The Sucker’s Bet

As is well known, from 1980–1992 tax cutting was great and deficits didn’t matter. But starting in 1993 it was crucially important for the government to run balanced budgets. But then suddenly in 2001, budget surpluses became dangerous and we needed giant tax cuts. Then from 2002–2008 deficits didn’t matter because it was wartime. So the plan was to explain that in January of 2009 suddenly deficits mattered again and Barack Obama wouldn’t actually be allowed to pass any progressive legislation. But there was a fly in the ointment, and Obama seemed unwilling to play ball, telling David Leonhardt that he wouldn’t be as willing as Bill Clinton to curtail his agenda in the interests of deficit reduction.

Fortunately, along came a $700 billion bailout, so now The Washington Post explains that that’s the real reason Obama needs to adopt an austerity agenda.

He seems inclined to go along with it, but I think as a progressive that you’d have to be out of your mind to do anything of the sort. For over fifteen years now, zero members of the conservative movement have shown any willingness whatsoever to sacrifice any priority to any degree in the interests of deficit reduction. Under the circumstances, it makes no sense to play along with the rules of a rigged game. If President Obama institutes an unpopular austerity agenda and the right sweeps the 2010 midterms, do we think they’re going to be clamoring for further austerity and responsible budgeting or for tax cuts?

If anything should be done, the case seems clear for wildly higher tax rates on high-income individuals than prevailed during the Clinton years. Are we afraid of stifling the kind of fat cat activity that’s brought us to our current situation?