Sunday, February 24, 2013

Why do Democrats love tax increases?

So the Democrats got a substantial tax increase on the wealthy at the beginning of the year. That should be enough for the fiscal health of the country, right?

Not according to most of the Dems out on speaking tours these past few weeks. From Obama on down, they are saying that the federal government needs even more revenue. If that's true, we have to wonder why the Dems didn't get that extra revenue in the fiscal cliff negotiations. Here some speculative ideas about why the Dems want that revenue:
  1. The Dems want to set the precedent that all deficit reduction will be a mixture of spending cuts (cuts below the current baseline, which is in an upward trajectory) and revenue increases.
  2. Dems want to kill off the GOP preferred method of deficit reduction, which is by spending cuts only, with no revenue increases except from economical growth.
  3. Dems want to force the GOP to capitulate to the Dem's preferred deficit cutting approach, and thereby humiliate the GOP.
  4. Dems don't want to be humiliated by the GOP if it ends up that government can be cut significantly without huge gaps opening up in the social safety net.
  5. Dems are concerned about the growth of income inequality and the reduction in broad, well-paying employment, and they want to even out the inequity using taxation to supporting public provision of standard benefits.
  6. Dems are protecting their loyal constituencies of government workers and those who received federal benefits.
  7. Dems honestly believe that the cuts will be devastating to government services that we depend on, so the sequester is too deep.
  8. Dems always want to raise taxes and spend more on government programs, and they don't even remember why.
Obviously I don't know the talking point reasons the Dems give for needing higher revenue, and I'm getting more and more exasperated as I try to figure out the reason. If you're wondering why I can be so nasty to the Dems just 4 months after supporting Obama's reelection, I'll remind you that the GOP proposals were even more dangerous and ridiculous.

I may be getting the government I voted for, but I never had a chance to vote for the government I really want. (That's true for lots of people--just ask a libertarian.)



Anastasios said...

Well, probably all of the above. But there are other reasons as well, mostly having to do with the old line about taxes being the price of civilization. Many elements of the Democratic party would not agree that the US is presently a civilized place, certainly not compared to Canada or western Europe. Given that, and if one wants the US to become a civilized place that one does not have to be ashamed of, it's going to cost. Of course, on a much wider scale, it is largely a reaction to Republicans. Since Republicans hate taxes so very, very much, then inevitably Democrats constantly press for them. As to why Obama did not press for more taxes in the fiscal cliff deal, I suspect we are back to the strategic vision thing. He really did think that level of tax increase would harm the recovery, and he also thinks that the Republican party, as it is presently constituted, is doomed. Given that, why risk short term havoc when in the longer term Democrats will be able to force Republicans to humiliate themselves with regularity? So why be so stubborn over the sequester? Because he has run out of chits with the left, for one thing. But he also believes that the Republicans, like the Gingrich House in the 90s, have their foot poised over a bear trap. Time will tell if he is right. Personally, I have no idea

Dangerous said...

It's not a tax increase if it just reverses some or all of the unaffordable tax give-aways of the Bush years.

ModeratePoli said...

@Anast + Dangerous,

Thanks for the additional speculative explanations. I knew I couldn't exhaust all possible hypotheses.