Why The Republicans Want To Raise Your Taxes
House Majority Leader Eric Cantor’s recent assertion that any disaster relief for Hurricane Irene would have to be offset with spending cuts elsewhere sparked a great deal of outrage, especially in the progressive sectors of the blogosphere.
On one level Cantor’s position is no surprise. Paying for emergency disaster relief used to be standard operating procedure in Washington, because it would be inconceivable that the federal government would force the states and individuals to shoulder the burden alone. But with the new GOP House majority, Washington has new rules. Now when there’s a policy objective that enjoys bipartisan support—avoiding a government shutdown or default, for example, or providing disaster relief—the GOP will use it as a hostage to extract their partisan policy objectives.
More broadly, people look askance at Cantor and the GOP for previously supporting (but not paying for) disaster relief, a pair of foreign wars, an expansion of Medicare, and the Bush tax cuts, and then finding their inner fiscal hawks when a Democrat entered the White House. (Robert’s 10th Rule of Politics: A party’s dedication to fiscal responsibility is inversely proportional to its political power.)
Of course the GOP still wants to make the Bush tax cuts permanent, at a cost of $4 trillion over 10 years. If pushing budget-busting tax cuts while carrying the banner of fiscal austerity on issues like disaster relief seems like cognitive dissonance, it is. But that’s today’s GOP.
Take taxes. Last month’s Iowa GOP presidential debate provided a defining moment for the party. The assembled would-be nominees were asked if they would accept tax increases if there were $10 in spending cuts for every dollar of new revenues. To a person, they refused. This came days after the conclusion of the debt ceiling crisis, which had been deliberately manufactured by House Republicans, and which had turned on their flat refusal to accept any tax increase. And it came after months of pious declarations that one never, ever, ever raises taxes on a soft economy (the experiences of Presidents Reagan in 1982 and Clinton in 1993 apparently notwithstanding).
And yet the GOP now wants to raise taxes, both in the immediate term and as a broader matter of principle.
They oppose, for example, President Obama’s call to prolong the payroll tax cut enacted last year when the (temporary) Bush tax cuts were extended. Ordinarily, American workers pay 6.2 percent of their wages in a tax that funds Social Security, with their employers matching the amount. For 2011, that rate was cut to 4.2 percent. The logic is simple: The poor and working class are most likely to pump extra disposable income back into the economy, making the tax cut a more efficient stimulant than, say, rate cuts for the wealthy. It’s as broad-based a tax cut as can be imagined, as it benefits virtually everyone who works, even those who don’t earn enough to pay income taxes. So of course Republicans oppose its extension, preferring to allow a broad-based tax hike to go into effect in the new year. “Not all tax relief is created equal,” Rep. Jeb Hensarling, the House’s fourth-ranking Republican, told the Associated Press, while others cited fiscal concerns. Extending the tax holiday, which cost $67.2 billion this year and a total of $111.7 billion over 10 years, would be fiscally irresponsible while extending the Bush tax cuts is sound policy? Not all tax cuts are created equal indeed.
And this isn’t an isolated instance of the GOP breaking from its usual anti-tax orthodoxy. The truth is that many leading Republicans yearn to raise taxes on working-class and poor Americans.
“We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax,” Texas Gov. Rick Perry intoned last month when announcing for president. What to do? Here’s Minnesota Rep. Michele Bachmann: “We need to broaden the base so that everybody pays something, even if it’s a dollar.” More recently, former Utah Gov. Jon Huntsman approvingly cited Florida Sen. Marco Rubio as saying we don’t have enough people paying taxes in this country. The GOP as stalwart fighters against taxes? No more. That more Americans should pay taxes is, according to the Wall Street Journal, “the new Republican orthodoxy.”
And who is it Republicans would like to raise taxes upon? According to the Tax Policy Center, 46 percent of U.S. households won’t pay income taxes this year. The elderly (who are mostly retired, have a larger deduction, and often don’t have their Social Security benefits taxed) make up a plurality of 44 percent of the nonpayers, while people whose income tax liability is wiped out by the child tax credit, child and dependent care tax credit, and the earned income tax credit—all of which were enacted with Republican support—make up an additional 30 percent of the group. (The rest of the nonpayers get a handful of smaller tax credits, including education credits, itemized deductions, and even capital gains benefits.)
