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Friday, October 17, 2003

Krugman and the Democratic Primary

The Dems have been having a fight for a while now on whether to roll back the entirety of the Bush tax cuts or to keep in place the tax cuts for the middle class while getting rid of only the cuts for the rich. I've been wondering where Paul Krugman stands on this one for a while and today we get the answer:

"Those who want to restore fiscal sanity probably need to frame their proposals in a way that neutralizes some of the administration's demagoguery. In particular, they probably shouldn't propose a rollback of all of the Bush tax cuts."

He goes on to say that the Bush campaign will be able to point out a few selective families that actually will have significant tax increases if the whole package gets repealed. This is certainly a challenge that a Dean or Gephardt would face, but Krugman doesn't address what I think is Dean's strong retort: that state fees, property taxes, etc. have gone up just as much or more for most working Americans, and the weak economy has definitely hurt people more than they've gained from the tax break.

Furthermore, proposing tax hikes for some while leaving others' tax cuts intact risks a muddled message. Candidates like John Kerry sound like they're trying to have things both ways to make everyone happy (not that he has that problem on any other issue!). Kerry, Lieberman and Edwards also implicitly give the president credit for helping out middle class people by leaving that part of the tax cut alone, which probably hurts their overall message.

Plus, the "class warfare" rallying cry could be just as damaging as those "typical families" Krugman is concerned about on the demagoguery front. And Krugman himself admits that even repealing the whole package won't be enough to restore the long-term fiscal solvency of the federal government.

I say Democrats should back getting rid of the Bush tax cuts in their entirety. It's the responsible course to take given the economic disaster the Bush administration has been and it's politically feasible to sell voters on a return to the tax code of the 1990s boom.