“This Year Belongs To The Republicans”: I Hope They Kept The Receipt.
The Wall Street Journal had an interesting report the other day on the congressional fight over extending the payroll tax cut through 2012. Democrats were quoted as saying they feel like they have the advantage in this debate — they’re the ones fighting for a middle-class tax break — but one Republican said something in response that stood out for me.
Terry Holt, a former House GOP aide who is close to Mr. Boehner, said any perceived political advantage is superficial, compared to the way Democrats have lost ground on spending issues over the past year.
“Democrats are trying to put the best face on a very bad year for them,” Mr. Holt said. “This year belongs to the Republicans.” [emphasis added]
Holt apparently looks back at the nearly-completed year and believes it’s been a good one.
He’s not alone. National Journal published the results of its latest Congressional Insiders Poll yesterday, and one of this week’s questions was, “What grade (A+ through F) would you give the first year of the 112th Congress?” Republicans were fairly impressed — a 39% plurality gave this Congress so far a B, and 28% gave it a C. While 66% of Democrats gave it an F, only 6% of Republicans felt the same way.
To my mind, this Congress is proving to be one of the worst — most destructive, most negligent, most dysfunctional — in the history of the country, but for Republicans, there’s a sense that 2011 wasn’t that bad. Indeed, a month ago, none other than House Speaker John Boehner (R-Ohio) defended his institution, saying it’s his job to make Congress work, “and it is working.”
I wonder what the weather is like in the GOP’s reality.
Look, some of the questions are subjective, but if Republicans can look back at the last calendar year and feel a sense of pride, the obvious question is what exactly they hoped to get out of 2011.
The year has been so miserable, it’s tough to imagine what the GOP finds satisfying. Republicans’ approval rating dropped to levels unseen since Watergate; Congress’ approval rating dropped to a level unseen since the dawn of modern polling. Republicans held the full faith and credit of the United States hostage, on purpose, and caused the first-ever downgrade of the nation’s debt. Neither party has been able to pass any of its major legislative priorities, and thanks to Republican intransigence, compromise between the parties has become a laughable pipedream.
At the same time, the Republican presidential nominating race has become farcical, with random cranks, clowns, and charlatans taking turns as ostensible frontrunners, hoping to serve as the main primary challenger to a core-free, flip-flopping coward who lies with discomforting ease. The more Americans see of the GOP field, the more they recoil.
This isn’t to say that the year has been awful for everyone. The domestic economy and job creation have steadily improved; the United States has scored some major counter-terrorism and foreign policy victories; the American auto industry is starting to flourish after nearly collapsing in 2009; and we saw the formal end of misguided policies like “Don’t Ask, Don’t Tell.”
But the year’s best news invariably resulted from developments that Congress couldn’t screw up and Republicans had nothing to do with.
“This year belongs to the Republicans”? Unless nihilism was the goal — and perhaps it was — I hope the GOP kept the receipt.
By: Steve Benen, Contributing Writer, Washington Monthly Political Animal, December 10, 2011
Human Weather Vane Mitt Romney Shifts On Payroll Tax Cut
The idea of extending the payroll tax cut polls very well. How do I know? Because human weather vane Mitt Romney suddenly vocally supports it.
When he was asked about President Obama’s jobs plan during a GOP presidential debate in October, Romney was dismissive of the idea of extending the payroll tax cut on the grounds that it would do nothing to create jobs. Here’s his answer, in full (emphases mine):
MR. ROMNEY: No one likes to see tax increases, but look, the–the stimulus bills the president comes out with that are supposedly going to create jobs, we’ve now seen this played in the theater several times. And what we’re seeing hasn’t worked. The American people know that when he–when he went into office and borrowed $800 billion for a massive jobs stimulus program, that they didn’t see the jobs. Some of those green jobs we were supposed to get, that’s money down the drain. The right course for America is not to keep spending money on stimulus bills, but instead to make permanent changes to the tax code.
Look, when you give–as the president’s bill does, if you give a temporary change to the payroll tax and you say, we’re going to extend this for a year or two, employers don’t hire people for a year or two. They make an investment in a person that goes over a long period of time. And so if you want to get this economy going again, you have to have people who understand how employers think, what it takes to create jobs. And what it takes to create jobs is more than just a temporary shift in a tax stimulus. It needs instead fundamental restructuring of our economy to make sure that we are the most attractive place in the world for investment, for innovation, for growth and for hiring, and we can do that again.
MS. GOLDMAN: So you would be OK with seeing the payroll tax cuts–
MR. ROMNEY: Look, I don’t like–(inaudible)–little Band- Aids. I want to fundamentally restructure America’s foundation economically.