Keep in mind that these people not having any income tax liability does not mean that they don’t pay taxes (as is often implied in GOP talking points). They pay state and local taxes, not to mention federal payroll taxes, which of course the GOP wants to see rise.
So Republicans worry about the wealthy paying too much in taxes while fretting about freeloading lower classes. They talk a big deficit game but are more concerned about cutting government spending, specifically on programs that benefit the nonrich. Perhaps this isn’t cognitive dissonance but the logical evolution of the modern GOP into an Ayn Rand-ian coalition explicitly focused on freeing a wealthy elite from the parasitical depredations of everyone else.
By: Robert Schlesinger, U. S. News and World Report, September 7, 2011
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Eric Cantor Is A Hypocrite On Disaster Relief Spending
Buried in this Saturday’s Washington Post Metro section was a short piece about the request from conservative Virginia Republican Gov. Robert McDonnell for $39 million in federal disaster relief for his state.
This was an initial request for 22 localities in Virginia hard hit by Hurricane Irene. According to the article, other local governments can request more aid and, in addition, McDonnell also asked for Hazard Mitigation Assistance for all Virginia localities.
This comes from a governor who, along with his Republican congressional counterpart Eric Cantor, rails against Washington and “government spending.”
What makes this quite interesting is the position taken by Cantor last week on Federal Emergency Management funding for disasters. We have had a record 66 natural disasters this year and Hurricane Irene was one of the 10 most costly ever.
Cantor, whose district was hit hard by the earthquake and the hurricane, has said that any spending for FEMA should be tied to cuts elsewhere, dollar for dollar, “Just like any family would operate when it’s struck with disaster,” says Cantor. Funny, that is not how he felt back in 2004 when he appealed for money for his district after another hurricane and voted against the amendment by Republican Rep. Jeb Hensarling of Texas to do require offsets.
Did Eric Cantor ask for dollar for dollar cuts to pay for the wars in Iraq and Afghanistan? Did he ask for dollar for dollar cuts to pay for the Bush tax cuts for the millionaires and billionaires? Did he ask for dollar for dollar cuts to pay for increases to homeland security? How about border agents?
Another very conservative congressman from Virginia, Leonard Lance, totally disagrees with Cantor. Help is needed now. Gov. Chris Christie of New Jersey, no friend of government spending, talks as though Eric Cantor has lost his marbles: “Our people are suffering now, and they need support now. And they [Congress] can all go down there and get back to work and figure out budget cuts later.”
It is time for a host of protesters to go to Cantor’s district office and call him on his absurdity. Does he believe we should help the victims of these disasters? Is that what government has done for over 200 years? Does he just want to play politics and delay help? Does he represent the people of Virginia? Does he care about the others who have been the victims of tornadoes and floods across this country?
It reminds me of a Senate debate where a certain Republican from Idaho was complaining about a bill that included funding for rat control in New York City.
“In Idaho, we take care of our own rats,” to which the New York senator replied, “In New York, we take care of our own forest fires.”
That about sums it up.
By: Peter Fenn, U. S. News and World Report, September 6, 2011
Public Perceptions And The Limited Value Of Recent History
CNN’s Candy Crowley made a noteworthy comment on the air last night, and we’ve heard similar remarks from other media figures quite a bit lately. The subject was President Obama’s prospects for a second term.
“He has to buck history, number one, a president with that kind of high unemployment rate has never been re-elected at 9 percent.”
At first blush, the observation is plainly false. Franklin Delano Roosevelt won a second term when unemployment was at 17%.
In fairness, though, Crowley probably just misspoke, and meant to refer to the post-Depression era. But even if we give her the benefit of the doubt here, the observation is largely pointless.
As a factual matter, it’s true that every president since FDR who’s won re-election has seen an unemployment rate below 7.2%. Will the unemployment rate fall below 7.2% by Election Day 2012? No one, anywhere, believes this is even remotely realistic.
