Posted on 12/22/2002 12:22:53 PM PST by Torie
Get Lucky
by Jonathan Chait
Post date 12.17.02 | Issue date 12.23.02
One of the things that has fascinated me about The Wall Street Journal editorial page is its occasional capacity to rise above the routine moral callousness of hack conservative punditry and attain a level of exquisite depravity normally reserved for villains in James Bond movies. To wit, a recent lead editorial titled "THE NON-TAXPAYING CLASS." A reader unfamiliar with the Journal's editorial positions might read this headline and assume it refers to ultra-wealthy tax dodgers. But no--the Journal, of course, approves of such behavior. The non-taxpayers it denounces are those who earn too little to pay income taxes: "[A]lmost 13 percent of all workers," the editorial fumes, "have no tax liability. ... Who are these lucky duckies?" In typical Journal fashion, the editorial is premised upon a giant factual inaccuracy--it completely ignores sales and excise taxes, which consume a huge share of the working poor's income. But what makes the editorial truly exceptional is the reasoning underlying it. The Journal complains that low taxes on the poor are "undermining the political consensus for cutting taxes at all." For instance, the editorial considers the example of a worker who earns $12,000 per year, and, after noting bitterly that he pays less than 4 percent in income taxes, concludes, "It ain't peanuts, but not enough to get his or her blood boiling with tax rage." In other words, the Journal wants to raise taxes on the working poor so that they will have more "tax rage" and thus vote for Republicans. Once in office, of course, those Republicans would proceed to cut taxes for the well-off. (Indeed, according to the Journal's logic, they couldn't cut taxes on the poor because that would just lead them to stop voting Republican.) When I try to visualize the editorial meeting that produced this bit of diabolical inspiration, I imagine one of the more rational staffers--maybe Dorothy Rabinowitz--tentatively raising her hand and asking, "Isn't that idea a bit, you know, immoral?" Then Robert Bartley or Paul Gigot would emit a deep, sinister laugh and press a hidden button, depositing the unfortunate staffer into a tank of piranhas. Come to think of it, I haven't seen Rabinowitz's byline in a couple of weeks.
The Journal is perhaps most famous for helping to transform supply-side economics from a crank doctrine ridiculed by mainstream economists and rejected by Washington policymakers into a crank doctrine ridiculed by mainstream economists yet embraced by Washington policymakers. But, even though President Bush is no less committed to supply-side economics than was Ronald Reagan, W.'s policies, unlike the Gipper's, are almost never described in the press as "supply-side." A rare exception occurred last month, when President Bush declared at a press conference that "the deficit would have been bigger without the tax-relief package." A minor stir ensued, with Democrats accusing the administration of practicing supply-side economics and Bush aides denying it.
Why Bush's embrace of voodoo economics became newsworthy just recently is hard to figure, because his spokespeople have been saying the same thing for months. "The tax cut gives us a chance for sustained economic growth. If we have higher taxes on this economy then the [revenue] projections won't get stronger; they're more likely to get weaker," insisted White House Budget Director Mitch Daniels last summer. "The president does believe that cutting taxes is the best way to spur growth and therefore to have a return of bigger surpluses," declared Ari Fleischer ten months ago. Indeed, describing this administration's economic policies merely as "supply-side" is something of an understatement. Supply-siders believe that cutting upper-bracket tax rates can cause massive economic benefits, and in the early '80s they did famously claim that those benefits would be so large that they would actually cause tax revenues to increase. But most have spent the intervening years fervently insisting never to have said any such thing. "[T]he 'supply-side' movement is not remembered for its correct predictions about prosperity, but for the 'Laffer curve,' and its supposed prediction that the revenue effects of tax cuts would be large enough to shrink the deficit," writes Bartley in The Seven Fat Years, his apologia for Reaganomics. "The prediction, however, is not one any of us really ever made." So Bush has embraced a version of supply-side economics so radical that even the supply-siders themselves have repudiated it. After the president's controversial pronouncement, no less a purist than Jude Wanniski, author of the influential 1978 supply-side tract The Way the World Works, told The Washington Post that the Bush tax cut is "decreasing revenues."
Wanniski, once a confidant of GOP stars such as Jack Kemp and Steve Forbes, has since become marginalized by holding forth on noneconomic subjects--for instance, defending Louis Farrakhan or insisting that Saddam Hussein did not use poison gas against the Kurds--where his nuttiness is apparent even to laymen. The other great tax-cut tome is Wealth and Poverty, written by George Gilder in 1981. Gilder's reputation, too, has gone south recently. After winning acclaim as a tax-cut zealot, Gilder abruptly became a telecommunications autodidact. During the 1990s boom he made a fortune as a new economy evangelist--he earned up to six figures for a single speech, and his newsletter, "Gilder Technology Report," often caused stocks he recommended to jump as much as 50 percent. Gilder used his wealth to purchase the conservative monthly The American Spectator, which he turned into a monument to his own genius. One issue featured a 6,600-word cover interview of Gilder himself, in which he was asked questions such as, "In the late 1970s and early '80s, you led the intellectual debate on sexual issues from the conservative side. In the 1980s your book Wealth and Poverty transformed the way people thought about capitalism. And then you wandered off to study transistors. Why did you do that?" (Gilder's reply: "I thought I had won those debates. Whenever I actively debated anybody, they didn't have any interesting arguments anymore.") In the same interview Gilder declared, "Almost all [upper-class women] are averse to science and technology and baffled by it. And they clutch at the pretentious irrationality of environmentalism as their countervailing wisdom." The Spectator promised its readers that "[a]n equally wide-ranging talk with George will be an annual event." Alas, only one ever took place. The technology crash caused most of the companies Gilder extolled in his newsletter to lose virtually all their value. "I told people in early 2000 they should sell half their shares in these companies," he told Wired in a semi-contrite interview last July. "I didn't say it often. I didn't put it in a newsletter." Gilder had to abandon the Spectator and, according to Wired, is now broke and has a lien against his home--giving the phrase "Wealth and Poverty" an unanticipated poignancy. But, as the Journal might note, his income-tax bill these days is probably almost nil. Lucky ducky.
