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To Heck With It? Rep. Heck Tries To Explain The Inexplicable

As if Nevada Representative Heck (R-NV3) didn’t make sense on the Benghazi Bluff, he’s released a little video of some 2.07 minutes to offer up his explanation of his “position” on the Fiscal Cliff/Austerity Bomb/Bunny Slope GOP poutrage du jour.

Representative Heck seems to have missed the part of the election in which the President won.  He does appear to cling to the message that the electorate wants the Congress to cooperate and negotiate with the Administration on how to address deficit reduction.   Let’s go back to the beginning.

There would be NO Fiscal Cliff, Austerity Bomb, or Bunny Slope had the Congressional Republicans not decided to make the debt ceiling such a humongous BFD, as the Vice President might say, in 2011.   Here’s the core of the problem:

“* 2010. Obama signs healthcare overhaul into law. Obama creates Simpson-Bowles deficit reduction panel. Its plan for drastic fiscal reform is largely ignored. Led by Tea Party conservatives, Republicans win control of House of Representatives in midterm elections. Obama agrees to extend Bush tax cuts for two years. Deficit shrinks to $1.3 trillion. (emphasis added)

* 2011. Treasury Department request for increase in U.S. debt ceiling becomes focus of fight in Congress. Republicans, Democrats settle dispute by forming “super committee” to examine fiscal reform. Debt ceiling raised. U.S. credit rating downgraded. Super committee collapses in discord. Deep, mandatory budget cuts triggered for 2013. Stock market makes choppy advance. Deficit estimated at $1.6 trillion.” [Reuters/Yahoo]

One might think a shrinking deficit, followed by economic recovery weak enough to create a bulge in 2011, would be sufficient to take some of the wind from the Free Marketeer Frigate sails, but since “Tax and Spend Democrats” have been the target of choice for Republicans since the New Deal, the GOP/Tea Party can’t quite manage to free itself from the bonds of its traditional narrative long enough to make sense in a reality based universe.

Here’s the reality:

Slowest Spending in Decades

Yes, that’s right — St. Ronald de Reagan’s terms showed annualized federal spending growth of 8.7% and 4.9%.  George W. Bush’s administrations saw annualized federal spending growth of 7.3% and 8.1%.  Even if we attach the 2009 stimulus package to the Obama Administration, his first term only saw annualized spending growth of 1.4%.  [HuffPo] [WSJ/Marketwatch]

So, terms like “out of control spending” and similar hyperbole from the right wing of the right wing party, become a fictional narrative rather than an accurate description of our current federal fiscal issues.   Representative Heck seems to prefer the comforting fiction of campaign rhetoric to current economic realities.

But wait, there’s more!  Representative Heck is worried about our fragile economic recovery… “We should not be raising anyone’s tax rates.”  This is boilerplate.  If the economy is booming, by GOP lights we can’t raise taxes because this would impinge on our prosperity; and, if the economy is fragile we can’t raise any taxes then either.  In short, we can never ever never raise anyone’s taxes even if we have to pay for two wars and keep the basic government services afloat during a recession.

Thirty seconds into Rep. Heck’s presentation he notes the House has passed a bill that would continue the Bush Tax Cuts of 2001 and 2003 for another year so we can “work on a permanent solution.”   Yes, that would certainly make the top 1% happy little campers.  This is also known as kicking the can down the road.  Anyone notice the conflict here?  On one hand Representative Heck is telling us that the federal deficit is a horrible no good thing which MUST be addressed — while telling all who will click on his little video that it’s perfectly all right to take yet another year to deal with it.

There’s more boilerplate to come, “the tax increases,” by which he means rate increases will cost 700,000 jobs.  In this instance he’s parroting Speaker Boehner, who in turn is mashing up a study by Ernst & Young:

“Boehner repeatedly cited an Ernst & Young analysis to claim that raising taxes on upper-income earners would “destroy nearly 700,000 jobs in our country.” But that analysis assumes revenue from the taxes would be used “to finance a higher level of government spending,” even though Obama would use the added revenue to reduce the deficit. The analysis also takes an extremely long view: Only “two-third to three-quarters of the long-run effect” is expected to occur within a decade.”  [Politifact]

Thus, even if we take the Ernst & Young study at face value, the effects are far less dramatic than Representative Heck’s intonation.   Those who looked into the Chamber of Commerce sponsored study found the assumptions flawed: “It is telling that when the additional tax revenues are used for across the board tax cuts, then the negative GDP impact is largely washed out and the employment impact is positive,” Zandi says.”  (Moody’s) [TPM]  However, removing the assumptions from the study wouldn’t achieve the Chamber of Commerce’s political interests, nor the interests of the Wall Street traders who are delivering Republican marching orders.

