GOP Friendly Fire

By David Frum:

I’ve been a Republican all my adult life. I have worked on the editorial page of The Wall Street Journal, at Forbes magazine, at the Manhattan and American Enterprise Institutes, as a speechwriter in the George W. Bush administration. I believe in free markets, low taxes, reasonable regulation, and limited government. I voted for John ­McCain in 2008, and I have strongly criticized the major policy decisions of the Obama administration. But as I contemplate my party and my movement in 2011, I see things I simply cannot support.

America desperately needs a responsible and compassionate alternative to the Obama administration’s path of bigger government at higher cost. And yet: This past summer, the GOP nearly forced America to the verge of default just to score a point in a budget debate. In the throes of the worst economic crisis since the Depression, Republican politicians demand massive budget cuts and shrug off the concerns of the unemployed. In the face of evidence of dwindling upward mobility and long-stagnating middle-class wages, my party’s economic ideas sometimes seem to have shrunk to just one: more tax cuts for the very highest earners. When I entered Republican politics, during an earlier period of malaise, in the late seventies and early eighties, the movement got most of the big questions—crime, inflation, the Cold War—right. This time, the party is getting the big questions disastrously wrong.

It was not so long ago that Texas governor Bush denounced attempts to cut the earned-income tax credit as “balancing the budget on the backs of the poor.” By 2011, Republican commentators were noisily complaining that the poorer half of society are “lucky duckies” because the EITC offsets their federal tax obligations—or because the recession had left them with such meager incomes that they had no tax to pay in the first place. In 2000, candidate Bush routinely invoked “churches, synagogues, and mosques.” By 2010, prominent Republicans were denouncing the construction of a mosque in lower Manhattan as an outrageous insult. In 2003, President Bush and a Republican majority in Congress enacted a new ­prescription-drug program in Medicare. By 2011, all but four Republicans in the House and five in the Senate were voting to withdraw the Medicare guarantee from everybody under age 55. Today, the Fed’s pushing down interest rates in hopes of igniting economic growth is close to treason, according to Governor Rick Perry, coyly seconded by TheWall Street Journal. In 2000, the same policy qualified Alan Greenspan as the “greatest central banker in the history of the world,” according to Perry’s mentor, Senator Phil Gramm. Today, health reform that combines regulation of private insurance, individual mandates, and subsidies for those who need them is considered unconstitutional and an open invitation to “death panels.” A dozen years ago, a very similar reform was the Senate Republican alternative to Hillarycare. Today, stimulative fiscal policy that includes tax cuts for almost every American is “socialism.” In 2001, stimulative fiscal policy that included tax cuts for rather fewer Americans was an economic­-recovery program….

Much as viewers tune in to American Idol to laugh at the inept, borderline dysfunctional early auditions, these tea-party champions provide a ghoulish type of news entertainment each time they reveal that they know nothing about public affairs and have never attempted to learn….

It is precisely these disaffected whites—especially those who didn’t go to college—who form the Republican voting base. John McCain got 58 percent of noncollege-white votes in 2008. The GOP polls even higher among that group today, but the party can only sustain those numbers as long as it gives voice to alienation. Birtherism, the claim that President Obama was not born in the United States, expressed the feeling of many that power has shifted into alien hands. That feeling will not be easily quelled by Republican electoral success, because it is based on a deep sense of dispossession and disinheritance….

The conservative shift to ever more extreme, ever more fantasy-based ideology has ominous real-world consequences for American society. The American system of government can’t work if the two sides wage all-out war upon each other: House, Senate, president, each has the power to thwart the others. In prior generations, the system evolved norms and habits to prevent this kind of stonewalling. For example: Theoretically, the party that holds the Senate could refuse to confirm any Cabinet nominees of a president of the other party. Yet until recently, this just “wasn’t done.” In fact, quite a lot of things that theoretically could be done just “weren’t done.” Now old inhibitions have given way. Things that weren’t done suddenly are done.

About Scot McKnight

Scot McKnight is a recognized authority on the New Testament, early Christianity, and the historical Jesus. McKnight, author of more than forty books, is the Professor of New Testament at Northern Seminary in Lombard, IL.

  • Richard

    Yep. Add to it the shift from, “The TEA Party Protest is American Democracy at its finest” to “OWS is a bunch of terrorist pinkos that deserve to be abused by the police.”

  • JoeyS

    “In fact, quite a lot of things that theoretically could be done just “weren’t done.” Now old inhibitions have given way. Things that weren’t done suddenly are done.”

    So something is getting done in our government…

  • Rick

    Richard #1-

    I am not a supporter of the Tea Party, but it does not do many, if any, illegal sit-ins. Its reps. got permits for the protests, then left when time was up.

    The OWS would have better PR if it did the same.

  • DLS

    I’m not sure #1 accurately summarizes the situation, but I’ll leave that to the discerning reader.

  • Rick

    Overall (he leaves out a few things, but is right about the tone) I agree with what Frum is saying, especially the comment,

    “The first decade of the 21st century was a crazy bookend to the twentieth, opening with a second Pearl Harbor and ending with a second Great Crash, with a second Vietnam wedged in between. Now we seem caught in the coils of a second Great Depression. These shocks radicalized the political system, damaging hawkish Democrats like Hillary Clinton in the Bush years and then driving Republicans to dust off the economics of Ayn Rand.”

    Now in “fairness”, I hope Scot posts the twin article by Jonathan Chait: “When did Liberals Become So Unreasonable?”

  • Kyle J

    One of the few voices in the GOP willing to break out of the crushing weight of the ideological orthodoxy that dominates the party today and talk about the massive and demonstrable shift to the right the party has taken, even compared to where it was in the Bush years.

    Unfortunately for Frum, once you do that, the conservative movement moves you from the “we” category to the “them” category, thereby eliminating your voice from the echo chamber (as Frum alludes to in the piece).

  • Kyle J

    @Rick

    The Chait piece should be read, but there’s a key difference–the people Chait’s complaining about aren’t in complete control of the Democratic Party’s policy agenda (hence their complaints).

