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Tuesday, November 9, 2010

Bush Tax Cuts: Redistribution of More Wealth to Top Won't Stimulate Economy

For those of you who think the fate of the Republic rests on granting more tax breaks to billionaires, review Nicholas Kristof's argument that the Bush tax cuts have made us a banana republic. The Bush tax cuts may have helped us climb out of the recession at the beginning of the decade, but the only trickle-down we've gotten since is the rich elites tinkling on us while hoarding the vast majority of the nation's income gains.

Instead of handing such huge tax breaks to the rich and hoping they'll buy lots of job-creating goods and services (they don't, says the CBO), we should pour our resources into the lower- and middle-income ranks by hiring teachers and ditch-diggers, extending unemployment benefits, and offering job-training programs. Keeping money in regular folks' pockets helps level the income gap, which in turn, says Kristof, would reduce the chances of another financial crisis, protect families from divorce, and maybe even pull us back from political polarization and toward a stronger sense of common national identity and purpose. (Remember, all that head-stomping Tea Party anger rises in some degree from economic anxiety of once-comfy white folks seeing their middle class eroding.)

We can't get Republicans to agree to in-the-trenches solutions to restore the middle class. But we can get the Republicans and Democrats to fall all over each other to hand out money to the folks who already have lots of money. That's the most dangerous redistribution of wealth taking place in our country.


  1. "The Bush tax cuts may have helped us climb out of the recession at the beginning of the decade ..."

    Indeed? How? Could an extension of those tax cuts have a similar effect at the start of the approaching decade?

    On another tack, I cannot resist the temptation to coin a new term based on your verbiage here: "Tinkle-down economics." I leave it to the reader's imagination to concoct a rigorous definition.

  2. Alas, the term has been taken. Google on it. Bloody good fun.

  3. Indeed! Complete with attribution of the term to Archie Bunker!

    In terms of fighting the recession, yes, the idea that extending those tax cuts could help is the main argument that the GOP and many Dems are making. There seems to be widespread agreement that allowing tax rates to go up during a recession is a bad idea. However, we can get that stimulus by extending the cuts for low-/middle-income folks while still ending the breaks for the wealthiest, who won't boost the economy proportionally to the huge chunk of the tax breaks they'd take.

    The "extend the Bush tax cuts" position also endorses the idea of accepting bigger deficits, especially if the extensioon goes any more than a year or two. The same folks clamoring for longer Bush tax cuts are often the same folks clamoring for no more deficit-spending. They can't have both, especially if they're serious about fighting the recession, since big cuts in gov't spending (the only other way to cut the deficit) would be as economically harmful right now as a big jump in taxes.


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