Monday, December 20, 2010

Promises of Recovery

Robert Kuttner asks a very good question in a piece entitled The Stimulus That Isn’t, echoing one that I have asked repeatedly,

If the tax rates on the books in 2010 did not produce a recovery, why should we expect that the very same rates will change the economy in 2011?

Read the piece. It is a thoughtful and serious piece, and not just ideology.
It is consistent with my question of why Democrats have come to call tax cuts stimulative, a position that they have refuted since Republicans adopted it many years ago, and which has never been substantiated with any empirical evidence.

I understand compromise, and I have no problem with it. Getting DADT repealed is a big deal, and giving Republicans some victories to achieve that is fine with me. Giving in on the “tax cut for the rich” in order to get the tax cuts for the middle class is fine. None of that presents any moral dilemma to me, nor any sense of political defeat.

What baffles me is the adoption of tax cuts as policy that Democrats have embraced since Obama took office. Where Bush presided over a couple of massive tax cuts, Obama’s preference has been for smaller but more frequent cuts, but the outcome is the same – the continuation of the culture of cutting taxes. Obama even brags about it in his speeches. Now he is embracing the continuation of the Bush tax cuts as a stimulus to the economy, and Democratic leadership is cheering him on.

Kuttner also touched on the pitfall of polls – they are taken and quoted in isolation. The infamous “public option” polled favorably during the “health care reform” debate, for instance, but when larger polls were taken, the public didn’t want that subject to be on the table at all; it wanted Congress to be dealing with jobs, the economy, and the wars overseas. The reality was that if health care was the subject then yes was the reply on the public option, but the topic of health care itself was unpopular.

Sort of “I like orange, but I don’t like ice cream” being taken to mean that the public liked and wanted orange ice cream.

You can’t really determine what’s on the public’s mind by asking yes/no questions on a single subject. If you ask someone if they want a tax cut, pretty much no one will answer no, but the popularity of “reducing the deficit” suggests that in a generalized dissertation on public policy a good many people might well not argue for tax cuts.

As Kuttner points out, today’s politicians are married to the idea that tax cuts generate votes, but promises of recovery that don’t materialize may overcome that dogma rather dramatically. Tax cuts don’t help someone who is not working and not paying taxes. This administration has already promised one recovery that did not materialize, and the result was the election of 2010. It did not learn anything from that and now is promising a tax cut that will lead to recovery by 2012.

Update: On the “I like orange, but I don’t like ice cream” being taken to mean that the public liked and wanted orange ice cream, what the public got, of course, was vanilla ice cream. No public option.

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