Facebook Badge

Toll Free Numbers To The Washington Switchboard

1-866 338-1015
1-866 220-0044

Sunday, January 11, 2009

Typical tax cuts for the rich mentality.

The conservative punditocracy that has spent the past eight years propping up a president who gave us an illegitimate war and leaves us with an almost unimaginably bad economic crisis apparently grows weary of defending this spectacular failure of a president. And so they have begun to shift their efforts to an easier task: trying to turn Americans against the president who ended the Great Depression, initiated the minimum wage, created Social Security, and helped defeat the Nazis.

Yes, they're trying to bring Franklin Roosevelt down to George W. Bush's level. Good luck with that.

On Fox News, for example, Brit Hume insisted this week that "everybody agrees, I think, on both sides of the spectrum now, that the New Deal failed."

Unless by "both sides of the spectrum," Hume means "far-right ideologues who have shows on Fox News and far-right ideologues who do not yet have shows on Fox News," he's overstating the consensus by a fair amount.

Economist Paul Krugman, for example, disagrees.

Krugman may not have the gravitas that comes with being Washington managing editor of Fox News, but he does hold the most recent Nobel Prize in economics. Krugman says the New Deal included "long-run achievements" that "remain the bedrock of our nation's economic stability" and "brought real relief to most Americans" and notes that "[b]y 1937, things were a lot better than they were in 1933." According to Krugman, the New Deal would have been even more successful had Roosevelt not been "eager to return to conservative budget principles."

Ben Bernanke disagrees with Hume, too. Bernanke has neither a Nobel Prize nor a gig at Fox News -- but he was appointed to chair the Federal Reserve by President Bush. Bernanke wrote in his Essays on the Great Depression: "Only with the New Deal's rehabilitation of the financial system in 1933-35 did the economy begin its slow emergence from the Great Depression."

So liberal Nobel Prize-winning economist Paul Krugman says the New Deal was a success, and the Bush-appointed Fed chair says the New Deal was a success. That's quite a broad spectrum of people who disagree with Brit Hume's assertion that "both sides of the spectrum" agree that the New Deal failed.

Not that Hume is alone in his attacks on the New Deal. Washington Times columnist Jeffery Kuhner called it "a complete and utter failure" during an appearance on Michael Savage's radio show, in part because it "never tackled the problems of unemployment and poverty." And Pat Buchanan added that "[b]efore 1940, not once did unemployment fall below 14 percent," concluding that "economically, the New Deal was a bust."

That sounds pretty bad, doesn't it? Unemployment above 14 percent every year of the New Deal? What a failure!

Well, maybe not. Here's a Heritage Foundation chart upon which Buchanan is likely relying for that statistic. Note that at the point Heritage identifies as the beginning of the New Deal, unemployment was higher than 35 percent. Suddenly 14 percent looks like extraordinary progress, doesn't it?

But there's another problem with Buchanan's use of the 14 percent figure, as Media Matters noted: It ignores public sector jobs. Given that a significant part of the New Deal consisted of jobs programs like the Works Progress Administration, which put millions of people to work doing things like building highways and bridges, excluding public-sector jobs in order to claim that the New Deal created few jobs is simply absurd, not to mention dishonest. It boils down to saying, "If you ignore all the jobs the New Deal created, the New Deal didn't create many jobs." Well, sure. Hard to argue with that.

In any case, even using Buchanan's 14 percent number, the unemployment rate dropped more than 60 percent during Roosevelt's New Deal. You might think that, given the soaring unemployment rate under fellow conservative George W. Bush -- from 4.2 percent when he took office to 7.2 percent today, a 70 percent increase -- right-wing pundits would avoid picking fights with FDR over how to reduce unemployment.

But that assumes a level of honesty that simply is not in evidence. This is a crowd that claims to be shocked when it snows in January so that they can argue that global warming is a myth. They think nothing of fudging a few numbers here and there.

(FDR's job creation record isn't the only aspect of his legacy taking a beating in the media. On CNN yesterday, anchor Tony Harris and correspondent Christine Romans described Social Security as a "Ponzi scheme.")

