A Budget Plan for the Political Center

September 19th, 2011 at 8:43 am David Frum | 91 Comments |

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The President has raised the curtain on his deficit reduction plan. Now the issue between the two parties is squarely joined.

On one side, the GOP, pledged to the Ryan plan, the most radical redefinition of government from the right since 1964.

On the other side, the President, offering the sharpest left turn since Teddy Kennedy’s challenge to Jimmy Carter in 1980.

The President’s new brainwave is a stunt that threatens the country’s long-term prosperity and growth. The lapse of the Bush tax cuts plus a new millionaire tax bracket thrusts us back to the high rates of the 1970s. The proposed new five-bracket structure opens new temptations to economically wasteful tax arbitrage.

And remember: all this comes atop the tax increases already embedded in the Affordable Care Act (taxes that, I won’t refrain from pointing out could have been negotiated away back in 2010).

Republicans would have a powerful case against this brutal rollback of the past 30 years – if not for the fact that their alternative is even more repulsive to middle-of-the-road voters: no spending for job creation during the present crisis, immediate cuts to social programs for the poor, the withdrawal of the Medicare guarantee from voters under 55, and another round of tax cuts for upper income Americans.

The budget plan to which congressional Republicans have committed themselves manages to combine maximum obnoxiousness and minimum effectiveness. Even supposing the plan could be passed into law, who imagines that it will ever actually bite? Will today’s 55-year-olds and 45-year-olds and 35-year-olds meekly assent to the withering of their Medicare benefits because Congress voted that way 10 or 20 or 30 years before?

We need a centrist alternative. Let me sketch out a vision of what such an alternative would look like:

1) In the short run, we need the federal government to continue to act in a stimulative way: spending on transportation infrastructure, cutting the payroll tax, and maintaining unemployment benefits.

2) We should not be postponing Medicare benefits for six years or 10. We should be starting now – but not by withdrawing coverage from beneficiaries. Instead, we should be squeezing America’s over-costly health providers. There’s a lot to be said in favor of a gradual shift to a premium support model for Medicare – the Ryan plan, but properly funded. But such a shift is a big and administratively complex project. In the interim, we should be doing as the Reagan administration did when it instituted Diagnosis-Related Group pricing in the 1980s: use the government’s monopsony power to force down prices.

3) Government needs additional revenue, but it should not be raising taxes on work, saving and investment. Instead of the taxes in the ACA and in the new Obama deficit plan, we should be planning carbon taxes and value-added taxes: consumption taxes, not production taxes. WIth the ACA, the spending side of the US government has become substantially more redistributive. It’s dangerous to finance redistributive spending programs with redistributive revenue sources – government loses all incentive to restrain costs. Back of the envelope: a 6% VAT would produce as much revenue as flat-out confiscation of 100% of the earnings of everyone who makes more than $1 million a year.

4) As the US government winds down commitments in Afghanistan (faster please) and Iraq (slower please), it must preserve a defense budget sufficient to respond to future contingencies. National defense, not healthcare, is the first and supreme responsibility of government.

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91 Comments so far ↓

  • Smargalicious

    BHO is so set on his wealth redistribution plan (the $1.5T tax hike) that he is now irrelevant.

  • sinz54

    It’s hard to make carbon taxes and consumption taxes fair.

    And if they’re not perceived as fair, they have no chance of passage through any Congress.

    A carbon tax is a gift to cities with good mass transit, and a huge dead weight to suburbs and rural areas where the population density is too low to make mass transit effective.

    In New York City, even today, 60% of New Yorkers don’t own a car (they use mass transit or walk). They would pay ZERO carbon tax. The tax would be borne primarily by the Red States, Western and Southern states where mass transit isn’t widely available and where travel distances are long. Try selling that.

    And because at the low end, consumption costs are relatively fixed, a VAT hurts the poor and lower classes more than it hurts the rich. Everybody has to eat and wear clothes. But the poorer you are, the larger the share of your household budget goes to these necessities of life. And now those necessities of life would be taxed as well. Even a cheap meal at McDonald’s or cheap clothing from Wal-Mart.

    So with these two taxes, you are essentially hitting everyone except affluent liberals who live in Blue cities. So much for your “political center” claims.

    • Chucko

      Just one point… Couldn’t the country or the government control what sorts of products and services a VAT applied to instead of just everything?

      It seems difficult to conceive that there’s no way to tax consumption of luxury goods and services much higher than necessities-to-live.

      • Primrose

        Or perhaps don’t tax products below a certain price point, tax only luxury goods etc. However, I just don’t see what is so vastly wrong about taxing millionaires more. If you are in that tax bracket, you are comfortable even if you live in a high priced city and have a large (though perhaps not duggenesque) family. You are not going to suddenly work considerably less so you are not that wealthy. I suppose you might pull back an hours worth of work so you earn 990,000 a year but really, at these levels, that’s not how it works. If you have a profession or business model that earns you that much money, you have to do the same amount of effort, and you are earning a lot more.

        I just don’t see someone whose work to money impulse is that linked, turning down an extra 200 K so they won’t be might be taxed more on it, to avoid being taxed more. And even if there was a direct work effort to money return, after a certain point, having people work more is not in society’s benefit. There is no benefit to society for people to work more than 120 hours a week.

