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Tuesday, September 28, 2010

Why the Democrats Should have Proposed Temporary Tax Cuts for Everyone Part MMMMCCCLXXXXII

Here, in Elmendorf's words, is what will surely be the Republican talking point:

"All four of the options for extending the expiring income tax cuts would raise output, income, and employment during the next two years, relative to what would occur under current law," Elmendorf said. "A full permanent extension or partial permanent extension would provide a larger boost to income and employment in the next two years than would a temporary extension, and a full extension would provide a larger boost than would the corresponding partial extension."

What we have here is Elmendorf noting that even the most inefficient stimulus is a stimulus. He went on to argue that tax cuts for the rich would slow growth in the long run.

If Democrats other than Clyburn had been arguing for permanent extension of Bush tax cuts on income under $250,000 and temporary extension of Obama tax cuts for 95% of working US families, then Elmendorf could have said that the Democrats proposal would cause higher growth in the short run and in the long run.

Republicans want the question to be "taxes high or low ?" Then a substantial minority agrees with them about tax cuts which benefit only the richest 2%.

If the question were "tax cuts for the rich or for the middle class ?" then The Republicans would have been crushed.

But Democrats from states other than South Carolina just won't ask that question, because it would be populist and demagogic. So ?

It is a good policy proposal. The fact that it would be extremely popular doesn't make it a bad policy proposal.

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