I recently had a Facebook conversation with an old friend of mine from back in my misguided Republican days, about a topic of great importance that I raised with him. Despite my having left the ranks of the Republican party long ago, I still like and respect this friend a great deal and very much enjoy engaging him in discussions about our fundamental differences of political opinion.
We may not agree on most policy issues, but he is still my friend, certainly not my enemy. If anything, such conversations serve to sharpen my own rhetorical skills as he tends to keep me on my toes, but always with healthy dose of respect and friendship.The reason I decided to share this particular conversation here is because I believe it uniquely highlights something we should all strive to do: challenge our own assumptions and pre-conceived political beliefs. Feel free to add your own comments below!
RMA: Here's something I'd love to discuss: We have the super-rich people, like Gates & Buffett, Reaganites like Laffer, Greenspan & Stockman, and now the Wall St. crowd - pretty much all in agreement that taxes need to be raised in order to achieve some level of fiscal sanity, yet the Congressional GOP continues to cling to the verifiably false belief that tax cuts for the rich creates jobs and/or economic growth. We have 30 years of unambiguous evidence that they do not. Please explain to me why the GOP continues to push this ideology in the face of so much evidence to the contrary. It's almost like an article of faith, not an evidence-based belief. (I'm in the middle of re-reading David Stockman's "The Triumph of Politics" in which he concluded, 25 YEARS ago, that supply-side simply does not work in practice. As such, the topic is at the forefront of my mind lately and I've been pondering the question of why, when one of the principle architects of the theory was forced to abandon it before Reagan even left office, the party, nonetheless, continues to espouse it. It's not as if supply-side economics was a central plank of the GOP's platform prior to Reagan's presidency - in fact, there were fewer supply-siders in the GOP back then than there were Keynesians and most Republicans were extremely skeptical of the entire concept in the first place - i.e. George H.W. Bush referring to it as "voodoo economics" when running in the primary against Reagan).
Friend: Rob, you grossly over simplify the point since everyone you have named has made statements that contradict each other and to explain it an FB post is rather ridiculous if not practically impossible... as an example, the much maligned "Ryan budget" has what would objectively be called "tax increases" since they trade off many exemptions for a lower top marginal rate. .. Laffer continues to support that as have all supply siders dating back to John Kennedy. Even Keynes, whose economic theory is what liberal economic policy is based on says in his writings that any top rate above 25% presents diminishing returns for the government. Gates & Buffet are welcome to pay more in taxes ... all they have to do is rid themselves of the phalanx of accountants and lawyers that protect their money. Then they will be credible as advocates for higher taxes.. As for me and the rest of small business America working hard to earn my living, the less tax dollars I put into the abyss know as the federal treasury, the better.
RMA: Well, don't get yourself in a snit over it - I wasn't looking to pick a fight, nor was I necessarily looking for you to explain supply-side economic theory to me (I'm pretty well-versed, thank you very much) - I raised it only because I believe it's a topic that, in my opinion, gets discussed entirely too little. Like I said, the notion that tax cuts for the rich creates jobs and/or economic growth is like an article of faith for the right and, therefore, nobody sees fit to discuss the validity of the underlying assumptions upon which it rests. My statement that we have over 30 years of evidence demonstrating that tax cuts for the wealthy do NOT trickle down as advertised was not an oversimplification - it's an indisputable fact. It makes sense on paper (which is why I was a believer before all the evidence was in) but it simply doesn't work in practice and, therefore, my question to you is why does the right continue to espouse an economic theory that, objectively, can only be described as an abject failure? Note that I'm not asking you or anyone else to change their political beliefs at all - I'm strictly talking about the right's continued belief in supply-side economics when even the architects of the theory have largely abandoned it.
Friend: It's hard to call it indisputable when President Obama used the exact opposite logic as his reason for extending the Bush tax cuts in December. I believe he actually cited economists from a wide spectrum as saying they were critical for economic growth. Historically, revenues and the economy have always grown as a result of tax cuts. The indisputable fact is that both Republicans and Democrats committed the added revenue to new spending and not deficit reduction. If I were a redistributionist, which I am not, but wanted to make a powerful populist argument for taxing the rich, I would suggest doing so and then taking that money and putting it toward direct tax cuts to the middle class. That way real people could spend it, not the government.
RMA: "Historically, revenues and the economy have always grown as a result of tax cuts." Not true, my friend. Not true at all. Yes, when taxes were cut in 1981 from a top marginal tax rate of 70% down to 50%, there was an uptick in economic growth - but that was short-lived and Reagan wound up having to raise taxes 11 times thereafter. The Laffer curve was about finding the optimal level of taxation to realize the most revenues - anything above OR BELOW that optimal rate results in less revenue, which is why the Bush tax cuts didn't do what the Reagan tax cuts did - they were cut past the point of diminishing returns.
Friend: Lots of born agains in politics Rob, especially when people are trying to sell books. I am sure no one would read Stockman if he wrote a memoir championing supply side economics. Let me guess, your next read is Colin Powell writing that Bush lied to him about WMD.
RMA: You're skirting the issue! Your pot-shots at Stockman and Powell are irrelevant to the narrowly tailored question I posed. By the way, I completely support targeted middle class tax cuts because those are the people most likely to spend the money, thus growing the economy. Buffet's taxes are completely irrelevant to his spending habits because there's an enormous buffer in between. For those in the middle class, however, there is no such buffer and, thus, if allowed to keep more money through tax cuts, they WILL spend it.