        So let’s say you have a medium size business, a local chain of pizzerias, as an example, you are now taxed on the salary you earn over a million much more. It is no longer worth your time to do as much work because of tax,better to see your kids more or volunteer for the local beautification committee, you like gardening.

        OK maybe. But will you stop selling pizzas? Stop opening up chains. You can’t. Business’s must grow to survive (or contract). So what will you do? You will hire someone else, to do the work, maybe you’ll stop doing the books yourself, or you used to make the pizza’s at your original location so now you hire a cook. This cuts down the money you take out as salary from the business but in now way harms the business. Or if you are a workaholic whose kids are grown and has no interest in flowers, you might simply plow the salary into investment, opening more locations hiring much more people.

        Or say, instead you choose to severely contract, another strategy, you miss your kids, you don’t just like flowers you are a competitive Rosarian. That doesn’t mean the people in your neighborhood have stopped eating pizza. There is still a market that needs to be served.

        So what happens, a bored cubicle jockey whose discovered that the only thing he or she really cares deeply about is pizza can now open a shop and prove to the world that anchovies and pineapple really do belong on pizza. If the world agrees, drivers, cashiers and eventually cooks are all hired, and another successful business is started.

        All the money doesn’t have to be in the hands of a few for our economy to be productive.

        • Frumplestiltskin

          sigh, not you too primrose. The higher tax rate for people making over a million only applies to the money made over a million dollars, that is the first million will be taxed at a lower rate. So, for example, I pay 28% on the first million, and then 33% on the second million. Why would I stop at a million? I would still get to keep 67% of the additional money. (at least if I am reading you correctly)

        • ratgov

          It is hard to believe that there are people who understand how to post to a web site that don’t understand a graduated tax system.

      • Pattyman

        No matter how you look at it a VAT is repressive because of the percentages survival plays on lower income budgets. If 30% of a lower income goes to food and auto, 20% goes to rent, and 20% goes to utilities for a lower income household, while comparing that to a wealthy budget of 20% for those entire costs. The components of VAT cut across far more more in the lower income budget than they do in the higher incomes, and that is really where the hurt comes.

      • ratgov

        I’d much rather see us just send people a rebate to apply to the first $20,000 they spend. So just send everyone a check for $1200 (or even better just apply it to their payroll deduction so we can spread it out over the year and not have to pay the cost of mailing a check). That would cover necessities and eliminate the hugely wasteful and political process of deciding what’s on the golden list.

    • SpartacusIsNotDead

      Could you please explain what qualities a tax must have in order for it to be considered “fair”?

      Most conservatives seem to believe it is fair for every person to pay the same percentage tax.

    • Carney

      Transportation fuel is not the only source of carbon. Half our electricity comes from coal, 20% from natural gas, 3% from oil.

      Unless New York City’s electricity exclusively comes from nuclear (20%) and green power (2%), its residents would pay a carbon tax in their power bills.

      Also, home heating oil and natural gas would be subject to a carbon tax. Southern states need less home heating oil, whereas LIHEAP, the Low Income Home Energy Assistance Program has strong support in Northeastern states. Natural gas heated homes work the same way, less usage in Sunbelt states.

      Natural gas stoves and dryers are higher end devices than electric powered ones, so upper crust people are more likely to pay that tax.

  • passionlessDrone

    The lapse of the Bush tax cuts plus a new millionaire tax bracket thrusts us back to the high rates of the 1970s.

    Total hyperbole. Unless Obama has recommended a true doubling of tax rates, we won’t be getting anywhere close to the 70% tax rates for upper incomes of the 70s. For shame for making such a bogus argument.

    But such a shift is a big and administratively complex project. In the interim, we should be doing as the Reagan administration did when it instituted Diagnosis-Related Group pricing in the 1980s: use the government’s monopsony power to force down prices.

    It is irresponsible, and ignores the reality, to try to consider health care costs from decades past to today; it doesn’t matter what Reagan did because he faced a massively different health care option structure. Look at it like this, if you had a heart attack in 1984, either you lived or you died, and your doctor sent you home with some advice on stopping smoking, losing weight, and a bottle of aspirin. Costs over. These days you get those things, and you also get a prescription for a pill that costs $10 / day, every day, for as long as you want to keep reducing your risk of a heart attack. The structural foundations of health care costs just can’t be compared across decades; we might as well try to figure out how Reagan handled the cost of cell phone data plans.

    - pD

    • JosephP

      This was what I logged on to say as well.

      That ridiculous sentence should be rewritten: “The lapse of the Bush tax cuts plus a new millionaire tax bracket thrusts us back to the (still relatively low) rates of the 1990s, when the nation enjoyed record growth and yet still managed to reduce the deficit.”

    • JohnMcC

      Mr Drone, I was going to make the very same points. Thank you, sir.

    • Kevin B

      +3 for the three of you. Distribute it however you like.

    • chephren

      Good rebuttal. I would add that at the time of those notorious “high rates of the 70s”, the US debt-to-GDP ratio was in decline, as it had been since the end of World War II. The end of Carter’s presidency coincided with the postwar low in debt-to-GDP, less than 30% (it was 120% in 1945, and approaches 90% now). For all the supposed fiscal excesses of liberal presidents and congresses, they were far more fiscally responsible than the Reaganites and Neocons who wrested power from them.

