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Why Republicans don't fear fight over tax cuts for rich

So why do Republicans seem unafraid -- why do they even appear to welcome -- a fight over the Bush tax cuts? Multiple polls show strong majority support for ending the Bush tax cuts for the rich. But even as Dems are preparing to go to the mat over just that issue, Republicans seem to relish the looming fight at least as much -- perhaps more so -- than some Dems do.

Why?

After talking to strategists involved in charting the GOP's midterm game plan, I'm convinced the answer is this: Republicans are gambling that any argument about taxes -- details aside -- feeds the larger story they're trying to tell, about a Democratic majority that has gone off the rails with spending and government overreach, with nothing to show for it.

Republicans have been aggressively portraying the Dem proposal to end the tax cuts on just the rich as a potentially catastrophic tax hike in the middle of an awful economy. In so doing, Republicans seem to be gambling that the nuance of the debate will get lost in all the noise, and people will see Dems as liberul tax-hikers even though they want to extend the tax cuts for the middle class. And that's clearly part of the game. But I think there's more to the GOP approach than just this.

Put simply, Republicans want a fight over taxes because they think the overtones of the debate will resonate with public pessimism about the very premise of the Dems' overall policy approach -- that government spending and intervention can turn the economy around. The narrative among independents and swing voters outside of D.C., one strategist argues to me, is twofold, pairing continuing expansion of government side by side with a disastrous failure at job creation.

This strategist adds that the angry and fearful public will be receptive to whoever is pushing a "different mode of job creation" from the one that's currently being perceived as a failure. Republicans think any argument about taxes reinforces this dynamic, in which Dems are just offering more of the same, while Republicans are offering something different. As long as Dem policies aren't pulling us out of the doldrums, anything they say is tainted.

What's more, Republicans also think any argument about taxes helps them continue turning the public against Washington in general. As another strategist puts it, Republicans hope people perceive any Beltway argument about "raising taxes on Americans in a struggling economy" as another sign of "what's wrong with Washington." In other words, the details of who is advocating for what aside, Republicans hope the specter of Washington politicians arguing about taxes will fuel anti-incumbent fervor that might hurt Dems at the polls.

All this isn't to say that Dems should shrink from this fight. As I've noted here, the Dems' best hope is to go into this in full confidence that the public is on their side, and that this is an argument they can win. But it's a good idea for Dems to keep the GOP view of things in mind as they stride headlong into battle.

By Greg Sargent  |  September 13, 2010; 3:37 PM ET
Categories:  2010 elections , House Dems , House GOPers , Senate Dems , Senate Republicans , economy  
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Comments

Shorter Greg:

1. GOP hopes the media (esp network and cable news) will not dig into the substance of the difference between the party's approaches.

2. GOP hopes the American people will be too stupid to notice that the GOP cut taxes and spent way too much money on wars and other stuff and then the economy tanked but then luckily Obama won the election and now they can blame him.

Posted by: BGinCHI | September 13, 2010 3:46 PM | Report abuse

I don't think that the Republican argument is going to work. We have had Bush tax cuts for 8 years yet we have lousy job creation. Americans know that.

Plus this argument allows for Democrats to show that they are champions for the middle class.

Posted by: maritza1 | September 13, 2010 3:47 PM | Report abuse

Dear President Snowe,

Vote for the Obama Middle Class Tax Cuts and join the Democrats in 2011.

Or forfeit your political career.

Love,

America

--------------------------------------

A new Public Policy Polling survey finds that 63% of Maine Republicans say they would support a more conservative alternative to Sen. Olympia Snowe (R-ME) when she's up for re-election in 2012 with just 29% saying they're committed to her.

"Moderate Republicans love Snowe. They give her a 70% approval rating and a strong majority say they'd vote to nominate her for another term. But those folks make up only 30% of the GOP electorate in Maine. It's now dominated by conservatives and they're particularly negative toward her, giving her just a 26% approval rating and saying by a 78-15 margin they'd like to trade her out for someone to the right."

http://politicalwire.com/archives/2010/09/13/snowe_faces_problems_at_home.html

Posted by: Ethan2010 | September 13, 2010 3:49 PM | Report abuse

Not to mention that for years now the Dems have (simply) portrayed the GOP as "the party of tax cuts - that's all they know." The Dems will have no success now trying to paint the GOP as being in favor of tax increases.

Posted by: sbj3 | September 13, 2010 3:50 PM | Report abuse

Ethan, good point on Snowe.

Similarly, if she had joined the Dems a few years ago, Blanche Lincoln would have a chance in Nov.

Posted by: BGinCHI | September 13, 2010 3:51 PM | Report abuse

Great, Republicans are willing to tax 98% of Americans higher if they don't get their way.

Isn't that swell.

Posted by: mikefromArlington | September 13, 2010 3:52 PM | Report abuse

Interesting and related. When Bush gave tax cuts in 2001, the wealthiest Americans saved more!

http://www.washingtonmonthly.com/archives/individual/2010_09/025638.php

Now that Obama wants to make the middle class tax cuts permanent, Republicans are willing to block it.

