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Kinsley on the Democrat plan
Posted by: McQ on Tuesday, November 07, 2006

Michale Kinsley confesses that he read the Democratic manifesto "A New Direction for America " after he voted and he's glad he did (implying he may not have voted Democratic otherwise). Why? Well actually there are a number of reasons. For instance, tax credits. They are numerous, and as Kinsley explains, they work directly against a couple of the supposed goals of Democratic governance this time around, namely "reduced spending" and helping the "middle class":
The Democrats may be poised to win the House, but their manifesto does not inspire confidence. The Democrats' two favourite words seem to be "tax credit". They promise to "modernise" the tax credit for research and development; to "expand and improve" the already ludicrously complex system of tax-deductible retirement accounts; and introduce a tax credit for college tuition up to $3,000. They also want a broadband tax credit for internet access in rural areas.

They call for a 50% tax credit for employee health insurance paid for by small businesses as their solution to the healthcare crisis. And - my favourite - they want a tax credit to cover the administrative costs of encouraging employers to offer their employees the option to convert their retirement plan into an annuity when they retire. I don't know what that last one is about, but I smell an interested party.

The problem with tax credits is that they never appear in the budget, so they never get the same scrutiny as direct spending, although their impact on the deficit is the same. By definition, they cost more than whatever benefit they are intended to achieve, since no one is going to be induced to spend an extra dollar on, say, dance lessons unless the subsidy is worth more than a dollar.

Tax subsidies often go to person X to help person Y (eg, to a corporation to help its employees), and person X gets a slice of the benefit - often a big slice. And the consequences are rarely examined. Take the tax credit proposal for tuition fees, for example. Why should a young person who is working and paying taxes subsidise someone in college who will soon be better off if he or she isn't already?
Instead why not quit subsidizing anyone, to include colleges and universities and let the market and the demand generated determine fees. College tuitions and costs associated with attendance have skyrocketed far above the inflation rate. Subsidies only encourage such a pricing mechanism since there is no punishment for increasing the price. Instead, under the present scheme, we just subsidize it with other people's money.

And as Kinsley points out, these tax credit subsidies aren't something which show up on the budget, so they go mostly unseen and their effect unrecognized.

Kinsley then throws out a bit of red meat with his further analysis:
Fairness is one of three qualities that need to be restored to American public life after six years of George Bush. The other two are honesty and competence.
Beware of those on the left preaching "fairness" as I've mentioned before, because in their lexicon that doesn't apply to opportunity, but instead, outcome.

But here is a key point by which any Democratic House (or Congress) should be graded. But you'll have to pay attention to get past the smoke and mirrors. Everything I've read by Pelosi and the gang says they'll go "back" to "pay-as-you-go ", but as Kinsley points out there's a lot of "you-go" and hardly any "pay" involved.
Honesty is not just therapeutic. Fiscal honesty is a practical necessity. A New Direction for America rightly denounces the staggering fiscal irresponsibility of Republican leaders and duly promises "pay-as-you-go" spending. But in the entire document there is not one explicit revenue raiser to balance the many new spending programmes and tax credits.
Pay-as-you-go means another favorite buzz phrase when speaking of a spending bill: revenue neutral. IOW it doesn't cost the taxpayer any more in taxes nor does the government go into debt to implement it. Kinsley, naturally, calls for increased taxes (revenue raisers) because all he is seeing in the proposal is more spending, whether overt or hidden through "tax credits". Obviously the other way to approach this is spending cuts in other areas, which, of course aren't entertained by Kinsley or the Democrats.

So to this date, one would have to be highly skeptical of any real Democratic commitment to pay-as-you-go. Or said another way, should they take Congress, it is more likely that pay-as-you-go will get maximum lip service and minimum application.

Kinsley then nails the major problem with the Democratic program:
Competence, of course, brings us back to Iraq. Apparently, and unfortunately, Bush is right that the Democrats have no "plan for victory". (Neither does he, of course.) For national security in general, the Democrats' plan is mostly about new cash benefits for veterans. Regarding Iraq, the Democrats' plan has two parts. First, they want Iraqis to assume "primary responsibility for securing and governing their country". Then they want "responsible redeployment" of American forces.

Older readers may recognise this formula. It's Vietnamisation - the Nixon-Kissinger plan for extracting us from a mistake. But Vietnamisation was not a plan for victory. It was a plan for what was called "peace with honour" and is now known as "defeat".
Hardly a formula which inspires confidence in their competence on this particular issue.

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Previous Comments to this Post 

Of course, they’ll just try and roll back the Bush Administration tax cuts for the "rich," knowing full well they have zero chance of passing. Then they can continue to blame Bush for the deficit. This of course ignores that (1) you can’t really roll back the tax cuts for the rich — the creation of the 10% bracket for income under $7K helps someone who makes $500000 a year as it does $50000 a year and (2) because of that, rolling back the tax cuts on the top marginal rates of 33% and 35% ($188K for married couples, eg more than Pelosi is talking about) only gets you $12 billion or so a year, assuming no dynamic effect.
Written By: Sean
Well I see one problem with the Democratic plan... it won’t produce "Boat People!" I mean what is the value of a cut and run strategy without boat people? These guys can just walk, or ride out, it lacks the pathos of being on a junk/sampan/scow desperately fleeing your former life...

So I am against the Democrats and their "plan" until they can produce Boat People....
Written By: Joe
URL: http://
Kinley leaves out the essential ingredient for the failure of "Vietnamization": a craven Democratic Congress to pull the rug out from under our allies. Read the history: South Vietnam defeated one invasion with American supplies and airpower. Apply Democratic cowardice, and the next invasion works.
Written By: SDN
URL: http://
a craven Democratic Congress to pull the rug out from under our allies.
Doesn’t that depend upon the outcome of the election?
Written By: Don
URL: http://

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