  • mbilinsky

    Yeah, haven’t seen scintilla of evidence to support the “back to the high rates of the 70′s” claim.

  • sweatyb

    As the US government winds down commitments in Afghanistan (faster please) and Iraq (slower please)

    sigh… if the US was pulling out of Iraq slower than Afghanistan, Frum would happily invert his criticism. Armchair General is not and has never been a respected military position in this country.

    Paul Ryan is not a person who should be taken seriously. He is incoherent on economics, policy, and the role of government. His “plan” is completely unsound and, from what I’ve seen, deeply unpopular with voters. How could he still be the Republican frontman on these issues?

    The President’s proposal is pretty centrist. He’s reducing entitlements and raising taxes to reduce the deficit. A left-of-center proposal would recognize that tax income will increase and entitlement spending will decrease when the economy recovers. So a left-of-center proposal might involve raising taxes on the wealthy and investing that money in infrastructure, worker training, small business loans, mortgage forgiveness programs and other direct stimulus measures.

  • Jon

    Value-added taxes might be refundable to foreignors. We need to install the FAIR Tax. It removes income taxes and replaces with a large sales tax. This sales tax is not refunded to foreignors. I know people will say it is regressive, but it is not. Read up on the FAIR Tax to understand.

    But the FAIR Tax will pull revenue from foreignors and illegal activities that are not paying their fair share now. How, do you ask? Well, we all know that drug dealers and prosititutes don’t report their income for tax purposes. But they do buy goods. So when they buy their Ferrari’s and other ‘bling’, they pay the embedded FAIR Tax. Wallah, the illicit money is taxed.

    People are noticing that we have a ground-swell movement towards major tax reform. We need to get this right. We also need to mitigate the influence of lobbyists by throwing out this ridiculous tax system that gives lobbyists too much influence and lawmakers too much power for the few.

    • Watusie

      Jon, in order to work, the “Fair” Tax is going to have to be around 30%. Therefore, it will act as a massive spur to smuggling and blackmarket selling. It is ironic to see someone citing a desire to get at the proceeds of illegal activity as a justification for it, given that it would probably surpass Prohibition as an encouragement to illegal activity.

      • Frumplestiltskin

        watusie, you know this jon fellow is nothing but a clown when he writes this: Well, we all know that drug dealers and prosititutes don’t report their income for tax purposes.

        Yeah, those millionaire hookers are what is keeping us down, as to drug dealers…most of the really rich ones are in Mexico and Columbia. The Fair tax is just something to pacify ignorant children to vote like sheep for Republicans, it will never pass because it is a brain dead idea. Why make exports more expensive? Why prevent Canadian day trippers spending their money in the states (oh wait, they must all be hookers and drug dealers…or something)

    • Carney

      A national retail sales tax? Maybe.

      The “Fair Tax”? No way. That tax has as an integral component a rebate, the so-called “pre-bate”, that involves a government check going to every US resident to help pay for the cost of necessities. Just what we need – everyone not already hooked on government getting hooked.

      • ratgov

        I think you drastically over-estimate the amount that pre-bate would be. We talking somewhere around $100-$300 a month, hardly enough to live off of.

    • Jon

      I didn’t realize that many people were afraid of the Fair Tax. The “pre-tax” offsets the embedded ‘sales’ taxes everyone is paying for their normal living activities. This makes it very progressive. It’s not living on the government ‘dole’ when you are getting a rebate on your taxes paid.

      In exchange for the FAIR Tax is that no one has federal income taxes deducted from their paychecks. Employers pay you less as the offset. So the overall cost of the item produced is lower due to the reduced burder on income taxes.

      The FAIR Tax needs to be around 22-23$, not 30%. This is in-line with the average income tax level for workers. So you have basically a neutralizing effect on the cost of the good. Yet, when your belover hookers, drug dealers, abnk robbers or anyone else will un-tax income goes on their spending sprees, they pay the embedded 22-23%. Oh, BTW, most countries require a rebate of VAT taxes paid. So that route would not accomplish taxes foreignors. FAIR Tax will have foreignors paying their fair share on the stuff Mickey doll they buy.

      Lefties and Righties need to stop thinking about making the other side lose and start thinking about pragmatic solutions to major problems. We don’t have time for name calling.

      • Watusie

        It isn’t “fear”, it is recognition that what is being proposed is implausible and unworkable. If your plan is to have the “Fair” Tax replace income tax, then it is going to have be at least 30%, or you’ll just make the budget deficit worse, not better.

        As if that wasn’t bad enough, then there is additional problem that such high rates are and open invitation to smugglers and black-marketeers.

        You think all those Tea Party types with their red-hot hatred wouldn’t be happy to get their flat screen TV from a man in a parking lot for a 30% discount plus the joy of sticking it the gubbiment?

      • Steve D

        The mere fact that many backers of the Fair Tax insist the rate will only be 23% because they calculate the tax as percent of price PLUS tax proves they’re economic and mathematical illiterates. Nobody in the world calculates percentages that way. When you calculate the percentage of change, it’s always on the quantity before the change.

  • WaPo: Obama going full populist with new budget proposals « Hot Air

    [...] chance of making it out of the Republican House, and that’s the point — so much so that David Frum blasts it as a “stunt”: On one side, the GOP, pledged to the Ryan plan, the most [...]

