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Krauthammer Declares Obama the Winner of the Tax Debate

Via his WaPo column (Swindle of the year):

Barack Obama won the great tax-cut showdown of 2010 – and House Democrats don’t have a clue that he did. In the deal struck this week, the president negotiated the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package. It will pump a trillion borrowed Chinese dollars into the U.S. economy over the next two years – which just happen to be the two years of the run-up to the next presidential election. This is a defeat?

Of course, this assumes that the package passes the House, which at the moment is in doubt.  See WaPoHouse Democrats vow to block tax measure.  (One figures that some sort of further deal will be cut before the clock runs out, but we shall see).

The part of Krauthammer’s piece that I found the most interesting is that he focuses on the cost of the package, rather than extoling the tax cuts:

these are the same Republicans who spent 2010 running on limited government and reducing debt. And this budget busting occurs less than a week after the president’s deficit commission had supposedly signaled a new national consensus of austerity and frugality.

[…]

Stimulus II will still blow another near-$1 trillion hole in the budget.

This is interesting because there is nary a peep of the Republican orthodoxy that all tax cuts pay for themselves through creating enough economic growth to raise revenues.  Indeed, Krauthammer describes the top marginal income tax rates as follows: “a mere 4.6-point increase in marginal tax rates for upper incomes” (emphasis mine).   Funny, to listen to some talk the shift from 35% to 39.6% is the path to socialism.  It is an interesting dismissal of such talk by a key conservative commentator.

He also is pointing out that a lot of the Tea Party rhetoric was just that for many Republicans during the recent campaign both in the quote above and here:

Obama is no fool. While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, Tea-Party, this-time-we’re-serious persona of debt-averse fiscal responsibility.

Now, I recognize that the true Tea Partiers (i.e., those new to politics entirely) won’t be sworn in until January.  However, practically the whole of the GOP embraced the TP message of smaller government and deficit and debt reduction.  And yet, the first post-election move is to increase both the deficit and the debt.

UPDATE (James Joyner)mistermix has a great line on this:  “The world is turning upside down: Krauthammer thinks Obama is a genius and Kos is comparing Obama to Neville Chamberlain.”  Those are not, I would note, mutually exclusive options.

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About Steven L. Taylor
Steven L. Taylor is Professor of Political Science and Dean of the College of Arts and Sciences at Troy University. His main areas of expertise include parties, elections, and the institutional design of democracies. His most recent book is the co-authored A Different Democracy: American Government in a 31-Country Perspective. He earned his Ph.D. from the University of Texas and his BA from the University of California, Irvine. He has been blogging since 2003 (originally at the now defunct Poliblog). Follow Steven on Twitter

Comments

  1. James Joyner says:

    Man, Krauthammer’s slow. I’ve been writing this all week!

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  2. Old guys and dead trees. What can you say?

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  3. All kidding aside, the thing that truly strikes me about the piece is the utter lack of any kind oa paean to the power of tax cuts as well as the utter dismissal of the dire consequences regarding upping the top marginal rate.

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  4. john personna says:

    Morning Joe is going schizophrenic today. to borrow Doug’s word from the other thread. They keep jumping back and forth between calling Obama a winner for finding the “center” and then talking about how bad the impact on the budget really is.

    That dissonance is where we are at. The political win is to adopt an irresponsible strategy.

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  5. Boyd says:

    And yet, the first post-election move is to increase both the deficit and the debt.

    That’s not an entirely fair analysis, Doc. You’re only commenting on the downside. Are you saying there’s not an across-the-board economic upside to holding the line on taxes on upper incomes? Because that’s certainly the talking point from the extreme left (of which I’m certainly not accusing you of being a member).

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  6. john personna says:

    BTW, as I mentioned yesterday, rumbles of the vigilantes …

    Bond Vigilantes Are Awoken by Obama Tax Compromise, Deficit, Yardeni Says

    At a certain point I welcome those hombres, as the final “check” on the system.

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  7. @Boyd:

    Are you saying there’s not an across-the-board economic upside to holding the line on taxes on upper incomes

    I will be honest: I have my doubts, I certainly have doubts that the economic benefit outweighs the downside in regards to the fact that it will facilitate more borrowing.

    Politically speaking, Krauthammer has a point when he says “While getting Republicans to boost his own reelection chances, he gets them to make a mockery of their newfound, second-chance, post-Bush, Tea-Party, this-time-we’re-serious persona of debt-averse fiscal responsibility.”

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  8. james says:

    Old guys and dead trees. What can you say?

    I say,”Check your mirrow”. lol

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  9. I say,”Check your mirrow”. lol

    Ok, older guys 😉

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  10. PD Shaw says:

    I think even Milton Friedman believed in the theory of government countercyclical deficit spending to reduce a recession, he just didn’t believe as a practical matter the spending could occur quickly enough and it would end up as procyclical spending that crowded out private economic activity.

    So, here’s the rub. If the economy was at risk for a double-dip recession, either because of the poor quality of the initial stimulus, events abroad or simply poor job creation, then it was time for stimulus. If the economy was not about to decline in growth, then we’re causing ourselves long-term stagnant growth.

    I’m not quite confident in knowing which it is and haven’t taken much comfort in the increasingly gloomy tone of the Fed.

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  11. john personna says:

    Stimulus? Seriously?

    That is a fig leaf on what is really going on, which is “I don’t care, as long as my taxes are cut.”

    If this were about stimulus the tip of the arrow would have been directed at payroll tax. It wouldn’t have been … well, a fig leaf.

