"From Hype to Fear" - Krugman 1/7/08

On Monday, Krugman discussed the GOP fear mongers and their take on the economy.

He hits the nail on the head when he discusses the flip flops this group does when the economic climate changes.

When the economy is doing reasonably well, the debate is dominated by hype — by the claim that America’s prosperity is truly wondrous, and that conservative economic policies deserve all the credit.

But when things turn down, there is a seamless transition from “It’s morning in America! Hurray for tax cuts!” to “The economy is slumping! Raising taxes would be a disaster!”

My economic thinking has always been informed by a progressive ideal, by which the affluent support the economic system from which they are the primary beneficiary. Therefore, if there is a concern about the current level of economic security for the middle and/or lower socioeconomic classes, the first place to look is the affluent. As Krugman points out, however, there are a number of folks out there who will do anything to keep this issue from being framed in this manner.

But there’s a powerful political faction in this country that understands very well that any real change will create losers as well as winners. In particular, any serious progressive reform of health care, let alone a broader attempt to reduce middle-class insecurity and inequality, will have to mean higher taxes on the affluent. And members of that faction will do whatever it takes to scare people into believing that change means disaster for the economy.

I have often been confounded by the success of this group (the have mores) of playing the middle and upper middle classes against the lower middle class. I would argue that the current highest rate is not sufficient and that the threshold is too low. Maybe a $1M top bracket at 40%? I'm not sure of the exact values, but the current system allows too many of the upper middle to fear being moved into the upper bracket(whether or not that fear is justified is debatable).