Goodman on Henderson on Krugman
David Henderson notes this claim by Paul Krugman:
Cut through the noise and fog, and it is true that Democrats broadly want to redistribute income down, and Republicans want to redistribute income up.
And then asks, “Where’s the evidence?”
Michael Stroup has shown that the Bush tax cuts actually made the tax system more progressive than it was and so did other Republican tax cuts, including the capital gains tax cut pushed on President Clinton by a Republican Congress.
If high incomes are growing faster than other incomes, the tax system will naturally look more progressive. But the main reason almost half the country pays no income tax is because Republican tax legislation explicitly took them off the tax rolls. Then let’s not forget that (Nixon’s) Earned Income Tax Credit is Milton Friedman’s negative income tax.
On the spending side, I believe you will find that social welfare spending grew more under Nixon and Ford than under Johnson — and mainly by executive order (they didn’t have to do it!) Also, I believe social welfare spending grew more under Reagan and Bush I than under Carter and a whole lot more under Bush II than under Clinton. See this Cato analysis.
While I don’t think that this does anything to disprove Krugman’s claim, it completely undermines the implication that Democrats are helping the poor and Republicans are helping the rich. So, the Krugmanites are effectively defeated.
“…Democrats broadly want to redistribute income down, and Republicans want to redistribute income up.”
This means that Republicans are helping the poor (and everyone else) while Democrats are actually hurting the poor.
but good luck changing people’s reaction to that statement.
There is a fundamental ideological divide between the two sides that creates this disconnect. People are becoming increasingly angry and bitter toward the opposition because their economic interpretations of policy are diametrically opposed. We are all discussing, debating, arguing and fighting issues that are based on totally different understandings of the world. If we want any real reconciliation and harmony, we need to figure out some way to get on the same page fundamentally.
I agree, although, what does that mean in practice? Isn’t resolving that disconnect what we are trying to do?
Yes, but I think that there has to be a better way. Maybe thinking backwards from policy issues to find where there is common ground and discussing the things that arise at a more fundamental level.
For example, in this case we have a difference of opinion on how to distribute income in order to maximize welfare. So, we need to discuss why we hold our positions (e.g. having wealth in the hands of those who are most productive has positive benefits for everyone in society vs. giving money to the poor means that they will be able to demand the products that the rich produce), if a difference of opinion still exists, discuss why you hold the positions that support the previous positions (e.g. the incentive of ownership and ability to create vs. the opportunity to create that poor people hadn’t had before), etc.
I would imagine that most discussions would find fundamental differences in what we think is natural law.
It would be difficult, but with all of the information that comes from both sides, we have to sift through too much useless material before finding the real fundamental gold.
There is strong ideological differences within the Republican Party.
Definitely. Sorry, I over-simplified things for the sake of argument. This isn’t just an Elephant and Donkey disconnect.
So…these arguments render the Republican Party more of a spending party. Clearly big ideological divides within the party itself.
Although it would be a gross oversimplification, I believe it partly true that Democrats want to redistribute some of the national income downward. Democrats see redistributive policies as a form of social justice. They believe any harm done to economic growth by taxing the affluent more heavily will be offset by the benefits of living in a more equal society.
However, I have to strongly disagree with Krugman; Republicans do not want to redistribute income upward! Indeed, Republicans don’t want to change the distribution of resources of either group by taking from one group and giving to another. They don’t believe a free society should seize property from one group and redistribute it to another group out of sympathy (or to garner votes). Republicans believe that promoting free market competition in the production of goods, services and labormarket will grow the economy faster and — in the long run — create a more prosperous society. Republicans also believe a prosperous society is the best anti-poverty program. You could argue that Republicans are the collectivists — they promote policies that do the most good for the economy — not one group within the economy.
Both Democrats and Republicans want policies that grow the economy and benefit everyone. The real point of disagreement is about where to draw the line.
Good point. We need to dispel this notion that Republicans are trying to help their rich buddies. When they do give money to the rich it is generally only a fraction of what has been already paid in, i.e. it is giving those people their money BACK.
I’m sure that people like Krugman understand their opposition, but it is much more expedient to slander (I am aware that both sides do this). Over the years the left has increasingly portrayed free-markets through a Marxist lens.
Somewhere I saw a chart of the majorities in House and Senate during each Presidential term. I’ll try to find that, if I have time. It’s too simplistic, if not outright misleading, to measure legislation and/or spending by Presidential term alone.
For example, Bush 43 had a slim Republican majority in the house until 2007 when the Democrats gained a 233-198 majority. The Senate was split 50-50 at the beginning of his first term and 49-49-2 at the end of his second term. The Democratic party had control of both the House and Senate, starting January 4th, 2007. The Democrats kept control until the voters chose the republican party to reclaim the House starting on January 3rd, 2011, after the first two years of Barack Obama’s presidency.
Re: my first comment, see here:
http://en.wikipedia.org/wiki/Party_divisions_of_United_States_Congresses
Frankly, both parties are big spenders on welfare — the division comes from the question of who pays and who benefits. Viz: the farm bill recently passed by the House benefits farmers without regard to any income threshold. Also, there’s a WSJ article this morning about the Feds buying sugar (that it will then have to GIVE AWAY) to support prices for sugar producers. WHY is our government making sugar & sugar-inclusive products more expensive for the U.S. consumer than it is for every other sugar consumer on the planet? Huh? Why? …because that’s what politicians do, whatever tag they wear.
*Viz: the farm bill recently passed by the Republican House *