Republicans keep 98% of Americans hostage for political games. What scum!

Posted by: mikefromArlington | September 13, 2010 3:55 PM | Report abuse

Yes BG.

Re: Snowe... Collins is in the same boat. I think polling on the two are almost identical.

I bet more than even odds that both of them side with the Dems on the tax issue.

They might even be the ones most responsible for McConnell's lack of a specific Pledge that the GOP caucus will filibuster any Dem efforts.

Posted by: Ethan2010 | September 13, 2010 3:56 PM | Report abuse

Eric Cantor promises to protect Deprived Billionaires from John Boehner.

It is a great day to be a Democrat, America!!!

Posted by: Liam-still | September 13, 2010 3:58 PM | Report abuse

I have a simple question for Mr Sargent:
Given the highly partisan nature of your blog, why should anyone believe your characterization of what these "strategists involved in charting the GOP's midterm game plan" told you?

And why would they talk to you at all? I guess they never read your blog.

Posted by: skipsailing28 | September 13, 2010 4:01 PM | Report abuse

skipsailing28, I suppose it would pain me too to know my party Representatives are about ready to play chicken with 98% of the populations tax cuts so they can get their way.

Posted by: mikefromArlington | September 13, 2010 4:05 PM | Report abuse

Republicans want to borrow another 750 Billion dollars to make Billionares Richer.

I love it. It is a gift to we Democrats.

Has John Boehner Flip Flopped yet. I have predicted he will soon.

He will have to pass out more tobacco lobby checks, to try and mend the rift he created in his own caucus.

Mean while, Eric Cantor is having his Save Billionaires From John Boehner, and The Middle Class, buttons printed up.

America! This is a great day to be, or to become a Democrat, that is unless you are a Billionaire.

Posted by: Liam-still | September 13, 2010 4:08 PM | Report abuse

Harldy an answer Mike. does Mr Sargent really need a mouthpiece or can he answer the question himself?

so much for your snarky misdirection but thanks all the same

Posted by: skipsailing28 | September 13, 2010 4:09 PM | Report abuse

skipsailing, it's a fair question.

It turns out some Republicans insiders, to their credit, are willing to talk to people they regularly disagree with.

Posted by: Greg Sargent | September 13, 2010 4:12 PM | Report abuse

O.K. I'll skip the snark.

Your party's leadership is playing politics with 98% of the public's tax breaks.

And with a mouth like mine, I doubt Greg would agree I'm his mouthpiece.

Posted by: mikefromArlington | September 13, 2010 4:12 PM | Report abuse


Harldy an answer Mike. does Mr Sargent really need a mouthpiece or can he answer the question himself?

so much for your snarky misdirection but thanks all the same

Posted by: skipsailing28 | September 13, 2010 4:09 PM |
....................

And yet you are the one who put yourself forward as The Mouthpiece for the Republicans who spoke to Greg.

Typical of the Rabid Right Wing Doublespeak crowd; with their; do as I say, not as I do, tactics.

Posted by: Liam-still | September 13, 2010 4:15 PM | Report abuse

* Rich Americans Save Tax Cuts Instead of Spending, Moody's Says *

Hand the wealthiest Americans a tax cut and history suggests they will save the money rather than spend it.

Tax cuts in 2001 and 2003 under President George W. Bush were followed by increases in the saving rate among the rich, according to data from Moody’s Analytics Inc. When taxes were raised under Bill Clinton, the saving rate fell.

The findings may weaken arguments by Republicans and some Democrats in Congress who say allowing the Bush-era tax cuts for the wealthiest Americans to lapse will prompt them to reduce their spending, harming the economy. President Barack Obama wants to extend the cuts for individuals earning less than $200,000 and couples earning less than $250,000 while ending them for those who earn more.

“I would tend to wonder how much the tax cut actually influences spending behavior,” said Chris Cornell, an economist who mined government reports back to 1989 for West Chester, Pennsylvania-based Moody’s Analytics. “Spending by the top 5 percent of households seems much more closely tied to business- cycle issues than it does to tax-cut issues.”

The Moody’s research covering couples earning more than $210,000 found that spending by the wealthy is more likely to be influenced by the ups and downs of the stock market than changes in income-tax rates.

Stock-market performance is the “primary factor that is driving the savings of the top 5 percent of households,” said Mustafa Akcay, economist and co-researcher of the savings data.

http://www.bloomberg.com/news/2010-09-13/rich-americans-save-money-from-tax-cuts-instead-of-spending-moody-s-says.html

Posted that earlier on the Crazy Angle thread, but it's more relevant here...

Posted by: Ethan2010 | September 13, 2010 4:19 PM | Report abuse

@Mike and Ethan: Yeah, that's a great article. I posted it in an earlier thread after qb started pulling the "tax breaks should go to the rich because they use the money to create jobs" schtick.

Posted by: schrodingerscat | September 13, 2010 4:23 PM | Report abuse

skip, if you don't think Greg is worth reading, why read him?

Don't you have any friends?