So, no one should be surprised when Rep. Heck parrots another line, this time from the Romney Campaign that we can fix all our troubles with “pro-growth tax reform which eliminates loopholes and deductions…”

OK, which ones?  Let’s look at the deductions first.   The most common tax deduction is on home mortgage interest.  In the reality based portion of the United States of America about 70% of the tax benefit from home mortgage interest deductions goes to taxpayers earning less than $200,000 per year. [NAHB]  Further, “Households with incomes between $40,000 and $75,000 receive, on average, $523 from the mortgage interest deduction. Households with incomes above $250,000 receive $5,459, or more than 10 times as much.”  [AProg] [Original Wharton Study pdf]

The second most common tax deduction is for charitable contributions.  Needless to say, some eleemosynary institutions are loath to see caps on this kind of expenditure.  However, the deductions nearer and dearer to people’s hearts are the deductions for state, local, and real estate taxes.  “You can deduct state and local income taxes paid during the year with one important exception: You cannot deduct state and local income taxes you pay on income that is exempt from federal income tax, unless the exempt income is interest income.” [Daily Finance]  And, “You can claim a deduction for real estate taxes on any state, local or foreign taxes on real property so long as they are based on the assessed value of the real property.” [Daily Finance]

Finally, the last on the list of most commonly itemized deductions are for medical expenses.  “You can deduct expenses for the diagnosis, cure, mitigation, treatment or prevention of disease. This generally includes the costs of physicians, surgeons, dentists and other medical practitioners as well as medical equipment, supplies and diagnostic devices prescribed by a physician. Deductible medical expenses also include the cost of health care insurance premiums and the costs of getting to and from your appointments.” [Daily Finance]

So, if we cap all itemized deductions at some contrived number like the 2% Solution, what happens?   We get a big middle class tax hike, illustrated below:

Tax Expenditure Cap

If we look specifically at what the Republicans were offering in the last presidential election another reality comes to the fore — the ARITHMETIC doesn’t add up:

“According to the Tax Policy Center, “the Romney plan would lower federal tax liability by about $900 billion in calendar year 2015 compared with current law, roughly a 24 percent cut in total projected revenue.”

So for Romney’s tax plan to be revenue neutral, as he has pledged, he would need to close tax breaks to the tune of $900 billion in 2015. That is not going to happen. Every tax break together costs about $1.1 trillion annually according to the Congressional Research Service — so Congress would need to make a nearly complete sweep to get the math right under Romney’s plan, a politically unrealistic outcome.” [HuffPo]

If we conclude that the deductions aren’t going to make the numbers, then what about those “loopholes?”

No one’s given a precise answer to this question — and we may not get one.  One insightful article may have grasp the key point, “Tax loopholes have become the modern equivalent of wasteful spending–a generic and vastly overestimated pool of money politicians can cite as offsets for their expensive policies.” [USNWR]   When some members of Congress have been pressed for details the minutiae makes its appearance — close the deduction for luxury skyboxes in athletic arenas, close the deductions for rum manufacturers and racetracks, eliminate deductions for second homes… [HuffPo]

While it might be nice to eliminate some of the special interest deductions in an overhaul of the tax code, (1) it shouldn’t take a year to find them — most of them are well known to those who make the tax code their life’s work, and (2) closing them won’t provide nearly enough revenue — unless we start talking about The Big Five Deductions, and the attendant tax hike on the middle class.

We’re only a bit over a minute into Representative Heck’s video when he observes the horrible state of affairs we must face if the Pentagon budget faces the Sequester Monster… but that’s a post for another day.