  • DLS

    “Unfortunately for Frum, once you do that, the conservative movement moves you from the “we” category to the “them” category, thereby eliminating your voice from the echo chamber (as Frum alludes to in the piece).

    - It’s a good thing the left doesn’t ever do this.

    Signed,

    Joe Lieberman
    Pat Caddell
    Zell Miller
    Evan Bayh
    Ben Nelson
    Richard Shelby
    Long list of others

  • http://homewardbound-cb.blogspot.com ChrisB

    Was Frum’s account hacked? Or has he decided that the two political parties should be the liberal party and the slightly-less-liberal party?

    This piece is full of half-truths and myopia. One in particular I have to get off my chest: “…Republican politicians demand massive budget cuts and shrug off the concerns of the unemployed.”

    Repeat after me: WE’RE OUT OF MONEY!

    If the government siezed every penny of every billionaire in the US, it would not be enough to close this year’s budget deficit. We have allowed them to spend so much more than they make for so long that it is now impossible to fix the problem without resorting to extremely painful solutions. But it’s also impossible to not fix the problem. The jig is up. They’re going to stop lending us money soon, and even if they didn’t, it will only make a bad problem worse to continue.

    As the saying goes, when you realize you’re in a hole, the first thing to do is stop digging.

  • EricW

    Columnists get paid to write stuff like this?

    I guess I’m overlooking an easy way to make some extra money!

  • Kyle J

    @DLS

    That list is composed mainly of elected officials, not political commentators, that broke with their party on major policy issues. Poor analogy. When was the last time a GOP elected official broke with his party on a major issue? (And I’m pretty sure some of them have made appearances on MSNBC at some point.)

    @ChrisB

    We are out of money partly because we have chosen to reduce the money available to spend. Saying “WE’RE OUT OF MONEY” is simply a rhetorical trick to take taxes off the table.

    And, of course, no single solution will take care of the entire deficit. You could eliminate all spending for low-income programs and it wouldn’t do the trick, either. The point is getting to a balanced solution–something GOP orthodoxy won’t allow for. The Dems may not be perfect, but they have, in fact, made proposals that include substantially more in spending cuts than in tax increases.

    @EricW

    Which part did you find misleading or inaccurate? Do you disagree with the notion that the GOP has moved substantially to the right in recent years? You might be happy with that shift if you prefer hard anti-govt policy positions, but you wouldn’t disagree that it’s occurred, right?

  • T

    As one who has only ever registered as a Republican, I feel much the same as the author of the post. Yes, there are plenty of examples of this in the Dem party too, but I always saw that as a weakness of the Democratic party that the Repubs had been smart or lucky enough to avoid. No longer. All moderation (a traditional necessity for presidential candidates and, to a lesser extent, congressional leaders) is vaporizing from the Republican party. Any moderation on tax policy, on immigration, on a host of issues, these are becoming political liabilities for republican pols instead of strengths. It’s not enough to be pro-military, we have to be pro-water boarding. It’s not enough to want to balance the budget, we have to do it without raising any taxes (despite a decade of aggressive tax cuts). It’s not enough to want to reform immigration policy that is better for immigrants and citizens alike, respecting current market and community realities; we have to take the hardest possible stance against anyone here without proper documentation, regardless of history, family or contribution to our nation. Republicans used to be ruled by moderates, but no longer. Moderates are seen as compromisers, as lacking conviction, courage or moral integrity. In my view, Republicans are making it clear that moderates are unwelcome in the party, which is a new and misguided move both politically and for the good of the nation.

  • DLS

    “That list is composed mainly of elected officials, not political commentators, that broke with their party on major policy issues. Poor analogy.

    - It’s not a poor analogy, because (a) I did include one pundit (b) there are several pundits that I could list and (c) the treatment of those elected officials within the democratic party is still an example of what you were talking about.

  • Richard

    @ 3

    Didn’t realize you needed permits to be in public spaces that are open 24/7?

  • T

    I remember when isolationists like Pat Buchanan were an interesting side show in the republican party. The current party is more Buchanan’s party than Reagan’s. The side show is the main event. The exception has become the rule.

  • Mike A

    The notion that either the GOP or the Democrats seek to cut spending is foolhardy.

    GOP and Democratic leaders are ratching up the drumbeat for trillion-dollar wars against Iran and Pakistan. They are increasing federal corporate welfare in red states at the expense of blue-state taxpayers, and they are increasing the laundering of taxpayer money to unaccountable megachurches, despotic foreign regimes, and for-profit prison companies.

    Drastic cuts in the social safety net and the education of children merely serve to subsidize and solidify a pandemic of corruption.

  • Richard

    @ 13

    The new lack of “Blue Dog” Democrats stems from GOP gains in the 2010 mid-term elections more than a concerted cannibalism by the Democratic Party. Their dissent to more liberal factions within the Democratic party has been around since 1994, ironically the same time when many note a shift in GOP tone that coincided with Newt Gingrich’s recapturing of Congress for the GOP.

  • DLS

    All of which may be true, @17, but his original point was that left-leaning Republicans who point out problems with conservatism are shunned by conservatives. My point (and the correct one) is that this happens on the left too.

  • Rick
  • Rick

    Let me clarify that I am including fees in the term “permits”. Overall charges.

  • Rick

    Richard-

    Furthermore, the OWS has not just limited their protests to “public” spaces. They have include roadways and sidewalks, preventing others from having access to those spaces.

  • DLS

    There’s also far more violence, property damage, public defecation/urination, etc. (all of which is well-documented) at the OWS ‘events’.

  • http://natomaschurch.wordpress.com Mike

    I am curious if there is another democratic country in the world that relies primarily on a two-party system. What the commentator bemoans are the discrepancies between his view of an ideal GOP and the reality. What if the conservative viewpoint had three or four parties and the liberal wing of politics the same number? Then, they would have to form voting blocs in all houses of government to get things done. They would become proficient at compromise and party whips would be less of a factor than they are now.

    Speaking as a transplanted Canadian, this is how politics works in the rest of the world. America could stand more diversity in political parties.

