Why The Republicans Want To Raise Your Taxes
House Majority Leader Eric Cantor’s recent assertion that any disaster relief for Hurricane Irene would have to be offset with spending cuts elsewhere sparked a great deal of outrage, especially in the progressive sectors of the blogosphere.
On one level Cantor’s position is no surprise. Paying for emergency disaster relief used to be standard operating procedure in Washington, because it would be inconceivable that the federal government would force the states and individuals to shoulder the burden alone. But with the new GOP House majority, Washington has new rules. Now when there’s a policy objective that enjoys bipartisan support—avoiding a government shutdown or default, for example, or providing disaster relief—the GOP will use it as a hostage to extract their partisan policy objectives.
More broadly, people look askance at Cantor and the GOP for previously supporting (but not paying for) disaster relief, a pair of foreign wars, an expansion of Medicare, and the Bush tax cuts, and then finding their inner fiscal hawks when a Democrat entered the White House. (Robert’s 10th Rule of Politics: A party’s dedication to fiscal responsibility is inversely proportional to its political power.)
Of course the GOP still wants to make the Bush tax cuts permanent, at a cost of $4 trillion over 10 years. If pushing budget-busting tax cuts while carrying the banner of fiscal austerity on issues like disaster relief seems like cognitive dissonance, it is. But that’s today’s GOP.
Take taxes. Last month’s Iowa GOP presidential debate provided a defining moment for the party. The assembled would-be nominees were asked if they would accept tax increases if there were $10 in spending cuts for every dollar of new revenues. To a person, they refused. This came days after the conclusion of the debt ceiling crisis, which had been deliberately manufactured by House Republicans, and which had turned on their flat refusal to accept any tax increase. And it came after months of pious declarations that one never, ever, ever raises taxes on a soft economy (the experiences of Presidents Reagan in 1982 and Clinton in 1993 apparently notwithstanding).
And yet the GOP now wants to raise taxes, both in the immediate term and as a broader matter of principle.
They oppose, for example, President Obama’s call to prolong the payroll tax cut enacted last year when the (temporary) Bush tax cuts were extended. Ordinarily, American workers pay 6.2 percent of their wages in a tax that funds Social Security, with their employers matching the amount. For 2011, that rate was cut to 4.2 percent. The logic is simple: The poor and working class are most likely to pump extra disposable income back into the economy, making the tax cut a more efficient stimulant than, say, rate cuts for the wealthy. It’s as broad-based a tax cut as can be imagined, as it benefits virtually everyone who works, even those who don’t earn enough to pay income taxes. So of course Republicans oppose its extension, preferring to allow a broad-based tax hike to go into effect in the new year. “Not all tax relief is created equal,” Rep. Jeb Hensarling, the House’s fourth-ranking Republican, told the Associated Press, while others cited fiscal concerns. Extending the tax holiday, which cost $67.2 billion this year and a total of $111.7 billion over 10 years, would be fiscally irresponsible while extending the Bush tax cuts is sound policy? Not all tax cuts are created equal indeed.
And this isn’t an isolated instance of the GOP breaking from its usual anti-tax orthodoxy. The truth is that many leading Republicans yearn to raise taxes on working-class and poor Americans.
“We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax,” Texas Gov. Rick Perry intoned last month when announcing for president. What to do? Here’s Minnesota Rep. Michele Bachmann: “We need to broaden the base so that everybody pays something, even if it’s a dollar.” More recently, former Utah Gov. Jon Huntsman approvingly cited Florida Sen. Marco Rubio as saying we don’t have enough people paying taxes in this country. The GOP as stalwart fighters against taxes? No more. That more Americans should pay taxes is, according to the Wall Street Journal, “the new Republican orthodoxy.”
And who is it Republicans would like to raise taxes upon? According to the Tax Policy Center, 46 percent of U.S. households won’t pay income taxes this year. The elderly (who are mostly retired, have a larger deduction, and often don’t have their Social Security benefits taxed) make up a plurality of 44 percent of the nonpayers, while people whose income tax liability is wiped out by the child tax credit, child and dependent care tax credit, and the earned income tax credit—all of which were enacted with Republican support—make up an additional 30 percent of the group. (The rest of the nonpayers get a handful of smaller tax credits, including education credits, itemized deductions, and even capital gains benefits.)
