Out Of The Shadows: Bush And Cheney Remind Us How We Got Into This Mess
Thank you, George W. Bush and Dick Cheney, for emerging from your secure, undisclosed locations to remind us how we got into this mess: It didn’t happen by accident.
The important thing isn’t what Bush says in his interview with National Geographic or what scores Cheney tries to settle in his memoir. What matters is that as they return to the public eye, they highlight their record of wrongheaded policy choices that helped bring the nation to a sour, penurious state.
Questions about whether President Obama has been combative enough in dealing with the Republican opposition — or sufficiently ambitious in framing his progressive agenda — seem trivial when viewed in this larger context. Obama is tackling enormous problems that took many years to create. His presidential style is important insofar as it boosts or lessens his effectiveness, but its importance pales beside the generally righteous substance of what he’s trying to accomplish.
It was the Bush administration, you will recall, that sent the national debt into the stratosphere and choked off federal revenue to the point of asphyxiation. Bush and Cheney decided to fight two wars without even accounting — let alone paying — for them. Rather than raise taxes to cover the cost of military campaigns in Afghanistan and Iraq, Bush opted to maintain unreasonable and unnecessary tax cuts.
So far, the wars and the tax cuts have cost the Treasury between $4 trillion and $5 trillion. If Bush had just left income tax rates alone, nobody except Ron Paul would be talking about the debt.
My aim isn’t to attack Bush but to attack his philosophy. When he was campaigning for the White House in 2000, the government was anticipating a projected surplus of roughly $6 trillion over the following decade. Bush said repeatedly that he thought this was too much and wanted to bring the surplus down — hence, in 2001, the first of his two big tax cuts.
Bush was hewing to what had already become Republican dogma and by now has become something akin to scripture: Taxes must always be cut because government must always be starved.
The party ascribes this golden rule to Ronald Reagan — conveniently forgetting that Reagan, in his eight years as president, raised taxes 11 times. Reagan may have believed in small government, but he did believe in government itself. Today’s Republicans have perverted Reagan’s philosophy into a kind of anti-government nihilism — an irresponsible, almost childish insistence that the basic laws of arithmetic can be suspended at their will.
The Bush administration also pushed forward Reagan’s policy of deregulation — ignoring, for example, critics who said the ballooning market in mortgage-backed securities needed more oversight. When the 2008 financial crisis hit, Bush did regain his faith in government long enough to throw together the $800 billion TARP bailout for the banks. But he failed to use the leverage of an aid package to exact reforms that would ensure that the financial system served the economy, rather than the other way around.
Faced with similar circumstances, would today’s Republican leadership react at all? Or is it the party’s view that the proper role of government would be to stand aside and watch the world’s financial system crash and burn?
This is a serious question. Just a few weeks ago, the Republican majority in the House threatened to force the United States government to default on its debt obligations — a previously unthinkable act of brinkmanship. Everything is thinkable now.
The Bush administration took Reagan’s tax-cutting, government-starving philosophy much too far. Today’s Republican Party takes it well beyond, into a rigid absolutism that would be comical if it were not so consequential.
We face devastating unemployment. Many conservative economists have joined the chorus calling for more short-term spending by the federal government as a way to boost growth. But the radical Republicans don’t pay attention to conservative economists anymore. The Republicans’ idea of a cure for cancer would be to cut spending and cut taxes.
Perhaps they’re just cynically trying to keep the economy in the doldrums through next year to hurt Obama’s chances of reelection. I worry that their fanaticism is sincere — that one of our major parties has gone completely off the rails. If so, things will get worse before they get better.
Having Bush and Cheney reappear is a reminder to step back and look at what Obama is up against. You might want to cut him a little slack.
Morally Inept: The New GOP Resentment Of The Poor
In a decade of frenzied tax-cutting for the rich, the Republican Party just happened to lower tax rates for the poor, as well. Now several of the party’s most prominent presidential candidates and lawmakers want to correct that oversight and raise taxes on the poor and the working class, while protecting the rich, of course.
