Apologies, and then some other things.
Could you believe I have the audacity to start Part One of a five-part extravaganza and then disappear for several days? I’ll finish it eventually, just as soon as I manage to adjust for overloading on credits for my last quarter here in graduate school. Essentially, this means an indefinite hiatus on everything except for quotes, videos and reblogging. All you’ll get for right now is something from the Economist you should read before Washington DC Shitstorm 2011 III: Buffett Time kicks into full-bore head-meets-wall form in the next week or so.
Why? Because that’s the best review of Obama’s deficit reduction plan I’ve seen. However, I feel (as I normally do whenever the Economist sees fit to write at length about Obama) that the magazine tacks too hard against Obama in order to fit events into a pre-determined discourse in which, to borrow a word that irked me from an editorial several months back, Obama is being “insouciant.*” Where, exactly?
1. The assertion that Democrats have abandoned the concept of eliminating absurd tax breaks as a method of increasing revenue in favor of “class warfare” attacks on the rich. If Congressional Democrats could not even get the idea of eliminating the most egregious and offensive tax break in America (the one for corporate jets), then what hope is there for tax reform with the current Congress? Anything Obama suggests will be met with cries of “class warfare,” so how is it a bad move politically to actually engage in some class warfare when - here is the kicker - you cannot even get House Republicans to agree to mundane things that they themselves agreed to two years ago (see: light bulbs).
2. This is hinted at here and is explicitly repeated time and time again throughout the Economist commentariat: the idea that raising taxes on the wealthy (the usual benchmark is $250k, or the top 2% of earners in the country) is in fact a tax on investment - that the government is taking money out of the hands of The Job Creators, who would otherwise use that wealth to hire people and contribute to growth.
First of all, that assertion is highly questionable during recessionary conditions - right now, most large corporations are holding on to large amounts of capital or paying down debt rather than hiring because they’re wary of taking risks in an uncertain market. Once sales and growth start to pick up again, any moderately well-run business will start hiring again. If you’re on the conservative side, you think it’s best to wait until dynamic private sector entrepreneurs kick-start the economy and everyone else follows suit. If you’re on the liberal side, you think the government should be picking up the slack in private sector spending with large amounts of fiscal stimulus.
But that’s all window dressing. The single biggest problem with the argument that higher levels of taxation on personal income (in whatever form) would discourage the Job Creators from hiring has its roots in a bizarre contradiction in contemporary economic thought that has yet to be ironed out (at least to 19centuryman’s satisfaction): the fact that neoliberal economics treat corporations as nothing more than anomalies stemming from individual actors finding innovative ways to lower transaction costs.
Or, at least this is the only hiccup in mainstream theory that I can see that permits serious, well-paid public intellectuals to conflate the personal tax rate levied on, say, the chief executive officer of General Motors and that individual’s decisions to hire or lay off workers. Put simply, it appears that wide swathes of the American public, political class and economic class believe that, if all other things are constant, the CEO of Company X, with $100 million at his or her company’s disposal, will be more proactive in job creation if his or her personal income is taxed at a rate of 30% rather than 35%. Keep in mind that this change in personal tax rate has literally zero observable effect on the amount of capital at his or her disposal to hire or fire workers.
If I’m wrong on this bit of analysis, I’d love to be educated on why. This has been infuriating me for some time and I cannot for the life of me understand why we conflate taxation of high earners with the capital available for those same high earners to get about to the task of job creation.
*The gist of Obama’s insouciance was insouciantly ignoring the budget deficit until Republican’s used it as wedge to shut down the federal government - despite the fact that healthcare reform’s secondary purpose was deficit reduction and (as was explicitly acknowledge in the same op-ed), America’s budget deficit was (and continues to be) of secondary short-term importance to high unemployment, and therefore should rightly command much more attention. However, all of these “facts” pale in the face of the opportunity to call Obama “insouciant.”
