Why I Support “The Ronald Reagan Tax Reform Act of 2011”
Ten years ago today, the wealthiest Americans caught a multi-billion dollar break from their benefactor, then-president George W. Bush. In the decade since, through two wars, natural disasters, a plummeting economy and a soaring debt, the wealthiest Americans have gotten to keep those Bush tax cuts. Happy birthday, everybody!
As the Republican Party now lines itself up behind Rep. Paul Ryan on his mission to cut the resulting deficit on the backs of working people and the elderly, I find myself surprisingly and strangely nostalgic for another GOP hero, whose legacy, at least when it comes to taxes, has become woefully misunderstood. Can it be that I find myself nostalgic for Ronald Reagan?!
Of course, I’m not alone in my nostalgia. I’m joined by the entire Republican leadership in this, but I think our reasons may be quite a bit different. In the spirit of unity, I’d like to suggest to Republicans in Congress that they look closely at the record of their favorite 20th century hero and adopt yet another policy named after the Gipper. I’m no fan of much of President Reagan’s legacy, but in a new spirit of bipartisanship, and historical accuracy, I’d like to present Republicans in Congress with an idea: the Ronald Reagan Tax Reform Act of 2011.
A key element of the Reagan lore believed by today’s GOP is that Reagan’s embrace of “trickle-down economics” is what caused any and all economic growth since the 1980s. In fact, after Reagan implemented his initial tax-slashing plan in 1981, the federal budget deficit started to rapidly balloon. Reagan and his economic advisers were forced to scramble and raised corporate taxes to calm the deficit expansion and stop the economy from spiraling downward. Between 1982 and 1984, Reagan implemented four tax hikes. In 1986, his Tax Reform Act imposed the largest corporate tax increase in U.S. history. The GDP growth and higher tax revenues enjoyed in the later years of the Reagan presidency were in part because of his willingness to compromise on his early supply-side idolatry.
The corporate tax increases that Reagan implemented — under the more palatable guise of “tax reform” — bear another lesson for Republicans. The vast majority of the current Republican Congress has signed on to a pledge peddled by anti-tax purist Grover Norquist, which beholds them to not raise any income taxes by any amount under any circumstances, or to bring in new revenue by closing loopholes. This pledge, which Rep. Ryan’s budget loyally adheres to, in effect freezes tax policy in time — preserving not only Bush’s massive and supposedly temporary tax cuts for the wealthiest Americans, but also a vast mishmash of tax breaks and loopholes for specific industries won by well-funded lobbyists.
The problem has become so great that many giant American corporations have become so adept at exploiting loopholes in the tax code that they paid no federal income taxes at all last year — if Republicans in Congress follow their pledge to Norquist, they won’t be able to close a single one of the loopholes that are allowing corporations to avoid paying their fair share.
Even Reagan recognized the difference between just plain raising taxes and simplifying the tax code to cut out loopholes that subsidize corporations. In 1984, he arranged to bring in $50 billion over three years, mainly by closing these loopholes. His 1986 reform act not only included $120 billion in tax hikes for corporations over five years, it also closed $300 billion worth of corporate loopholes.
These kinds of tax simplification solutions are available for Congress if they want them. As I wrote in April, nixing Bush’s tax cut’s for the wealthiest Americans would help the country cut roughly $65 billion off the deficit in this year alone. Closing loopholes that allow corporations to shelter their income in foreign banks would bring in $6.9 billion. Eliminating the massive tax breaks now enjoyed by oil and gas companies would yield $2.6 billion to help pay the nation’s bills.
But before Republicans in Congress change their math, they have to change their rhetoric — and embrace the reality of the economic situation they face and the one that they’d like to think they’re copying. In 1986, during the signing ceremony for the Tax Reform Act, Reagan explained that “vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share.”
It’s time for the GOP to take a page from their hero’s playbook. If they do so, they might be able to find some allies that they never thought possible. It’s time for “everybody and every corporation to pay their fair share.” We can all get along. Sign me up for “The Reagan Tax Reform Act of 2011.”
