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Why tax cuts for the rich make no sense

By Drew Westen, Special to CNN
  • Drew Westen: Tax cut issues pose a challenge for Democrats, GOP
  • Westen says Republicans will be tested on whether they're serious about cutting deficit
  • He says presidential adviser David Axelrod was wrong to suggest extending all the cuts
  • Westen: Democrats should yield a bit on tax-cut ceiling while opposing blanket extension

Editor's note: Drew Westen is professor of psychology and psychiatry at Emory University and founder of Westen Strategies, a strategic messaging firm. His is the author of "The Political Brain: The Role of Emotion in Deciding the Nation." He has been a consultant or adviser to several candidates, and he informally advised the Barack Obama campaign in 2008.

(CNN) -- Democrats and Republicans agree on extending tax cuts to the middle class. People who are already struggling to get by do not want to see their taxes go up on January 1.

The question is how to define middle class and whether to give tax breaks to the rich that would add nearly three-quarters of a trillion dollars to the deficit. How the two parties handle this question in the next few days or weeks will signal who they really are, whether they will be able to govern together with a divided Congress, and what lessons they took away from the election this month.

Given the more than 60 percent disapproval rates for both parties, it's clear that this election was a mandate for helping solve the problems of the millions of Americans who are out of work and the two-thirds of American workers who are now living month to month. It was not a mandate for more gridlock, ideological battles or a continued transfer of wealth from the ordinary Americans who voted for members of Congress on November 3 to the special interests who paid for their campaigns.

For the Republicans, this is a test of whether they are serious about governing. They ran this year, as they have for 30 years, against deficits. Yet under George W. Bush they doubled the national debt -- by handing over tax breaks to the rich without offsetting them with either tax hikes on somebody else or spending cuts, by funding a war in Iraq without asking anyone to sacrifice to pay for it (other than our kids and grandkids, who will pay trillions for it), and by adding more than half a trillion in new unfunded provisions to Medicare that are now impossible to repeal without losing the votes of senior citizens.

Now Republican leaders say they have come back to their senses and accepted the gospel of fiscal restraint. This is a test of whether that is true. They are demanding the same unfunded tax cuts to the rich, for the same three-quarters of a trillion dollars in debt charged to our children's credit cards, and advancing the weak rationalization that the rich are "job creators."

Given that the Bush tax cuts coincided with the most sustained period of private-sector job loss in this country since the Great Depression, and that there is no credible challenge to the view showing that tax cuts to the rich are far more likely to wind up in hedge funds than in the pockets of newly hired workers, Republicans need to decide whether paying off their wealthy campaign contributors trumps doing the right thing.

While for the Republicans this is a test of whether they are serious about governing, for the Democrats it is a test of whether they are capable of governing -- and whether they will continue to play checkers while the Republicans play chess. They know that tax cuts to the rich are bad policy and bad politics. From a policy standpoint, we can't afford them. From a political standpoint, the average American does not believe millionaires and billionaires are in need of government assistance.

In a survey of more 1,000 Americans I conducted with Media Matters Action Network in September, a single sentence summed up the views of Americans across the political spectrum: "In tough times like these, millionaires and billionaires should be giving to charity, not getting it." That simple values statement beat Republican talking points about extending tax breaks to millionaire "job creators" with swing voters by nearly 40 points.

So what are the options for Democrats, who need to demonstrate to the country that they are willing to compromise with Republicans to solve the country's problems but are not willing to compromise on principle -- in this case, principles of fairness shared by most Americans, who have been watching their income decline while the income of bankers, CEOs and hedge fund managers continues to skyrocket?

The "compromise" floated by President Obama's adviser David Axelrod -- extending tax cuts to the rich temporarily, even though they are economically useless, fiscally irresponsible and politically unpopular -- suggests that the White House needs a house cleaning, because the president and his key advisers clearly do not understand the message the American people sent in this election.

Voters are not interested in compromise for compromise sake. They are not interested in bad bipartisan decisions for the sake of bipartisanship. And above all, they are not interested in weak leadership and the politics of appeasement.

Sen. Chuck Schumer, D-New York, has proposed extending the tax cuts to families earning less than $1 million. That is a serious proposal and a serious compromise.

It would cost American taxpayers about $8 billion a year, but it has two advantages. First, it eliminates any concern about raising taxes on small business owners or people who live in large metropolitan areas, where $250,000 a year (the cutoff for tax cuts vs. tax hikes under Obama's proposal) is arguably not "rich." Second, it draws a clear line in the sand: As a nation, we are going to cut the taxes of working and middle-class Americans -- and we will even make sure we don't raise taxes on the 3 percent of small business owners who could get caught in the $250,000 net.

A similar alternative would set the ceiling for tax cuts at half a million, which would accomplish many of the same goals and allow Democrats the same advantage of being able to hold Republicans accountable if they try to cut the taxes of millionaires and billionaires, since anyone who has made $500,000 a year for a couple years or more has either put away more than $1 million (and hence is a millionaire) or needs a 12-step program for shopping.

The only question, then, is whether to extend the middle-class tax cuts long enough to help struggling families through the roughest economic patch since the Great Depression or to make them permanent, which would be politically expedient but arguably reckless for a country that is considering cuts to programs such as Social Security and education to get back to the balanced budgets of the Clinton years.

This is the first real test for both parties following the election. It will tell us whether Republicans intend to help govern or just to spend the next two years campaigning against the president, and it will tell us whether the Democrats intend to stand up for the principles they profess -- including holding vote after vote in the Senate if they have to until they get a fiscally responsible middle-class tax cut passed. Voters would like to see Republicans show a little heart and Democrats show a little spine.

The opinions expressed in this commentary are solely those of Drew Westen.