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).

3 Responses to “Taxes and deficits”

  1. bj Says:

    I kind of disagree — that “paygo” rules will result in more gain than loss for progressive/liberal causes, and I base this as a resident of one of the Western states that requires balanced budgets, no deficit spending allowed.
    The Republicans hope that the rules will prevent spending (and they foolishly think there’s a lot of painless cutting to be done). But, Democrats are wrong in thinking that knowing where the cuts will hit will make people support taxes. Folks tend to remain delusional, and think there’s some magical way to get services without paying for them (look at the whole schools debate, for example). So you end up with status quo detoriation of services and infrastructure.
    We just passed an initiative to further bind our ability to raise taxes, rejected a measure that would have allowed school levies to pass without supermajorities, and rejected a weird transportation bill. So, more spinning our wheels while we wait for catastrophic failure of our bridges (hopefully, found during an inspection so that we can close the bridge without killing anyone).

  2. dave.s. Says:

    “…then being a Democrat doesn’t mean squat.”
    That’s been my view for some time. My view is sort of jaundiced because Jim Moran is my congressman, too – Mister Vote-for-the-credit-card-companies-and-then-get-a-personal-mortgage-from-them. I have gone independent.

  3. dave.s. Says:

    More! More! this is Mickey Kaus today quoting Nora Ephron:
    Nora Ephron: “[T]he Democrats tend to break your heart and the Republicans are just the boys you’d never go out with anyway.” When people ask me why I spend so much time attacking fellow Democrats, I think this is what I’m going to start telling them. It’s even true, at least as far as the Republicans are concerned. My expectations of modern Democrats are so low that ‘break your heart’ doesn’t really apply.

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