Posted by
Andrews on Thursday, April 17, 2008 9:53:15 AM
I have realized conditions are perfect for a smart Democrat to run a centrist Clinton-like campaign and win. Fortunately, we don't have smart candidates on the Democrat side, so we don't have to worry. But if we did, they could actually run on real, centrists promises, and not just promises, but promises they could keep.
How so?
Well, a Democrat could run on tax cuts. And not just tax cuts for the "working poor" or the "middle class", as most Americans know that means "no one I know". Everyone is aware that Democrats who promise tax cuts for a specific group mean they are going to create minute exceptions which apply to maybe four working poor families in the entire nation. No one believes a Democrat when he offers "targeted" cuts.
But this election, a Democrat could run offering a 10% cut in rates across the boards. He could say something along the lines of "I am not going to pick and choose who should benefit from a tax cut. I know a lot of my predecessors said they would tax the rich more heavily, but we already do that with our graduated system. So, I am not going to increase their burdens more just because they are successful. Instead, I am going to give everyone a bit of relief in these hard times." It would play well to everyone except the most die hard class envy warriors. And they certainly aren't defecting to the Republicans, so why bother appeasing them?
And why would a Democrat want to do this? Break with party tradition so drastically?
Three letters: A M T.
We are rapidly reaching the point where the AMT will start hitting the upper middle class in significant numbers. And, before too long, it will cover everyone who actually pays taxes. At that point, all the tax cuts in the world won't matter, as the AMT will govern taxes owed, not the schedules the candidate would be cutting. In other words, he can cut the normal schedule down to zero and still see the same revenues.
And the AMT offers two choices. First, the tax cutter can just let normal inflation take its course and satisfy the egalitarian wing of the party, as it will hit the rich first and then the middle class. Thus the middle class will benefit from the cuts while the rich pay the AMT. This gives the outcome Democrats want without having to actually raise taxes on the rich.
Or, if the candidate just wants the cash, after cutting taxes he can lean on the Fed to inflate like mad, or lean on banks to increase the credit they issue if the Fed won't play along, anything to increase the effective money supply and raise wages and prices. Once that is achieved, incomes will rise, the AMT will effect ever more people, and those tax cuts he promised will be meaningless, as the AMT will cover effectively all wage earners.
The AMT, with its lax of indexing for inflation, offers the perfect opportunity for a smart Democrat to run as a centrist tax cutter without having to either break his promises or suffer the reduced revenue tax cuts bring.
Once again, I have to say I am glad we do not have smart Democrats running.
Correction (04/23/2008): Throughout this essay I accidentally used ATM instead of AMT. I have now corrected that. (I freely admit to being "acronym impaired", I have trouble recalling what acronyms mean and often end up using the wrong one.)