Commentary Magazine


Topic: taxes

Bill de Blasio Is a Terrible Messenger for an Anti-Inequality Campaign

Capital New York reports that Mayor Bill de Blasio, seeking to increase his national profile, will go where such politicians always go to raise their name-ID: Iowa. The theme of de Blasio’s trip will be to “highlight inequality.” This is more appropriate than even de Blasio knows, just not for the reasons he might think. Bill de Blasio not only governs a city with high inequality; he’s also a purveyor of the kind of liberal ideology that ensures such inequality will continue, and increase. If you want to highlight inequality, you couldn’t do much better than its mascot Bill de Blasio. Which is what makes him a terrible messenger for the anti-inequality brigades.

Read More

Capital New York reports that Mayor Bill de Blasio, seeking to increase his national profile, will go where such politicians always go to raise their name-ID: Iowa. The theme of de Blasio’s trip will be to “highlight inequality.” This is more appropriate than even de Blasio knows, just not for the reasons he might think. Bill de Blasio not only governs a city with high inequality; he’s also a purveyor of the kind of liberal ideology that ensures such inequality will continue, and increase. If you want to highlight inequality, you couldn’t do much better than its mascot Bill de Blasio. Which is what makes him a terrible messenger for the anti-inequality brigades.

According to recent data, New York City is the sixth-most unequal city in the country, though Manhattan individually tops the charts. Last year’s landmark Brookings Institution study shed a great deal of light on the subject, and they updated the data two weeks ago. As I wrote at the time the study was released, from 2007-2012 inequality increased despite the fact that rich households were less rich, not because the rich were going in one direction and the poor another. Dramatic increases in inequality happened in places where lower-income Americans were hit harder by the economic downturn.

That seems to have continued, as Brookings notes: “Despite positive trends in some cities from 2012 to 2013, lower-income households in the majority (31) of the 50 largest cities had lower incomes in 2013 than they did in 2007.” What the poor needed, and continue to need, are jobs. As the study had noted last year, dynamic economies were also unequal economies. The focus on inequality can at times be more than a distraction; it can harm those at the lower end of the spectrum by focusing on regulation and redistribution at the expense of economic growth.

Additionally, New York is a good example of how liberal policy exacerbates inequality (and why liberal demagogues focus so much on income inequality instead of real inequality). Among the many effective critiques of Thomas Piketty’s treatise on inequality was that of a graduate student at MIT named Matthew Rognlie, who has now expanded his criticism into a paper. The Economist notes:

Second, Mr Rognlie finds that higher returns to wealth have not been distributed equally across all investments. The return on assets other than housing has been remarkably stable since 1970. In fact, surging house prices are almost entirely responsible for growing returns on capital.

Third, the idea that workers’ share of wealth can continue to decline rests on the assumption that it is easy to substitute capital (ie, robots) for workers. But if lots of the capital in question is tied up in houses, then this switch would be far harder than Mr Piketty suggests.

Why it matters:

For one thing, homeowners are a much bigger and more lovable group than hedge-fund managers. Moreover, if housing is the biggest source of rising inequality, then the wealth tax Mr Piketty advocates is the wrong response. Policymakers should instead try to reduce the planning restrictions which, by inhibiting new construction, allow homeowners to earn such big returns on their assets.

Good idea! In fact, let’s expand on this. The larger problem with such restrictions is not that homeowners earn such big returns per se, but that they do so because such regulation drives up prices in the first place. In 2010, viewers of the New York gubernatorial debate were captivated by Jimmy McMillan, leader of the Rent Is Too Damn High Party. His main concern was, well it’s all there in the name.

And he’s right: rent is high in New York. Why is it high? In July 2013, Josh Barro wrote a piece for Business Insider listing eight reasons rent in New York is so high. Each had an explanation, but here are the eight reasons as listed:

  1. There’s only so much space.
  2. Zoning rules inhibit supply.
  3. Rent control raises your rent if you’re not rent controlled.
  4. Property taxes are very high.
  5. High construction costs.
  6. Affordable-housing set asides.
  7. Minimum parking requirements.
  8. Tenant-friendly laws.

Most of these are self-explanatory. The effects of heavyhanded regulation are clear. But it’s worth expanding briefly on two of them. Barro adds, for example, with regard to zoning rules:

Incidentally, contra Hamilton Nolan, this is a reason non-rich New Yorkers should cheer the construction of “superluxury condos.” Wealthy people are going to buy in New York one way or another. When we limit their ability to build shiny new towers in Manhattan, they come over to Brooklyn and bid up the prices of brownstones that used to be almost affordable.

It’s counterintuitive, but another example of why the eat-the-rich attitude toward regulation and policymaking can have all sorts of unintended, and negative, effects on the less well-off. And it’s not just strict regulation, either. As Barro explains under the “construction costs” heading, in addition to the regulatory burden, “there are no non-union crane operators in New York City, meaning any construction project tall enough to require a crane must be built with union labor. That adds costs; union work rules require overstaffing, according to the Real Estate Board of New York, and some crane operators in the city make over $500,000 a year including overtime and benefits.”

Liberal policy and inequality go hand in hand. It’s what makes de Blasio such an ironic ambassador for economic policy. It’s true that he has real-world experience with inequality, but that’s because he’s the arsonist here, not the firefighter.

And then there’s the other question of what kind of national Democratic figure de Blasio thinks he might be. It’s true that he was swept into office in a wave of leftist populism. And that populism hasn’t gone away–witness the fans of Elizabeth Warren. But the intervening midterm elections have made it clear that the economic justice warriors like de Blasio tend to be an occasional passing fad. Support for the leftist from Brooklyn is, perhaps appropriately, political hipsterism.

And it’s unclear where de Blasio could go from here anyway. His rocky relationship with the NYPD ended his political honeymoon. And he’d be more likely to try for another office before going national–by, say, running for governor before running for Congress. Either way, his appeal will be limited and will grow more so over time. In that sense, maybe his Iowa trip makes sense now. He might as well accept the invitations now and not assume they’ll still be arriving in his inbox in the future.

Read Less

‘The West Wing’ vs. ‘House of Cards’: Finding Truth in Fiction

The third season of the American adaptation of House of Cards is coming in for some harsh reviews. It earned them–this season was a mess. There were many contributing factors to this, but surely one of them was the fact that Frank Underwood began the season as president. That is, his rise to power was inherently more dramatic and interesting than his actual governing. In following this plot point, it earned some comparisons to The West Wing. But that’s unfair to The West Wing, and the reason has to do with what Americans see as dramatic when it comes to governing the United States–how we prefer to see ourselves and our political debates reflected back to us on the television screen.

Read More

The third season of the American adaptation of House of Cards is coming in for some harsh reviews. It earned them–this season was a mess. There were many contributing factors to this, but surely one of them was the fact that Frank Underwood began the season as president. That is, his rise to power was inherently more dramatic and interesting than his actual governing. In following this plot point, it earned some comparisons to The West Wing. But that’s unfair to The West Wing, and the reason has to do with what Americans see as dramatic when it comes to governing the United States–how we prefer to see ourselves and our political debates reflected back to us on the television screen.

Over at the Washington Post’s Monkey Cage blog, Seth Masket sets out to show why, as the headline has it, “‘House of Cards’ is the worst show about American politics. Ever.” What he appears to mean is that House of Cards is the least-realistic show about American politics. He makes a convincing case. But it’s also worth keeping in mind that these shows are all unrealistic in their own ways. They’re fantasy. And although House of Cards plays out as The West Wing’s evil twin–meaner, edgier, and cynical–The West Wing, while cheesy, gets certain things right. Those things are not exciting, but they contain more truth about American politics than most competitors.

The West Wing was a liberal fantasy version of American politics with a Democratic president. But the fantasy was not about eliminating the competition or bulldozing Congress. The fantasy was defeating the GOP in the battle of ideas, and for it to be a true battle, conservative arguments had to be engaged and overcome with better arguments. It was intended to be a fair fight, and a civil fight, with battles the left didn’t always win.

There are three examples that stand out to me, though I imagine there are plenty more.

The first that comes to mind is an ongoing debate between presidential speechwriter Sam (played by Rob Lowe) and Mallory, who Sam is trying to woo. Mallory is the daughter of the chief of staff, Leo; to make trouble for Sam, Leo gives Mallory, who is a public-school teacher, a position paper Sam wrote defending school vouchers. Mallory is livid (the word “fascist” makes a couple of appearances). They go back and forth a few times throughout the episode, and have the following exchange (via West Wing Transcripts):

SAM

Mallory, everything that you’re saying makes sense. I just think that the state of urban schools is such that if you can save even one kid…

MALLORY

[stands] You can save more than one kid.

SAM

Tell me how.

MALLORY

By asking Congress to approve, not just a little, but a lot more money for public education.

Sam laughs.

MALLORY

What?

SAM [stands]

Public education has been a public policy disaster for 40 years. Having spent around four trillion dollars on public schools since 1965, the result has been a steady and inexorable decline in every measurable standard of student performance, to say nothing of health and safety. But don’t worry about it, because the U.S. House of Representatives is on the case. I feel better already.

MALLORY

[beat] Wow.

And again later:

SAM

It occurs to me Mallory, that you attended a private primary school, a private high school and a private college.

MALLORY

What’s your point?

SAM

Well, just that liberals have no problem with rich kids going to expensive private schools, that doesn’t undermine public education. And liberals have no problem with middle-class kids going to parochial schools, that doesn’t undermine public education.

MALLORY

Hang on!

SAM

The idea that letting poor public school students choose private alternatives would destroy public education is simply contrary to our experience.

Sam finally reveals later on that the position paper was “opposition prep”–Sam’s not pro-school choice, he’s just arguing that position for debate prep. Then he tells Mallory his real opinion on education reform:

Mallory, education is the silver bullet. Education is everything. We don’t need little changes. We need gigantic monumental changes. Schools should be palaces. The competition for the best teachers should be fierce. They should be making six-figure salaries. School should be incredibly expensive for government and absolutely free of charge to its citizens, just like national defense. That’s my position. I just haven’t figured out how to do it yet.