  • Richard

    @ 19

    In the article you link, it says, “Occupy, she argues, didn’t need a permit, since “there are no permits to allow 24 hour encampment on public property.”

    I’m not sure this supports your point the way you think it does. Even with your clarification at 20

    @ 21-22

    Much of the violence has been documented as being initiated by police officers at these event (rogue or commanded is the unclear issue here). It has also included the use of force directed at the Press Corps. As for public sanitation, that would be more easily resolved if the cities would allow them to rent port-a-johns – an OWS request that was refused by NY. As it is, your “documentation” is based on verbal reports from officials like Bloomberg, not actual citations and document instances. I’ll gladly trust the live cast videos on the internet over Mayor Bloomberg.

    I’m fine with dropping this after your next response (if you choose to) so we don’t hijack this thread into an “OWS – Nuisance or Resistance” debate.

  • Kyle J

    @DLS

    And to my question, “When was the last time a GOP elected official broke with his party on a major issue?”?

    Again, arguing that the current lockstep adherence to right-wing ideology is a good thing is one thing. Arguing that’s not a change from the past (when Newt was for addressing climate change, George W. was for Keynesian stimulus, and any number of Republican were on record as favoring some form of universal health care) is another.

  • DLS

    Kyle, if you want a list of republican elected officials breaking with official party stances, I can give you an extremely long list if you like. I think we can dispense with that, however, because I’m sure that you know about those cases too.

  • bob k

    A huge issue with me is that no one wants to hold their own party accountable for what is happening in this country today. Every problem, mistake and misguided effort is way to easily blamed on the other guys. I applaud David Frum for being able to see past all the rhetoric and see that the direction of his party is flawed.

  • Job

    What about signing a pledge to never raise taxes? That one thing may hand the presidency to Obama, because it is very clear to the average American that we cannot continue with the lowest tax rates in most of our lifetimes with the highest deficits in our lifetimes.

    Making a pledge that could stand in opposition to another oath to the constitution and the general welfare is not evidence of leadership, only opposition.

  • Kyle J

    @DLS

    I would be delighted to see the list of such occurrences since President Obama was sworn into office.

    There are certainly many cases of GOP elected officials crossing the aisle before 2009. But that’s my point–that ideological/partisan rigidity has overwhelmed all other intellectual instincts in the GOP over the last three years.

    I suspect you will respond that all of Obama’s major initiatives have passed on party line votes only because they are so extreme. Which will bring us full circle to article in question–they are not so extreme not to have garnered GOP support pre-Obama.

    And I suppose that’s the problem. If you concede that the GOP has moved to the right, you can’t keep calling Obama a socialist. The facts do get in the way, though.

  • DLS

    “Making a pledge that could stand in opposition to another oath to the constitution and the general welfare is not evidence of leadership, only opposition.”

    - And continually going back to our sugar daddies (the rich) for our fix (more allowance please, daddy!) isn’t leadership either. The only thing is this debate that would be ‘leadership’ would be telling the american voter the unpopular truth, which is, daddy can’t finance everything you want. That would be leadership, and neither party is willing to do it.

  • Edward Vos

    It is not about governing it is about winning. The measure of success is not governing well it is controlling Congress to keep the money flowing in the direction of the halves, lest they lose power and become like the rest of the raggedy as masses.

  • Kyle J

    @DLS

    “And continually going back to our sugar daddies (the rich) for our fix (more allowance please, daddy!) isn’t leadership either.”

    Again, can we deal in facts, rather than an ideological narrative pulled out of thin air?

    Please show me where the rich are paying more in taxes than they were at some point in the recent past. In fact, the opposite is true.

    http://www.washingtonpost.com/blogs/ezra-klein/post/the-income-made-by-and-the-taxes-paid-by-the-rich-in-one-graph/2011/05/09/AF2LmtzG_blog.html

    If you’re opposed to a tax increase for the wealthy as part of deficit-reducing measures, fine. But don’t pretend we’ve been piling on them for a long time.

  • DLS

    @32.

    Given the percentage of taxes that they pay, we have been “piling on them” for some time. But that’s not the issue before us, so let’s set that aside. The issue before us is how to raise additional revenue now. Every proposal from the left is to go back to that group, and only that group, to the exclusion of all others. That, without question, is simply asking daddy for another credit card. It’s saying “we need to raise more revenue, just not from me.” You can claim this is okay, but make no mistake, it’s what is being proposed. And the reason it’s being proposed it that we’re come to rely on daddy when we get in a financial bind, and daddy is outnumbered.

  • http://LostCodex.com DRT

    I’m certain that most won’t believe this, but I am a registered repub, but most definitely do not support the party now pretty much for at least the same reasons as the original post.

    I apologize in advance to my conservative friends, but I want to tell you honestly that I feel there is a mass hysteria that has overtaken much of the population. I honestly, and will say this tenderly, feel something is terribly wrong with the way the right is pursuing things.

    Now maybe it is me that is nuts, they say you are the last to know, but it really seems like the someone is doing an acid test on part of the population.

  • http://LostCodex.com DRT

    Now that I got that off my chest, I have a serious question for the right wingers here.

    Don’t you agree that the Repubs have gone way right and no longer are looking for compromise?

  • http://LostCodex.com DRT

    Edward Voss#31 has it right “It is not about governing it is about winning”

  • Robin

    DRT,

    In the recent debt ceiling discussions Republicans relented and agreed to raise the debt ceiling on the condition that the super committee would come up with either revenue increases or spending cuts to lessen the impact on the deficit. In the super committee discussions we know that the Republicans put $300 billion in tax increases on the table and John Kerry’s first comment was that wasn’t even good enough to open up negotiations.

    Just this week the Democrats have proposed a $1500 payroll cut for the middle class and another tax cut that I haven’t had time to study. There simply is no willingness on the part of Democrats to (1) cut any spending (2) especially entitlements or (3) raise taxes to pay for the spending that they are promoting.

    Right now, to balance just this years federal deficit we would need to either (1) raise everyone’s taxes around 40% (2) cut spending significantly or (3) do some combination of the three. If you changed that tax increase to 50% (the extra 10% going to pay down the federal debt) I would vote for any of the combination of the three. I want us to be willing, as a nation, to pay (currently) for the programs that we think are important.

