In David Leonhardt's latest "Economic Scene" column for the New York Times, "The Perils Of Pay Less, Get More," he reestablished his reputation as the paper's neo-liberal economic voice, admitting that at a certain point taxes hurt economic growth, but also urging Obama to break his pledge and raise taxes on everyone, not just people making over $250,000 a year, in order to cut the deficit.Leonhardt has certainly changed his mind about Obama's tax pledge. In a huge August 2008 story for the New York Times Magazine, Leonhardt actually promoted Obama's popular campaign promise to reduce taxes for those making under $250,000, in the name of addressing "inequality":
Obama's agenda starts not with raising taxes to reduce the deficit, as Clinton's ended up doing, but with changing the tax code so that families making more than $250,000 a year pay more taxes and nearly everyone else pays less. That would begin to address inequality.
He opened Wednesday's column by talking up Wagner's Law and softening the ground for his unpopular solution: "As a society gets richer, its tax rates tend to rise." Leonhardt explained, "Citizens of richer societies generally prefer more government services...With their basic needs met, they want a military to protect them, good schools for their children, comfortable retirement for the elderly, medical care even when it isn't profitable and a strong social safety net."He claimed that Wagner's Law has been repealed over the last couple of decades, given that "Taxes are no longer rising....Yet our desire for government services just keeps growing."His solution today not only contradicts, but reverses, the cut-tax pledge Leonhardt approved of during Obama's campaign:
What needs to happen? Spending will need to be cut, and taxes will need to rise. They won't need to rise just on households making more than $250,000, as Mr. Obama has suggested. They will probably need to rise on your household, however much you make.
After making vague arguments that the vastly expensive Obama-care would somehow cut health spending, he again called on everyone, not just the rich, to pony up (he proposes not an income tax hike, but "some kind of consumption tax").
On taxes, the affluent can certainly stand to pay higher rates than they have. Over the last three decades, they have received both the biggest pretax pay increases and the biggest tax cuts. But there is not enough money at the top to eliminate the long-term fiscal gap. Households making more than $250,000 pay federal taxes equal to only about 5 percent of G.D.P.