The Myth of 'Mr. Obama's Agenda'

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"The only way to pay for Mr. Obama's ambitions is to reach ever deeper into the pockets of the American middle class," declares the Wall Street Journal in the kind of editorial that makes me hope the newspaper's audience is affluent enough to afford other sources of information.

It's fine to say taxes will eventually have to rise on more than the top two percent. It's also fine to say that soaking the rich to shrink the deficit is not a permanent solution. But there is something rather pernicious in suggesting that "Mr. Obama's ambitions" created the deficit, or the need for higher taxes.

There are basically three sources of the historically high deficits in the near-term: (1) historically low effective tax rates (2) paying historically low revenues in this weak recession that (3) requires historically high counter-cyclical spending.

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Still the authors insist that "unwinding the U.S. commitment in Iraq and allowing the Bush tax cuts to expire can't possibly pay for [Obama's] agenda." What agenda are they talking about?

There's the Recovery Act, which accounts for about six percent of the federal budget, costs less than the Middle East wars, and will barely exist in two years. There's the health care bill, which is projected to lower the deficit over a ten year horizon.* There's financial reform, whose federal cost will be negligible. The idea that we need hundreds of billions of dollars of higher taxes a year to pay for this president's long-term agenda isn't right.

The stuff that needs more money predates not only Obama's presidency, but also his kindergarten classes. Social Security, Medicare and Medicaid are old programs making new troubles. They are the tectonic plates slowly moving the mountains of our debt crisis. Paying for those promises will require either more taxes or broken promises. That's not hard to say, but since it's a sentence that doesn't require the crutch of anti-socialism rhetoric, you won't see it in the Wall Street Journal.


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*This is where you, health care critic, say it's a myth that reform is deficit neutral, and I call your attention to the CBO estimate, and you respond that the CBO's estimates were gamed, and I respond that a "formula" is different from a "game", and you respond that there's no reason to expect the Medicare cuts to be kept any more than the doc fix or the AMT patch, and I say now you're blaming the current White House for the hypothetical decisions of future administrations, and you make a good point about making policy you expect to last and so on and so forth, and we agree to disagree.
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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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