Skip to comments.Get Lucky; Is The Wall Street Journal's editorial page written by James Bond villains?
Posted on 12/22/2002 12:22:53 PM PST by Torie
by Jonathan Chait
Post date 12.17.02 | Issue date 12.23.02
One of the things that has fascinated me about The Wall Street Journal editorial page is its occasional capacity to rise above the routine moral callousness of hack conservative punditry and attain a level of exquisite depravity normally reserved for villains in James Bond movies. To wit, a recent lead editorial titled "THE NON-TAXPAYING CLASS." A reader unfamiliar with the Journal's editorial positions might read this headline and assume it refers to ultra-wealthy tax dodgers. But no--the Journal, of course, approves of such behavior. The non-taxpayers it denounces are those who earn too little to pay income taxes: "[A]lmost 13 percent of all workers," the editorial fumes, "have no tax liability. ... Who are these lucky duckies?" In typical Journal fashion, the editorial is premised upon a giant factual inaccuracy--it completely ignores sales and excise taxes, which consume a huge share of the working poor's income. But what makes the editorial truly exceptional is the reasoning underlying it. The Journal complains that low taxes on the poor are "undermining the political consensus for cutting taxes at all." For instance, the editorial considers the example of a worker who earns $12,000 per year, and, after noting bitterly that he pays less than 4 percent in income taxes, concludes, "It ain't peanuts, but not enough to get his or her blood boiling with tax rage." In other words, the Journal wants to raise taxes on the working poor so that they will have more "tax rage" and thus vote for Republicans. Once in office, of course, those Republicans would proceed to cut taxes for the well-off. (Indeed, according to the Journal's logic, they couldn't cut taxes on the poor because that would just lead them to stop voting Republican.) When I try to visualize the editorial meeting that produced this bit of diabolical inspiration, I imagine one of the more rational staffers--maybe Dorothy Rabinowitz--tentatively raising her hand and asking, "Isn't that idea a bit, you know, immoral?" Then Robert Bartley or Paul Gigot would emit a deep, sinister laugh and press a hidden button, depositing the unfortunate staffer into a tank of piranhas. Come to think of it, I haven't seen Rabinowitz's byline in a couple of weeks.
The Journal is perhaps most famous for helping to transform supply-side economics from a crank doctrine ridiculed by mainstream economists and rejected by Washington policymakers into a crank doctrine ridiculed by mainstream economists yet embraced by Washington policymakers. But, even though President Bush is no less committed to supply-side economics than was Ronald Reagan, W.'s policies, unlike the Gipper's, are almost never described in the press as "supply-side." A rare exception occurred last month, when President Bush declared at a press conference that "the deficit would have been bigger without the tax-relief package." A minor stir ensued, with Democrats accusing the administration of practicing supply-side economics and Bush aides denying it.
Why Bush's embrace of voodoo economics became newsworthy just recently is hard to figure, because his spokespeople have been saying the same thing for months. "The tax cut gives us a chance for sustained economic growth. If we have higher taxes on this economy then the [revenue] projections won't get stronger; they're more likely to get weaker," insisted White House Budget Director Mitch Daniels last summer. "The president does believe that cutting taxes is the best way to spur growth and therefore to have a return of bigger surpluses," declared Ari Fleischer ten months ago. Indeed, describing this administration's economic policies merely as "supply-side" is something of an understatement. Supply-siders believe that cutting upper-bracket tax rates can cause massive economic benefits, and in the early '80s they did famously claim that those benefits would be so large that they would actually cause tax revenues to increase. But most have spent the intervening years fervently insisting never to have said any such thing. "[T]he 'supply-side' movement is not remembered for its correct predictions about prosperity, but for the 'Laffer curve,' and its supposed prediction that the revenue effects of tax cuts would be large enough to shrink the deficit," writes Bartley in The Seven Fat Years, his apologia for Reaganomics. "The prediction, however, is not one any of us really ever made." So Bush has embraced a version of supply-side economics so radical that even the supply-siders themselves have repudiated it. After the president's controversial pronouncement, no less a purist than Jude Wanniski, author of the influential 1978 supply-side tract The Way the World Works, told The Washington Post that the Bush tax cut is "decreasing revenues."
