The fiscal winds of change

The Wall Street Journal opinion page has decided that arguments about taxation are the only thing that John McCain has left at this point -- notwithstanding McCain's enormous list of public spending commitments and lack of any financing measures. And the scare stories they trot out are so unreconstructed. Here's Alan Reynolds after crunching some numbers --

Altogether, Mr. Obama is promising at least $4.3 trillion of increased spending and reduced tax revenue from 2009 to 2018 -- roughly an extra $430 billion a year by 2012-2013.

Even accepting his numbers, how big is $430 billion 4 years from now? Well, George Bush's defence budget was $595 billion last year. This is what the conservatives don't realise. What did they think was going to be cut if George Bush loaded up the budget with new entitlement programs and massive debt? Soon enough politicians will start to look at the huge chunk of the budget that they can cut at fairly short notice. Fewer wars, fewer useless weapons, and fewer military contractors hand in glove with the government, and you're into some big savings pretty fast. And anyway, George Bush has defined deficit deviancy down so if Obama has to borrow the money, he can.

Then there's Andrew Biggs adopting the very strange McCain talking point that since Obama's tax credits are refundable, they give too much money to poor people --

While Mr. Obama calls his plan "Making Work Pay," under standard economic assumptions his plan would actually discourage work for anyone earning over $8,000 per year. The tax credit itself would increase workers' take-home pay, an "income effect" that reduces incentives to work.

The income effect is present at any level of income. It's just as likely to apply to a high income person who gets a tax cut as a low income person who gets a tax credit; indeed since the low income person could still use more money to meet basic needs, they might be more inclined to maintain or increase their hours of work even with the Obama tax credit.

But then it seems to be conservative dogma these days that poor people need less money to make them work harder, while rich people need more money to make them work harder.

That my friends is why John McCain is going down like a lead balloon in this election.