07 December 2010

Did fiscal conservatives compromise their principles?

Maybe I misunderstood, but it was my understanding that Republicans had objected to a further extension of unemployment benefits because the Democrats had not submitted a proposal to "pay for" them by cutting other forms of federal spending. Today, however, I hear that Republicans have agreed to support the extension of benefits in return for an extension of reduced tax rates for the wealthiest Americans. Something seems inconsistent here ... unless you're a faith-based supply-side ideologue. It's the persistent contention of such people -- I heard Mr. Right reiterating the argument just yesterday -- that cutting tax rates always results in an increase in tax revenue. The idea is that allowing people at all income levels to keep more of their money will inspire the poor to spend and the rich to invest. The rich make more money as a result and pay more to the government, at a lower rate on larger income, than they would had higher tax rates resulted in lower income, as supply-siders claim they must. Mr. Right in particular is fond of pointing out that this was once Democratic doctrine, that President Kennedy cut taxes and got more revenue in the early 1960s. Given the power of the American economy back then, however, it's fair to question whether the Kennedy tax cuts in their own right stimulated the economy in any significant way. JFK may have assumed that, given a surging economy, he could spare lower taxes and still get the revenue he deemed necessary. The economy of 2010 is not surging, and it's arguably the wrong time to test a hypothesis that tax cuts on their own stimulate greater productivity or taxable profitability.

For that matter, how many practicing Republican politicians actually believe the tax cut = more revenue thesis? How many right-wingers actually care whether tax cuts result in more government revenue? If they believe in limited government, I imagine that they care little whether tax cuts fund more government. The entire argument strikes me as a bit of sophistry aimed at independents and moderates who don't necessarily share reactionary Republicans' moralistic antipathy to taxation in general and would want assurance that government can still fulfill obligations that Republicans don't even necessarily endorse.

Even if we presume that Republicans are sincerely convinced of the revenue-stimulating effect of tax cuts, we must observe that they've opted to pay for the extension of unemployment benefits with a promise of revenue, not with any actual spending cuts of the sort they'd demanded. Whether the extended benefits will be paid for depends on the performance of the economy; as usual, Republicans stake much on a risky investment instead of accepting an immediate obligation. The President, for a short time, at least proposed to pay for the extension and other priorities by increasing taxes on those Americans most capable of paying them. He has now decided not to "play politics," making one wonder what he's doing in the White House beside satisfying his personal ambition to make history merely by being there. Someone needs to launch an all-fronts moral attack on reactionary Republicanism, and if the nation's top Democrat won't do it, what good does a two-party system do us?

1 comment:

Crhymethinc said...

No. It is just business as usual.

Republican: "So, Mr. Democrat - you wish us to do something to help the poor and working class? Do something for the wealthy first, then we'll consider whether the poor and working class are entitled to any more crumbs than what we've already thrown them."

Democrat: T-t-t-thank you, Mr. Republican. And thank you for not questioning my patriotism, calling me a terrorist supporter, inferring that I may be a secret muslim or doing anything that might compromise my shaky perch on this here fence.