Memo to Obama: Don’t tie progressive spending policy to progressive tax policy. Each can stand on its own.<\/p>\n
Reported today in the Washington Post<\/em>:<\/p>\n Obama proposes $600 billion in new spending to boost economy<\/a><\/p>\n President Obama on Tuesday unveiled an ambitious budget that promised more than $600 billion in fresh spending to boost economic growth over the next decade while also pledging to solve the nation\u2019s borrowing problem by raising taxes on the wealthy, passing an overhaul of immigration laws and cutting health costs without compromising the quality of care. Obama seeks to raise more than $1 trillion \u2013 largely by limiting tax breaks that benefit the wealthy \u2013 to spend on building roads and bridges, early childhood education and tax credits for the poor.<\/p><\/blockquote>\n Here’s the conceit: Uncle Sam is broke. He’s got a borrowing problem. He’s gone hat-in-hand to those who’s got, trying to borrow a few dimes off them. But they are ready to foreclose on his Whitehouse.<\/p>\n Obama knows his economy is tanking. Five and a half years after Wall Street\u2019s crisis, we still have tens of millions of workers without jobs. Even the best-case scenarios don\u2019t see those jobs coming back for years.<\/p>\n Obama will leave office with a legacy of economic failure.<\/p>\n Belt-tightening austerity isn\u2019t working. He wants to spend more, but he doesn\u2019t have more to spend. He\u2019s run up his credit tab at the local saloon and the bar-keep won\u2019t pour another whiskey.<\/p>\n So he\u2019s got an idea: let\u2019s take from the rich and give to the poor, homeless and jobless. Robin Hood rides to the rescue.<\/p>\n Look, we all love Robin Hood. Almost no one outside the One Percenters disagrees with the view that the rich have too much. It is immoral. It is easy to argue that public policy ought to aim at reducing their income and wealth. And giving some to the poor.<\/p>\n If you have any remaining doubt at all that the One Percenters deserve to be dispossessed of much of their wealth, take a look at this segment by Chris Hayes<\/a>. Kevin Roose crashed their obscene party and secretly recorded their shenanigans. Their hatred of the 99 percent just oozes from the video.<\/p>\n Or look here<\/a> at the Mother Jones<\/em> piece on the Fabulous Fab, who\u2019s now teaching recruits at the University of Chicago for Wall Street\u2019s fraud machine.<\/p>\n No lesson learned. Or, rather, they\u2019ve learned that fraud pays. Big time.<\/p>\n Now to be clear, I do not know that Obama would win on a tax the rich platform; indeed, I\u2019m not sure I even believe he wants to do it. The top One Percenters are not just Bush\u2019s \u201cbase\u201d\u2014they also got Obama elected. Twice. And, of course, they are Hillary\u2019s base, too, so get ready for a couple of years of nonstop of the inevitable.<\/p>\n But why link this to Obama\u2019s plans to spend more? You then automatically ensure that anyone against \u201csoak the rich\u201d schemes will oppose the Robin Hood plan to \u201ctake from the rich to give to the poor.\u201d It is bad politics to put a poison pill into your stimulus bill.<\/p>\n And it is bad economics, too. Doubly bad.<\/p>\n First, if you are trying to stimulate the economy, you don\u2019t enact a \u201ctrillion dollar\u201d tax increase. I do believe there is something to the \u201cbalanced budget multiplier\u201d: if you reduce the income of those who don\u2019t want to spend but increase the income of those who do, you will get some stimulus. But we are literally trillions of dollars of spending away from full capacity. And Obama\u2019s plan is, apparently, to tax $1 trillion and spend $600 billion. Uhmmm. Can he subtract? I calculate a $400 billion shortfall. I doubt the differing spending propensities involved would make that much of a stimulus.<\/p>\n Second, Uncle Sam is the currency issuer. He cannot run out. He cannot become insolvent. He always spends by crediting bank accounts with High Powered Money. He never spends \u201ctaxpayer\u2019s money.\u201d Unless we\u2019ve got a nation of counterfeiters, every single dollar that a taxpayer pays to Uncle Sam came from Uncle Sam.<\/p>\n