Now, who has the stronger position here? Is it the side that points out how government has failed public education and how money hasn’t solved the problem? And that liberals only seem to oppose private education for those who can’t afford it? And that the liberal position that school choice for poor students undermines education in America is not only unproven but contrary to the evidence we have?

Or is it the one that insists more money is necessary, a lot more money, because “schools should be palaces” and somehow “free” to taxpayers who are paying for it? And who hasn’t figured out how to get the money for this scheme? It’s incoherent, it’s unrealistic, and it flies in the face of the data on the subject, to say nothing of basic fairness. But it’s the liberal position. And on The West Wing, it loses the argument.

Another example: Josh, a presidential advisor, is being asked by his assistant, Donna, why Democrats oppose the Republican plan of giving back the budget surplus in tax relief:

“We have a $32 billion budget surplus for the first time in three decades.”

“Yes.”

“Republicans in Congress want to use this money for tax relief, right?”

“Yes.”

“So, essentially what they’re saying is they want to give back the money.”

“Yes.”

“Why don’t we want to give back the money?”

“Because we’re Democrats.”

“But it’s not the government’s money.”

“Sure it is, it’s right there in our bank account.”

Later in the episode, Donna reopens the argument:

“What’s wrong with me getting my money back?”

“You won’t spend it right.”

“What do you mean?”

“Let’s say your cut of the surplus is $700. I want to take your money and combine it with everybody else’s money and use it to pay down the debt and further endow social security. What do you want to do with it?”

“Buy a DVD player.”

“See?”

“But my $700 is helping employ the people who manufacture and sell DVD players. Not to mention the people who manufacture and sell DVDs. It’s the natural evolution of a market economy.”

“The problem is, the DVD player you buy might be made in Japan.”

“I’ll buy an American one.”

“We don’t trust you.”

“Why not?”

“We’re Democrats.”

And the third example occurs when the (Democratic) White House political team initiates efforts to come to a grand bargain to save entitlements. They need Republican buy-in, and they’re willing to make tough concessions if the Republicans match them each step of the way. But they’re encountering suspicion on the part of Republicans in Congress, and the Republican they really need, the guy who could lead such an effort on the right, is not in Congress anymore. A staffer asks one of the presidential advisors what happened to him. The advisor responds:

Josh and I wrote a TV ad that destroyed his career. We figured if we won his seat, maybe a half dozen others, got more Democrats in Congress, we’d be able to get something done around here.

To recap: the first example is a liberal losing an important argument, and badly. The second is some welcome self-awareness, on the part of Democrats writing and consulting on the show, that some of their policies sound awfully ridiculous when you say them out loud. And the third is contrition, an acknowledgement that the throw-grandma-off-the-cliff advertising Democrats do whenever Republicans want to reform an entitlement and are willing to take political risks to do so erodes trust and paves the way to crisis.

Now, obviously these are exceptions on the show, not the rule. The Democrats usually won. But the point is that shows about American politics display their un-realism in different ways. House of Cards was unrealistic in a deeply cynical way. The West Wing was unrealistic in a naïve way. But the naïve way ended up being closer to home because it at least spoke the language of American politics. House of Cards doesn’t.

I also chose those West Wing examples for another reason. In the first and third examples, the problem doesn’t get solved at all; in the second the Democrats’ position shows that sometimes power trumps principle. There are limits to pretty words and fair play.

Neither The West Wing nor House of Cards is a realistic depiction of American politics. But the America of The West Wing was at least recognizable, especially if you were paying attention.

Read Less

Republicans Who Are Rising to the Challenge

A new survey by the Pew Research Center finds that 72 percent of those polled say that, in general, the government’s policies since the recession have done little or nothing to help middle class people. This isn’t surprising, since median household income actually decreased after the official end of the recession in the summer of 2009. As many of us have argued before, the middle class is feeling anxious, insecure and uneasy — and they are right to feel that way.

Read More

A new survey by the Pew Research Center finds that 72 percent of those polled say that, in general, the government’s policies since the recession have done little or nothing to help middle class people. This isn’t surprising, since median household income actually decreased after the official end of the recession in the summer of 2009. As many of us have argued before, the middle class is feeling anxious, insecure and uneasy — and they are right to feel that way.

This unhappiness provides Republicans with an opportunity — and two senators, Mike Lee and Marco Rubio, are stepping up at just the right time. Senators Lee and Rubio, the Tea Party’s great gifts to American politics, have put forward an outstanding tax plan. As my Ethics and Public Policy Center colleague Yuval Levin writes in summarizing the plan, it would:

  • Cut the business tax rate to 25 percent (including for all pass-through business income, so that large and small businesses pay the same rate);
  • End the taxation of capital gains, dividends, and interest;
  • Allow businesses to deduct capital investments from their taxable income immediately rather than over time;
  • Consolidate today’s seven tax brackets into two brackets at a 15 percent and 35 percent rate (although business income would be taxed at 25 percent and income from savings would not be taxed);
  • Repeal the Alternative Minimum Tax and most of the deductions in the code (leaving only the charitable deduction and a capped mortgage interest deduction that would both be available to all taxpayers, not just those who itemize); and
  • Replace today’s standard deduction with a $2,000 individual ($4,000 per married couple) credit, end the marriage penalty in the tax code, and provide a new $2,500 per child credit (alongside the existing $1,000 credit, which phases out with income).

There’s more to it than that, of course, and there are still important matters still to be determined, most especially the details of the cap on mortgage interest deductions (meaning the design and level of the cap). But the key thing to take away from this effort, I think, is that it would lesson the tax burden on working families and businesses, and in doing so provide help to the middle class and promote economic growth.

“Our hope here isn’t to pick winners and losers. Our hope here is to trigger economic growth,” Senator Rubio told reporters. He added that he believes “the vast majority of Americans” would see tax cuts if the plan was implemented.

This is a model approach for Republicans, whether they are running for president, the House or Senate, governor, or state legislator: To put forward ideas that are substantive and specific, bold, and address to the needs and challenges of our time. By which I mean they will actually and materially improve the conditions of ordinary Americans.

Too often these days politics is about theatrics, about silly threats, banalities and rhetorical recklessness. What Senators Lee and Rubio have done is to provide something of an antidote to this. Like others — Jeb Bush, Paul Ryan, Rob Portman, Scott Walker, John Kasich, Mike Pence and many more — these are serious individuals promoting good (conservative) ideas in a responsible fashion, and in a way that will appeal to voters. It’s a powerful contrast to the Democratic Party, which is reactionary, tired, increasingly bitter and out of ideas.

These are politically interesting times we’re in — and for conservatives, increasingly hopeful ones.

Read Less

Why Politicians Are Right To Refuse to Take the Anti-Tax Pledge

Jeb Bush’s spokeswoman, Kristy Campbell, said in a recent statement that the former Florida governor would not sign any pledges, including ones saying he won’t increase taxes. Not surprisingly, some anti-tax crusaders aren’t happy. No matter. Governor Bush is right.

Read More

Jeb Bush’s spokeswoman, Kristy Campbell, said in a recent statement that the former Florida governor would not sign any pledges, including ones saying he won’t increase taxes. Not surprisingly, some anti-tax crusaders aren’t happy. No matter. Governor Bush is right.

Before explaining why, it’s worth pointing out that Bush’s decision – contrary to some silly headlines — is not based on a desire to raise taxes. How do I know? Because Bush, as governor of Florida, had an impeccable tax-cutting record, having cut them every year he was governor — a period covering eight years and totaling nearly $20 billion. In that sense, Bush is exactly the right person to oppose taking an anti-tax pledge, since no governor I’m aware of has a better record on taxes than Bush. (As a reference point, as governor of California, Ronald Reagan signed into law what his biographer Lou Cannon called “the largest tax hike ever proposed by any governor in the history of the United States”–one four times as large as the previous record set by Governor Pat Brown.)

Now let’s turn to the substantive arguments against signing the anti-tax pledge.

It’s one thing to believe, as I do, that taxes should be lower. (I’m partial to this plan by Senators Mike Lee and Marco Rubio.) But it’s quite another to declare that there are no circumstances, ever, in which taxes can be raised. The proper tax rate is a prudential matter, not an inviolate principle. It needs to be judged in the context of circumstances and trade-offs. Which taxes are we talking about? Increasing them in exchange for what?

Here’s where this mindset eventually leads. In a 2011 GOP presidential debate, eight candidates were given a hypothetical: If you could get $10 in spending cuts for $1 in tax increases – the assumption in the question was that the cuts could be enforced, that they were real — would you walk away from the 10-to-one deal? All eight candidates said they would.

I was critical of them at the time, believing this was turning an economic policy into a dogma, conservatism into an adamantine ideology, and lawmakers into absolutists. I get why people whose professional lives are dedicated to low taxes want politicians to take pledges. But it’s the job of politicians and lawmakers to have the courage and wisdom to say: I’m sympathetic to your cause, but I’ll respectfully decline your offer.

It’s perhaps worth keeping in mind that if the Founders had taken and abided by the 18th-century equivalent of the anti-tax pledge, the Constitution would never have been created. After all, it was the product of a remarkable series of difficult compromises on matters ranging from the Bill of Rights to proportional representation to how we elect the president to how Supreme Court justices were picked to the thorniest issue of all: slavery.

Taxes are obviously in a wholly different category than slavery, which was a moral obscenity. Yet in the words of James Madison, “great as the evil is, a dismemberment of the union would be worse.” What the wisest Founders understood is that the Constitution would put slavery on a path to extinction. Frederick Douglass, the former slave who became a great abolitionist leader, would later say, “Interpreted as it ought to be interpreted, the Constitution is a glorious liberty document.” But if abolitionists had insisted that the Founders, including those who supported their cause, take a pledge that they would not become a signatory to the Constitution unless it ended slavery, the whole project would have come crashing down. (The Southern delegates would never have supported the new Constitution if it meant the abolition of slavery.)

