so about those tax cuts
Before I go over the latest in the game of chicken on the tax cuts, I want to point out this chart from Who graduates, who votes and who’s unemployed - in one graph (h/t Andrew Sullivan, Mother Jones):
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The part that fascinates me is that it turns out that even though high school graduates outnumber college graduates in this country, three times as many college graduates voted. No wonder there is such a concerted attack on our educational systems: not just K-12 but also public universities, raising the cost of a college education to absurd proportions. If this can be accomplished, the rich & educated can rest easy and completely control the country via “voting” - in this case the tyranny of the minority. There’s also that very interesting bit about the unemployment rate - much easier to ignore this issue if it isn’t affecting you as directly.
So anyway, it turns out that expiring the Bush tax cuts, which have lead directly to the present deficit, has been a more complicated thing than a liberal would have thought. Everybody knows the tax cuts have triggered the present crisis: it’s the Republicans, or more properly the anti-Administration (hyperrich) folks who are happy to ignore this and who keep making up flat out lies to obscure this. (Lies, btw, which are easier to swallow when you are uneducated and/or unemployed… a pretty cynical strategy, eh?):
One thing that I admit surprises me about the above chart is that the wars are relatively small in cost. (It helps that they seem to be more or less fixed instead of continually expanding.) Thing is, I remember that during the Bush-era “heights” of the Iraq war, we were spending billions a month. I guess this gives some perspective as to the size of this thing…but it’s pretty amazing that taxes on the hyperrich are that large a piece of this picture. Think about the money this involves. And that kind of money is how both Republicans and Democratics are being bought out at the price of the U.S. public. Anyway, these deficits are, of course, are projected to cause a hell of a lot more trouble down the road, which is why everyone’s excited about them, even if the solutions proposed are different. (And I mean different: one set proposes to actually reduce the deficit; other proposals will increase it.)
So then, with all that, seems like there’s a really easy solution, right? In fact, a solution that many Democratics ran on in their elections. Including Obama. It’s a very popular one: let the Bush era tax cuts expire. After all, taxes are at the lowest level they have been in 60 years, it’s not like we’re popping them back to, say 1953 rates. And to sweeten the deal, to allow for the fact that we’re as close to a Depression economy as we’ve ever been since the ’30′s, the Dems floated a compromise: keep the tax cuts for those making less than $250K per year. Given that 98.5% of us fit that criteria, it should have been a slam dunk. (Following chart from Stephan Culp)
But OH the HOWLING! The Republicans can NOT tolerate the SLIGHTEST HINT OF A TAX CUT! In fact, they decided to hold the government hostage: Entire Senate Republican Caucus Commits To Filibustering Anything Prior To Budget, Tax Cuts. The money to cover the deficit MUST be taken out of any kind of Federal spending, whether infrastructure, social programs, or, really, any kind of spending the current Administration is in favor of. Even Obama recognizes this:
Click to viewHowever, no one was sure what sort of “compromise” would be reached. After all, the last two years worth of “compromises” haven’t got a particularly good record. Digby covered a lot of the problematics in the deal with her usual imitable brilliance in Let’s Make A Deal:
So why [capitulate to the Republicans]? I think it’s a basic belief in “markets” as the savior of all economic problems and a broader fear of further angering the business community and the financial sector: they hear the threats loud and clear - “unless you give us our tax cuts, the country gets it.” The corporations and Wall Street are already sitting on a boatload of cash which they have no need to distribute as long as they are making big profits anyway. They simply do not believe they should have to pay higher taxes so they are holding a metaphorical gun to the head of the government and daring it to thwart them.
I’m not saying this to defend the administration. Indeed, I think capitulating to this is about as uncreative and lacking in seriousness as possible that I believe they are either clueless or cowardly for not doing the right thing on this. After all, if what really matters to the administration is that the economy recovers, then this is nothing more than a faith based premature capitulation to the business community. A business community which is not going to reward them even if they install a whole slew of Wall Street insiders like Roger Altman in the White House.
And then there were some signs of revolt: Obama Faces Liberal Revolt over Tax Cut Deal.
The battle over extending the Bush-era tax cuts has emerged as a defining moment for liberals disenchanted with President Obama, who they increasingly see as unwilling or unable to back up his campaign promises.
Mr. Obama vowed as a candidate to extend the Bush-era tax cuts for incomes below $250,000 for a couple or $200,000 for an individual - but let the cuts, which lapse at the end of the year, expire for incomes above those thresholds.
Surprisingly, the Dems and Reps hammered out something of an actual deal. The tax cuts stay (with an extended expiration date, at least) but a number of other things to help with the economy and job market have been negotiated. The basics of the deal can be found here
The scope of the agreement, announced by the White House late Monday, was far broader than lawmakers in either party had been expecting. The deal would extend a college tuition tax credit and other breaks for middle-class families that were due to expire New Year’s Eve. And it would revive the inheritance tax after a year-long lapse, imposing a 35 percent rate on estates worth more than $5 million for individuals and $10 million for couples.
There is guarded praise for the compromise:
The deal has something to annoy everyone - but also something for everyone. You’re a Democrat? The tax cuts for the rich are extended, and the estate tax deal exempts inheritances up to $5 million while cutting the rate heirs pay to 35 percent. But that’s why the Republicans like it. You’re a Republican? The tax cuts are only extended for two years, and they’re paired with 13 months of unemployment insurance, an extension of a variety of tax credits passed in the stimulus, and a new payroll tax cut - all of them deficit-financed. But that’s why the Democrats like it. You’re a deficit hawk? The deal adds more than $700 billion to the deficit. And, let’s be honest, you got nothing in return.
But reaction is mixed. The End of Social Security has a much more dire view:
I find it unfathomable that a more conservative Congress, in two years, in an election year, will increase the payroll tax by 2 percent on the very first dollar, and every other dollar up to the cap, earned by virtually every single worker in the country. Consequently, I think we have to assume that the payroll tax holiday will be extended beyond the two years the president is proposing and quite likely could become permanent.
That means that the federal government will have to continue to transfer $120 billion to the Social Security trust funds each and every year even as it has to transfer more and more interest payments as the trust funds continue to grow and as interest rates return to more normal levels.
The article goes on to describe how this leads step-by-step to unwinding Social Security. Much of the left base is pretty unhappy, too - and they’re calling in on the phone lines. Politicians might ignore emails and petitions, but letters and phone calls are a different kettle of fish: Obama’s Chamberlain impersonation fuels new progressive uprising. Plus, House Democrats signaled Monday they will fight the tax-cut deal President Obama announced a day earlier with Republicans. (Pelosi for the win.)
The Republicans may not hold to their end of this deal, either: Rep. Michele Bachmann (R-Minn.) says the “compromise” is that Republicans will only extend tax cuts for two years rather than permanently. Granted, this is the batshit crazy, almost even by Teabagger standards, element of the Republican party, but that means she can say outloud what other Republicans will not.
And actually another victim of this may be the repeal of DADT, if the lawmakers are all mired in this controversy until the end of the month. We’ll have to see…
Whew, this got a lot longer than I thought it would. If you made it this far, thanks for reading!
Originally published at What's that you said?. You can comment here or there.