So many ways to get played: For our money, the New York Times presents an astounding array of editorials today, including this classic High Manhattan groaner concerning Ozzie Guillen.
(It’s the requisite jibe at South Florida which made the analysts laugh. That and the editors’ subsequent absurd attempt to paraphrase what Guillen said.)
That said, the featured editorial, concerning the Buffett Rule, merits a longer look.
As they start, the editors seem to misstate the rule; they seem to feel required to do this. But early on, we were very much struck by this passage:
NEW YORK TIMES EDITORIAL (4/11/12): The Buffett Rule, which would raise an estimated $50 billion over 10 years, would not make an appreciable dent in the deficit or provide a lot more for essential programs. By comparison, letting the Bush-era tax cuts expire for taxpayers making more than $250,000 a year, as the president has also called for, would raise $800 billion over 10 years.Wow. In terms of revenue enhancement and deficit reduction, $50 billion over 10 years is truly less than a drop in the bucket. Citizens might ask themselves if they’re getting played when their president makes such a big deal about an idea which involves such a tiny amount of revenue.
Don’t get us wrong—we support higher taxes on upper-end earners. But that brings us to our second point:
The editors reject the tiny amount the Buffett Rule would bring in. “By comparison,” they praise Obama’s proposal to let the Bush tax rates expire on those who earn more than 250 large.
This proposal would raise $800 billion over 10 years, the editors say—and they seem to regard this as a hefty amount. Later, they say this proposal “is not only fair, it is essential for raising substantial and much-needed revenue.”
We would support that proposal too. But given the size of projected deficits, is $800 billion over 10 years really a hefty amount? We’ll remind you of what Paul Krugman told Charlie Rose last year concerning the need for future revenue (see THE DAILY HOWLER, 7/26/11):
KRUGMAN (7/22/11): What the long-run solution to the U.S. budget problem is, is controlling health-care costs. It means more of the kinds of things that were already in the Affordable Care Act. A lot of serious, serious efforts to bring the rate of growth of health-care costs down, bending the curve—horrible metaphor, but bending the curve. Which we know can be done because other countries do it, and then we need revenue. In the end, we’re going to need three, four percent of GDP in additional revenue. You can get some of that by allowing the Bush tax cuts to expire, but we’re going to need more than that.Regarding the Bush tax cuts, Krugman didn’t specify whether he meant all the cuts or just those on income above $250,000. Whatever he meant, he said that wouldn’t provide enough extra revenue. This would mean that the editors’ proposal is inadequate.
So in fact I have a prediction. If David [Brooks] and I are still around here 25 years from now, I predict that we will have a much more controlled health-care system that sort of matches the cost performance of other countries, and we’ll have something like a value-added tax to increase revenue. And that is how America will be solvent in the end.
Would $800 billion over 10 years be sufficient extra revenue? When the editors at the New York Times type, they treat this as the outer limit of imaginable tax increases. They don’t even consider a third framework—letting all the Bush tax rates expire. Their readers don’t even get to see a discussion of this possibility.
Our public discussions are very weak. The editors are very much part of that problem.
In closing, let’s discuss one more part of this editorial. At the start of their piece, the editors cite the fact that Mitt Romney only paid 14 percent federal tax on his mammoth income last year. If you watch The One True Liberal Channel, you will see various chimps chattering about this fact this week.
Lawrence O’Donnell is having great fun. Let’s consider an earlier candidate, one he hotly supported.
In 2004, Candidate Kerry and his wife, Teresa Heinz Kerry, filed separate tax returns, as is often the case when one spouse is very wealthy. Just for some context, the New York Times reported in October 2004 that Heinz Kerry had paid 12.3 percent federal tax in 2003 on $5.1 million in income. That was less than 14 percent!
Yes, that was Kerry's wife; it wasn't Kerry himself. But Lawrence didn’t fling poo about that! We support higher taxes on high earners. But then, we also support the need for honest brokers in high journalistic places.
O’Donnell has played a noxious role in at least two previous White House campaigns. He’s clowning around on your side this year.
Next time, who really knows? When we let clownish cultures develop, such cultures can come back to bite us.
As they have done in the past.
Obama’s formulation: How does Obama describe the Buffett Rule? Yesterday, he offered this formulation:
OBAMA (4/10/12): And Florida, I've told you where I stand. So now it's time for members of Congress to tell you where they stand.That’s a hazy formulation. (It’s “very simple,” the president correctly said.) The editors were more precise. So was Times reporter Jackie Calmes—and her formulation in today’s news report differs from that of the editors.
In the next few weeks we're going to vote on something we call the Buffet Rule. Very simple. If you make more than a million dollars a year...then what the rule says is you should pay the same percentage of your income in taxes as middle class families do.
You shouldn't get special tax breaks. You shouldn't be able to get special loopholes.
And if we do that, then it makes it affordable for us to be able to say for those people who make under $250,000 a year, like 98 percent of American families do, then your taxes don't go up.
Her percentage is the same—30 percent. Her formulation is massively different. ("The Buffett Rule would set a minimum tax rate of 30 percent for individuals on their annual income above $1 million." Our emphasis.)
Classic Times! If it weren’t for contradictory accounts, would America’s greatest newspaper have any accounts at all?
