Even Alan Greenspan Wants a Tax Increase

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Last week, I attended the First Draft of History forum, hosted by the Atlantic and the Aspen Institute. With these on-the-record conferences, there's always a fraught dance the journalist-interviewers and the newsmaker-interviewees. The problem is precisely that "newsmaker" is an aspirational term -- we'd like them to make splashy news, and they would very much like to be thoroughly boring from a news-making perspective. But there were some key moments, like when Alan Greenspan, intellectual apple of the Randian tree, said we will absolutely need to raise taxes.



Here's Megan McArdle's write-up:

Greenspan, who supported the Bush tax cuts, has said that taxes need to rise, a point he and Leonhardt discussed at some length. Greenspan indicated that he favors a VAT (Derek: That's a value added tax, like a national sales tax) to deal with America's large and growing budgetary imbalances--not, he said, because this is what he wants, but because our current spending commitments have made it a necessity. He also favors spending cuts, such as means-tested copays for Medicare services, but as he admits, he's no politician. It doesn't matter if all the wonks agree, if America rejects their "obvious" solution.

Logically, this is obvious, and yet politically, it seems almost impossible. Obama could not get elected without promising that he would cut taxes for every American making under $250,000 a year. But that's not all. The stimulus plan passed in January includes a "Making Work Pay" tax cut that many expect the administration to extend next year. Obama is also expected to extend the AMT patch to protect millions of top quintile payers. Even after extending the Bush tax cuts, he's expected to cut taxes for every American between percentiles 1 and 95. And this is a Democrat (and probable secret Socialist) we're talking about! It's sort of depressing to think that a Ayn Rand acolyte is the left of our political system in the tax debate.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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