Posted by: BGinCHI | September 13, 2010 4:23 PM | Report abuse

now I have two stalwart liberals taking me on. Oh my. what will I do.


I asked Mr Sargent a direct question. Both of you tried trite, tired liberal techniques to evade it. First was a snarky misdirection and next was good old name calling.

Honestly, is that all you've got left in the tank? so much for the much vaunted intellect of the liberals it seems.

Posted by: skipsailing28 | September 13, 2010 4:25 PM | Report abuse

OK, moment of weakness on the troll feed. Sorry all.

Thanks for that, Ethan. There is NO analysis of the "top 2%" and what they are doing with their money, how they earned it, what sorts of investment they have, whether it's domestic or foreign, whether their money and business is tied up in offshore accounts, and so on.

There's just so little reporting outside the horse race of it all. Depressing.

Posted by: BGinCHI | September 13, 2010 4:26 PM | Report abuse

skipsailing, I tried to answer you above, but you are ignoring me.

Posted by: Greg Sargent | September 13, 2010 4:26 PM | Report abuse

Shorter article above: just because rich people benefit from our economy doesn't mean they are its sole driving force.

Posted by: BGinCHI | September 13, 2010 4:28 PM | Report abuse

now it is up to three.

Mr Sargent, it is one thing to disagree. It is another to grossly mischaracterize the words spoken to you.

I'm talking about simple trust. Why would anyone whose basic philosophy differs from your have faith that you would accurately characterize their words?

Is this a spelling error, or just some blog host permissible snark Mr Sargent"
"and people will see Dems as liberul tax-hikers "

It is a simple question and I note that you didn't actually answer it.

Posted by: skipsailing28 | September 13, 2010 4:29 PM | Report abuse

asked Mr Sargent a direct question. Both of you tried trite, tired liberal techniques to evade it. First was a snarky misdirection and next was good old name calling.

Honestly, is that all you've got left in the tank? so much for the much vaunted intellect of the liberals it seems.

Posted by: skipsailing28 | September 13, 2010 4:25 PM
........

Apparently you can not even understand your own ravings. You are the one who asked Greg, why Republicans talked to him, and why they did not avoid talking to him. So at the same time, that you are complaining about someone else acting as " a mouthpiece for Greg" you were asking Greg to act like a "mouth piece" for those Republicans, and answer a question that should be asked of them.


Like I said before Skippy, you are typical of Double Speaking Right Wingers, who love to whine that others are guilty of doing what you do all the time.

Greg, is not a "mouth piece" for those Republicans, so why did you try to make him into one?! Get it now, Skippy?!

Posted by: Liam-still | September 13, 2010 4:36 PM | Report abuse

BG, it's so clear-cut too.

And it's been, what 30+ years of failure of trickle-on-America Voodoo Economics?

Ya'd think our country or our media would be able to understand these facts and be able to call the Republican economy for what it is:

Government-approved -- if not sponsored -- unadulterated outright uncut greed.

Posted by: Ethan2010 | September 13, 2010 4:36 PM | Report abuse

What about capital gains / dividends? Are the Democrats proposing to keep those the same as well?

If not, expect to see selling in the market as people unload winners ahead of the change in the capital gains rate.

Posted by: sold2u | September 13, 2010 4:36 PM | Report abuse


Shorter article above: just because rich people benefit from our economy doesn't mean they are its sole driving force.

Posted by: BGinCHI | September 13, 2010 4:28 PM |

................

Republican claim that cutting taxes for Billionaires creates jobs, and increases revenues. They apparently have not noticed, that since Bush cut Taxes for those Billionaires, the exact opposite has happened, and, even though those Billionaires are still enjoying those tax cuts now, they have not been creating any jobs with them.

The one stimulus package that we know has created no additional jobs, is the Bush Tax Cuts, yet Republicans want to borrow another 750 Billion dollars from China, to repeat that utter failure, all over.

Posted by: Liam-still | September 13, 2010 4:44 PM | Report abuse

I don't think that argument is a winner for republicans. THe president has framed it pretty simply - why are you talking about giving $100,000 to people who are already millionaires and billionaires?

And if they don't get their way they're going to make 97% of the country suffer. Yeah, that's a winning argument. NOT.

Posted by: lcrider1 | September 13, 2010 4:46 PM | Report abuse

The plain fact is that only the dems want to raise taxes.

All their explaining after that that they are only punishing the rich is incoherent, divisive economic nonsense.

Posted by: quarterback1 | September 13, 2010 4:49 PM | Report abuse

Republicans want to pamper Billionaires, even if they have to borrow 750 Billion dollars from China to do so.

That is a very coherent truth, that the average person has no problem grasping, despite what the Fantasy Toon Town Lawyer claims.

Republicans are dyslexic Robin Hoods, who voted against raising the minimum wage, in order to give more and more to the richest people in the country.

Posted by: Liam-still | September 13, 2010 4:55 PM | Report abuse

OT but worth noting for its relevance to a larger picture...

