Edited by Gavriel D. Rosenfeld

Edited by Gavriel D. Rosenfeld

Monday, January 4, 2016

Another Krugman Counterfactual: Why the Dems and the GOP are NOT Interchangeable

Paul Krugman often uses counterfactual reasoning in his New York Times opinion pieces and today's column is no exception.

It nicely shows how President Obama's tax reforms have benefited the country by highlighting the effects of their absence under a GOP presidency.

Krugman writes:

"One of the important consequences of the 2012 election was that Mr. Obama was able to go through with a significant rise in taxes on high incomes. Partly this was achieved by allowing the upper end of the Bush tax cuts to expire; there were also new taxes on high incomes passed along with the Affordable Care Act, a.k.a. Obamacare."

"If Mitt Romney had won, we can be sure that Republicans would have found a way to prevent these tax hikes. And we can now see what happened because he didn’t. According to the new tables, the average income tax rate for 99 percent of Americans barely changed from 2012 to 2013, but the tax rate for the top 1 percent rose by more than four percentage points. The tax rise was even bigger for very high incomes: 6.5 percentage points for the top 0.01 percent."

"[In forcing through these changes]  Mr. Obama has effectively rolled back not just the Bush tax cuts but Ronald Reagan’s as well."

"The point, of course, was not to punish the rich but to raise money for progressive priorities, and while the 2013 tax hike wasn’t gigantic, it was significant. Those higher rates on the 1 percent correspond to about $70 billion a year in revenue. This happens to be in the same ballpark as both food stamps and budget office estimates of this year’s net outlays on Obamacare. So we’re not talking about something trivial."

"Speaking of Obamacare, that’s another thing Republicans would surely have killed if 2012 had gone the other way. Instead, the program went into effect at the beginning of 2014. And the effect on health care has been huge: according to estimates from the Centers for Disease Control and Prevention, the number of uninsured Americans fell 17 million between 2012 and the first half of 2015, with further declines most likely ahead."

"So the 2012 election had major consequences. America would look very different today if it had gone the other way."

Krugman's intent in presenting his counterfactual argument is to convince skeptical Democrats that they should actually be grateful that Obama has accomplished what he has, rather than be disappointed that he has not done more by showing how much worse things could have been.

As he puts it:

"On the left, in particular, there are some people who, disappointed by the limits of what President Obama has accomplished, minimize the differences between the parties. Whoever the next president is, they assert — or at least, whoever it is if it’s not Bernie Sanders — things will remain pretty much the same, with the wealthy continuing to dominate the scene. And it’s true that if you were expecting Mr. Obama to preside over a complete transformation of America’s political and economic scene, what he’s actually achieved can seem like a big letdown."

"But the truth is that Mr. Obama’s election in 2008 and re-election in 2012 had...real, quantifiable consequences"

The lesson for the 2016 election is thus clear:

"Whoever the Republicans nominate will be committed to destroying Obamacare and slashing taxes on the wealthy — in fact, the current G.O.P. tax-cut plans make the Bush cuts look puny. Whoever the Democrats nominate will, first and foremost, be committed to defending the achievements of the past seven years."

"The bottom line is that presidential elections matter, a lot, even if the people on the ballot aren’t as fiery as you might like. Don’t let anyone tell you otherwise."

Otherwise, we might be confronting an analogous future counterfactual a la Ralph Nader in 2000.   And who wants a repeat of that?

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