Extremely Subtle GOP Public Finance Theory

In the middle of his evisceration of the House Republicans’ attack on the Affordable Care Act, MIT’s Jonathan Gruber notes that the attack claims that the ACA’s tax credits are a form of spending.

But…but…but…Saint Grover says that we cannot get rid of any corporate welfare tax credits because that is a tax increase!  So wouldn’t the ACA’s tax credits be a form of “tax relief”?

Silly me.  Tax credits that support, say, large oil companies are not spending: they are tax relief.  Tax credits that increase working families’ capacity to buy health insurance are spending, and are thus wasteful.

Of course it is irrelevant that the ACA’s credits are refundable.  All those who receive these credits are working, so they also pay Social Security, Medicare, state, local, and sales taxes.  The ACA credits offset those, too, because money is fungible.

So once again: tax credits for corporate welfare, good; tax credits to cover the uninsured, bad.

I’m sure glad we cleared that up.

Author: Jonathan Zasloff

Jonathan Zasloff teaches Torts, Land Use, Environmental Law, Comparative Urban Planning Law, Legal History, and Public Policy Clinic - Land Use, the Environment and Local Government. He grew up and still lives in the San Fernando Valley, about which he remains immensely proud (to the mystification of his friends and colleagues). After graduating from Yale Law School, and while clerking for a federal appeals court judge in Boston, he decided to return to Los Angeles shortly after the January 1994 Northridge earthquake, reasoning that he would gladly risk tremors in order to avoid the average New England wind chill temperature of negative 55 degrees. Professor Zasloff has a keen interest in world politics; he holds a PhD in the history of American foreign policy from Harvard and an M.Phil. in International Relations from Cambridge University. Much of his recent work concerns the influence of lawyers and legalism in US external relations, and has published articles on these subjects in the New York University Law Review and the Yale Law Journal. More generally, his recent interests focus on the response of public institutions to social problems, and the role of ideology in framing policy responses. Professor Zasloff has long been active in state and local politics and policy. He recently co-authored an article discussing the relationship of Proposition 13 (California's landmark tax limitation initiative) and school finance reform, and served for several years as a senior policy advisor to the Speaker of California Assembly. His practice background reflects these interests: for two years, he represented welfare recipients attempting to obtain child care benefits and microbusinesses in low income areas. He then practiced for two more years at one of Los Angeles' leading public interest environmental and land use firms, challenging poorly planned development and working to expand the network of the city's urban park system. He currently serves as a member of the boards of the Santa Monica Mountains Conservancy (a state agency charged with purchasing and protecting open space), the Los Angeles Center for Law and Justice (the leading legal service firm for low-income clients in east Los Angeles), and Friends of Israel's Environment. Professor Zasloff's other major activity consists in explaining the Triangle Offense to his very patient wife, Kathy.

6 thoughts on “Extremely Subtle GOP Public Finance Theory”

  1. Yo, wake up and smell the Denny’s coffee, if you can afford it!

    The one percent apologists will pull all stops to hoodwink the unassuming American electorate, simply because that is what they’re paid for – make up look like down, and down to look like up if that’s what the measure of the day demands.

    The assault upon America’s working and middle class citizens continues as corporate citizens still have a few of us to fleece!

  2. Jonathan Gruber makes sense in a universe where ACA has reached all the way to the level of something-better-than-nothing, but I have to ask where Professor Gruber is getting his research/consulting money these days?

    1. Generally, you can look at his papers. Academics often list sources of funding in their papers (most importantly, to document to providers of grants what they have done with the money they were given). Some publications, such as the NEJM, require extensive disclosure forms.

      1. Yes, I know. Every paper (a feeble 26 at last count in PubMed) I have ever published has acknowledged financial support, among other things, including potential conflicts of interest (very rare in my basic science field). But IIRC, back when Professor Gruber was shilling (OK, advocating) for the President’s health care initiative he neglected to mention that he had a substantial consulting contract with the federal government. That “oversight” casts doubt on his veracity. That’s all.

        1. Is your implication that the House Committee on Oversight and Government Reform does not make the claims Gruber says it does? If that is not your implication, what, specifically, does Gruber claim that you doubt?

  3. I think the argument is slightly more complicated than that. You see, poor and middle-class people, even when they work two or three shifts to keep their families housed and fed, don’t create jobs. So they don’t deserve tax relief. Corporations, on the other hand, do create jobs, so they deserve tax relief, both as a reward for their highly moral behavior and as an incentive to create more jobs. Once you recognize that job creation has everything to do with taxes and nothing to do with demand for goods and services (or at least nothing to do with the quantity of goods and services demanded by the income-constrained, aka the poor and middle-class) then everything else falls out automatically.

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