So here’s my advice to conservatives: Familiarize yourselves with the records of the candidates. Learn their stands and listen to their arguments. Make a judgment about their public and personal character. Judge them in the totality of their acts. And then vote for the individual you believe will govern in the most responsible way — without taking pledges to do anything except to preserve, protect and defend the Constitution of the United States. George Washington did it. Abraham Lincoln did it. Ronald Reagan did it. And they did just fine.

Read Less

Obama’s Budget and Our Potemkin Politics

After President Obama’s State of the Union address, I noted that even partisan-left media outlets were unwilling to play along with Obama’s self-serving framing of his foreign policy. Now Obama’s getting the same treatment on domestic policy as well. It’s a rude awakening for a president so accustomed to being treated with kid gloves by an adoring media, and a sure sign he’s officially a lame duck.

Read More

After President Obama’s State of the Union address, I noted that even partisan-left media outlets were unwilling to play along with Obama’s self-serving framing of his foreign policy. Now Obama’s getting the same treatment on domestic policy as well. It’s a rude awakening for a president so accustomed to being treated with kid gloves by an adoring media, and a sure sign he’s officially a lame duck.

Obama has released his proposed budget, and commentators have been mostly unable to stifle their disbelief. To be fair, part of the reason Obama’s budget is so unrealistic is that the Republicans currently control Congress, so it has no chance of passing. But in truth, that probably doesn’t change its chances so much as it gives the president and his party’s populists an excuse to claim Republican intransigence. Many Democrats surely don’t want to be put in a position to vote for the taxman’s anthem that is this budget document.

Here, via the New York Times, are some of the ways it’s being received by the left. A Times reporter’s description of its content:

President Obama presented a budget on Monday that is more utopian vision than pragmatic blueprint. It proposes a politically improbable reshaping of the tax code and generous new social spending initiatives that would shift resources from the wealthy to the middle class.

The same reporter’s take on what it’s missing:

Absent from the plan is any pretense of trying to address the main drivers of the long-term debt — Social Security and Medicare — a quest that has long divided both parties and ultimately proved impossible. The document instead indicates that Mr. Obama, after years of being hemmed in on his fiscal priorities because of politics and balance sheets, feels newly free to outline an ambitious set of goals that will set the terms of a debate between Democrats and Republicans and shape the 2016 presidential election.

A former economic advisor to Vice President Biden’s opinion of it:

“It’s a visionary document and basically says, ‘You’re with me or you’re not,’ and we can have big philosophical arguments about the role of government, and perhaps in 2016 we will,” said Jared Bernstein, a senior fellow at the Center on Budget and Policy Priorities and a former top economic adviser to Vice President Joseph R. Biden Jr.

Back to the Times reporter on Obama the Bipartisan Healer:

Yet the budget confirms that for Mr. Obama, the era of searching for a “grand bargain” with Republicans on entitlements and spending — an exercise that alienated liberal Democrats who were loath to consider any measure to rein in Medicare and Social Security — is over.

And all this, believe it or not, is still a favorable reading of it. The Times repeats uncritically the president’s propagandistic declarations of “middle-class economics” and that the bill’s tax increases would hit “the rich” without investigating how these taxes and fees would end up on the shoulders of the “middle class”–to say nothing of the president’s own shots at confiscating middle-class cash, like his ill-fated 529 plan.

And it also takes as Gospel the idea that Obama has truly been searching, in good faith, for grand bipartisan solutions. The lesson of Obama’s first six years, with occasional exceptions, is that “bipartisan” to Obama means that Republicans vote for his policies. The Democrats have shown they can file legislation without Republican input and without Republican amendments with a clear conscience. And during the rare times when Democrats and Republicans really were negotiating in good faith for a deal, Obama showed a propensity to sabotage those talks or poison the well.

So it might be more accurate to say that the era of pretending to search for a “grand bargain” is officially over. And that, in its own way, is the one honest aspect of the budget. The rest is theater. And theater is, increasingly, what national politics has become.

There’s the State of the Union itself, which is clear pageantry made all the more intolerable by the orchestrated applause and non-applause, standing and sitting, laughing and scowling from the congressional audience. There are the presidential nominating conventions, which are devoid of drama of any kind. (Though the Democrats’ 2012 convention did have that one hectic unscripted moment when the party’s delegates angrily voted down adding pro-Israel language to the party’s platform.)

And now we have Potemkin budgets, constructed to look pretty but act as a façade to cover the ideological ruins behind it. Except by year seven the press gets tired of playing along, even for Obama.

Read Less

In Praise of Ted Cruz

In the past I’ve been critical of Texas Senator Ted Cruz, but in his questioning of President Obama’s choice for attorney general, Loretta Lynch–which occurred during her confirmation hearing before the Senate Judiciary Committee–was not just skillful but superb.

Read More

In the past I’ve been critical of Texas Senator Ted Cruz, but in his questioning of President Obama’s choice for attorney general, Loretta Lynch–which occurred during her confirmation hearing before the Senate Judiciary Committee–was not just skillful but superb.

Senator Cruz’s tone was respectful but firm. He stayed away from theatrics and polemics. He didn’t personalize the line of inquiry. In doing so, he kept the focus right where it needed to be.

But more than that, Senator Cruz exposed the lawlessness that is at the core of President Obama’s executive amnesty, and he did so in a logical, step-by-step manner. Senator Cruz started with the fact that Ms. Lynch supports what the president did, and then probed her thinking in order to find out what limits there are on the government’s power, if any at all. What he found is that there are none–at least none that are rooted in the Constitution and anything more than arbitrary parameters and presidential whim. If the president wants to provide amnesty to five million illegal immigrants, then why not 12 million? What’s to stop him? Senator Cruz wanted to know. Ms. Lynch had no answer.

What about the Obama administration printing millions of work authorizations in direct conflict with federal law? Is that a problem? Ms. Lynch was unwilling to say. And then Senator Cruz put forward a devastating hypothetical. Assume that in 2017 President John Cornyn instructs his secretary of the treasury not to collect any taxes in excess of 25 percent, based on “prosecutorial discretion.” Or that President Cornyn broadens his ambitions and decides, using the infinitely elastic Obama-era definition of prosecutorial discretion, he won’t enforce federal labor laws and environmental laws? Once again, Ms. Lynch had nothing to say, no defense to offer.

What Senator Cruz did was to reveal Mr. Obama’s utter disdain for the Constitution and what a fundamentally lawless and capricious president he is. He showed that Mr. Obama views himself in possession of kingly powers. And he demonstrated that there are simply no checks on government power, at least according to the legal theory that is guiding the Obama administration.

This is the progressive vision–radical, unmoored, dismissive of the Constitution, and indifferent to the rule of law–and it’s being realized in the Obama presidency. It’s to his credit that Ted Cruz exposed this in his short colloquy with the woman who wants to be America’s next attorney general.

Read Less

Lame Duck? Yes. Boehner Halts Obama’s Brief Winning Streak.

The prevailing political narrative of the last few weeks has been all about how President Obama has seized the initiative back from the Republican victors in November’s midterms. But the president’s winning streak—at least as far as prevailing in the daily struggle to dominate the news cycle—may be over. Though most accounts of the State of the Union followed the White House talking points that claimed his proposals would help the middle class, the fact that one of them would have taken away a key college savings plan that helped ordinary taxpayers did not escape the attention of the public or his Republican foes. As a result of the anger the idea generated, the president waved the white flag on the idea today and withdrew his proposal to eliminate 529 college savings accounts. Though much of the rest of his Robin Hood budget that is long on left-wing populist rhetoric and short on economic sense won’t be passed either, this particular defeat demonstrated just how disingenuous the president’s pose as defender of the middle class truly was.

Read More

The prevailing political narrative of the last few weeks has been all about how President Obama has seized the initiative back from the Republican victors in November’s midterms. But the president’s winning streak—at least as far as prevailing in the daily struggle to dominate the news cycle—may be over. Though most accounts of the State of the Union followed the White House talking points that claimed his proposals would help the middle class, the fact that one of them would have taken away a key college savings plan that helped ordinary taxpayers did not escape the attention of the public or his Republican foes. As a result of the anger the idea generated, the president waved the white flag on the idea today and withdrew his proposal to eliminate 529 college savings accounts. Though much of the rest of his Robin Hood budget that is long on left-wing populist rhetoric and short on economic sense won’t be passed either, this particular defeat demonstrated just how disingenuous the president’s pose as defender of the middle class truly was.

As Seth Mandel noted last week, the elimination of the 529 accounts had little to do with helping middle-class taxpayers or promoting education. The point of the plan was to expand the power of government and its loan racket that exploits the students it purports to help.

Obama’s apologists at the New York Times tried to spin this attack on those trying to save for college as somehow a break for them since the administration claimed that other proposals would offset this loss. But what taxpayers know is that such deals always backfire. New breaks may or may not have worked out as the president claimed. But the elimination of the 529 accounts would have been permanent. In the game of tax breaks, citizens are always playing against the house in a government casino where the house always wins.

So it was little surprise that Republicans planned to resist the plan with Speaker John Boehner demanding that the president withdraw his proposal before the House even considered the rest of the budget. But what happened in the last week is that even Democrats understood that what Obama was trying to shove down the nation’s throat was a knife in the back to those trying to save for their children’s college education. In the end, the White House had no choice but to give up.

Obama’s executive orders on immigration and boasts about recent good economic news helped fuel an aggressive approach that has given the press the impression that the president can avoid being a lame duck in the last two years of his second term. But no amount of spin or high-handed extra-constitutional actions can enable the president to impose all of his agenda on the nation. Nor can the near unanimous applause of the media allow him to sell a measure that strips taxpayers of one of their few defenses against the ravages of the Internal Revenue Service as a gift to them.

This was more than what even the Times termed a “flubbed launch.” It was a crucial moment that exposed the presidential Merry Men as mere thieves preying on the middle class, not its saviors. Conservatives who have been back on their heels this month should take heart. The Obama comeback remains what it has always been: mere smoke and mirrors designed to spin the weakest recovery since the Second World War as a time of prosperity and an excuse for more liberal looting of the Treasury and citizens’ wallets. Boehner’s successful demand shows that he’s still in charge of the budget and Obama really is a lame duck.

