“Pain For The Afflicted, Benefits For The Rich”: The Republican Party’s Top Priority Is To Raise Taxes On The Poor. Literally.
Following their convincing victory in the 2014 elections, everyone is wondering what Republicans will do with their new majority in the Senate and House. Well, their policy agenda is becoming clear. It will be unrestrained class warfare against the poor.
This priority was made apparent over the last week during the negotiation of a colossal tax cut package. Senate Democrats and Republicans had been doing some low-key negotiations to renew a slew of tax cuts for corporations and lower- and middle-income Americans, according to reporting from Brian Faler and Rachel Bade at Politico.
Then President Obama announced his executive action on immigration. Enraged Republicans promptly took vengeance on all the goodies for the working poor (as well as for clean energy), cutting them out of the deal and proposing a raft of permanent tax cuts for corporations alone worth $440 billion over 10 years. Cowed Democrats, led by Sen. Harry Reid (D-Nev.), were about ready to go along, prompting a decidedly justified outcry from liberals. Obama then threatened a veto, and the negotiations broke down entirely.
A few takeaways from this. First, it’s yet another reminder that Republicans don’t care about the national debt. Conservative carping about the debt is 100 percent of the time a rhetorical cudgel deployed with utter cynicism against programs they dislike for other reasons. When the topic is food stamps or unemployment insurance, they demand offsets to pay for them. (Because “we’re broke,” as Speaker John Boehner (R-Ohio) put it in a similar context.) But when it comes to dropping planeloads of money on corporations and rich people, Republicans will casually blow a half-trillion hole in the 10-year budget without blinking.
We can safely assume that should Republicans win in 2016, they’ll take all the reduction in the budget deficit accomplished over the Obama years (at great cost and for no benefit, but that’s another story) and do the same thing that George W. Bush did: hand it immediately to the rich.
That’s not all, though. Unlike Bush, who gave his eye-wateringly regressive tax cuts a patina of democratic legitimacy by cutting the non-rich in on a small fraction of the spoils, Republicans are now firmly committed to the idea that poor people don’t pay enough in taxes. The Earned Income Tax Credit was originally a conservative alternative to the welfare state, but increasingly only Democrats support it. Republicans are convinced that the EITC is riddled with fraud, and that voting for it means giving welfare to unauthorized immigrants. (In reality, the EITC results in quite a lot of technically improper payments, but mostly as a result of unnecessary complexity.)
Massive transfers of money to the rich are one half of the Republican economic policy agenda; massive transfers of money away from poor are the other half. And the cuts would be cruel indeed:
For example, a single mother with two children working full time in a nursing home for the minimum wage and earning $14,500 would lose her entire [Child Tax Credit] of $1,725 if the CTC provision expires. [CBPP]
Apparently, cutting the income of a poor working single mother by 12 percent is good and proper conservative policymaking in 2014. Because immigration.
Finally, we see that Republicans are still incapable of the basics of political governance. They can’t maintain any sort of agenda outside of being against what Obama is for. Once the president drives them into a frenzy — which is to say, anytime he does anything at all — any negotiations on deck will be blown up as punishment. These days, divided government means constant high-stakes conflict, as everything, including tax credits for working moms, is weaponized in a naked struggle for power.
But should Republicans ever get the run of things, we now have a very good idea of what’s in store: pain for the afflicted, and benefits for the comfortable.
By: Ryan Cooper, The Week, December 3, 2014
“More Silliness And Hysteria”: Gripes About Excessive Regulations And Taxes Often Are Baseless
In the last couple of months we have seen the country whipped up into near hysteria over the virtually nonexistent threat of Ebola.
While the only people who contracted the disease in this country were those who treated a man who died of the disease, tens of millions of people became convinced they were in danger on airplanes and public buses and even routine visits to the supermarket.
Politicians have sought to exploit the same sort of fears with their rants about regulations and high taxes sinking the economy. These complaints have as much foundation in reality as the Ebola threat.
The regulation screed usually focuses on the number of pages in bills like the Affordable Care Act and the Dodd-Frank financial reform bill. While lengthy bills are unfortunate from the standpoint of the trees cut down for the paper, the length bears no relationship to the amount of regulation.
To take one example, the Volcker Rule, which prohibits banks with government insured deposits from engaging in risky speculation, ended up more than three times its original length as the industry carved out an array of exceptions. The greater length was associated with less regulation, not more.
Dodd-Frank was about curbing the sorts of abuses that gave us the financial crisis. Is the argument that we need corrupt banks to foster growth?
The screams over the ACA are equally misguided. The rules have little impact on large firms, the vast majority of whom already offered insurance that met ACA requirements. It might have been expected to affect mid-sized firms that did not previously offer insurance, but none of the complainers has yet presented any evidence that these mid-sized firms have been especially hard hit in the last few years.