Romney gives no indication whatsoever of favoring an extension of the payroll tax. If anything he indicates a willingness to see it rise, saying, “No one likes to see tax increase, but …” to start and giving his much ballyhooed “Band-Aids” answer when questioner Julianna Goldman asserts that he’d be OK with the payroll tax cuts expiring.
That was October. Since then the political winds have started blowing strongly in favor of extending the tax cut—so strongly in fact that, Romney told conservative radio show host Michael Medved, “I would like to see the payroll tax cut extended just because I know that working families are really feeling the pinch right now—middle-class Americans are having a hard time.”
Of course Romney’s camp is outraged at the notion that badmouthing an extension in October and supporting it in December constitutes either a flip or a flop from the famously flexible former Massachusetts governor. “Governor Romney has never met a tax cut he didn’t like,” spokeswoman Andrea Saul said in a statement E-mailed to reporters Monday night. “He has made it clear that he does not believe that by itself the payroll tax cut will create the type of permanent long term change that is needed to turn the economy around.”
Let’s give Romney the benefit of the doubt. Let’s assume that in October he liked the idea of a payroll tax cut extension. The characterization of him as a human weather vane still holds: He kept his support secret in October because he apparently didn’t think a GOP debate audience would cotton to that view; now he’s trumpeting it because the winds have shifted.
Who needs polls when we have Mitt Romney?
By: Robert Schlesinger, U. S. News and World Report, December 6, 2011
Morgan Stanley Executive Calls For Higher Taxes On The Rich: ‘We Cannot Cut Our Way To Greatness’
Several wealthy bankers, investors, and entrepreneurs have called for higher taxes on the rich as an important part of reducing the nation’s deficit, led most prominently by Warren Buffett. “It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again,” wrote wealthy entrepreneur Nick Hanauer in an op-ed last week. “Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.”
Joining the list of those in financial positions of power that are calling for higher taxes on the rich is Morgan Stanley Chief Financial Officer Ruth Porat who, as the Huffington Post’s Bonnie Kavoussi reported, said over the weekend that it’s “inappropriate” that income inequality in the country is continuing to grow while taxes on the rich stay low:
“The wealthiest can afford to pay more in taxes. That’s a part of the deal. That makes sense. I don’t know anyone that doesn’t agree with that,” Porat said. “The wealth disparity between the lowest and the highest continues to expand, and that’s inappropriate.” “We cannot cut our way to greatness,” she added.
The rising compensation of executives and those in the banking industry is one of the major factors driving the nation’s income inequality. And at the same time that the rich have been getting richer, their tax rates have been plummeting. It’s refreshing to hear someone in the banking industry acknowledge these truths and want to rectify them, rather than decrying higher taxes on the rich as akin to the Nazi invasion of Poland.
By: Pat Garofalo, Think Progress, December 5, 2011
“Capitalists Without Customers Are Out Of Business”: Raise Taxes On Rich To Reward True Job Creators
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.
I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)
Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.
That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.
And that’s what has been happening in the U.S. for the last 30 years.
Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France byDassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.
More Shoppers Needed
I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush-era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
By: Nick Hanauer, Bloomberg, November 30, 2011
Grover Norquist Tells GOP That Raising Taxes On The Middle Class Doesn’t Count As A Tax Increase
Anti-tax zealot Grover Norquist, the president of Americans For Tax Reform and author of the radical anti-tax pledge that has played a significant role in hamstringing budget and deficit-reduction negotiations, has said that it is unacceptable for those who have signed his pledge to vote in favor of any tax increase. But now that President Obama and congressional Democrats are backing a tax cut aimed at stimulating economic growth, Norquist has changed his tune.
Norquist met with Republican members today to let them know that opposing the extension of the payroll tax cut — which would provide many families an extra $1,000 a year — would not amount to supporting a tax increase, National Journal’s Billy House reported today:
That stands in contrast, however, to Norquist’s position on tax cuts for the wealthy. Norquist has repeatedly warned GOP members about voting in favor of repealing the Bush tax cuts for the rich or tax hikes on millionaires, even verbally sparring with a member of a group of millionaires advocating for higher taxes on themselves last month in Washington, D.C. And yet, when it comes to tax cuts for the middle class meant to drive economic recovery, Norquist clearly takes a different stance.
Republicans who have defended those tax breaks for the wealthy aren’t so sure about holding the Norquist position, though. House Majority Leader Eric Cantor (R-VA) warned his rank and file this morning about opposing the extension, telling them that “taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government.” Multiple Republican senators, meanwhile, have come out in favor of the extension, and Sen. Sue Collins (R-ME) even proposed raising taxes on some wealthy Americans to pay for it.
By: Travis Waldron, Think Progress, December 1, 2011
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