HOW TO LOSE AFTER BEING DEALT A GOOD HAND…. The high-profile fight of the moment is over tax policy, and by most measures, Democrats are in a reasonably good position. Republican leaders are arguing amongst themselves; polls show President Obama’s proposal to be considerably more popular than the GOP’s; and just weeks before the midterm elections, Republicans are prepared to fight tooth and nail to hold middle-class tax cuts hostage.
It’s not a bad scenario for Democrats, right? The only way for Dems to screw this one up would be for them to start breaking ranks and siding with Republicans on the minority party’s misguided, unpopular, and irresponsible plan, and start echoing bogus GOP talking points.
And wouldn’t you know it….
[Independent Sen. Joe Lieberman of Connecticut] called on Monday for extending the cuts at all income levels, for a year. “I don’t think it makes sense to raise any federal taxes during the uncertain economy we are struggling through,” Mr. Lieberman said in a speech to the Chamber of Commerce in Middlesex, Conn. […]
At the Capitol later in the day, Mr. Lieberman said he would not block a bill that continued the tax breaks only at the lower levels.
But Senator Ben Nelson, Democrat of Nebraska, refused to make a similar commitment, saying he did not expect his party leaders to force a vote only on Mr. Obama’s preferred plan. But he said he would not vote for a bill that included only a partial extension. “It would be very hard for me to support that,” he said.
For nearly two years, senators like Lieberman and Ben Nelson demanded that nearly everything on the Democratic agenda — from health care to energy to extended unemployment benefits — had to be fully paid for. The American people, they said, demanded fiscal responsibility. But the moment Republicans ask for $700 billion in tax breaks for the wealthy, all of which would be added to the deficit, there’s Lieberman and Ben Nelson, insisting that fiscal responsibility no longer matters.
More importantly, they’re just wrong about the efficacy of the policy.
[L]etting people who already have plenty of money keep a little bit more of it doesn’t boost demand in any meaningful way. The wealthy will save, rather than spend, that money. The deficit will be bigger and demand won’t be any higher.
This is why the CBO rated tax cuts for the wealthy as the least-helpful of 11 forms of economic stimulus they evaluated. This is why former McCain adviser Mark Zandi of Moody’s estimated that making the Bush tax cuts permanent would return a mere 29 cents of economic growth for each dollar the government spent on the tax breaks. This is why Bloomberg wrote this today: “Hand the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.”
Despite all of this, Republicans are prepared to hold middle-class tax breaks hostage — and Ben Nelson is inclined to help them, while Joe Lieberman repeats their talking points.