Chris Hayes: The Return of Fuzzy Math

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Up with Chris Hayes

Chris Hayes: The Return of Fuzzy Math

The contemporary Republican party faces a fundamental political problem and it is this: the policy position to which the party is most committed is very unpopular. Over the last decade the single most urgent, durable domestic priority of the Republican Party is reducing taxes on wealthy Americans. If there is one thing you can bank on when the Republicans are in power, it's that.

 It happened twice during George W. Bush's terms, in which he pushed through tax cuts that totaled a combined $2.74 trillion. When those tax cuts were set to expire in 2010, Republicans announced they would happily let taxes rise for everyone, and let unemployment benefits expire—an unprecedented move under such dire conditions—rather than raise taxes for the top 1%.

They won that standoff and got their way, leading to at least $225 billion in tax cuts for the top 1% over the last two years. Once Republicans took the House, they moved quickly to vote for the Ryan budget, which passed the House the first time on a vote of 235-193. All but four Republicans voted for it, and it would have cut taxes for those at the top even further. The Ryan budget died in the Senate, but undeterred, earlier this year Ryan unveiled a second version of his budget, this one would have cut more than $1.76 trillion from the taxes of the top one half of the top 1% over ten years.

Which brings us to the current campaign. During the Republican primary every candidate in the field offered tax cuts that, it turned out, would most benefit the wealthy. A number of the plans proposed - Cain's, Gingrich's - came right out and said explicitly that they lowered taxes for the wealthiest. I suppose it's to Mitt Romney's credit that he did not have the most cruelly regressive tax plan in the primary. But it's under-appreciated that he is currently proposing at least three major separate tax cuts, all of which would disproportionately benefit the rich.

First, he's proposing that all of the Bush tax cuts be made permanent, which would mean a tax cut of $3 trillion for the wealthiest over just the next ten years. Second, he's proposing to cut the corporate tax rate from 35% to 25%. The Tax Policy Center estimates that just over half of the corporate tax burden ultimately falls on the top 1%, so Romney's plan amounts to a cut of $43-thousand for each household in the top 1%. And then there's the now famous $5 trillion tax cut Mitt Romney is, or at least was proposing, which he says isn't a tax cut because he'll close unspecified loopholes and deductions.

We all know inequality has grown, that the 1% have pulled away from everyone else, and perversely, the recovery has only made that trend worse.  So it violates voters' basic and appropriate sense of fairness to further skew the tax code towards those who are doing the best, in fact some doing much better year after year than anyone else. Why, they ask, should Mitt Romney, who makes more than $20 million a year and sits on a fortune of $230 million only pay 14% in taxes?  The polling on this is remarkably robust and incredibly consistent. Heck, even a majority of Republican support higher taxes for the wealthy, as several polls have found.

So if you're a Republican seeking the highest office in the land, you've got a real problem. On the one hand you absolutely have to advocate for and push through tax cuts for the wealthy, knowing full well the electorate as a whole does not like or want them. So what do you do?  Well, up until this point, Mitt Romney has floundered a bit, but Wednesday at the debate, he fully embraced the very effective strategy used by the last man to successfully pull off this particular bait and switch: George W. Bush. The centerpiece of Bush's campaign was a large tax cut, skewed heavily to the wealthy. But rather than defend this principle of tax cuts for the wealthy, he simply obfuscated and hand waved and misled about his tax cuts' effects.

Bush: Everybody who pays taxes ought to get tax relief. After my plan is in place, the wealthiest Americans will pay a higher percentage of taxes then they do today, and the poorest of Americans, six million families, seven million people won't pay any tax at all.

Notice the sleight of hand. The wealthiest Americans will pay a higher percentage of taxes than they do today. Not a higher percentage of their income in taxes, since that would be an outright lie. This is a very common bit of conservative misdirection used to hide the distributional unfairness of their tax cuts. 

Even in Herman Cain's regressive world of a 9-9-9 flat tax, you can imagine that with enough concetration of income at the top, the wealthiest households would still pay the majority of total income-tax revenue. That doesn't reflect how progressive or fair the taxation system is, it reflects just how unequal incomes are. Bush did it again in the next debate, too.

Under my plan, if you make -- the top -- the wealthy people pay 62% of the taxes today. Afterwards they pay 64%. This is a fair plan. You know why? Because the tax code is unfair for people at the bottom end of the economic ladder. If you're a single mother making $22,000 a year today and you're trying to raise two children, for every additional dollar you earn you pay a higher marginal rate on that dollar than someone making $200,000, and that's not right. 

At the time, this drove observers to distraction. Bush was running on a huge tax cut for the wealthy and refusing to admit he was running on a huge tax cut for the wealthy. Paul Krugman nearly broke his keyboard writing column after column pointing this simple fact out. "The big lesson of this year's campaign," he wrote, "a lesson that we can be sure politicians will take to heart -- is that a candidate can get away with saying things that are demonstrably untrue, as long as the untruths involve big numbers."

Romney has already embraced much of the substance of Bush's domestic policy, and now he's come around to fully embracing Bush's style to sell it. Confronted with his 5-trillion dollar tax cut, which would skew towards the wealthy, Romney simply refused to own the consequences of his own proposal. And he used exactly the same "share of taxes" sleight-of-hand Bush got away with: "I'm not going to reduce the share of taxes paid by high- income people."

But Romney has an even more sophisticated game of three card monte than Bush had, with three principles that are impossible to satisfy together--lower tax rates for everyone, revenue neutral, and taxes won't be lowered for high-income people.  But if you point towards one of those cards, he waves at the other two. We've seen this before and a lot of folks got fooled the first time. So it's all the more true that those reporting on this campaign have a duty to make sure voters are not fooled again. We can start by listening to Romney himself:

We're going to cut taxes on everyone across the country by 20%, including the top 1%.

That was Romney before he found his inner Bush. But hear me now: if Mitt Romney is elected president, taxes for the top 1% will be reduced.  If I had Romney's money, I'd even bet $10,000 on it.

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