Read Less

Robin Hood Would Be an Improvement

Tonight, President Obama plans to announce some budget outlines in his State of the Union address. One of those goals will be to make a college education all but unaffordable to anyone but the wealthy. He won’t use those words, of course. But it puts the lie to the copycat “analysis” of the president’s cruel budget that he is somehow playing Robin Hood by taking from the rich to give to the poor. Though I generally don’t mind any analogy that correctly paints confiscatory taxes in the service of crony capitalism as theft, in this case the truth is that Robin Hood would be a vast improvement.

Read More

Tonight, President Obama plans to announce some budget outlines in his State of the Union address. One of those goals will be to make a college education all but unaffordable to anyone but the wealthy. He won’t use those words, of course. But it puts the lie to the copycat “analysis” of the president’s cruel budget that he is somehow playing Robin Hood by taking from the rich to give to the poor. Though I generally don’t mind any analogy that correctly paints confiscatory taxes in the service of crony capitalism as theft, in this case the truth is that Robin Hood would be a vast improvement.

The court stenographers at the Washington Post played along over the weekend, “reporting” on Obama’s State of the Union proposals by parroting talking points. The lede: “President Obama plans to propose raising $320 billion over the next 10 years in new taxes targeting wealthy individuals and big financial institutions to pay for new programs designed to help lower- and middle-income families, senior administration officials said Saturday.”

As is generally the case with this administration, the actual reporting had to be done by those outside the mainstream press. Ryan Ellis at Americans for Tax Reform explained five different tax increases sought by the president. And surprise, surprise–they don’t all target those who make up the richest of the rich and are therefore the Democrats’ cash piñatas.

The taxes include an increase in the death tax, proving that Democrats still adhere to Miracle Max’s advice that the only thing to be done with a man who is “all dead” is to “go through his clothes and look for loose change.” It will also include a bank tax that will be passed along to the bank’s customers, as well as a new tax on retirement savings. But the worst among them is probably the tax on education. (Morally speaking, the death tax is probably the “worst,” since organized grave robbing is generally frowned upon in the civilized world. The education taxes are the “worst” from the standpoint of their dishonesty and their burden on those least able to shoulder it.)

Here’s Ellis:

Under current law, 529 plans work like Roth IRAs: you put money in, and the money grows tax-free for college. Distributions are tax-free provided they are to pay for college.

Under the Obama plan, earnings growth in a 529 plan would no longer be tax-free. Instead, earnings would face taxation upon withdrawal, even if the withdrawal is to pay for college. This was the law prior to 2001.

This is remarkably grotesque policymaking, because of how it builds on the Obama administration’s general attitude toward paying for higher education. The federal student loan bubble has artificially inflated the cost of tuition. It doesn’t lower college costs, it merely defers them after increasing them. The government’s approach to paying for college is a loan racket that sees young people taking on mountains of debt to pay for the salaries of administrators and tenured professors.

The goal is not education, either, as much as it is about selling a piece of paper that has become a prerequisite for participation in much of the economy. In other words, while students are being sent to college ostensibly to get an education, the government sees it as a licensing scheme. If and when the bubble bursts, taxpayers will be on the hook for the inevitable bailout.

So it’s already an immoral status quo, held up and protected by liberal establishment politicians, like Obama. But Obama’s tax plan would make the system even less fair. Thanks to the government’s role in ballooning tuition costs, college savings accounts can be crucial to anyone who doesn’t have the disposable income to toss off tens of thousands of dollars a year per student.

So what does Obama do? He attacks the last bastion of college affordability, the savings account. In a follow-up piece at Forbes, Ellis notes that the tax change that made college savings accounts more advantageous were part of George W. Bush’s tax relief for the middle class. Ellis writes:

The 2001 tax law change which the Obama budget repeals resulted in an explosion of mass participation in 529 plans. According to the College Savings Network, taxpayers responded to the changes virtually overnight. Assets in 529 plans doubled from 2001 to 2002 (from $13 billion to $26 billion) and began their fast march to the quarter-trillion dollar level we see today. The total number of accounts grew from 2.4 million in 2001 to 4.4 million just a year later in 2002. There’s every reason to believe that taxpayers will snap back almost as quickly.

The good news is that Obama’s financial abuse of the middle class and poor has to pass Congress (at least until Obama discovers executive authority for that too). Congress is in the hands of the Republicans, but even many Democrats will balk at further blurring the boundaries between the modern welfare state and an organized crime syndicate. But it does give the country a glimpse into the cruelty awaiting them if Congress weren’t standing in the way.

Read Less

Who’s the Real Extremist? Obama or GOP?

The prevalent narrative of Washington politics over the last two years has been one in which Republican hardliners have consistently torpedoed efforts to reconcile the two parties. The Tea Party has been the scapegoat for D.C. gridlock as efforts to derail ObamaCare and other aspects of President Obama’s agenda have been highlighted as proof of this faction’s disdain for compromise and any notion of accommodation with those across the political aisle. Their suicidal charge into the government shutdown in the fall of 2013 was treated, perhaps not unfairly, as not only evidence of a lack of political judgment but also their disdain for the notion of governance itself. But by presenting a political agenda tonight in his State of the Union speech that is as ideological and divorced from political reality as anything cooked up by bitter-end Tea Partiers like Rep. Louis Gohmert, President Obama will demonstrate that it is not just the GOP that must cope with extremists. The Democrats’ obstructionists are not their House backbenchers. Rather, it is their leader who is most determined to widen the divide between the parties and make Washington ungovernable.

Read More

The prevalent narrative of Washington politics over the last two years has been one in which Republican hardliners have consistently torpedoed efforts to reconcile the two parties. The Tea Party has been the scapegoat for D.C. gridlock as efforts to derail ObamaCare and other aspects of President Obama’s agenda have been highlighted as proof of this faction’s disdain for compromise and any notion of accommodation with those across the political aisle. Their suicidal charge into the government shutdown in the fall of 2013 was treated, perhaps not unfairly, as not only evidence of a lack of political judgment but also their disdain for the notion of governance itself. But by presenting a political agenda tonight in his State of the Union speech that is as ideological and divorced from political reality as anything cooked up by bitter-end Tea Partiers like Rep. Louis Gohmert, President Obama will demonstrate that it is not just the GOP that must cope with extremists. The Democrats’ obstructionists are not their House backbenchers. Rather, it is their leader who is most determined to widen the divide between the parties and make Washington ungovernable.

Much will be written today and tomorrow about the president’s “Robin Hood” tax plan in which the wealthy will be taxed to supposedly benefit the middle class, even though the details of his scheme reveals that many of those who are not rich will also bear the burden of this plan. Though couched in fresh rhetoric about inequality, the entire package must be understood as nothing more than recycled class warfare and big government tax and spend policies familiar to Americans from generations of failed liberal experiments.

Some see this new populism as an attempt by the president to invest his new and more favorable poll ratings so as to put the new GOP Congress on the defensive. This will transform him from a pure lame-duck president to one who will be able to thwart the legislative branch in any effort to put forth a Republican vision for the country. Others less convincingly see it as a trial run for the ideas that could help Hillary Clinton win the 2016 presidential election, a theory that ignores Obama’s egoism, a characteristic that must be taken into account when discussing anything done by the White House.

But no matter what the reasons for this strategy or whether, as liberals hope, it will serve as the foundation for future debates in their efforts to turn back the page to the era of unabashed big government and income redistribution efforts, Obama’s decision to tack hard to the left must also be seen in the context of the ongoing discussion about how to make Washington less dysfunctional.

Let’s be frank. If Tea Partiers were bashed for prizing their ideological purity over the obligation to work for consensus and compromise, what then should we think about a president who is equally unconcerned with working with a Republican Congress?

Nobody expects Obama to present Congress with a conservative wish list or to bow down to GOP demands on issues where he disagrees. But by presenting his own wish list that is as ideologically extreme as anything uttered by Ted Cruz, it’s impossible to avoid the conclusion that he is as unconcerned with compromise as that firebrand. So why isn’t his agenda being viewed in the same light as that of the Tea Party?

First of all, he’s the president and there’s a big difference between presenting a set of proposals from the bully pulpit of the State of the Union address and one put forward by a mere representative or senator. The president is in a unique position to steer the debate and it is only natural that he be given a certain degree of deference to do that.

But the president’s proposals aren’t merely a statement of his vision for the country. They are a salvo fired in the direction of a Congress that was just elected to pursue a completely different vision. Better presidents than Barack Obama have been presented with similarly difficult positions and responded, as did Bill Clinton, with an attempt to find common ground rather than a slap in the face. Rather than laying the foundation for the election of a second President Clinton or bolstering a legacy that is mere ephemera, the only real purpose of this raft of tax and spend ideas is to win the current news cycle and discomfit his opponents. The one aspect of being president at which Barack Obama has always excelled is campaigning and pure partisan politics.

Obama made no effort to discuss his proposals with the leadership of the House or the Senate or to get their input because they are not being presented with the idea that they will get serious consideration. They are mere rhetorical aspirations, words that mean nothing.

If that is how the president wishes to spend the public’s time at the annual event, that is his privilege. But if the public disdains Republicans for being obstructionists who don’t care about working with their opponents, then the question arises as to why Obama’s speech is being presented as being any different from their efforts. The answer is that the same liberal media bias that has been an essential element to the president’s ability to survive scandal and failure is acting as his safety net again.

As much as the public blames Congress and dislikes the Republicans for their devotion to their principles, it is not unfair to ask the mainstream media that is heralding Obama’s proposals as another installment of the New Deal to ask themselves if there is any real difference between his ideological rigidity and that of his opponents. The honest answer, and one we’re not hearing or reading much about today, is that there is none. The obstructionist-in-chief’s “Robin Hood” plan for government will do as much to make compromise impossible as any Ted Cruz speech or the actions of House Tea Partiers and is as unlikely to become law as any Tea Party manifesto. The 2015 edition of the State of the Union speech is merely more evidence that Obama is guilty of the same sin for which his foes have been routinely denounced over the course of his presidency.