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  12. Richard Scott Nokes says:

    You wrote: “there is nary a peep of the Republican orthodoxy that all tax cuts pay for themselves through creating enough economic growth to raise revenues.”

    Unless I understand the deal wrong, that’s because it isn’t a tax cut — it is in essence just forestalling a tax hike, with the exception of a 2% reduction in payroll taxes and a weird sort of hike/cut in the estate tax (hike from this year, cut from the old 2003 rate).

    It wouldn’t make sense for Republicans to peep that this would raise revenues by creating economic growth, since it basically just continues the existing tax rate. It WOULD, however, make sense for Republicans to argue that raising taxes (or, if you prefer, failing to maintain the Bush tax cuts) would further stall the economy — an argument that’s been peeped rather loudly for a while.

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  13. john personna says:

    “Unless I understand the deal wrong, that’s because it isn’t a tax cut ”

    That’s wrong in two senses. First, the budget projections were based on expiration of temporary tax reductions. Extending a temporary cut, is a cut.

    Second, the extensions are not the only tax cuts in this agreement, there is also a payroll tax reduction, and an estate tax reduction.

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  14. john personna says:

    “Extending a temporary cut, is a cut.”

    It’s important to remember that this is true in a numeric sense. It is math, not politics.

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  15. @Scott:

    The thing that I find striking coming from Krauthammer is the focus on a) the deficit/debt implications and b) that raising the upper marginal rate is not that big a deal.

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  16. @Scott:

    And in re: cutting or not cutting. It seems to me that if tax rates for 2011 onward were going to be at the pre-Bush cut levels automatically, then an any affirmative move to lower then is a tax cut.

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  17. PD Shaw says:

    As a matter of economics it’s the same. The tax rate is X on 12/31/2010; it’s Y on 1/1/2011.

    Also, nobody thinks the estate tax was going back to it’s top level. It was going to be somewhere in the middle.

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  18. john personna says:

    PD, if you can’t hold a “function over time” in your head, that doesn’t make it any less real.

    In this case, total revenue is related to area under the curve, which is critical.

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  19. Steve Plunk says:

    If doing the right thing is also going to help Obama in 2012 should the Republicans do the wrong thing? Of course not. This maintaining of the current tax rates is not a budget buster since it’s not a cut at all. It’s like saying since we didn’t double taxes we’re increasing the deficit.

    The economy is a mess and must be priority #1.

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  20. PD Shaw says:

    Nice insult jp.

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  21. john personna says:

    Sorry, cranky today.

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  22. Rick Almeida says:

    This maintaining of the current tax rates is not a budget buster since it’s not a cut at all.

    Yet it continues to increase the deficit.

    It’s like saying since we didn’t double taxes we’re increasing the deficit.

    Which we are.

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  23. I think Krauthammer was saying this on Fox right after the Obama news conference but his column doesn’t come out until later in the week. Perhaps great minds think alike, but I don’t think he was stealing from you or that he is slow.

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  24. anjin-san says:

    > It’s like saying since we didn’t double taxes we’re increasing the deficit.

    Except it’s not. “Doubling taxes” is lame even by your standards. Do you ever write posts that don’t include you simply making things up?

    > should the Republicans do the wrong thing?

    That would never happen. Just ask the sick 9.11 responders. (a lot of them have already died, you can’t ask them)

    >>EAST ISLIP, N.Y. — A retired NYPD officer has become the 986th Sept. 11 first responder to die from illnesses he incurred while working at Ground Zero.

    Robert “Bobby” Ehmer, 47, of East Meadow, Long Island died Sunday after succumbing to a three-year battle with kidney cancer.

    Ehmer raced to the site of the World Trade Center and worked there for several weeks as he assisted in the search for survivors and removal of debris. He along with several thousand first responders were exposed to toxic dust that blanketed the area.

    He was an officer for the 100th Precinct in Queens and retired in 2005. He also dedicated his time to his community as a volunteer firefighter and an EMT for St. John’s Hospital.

    In 2007, he was diagnosed with kidney cancer. His condition worsened over the last three years as the cancer spread throughout his body.

    Apparently the GOP position on this is “FU, you are not someone we actually care about, like a billionaire”.

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  25. An Interested Party says:

    Maybe the president will actually enjoy having the GOP in charge of one branch of the Congress…certainly he’s getting more out of this new stimulus than he did out of the previous stimulus…still, everything depends on what happens in the next two years…like the man said back in the day, “Events dear boy, events”…

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  26. Terrye says:

    I have read this from CK and to be honest, I don’t get it. The Tea Party people do not want those taxes to go up in Jan. And that is what this was about. This was not a budget, it was a vote about extending the tax cuts or letting them expire. Ethanol subsidies and the extension of unemployment benefits do not equal a trillion dollars.

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  27. Zelsdorf Ragshaft III says:

    Since maintaining the current tax rate is not a tax cut, but to revert to what it was before this rate was installed is a tax increase, from what is currently paid. Once again Democrats and other liberal left leaning socialists use inaccurate language to conceal the reality of what they intend.
    Just when did this bill pass? No one won anything yet.

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  28. John Personna says:

    The funny thing is that in these very pages GWB has been criticized by conservatives, for not being a real conservative, exploding spending and debt.

    But give them a Republican continuation, and the applaud.

    Zelsdorf, the debt just went up by a trillion.

    Maybe in 2012 you can claim these weren’t real conservatives signing on – but do remember that you were one of them.

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  29. james says:

    @ Steven “Notion”
    Research: http://www.youtube.com/watch?v=eJxUmyFwnQA
    Judge Napolitano

    75% of Budget is spent on Well Fare, Wealth Transfer, Interest payment on Debt.

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