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Kingfish Award, 1/5: Paul Krugman |
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Krugman hits Obama from the left on taxes and stimulus:
Look, Republicans are not going to come on board. Make 40% of the package tax cuts, they’ll demand 100%. Then they’ll start the thing about how you can’t cut taxes on people who don’t pay taxes (with only income taxes counting, of course) and demand that the plan focus on the affluent. Then they’ll demand cuts in corporate taxes. And Mitch McConnell is already saying that state and local governments should get loans, not aid — which would undermine that part of the plan, too.
OK, maybe this is just a head fake from the Obama people — they think they can win the PR battle by making bipartisan noises, then accusing the GOP of being obstructionist. But I’m really worried that they’re sending off signals of weakness right from the beginning, and that they’re just going to embolden the opposition.
Reading my boys at Agonist, mainly Sean Paul and Stirling, has convinced me that the anti-tax movement is one of the biggest obstacles toward progressive governance. We can’t keep feeding that troll. If every economic plan has to include tax cuts, we’re going to have a hard time solving problems. I don’t even know that people inherently object to taxes - I think they object to taxes most when they feel they’re getting a bum deal. As a friend put it the other night, he gives a third of his check and in return gets a police state that could kick down his door and bust him for smoking pot at literally any moment. And he doesn’t see much other benefit from his taxes. But that doesn’t mean people always favor cutting taxes. If the government can create good jobs, provide decent healthcare, offer dependable pensions, and maintain high standards in infrastructure (trains, internet access, etc), people won’t demand tax cuts.
People object to higher taxes when they see the mismanagement of current revenue. If the gov throws half of what we give them into dead-ends, or projects of marginal importance, why should we give them more? Problem is, no one agrees on what constitutes a dead-end, or an important project, so we have to raise taxes to get more flexibility in our budget. When we do this, the original argument remains valid for everyone - the government mismanages our revenue and doesn’t deserve more - because while government jobs, dependable pensions and decent healthcare might be good for many, there’d be an influential section of the citizenry objecting. “I don’t need a pension, I don’t use your public healthcare because my private healthcare is higher quality, and I certainly never took advantage of your government jobs,” they’d say. To them, this would be wasteful spending, and they would still demand tax cuts.
Good point. I think showing wealthy people - which I think is basically who you’re talking about at the end - the benefit of such government intervention/spending will be complicated. But for most wealthy people, I think the benefits are indirect but very real. Putting people to work increases the strength of the economy as a whole. If the government provides healthcare, business owners will no longer have to. Same for pensions. And we all benefit from better infrastructure; I think that’s especially true for trains. Even a wealthy man cannot currently travel by train from Cincinnati to DC in 4 hours. So there’s a reason that even some super-rich people like Warren Buffett say theyre willing to pay more taxes.
I agree wholeheartedly that everyone will see the value in trains, which is why I chose not to include that in my projected wealthy person’s comment. You may be right on the healthcare too, but it’s a hard sell to say to the wealthy individual (and I don’t know enough on the subject to say whether or not this would even be true), “look, however much more we take from you you’ll make back in healthcare savings.” As for the government job creation = stronger economy, that’s true in an economic downturn, like now, but once the economy recovers, those generally opposed to tax increases will be looking at all the government jobs high taxes and seeing ought but socialism. “We create enough jobs in this economy, that’s our hallmark,” they’ll say, and they won’t be entirely wrong. At that point, however, they’ll be stuck with the higher taxes.
I know it’s a tricky business, for exactly the reasons I gave in my first comment, but I’d like to see smarter spending in Washington (particularly in Defense) as a means of opening up room in the budget. And when we do cut taxes, as Jason was saying in his subsequent post, why not make it a progressive tax break? I’m thinking in particular of a reduction in sales tax for a basket of essential goods like milk, bread, eggs, etc. Everyone gets to enjoy these tax breaks, but they invariably comprise a higher percentage of an individual’s income the further down the class ladder you move.
Good points again, and I think we’re in agreement. I’m not opposed to tax cuts per se, and I don’t think that job creation automatically requires tax increases. It also matters how we cut taxes. And there are a whole host of measures we could take, easily, to make room in the budget: cutting military spending and cutting the drug war are the two biggest candidates, and no one needs to “go line by line through the budget” to figure that out.
I am concerned though about ceding the rhetorical ground to the antitax movement, because the issue at its core is not just about taxes, it’s about what government is. Repeatedly affirming the value of tax cuts starts to sound, after a while, like an avowal that government has no role in promoting social welfare. Krugman makes his case economically, and wiser heads than mine can judge its merits (though I tend to trust him, as I do Stirling and Sean Paul at Agonist on these issues), but he also makes a political case that I agree with and, frankly, understand better than the economic argument: give the Republicans and the antitax crowd an inch and they’ll take a mile. And then the good and necessary government functions in times of crisis (or prosperity - would’ve been nice to have the WPA around in the inner city in the 90s) won’t ever happen.
At some point, legislatures at the federal and state levels will have to start eliminating expensive government programs to save our economy.
Oh yeah? Why’s that? And which programs would you propose get axed? Please give links and explain just why these costly programs need to go.
I agree, assuming we’re talking exclusively about the defense budget.
A third of our taxes go toward interest on the national debt. Another third are simply wasted through inefficiency.
We want tax cuts because, what gives anyone, government included, the right to steal from one person and give to another? That’s unethical and immoral.