Read Less

End of an Error

On October 30, 2008, Barack Obama, sensing victory in the upcoming election, said with characteristic self-effacement that “We are five days away from fundamentally transforming the United States of America.” A good many people (but not enough, alas) wondered why the most successful country in the history of the world needed to be transformed at all, let alone fundamentally.

Read More

On October 30, 2008, Barack Obama, sensing victory in the upcoming election, said with characteristic self-effacement that “We are five days away from fundamentally transforming the United States of America.” A good many people (but not enough, alas) wondered why the most successful country in the history of the world needed to be transformed at all, let alone fundamentally.

Which is not to say that the country didn’t need reform in many areas, beginning with the federal government itself. It had not been reorganized since the Truman era, which predated the electric typewriter let alone the digital revolution. The barnacles of decades of congressional piecemeal action had produced a bloated, duplicative, inefficient mess. The budget process needed to be reformed in order to get control of the government’s finances. Social Security and other entitlement programs needed to be reformed before they went broke or bankrupted the country. The tax system had metastasized over the previous century into an incoherent, arbitrary, and deeply unfair quagmire that benefited only politicians’ reelection efforts and those able to make large political contributions to them in exchange for favorable treatment.

But Barack Obama sought reform in none of these areas, instead just pushing the tired old liberal agenda and for the most part getting nowhere with it. Instead of reforming the budget process, he and his Democratic allies in Congress totally ignored it and there has been, quite literally, no budget process for the last six years, just a series of continuing resolutions. His only reform for entitlement programs was to add a new one, pushed through Congress with the very old-fashioned use of political muscle over the howls of both the opposition and the people in general. ObamaCare remains deeply unpopular.

As for taxes, his one idée fixe has been to raise taxes on the rich, an idea that goes back to the 1840s. Consider his proposal regarding inherited property, to be unveiled in the State of the Union speech this Tuesday. It calls for heirs to inherit not only the property but also the original cost basis of the property, subjecting it to far higher capital gains taxes when the heirs sell it. As it stands now, the heirs’ cost basis is the price on the date of death.

But the heirs of large estates would have already paid as much as a whopping 40 percent under the estate tax, which is nothing more nor less than a capital gains taxes triggered by death instead of sale. Obama also wants to raise the capital gains tax to 28 percent, so the total tax take might be as high as 56.8 percent. But many capital assets, such as real estate and shares in a company founded by the decedent, are held for decades and the capital gains and estates taxes are not indexed for inflation.

So much of the value taxed away would be illusory, a tax on phantom gains. An investment worth $1 million in 1970 would have to be worth $6.1 million today for there to be any real gain at all. That won’t stop the president from calling his proposal “fair” and “the right thing to do.” It is, of course, neither, just the same century-old leftist, stick-it-to-the-rich boilerplate.

Fortunately these proposals have zero chance of getting through the new Republican Congress. Still, it’s going to be a long two years until January 20, 2017, a date that will mark what my new favorite bumper sticker calls ‘The End of an Error.”

Read Less

NYT on Garner: We Should Have Bad Laws Just Not Enforce Them

To read the New York Times today on the tragic death of Eric Garner is to forget, momentarily, the ideological canyon between right and left in America. Conservatives have not been shy about expressing their outrage both at the excessive force used by police against Garner and at the seemingly bizarre grand jury decision not to indict the officer responsible, despite the video evidence, as the Times reports in its news pages today. Conservatives have also criticized the unintended–and in this case, as in others, deadly–consequences of bad laws. Liberals have pushed back on this, but conservatives got an unexpected (and, one suspects, unintentional) note of support from the New York Times editorial page.

Read More

To read the New York Times today on the tragic death of Eric Garner is to forget, momentarily, the ideological canyon between right and left in America. Conservatives have not been shy about expressing their outrage both at the excessive force used by police against Garner and at the seemingly bizarre grand jury decision not to indict the officer responsible, despite the video evidence, as the Times reports in its news pages today. Conservatives have also criticized the unintended–and in this case, as in others, deadly–consequences of bad laws. Liberals have pushed back on this, but conservatives got an unexpected (and, one suspects, unintentional) note of support from the New York Times editorial page.

Garner was being confronted by police in the first place because he was selling “loosies”–individual cigarettes. The black market for cigarettes was created by New York’s insanely high tax on cigarettes, a so-called “sin tax” because it is meant to dissuade citizens from behavior the state considers too harmful to themselves. It is a way for the nanny state to exert more control over people and to satisfy its desire to use citizens as guinea pigs in a big-government social engineering scheme. The cigarette tax is an effectively regressive tax on low-income communities. The state then sends the police to these low-income communities to enforce it.

Liberals are quite fond of social engineering and taxing low-income communities to grow their leviathan. But liberals aren’t so fond of police. Conservatives have pointed out that this is one of the many contradictions at the heart of modern liberalism. They have used the Garner case to point out that using the state’s enforcers to hassle citizens over bad laws can be deadly. This is unquestionably true, and the Garner case is one example.

That doesn’t negate a possible racial angle–the liberals’ tax scheme, after all, means minorities will be targeted in addition to the already fraught relationship between the police and the black community. And it doesn’t exonerate the police, especially since they apparently used a banned hold on Garner which caused his death. It’s just one factor to consider, and it’s one with a clear policy angle as well.

Today, however, conservatives should read the New York Times editorial on Garner. The Times is a far-left voice, and a reflexive one at that, so you don’t usually need to read the dumbed-down DNC press releases they pass off as editorials. But today’s is interesting. The editorialists mainly focus on the use of excessive force. But then they offer this quite revealing paragraph:

The Garner killing must lead to major changes in policy, particularly in the use of “broken windows” policing — a strategy in which Officer Pantaleo specialized, according to a report in September by WNYC, which found that he had made hundreds of arrests since joining the force in 2007, leading to at least 259 criminal cases, all but a fraction of those involving petty offenses. The department must find a better way to keep communities safe than aggressively hounding the sellers of loose cigarettes.

Read that last sentence again: “The department must find a better way to keep communities safe than aggressively hounding the sellers of loose cigarettes.” In other words, this law should be on the books but cops shouldn’t enforce it.

High regulatory burdens that contradict market demands result in black markets. We don’t have quite the problem with this that some of our European friends do because we haven’t completely abandoned market economics for the administrative state. But we’re getting closer, as the Western left’s program demands. And as we get closer, the left is beginning to notice that the financial burden of a high-tax, overly regulated government is not only shouldered by “Big Oil” or Wall Street or other bogeymen.

Those burdens–especially of taxes, as everybody knows–filter down to those the New York Times’s editors write about with empathy but in whose neighborhoods they would never choose to live. So the Garner case is giving them a window into the sometimes-deadly unintended consequences of the administrative state. Conservatives want to alleviate that burden, and the left won’t speak of it.

But who sounds more compassionate, more rational, more reality-based here? The liberal position, such as that of the New York Times, is that we should have bad laws but not enforce them, undermining the rule of law and creating new classes of criminals in the process. The conservative position is that we shouldn’t have dumb laws, or else that we should reform them.

Of course, conservatives could easily troll the left here and use the left’s argument against them: “If it saves one life…” But the policy stands on its own without resorting to hyperbole: if you overburden your citizens and turn them into classes of criminals and seek to enforce those laws you will send the police after them. This isn’t complicated. And the New York Times, against its own instincts, seems to grasp that.

Read Less

Elizabeth Warren Strikes a Pose–And the Establishment Strikes Back

Thanks to a recent controversy over an Obama administration nominee to serve in a key post at the Treasury Department, two lingering questions about Elizabeth Warren’s place in the Democratic Party have been answered. Warren is the leader of the populist wing of the party, which–faced with the prospect of their party leadership going all-in on the soulless crony capitalism of the Clintons–hope to see a Warren presidential candidacy. But to gauge Warren’s appeal, two questions had to be answered: Does the Democratic establishment see her as a threat or a sideshow? And does her populism have a serious economic foundation or is it airy claptrap?

Read More

Thanks to a recent controversy over an Obama administration nominee to serve in a key post at the Treasury Department, two lingering questions about Elizabeth Warren’s place in the Democratic Party have been answered. Warren is the leader of the populist wing of the party, which–faced with the prospect of their party leadership going all-in on the soulless crony capitalism of the Clintons–hope to see a Warren presidential candidacy. But to gauge Warren’s appeal, two questions had to be answered: Does the Democratic establishment see her as a threat or a sideshow? And does her populism have a serious economic foundation or is it airy claptrap?

Warren has given us insight into those questions with her forceful opposition to President Obama’s nomination of Antonio Weiss to serve as under secretary of Treasury for domestic finance. For this president, Weiss has the one clear credential necessary: he’s a rich Obama donor. It’s unclear whether Obama even saw the rest of the resume.

But Warren did. She saw that Weiss serves as an advisor to the investment bank Lazard. And more importantly to Warren, Weiss was apparently an advisor to the recent merger of Burger King and Tim Hortons, the latter based in Canada. The deal was initially thought to be a kind of tax “inversion,” in which a company relocates in order to escape onerous U.S. taxes. This is entirely rational behavior.

But it does not appear to be what Burger King was doing in this case. As Matt Levine explained in Bloomberg, for U.S. companies the inversion strategy “will vary in direct proportion to how much business you do in the U.S. and how much you do” elsewhere in more competitive tax environments. The majority of Burger King’s business is done in the U.S. and Canada, not tax shelters. And Burger King is not a pharmaceutical company, Levine notes: “You can’t really assemble a burger in Bermuda and then sell it in Canada.”

Levine also points out that “Tim Hortons and Burger King’s effective tax rates are basically the same.” And finally: “This inversion is not all that inverted. Tim Hortons is actually bigger than Burger King, on revenue and net income though not on stock market capitalization. This is not just an aesthetic point.” Indeed, it has important legal implications.

