Tax Cuts for the Rich Are Pure Insanity at This Point
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When President Obama said he was forced to negotiate with hostage-takers, he conjured an image of ski-masked Republicans suddenly storming the White House and demanding tax cuts for the rich, a screaming Jane Middle Class in tow.
The imagery made it seem as if this bitter fight just emerged -- an impression reinforced by the breathless commentary of pundits who act as if history began last week. In reality, the hostage takers laid their "trap" a decade ago, as former Bush spokesman Dan Bartlett helpfully explained to The Daily Beast: "We knew that, politically, once you get [a big tax cut] into law, it becomes almost impossible to remove it. That's not a bad legacy. The fact that we were able to lay the trap does feel pretty good, to tell you the truth."
Republicans have dominated the tax-cut debate because they have consistently kept their long-term objective in mind and skillfully, if ruthlessly, designed their initiatives to achieve it. Indeed, they've counted on the fact that most of us have short memories -- including, alas, journalists who say they want to keep politicians honest.
In our 2005 book Off Center, we summed up the Republican tax-cut strategy as follows:
Republicans carefully calibrated their presentation of the tax cuts to circumvent hostile public opinion. Three strategies were central -- each attuned to the tax cuts' principal liabilities. First, unrealistic projections of federal surpluses and of the costs of the tax changes were used to justify the tax cuts and obscure their effects on competing priorities. Second, Republican leaders managed the legislative agenda to prevent consideration of the tax cuts' specific effects on valued programs. And third, tax-cut advocates worked assiduously to make the cuts look far less tilted in favor of the rich and well connected than they really were...
To respond to their base, Republicans misled most Americans. On an unprecedented scale, phase-ins, sunsets, and time bombs were used to give the tax cuts of 2001 the most attractive public face possible while systematically stacking the deck in favor of Republicans' long-term aims. From top to bottom, Republicans larded the tax cuts with features that made sense only for the purposes of political manipulation.
Most reporters have done a lousy job of reminding us of this background. Why were the tax cuts of 2001 scheduled to expire? Because the Bush administration could not convince enough Senators back then that they were affordable, even at a time of record budget surpluses. The GOP's gamble was that when the tax cuts were due to expire, they would be extended because too many in Washington would be afraid to "raise taxes."
Many Democrats probably thought budgetary realities would make this hat trick hard to pull off. But the Democratic message, if you can call it that, is muddled and complex: one part fiscal rectitude, one part populism -- and lacking any clear alternative vision for the hundreds of billions that Republicans want to give to the rich. And it's made even less coherent by the non-trivial number of congressional Democrats who have basically accepted the GOP position.
Republicans, by contrast, bet on the power of a simple, unified message no matter how divorced from economic reality: failing to extend tax cuts skewed to the rich was to "raise taxes" on "ordinary Americans." And they bet that when the time came for a vote, nobody would remember how we got in this mess in the first place. For now, that bet has paid off -- big time.
Two years from now, tax cuts for the rich will come up for a vote in the lead-up to an election with the economy likely quite weak. Democrats had better start learning from history, lest they be condemned to repeat it.
Or, as President Bush memorably put it a year after the tax cuts passed, "Fool me once, shame on -- shame on you. Fool me -- you can't get fooled again."