O'Donnell says her strategy includes appealing to the "PUMA" Hillary Democrats:
http://tpmdc.talkingpointsmemo.com/2010/09/christine-odonnell-targeting-hillary-democrats-in-delaware-republican-primary-video.php?ref=fpblg

Now, first off and just to demonstrate the silliness of this claim, if there is any correspondence between O'Donnell's ideas and Hillary's it would be some agreement on cannibalism being morally undesirable. And that's about the only correspondence available. Why on earth would a Hillary supporter sign on to O'Donnell's campaign, of all people?

Of course, there's something else going on here and that is the attempt to mesh with the Palin mamma grizzly strategy - victimized and disempowered females deserve their chance at power too. And that strategy means to pull the women's vote from their normal home with Dems.

The attempt to ressurrect the PUMA label is more revealing to some of us than to others. That "movement" was, as a bunch of us who dug into the guts of those groups and activities at the time found, a small core of Hillary supporters angry at her loss in the contest for presidential candidate initially augmented and pushed forward by Limbaugh and others to foment division and anger amongst the Dem constituency. Then, a very organized and well-funded program was launched by Republican activists to spread negative propaganda on Obama and the Dem party. ClintonsforMcCain, for example, was registered by the RNC (a Wired reporter broke that one) and spokesperson Cristi Adkins, who claimed to be a disaffected independent and Hillary supporter, was neither (check her on google for present activities).

We'll see more of this over the next two years.

Posted by: bernielatham | September 13, 2010 4:56 PM | Report abuse

is there any reason to believe Mr Sargent's characterization of the interview with as yet unnamed sources?

And I continue to wonder why anyone whose politics differ from dogmatic liberalism would trust that Mr Sargent would get it right on his blog.

I believe these are fair questions. There should be practical limits to the credibility of a highly partisan writer. I understand that Mr Sargent is an opinionator and not an old fashioned "reporter". but even still both must rely on some "facts" to make their story.

Posted by: skipsailing28 | September 13, 2010 4:57 PM | Report abuse

"The plain fact is that only the dems want to raise taxes.

All their explaining after that that they are only punishing the rich is incoherent, divisive economic nonsense.

Posted by: quarterback1 | September 13, 2010 4:49 PM"

Sir, I believe you find our present deficit appalling. How would you decrease it, if we take it as a given that taxes on the rich must not be increased?

Posted by: wiccan | September 13, 2010 4:57 PM | Report abuse

* Interest-Group Spending Drives G.O.P. Lead in Ads *

Driving the disparity in the ad wars has been an array of Republican-oriented organizations that are set up so that they can accept donations of unlimited size from individuals and corporations without having to disclose them. The situation raises the possibility that a relatively small cadre of deep-pocketed donors, unknown to the general public, is shaping the battle for Congress in the early going.

The yawning gap in independent interest group spending is alarming some Democratic officials, who argue that it amounts to an effort on the part of super-wealthy Republican donors, as well as corporate interests, newly emboldened by regulatory changes, to buy the election.

[...]

“Corporate interests are buying the elections?” said Sheila Krumholz, executive director of the Center for Responsive Politics, a watchdog group. “Oh no, it’s much worse than that. We don’t know who’s buying the election.”

http://www.nytimes.com/2010/09/14/us/politics/14money.html

“Corporate interests are buying the elections?” ... “Oh no, it’s much worse than that. We don’t know who’s buying the election.”

We don’t know who’s buying the election.

We don’t know who’s buying the election.

We don’t know who’s buying the election.

Posted by: Ethan2010 | September 13, 2010 5:00 PM | Report abuse

bernielatham

I have always believed that a lot of those so called PUMA Hillary backers, were made up of people who became members of the Tea Party. Remember; Limbaugh was pushing for his followers to go vote for Hillary.

Posted by: Liam-still | September 13, 2010 5:02 PM | Report abuse

The bloggers here have clearly PROVEN why Americans hate politicians so much.


Who is pitting who against who?


Only to a democrat is keeping taxes the same - a tax cut.


Anyway - I don't think the American People are listening to the democrats anymore - and if by chance the American People DO listen to this crap from the democrats, it will hurt the democrats.

So the democrats are lucky no one is listening.


.

Posted by: SaveTheRainforest | September 13, 2010 5:04 PM | Report abuse

Can we get a number on how many jobs were "created or saved" by the Bush tax cuts?

I think the administration basically divined the jobs created or saved number by plugging the expected GDP boost from the stimulus into a historic model that (probably) regresses job creation against GDP growth. I would be very curious to see how many jobs created or saved would be spit out of that model from the Bush tax cuts.

If we want to be intellectually honest (and non-partisan) about the different policy alternatives then we have to make apples-to-apples comparisons. It may be a nice lawyerly maneuver to slam Bush for not creating jobs while giving Obama credit for saving them, but as an analysis, it is lacking. Plus, isn't anyone just a little bit curious as to what the answer is?

Posted by: sold2u | September 13, 2010 5:09 PM | Report abuse

@Liam - That's right. Back then, one could visit the many linked sites and interact with the folks involved. They (9 of 10 of them) could not/would not voice a Hillary policy or philosophical idea if their life depended on it. Just poisonous anti-Obama stuff (lots of racism, etc). Pretty much the same crowd, you're right.