    If we think social security is awesome, or new bridges are needed, or that we need universal health care, we need to be willing to pay for it now, not pass the bill onto our kids.

    If you are a Keynesian and think that recessions are precisely the time we should be spending more (stimulus) then I would propose James Buchanan’s (nobel economist) UNBALANCED budget amendment…it would require that our budgets be smaller than our revenues (savings) in prosperous times and larger than our revenues (stimulus) in recessionary times. It is essentially Joseph’s storage system for Pharaoh applied to the federal government.

    I have very few problems with any combination of spending/taxing that we choose, with the provision that the two be equal over time. The democrats have realized that it is easier to complain about “the rich” than it is to pay for your spending.

    The current federal deficit for 2011 alone is $1.3 Trillion dollars. Here are some figures about how much “taxing the rich” could chip into that $1.3 trillion if we tried really hard and Grover Norquist didn’t exist.

    from WSJ.

    “He says a 45% rate on incomes of more than $1 million would generate $31 billion, while an even more progressive tax, with rates of 50%, 60%, 70% on incomes of $500,000, $5 million, $10 million respectively would generate an added $133 billion.

    That is roughly 10% of the current annual budget deficit.”

    THe bottom line is that we either need drastic spending reform or the willingness to raise taxes drastically on EVERYONE.

  • napman

    I am with Bob #27. The politics of our republic are broken and most in our political class are more about winning their ideological battles than solving the most critical problems of our country. When our economy was reeling and our deficit was at historic highs, Obama and the Democratic congress passed a new health care entitlement with little to no Republican support that will inevitably raise deficits even higher. Republicans refuse to recognize that new taxes are needed along with spending discipline and indeed cuts.

    Because of such partisan obsessions and a refusal to work together on finding common solutions to the problems of health care and the deficit we are left with a populace and leadership more polarized than ever. We await a leader who will work with both parties to reform our budget and our healthcare system in ways that will bring broad support among the people, We await parties and politicians who care more about solving problems than winning the next election. Our present course threatens to bring about nothing less than national insolvency.

    By the way, I don’t understand why T#15 thinks the Republicans are now mainly isolationists like Buchanan. The principal contenders for the party’s nomination for the presidency are all free traders and endorse a robust vision of US engagement with the larger world, Ron Paul excepted. As far as I can tell, Buchanan’s view is regarded as out of season. Reagan is the name that candidates want to associate with, and isolationism is not associated with him, as T has noted.

  • Tom

    “It is precisely these disaffected whites—especially those who didn’t go to college—who form the Republican voting base.”

    If those dumb, white, republicans would just go to college we wouldn’t have all these problems!

  • Kyle J

    @DLS

    I support putting all tax rates back at Clinton era levels. The Democratic position is far from ideal, but at least contemplates both tax increase and (in larger amounts) spending cuts. That’s a lot closer to balance than unilaterally ruling out any tax increase–even for those who have gained the lion’s share of national income in recent years.. Even Ronald Reagan was willing to raise taxes in the face of escalating deficits.

    I’ll give up now. I think it’s really hard to argue with the factual case Frum layout in terms of the GOP’s lurch to the right on real policy matters, but finding consensus on anything is elusive these days, I guess.

  • http://LostCodex.com DRT

    Robin, thanks for the details.

    First, let me say that I am largely a Keynesian and do believe that we should run an unbalanced budget right now. So the WSJ quotes for how much dent we would get based on various tax increases is quite relevant to me.

    Further, I do believe the increase in tax should be for those making over $250 per year.

    I have been predicting this problem since the late 90’s and believe that people need to look at the whole thing a bit more simply. It is simply a structural problem in the population demographics. This is what happens when a large proportion of the wage earning population goes past its peak wage earning (and spending) years. There simply is less money being spent on stuff.

    That view also explains that duration of the event.

    Now, having said that, I want to restate my question. Don’t folks realize that the perspective of the repubs has moved way right?

    Now, to address your argument that the burden has to be paid by everyone, I agree with that. The question I have is the nature of the payment. There are quite a few people, mainly in the lower income areas, that are already paying dearly for the structural problems our country is facing. Why would we want to make them pay more?

    And when I am talking about payment, I am talking about paying out of bone, not muscle. The rich (if you excuse the moniker), would eliminate some fat and muscle, the poor are eliminating bone.

    Having said all of that, the big thing I don’t understand is the reluctance to raise taxes on those that have *a lot*. I hear the saber rattling that it is class warfare, but isn’t it class warfare to not chip in when the going gets tough? I honestly cannot understand how someone who is obviously thinking and moral as yourself does not immediately say that those who have should contribute more than those who have not!

    Here is my thesis on the rationale. Income inequality has an effect much like debt financing. The leverage associated with low income is similar to that associated with high levels of debt in corporate finance. In good times, the poor can have a much larger percentage increase in discretionary spend because of the high level of fixed cost relative to income. And in bad times they pay a much greater burden for the same reason. They are the stone from which we can’t get more blood.

    But the rich (OK , it is a bad term, but let me continue) have the ability to do more, and I argue, based on their citizenship, the obligation to do more to get us through this situation.

    Folding in my analysis on the structural cause of the downturn, it then becomes obvious that there will be two outcomes. First, the steady state post recession will likely be of a lower level than prior to the recession, because of population dynamics. And second, the recession will be finite, though protracted. So why sacrifice, and I mean that literally, a large section of the population just so those with less at stake can be comfortable during this time and feel that they have a buffer in case it goes even longer than most feel?

    Sorry for the length, but I don’t understand your view.

  • http://LostCodex.com DRT

    Now that I wrote all that stuff, it seems to me that if we could agree on a vision of what the state of the country will be like in 10 years, then we could, perhaps, agree on a course of action. Sorry to bring out the f bomb, but I think a lot of the approach on the right is driven by fear. A fear that it won’t get better and won’t allow them to recover. So they hunker down and make others suffer. Fear.

