by hilzoy
While I’m thinking about fiscal policy, I want to say this: if Democrats ever regain control of government, I think they will certainly let a lot of the Bush tax cuts expire, and probably raise taxes. And they will be absolutely right to do so. I don’t say this because I like higher taxes. Some conservatives seem to think that liberals just like higher taxes, but this is absurd. No one likes higher taxes. It’s like liking higher utility bills: other things being equal, who on earth would like to pay more money rather than less?
The problem is that other things are not equal. And the reason other things are not equal is not that liberals do, in general, favor more spending. We do, though not, as Peggy Noonan (subscription required, WSJ) suggests, just any spending. As Josh Marshall says, not just any spending counts as ‘liberal’, and Bush’s, in particular, does not.
The reason it’s not about higher spending is this: if we were Republican Congresspeople, we could just raise spending and pretend that we didn’t have to pay for it, or that lower taxes would pay for themselves. Then we could have our spending without raising taxes. But, strange to say, we don’t take this view. We think that it’s irresponsible to load future generations with debt, and that as a result, we need to raise taxes, both to slash the deficits we are now accumulating and to pay for whatever new programs we devise. It’s fiscal responsibility, not big spending, that leads to tax increases (at least, in the short run. In the long run, you can’t get away with the kind or irresponsibility we’re now engaging in. It will lead to higher taxes eventually.)
I fully expect that if Democrats regain power we will, once again, have to set aside most of our own agenda in order to get our fiscal house in order after Republicans have made a mess of it. Any conservative with principles will, at that point, try to distinguish between the tax [cuts increases — update; brain apparently not working] that are required by fiscal responsibility and those that are required by new spending that he or she disagrees with, and criticize only the latter. That Democrats will raise taxes in order to cut the deficits will be a sign of their political courage: it’s obviously unpopular, but it’s also obviously necessary. Conservatives who care about fiscal responsibility should have Democrats’ back on this one. It will be interesting to see how many of them there are.
***
For what it’s worth: I am not, actually, a complete deficit hawk in general. In my perfect world, the government would run deficits during bad economic times and compensatory surpluses in good ones. When politicians said “hey, we’re running surpluses, give us back our money“, I’d reply: “sure, as soon as we finish paying down our debt.” I favor using fiscal policy countercyclically: when recessions hit, there’s always some critical infrastructure that needs repair, or (more recently) homeland security spending that needs doing; and in my perfect world, we’d use that fact to ameliorate the business cycle. (In my perfect world, for instance, we would have responded to the 2001 recession and 9/11 by embarking on a crash program of homeland security upgrades. This would have done a lot more than Bush’s tax cuts to stimulate the economy, and we’d be safer besides.) But it’s not my perfect world; in fact, we’re so far from it that I will, for the foreseeable future, be indistinguishable from complete deficit hawks, my rough and ready Keynesianism notwithstanding.
I fully expect that if Democrats regain power we will, once again, have to set aside most of our own agenda in order to get our fiscal house in order after Republicans have made a mess of it.
looks like you are a mere half-thought away from understanding the basis of the GOP fiscal policy.
“We do, though not, as Peggy Noonan (subscription required, WSJ) suggests, just any spending.”
I stopped taking the Volokh people seriously as political commentators when one of their conspirators (Barnett IIRC) vociferously argued this point, and no conspirator disagreed with him, in the run up to the 2004 election.
Not to be Mr. picky today but, shouldn’t it be “tax increases” in the following:
Any conservative with principles will, at that point, try to distinguish between the tax cuts that are required by fiscal responsibility and those that are required by new spending that he or she disagrees with, and criticize only the latter.
cleek,
Exactly right. Proving again how silly the meme “The grown-ups are back in charge” was. Grown-ups do not put the country on the track of ruin for political advantage.
Very good post. Sadly, raising taxes is about the easiest issue to demagogue, so the notion that there will ever be a political reward for acting responsibly is a lost cause. Cutting taxes is the balance-sheet version of bread and circuses.
Steve: I’ve been trying, without success, to change that for decades. Whenever a politician would tell the truth on these issues, I would go and work my heart out for him or her, just on the principle that there ought to be a reward. So far no luck, though.
A very sad example is happening right here in Anchorage. We pay no state or local taxes of any kind (sales, income, whatever) except for property tax. So, naturally the challenger’s platform seems to be “Cut Property Taxes Now! Plus, wouldn’t it be cool if Anchorage’s mayor was named ‘Jack Frost‘”
Because, we don’t need things like police, or snow removal…
“That Democrats will raise taxes in order to cut the deficits will be a sign of their political courage: it’s obviously unpopular, but it’s also obviously necessary. Conservatives who care about fiscal responsibility should have Democrats’ back on this one. It will be interesting to see how many of them there are.”
I’d have their backs right now to cover current and projected military spending, military pay increases and the like. I’d support tax increases to put the government nearer to balance. But I honestly wouldn’t support one more penny for ‘entitlement’ programs until Social Security and Medicare (especially the latter) made better sense.
re SH’s comment: what would make more sense would be to place everyone in medicare. freeriding, adverse selection, claim denial and procedure-based (as opposed to capitation based) compensation would all be ended.
(i suspect, however, that this is not what SH intended by his comment).
(it’s also worth noting that the residents of San Diego will soon be paying a LOT more in taxes, to cover their pension shortfall and start rebuilding their potable water delivery system. So SH’s grouchiness about taxes arises, shall we say, in a certain context.)
Francis: lucky me gets to be grouchy about energy deregulation, which is about to land me with a 72% hike in my energy bills.
Then:
I am, broadly speaking, a free market girl, though I also think that markets require regulation. (Why? One word: Russia.) But much more than that, I am a devil-in-the-details girl who thinks that there are some spheres in which, for one reason or another, normal markets don’t work. I do not know energy well, but I’ve always suspected it’s one of them, partly because you just can’t have the sort of supply and demand price adjustments you need when you’re talking about electricity, and partly because this is the second deregulating state I’ve lived in. In the first, CA, I luckily missed the Enron energy debacle, but I caught the beginning of it. My town, Pasadena, had its own municipal water and power, and they explained deregulation to us at length, and we did a lot better than our less regulated neighbors while I was there.
In any case, this turns out not to be one of those ‘competition leads to lower prices’ moments. Instead:
And what about competition? Um, er:
Energy is not a normal market. It is just not. As far as I can tell, there is no reason at all to expect that the sorts of principles that work well when e.g. shopping for cereal will work well in the energy market.
But hey: no one listens to me.
Ditto health care.
The Bush administration did not cut taxes. It deferred them. Taxes can only be cut with equal reductions in expences. Logic tells you that politicians who can’t start these cuts today will be equally incapable tomorrow. It’s like maxing out your credit cards because then you will have to pay back.