  • balconesfault

    Huh – so the “centrist” budget plan is beating up on the doctors and implementing a carbon tax?

    Who’d have thought?

    • balconesfault

      By the way … I’m not challenging the idea that these are centrist proposals. Rather, I’m poking at Frum who seems to feel that he’s qualified to pick and choose what is really “centrist” … while declaring that other proposals that are favored by the majority of Americans, such as a very modest bump up in high end tax rates, represents radical leftism.

  • Watusie

    I can’t imagine a more centrist position than the idea that the US must not cause another global financial meltdown by intentionally defaulting on its debts. However, the Republicans embraced default with both arms. So, please, no whining about Obama not being sufficiently in the center. Everything – everything – moderate, reasonable, sensible, centrist he has proposed has been shot down by the Republicans because their only concern is inflicting personal defeat on him. Country Second.

  • more5600

    As a Dem and supporter of the President I would be the first to admit this is a stunt, the Dems will be playing the class warfare game, why not the war has already begun and we are losing, so expect a lot of it. Obama backing off of SS fixes will also be part of the populist campaign the President will be running. Don’t expect solutions any time soon, the Republicans will not allow solutions to pass, certainly ones that require bipartisanship. So here we are, the President moves left, the do nothing Republicans stay fixed in their Tea Party delusion and the campaign begins. The only thing missing is jobs for Americans and a real plan moving forward. Maybe the Constitution IS a suicide pact.

    • balconesfault

      Well, unfortunately the President has not been rewarded for moving to the center, or even to incorporating moderate Republican proposals. If for example we saw the Frums of the GOP stepping up to say “the current proposal by the President is the best we could hope for given a Democratic President and a Democratic Senate, and Congress should move swiftly to pass it” there might be hope – but instead the “moderate” Republicans have ossified into a position where they are holding out for something that will never exist, and Obama’s approval rating by them hasn’t budged.

      Meanwhile, Obama’s liberal base rightfully feels a bit pissed off after watching him make compromise after compromise with the radical end of the GOP in order to pass things which are centrist in nature.

      Obama can recapture and energize this base by moving leftward in the coming months … and he clearly gains nothing by trying to woo the Frums. So be it.

      • think4yourself

        As an avowed centrist, I hate that Balconesfault is right – but he is. For almost 3 years, the GOP has taken every overture from the President as an opportunity to steal more rather than compromise.

        As for David’s attempt at centrism, I don’t view that the President’s plan either is now, or leads us in the direction of 70% Federal income tax. And having hedge fund managers and other investors paying the same tax on their earnings as wage earners isn’t “class warfare”.

        My only wish is that both parties would give up this sacred cow of “the middle class”. I’d like to see Obama let all of the Bush tax decreases lapse at all income levels. If we live in America, it’s okay to pay for the benefits we receive from this country. And/or consider lower tax rates at all level if loopholes are closed with a resultant net increase in revenues collected.

        • ratgov

          I think that’s what is going to happen. I fully expect Obama to veto any extension of the Bush tax cuts no matter what.

  • HereInVA

    I need help understanding this:

    “we should be planning carbon taxes and value-added taxes: consumption taxes, not production taxes. ”

    Is you put taxes on things that are consumed to make them higher, then wouldn’t fewer things be consumed? What’s the value of producing something that will be more expensive and thus have fewer people buy it?

    • balconesfault

      Well done, Hereinva. That supply side fallacy exposed.

      Although in reality a carbon tax is still a production tax – because everything we produce requires consumption of energy.

      I’m not saying that we don’t need a carbon tax, btw – I’m just agreeing that Frum’s thought processes on the matter are as clear as drilling mud.

    • Primrose

      Excellent in HereInVa

    • ratgov

      Read some of the work by Bruce Bartlett on sales tax versus income tax. There is some compelling econ work that using a sales tax to fund the government has less of a drag on the economy than a income tax. I’m not sure how well it holds up when a sales tax gets to be high (>10% or so), because it fosters black markets in goods, but if you want a way to raise revenues that impacts people’s spending the least a sales tax is a good way to go.

  • Banty

    “On one side, the GOP, pledged to the Ryan plan, the most radical redefinition of government from the right since 1964.

    On the other side, the President, offering the sharpest left turn since Teddy Kennedy’s challenge to Jimmy Carter in 1980.”

    I’d agree with most of the recommendations. But, pray tell, in what negotiation does one start with a moderate outcome, while an aggressive opponent starts with the most extreme embodiment of where they want to go?

    BTW, the answer to this would better inform your thinking about the middle east. In politics and national affairs, there is a lot of the silk buyer haggling in the souk.

  • jamesj

    “The lapse of the Bush tax cuts plus a new millionaire tax bracket thrusts us back to the high rates of the 1970s.”

    This statement is simply false. Categorically. Undeniably. It feels like you are straining against the bonds of empirical reality to stake out a moderate position between the two political parties. But that is very difficult to do when one of the two parties is already proposing measures that are moderate by historical standards and the standards of the rest of western civilization. Banty’s point about how negotiations work is also an important one.

    You criticized the president for his weakness in allowing House Republicans to run wild during the debt ceiling debate. Now you are criticizing the president for the over-boldness of allowing tax cuts that were scheduled by law to expire… to expire. Even while I agree with most of your proposals, it seems like inconsistent standards are being applied here in your criticism.

