Jump
Clinton-era income tax rates, we are told, were positively the best things ever to bless the American economy. Higher taxes yielded untold boons: budget surpluses; robust economic growth; intern White House pizza delivery—an unbroken chain of beneficent causality.
However, if current tax rates—curiously referred to as the Bush tax cuts more than a decade after passage—expire and we go the Full Clinton (in the economic sense), higher taxes will push the economy over a fiscal cliff and into another of those recessionary crises that Rahm Emanuel was so fond of not wasting a few years back.
What gives? After all, celebrated investor Warren Buffett assures us that, notwithstanding his contrary actions and counsel over fifty years, marginal tax rates have no effect on investment decision-making. And we have a $1.3 trillion annual federal budget gap to close somehow before Mr. Bernanke runs out of real assets to buy with imaginary money, not to mention some $60+ trillion in unfunded obligations looming just over the horizon.
If the Clinton tax rates were so great then why not have them all back, along with some modest reductions in the rate of spending growth courtesy of the Budget Control Act of 2011—the dreaded sequester? Let President Obama extoll the Clinton tax hikes to the 111 million taxpayers affected, including the 5 million added back onto the income tax rolls.
Negotiating with ourselves is not working, and the president is doing nothing substantive—unless you credit preparations for his $4 million three-week Hawaiian vacation. Mr. Obama hopes to splinter the Republican Party on a political cliff of his design, thereby fixing the ascendancy of his new New Deal coalition. Let’s disappoint him: why not link arms and jump?
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Comments:
Apr '11
Re: Jump
I hate to say it, but I think you are right.
Sep '12
Re: Jump
Too true. Progressives have spent most of the past decade waxing nostalgic over Clintonion tax rates - they ought to be delighted at the prospect of their return.
Incidentally, why don't Democrats own the Fiscal Cliff? Wasn't it they who insisted that the Bush rates must have an expiration date? Haven't they declined every opportunity to make the rates permanent?
Own it, Progs!
Jul '11
Re: Jump
I am for letting them expire. If Obama does not like them then let him make his own tax cuts and push them through. We can then spend the next 10 years complaining about his tax cuts.
Apr '11
Re: Jump
Why don't we join hands and jump? Because the economy would crash and Republicans, not Democrats would get the blame. And really, they don't want the return of the Clinton tax rates, they only want the return of the Clinton tax rate on those making over $250 thousand a year...
Oct '10
Re: Jump
Yup, it's time to stop arguing and just hunker down. All those who oppose Obama and that walking soporific Harry Reid should just vote 'present.' Americans can then see what happens when Alinskyites get exactly what they want. Too few people pay federal income tax and this is a chance to start correcting that reality Why soften the blow on Democrat voters while socking it to mainstream Republican supporters?
Nov '10
Re: Jump
As I've proposed before on this blog, PULL THEM OVER THE FINISH LINE! It's an old jujitsu move, when they lunge, pull!
Most people barely notice the gradual degradation of morals and economy. But if disaster comes quickly there might be enough people nostalgic about free markets.
Otherwise, we are destined to live in "interesting times". For me? I just want to see what happens next! History is happening.
Edited on December 1, 2012 at 4:30amMar '11
Re: Jump
Channeling your inner Krauthammer I see Mr. Savage. You have a point, you both do.
The ideal appeals if for no other reason that it would be well to see Speaker Boehner finally show some spine.
May '11
Re: Jump
Bad idea, we don't have the media or quality leadership to make this argument and avoid getting all the blame.
the GOP may get the blame regardless, but they will definitely get the blame if the House fails to pass a bill that extends the middle/lower tax brackets
Edited on December 1, 2012 at 4:05amOct '10
Re: Jump
As though Republicans won't get blamed when the economy fails to recover because America's entrepreneurs/small business owners are robbed of the incentive to invest, grow and innovate? Since they get blamed either way, why give Democrats the red meat they need to feed their base? Call the sucker's bluff and let him explain the expanded tax rolls, and a collapsed defense-dependent Virgina economy.
