If you want to take a break from hating Obama for the fiscal cliff deal—as Krugman put it, it’s not the compromise that’s so odious, but Obama’s “I’ll have to retreat if you don’t stop being so stubborn” style of getting there—you might want to take a few minutes to read over Marco Rubio’s reasons for voting against the compromise. (He was one of eight senators* to do so.)
Rubio’s principle claim is that the return to Clinton-era tax rates will hurt the economy (yes, you have to ignore the fact that we had rapidly growing economy during Clinton years and that the Bush-era tax cuts contributed mightily to the debt problem the Republicans currently claim to hate—or don’t!):
Thousands of small businesses, not just the wealthy, will now be forced to decide how they’ll pay this new tax…
I’m no big city economist, but Blake Goud is**, and I’m pretty sure he destroyed this whole “tax raises on small businesses” nonsense on this very blog a long time ago. Most of the revenue taken from small businesses under the higher tax rates will come from a tiny (.3%) number of “small” businesses that make most of the money of businesses classed under S corporations. Note Rubio draws a distinction between small businesses and wealthy in the above sentence; but there’s no real distinction in the case of the tax rates.
Here’s the rest of that sentence:
Thousands of small businesses, not just the wealthy, will now be forced to decide how they’ll pay this new tax and, chances are, they’ll do it by firing employees, cutting back their hours and benefits, or postponing the new hire they were looking to make.
This is a reprise of the past two years’ worth of arguments over austerity: cut rich people’s taxes, or else. It’s not based on any sort of economic theory or empirical data. It’s a temper tantrum, in which rich people get what they want or nobody gets an economy. This was roughly Mitt Romney’s raison d’etre as a candidate, and he lost decisively.
Furthermore, this deal just postpones the inevitable, the need to solve our growing debt crisis and help the 23 million Americans who can’t find the work they need.
Again, the debt crisis was partially created by the Bush tax cuts.
And my favorite part:
Rapid economic growth and spending reforms are the only way out of the real fiscal cliff our nation is facing.
This sentence makes no sense. Yes, economic growth over the long term helps eliminate deficits. But Rubio here seems to be proposing economic growth as both a cause and a consequence of this solution. It’s like if he said at the start of the Iraq War, “Winning is our only path to victory!” Come to think of it, somebody basically did just that, the same person who’s at the start of this whole tax cut mess in the first place.
* Go on, guess who one of the others was. Go on. Okay, it was Rand Paul.
** For the purposes of this post, Portland is a big city.