By: Michael B. Keegan, President, People For The American Way, Published in Huffington Post Politics, June 7, 2011
Bush Tax Cuts Turn 10: Wall Street Celebrates, Americans Suffer
Break out the bubbly, because there will be celebrations today on Wall Street and in corporate boardrooms and mansions all across America. Why? Because today is the 10th anniversary of the big Bush tax breaks for bankers and billionaires and the businesses that bankroll their big-budget campaigns.
Today is an opportunity to ponder these questions: If the Bush tax cuts are so great, why has the economy been so bad since they became law 10 years ago? And how about this brain teaser: If the GOP theology of cutting taxes for the rich brings in more revenue, why is Democratic President Bill Clinton the only president in the last generation to leave a surplus behind for the next president?
In 1980, President George H.W. Bush called it voodoo economics. Bush 41 conveniently changed his position when he became Ronald Reagan’s running mate that year. But the first President Bush was right the first time. The idea that tax revenues will go up when you cut taxes has cast an evil spell over the U.S. economy going all the way back to Ronald Reagan. In 1981, the new GOP math became 1 + 1 = 3. With this kind of fuzzy math, it’s no wonder that President Reagan left behind a massive budget deficit.
George W. Bush may have had George H.W. Bush for a father, but Ronald Reagan was his role model. The latest incarnation of voodoo economics was the creation of the second President Bush. The tax cuts for bankers and billionaires that became law in 2001 quickly turned the Clinton surplus into the Bush budget deficit as big as Donald Trump’s ego. Voodoo is what Republicans do so well.
But Bush 43 did not stop there in handing out goodies to Wall Street. In 2008, the president asked his Treasury Secretary, Henry Paulson, the former CEO of Goldman Sachs, to bail out Goldman Sachs and other Wall Street investment firms to the tune of three quarters of a trillion dollars. Of course, President Bush never even considered an attempt to rescue the millions of working Americans who first lost their jobs and then their homes because of malfeasance on Wall Street.
Last month, the Center for Budget Priorities released a study that demonstrated that the two biggest reasons for the current budget deficit were the Bush tax cuts and the wars in Afghanistan and Iraq. So what do the Republicans do? Do they vote to cut Pentagon spending or end dole welfare for wealthy Americans? Of course they don’t. They gut Medicare. Genius!
Yesterday, Frank Patitucci, CEO and Chairman of NuCompass Mobility Service, called on Republican Speaker John Boehner to increase taxes on Americans making more than $1 million a year. Patitucci explained his position by saying businesses need a strong middle class to prosper.
But I don’t want to be a party pooper or rain on Wall Street’s parade, so party hardy, guys. Don’t scrimp on the Dom Perignon and the caviar. Santa Claus comes only once a year. Let’s worry about the GOP cuts in healthcare for seniors and nutrition programs for women and their infant children another day.
By: Brad Bannon, U. S. News and World Report, June 7, 2011
Not Resting On Their Laurels, Wisconsinites Establish Walkerville
Walkerville, Wisconsin
After the huge wave of protests throughout February and March, the focus of activists in Wisconsin moved to the impending recall elections this summer. The winter actions erupted as a result of an anti-union bill which threatened to remove essentially all collective bargaining rights for public employees as well as hamstring unions by requiring the almost impossible tasks of annual recertification and individual opt-in dues collecting. In response, besides assembling in numbers reaching nearly one-hundred thousand, Wisconsin citizens amassed signatures on petitions to facilitate the recall of numerous state senators who had voted for Governor Walker’s duplicitous legislation.
In the past two months, though a presence of protesters has remained – with their t-shirts, buttons, signs, banners, vuvzelas – around the vicinity of the capitol building, it appeared the united front of thousands had waned. Groups still came to meet for solidarity sing-a-longs and to attend governmental committee hearings on the many new regressive, pro-corporate, anti-human bills being forwarded by the Wisconsin legislature. But with the recall elections on the horizon and with the recent small victory of the Dane County circuit court dismissing the anti-collecting bargaining law (as it had been passed so hastily as to not adhere to common legislative requirements), it appeared that Wisconsinites might be done with the fight, resting on their own laurels and those of the Democrats they hoped to elect via the recall.
