House Majority Leader Eric Cantor (R-Va.) told reporters yesterday, “We, as Republicans, are not going to support tax increases. It is counterintuitive to think that you can raise taxes in a sputtering economy.”
The problem with this, as reader F.B. reminded me, is that Cantor may not fully understand what “counterintuitive” means.
Putting that aside, let’s also consider what else Cantor told reporters yesterday.
“Just look at the jobs report today,” Cantor added. “I cannot fathom how anybody, how anyone thinks right now is a good time to raise taxes. Who thinks that raising taxes on individuals and small businesses can help create jobs?”
Now, the natural response to this is to point to the recent examples of policymakers — most notably Ronald Reagan and Bill Clinton — who raised taxes in the midst of weak economies, only to see the tremendous economic results soon after.
But let’s go a step further. The more pressing problem with Cantor’s contention is that it’s largely Keynesian — and Cantor hates Keynesian economics. Jon Chait had a good item on this.
[I]f you think the state of the business cycle should influence your fiscal policy, then you should oppose any spending cuts at all, and the tax cuts you support should be as progressive as possible. Alternatively, if you’re worried about the incentive effects of tax cuts on business and the rich, then you don’t care about whether unemployment is high or low at any particular moment. Cantor’s position, which is the universal Republican position, is pure nonsense by absolutely any standard, including the most conservative standard.
That’s even aside from the fact that nobody is proposing an immediate tax hike. Democrats are perfectly happy to phase in any tax increase slowly. Cantor’s argument is nonsense economics piled on top of a factual misrepresentation.
Most of Cantor’s arguments are.
Regardless, Chait’s point is an important one. Why does Eric Cantor oppose any and all tax increases? Because, as he sees it, the economy is weak, and if there are tax increases, it would take money out of the economy and put into the Treasury. That would be wrong, Cantor believes, because we want that money in consumers’ hands, generating economic activity.
In the next breath, Cantor then argues that he also wants spending cuts, taking money out of the economy and putting it into the Treasury.
Do you see the disconnect? Well, you probably do, but the Majority Leader doesn’t.
Let’s put this another way: the policy reasoning that tells Eric Cantor that tax increases are a bad idea is the same policy reasoning that makes sweeping budget cuts a bad idea, too.