The Grand Delusion: Higher Taxes “Soak” The Rich
Squeezing, gouging, soaking, it’s all the same, and it’s all wrong. The richest Americans, we hear it said, pay most of the federal income taxes. That’s true. But since 1980 their AFTER-TAX SHARE of America’s income has TRIPLED. That’s a trillion dollars a year in extra income for the wealthiest 1%.
A trillion dollars is seven times more than the budget deficits of all 50 states combined.
A trillion dollars, if it hadn’t been redistributed to the rich, would provide an extra $10,000 a year for every family that has contributed to American productivity since 1980.
The defenders of unlimited wealth insist that the very rich have earned their money. But what does EARN mean? Does it mean that the million richest families worked harder than the other 99 million families for thirty years? Does it mean that one man can bet against the mortgage industry and make enough money to pay the salaries of 100,000 health care workers? Does it mean using American research and infrastructure and national security to build a corporation that pays zero federal income taxes?
Most of the fortunate 1% benefited from tax cuts, financial system de-regulation, ownership of 50% of the stock market, and a 15% capital gains tax. According to a study by the University of California, in 2008 only 19% of the income reported by the 13,480 individuals or families making over $10 million came from wages and salaries.
The very rich claim that their income growth stimulates the economy. But it hasn’t happened. Low-income earners spend a greater percentage of their overall income on consumption, but they have less purchasing power than they had thirty years ago.
What the very rich won’t admit is that they benefit the most from government-funded research, national security, infrastructure, property rights, and a financial industry tailored to their pleasure and profit.
Instead, they claim that anyone can be rich if only they work hard. Much of America wouldn’t know if this is true. They haven’t had a chance to work lately.
By: Paul Buchheit, CommonDreams.org, May 10, 2011
Boehner The Extortionist: “Give Us Trillions In Cuts In Medicare and Medicaid Or We Blow Up The Economy”
Stripped of its politician’s gloss, this is the message that House Speaker John Boehner delivered to Wall Street Monday in discussing the price Republicans demand for raising the debt ceiling.
Boehner portrays himself as a reluctant extortionist: “It’s true that allowing America to default would be irresponsible.” But he told the barons of Wall Street he has no choice. The Tea Party made him do it: “Washington’s arrogance has triggered a political rebellion in our country. And it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”
Notice the Speaker’s phrasing. He curses deficits and debt but he isn’t focused on them. He is focused on “our spending addiction.” “Everything is on the table,” he says, “with the exception of tax hikes.”
And even that is a half-truth, since Boehner and his party have also no appetite for real cuts in the defense budget. Boehner isn’t pushing to get out of Iraq and Afghanistan and roll back the costly U.S. global police role. In the budget that Boehner pushed through the House, Republicans voted to give the Pentagon back most of the relatively nominal defense cuts that Defense Secretary Robert Gates had projected over the next years. And many harshly censored the president for suggesting that another $400 billion in cuts might be chipped out of the more than $8 trillion the Pentagon will spend over the next 12 years.
So if tax hikes aren’t allowed—even though the wealthiest Americans are now paying a lower effective tax rate than their chauffeurs—and defense cuts are off the table, how does Boehner propose to get “trillions” in spending cuts? Medicare and Medicaid get the ax. Or as Boehner puts it in politician speak, “Everything on the table” includes “honest conversations about how best to preserve Medicare.”
The budget math is inescapable. The federal government, as Paul Krugman puts it, is basically an insurance system for our retirement years that also has an army. About half of the government’s spending is in retirement programs—Social Security, Medicare, much of Medicaid and other insurance programs. Defense is half of the rest. All of the rest of government —public health, environmental protection, the IRS, the FBI and Justice Department, education, Pell grants, roads, health research, R&D—consumes the last fourth. When Republicans take taxes and defense off the table, and call for trillions in spending cuts and you have no choice but to go after Medicare, Medicaid and/or Social Security.
Which of course is what they are doing. The House budget cuts nearly $800 billion out of Medicaid over the next five years—and ends Medicare as we know it.
