Gideon's Blog

In direct contravention of my wife's explicit instructions, herewith I inaugurate my first blog. Long may it prosper.

For some reason, I think I have something to say to you. You think you have something to say to me? Email me at: gideonsblogger -at- yahoo -dot- com

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Tuesday, July 06, 2004
So it's Edwards. Woo-hoo.

You want my opinion? I never liked Edwards. Never liked him, never trusted him. I think he's a lightweight, a smooth-talking poser. I think his "two Americas" shtick is ridiculous. I think he talks to America like it's a jury, and that is not a good thing.

I never really understood the enthusiasm for him. Yeah, he's good at delivering a speech. He was a trial lawyer; of course he's good at delivering a speech. So? This is the most important Presidential skill we can think of? I also know he's like, good-looking and from the South, which I suppose is helpful. Can serious people actually base their political preference on this stuff?

But then, I never really understood the hatred for John Kerry either. Kerry strikes me as a serious, sober, very intelligent, very liberal senator. The main character faults he stands rightfully accused of are: over-caution and obsessive personal ambition. The latter is certainly negative but simply cannot be considered disqualifying; if it were, Kennedy, Johnson, Nixon, Carter, Bush I and Clinton would have to be ruled out. There are a lot of duds in that bunch, but also a majority of recent Presidents. The former is more serious, particularly when you consider just how thin his record is after long service. But is it enough to inspire the profound contempt that so many seem to have for the guy? He's a lousy candidate, but it seemed to me from the beginning that he was the very best of a weak field.

Why do I dislike Edwards but find Kerry basically tolerable? Let's put it this way: Edwards was a trial lawyer; Kerry was a prosecutor.

There is one thing that Kerry should pick up from Edwards, though, and it's not hair care advice. I said I couldn't stand Edwards' "two Americas" line. It's a distant echo of the losing 1984 Mondale campaign, and particularly of Cuomo's famous and beloved (and, the Dems ought to admit it by now, politically disastrous) speech.

But another Edwards line is a very promising line of attack: the "war against work."

Since the Reagan years, GOP orthodoxy on taxes has been: cut taxes on capital because high and multiple taxation of capital reduces the incentive to invest, which reduces productivity growth, which means we get richer more slowly as a society. All true. But since you have to tax something, and you systematically lower taxes on capital, you will wind up taxing labor more heavily.

This is what has happened over the past 20+ years. The proportion of total taxes represented by the payroll tax - a tax on earned wages - has shot up, while taxes on "unearned" income - capital gains, dividends, etc. - have gone down.

The Democrats have a strong and legitimate point to make that this trend is unjust.

Now, the Republicans have a bunch of legitimate answers - among them, that there are a host of rebates and credits and the like designed to offset the payroll tax; that the payroll tax is supposed to pay for Social Security, so cutting it would require cutting benefits down the road; that Social Security Reform is, in fact, designed to turn a big chunk of this tax into an investment on behalf of future beneficiaries, which amounts to a tax cut; and, of course, that a rising tide lifts all boats.

But the Democrats can be smart in their response in turn. They can make two legitimate, hard-to-answer counterattacks to the GOP line.

First: if the objective is to encourage investment, why are we giving a windfall to people who already have investments, by cutting taxes on their returns, rather than lowering the cost of actually investing? Wouldn't it make more sense - and be more efficient - to tax all income the same, but to expand IRAs to make a larger chunk of savings tax-deductible? We could even have tax-credits for saving that phase out with income, or other mechanism to effectively "match" the savings of lower-income citizens, just as many companies "match" 401k contributions by their employees.

Second: since we have to tax something, and since we want to encourage the deployment of capital to make the economy more productive, wouldn't it make sense to tax wealth rather than labor? Labor, after all, produces value. Wealth, unless it is invested, just sits there. Hyper-capitalist Switzerland has a 0.25% wealth tax. Why shouldn't we have something similar in the U.S.? A tax on wealth would not discourage investment - it would encourage it, since it would become more important than ever to earn a return in order to have income to pay the wealth tax.

There are GOP answers to both of the above. To the first: great! We're all for a universal IRA that makes more savings deductible! But a "match" or a phased-out tax credit effectively creates a high marginal tax rate, so we're against that. To the second: in theory, this sounds lovely. But in practice, it means an enormous new set of paperwork and staff to administer said paperwork, and there are privacy issues, and so forth. And anyhow, a policy of mild (<2%) annual inflation achieves the same effect: inflation *is* a tax on wealth, with the proceeds redistributed to debtors. So we'd only agree to an explicit wealth tax if it was coupled with a return to the gold standard.

But these answers do not make for great debating points in a Presidential campaign (and there are answers to them as well - and answers to the answers to the answers, etc. This stuff doesn't end, you know.)

The Democrats have the germ of a potentially winnning, "3rd Way" type of issue with this "war against work" business, but only if they use it right. I'm far from convinced they will; I suspect, rather, that they'll just fulminate against the deficit and the irresponsibility of Bush's tax cuts. Bush, through over-spending and a tax cut larded with too many gimmicks and special-interest goodies (most of both added by Congress, but so what; Bush signed it) has erased the traditional Republican advantage on taxes and fiscal responsibility. Kerry/Edwards have a chance to expand the breach. We'll see if they capitalize on it, or if they fall back on mindless Shrummery.