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Tipsheet

Democrats Can't Keep Their Story Straight on Taxes

James Pethokoukis has done a great job over the weekend of documenting the Obama Administration's turnabout on the debt ceiling deal. As a deal got closer and closer to fruition, the Obama Administration, either as a form of political posturing, incessant ideology or pandering to the left-wing base,
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decided to push much larger tax increases than previously thought.

In short, Obama sees a need for a permanently bigger government and a lot more tax revenue to fund it. Had Obama agreed with his own debt commission and Republicans, a big agreement was possible. Or he could have proposed real reforms to entitlements. But he declined and there wasn’t a mega-deal. Don’t blame Boehner for that.

In light of the disastrous Friday jobs report, many on the left have been calling for more spending and claiming that the GOP's quest for a smaller government is especially damaging during a sluggish recovery from a massive recession.

This is in line with standard Keynesianism. They claim that during a recession, there should be higher government spending ("investment") and that it's ok to cut back on government spending during boom times (this rarely comes to pass, but we're dealing in theory here, not practice).

What is much less heralded is that Keynesianism also advocates tax cuts in recessions to stimulate recovery. So here's the question: where's the Left's Keynesian outrage that Obama would dare propose unreasonable tax increases that could endanger a recovery?

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There are three options. Obama could be posturing and advocating for something that he doesn't actually want in order to purposely torpedo the debt deal. Obama could be pandering to the left-wing base that wants higher taxes come hell, high water or sluggish recovery. Or he could be pushing for higher taxes because he's not a "pragmatic Keynesian," he's just a doctrinaire leftist that believes in a more extremely redistributionist society.

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