While the President desperately tries to A) distract from investigations of his administration and of other Republicans, and B) control the issues of the 2006 elections, other people are talking about the economy. First thing to note: tax policy pretty much has zero effect on any sort of economic recovery. Furthermore, it’s worth nothing that, as Matt Yglesias says, “obviously, the aim of conservative tax policy isn’t to cut spending or to increase revenue. It’s to increase the after-tax income of very wealthy people.” Well, duh.
OK, so “tax cuts” make little difference to the economy, and mainly serve only those who are already doing just fine. No point in bothering with tax cuts in the future.* Furthermore, normal tax levels, or even hiked tax levels, also have little effect. Any government interference in the economy shouldn’t worry too much about taxes, but rather concentrate on helping stabilize the system, and making sure that businesses do less harm than good. Safety nets, public services, and regulation. They do a civic body good.
“As for the current economy,” notes Ezra Klein, “There is growth, to be sure, but it’s been curiously hollow.”
The bottom line is that inequality hasn’t been this severe since the 1920’s. As for alternative paths, the Clinton era, with higher marginal tax rates and less government spending, saw faster growth with fairer distribution. And that, at base, is the question. Do you believe growth should accumulate to the rich, or be shared across society? Jumping up and down about the 1970’s is silliness, it’s like blaming 9/11 on Rudy Giuliani. After all, the economy kicked ass under FDR and Lyndon Johnson, so theirs should hardly be a discredited economic vision. The question isn’t about growth, or employment, or anything else (all those metrics do better under Democrats, by the way). This is about the distribution of growth, and about the level of acceptable inequality.
Emphasis mine, of course.
* [I might support progressive tax cuts that actually helped those who most needed help, and made up the difference on the wealthy. But I'd prefer a stronger minimum wage and better unemployment assistance.]
