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By James Kwak
In the current issue of Democracy, Elbert Ventura discusses the history of a problem that I’ve brought up as well: the transformation of the Democratic Party into the party of tax cuts. Except, that with the Republican Party as the real party of Texas-sized tax cuts, the Democrats can never be more than the kid brother, half-hearted, talking-out-of-both-sides-of-its-mouth party of tax cuts.
Ventura points out that the Democrats have always been squeamish about taxes, even in the supposed glory days of the New Deal. But things have gotten worse. As Ventura points out, President Obama’s proposal to raise taxes only on households making over $250,000 per year means that “he would bring back the higher Clinton-era rates for only the top 2 percent of taxpayers.” While that proposal still stands (I think), the recent emphasis on the Buffett Rule means that Obama has shifted the tax discussion up to an income group that is completely foreign to most Americans. (Yet a significant minority of Americans are bitterly against the Buffett Rule. Go figure.)
The economic results are obvious: With both parties allergic to tax revenues, there is little alternative to rising deficits as the dependency ratio gets worse and health care costs increase. The political results are only slightly less obvious. A message of “tax cuts for most people” has little chance against “tax cuts for all,” even if it makes slightly more policy sense.
The underlying problem is that forty years of conservative tax revolt, abetted by twenty years of Democratic me-tooism, have conditioned the public to expect tax cuts as their constitutional right. It will take forty years to reverse this trend and will require the kind of “think tanks,” foundations, and media outlets that conservatives have and liberals don’t. Which is to say it could take forever.