What became clear was that critics of the Burger King “inversion” didn’t initially understand the deal or U.S. tax law. This is understandable; the federal government and especially the IRS would prefer that Americans not understand these laws, because understanding them would result in 1.) outrage at the legalized theft and 2.) a reduction in the amount confiscated in penalties.

But it is not so forgivable for, say, a sitting U.S. senator on the banking committee not to understand it, because that has consequences. Elizabeth Warren does not understand inversion law, the economics of corporate relocation and merger, or how various business taxes are assessed. This is a problem. It also answers the second question about Warren: she is not an expert in her field. She is, rather, an uninformed bureaucrat who spouts vapid populism in a bid to gather ever more power for herself and the government.

Just ask, for example, the Washington Post editorial board:

To the extent we know anything about Mr. Weiss’s actual policy views, they seem consonant with Ms. Warren’s. For example, he is a co-author of a Center for American Progress tax reform paper that called for a more progressive system and $1.8 trillion in tax increases on upper-income Americans over 10 years.

The populists’ case against Mr. Weiss so far amounts to a grab-bag of symbolism and epithets, not a rationale.

Or the New York Times’s Andrew Ross Sorkin:

Ms. Warren’s wrath is misdirected, and her understanding of the so-called inversion deal on which she bases much of her opposition appears misinformed. On these issues, as she might say, “Enough is enough.” …

Unless Ms. Warren wants to prohibit all cross-border deals and pursue a nationalism agenda, it is hard to imagine any rule that would have stopped this one. It was not, as she contended, “a tax deal, plain and simple.”

Sorkin’s most enlightening detail was this:

Ms. Warren might have learned some of this if she had been willing to meet with Mr. Weiss, as is the customary process, especially among nominees from the same parties. An aide to Ms. Warren allowed that she would meet with him but that she had told the Treasury Department that she would still vote against him.

Warren didn’t know, but more than that, she didn’t want to know. She chose to remain ignorant of the relevant law so she could make a public show for her populist supporters. Those populist supporters don’t understand economics (in this they have much in common with their fellow Democrats) and therefore their support hinges on making an example out of someone who doesn’t deserve it built on falsifications and distortions. Remaining ignorant probably kept Warren’s conscience cleaner that it should have been while engaging in this behavior.

And it also answers the first question, this time in Warren’s favor. How much of a threat does the establishment perceive her to be? Enough of one to start pushing back on her tendency to demagogue on issues that deserve a fair hearing. The Democratic establishment sees the momentum Warren has and believes–almost surely correctly–that she’s still on her way up. That’s bad news for the American economy and the cause of limited and non-abusive government. But it’s also bad news for the Clinton wing of the party, even if it doesn’t end up posing a threat to Hillary Clinton herself.

Read Less

Why Jeb Bush Is Right and Grover Norquist Is Wrong

According to an article in Politico:

Read More

According to an article in Politico:

Jeb Bush has a tax problem.

The former Florida governor has said he could accept tax increases in a hypothetical deficit-cutting deal. Never mind that he added that would come only in exchange for major federal spending cuts, or that he repeatedly cut taxes as governor.

Tax hikes are still apostasy in Republican circles, and the stance could be a big problem for Bush if he decides to seek the party’s presidential nomination in 2016.

Bush’s views are already pitting him against one of his party’s most influential activists, Grover Norquist, the high priest of anti-tax orthodoxy who’s convinced nearly every elected Republican to sign a pledge not to raise taxes.

“Mind-boggling,” Norquist said of Bush.

Actually, it isn’t, or at least shouldn’t be.

Set aside for the moment your view of Jeb Bush and the 2016 presidential race. Let’s instead examine this broader argument with some care, beginning with putting the story in context.

As Politico points out, during a June 2012 House Budget Committee hearing, Bush was asked about a theoretical deficit plan that would actually cut $10 in spending in exchange for a dollar in tax increases. This was a question first posed to Republican presidential candidates by Byron York and Bret Baier and was rejected by all eight of them. (I criticized that response at the time.) Governor Bush’s response was different than the Republicans running for president. “If you could bring to me a majority of people to say that we’re going to have $10 of spending cuts for $1 of revenue enhancement — put me in, Coach,” he said.

Note well what Bush didn’t say. He didn’t say he believed we as a nation are under-taxed. In fact Bush, as governor of Florida, had a sterling tax-cutting record, having cut them every year he was governor (a period covering eight years and totaling nearly $20 billion). What Bush said is that if you could actually get a 10-to-one ratio in spending cuts to tax increases–that after all was the premise of the thought experiment–he’d do it. So, I would think, would any conservative interested in limiting government.

I not only understand the case for lower taxes; I support tax cuts. But it’s not an inviolate principle. The question on these things is always context. Higher taxes in exchange for what? Which taxes are we talking about? And what else might be considered in any such deal (e.g., reforming Medicare by replacing the current fee-for-services system with a premium support one)?

People I respect believe the no-new-tax pledge has done more good than harm, that without it Republicans would be far more inclined to raise taxes. That’s not an unreasonable stance. But for conservatives to say, as many now do, that there’s no scenario in which taxes could ever be raised–and to pledge to oppose a tax increase regardless of circumstances–strikes me as misguided. Nor do I believe most Republicans, if you had a long, honest conversation, would be that absolutist. The right level of taxation is a prudential, not a theological, matter; it needs to be seen in the context of other economic conditions and possible gains in other areas.

This debate highlights a danger for conservatism, which is that certain policies are elevated to dogma, to canon. It takes a reasonable starting point in a negotiation and turns it into a non-negotiable end point. Vin Weber, a principled conservative, said Bush’s answer on the tax issue “was totally right, and if we’re ever going to deal with the long-term debt question, Republicans are going to have to come to grips with that.”

This debate also exposes a mindset that views compromise per se as unprincipled, a capitulation, a sign of weakness. This is a deeply unconservative attitude and quite at odds with what James Madison and the other Federalist founders believed. The Constitution itself was the result of a whole series of difficult, reluctant, remarkable compromises. That’s why it’s so odd that those who consider themselves “constitutional conservatives” are often the ones who react most strongly against even the idea of compromise.

One other thing. If the attitude many of those on the right have toward taxes today existed in the 1970s and 1980s, Ronald Reagan would have been considered a heretic. I say that because Reagan himself signed into law what his biographer Lou Cannon called “the largest tax hike ever proposed by any governor in the history of the United States”; and as president he signed a tax increase (TEFRA) that at the time was the largest in American history. As president Reagan, in fact, raised taxes multiple times.

Now my own view is that Reagan’s record, including his record on taxes, needs to be seen in whole–and seen in whole it was outstanding. He was responsible for cutting the top rate from 70 percent to, when he left office, 28 percent, which helped catalyze our economy; and his 1986 tax reform plan was a tremendous achievement. Yet Reagan did raise taxes.

It’s true that President Reagan came to regret his 1982 tax increase. But it’s important to keep this in mind: He agreed to it, he said, assuming he’d get $3 of spending cuts for every dollar in tax increases. (He didn’t, though the reality is somewhat complicated.) If that result had in fact come to pass, would the deal have been wrong? Would today’s anti-tax advocates torch him for his apostasy? Would he be vilified as a RINO? Would he be vulnerable to a primary challenge?

It tells us something about some currents within conservatism that a governor with a sterling tax cutting record, in expressing support for a theoretical deal far more conservative than what Ronald Reagan was willing to accept, would be the object of harsh criticisms.

My guess is that this kind of approach to politics, while still embraced in some quarters, is losing influence. At least I hope so. Not because I want higher taxes, but because I don’t think conservatism is a rigid, adamantine ideology; that the quest for political purification is fraught with danger; and because conservatives shouldn’t assume that any deal that gives you less than everything is a bad deal. Conservatives shouldn’t treat a debate about tax rates as a metaphysical matter.

We all have roles to play, and governing is different than critiquing those who do. The former certainly need to be prodded now and then by activists and commentators; I do a fair amount of that myself. But activists and commentators need to understand that while we need to strive for the ideal, the ideal can’t become the standard by which we judge politicians. Nor is every issue a hill to die on. And, as the greatest American conservative of them all warned, there’s not a lot to be won, and even a lot to be lost, by going over the cliff with our flags waving.

Read Less

Marylanders to the Rest of the Country: Beware Martin O’Malley

What does Maryland Governor Martin O’Malley have in common with self-described socialist Vermont Senator Bernie Sanders? The same percentage of Maryland Democrats want them to be the next Democratic presidential nominee. That would be 3 percent. It’s just one of the many data points to come out of the latest Washington Post/University of Maryland poll to support H.L. Mencken’s contention that “Democracy is the theory that the common people know what they want and deserve to get it good and hard.”

Read More

What does Maryland Governor Martin O’Malley have in common with self-described socialist Vermont Senator Bernie Sanders? The same percentage of Maryland Democrats want them to be the next Democratic presidential nominee. That would be 3 percent. It’s just one of the many data points to come out of the latest Washington Post/University of Maryland poll to support H.L. Mencken’s contention that “Democracy is the theory that the common people know what they want and deserve to get it good and hard.”

Although, in the interest of basic compassion, it might be unkind to claim Maryland residents–or anyone, really–deserve to get two terms of Martin O’Malley.

And, to their immense credit, Marylanders don’t want the rest of the country to bring Martin O’Malley upon themselves. The message from Marylanders to the nation at large is: Don’t let our years governed by O’Malley be in vain; let something good come out of all of this. And that something good appears to be a national future unencumbered by Martin O’Malley as the nation’s chief executive.

But there are worse numbers in the poll for O’Malley than Democratic voters’ resounding declaration that they don’t want him representing their party in the next presidential election. That at least can be spun away. After all, if Democrats are asked to pick one politician to be their next presidential nominee, it’s no surprise that so many–63 percent–chose Hillary Clinton. (Although it is somewhat humorous that “Other/no opinion” polls nearly five times as well as O’Malley. They say you can’t beat something with nothing, and O’Malley appears to be the exception that proves the rule.)

