The Right Reason to Raise Revenues
Andrew Rosenthal of the New York Times engages in a common liberal fallacy about the Bush tax cuts:
Last Friday, Mr. Obama excited talking heads in Washington by referring to increases in “revenue” instead of “rates.” I hope that is not a sign that he is preparing to cave in on the budget talks, yet again. During the campaign Mr. Obama frequently asked crowds why we would want to go back to bad policies that led to the Great Recession. He might want to keep reviewing those videos.
I caught Vice President Biden committing the same error in his debate with Rep. Paul Ryan:
And by the way, they talk about this Great Recession as if it fell out of the sky, like, oh my goodness, where did it come from? It came from this man voting to put two wars on a credit card, to at the same time put a prescription drug benefit on the credit card, a trillion-dollar tax cut for … the very wealthy.
When liberals argue this way, they indirectly bolster one of conservatives’ ideological delusions about the causes of the financial crisis: that we “got into this mess because we spent too much,” and thereby ran up too much debt. In a roundabout way, attributing the Great Recession to the Bush tax cuts is to agree with conservatives that annual deficits are the, or at least a, culprit. And that’s just notthe case.
This is not to say that historically low tax rates — and, consequently, revenues — didn’t make it harder to respond to the crisis. But that’s different than saying they caused the crisis. If President Obama is going to barnstorm around the country, Woodrow Wilson-style, to put pressure on Republican lawmakers, he should be honest about what he’s asking for: more money to pay for what he believes should be our highest national priorities, as well as to reduce long-term deficits. This isn’t about preventing another financial crisis (or not letting one go to waste, as the mayor of Chicago once put it). That’s what Dodd-Frank was about — and that’s an argument for another day.