The Sucker’s Bet
As is well known, from 1980-1992 tax cutting was great and deficits didn’t matter. But starting in 1993 it was crucially important for the government to run balanced budgets. But then suddenly in 2001, budget surpluses became dangerous and we needed giant tax cuts. Then from 2002-2008 deficits didn’t matter because it was wartime. So the plan was to explain that in January of 2009 suddenly deficits mattered again and Barack Obama wouldn’t actually be allowed to pass any progressive legislation. But there was a fly in the ointment, and Obama seemed unwilling to play ball, telling David Leonhardt that he wouldn’t be as willing as Bill Clinton to curtail his agenda in the interests of deficit reduction.
Fortunately, along came a $700 billion bailout, so now The Washington Post explains that that’s the real reason Obama needs to adopt an austerity agenda.
He seems inclined to go along with it, but I think as a progressive that you’d have to be out of your mind to do anything of the sort. For over fifteen years now, zero members of the conservative movement have shown any willingness whatsoever to sacrifice any priority to any degree in the interests of deficit reduction. Under the circumstances, it makes no sense to play along with the rules of a rigged game. If President Obama institutes an unpopular austerity agenda and the right sweeps the 2010 midterms, do we think they’re going to be clamoring for further austerity and responsible budgeting or for tax cuts?
If anything should be done, the case seems clear for wildly higher tax rates on high-income individuals than prevailed during the Clinton years. Are we afraid of stifling the kind of fat cat activity that’s brought us to our current situation?
36 Responses to “The Sucker’s Bet”
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September 24th, 2008 at 10:38 am
Goddawg ya’ll. That cat’s fatter than a motherfucker.
September 24th, 2008 at 10:40 am
Looks kinda like Carly Fiorina, if you ask me.
September 24th, 2008 at 10:43 am
sory u kn not hv hlthcr we gav all ur mony to bnkrs kthxbai
September 24th, 2008 at 10:46 am
Finally.
I think it’s safe for Dems to start using the word ‘redistribution.’
September 24th, 2008 at 10:47 am
it’s not altogether clear that we would have had the same quality of economic performance under clinton had we simply marched along without caring about deficits at all (and, for that matter, it’s not true that deficits didn’t matter to a single republican: remember “read my lips” being broken?).
nor is it clear that had george bush followed a more responsible fiscal policy, we would have the same set of financial system tremors that we have now.
so the story is a little more complex than your headline level narrative: fiscal policy does make a difference.
September 24th, 2008 at 10:47 am
By the way, this debate is over, because tonight Preznit Pissy Pants is gonna come out on prime time TV and amaze America with his brilliant arguments to hand a $700 billion rotating taxpayer credit account to this Goldman-Sachs guy, and once America hears Preznit Bush Jr’s clarion call to action, we will respond!
September 24th, 2008 at 10:50 am
I’m actually a bit worried about that cat’s health.
September 24th, 2008 at 10:50 am
The bailout, if it goes through (I tend to think it will), will add to the grudge that people hold against the top 1% for taking all the gains in the economic growth we’ve seen and for having a different set of rules applied to them.
It may actually make it easier for raising taxes on the very rich, along with passing new regulations on business and other parts of the progressive agenda.
September 24th, 2008 at 10:53 am
Deficits don’t matter is a GOP thing. It is correct to call them out on it. However, that should not mean that the democrats abandon fiscal responsibility. There are many reasons for the current financial crises. However, monetary expansion and artificially low interest rates (to facilitate govt. borrowing) ranks up there.
Fiscal austerity/responsibility is an important and worthwhile policy goal. It wouldn’t hurt if it became part of the democratic brand. That does not mean we have to cut progressive programs. It just means we have to cut somewhere else… like defense and spending on useless wars. And of course, raise taxes on the wealthy.
September 24th, 2008 at 10:54 am
Obama will have to practice some degree of financial austerity, but he should not deep six his progressive agenda. This will hurt him political short term, and indeed set up a return to power of profligate “conservative” Republicans, who will again spend us into oblivion. Continued Democratic rule will depend on finding the right balance between taxing and spending. I wholeheartedly agree tht part of the taxing ought to include a heavy burden on the wealthy. And it can be justified with a classic “Republican” argument: as Biden has said and should keep on saying, it’s patriotic!
September 24th, 2008 at 10:56 am
Hello.
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September 24th, 2008 at 11:05 am
You should’ve used a picture of this fat cat, who was actually a victim of foreclosure.
September 24th, 2008 at 11:22 am
One fundamental difference between the Democratic and Republican parties is that the Democrats believe in good governance. Of course in practice they may miss the mark, but there is an underlying belief that government policies should not just make sense now, but should also make sense for the future. There is some consideration of how everything fits together structurally.
