August 3, 2010

As quite a few took note of today, Eric Cantor finally admitted that extending the Bush tax cuts will increase the deficit during his appearance on MSNBC's The Daily Rundown. Now that Cantor has tried to change the conversation to job creation, Steve Benen made this point today...

Oddly enough, I consider this something of a breakthrough. For 18 months, Democrats, most notably President Obama, have said the deficit matters, but the state of the economy matters more. Republicans and their Tea Party base have argued the opposite, insisting that the deficit has to take priority; we're facing a debt crisis; etc.

Cantor's line, repeated as if it were obvious, puts Republicans in a different place -- if boosting the economy means "digging the hole deeper," so be it. I happen to agree wholeheartedly.

At this point, then, it's time for a different debate. For a year and a half, it's been economic growth vs. deficit reduction. Cantor is signaling a new argument -- economic growth through spending vs. economic growth through tax cuts.

Instead of arguing over whether to increase the deficit, Cantor seems prepared to concede the point, and argue deficit increases are unfortunately necessary. Democrats should welcome his new-found wisdom, and initiate a discussion over the efficacy of spending vs. the efficacy of tax cuts.

And David Dayden followed Benen's post with this.

He basically said, “Sure, less revenues theoretically increase the deficit, but we’re about getting people back to work, and low taxes for ‘job creators’ facilitates that.”

So I wouldn’t say he conceded the point so much as he raised a different one, a point which is equally wrong as the Laffer curve, incidentally. He claims that lower and lower taxes facilitates job creation. But the two Bush terms saw the lowest taxes for the wealthy, presumably the “job creators” Cantor is talking about. And those two terms saw the worst job creation in recorded American history going back to the Depression. This chart from the Wall Street Journal lays it out. Nobody since Hoover had worse annual job growth than George W. Bush, at a time when it was not at all expensive for “job creators” to make money.

I agree with Steve Benen that Cantor is conceding that the economy matters more than the deficit, a key bit of info. But if you think that paves the way for a legitimate discussion of these issues you haven’t seen one Washington Republican speak over the past decade.

Meanwhile, I’d rather pigeonhole Republicans along the lines of what Andrew Samwick asks of those still clinging to the idea that tax cuts raise revenue: if that’s the case, where does it end? Where does the Laffer curve bend? At what point do marginal tax rates, in this theory, end up becoming counter-productive and decreasing revenue?

I agree completely and if the Republicans want to make the argument that those Bush tax cuts created jobs, let them explain this chart.

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