“Magic Asterisks”: Buffett Rule Is Not Raising A Tax; It’s Closing Republican Tax Loopholes
The debate over the Buffett Rule is missing something important. As it stands, the fight is between Democrats who believe millionaires shouldn’t pay a lower tax rate than the middle class vs. Republicans who says no one’s taxes should go up by any amount at any time for any reason.
That’s a legitimate fight, to be sure, but there’s more to it: approving the Buffett Rule would mean closing a loophole, and in the larger context of the debate over tax policy, this makes all the difference in the world.
Let’s step back for a second. Paul Ryan’s House Republican budget plan appears to add an additional $5.4 trillion to the deficit over the next decade. Ryan insists that’s not the case — once he “clears out all the special-interest loopholes,” his numbers will start to add up.
Which loopholes? Well, it turns out that Ryan refuses to say. Maybe they’re secret loopholes; maybe they’re imaginary loopholes; but either way, he hasn’t identified any — literally, not one — loophole he’s willing to close to help pay for his own agenda. It is, as Paul Krugman put it, the “mystery meat” of the Republican plan.
“Oh, yeah?” my Republicans friends ask, “well why don’t Democrats come up with some loopholes to close?”
And therein lies the point: the Buffett Rule closes a loophole. It’s a quirk of the tax code that certain millionaires who enjoy private-equity riches pay a lower tax rate than middle-class families, and approving the Buffett Rule would not only mean establishing a degree of fairness, it would also mean scrapping this loophole.
The point is not lost on President Obama, who made this observation on Wednesday:
“I’d just point out that the Buffett Rule is something that will get us moving in the right direction towards fairness, towards economic growth. It will help us close our deficit and it’s a lot more specific than anything that the other side has proposed so far.” [emphasis added]
In other words, where Paul Ryan is vague and evasive, Obama is being direct and specific. The president is identifying actual loopholes he wants to see closed (Buffett Rule, corporate-jet loophole, tax subsidies for oil companies), which would total tens of billions of dollars in the coming decade. Meanwhile Republican leaders talk about loopholes, but choose not to back this talk up with anything substantive.
One approach represents an honest budget policy. The other, relying on magic asterisks, is a fraud.
By: Steve Benen, The Maddow Blog, April 13, 2012
“A Strategic Dilemma”: How Santorum Boxed In Romney
Rick Santorum’s departure from the presidential race could not come soon enough for Mitt Romney. In proving himself more tenacious than anyone predicted, Santorum dramatized one of Romney’s major problems, created another and forced the now-inevitable Republican nominee into a strategic dilemma.
Republicans may condemn class warfare, but their primaries turned into a class struggle. Romney performed best among voters with high incomes, and he was consistently weaker with the white working class, even in the late primaries where he put Santorum away. And Romney cannot win without rolling up very large margins among less well-off whites.
At the same time, Santorum’s strength among evangelical Christians pressured Romney to toughen his positions even as the Republican Party as a whole, at both the state and national levels, has pushed policies on contraception and abortion that have alienated many women, particularly the college-educated.
This is Romney’s other problem: Among college-educated white men, Romney had a healthy 57 percent to 39 percent lead over President Obama in the latest Washington Post/ABC News poll. But among college-educated white women, Obama led Romney by 60 percent to 40 percent. This netted to a rather astounding 38-point gender gap, compared with a net 27-point gap among all white voters. (Thanks to Peyton Craighill of The Washington Post’s polling staff for extracting these numbers, which are based on registered voters.) Overall, the poll taken before Santorum left the race showed Obama leading Romney by 51 percent to 44 percent.
Thus the box the primaries built for Romney: He must simultaneously court evangelical Christians and working-class voters who have eluded him so far and also reassure socially moderate women higher up the class ladder who, for now, are providing Obama with decisive margins. It’s not easy to do both.
Even if the most conservative Republicans who supported Santorum and Newt Gingrich largely fall into line out of antipathy to Obama, Romney still has to worry about whether they’ll be enthusiastic enough to turn out in the large numbers he’ll need. Yet if he concentrates on winning back upscale women, who now favor Obama by even larger margins than they gave him in 2008, Romney will only aggravate his enthusiasm problem on the right.
Romney’s predicament is Obama’s opportunity. The president is moving aggressively to take advantage of the class opening afforded him by the candidate of “a couple of Cadillacs,” “I like being able to fire people” and “corporations are people, my friend.” In a series of speeches in Florida the day Santorum withdrew, Obama hit repeatedly on the twin themes of fairness and opportunity. He called for a nation in which “everybody gets a fair shot, and everybody does a fair share, and everybody plays by the same set of rules,” while eviscerating Rep. Paul Ryan’s fiscal plan, which Romney supports, as a budget “that showers the wealthiest Americans with even more tax cuts.”
