Editore"s Note
Tilting at Windmills

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January 3, 2011

THE POPULAR DEFICIT-REDUCTION IDEA.... The problem with most proposals to reduce the deficit is that they carry policy or political costs. Identifying ideas that would be effective and not spur a public backlash is inherently tricky.

But it's not impossible. Take the idea of raising taxes on the wealthy, for example.

Raising taxes on the rich beats out cuts to defense spending, Medicare or Social Security as U.S. adults' top preference on how to close the deficit, according to a 60 Minutes/Vanity Fair poll.

Sixty-one percent of Americans said that increasing taxes to the wealthy should be the first step toward balancing the budget.

By contrast, 20 percent of respondents preferred cuts to defense spending as the first option, while four percent said that cutting Medicare would be the best way to start cutting the deficit. Three percent said they preferred cutting Social Security.

Increased taxes on the wealthy tops those four options even among higher earners who might be most affected by a tax hike, the poll suggested.

So, the single most popular idea for reducing the deficit is the one idea Republicans will fight the hardest to defeat.

Indeed, the political dynamic is almost amusing. The conversation seems to go something like this:

GOP: We must prioritize deficit reduction immediately, and all options must be on the table.

Everyone else: OK, how about a slight increase in the top marginal rate for the wealthy? It won't hurt the economy; it will lower the deficit; and the idea enjoys broad national support.

GOP: We didn't mean "all" options must be on the table.

Steve Benen 1:05 PM Permalink | Trackbacks | Comments (27)

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Comments

"Increase taxes on someone else". Now there's a shocker. And you actually applaud this.

Posted by: a on January 3, 2011 at 1:10 PM | PERMALINK

Don't worry, the idea won't get very far. After all, pretty much all of the "opinion shapers" are wealthy, and they don't want to pay more taxes.

Posted by: bleh on January 3, 2011 at 1:13 PM | PERMALINK

a, first off, high-income should get down on their knees in thanks every single day that the united states exists. otherwise, the only high-income people would be organized crime bosses. that's why it's perfectly moral and ethical to insist that high-income people pay higher taxes: they enjoy the greatest benefits of a country where contracts are enforceable.

more seriously, the republican party, of course, isn't interested in deficit reduction. it's interested in small government and it's interested in low tax rates on high-income individuals: it only discusses deficit reduction insofar as it enables those goals to be advanced.

so in this case, deficit reduction means "cut government programs that i don't like;" it doesn't literally mean "reduce the deficit."

Posted by: howard on January 3, 2011 at 1:17 PM | PERMALINK

As i posted earlier today:

-just a reminder; the top tax bracket under Eisenhower was 90%, under Nixon, 70%.
That's back when Dad worked, Mom didn't, and the kids played stickball. . .

Posted by: DAY on January 3, 2011 at 1:23 PM | PERMALINK

That's right, "a". And if you have a problem with it, feel free to "Go Galt." Don't let the door hit you in the ass on the way out.

Posted by: square1 on January 3, 2011 at 1:26 PM | PERMALINK

Angry Bear had a post several weeks ago arguing that the optimal (as in revenue producing) top marginal is 65%. Not so sure about the methodology, but it was an interesting extrapolation from historical data.

Posted by: Walker on January 3, 2011 at 1:26 PM | PERMALINK

The Republican philosophy and effect of proposed budget reductions summed up:

Reduce modern worker & health protections by cutting the funding supporting enforcement, eliminate Medicaid (in Arizona),  and take away modern banking consumer protections with the intent to go back to the glorious 19th century when large banks controlled the flow of money, monopolies cheated everyone, and wages were so low the slums of NY were only a step above those of today's Calcutta.

It was a fetid existence for most people... life expectancy was low, plagues flitted across the land,  and the gap between rich and poor rivaled that of pre-revolutionary France... the rich could build hotel sized houses with gigantic Tiffany windows produced by keeping wages were low, keeping state sponsored debtors prisons, suppressing unions with armed men, and the forcing the unemployed to fend for themselves. This seems to be just the way the modern day Republicans want it to be.

"Impossible!" you say. I ask you, WHY do they defend the irresponsible spending habits of the over rich and denounce modern safety net programs if they do not intend a return to that most complex century? 

I take them at their word.

Now remember, America and the world was never more prosperous than during those times when taxes on the rich were high aka the mid 20th Century. THE SOLUTION to our problems is to tax the über rich and use the money to build infrastructure paying good wages for good work to good people.

Posted by: KurtRex1453 on January 3, 2011 at 1:29 PM | PERMALINK

1% of Americans say ABSOLUTELY NO to raising taxes on the top 1%!!!

25% of Americans are our 'tools and fools' who will support whatever we have Fox News tell them!

1% of Americans control the wealth and the corporations who buy the government and the politicians.

1% of Americans will NOT allow their taxes to be raised.

Posted by: RepublicanPointOfView on January 3, 2011 at 1:29 PM | PERMALINK

(DEM): "We'll line our own pockets."