Posted by: bernielatham | September 13, 2010 5:13 PM | Report abuse

"History Shows Businesses Can Prosper at Tax Rate Slated for 2011

History refutes the notion that small businesses would be unable to thrive under a 39.6 percent tax rate. Small businesses do not need an exemption from that rate to prosper.

During the 1990s, when the top tax rates were at the levels to which they are slated to return in 2011, small business employment rose by an average of 2.3 percent — or 756,000 jobs — per year. In contrast, between 2001 and 2006, when tax rates were lower as a result of the 2001 tax law, small business employment rose at only a 1.0 percent annual rate (367,000 jobs per year) — less than half as much.

In short, the 1990s tax rates did not deter a robust, job-creating economic expansion, and the lower tax rates after 2001 did not prevent a recovery that proved very disappointing in generating job growth.a"

(a. Average annual small business job growth (firms with 20-499 employees), calculations based on data from the Small Business Administration and the U.S. Census Bureau.)

http://www.cbpp.org/cms/index.cfm?fa=view&id=3251

Posted by: lmsinca | September 13, 2010 5:13 PM | Report abuse

Someone remind me, was the Bush plan to stimulate the economy by spending a huge pile of money to attack Iraq?

Posted by: BGinCHI | September 13, 2010 5:16 PM | Report abuse

I believe these are fair questions. There should be practical limits to the credibility of a highly partisan writer. I understand that Mr Sargent is an opinionator and not an old fashioned "reporter". but even still both must rely on some "facts" to make their story.

Posted by: skipsailing28 | September 13, 2010 4:57 PM |

.......................

YOu can say the same thing about any Right Wing Writer on the Washington Post.

Like I said before, you Right Wing Nut Jobs love to tell left leaning people to not do, what you support Right Wingers doing all the time.

Posted by: Liam-still | September 13, 2010 5:16 PM | Report abuse

@skipsailing - your premise/assumption that you keep pushing above - a liberal commentator will/must misrepresent what he's told by a conservative - isn't merely cynical and evidence-free, it is self-defeating.

It's self-defeating because if true, it would hold true the other way as well and you would never again be able to accept any account from any rightwing writer on what liberals had communicated to him.

Posted by: bernielatham | September 13, 2010 5:16 PM | Report abuse

I know as much about the economy as I do neurosurgery (or, that matter, programming my DVD player), but I can say I have yet to see any convincing argument that raising taxes is the "job killer" that conservatives claim it is. It seems to be more like a religious article of faith that is rarely, if ever, questioned.

Can anyone cite a study that supports the claim?

Posted by: MidwaySailor76 | September 13, 2010 5:17 PM | Report abuse

All, check this out: Cantor tactfully distances himself from Boehner:

http://bit.ly/beSbkV

Posted by: Greg Sargent | September 13, 2010 5:20 PM | Report abuse

Some interesting facts from that NY Times article that Ethan linked:

"It is not clear, however, whether it is actually an influx of new corporate money unleashed by the Citizens United decision that is driving the spending chasm, or other factors, notably, a political environment that favors Republicans.

"... They had the right to make such contributions before the ruling, he said, but Citizens United made it more straightforward.

"... In recent elections, it is Democrats who have used so-called soft money vehicles, which are able to accept unrestricted donations, to a much greater degree.

"In 2006, for example, the last midterm election, Democratic-leaning 527 groups, named for the part of the tax code they fall under, outspent Republican-leaning ones in federal races $121 million to $65 million, according to the Center for Responsive Politics."

Posted by: sbj3 | September 13, 2010 5:21 PM | Report abuse

We are as one, Liam

Posted by: bernielatham | September 13, 2010 5:23 PM | Report abuse

MidwaySailor76

well, a simple way to compare and contrast, would be to look at how many jobs were added during Clinton's two terms, compared to Bush2's two terms.

Over twenty two million jobs added during the Clinton years, while the tax rates were higher.

No net jobs added, during the Bush years, after the Tax Cuts were in place.

Furthermore; when Clinton left office, he left behind an annual budget surplus, which was going to reduce the national debt. When Bush2 left office, he left behind a massive annual budget deficit.

Posted by: Liam-still | September 13, 2010 5:29 PM | Report abuse

Boooo hiss! two thumbs down for the Republicans. They have proven Obama absolutely correct. They only care about preserving their own wealth and the huge Bush tax cuts they greedily scarf up like pigs at a trough. They do not care about the American people at all. If you are among the the middle or lower class, making less than 250,000.00 a year Obama will extend your tax cuts and you should realize the wealthy among us do not care about you. It is up to YOU to care about you and support our President. Obama is not perfect, but he is right and doing all he can to help America up on it's feet. More Republican greed will not solve the problems we face. Wealthy Republicans have had their tax cuts for nearly 10 years now and they CUT American jobs and sent them overseas while taking their huge tax cuts and giving themselves bonuses! Don't drink the Koolaid, the Republicans want you to be POOR.

Posted by: Hillary08 | September 13, 2010 5:34 PM | Report abuse

No one cares about this issue


.