But the context matters, and the media routinely pretends it doesn’t exist. No president since FDR has won with a high unemployment rate because no president since FDR has had to govern at a time of a global economic crisis like the Great Depression or the Great Recession. The U.S. has seen plenty of downturns over the last eight decades, but financial collapses are fairly rare, produce far more severe conditions, and take much longer to recover from.
Of course the unemployment rate won’t be below 7.2%. Under the circumstances and given the calamity Obama inherited, that’s impossible.
The more relevant question is what Americans are willing to tolerate and consider in context. In 1934, during FDR’s first midterms, the unemployment rate was about 22%. The public was thrilled — not because a 22% unemployment rate is good news, but because it had come down considerably from 1932. By 1936, when FDR was seeking re-eleciotn, the unemployment rate was about 17%. How can an incumbent president win re-election with a 17% unemployment rate? Because things were getting better, not worse.
That’s obviously the challenge for President Obama. The numerical thresholds are largely irrelevant — comparing the current economic circumstances to what other modern presidents have dealt with is silly. The more relevant metric is directional — are things better or getting worse by the time voters head to the polls, and if worse, who gets the blame.
What’s more, let’s also not lose sight of sample sizes. CNN’s Crowley made it seem as if no American president has ever won a second term with this high an unemployment rate. But even if we limit the analysis to the post-FDR era, as Dana Houle explained a couple of months ago, “Since FDR only Eisenhower, Nixon, Carter, Reagan, Clinton and the two Bush’s have been elected president and then sought reelection. It’s hard to draw big conclusions from a sample of seven.”
If the media is preoccupied with this metric, it will shape the public’s perceptions and help drive the campaign. Here’s hoping news outlets come to realize how incomplete this picture is.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, September 4, 2011
GOP ‘Jobs Agenda’ Revives Ineffective Business Tax Giveaway
This week, House Majority Leader Eric Cantor (R-VA) released a memo outlining the House GOP’s supposed “jobs agenda.” In addition to being an assault on organized labor and recommending the elimination of environmental regulations that save tens of thousands of lives every year, the document proposes reviving some of the GOP’s favorite tax cuts, including the so-called “20% Small Business Tax Deduction.”
This particular idea made an appearance in both an “economic plan” that Cantor and House Speaker John Boehner (R-OH) presented to President Obama in 2009 and the GOP’s 2010 Pledge to America. The policy would allow businesses to deduct 20 percent of their income from their taxes, and in Cantor’s words, “immediately free up funds for small business people to retain and hire new employees, and reinvest in and grow their businesses.”
However, as Citizens for Tax Justice pointed out in 2009, there is little reason to think this tax break would be anything but a boondoggle:
The Republican plan proposes to allow a “small business” to take a tax deduction of 20 percent of its pretax income, whether the small business is a corporation or a sole proprietor. The plan defines a “small business” as one with 500 or fewer employees. It makes no distinction based on income. A “small business” making $100 million would get to deduct $20 million of its income right off the top. (Apparently, a company with slightly more than 500 employees would have an incentive to lay off staff to qualify for the tax break!) […]
A business tax cut is just about the least effective stimulus measure Congress could possibly enact. The tax cuts put more money in the hands of business. But there is very little correlation between a corporation’s cash position and its plans for investment—whether expanding capacity or hiring new employees. Businesses invest in expansion when they believe there will be an increase in the demand for the goods and services they provide. If they don’t anticipate a sales increase, they won’t expand no matter how many tax breaks the federal government gives them.
And the Center for American Progress’ Christian Weller noted in 2010 that, while the credit is restricted to business with fewer than 500 employees, it’s still “an ‘upside-down’ tax break that gives the largest benefits to those who already have the highest incomes” because the amount of the deduction is contingent on which tax bracket a business files in (the higher the tax bracket, the more the deduction is worth):
A deduction reduces the taxable income and thus the taxes that somebody has to pay. A business owner with lots of business and other income will thus get a government subsidy of 35 cents for each dollar in deduction, while a small business owner in the 15 percent tax bracket will get 15 cents for each dollar in deductions…Larger businesses could easily use this windfall to outcompete smaller businesses. A larger business owner with a 35 percent marginal tax rate will get a benefit that is 133 percent greater than the benefit that a smaller business owner with a 15 percent marginal tax rate gets for each dollar in tax deduction.