Your party at work Mr Benen:

Geithner Aides Reaped Millions Working for Banks, Hedge Funds


By Robert Schmidt - Oct 14, 2009 Oct. 14 (Bloomberg) -- Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms."

High earners indeed! Thanks again Barry...

Posted by: Lloyd on January 3, 2011 at 1:30 PM | PERMALINK

such poll questions address a world divorced from reality AND DON'T GET worthwhile insight.
so...
1. tell people the total deficit reduction achievable (if any) depends on public support and political will

2. ask people to state THEIR VIEW, whatever the reduction that CAN be achieved IN CONGRESS, how much of the reduction should come from various sources, e.g.,
ASK PEOPLE TO CHOOSE ONE
-all from tax increases (ATB=across the board)
-all from tax increases on the top 2% of incomes
-more than 50% from tax increases ATB, and the rest from X
-more than 50% from tax increases on 2%ers, and the rest from X
REPEAT LAST TWO WITH Y, AND Z, ETC INSTEAD

Posted by: Steve-A-Dor on January 3, 2011 at 2:10 PM | PERMALINK

"Increase taxes on someone else."
Posted by: a on January 3, 2011 at 1:10 PM

I love how the Publicans, Teabeggars, and conservatards -- you know, the ones who tell us all how immoral it is that they, "the productive ones," should be "punished for their success" by having to "support the unproductive" -- then proceed to demonstrate the utmost levels of incompetence at, well, everything... but in this case, it's basic reading comprehension skills -- and integrity.

Here, "a," is the part of the original work, accurately quoted above, that makes your response off-point, immaterial, irrelevant, deceitful, and stupid:

"Increased taxes on the wealthy tops those four options even among higher earners who might be most affected by a tax hike, the poll suggested."

(Emphasis added, to make it easier to find the relevant wording -- words that clearly evaded your eyesight on first read. Or were you just lying?)

And here's the immediate concrete-evidence followup, copied directly from the original article in the non-partisan "The Hill:"

"Fifty-eight percent of respondents making between $50,000 and $100,000 per year rated tax hikes as the best first step to balancing the budget, while 46 percent of those making more than $100,000 said it was their top choice, as well."

And, of course, this is on top of the many, many articles, teevee shows, blogposts, etcetc, on which well-known, highly-"productive" Americans such as Warren Buffett and Bill Gates have strongly and repeatedly supported moving the Federal income tax system at least somewhat back toward its former progressivity -- you know, the state it was in at times of great economic growth like the '50s and the late '90s.

You'll need to either work a bit harder (you are one of "the productive ones," aren't you?), or find an audience more easily deceived. Preferably both.

Posted by: smartalek on January 3, 2011 at 2:18 PM | PERMALINK

Raising taxes on the rich is a great idea. How come I'm just hearing about it now?

Posted by: Hieronymus The Troll Braintree on January 3, 2011 at 2:18 PM | PERMALINK

Now remember, America and the world was never more prosperous than during those times when taxes on the rich were high aka the mid 20th Century.

Depends on your point of view. If you love Leave It To Beaver and other shows that dramatized the fantasy of life in the 1950s, well, it's hard to argue against that fantasy world.

In the real world, however, the 1950s were prosperous for the U.S. not just because of higher marginal tax rates, but because the U.S. was the only real economy left standing after World War II. And the U.S. was making a lot of money off its monopoly, all the while helping Europe and Japan get back on their feet.

Of course, the rest of the world was doing so well in the 1950s, as some countries were dealing with a war-ravaged economy and population, with a decimated countryside, urban areas and in many places, a lack of young men.

So don't be too hopeful thinking that a return to the 1950s-era marginal tax rates are going to create a 1950s-era economy.

Posted by: Schlocky Balboa on January 3, 2011 at 2:24 PM | PERMALINK

During the last election Republicans refused to tell us which programs they would cut. Now we are going to find out. I suspect a lot of tea party faithful will not be amused to learn that their favorite programs are on the block.

Posted by: Ron Byers on January 3, 2011 at 2:27 PM | PERMALINK

By the way, to have meaningful deficit reduction when you refuse to touch the DOD, social security and medicare will me some pretty draconian cuts in some pretty popular departments.

Posted by: Ron Byers on January 3, 2011 at 2:31 PM | PERMALINK

How about this? No state may receive more Federal money than they pay in. This would end up to be pretty harsh on a good many 'red states', but they're the loudmouths for states rights, ending welfare etc. What better way to be bi-partisan than to give repubs exactly the things they claim to cherish?

Posted by: JoeW on January 3, 2011 at 2:40 PM | PERMALINK

" I suspect a lot of tea party faithful will not be amused to learn that their favorite programs are on the block." Ron Byers

-Dancing with the Stars? American Idol? Oh, the horror!

Posted by: DAY on January 3, 2011 at 2:47 PM | PERMALINK

Bewildering that the "Defense (of empire?)" Dept continues to escape serious consideration by the vast majority of scaredy-cat Americans. Raising taxes on the uber-rich is a good start, but that alone won't balance the budget.

