Monday, December 06, 2010

Liberal Doublethink

The novel 1984 introduced the term "doublethink" which means to believe two contradictory things at once. The last few days have been full of liberal doublethink.

The two hottest issues of the day are President Obama's pay freeze on federal workers and extending the Bush tax cuts for everyone or letting them expire for a portion of the population.

The arguments against the federal pay freeze as given by Paul Krugman are:

The actual savings, about $5 billion over two years, are chump change given the scale of the deficit.

Anyway, slashing federal spending at a time when the economy is depressed is exactly the wrong thing to do.

You know the old expression - a billion here, a billion there and pretty soon we're talking real money.

So, according to Krugman, any cut in federal spending is bad - exactly the wrong thing to do. But hold on a minute. He also wants to raise taxes on the wealthy. If keeping federal workers from getting $2.5 billion in the next year will hurt the economy then what will it do to the economy if we take $70 billion a year from the group that accounts for nearly half of all consumer spending?

Do you see the paradox? Obviously Krugman does not? How do we explain this paradox? Apparently only federal spending stimulates the economy and salaries count as federal spending but only for federal employees.

One wonders about federal employees who make more that $200,000 per year? According to Krugman, they need to keep getting increases in order to keep the economy going but they also need to have their taxes raised because they are wealthy and make too much money.

There are other issues but these are seldom discussed. For the federal workers, there is the fairness issue. A huge number of the population is unemployed or underemployed. Another huge portion has had to cope with pay freezes of actual cuts for the last couple of years. At the same time, the government was giving pay increases to its employees with borrowed money. This shows an arrogance towards the average worker.

An argument against extending the Bush tax cuts for a portion of the population is that it will raise the deficit by $700 billion over the next ten years. Seldom mentioned is that the Bush tax cuts as a whole will cost $3.7 billion over the same period. Liberals concentrate on the $.7 trillion and ignore the $3 trillion.

Are conservatives engaging in their own doublethink? Not really. They are least explain their apparent contradictions.

First, the pay freeze was President Obama's idea. conservatives may applaud it but it was never high on their list of priorities. That only leaves balancing tax breaks against cutting the deficit. There is no major contradiction here, either. Since the days of President Reagan, conservatives have been for lower taxes in order to improve the general prosperity and for cutting the federal deficit by cutting government. Liberals are asking them to abandon their quest for smaller government in order to cut the deficit.

Also, the numbers are not a hard as they sound. People avoid paying taxed. Raise their taxes and the put more effort into avoiding taxes. Back when the highest tax rate was above 70%, no one actually paid this percentage. They put their money into tax shelters. These cost money but the high tax rate made it worth the effort. The liberals want to bring back those days.

Taxes are also  drag on the economy. The government does not spend money, it reallocates it. In takes money that might have been used to buy a new car or invest in a new business and uses it in other ways. One hopes that it is at least spent wisely but often it ens up in earmarks and pork barrel projects. Krugman and company only look at the good that federal spending does without considering the good that private spending can also do.

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