If Only Life Were Like This: Hacker and Pierson explain whatshould be obvious

If Only Life Were Like This

by digby


I made this point earlier, several times, but with people still arguing that the payroll tax "holiday" is a great idea, it's immensely edifying for Jacob Hacker and Paul Pierson to write this piece explaining why the "temporary" Bush tax cuts were a fools game:

In our 2005 book Off Center, we summed up the Republican tax-cut strategy as follows:

Republicans carefully calibrated their presentation of the tax cuts to circumvent hostile public opinion. Three strategies were central -- each attuned to the tax cuts' principal liabilities. First, unrealistic projections of federal surpluses and of the costs of the tax changes were used to justify the tax cuts and obscure their effects on competing priorities. Second, Republican leaders managed the legislative agenda to prevent consideration of the tax cuts' specific effects on valued programs. And third, tax-cut advocates worked assiduously to make the cuts look far less tilted in favor of the rich and well connected than they really were...

To respond to their base, Republicans misled most Americans. On an unprecedented scale, phase-ins, sunsets, and time bombs were used to give the tax cuts of 2001 the most attractive public face possible while systematically stacking the deck in favor of Republicans' long-term aims. From top to bottom, Republicans larded the tax cuts with features that made sense only for the purposes of political manipulation.

Most reporters have done a lousy job of reminding us of this background. Why were the tax cuts of 2001 scheduled to expire? Because the Bush administration could not convince enough Senators back then that they were affordable, even at a time of record budget surpluses. The GOP's gamble was that when the tax cuts were due to expire, they would be extended because too many in Washington would be afraid to "raise taxes."

Many Democrats probably thought budgetary realities would make this hat trick hard to pull off. But the Democratic message, if you can call it that, is muddled and complex: one part fiscal rectitude, one part populism -- and lacking any clear alternative vision for the hundreds of billions that Republicans want to give to the rich. And it's made even less coherent by the non-trivial number of congressional Democrats who have basically accepted the GOP position.

Republicans, by contrast, bet on the power of a simple, unified message no matter how divorced from economic reality: failing to extend tax cuts skewed to the rich was to "raise taxes" on "ordinary Americans." And they bet that when the time came for a vote, nobody would remember how we got in this mess in the first place. For now, that bet has paid off -- big time.

And it will pay off again two years from now when the payroll tax and millionaires' tax cuts are scheduled to expire. They will spend the presidential campaign demagoguing the hell out of the pending "tax hikes" as they continue to rail about cutting spending because they have figured out that they can decouple taxes from deficits. It's a trap.

The good news is that the president is intent upon "reforming"social security and the tax code. And th administration is meeting with his Catfood Commission (which failed to get the required votes but is nonetheless considered a big success) to brainstorm how to implement the new bipartisan baseline:

The commission failed to fully endorse the plan, which would shave $4 trillion in deficit spending over nine years, but 11 of 18 commissioners backed the plan last week. It needed 14 votes to get official backing.

"We believe the Fiscal Commission’s plan provides a serious and substantive starting point for the tough choices Washington cannot afford to put off any longer," co-chairmen Erskine Bowles and Alan Simpson said in a statement afterwards.

"We urge the President to build on these bipartisan ideas by putting forward his own plan in his State of the Union address and budget. We further call on him to bring key congressional leaders together with administration officials to negotiate and reach conclusion on a specific deficit reduction agreement that would be enacted."

They added that they believe any agreement should be reached before Congress agrees to raise the nation's $14 trillion debt limit. That borrowing limit is expected to be reached next spring.

"While no Commissioner supports every element of the Commission plan, the nation desperately needs a broad, bipartisan agreement on a plan that would get our debt under control and safeguard our economic future," the chairmen stated.


What could go wrong?

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