These Republican leaders, who think nothing of widening tax loopholes for corporations and multimillion-dollar estates, are offended by the idea that people making less than $40,000 might benefit from the progressive tax code. They are infuriated by the earned income tax credit (the pride of Ronald Reagan), which has become the biggest and most effective antipoverty program by giving working families thousands of dollars a year in tax refunds. They scoff at continuing President Obama’s payroll tax cut, which is tilted toward low- and middle-income workers and expires in December.
Until fairly recently, Republicans, at least, have been fairly consistent in their position that tax cuts should benefit everyone. Though the Bush tax cuts were primarily for the rich, they did lower rates for almost all taxpayers, providing a veneer of egalitarianism. Then the recession pushed down incomes severely, many below the minimum income tax level, and the stimulus act lowered that level further with new tax cuts. The number of families not paying income tax has risen from about 30 percent before the recession to about half, and, suddenly, Republicans have a new tool to stoke class resentment.
Representative Michele Bachmann noted recently that 47 percent of Americans do not pay federal income tax; all of them, she said, should pay something because they benefit from parks, roads and national security. (Interesting that she acknowledged government has a purpose.) Gov. Rick Perry, in the announcement of his candidacy, said he was dismayed at the “injustice” that nearly half of Americans do not pay income tax. Jon Huntsman Jr., up to now the most reasonable in the Republican presidential field, said not enough Americans pay tax.
Representative Eric Cantor, the House majority leader, and several senators have made similar arguments, variations of the idea expressed earlier by Senator Dan Coats of Indiana that “everyone needs to have some skin in the game.”
This is factually wrong, economically wrong and morally wrong. First, the facts: a vast majority of Americans have skin in the tax game. Even if they earn too little to qualify for the income tax, they pay payroll taxes (which Republicans want to raise), gasoline excise taxes and state and local taxes. Only 14 percent of households pay neither income nor payroll taxes, according to the Tax Policy Center at the Brookings Institution. The poorest fifth paid an average of 16.3 percent of income in taxes in 2010.
Economically, reducing the earned income tax credit and the child tax credit — which would be required if everyone paid income taxes — makes no sense at a time of high unemployment. The credits, which only go to working people, have always been a strong incentive to work, as even some conservative economists say, and have increased the labor force while reducing the welfare rolls.
The moral argument would have been obvious before this polarized year. Nearly 90 percent of the families that paid no income tax make less than $40,000, most much less. The real problem is that so many Americans are struggling on such a small income, not whether they pay taxes. The two tax credits lifted 7.2 million people out of poverty in 2009, including four million children. At a time when high-income households are paying their lowest share of federal taxes in decades, when corporations frequently avoid paying any tax, it is clear who should bear a larger burden and who should not.
By: Editorial, The New York Times, August 30, 2011
Grover Norquist, The GOP, And The Payroll Tax Cut
For the last day or so, a few of us have been trying to get Grover Norquist’s group to say whether GOP opposition to extending the payroll tax cut — which Obama wants — constitutes a “tax increase” and a violation of Norquist’s infamous anti-tax pledge.
Norquist’s spokesman is now clarifying that the group isn’t yet willing to say.
Norquist’s pledge not to raise taxes has been signed by virtually every Republican in Congress, and Norquist has clearly stated that the failure to extend the Bush tax cuts would constitute a “tax increase.” The question now is this: With Republicans now opposing an extension of the payroll tax cut, which impacts workers but not employers, will Norquist’s group also declare the GOP opposition tantamount to a tax increase that violates the pledge?
John Kartch, a spokesman for Americans for Tax Reform, tells me that “one would have to see the final legislation” before making the call one way or the other, in order to determine ”what is the net effect on total taxes.”
The problem here, though, is that this doesn’t deal with the possibility of the payroll tax cut simply expiring through Congress doing nothing. If Congress doesn’t extend the payroll tax cut, as Republicans want, it will simply expire on January 1st.
So it’s fair to ask whether Norquist’s group — which wields great influence over Republicans in Congress — thinks that Republicans who favor doing nothing and letting the payroll tax cut expire are hiking taxes and violating the group’s pledge. And for now, the group isn’t prepared to say.