    When I look at your list of proposals I know with decent certainty which of the two major political parties falls closest to your vision. But your criticism is slathered on to both parties in equal proportion. Must we keep up this ruse? I respect what you’re trying to do, but I question deeply whether or not more good can be done by telling it like it actually is and not sugar coating it for those who suffer from epistemic closure (which is enabling in a way).

    • ratgov

      Does Frum ever respond in the forums? I think your post is excellent and I’d like to see him respond.

  • Slide

    So David, you basically agree that the very rich should pay a lower rate in taxes than middle class taxpayers? How very centrist of you.

  • Slide

    From my reading of Obama’s proposal there is no increase in tax rates but that millionaires would have a minimum rate comenserate with with middle class taxpayers pay now. How is that a “brutal rollback of the past 30 years”?

    This is such absolute rubbish. How stupid do you think we are David? Sometimes I really wonder about you, you can be so reasonable at times and then you write something so misleading and nonfactual that I throw my hands up and say, “once a Republican ahole, always a Republican ahole”.

    Lets look at the rates in the period 1966 through 1976


    What are they now for the same brackets?


    And what is Obama proposing by letting the TEMPORARY Bush tax cuts EXPIRE?


    A 30 year rollback? What utter and complete nonsense David. You should be deeply ashamed of yourself

    • Primrose

      Is this really what Mr. Frum is calling a far left plan? Good grief. His far right friends must be giving him grief for calling them crazy.

    • John

      + 1

      imagine if Congress enacted a two-week holiday on all federal income tax. at the expiration of the two-week holiday, a congressional republican proposes a bill to make the ‘tax cut’ permanent so as to avoid the largest ‘tax increase’ in U.S. history. people would call that guy crazy, right?

  • SteveThompson

    The greatest concern for Americans should be that a rather large sampling of U.S.-based corporations shows that highly profitable companies like GE are paying their CEOs far more than they are remitting in Federal corporate taxes as shown here:


    Until the taxation playing field is leveled between Wall Street and Main Street, the system will remain unjust.

    • balconesfault

      And there’s the great divide between the Frum “moderate Republicans” and the Democrats.

      The moderate Republicans believe that the fact that any Corporate taxes are being collected is the real unjustice.

  • Slide

    Reality Check

  • Slide

    Another reality check

    (because a graph can tell you so much more than lying Republicans. They keep saying that we have a high corporate tax rate which is true if we didn’t have so many tax loopholes. What we actually pay in corporate taxes is quite low as demonstrated by the below graph, but the GOP won’t be happy till we beat the stuffing out of Iceland.

    • Marioth

      Slide, I admire your attempts, but our politics are no longer about facts. They are about Belief. Our conservative friends have gone on a mad bender with ugly belief-drink, and it’s rending them apart. Until they denounce the smargs in their open midst, this is likely to continue. Otherwise, we wait for a critical mass of elderly nonsense-believers pass from this (not so flat) earth.

      Or, Grover Norquist gets his way, the gub’ment drowns in the bathtub, ushering in…what exactly? Far too little discussion concerns this Day After. Hint: it rhymes with theocratic oligarchy.

      • balconesfault

        The frustrating thing in this whole episode is that Frum doesn’t want to see government drowned … but he’ll still lay in with those who do when push comes to shove.

        • Marioth

          Frum is a bet-hedger. He still hopes for a “return” to sanity in the GOP, and that is no longer possible. The GOP as constructed is dying, and Frum suffers from nowhere to turn. Conservative thought has been replaced by belief alone, and the floor is continuously dominated by whomever says the worst thing the loudest.

          It assures Obama’s second term. This crazy stuff is a HUGE turn off. Mitt won’t be able to escape it, either.

        • LauraNo

          I believe that Frum is nothing more than a party hack. If he holds conservative values and abhors the radicals in the republican party and the nonsense proposals they spout, he would become a democrat where (unfortunately in my opinion) there are many conservatives who are not party hacks and where he could work toward good policy. There is no hope of good policy ever again coming from the GOP, not in our lifetimes anyway.

        • Banty

          LauraNo, I’m one of those democrats. For now. Voting for everything breathing and blue, because any Republican I vote for, whatever his or her statements during the campaign, will be whipshaped into voting lockstep with the Tea Party line. I changed registration so that I can vote in the NYS Democrat primaries, so useless it is to be a Republican right now.

          But I’m not happy with that. The most active Democrats are, of course, progressives who don’t match my convictions at all.

          Someone has to stay within the party and be the voice of opposition. I don’t subscribe to your idea that switching sides is the best, or even inevitable, course for someone like David Frum to take. If I were a prominent commentator, I’d not have changed parties.

        • balconesfault

          I don’t think it bad that Frum decides he wants to still wear the GOP label. I consider it a good thing to have Republicans preaching reality from within the party.

          What galls is that he seems compelled to constantly bring up false equivalencies, often having to stretch his thesis to the breaking point (see the discussion of tax rates in this thread), to attack Democratic positions every time he offers a critique of the right.

          Compare him with, say, Bruce Bartlett. Bartlett is reality based, and he has no problem writing a piece that says “the GOP needs to change their position on X, Y, and Z or they’re harming the economy and the country” without adding “oh yeah, and the Democrats are bad for also doing “A, B, and C”. Frum could learn something.

