Editore"s Note
Tilting at Windmills

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August 2, 2010

QUOTE OF THE DAY.... Throughout July, Republican leaders were aggressive in touting their belief in the Tax Fairy -- there's no need to worry about paying for tax cuts, because they magically pay for themselves. It was a startling example of "invincible ignorance," but from the Senate Minority Leader to unelected GOP candidates, this was the official party line.

This morning on MSNBC, House Minority Whip Eric Cantor (R-Va.) accidentally noted the truth about Republican demands to extend Bush's tax cuts. Host Savannah Guthrie asked Cantor if he would "simply acknowledge that passing these tax cuts worsens the budget deficit problem." Cantor dodged, arguing that people don't want to see "a tax hike."

So, Guthrie tried again, asking if Cantor "had any dispute with the notion that it does exacerbate the deficit picture." The Republican replied, "What I said in the beginning is, um, if you have less revenues coming into the federal government, and more expenditures, what does that add up to? Certainly you're gonna dig the hole deeper. But you also have to understand, if the priority is to get people back to work, is to start growing this economy again, uh, then you don't wanna make it more expensive for job creators."

That's quite a concession. Cantor is willing to admit that tax cuts would "dig the hole deeper" when it comes to the deficit -- a fact that's consistent with common sense, but which Republicans have fought vehemently for a month -- but believes the economy is more important than the deficit.

Oddly enough, I consider this something of a breakthrough. For 18 months, Democrats, most notably President Obama, have said the deficit matters, but the state of the economy matters more. Republicans and their Tea Party base have argued the opposite, insisting that the deficit has to take priority; we're facing a debt crisis; etc.

Cantor's line, repeated as if it were obvious, puts Republicans in a different place -- if boosting the economy means "digging the hole deeper," so be it. I happen to agree wholeheartedly.

At this point, then, it's time for a different debate. For a year and a half, it's been economic growth vs. deficit reduction. Cantor is signaling a new argument -- economic growth through spending vs. economic growth through tax cuts.

Instead of arguing over whether to increase the deficit, Cantor seems prepared to concede the point, and argue deficit increases are unfortunately necessary. Democrats should welcome his new-found wisdom, and initiate a discussion over the efficacy of spending vs. the efficacy of tax cuts.

Since we already know we get a much better bang for the buck when it comes to spending, it's an argument Republicans will lose, at least if reality had any bearing on the outcome of policy debates.

Steve Benen 3:30 PM Permalink | Trackbacks | Comments (25)

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Comments

"tax cuts would "dig the whole deeper" when it comes to the deficit -- a fact that's consistent with common sense, but which Republicans have fought vehemently for a month"

They've been arguing this nonsense since Reagan. Nothing new.

Posted by: Captain Obvious on August 2, 2010 at 3:39 PM | PERMALINK

The real breakthrough is that some MSM talking head actually kinda sorta held Cantor's feet to the fire.

If we could get some of these people to actually exercise some form of journalism, the story might change significantly.

I'm not holding my breath.

Posted by: bdop4 on August 2, 2010 at 3:41 PM | PERMALINK

2 trillion surplus? And Cantor argues job creators need one more taxcut?

The Federal Reserve recently reported that America's 500 largest nonfinancial companies have accumulated an astonishing $1.8 trillion of cash on their balance sheets. By any calculation (for example, as a percentage of assets), this is higher than it has been in almost half a century. Yet most corporations are not spending this money on new plants, equipment or workers.
Posted by: koreyel on August 2, 2010 at 3:42 PM | PERMALINK

Whatever you do, stay out of Cantor's way.
He's not going to be just 'walking this back,' it's going to be a full-on reverse sprint that will make Hussein Bolt jealous.

Posted by: c u n d gulag on August 2, 2010 at 3:43 PM | PERMALINK

---
Republicans have fought vehemently for a month
---

Republicans have fought vehemently for *30 years*

There, fixed it.

Posted by: eightnine2718281828mu5 on August 2, 2010 at 3:44 PM | PERMALINK

Big Deal, republicans can say whatever they want, doesn't mean jack. Cantor will come out tomorrow remembering the tax fairy effect stating he misspoke or we interpreted his words wrong.