We can 'defend' our homeland (from those hordes of sword-wielding, horseback-riding, Islamic jihadists plotting to overrun our country from their Pakistani caves) on a fraction of the Pentagon's current budget. Americans are brainwashed into thinking nukes, carriers, subs, etc. are keeping us safe. So sad...

Posted by: nemisten on January 3, 2011 at 2:50 PM | PERMALINK

"Raising taxes on the uber-rich is a good start, but that alone won't balance the budget."

Yeah, we need to keep bailing out Wall Street too! Orszag needs his job.

Posted by: Paulie K. on January 3, 2011 at 2:53 PM | PERMALINK

Why bash the GOP on this? Despite the popularity of raising taxes on the rich and leaving social security alone, the President--who ran and was elected as a Democrat-- and the Congress with both chambers controlled by folks elected as Democrats conspired to not only keep taxes on the well to do unconscionably low, but to seriously weaken the funding of social security.Sounds like it is the Democrats not the GOP who are not listening to the American public.

Posted by: Terry on January 3, 2011 at 2:59 PM | PERMALINK

balboa, the point is not that the 1950s level tax rates will automatically produce 1950s levels of growth (although as a side note, the weakness of other economies wasn't that big a factor in the us growth in that period, since trade was a relatively modest amount of the total economy); the point is that current republican doctrine holds that the 1950s could not have happened, that it is impossible to have substantial growth with marginal tax rates that high....

Posted by: howard on January 3, 2011 at 3:22 PM | PERMALINK

Balboa,

In the real world, however, the 1950s were prosperous for the U.S. not just because of higher marginal tax rates, but because the U.S. was the only real economy left standing after World War II. And the U.S. was making a lot of money off its monopoly

Ah, no.

You’re forgetting that those economies that were no longer “standing after World War II” were also our previous major customers.

This story you’re regurgitating is merely a myth.


Posted by: Joe Friday on January 3, 2011 at 5:17 PM | PERMALINK

-You’re forgetting that those economies that were no longer “standing after World War II” were also our previous major customers.-

What did the Germans buy?

Posted by: Curious on January 3, 2011 at 5:35 PM | PERMALINK

funny how Benen leaves out the great enabler in the republican inanity: his man obama.

republicans get away with IGNORING WHAT AMERICANS WANT for one reason and one reason only - republicans know OBAMA WILL NOT FIGHT THEM!! In fact they know obama will work to undermine any opposition to what they want.

obama is the Great republican Enabler; a progressive Trojan Horse.
.

Posted by: pluege on January 3, 2011 at 6:12 PM | PERMALINK

Curious,

What did the Germans buy?

If you mean early in the 20th Century, how the hell would I know ?

Ask Dupont.


Posted by: Joe Friday on January 3, 2011 at 6:47 PM | PERMALINK

Tax rates for the upper incomes had a 70% rate during the Depression. They were RAISED to that level during the Depression because it was understood that a single person, or family, simply couldn't spend an income of more than $100,000 (the level, I understand, at which the marginal rates really started climbing). Until WWII started producing lots of well-paying jobs, most citizens didn't pay ANY income taxes; their incomes were simply too small.
From the Depression until the late 1950s, the high marginal tax rates were maintained first, to help finance the various public works programs and then WWII. The rates were kept to help pay off the debts incurred during WWII, provide for European reconstruction and our own re-armament AFTER we had completed demobilization in the late 1940s.
The 1950s saw the Korean War, expansion of nuclear armaments and the beginnings of the Interstate Highway System; all of which cost very large amounts of money. Eisenhower (the last Republican I can conceive of voting for) was determined that Federal expenditures be as tightly controlled as possible. The military wasn't to get any more than around 3-4% of the GDP AND the budget was to be balanced. He accomplished the first, but not the second.
The economic expansion of the 1940s-1960s was largely based simply on finally providing to the vast majority of the US population those things that had been denied them since 1930: their own homes and cars, readily available and affordable clothing and food and access to higher education if they so desired. The expansion in owner-occupied, newly-constructed homes alone would probably have been enough to keep the economy steaming. Add in everything else that was going on and it is little wonder that the 1950s and early 1960s are looked at as an economic paradise.
What the high marginal rates did was to continually make it more attractive financially for a company, any company, to limit the compensation of its' upper management/owners and invest that money on R&D, company expansion, and higher wages for its employees. Why give the Federal government 70% of $400,000; why not, instead, invest it in the company?
Which is what they did and which as also why returning to higher marginal rates would, most likely, be a smart move.
Which is ONE reason the Republicans are against it...

Posted by: Doug on January 3, 2011 at 9:22 PM | PERMALINK

"Obama is the Great Republican Enabler; a progressive Trojan Horse."

Which is why Republicans love him so much and cooperate with everything he tries to do.

Posted by: beejeez on January 4, 2011 at 2:55 PM | PERMALINK




 

 

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