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Friday, March 01, 2013

The tax-cutters' eternal advantage

David Atkins does not like Obama's proposed Medicare and Social Security benefit cuts and complains about moral um, unequivalence in D.C.:
The idea that spending cuts are morally and politically superior to revenue increases is so ingrained the Village political press that to even put the shoe on the other foot creates an unthinkable scenario. This is one of Ronald Reagan's most baleful legacies: a Washington establishment that can't stop believing it's the 1980s or early 1990s.
But then, the current President has some culpability in the affair as well... Among the cuts the President is proposing is "Superlative CPI", also known as Chained CPI... [along with] unspecified discretionary cuts, as well as specified, real cuts to Medicare. That's the President's own plan. We also know that cuts to Social Security and increases to the retirement age have been on the table from the White House. Meanwhile, Republicans are refusing to give any ground on revenues.

One side advocates lots of cuts and a few tax increases. The other side advocates only cuts. It's hard to blame just the press for implicitly placing cuts on a higher moral pedestal.
Too true (though I don't really have a problem with Obama's proposed cuts). But in addition to a false moral advantage, the anti-tax side also has an inherent political advantage.  No one likes to have their taxes raised, and so no elected official likes to raise taxes. Last time but one the Republicans exploded the deficit with enormous tax cuts, it was a thirteen-year slog to get them back to levels adequately funding the federal government -- and that step-by-step climb was only possible because neither Reagan nor Bush Sr. were captive to today's extreme of GOP tax fundamentalism. This time, it will probably take twenty years to crawl out of the hole Bush Jr. dug.

It works like this: Republicans gut taxes, and Democrats pay in political blood to get a fragment of the revenue back.  Bush cuts taxes in a way that would reduce revenues by $3.6 trillion over the next ten years (if all the cuts remained in place), and Obama at no point proposes getting as much as half the revenue back.  Partly on the merits, perhaps (middle class stagnation, widening inequality), but mainly because of the political toxicity of tax hikes, he has promised since 2007 to hold the middle class harmless in the revenue wars.  And thanks to his poor negotiating, we'll be lucky if he gets a quarter of the revenue back.

Of course, people don't like benefit cuts either. On that front it's true, as Brian Beutler says, that "Obama’s done a genuinely excellent job of fixing the broken link in the public’s mind between taxes and popular spending priorities." But that in itself doesn't put Humpty together again.

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