Monday, November 15, 2010

Democrat's the Party of No?

Ross Douthat has a column this morning on the deficit commission and the Democrat's rejection of it.  Here, he accuses the Democrats of being the party of no and blocking any solution and tries to imply that the Democrats must be in favor of all the distortions.  He also tries to argue that the deficit commission is not that in favor of Republicans.

This is nonsense.  The left in the US shows pretty strongly that its biggest concern is rising income inequality.  The Bowles-Simpson plan would substantially shift the tax burden away from the wealthiest Americans.  Sure, it would do this without cutting programs for the very poorest but it wouldn't make things better for the working poor or anyone on up to the highest income brackets.  This is why liberals and progressives are crying bloody murder over it.  I may not always be on the side of the Democrats, and I think inequality needs to be broken down more to be useful, but I can't support a plan that would slash the top income bracket to 23% either.  Where I differ from most Democrats is I'd like to see the corporate tax go much lower but income from corporate ownership get taxed when it becomes income for an individual (more on this when I take up tax policy as a whole).  But you can't say the Democrats are opposed to sensible solutions when the left's primary argument is that income inequality is making America less competitive and making it more unjust as well.  Few on the left seem opposed to most of the sensible measures, some are opposed to Social Security reform but they have a good critique about actual changes in life expectancy by income and there are ways around this (more on this later), what they can't stomach is a plan that functions primarily by making the existing tax structure favor the wealthiest even more.  This is a deal breaker for the left.  The commission could have lowered rates a bit, particularly if they added a few brackets closer to existing rates (why not additional brackets at $1 million, $10 million, and $100 million) this would have been far more palatable for the left.

What shocks me is that anyone would think this isn't highly favorable to the right.  No one is opposed to fixing government by ending its worst programs, many people are opposed to doing this solely to justify shrinking government as a whole and doing it in a way that primarily favors our wealthiest citizens.

[Update:  My first thought on what I bipartisan compromise would actually look like.  This plan comes close but to make it bipartisan it would need to put the spending cap higher, it's obvious we're going to have record levels of government spending when our demographics are the worst our country is likely to ever face, pretending otherwise is simply ignoring the obvious.  The alternative is politically impossible, reinstate the policy of open borders. 

The next compromise would be that an additional tax bracket for those making over $1 million would have to be added at 25%.  Then further tax cuts to every lower bracket, and a much higher initial exemption, would have to be added as well to be paid for with a pollution tax and a VAT.  This additional revenue would also pay for a new old age expansion of SSI for the elderly that would have formerly received social security but no longer can under new rules.  Ideally eligibility for this would be set at 60 and rules would be designed to favor those working at manual labor who are the most likely to have difficulty working when they are older and who have also not seen the sort of longevity increase that those better off have.  To throw the Republicans something corporate taxes could be lowered further if additional revenue is sufficent.  I think this would be enough to buy off the Democrats without compromising the rest of the plan.  I haven't gotten around to reading the full report yet, when I do I'll do a more complete review.]

[Update 2:  Actually, I think I let a couple of my priorities slip in with what I think the Democrat's priorities are.  I think if you added in an additional tax bracket on those making over $1 million and use it to pay for an SSI expansion aimed at the elderly working poor then you're all the way to something acceptable.  Throw in a pollution tax and an infrastructure fund and I'm sure that compromise is very possible.]

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