Democrats may — may — finally be about to agree on a revenue and spending plan. It will clearly be smaller than President Joe Biden’s original proposal, and much smaller than what progressives wanted. It will, however, be infinitely bigger than what Republicans would have done, because if the GOP controlled Congress, we would be doing nothing at all to invest in America’s future.
But what will the plan do? Far too much reporting has focused mainly on the headline spending number — $3.5 trillion, no, $1.5 trillion, whatever — without saying much about the policies this spending would support. To be fair, though, the Biden administration could have done a better job of summarizing its plans in pithy slogans.
So let me propose a one-liner: Tax the rich, help America’s children. This gets at much of what the legislation is likely to do: Reporting suggests that the final bill will include taxes on billionaires’ incomes and minimum taxes for corporations, along with a number of child-oriented programs. And action on climate change can, reasonably, be considered another way of helping future generations.
Republicans will, of course, denounce whatever Democrats come out with. But there are three things you should know about both taxing the rich and helping children: They’re very good ideas from an economic point of view. They’re extremely popular. And they’re very much in the American tradition.
About the economics: Although the modern Republican Party is utterly committed to the proposition that low taxes on corporations and the rich are the key to economic success, there is no evidence that this is true. If anything, the historical correlation runs the other way. The U.S. economy grew faster during periods when taxes at the top were relatively high than it did when they were low.
On the other hand, there is overwhelming evidence that helping children, in addition to being the right thing to do, has big economic payoffs. Children who benefited from safety-net programs like food stamps became healthier, more productive adults. Children who were enrolled in pre-K education were more likely to graduate from high school and go to college than those who weren’t. As I’ve argued in the past, the economic case for investing in children is even stronger than the case for investing in physical infrastructure.
When it comes to public opinion, what’s striking is how little effect more than 40 years of anti-tax, anti-government propaganda has had on voters’ views. Polls consistently show large majorities, including many Republicans, supporting higher taxes on corporations and the rich. Large majorities also support subsidizing child care and aiding families with children.
It’s true that anti-government politicians often win elections — but they do so, with rare exceptions, not because the public buys into libertarianism but because white voters can sometimes be persuaded that government programs benefit only people of color.
Finally, while Republican politicians routinely claim that Democrats are anti-American and that Democratic proposals are Marxist, history tells us that the key elements of the legislation we’re probably about to see — aid to middle-class and poor children together with higher taxes on the wealthy — are quintessentially American ideas.
Remember, we are the nation that basically invented universal education. Thomas Jefferson called for publicly funded schools even in the midst of the Revolutionary War (yes, only for whites, but still). In the 19th century, America led the way in creating “common schools” that were meant to include students from all social classes, and were justified by many of the same arguments now being made for universal pre-K and other forms of aid to children.
So when Republicans denounce pro-child policies as socialist and try to promote private schools, they, not Democrats, are rejecting our nation’s traditions.
And guess what: We are also, arguably, the nation that invented progressive taxation. America has had progressive income taxes and estate taxes — that is, taxes that are levied at a higher rate on large incomes and estates — since 1916.
It’s notable that the early proponents of these taxes didn’t view them simply as ways to raise revenue. They also explicitly called for taxes on the wealthy as a way to limit inequality, and in particular to prevent the emergence of a hereditary oligarchy. Thus in 1905 Theodore Roosevelt argued that it was essential to prevent the “inheritance or transmission in their entirety” of “fortunes swollen beyond all healthy limits,” and in 1907 he called for a “heavy progressive tax” on estates to achieve this goal.
A modern U.S. politician who said anything similar would be accused of engaging in un-American class warfare. But if this be class warfare, make the most of it; like spending to help children from lower-income families, progressive taxation is as American as apple pie.
So if Democrats finally do agree on a fiscal plan, they should go all-out in promoting it. Economics, politics and America’s historical traditions are on their side.
Paul Krugman | The New York Times (CREDIT: Fred R. Conrad)
Paul Krugman, winner of the Nobel Memorial Prize in Economic Sciences, is a columnist for The New York Times.