Keep in mind that these people not having any income tax liability does not mean that they don’t pay taxes (as is often implied in GOP talking points). They pay state and local taxes, not to mention federal payroll taxes, which of course the GOP wants to see rise.
So Republicans worry about the wealthy paying too much in taxes while fretting about freeloading lower classes. They talk a big deficit game but are more concerned about cutting government spending, specifically on programs that benefit the nonrich. Perhaps this isn’t cognitive dissonance but the logical evolution of the modern GOP into an Ayn Rand-ian coalition explicitly focused on freeing a wealthy elite from the parasitical depredations of everyone else.
By: Robert Schlesinger, U. S. News and World Report, September 7, 2011
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Eric Cantor Is A Hypocrite On Disaster Relief Spending
Buried in this Saturday’s Washington Post Metro section was a short piece about the request from conservative Virginia Republican Gov. Robert McDonnell for $39 million in federal disaster relief for his state.
This was an initial request for 22 localities in Virginia hard hit by Hurricane Irene. According to the article, other local governments can request more aid and, in addition, McDonnell also asked for Hazard Mitigation Assistance for all Virginia localities.
This comes from a governor who, along with his Republican congressional counterpart Eric Cantor, rails against Washington and “government spending.”
What makes this quite interesting is the position taken by Cantor last week on Federal Emergency Management funding for disasters. We have had a record 66 natural disasters this year and Hurricane Irene was one of the 10 most costly ever.
Cantor, whose district was hit hard by the earthquake and the hurricane, has said that any spending for FEMA should be tied to cuts elsewhere, dollar for dollar, “Just like any family would operate when it’s struck with disaster,” says Cantor. Funny, that is not how he felt back in 2004 when he appealed for money for his district after another hurricane and voted against the amendment by Republican Rep. Jeb Hensarling of Texas to do require offsets.
Did Eric Cantor ask for dollar for dollar cuts to pay for the wars in Iraq and Afghanistan? Did he ask for dollar for dollar cuts to pay for the Bush tax cuts for the millionaires and billionaires? Did he ask for dollar for dollar cuts to pay for increases to homeland security? How about border agents?
Another very conservative congressman from Virginia, Leonard Lance, totally disagrees with Cantor. Help is needed now. Gov. Chris Christie of New Jersey, no friend of government spending, talks as though Eric Cantor has lost his marbles: “Our people are suffering now, and they need support now. And they [Congress] can all go down there and get back to work and figure out budget cuts later.”
It is time for a host of protesters to go to Cantor’s district office and call him on his absurdity. Does he believe we should help the victims of these disasters? Is that what government has done for over 200 years? Does he just want to play politics and delay help? Does he represent the people of Virginia? Does he care about the others who have been the victims of tornadoes and floods across this country?
It reminds me of a Senate debate where a certain Republican from Idaho was complaining about a bill that included funding for rat control in New York City.
“In Idaho, we take care of our own rats,” to which the New York senator replied, “In New York, we take care of our own forest fires.”
That about sums it up.
By: Peter Fenn, U. S. News and World Report, September 6, 2011
GOP ‘Jobs Agenda’ Revives Ineffective Business Tax Giveaway
This week, House Majority Leader Eric Cantor (R-VA) released a memo outlining the House GOP’s supposed “jobs agenda.” In addition to being an assault on organized labor and recommending the elimination of environmental regulations that save tens of thousands of lives every year, the document proposes reviving some of the GOP’s favorite tax cuts, including the so-called “20% Small Business Tax Deduction.”
This particular idea made an appearance in both an “economic plan” that Cantor and House Speaker John Boehner (R-OH) presented to President Obama in 2009 and the GOP’s 2010 Pledge to America. The policy would allow businesses to deduct 20 percent of their income from their taxes, and in Cantor’s words, “immediately free up funds for small business people to retain and hire new employees, and reinvest in and grow their businesses.”
However, as Citizens for Tax Justice pointed out in 2009, there is little reason to think this tax break would be anything but a boondoggle:
The Republican plan proposes to allow a “small business” to take a tax deduction of 20 percent of its pretax income, whether the small business is a corporation or a sole proprietor. The plan defines a “small business” as one with 500 or fewer employees. It makes no distinction based on income. A “small business” making $100 million would get to deduct $20 million of its income right off the top. (Apparently, a company with slightly more than 500 employees would have an incentive to lay off staff to qualify for the tax break!) […]
A business tax cut is just about the least effective stimulus measure Congress could possibly enact. The tax cuts put more money in the hands of business. But there is very little correlation between a corporation’s cash position and its plans for investment—whether expanding capacity or hiring new employees. Businesses invest in expansion when they believe there will be an increase in the demand for the goods and services they provide. If they don’t anticipate a sales increase, they won’t expand no matter how many tax breaks the federal government gives them.
