Daily Archives: August 5, 2011

Why Won’t Progressives Act Like Progressives?

By Stephanie Kelton

Paul Krugman just addressed a plea from Cullen Roche, who implored him to throw his considerable weight behind a proposal for a payroll tax cut to help bolster the fledging recovery.  Krugman doesn’t really take a position for or against the proposal but instead suggests that it is DOA because the GOP doesn’t support it. Well WTF?

Is this really what it’s come to?  Experts in the field — even those with a Nobel Prize — can’t stand up for what they believe in unless they consider it politically feasible? An extension of the payroll tax cut — or, far better, a full payroll tax holiday (a 0% withholding for employers and employees) should have been a key component of the stimulus from the beginning.  But the deficit doves (the most high-profile progressives out there) never supported it.  Had they advocated such a policy, there’s a good chance the economy would be on sound footing by now.  But they did not, and impatient voters delivered the House to the GOP.  Now Social Security — along with Medicare and Medicaid — will be sacrificed at the alter of the deficit hawks.

Many of us called for a full (0% deduction) payroll tax holiday (employer AND employee) more than 2 years ago, but the beltway “progressives” all fought against it, preferring instead to accept the conservative frame that these programs face long-term solvency problems that can be “fixed” by chipping away at the very programs they claim to be defending.

I agreed (here) with Professor Krugman’s point about the politics of a payroll tax  — Republicans will do whatever they can to prevent the economy from improving before Nov. 2012. But it is the President’s job to call them out — publicly — and make them explain why they are opposed to reducing/eliminating this regressive (and anti-business) tax.

Oh, and S&P just downgraded the US.  BFD.