Stoopid repuglicans: Tax Fairy Edition

John Amato asks: Why is John McCain talking about "his" budget proposal on CNN? If I'm not mistaken, didn't McCain lose the election? And the major reason was because of his nonexistent economic skills so why would people care? The best political team wants to know.

Sully: Not April Fools

Question: What makes Erick Erickson so mad that he stokes revolution? He writes:

At what point do [citizens] get off the couch, march down to their state legislator’s house, pull him outside, and beat him to a bloody pulp for being an idiot?...Were I in Washington State, I’d be cleaning my gun right about now waiting to protect my property from the coming riots or the government apparatchiks coming to enforce nonsensical legislation.

Answer: "a ban on dishwasher detergent made with phosphates, a measure aimed at reducing water pollution."

Yglesias gets his licks in.

John Cole finds The Next Victim

Of the smear brigades:

It’s 11:45 a.m. on April 1, and if you run a Google News search on Harold Koh, dean of Yale Law School and President Obama’s pick for legal adviser to the State Department, here’s what you’ll find: 13 pieces on far-right Web sites characterizing Koh as dangerous and anti-American; several Fox News stories, updated several times daily, one of which describes the anti-Koh screeds as “burning up the Internet”; and a measly two blog posts defending Koh from these attacks. By the time you read this, I suspect that Fox News will have a scrolling red banner that reads, “Obama’s Koh pick imperils us all” (and … wait for it … BINGO!), the anti-Koh pieces will number 18, and the pro-Koh blog posts will number three.

You know where this is going, don’t you? His only sin was to be appointed.

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Yglesias: April Fool’s Budget Relies on Inconsistent Tax Rates

The April Fool’s Budget released today contains, naturally, generous tax cuts for the wealthy. One such tax break is that they propose to offer Americans a “choice” between the current tax system, or else you could choose to pay a marginal tax rate for income up to $100,000 of 10 percent and 25 percent for any income thereafter.” Since right now the top marginal tax rate is 35 percent, that would be a huge tax cut for wealthy Americans. And of course wealthy Americans would choose the option that’s cheaper for them. This would sharply reduce government revenue and lead to large budget deficits.

But one of the April Fool’s Plan’s conceits is that it’s supposed to produce low deficits. How to accomplish that? Well, Ryan Grim points out that one thing Paul Ryan did to make the math work out is assume people would choose to pay the higher rate:

But the real way that Republicans offer the tax cut without factoring it into the budget’s revenue is to suggest that Americans won’t actually take advantage of the lower rates. Instead, the GOP budget permanently extends President Bush’s 2001 and 2003 tax cuts. A Republican budget committee aid said that the revenues assumed in the GOP budget are based on the current tax structure that resulted from those cuts. […] Under the current tax code, an individual making more than $160,850 pays a 33 percent rate; under the Republican plan, that taxpayer could choose to pay 25 percent instead. (For a family, the income threshold is $195,850.) For a family earning more than $349,700, the rate rises to 35 percent, but filers could still choose the 25 percent rate.

It would be nice to have a real debate between progressive and conservative ideas about the course of public policy instead of needing to spend all this time hunting around for gimmicks.

Benen: THE RIGHT WON'T LET THE TAX FAIRY GO....

The National Review's Andy McCarthy had an item yesterday, which was not an April Fools' joke, and which served as a helpful reminder of why discussing tax policy with conservative activists tends to be frustrating.

We know that lowering marginal tax rates can increase federal revenue, but it's clear that the President won't cut taxes (not even for "95 percent of Americans"). So we need a Plan B....

So, if the government lowers taxes, the argument goes, government revenue necessarily goes up. It's something "we" already know. Indeed, it's so obviously true to McCarthy, he doesn't bother to explain how he came to believe such nonsense.

The idea has been around for years, and it's known in some circles as the "Tax Fairy" argument -- all we have to do is lower taxes and, like magic, the Tax Fairy will boost revenues. Under this approach to tax policy, tax cuts just pay for themselves.

The problem, of course, is that the argument is wildly wrong. Dean Baker recently explained, "It is amazing to me that people have treated this as though it is a debatable point, because it is really not." Or, as A.L. noted yesterday:

[I]t's demonstrably, empirically untrue. We've lowered marginal tax rates multiple times, and it never produces more revenue. Even the most ardent supply-side economists don't believe that tax cuts fully pay for themselves (they believe only a fraction of lost revenues are offset by supply-side effects).