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Filed under Economy, Federal budget, Heck, tax revenue, Taxation

Six Talking Points about Fiscal Cliffs and Austerity Bombs

Senate Majority Leader Harry Reid (D-NV) has a message for the middle class this morning:

“Nevadans and Americans across the country agree that we can strengthen the middle class by adopting a balanced fiscal policy that requires millionaires and billionaires to pay a little more. In July, the Senate passed a bill to cut taxes for the 98% of Americans and 97% of small businesses making less than $250,000. House Republicans should stop trying to protect the wealthiest Americans from contributing their fair share and pass this bill immediately. Middle class Americans will have more opportunities to succeed when we level the playing field and make tax policy fairer.”  Senator Harry Reid (D-NV) 11/19/12″  (emphasis added)

In order to effectively expound on this message it is necessary to plant oneself firmly in the Reality Based World, and to dismiss some common misconceptions being promoted by the plutocrats and their GOP allies.

#1.  When the GOP says “your taxes will be raised” they are not talking to 98% of the American public who earn less than $250,000 in adjusted gross income annually.  The Obama Administration’s proposal is to allow the Bush Tax cuts to expire on earnings above $250,000; and to KEEP the Bush era tax rates in place for those individuals earning less than $250,000 in adjusted gross income annually.

#2. When the GOP says taxes will increase on small businesses, they are including those 3% of “small businesses” which are lobby shops, major law firms, large hedge funds, etc.  They are NOT speaking of the 97% of American small businesses which are small partnerships, single proprietorships, or small corporations which constitute the backbone of the American economy.

#3. Social Security and Medicare are called “entitlements” because they are earned benefits, which individuals have paid for and therefore are entitlements. These programs are not the problem, they are simply the target of choice from the Republican leadership which wants to cut Social Security and privatize Medicare.   These programs have NO place in budget negotiations concerning the reduction of the federal debt.

#4.  The legislation to which Senator Reid refers is S. 3412.  The terms of which can be generally summarized as:

“The Senate bill (S. 3412), passed on July 25, 2012, would extend current tax rates for lower- and middle-income persons, would increase tax rates on higher-income persons, would extend for one year (through 2013) certain tax provisions that expire at the end of 2012, and would patch the alternative minimum tax for one year only (2012).” [source]

#5.  “Harry and Louise” style ads from the Edison Electrical Institute (DefendTheDividend) notwithstanding,  S. 3412 and the Obama Administration proposals are  NOT an attack on retirement savings.  Remember the threshold levels:  “Individuals with incomes above these threshold levels, would have some of their itemized deductions and personal exemptions limited by phase-outs, would have a 20% rate on dividends and long-term gains, and would face tax rates of 33%, 36% and 39.6%”  [source]  The current rate for investors is 15%.

Who would  be affected by the Obama Administration’s tax proposals on capital gains?  Information from the Tax Policy Center is helpful.

Things to note — there are NO changes for those individuals in the bottom four income quintiles.  Only those individuals who are in the TOP income brackets (the top quintile, especially those in the top 1% or the top 0.1%) would be affected by the proposed changes in tax treatment of dividends.

#6.  There is NO correlation between low tax rates and economic growth. The non-partisan Congressional Research Service came to this conclusion after studying data from the last 65 years.

“The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.”  [CRS pdf]

In short, the only economic feature impacted by a reduction in tax rates is income inequality.   Nothing says “Support The Plutocrats and Financialists” better than saying we can’t raise taxes on the top 2% without cutting earned benefit programs like Social Security and Medicare.

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Filed under Economy, income tax, national debt, Politics, Reid, tax revenue, Taxation

Fiscal Cliff or Stairway to Heaven?

As the Nevada Progressive points out, the looming “fiscal cliff” is a meaningful moment for the Republicans in the U.S. Congress.   The somewhat sordid history of this “cliff” which in actuality could be more like a slight slope is summarized as:

“The United States fiscal cliff refers to the effect of a series of recent laws which, if unchanged, will result in tax increases, spending cuts, and a corresponding reduction in the budget deficit beginning in 2013.  These laws include tax increases due to the expiration of the so-called Bush tax cuts and across-the-board spending cuts under the Budget Control Act of 2011.” [link]

At this point, even the well informed may need a reminder that the term ‘fiscal cliff’ was coined by Federal Reserve Chairman Ben Bernanke, who was concerned that the impact of the failure of the Super Committee to reach an agreement would depress the economy:

“For the record, although the explanation wasn’t reported or repeated as much as the catchphrase itself, Bernanke actually said the fiscal cliff was about the large spending cuts and tax increases already scheduled to occur being far too big for the current U.S. economy to handle at one time. “I hope that Congress will look at [the spending cuts and revenue increases] and figure out ways to achieve the same long-run fiscal improvement without having it all happen at one date,” he told the committee.

