Tax cuts have become a sick joke

(Cross-posted from Think it Through.)

Did you hear the joke about the president who wants to reduce the deficit and cut taxes?  Depending on your level of cynicism, you are either amused or annoyed that our lawmakers in Washington simultaneously pay homage to special commissions on the federal budget deficit and debate the size of the tax cuts they will enact.

But you cannot place all the blame on our politicians.

Ever since Ronald Reagan made tax cuts the engine of his drive for smaller government, the American voters have acted like spoiled children holding out their hands for more candy even when Halloween is long past.  The tea party members have built an entire political movement based on such childish selfishness.

Before Ronald Reagan, Americans seemed to understand the income tax was a necessary price to pay for the functions of government that benefit society as a whole and each of us as individuals.  This may be why, prior to Ronald Reagan, no candidate had run for president on a platform of cutting taxes.

It is true that President Kennedy, once in office, decided to try a Keynesian approach to stimulate a sluggish economy by lowering taxes and increasing government spending temporarily, but he did not campaign on tax cuts.

In the last century, Americans managed to build a strong economy and a broad middle class with top tax rates ranging from 70 to 90% of income.  By the time Reagan left office in 1988, he had cut the top tax rate to 28%.

The lost income for the government, mixed with Reagan’s huge military build-up, left the country deeply in debt.  Nonetheless, Reagan’s legacy has been that Americans feel entitled to tax cuts and, ever since, political candidates of both parties have made sure some type of tax cut played prominently in their campaigns.

George H.W. Bush and Bill Clinton both campaigned on tax cuts – Bush promised a cut in the capital gains tax and Clinton called for reduced taxes for middle- and low-income workers.  Once in office, however, both of these presidents raised rates on upper-income households in order to recover from the deficit-spending Reagan years.  Clinton’s tax and budget policies gave the country eight years of economic prosperity, and he handed his successor a budget surplus.

George W. Bush reverted to the Reagan lesson.  He promised and delivered a massive tax cut with virtually no rationale other than “It’s your money, I want to give it back to you.”  Democrats in Congress were not willing to buck the Reagan legacy, so they essentially went along.

Even Barack Obama, the self-described agent of change, followed suit and ran for president on a platform of a middle class tax cut.  Now he is shadow-boxing with himself about how many of the Bush tax cuts installed in 1981 he wants to let stand.

The Pew Research Center reported this year that a majority of nearly six in ten voters would choose to either repeal all of the tax cuts (31%) or just repeal the tax cuts for the wealthy (27%), while only one in three (30%) wanted to keep all of the tax cuts.

In extensive research on taxes over the years, we have found that when people are informed of things such as the budget deficit, the national debt, and the billions of dollars the government spends every month simply to pay the interest on the national debt, tax cuts are placed on a much lower priority.

Yet, President Obama has not explained the choices between tax cuts and what else can be done with the money.  He, like most other politicians, has accepted as truth that you cannot oppose all tax cuts.

Why not inform people of the payoffs – for jobs, for the economy, for programs they care about – if we repeal all of the Bush tax cuts?  You can make a compelling case that the benefits to repeal are far greater than those of letting the tax cuts continue.

Is there no public official with the skill and courage to help the country break its adolescent dependency on tax cuts?

John Russonello is a partner with Belden Russonello & Stewart: Public Opinion Research and Strategic Communications in Washington, DC. He writes the blog Think it Through.

Why Can't We Be the Job Creators?

The Republicans always use the excuse that we have to give the rich huge tax cuts because they are the "job creators." Of course, the reality is that giving tax cuts to the rich is the very worst way of getting more money into the economy. The multiplier effect for tax cuts for the wealthy is the lowest of almost any stimulative program the government can try.

Plus, if they are creating jobs, it isn't here. The money is flowing out of the country and into developing markets at an incredible rate. Between 2002 and 2008, the Bush tax cuts equaled $1.3 trillion. The amount of money leaving the United States in the form of investment in developing countries in that same time period -- $1.9 trillion. It can be argued that all of the tax cuts to the rich went out of the country and then some (of course, it's a little more complicated than that but obviously a huge portion of the extra money went into investment abroad).

So, if jobs are being created through tax cuts it's probably in Shanghai or Mumbai. So, the Republican answer now is to give ... more tax cuts to the rich. They want to give $700 billion in tax cuts to the top bracket over the next ten years. I have a revolutionary idea instead.

