Situational Keynesianism Redux

Here’s one of California’s worst ever contributions to the congress (and considering our history, that’s saying something) telling his constituents that you can’t possibly raise taxes in an economic downturn:



Now, it’s fair to say this if you subscribe to Keynesian economics. It’s usually considered contractionary to raise taxes in a downturn. On the other hand, if you are simply proposing to tax a bunch of rich people at the high end who are sitting on huge piles of cash so that you can use it to stimulate the economy, then probably not so much. (And you could also say that using this same money that’s just sitting around anyway to pay down the deficit is no harm no foul on the current economy. It doesn’t make a lot of sense, but nothing much makes sense right now). But no matter how you slice it, if you subscribe to the belief that you can never raise taxes during a recession because it will be contractionary, you can’t also say that government spending in a downturn is counterproductive. Both of those ideas are operating on the same principle. But then, conservatives like Dan Lundgren don’t believe in raising taxes no matter what the circumstances and are using this latest justification in the most hypocritical way possible. That’s just how they roll.

Update: Speaking of tax cuts, Dave Weigel has an entertaining piece on why Democrats are so keen to extend the payroll tax over GOP objections. (Hint: it’s so they can use the word “hypocrite” over and over again even though it should be clear by now that the GOP has retired the concept and nobody gives a damn.)

But I think this quote by Nancy Altman really nails it:

“It’s completely hapless negotiating!” says Nancy Altman, the co-director of the defend-the-New-Deal-at-all-costs group Social Security Works. “You’re taking something the other side wants and then begging them to take it. I’d expect that Republicans would eventually take it, but in exchange for some other concession. What a perfect position to be in, when you’re begging me and offering me more if only I’ll vote for something I want already.”

Oy vey. As Weigel points out, there’s a much better plan out there, one that used to be considered a totally mainstream Democratic position, that has been completely abandoned by everyone but Bernie Sanders.

As he says:

It’s not really a fringe idea. Sanders’s proposal is actually more popular than the one the Democratic establishment has tattooed on its forehead. Last week a Reuters poll asked voters to assess a few different stimulus proposals. Forty-six percent of them liked “raising taxes on wealthy individuals.” Only 20 percent liked “extending the payroll tax cut.” That’s what happens when Democrats get Norquist on the brain: They become obsessed with making Republicans uncomfortable instead of with something that voters like. Or with something that’s easier to campaign on. Or with something that works.

Of course, if we could the projected deficit off the brain for five minutes, we could do some serious stimulus to get everyone working again and see what the numbers are once that’s accomplished. First things should be first, but … whatever.

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