  • abc123

    Every time Obama starts in the middle, he ends with nothing. He’s simply changed strategies and starting from the left. Hopefully we end up with something that looks more like a solution this time instead of Republican theology.

    • jamesj

      I don’t see how allowing tax cuts to expire in accordance with law and slightly raising marginal tax rates on high income earners to levels still lower than most of the last 100 years is “starting from the left”. Don’t get me wrong. I’m fiscally Conservative and acknowledge that tax hikes likely dampen economic growth in most situations. But I also acknowledge that spending cuts will likely dampen economic growth in a worse way in the current situation. And I oppose the false narrative, pushed by folks I normally agree with, that Obama’s proposal is “left wing” in any way. It seems fairly sensible, fairly economically Conservative to me.

      • wileedog

        “And I oppose the false narrative, pushed by folks I normally agree with, that Obama’s proposal is “left wing” in any way. It seems fairly sensible, fairly economically Conservative to me.”

        When I saw the article title and the photograph of the Pres, I actually thought this was going to be about Obama’s plan, which I think is pretty darned centrist with a 2-1 cuts to revenue ratio, not some attempt to make it out to be a Marxist Manifesto.

        • ratgov

          The problem is that the GOP have absolutely no trust of Obama at all, so even if he says something they should agree with, even if he puts it down on paper, they are 100% sure he is lying. It is very difficult to make any kind of argument against that. For example, the medicare changes proposed do no happen for several years, the conservative side is completely convinced they will be repealed after the tax increases pass. How can you argue with that? The democrats could potentially do it, you have to have some trust in people for any kind of compromise to occur and the right has vilified Obama to such an extent that they have zero trust for him.

  • Oldskool

    These wonkish threads are nice to pick apart but they skirt around a bigger question. Knowing firsthand the motivation of todays Republican party, why would any consciencious person remain in that party or vote for its candidates?

    I understand a person could be ostracized bigtime, but still, we’re looking into an abyss right now and if any of the crazies win again, we’re toast.

    • Marioth

      One predicts Perry will get the nod, and when the rest of the country closes their eyes, and hears W, it’s over. The electoral math is not on the side of the GOP. However, being math, this doesn’t matter because they believe they will win, and so putting forward policies which unite the country are not necessary.

      It’s a sick view of politics, but here we are. Thank you, southern strategery, in which you scare the daylights out of voters into enacting unconstitutional hooey, and voting against their own best interests, all in a bid to retain power for another 5 minutes.

      Because that’s about how much time is left on the conservative clock, as constructed.

      • Oldskool

        Whether it’s Perry or Romney or anyone else, the downstream races will have as much of an affect as the presidential. When Obama won, I thought maybe we reached a tipping point but now I’m not so sure because the crazy GOP base is more reliable than the Dem base. (And too, new voter restriction laws.) I think far right populist idealogues could win in this environment and finish off what’s left of this country.

      • kccd

        Yes, the Republicans have looked at the electoral math, which is why they are feverishly enacting new voting laws to disenfranchise as many Dems as possible.

  • rbottoms

    “By the time I feed my family, I have maybe $400,000 left over,” – Rep. John Fleming (R-LA), in an interview on MSNBC, on why as a small business owner he can’t afford a tax increase.


  • Slide

    David Frum’s idocy: “On the other side, the President, offering the sharpest left turn since Teddy Kennedy’s challenge to Jimmy Carter in 1980. The President’s new brainwave is a stunt that threatens the country’s long-term prosperity and growth. The lapse of the Bush tax cuts plus a new millionaire tax bracket thrusts us back to the high rates of the 1970s.

    Andrew Sullivan’s Reality: Every Single Poll …… shows that the American public overwhelmingly supports higher taxes on the wealthy as part of a package to cut the deficit. The margins are staggering: the NYT poll shows a majority of 74 – 21; even Rasmussen shows a majority of 56 – 34. What the president proposed this morning is simply where the American people are at. If he keeps at it, if he turns his administration into a permanent campaign for structural fiscal reform, I don’t see how he loses the argument.


    So has the American public taken the sharpest turn left since Ted Kennedy’s challenge to Jimmy Carter? hmmmm? I think not. Obama is squarely where the American public are and the GOP, (disappointingly with David Frum), is squarely where the billionaires are.

  • nikhil_gupta

    This comment is way far down, but one of the reasons that Dem’s have moved “left” is because nobody in the center either cares or knows the difference. Everything that they endorsed is too far left no matter what it is, and after a while the center moves farther and farther right.

  • Frumplestiltskin

    great thread that covered pretty much everythin I would have said, except this:
    There’s a lot to be said in favor of a gradual shift to a premium support model for Medicare – the Ryan plan, but properly funded

    What is to be said for the Ryan plan? Honestly? About the only thing I see is if your goal is that old people die quickly, thereby freeing up their homes and assets for the next generation, then this is the way to go. Why in the world would insurance companies want to insure the oldest in America and the ones with the most bills? Where is the profit motive? Does David have any idea how much a typical Alzheimers patient cost? The reason Medicare was created is because insurance companies themselves did not want to foot the bill for the oldest and sickest segment of our society, and that was a time when most people died before they got very old.