There is a bitter irony to this. The current deficits stem largely from three sources—the Bush tax cuts, the two wars that were fought on the tab, and the Great Recession that cratered tax revenues and lifted spending on everything from unemployment to food stamps to the recovery spending. Boehner argues that “adding nearly a trillion to our national debt—money borrowed mostly from foreign investors—caused a further erosion of economic confidence in America.” But he ignores the trillions added to the debt by the Bush tax cuts, the wars and the Great Recession, focusing only on the Obama recovery spending, which made the smallest contribution of all of these to the deficits. And, he rules out reversing the top-end tax cuts or cutting the military spending to address the deficits that they helped to create. (And if we actually adopt his policies, he’s likely to extend the Great Recession as well).
Boehner argues that adopting his position would show that Washington is “starting to get the message” from the American people. But Boehner isn’t hearing what most Americans are saying. Americans are concerned about deficits, and they are certain that government wastes significant portions of their money. They also oppose the billions squandered on subsidies and tax breaks for Big Oil, Big Pharma, Agribusiness and the like—tax breaks that Republicans defend, arguing that repealing them constitutes a tax increase.
In fact, the vast majority of Americans don’t agree with Boehner’s priorities. The Campaign for America’s Future, which I help direct, has started an American Majority campaign to remind the media of this fact. Three quarters oppose cutting Medicare to help balance the budget. Two thirds oppose raising the retirement age. Three fourths oppose cutting state funding for Medicaid. Over 60 percent favor raising taxes on those making over $250,000 to help reduce the deficit. A growing majority think defense cuts ought to be on the table.
Boehner wants to extort his cuts now—at a time when the economy is struggling, and the country is suffering from mass unemployment. With interest rates near record lows, the construction industry idle and our infrastructure in deadly state of disrepair, the country would be well advised to use this occasion to invest in rebuilding the country, and put workers back to work.
Instead, Boehner offered Wall Streeters a shower of conservative shibboleths, stuck randomly like pieces of lint on a serge suit. “The massive borrowing and spending by the Treasury Department crowded out private investment by American businesses of all sizes,” he argued to what must have been a bemused audience well aware that with interest rates low, and business sitting on trillions in capital waiting for demand to pick up, the only “crowding out” comes from ideology displacing reality in Boehner’s head..
Boehner argues that business people crave stability. Even the mere threat of tax hikes causes them to retreat from investments they might otherwise make. Regulatory changes are similarly disruptive:
“For job creators, the ‘promise’ of a large new initiative coming out of Washington is more like a threat. It freezes them. Instead of investing in new employees or new equipment, they make the logical decision to stand pat.” Sadly, Boehner didn’t explain why the threat to blow up the economy if he can’t get trillions in unidentified spending cuts doesn’t constitute the “promise” of a large new initiative coming out of Washington.”
What happens now? Boehner’s position is untenable. He is holding a hostage—the economy—that he dare not shoot. He is demanding trillions in cuts from programs that he dare not name. He is looking for a back room negotiation in which he can get the president to give him cover in enacting cuts that are unpopular to the American people and likely to be ruinous to the economy. If the president falls for it, Republicans make progress in dismantling the Medicare program that they have always opposed, and the president takes the rap for the bad economy.
What’s to be done? Jonathan Chait gets it right. The president—and the country—would benefit from an open discussion, not a backroom negotiation. The president needs to call Boehner out. What are the trillions in cuts that he wants as the price for letting the economy go free? If he lays them out, as in passage of the House budget plan that ends Medicare as we know it, the President can show Americans why they are unacceptable, and use the bully pulpit to take the case to the country. If Boehner isn’t prepared to lay out his cuts, call his bluff. Surely he can’t long threaten to cripple the economy if he doesn’t get cuts that he isn’t prepared to define.
One thing Boehner says rings true. Americans are sick of the arrogance in Washington. But it is hard to imagine a more arrogant politician than one threatening to blow up the economy if he doesn’t get his way.
