In the last 72 hours, we've finally seen the outlines of the inevitable Democratic civil war that's been brewing over taxes and spending. Both sides argue that their way is the path to economic prosperity - and so the question is, which side represents a fact-based argument, and which side represents fact-free theorizing?
Before answering that question, let's first outline which side is which.
On one side is the Obama administration and progressive Democrats, pledging to keep its promise to let the Bush tax cuts for the very wealthy expire on schedule. Most on this side want to reinvest some or all of the recovered tax money and plow it into domestic spending that would rebuild crumbling infrastructure and economically support those hard-hit by the recession.
On the other side are conservative Democrats in Congress who are becoming increasingly brash in their declarations that either today's middle-class Americans or tomorrow's middle-class Americans (via. debt interest payments) should have to pay higher taxes or suffer through slashed services/benefits in order to prevent today's wealthy from paying any more. This is a varied group, but a nonetheless powerful one in its diverse motivations.
For instance, you have many "Blue Dog" Democrats. Afflicted with a debilitating case of Selective Deficit Disorder, these Democrats cite their devotion to deficit hawkery as reason to vote against unemployment benefits - but also defend policies like the Bush tax cuts. Democratic Sen. Ben Nelson is about the best example of this.
You also have what you might call Trickle-Down Democrats, who now openly insist their first and foremost priority is to prevent millionaires from having to go back to paying Clinton-era tax rates. A good example comes from Rep. Bobby Bright (D-AL), who told the Hill newspaper, "I don't care if it's the wealthiest of the wealthy, you don't raise their taxes."
And, of course, you also have Military-Industrial Democrats, who are saying that instead of reducing the Pentagon budget and its largesse to some of the wealthiest corporations as a way of finding new public resources, middle-income families should be compelled to pay higher taxes or endure cuts to their Social Security and Medicare benefits. Here's a good example:
Senator Daniel K. Inouye, Democrat of Hawaii and chairman of the Senate Appropriations Committee, said that he would be looking first at tax increases and changes in Social Security and Medicare to lower the deficit, and that there was "no way" Congress would make major cuts in the military while more than 100,000 troops were still at war.
Who is right and who is wrong in this debate? As they used to say in those old Major League Baseball commercials, you make the call after considering the verifiable facts.
From the stimulus debate, we know that both progressive and conservative economists agree that spending on programs like unemployment and food stamps are a far better boost to the economy than extending tax cuts. This makes sense - whereas a rich person may simply pocket a new tax break, a person on the economic brink will spend cash on necessities almost immediately. Thus, we can safely conclude that raising taxes on the wealthy and devoting those new resources to such programs would be a much better boost to the economy than simply extending tax cuts for the wealthy.
From government data, we know that tax rates are at their lowest level in 6 decades; the Bush tax cuts gave the vast majority of their benefits to the super-rich; and the Bush tax cuts are the largest single factor in our budget deficits. We also know that the Pentagon is at its highest funding level since World War II, and that this budget is so wasteful, the Pentagon has lost - yes, lost - of somewhere between $1 trillion and $2 trillion.
Finally, from the Clinton era, we know that higher tax rates on the very wealthy does not hamper the economy - as Sen. Byron Dorgan noted, "One of the most robust periods of economic growth was prior to the Bush tax cuts."
So, to re-ask the original question, which side of the Democratic civil war over taxes and spending represents a fact-based argument for economic prosperity, and which side represents fact-free theorizing? I'd say the evidence is pretty clear.
Unfortunately, new scientific studies show that stuff like facts and evidence no longer goes very far in our politics or in our mass psychology. But hey, we can still hope, right?
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