In other words, “fiscal cliff” means the big deficit reductions that have been both inadvertently and intentionally scheduled to go into effect at the turn of the year are the absolutely wrong fiscal policy at that time and that the economy will be damaged if they are not changed.” [OF.org]  (emphasis added)

For those likely to hit the panic button — some programs are exempted from the budget cuts: Social Security, federal pensions, and veteran’s benefits.  Social Security is properly called an entitlement program, because the beneficiaries have paid into it, and it is supported by payroll taxes and its own trust funds.  No one, repeat NO ONE, has “spent” money earmarked for the Social Security Trust Funds.  [SSA]

For those likely to run screaming into the sage brush about THE DEFICIT, we should note that reductions in military operations in Afghanistan will reduce that beast, and we should remember that the Affordable Care Act also has some deficit reduction benefits.  Cherry-picking selective think tank and editorial board musings notwithstanding, the  “CBO and JCT estimate that enacting both pieces of legislation—H.R. 3590 and the reconciliation proposal—would produce a net reduction in federal deficits of $143 billion over the 2010–2019 period as result of changes in direct spending and revenues.” [WH.gov]

The central question about the ‘fiscal cliff’ is whether or not  it becomes a stairway to heaven for the American middle class.  It’s a cliff if the Republican controlled Congress obstructs the negotiation process such that ALL tax breaks enacted during the Bush Administration expire — including those for those earning less than $250,000 annually.  It’s a stairway to heaven, if the Congress can agree to allow the tax breaks for millionaires and billionaires to expire, and retain the tax breaks for middle class families.

It’s a cliff if the Congress demands that automatic economic stabilizers like unemployment insurance support, nutrition programs, and other means by which we prevent highly volatile economic swings are cut in order to prevent the upper 1% of American income earners from having to pay any increased taxation.  It’s a stairway if the economic stabilizers can be themselves stabilized, perhaps even if in slightly reduced forms.

It’s a cliff if the tax breaks for 97% of American small businesses are lost in the interest of sparing the top 0.01% of American income earners any tax increases.  It’s a stairway if tax breaks for 97% of American small business owners are maintained, and the deficit is reduced by encouraging economic growth, and by taxing the top 1% more fairly.

The newly re-elected President had some words about this choice:

“President Obama said he refuses to accept any approach that isn’t balanced. “I’m not going to ask students and seniors and the middle class to pay down the entire deficit,” while higher earners get tax cuts, he said.

The President said he will ask Congress to pass a bill that will continue the tax cuts for the middle class, which he says will eliminate much of the uncertainty in the nation. After that point, he said, he and Congressional leaders can work on a compromise for the remaining tax cuts.” [CSPAN]

The President’s own words, on video (not yet embeddable) from CSPAN.

 

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Filed under Bush Administration, Congress, Economy, Federal budget, House of Representatives, national debt, Obama, Politics

Republican Mythology: Small Business Facts and Fantasies

Nothing is more predictable than the insertion of the Great GOP Myth that Republicans protect the interests of SMALL businesses into any political campaign.  First, let’s deal with some small business FACTS.

As of 2007 there were 27,757,676 firms in this country.   21,708,021 of these were non-payroll companies.   6,049,655 were firms with payrolls.   The firms operated 29,413,039 establishments.   The firms with payrolls operated 7,705,018 establishments.  [Census]

As of 2008 there were 21,351,320 non-employer firms in the United States, and another 5,930,132 firms which had people on payrolls.  [Census]   If we make a pie chart of establishments and employment numbers it looks like this:

The pie chart makes it obvious that most of the business establishments in this country employ from 0-4 employees.    It also makes it perfectly clear that any legislation which exempts companies with fewer than 500 employees from taxation or otherwise gives them a break will affect a preponderance of the business establishments in this nation.  So far so good for the GOP mythology.  However, if we stop at this point and simply characterize American small business solely in employment and establishment figures  we’re leaving out an important part of the overall picture.   Business revenues or receipts.

Let’s put those back into the picture.

