The Tax History Conservatives Want Us to Forget
Grover Norquist is regularly billed as one of the leading intellectual lights of the conservative movement – and I think you will agree that the arguments he made in a debate with me over taxes this morning on CNBC highlight not merely the shocking intellectual bankruptcy of the movement he leads, but just how out of touch Republicans in Washington really are.
The debate revolved around President-elect Obama’s potential plans to put off raising taxes on the very wealthy. Norquist begins the debate with the claim – I kid you not – that "the economy is in the present state because when the Democrats took the House and Senate in 2006 you knew those tax increases were going to come in 2010." He insisted that, "The stock market began to collapse as soon as you recognize that those old tax rates were coming back." Yes, because under "those old tax rates" – ie. Clinton-era tax rates – the economy was so much worse than it is today.
As you’ll see, the CNBC reporters start laughing at Norquist, having trouble taking him seriously. And I must say, I really wasn’t sure he was being serious – but, of course, he was. I went on to make the point that I’ve often made in the past – the point that conservatives simply want everyone to forget: Namely, that President Clinton faced down a recession in 1993 by raising taxes on the wealthy in order to finance an economic stimulus package, and the economy subsequently boomed.
That simple, undeniable bit of history undermines the entire structure of conservatives claim that raising taxes on the super-rich will hurt the economy. And as you’ll see from Norquist’s response, they simply cannot deal with that truth. Indeed, Norquist actually goes all the way back to the 1920s as his example that raising taxes on the wealthy impedes economic growth – somehow ignoring the history from 15 years ago. He then goes on to claim with a straight face that Franklin Roosevelt created the Great Depression (this, along with the "center-right nation" propaganda, seems to be the right’s new talking point).
The question now is whether the Obama administration buys into Norquist’s fact-free nonsense, or whether it musters the same courage President Clinton mustered in prudently raising taxes on the super-rich to responsibly finance an economic stimulus package. Sure, temporary deficits are acceptable right now – there’s no arguing that. But doing what’s necessary to minimize those deficits is also important.
In terms of policy, if, as Congressional Quarterly reports, Obama wants to enforce budget discipline on a necessarily large economic stimulus package, it will require generating additional revenue from the wealthy. In terms of raw politics, if Clinton’s 43 percent of the vote gave him enough political capital to come into office during an economic downturn and do that, I’d say Obama and his 53 percent gives him enough political capital to do the same today. And I would argue that if Obama backs off his promise to raise taxes on the wealthy, he will effectively validate the false conservative frame that claims tax increases on the wealthy endangers an economy.
While I certainly agree with the CNBC reporter that the 2008 is different than the 1990s, it isn’t different when it comes to taxes – we have very recent history that proves raising taxes on the wealthy in order to raise revenues for economic stimulus, if done prudently, helps an economy recover. That is the argument that nobody during this debate was able to undermine – and it is the argument conservatives fear most, because they know it is accurate.