, at least when it comes to taxes. The Sturm und Drang over the tax cuts for the rich obscured the Democrats’ massive capitulation on the tax cuts for everyone else. Even the party’s liberals had accepted Obama’s argument that the tax cuts for income of less than $250,000 – which includes the bulk of the Bush tax cuts – should be permanently extended. Another way of saying that is Democrats had agreed that the Clinton-era tax rates were too high. If you put it to most Democrats that way, they’d protest vigorously. The economy boomed under Clinton, and the Democratic Party is proud of the efforts it made to balance the budget. But Democrats are so terrified of being accused of raising taxes that they’ve conceded to the Bush tax rates for 98 percent of Americans.
If I were a more ambitious political scientist, I’d be really curious to know the degree to which America is unique in our political dialog over taxes or how much this may resemble the debate in other modern democracies. To some degree, we’re clearly unique, otherwise all those other nations would not have a larger (and kinder) public sector. Still, are the left parties in other democracies simply unafraid of discussing raising taxes or are they rather just not quite as cowed as the Democrats are.
To reiterate a favorite point of mine, the real problem with our current situation is Americans are simply unwilling to pay for the amount of government we are receiving yet unwilling to cut the amount of government. We’re just pawning off the gap on future generations. So wrong. I forget which blogger suggested that Republicans be labelled “borrow and spend” in contrast to the “tax and spend” Democrats, but it’s really what a big part of the difference comes down to. Democrats are theoretically willing to actually raise the revenue for the government programs they want (but political too afraid to talk about it), whereas Republicans simply believe in borrowing for the (different) government programs they want.