Tradeoffs

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Apparently The New Yorker now runs web-only articles (who knew?) and one of them is this great James Surowiecki piece about the Laffer acolytes of the world. Since I've sort of blogged this general subject to death already, though, it's worth echoing a point that Hacker and Pierson make in Off Center, namely that this bogus idea about tax cuts and revenue is just one of several arrows in a quiver that's designed to obscure the existence of real tradeoffs when the subject of tax policy gets debated.

At the end of the day, it's just very hard to get people agitated about even the most regressive tax cut imaginable simply because the number of people motivated by pure resentment against the hyper-rich turns out to be pretty small. On top of that, these cuts are usually structured so as to at least throw a bone to the common man. I get $50 while some much richer person gets $50,000 and though I might wish I'd gotten more, at least I'm walking away with $50. But if the proposal on the table were structured explicitly as a choice between that and a different plan wherein the $50,050 goes to guarantee health insurance and a day care subsidy for me and for the rich guy, then suddenly the programs look like a much better deal.

Thus even when spending cuts are put on the table legislatively, it's always done as a separate piece of legislation from the tax cuts. Meanwhile moderate (i.e., vulnerable) Republicans who wouldn't necessarily embrace Lafferite dogma explicitly have a tendency to vote for tax cuts but then against the spending restraint measures required by the logic of tax cutting. Obviously, trying to avoid explicit discussion of tradeoffs is a trick of the trade beloved by politicians of all stripes all around the world, but the Laffer concept is an uncommonly effective tactic since the US press adamantly refuses to treat it as a "gaffe" when a Republican politician goes and puts patently untrue claims at the center of his economic policy.

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Matthew Yglesias is a former writer and editor at The Atlantic.

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