By: Robert Borosage, CommonDreams.org, May 10, 2011
What Do You Mean We, White Man? Deficit Edition
Whenever I read pieces like David Brooks’s column this morning — pieces that attribute our budget deficits to the public’s irresponsibility and lack of realism — I find myself wondering how so much recent history went down the memory hole.
To be fair, polling on budget questions does suggest a popular demand that we repeal the laws of arithmetic — that we not raise taxes, not cut spending on any popular program, and balance the budget.
But if we look at actual policy changes, it’s hard to see that too much democracy was the problem.
Remember, we had a budget surplus in 2000. Where did it go? The two biggest policy changes responsible for the swing into deficit were the big tax cuts of 2001 and 2003, and the war of choice in Iraq.
And neither of these policy changes was in any sense a response to public demand. Americans weren’t clamoring for a tax cut in 2000; Bush pushed his tax cuts to please his donors and his base. And the decision to invade Iraq not only wasn’t a response to public demand, Bush and co. had to spend months selling the idea to the public.
In fact, the only budget-busting measure undertaken in recent memory that was driven by popular demand as opposed to the agenda of a small number of powerful people was Medicare Part D. And even there, the plan was needlessly expensive, not because that’s the way the public wanted it — it could easily have been simply an addition to traditional Medicare — but to please the drug lobby and the anti-government ideologues.
Now, a lot of historical rewriting has taken place — I’ve even seen pundits solemnly describe the Iraq war fever as an illustration of the madness of crowds, somehow erasing the fact that it was Bush and Rumsfeld, not the masses, who wanted the thing.
But the reality is that if you want to see irresponsibility and self-indulgence at the expense of the nation’s future, you don’t want to visit Main Street; you want to hang out in the vicinity of Pennsylvania Avenue.
By: Paul Krugman, The New York Times, Opinion Pages, May 6, 2011
Are There Any Pro-Choice Republicans Left In The House?
Yes, America, there are pro-choice Republicans. But after this week, there’s some question about whether are any left in the U.S. Congress.
H.R. 3, the “No Taxpayer Funding For Abortion Act” that passed the House May 4 is not likely to become the law of the land. But the fact that it passed the House with unanimous Republican support means the pro-life members of the party, which includes all the House leadership, can tout their attachment to social issues, even after the supposedly fiscal-first tea party movement helped take over the GOP last year.
For pro-choice Republicans, the vote means embarrassing questions. Basically every pro-choice group says H.R. 3 is an anti-abortion bill that goes far beyond the government’s current prohibitions on abortion funding and actually raises taxes on women who want to seek abortion coverage in their private insurance plans.
That’s a double-whammy for pro-choice Republicans. One, raising taxes under any circumstances is a no-no for anyone in the modern GOP. And, two, the bill has been cast as the biggest assault on abortion rights in years.
Voting against such a measure, then, would seem like a no-brainer. Except it wasn’t. None of the about a dozen House GOP members of the Republican Majority For Choice PAC considered as allies, voted against H.R. 3. In fact, all of them voted yes.
“We opposed the bill, we considered it an anti-choice, big government intrusion and politically we think it’s a bad move for the Republicans to keep focusing on this,” K.R. Ferguson, executive director of the PAC told TPM.
Still, she says that she’s not prepared to say the members who voted for it have given up their pro-choice credentials. She pointed to the refusal of some Republicans to sign on to the House plan to defund Planned Parenthood as the kind of thing that will keep the PAC’s endorsement coming.
“I would not say we would stop supporting any of the members who took this vote,” Ferguson said. She said that though it’s hard to rectify being pro-choice and voting for H.R. 3, support from her PAC isn’t “an all or nothing” prospect.
There are still Republicans who run as pro-choice members, despite the fact that the party in the House is about as far from supporting a woman’s right to choose as it could possibly be these days.
Rep. Robert Dold (R-IL) touted his endorsement from Ferguson’s PAC back in 2010. Ferguson said he might get it again, despite his vote for H.R. 3. Dold’s office didn’t respond to a request for comment.
