Taxes and deficits
I don’t have the words to say how appalled I was by today’s Washington Post article on how Senator Schumer has become a wholly-owned subsidiary of the hedge funds. If being a Democrat doesn’t mean that it’s a no-brainer to vote for closing a loophole that lets people who earn tens of millions of dollars a year pay taxes at a lower rate than people earning the minimum wage (because payroll taxes are over 16 percent), then being a Democrat doesn’t mean squat.
Last week, I listened to most of the Ways and Means Committee debate over Rep. Rangel’s one-year patch bill, which would fix the AMT for one year, extend a bunch of expiring credits for a year, and also help some low income families by extending the refundability of the child tax credit. No one argued against any of these things, but all the Republicans were saying that they didn’t need to be offset with tax increases anywhere else, because taxes are too much of the GDP already. The Democrats were all responding by saying that it would be irresponsible to increase the deficit.
It’s sort of bizarre that the Dems have become the spokespeople for fiscal responsibility (at least on the House side). I listened to a radio show a few weeks ago where a bunch of traditional fiscal conservatives sounded totally shell shocked about how little today’s Republican leadership cares about running deficits. In principal, I agree that modest deficits aren’t inherently a bad thing, if they’re supporting investments in future productivity. (And I’d add that government spending needs the flexibility to be countercyclical — e.g. to expand when the economy gets bad). But given the Republicans’ willingness to mortgage the future, I think there’s more to be gained than lost from "paygo" rules (e.g. where any tax cuts or spending increases need to be offset).