This isn't even close to being a story, that would require the media to let Rangel and waters story die.

Posted by: ScottW714 on August 2, 2010 at 3:51 PM | PERMALINK

If these tax cuts create jobs then why is the unemployment rate not lower then when these tax cuts were implemented?

Posted by: Fed Up and Tired on August 2, 2010 at 3:55 PM | PERMALINK

Today in WSJ online, Arthur Laffer came up with his usual fraudulent argument that lowering rates "increases revenue." Well, in a sense it does. But he cheated by taking how much is paid by *the top one percent* and touting its increase over the Bush years - without even mentioning, this is because those people's relative earnings increased so much to begin with! I and others eviscerated his trash and his supporters, see at The Soak-the-Rich Catch-22
(This belonged here and not the thread on Steele.)

Posted by: Neil B on August 2, 2010 at 4:06 PM | PERMALINK

The wealthy already run the show. Money and power go hand-in-hand - always have, always will. While there is nothing intrinsically wrong with wealth - everyone wants it, to a greater or lesser extent - there is a major problem for a properly functioning democracy when the party of the wealthy is hell-bent on permanently jamming up the works. That's the problem that needs to be addressed and solved.

Posted by: Goldilocks on August 2, 2010 at 4:06 PM | PERMALINK

Raising the taxes on income above $250K gives them more incentive to invest their money and get taxed at the capitol gains rate instead of hoarding it. That is raising the tax rate ptromotes investment and job growth.

Posted by: golack on August 2, 2010 at 4:19 PM | PERMALINK

"Republicans will lose, at least if reality had any bearing on the outcome of policy debates."

Just as Cantor's comment admitted that tax cuts will increase the deficits, so Steve's comment admits that the Republicans will not lose. When has reality ever had any effect whatsoever on the bearing of policy debates? The American public lost the ability to think several generations ago at least.

Posted by: Texas Aggie on August 2, 2010 at 4:19 PM | PERMALINK

Steve Benen again quoted Paul Krugman: "It was a startling example of 'invincible ignorance' ..."

No, it was an entirely predictable and not at all startling example of shameless, sneering, blatant, deliberate dishonesty, which sensible liberals like Steve Benen and Paul Krugman inexplicably insist on pretending is "ignorance".

The Republicans are not "ignorant" nor are they "crazy" or "confused".

They are LIARS.

Posted by: SecularAnimist on August 2, 2010 at 4:39 PM | PERMALINK

So, if the tax cuts are good for job creation, and the tax cuts are still in effect, why are there no new jobs being created? Why is unemployment still climbing? Who are these tax cut recipients and what is their record of creating jobs? No one is asking Can'tor and the others this simple question: Where are the jobs that tax cuts have created?

I am committed to Oneness through Justice and Transformation
peace,
st john

Posted by: st john on August 2, 2010 at 4:51 PM | PERMALINK

The tax cuts were passed in 2001. Since that time the US went through the 'jobless recovery' of 2002-03 where the stock market climbed and Wall Street profits exploded but the people who lost their jobs in 2000-01 recession stayed unemployed.

From 2002-2008 the US had the lowest rate of private sector job creation since (you guessed it) the Great Depression. That's virtually unheard of while the economy is 'growing' by the leaps and bounds it was during the zero years.

I get that the current Republican argument is the rich are hoarding their money because of all the 'uncertainty' about tax rates and regulations. But they had 6+ YEARS of low tax rates w/ a friendly President and Republican Congress.

Where the hell was the job growth during that period!!!!

Posted by: thorin-1 on August 2, 2010 at 5:06 PM | PERMALINK

As if his admission won't go down the memory hole in the next 24 hours. If the MSM won't conveniently forget it, he'll walk it back and then it will be as if he never said it. Because that's how walkbacks work when you're a Republican.

