Kamikaze Democrats
Written by Brian Garst, Posted in Economics & the Economy, Taxes
As has been widely publicized, the White House and Congressional Republicans have forged a compromise that will prevent tax rates from going up at the end of the year (except for the death tax which will return with a 35% with a $5 million exemption). In exchange for extending the current individual, capital gains and dividends rates for 2 more years for all Americans, Republicans agreed to support another year’s worth of unemployment benefits (which will reduce employment) and some various tax credits, which will do nothing. Overall, compared to what would happen if capital gains and dividends rate went up, this is a good deal. It’s certainly not the best policy (permanent extension would do a lot more to reduce uncertainty), but it’s better than tax increases (even, yes, on the wealthy).
It’s hard to see what democrats can really complain about either. They get their entitlements, and even by CBO’s gimmick accounting (where keeping tax rates the same has “costs”) most of the bill’s costs still comes from their entitlements, so they cannot complain about that. So why are so many so pissed off that they’re willing to try and scuttle the deal, taking America’s economy down with it?
The only explanation that makes any sense is that they’ve backed themselves into a corner with a decades worth of nonsensical class warfare demagoguery. They’ve falsely blamed Bush’s rate cuts “for the wealthy” (I’d point out for them yet again that Bush made the tax code more progressive, and not less so, but we all know I’d be wasting my time with these people) for everything from spending induced deficits to the financial crisis. Most of them probably really didn’t even believe this crap, but class warfare sells. Why argue for policy based on principle or careful analysis when you can just get one group of Americans pissed off at another group?
Democrats weren’t always this way. JFK argued for significant tax cuts as a way to grow the economy, and he was right. But for the hard left, to not raise taxes now would be to admit that their last ten years worth of rhetoric was a lie. We all know it was, but they are desperate not to admit it. And to protect their baseless ideology, they’ll happily fly the class-warfare fighter into the American economic ship.
I serve as Vice President of the Center for Freedom and Prosperity, a non-profit think tank dedicated to preserving tax competition and free markets. This site features my personal views, which are not reflective of CF&P.