Jonathan Chait has returned to his theme that tax cuts are bad and the
people who advocate them are crazy, dishonest, or acting in bad
faith. He argues that conservatives will say anything to defend the
Bush tax cuts without acknowleding that their repeal/expiration
would merely take us back to where were in the 1990s, when the good
times rolled.
Chait doesn't take issue with the Democratic politicians,
ranging from Hillary Clinton to Howard Dean, who suggest that the
economy grew in the 1990s because of the 1993 Clinton tax
increase. Nor does he find fault with the fact that Democratic
presidential candidates are promising to use a return to
Clinton-era tax rates to fund healthcare reform, Social Security
reform, deficit reduction, and a variety of expanded federal
programs that did not exist when Bill Clinton was president. In
fact, Chait stops just short of saying these kinds of things
himself.
That's where the "France" jibes about Hillary and company come
in. The reality is that in order to fund the programs they are
proposing on the campaign trail, they will have to do more than
repeal the Bush tax cuts. Absent reforms these candidates mostly
oppose, the automatic increases in existing federal entitlement
programs will start pushing us toward European-level tax rates as
the Baby Boomers retire. Factor in the price tag of the Democrats'
campaign promises, and that economic fate will be very difficult to
avoid. Does Chait want to defend those tax rates?
The 1990s did prove that, under the right circumstances (like,
say, an Internet boom), a 39.6 percent tax rate is compatible with
robust economic growth. Conservatives took a hit for predicting
otherwise fourteen years ago, and should be careful not to make
this mistake again in arguing for the retention of the Bush tax
cuts. But that doesn't mean the Clinton tax increase was in any
meaningful sense a catalyst of growth or that there would be no
growth trade-offs in repealing the Bush tax cuts, especially the
2003 package pertaining to capital gains and dividends.
topics:
Trade, Bill Clinton, Hillary Clinton, Social Security