Posted by: SaveTheRainforest | September 13, 2010 5:34 PM | Report abuse

They don't fear the fight because they think the American public is stupid. So far, we have been proving them right.

Posted by: temptxan | September 13, 2010 5:34 PM | Report abuse

We are as one, Liam

Posted by: bernielatham | September 13, 2010 5:23 PM

..................

But we're not the same;

We get to carry each other, carry each other.....

Posted by: Liam-still | September 13, 2010 5:34 PM | Report abuse

Wow, so SBJ, you also support Campaign Finance Reform?

Whoda thunkit!

Posted by: Ethan2010 | September 13, 2010 5:46 PM | Report abuse

@MidwaySailor76:

Two arguments as to why tax increases affect jobs. I won't use the loaded term job killer. But they show why increased taxes do decrease investment and jobs.

1) Nothing is certain in investment - every investment has a continuum of payoffs and a probability of each happening. So, when you are evaluating whether to make an investment you are looking at the amount you have to risk up front, the chance it will be successful, the payoff if it is successful and the timeline.

Let's take a simple example - a coin flip. You win, you get $550, you lose, you pay $500. Of course you'll take that bet. But what happens if the tax rate is 20%? If you win, you really only get $440 and if you lose, you still pay $500. The fact that you are winning $550 is irrelevant - you care about your after-tax payoffs, not pre-tax payoffs.

Increases in tax rates do the same thing for business as well as gamblers. Increase the tax rate, and you lower the expected returns and at the margin, you make otherwise economically viable projects uneconomic. Less investment means less jobs, pretty much by definition.

2) GDP = consumption + investment + government spending. Government spending is a net number. meaning it is expenditures minus tax receipts. If tax receipts fall, net government spending increases, and GDP rises.

I will caution that these are ceteris peribus arguments, and there is no such thing as ceteris paribus in real economies. You can't create conditions where you only change one variable, leave all others constant, and can observe what happens over and over. So, there is a theoretical aspect to all of this, but it is generally pretty much accepted by economists. Guys like Krugman and Kudlow believe one flavor of economic stimulus is better than the other, but they both agree that cutting taxes while holding all other variables constant, does increase GDP and there is a relationship between increasing GDP and increasing jobs. But there are more variables to job creation than just GDP, so you can experience GDP growth and flat job growth simultaneously.

Hope that helps and is non-religious enough.

Posted by: sold2u | September 13, 2010 6:02 PM | Report abuse

a simple answer to a loaded question:
============
Sir, I believe you find our present deficit appalling. How would you decrease it, if we take it as a given that taxes on the rich must not be increased?


=========

Stop spending.

Stop spending

Stop spending.

Lather, rinse, repeat.

Posted by: skipsailing28 | September 13, 2010 6:04 PM | Report abuse

I have a simple question for Mr Sargent:
Given the highly partisan nature of your blog, why should anyone believe your characterization of what these "strategists involved in charting the GOP's midterm game plan" told you?

And why would they talk to you at all? I guess they never read your blog.

Posted by: skipsailing28
------------
I am not sure if you knew this, both parties' strategists talk to the media about their game plan as part of getting out the message.

Posted by: beeker25 | September 13, 2010 6:04 PM | Report abuse

"No one cares about this issue
Posted by: SaveTheRainforest | September 13, 2010 5:34 PM"

There's been 52 posts in 2.5 hours, including some really stimulating debate. Are you serious?

Am I breaking an unwritten rule here by responding to STRF's random ejaculations?

Posted by: PedroGonzales | September 13, 2010 6:09 PM | Report abuse

@MidwaySailor76:

Two arguments as to why tax increases affect jobs. I won't use the loaded term job killer. But they show why increased taxes do decrease investment and jobs.

1) Nothing is certain in investment - every investment has a continuum of payoffs and a probability of each happening. So, when you are evaluating whether to make an investment you are looking at the amount you have to risk up front, the chance it will be successful, the payoff if it is successful and the timeline.

Let's take a simple example - a coin flip. You win, you get $550, you lose, you pay $500. Of course you'll take that bet. But what happens if the tax rate is 20%? If you win, you really only get $440 and if you lose, you still pay $500. The fact that you are winning $550 is irrelevant - you care about your after-tax payoffs, not pre-tax payoffs.

Increases in tax rates do the same thing for business as well as gamblers. Increase the tax rate, and you lower the expected returns and at the margin, you make otherwise economically viable projects uneconomic. Less investment means less jobs, pretty much by definition.

2) GDP = consumption + investment + government spending. Government spending is a net number. meaning it is expenditures minus tax receipts. If tax receipts fall, net government spending increases, and GDP rises.

I will caution that these are ceteris peribus arguments, and there is no such thing as ceteris paribus in real economies. You can't create conditions where you only change one variable, leave all others constant, and can observe what happens over and over. So, there is a theoretical aspect to all of this, but it is generally pretty much accepted by economists. Guys like Krugman and Kudlow believe one flavor of economic stimulus is better than the other, but they both agree that cutting taxes while holding all other variables constant, does increase GDP and there is a relationship between increasing GDP and increasing jobs. But there are more variables to job creation than just GDP, so you can experience GDP growth and flat job growth simultaneously.

