Good God. I read the TNR drivel so you don't have to normally -- but you really need to be exposed to what passes for smarter-than-thou ruling class condescension on the debt debate from Jonathan Cohn:
Taxing The Wealthy Won't Make The Deficit Disappear. But It Will Make The Deficit A Lot Smaller. | The New Republic: "Believe it or not, I am a little sympathetic to Rubin’s argument here. Plenty of Democrats, including President Obama, have exaggerated the impact of repealing only the Bush taxes that apply to higher incomes. If we want to preserve the program integrity of Medicare, Medicaid, and Social Security, we are going to need more revenue than those tax cuts alone represent. That’s why some of us have long argued that we should let all of the Bush tax cuts, even those that apply to lower incomes, to expire once the economy has stabilized.Smarm-o-rama, eh Jonathan? So let's put this in mathematical perspective.
But if it’s an exaggeration to suggest that higher taxes on the wealthy will take care of the deficit, it’s a gross exaggeration to suggest, as Rubin and other conservatives do, that higher taxes on higher incomes can’t reduce deficits significantly.
Start with those upper income Bush tax cuts. Allowing them to expire after 2012 would generate around $800 billion in revenue, depending on how you count. Closing loopholes that primarily affect the very wealthy would add to this total, albeit incrementally. Partly eliminating the infamous “carried interest” provision, which allows hedge fund managers to pay low rates on most of their incomes, would generate around $15 billion, or maybe even more. And that's just one loophole. If we were willing to talk about new taxes on the wealthy, like limiting their itemized deductions, or new taxes on oil companies and other businesses, we could get more revenue still. Economist Jared Bernstein, formerly of the Obama Administration and now of the Center on Budget and Policy Priorities, detailed some of these on his blog not too long ago.
Put it all together and it's easy to generate revenue in excess of $1 trillion. That works out to about a half percentage point of gross domestic product. And if that doesn't sound significant to you, think of it this way: That's $1 trillion in cuts to government programs we wouldn't have to make."
First notice how you walk away thinking that when he says letting the Bush tax cuts expire for those making over $250K per year will generate $800 billion -- never mind that it won't of course but lets be as generous as possible here -- you're tempted. After all, with a deficit of about $1500 billion per year -- never mind that if you stop the Enron accounting it's probably more like $3000-4000 billion per year -- that's actually enough to make a difference.
Wrong, turnip breath.
Because what he forgot to tell you was that $800 billion was over the course of ten years! So our genius overlords think that a 6% dent in the deficit (800 / (1500 * 10) rounded up to be generous -- never mind the full budget!) that won't materialize anyway and slows the economy and hiring further (which is the real issue here) is front and center of their economic Rx?
Did I forget to say Good God?
And to add insult to injury, the list he links to from Jared Bernstein would well and truly throw the economy into turmoil for who knows, maybe another 500-1000 billion over ten years. Now if we shake the tree with another 5-10 impotent yet disastrous plans like this we might actually be able to close the deficit. But you might have noticed that there are no more meaningful targets left after this without going after those making less than $250K. Which Cohn is at least honest enough to also detail here.
Oh, and did I mention that there is no economic school (Keynesian, Monetarist or Austrian) that advocates raising taxes in a recession? None. Well except maybe the Socialist "school".
But don't worry, they're not Socialists or Communists or anything like that. Just apparently entirely mentally incompetent and innumerate.
Which reminds me that this is probably a good time to repeat the old joke about the ten item fast lane grocery cashier in Cambridge, MA who when confronted by a young man with a cart heaped with items asked: "Are you from Harvard and can't count or from MIT and can't read?"
Obama went to Harvard for his law degree. And interestingly, the second biggest spender in history got one of his degrees there also...
Oh, and did I forget to mention that TNR author Jonathan Cohn went to Harvard also?
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