Tuesday, July 05, 2011

Tax Increases Are Like Diamonds

Paul Krugman expresses some amusement at David Brooks' professed consternation, noting that he was denounced as "unreliable and shrill" for saying, a decade ago, what Brooks now accepts to be the case.
A normal Republican Party would seize the opportunity to put a long-term limit on the growth of government. It would seize the opportunity to put the country on a sound fiscal footing. It would seize the opportunity to do these things without putting any real crimp in economic growth....

This, as I say, is the mother of all no-brainers.

But we can have no confidence that the Republicans will seize this opportunity. That’s because the Republican Party may no longer be a normal party. Over the past few years, it has been infected by a faction that is more of a psychological protest than a practical, governing alternative.

The members of this movement do not accept the logic of compromise, no matter how sweet the terms.
But there's more to this. Sure, there's the faction that Krugman identified, now so obvious that even Brooks has to acknowledge its dominance, that will actively harm the country in its quest for power, its mindless advancement of dogma, or some combination thereof. But on the tax issues, their number is enhanced by an additional faction of Republicans that recognizes the reality of these negotiations: You can't bind future Congresses, so if they cut a deal for budget cuts over ten years they are making a deal that binds no one. Not even themselves.

Tax increases, on the other hand, can be put into effect immediately. When they abrogate their long-term tax plan in a year or two, as they almost inevitably will do, they don't want to be in a position of having "raised taxes" (even if only on luxury corporate jets), and can't reasonably anticipate that they'll have the support to restore that type of tax break even if they walk back their spending cuts. Tax increases, like diamonds, are forever.1

Trademark Brooks:
Over the past week, Democrats have stopped making concessions. They are coming to the conclusion that if the Republicans are fanatics then they better be fanatics, too.
Because, when negotiating with a fanatic, if you do anything short of giving the fanatic everything he demands you're also a fanatic. That's some logic....
If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.
As Brooks is implicitly admitting, they're right even if the "responsible Republicans" do take control of this issue.
1. The ad campaign, "Diamonds are forever", is designed in no small part to suppress the second-hand market for diamond jewelry. It is possible to cut taxes or repeal a specific tax, just as it is possible to resell a diamond; but once enacted it's much more likely that a tax will go up as opposed to down.

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