And the Center for American Progress’ Christian Weller noted in 2010 that, while the credit is restricted to business with fewer than 500 employees, it’s still “an ‘upside-down’ tax break that gives the largest benefits to those who already have the highest incomes” because the amount of the deduction is contingent on which tax bracket a business files in (the higher the tax bracket, the more the deduction is worth):
A deduction reduces the taxable income and thus the taxes that somebody has to pay. A business owner with lots of business and other income will thus get a government subsidy of 35 cents for each dollar in deduction, while a small business owner in the 15 percent tax bracket will get 15 cents for each dollar in deductions…Larger businesses could easily use this windfall to outcompete smaller businesses. A larger business owner with a 35 percent marginal tax rate will get a benefit that is 133 percent greater than the benefit that a smaller business owner with a 15 percent marginal tax rate gets for each dollar in tax deduction.
But for the GOP, this idea is so good that it’s worth bringing up over and over again.
By: Pat Garofalo, ThinkProgress, September 3, 2011
Austerity Versus Salvation: What Price Life?
So the big, bad storm huffed and puffed and didn’t blow all the houses in.
Reversing Katrina, on the sixth anniversary of that shameful episode in American history, the response to Irene was more powerful than Irene.
And that made some solipsistic Gothamites who missed their subways and restaurants grouchy. There is no greater abuse to New Yorkers than inconvenience.
Once the storm became “Apocalypse Not,” as The New York Post called it, there were those who accused Mayor Michael Bloomberg and Gov. Chris Christie of New Jersey of overreacting to make up for their infamous underreactions to last year’s Christmas blizzard, when Hizzoner was baking in Bermuda and the Guv was playing at Disney World in Florida with his family.
In a Wall Street Journal column, Bret Stephens suggested “a new edition of the Three Little Pigs, this one for the CYA age.”
Ordered to evacuate from his Manhattan home near the Hudson River, Stephens took his family to his parents’ wood-framed house in Connecticut, where a 50-foot elm crashed in the yard. So he went hard on the Chicken Little mayor. “What’s the wisdom of the ages,” Stephens asked, “when a mayor wants to erase the stain of mishandling last winter’s snowstorms by forcibly relocating people from his zone of responsibility to places that are somebody else’s zone of responsibility?”
Should those whose job it is to prepare for the worst be punished because the worst didn’t happen?
What determines your judgment of politicians’ reaction is what happens to you. Those washed out from North Carolina to New Jersey to Vermont don’t think government overreacted. As Mel Brooks once said, “Tragedy is when I cut my finger. Comedy is when you walk into an open sewer and die.”
Asked at a Saturday hurricane briefing about the response in relation to the debate about the role of government, Christie made it clear that saving lives was the most important thing. The Republican said he didn’t think that Democrats and Republicans were debating this: “Protecting the safety of our citizens is one of the bedrock roles of government.”
Not so bedrock for some of the Flintstones types in Washington who are now hotly debating austerity versus salvation. The impressively hands-on performances of Christie, Bloomberg and Gov. Andrew Cuomo of New York were not enough to make Tea Partiers, Republican presidential candidate Ron Paul and Republican House Majority Leader Eric Cantor root for big government against rampaging nature.
Paul, a libertarian whose scorn of government is so great that he doesn’t even want it to coordinate in natural disasters, insisted that FEMA, which he calls “a giant contributor to deficit financing,” should be shut down.
Though his state of Virginia was the epicenter of an earthquake before being hit by Irene, Cantor has insisted that additional money for cash-strapped FEMA must be offset by spending cuts, echoing his remarks in May that money sent to traumatized tornado victims in Joplin, Mo., would mean cuts somewhere else.
The callous comments about disaster relief in recent days by Cantor, Paul and, believe it or not, the disgraced former FEMA Chief Michael “Heck of a job, Brownie” Brown infuriated Bernie Sanders, the independent Vermont senator touring his inundated state. He told Carl Hulse of The Times that coming together to help on disasters “is what being a nation is about.”