    We need to aknowledge why we are really in the bind we are in. It is global. The cause is WWII and the baby boom. It is natural. This is predictable.

    The only reason it happened as late as it did was because of the artificial wealth generation due to the housing debt over extension. Without that this would have hit closer to the 2003 time frame.

  • http://facebook Dave

    As a rule I vote democrat. The last time I voted rebublican it was for a man who advertized himself as a “Compassionate Conservitive.” I do not see any compassionate conservitives out there any more. We are the poorer for that

  • http://LostCodex.com DRT

    OK, one more.

    It goes back to elementary business decision analysis. First you must identify “What is the problem?”. We are inherently going after different problems. Are we going after a 10 year structural defect in the population dynamics, or are we going after a view of the great abyss from which we will, perhaps, never recover.

    That is the first rule of strategic leadership. We must identify where things will be *in the future*. The nature of the politics of the right seems like they are trying to fix the problems of today but they are not looking at what things will be like in the future. It will be better for everyone if we look at this strategically based on where we will be in the future, 10 years out, not where we are now.

  • DLS

    @44. “The nature of the politics of the right seems like they are trying to fix the problems of today but they are not looking at what things will be like in the future.

    - And I think it’s the exact opposite. I think that only the right is realistic about the abyss that we face. Thus, it’s attempting (finally) to address the real problem (spending) rather than the immediate quick fix (getting daddy to give us another credit card).

  • Alan K

    @23 Mike,

    Our system has always struggled to have more than two parties, partly because we do not have a parliament. It is difficult for third parties to consolidate gains in our system over a series of elections.

  • Robin

    DRT,

    Let’s leave the short term alone for now…we are in a recession, we can throw whatever we want to at the wall. The question, long term, is what does an equitable tax policy look like and what relationship should spending and taxing have to one another.

    ALL OF THE RECENT RHETORIC SURROUNDING TAXATION HAS BEEN CLASS WARFARE. I can support tax increases on the wealthy, on corporations, on any group you want to talk about, but I cannot support them when the rationale is “screw the rich, we’ve got more voters than they do.” I’m not against taxing anyone just because we have more voters, I AM in favor of taxing people in proportion to the benefits they receive from a given program, but noone wants to make a rational case for that.

    Here are some commonsense tax reforms that would have the effect of raising taxes on the rich without the class warfare that turns me off.

    (1) set the capital gains rate as equal to the marginal rate. Warren Buffett’s tax rate would go from 17% to 35% overnight and we could claim, truthfully, that all income is being treated equally.

    (2) Eliminate all individual tax expenditures (phased in over time if necessary) including charitable deductions, mortgage interest, employer provided insurance and pension, etc. This would mean that EVERYONE will pay their marginal rate. [You could keep some that are targeted 'welfare' programs like the EITC if you are concerned about poverty]

    (3) Eliminate almost all corporate tax expenditures. The only one I can think off the top of my head that I could keep is the carry-forward of losses, it works like an EITC for businesses.

    (4) Uncap Medicare taxes and benefits. The rich currently pay no medicare taxes on income above (I believe) $105,000 or so. Tax them at the current rate all the way to their billionth dollar, but also increase their payout accordingly so that social security doesn’t explicitly become a welfare program. (The rate of return on social security contributions is a decreasing function so this would, on the whole, raise billions of dollars every year)

    (5) Require that all unplanned expenditures be paid for with a surtax. If we want to spend $300 million invading Yemen, we automatically get a surtax (either a head tax or proportional tax tacked onto our tax returns to pay for it).

    (6) Make all of the income tax rate “float” so that they adjust automatically with the expenditures (again this could be done in a balanced or unbalanced manner)…if it was done in a “balanced budget approach” and expenditure levels were set 50% above revenues, every marginal tax rate would adjust upward by 50%. Politicians need to know that when they commit to spending, they are committing to the corresponding tax increases that it necessitates. That holds true whether we are talking about wars in the middle east or infrastructure spending in this country.

    (7) Require all current national debt, and any debt incurred using an “unbalanced approach” be financed and amortized on a 30 year payment plan (just like a mortgage) and set up an automatic surtax to be tacked onto everyone’s income taxes to pay for it.

  • Robin

    Clarification on #6. What I have in mind is this. If projected revenue from the current rate structure were $10 trillion and projected expenses were $20 trillion then we would need a 100% increase in revenue. Under my proposal EVERY MARGINAL TAX RATE would increase by 100%. If you are currently in the 0% bracket, you would still be in the 0% bracket. The 25% bracket would go to 50%, the 35% bracket would go to 70%.

    Because our current tax structure is somewhat progressive, this would ensure that any spending increases would result in a tax structure that is even more progressive. This, combined with the elimination of preferential rates for capital gains would get Warren Buffett to a very high rate very quickly.

    I would also be amenable to higher tax brackets for people with income >$100,000 or >$250,000 or >$1,000,000 but only if congress made a clear case, empirically, that the higher than proportional rates were commensurate with higher than proportional benefits they were receiving from the government.

    Our current tax structure implies that for every $1 I earn 35 cents of it was due to federal programs. I would need to believe that for every $1 Warren Buffett earned 60 cents of it was due to federal programs and policy in order for me to favor a 60% rate on his income. Noone has made that case, they have just said “the rich can afford it, and screw ‘em we’ve got more voters”

  • http://LostCodex.com DRT

    DLS#45, well that sounds like a better conversation that what to do today. If we can’t agree on what the future is going to look like then we won’t agree on what to do today.

    FWIW, I agree that there is also a spending problem.

  • Robin

    Lastly, marginal tax rates on the wealthy are almost meaningless. If your sole tax policy is raising tax rates on the wealthy then you haven’t thought things true. You could set Warren Buffet’s marginal rate to 100% and his effective rate is still going to be 15% (or close to it) because he is going to make sure that Berkshire pays him in stock options that are taxable at 15%.

