cost is literally no object when it comes to tax cuts for the affluent.
Cost shouldn't be an object. Tax cuts don't have a cost. Really they have a negative cost. Reducing government revenue, but increasing personal after-tax income by a greater amount is a net benefit not a cost.
Which doesn't mean there are not important fiscal balance issues, from the high spending without enough taxes to cover it, but the tax cuts themselves have a negative cost.
Also avoiding the planned tax increases isn't a tax cut. And avoiding increases or making actual cuts would not be entirely just for the affluent. Not that tax cuts for the affluent are wrong morally or practically. They would still pay a larger percentage of their income, and also if you never cut taxes for the affluent gradually their tax burden becomes confiscatory since 1 - Tax brackets are not always indexed for inflation, and 2 - Taxes go up and down, when they go up, the rich do get charged more, if the rich don't get a cut when taxes are generally cut than their taxes will ratchet up.
As for the unemployment extension.
1 - The Republicans are not rejected extending unemployment insurance, they are rather insisting that the money come from unused TARP funds or from spending cuts, rather than be an addition to the deficit.
2 - Long term unemployment benefits have the effect of increasing unemployment.
As for local and state government workers (Krugman's "prevent mass layoffs of schoolteachers") the main effect of the bailouts from the feds have been to fund further increases in their salaries while at the same time many in the private sector have lost their jobs or been forced to take pay cuts. It used to be that government employees made less than private employees but made up for it with more job security and better retirement benefits, now they still have the generous pensions and higher job security but they make more than the private sector after (or before) adjusting for education and years of experience.
Its not just a matter of their compensation often being more generous than it need be, governments at various levels employee too many people, there should be some layoffs of public employees, and yes that includes teachers. Public education costs have doubled or more in real per student terms each generation, without showing a lot of benefit from all that extra spending. Costs have gotten out of control and dumping more federal funds in to the balance just makes the problem worse.
As for tax cuts and revenues, tax cuts can lead to increased revenues, either over the very long run (except specific tax regimes don't last for the very long run), or if the cuts are from very high rates, or are cuts of taxes on investments, or are cuts in areas where there is a noticeable amount of tax competition, or in some other areas. Nothing "voodoo" about that. OTOH the claim that they always or even almost always cause revenue to increase is unreasonable. But demolishing that argument doesn't amount to an argument for higher taxes, or against lower taxes.
Some Republicans supported "starve the beast" (and I might have been one of them if I thought it would work in a solid way), but Democrats, including Krugman, are supporting the much worse "gorge the beast" policy; spend more and more money to make tax cuts more and more difficult. |