Hope that helps and is non-religious enough.

Posted by: sold2u
----------
You left out the period when Clinton had to raise taxes to reduce the deficit(it was a campaign issue by Ross Perot). Both Gingrich and Gramm have argued that it will lead to a "recession" and "job loss" and yet it never happened.

While it is true that excessive tax rate will reduce expected margin however it having the right mix of taxes and spending will produce growth. We never did have that because much of it was borrowed money.

Posted by: beeker25 | September 13, 2010 6:15 PM | Report abuse

yay...tax breaks for the rich who send jobs abroad...yay..........

Posted by: Chops2 | September 13, 2010 6:18 PM | Report abuse

"Stop spending."

WHAT SPECIFICALLY?

AND WHY?

I want to see hard evidence that explains why YOU think this is the smart path, Skippy.

Posted by: Ethan2010 | September 13, 2010 6:19 PM | Report abuse

Am I breaking an unwritten rule here by responding to STRF's random ejaculations?

Posted by: PedroGonzales | September 13, 2010 6:09 PM
............

I wouldn't worry about it. He keeps gushing out his torrent of babble, regardless of if anyone responds, or not.

He is the sorcerer's apprentice.

Posted by: Liam-still | September 13, 2010 6:20 PM | Report abuse

@beeker25. That's why I stipulated ceteris paribus. The economy reacts to numerous variables, and often one variable will offset another. That is why you can't use the "taxes dropped and job growth didn't happen" as evidence that tax cuts don't stimulate the economy.

FWIW, I believe the Clinton balanced budget was due mainly to capital gains from an unsustainable investment bubble in stocks. Bubble economies feel great while in the bubble phase, but the hangover is epic. The only reason why the great recession didn't happen in 2001 was because Alan Greenspan was busily inflating a bubble in residential real estate.

Posted by: sold2u | September 13, 2010 6:28 PM | Report abuse

sold2u:

Right on. The U.S. hasn't had a legitimate economy since 1973. Carter was hounded out of office for trying to say it and no leader since has had the guts to say so, never mind do anything about it. And we are now falling behind even in the emerging industries because our politics is so backward that we are following our tail right off the cliff.

Posted by: wbgonne | September 13, 2010 6:40 PM | Report abuse

The GOP "gift wrapped" the awful economy on their watch. Presently their argument holds no water. Sometime after November 3rd, maybe they'll use the bucket their crying into to hold some water in serious debate. Meanwhile, as they look over their shoulders or in a mirror... all they see is a ghost, the T Party. Many fine principles exist within the GOP... but there is too much fog at the moment. Too many collisions and noise.

Posted by: deepthroat21 | September 13, 2010 7:03 PM | Report abuse

I know I'm new here, but would someone break the code for me?

Skipsailing distrusts Greg Sargent's reporting and demands answers. Right? From Greg?

Why does that seem pointless?

Posted by: 12BarBlues | September 13, 2010 7:03 PM | Report abuse

Obama, "The Teleprompter President" is and has always been in campaign mode. This Administration and Congress should get out of campaign mode and start working for the American people. This administration and Congress will never understand the middle and low income groups DO NOT CREATE JOBS, they take jobs. It is the upper income groups who create jobs and those groups are not going to create jobs in the face of high taxes, senseless regulation, and uncertainty.

Boehner should support any tax cut he can get but that does not mean he should not work to get reduced taxes for EVERYONE. Excluding upper income people from any tax cut plan is an act AGAINST JOB CREATION, and Boehner should make sure the citizens of Ohio and the United States know that.

As long as our government continues the reckless spending and unprecedented meddling with businesses, we cannot expect real long term growth.

The Congress and current Administration have put the country on a course of reckless government spending that has mortgaged the future of all Americans especially future generations. The only way to fix this long term structural problem is to create a pro-growth atmosphere for business. To do this we must reduce taxes NOW. How many different taxes does a business or individual pay on a regular basis? We must eliminate number and complexity of all these taxes and reduce the tax burden.

We also need to end the micro-management of business and the economy. Until we GREATLY reduce the tax burden on business and consumers and remove the senseless regulations that accomplish little in relation to the cost they impose, our future is bleak.

REMEMBER IN NOVEMBER...VOTE THEM OUT!!!

Posted by: AngryMobVoter | September 13, 2010 7:47 PM | Report abuse

This isn't about Republicans having faith that their narrative is stronger.

They can't support tax hikes. Not on the wealthy. Not ever. Grover Norquist will crucify them. Their donors will crucify them. This is ALL they stand for. This is their party's core, unifying value. This is the reason they are Republicans--so they can lower taxes for the wealthy.

For Republicans, supporting lower taxes for the rich is life and death political survival.

This isn't a case of Republicans believing they will win the argument with the American people--it's a case of them knowing they have no other choice, so they tell a plausible story about why they are making their choice. But it doesn't matter if the story sells or not-THEY ARE NOT GOING TO CHANGE THEIR POSITION ON THIS. EVER.