Friend: Reagan never raised top marginal rates Rob. You are throwing out a lot of disconnected data points and trying to derive a causal relationship that does not exist. That was my point, which clearly you did not get about the Ryan budget. They include some tax increases but in exchange for lower marginal rates. Not all taxes are of equal importance to supply siders. That is the nuance you are missing. Reagan never cut capital gains, but Clinton did as an example. Reagan cared mote about income taxes vs others.
RMA: I wish you'd stop trying to characterize my level of understanding of the topic - it's a little insulting and not at all accurate. I got your point and I know the difference between income taxes and other types of taxes. The nuance that YOU seem to be missing is that tax cuts for the rich don't trickle down because no matter how much they pay in taxes, they still have lots more money to spend and, therefore, their spending habits aren't changed very much, if at all. Middle class tax cuts, on the other hand, absolutely stimulate economic growth precisely because middle class people with a few extra bucks WILL spend it.
Friend: So is the essence of your point that people in America should be limited in the amount of wealth they achieve? And with a top federal rate at 37%, what is your acceptable level of wealth confiscation? Funny how I have not heard a peep in this conversation about spending cuts. We'd will still be broke if the rich paid what I imagine you desire they would in taxes. Spending is the problem Rob. Not successful people who achieve wealth.
RMA: Wow, you really have to WANT to believe that my argument is that Americans should be limited in the amount of wealth they achieve based on the actual words I used. I didn't say anything even resembling such a comment. And the reason why you haven't heard a peep about spending cuts in this conversation is because that's not what I asked about. My question was very specific and limited solely to the issue of supply-side theory, i.e. tax rates and revenues. Spending has nothing to do with the specific point I raised about the dubious nexus between tax cuts and job creation/economic growth. Federal spending is an entirely separate discussion, one on which reasonable minds can disagree as it is a reflection of one's wholly subjective political beliefs and values. The issue I raised, on the other hand, relates to an objective analysis of the numbers. Nowhere did I say anything about successful people achieving wealth being the source of all our problems - or any of them, for that matter. I hope you realize that I'm in no way trying to pick a fight or to trap you in a rhetorical box. I'm genuinely interested in raising the intellectual caliber of our political discourse and you are one of the few conservative friends I have that are capable of keeping up, that's why I posed the question to you and not some random schlub. Politicians, not economists, are the ones who continue to bow at the alter of supply-side economics. Even Art Laffer doesn't have the commitment to his own theories that Congressional Republicans have.
Friend: I get it man.. but I have little patience for class warfare which solves little to nothing.. I want to understand your perspective, but I'm getting stuck on the point that the rich should pay more than they do because they're rich.
RMA: Dude - chill with the hyperbole and sound bites! I'm not engaging in "class warfare" by suggesting that the top 2% of income earners should pay 3.4% more in income taxes! My god! Effective tax rates are at their lowest point in about 60 years! Do you REALLY believe that anyone who thinks we should return to Clinton-era levels of taxation is truly engaged in class warfare? While that might make for a good sound bite, it doesn't contribute anything to an honest, intelligent discussion about a serious and, frankly, complicated issue. Politicians pretend as if economics is simple and straightforward but you and I know different - it's an extremely complex subject that most people do not understand, which is why it's so easy to shut down serious discussions about it with ridiculous statements like "class warfare" because, for most people, that's easier to understand and to pick which side of the issue you stand on than it is to wrap your head around the nuances of economic theory. As for why I believe that the top 2% should pay a little more in taxes (and that's really what we're talking about here - a little more) it's because they can. I know all of the convenient little statistics that I'm sure you'd want to throw at me at this point in the conversation - like the top 2% paying 40% of all revenues collected - and similar such arguments. Again, they make for good sound bites, but they don't get to the heart of the issue. For me, neither the percentages nor the numbers in real dollar amounts tell the right story. It's not about the relative amounts of taxes paid when comparing the rich to the average middle class worker. Rather, I think the focus should be on how much an individual or family has left over after deducting all of life's expenses - food, rent/mortgage, cars, utilities, tuition, credit cards, etc. For the average middle class person, not much is left over. For the average rich person, however, a great deal is left over. That is why I said earlier that taxes really don't change the spending habits of the super wealthy - if they want to buy that yacht they've been eying, they can do so regardless of their tax burden. So, therefore, it is my belief that how much someone pays in taxes should be based on how much it would "hurt" in terms of what's left over after you deduct all necessities. To me, the wealthy have a moral obligation to carry more of the burden - because it's really not the same burden to them that it is to a middle class family struggling to make ends meet. I'm not looking to punish anyone's success. I wish people would stop framing the debate in those terms because it deflects attention away from consideration of what really matters. We live in a modern, civilized community of over 310 million people. We are ALL Americans. I'm not usually the one to quote Jesus, however, wasn't it him who said that people shall be judged on how they treat the least of our brethren? We have an obligation to one another as fellow citizens of a great country. I don't know why that belief is continuously derided as un-American or "socialism" or any of the other mischaracterizations that are routinely made by those who so often claim to follow the teachings of Jesus. If you haven't already seen it, take a look at the letter to Boehner from the Catholic University religious studies professors that was sent a few days ago and consider their point about the Ryan budget being "anti-life." It's not exactly what we're talking about here but they make a very similar point to the one I'm trying to make. There are a lot of reasons why I'm not a Republican anymore and this is one of them. Somewhere along the way, the GOP became the party of greed, resentment, hypocrisy and mean-spiritedness and, as a result of that and several other factors, I could no longer be a part of it while continuing to be true to what I believe.
* * *
Unfortunately, this is where the conversation ended, however, I look forward to picking up where we left off as soon as possible. If and when we do, I'll be sure to post the continuation here.