On Debt Impasse, GOP Full Of Contradictions
Sen. Mitch McConnell has a clever plan to resolve the federal debt impasse. Congressional Republicans would invite President Barack Obama to raise the debt ceiling on his own, and then they would excoriate him for doing so.
Hmm. Just a bit contradictory?
Meanwhile, the impasse arose because congressional Republicans thunder against government red ink, yet refuse to raise revenue by ending tax breaks that help Warren Buffett pay a lower tax rate than his receptionist (which he agrees is preposterous). Another contradiction? Of course.
McConnell’s plan – a pragmatic way to avert a catastrophic default – may be torpedoed by more extremist House Republicans, such as Michele Bachmann. They seem to fear that ending tax loopholes for billionaire fund managers would damage a fragile economy. Yet they seem to think that this invalid of an economy would be unperturbed by the risk of a default on our debts.
A contra- . . . yes, you got it!
What about this one? Republicans have historically been more focused on national security threats than Democrats. Yet what would do more damage to America’s national security than a default that might halt paychecks for American military families?
This game of “spot the contradiction” is just too easy with extremist Republicans; it’s like spotting snowflakes in a blizzard. Congressional Republicans have taken a sensible and important concern – alarm about long-term debt levels, a genuine problem – and turned it into a brittle and urgent ideology.
Politicians in both parties have historically been irresponsible with money, but President Bill Clinton changed that. He imposed a stunning fiscal discipline and set the United States on a course of budget surpluses, job growth and diminishing federal debt – until the Republicans took over in 2001.
In the Bush years, Republicans proved themselves reckless both on the spending side (unfunded wars and a prescription drug benefit) and on the revenue side (the Bush tax cuts). Their view then was, as former Treasury Secretary Paul O’Neill quoted Vice President Dick Cheney as saying, “Reagan proved deficits don’t matter.”
It may seem odd that Republicans were so blithe about debt in the Bush years, yet now insist on addressing the problem in the middle of a downturn – even though basic economics dictates that a downturn is the one time when red ink is advisable. Well, just another of those contradictions.
Then there’s the rise of health care costs, a huge burden on our economy. It’s pretty clear what doesn’t work: the existing, dysfunctional system. A forthcoming book on health care by Paul Starr, “Remedy and Reaction,” notes that in 1970 the United States spent a smaller fraction of income on health care than Denmark and the same share as Canada.
Today, in dollar terms, we spend 21/2 times the average per capita of other rich countries.
When congressional Republicans do talk about health care, they have one useful suggestion – tort reform – and it was foolish for Democrats (in bed with trial lawyers) to stiff them on it. But research suggests that curbing malpractice suits, while helpful, would reduce health costs only modestly.
Beyond that, the serious Republican idea is to dismantle Medicare in its present form. That would indeed reduce government spending but would increase private spending by even more, according to the CBO.
The Obama health care plan could have done better on cost control, but it does promote evidence-based medicine, so that less money is squandered on expensive procedures that don’t work. And the Independent Payment Advisory Board will recommend steps to curb excess spending in Medicare.
Yet congressional Republicans are trying to kill the Obama health plan. Yes, of course: another contradiction.
A final puzzle concerns not just the Republican Party but us as a nation. For all their flaws, congressional Republicans have been stunningly successful in framing the national debate. Instead of discussing a jobs program to deal with the worst downturn in 70 years, we’re debating spending cuts – and most voters say in polls that they’re against raising the debt ceiling. I fear that instead of banishing contradictions, we as a nation may be embracing them.
By: Nicholas Kristof, Columnist, The New York Times, Published in the Milwaukee Journal Sentinel, July 14, 2011
Those Bush Tax Cuts Will Work Wonders Eventually
Soon after the awful new job numbers were released, Dave Weigel had a good line, at least in a sardonic sort of way:
“Me? I’m just glad we kept the Bush tax rates so the economy could start surging.”