Here’s the point at which not all tax breaks are created equally.  Most firms in the U.S. are bringing in less than $500,000 in receipts annually.  Formulas based on the number of employees alone will necessarily benefit those establishments which may hire fewer than 500 persons, BUT which may also be generating receipts well over the common $500,000 threshold for receipts.   Consider the lobby shops for example.

Patton Boggs LLC leads the pack with retainers of $47,710,000 for 2011, Akin Gump pulled in $37,930,000, Podesta Group $27,300,000, and Van Scoyoc $24,830,000.  [OpenSecrets] Some 110+ lobbyists may be employed, plus support personnel, but the major lobby shops will still be classified as “small” business if the number of employees is the sole definition of what it means to be a small business.   We can get another illustration by looking at hedge fund employment.

Hedge funds tend to hire based on AUM (assets under management) figures and as of 2008 there tended to be 1 employee for every $54 million under management.   The Hedge Fund Review (2008) described employment and staffing as follows:

Employee numbers more than doubles to 36 on average when the management company reaches the $1-$5 billion rage. Efficiency increases on average 47% to $84 million per employee.

“The biggest leap in organisational size occurs when AUM grows to $5-$11 billion. Employee numbers tends to triple to 120 while managing on average $82 million per employee. The report concluded there was no one reason for this change, unless it could be attributed to the fact that most companies managing these amounts tend to be platforms or multi-strategy funds. A full 90% of funds surveyed in the $5-$11 billion range were platform or multi-strategy compared with 55% of the $1-$5 billion funds.”

Again, if the number of employees is the exclusive definition for what constitutes a small business then the “average” hedge fund fits the categorization, and as of October 2003 there were approximately 6,000 to 7,000 hedge funds operating in the United States. [SEC] The old radio show disclaimer may be modified and applied here, “any resemblance between a small retail business and a hedge fund is purely coincidental.”

And yet… The Republicans continue to claim that to allow the Bush Tax Cuts to expire for those earning more than $200,000 annually would “hurt” small business.”  Not really.  Only about 3% of “small business” operations would be affected. [Politifact] [Gavel]

And yet… The Republican controlled House of Representatives was pleased to pass a “small business” bill (H.R. 9) with a $46 billion loophole for the 1%.

“Under Rep. Cantor’s bill, in general, all businesses with fewer than 500 employees are eligible for the tax deduction on their active domestic income.  The term “small business” evokes images of mom-and-pop stores or startups hoping to expand, but in fact a very wide range of enterprises owned by extremely wealthy people have fewer than 500 employees. These businesses and their owners would reap a giant windfall from the Cantor bill.
An exchange during the House committee’s consideration of the bill between Rep. Xavier Becerra (D-CA) and Thomas Barthold, who heads Congress’s nonpartisan Joint Committee on Taxation, underscored that Rep. Cantor’s tax cut could potentially provide large windfalls to the owners of a host of enterprises that are a far cry from the image Cantor tries to evoke of the struggling small-business owner.”  [CAP]

Again, this is what happens when the number of employees is the sole factor in defining a “small business.”  76% of the businesses in the United States have annual incomes below $200,000 but this group would see only 16% of the benefits of H.R. 9.  55% of small business employers have incomes of less than $100,000, but that group will secure only 6% of the bill’s benefits.  [CAP]  The Republicans offered no “payfor” to cover the costs of H.R. 9.

And yet… the presumptive GOP candidate for the presidency is offering an economic plan that “can’t be scored” and to date can’t seem to be specified.  The Tax Policy Center explains: “Because Gov. Romney has not specified how he would increase the tax base, it is impossible to determine how the plan would affect federal tax revenues or the distribution of the tax burden. ”  At one point the former Governor suggested that he might close the loophole on mortgages for vacations homes for those in the upper income brackets, but (as has been a rather common practice for the Romney excursion into presidential politics) he quickly walked that suggestion backward.  [TP] [WSJ] [TO]

To date the Romney Campaign has relied upon generalities — Glittering and Otherwise — to attract voters.  “Gee, Mr. Romney wasn’t making a policy statement about eliminating the vacation home mortgage deduction, he was just tossing out an idea,” from an economic plan that “can’t be scored.”