In a briefing at the White House Monday, FEMA Director Craig Fugate said that the lesson of Katrina is for the federal government to “get things going earlier” and not wait until an overwhelmed state “says we’re going to need help.”
Too bad that didn’t occur to W. in 2005. He met with Gov. Kathleen Blanco of Louisiana and New Orleans Mayor Ray Nagin on Air Force One and correctly assessed that they were not up to the job but then retreated behind clinical states’ rights arguments as a great American city drowned.
In his new memoir, Dick Cheney faults Blanco for dithering and not requesting that the president federalize the response to Katrina. It’s a variation on Rummy shrugging that “You go to war with the army you have.”
Always the hard-liner, Cheney notes: “President Bush has written that he should have sent in U.S. troops earlier, which may be true, but which to my mind lets state authorities off the hook too easily.” Why save lives if you can slap bumbling Democrats around? Proving once more that he is truly delusional, Vice praised President Bush in the wake of Katrina for “reaching out to people who needed to know that their government cared about them.”
The awful hypocrisy is this: As we saw when they spent trillions trying to impose democracy on Iraq and Afghanistan, W. and Cheney believe in big government, in a strong, centralized executive power. But with Katrina, they chose not to use it.
By: Maureen Dowd, Op-Ed Columnist, The New York Times, August 30, 2011
Morally Inept: The New GOP Resentment Of The Poor
In a decade of frenzied tax-cutting for the rich, the Republican Party just happened to lower tax rates for the poor, as well. Now several of the party’s most prominent presidential candidates and lawmakers want to correct that oversight and raise taxes on the poor and the working class, while protecting the rich, of course.
These Republican leaders, who think nothing of widening tax loopholes for corporations and multimillion-dollar estates, are offended by the idea that people making less than $40,000 might benefit from the progressive tax code. They are infuriated by the earned income tax credit (the pride of Ronald Reagan), which has become the biggest and most effective antipoverty program by giving working families thousands of dollars a year in tax refunds. They scoff at continuing President Obama’s payroll tax cut, which is tilted toward low- and middle-income workers and expires in December.
Until fairly recently, Republicans, at least, have been fairly consistent in their position that tax cuts should benefit everyone. Though the Bush tax cuts were primarily for the rich, they did lower rates for almost all taxpayers, providing a veneer of egalitarianism. Then the recession pushed down incomes severely, many below the minimum income tax level, and the stimulus act lowered that level further with new tax cuts. The number of families not paying income tax has risen from about 30 percent before the recession to about half, and, suddenly, Republicans have a new tool to stoke class resentment.
Representative Michele Bachmann noted recently that 47 percent of Americans do not pay federal income tax; all of them, she said, should pay something because they benefit from parks, roads and national security. (Interesting that she acknowledged government has a purpose.) Gov. Rick Perry, in the announcement of his candidacy, said he was dismayed at the “injustice” that nearly half of Americans do not pay income tax. Jon Huntsman Jr., up to now the most reasonable in the Republican presidential field, said not enough Americans pay tax.
Representative Eric Cantor, the House majority leader, and several senators have made similar arguments, variations of the idea expressed earlier by Senator Dan Coats of Indiana that “everyone needs to have some skin in the game.”
This is factually wrong, economically wrong and morally wrong. First, the facts: a vast majority of Americans have skin in the tax game. Even if they earn too little to qualify for the income tax, they pay payroll taxes (which Republicans want to raise), gasoline excise taxes and state and local taxes. Only 14 percent of households pay neither income nor payroll taxes, according to the Tax Policy Center at the Brookings Institution. The poorest fifth paid an average of 16.3 percent of income in taxes in 2010.
Economically, reducing the earned income tax credit and the child tax credit — which would be required if everyone paid income taxes — makes no sense at a time of high unemployment. The credits, which only go to working people, have always been a strong incentive to work, as even some conservative economists say, and have increased the labor force while reducing the welfare rolls.
The moral argument would have been obvious before this polarized year. Nearly 90 percent of the families that paid no income tax make less than $40,000, most much less. The real problem is that so many Americans are struggling on such a small income, not whether they pay taxes. The two tax credits lifted 7.2 million people out of poverty in 2009, including four million children. At a time when high-income households are paying their lowest share of federal taxes in decades, when corporations frequently avoid paying any tax, it is clear who should bear a larger burden and who should not.
By: Editorial, The New York Times, August 30, 2011
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