Kausfiles: A mostly political weblog.

Hyping Obama's Budget--Everyone Wins!

E.J. Dionne on Obama's budget:

The central issue in American politics now is whether the country should reverse a three-decade long trend of rising inequality in incomes and wealth.

Hmm.  Does Dionne think Obama's budget will "reverse a three-decade long trend of rising inequality in incomes and wealth"? As opposed to making the trend slightly less inegalitarian than it would otherwise be?  I'd like to see the calculation. 

A "reverse" in the decades-long inequality trend would be an impressive feat for what is only a rise of 4.6% in the top tax rate (from 35% to 39.6 percent) plus a modest rise in the capital gains rate and some reduced deductions. Isn't it more likely that whether inequality rises will still depend on trends in before-tax incomes--i.e. the underlying economy--which tend to swamp modest shifts in how those incomes are taxed? And if economic health returns, why would we expect the rich to stop getting as rich, before taxes, as they've been getting?

Maybe Obama's biggest feat of salesmanship** will have been convincing starry-eyed Money Liberals like Dionne that he's grandly reversing the inequality trend, when he's really doing something much more modest and realistic (e.g., funding some important new benefits by raising some taxes on top earners). ... 

**--Obama's helped here, of course, by the alarmist right, which also has an interest in exaggerating the distributive impact of his budget. ... 2:17 A.M.

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