Contrasting words with deeds in Republican tax policy

>>> we must not be the party that simply protects the well off so they can keep their toys. we've got to be the party that shows all americans how they can thrive. we're the party whose ideas will help the middle class and help more folks join the middle class . we're a populist party , and we need to make that clear to every voter and every american.

>> louisiana governor bobby jindal making the case that the republican party is a populist party . two weeks ago governor jindal says he wants to eliminate all income taxes in his state in a revenue-neutral way, making up for it mostly with the sales tax . whatever you think about tax policy , that is pretty much the exact opposite of populist, if the word populist has any meaning. joining us for the interview tonight the paul krugman , author of the best-selling book "end this depression now" which sought right now. thank you for being here.

>> hi there.

>> you have argued that the republicans get credit for all sorts of things they are not actually for. they get credit for being tough on the deficit when they're not, conservatism in their approach to policy when they really want quite radical changes. is there a coherence that matches the way they talk about themselves that is evident in the way they are governing in the states that might not be obvious in washington?

>> wow. i mean -- in state, in deep red states like louisiana or kansas, basically they are -- we've reached a point where they don't worry about losing the election to democrats. you know, if you talk about one-party rule and southern whites are 90% republican voters, it's just not. so their only concern is about fengd off challenges from their own right. so they are free to do what they really want to do, or what their base really wants them to do. and that turns out to be radically -- in a way, it's fiscally more honest, right? at the national level, they've always had the pretense we can cut taxes and somehow that will pay for itself. we will eliminate waste and fraud we won't tell you what, or the magic of the laffer curve . at the state level you can't get away with that but on the other hand, they're free to be honest and say what we really want to do is take away from middle class and poor families and give to it the rich. and somebody like jindal, who has national ambitions, but is simultaneously running policy in a deep red state, the difference between what he says republicans stand for and what he shows republicans stand for is really dramatic. it's quite something to watch. what is interesting, both these things, both the rhetoric, what he said about we must not be the party that helps the rich keep their toys, that's something you aren't hearing. republicans wouldn't even acknowledge that there was even a possible perception of such things until after this last election. so on one sense they said oh, maybe we have to worry about this class warfare thing. but on the other hand, this brutal upward redistribution of income, that's also something new. it's quite an amazing moment.

>> in terms of understanding the magnitude of impact on typical family life in these states, if these changes are made, if kansas and louisiana and some of the other states are considering totally eliminating income taxes , they do actually make up for it by jacking up sales tax . how will that change those states?

>> well, it's a few percent. we're talking something like a 3% hit to the poorest fifth of families, and something like a 3% benefit in terms of income to the richest 1%. so, you know, state budgets are not that big. so federal level changes could be a bigger hit. big. so federal level changes could be a bigger hit. but if you're living fairly close to the edge or at the edge which a lot of poor families are this is a significant thing. if you're -- in the top 1% in louisiana , something like that $25,000 extra a year spending money, not trivial. what is really amazing, by the way, one thing i couldn't get into in the column, if you're worried about the incentive effects, suppose you really worry about taxes diminishing the incentive to work, turns out in our system the highest marginal tax rates , the biggest disincentives to work in our system are not for the rich. they are for lower income workers who are in the range where if you start to work more, you lose benefits. this raises taxes on people who have the biggest disincentives to work. so it is actually even from the supply side incentive this is going in the wrong direction, but hey, that is not what it is about, right?

>> well, it is about marketing in a way, and when they talk about how they want to be seen rather than how they want their policies to be parsed, they're often increasing it. in terms of internationally, the global crisis , one thing you reference is how the united states has fared in the depression compared to other countries. we've sort of done comparatively better than europe.

>> we lost the race to the bottom of stupidness. we didn't do as many things wrong as the europeans did. we didn't do well, by any means, but we didn't do the austerity the way britain did. we at least have a single currency across the continent, but also have a single government. the europeans screwed up in that dimension. but what is interesting, all the things that luckily we didn't do are the things that the gop wanted us to do. wanted us to have british-style austerity and have bad money the way they did. we're actually o -- things could be worse, in the environment in the united states . and that always ends with the punch line, and sure enough things got worse, here we are.

>> but to explain, and for purposes we ran a experiment, an some countries didn't.

>> and up to that point, the track of recovery had been about the same in the u.s. and britain. since then, we've started to recover, and they are in a recession.

>> thank you for joining us.

>> all right, we'll be right back with a rachel maddow show, bullpucky alert, this proves to be a real life pile of bull. hold on.