The “plan” assumes that lowering taxes will mean faster economic growth, although the statistics demonstrate the reverse.   [AngryBear] [Kimel: Angry Bear] [Lynch: EPI] “The claim that the plan’s large tax cuts would be financed in significant part by greater economic growth is one that proponents of tax cuts often make, but that Congress’ official scorekeeper of tax proposals — the Joint Congressional Committee on Taxation (JCT) — and most other mainstream analysts do not accept. The claim is also inconsistent with the historical evidence.”  [CBPP]

The “plan” assumes that lowering taxes for the ultra-rich won’t have a significant impact on federal revenues, even though it is obvious that lowering tax rates create lower revenues.   There is evidence to the contrary:

“…a close reading of the document from the Romney campaign about the plan, as well as Governor Romney’s February 23 op-ed in the Wall Street Journal and statements by Romney campaign advisor Glenn Hubbard, suggest that the plan is not, in fact, intended to be revenue neutral. Neither the campaign document nor the Romney op-ed actually says it is. Instead, both state: “Stronger economic growth and reductions in spending will help to ensure that these tax cuts do not expand deficits.” In other words, along with scaling back unspecified tax expenditures, the plan relies in substantial part on “dynamic scoring” — an assumption that tax cuts will boost economic growth and, in turn, federal tax revenues — and very deep budget cuts to avoid expanding the deficit.”  [CBPP](emphasis added)

This all sounds perilously close to the Wall Street penchant for adopting the precepts of the “mark to mythology” school of accounting.

Meanwhile back in the real world…

What we probably ought to be requiring of any economic plan set before the American voting public this campaign season are some basic concepts such as:

1. Any economic plan involving government expenditures and tax proposals should at least be revenue neutral.   And, that’s real revenue, not conveniently redefined revenues, which beset the Hubbard analysis.  [Goolsbee][TP]

2. Any economic plan should  reduce the federal deficit.

3. Any tax reform plan should reduce corporate incentives for overseas investment, and encourage domestic investment.

4. Any tax reform plan should not exacerbate the already alarming level of income inequality, and should be based on progressive taxation within the classic definition of the term.   It’s fine if the rich get richer, but if this is accomplished by diminishing the resources of the Middle Class then our consumer based economy is in serious trouble.

5. No plan should plan should reduce our capacity to care for our children, our elderly, our veterans, or our infrastructure.

Small business owners throughout the nation need a well maintained and improved physical infrastructure, assistance educating and caring for their children, security for their parents and grandparents, revenues generated from the capacity of their customers to pay for their goods and services, assistance with complex matters like dealing in foreign markets, and a level playing field with competitors.

They could probably do with a bit less highly generalized ideological gibberish about “no more taxes,” and “less is more.”   They could certainly do with an economic plan that isn’t “pie-in-the-sky-mark-to-mythology” generalities that are here today and walked back tomorrow.   Speaking specifically to Governor Romney’s plan — if it can’t be scored, then how is it to be trusted?

Additional Reading:  See “Six Tests for Corporate Tax Reform,” CBPP 2/24/12.   “Statistics about Small Businesses,” Census. “Did Hubbard Mean To Raise That? Austan Goolsbee, 4/25/12. “Taxes and Economic Growth,” Crawford, Angry Bear, 5/2/2012. “Over There: Euro Zone Unemployment rises to 10.7%, Calculated Risk, 5/2/2012. “Tax Cuts and Job Growth: They’re Just Not That Into Each Other,” Bernstein, 5/1/12.

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Filed under 2012 election, Cantor, Economy, Taxation

Budget Day: The Perfectly Predictable Reaction

If I’d placed a bet on the Republican reaction to the Obama Administration’s budget yesterday I’d be a winner. Senator Jeff Sessions (R-AL) ranking member of the Senate Budget Committee was on MSNBC this morning with the standard complaints.  (1) There aren’t enough spending cuts. (2) The budget doesn’t sufficiently cut the debt.  (3) The budget doesn’t change the debt trend. (4) The budget doesn’t “reform” Social Security and Medicare.

Asked directly if the budget shouldn’t increase taxes for the wealthy in order to reduce the debt, Senator Sessions reverted to GOP dogma — we wouldn’t have to increase taxes if we made more spending cuts. As to the main program thrusts in the President’s spending plan (increased support for manufacturing, transportation and infrastructure investment) Senator Sessions replied that we just don’t have the money for those programs.  Translation:  Evidently, we must cut government programs in order to maintain the tax benefits for millionaires and billionaires in the Bush Tax Cuts of 2001 and 2003.