How about instead of giving the money to the rich and hoping that they create jobs, we just create the jobs! Imagine what we could build and how much good we could do for the country if we used that extra $700 billion to actually hire people directly. Imagine how many jobs that could create.

It might be worth it if we just hired people to do what would otherwise be volunteer work. It might be worth it if we just built a whole new green energy sector. It might be worth it if we just hired an enormous number of teachers to give our kids the best education in the world. It might be worth it if we hired so many more cops to protect our streets or firemen to protect our neighborhoods. Or doctors to treat our sick. Or people to take care of the elderly or disabled. Or people to take care of our kids while we worked. Or people to build our bridges and our roads. Or just about anything else you can imagine.

Imagine. $700 billion set aside just to hire people. To hire Americans. Or we can go with the Republican plan of giving it all to the rich and hoping they create jobs at some point and hoping that those jobs are here in America. You be the judge.

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Why Can't We Be the Job Creators?

The Republicans always use the excuse that we have to give the rich huge tax cuts because they are the "job creators." Of course, the reality is that giving tax cuts to the rich is the very worst way of getting more money into the economy. The multiplier effect for tax cuts for the wealthy is the lowest of almost any stimulative program the government can try.

Plus, if they are creating jobs, it isn't here. The money is flowing out of the country and into developing markets at an incredible rate. Between 2002 and 2008, the Bush tax cuts equaled $1.3 trillion. The amount of money leaving the United States in the form of investment in developing countries in that same time period -- $1.9 trillion. It can be argued that all of the tax cuts to the rich went out of the country and then some (of course, it's a little more complicated than that but obviously a huge portion of the extra money went into investment abroad).

So, if jobs are being created through tax cuts it's probably in Shanghai or Mumbai. So, the Republican answer now is to give ... more tax cuts to the rich. They want to give $700 billion in tax cuts to the top bracket over the next ten years. I have a revolutionary idea instead.

How about instead of giving the money to the rich and hoping that they create jobs, we just create the jobs! Imagine what we could build and how much good we could do for the country if we used that extra $700 billion to actually hire people directly. Imagine how many jobs that could create.

It might be worth it if we just hired people to do what would otherwise be volunteer work. It might be worth it if we just built a whole new green energy sector. It might be worth it if we just hired an enormous number of teachers to give our kids the best education in the world. It might be worth it if we hired so many more cops to protect our streets or firemen to protect our neighborhoods. Or doctors to treat our sick. Or people to take care of the elderly or disabled. Or people to take care of our kids while we worked. Or people to build our bridges and our roads. Or just about anything else you can imagine.

Imagine. $700 billion set aside just to hire people. To hire Americans. Or we can go with the Republican plan of giving it all to the rich and hoping they create jobs at some point and hoping that those jobs are here in America. You be the judge.

Watch The Young Turks Here

Follow Cenk Uygur on Twitter: www.twitter.com/TheYoungTurks
"Like" The Largest Online News Show In The World Here: www.facebook.com/tytnation

 

 

Weekly Audit: Curbing the Deficit, Cat Food, and You

by Lindsay Beyerstein, Media Consortium blogger

The deficit commission released its much anticipated list of helpful money-saving tips for the federal government last week. These tips include tax cuts for the rich, reducing unnecessary printing costs, and cutting the jobs of federal contractors.

The recommendations are more like a menu than a program. As Mark Schmitt of The American Prospect notes, there’s no coherent vision, just a list of possible tax increases and program cuts with projected savings attached.

The commission was dubbed the Cat Food Commission by critics who see the project as an attempt by the Obama administration to provide political cover to gut Social Security, thereby forcing the elderly to subsist on cat food.

Officially, the commission is charged with making suggestions to balance the budget by 2015. Kevin Drum of Mother Jones is surprised at the hype the presentation has attracted, considering that it’s not a piece of legislation, or even proposed legislation, or even the actual report by the deficit commission, but rather a draft presentation by “two guys in a room” (co-chairs former Sen. Alan Simpson (R-WY) and Erskine Bowles).

Hope is not a plan

Drum has trouble taking the draft seriously because its main focus is cutting discretionary spending, which according to the Congressional Budget Office, only accounts for about 10% of our projected deficit. The secondary focus of the report is Social Security, which only accounts for a small share of the projected deficit, and moreover, is easily fixable with very small tax increases and tiny decreases in benefits phased in over a long period of time.