Most conservatives seem oblivious to the party’s working-class problem, but not all. Henry Olsen, a vice president at the American Enterprise Institute, says Republicans need to understand that the GOP’s success in the 2010 House races was built in less affluent districts at a moment when Obama’s approval rating among white working-class men was so low “that it was only a few points higher than Richard Nixon’s was at the time of his resignation.”
Olsen sees Obama’s echoes of Bill Clinton’s pledges to help those who “work hard and play by the rules” as shrewd politics aimed at rehabilitating his standing with such Americans. And in Romney, Obama faces a candidate whose “troubles in the primary electorate demonstrated his trouble in connecting with the white working class.” Romney, Olsen says, “has difficulties with his background, difficulties with his manner, some difficulties Obama shares.”
Romney isn’t losing downscale whites. The Post/ABC poll showed him leading Obama by 19 points among white voters without a college education. The problem: That’s roughly the lead John McCain had in this group in 2008, and we know who won that election. Obama, Olsen said, can lose the white working class “by a substantial margin” and still win because of his strength among African Americans, Latinos and well-educated women.
Yes, it’s still early. Renewed economic jitters in Europe could spoil a fragile U.S. recovery. But for now, Romney finds himself in a political maze with no obvious path out. He’s there partly because of his own mistakes, but he was also led to this point because of the unlikely strength of Rick Santorum’s challenge.
By: E. J. Dionne, Opinion Writer, The Washington Post, April 11, 2012
“Attack Of The Right”: Ryan Budget A Disappointment To Conservatives
The conservative group Club for Growth said Wednesday that a Republican House budget plan authored by Rep. Paul Ryan (Wis.) is a “disappointment” to fiscal conservatives that falls short of making necessary cuts to balance the nation’s budget.
The group’s president said in a statement that Ryan’s plan does not put the country on a path to chop deficits quickly enough.
Chris Chocola also complained that that the budget largely waives massive cuts that are set to go into effect in January as a consequence for the failure of Congress’s special deficit reduction “supercommittee.”
According to the Budget Control Act — the hard-fought law that raised the nation’s debt ceiling over the summer — failure of the supercommittee was to trigger about $1.2 trillion in cuts over the next decade, split between military and domestic spending.
In Ryan’s budget, the so-called sequester–deeply unpopular to Republicans because of its powerful hit to defense–would be replaced. Tackling only the first year of the cuts—about $110 billion—his budget calls for instructing Congressional committees to come up with $18 billion in trims the first year and $116 billion over five years.
“It is hard to have confidence that our long-term fiscal challenges will be met responsibly when the same Congress that passed the Budget Control Act wants to ignore it less than one year later. On balance, the Ryan Budget is a disappointment for fiscal conservatives,” Chocola said in a statement.
Ryan’s budget also seeks to eliminate deficits by 2040. The Club for Growth has called for a budget that balances within the decade. Chocola said the budget contains “several important reforms and pro-growth policies” but is not enough.
“The Club for Growth urges Republicans to support a budget that balances in the near future and complies with the Budget Control Act,” he said.
The attack from the right comes as Ryan is facing a far more vigorous outcry from Democrats—who believe this plan slashes programs for the poor and elderly even while cutting taxes for the wealthy.
They have also complained that the Ryan plan slices agency budgets by $18 billion more than a year-long cap agreed to in the debt deal—a key concession made to conservatives whom Ryan will need to get his budget plan through the House.
With Democrats unified against Ryan’s plan, the Club for Growth statement could pose problems for its passage in the House if it persuades the GOP’s restive caucus to waver in its support.
Some centrist Republicans are also anxious about Ryan’s plan—fearful it will set the House on a path to another nasty clash with the Senate just weeks before the November election.
By: Rosalind S. Helderman, The Washington Post, March 21, 2012
“Massive Tax Breaks For The Rich”: GOP Budget Plan To Reduce The Debt Actually Makes The Debt Worse
House Budget Committee Chairman Paul Ryan (R-WI) released the GOP’s new budget this morning, and in doing so, he touted it as a plan to make America’s level of debt more sustainable. “We’ve shared with Americans a specific plan of action that cuts spending, pays off the debt and gets our economy back on the path to prosperity,” Ryan said.
The problem with Ryan’s rhetoric is that his plan fails to match it. By giving massive tax breaks to corporations and the top one percent and preserving unsustainable levels of defense spending, the House GOP’s plan to reduce the debt would fail to reduce the debt. In fact, because it assumes levels of revenue that are pure fantasy under his tax proposals, the plan would actually increase the debt, according to an analysis by Center for American Progress Tax and Budget Policy Director Michael Linden:
But the House budget’s entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget’s tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.
The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama’s budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.