Of course, the corporate media, who operate under the same anti-human system that fosters plutocracy and redistribution of wealth from the many to the few, would like nothing better than to make it appear that all is “back to normal” in the cheese state. So, perhaps few people outside of Wisconsin and even outside of Madison realize that we were serious when we said that this was not a protest but a movement. There is much yet to be accomplished.
As of 7pm on Saturday, June 4th, a diverse group of citizens, representing unionists, non-union workers, students, teachers, immigrants, farmers, families and people with no formal affiliation (save for being a part of the empathetic class who truly seeks liberty and justice for all) laid down their tents and founded “Walkerville” around the perimeter of the Wisconsin capitol building. With a nod to the Hooverville tent cities of the Great Depression, these activists are demonstrating that we are not only opposed to the aforementioned anti-union bill, but that we are opposed to the entire regressive budget of this state, which wholly removes the rights and social safeties for the most vulnerable members of our society and shifts all of the state’s bounty to the wealthiest and most anti-social corporate oligarchs. The police state enacted by the Walker administration has severely hampered the lawful and peaceful assembly of citizens in our own statehouse, so Walkerville exists to re-establish the constant presence and occupation by the people of the state, whose voice is being muted within the capitol.
Most importantly, Walkerville demonstrates that we in Wisconsin are not going to let up. Just as we are being attacked on all fronts as citizens, we will be fighting back on all fronts. Though the Democrats in our state legislature have stepped up to the plate and helped to support the will of the people, it is unlikely that they would have done so had their feet not been held to the fire. If we had not gathered in the capitol clearly proclaiming our will, our presence, and our solidarity, it is not clear the state Democrats would have had the impetus to help us fight. Thus we know that simply electing new officials will never be enough to ensure justice for the people from the government.
States like New York and California serve as prime examples of how the Democratic agenda is just as corporate as the Republican. Governor Andrew Cuomo, the son of a man once considered one of the strongest liberals in NY State history, is promoting many of the same brutal and unnecessary cuts to education and poverty programs. The underserved of California are faring no better under Jerry Brown. If we citizens fail to realize that we must pressure ALL politicians of all politician affiliations, and we must be prepared to fight indefinitely against the bipartisan corporate takeover of our local, state, and federal our government, we are sure to lose.
Walkerville signifies the fortitude of the Wisconsin people, and the recognition that our struggles as citizens are not soon to end. Our actions may take new forms or may morph as they are reassessed for utility, but they are far from over.
For those of us in Wisconsin who cannot camp out day and night around the capitol but still want to volunteer with the movement, there are numerous opportunities to be present for more protests and actions against the state budget, which will be negatively affecting all of us. (See Defend Wisconsin for full details.) For those in other states who will likely see similar developments, please know that we are still fighting, as you will surely have to fight too. The more we acknowledge that this struggle against the ruling class will be ongoing, that it affects us all, and that we may not ever be able to “return to normal,” the more likely we may have a fighting chance for our future.
Ryan Plan “V” Word: A Voucher By Any Other Name…
When President Obama met with congressional Republicans this week, GOP leaders were particularly incensed about Democrats using the word “voucher” when describing the Republican plan to end Medicare. Paul Ryan and others prefer “premium support,” and consider the Dems’ rhetoric to be “demagoguery.”
There are two main problems with this rhetorical disagreement. The first is that the GOP plan really does rely on vouchers, whether the party cares for the word or not. The second is that plenty of far-right Republicans are inclined to ignore their party’s talking-point instructions.
Here, for example, was Sen. Ron Johnson (R) of Wisconsin, a Tea Party favorite, explaining one of the things he likes most about his party’s Medicare plan.
“What I like about the Paul Ryan plan is it’s trying to bring a little bit of free-market principles back into Medicare.