    At most, and I mean most, that I can see it pushing the date of Medicare back to the date of full retirement, since people will continue to be working the provisions of the PPACA will cover them (oh wait, I guess David wants to get rid of such provisions)

    • Marioth

      Pushing back the retirement age will increasingly become a no-brainer as medical science extends both quality and quantity of years. Today’s grandchildren will have the option of elvish-style longevity, where one is brought down by injury, and not old age.

      The implications of this are profound. Instead of 40 years, we will be asking workers to spend an indefinite amount of their lives in thralldom to the current system. You “retire” because you are tired, and after 40 years, ground down into a grumpy nub. But this is no longer the actual future. Automatic retirement will not be guaranteed. And if you can be milked for 40 years, what’s 400?

      This assumes medical science will share with All. Longevity is not in the State’s interest because it cannot manage the people it currently has. But if you are not going to grow old, your future health care costs are not going to be what they otherwise would. That is HUGE.

      I have seen no policies that look at the future with something other than Rapture Goggles. It’s actually exciting, what is coming. Our task is to ensure it remains free and open.

      Drowning he gub’ment in Norquist’s bathtub is not the pathway to get there. That way leads to theocratic oligarchy.

      • ratgov

        I think the dirty secret of all the advances in medicine we’ve made over the past 50 years is that we’ve extended people’s lives, but not their productive life. People live to 85 now, but they’re still just as productive at 65 as they were in the 1950′s.

    • Banty

      “There’s a lot to be said in favor of a gradual shift to a premium support model for Medicare – the Ryan plan, but properly funded”

      … and/or a system with deductibles and co-pays, so that people need to be informed to some degree (or at least think about) the real costs that they are incurring. No other insurance than health insurance are people expecting every penny to be paid for every risk.

      But, yes, fund that. Ryan’s plan is really to put the task of holding down health care tasks completely in the hands of individual elders and their families, the free market to speak in terms of desperate decisions forced by the sizes of individual wallets.

  • nuser

    Frum has openly admitted he is a Hawk. President Obama has suggested 1967 borders return and and dismantlement of Illegal settlements. Republican Congress gave Netanyahu 9-10
    standing ovations. Under no circumstance would Frum ever become Democratic unless of course they turn Pro-Israel(that entails looking the other way). It is blatantly obvious what is going on here. What is that term Pro-Israel anyway and what does it stand for? I too wish the people of Israel well.
    This cat and mouse game has to stop. Country first. Which means America. Let us get this priority first. America!!!

  • balconesfault

    Under no circumstance would Frum ever become Democratic unless of course they turn Pro-Israel

    I think the Democratic Party is very clearly “Pro-Israel”.

    What Frum does seem to be looking for is a policy of “Israel First”.

    • nuser

      My Bad. Israel first is really what I meant. Can that be taken a little further and make it Israel
      before America. It really looks that way to me.

  • nuser

    National Defense not Healthcare,is the first and supreme responsibility of Government.
    Spoken like a true Republican!

  • MSheridan


    In the early 80′s, my sister and I were, for a few years, probably the only white kids in Oakwood Venice, CA. http://www.streetgangs.com/topics/1994/012794venice.html

    Rent was cheap and we lived there because my parents were saving up to buy a house somewhere in the foothills. For years, they’d worked at nonprofit union organizing, so they started with nothing. It wasn’t fun there, nor was it very safe (for a kid of any color). Gangs were everywhere. Like everyone else who lived there, our home was broken into repeatedly (even with the bars on the windows), twice when a family member was home alone (once it was me and once my mother). Like a lot of kids, I learned to hide my money –the little I had–somewhere other than my pockets when leaving the house. At the time, it was quite literally the worst neighborhood for crime in the entire L.A. region, meaning that it had to be one of the worst of the worst in the nation.

    And even so, with all of that, it was nowhere near as bad as the Mad Max kind of fantasy you’ve concocted, lovingly polish, and drool over. You’re sick. Get help.

    • Steve D

      Did I miss something? After a couple of scroll-throughs, I see Smarg has only one post at the very beginning.

      • Watusie

        Note the new boilerplate down below. Smarg’s reign of excrement is almost over.

  • Scritor

    Firstly, you should note Frum’s centrist plan is basically Obama’s deficit reduction plan minus the tax hike. So I don’t see exactly where he gets off saying Obama is off-base. In fact, when you account for the fact that a clear majority of Americans think we should raise the taxes of millionaires, Obama’s plan must properly be understood as centrist. By definition, it contains the centre. People who object to raising taxes on the rich never carry the majority and almost all of them lie right of centre. I think Frum wants to see Obama carry out policies that appeal to the “centre”, which Republicans have helpfully defined as centre-right. This reprises the “America is a centre-right nation” mantra. But think about what that means: America’s centre cannot simultaneously be centre-right. This is just a very effective example of Republicans hijacking the terms of debate.

    Secondly, and more substantively, in economics one of the motives for taxation is to curb a social ill. But of course there may be other motives. It just so happens that we tax to fund government, to correct for externalities, and a plethora of other reasons. I like carbon taxes as a means to ratchet down greenhouse emissions and correct for market distortions that currently persist. I don’t generally side with even more consumption taxes, but I see some of the justification. 70% of American GDP is intimately tied up with personal consumption, so I guess you could point the tax vacuum in that direction and start to discourage unhelpful consumption. But surely sales and excise taxes–which exist in many states–are VAT by another name? We would ratchet up consumption taxes, but you have to address two precautions first:

    1) Ensure that the economy isn’t sent into recession because you are simultaneously imposing a price hike on everything and cutting away at a substantial part of our GDP.