Yes, a tax increase of $800 billion over ten years isn't very much. It's only 2/3 of the projected deficit just for the current fiscal year.ReplyDelete
In order to deal with the deficit and debt, our federal government needs a combination of radical tax increases and politically unthinkable spending cuts. Furthermore, many state and local governments are in much the same situation.
Glad to hear you say that, David. Because that is exactly what Obama has been saying, while the GOP is proposing even deeper tax cuts to go with "politically unthinkable" spending cuts.Delete
Nice to hear you say the GOP plan won't work. So I guess we know who you'll be voting for this fall?
President Obama has said a lot of things. His actual submitted budget included a huge number of spending increases. It was so ridiculous, the House rejected it unanimously. It didn't even get a Democratic vote.Delete
Romney has proposed a combination of tax cuts and loophole increases that are supposed to offset each other. I don't think that's a good enough plan, but it's not accurate to say he has just proposed tax cuts.
Neither party is proposing anything like the necessary changes. Ryan has come closest, although even his proposed cuts aren't sufficient.
David? About that unanimous House "rejection" of the Obama budget plan.Delete
A little gamesmanship played by the GOP leadership to write up their own version of the Obama budget, with only the numbers and not the policy changes behind them, then waiving the rules and putting it up for a vote without committee hearins, and on strictly an up-or-down basis with no opportunity for debate or amendment.
Knowing it would fail but still hoping for a party-line vote, they then were going to go around the country to talk about how the Democrats wanted to raise taxes without spending cuts during an election cycle.
Only the Demcrats didn't take the bait.
By the way, Obama's budget proposals are still on the table, where the legislative process will run its course.
You might also want to know that Romney hasn't really proposed anything. He's simply bought into the Paul Ryan plan. And while the Ryan plan is big on specifics about the tax cuts, mainly benefitting all those so-called "job creators" in the 1 percent, he is quite short on the specifics of those "loopholes" he wants to close.
I'm going to guess that one of those loopholes that will remain open is those subsidies for the oil industry that the GOP will die with their boots on defending.
Here's the magnitude of the problem. If we immediately raised all taxes 40% and raised Social Security and Medicare assessments 40%, we would theoretically eliminate the annual deficit. However, that kind of tax increase might throw the country into deep recession, so the anticipated tax income might not be realized. Even a 40% increase might not be enough.Delete
Or, we could cut all federal spending by 30%. Fire 30% of federal employees and military. Cut 30% off everyone's Social Security. Revise Medicare, Medicaid, SCHIP, the Veteran's Administration, etc. to eliminate coverage for procedures that account of 30% of their current spending. That would eliminate the deficit, again ignoring that fact that such a huge spending cut might lead to a recession, thus reducing tax income to the government.
Furthermore, either of those plans, or an any combination of them, would be politically unthinkable.
The point is, we don't have any good budget options. We just have a choice of bad ones. Ryan's budget proposal is bad, but it may be the least bad we have. At this moment, I haven't seen a less bad Democratic budget proposal.
You know, I'm old enough to remember the same thing before Clinton took office. The budget was out of control, and there was no way to rein it in without throwing the entire country into Great Depression II.Delete
Well, Bill Clinton ran on a platform of raising income taxes on those making $125,000 and up. And he did it, with no Republican votes. And it cost him the Congress in 1994.
That budget, his very first, was followed by the longest peacetime expansion of the economy in history, and by the time he left office, he had achieve the "impossible." The budget was not only balanced, but in surplus.
Yes, Clinton deserves a lot of credit. So does Gingrich. A deal between the two of them held spending increases in check and then there was a boom that inflated tax income. And, luckily for Clinton, his health care plan was defeated.Delete
Unfortunately, things today are entirely different. Clinton inherited a boom economy in the midst of a mild recession. Today, we're maybe coming out of severe recession. Today's federal deficit is 5 times as large as the average deficit under GHW Bush. The national debt is four times as large as it was in 1992.
If Krugman and Baker's numbers are to be believed, the elephant in the room is health care. By paying the drug companies, insurance companies, and the doctors much more than in other civilized societies we have put ourselves in an uncomfortable position. If we were to agree that the health care industry could survive with a mixed economy (one with both government run services for those that want them, and private services for procedures like elective rhinoplasty), these debt crises would virtually disappear.
"in the midst of a mild recession."Delete
Well, that's putting it mildly.
About half of the annual deficit currently accumulating is a result of revenue loss due to the recession. Getting people working and paying taxes fixes a lot of the deficit. I have little faith our politicians will raise taxes on anyone for the next few years, partly due to political expediency and partly due to folk economics.Delete
Just a thought here, Bob. Perhaps the hated Lawrence O'Donnell wasn't flinging "poo" at Mrs. Kerry's tax rates because Candidate Kerry wasn't proposing deeper tax cuts for the wealthy.ReplyDelete
That's the point. You don't have two different standards of behavior -- one for people proposing things you like and another for people whose proposals you don't like. If it is bad when millionaires don't pay their fair share of taxes, then it is bad no matter what the political opinions of those millionaires. It is intellectually dishonest to have one standard for Dems and another for Repubs, and no, the fact that they are nasty Repubs doesn't justify it.Delete
Except for one troubling little detail: John Kerry has consistently and strongly opposed tax cuts for the wealthy, including and especially the capital gains tax cuts, while at the same time fighting for tax cuts and expansion of tax credits for low and middle income taxpayers.Delete
So all that "double standard" talk, and all that troubling behavior from Kerry? It doesn't exist.