As Linden notes, the GOP’s “debt reduction” isn’t just based on fantasy levels of revenue — it’s based on “massive, unrealistic” spending cuts as well. Medicaid would face $1 trillion cuts in the first decade, while education and workforce training programs would get cut in half and transportation funding would be reduced by nearly 25 percent. The plan, which also ignores previous deals and increases defense spending, would also require deep cuts in other vital domestic programs.
“If you agree it’s morally wrong to ignore the most predictable crisis in U.S. history, this is your budget,” Ryan tweeted yesterday. Apparently, though, it seems Ryan and his Republican colleagues got so wrapped up in creating a budget that benefits the top one percent, they forgot to actually reduce the debt.
By: Travis Waldron, Think Progress, March 20, 2012
“Groundhog Day”: The 5 Worst Things About The House GOP’s Budget
After his last attempt at a budget went down in flames last year, House Budget Committee Chairman Paul Ryan (R-WI) unveiled the House GOP’s new budget this morning, painting it as a sensible plan to reform the nation’s tax code and reduce the debt while maintaining entitlement programs like Social Security, Medicare, and Medicaid. Yet again, however, Ryan and the GOP have the social safety net and Medicare in their sights, and yet again, they’re attempting to pass the cost of massive tax breaks for corporations and the rich off to middle and lower-income Americans.
Here are the five worst things about Ryan’s budget:
1. SENIORS WOULD PAY MORE FOR HEALTH CARE: Beginning 2023, the guaranteed Medicare benefit would be transformed into a government-financed “premium support” system. Seniors currently under the age of 55 could use their government contribution to purchase insurance from an exchange of private plans or traditional fee-for-service Medicare. But the budget does not take sufficient precautions to prevent insurers from cherry-picking the the healthiest beneficiaries from traditional Medicare and leaving sicker applicants to the government. As a result, traditional Medicare costs could skyrocket, forcing even more seniors out of the government program. The budget also adopts a per capita cost cap of GDP growth plus 0.5 percent, without specifying how it would enforce it. This makes it likely that the cap would limit the government contribution provided to beneficiaries and since the proposed growth rate is much slower than the projected growth in health care costs, CBO estimates that new beneficiaries could pay up to $1,200 more by 2030 and more than $5,900 more by 2050. Finally, the budget would also raise Medicare’s age of eligibility to 67. Some seniors who would no longer be eligible for Medicare would pick up employer coverage—but they would pay more in premiums and cost sharing. And since the budget would scale back or eliminate other coverage options, hundreds of thousands of seniors would become uninsured.
2. ELDERLY AND DISABLED WOULD LOSE MEDICAID COVERAGE: The budget would eliminate the exiting matching-grant financing structure of Medicaid and would instead give each state a pre-determined block grant that does not keep up with actual health care spending. This would shift some of the burden of Medicaid’s growing costs to the states, forcing them to — in the words of the CBO — make cutbacks that “involve reduced eligibility for Medicaid and CHIP, coverage of fewer services, lower payments to providers, or increased cost sharing by beneficiaries—all of which would reduce access to care.” The block grants would reduce federal Medicaid spending by $810 billion over 10 years, decreasing federal Medicaid spending by more than 35 percent over the decade. As a result, states could reduce enrollment by more than 14 million people, or almost 20 percent—even if they are were able to slow the growth in health care costs substantially.
3. THIRTY MILLION AMERICANS WOULD LOSE HEALTH COVERAGE: The budget repeals the Affordable Care Act’s requirement to purchase health insurance coverage, the establishment of health insurance exchanges and the provision of subsidies for lower-income Americans, the expansion of the Medicaid program, tax credits for small businesses that provide insurance coverage. As a result, more than 30 million Americans would lose coverage and the budget would eliminate the new law’s consumer protections, which have already benefited tens of millions of Americans.
4. CORPORATIONS AND THE RICH WOULD GET A $3 TRILLION TAX CUT: By repealing the Alternative Minimum Tax and the investment taxes in the Affordable Care Act and lowering the top income tax rate to 25 percent, the Ryan budget provides the wealthiest Americans with $2 trillion in tax breaks. By lowering the top corporate tax rate and allowing corporations to return profits made overseas to the United States at no cost, he gives corporations more than $1 trillion in tax breaks. Ryan insists his plan will be revenue neutral — he just won’t say how. The CBO’s scoring of the plan, meanwhile, is based on Ryan’s own assertions that the plan would maintain or increase revenue.
5. DEFENSE BUDGET WOULD GET A BOOST, WHILE THE SAFETY NET IS CUT: The Ryan budget protects defense spending from automatic cuts agreed to in last year’s debt deal, then boosts defense spending to $554 billion in 2013 — $8 billion more than agreed upon in the deal. At the same time, it asks six Congressional committees to find $261 billion in cuts. That includes $33.2 billion from the Agriculture Committee, meaning food stamps and other social safety net programs are likely to face cuts, all while the Pentagon remains untouched.
By: Igor Volsky and Travis Waldron, Think Progress, March 20, 2012
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