Massive debt is a structural problem. Bill Clinton ran on a platform of balancing the budget and he succeeded by the end of his second term. He solved the structural problem and got the country to a point where the country could start paying down the debt. The necessary compromises lost the Democrats control of Congress and wiped many progressive programs off the map.
I don’t think Obama should run on a platform of balancing the budget. Our financial ship needs to be righted, clearly, but there are also a lot of progressive goals which we could pursue. After the spectacular decline of the Bush years maybe it is time to spend some effort and capital rebuilding the country.
September 24th, 2008 at 11:39 am
This is absolutely right.
I think the argument the next Democratic President needs to be making is that we have to make these investments before the Republicans find a way to piss everything away. We can’t have another situation like the 90’s, where we put off a lot of necessary investment in order to pay down the debt and build a surplus–and then a Republican president comes in and blows it all on pointless wars, tax breaks for the rich, and Wall Street bailouts.
The argument is a little perverse, but it’s basically that we have to invest this money in the future (energy, infrastructure, fixing healthcare) so the government can’t get their hands on it.
We need lockboxes.
September 24th, 2008 at 12:01 pm
If you ask me (I know. I know. No one asked me.), this whole bailout is one big Republican fraud to deprive the coming Democratic Congress of the wherewithal to pass progressive legislation.
September 24th, 2008 at 12:35 pm
So the GOP’s plan has worked perfectly. Though none of the elected Repugs ever said it for the record, some of the unelected ones such as Grover Norquist(Fascist Party) have made it clear that they planned to kill all programs that would help the common people by running up so much debt that they couldn’t be afforded. So if Obama now wants to forego his plans to pay off the Repug debt…why should I now go vote for him? If we’re going to stick to GOP policy why should the Democrats take the blame for it; we might as well have another GOP president if he is just going to be their sucker…
September 24th, 2008 at 1:01 pm
“If anything should be done, the case seems clear for wildly higher tax rates on high-income individuals than prevailed during the Clinton years.”
Except your math doesn’t add up. Tax them at near 100% of their income and you don’t get enough money to pay for the things you want. There just aren’t enough ‘high-income’ individuals to go around.
Essentially deficit reduction is important to the party that is out of power because the other party is spending money on things you don’t like. When you are in power, the money is being spent on things you think are important, so deficits are ok.
Of course since everyone pretty much acts that way, deficits are never dealt with by restraining spending like they would in a normal household or corporate budget. You always have to hope that you can grow your way out of it.
This is closely related to the fact that approximately 60% of Americans want lower taxes and about 60% of Americans want lots more government services.
September 24th, 2008 at 1:09 pm
I actually think if Obama has any brains he actually uses the current crisis as a justification for an even more progressive agenda. Health care, propose single payor instead of his version of the German system (which it is my understanding it is most similar to) with the justification that is original proposal didn’t have cost control systems but the single payor will be able to, and we need them in place to squeeze every penny out of the national economy. Green energy plan, start it day one since it will be a first step towards getting the economy back on its feet and solving the current account balance problem (paying for oil), etc. etc.
September 24th, 2008 at 1:15 pm
And don’t forget that lovely little venture of a land war in Asia. Might be able to save a bit on that don’t you think? We can send Cheney over with his shotgun to keep them in line…
September 24th, 2008 at 1:42 pm
The income of the top 10% is roughly equal to the total of all income tax receipts of the federal government.
September 24th, 2008 at 2:41 pm
The best thing about the financial crisis is that it has finally smoked George Bush out of his spider hole.
September 24th, 2008 at 6:10 pm
Sebastian, if you’re going to say that someone’s math doesn’t work, you really ought to provide numbers showing that it doesn’t work. You do want us to take your post seriously, don’t you?
September 24th, 2008 at 6:55 pm
For the entire post-war era before Reagan, not only was the top tax rate higher, but the bracket itself was much higher on the income scale- it has barely adjusted sine the 1970s. Why haven’t the Democrats proposed a new higher tax bracket in the $1 million+ range? This would allow them to reduce taxes on 6-figure upper-middle class professionals, an important swing vote bloc.
http://www.truthandpolitics.org/top-rates.php
September 25th, 2008 at 10:24 am
So… democrats should behave recklessly because republicans behave recklessly. This is kind of like not following the Geneva conventions because our opponents don’t, no?
September 25th, 2008 at 11:06 am
Behave recklessly? On the contrary. Progressive taxation and social invesment is the only way to break out of the whole “GOP wrecks the economy/Democrats tighten the belt to fix it while being decried as wasteful spenders” vicious circle.
It has been proven beyond all expectations that nothing is more reckless that letting conservatives defund and de-capitalize government in favor of financial pyramid-schemes.
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