The reason for the conservative media's assault on FDR is clear: With a new president facing economic crisis, conservatives want to prevent him from stimulating the economy via government spending on things like unemployment benefits and infrastructure. Such spending would not only help people who need it most, it would also do more to stimulate the economy than would the tax cuts Republicans prefer. And that's according to Mark Zandi, who was economic adviser to John McCain.

So why don't conservatives want Obama to pursue such stimulus plans? Because they're rigidly opposed to government spending as a matter of ideology. Well, let me amend that: They're rigidly opposed to government spending by progressives. They're rigidly opposed to government spending on things like health care. They're wildly enthusiastic about government spending on things they like; government spending increased rapidly under Bush, just as it did under Ronald Reagan. (Just as their insistence that people have a right to be free from government interference goes by the wayside when it comes to reproductive rights or your ability to marry the person you love or to conduct telephone conversations without fear of Dick Cheney listening in via wiretap.)

So how do conservatives want to fix the economy? Must be tax cuts, right? They always think tax cuts are the solution, no matter what the problem.

And that's where things have gotten really strange.

For years -- no, decades -- conservatives have been repeating as a mantra their complaint that Americans are taxed too darn much. Not just too much, but too often. "We're taxed when we're born, when we work, when we get married, when we die," the right likes to remind us, as though the number of taxes we pay is more important than the amount.

But suddenly, many conservatives in the media seem to think there is only one kind of tax: federal income tax.

That's because President-elect Obama is considering as part of his stimulus package a $500 individual tax credit. You would think conservatives would be thrilled; instead, they denounce it. Fox anchors and Pat Buchanan and Don Lambro and countless other conservatives have attacked the tax credit as a giveaway to "people who don't pay taxes."

What they mean is that some people who would receive the tax credit effectively pay no federal income taxes because their income is too low. But it isn't the case that they "don't pay taxes." They pay payroll taxes and excise taxes (such as taxes on gasoline) and property taxes and sales taxes.

Conservatives used to delight in enumerating the ways in which Americans are taxed. Now, in order to oppose tax cuts for those who could most use the money, those same conservatives are pretending there is only one type of tax: federal income tax. For the sake of opposing Barack Obama, and in order to keep people who most need help from getting it, these conservative commentators are actually arguing against tax cuts, disregarding years of their own rhetoric in order to do so.

Set aside the inconsistency for a moment, though: The more important fact may be that in denouncing tax cuts for people who don't make enough money to pay federal income taxes, conservative commentators like Buchanan are opposing tax credits for the very people who would be most likely to spend that money, thus stimulating the economy.

The conservative pundits, then, don't want to deal with the economic crisis by spending money on things like unemployment benefits and much-needed infrastructure improvements. And they don't want to address the situation by giving tax credits to the people who most need them and would be most likely to spend them (the whole point of including tax cuts in a stimulus package in the first place).

So what does that leave us with? Oh, right: tax cuts for the rich.

Matt Yglesias explains:

Jeremy Pelofsky and Richard Cowan report for Reuters that "Some Republicans, including Minority Leader Mitch McConnell of Kentucky, have pushed for cutting the 25 percent middle-class tax rate as a way to get money into the hands of Americans quickly." But of course conservatives always say they want to help the middle class, but they always mean they want to help multi-millionaires. And as we had occasion to observe yesterday, this proposal is no exception.

Ben Furnas, Yglesias' colleague at the Center for American Progress Action Fund, offers more detail:

A new analysis from the Tax Policy Center finds that this tax change would lower taxes by less than $400 for average middle-class Americans, give a $4,000 tax break to those making over $2.8 million a year, and do nothing for households making less than $40,000.

For households with children the benefits are even more uneven. Families making less than $70,000 a year would see their taxes go down by an average of just $21 and those making between $70,000 and $140,000 would get even less. Households making over $600,000 with children, however, would get an average tax cut of $3,600.

In other words, conservatives don't want to return to Franklin Roosevelt's policies, they want to continue George W. Bush's.