Rudy Giuliani is a Very Serious Person

In Rudy Giuliani's new television ad, which is currently airing in New Hampshire and elsewhere, he declares: "I know that reducing taxes produces more revenue." He then smiles and says: "The Democrats don't know that. They don't believe that." He then claims that Hillary Clinton, Barack Obama, and John Edwards have all promised to raise taxes and assures the television audience that they'll in fact raises taxes even more than they are promising to do (watch the whole ad here).

Many forms of deception and demagoguery have become commonplace among Republican politicians, but this kind may be the most pernicious. Giuliani is, of course, smart enough to know that tax cuts do not in fact increase revenue. They may spur growth, depending on the type of cut and the circumstances, but no reputable economist anywhere (including those who work for the Bush administration) thinks that they result in more net revenue for the government. If that were true, we'd keep cutting taxes until they reached 0% and reap the windfall.

But this isn't surprising. Giuliani is particularly shameless on these issues. In a lengthy op-ed in today's Wall Street Journal on this very subject, Giuliani writes:

We need to keep taxes low for our economy to grow. It's not just a theory for me. I cut taxes 23 times as mayor of New York City with a Democratic City Council and State Assembly, and saw that lower taxes can result in higher revenue. Amid fears of an economic slowdown, now is the time to cut taxes, not raise them. But the Democratic presidential candidates all seem determined to impose an unprecedented $3 trillion tax hike on the American people.

This paragraph is so chocked full of nonsense and hyperbole that it's embarrassing. First, as Steven Benen points out, Giuliani's claim to have cut taxes 23 times is a ridiculous exaggeration. You can only arrive at that number by double-counting certain tax cuts, counting others that Giuliani opposed, and counting some cuts that were never actually implemented. Worst of all, though, is Giuliani's ludicrous claim that municipal tax cuts played some sort of causal role in increasing the City's revenue. New York City's revenue increased in the 90s because the national economy, and Wall Street in particular, were booming. Even the craziest, most radical supply-siders don't think that the municipal tax rates in one city have any significant impact on the economy or stock market.

Like he does in his commercial, Giuliani again claims that the Democrat presidential candidates are determined to raise taxes dramatically. I'm not sure where he gets the $3 trillion figure. It's probably just made up. And I'm almost certain it counts not renewing the Bush tax cuts (even though the Republicans themselves chose not to make those cuts permanent when they were originally passed in order to downplay their fiscal impact).

Whats particularly shameless about this line of attack, though, is that Giuliani knows that the Democrats have no desire to raise taxes as an end in itself. They're proposing raising taxes (on higher income folks only) because the federal government has a major revenue shortfall and a crippling debt-load, both of which will only get worse in the years to come. In other words, they're advocating the only responsible course of action, and doing so at their own political peril (because they know that shameless demagogues like Giuliani will attack them for it).

Giuliani, by contrast, is promising that people can have their cake and eat it too, that we can just keep lowering taxes indefinitely. And guess whose taxes he wants to lower:

Republicans have a clearer understanding of how our economy works. This summer, I unveiled my tax plan, which committed to making the 2001 and 2003 tax cuts permanent, while aiming for still-lower marginal rates. We'll give the death tax the death penalty, index the Alternative Minimum Tax for inflation as a step toward eliminating it entirely, expand tax-free savings accounts, and expand health-care choice through tax reform. We also need to reduce the corporate tax rate . . .

All of these proposals have one thing in common; they primarily benefit the wealthy. That's certainly true of Bush's 2001 and 2003 tax cuts (especially considering the Democrats have promised to keep in place the parts of those cuts that benefit lower and middle income tax payers). And I'm going to go out on a limb and guess that when Giuliani talks about "aiming for still lower marginal rates," he's primarily concerned with the top rates. The estate (death!) tax is a tax on rich heirs, and eliminating it would serve only the interests of the very wealthy (not even supply-siders think such a cut would result in economic growth; it's a naked give-away to the rich). And while fixing the AMT would benefit some upper-middle class tax payers (like me), eliminating it entirely would, again, only benefit the very wealthy. The tax was created for the sole purpose of making sure the rich couldn't use loopholes to avoid paying their fair share of taxes. Similarly, expanded use of tax-free savings and health accounts primarily benefits those of us in the higher tax brackets while doing very little for those in the lower brackets. There is literally nothing in Giuliani's laundry list of tax cuts that is aimed at lower or middle classes Americans.

Giuliani embodies everything that is wrong with Republican fiscal policy. It makes no sense. It's built on lies and deception. It's unbelievably irresponsible. And it's primarily geared toward making our system more regressive (not to mention bankrupt). But that's okay because Rudy Giuliani is a very serious person.