“If you need subsidized care, we’ll give you vouchers. You figure out how you want to spend. You select what insurance carrier you want to use. It’s a start.”
It’s not just Johnson. Last week, GOP presidential hopeful Herman Cain argued, “Nobody’s talking about the fact that the centerpiece of Ryan’s plan is a voucher. Now, a lot of people don’t like to use that term because it has a negative connotation. That is what we need.” Even Fox News has referred to the Republican plan as being built around “vouchers.
If conservative Republicans are using the word, why is it outrageous when Democrats do the same thing? Are Johnson, Cain, and the Republican cable news network all secretly siding with the left?
As for the substance behind the claim, it’s worth noting that this isn’t just about semantics — the GOP claim that their scheme doesn’t include vouchers is just wrong. Paul Krugman explained yesterday:
[T]he ACA is specifically designed to ensure that insurance is affordable, whereas Ryancare just hands out vouchers and washes its hands. Specifically, the ACA subsidy system (pdf) sets a maximum percentage of income that families are expected to pay for insurance, on a sliding scale that rises with income. To the extent that the actual cost of a minimum acceptable policy exceeds that percentage of income, subsidies make up the difference.
Ryancare, by contrast, provides a fixed sum — end of story. And because this fixed sum would not grow with rising health care costs, it’s almost guaranteed to fall far short of the actual cost of insurance.
This is also why Ryancare is NOT premium support; it’s a voucher system. No matter how much they say it isn’t, that’s exactly what it is.
Given this reality, why do Republicans throw such a fit about the use of the “v” word? Because vouchers don’t poll well. For the right, the key is to come up with phrasing, no matter how deceptive, that persuades the public. If GOP leaders throw a big enough tantrum, they’re hoping everyone — Dems, pundits, reporters, even other Republicans — will use the words they like, rather than more accurate words that make the party look bad.
No one should be fooled.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, June 4, 2011
House GOP Scoffs At The Fact That Taxes Are Lower Under Obama Than Under Reagan
President Obama met with House Republicans today at the White House to discuss ways to move forward on negotiations regarding the nation’s debt ceiling and the budget. During the discussion, talk evidently turned to taxes, and when Obama noted that taxes today are lower than they were under President Reagan, the GOP, according to The Hill, “engaged in a lot of ‘eye-rolling’“:
Republicans attending a White House meeting on Wednesday didn’t take kindly to President Obama telling them tax rates were higher during the Reagan administration. GOP members engaged in a lot of “eye-rolling,” according to a member who was on hand to hear Obama, who invited House Republicans to the White House for discussions on the debt ceiling. […]
“[The President] made a comment like the tax rate is the lightest, even more than (under former President) Reagan,” Rep. Lee Terry (R-Neb.) told The Hill following the meeting. House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) joked that during the meeting, “We learned we had the lowest tax rates in history … lower than Reagan!”
That House Republicans find this preposterous is symptomatic of the hold Reagan mythology has over them. After all, for seven of Regan’s eight years in office, the top tax rate was higher than the current 35 percent. In six of those years, it was 50 percent or more. And every year that Regan was in office, the bottom tax bracket was higher than the current ten percent.
For a family of four, the “average income tax rate under Reagan in 1983 was 11.06 percent. Under Clinton in 1992, it was 9.18 percent. And under Obama in 2010, it was 4.68 percent.” During Reagan’s time, income tax revenue ranged from 7.8 to 9.4 percent of GDP. Last year, it was 6.2 percent and is not projected to climb back to 9 percent until 2016. In fact, in 2009, Americans paid their lowest taxes in 60 years.
Republicans are very fond of saying that the U.S. has “a spending problem, not a revenue problem.” But the truth is that revenue has plunged due to the recession and to continued misguided tax cuts, and revenue needs to be raised to eventually bring the budget into balance. And Reagan knew that taxes were an important part of the budget equation. After all, he “raised taxes in seven of his eight years in office,” including four times in just two years.
By: Pat Garofalo, Think Progress, June 1, 2011
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