The tax complaints require some serious amnesia. Tax rates were higher for most people in the 1990s when we saw the strongest growth in almost three decades. We then lowered taxes in 2001 and saw a weak recovery followed by the collapse in 2008.
The explanation for the continuing weakness is not a surprise to those of us who warned of the housing bubble before the crisis. The bubble had been driving the economy both directly through its impact on construction and indirectly through the impact that $8 trillion of housing bubble wealth had on consumption. When the bubble burst, the economy lost its driving force.
The building boom of the bubble years lead to enormous overbuilding of housing. When the bubble burst, construction didn’t just fall back to normal. It fell to the lowest levels in 50 years, costing the economy more than four percentage points of GDP, amounting to $700 billion annually in lost demand. The loss of housing wealth meant that consumption fell back to more normal levels.
While both housing and construction are up from their low-points in the recession, they are not going to return to bubble peaks, at least not without another bubble. This means that the economy continues to have a huge shortfall in demand. Cutting taxes and reducing regulation will not magically fill this gap in demand.
There are essentially two ways to increase demand. One is directly through more government spending. This is currently taboo in Washington since we are all supposed to hate budget deficits.
The other is by reducing the trade deficit. The way to reduce the trade deficit is to make U.S. goods more competitive with a lower-valued dollar. Talk of a lower dollar is also taboo in political circles.
In short, it is not difficult to find ways to boost the economy; the problem is that politics prevents them from being discussed. Instead we get silliness about taxes and regulation.
By: Dean Baker, Co-Founder of the Center for Economic Policy and Research; The National Memo, November 20, 2014
“A Little Hard To Swallow”: The ‘Pressing’ Need For More Tax Breaks For The Rich?
President Obama delivered a pretty interesting speech on the economy yesterday, but towards the end, he completely abandoned his prepared text, ignoring the teleprompter to reflect on something that clearly bothered him on a personal level.
“[J]ust last month, at least one top Republican in Congress said that tax cuts for those at the top are – and I’m quoting here – ‘even more pressing now’ than they were 30 years ago. More pressing. When nearly all the gains of the recovery have gone to the top 1 percent, when income inequality is at as high a rate as we’ve seen in decades, I find that a little hard to swallow that they really desperately need a tax cut right now, it’s ‘urgent.’
“Why? What are the facts? What is the empirical data that would justify that position? Kellogg Business School, you guys are all smart. You do all this analysis. You run the numbers. Has anybody here seen a credible argument that that is what our economy needs right now?”
Almost every word of this was ad libbed. Presented with the Republican argument that the wealthy really need yet another tax cut, the president seemed genuinely gobsmacked. To appreciate the degree to which Obama was amazed, watch the video – go here and forward to the 48:02 mark.
Of course, the president wasn’t making up any of the allegations themselves – a leading congressional Republican really did argue last month that tax breaks for the very wealthy are “even more pressing now” than a generation ago.
The congressman is none other than House Budget Committee Chairman Paul Ryan (R-Wis.), who recently suggested combating poverty is one of his top priorities.
Here’s the interview the far-right Wisconsinite did with the conservative Weekly Standard.
“I’m a classic growth conservative. I believe that the best way to help families, the best way to help the economy is to reduce rates across the board,” Ryan said when asked about Utah senator Mike Lee’s plan to increase the child tax credit and create two income tax brackets of 15 percent and 35 percent. “Growth occurs on the margin, which is a wonky way of saying, if you want faster economic growth, more upward mobility, and faster job creation, lower tax rates across the board is the key-it’s the secret sauce.
“Some conservatives have argued that reducing the top rate is less urgent now than it was during the Reagan administration, when the top rate was cut from 70 percent to 50 percent and then cut again from 50 percent to 28 percent. But Ryan says that cutting the top rate is “even more pressing now” than it was back then “because the American economy was so dominant in the global economy and capital was not nearly as mobile as it is today.”
As a substantive matter, this serves as a reminder of why it’s tough to take Paul Ryan seriously as an alleged wonk. As Matt Yglesias explained after the Ryan interview was published, “The idea that globalization, which tends to increase the overall size of the economy while also increasing inequality, makes tax cuts for the rich even more urgent strikes me as a little bit hard to defend intellectually.”
But as a political matter, let’s not lose sight of the larger context. Sen. Mike Lee (R-Utah) has floated a tax cut plan that focuses primarily on the middle class. Paul Ryan is drawing a distinct between Lee’s approach and his own – Ryan wants the tax cuts focused on the rich.
In light of everything we’ve seen, in light of the enormous class gap, in light of the already low U.S. tax rates as compared to most of the world, Ryan’s ideas about tax breaks for the wealthy just won’t budge.
Is it any wonder the president is astonished?
By: Steve Benen, The Maddow Blog, October 3, 2014
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