Posted by: Steve (Not That One) on August 2, 2010 at 5:14 PM | PERMALINK

thank you SecularAnimist. Yes they are LIARS and in this case I think Cantor got a little tangled up because he used the words 'job creators' about 20 times...he kept reiterating the 'job creators' and how we REALLY didn't want to piss them off. It was pathetic and Savannah just kept plugging away.

Posted by: SYSPROG on August 2, 2010 at 5:22 PM | PERMALINK

golack has it right above. Cantor is talking nonsense when he says about rescinding the Bush tax cuts "You don't want to make it more expensive for job creators.." Taxes are calculated after expenses not before. Wages paid to employees are an expense and thus deducted from the gross income of a small business. An increase in personal income tax rates is irrelevant to small businesses. There are two exceptions to this. The first is if there is a significant spread between the highest marginal income tax rate and the capital gains tax rate. If that spread is sufficiently large then individuals will have incentive to invest revenue rather than to take it out in salary. That would help to fuel economic growth. The second is if the tax rate is sufficiently high that the business owner "goes Galt", cuts back on activities, and works less than possible. In that case the unmet demand will likely prompt the growth of a competitor. Economic competition flourishes, consumers win, and the market becomes more efficient.

Posted by: rk on August 2, 2010 at 5:23 PM | PERMALINK

I saw this interview this morning and was totally disgusted with little Chuckie Todd...he let Cantor repeat the lies about this being a "tax increase" three times without challenging him that these tax breaks were initiated by Bush and the Republicans ten years ago and were designed by THEM to lapse.

Todd is a total disgrace as a news reporter and a failure as a human being!

Posted by: wagonjak on August 2, 2010 at 5:25 PM | PERMALINK

Is there any way to actually get our comments and opinions to the "newsmakers"? We spend a lot of time, energy and cyberspace complaining about the MSM's abject failure to pursue lines of questioning that actually extract information from their interviewees. But, no one seems to be able to actually change how they practice "journalism." Any thoughts?

Posted by: st john on August 2, 2010 at 5:38 PM | PERMALINK

It doesn't matter what Cantor says today or tomorrow. The Rethugs are committed to making the economy as bad as possible before the mid-term elections. That is their whole strategy. They don't care about the unemployment rate, or if the unemployed starve. They don't care if teachers, firemen, policemen, public employees of every stripe get laid off. They want Obama to fail. They want control. It's really very simple.

Rethugs like Cantor aren't entirely stupid. They understand that extending the Bush tax cuts will worsen the deficit, so over analyzing his admission is of no value. It's about the mid-terms. It's about power.

Posted by: rrk1 on August 2, 2010 at 5:50 PM | PERMALINK

"Since we already know we get a much better bang for the buck when it comes to spending, it's an argument Republicans will lose, ..."

And those tax cuts have already failed (duh!) so the Cons are going to have to come up with something better.

Posted by: Marko on August 2, 2010 at 6:52 PM | PERMALINK

If there's a Tax Fairy, is there also a Tea Party Fairy?

Posted by: The Oracle on August 2, 2010 at 9:48 PM | PERMALINK

Cantor better be careful or he will be called on the carpet before Grand Dragon Limbaugh.

Posted by: Bill on August 3, 2010 at 2:28 AM | PERMALINK

Republicans and their Tea Party base have argued the opposite, insisting that the deficit has to take priority; we're facing a debt crisis; etc.

There is an opening here large enough for the dems to drive a bus through-- only GOPers think this, most people think JOBS are the issue, not the deficit. If Dems spend the next few months talking about job creation while the gop only babbles on about the deficit and spending, the dems may have a shot. Not that I expect them to all get on same page, coordinate talking points, but there is at least an obvious strategy if they feel like following one.

Posted by: zoe kentucky on August 3, 2010 at 7:57 AM | PERMALINK

Following on to zoe, it isn't even an either / or. If the Democrats focus on fixing the economy and creating jobs, the deficits will natruall start to taper off.

Democrats should point out, repeatedly, that jobs creation is deficit control.

Sadly, Democratic message discipline sucks.

Posted by: Gregory on August 3, 2010 at 9:00 AM | PERMALINK




 

 

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