I dunno who Adam Davidson is, but he appears to be auditioning for David Brooks’ role if some
act of God incapacitates something unfortunate happens to Bobo. Davidson appears to be deeply Serious. In a piece for NYT Mag (I think?), Davidson offers some sober Beltway wisdom:
This election is about stark differences on economic policy, but one of the few fiscal issues on which Democrats and Republicans agree — surprisingly — is how to tax corporations. Every Republican presidential candidate, and even the guy who currently has the job they’re after, wants to lower rates. Raising them, or even maintaining them, might satisfy the anti-corporate angst of protesters and populists, but it won’t come anywhere near paying off our debt.
Is anyone suggesting that such a raise would entirely pay off our debt? I haven’t heard so. But whatever, I s’pose. After noting that the 35% corporate tax rate is way WAY too high (and then noting in the next paragraph that the effective rate is far lower), Davidson writes this:
Businesses are easy targets, but taxing them — or not taxing them — isn’t the answer. If you can ignore the politics and look at our country’s fiscal picture as a math problem, the situation is fairly grim, but it’s also fairly clear. Unless we make serious changes, we are going to be in far more debt than we can afford. There have been two important bipartisan commissions — Rivlin-Domenici and Simpson-Bowles — that reached the same conclusion: we need to make some significant cuts in Social Security, Medicare and defense and, at the same time, pay a lot more in taxes. The total cost could be around $400 billion more a year.
First bold: really? How so? Davidson provides nothing to substantiate this statement. Bond rates are at historic lows. How do we know how much debt “we can afford?” If this is supposed to be a news piece, that’s a pretty editorialized statement.
Second bold: ah yes, the old and easy tell. Social Security, which has never contributed a dime to the deficit, and furthermore has for years been used to make deficits seems smaller, must be cut. It must be done! It’s Serious! The math demands it! Does Davidson link to anything that shows how SS contributes to the deficit? Of course he doesn’t. Because no such (undoctored) documents exist. More Davidson:
Corporations aren’t going to be able to pay that much. And as much as some people might want to punish them, or at least the C.E.O.’s that run them, it would wreck our economy if we did. It’s tempting to look to our millionaires and demand they pay more in taxes, but the same inconvenient truth applies. When you add up all the money made by all the people who earn more than $1 million a year, it amounts to around $700 billion. But since the millionaires already pay close to $200 billion in taxes, the government would have to increase rates to nearly 100 percent — which is about the worst idea ever — for it to have any real impact.
Is anyone suggesting that we raise the rates to 100%? Also, why doesn’t Davidson let us in on the secret of what a “real impact” would be? Why doesn’t he use a number? Also too, the “worst idea ever” is just self-parody. First, ‘cuz no one’s suggesting that. Second, ‘cuz that’s still a better idea than slashing SS or Medicaid, which is the Serious alternative that Adam Davidson proposes. Hurts me to keep reading, but I did:
It serves the interest of both parties to argue about taxes on corporations and the wealthy because neither wants to discuss the alternative, which is where things get touchy. To solve our debt problems, we have to go to where the money is — the middle class. People who earn between $30,000 and $200,000 a year make a total of around $5 trillion and pay less than 10 percent of that in taxes (owing mostly to tax incentives and the fact that most families make less than $68,000, where larger tax rates begin). Increasing the middle-class tax burden an additional 8 percent, however, would actually have a bigger impact than taxing millionaires at 100 percent. Still, many experts say we don’t need to raise the tax rate on the middle class; we just need to get rid of some of those despised loopholes (or beloved incentives). Most reform proposals suggest gradually eliminating the most popular tax deductions, like mortgage interest rates ($120 billion per year) and workplace health insurance ($200 billion per year). Regardless, most economists acknowledge, and most politicians privately concede, that the middle class will have to give up some benefits (Social Security, Medicare) or it will have to pay more in taxes. Actually, it will probably have to do both. The millionaires will be paying more, too. Leading Democrats are proposing a nearly 10 percent hike.
Absurd cut-off point. 30k to 200k? Seriously? I’d actually be in favor of having the entire Bush tax cuts expire, which would give the country an additional $4 trillion of revenue, most of which (most estimates I’ve seen say $3 trillion) comes from the middle class. Funny enough, and this just occurs to me now, Davidson never mentions that. It’s a pretty easy solution: to reduce the deficit by $4 trillion dollars, all we have to do is NOTHING. Just let the tax cuts expire. Davidson finishes in grand fashion:
It’s a tough but manageable financial math problem. And America’s middle class is actually a lot luckier than its counterparts in Greece, Spain or Ireland, who will be paying higher taxes while their countries’ economies shrink, or stagnate. Even the Fed’s dark forecasts anticipate that the U.S. economy will return to healthy growth (about 3 percent annually) within a couple of years. Unless we hold on to the fantasy that the solutions to our problems lie in the bank accounts of rich people and corporations.
Mmm yes. Fear not, middle-class Americans. Your Galtian Overlords may be decadent, soulless, out-of-touch sociopaths, but they aren’t quite as bad as Europe’s! Spectacular.
But even the liberal NPR clutches for Adam Davidson’s pearls of wisdom, so he must know what he’s talking about…