Wanniski, once a confidant of GOP stars such as Jack Kemp and Steve Forbes, has since become marginalized by holding forth on noneconomic subjects--for instance, defending Louis Farrakhan or insisting that Saddam Hussein did not use poison gas against the Kurds--where his nuttiness is apparent even to laymen. The other great tax-cut tome is Wealth and Poverty, written by George Gilder in 1981. Gilder's reputation, too, has gone south recently. After winning acclaim as a tax-cut zealot, Gilder abruptly became a telecommunications autodidact. During the 1990s boom he made a fortune as a new economy evangelist--he earned up to six figures for a single speech, and his newsletter, "Gilder Technology Report," often caused stocks he recommended to jump as much as 50 percent. Gilder used his wealth to purchase the conservative monthly The American Spectator, which he turned into a monument to his own genius. One issue featured a 6,600-word cover interview of Gilder himself, in which he was asked questions such as, "In the late 1970s and early '80s, you led the intellectual debate on sexual issues from the conservative side. In the 1980s your book Wealth and Poverty transformed the way people thought about capitalism. And then you wandered off to study transistors. Why did you do that?" (Gilder's reply: "I thought I had won those debates. Whenever I actively debated anybody, they didn't have any interesting arguments anymore.") In the same interview Gilder declared, "Almost all [upper-class women] are averse to science and technology and baffled by it. And they clutch at the pretentious irrationality of environmentalism as their countervailing wisdom." The Spectator promised its readers that "[a]n equally wide-ranging talk with George will be an annual event." Alas, only one ever took place. The technology crash caused most of the companies Gilder extolled in his newsletter to lose virtually all their value. "I told people in early 2000 they should sell half their shares in these companies," he told Wired in a semi-contrite interview last July. "I didn't say it often. I didn't put it in a newsletter." Gilder had to abandon the Spectator and, according to Wired, is now broke and has a lien against his home--giving the phrase "Wealth and Poverty" an unanticipated poignancy. But, as the Journal might note, his income-tax bill these days is probably almost nil. Lucky ducky.
Jonathan Chait is a senior editor at TNR.
The WSJ point is solid. If poor people can vote themselves goodies from the government, yet pay only 4% of their income in taxes, then they will vote for lots and lots (and lots) of goodies for themselves. Just so long as other people pay for them.
It should be clear that this is unsustainable over the long haul.
Your figures are just based on the personal income tax. You need to take into account all taxes, including FICA and local taxes, and figure that about half of the corporate income tax is a disguised sales tax. Looking at absolute dollars paid, rather than percentage of income paid, is interesting but tends to obscure the issue.
I would like to see the particular WSJ editorial too, but the WSJ's tone on this matter has become quite strident, and I do recall the WSJ worrying about talking so many folks off the income tax rolls would foster a soak the rich mentality. The WSJ tends to get a bit paranoid about these things.
Someone mentioned envy. I am afraid that shot rather misses the mark. :)
... The richer should pay more ...Who gets to decide who's rich?
Has this idiot ever taken an econ course? I swear, these loudmouths are completely ignorant on economics but they have it in their head that they are automatically knowledgeable. I wrote a guy from the LA Times, Doyle McManus, about his ignorance masked by faux-confidence on the subject of price caps. He had one econ course in school but proclaimed that someone was wrong because they didn't embrace price caps.
Mr. Chait, Supply Side economics works, crusty Keyensianism doesn't, and you wouldn't want half of the techniques in Keynesisnism enacted anyway, for one, tax cuts. See Kennedy, John F.
I believe that the standard measure for the Democrats (though they try not to say it loudly) is that household income over $50,000 a year classifies you as Rich. So, we should soak the rich, right? Lots of folks say "Yes" without realizing they're volunteering to be soaked.
And just in case Torie wants to say "But I do volunteer!", I'll just point out that NO ONE to whom I have explained this has actually taken that position. I know a lot of Liberals. But when I tell them that they are rich, due to their household income, they completely deny it -- and continue to say that they should not pay higher taxes, but the rich should. That's called cognitive dissonance, folks.
Give that man a cigar!
I will.Thank you. This is precisely my point. So what your arguing is not economics, but ethics.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.