The Tax History Conservatives Want Us to Forget

by: David Sirota

Tue Nov 25, 2008 at 15:30

Grover Norquist is regularly billed as one of the leading intellectual lights of the conservative movement - and I think you will agree that the arguments he made in a debate with me over taxes this morning on CNBC highlight not merely the shocking intellectual bankruptcy of the movement he leads, but just how out of touch Republicans in Washington really are.

The debate revolved around President-elect Obama's potential plans to put off raising taxes on the very wealthy. Norquist begins the debate with the claim - I kid you not - that "the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010." He insisted that, "The stock market began to collapse as soon as you recognize that those old tax rates were coming back." Yes, because under "those old tax rates" - ie. Clinton-era tax rates - the economy was so much worse than it is today.

David Sirota :: The Tax History Conservatives Want Us to Forget
As you'll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn't sure he was being serious - but, of course, he was. I went on to make the point that I've often made in the past - the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.

That simple, undeniable bit of history undermines the entire structure of conservatives claim that raising taxes on the super-rich will hurt the economy. And as you'll see from Norquist's response, they simply cannot deal with that truth. Indeed, Norquist actually goes all the way back to the 1920s as his example that raising taxes on the wealthy impedes economic growth - somehow ignoring the history from 15 years ago. He then goes on to claim with a straight face that Franklin Roosevelt created the Great Depression (this, along with the "center-right nation" propaganda, seems to be the right's new talking point).

The question now is whether the Obama administration buys into Norquist's fact-free nonsense, or whether it musters the same courage President Clinton mustered in prudently raising taxes on the super-rich to responsibly finance an economic stimulus package. Sure, temporary deficits are acceptable right now - there's no arguing that. But doing what's necessary to minimize those deficits is also important.

In terms of policy, if, as Congressional Quarterly reports, Obama wants to enforce budget discipline on a necessarily large economic stimulus package, it will require generating additional revenue from the wealthy. In terms of raw politics, if Clinton's 43 percent of the vote gave him enough political capital to come into office during an economic downturn and do that, I'd say Obama and his 53 percent gives him enough political capital to do the same today. And I would argue that if Obama backs off his promise to raise taxes on the wealthy, he will effectively validate the false conservative frame that claims tax increases on the wealthy endangers an economy.

While I certainly agree with the CNBC reporter that the 2008 is different than the 1990s, it isn't different when it comes to taxes - we have very recent history that proves raising taxes on the wealthy in order to raise revenues for economic stimulus, if done prudently, helps an economy recover. That is the argument that nobody during this debate was able to undermine - and it is the argument conservatives fear most, because they know it is accurate.

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You Go David!!! (4.00 / 5)
You sent Grover back to Sesame Street.  Your stock went up 1000%.  Great point, and you stuck to it, textbook debating.  

Next time you see CF you should take her to lunch, she was good, too.

Questions: (0.00 / 0)
Should Obama let the tax cut lapse, or spend political capital pushing for a vote on early termination of the tax cut?  One of my memories of the '93 vote was the Republican takeover of Congress the next year.  Letting the tax cut lapse is politically safer, but can we wait that extra year?  Is it better to let it lapse later so that the grown ups stay in charge and prevent a devastating tax cut in 4 years under President Palin and Senate leader McConnell?

John McCain won't insure children

There Is No Evidence That The Tax Cut Is Why The GOP Took Over (4.00 / 1)
I'm sure it was a factor in a few races.  But as Mike Lux pointed out a while back, the main reason we lost in 1994 was because we didn't do enough to bring out our base.  And as I pointed out, a close second was the Perot vote, which was more interested in blancing the budget than it was in lowering taxes.

So, beware of false "pragmatism".  Check your facts and figures first.

"You know what they say -- those of us who fail history... doomed to repeat it in summer school." -- Buffy The Vampire Slayer, Season 6, Episode 3

[ Parent ]
Mostly, I think that '94 was due to (0.00 / 0)
Clinton's early political ineptness (e.g. poorly handling gays in the military, universal health insurance, vetting of political appointees, relations with the Dem-controlled congress, media relations, etc.), along with Dems' lack of cohesion and a sense that they didn't stand for anything, and GOP sharks smelling blood in the water and exploiting Clinton and the Dem's weakness fully. Gingrich, Armey & Co. basically outplayed Clinton, Foley & Co.

As in '68, '80 and '00, there was no real underlying substance to the Repub takeovers, but rather a shrewd and cynical exploitation of exigent political realities to make the more effective sales pitch. Repubs haven't been serious about policy, in terms of the national rather than narrow interests, since the 50's. Since then, it's been largely and increasingly about messaging, grass-roots organizing, and dirty tricks. Even Nixon, the last Repub president with some decent policies, couldn't help putting politics way ahead of policy.

It only works when Dems lose focus and fail to stand and fight for anything. Which, sadly, has been often. Hopefully, that will no longer be the case.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

[ Parent ]
Wow he really is out to lunch. (0.00 / 0)
Stuck in a time warp, fighting the last war (last two wars actually) and denying the reality around him.  It was interesting to see Chrystia Freeland nodding her head emphatically when you called him out for making a dated political argument at the end there.

speaking truth to idiocy (0.00 / 0)
por fin!