I had the same thought. Indeed, when thinking about who has credibility on economic projections and governmental policy, the right’s uninterrupted track record of failure remains fascinating. In 1982, conservative Republicans said Reagan’s tax increases would cause a disaster (they didn’t). In 1993, conservative Republicans said Clinton’s tax increases would invariably fail (they didn’t). In 2009, conservative Republicans said Obama’s stimulus would make the economy worse (it didn’t).
And in 2001, conservative Republicans said Bush’s tax cuts would cause a remarkable economic boom (they didn’t). In 2003, these same conservative Republicans said more Bush tax cuts would do the trick (they didn’t). In 2010, these same conservative Republicans said if we could just keep those Bush tax cuts around a little more, we’d be amazed at the economic turnaround in 2011.
Here we are. I don’t think anyone’s amazed.
The response from the right is that we should just stick with the tax cuts indefinitely, because they’re bound to work eventually. Indeed, to hear some conservatives tell is, it’s other factors that deserve the blame — Democrats have let spending get out of control (they haven’t) and allowed the debt to become a drag on the economy (it isn’t).
Ezra Klein noted the other day that the Republican approach to tax policy “is no longer based on any recognizable economic theory.” Of course not. Who needs economic models, egghead academics, and evidence when the GOP has a religious-like certainty in a policy based solely on ideology?
One wonders, though, when the political world might pause to question whether these folks have any credibility left at all.
By: Steve Benen, Contributing Writer, Washington Monthly-Political Animal, July 9, 2011
Corporate Tax Cuts Don’t Stimulate Job Growth
Prevailing conservative wisdom dictates that businesses need tax cuts—and investors need capital gains tax cuts—to get the economy moving. But two very well-executed articles on wages and taxes published recently suggest that targeting tax cuts at business executives may do little to improve the dismal unemployment picture.
The Washington Post offers a startling analysis of income disparity, noting that the gap between the very rich and the rest of us has grown dramatically in the past few decades, reaching current levels that have not been seen since the Great Depression. In 2008, the Post reports, the top one-tenth of one percent of earners took in more than a tenth of the personal income in the United States. But the moneyed class is not dominated by professional athletes or big-name artistic performers or even hedge fund managers, the Post found. Instead, it is due to a big increase in executive compensation, even as real wages for some of their workers have dropped:
The top 0.1 percent of earners make about $1.7 million or more, including capital gains. Of those, 41 percent were executives, managers and supervisors at non-financial companies, according to the analysis, with nearly half of them deriving most of their income from their ownership in privately-held firms. An additional 18 percent were managers at financial firms or financial professionals at any sort of firm. In all, nearly 60 percent fell into one of those two categories.
The New York Times has a fascinating story that serves as an unwitting companion piece to the Post story. Corporate executives, the paper reports, are clamoring for a tax holiday to encourage them to bring their offshore profits back to the United States. And the money in question is big, the Times notes: Apple has $12 billion in offshore cash, while Google has $17 billion, and Microsoft, $29 billion. The companies with money sitting offshore argue that if the federal government were to offer them a huge tax break—say, a one-year drop from 35 percent to 5.25 percent—the businesses would bring the money home and operate as a private-sector economic stimulus.
However, the Times notes:
(T)hat’s not how it worked last time. Congress and the Bush administration offered companies a similar tax incentive, in 2005, in hopes of spurring domestic hiring and investment, and 800 took advantage. Though the tax break lured them into bringing $312 billion back to the United States, 92 percent of that money was returned to shareholders in the form of dividends and stock buybacks, according to a study by the nonpartisan National Bureau of Economic Research.
Who needs a tax cut, then? The U.S. economy is very much consumer-driven; companies aren’t hiring, many business owners say, because people aren’t buying. The past behavior of corporations that have received huge tax cuts has not necessarily been to use the money to hire more people; the Bush-era tax cuts have been in place for a decade, and the unemployment rate is still 9.1 percent. And executive compensation has grown. Executives may feel entitled to earn more and more if their companies are doing well and expanding. But without customers, those companies will go bust.
By: Susan Milligan, U. S. News and World Report, JUne 20, 2011
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
Share This Blog
Unknown Feed- An error has occurred; the feed is probably down. Try again later.
mykeystrokes.com 