Krugman Advises AGAINST Full Tax Cut Rollback

[DoveTurnedHawk]

<...>

So if a Democratic candidate proposes a total rollback of the Bush tax cuts, he'll be offering an easy target: administration spokespeople will be able to provide reporters with carefully chosen examples of middle-income families who would lose $1,500 or $2,000 a year from tax-cut repeal. By leaving the child tax credits and the cutout in place while proposing to repeal the rest, contenders will recapture most of the revenue lost because of the tax cuts, while making the job of the administration propagandists that much harder.

Purists will raise two objections. The first is that an incomplete rollback of the Bush tax cuts won't be enough to restore long-run solvency. In fact, even a full rollback wouldn't be enough. According to my rough calculations, keeping the child credits and the cutout while rolling back the rest would close only about half the fiscal gap. But it would be a lot better than current policy.

The other objection is that the tricks used to sell the Bush tax cuts have made an already messy tax system, full of special breaks for particular classes of taxpayers, even messier. Shouldn't we favor a reform that cleans it up?

In principle, the answer is yes. But an ambitious reform plan would be demagogued and portrayed as a tax increase for the middle class. My guess is that we should propose a selective rollback as the first step, with broader reform to follow.

Will someone be able to find the political sweet spot, the combination of fiscal responsibility and electoral smarts that brings the looting to an end? The future of the nation depends on the answer.

http://www.nytimes.com/2003/10/17/opinion/17KRUG.html

DTH

[Julien Sorel]

1. LOL

This is a slap in the face. Last week, the Deanies were singing Krugman's praises; soon, he will be the anti-Christ, at least for the more perceptive. Some of them will probably try to claim that this is somehow an endorsement of Dean's economic mumblings. We're through the looking glass...

[Jim Sagle]

3. Dean rocks, Clark sucks, and that's the end of it.

Just so you know. ;)

[Pastiche423]

9. I gotta say, Jim

I like your style.

[FrenchieCat]

10. I know.....but I'm starting

to believe that you don't. What Krugman is writing is read by many. It's unfortunate that it's not what your guy is saying, considering that Krugman is the progressive economist with the loudest voice at the moment.

I won't say that Dean sucks.....cause that would be too simple, but he does remind me of Jack Nicholson in "The Shining". And that ain't a comforting feeling. Also, I only can see his bottom teeth when he talks and smiles.....now some might find that kinda of creepy.

I really didn't mean any of what I wrote in the above paragraph....however, I get ticked when all of the sudden someone screams that the candidate that I support SUCKS.

It's amazing how a thread that should encourage intelligent dissent and debate crumbles to name calling at the first chance. I felt compeled to name call because you started it......

[unfrigginreal]

12. Who started it?

Perhaps you should check out reply #1.

[FrenchieCat]

13. Reply #1 was witty....

and somewhat confrontational...but not animalistic in name calling.

I just thought it could have been handled better than sinking to the level of kindergarden chants.

[unfrigginreal]

14. Oh, so it's ok as long as we're "witty" ...

about the way that we say a candidate sucks.

[maha]

27. Krugman is the expert ...

I am inclined to want to roll back the entire tax cut, as Dean suggests, and/or to go back to the Clinton tax code, as Gephardt suggests, but if Krugman says that might not be the best way to go, then maybe it isn't. I'm not an economist, and he is, and a pretty darn smart one to boot.

Sometimes you do have to consider expertise. If your doctor says you're having a heart attack and you need emergency medical attention, and your mother-in-law says nah, it's just acid reflux, take an alka seltzer, who you gonna believe?

I'm not saying Krugman is infallible, but ...

On the other hand, in order for "rolling back ALL the tax cuts" to happen, it would take a Dem in the White House and a Dem majority in Congress, and that would be GOOD.

[Romberry]

17. No slap there.

The only insult I see is the way some people think others are so stupid as to fall for their spin.

[Guaranteed]

21. Unless, of course, Krugman is contradicting himself.

i.e. his plan doesn't balance the budget quickly.

[sangh0]

31. You might want to read his articles

Krugman doesn't think we need to balance the budget, quickly or slowly. Sometimes it helps to be familiar with what someone has said in order to determine if they've contradicted themselves.

[unfrigginreal]

2. He's definitely trying to send a message to Dean...

but I don't think that Dean will heed it.

Krugman's basically saying, don't take a position that will be demogogued. That may hold some weight with politicians like Gephardt but I'd be surprised if Dean went along with it. Dean staked out his position because he believes that it's the best course for the country...he'll welcome the debate.

[Jim Sagle]

4. And he'll win it.

[FrenchieCat]

11. I am an Tax accountant....

amd I agree with Kurgman. If a car tax can lose an election for a Democrat in california....

the issue of taking back tax cuts to those who feel like they really need it (even if it's miniscule) won't play well in a General election. It's fodder for Bush, and Lord knows with $200 million to spend, this has got to be a consideration.

[Guaranteed]

23. Bush can try it

but Dean's just going to come right back and say it's the fault of Bush and his corrupt corporate government. And the more descriptive Dean is (he gets to tie it into the war and all the lies) the more convincing he's going to be. This is going to be a bloodbath.

[AP]

5. I can't believe Krugman thinks it's only an issue of demagoguery.

At liberal oasis, he said the tax code could use a little progressivity. I saw wis 1.5 your book tour talk and he didn't say very much if anything at all about prrogressivity, and this article seems to reduce the issue to demagoguery.

I know tax policy isn't his area of expertise. I wish he would make it his area of expertise so I can know if I'm right about this.

[pruner]

6. is that the most flattering pic of Edward's wife you can find?

