Republicans’ New Twist on Tax Cuts for the Rich

Paul KrugmanThe Republicans are back with their bad old idea on improving the economy: tax cuts for the rich. But you’ll never believe their new twist!

Paul Krugman published two short post that I thought were very interesting. The most recent one was a comparison of the economic recovery under Obama and Bush, Obama The Job-Killer. As you can see in the graph below, the Bush recovery was much worse than the Obama recovery. Don’t worry about the recession at the end of the Bush administration. Just look at the main trend line. Obama’s trend is faster than Bush’s. That’s amazing. I’m the first to admit that the Obama recovery has been mediocre. I don’t blame Obama for that; the Republicans have stood in the way at every turn, pushing policy that only hurts the economy.

But there was Bush. During his first two years, he had a Republican House and a compliant Democratic Senate. From 2003 to 2007, he a Republican controlled Congress. So he got to do pretty much what he wanted. And the results were meh. Because that’s what Republican policy does. It is designed to help the rich, and it does that brilliantly. But it doesn’t help the economy generally. And that would be fine if that was what the Republicans campaigned on. But they know that if they campaigned on their actual agenda, they would never get elected anywhere.

Here is the comparison of private jobs created during the two administrations:

Private Job Creation: Bush vs Obama

So what are the policies that we are talking about? Basically, we are talking tax cuts for the rich. The Republicans only have two policies that they push. They are the same policies that they have been pushing for four decades. The first is deregulation of the finance and oil industries. I’m not going to go into it here, but these are policies that give more money to the already rich without helping the overall economy. The second is focused tax cuts that give more money to the rich.

Under the right circumstances, tax cuts can be helpful for the economy. It is certainly true that the temporary payroll tax cut during the first term of the Obama administration was helpful. That’s a tax cut that helped all working people, allowing them to spend more money. But you will note that when it came time to lift that tax cut, the Republicans didn’t complain. They had “reasons” why it didn’t matter. Grover Norquist was okay with it. He didn’t have a reason for it. But we know why he didn’t care: it didn’t affect the rich.

Giving tax cuts to the rich does not help the economy because they will just sit on the money. If the government had it, the money would be put to use in the economy. Alternatively, it could be given to working people who would also put it to use. But giving money to people who already have too much money does little good for the economy. But what do you think the new breed of Republicans think we should do to help the economy. Let’s all say it together: tax cuts for the rich! Here’s a graph from the second Krugman article, Doubling Down On W:

Republican Tax Cut Distribution

The only think that has changed is that the tax cuts of the establishment candidate, Jeb Bush, and the “crazy” candidate, Donald Trump, are even more lopsided than the very lopsided tax cuts of George W Bush. This is what we get from the Republicans. I constantly hear from Republicans how Democrats want to do the same old stuff but that the Republicans have big new ideas. But they don’t have any ideas. Sure, some conservative thinkers have some ideas. But they are only around for window dressing. If they ever became politically possible, the Republicans would turn on them in an instant.

So time and again, giving the rich huge tax cuts has not helped the economy. So the new group of Republicans is back with the same old idea. But with a twist: the tax cuts will be even bigger!

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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

6 thoughts on “Republicans’ New Twist on Tax Cuts for the Rich

  1. https://www.youtube.com/watch?v=-N3Uk8Y5km8

    It shouldn’t be a surprise since they have not had any idea that was popular with voters since about 1979. Maybe if you consider destroying ADFC to be an idea they had but they came up with that in the 60s. It is pretty sad that this is where we are stuck at.

    Although the reason why the Democrats’ ideas are all old is because the old ones work when properly implemented. Social Security works exactly as intended. Medicare works better than private market insurance. So why not let them run everything?

    Also I have to keep writing because your spam filter kicks my comments otherwise so I am going to publicly ponder why I have “Cool Nights” by Paul Davis stuck in my head…Probably because it is cold tonight.

    • What’s funny is that you might say that the Democrats ideas date back to Keynes. (They have many other newer ideas, but let’s stick with that.) So those ideas are about 75 years old. But the “new” Republican ideas date back to Adam Smith 225 years ago — or earlier still given that they mostly don’t even understand what Smith was talking about.

      • Adam Smith talked about cutting taxes on property?

        Personally I wish they would embrace the view that Andrew Mellon had:

        The fairness of taxing more lightly incomes from wages, salaries and professional services than the incomes from business or from investments is beyond question. In the first case, the income is uncertain and limited in duration; sickness or death destroys it and old age diminishes it. In the other, the source of the income continues; the income may be disposed of during a man’s life and it descends to his heirs.

        Surely we can afford to make a distinction between the people whose only capital is their mental and physical energy, and the people whose income is derived from investments. Such a distinction would mean much to millions of American workers and would be an added inspiration to the man who must provide a competence during his few productive years to care for himself and his family when his earning capacity is at an end.

        Taxation: The People’s Business

        Granted Mellon thought taxes should be next to nothing on capital but at least he favored taxing lazy people over the worker bee.

        • No. My point is that Republican economics is primitive and based upon the idea of free markets, which were always a theoretical idea and not a reality. As it was, Adam Smith was a moral philosopher. And even in Wealth of Nations, he said markets work better than one would think — not that they work perfectly. But modern conservatives really hearken back to Hayek, who really wasn’t an economist but an anti-communist crusader. I understand the impulse: you want to believe something so you cherry pick information that proves it. But it’s wrong to claim that Republican ideas only go back to him, because his “ideas” are far older.

          • Oooooh, well that makes sense. My point was as a political idea to win elections-they came up with tax cuts. Their reasons for it change but ultimately it is all about tax cuts because it was such a popular idea for such a long time.

            The underlying philosophy is one thing but I was referring specific policy proposals that they have to say they want to enact and they don’t have anything except tax cuts.

            • It’s all about constituency. The Republicans depend upon a lot of people voting for them who are really not part of their constituency. The same thing goes on in the Democratic Party, but it isn’t nearly as extreme.

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