tag:blogger.com,1999:blog-9214992163505630708.post3318659959840543909..comments2023-10-07T02:44:22.651-07:00Comments on The Titanic sails at dawn: True facts - "A larger welfare state can mean a lower deficit"Bruce Schmiechenhttp://www.blogger.com/profile/08148812188493608928noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-9214992163505630708.post-43429220132957668862011-12-11T18:54:55.830-08:002011-12-11T18:54:55.830-08:00When talking heads make statements like that they ...When talking heads make statements like that they are twisting the conversation. Obviously you can have a large welfare state if your tax rates support it and you can't have a large welfare state if your tax rates don't support it. That is as simple as 1+1. The implicit message is that it is inconceivable to have higher tax rates in the US. Two facts seem to run against this "common wisdom": the majority of Americans support higher tax rates for the very wealthy and, if Congress does nothing at all (which seems like their current forte) we will have higher tax rates. <br /><br />The more pernicious assumption within this "common widsom" is that we shouldn't have higher tax rates because it is damaging to the economy. This makes a certain sense broadly speaking, but if you consider a number of details in our current situation, the logic is much less obvious:<br /><br />1) The only rates in question are the top rates, so it mostly effects people who don't immediately spend most of the money they make. Rich people aren't "job creators", the alrge companies they run are. If someone was talking about raising the corporate tax rate, maybe conservatives would have a point. In fact the GOP is balking at lowering the payroll tax (does anyone have a handkerchief for David Frum?), the most direct "supply-side" policy factor in hiring.<br /><br />2) The employment, infrastructure investment and social services that the government buys with tax revenue can have a very positive impact on the economy. All spending is not created equal, but during a recession, when physical infrastructure is aging, when government employment is falling while private employment is finally rising, when a larger than normal slice of the populace is in need of social services like medicaid, AFDC, mortgage modifications, etc., when interest rates are historically low, and when, Merriam Webster aside, capital gains income is not taxed at he same rate as "income", everything seems to be pointing in one direction. <br /><br />Anyone with eyes and a brain should be able to see this. And there may be some cogent arguments that a conservative could make in response, but instead of this conversation being at the center of current political debate, it is swept aside, hidden behind a simple-minded obsession with "deficits", as if they existed outside all other government policies.Jamiehttps://www.blogger.com/profile/17627071722488465736noreply@blogger.com