Our next president has come under some fire on this blog for apparently breaking a campaign promise to raise taxes on the wealthiest 5% of Americans. Lee — the other regular blogger on this site — has suggested that this is an important issue:
Let’s get this straight: Obama campaigned on the promise of raising taxes on a certain segment of “high-income” Americans. He won. He might be said to have received a mandate from the American people to do so. Does anyone think it’ll be easier to return to this promise in 2011?
Lee also reiterated his belief that the left needs to put pressure on Obama to steer this country in keeping with the views of the left-wingers who made it possible for him to win:
Obama’s weakness, his dependency on large numbers of enthusiastic (mostly progressive, but somewhat cynical and alienated) voters, is our strength. Politicians should ideally fear their supporters. They should be terrified of betraying their supporters because doing so, theoretically, ought to destroy their credibility and careers in the long term.
So here’s to the so-called “netroots.” Keep twisting the screws. Keep putting on the pressure. Make Obama sweat.
I don’t have a problem in principle with the idea of making Obama sweat – if Obama is doing things that are bad for the country, we need to speak truth to power. There’s plenty of evidence that pressure from online activists prevented Obama from appointing John Brennan to head the CIA.
But I do have a problem with the idea of trying to “make Obama sweat” for abandoning his plan to immediately push for a tax increase on the top 5% of the population, income-wise.
I don’t think it’s a good idea, politically or economically, for Obama to push for a tax increase on anybody right now. Eventually, the wealthiest 5% of the population should be paying a lot more in taxes — but I don’t think such an increase would help the economy in the short-term, and I think pushing for this increase could sabotage everything else Obama must strive to accomplish over the next six months.
That said, I wanted to point out that if Lee and like-minded activists want to try to “make Obama sweat” over the tax hike issue, they’ll have to do it with no help whatsoever from the most prestigious left-wing economic pundit in America — Nobel Laureate and New York Times Columnist Paul Krugman.
I’m not a huge fan of Krugman because I feel he was disrespectful of Obama supporters during the Democratic primary earlier this year, and because I thought he was somewhat misleading in explaining his opposition to the $700 billion bailout plan originally proposed a few months back by Treasury Secretary Paul Krugman.
But I have to acknowledge Krugman’s prestige and credibility right now — and it’s hard to imagine how the netroots could “make Obama sweat” over tax increases while Krugman has Obama’s back.
Here’s an excerpt from a recent interview Krugman gave on NPR to Tom Ashbrook:
ASHBROOK: Question for you from our website, www.onpointradio.org: ”Mr. Krugman, please discuss how the tax structure should be changed in order to help bring the new gilded age to an end,” by which I guess our correspondent here is looking at income inequality.
KRUGMAN: Yeah, uh, there’s a fair bit you can do. Although most of the surge in inequality has been in pre-tax income. But it’s been exaccerbated by a real reduction in the progressivity of taxes. So we’ve gone from — well, if you go back to the days when that Socialist Dwight Eisenhower was in the White House, the top tax rate was actually 91% and now it’s 35%. Now, most economists, myself included, don’t actually think that a 90% tax rate is actually a good idea. But, we certainly have sharply reduced taxes at the top end of the scale, which has made things worse. I’m not sure that you — Yeah, let me say that reforming the tax code is not in itself going to be enough to bring us back to a middle class society, but it sure is a step in the right direction and we have to get over this notion that if you tax rich people even a dime more, that somehow they’ll all go away and refuse to invest or be entrepreneurial. If you require some CEO to pay 38% of his income instead of 35% of his income in taxes, he’ll quit his job and go home. We have a lot of scope for being more progressive again in taxes.
ASHBROOK: Obama has indicated he may put off those higher taxes for upper-income groups while we’re in this ditch. Are you with him on that?
KRUGMAN: Yeah. I actually never thought it was going to happen anyway until 2010. I mean, the, uh — Legislatively, it’s quite hard to change the tax code. The Democrats, unless Al Franken pulls it off and there’s an upset in Georgia, are not going to have 60 seats in the Senate, so the great hope for rolling back the Bush tax cuts actually was the fact that Bush tried to hide the true cost of it, wrote it so the tax cuts turn into a pumpkin at the end of 2010.
So I never thought it was actually going to happen before 2011, anwway. And look, raising taxes in the face of a recession is not great policy even if the tax cuts were very ill-advised when they took place. Ideally, we’d be able to completely restructure the tax code right now, instantly, and also, in the process, avoid having too great a tax increase. But you know, that’s too hard to do, legislatively. So, you know, I don’t have a problem with that. I don’t think that’s a major concession on Obama’s part.
So here’s the deal for those of you hoping to “make Obama sweat” for abandoning his campaign plan to push for a tax increase — a rolling back of the Bush tax cuts — as soon as he took office: If you try to pressure Obama to keep his promise, your opponents (if they feel the need to even argue the point at all) will point out that even Krugman, the most left-wing progressive economist with a national audience and a Nobel prize, says “raising taxes in the face of a recession is not great policy even if the tax cuts were very ill-advised when they took place.”
Now why would Krugman say a thing like that if it weren’t true?
You’ll need an answer to that question, liberal netroots, if you intend to convince Obama that he’ll face the wrath of the lefties if he doesn’t follow through on the tax hike.
Of course, it’s ridiculous to assume that a tax increase on the rich would be bad right now just because Krugman says so. Obviously, Krugman could be wrong. But Krugman’s opinion is a lot to overcome if you want to rally an anti-Obama revolt.