A Good Faith Disagreement with Michael Kinsley

by Reihan Salam

This will be a rather abstract post. My apologies in advance. In a recent Politico column, Michael Kinsley writes:

Of course, when the government is spending $1.3 trillion more than it brings in and borrowing more than a third of what it spends, the details of the tax law almost don’t matter. You’ve got to start making some assumptions about who will ultimately bear the burden of this year’s spending and the effect this will have on that person’s work incentive. (Even deficit doves like Berkeley professor Brad DeLong are quoting Milton Friedman’s famous truism: “To spend is to tax,” meaning that today’s spending commits you to pay for it, however much you initially put off.) If people making more than $250,000 a year can’t be asked to dig a little deeper, who can?

This is a terrific point. But before asking taxpayers — any taxpayers — to dig deeper, I’d gently suggest that we look at public bureaucracies. If the Milwaukee Public Schools spend twice as much as choice schools to deliver the same results in terms of reading and math scores, I’d say MPS can dig deeper, ideally be restructuring compensation and giving workers more autonomy. If one-fifth of public dollars spent on infrastructure are essentially wasted, as Barry LePatner argues in his brilliant new book Too Big To Fall, which I’ll discuss in greater detail soon, I’d say the bureaucracies we’ve placed in charge of public construction projects can dig deeper, ideally by doing a better job of sharing data and using life cycle assessments. If we could reduce Medicare expenditures by 8% per year by creating a competitive pricing system, I’d say the federal government can dig deeper by making a commonsense reform that will leave the quality of Medicare unchanged if not markedly improved. 

Once we address these domains, we can turn to revenue. And on the revenue front, I’d gently suggest that we try to find ways to raise revenue that do the least amount of damage to the broader economy. Alan Viard and Doug Elmendorf of the CBO have offered thoughts on this subject, but of course assessments and opinions vary. I’ll just gently suggest that it is not obvious that marginal tax increases on high earners aren’t going to get us where we’d like to go in the absence of deep cuts in expenditures, which are, of course, the harder part.

Raising taxes on other people is not the hardest sell in the world. My sense is that Michael Kinsley — an exceptionally smart person and a gifted writer — really believes that he is fighting the good fight when he trains his guns on “whiny” affluent taxpayers. But as many dedicated and public-spirited public employees across the country understand, rigid work rules, structural inefficiencies, etc., are defended by organized, disciplined, well-funded interests. Those public employees who are fighting for more autonomy, more transparency, and more efficiency are the real good guys, in my view, and they need our help. 

People on the right often talk about “class warfare.” Many of my fellow right-wingers will no doubt suggest that Michael Kinsley, for example, is indulging in “class warfare” in his latest column. I have a different view. I think we’re talking about an upper-middle-class civil war. It is complete and utter kabuki. Rest assured, gentle tax increases on high-earners are necessarily a down payment on tax increases for everyone. Closing the fiscal imbalance through tax increases on the rich is a canard, as we’ve discussed on more than one occasion. Matt Yglesias wrote a great essay on this subject that I can’t recommend enough. I don’t embrace his conclusions, but his analysis is definitely sound.

The truth is that I don’t give a dang about the upper-middle-class civil war. Rather, I care about seeing to it that the people who rely on public services and the people who pay for them are getting value for money. If I honestly believed that the federal government was not flagrantly wasting vast amounts of gasoline and coal, that it was offering high-quality services to poor, working, and middle-income households, and that its investments in roads and bridges were being deployed effectively, I would feel very differently than I do about the prospect of tax increases on people like my parents, who spent my childhood working four jobs between them to gain a foothold in the middle class. 

Why does no one care about how public money is actually spent? Part of it has to do with the fact that abstractions are appealing, particularly to conservatives but also to at least some egalitarian liberals who find abstract arguments for a more progressive tax regime more engaging than serious discussions of how public bureaucracies work. If we think of public employees as actual people who respond to incentives yet who generally want to do their jobs well — I can’t help it because I grew up around public employees, two of whom were my parents — you have a different perspective than if you think of public employees as cash-hungry villains or, more to the point, as selfless heroes constantly attacked by the tax-phobic right.