    That goes for every Wall Street Banker and every “Wealthy” person with accumulated wealth and every Wall Street CEO. Goldman Sachs CEO’s will still have $100 million years at a 15% rate because they will take their income in stock options. THe only people who would really be hurt by such policies are the “working wealthy” like doctors, lawyers, professors, athletes, musicians and other professionals who have to take their salaries in normal paychecks.

  • http://LostCodex.com DRT

    Robin#47, well done, on a once through I only come up with two changes.

    (3)I believe R&D tax credits (I refuse to say expenditures) should be retained in some way

    (7) I feel we need to be more ad hoc in the provisioning of excess spending. That is a difficult issue.

  • Bob Smallman

    Finally, a Republican I can support! David Frum for President!

  • Fish

    The first step is simply to reset: Put taxes back at Clinton-era levels and get us out of occupying two countries.

    Taxing capital gains at the same rate as a worker’s wages would not be a bad thing, either. Income is income.

  • Rick

    Wow. I like how this thread has come to a conclusion with so much agreement from those on various sides. Perhaps those in Washington could learn from this.

  • Job

    I agree with how well this thread has went. The difference between DC and here is that none of us made pledges. It is much like OWS style dialog if I dare say it.

  • DLS

    Taxing capital gains at the level of income is the worst idea in the history of taxation. If anything, tax on capital gains should be reduced substantially, or better yet, cut to zero.

  • Job

    Capital gains = Increases in stock price = gambling, basically.

    If I put $10,000 into Google and 3 years later have $50,000, so I make $40,000, why should that income to me be taxed at a lower rate than if I worked with my hands and made $40,000?

    I suggest the biblical alternative might be to give favorable treatment to human capital over money capital: i.e. cut the tax on wages to zero and raise the tax rate on capital gains to the level taxes on labor were.

    That puts more money directly into the hands of consumers who create demand for products and services, thus stimulating the economy, while moving it out of the non-job-creating financial accounts where it is currently stored away, thus stimulating the economy.

  • Richard

    @ 56

    “Taxing capital gains at the level of income is the worst idea in the history of taxation. If anything, tax on capital gains should be reduced substantially, or better yet, cut to zero.”

    What? Can you unpack why you feel that way?

    Surely it can’t be as bad as extending the Bush Era Tax cuts indefinitely, can it?

  • Robin

    “Taxing capital gains at the level of income is the worst idea in the history of taxation. If anything, tax on capital gains should be reduced substantially, or better yet, cut to zero.”

    I am a universal base-low rate guy. The only possible reason I can see for a position like the one held above is that it can represent double-taxation. For example, Joe Schmoe brings in $50,000 annually and he has the following choices (1) spend the money (2) save the money. If he spends it he faces 0% federal taxation (though usually a state sales tax) if he saves it he also faces 0% taxation on the principal, but 35% taxation on the interest.

    This could lessen the incentive for savings, but the incentives for savings are still greater than “0″.

    Also this critique would only apply to labor wages that are re-invested in the capital gains markets. When CEOs, etc. are compensated primarily through stock options there is no possibility of double taxation since they weren’t taxed as regular wages in the first place.

    One other possible critique would be that raising the rates on capital gains would decrease overall investment and the economy would collapse. This, however, assumes that the economy is run solely on the supply of capital available to companies (through stocks and mutual funds). Companies need both a supply of capital to made a product, and demand for the product that they sell. It is great for Luxury car companies to have low capital gains rates so they always have access to capital in order to maximize their bottom lines, but it is also great for them if higher capital gains rates cause wealthy members of society to decrease their savings and increase their consumption.

  • DLS

    @58.

    I’d be happy to. It’s far worse than extending the Bush Tax Cuts (which, again, Obama has extended, so aren’t they really the Obama tax cuts now?). Those tax rates should be made permanent, or at least extended further.

    Where people got this idea that ‘capital gains’ refers only to some fat cat one percenter sitting around doing nothing and cashing checks while lounging on his yacht and mocking the destitute is beyond me. Capital gains reflect profits made from risking capital. I do that from my Ameritrade account all the time, and I’m not rich.

    Placing capital at risk is what drives this economy. Nearly everyone has capital gains every year. So it’s not just the evil rich (a/k/a our sugar daddies) that benefit from capital gains.

    Most importantly, however, reducing the corporate tax to near zero and dramatically reducing taxes on capital gains would cause a dynamic expansion of our economy the likes of which we’ve not seen in decades. Foreign investment would flow into U.S. business (i.e., the economy) at an unprecedented rate, and that’s good for the United States. That investment would come because those investors would be able to risk their capital (buying securities) in U.S. businesses in a way that’s far cheaper than what’s currently possible. Those businesses, with more capital, actually do things with it, because they want to maximize their return on that investment (evil profits) while they have it. To maximize that investment, they do things which further propel the economy, and which in turn creates jobs.

    Now, that’s the logical explanation for why it’s a good idea. For those that approach this emotionally (‘we need to help the average man by sticking it to the rich guy and getting him to buy more stuff for us because he’s rich and we’re not and that makes us angry!’) then this approach won’t make much sense. But, as has been proven time and again, people that don’t understand economics and what drives the U.S. economy typically end up putting in place policies that make us feel good, but hurt the very people they’re trying to help in the long term for a host of reasons, most of which are simple economics and the law of unintended consequences.

  • Robin

    I should note that my preference for taxing capital gains exists because it is the equitable thing to do…not because I think it will maximize GDP or minimize unemployment. I fully realize that it could have negative consequences, but I consider it more important that all income (and all income earners) be treated equally than that the economy is maximized.

    I would be willing to exempt re-invested capital gains (People who invest the money they make in a day job),

  • Job

    Businesses are already awash in capital. Interest rates are what, 2%?

    There is a reason Bush the First referred to supply-side economics as “voodoo economics.”

    The only thing that stimulates business investment is demand for products and services. If a business has demand, they can easily get capital at a very cheap price to produce stuff to meet that demand.

    (If making capital more available through tax cuts stimulated the economy and created jobs, there would not be 4 unemployed people for every open job at the same time I am paying more income tax than GE or Exxon at a higher rate than Warren Buffet.)

