Bruce Bartlett on McCain vs. Obama

Bruce Bartlett, a leading conservative critic of contemporary Republicans who have hijacked and besmirched the conservative label, argues on the following grounds that McCain's and Obama's tax policies would be less different than one might think. To preview my response, it would be a better world if Bruce were right in his predictions about what they would do but I'm not convinced that he is right. Anyway, he says the following:

"As for taxes, the next president is probably going to raise them regardless of who is elected. That is because our nation’s fiscal problems are becoming too pressing to ignore. A key reason is that the first members of the baby boom generation will turn 65 during the next administration, qualifying for Medicare and, at 66, for Social Security. Sooner rather than later, fiscal reality will force action on the budget. And with the political impossibility of cutting spending by enough to matter, especially with Democratic control of Congress, the default position will necessarily be higher taxes.

"To be sure, McCain and Obama will raise taxes differently, and that is not unimportant. But the simple idea that Obama will raise taxes and McCain will cut them is nonsense. Every serious budget analyst knows this, even if McCain insists that he can continue all the Bush tax cuts, cut taxes by hundreds of billions of dollars additionally, and still balance the budget. That is impossible. It’s also worth remembering that McCain has never been a stalwart tax cutter, having opposed the Bush tax cuts in 2001 and 2003 on the grounds that they were giveaways to the rich."

This is entirely, indeed verging on indisputably correct if we posit that the next president will follow policies that are not entirely insane. But insanity can prevail for a long time, so I disagree that McCain will raise taxes simply because the fiscal situation makes doing so unavoidable in the long run.

Obviously he will not balance the budget. But until the capital markets go haywire (i.e., the U.S. can no longer sell bonds without paying a huge interest rate premium based on investors' concern about default, whether explicit via non-payment or implicit via hyper-inflation), absolutely nothing stops us from following a fiscal policy that is crazy and unsustainable.

I'm reminded of Mondale's claim during the 1984 campaign that both he and Reagan would raise taxes, and differed only in his being honest enough to admit it. The claim was that deficits would make tax increases necessary no matter what. But Reagan got along just fine in his second term without raising taxes to cut the deficit (although this happened in 1990 and 1993).

One reason Mondale proved wrong was that the fiscal situation actually wasn't incredibly dire back then, except over the very long haul. Now it is quite dire, to the point that disaster is looming, probably in the next ten years or so, if we don't get astoundingly lucky or else have a course correction. But no political force can make us do the sane thing before circumstances turn ugly.

As for McCain, it's true that he wasn't and presumably still isn't a dyed in the wool tax cutter. I don't think he actually knows or cares about taxes any more than the average high school student does. And it's true that he took a more responsible stance in 2001 and 2003. But that was at a time when (a) he was furious at Bush for throwing filth at him in the 2000 presidential campaign and (b) he didn't see his future as necessarily linked to the ruling powers in the Republican party. Now he is institutionally committed to reckless tax cutting even if it remains a matter of personal indifference to him.

Readers may have noticed that I've been criticizing McCain a lot in my blog entries but not saying a whole lot about Obama. This reflects that I'm not necessarily sold to a high degree either on Obama personally (although he appears to be intelligent, and the attacks on him have generally been unfounded and idiotic) or on the institutional commitments of a Democratic nominee. My main reason for supporting him, as one clearly can infer from these columns that I do, is that I fear McCain will be incredibly bad. This basically reflects the institutional commitments that I think McCain has via the Bush-Rove Republican party, plus the fact that he appears to be a dangerous warmonger.

Returning to the tax and budgetary realm, I believe we are headed for the shoals of a fiscal disaster unless the Republicans become sane again, at which point bipartisan solutions may become possible. But they need to lose a few more times before that has any chance of happening. In the short term, McCain like Bush will, I fear, act mainly to make things worse - as Obama might too if political constraints are binding enough (although his advisors know better and he appears to be smart enough to understand what they tell him), but at least in far lesser degree.