No, the most unflattering portion of the poll is probably when registered voters are asked “Do you think Martin O’Malley would make a good president, or not?” The response: 14 percent said yes; 70 percent said no. The poll contrasts that with the result when the same question was asked in October 2012. At that time, the numbers were only slightly better–22 percent said yes; 62 percent said no–but still so far underwater as to be invisible from the surface.

There are more bad numbers–really, the whole poll is just an opportunity for Marylanders to unload on their horrendous governor. As the Post reported in an accompanying story, his “job-approval rating has fallen to an eight-year low of 41 percent, with his biggest defections coming from fellow Democrats.” What happened? The Post offers some suggestions:

Although O’Malley is not on the ballot this year, his policies in Maryland — particularly a string of tax increases during his tenure — have come under heavy fire from other candidates. Months of attacks, including some from fellow Democrats, appear to have taken their toll, some analysts say.

Other observers suggest that the time O’Malley has spent crisscrossing the country, seeking to gain national exposure, has alienated some constituents in Maryland.

Plausible. But it might be worth delving a bit more into his policies. The lesson might not be one national Democrats want to learn:

His legacy will include legalization of same-sex marriage, a sweeping gun-control bill, repeal of the death penalty, several measures expanding immigrant rights and an increase in the minimum wage. He has also overseen multiple tax hikes during his tenure, including increases in personal income taxes paid by high earners, the corporate income tax, sales tax, gas tax, tobacco tax and alcohol tax.

All politics is local (though not as local as it ought to be), so I doubt it’ll worry Democrats too much. Some of this might be personal; O’Malley is, after all, deeply unlikeable. But his agenda is also very liberal in a pretty liberal state, and voters don’t seem to love the results. It’s a common feature in American politics: there’s only so much liberalism even liberals can take.

And part of that could be the impression of the stereotype come to life. Reread that list of O’Malley tax increases, and you not only understand the O’Taxey nickname but get the sense the governor is to taxes what Bubba Blue is to shrimp.

Democrats may counter all this by pointing out that O’Malley is terrible at his job, and Democrats who aren’t terrible at their jobs will not suffer the same poll numbers. That’s true. But an element of O’Malley being terrible at his job is that, when it comes to issues like taxes, he cranks his liberalism up to eleven.

The other phenomenon here is just how “Ready for Hillary” national Democrats are. They don’t want a divisive nomination fight, and they don’t want a battle over ideas, in part because they want to nominate Hillary instead of a candidate who has ideas. So they’re not much interested in even having this conversation. And you almost can’t blame them: O’Taxey, a Vermont socialist, Joe Biden–the alternatives to Hillary aren’t exactly a sparkling A-team of Democratic leaders.

And that’s what might actually concern Democratic Party leaders more than O’Malley’s unpopularity: the prospect that there is no A-team. There’s just Clinton. They may get the nominee they want, but as far as Democrats see it, that’s not because she’s their best choice as much as that she’s their only choice.

Read Less

What’s Wrong with the American Economy?

Growth in the American economy since the year 2000 has averaged 1.7 percent per annum. That’s about half of what it averaged in the Reagan, Bush I, and Clinton years. Unemployment, especially in the broader measures, remains stubbornly high five years after the recession of 2007-2009 ended. What’s going on?

Read More

Growth in the American economy since the year 2000 has averaged 1.7 percent per annum. That’s about half of what it averaged in the Reagan, Bush I, and Clinton years. Unemployment, especially in the broader measures, remains stubbornly high five years after the recession of 2007-2009 ended. What’s going on?

According to Peter Morici, an economics professor at the University of Maryland (and the bow-tied star of TV commercials for Kyocera office equipment) the problems lie in five key areas. 1) Poorly enforced trade agreements that allow China to manipulate its currency and export more goods to the United States, costing U.S. jobs. 2) Counterproductive energy policies that reduce domestic production, and therefore jobs, and cause more oil to be imported. 3) Burdensome regulations and taxation, such as restrictive licensing requirements and the highest corporate tax in the developed world. 4) Crony capitalism that reduces competition in the private sector in exchange for political contributions. 5) Disincentives to work, such as ever-expanding entitlements.

The good news is that, unlike the economic problems faced by many countries, all of these problems are amenable to reform. The bad news is that reforming the status quo, which always has determined defenders, requires strong presidential leadership and a Congress capable of acting in the national interest, not just in its members’ interests.

Right now, of course, we have neither. Even Democrats are beginning to notice that the Obama presidency is notably lacking in leadership. And Congress is more dysfunctional than it has been in a very long time. The latter problem can be at least partially ameliorated in a month. The former will have to wait until 2017.

Read Less

Obama and Burger King Demagoguery

Who are the biggest villains in the United States today? As much as Americans may rightly fear the rise of ISIS Islamist terrorists, to listen to some commentators, the owners of the Burger King fast-food chain aren’t just the epitome of corporate greed. They’re also being depicted as 21st century Benedict Arnolds for planning to move their corporate headquarters to Canada to evade high U.S. tax bills. But instead of joining in a cost-free demagogue fest that both left and right-wingers can enjoy, rational citizens should be blaming the tax code and a president who could reform the system if he was willing to work with Republicans rather than use them as rhetorical punching bags.

Read More

Who are the biggest villains in the United States today? As much as Americans may rightly fear the rise of ISIS Islamist terrorists, to listen to some commentators, the owners of the Burger King fast-food chain aren’t just the epitome of corporate greed. They’re also being depicted as 21st century Benedict Arnolds for planning to move their corporate headquarters to Canada to evade high U.S. tax bills. But instead of joining in a cost-free demagogue fest that both left and right-wingers can enjoy, rational citizens should be blaming the tax code and a president who could reform the system if he was willing to work with Republicans rather than use them as rhetorical punching bags.

The manner by which Burger King is heading to the great white north is called corporate inversion and is being facilitated by the fast-food franchise purchase of Tim Horton’s, the Canadian donut chain named after an otherwise obscure hockey player. Once they own Horton’s, BK can shift its corporate operations to Canada where they will pay lower taxes than they do now. This is an eminently sensible business decision, but to listen to the likes of MSNBC’s Joe Scarborough, it’s tantamount to treason; the onetime congressman says he won’t eat there any more is encouraging others to do the same. Left-wing lawmakers like Ohio Senator Sherrod Brown agrees and also supports a boycott which would aid both White Castle and Wendy’s that are currently based in his state.

President Obama isn’t calling for a boycott. Instead he issued a call for Congress to pass corporate tax reform that would eliminate the need for American companies to flee the country over their tax bill. But he also said that the need to immediately pass a bill prohibiting such corporate moves shouldn’t have to wait until a solution to the years-long standoff about taxes that helped fuel numerous confrontations between the White House and congressional Republicans is found. Which is to say, he wants companies like Burger King compelled to stay without actually offering them tax relief.

Nobody need hold a benefit for Burger King but the hypocrisy and foolishness that form the foundation for all the demagoguery being aimed at that company seems at least equal to the venality of the fast food franchise.

First, the talk about patriotism and hamburgers is pure baloney. In the global economy trying to tie down a company that does business around the world in this fashion is silly. Americans haven’t owned Burger King since 2010 when SG Capital, a Brazilian private equity firm, purchased it when its previous proprietors dumped it because of its declining value. Expecting these stockholders who purchased a flagging company in the hope of increasing its worth and not to do their part in funding America’s out-of-control government spending is absurd. Global capitalism may not appeal to our sentimentality but it is a reality, and for supposedly smart people who are otherwise happy to profit from it to bash BK in this manner is hypocrisy on an Olympic scale.

Second, the president’s umbrage should be tempered by the fact that the person enabling this transaction is none other than his good buddy Warren Buffett. In 2012, Buffett was a major asset to Obama’s reelection because the billionaire’s support for higher taxes was seen as a definitive answer to conservatives who rightly believed Obama’s budget plans were bad for the economy and economic growth. But though he claimed to be personally in favor of higher taxes for himself, apparently Buffett doesn’t think the same principle applies to companies and it is his Berkshire Hathaway firm that is financing Burger King’s purchase of Horton’s. Hopefully, his secretary, whose higher personal tax rate than her boss (a disingenuous argument if ever there was one) became a staple of Democratic campaign rhetoric, will get a cut of the profits from the deal.

But more important than either of those facets of the story is the fact that if President Obama really wanted to reform our tax code, he could have done so years ago. While joining in the gang tackle of Burger King, Obama lamented Congress’s failure to pass reforms that would have made such moves unnecessary. Yet he torpedoed every opportunity to do so by demanding that a fairer revenue code be tied to tax increases. Rather than make cuts in the entitlements and government boondoggles he wishes to preserve, Obama preferred a continued stalemate because it enabled him to blame this failure on his congressional antagonists. That’s good politics but bad economics.

Liberals have given a lot of praise to Canada in recent years because of its government health-care program, but instead of trying to work toward the creation of a medical system that is a bad fit for Americans, they should have been studying our northern neighbor’s tax codes. Rather than jumping on the bandwagon of those wanting to boycott Burger King, the president and his supporters should stop the demagoguery and begin negotiating in good faith with Republicans in order to create a tax system that doesn’t punish success or reward failure. Kicking Burger King is easy. Protecting both citizens and corporations from the greed of the government and its permanent bureaucracy is hard.

Read Less

Walmart, Wages, and the Public Good

Who knew corporations could do snark? When New York Times columnist Timothy Egan wrote a column called “Walmart, Starbucks, and the Fight Against Inequality,” claiming that Walmart’s low wages forced many of its employees onto public assistance, such as food stamps and Medicaid, David Tovar, the communications director for Walmart, treated it as a first draft and pointed out its many factual inaccuracies. He then posted it on the Walmart website. It makes for hilarious reading.

Read More

Who knew corporations could do snark? When New York Times columnist Timothy Egan wrote a column called “Walmart, Starbucks, and the Fight Against Inequality,” claiming that Walmart’s low wages forced many of its employees onto public assistance, such as food stamps and Medicaid, David Tovar, the communications director for Walmart, treated it as a first draft and pointed out its many factual inaccuracies. He then posted it on the Walmart website. It makes for hilarious reading.

