Why the Plumber Story Doesn't Hold Water

As Melissa just pointed out, the star of last night's debate was Joe the Plumber (who does not hold a plumbing license, makes less than $250,000 a year and has not paid his taxes anyway, rendering the whole argument utterly moot). US Sen. John McCain brought Joe up in order to paint US Sen. Barack Obama's tax plan as class warfare - he accused Obama of wanting to take Joe the Plumber's wealth and spread it around (although in liberally-biased "reality," it turns out that Joe would actually receive a tax cut under Obama's plan), and repeatedly asked why Obama would want to raise taxes on anyone in these difficult times. McCain even asserted that there could be no possible justification for Obama's tax plan.

Really, Senator McCain? How's this for a start; Obama's tax plan does nothing more than to partially (and not even completely) reverse Bush's tax policy. Under the Bush tax cuts, which Senator McCain supports and wants to extend, the bottom 20% of earners got 1% of the tax cuts, while the top 1% got a whopping 33%. The top 5% got almost 50% of the tax cuts.

This isn't just a problem of fairness, as Joe Biden argued in the vice-presidential debate (although this question of fairness in our tax structure certainly merits a more sustained philosophical discussion). It also happens to be bad economics; because lower and middle-income people have a higher marginal propensity to consume, more of the money that goes to them in tax cuts goes back into our economy, resulting in a larger multiplier effect and a greater increase in aggregate demand. This, of course, is simple common sense; give tax breaks to the people that actually NEED them, not the top 1% who are already making an average of $13+ millon a year.

The growing inequality in our country is making our economy increasingly unstable and our current form of government untenable and unsustainable. But don't just take my word for it: ask the most recent winner of the Nobel Prize for Economics, Paul Krugman. In a fantastic piece from 2003 in the New York Times Magazine entitled "The Tax-Cut Con", Mr. Krugman laid out a prescient analysis of where the Bush economic policies would lead us. It turned out that he was right, yet Senator McCain continues to espouse the same flawed and discredited economic arguments. It is high time that progressives pushed back, hard. At the end of this must-read article, Krugman says this:

The astonishing political success of the antitax crusade has, more or less deliberately, set the United States up for a fiscal crisis. How we respond to that crisis will determine what kind of country we become.

If Grover Norquist is right -- and he has been right about a lot -- the coming crisis will allow conservatives to move the nation a long way back toward the kind of limited government we had before Franklin Roosevelt. Lack of revenue, he says, will make it possible for conservative politicians -- in the name of fiscal necessity -- to dismantle immensely popular government programs that would otherwise have been untouchable.

In Norquist's vision, America a couple of decades from now will be a place in which elderly people make up a disproportionate share of the poor, as they did before Social Security. It will also be a country in which even middle-class elderly Americans are, in many cases, unable to afford expensive medical procedures or prescription drugs and in which poor Americans generally go without even basic health care. And it may well be a place in which only those who can afford expensive private schools can give their children a decent education.

But as Governor Riley of Alabama reminds us, that's a choice, not a necessity. The tax-cut crusade has created a situation in which something must give. But what gives -- whether we decide that the New Deal and the Great Society must go or that taxes aren't such a bad thing after all -- is up to us. The American people must decide what kind of a country we want to be.


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