Eduardo Porter gone wild about taxes!


The latest discussion which will never occur: Every Wednesday, Eduardo Porter does his “Economic Scene” column in the New York Times.

Often, he strays off the reservation. This is one of those days.

In today’s column, Porter engages in heretical musing about the idea of raising everyone's taxes.

Such musings are almost never offered. They offend the spirit of Serious culture. But early on, Porter says this:
PORTER (1/23/13): To make ends meet, both parties agree, spending must be drastically cut. Under the White House budget proposal, discretionary spending on everything except the military is projected to shrink to its smallest share of the economy since the Eisenhower administration by the beginning of the next decade. Though he has resisted Republican demands to slash entitlements, President Obama remains willing to look for further savings from Medicare.

This is not, however, the only option we have. There is an alternative: raising more money from all taxpayers, including the middle class.

Nobody wants to talk about this. Republicans don’t want to raise taxes at all. “The tax issue is finished, over, completed,” declared the Senate minority leader, Mitch McConnell. President Obama does want to raise more money, but only narrowly. His proposals for tax reform are aimed carefully at high-income taxpayers and corporations.

Yet Americans would benefit from a discussion of this possibility...
We tend to agree with that judgment. But of one thing you can feel quite certain—Porter’s column will generate no such discussion. The discussion he proposes isn’t going to happen!

Is there a case to be made for “raising everyone's taxes?” Porter is making a generally “progressive” suggestion; he's suggesting that the U.S. might want to be more like Europe. But we liberals and progressives don’t try very hard to drive such heretical discussions. We like to talk about social issues. We fail at everything else.

Would Americans be better off if we were more like Europe? You can read Porter making his case. But you won’t see it anywhere else.

By the way: In all the excitement about Obama’s “progressive” Inaugural Address, are we the only ones clinging to a faint suspicion—the suspicion that the base is being appeased with a lot of social issues, while Obama may still be planning to cut benefits in one of the major social insurance programs?

We liked the Brooklyn Tabernacle Choir too—and this faint suspicion may turn out to be pure paranoia. But we liberals tend to be easy when it comes to matters like this.

We’ll offer one complaint about Porter’s budget-based piece. We still want someone to tell us where all that health care money is going—the heath care money which helps create the need for higher taxes.

As Dean Baker constantly notes, the federal government would be running surpluses if our per capita spending on health care matched that of other developed nations. (To use Baker's fiendish Health Care Budget Deficit Calculator, go ahead: Just click here.)

In theory, all those budget problems would fly if someone discovered where all that extra money is going. If we could recover that extra money, there might not even be a need for Porter's higher taxes.

But we liberals never ask about that. The truth is, we aren’t especially bright about such matters, and we aren’t especially disciplined. As long as you give us a choir from Brooklyn—a choir we liked!—we feel fairly sure that we’ve won.

“Americans would benefit from a discussion of this possibility,” Porter writes of his suggestion about higher taxes. In principle, we think he's right.

Even more, we’d like to see that discussion about the apparent looting of health care. But Baker can yap as long as he wants.

That discussion will never occur.


  1. You don't raise middle class taxes when unemployment is 7.8%. You usually don't raise any taxes, but because the wealthy will cut back little if at all from somewhat higher taxes (in most cases, slightly higher), you can correct a wrong -- the flatter Bush taxes -- without much affecting the economy.

    The critical need for getting any positive action on unemployment is to Flip the House -- Clean the House, pick your catchy metaphor -- in 2014. There are somewhere between 40 and 50 seats where the Republican's winning margin was 55% or less in 2012 -- in theory, anyway, potentially flippable.

    The key to that is turnout of the Democratic base: the ones who stayed home in 2010 because Obama went back on some of his key progressive 2008 positions to show the DC political press he was the adult in his room, but who, faced with Romney-Ryan, showed up again in 2012. The utterly stupidest thing he could do politically is continue with any of his indefensible proposals on Social Security (like "Chained-CPI" or a still-higher retirement age). If he wants to create a chance for a Democratic House in 2014, he needs to walk that one back and take Social Security back off the table completely. He also needs to take consistent Democratic-base positions on basically everything, especially the populist economic case. Virtually all of them enjoy majority support among the public, so they will cause independent leaning towards the Democrats in addition to bringing out the base.

    1. I completely agree. The American voters want low taxes and high benefits. They'll vote for the candidate and party who give them what they want.

      Unfortunately, this approach will mean continuing trillion dollar deficits and, at some point, economic disaster.

    2. The Real David in CaliforniaJanuary 24, 2013 at 9:00 AM

      Yeah. Everybody but David in CA is a big baby!

      Where we got the trillion dollar deficits from? Tax cuts for the rich, unfunded wars, and a crashed economy under 8 years of Republican rule.

      But just look at me pose as the grownup!

    3. Don't look now, David, but deficits are dropping fast: down over 50% for the second half of 2012 from the same period in 2009. Centrists like the Fiscal Times and Peter Orszag, as well as the ones who have basically been right all along like Krugman and Stiglitz, understand that the deficit and national debt are relatively insignificant issues compared to continuing high unemployment.

    4. But, do big deficits actually prevent continuing high unemployment? Deficits have been high starting late in Bush's term and continuing into Obama's, while employment gain has been poor. The unemployment rate has remained unacceptibly high. Japan has been running deficits for several decades, but their economy hasn't recovered.

    5. Nor has inflation surged, as your theories and preferred theorists assured it must. Hmm.

      Perhaps, rather than being too large, as you would have it, the deficits haven't been nearly large enough.

      But, of course, you are unable to recognize that many economists believe that although US unemployment remains too high, it would have been EVEN HIGHER in the absence of the government spending that so troubles you (you idiot).

    6. Yes, I was wrong in expecting higher inflation in 2012.

      As you say, Anon, for all we know, unemployment might have been even higher in the absence of government spending. Or it might have been even lower. There's no way to prove a counter-factual directly.

      It is the case the current economic recovery has been sub-standard compared with past recoveries. That suggests that the current economic policies may be a drag on the economy. Even if this is so, it's possible, e.g., that the new regulations and Obamacare are the cause of the drag and the deficit spending was helping.

    7. The economy is not coming back until the bankers and Wall Street who caused the economic crash through fraud are imprisoned. Why would anyone want to join a rigged game?


  2. Paradox:

    it's good for individuals to pay down debt instead of shopping, but bad for the economy.

    It's good for the economy (hence good for individuals) for government to spend rather than pay down debt.

    I submit:

    Dates of US budget surplus and deficit reduction:







    Date US depressions started:

    1819, 1827, 1857, 1873, 1893, and 1929.

    As a thought experiment, let’s juxtapose the dates.

    1817-1821 1819

    1823-1836 1827

    1852-1857 1857

    1867-1873 1873

    1880-1893 1893

    1920-1930 1929

    Of course, the simple figures do not demonstrate causality, or post hoc ergo propter hoc, but the synchronicity (non-Jungian) is nonetheless compelling.

    Clinton had a surplus 1998-2000 but no reduction in debt.

    Republicans claim the Great Recession actually started in 2002.
    The Bureau of Labor statistics say it was from Dec 1, 2007 to June 2009.


    The 1973-75 recession was triggered by the Oil embargo. (Remember the gas lines and the fistfights at gas pumps?)

    The 1980-82 “planned” recession is blamed on Paul Volcker and his draconian (and justifiable) AND successful efforts to bring down inflation. (Remember 30-year mortgages at 16%?)

    Step 1 Single payer Medicare from cradle to grave.

    Step 2 Raise Capital Gains taxes so that the risk and potential gains of starting new or expanding existing businesses is equal to gambling on securities markets.