Founding Editor Bob Kuttner is joining us on TAPPED with commentary about his new book, Obama's Challenge: America's Economic Crisis and the Power of a Transformative Presidency, and on economic issues in the campaign.
In the end, this election will depend on whether Barack Obama is able to be persuasive to working and middle-class voters who have deep economic anxieties. That means promising an economy of restored opportunity, decent incomes, and economic security.
But if the debate comes down to a battle-of-the-tax-cuts it will be a war that only Republicans can win. Theirs are always bigger, since they don't much care of the whole government outside the military establishment shrinks to a size that could fit in a bathtub, as strategist Grover Norquist once so quaintly put it.
If needed revenues are given away in tax cuts -- even the downwardly tilted ones that Obama favors -- there are two big problems. First, the fight is waged on Republican ideological turf of tax-cutting-as-virtue. And second, revenues needed to underwrite a transition to a high-wage economy are used up on tax cuts. If people had decent jobs, health security and retirement security, the would not need the poor substitute of tax breaks.
The Obama campaign has tacked back and forth on this question -- itself not a good sign. In a recent oped piece in The Wall Street Journal, Obama top economic advisers Austan Goolsbee and Jason Furman, surrogates for the candidate, offered a profusion of new tax cuts that their man would deliver: new tax breaks for “working couples…. low- and middle-income seniors, homeowners, the uninsured, and families sending a child to college or looking to save and accumulate wealth” and also cuts for small businesses to defray health insurance costs, as well as “elimination of capital gains taxes for small businesses and start ups.”
Wow. No wonder The Wall Street Journal 's op-ed page deigned to publish something from the Obama campaign.
None of this, however, alters the structural injustices of the US economy. Maybe we need less in the way of tax breaks for small business to buy inefficient private health insurance, and more of a transformation of the whole health insurance system (which Obama is also for -- but why mix the message?) Maybe we need to restore funding for America's great public universities and community colleges to make college affordable, as well as more adequate Pell Grants, rather than making it the family's problem and then soothing the family with tax breaks.
At other times, however, Obama himself has sounded like the real deal. His proposed $50 billion emergency recovery program, providing aid to strapped cities and towns to spending on public works so they don't lay off workers in a recession, is good stuff -- it just needs to add another zero to get the economy of its deep hole. And here is Obama, in an off-the-cuff dialogue with NPR's Michele Norris, with Obama playing the part of a progressive and Norris in the role of the conventional wisdom:
Norris: “This morning you announced a new emergency economic plan. It includes a $50 billion package. Can you promise to pay for all that without increasing our debt? Where will this money come from?”
Obama: “When it comes to a stimulus package, typically you are not looking at offsets, because what you are trying to do is to prevent the economy from going into a further tailspin.”
Norris: “But with the deficit as high as it is right now, is it responsible to propose something that is likely to increase deficit spending?”
Obama: “Well, Michele, Understand that if we continue on the trends we're on right now, where unemployment keeps on going up -- I'm in Florida, where they are in recession for the first time in 16 years -- if you continue to see an economic slide, that is going to cost far more in terms of tax revenues, because businesses aren't selling, taxes aren't being collected. And what we're going to end up with is a much worse situation when it comes to our deficit.”
Awwright! Why do I feel that this guy does best when he listens to his own heart?
--Robert Kuttner
