Oddly worded, but still disturbing:
A fiscally conservative Democrat who chairs the U.S. Senate’s budget committee on Wednesday said he supports extending all of the tax cuts that expire this year, including for the wealthy.
“The general rule of thumb would be you’d not want to do tax changes, tax increases … until the recovery is on more solid ground,” Senator Kent Conrad said in an interview with reporters outside the Senate chambers, adding he did not believe the recovery has come yet.
Conrad’s comments are sympathetic with Republican arguments against raising taxes amid a fledgling economic recovery. They frame a debate gaining steam over whether stimulus to bolster the economy’s recovery, or deficit reduction, should be the top policy priority.
In Reuters’ telling, Conrad is on the side of stimulus because he’s willing to waive PAYGO rules to give yacht-owners money for gasoline. Conrad is always, always complaining about the budget deficit, but now that we have an opportunity to raise some significant revenues by letting the Bush tax cuts for the super-rich sunset, suddenly he wants to waive PAYGO. I was recently reminded that my mother reads this blog so consider a long string of expletives (concerning objects and insertion points) to have been deleted here.
Democratic Senator Evan Bayh also recently questioned whether taxes should be raised on the wealthy, citing the economy.
Sen. Bayh didn’t even show up this evening to extend unemployment benefits. How about this? Take the money from the wealthy and use it to stimulate the economy and create jobs for people who are unemployed?
Ugh, I hate this shit. Technically they’re right: we should NOT be raising taxes whatsoever, even if it means extending the Bush tax cuts. On economic grounds, I’m worried that allowing them to expire AND refusing to stimulate the economy through Congress is a sure guarantee at a double dip.
However, I know that these bastards don’t give a fuck about the economy, and just want to extend these cuts indefinitely for their rich friends.
So, as a compromise, if I were in the Senate, I would use my leverage to argue for more stimulus. If we have another huge jobs bill, I’d vote for extending the Bush tax cuts for another three years, or something. I wouldn’t get rolled and extend them first, though. The liberals have leverage here: we do nothing, they expire. Use it.
From the same article:
Ouch!! Rubin told Conrad and Bayh. I know why Bayh is a Democrat(because of his dad). But why is Conrad? Is he a Democrat for the same reason Ben Nelson and Max Baucus are? Sure sounds that way.
What they should do, ideally, is let the cuts sunset and raise spending by an equal amount.
It won’t have a huge effect on aggregate demand, but it will have a positive effect taking advantage of the higher propensity to consume from lower-wage workers.
No this is not right at all. If the rich bastards aren’t actually spending their money (either on investments in this country or on luxuries to stimulate retail spending) then the right thing to do for the economy is to take that money away from them and spend it. Period. It can be argued that it isn’t the moral or the ethical thing to do, but damn it if they aren’t spending it to stimulate the economy then the correct thing to do economically is to take the money from them and spend it.
On top of that – if the size of the budget deficit is creating a political block to deficit spending, then again the right thing to do politically is to plug that budget deficit so that that argument can be neutralized.
Yeah, in a macroeconomics 101 course letting these taxes expire is the wrong thing to do. But that’s because in a macro 101 course there are a whole lot of assumptions about how the world works that just aren’t true but make the models easier to understand. Macroeconomics assumes all actors are rational, for example, and that governments won’t be doing irrational things with their tax and monetary policy to win votes. That’s why the Laffer Curve looked rational back in the 80s even to people who should have known better – it plays on people’s ideas of how micro and macro economics work that are taught to college freshmen but are absolutely wrong in the real world once all the variables are put into place.
Right, I agree with this, I don’t see how you read my post as something else.
If the tax cuts expire, they expire for EVERYONE, not just the rich people. I’m saying that because liberals have leverage, for once, they should use it to argue for more stimulus spending. If we get another big stimulus (not some paltry $100 billion thing), I would agree to extend the tax cuts for everyone for a period of a few years. I’m not saying that’s my ideal world; my ideal world would be to extend them the way Obama wants to extend them AND massive stimulus. That’s not on the table or in the cards, though.
Basically, my point is that liberals should be using this to argue for more stimulus, somehow and someway, and I worry that if the tax cuts are let to expire–which they would expire for everyone–AND get no stimulus, that it’s a sure fire way to get a double dip.
I guess my comments are being misconstrued because of the raising taxes aspect.
What I misconstrued was where you said “technically they’re right”. They’re not right even technically speaking. Raising taxes in a recession actually isn’t actually always a bad idea – even if there’s no additional stimulus at all the political cover of being able to plug the budget deficit with the money coming in from the expiration of the tax cuts is going to be better for the economy in the long run than not letting the tax cuts expire even in a recession.
So I disagree with the idea that unless they both raise taxes and add stimulus it will hurt the economy – it won’t. The rich assholes are just sitting on their money right now not doing anything with it anyway – they’re keeping it in low-risk savings sitting on it until the market turns around. So taking it away from them and having the government write off some debt with it instead is a net zero for the economy, not a harm. And if the budget deficit is giving the Republicans something to scream about then taking it away from them as an excuse for their stonewalling then that’s a net benefit for society.
It would be different if there were evidence that the rich were doing their part to stimulate the economy – expanding businesses in the US or investing in start-ups or any other of the hundreds of things they could be doing that “supply-side” economics takes as a given that they will do given lower taxes. But they aren’t – they’re either sitting on that money or they’re expanding in other countries. So fuck ’em – taxing their money that they aren’t investing in our economy isn’t going to hurt our economy and it might just help a lot.
Here’s Mark Thoma:
That’s his argument regarding the tax issue, and I would agree with him. I was just using the tax argument as leverage to get more stimulus.
I’m not sure that Bayh didn’t “even show up”. The link just said “not voting” which could mean something else, couldn’t it? I would agree that Bayh is pathetic and must be considered as a Republican vote most of the time. He will not be missed.
Here is a case where progressive stonewalling makes sense. Force the sunsetting of the Bush tax cuts by stonewalling attempts to extend them.
And yes, Conrad is a jerk.