“If the government can create good jobs, provide decent healthcare, offer dependable pensions, and maintain high standards in infrastructure (trains, internet access, etc), people won%u2019t demand tax cuts.” That’s a big if. The government doesn’t create jobs - the private sector does. If it does create a job, it creates it by stealing someone else’s by taxing away from businesses the money they could use to hire their own employees. Look to the USSR or Cuba to see how “great” their government jobs are. Further, the government tends to spend its money on “failing” businesses - e.g., look at all the current bailouts - sure, that spending is creating or saving some jobs, but in failing companies - is that smart? The government does not provide decent healthcare - it destroys decent healthcare. ANYWHERE where there is government provided healthcare there is (a) rationing, (b) waiting lists for treatment, and (c) lack of innovation. It is pure hubris to think that Americans have some special knowledge gene that will make nationalized medicine work when it is a failure in any other country. The ONLY system that provides both medical innovation and quality healthcare is a system that incentivizes providers to provide the best care at the best price - i.e., a free market system (one which has been absent from the U.S. for many years, except of course in those specialties that the government does not yet control, such as cosmetic surgery). High standards in infrastructure - read the paper and all you will read about is how our infrastructure (which is presently government run) is crumbling - what, tomorrow, the government is going to wake up and all of a sudden start providing quality infrastructure? The Internet was not built out by the government - it was built-out by profit driven private businesses - indeed, the principal reason why the U.S. lags in bandwidth and other innovation is overregulation. Therefore, based on the premise above, I think tax cuts are in order.
LOL, you do raise some very valid points, well done!
http://www.web-privacy.pro.tc
no problem, then please never leave your house again, as you might be using services provided from taxes, like roads, parks, etc. and also you need to sever all ties to services provided by the government, like sewer, water, etc.
Taxes are a needed thing. Yes they are abused and yes it would be great not to have them. But that is not reality. As to how to force our government to spend what we give them more wisely, well that is the real issue, isn’t it?
egads
The government doesn’t create jobs and never could. The government doesn’t provide the internet and never can. If they did, it would have all kinds of weird rules attached and take 2 years to install per home.
Pensions, by definition, aren’t government paid unless you work for the government. Pensions are employer paid.
Infrastructure, roads and such, are local and state rather than federal. That’s a seperate tax entirely (gas, county, and state taxes. some federal grants but it’s a drop in the bucket and generally pork anyway.)
Trains, again, aren’t federal. Most trains are semi-private with state money going to help pay, but they are stuck mostly at the level of 1930’s technology and can’t break out of it due to regulations, bureocracy, and lack of desire to make changes.
Healthcare is another issue entirely. Conceivably the feds could handle it, but I doubt if they would do it well.
I would hate to see MORE of my life get managed by the feds, or even the state or county.
“Taxes are a needed thing.”
Sorry, but not true. We didn’t even have income taxes until the 1930’s or so and then it was only 1%.
Previously to that, all government spending was paid for by minimal property taxes.
Most of the taxes we now have are wasted.
And by the way, taxes != pensions. social security is paid for not with taxes.
The income tax that we have today was first enacted in 1913, with the creation of the Federal Reserve. There were several income taxes before then, but they were shorter lived.
It’s easy to prefer direct public deficit-spending rather than tax cuts, if you happen to believe that either is a possible solution to the current economic debacle. Many government expenditures are, indeed, needless and/or demonstrably harmful (i.e. the Iraq War), but the crucial fact of the matter is that such expenditures are almost never cut, since they take on a life of their own when they become “necessary spending” instead of waste.
For my part, I think the government can give us more for far less taxes, but tax cuts aren’t going to get us there. The government is far more likely to cut programs that help us, rather than the ones that hurt us, wailing the whole time that the public isn’t willing to pay the price for the goods it wants. Otherwise, the gap will be paid with loans, which make our debt problem worse.
On the other hand, I don’t think that the proposed increase in spending will be effective either, for the simple reason that, if it’s theoretically capable of working (which it may be, though I doubt it), the amount is far too little. If the amount were adequate, the national debt would be pushed beyond the capability of GDP growth to sustain payments on the interest if and when the dollar loses its status as the world’s reserve currency, or our creditors refuse to lend.
What I fear most is the fact that the government, with the Fed, has become both the lender and consumer of “last” resort (more often the first resort). The government has every opportunity, and politicians have every temptation, to withhold or provide assistance to industries on the basis of lobbying power or corrupt influence, rather than on the basis of helping people. If the stimulus fails, due to incompetence or corruption, there will be another dose to follow it.
If it works, kudos to Obama and the Democratic congress. I hope it works. I want it to work. Yet, the last eight years have made an indelible mark.
The government doesn’t create good jobs. By its very nature the government itself produces nothing (so how can it employ?), but requires money from its constituents to do anything.
It can be helpful to think of the government as a company with a monopoly on a set of services. A company without competition is unlikely to innovate or work harder than it has to.
You can pull the “voter” card, but I think you know better.
“. If the government can create good jobs, provide decent healthcare, offer dependable pensions, and maintain high standards in infrastructure (trains, internet access, etc),”
As it happens, our government has repeatedly proven itself incompetent to provide any of the benefits listed above. No government can create jobs, they can only move them around by looting the productive sector of the economy. If you want decent healthcare, then you should be yelling for full deregulation of health care, starting with ending the War on Drugs. Dependable pensions? How about a Ponzi scheme instead? That’s what the Social Security scam is, and what it’s always been. As for trains and internet access, look at Amtrak. Want those clowns to be who you call when your net connection dies?
Bad government programs never go away — they get worse. That’s the problem. As they get worse than that programs aren’t allowed to fail - instead we pump more money into them. That’s the solution?! Look at how much the federal budget has grown just in the past 25 years - is your government twice as good as then? three times as good? how about six times as good? You don’t think each individual could have spent that money better? Come on.