Rising health care costs account for the lion’s share of our projected deficit, but as Drum notes, the draft doesn’t get into detail about how to contain those costs, the authors simply stress that someone had better get on that. No kidding. The authors assert that that the government should never take in more than 21% of GDP in total taxes. Drum dismisses this suggestion as completely unrealistic seeing as the authors have no plan to slow the growth of health care costs.

Note to workers: “Drop dead”

Roger Bybee of Working In These Times takes aim at the presentation’s suggestion to cut taxes on the rich. The deficit chairmen urge legislators to cut the top tax rate from 35% to 23%, which as Bybee notes, would actually add to the deficit. The presentation also favors cutting corporate taxes and taxes on American expatriates. Hardly deficit-friendly stuff. Bybee argues that the real goal of this commission is to deflate public expectations about the role of government:

This draft report was thus not about slicing the deficit, but shrinking those portions of the government on which the poor and working class depend and shoveling new benefits to corporations and wealthy, at a time when the richest 1% already rakes in 23.5% of all U.S. income.

According to AFL-CIO head Richard Trumka, whom Bybee quotes, the message to the American worker is: “Drop dead.”

Gawker vs. the Cat Food Commission

Astute commenters at the media gossip blog Gawker discovered, via a New York Times interactive feature, that the entire problem could be solved by rolling back the Bush tax cuts and ending foreign wars. John Tomasic of the Colorado Independent explains how they did it:

The Gawkers simply let the non-job-making Bush tax cuts expire (because they were never meant to be permanent and because most Americans don’t want them extended) and they ended Bush’s (now Obama’s) overseas military adventures, which cost more money every week ($2 billion!) than the Rolling Stones have made in the last forty years, our contemporary version of the Cold War space race taking place not in space but in Afghanistan and Iraq, where the United States is racing only against itself to borrow and spend as much money as possible every single day– almost none of that money spent on the troops who come home wounded and sad and totally screwed up.

Nine out of ten grandmas prefer the fiscal policies of the Clinton administration to Meow Mix.

Extending unemployment = Jobs

Ed Brayton of the Michigan Messenger argues that extending long term unemployment insurance benefits would benefit the economy to the tune of half a million jobs. The unemployed still have to eat. Their children still need shoes. If unemployment benefits are extended, the unemployed will spend their benefits quickly in order to live, which is exactly what an economic stimulus is designed to do. Grocery stores and shoe stores employ people. Checkers and shoe salesmen also spend their wages in their communities, thereby sustaining the jobs of still more people.

Pension plan bets green on green

Investing in green jobs is sound economic policy, but governments can’t do it alone. The private sector has to help finance the greening of our economy, too. One California pension plan is stepping up and betting big, investing $500 million on green projects, according to Mikhail Zinshteyn of Campus Progress. The California Public Employees’ Retirement System (CalPERS) has a green portfolio worth $2.5 billion, which it has amassed since 2006. CalPERS is betting that low carbon energy programs and other clean energy initiatives will be a lucrative place to park their members’ money.

Hopefully, these investments will also benefit the economy in the short term by creating jobs, including jobs for some California public employees. However, some analysts are skeptical that these investments will yield the handsome dividends that CalPERS analysts are projecting.

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. Visit the Audit for a complete list of articles on economic issues, or follow us on Twitter. And for the best progressive reporting on critical economy, environment, health care and immigration issues, check out The Mulch, The Pulse and The Diaspora. This is a project of The Media Consortium, a network of leading independent media outlets.

Bush Tax Cuts

 

White House Gives In On Bush Tax Cuts

Whatever happened to audacity? Win or lose, stick to your guns and make the Republicans vote against middle class tax cuts. Make them vote to protect unaffordable cuts for the rich while they rail against government deficits.

Word is that the White House will agree to extend all cuts for a year or two. Do they think that Congress will then be more responsible?

As E.J. Dionne Jr. of the Washington Post put it "Any wholesale extension would be a shameful and abject capitulation that would just prove how easy it is to bully Democrats."

 And posted here a few days ago: "During the lame duck session, Democrats should not capitulate, nor even compromise. It certainly does no good to have a short extension of the Bush tax cuts; that just puts them in the hands of a more Republican Congress. Why not just let let all cuts expire as the law specifies and introduce in this session a slightly reduced tax reduction for the middle class?

Let the Republicans vote against that. With the richest 1% of Americans now taking home about 25% of all income (compared to 9% in 1976), let the Republicans justify more benefits for the rich."

homer  www.altara.blogspot.com

 

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