Has Kent Conrad done an about face and become a supporter of the Republican plan to endlessly extend tax cuts for the rich? Far from it.
“The Republicans’ proposal to me is a formula for the decline of the United States,” Conrad said last night in response to a question from TPMDC.
Conrad is among the only Senators whose hawkish rhetoric on deficits closely matches his voting record, and he surprised many — even senior members of his own party — when he was quoted widely supporting a continuation of the Bush tax cuts, including for high income earners.“The general rule of thumb would be you’d not want to do tax changes, tax increases … until the recovery is on more solid ground,” he told reporters outside the Senate chamber yesterday afternoon.
And indeed, he reiterated that position at length when TPMDC caught up with him last night. But he also made it clear that he’s in no way supportive of the GOP position on taxes.
“In the short term, most economists would say raising taxes or cutting spending during an economic downturn is counterproductive,” Conrad said. “Now if you break it down, the high income would be the least problematic in terms of…a change in the tax rates, because they’re the least likely to spend the money. Middle income, far more important. And with [unemployment insurance], that’s actually the most important thing, because that money’s all going to get spent.”
In other words, a deficit-financed tax cut for the wealthy (as the GOP currently proposes) is the least stimulative of the options Conrad listed and ,though he’d like to preserve all of the current tax rates temporarily, tax cuts for the rich ought to be the first to go.
“[M]ost economists are saying that for the next 18 months or two years, we’re going to have continued economic weakness,” Conrad said. However, “the analysis has been done by CBO and others show that deficit-financed tax cuts actually hurt long term growth.
“I was answering what would be my reaction to the circumstance we face,” Conrad explained. “My reaction would be don’t cut spending, don’t raise taxes and that would mean on anyone. But this is the time to prepare to pivot, to put together a plan that does bring deficits and debt down over the more extended period of time.”
Conrad said he’d be happy sunsetting the Bush tax cuts on the wealth after 18-24 months. But faced with a choice between the Republican plan — indefinite tax cuts on the rich — and the Democratic plan — ending tax cuts on the rich this year — Conrad was crystal clear.
“[Republicans] will absolutely explode the debt,” he said.