"Ford’s ‘Clueless’ Math: Balance The Budget By Doling Out Billions In Tax Cuts For The Wealthy"
As part of his theatrical flirtation with a run for New York’s Senate seat, former congressman Harold Ford Jr. had an op-ed in today’s New York Times, in which he said that Democrats “need to shift attention away from health care and toward a bold effort to create jobs, improve the economy and rein in the size of government.” Ford laid out four steps that he believes “we must take immediately to put us, and the nation, on a better course”:
We can start by giving any companies that are less than five years old an exemption from payroll taxes for six months; extending the current capital gains and dividend tax rates through 2012; giving permanent tax credits for businesses that invest in research and development; and reducing the top corporate tax rate to 25 percent from 35 percent…Finally, we need to address budget deficits now rather than waiting for some ideal future economic situation…By focusing on job creation and deficit reduction, we can expand our economy and balance the budget.
As Paul Krugman pointed out, the economic vision Ford outlines “has to set some kind of new standard for cluelessness.” Indeed, Ford’s op-ed is based on a total contradiction: he advocates a slew of supply-side tax cuts (including a big cut in the corporate tax rate) that would balloon the deficit, while laying out nothing in terms of real steps toward deficit reduction, beyond paying lip service to a commission that would recommend some spending cuts.
The cost of the corporate tax cut alone would be about $1 trillion over ten years, or $100 billion per year. As for extending the current capital gains and dividends rates, which are a product of the Bush tax cuts, a similar move in 2008 (which extended the rates through 2010) cost about $51 billion, with more than half of the benefit going to the richest 0.2 percent of households.
As Matthew Yglesias put it, “to make the deficit smaller, you can’t also make revenues smaller. The math isn’t difficult.” Mark Thoma, meanwhile, labeled Ford’s job-creation ideas the “same old tired set of supply side tax cuts that we always hear, most of which only work in the long-run if they work at all”:
To the extent that there would be any job creation effects from these tax cut policies, and some types of tax cuts could help a bit, they are likely to be more than offset by the deficit reduction and his other policy recommendations that work in the opposite direction. Does [Ford] really think voters will reward Democrats for making unemployment worse through deficit reduction? With friends like these, who needs Republicans?
Ford is yet another “deficit peacock,” professing his concerns about the deficit while not advocating any serious steps to get long-term deficits under control. As Michael Linden wrote, “peacocks prefer scoring political points to solving problems.” And an attempt to score political points is all that Ford’s op-ed amounts to.
Cross-posted on The Wonk Room.