    Conversely, if a business has capital but no demand (as we do now), then they are dumb to invest that capital in the production of goods and services and fiddle with troublesome things like employees. They bank it. They move it around to avoid paying taxes on it. They turn to financial engineering rather than mechanical engineering.

    Our money did not disappear. It has simply been taken out of circulation, awaiting increases in demand which will never materialize as consumers have no money. Doubling down on that self-reinforcing negative cycle will only hurt us more.

  • http://LostCodex.com DRT

    DLS#60, supply side economics like you are proposing and are supported by the tea party folks and radical right are quite similar to the global warming debate. The supply side theories ahve generally been shown to be wrong, espceciallly at the levels we currently have.

    Now one could argue that Reagan was correct in reducing the top marginal rate from 70%, but in reality there is no proof. Likewise the best performing years of our economy were at a time when the top marginal rates were nearly 100%.

    Check out this section of the supply side wiki page http://en.wikipedia.org/wiki/Supply-side_economics#Research_since_2000

    Now before you start saying you can’t trust Wiki, which is another pop tactic of the TP and far right, note that that section of the article has been nearly unchanged for the past 3 months. Go ahead and see if you can make it sound more like your view and you will find that you will need to provide evidence.

    I am definitely not proposing that we should increase taxes on the wealth to “stick it to them”, that is just plain silly. I propose it because it is the right thing to do analytically, morally, fiscally and every other way I can see.

    Likewise your whole attack and using words like “evil profits” is a strawman argument. No one here is saying profits are evil. Please stop that.

    I am a Mechanical Engineer with an MBA in Finance, am a professional, and am an entrepreneur (I wholly own a manufacturing company). I like to make money and have profits, and all else being equal would like to take more of my money home. But, all else is not equal. We will do better if I paid more taxes, plain and simple.

    Last thing, your argument against paying tax on Capital gains at regular rates because not rich people also do this makes no sense. I am arguing that it should be paid at the marginal rate, which, if you are not rich, could likely be 25% or less. But for the wealthy it would be, by definition, at a high rate.

  • Richard

    @ 60

    Those are great talking points but they don’t reflect reality and the history of the past 80 years of taxation and economic growth. Our strongest boom times have come during periods of “higher” taxation and there’s actually a pretty strong consensus amongst economists that there isn’t a relationship between tax rates and private economic impact or investment rates. There is a correlation between tax rates and public investment (i.e. more revenue = more public works projects= more jobs)

    Here’s a pretty clear picture from someone less emotional about it (http://jaredbernsteinblog.com/taxing-capital-gains-at-ordinary-rates-evidence-says-do-it-so-does-buffet/) but there are far more academic approaches available as well (http://elsa.berkeley.edu/~saez/saez-slemrod-giertzJEL10round2.pdf).

    I kind of trust this Buffet guy when it comes to economics…

  • DLS

    First, the use of supply-side economics (as defined by you) has not been limited to Republicans. Democrats use it too, including JFK, and I’m sure you’ve seen the quote from him on that. Obama is for extending the payroll tax cut (and already extended the other Bush tax cuts, as pointed out above.

    I do appreciate you attacking me for using straw men, but then use them yourself. Specifically, with respect to the ‘evil profits’ line, we both know that there is a not-insignificant portion of the left who does, indeed, have a problem with ‘excessive profits’ (unless those profits are made by Apple, which is another post altogether). To pretend otherwise isn’t helpful.

    Finally, you state (“We will do better if I paid more taxes, plain and simple”). First, I simply disagree, because I’m a business owner too and if I pay more taxes, then I pay people less, hire fewer workers, and potentially let some go. But more importantly, very, very few of the current advocates of “paying more taxes” are willing to pay more themselves. One need no follow this debate closely to know that for most people, they want more taxes paid, but by ‘the other guy’. Having said that, I at least respect that you’re willing to pay more yourself, as opposed to looking to dad for another credit card.

  • DLS

    @64

    “I kind of trust this Buffet guy when it comes to economics…

    - That might be part of the problem. Because he’s not an ‘economics’ guy. He’s a finance and equities guy. Secondly, he’s currently in a protracted battle with the IRS trying to avoid paying those taxes that he tells you he wants so badly to pay.

    Don’t kid yourself. When it comes down to it, Democrats know (and utilize) tax cuts (and even – gasp! – reducing regulation) when they want to get economic activity going. See the latest move by the Administration to delay new EPA regulations as but one example. The move by Kennedy as another high-profile one. Don’t worry. You can still keep your Keynesian card, because supply-side involves government action.

  • http://LostCodex.com DRT

    DLS, FWIW, I have never heard someone on the left call profits evil.

  • http://LostCodex.com DRT

    DLS#65, now that I have more time…..

    You objected to my strawman allegation of yours that no one says the profits are evil, yet you changed the words in your post to say excess profits. That is quite a significant difference.

    No one is saying evil profits and it seems to me that you are misrepresenting what people think. I agree the profits may be excessive, but not evil necessarily.

    Further, you claim that you would have to “pay people less, hire fewer workers, and potentially let some go”, well clearly you are not managing your life very well. Those who make more than what everyone would call a rich wage should certainly be able to absorb a higher *marginal* tax rate without doing what you said. I dare say that you are doing something wrong, and would be happy to consult for you to fix this. Let me know if you need the advice.

    If you are making less than what we would call a high income wage, then you have nothing to fear. This would not apply to you.

  • http://www.debatingobama.blogspot.com greg metzger

    I am sure that many will dismiss this because it is from the supposedly RINO Frum, but these are the thoughts of many of us who have at one time or another identified ourselves as Republican. The party has crossed a line into extremism like Democrats did between 68-72.

  • Richard

    @ 66

    For someone that accuses others of being emotional you sure don’t engage with actual data much.

    Re: Buffet, if by “protracted battle” you mean, “follows the tax code and every loophole it affords him” sure, I’ll buy that.

    You can generalize examples all you want, it doesn’t change the fact that Reagan raised taxes to get us out of trouble in the 80s and that the economy skyrocketed under Bill Clinton’s tax raises. No one is saying “never cut taxes,” after all many Democrats supported the Bush Tax Cuts when they were first proposed because we were in a boom time. That doesn’t mean its unreasonable to raise taxes when we need to boost public investment and private investors are sitting on piles of money – again, documented fact.