    2) Ensure that an adequate social safety net is in place to help displaced workers adjust and retrain, and shore up or extend social supports where necessary. If you impose a regressive tax that eats away at the discretionary income of most consumers, then you better make sure these people can still afford to get by in our economy, otherwise you trigger another recession once those people stop consuming.

    What people tend not to mention is that our federal taxes are very slightly progressive while all other taxes (state, local, etc.) are deeply regressive. A federal consumption or carbon tax would be astoundingly regressive–to shift from income, capital gains, corporate, and estate taxes means you will stop taxing a lot of money that is on its way out of the real economy to be tied up in investment vehicles and drastically shift the tax incidence down the scale, to people whose net income hasn’t grown in several years and whose wage productivity has stagnated for more than a decade. This won’t be tolerated, and I don’t care how hard you argue that an autonomously imposed idea that doesn’t poll well qualifies as centrist on the political spectrum.

    Thirdly–and it is related to my second point–our income, capital gains, corporate, and estate taxes might, in some quarters, be understood as discouraging wealth. But they are more significantly (and properly) understood as taxing rents. Money that isn’t being re-invested into the economy–excess corporate profits, the economic rents of outsize executive compensation, and dollars that spend their life cycle in a trust next to millions or billions of brethren–these are dead-weight costs to our economic system that those “punitive” taxes on “job creators” seek to capture and re-inject into the economy. For make no mistake: if the US actually proceeded to zero out all of these tax sources and collect the difference by solely taxing consumption, our economy would crater in a depression the likes of which you are unlikely to know.

  • SpartacusIsNotDead

    I’m still not sure what specifically Frum doesn’t like about the plan. I know on his other thread he lied about 1970s tax rates, but he knows that was b.s. Is he really complaining that Obama wants to cut the deficit by over $4 trillion while providing $480 billion on a short-term jobs stimulus, and to help do this he’s willing to keep the highest marginal tax rate lower than it was during Reagan’s presidency?

    Frum is just as vapid as the rest of the GOPers. He only cares about good public policy if it doesn’t interfere with the GOP gaining power.

    • Watusie

      I think he is annoyed that it is likely to work, and likely to guarantee Obama a second term.

      • SpartacusIsNotDead

        I’m often amazed that he takes himself so seriously when he is so patently a farce.

  • chephren

    ” . . . the sharpest turn left since Ted Kennedy’s challenge to Jimmy Carter.”

    Nonsense. Obama’s fiscal policy is center-right, as Bill Clinton’s was. It only looks leftist if you’re in the mainstream of the Republican party – which has shifted out to the loony, libertarian, Koch-worshipping fringe.

  • Steve D

    Here’s my plan:
    1. Line item veto (Constitutional Amendment)
    2. Require all bills to be on a single issue (Constitutional Amendment)
    3. Forbid all laws exempting special interests from taxes (Constitutional Amendment)
    4. Zero-based budgeting. All agency budgets start from zero, not the previous year’s budget.
    5. All savings that result from cuts to public services or fee hikes revert to the Treasury and are subtracted from the agency’s budget. This will deter the common practice of retaliating against the public for budget cuts by raising fees or cutting services. Close a National Park, lose the savings. You want to cut something, cut regulations.
    6. Define the concept of “frivolous enforcement.” For example, while the FDA was failing to prevent some food-borne disease outbreaks, it spent a couple of years wrangling over whether it was legal to call prunes “dried plums,” merely because they were actually dried plums. Something like that should cost the FDA a huge budget cut, since they obviously have more money than they need.
    7. Pro-rate government salaries according to the available funding. And yes, I’m afraid this has to include the military. Any inequality at all and we’ll be right back where we are now.
    8. Require all benefit recipients to conform to socially responsible behavior: staying out of crime, keeping kids in school and well behaved, cooperating with the police in solving crimes. The financial impact of this rule will be minuscule, but it ought to accomplish three things: reduce crime, create a healthier and safer environment for kids, and defuse a lot of the anger Tea Partiers feel over benefits.
    9. Ban all unfunded mandates to State and local governments.
    10. Place a strict, and short time limit on all regulatory decisions, and require all regulatory decisions to be signed by someone personally responsible for its timeliness and correctness.

    • SpartacusIsNotDead

      Aside from #3 and #7 (pro-rating government salaries), you haven’t listed a single cut to government spending or a single increase to taxes that you would make. And, it’s not even clear #7 will result in a spending cut because Congress could simply choose to raise enough revenues so that funding is sufficient to pay the current salaries.

  • beowulf

    1. Tax capital income at ordinary rates
    2. Drop age restrictions and make Medicare a universal program
    3. Zero out tax expenditures and (and direct welfare programs) and create a negative income tax system.

  • Mary Kaszynski

    I cannot agree more strongly with the last point. We’ve already spent at least a trillion dollars in Iraq and Afghanistan in the past ten years – as much as three trillion, by some estimates. And we’re on track to spend over $100 billion in the next year alone. Any serious deficit reduction plan will have to include defense cuts, and war costs are a big part of that.

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