By: Greg Sargent, The Washington Post Plum Line, August 23, 2011
Class Warfare, Republican Style
Republicans have finally found a group they think deserves a tax hike: People who don’t make enough money to pay income taxes.
At the recent GOP debate, all the 2012 presidential hopefuls were unanimous in claiming they would reject a deficit-reduction deal if it contained a 10-to-one ratio of spending cuts to tax increases. But as Dave Weigel writes, the GOP’s supposed anti-tax zealots have been strangely unified in arguing that Americans who pay no income taxes — but pay a variety of other taxes — should see their taxes go up:
Republican politicians didn’t make this argument — until the Obama era. What changed? For decades, the “lucky ducky” number, the percentage of Americans that pay no taxes, never rose above 30 percent. The Bush tax cuts pushed it over 30 percent, but not too far over. Then, in 2008 and 2009, the economy collapsed. The government responded with, among other things, new tax deductions.
The result: The percentage of people paying no income taxes spiked up to 47 percent and stayed there. When the Tea Party started rallying in 2009, it wasn’t protesting higher taxes, because federal income taxes were lower, with more loopholes. It was protesting the perception that productive Americans were shelling out for an ever-expanding class of moochers. And Republicans have taken the Tea Party’s lead.
Of course, as Weigel reminds us, these people do pay sales taxes, payroll taxes, gas taxes and the like. As an April 2010 report from Citizens for Tax Justice explained: “Most of these other taxes are regressive, meaning they take a larger share of a poor or middle-class family’s income than they take from a rich family. This largely offsets the progressivity of the federal income tax.” Fat City!
This tax-the-poor attitude is widely held among Republicans, who are currently positioning themselves to oppose an extension of the payroll tax credit. After having demanded Obama extend the Bush tax cuts for the wealthiest Americans, Republicans are now fretting that the payroll tax cut will increase the deficit. Extending the Bush tax cuts increased the debt by far more than an extension of the payroll tax cut will, but that was worth it, because cutting taxes on the wealthiest Americans is the GOP’s highest priority. It’s far more important than stimulating the economy by giving a tax break to people who might actually need the money.
Of course, we’re not supposed to call the GOP’s commitment to making sure the wealthiest Americans pay as little as possible in taxes — and to increasing taxes on lower income folks — by its rightful name: “Class-warfare.” That term only applies to socialists who think we ought to return to Clinton-era tax rates.
By: Adam Serwer, The Washington Post, August 23, 2011
Brazen: Eric Cantor’s Chutzpah
Eric Cantor’s op-ed laying out the Republican agenda is filled with the kind
of distortions you’d expect, but this passage deserves special commendation.
After decrying a National Labor Relations Board Ruling, he continues:
Such behavior, coupled with the president’s insistence on raising the top tax rate paid by individuals and small businesses, has resulted in a lag in growth that has added to the debt crisis, contributing to our nation’s credit downgrade.
So Cantor is arguing that S&P downgraded U.S. debt because of President
Obama’s future plans to increase the top tax rate. That’s such a mind-boggling
claim that even Cantor cannot bring himself to put it in quite these terms. So
instead he breaks it into a series of steps.
First, he claims that the future promise of upper-bracket tax hikes “has
resulted” in a lag in growth. (Question: if the mere possibility of future tax
hikes is enough to depress growth, why don’t we go ahead and just raise taxes?
If we’re going to get the slower growth anyway, might as well get the revenue,
right?)
Second, the lag in growth “caused” by hypothetical future tax hikes added to
the debt crisis.
Third, the debt crisis contributed to the downgrading of the debt.
It’s a fairly brilliant bit of rhetoric. After all, S&P specifically cited the Republican threat to fail to lift the debt ceiling and Republican refusal
to consider any tax increases as the cause of the downgrade. cantor has
found a way to present Obama’s support for higher taxes as the cause of the
downgrade. That’s so brazen I almost have to admire it.
By: Jonathan Chait, The New Republic, August 22, 2011
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