May '10
Re: Jump
The rub: Immediately post-cliff, Dems would propose a tax cut for those making under 200 grand (or whatever). Would Republicans then officially become the party that resists such cuts? Would Dems then officially become the party that favors such cuts? That would be a disasterous reversal of party reputations, I'm afraid.
A better idea might be one outlined by Guy Benson at Townhall: Republicans should unequivocally embrace Bowles-Simpson. Submit it as our bill. Force Obama to reject his own commission's proposal. If he does, then he puts himself in a much weaker position politically than he's in now. On the other hand, if he accepts it, then we have a deal that is on balance pretty conservative -- certainly more conservative than anything we can reasonably expect in the current circumstances.
What do you think of Benson's idea, George? Personally, I can't find a down side.
Edited on December 1, 2012 at 4:07amMay '10
Re: Jump
I think going over the cliff could be a good thing. If it is important to have a fair tax system, then raising everyone's taxes is fair. And if eveeryone's taxes go up, then everyone may begin to undeerstand what government costs. There are times when a lesson is worth learning....even if it is expensive.
Jan '11
Re: Jump
Thank you George Savage! I've heard enough from Obama & Clinton about how great it was before W. Unfortunately, people need a reminder of the good old days. It also has the benefit of tarnishing Hillary should she want to run.
Progressives continue to insist that there's nothing to the Laffer Curve - well, time to show them that theory works ( again).
Apr '12
Re: Jump
Going over the cliff will teach progressives and low knowledge voters nothing. It will push the US into a mild recession and increase business failures and unemployment . Best to embrace Simpson - Bowles loud and clear and as the president, for the benefit of our country, to sign it into law
Jun '10
Re: Jump
You mock, but I think you underestimate how politically effective this argument is.
The left claims the rich should pay their "fair share," and points to the fact that Romney paid a lower effective tax rate than most middle class voters, and that Warren Buffet loudly proclaims that he pays a lower tax rate than his secretary.
The right responds that we cannot raise taxes on the rich because they are the "job creators" and this will ruin the economy. We seldom challenge the "fairness" premise, implictly conceding that we're fine with the rich paying lower tax rates than the middle class so long as this helps the economy.
The left then responds by pointing to the Clinton years. They don't need to show that higher taxes caused the boom years, merely that higher taxes did not prevent the boom years that followed.
Aug '12
Re: Jump
Could someone please explain to me the liberal theory of how Clinton's higher tax rates helped the economy? Is it the whole "more bridges and teacher union funding provides a more prosperous people" schtik (e.g. You didn't build that)?
Aug '12
Re: Jump
Joseph Stanko:Good point.We should also discuss fairness/unfairness. Is it fair to load up future generations of debt? Is it fair to middle class families to hurt their opportunities to provide for themselves (prosperity) by taxing the economy and job market to fuel redistribution?There are many "unfair" consequences to liberal policies - we need to do a better job pointing them out.
Apr '11
Re: Jump
Wow! this sounds promising; I'm interested in finding out the pros and cons of this approach...
Apr '11
Re: Jump
It's worth checking out the latest podcast: Rob Long has an impassioned rant that touches on this very topic (spoiler alert: he disagrees)
Edited on December 1, 2012 at 7:02amJun '10
Re: Jump
As I said above, I don't think they're really claiming higher taxes help the economy, merely that returning to Clinton-era rates will not hurt the economy.
Our side says tax hikes will cause a double-dip recession. They point to the fact that Clinton raised taxes coming out of a recession as proof that we are wrong about this.
Jun '10
Re: Jump
The left would answer: "No, it's not fair. We think it's fairer to ask the wealthy to pay more now rather than pass the burden on to our children. We have high debt because the stubborn Republicans won't let us raise taxes on their rich buddies."