January 29, 2007
Paul Krugman and Partisanship II Posted by John Steele Gordon at 09:00 PM EST Fredric Smoler quotes the New York Times columnist Paul Krugman as follows: “The signature domestic policy initiatives of the Bush administration have been attempts to undo F.D.R.’s legacy, from slashing taxes on the rich to privatizing Social Security. And a bitter partisan gap has opened up between the G.O.P. and Democrats, who have tried to defend that legacy.”
As I’ve mentioned before on this blog, I have zero respect for Paul Krugman. He used to be an economist, and perhaps he still is when he’s teaching at Princeton. But on the editorial page of The New York Times he is a hyper-partisan of the left and will write whatever suits his agenda, leaving out and twisting facts as necessary to make everything George Bush’s fault. As the Times’s own first public editor, Daniel Okrent, wrote, “Op-Ed columnist Paul Krugman has the disturbing habit of shaping, slicing and selectively citing numbers in a fashion that pleases his acolytes but leaves him open to substantive assaults.”
Krugman’s two-sentence history of modern American politics above is a case in point. Slashing taxes on “the rich” did not originate with George Bush. In postwar America it originated with the Democrat John F. Kennedy, who pushed for reductions in the top marginal rate from 90 to 70 percent. Kennedy did not live long enough to sign the bill, but his successor, Lyndon Johnson, an FDR apostle if ever there was one, shepherded it through a Democratic Congress and signed it into law in 1964. It was the Democrat Jimmy Carter who signed the bill, passed by a Democratic Congress, that lowered the capital-gains tax rate in 1978. It was a Democratic House that passed President Reagan’s tax cut proposals in 1981, and a Democratic House that passed his second tax cuts—lowering the top marginal rate to 28 percent, lower than it is today—in 1986. Democratic President Bill Clinton signed the bill in 1997 that lowered capital-gains tax rates yet again. George Bush is merely continuing a trend pushed by both parties, intermittently to be sure, over the last 40-plus years, a trend that has had an altogether beneficial effect on the economy as a whole and on people living from one end of the socioeconomic spectrum to the other. Since you won’t read it in Paul Krugman’s column, here’s an interesting fact. Government revenues have benefited too. The Congressional Budget Office and the Joint Tax Committee estimated that George Bush’s proposed cutting of the capital gains tax from 20 percent to 15 percent for the upper brackets (it’s now only 5 percent for the bottom two brackets), would cost the Treasury $5.4 billion in lost revenues from 2003 to 2006. They were off by a mere $133 billion. The CBO thought capital gains tax receipts in 2006 would be $57 billion. They were $110 billion. So these “unconscionable tax cuts for the rich” made the federal government richer by far. As for Social Security, it seems to me that FDR’s legacy is the idea of a mandatory retirement program to secure the old age of all American citizens, not the legal requirement that the funds generated by the program be invested solely in federal bonds, which pay less than any other investment. Paul Krugman has consistently misrepresented what George Bush proposed, as, of course, has The New York Times. As a result, we are now two years closer to the Social Security train wreck that is inevitable if we leave the system as it is. Allowing that train wreck to happen would be the ultimate undoing of FDR’s legacy.
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