1993 Clinton stimulus package (4.00 / 1)

You stated that "President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed."  My memory is that the primary focus of the 1993 budget bill that included the tax increase was basically deficit reduction -- Clinton wanted to rein in the budget deficits he had inherited from Bush on the theory that public borrowing to finance deficit spending had made borrowing by the private sector more expensive (and had resulted in economic stagnation).  If I remember correctly, Clinton's stimulus package was ultimately blocked by Republicans in the Senate, and the total value of that proposed package was only around $16 billion.  Clinton may have linked financing his stimulus package to a budget bill aimed at deficit reduction, but I don't believe the stimulus package was ever enacted.

I remember how Republicans argued at the time that we simply could not afford that package, and now 100x, 200x of that amount is given away to banks in the blink of an eye...

Bush recession I (4.00 / 3)
Just once I'd like to have Pete Wilson's idiot utility deregulation and the consequent looting of California by Enron get the condmnation it deserves.

The huge economic  controversy of my adolescence was the right wingers constantly bashing LBJ for not raising taxes immediately during the Vietnam war.  They attributed every drop of inflation for at least 20 years to that.

Bravissimo, David! (0.00 / 0)
I swear, I never know if it's polite for folks to interrupt each other during these talking-head debates, but that seems to be the only thing that works in such a constricted time frame.  

"This ain't for the underground. This here is for the sun." -Saul Williams

Strongly agree (0.00 / 0)
The tax plan Obama laid out should be followed.

Also, as dissimilar as 2008 is to 1993, its obvious even less like the late 1920s.  

Saxby Chambliss  

grover, about that bathtub (0.00 / 0)
rather then drowning the govt how about you drown yourself in that bathtub, the country will be better off and you won't have to look so foolish after making another one of your idiotic comments, oh, and while i'm at it, get a real job.

The GOP is furiously throwing memes against the wall to see what sticks (0.00 / 0)
Lacking the ability, discipline or integrity to try to formulate serious policy proposals, they're basically throwing together ad hoc memes and talking points and tossing them out at a furious pace in the hopes that some might stick. This is just the latest one, but there have been so many these past few months:

--ACORN, the CRA, shiftless blacks and Dems caused the financial meltdown
--Massive voter fraud, also caused by ACORN (and Obama)
--Obama's a socialist Marxist communist radical terrorist secret Muslim
--FDR caused, or at least didn't end, the great depression
--Drilling NOW is the solution to our energy problems
--It's a center-right nation
--Joetheplummer and Sarah Palin are the real America

Um, yeah. But they'll keep at it, as it's all that they've got. Always was. Oh, plus the ratfucking.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

The rich don't spend. (4.00 / 1)
Taxing the rich as a means to economic stimulus is effective because it puts more money into circulation than would otherwise be there.   Yes, the rich have the capacity to invest, but they're not going to do so during a recession, particularly not one that is hinging on becommming a depression.

Even if you cut taxes on the rich right now, they'll just soak it up and save it.  Actually, in general I think a tax cut right now is a bad idea in that respect.  Infrastructure spending is the way to go.  Even the middle class will use any tax cut to pay down debt/save...not bad, but not effective stimulus either.

Rather than delaying the tax increase on the rich, Obama should be pondering delaying the middle class tax cut.  

on top of that (0.00 / 0)
when they do invest, they don't invest in things that hire a lot of people. People are expenses.  

They like pure financial instruments, which have (HAD) a higher return than actually producing things or providing services.

[ Parent ]
Taxes on the rich (4.00 / 1)
Certainly it is correct that raising taxes is good, but let's not go overboard on some nemes.  In particular, Clinton's tax increase, while there, was meagre compared to that of Wilson, FDR, Truman, and even Eisenhower-those people had 75% top rates and more, for God's sakes.  If Clinton had wanted to balance the budget he should have raised taxes and cut defense spending much more than he did.  Not that I am favoring such a policy, as a Keynesian first, last, and all the time, but the idea of Clinton restoring fiscal stability to this country is largely a myth.  Also, the debacle of 1994 was because:  Clinton was too conservative, not proposing a single universal social service, excepting health insurance which he (not his wife) proceeded to botch up, not proposing any measures to fight big business and the Overclass or to help the working person, unions, labor, etc., and NAFTA and sundry other "economically liberal" acts;  and the Democrats never carried out the promise of the Progressive era and the Roosevelt-Truman period.  They never carried out anti-business and pro-labor acts, never even proposing universal social services, never doing anything truly radical to solve the nation's great problems.  That goes for the 60's and 70's as well-Kennedy and Johnson never did anything as radical as the early 20th century presidents did, with the exception of civil rights, which was increasingly used as a substitute for doing anything else.  Please someone just look at the Great Society, and ponder-it really was not as radical as the New Deal was, and was inadequate for the growing problems of our nation, things began getting out of hand right then.  And so, after 30-40 years of waiting for the Democrats and othe non-Republicans to do something, the American people, in 1994, just gave up.
One last matter:  the middle class tax probably should be delayed, if not reconsidered entirely.  We should help the great middle income groups in our society-that includes the workers and farmers-and also the poor, by spending money on them, through a universal welfare state.  The middle class does not hate taxes, it merely wants some of the money to be spent upon them.          


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