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Election Mandates, Party Principles, and the Tax Cuts
Jesse Richman, 12/18/2010

The recent decision by Congress to pass a tax-cut focussed stimulous package consisting of roughly 875 billion in deficit spending over the next two years reflects a compromise between the Democratic and Republican Parties, but it is a compromise in which both parties suggest a lack of concern about debt and deficit spending, this in spite of a midterm election in which Republicans won on the basis of that issue. 

Although the 2010 election was a stark repudiation of the Democrats, it was not an endorsement of Republicans.  In the exit poll, 44 percent of voters expressed a favorable view of the Democratic party, while 41 percent held a favorable view of the Republican party.   The independents and conservatives who elected Republican candidates often lacked strong affection for the party of the candidates they selected.  Republicans cannot count on loyalty from the independent voters who swung their way this year any more than Obama could count on maintaining support from the independents who put him over the top in 2008.  Even in the 2010 exit polling, Wall Street bankers and George W. Bush both received more blame for the current economic problems than Barak Obama.

The fight over the tax extension has a remarkable air of unreality to it.  Didn’t we just come out of an election focused in substantial part on concerns about the expanding federal government debt?   18 percent of those polled in the exit poll thought that the highest priority of the Next Congress should be cutting taxes (71 percent of them voted Republican) while 40 percent said the highest priority should be reducing the deficit (65 percent of them voted Republican).  Thus, the largest share of Republican support by an almost two-to-one margin came from voters who thought that deficit control should be the top priority.  How does this square with passing an 875 billion tax cuts / stimulous bill paid for entirely by borrowing?  I’m not convinced that Republicans have properly interpreted what mandate they got.  

We are heading for interesting times nationally in part because voters seem increasingly likely to distrust both parties.  A recent Heartland Monitor poll sponsored by National Journal and Allstate found that “Twenty one percent said they were “not convinced that [the] agendas of either party can solve our problems” and are “pessimistic that they can work together to find solutions.”  The largest group, 38 percent, also said that they were not convinced that either party’s policies could fix the nation’s problems, but said they were optimistic that the sides would find a way to cooperate for progress.”  Thus, a solid majority (59 percent) of respondents do not believe that either party has an agenda capable of solving the country’s problems! (National Journal December 11th, 2010 page 30).  2008 offered Democrats an opportunity for a realignment if they could keep it.  They have not.   But Republicans cannot yet claim strong public backing.   Meanwhile, the easy compromises will be ones like the currently proposed tax extension that cut taxes and increase spending without paying for either.  Will we also be able to find solutions to the long-term problems? 

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]