It's suicide for them to fail to support these tax cuts. Utter suicide. And so, like a smart political party, they are taking what they must do for political reasons and making up a story about why they must do it for policy reasons. And because rich people have a lot of money, there are a lot of "independent" validators to agree with them.

Posted by: theorajones1 | September 13, 2010 8:55 PM | Report abuse

The top 1% of the Population owns 35% of the total net worth in America. This works out to $20 TRILLION. Again...the top 1% of the population owns over $20 trillion and they have the audacity to want further tax breaks? Much of the discussion talks about income....I am talking about net worth. Someone who is making $250,000 maybe sitting on a net worth of several million dollars. They have a massive “safety net”. They have their personal attorney/account/financial adviser. The rest of the population are on the edge...with little savings, a job with less benefits, job insecurity and talk that the Republicans want to dismantle many of the middle class safety nets...like unemployment benefits, raising the retirement age to 70, privatize social security (major benefit to Wall Street)...etc. The middle class desperately needs help, yet the elite upper 1% has substantial net worth along with a steady income of at least $250,000 ….and they are complaining about a few percentage point increase in their income tax (this will not impact their substantial net worth of over $20 trillion). How can anyone defend the obsession that the Republicans have towards protecting the very rich.

And again, important “facts” about small businesses. The vast majority of small business owners do NOT make over $250,000. Actually only 3% do. So please enough of the Republican talking points which distorts the “facts”.

Posted by: DominionDem | September 13, 2010 11:47 PM | Report abuse

Do any of those Republicans who want to fight for $700 billion in welfare for the rich read the polls?

More than half of all Americans WANT the rich taxed more. So fighting to keep the rich from paying more taxes isn't going to find a sympathetic ear, now, is it?

Posted by: ceflynline | September 13, 2010 11:48 PM | Report abuse

Greg:

Can you get the WAPO to set you up with the system they gave CC?

There is actually some real discussion beginning to build, as even the posters with nothing but talking points have to carefully restate them to continue in the column's graces.

Sorry we drove 37, jake D and friends over here.

Posted by: ceflynline | September 13, 2010 11:56 PM | Report abuse

All, check this out: Cantor tactfully distances himself from Boehner:

http://bit.ly/beSbkV
Posted by: Greg Sargent | September 13, 2010 5:20 PM |

*******
We are watching the Republican politicians as they eat their own. They are scared to death of the Taliban Teabaggers and the wacked out people who call themselves evangelicals, (whatever that means).
They quake at the voice of Limpballs, Beck the Clown, and the dimbulb from Wasila.
They stand before the cameras like frat boys with something exciting to say. Watching Boehnner and McConnell, I cannot understand what their constituents think of these two. Neither has an ounce of personal courage or integrity. Neither has done anything in the past two years but stand like little cowards as they say no to everything our nation's President has tried to do to save our financial integrity and keep us all from losing everything we have worked for because of the thieves the Republicans spend all of their time protecting.
They fight with all of their might to keep those earning only minimum wage from ever getting an increase. What do they have against minimum wage earners? Are they less human because they do the low paying jobs that make our lives possible?
They have spend decades destroying all unions because their big business owners don't want to give their employees anywhere near the obscene wealth they give themselves.
They condemn the new health care legislation because it will help ordinary Americans who work themselves to death but still cannot afford the exorbitant cost of health insurance. What kind of louses are these Republicans?
They may gain a few seats in the coming elections, but their lack of representation for all Americans will be their death knoll.
In ten years there won't be a Republican party, because the young people see right through them.
At present most of them are older, white, frightened men and women, a great many who resent anyone with dark skin or foreign sounding names who believe man and dinosaur walked the earth together.
It is a pleasure in this trying time to watch them self-destruct because they have nothing to say about the future of America, except more tax cuts, more guns, more wars, no more science, dismantle Social Security and Medicare, health savings accounts (big laugh) for the poor, and more government aid for their pals at Halliburton and companies like them. fritz

Posted by: papafritz571 | September 13, 2010 11:57 PM | Report abuse

"What about capital gains / dividends? Are the Democrats proposing to keep those the same as well? If not, expect to see selling in the market as people unload winners ahead of the change in the capital gains rate. Posted by: sold2u"

Or maybe not.

Assume the Big money men decide to take their winnings and get out before they have to actually pay taxes on their capital gains.

They all dump stock and the market tanks.

Those who got out fast buy the stocks of those who flinched at Black Tuesday prices. Those they bought from now have lots less money to invest and have to buy each others stock at slightly better than Black Tuesday prices. Now the stock market begins recovering from its hiccup and their stock quickly regains its original value, and having taken a beating in the quickie crash, they now face even greater capital gains on the same stocks they took a beating on to avoid paying those capital gains.

And my speculation isn't nearly as silly as yours.

Capital gains ought to be taxed like personal income, with the exception that the gains are calculated, and taxed, in constant dollars.

Posted by: ceflynline | September 14, 2010 12:09 AM | Report abuse

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