But for the GOP, this idea is so good that it’s worth bringing up over and over again.
By: Pat Garofalo, ThinkProgress, September 3, 2011
Politics Without Purpose: September 11 Should Not Be Another Media Event
It was another one of those weeks in the capital when our leaders debated matters crucial to the survival of American civilization.
Did President Obama try to upstage the Republican presidential debate by asking to address a joint session of Congress that same night? And did House Speaker John Boehner dis the president, and the presidency, by denying him that slot?
Tempted though I was to weigh in on this important matter, I decided instead to head over to the Smithsonian’s National Museum of American History, to preview a small but immensely powerful exhibit marking the 10th anniversary of the Sept. 11 attacks.
There, displayed for the first time, are sacred relics of 9/11: the crumpled piece of the fuselage where the American flag had been painted on the Boeing 757 that crashed in a Pennsylvania field, a flight-attendant call button from the plane, a window shade, a landing gear strut, and a log book with the pages intact. The exhibit is simple and raw, without glass or showcases. Some dried mud caked on an airplane seatbelt was flaking off onto a tablecloth.
Nearby is the door from a fire truck crushed at Ground Zero and the beeper of a man who died in the South Tower. There’s a Pentagon clock frozen at about the time American Airlines Flight 77 struck the complex and the phone on which Ted Olson received the last call from his wife on the doomed plane. Most poignant, perhaps, is the postcard from another passenger, written to her sister the day before the crash to give the address of a new home in which she would never live.
The spare exhibit brought back the horror of that time. But it also reminded me of the pride in what followed, the national unity and sense of purpose.
The warm feelings didn’t last long, of course, destroyed by the war in Iraq and the politicization of homeland security. By now, we have lost all sense of purpose in politics, alternately distracted by Sarah Palin’s bus tours, Anthony Weiner’s private parts, David Wu’s tiger suit, Donald Trump’s birth-certificate campaign, and Dick Cheney’s broadsides.
Obama, whose uncertain trumpet has ceased to rally even his own troops, contemplated his long-delayed jobs agenda while lounging on Martha’s Vineyard last month. His leading Republican rival for the presidency talks of treason and secession. Another challenger arranges to quadruple the size of his California home (his defense: He’s only doubling the living space). Lawmakers play games with the debt ceiling and wound the nation’s credit rating but can’t agree on anything to put Americans back to work.
The political extraneousness of the moment, in other words, is like that of early September 2001. We spent those days amusing ourselves with Gary Condit and shark attacks. President George W. Bush spent August on a record-long ranch vacation. The biggest issue under debate: stem-cell research. Warnings about Osama bin Laden were ignored while the administration obsessed over rewriting a missile treaty with Russia.
What will it require to end the drift this time? A depression? Another attack? Or is there a less painful way to regain national purpose?
“For most people,” curator David Allison told me as I toured the Smithsonian exhibit, “Sept. 11 is only a media event.” The exhibit is a modest attempt at changing that, taking that day’s ruins out of storage and rekindling memory. The lucky few who see the exhibit during its short run will be reminded that there are things more important than whether the president addresses Congress on a Wednesday or a Thursday.
Consider the simple postcard, written by Georgetown economist Leslie Whittington to her sister and brother-in-law, as Whittington, her husband and their 8- and 3-year-old daughters headed off to Australia for a sabbatical. The card, postmarked Sept. 12 at Dulles Airport, must have been mailed just before the family boarded American Flight 77. The note says, in its entirety:
9/10/01
Dear Sara & Jay,
Well, we’re off to Australia. When we return we will have a new address (as of 11/30): 8034 Glendale Rd. Chevy Chase, MD 20815
We don’t know our phone # yet. While we are in “Oz”, email will work best for contacting us: whittinl@georgetown.edu.
Love, Leslie, Chas, Zoe & Dana
I thought about Sara receiving that postcard from her dead sister, and about those little girls who never made it to Glendale Road – because of 19 evil men and a government distracted by less important things.
Then I went out onto Constitution Avenue, where, across from the museum, a bus labeled “Extreme Makeover: Home Edition” had just parked.
By: Dana Milbank, Opinion Writer, The Washington Post, September 2, 2011
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