It is also apparent that no budget proposal will ever be acceptable to Republicans which doesn’t “reform” Social Security and Medicare.  Translation: Privatize. There is a way to quickly pump more revenue into the Social Security Trust Funds, simply raise the earnings cap above the current $106,800.  However, that would be an “unacceptable tax increase” for the GOP.  Again, it is obviously more important for the Republican members of Congress to protect the incomes of those in the upper reaches of American income brackets than it is to support manufacturing, infrastructure, Social Security, and Medicare.

The intransigence of the GOP on matters concerning the now sanctified Bush Tax Cuts has become repetitious to the point of tedium.

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Filed under Federal budget, Infrastructure, Medicaid, Medicare, Obama, Republicans, Social Security

Groundhog Day Redux

   Groundhog Day is as good an occasion as any for offering a review of information and articles of interest.  Since we’re supposed to have six more weeks of Winter, there will be ample time to read and review some of the better articles published recently — or even some time ago.  The following items are highly recommended:

First, click quickly over to the Washington Post’s publication on the national deficit.  Remember when this was such a traumatic issue that the Republicans thought it necessary to risk shutting down the Federal government in order to address it?  What we can clearly see from the Post’s graphic is that while the Bush Administration added $5.1 trillion to the national deficit (and did nothing to reduce it,) the Obama Administration has added approximately $983 billion, and reduced the deficit by $503 billion in automatic spending cuts, $271 billion in defense savings (it helps to get out of Iraq,) and another $123 billion in health care cost reductions, supplemented by $51 billion in non-defense discretionary spending cuts.  Thus much for the GOP’s continuous wail about Democratic out of control spending.  Of course we could let the Bush Tax Cuts for the rich expire and the resulting revenue would add a tidy $1 trillion to the Treasury — which would cover the current deficit immediately.  [Hiatt, WaPo]

Secondly, we might want to wander into the morass of GOP politics and ask, “Where is George W. Bush these days?”  The man may be out of the spotlight, but his policies have been warmly adopted by his Republican cohorts.   How much daylight is there between the Bush Tax Cuts of 2001 and 2003 and Governor Romney’s suggestions?  Romney would extend the Bush Tax Cuts for the rich, and then put them on a steroid regimen. His plan would give $2.24 trillion in tax breaks to the top 1% over the next ten years, and cut food assistance and health care for the other 99% by $2.3 trillion in the same period.  [APA] Analysis of the Romney plan can be found here, and from the Center for Budget and Policy Priorities.  Rebecca Theiss adds her analysis from the EPI, and then because it’s Groundhog Day I’ll repeat the links to the Tax Policy Center’s comparisons of the tax proposals offered to American voters by the Republican candidates.

Third, in a perpetual Groundhog Day repetition of campaigns of 30 years ago the Republicans are offering the same old Guns, Gays, and God platform in the 21st century.  So called “Pro-Life” activists are gleefully giddy that the Susan G. Komen Foundation has severed its ties with Planned Parenthood.  Hauling out the same old long debunked charge that abortion increases the risk of breast cancer. [RWW] The knife and gun club was equally exuberant over H.R. 822’s passage in the House. [HuEv] And, we have no end of right wingers singing dirges for  the democracy because the LGBT community might be getting closer to obtaining full citizenship. [Keep tabs at RWW]

Finally, I’d be remiss if I didn’t offer a few links previously recommended as essential reading.  Don Peck’s article in the Atlantic, “Can The Middle Class Be Saved,” certainly fits into this category, as does the PBS sponsored “Mr. Weill Goes to Washington,” on the demise of the Glass Steagall Act.  Those who want to get more deeply into the topic of the Wall Street embrace of formula trading should definitely review Felix Salmon’s excellent piece, “Recipe for Disaster: The Formula That Killed Wall Street,” in Wired.  And, one more time, Ed Hess’s article, “The Business Revolution That’s Destroying The American Dream,” Forbes magazine is definitely in the Essential Category.

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Filed under civil liberties, conservatism, Federal budget, national debt, Republicans, Romney, Taxation