Jonathan Chait is a senior editor at TNR.
Actually, you are a liberal on most matters. I, too, beleive the richer should pay more. That would be the case under a flat tax.
Anyway, the issue of some people not paying taxes is a real one. If we ever reach the situation where 50% of the people don't pay much in taxes, this country will be in deep doo doo as those 50% will always vote for more and more spending.
... Just prudential limits. One doesn't want to kill the goose the lays the golden eggs ...Thank you. This is, again, precisely my point. I would far rather trust in a law fairly and equally applied than any one politico or party's notion of "prudence."
I would offer a meaningful response concerning the characteristics of a free society, but I think I'd rather just call you names. Unfortunately, even egg-sucking-dog-marxists are protectd by the rules of this site, so I will refrain from personal attack.
Please don't confuse liberals with economics. Of course, how much tax is passed on is a function of the elasticity of supply, as well as the elasticity of demand.
Chait is a big admirer of (and apologist for) Krugman; he has defended Krugman's pathological obsession with Bush (and Krugman's lies about his Enron kickbacks) on numerous occasions.
Chait is also obsessed with labeling Bush as a "liar" on just about every issue other than Iraq (Chait is a hawk on that issue). This would probably be a more impressive line of argument if a) Bush was actually lying and b) Chait had a track record of being bothered by politicians who lie. Chait showed no such indignation toward Bush's predecessor and his lies, so his outrage is rather selective.
If you read Chait's writing, you sense that he still hasn't figured out what he is: A bright guy making neo-liberal arguments about taxes or a snide Carville-esque child trying to echo Paul Krugman with soundbites and ridiculous accusations. The piece you posted is strong evidence for the latter theory.
Finally, Chait has been among the most strident outside of the far left in attacking Social Security privatization. He's intelligent enough to know that stocks provide a much better long-term rate of return than the Social Security funds, so one wonders what his real agenda is. The most logical conclusion is that he fears people having their own retirement accounts independent of government largesse.
Chait could be a lot more useful as a writer if he'd be more intellectually honest and less cute and glib in his writing.
And Milton Freidman. Oh, and my Macro textbook by a guy named Parkin who is a neo-keynsian also accepts that lower marginal tax rates induces more work. The vast majority of economists accept that position. The keynsians just don't think that the extra production is worth the "unfairness" and other liberal concepts.
Absolutely right. Most Democrats don't even know enough to wrongly support Keynesian economics.
Keynesian economics: cut taxes and increase spending at the trough, raise taxes and cut spending at the peak.
Uneducated Partisan Hack Pseudo-Keynesian economics: increase taxes and increase spending at the trough, increase taxes and increase spending at the peak, and increase taxes and increase spending on the way up and on the way down as well.
I'm not in your tax bracket so we are arguing from different perspectives. From my perspective the amount I pay for the services I get is bad business.
Despite that, however, we voluntarily lop even more off the net because we contribute to those not as fortunate.
We don't have a problem paying more than those who can least afford it but we do have a problem seeing that money poured down the drain while the leviathan grows ever larger.
State employees in Ct are the wealthiest subgroup in the state. They invest nothing, risk nothing and inevitably get golden parachutes while the rest of us get golden showers.
All in all I prefer to give what I can to those in need directly. It's better business.
I have given that other issue some thought and have several questions. Let's start here:
If the remedy is just for the law profession, why isn't it for the medical profession?
I am not rich either, but I favor much lower tax rates for those who are. The truly rich invest a large percentage of their assets. I think those investments will do more for me in the long run than federal government "investments".
I get so annoyed over the way that term "progressive" is misused by leftist demagogues. It refers, of course, to rates that become progressively higher at higher income levels. It is not meant to imply that those that favor such rates are forward thinking, unlike the Neanderthals who favor a regressive rate structure. I know you know this but I had to rant. :)
It seems to me that a "flat tax" would be every man paying the same amount. Everyone pays $3,000. per year, for example. A flat tax rate, on the other hand, seems seems quite effective at soaking the rich, if that is one's goal. At 10%, the man making $10,000 pays $1,000, and the man making $10,000,000 pays $1,000,000, a thousand time more! Where is it written in stone that fairness demands progressive rates?
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