  • DLS

    “If you are making less than what we would call a high income wage, then you have nothing to fear. This would not apply to you.

    - This is what I find unconscionable.

  • DLS

    “You can generalize examples all you want, it doesn’t change the fact that Reagan raised taxes to get us out of trouble in the 80s and that the economy skyrocketed under Bill Clinton’s tax raises.

    - You think the economy ‘skyrocketed’ under Bill Clinton because of higher taxes?

  • Fish

    Wow, DRT, I am also a Mechanical Engineer with an MBA (except mine is in Marketing) who was an entrepreneur in a previous stage of life.

    DLS, the point is that Clinton’s tax increases did nothing to hurt the economy. And if you consider reducing deficits helping the economy, then they indeed helped it.

    I do not understand the fear of taxes. They are the price of civilization and the wealthy have always paid more – which is fair because the wealthy get the greatest benefit from a civilized society. If the government disappeared, not too much would change for the homeless except that the investment bankers would be joining them.

  • Diane

    DLS,

    Imagery is powerful. I do not at all see the rich at “Daddies” whom the poor–apparently “the children”–come to begging for more money. The rich are not “Daddy”–they are people like you or me. Peers. Not parents. I would not lump all the rich together–I, for example, don’t begrudge Steve Jobs a penny of his billions, as he added value to our world–though I do think, as a peer, he should pay taxes, and that taxes should, in the interests of fairness, be progressive–and I do think the investors and bankers who wrecked the world economy should be held accountable. I think bankers who were ready to socialize their losses with huge government bailouts should extend the same courtesy to the rest of us and not suddenly treat us with contempt as “children.” The gov’t can always “afford” it when they need it. I agree that if the banks would stop sitting on their billions and would being to invest, the economy would surge–and that they would invest if gov’t stimulated demand (!). As for the tyranny of democracy, yes, that exists and it’s never pleasant when one is in the minority–I marched against the war in Iraq and was overruled by the majority–did that make me happy? No, because living in a democracy means that sometimes the majority will make decisions we don’t like. That’s not a reason to attack the system. For me, the more significant issue is the degree to which money has and continues to corrupt democracy.

  • http://LostCodex.com DRT

    Diane, lots of good points but I disagree on one.

    There is plenty of demand for the banks, but the supply is not there. The banks have been forced by everyone to go conservative in their lending practices and now it is difficult to lend (supply constriction).

  • http://LostCodex.com DRT

    I always liked you Fish :)

  • DLS

    I do not at all see the rich at “Daddies” whom the poor–apparently “the children”–come to begging for more money.

    - Not the poor for the most part. No, for the most part it’s people like you and me in the middle class. We really really really want to help poor people, we just like to do it with daddy’s money.

  • Diane

    But DLS, I reject the basic premise that it’s “Daddy’s” money. How does a rich person become “Daddy” any more than a middle-class or poor person? I think it’s the wrong metaphor. It’s belittling to the middle-class to cast us as children. (I, for example, am a responsible, hardworking parent who simply happens to be middle class, not wealthy, who doesn’t think that makes me lesser than a rich person and who realizes that such privileges as my white race have helped me to the middle class.) If we’re all sitting in a circle, as equals, as we are in a democracy, and discussing how to pay for a peer in distress, it could very well make logical sense to ask the richest person to kick the most into the fund. That person is no better than anyone else for having more money and certainly not suddenly “Daddy” for having more money. He is a person like you or me. It’s the very elevating of the wealthy to a higher status — Daddy versus the children–that is a part of the problem.

  • DLS

    I didn’t say that a person is any better or worse for being rich or poor. I characterize the rich as “daddy” (more accurately our ‘sugar daddy’) because when we want more stuff, we prefer to use their money rather than our own. That’s an indisputable fact, and exemplified most recently by the calls to ‘raise taxes on the rich but not on me!’.

    You’re trying to hard to make this a moral judgment on a person’s wealth. It’s not. It’s a moral judgment on people using the wealth of others to do things that they want themselves.

  • Richard

    @ 73

    Thanks Fish. That was exactly my point but DLS doesn’t seem concerned with engaging the actual points presented by people that disagree with him.

  • DLS

    I tried to type “lol” as the entirely of a post but the software wouldn’t let me.

  • Fish

    I’ve never heard anyone say “raise taxes on the rich but not on me!” and I make no moral judgements about wealth.

    I rest my case on simple economic facts, observed history and common sense. As noted above, I’m an engineer and data is all that matters to me. When data on the ground conflicts with theory, theory falls, and that is true whether it be scientific theory or political theory.

    It is the same reason I argue for universal health care. Not from a social justice standpoint (although that is certainly present) but simply because we have loads of data that says it is a more financially efficient system that produces a higher quality result and a more caring system.

  • DLS

    I’ve never heard anyone say “raise taxes on the rich but not on me!”

    - Do you watch the news? This is exactly the argument made by every single advocate of higher taxes currently. Not one person is proposing raising income taxes on the middle class.

  • Edward Vos

    I voted for John Anderson instead of Reagan because he wanted to raise the gasoline tax. I believe in tithing and supporting our government. I also believe as Jesus said;

    Luke 12:48:
    “48 …From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked. ”

    Rich people know about investing, why can’t they invest in America to help us reduce our debt? Why can’t Democrats realize that people who get welfare and unemployment checks should do at least 20 hours of community service for the money they receive. Houses could get rehabbed before they become condemned. The list could go on as far as helping and improving the community. This is a two away street. We Americans all need to learn how to invest in America before it is too late.

    If the rich don’t want to invest in America, (through taxes), to get us out of debt, why would the common man want to?

  • Richard

    @ 84

    Great middle road Edward Vos, would love to see “sweat equity” tied to federal assistance programs (obviously with caveats for those demonstrably unable to do anything, which is a very narrow category when we take imago dei seriously and creatively)


CLOSE | X

HIDE | X