I'm not dissing her looks… I'm just saying that isn't a good pic.

[AP]

7. If you care so much about looks, you should be voting for John Edwards.

I don't have the picture here because of the way she looks.

Anyway, I got a lot of messages from people asking who it was. I got the impression some of them were hoping it was me. So it can't be all that bad of a picture.

[dkf]

8. So why do you have a picture of Edwards wife there?

I don't get it.

[AP]

15. I want to get in on her senate campaing on the ground floor.

I want to start rooting early.

[spooky3]

20. wow, are you serious?

If so, Edwards' decision to devote full time to seeking the presidency makes even more sense. If she were to step in as a senate candidate, maybe they won't lose the seat.

[Romberry]

16. No, that is not what he advises at all

He says that what is needed is likely not politically possible, hence selective reform followed by later steps. In fact, Krugman is saying (explicitly in the same column) that just rolling back the Bush cuts is not enough to undo the damage that has been done. Is there some reason that you feel a need to distort what he said?

[DoveTurnedHawk]

19. You're the One Distorting and Spinning

Krugman's bottom line recommendation -- after taking into account all of the factors, most importantly the pragmatic factor of political possibility -- is not to roll back the whole tax cut.

Sorry that doesn't fit with what your probable candidate has proposed.

DTH

[sangh0]

32. You are distorting Krugman

1) Krugman has NEVER said that repealing the entire tax cut is NEEDED.

2) Krugman never even implied that "just rolling back the Bush cuts is not enough to undo the damage that has been done", nevermind saying it "explicitely". He said that rolling back ALL the cuts would not result in a balanced budget. However, Krugman has said that there is no need for a balanced budget.

[union_maid]

18. He's right, of course

It's not just electoral smarts involved either. Kerry was the first one that I heard pointing it out, but others might have said it at the same time - the middle class never got a tax cut. Local taxes and rises in user fees ate up their tax cut and more and those things aren't going to be rolled back. That was so predictable that I never did understand why people didn't rise up and protest over the original "tax cuts". It's just smarter to leave the tax cuts in place for the lower income levels. For most, they only partially pay for the increased costs that Bush's tax cuts have passed on to the average American.

[poskonig]

22. Again, Krugman's advice is reactive, not active.

As I said elsewhere, Dean takes the fight to Bush. As Dean said elsewhere, Bush's plan is to borrow $1000 in your name and give you $250 of it. While I favor a graduated tax policy, I cannot ignore the political value of drawing sharp distinctions on the tax cut.

[DoveTurnedHawk]

26. That $1,000/$250 Argument Is Never Going To Fly

The American people aren't going to see it that way, especially not with Bush's $200 MM war chest blaring at them otherwise.

Start with rolling back the cuts on the rich, then maybe try for some more. Personally, I'd rather roll back the cuts on the rich and then add some MORE taxes on the rich, and not touch the middle class at all. That's the more fair, progressive way to go, and also more politically viable, IMO.

Raising taxes on the middle class is just a stupid idea, IMO.

DTH

[poskonig]

29. While State and Local taxes mean nothing to you,

They mean a lot to others. Yes, those taxes *have* gone up on the middle class as a result of Bush's economic policy. Looking at the Bush tax cuts discretely, *most* working individuals only received only a few hundred bucks from them, if that.

I'm betting the middle class, when given the choice between the Clinton economy and $0.80 extra a day, will chose the Clinton economy.

[CWebster]

24. Krugman will be the first to tell you he is not a progressive

in fact he is a freetrader, but that doesn't discount his astute observations and couragous integrity among the current crop in the journalistic cesspool.

It is kinda of humorous that your highlighted selection alludes to "broader reform to follow" LOL, not exactly putting a limitation on it. But aside from that, his argument is limited to tax cuts alone--not tax cuts and the feasibility of national healthcare or other concerns like education and the burden increased property taxes and fees.

[Donna Zen]

25. Krugman plus Krugman

First: Lumps of Labor (Krugman advocates for upper level tax break $$$ moved to jobs)

Since 2001, sensible economists have been pleading for federal aid to state and local governments so schoolteachers and police officers needn't be laid off because of a temporary fall in revenues. They've also urged the administration to stop dragging its heels on much-needed homeland security spending, not just because such spending is needed to make the country safer, but also because it would create jobs and put more income into the hands of Americans likely to spend it. (And if you're worried about spending's leading to increased deficits, why not cancel some of those long-run tax breaks for upper brackets?) Until we've done the obvious things, there's no reason to despair about job creation.

In today's Krugman, he warns about total tax-rollback for two reasons IMHO: 1) the middle-income taxcut does have influence on stimulating the economy and would be part of any tax reform program 2) it is political stupid leaving whomever advocates such a position in a very vulnerable position.

Did junior tell the American people he was going to bankrupt the government to set up the end of all social programs? Krugman knows hardball and he is offering sound advice. He doesn't want to lose this election. Nuff said.

[JNelson6563]

28. We get an extra $28 a month

We are definitely middle class. I would gladly give it back to achieve some stability in out economy and other necessities. Gladly. I know many who feel the same way.

Julie

[Donna Zen]

30. I think I received zero

but this isn't about me. This is about winning an election, because unless a Dem wins, it will only get worse. Krugman is advocating a middle ground: some roll back of upper income level taxcuts exchanged to fund jobs and the states, coupled with a silence to deflect junta attacks. (Lumps of Labor)

That leaves flyboy either attacking a policy to keep money from moving to lower the tax burden for the states and increase jobs, or defending a policy meant to move money to the already well-off. If you include all tax-cuts, the Dems become a target for a difficult to explain policy. (Today's article)