In other words, only complete crackpots believe that McCarthy's "Plan A" would increase revenue. Sadly, with respect to this issue, virtually all mainstream Republicans are now complete crackpots. Which goes a long way toward explaining why the Republican party's budget proposals make absolutely no sense. How can you craft a coherent budget when your only idea for raising revenue is to massively cut revenue? If you're working from that premise, why bother coming up with numbers at all?

What's more, even if we accept McCarthy's foolishness at face value, why wouldn't officials just cut taxes all the time? As Matt noted, tax cuts tend to go over well with voters, so political leaders have an incentive to keep cutting. If "we know" lowering marginal tax rates can increase federal revenue, why would any politician ever oppose more tax cuts?

As for McCarthy's contention that President Obama "won't cut taxes ... even for 95 percent of Americans," didn't we just have this debate? Hasn't Obama already cut taxes for 95% of Americans?

How odd.

benen: SENATE GOP DABBLES IN BUDGET POLICY....

House Republicans clearly had some trouble crafting a budget alternative, and when the caucus finally unveiled a proposal, it was a rather pathetic joke. But what about the upper chamber? Will Senate Republicans try to be constructive and offer a budget blueprint of their own? At this point, it's a little hard to say.

John McCain said on Sunday that the Senate GOP caucus is "working very hard" on their own alternative budget plan. Mitch McConnell said on Monday that the caucus is doing no such thing. McCain leaked word on Tuesday that Senate Republicans really are moving forward with their own budget proposal, but they're bypassing the GOP leadership and the Senate Budget Committee. Judd Gregg, the ranking Republican on the Budget Committee, said yesterday he's prepared to vote for the GOP alternative budget, which he said is unlikely to exist.

When it comes to Republican policy making, one gets the sense the right hand doesn't know what the far-right hand is doing.

As of last night, it seems McCain -- undeterred by having his economic agenda rejected by the electorate -- will unveil a budget alternative sometime today.

The McCain budget, which comes on the same day GOP House leaders introduced their own version of the budget, would spend $229 billion less than President Obama's over five years, primarily by freezing all discretionary spending with the exception of defense and veterans' services. [...]

McCain's budget would also make permanent the Bush tax cuts, provide a permanent fix to the Alternative Minimum Tax, and set up a special commission on entitlements that would seek to "reduce mandatory spending by at least 4 percent over the next 5 years, and 7 percent over the next decade," according to the fact sheet.

McCain has been working with a small circle of allies on the proposal, including Sen. Lindsey Graham, R-S.C., Sen. Tom Coburn, R-Okla., and Sen. Kay Bailey Hutchison, R-Texas.

Cut taxes, cut Social Security, cut spending in the midst of a deep recession. It's the agenda that McCain presented to voters last year, and aparently, he hasn't gotten the hint.

I still find it hard to believe anyone, least of all an experienced senator, would look at our economic crisis and recommend a spending freeze, better yet a five-year spending freeze. As David Brooks recently said, "A lot of Republicans up in Capitol Hill right now are calling for a spending freeze in a middle of a recession/depression. That is insane."

It really is. Josh Marshall explained a few weeks ago, "When the crisis is a rapid and catastrophic drop off in demand, you handcuff the one force that can create demand (i.e., the federal government) in the throes of the contraction. That's insane. Levels of stimulus are a decent question. Intensifying the contraction is just insane and frankly a joke."

In some ways, McCain has become more ridiculous as the crisis has grown more serious. Last fall, he wanted a one-year spending freeze. As the need for government intervention has grown, McCain has gone in the opposite direction.

Assuming these GOP lawmakers aren't deliberately trying to undermine the strength of the country, it's hard to wrap one's head around such irresponsibility. McCain and his cohorts believe the best way to address a raging economic fire is to turn off the spigots for the firefighters. Food stamps, unemployment benefits, infrastructure, health care, education -- all of these stimulative efforts would be slashed through 2014, at the exact time we need to spend more, not less.

The pre-recession mentality keeps getting scarier.