If I were to quote just one passage from the NY Times Sunday Magazine piece, Obamanomics, it would be this:
There have now been two presidents in the last 30 years — Bush and Reagan — who cut taxes and promised that deficits would not follow. But the deficits did come, and they went away only after two other presidents — George H. W. Bush and Bill Clinton — raised taxes. It also seems fairly clear by now that tax cuts for the affluent do not necessarily trickle down to everyone else.
For Democrats who want to think the worst about their opponents, McCain’s reliance on these ideas may be affirming. But it’s really a shame. For the time being, only one party is applying the lessons of history to the country’s biggest economic problems. There is no great battle of new ideas, and that can’t make it more likely that those problems will be solved.
Kevin Drum said of this (just before moving on to Mother Jones):
The palpable exhaustion of conservative economic thought really is extraordinary. The evidence has been clear for years that that, at current U.S. tax levels, neither modest cuts nor modest increases has any real effect on economic growth, but the GOP’s core interest groups — rich people and corporations — want tax cuts, so that’s what they continue to offer. They’ve simply got nothing else in the tank.
And John McCain desperately wants to be president, so he’s surrendered to the flat earthers. He knows perfectly well that Grover Norquist and the Club for Growth and the cranks at the Wall Street Journal editorial page can torpedo his campaign if he doesn’t pay fealty to their mindless tax cut jihadism, so fealty he pays. He’s sort of a Manchurian candidate at this point, reciting the talking points in a monotone and hoping wearily that it’s enough for one more trip to the well. Kinda sad, really.
So let’s sample Obama’s tax plan:
All told, Obama would not only cut taxes for most people more than McCain would. He would cut them more than Bill Clinton did and more than Hillary Clinton proposed doing. These tax cuts are really the essence of his market-oriented redistributionist philosophy (though he made it clear that he doesn’t like the word “redistributionist”). They are an attempt to address the middle-class squeeze by giving people a chunk of money to spend as they see fit.
He would then pay for the cuts, at least in part, by raising taxes on the affluent to a point where they would eventually be slightly higher than they were under Clinton. For these upper-income families, the Tax Policy Center’s comparisons with McCain are even starker. McCain, by continuing the basic thrust of Bush’s tax policies and adding a few new wrinkles, would cut taxes for the top 0.1 percent of earners — those making an average of $9.1 million — by another $190,000 a year, on top of the Bush reductions. Obama would raise taxes on this top 0.1 percent by an average of $800,000 a year.
That sounds like a lot. But:
To put it another way, the wealthy have done so well over the past few decades, with their incomes soaring and tax rates plummeting, that Obama’s plan would not come close to erasing their gains. The same would be true of households making a few hundred thousand dollars a year (who have gotten smaller raises than the very rich but would also face smaller tax increases). As ambitious as Obama’s proposals might be, they would still leave the gap between the rich and everyone else far wider than it was 15 or 30 years ago. It just wouldn’t be quite as wide as it is now.
What he’d do with the money:
Obama’s agenda starts not with raising taxes to reduce the deficit, as Clinton’s ended up doing, but with changing the tax code so that families making more than $250,000 a year pay more taxes and nearly everyone else pays less. That would begin to address inequality. Then there would be Reich-like investments in alternative energy, physical infrastructure and such, meant both to create middle-class jobs and to address long-term problems like global warming.
Bob Kuttner says those investments are too small:
…the big battle will be over scale. The scale the campaign has proposed to date is too puny to generate a real recovery, or to fundamentally alter the trajectory of economic insecurity and inequality. Larger scale public investment would bump into the objections of the Rubinistas.
He says the NY Times piece minimizes dissension:
The few-left-of-center economists Obama has reached out to – Jamie Galbraith, Jared Bernstein, William Spriggs, Daniel Tarullo, would counsel much more substantial public interventions to redress market “imperfections,” which are far more than minor blemishes. By contrast, the Goolsbee-Furman-Rubin camp would be for “incremental, market-based solutions” often too feeble to make a difference.[…]
The big debates within an Obama administration—if we get one—are still to come. It would be nice if the major policy disputes over economic issues had been resolved, just as it would be nice if Fox were fair and balanced. Hasn’t happened yet, probably never will, any more than “the end of history” happened.
So there will be debate within an Obama administration. Everything I read says Obama thrives on that. And doesn’t hesitate to make his own decision in the end. Read the whole article. It’s a darn good one. And be sure to click through to the Tax Policy Center’s detailed analysis [pdf] of the Obama and McCain tax plans. The series of tables are indeed fascinating.