Though repeatedly expressing her extreme disappointment with the vote, Ferguson suggested Dold and his fellow pro-choice Republicans really had no choice.
“The extreme who was pushing this bill did a masterful job of spinning it as a no taxpayer fundings for abortion [measure] and putting these members in an almost impossible position,” she said. “We don’t like it, we will continue to call on our members to try to educate them” on the truth of the bill.
Illinois Republican Rep. Judy Biggert, a past co-chair of the House pro-choice caucus, says that her vote for H.R. 3 was completely consistent with her pro-choice views.
“Rep. Biggert is pro-choice. She supports a women’s right to chose, but she does not support public funding for abortion,” spokesperson Zachary Cikanek told TPM. “Abortion is a private decision, and it should be paid for with private dollars – without government involvement. That’s why she voted for H.R. 3.”
Cikanek noted that Biggert “has stated publically that she thinks Congress should be keeping its attention focused on spending and jobs, and not spending its time locked in debate on divisive social issues.”
Not all pro-choice advocates are willing to accept that kind of answer. NARAL President Nancy Keenan told TPM that a pro-choice vote for H.R. 3 is a political oxymoron. Though her group is non-partisan, NARAL hasn’t endorsed any Republicans serving in the current House, despite the fact that members like Biggert claim to be supporters of the cause.
“No member of congress can vote for this egregious bill and be considered pro-choice,” Keenan said. “Bottom line.”
By: Evan McMorris-Santoro, Talking Points Memo, May 7, 2011
How Grover Norquist’s Pledge Blocks Real Deficit Cuts
Eli Lehrer has an incisive piece on this page about Tom Coburn’s “Gang of Six” tax proposals. I believe however that the proposals deserve a warmer endorsement than Eli offers.
An important cause of America’s long-term debt problem is the intellectual cul-de-sac into which Republicans have driven themselves. Republicans have accepted a total ban on any kind of tax increase as party orthodoxy. And they have submitted to the authority of Grover Norquist of Americans for Tax Reform to determine what constitutes a “tax increase.”
Norquist takes the view that any action that increases the revenue column of the federal government must be deemed a tax increase – and that such increases are only permissible if they are offset by an equivalent cut to the spending column.
The trouble is that a lot of federal spending – especially the spending done by Republicans – takes the form of tax remission.
The federal government offers a tax credit of up to $9,500 for the purchase of plug-in electric cars. How exactly is that different from writing a check to every plug-in buyer? Yet canceling this program would count as a tax increase under Grover Norquist’s test.
Adopt a child and you can qualify for a tax credit of up to $13,100. You can even get credit for the cost of meals and lodging while traveling in a foreign country to receive the child. You can say a lot of things about this measure. But is it a “tax cut”? Hardly.
Enrolled in college or university? You can deduct up to $4,000 of qualified tuition expenses.
Over 65? Or disabled? Adjusted gross taxable income of less than $17,500? Tax credit for you.
And so on. The point is not that these tax expenditures are all necessarily ill-advised. (It’s genuinely more expensive to be disabled, and public money to help the disabled cope with the costs imposed on them by nature or accident seems a reasonable response by a civilized society.) The point is: they are expenditures, disguised as tax cuts.
This point – so obvious with the smaller tax expenditures – is true also of many of the larger tax expenditures, even if familiarity blinds us to the fact. Mortgage interest deductibility and the tax exclusion of employer-provided fringe benefits: these are subsidies too, no less subsidies for being widely rather than narrowly used.
Yet on the Norquist system and by the Norquist rule, the US cannot address these subsidies contained in the tax code unless and until they are simultaneously matched exactly with other subsidies and benefits that happened to have been framed as outlays. Economically, the rule makes little sense. Politically, it has the job of making deficit reduction twice as difficult as it needs to be. With consequences that …. well let’s leave that for a second post.
By: David Frum, Frum Forum, April 25, 2011
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