The Next Tax Revolt

The Next Tax Revolt

Yglesias on the art of learning how to love taxes:

Obama did not change the framework so much as find a way to survive within it. A platform of no tax increases for the bottom 95 percent can win elections, but it reinforces rather than debunks the right’s fundamental view of the tax question — that public services aren’t worth paying for — and merely suggests that the correct answer is to get someone else to pay for them. This is, to be sure, better than the alternative, which is to provide no public services at all. And amid a cataclysmic recession, there are sound macroeconomic reasons to eschew any kind of tax increase until recovery is underway. Still, it’s hard to see how a long-term progressive agenda can be financed with the revenues raised through this method. A March report by the Congressional Budget Office showed that the administration’s proposed budget would lead to unsustainably large deficits in which interest payments would steadily grow as a slice of the budget pie. This set off a brief political firestorm, but attention waned once it became clear that neither congressional Republicans nor Democratic deficit hawks had any serious alternative to offer.

For the moment, that’s all for the best. The administration argued, correctly, that its proposed increases in spending are vital to transforming the country’s health, energy, and education sectors. The mere fact that the 2010 budget document implies unduly large deficits in 2014 or 2017 is not a problem in 2009 when the bleak macroeconomic outlook calls for large short-term deficits. The moderates were not off base in their concerns about long-term deficits. But, having drawn attention to a real problem, they were unwilling to face the only realistic solution: higher taxes.

The flaw in the budget is that the taxes it proposes are too low.



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