Egan’s argument is that if Walmart paid higher wages, its employees wouldn’t need public assistance. Using very dubious math and a “study” that left-leaning Politifact.com calls “mostly false,” Egan describes Walmart as a “net drain” on taxpayers. Tovar points out that Walmart is the largest taxpayer in the country.

I doubt that Timothy Egan has ever gone into a store to buy something and, on being told the price, insisted on paying more. So if Walmart can hire a satisfactory employee at a given wage, why should it insist on paying more? For one thing, it would violate its fiduciary duty to the stockholders. For another, it would have to raise the prices its hundreds of millions of customers pay.

Egan’s column, demanding that Walmart pay higher wages, is classic modern liberalism, solving the problems of the world with other people’s money, and using junk statistics to justify it.

Read Less

Conservatism Means Adjusting to Shifting Circumstances

The American Enterprise Institute’s James Pethokoukis has written a post with a provocative headline: “Have Reagan-style tax cuts lost their political power?”

The answer, he says, is yes. “It shouldn’t be surprising that the tax issue doesn’t have the old oomph that it used to with voters,” according to Pethokoukis. And he highlights these poll results:

Read More

The American Enterprise Institute’s James Pethokoukis has written a post with a provocative headline: “Have Reagan-style tax cuts lost their political power?”

The answer, he says, is yes. “It shouldn’t be surprising that the tax issue doesn’t have the old oomph that it used to with voters,” according to Pethokoukis. And he highlights these poll results:

1. In the early 1980s, close to 70 percent of Americans thought their taxes were too high. Today, that number is 50 percent.

2. Middle-class Americans, by 53 percent to 42 percent, think they’re paying their fair share in taxes.

3. Americans rank taxes low on their list of concerns—even below climate change.

4. In the age of online tax preparation, Americans don’t think their tax returns are hard to fill out.

5. Americans think raising the minimum wage and business deregulation are better ways to boost economic growth than cutting tax rates on businesses and the wealthy.

Now, these findings don’t tell us which tax plans might be economically best for this particular moment in time. But I do think this has some bearing on a point I’ve made before and will undoubtedly make in the future: Ronald Reagan’s policies worked fabulously well in the 1980s. But the problems we face are different now than they were then. Conditions have changed, and the task for conservatives is to change–in a responsible, principled way–with them. That is in important respects what it means to be a conservative.

This point should be so obvious that it shouldn’t need to be made, except that for some on the right, to say that what Reagan did nearly 35 years ago may not be what is required today borders on heresy. For others, I suspect what is at play here are certain habits of thought. The tax issue has worked so well for so long for Republicans, they have developed well-worn mental and public policy grooves. And those are difficult to escape from.

It’s isn’t always easy, but it is necessary, to pull back from time to time to re-examine the intellectual and political landscape, to see problems in a somewhat different light, and to periodically think anew and act anew. Reagan himself did precisely that. The Reagan who ran in 1980, embracing supply-side economics, is not identical to the Reagan who ran in 1976, when he focused less on sweeping tax cuts.

Conservatives need to learn from the past but not simply try to replicate it; to understand that our principles applied to new problems will sometimes yield new solutions. To do anything else would not be conservatism but dogmatism.

Read Less

Answering the Wall Street Journal’s Kimberley Strassel

Wall Street Journal columnist Kimberley Strassel, whose work I generally like, has written a column in which she attacks a publication to which I contributed, Room to Grow. Most of her focus is on tax policy. She is a fierce critic of child tax credits, which Rob Stein, who authored the chapter on taxes, endorses.

Bloomberg’s Ramesh Ponnuru has written a response which is largely devoted to the matter of tax policy and child credits, and I commend it to you.

I thought it might be useful is to analyze two claims made by Strassel, one of which is that “The authors are clear that politics, not principle, needs to drive conservative policy.”

Really, now? Ms. Strassel need only have read the opening paragraph of the introductory essay (written by me) to refute this assertion. Here’s what it says (the italics are mine):

Policy is problem solving. It answers to principles and ideals, to a vision of the human good and the nature of society, to priorities and preferences; but at the end of the day it must also answer to real needs and concerns. And public policy today is clearly failing to address the problems that most trouble the American people.

Read More

Wall Street Journal columnist Kimberley Strassel, whose work I generally like, has written a column in which she attacks a publication to which I contributed, Room to Grow. Most of her focus is on tax policy. She is a fierce critic of child tax credits, which Rob Stein, who authored the chapter on taxes, endorses.

Bloomberg’s Ramesh Ponnuru has written a response which is largely devoted to the matter of tax policy and child credits, and I commend it to you.

I thought it might be useful is to analyze two claims made by Strassel, one of which is that “The authors are clear that politics, not principle, needs to drive conservative policy.”

Really, now? Ms. Strassel need only have read the opening paragraph of the introductory essay (written by me) to refute this assertion. Here’s what it says (the italics are mine):

Policy is problem solving. It answers to principles and ideals, to a vision of the human good and the nature of society, to priorities and preferences; but at the end of the day it must also answer to real needs and concerns. And public policy today is clearly failing to address the problems that most trouble the American people.

If she had read only a bit further into the chapter, she would have stumbled across this:

conservatives in American politics need to understand constituents’ concerns, speak to those aspirations and worries, and help people see how applying conservative principles and deploying conservative policies could help make their lives better.

And this:

Conservatives today need to show Americans how the principles that led to successful solutions when applied to the problems of that era [the 1980s] can do the same when applied to the rather different problems of this one. The same principles applied to new problems will yield new solutions.

The point of Room to Grow–which is explicitly stated in the book–is to (a) elucidate how a conservative vision of government could speak to today’s public concerns; (b) suggest how such a vision would translate into concrete policy reforms; and (c) explain how that vision and those reforms embody the spirit of our constitutional system. That hardly amounts to arguing that principles need not drive conservative policy. In fact, it amounts to the opposite.

We of course take political realities into account, as any sane person, and certainly any true conservative, must; but that is done in order to make it more, not less, likely that a conservative governing agenda actually be translated into law.

Now let me turn to Strassel’s claim that Room to Grow’s central premise is “That conservatives need to embrace government to better endear themselves to the ‘middle class.'”

This charge, like the first one, is wildly wrong. In the book’s second chapter, by my Ethics and Public Policy Center colleague Yuval Levin, he explains with some care why the proposals in the book would result in a government that “would no doubt be much smaller, more restrained, and less expensive than the one we have today.”

Yet Levin goes further than that. He also argues that conservatives should not be satisfied with accepting less of the same: the liberal welfare state at a lower cost. A bolder and more far-reaching goal is to change the underlying structure, the basic architecture, of much of the liberal welfare state, in order to advance the conservative vision of society.

The argument over which approach to tax cuts conservatives should take–tax credits for families v. cutting taxes on capital, and which are most appropriate at any given moment–is a serious and long-standing one. Ms. Strassel, an intelligent writer, is certainly able to present her substantive case. What is somewhat surprising is that her column so clearly misrepresents the book and the views of the various authors, to ascribe to them views and motivations that are quite obviously false.

She can do better than this, and usually she does.

Read Less

Paying the Corporate Income Tax

Who actually pays the corporate income tax has long been a problem for economists. Depending on the particular competitive circumstances in an industry, the tax is paid through some combination of lower wages for workers, lower capital gains for investors, and higher prices for consumers. 

A new study from Ben Southwood of the Adam Smith Institute calculates that, on average, workers pay 57.6 percent of the corporate income tax. In other words, a tax that was instituted under President William Howard Taft in order to tax the rich, who owned almost all corporate stock in the early 20th century, now taxes mostly the average guy.

Read More

Who actually pays the corporate income tax has long been a problem for economists. Depending on the particular competitive circumstances in an industry, the tax is paid through some combination of lower wages for workers, lower capital gains for investors, and higher prices for consumers. 

A new study from Ben Southwood of the Adam Smith Institute calculates that, on average, workers pay 57.6 percent of the corporate income tax. In other words, a tax that was instituted under President William Howard Taft in order to tax the rich, who owned almost all corporate stock in the early 20th century, now taxes mostly the average guy.

In 2013 the corporate income tax yielded $273 billion in revenue to the federal government, a little less than 10 percent of all federal revenues. Because it was never coordinated with the personal income tax that was instituted after the adoption of the 16th Amendment in 1913, it has been one of the main drivers of the ever greater complexity of the tax code as taxpayers have sought to legally avoid taxes by playing one tax off against the other.

While, heaven knows, the whole tax code needs to be junked and completely rethought, a good place to start would be by abolishing the corporate income tax.

Read Less




Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor to our site, you are allowed 8 free articles this month.
This is your first of 8 free articles.

If you are already a digital subscriber, log in here »

Print subscriber? For free access to the website and iPad, register here »

To subscribe, click here to see our subscription offers »

Please note this is an advertisement skip this ad
Clearly, you have a passion for ideas.
Subscribe today for unlimited digital access to the publication that shapes the minds of the people who shape our world.
Get for just
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
YOU HAVE READ OF 8 FREE ARTICLES THIS MONTH.
FOR JUST
Welcome to Commentary Magazine.
We hope you enjoy your visit.
As a visitor, you are allowed 8 free articles.
This is your first article.
You have read of 8 free articles this month.
YOU HAVE READ 8 OF 8
FREE ARTICLES THIS MONTH.
for full access to
CommentaryMagazine.com
INCLUDES FULL ACCESS TO:
Digital subscriber?
Print subscriber? Get free access »
Call to subscribe: 1-800-829-6270
You can also subscribe
on your computer at
CommentaryMagazine.com.
LOG IN WITH YOUR
COMMENTARY MAGAZINE ID
Don't have a CommentaryMagazine.com log in?
CREATE A COMMENTARY
LOG IN ID
Enter you email address and password below. A confirmation email will be sent to the email address that you provide.