Congressional Republicans Poised to Raise Middle Class Taxes

We know the drill – our sovereign debt is about to be downgraded because (a) the Congress couldn’t get it together to pass a budget that includes both a reduction in public spending and a repeal of the Bush/Obama tax cuts for the richest earners, so they punted to a so-called “Supercommittee” to do it; and (b) predictably, the Supercommittee was unable to reach an agreement because a tax hike for the wealthy was out of the question for almost all Republicans, and some Democrats.

So, now with our malaise economy of high unemployment, uncertainty, and a crisis of demand in the market, the federal government refuses to increase revenues by asking the wealthy to pay more, and is instead seeking contraction of the government’s involvement in the economy. To say this is backwards would be an understatement.

Many fingers have been pointed in recent weeks at Republicans’ obeisance to a pledge most of them signed with Grover Norquist’s “Americans for Tax Reform“. As ATR describes it,

…candidates and incumbents solemnly bind themselves to oppose any and all tax increases. While ATR has the role of promoting and monitoring the Pledge, the Taxpayer Protection Pledge is actually made to a candidate’s constituents, who are entitled to know where candidates stand before sending them to the capitol. Since the Pledge is a prerequisite for many voters, it is considered binding as long as an individual holds the office for which he or she signed the Pledge.

Yet, the Republicans have pledged themselves into a corner.

Part of the Obama stimulus package included a payroll tax holiday for wage-earners. Social Security payroll taxes are paid equally by the employee and his employer at 6.2%. The tax holiday reduced the employee’s share to 4.2%, and the Social Security trust fund took no hit whatsoever.  A vote to extend the tax holiday is scheduled for later this week, and all indications are that Congressional Republicans are going to vote against it.

For a $50,000 earner, [the tax holiday] meant paying $1,000 a year less in payroll taxes. It was agreed in that law that the holiday would cost the Social Security Trust Fund nothing—the depleted revenue would be replaced out of the general treasury. So the holiday adds to the general deficit but does not affect the trust fund.

This is part of the Republican jobs and economic program, which basically amounts to “prevent anything Obama might do to help the economy, so one of our party’s questionable fringe candidates wins the White House in 2012.”  All it’s missing is a catchy acronym.

And if the no-tax-hike-pledge-taking Republicans vote against a renewal of the payroll tax holiday, thus effectively raising taxes on wage-earners. The party that supported President Bush’s gimmicky $300 rebate checks now recommends a plan that may plunge us deeper in an economic hole, all in the hopes that Obama would get the blame.

Two economists at the Economic Policy Institute say ending the holiday would reduce GDP by $128 billion and cost 972,000 jobs in 2012. The EPI is a liberal outfit, but Mark Zandi of Moody’s, who advised John McCain in 2008, agrees that raising the payroll tax back to where it was could cause another recession.

And besides those macroeconomic concerns, there is the simple question of money in people’s pockets as they try to tough out the economy. A thousand dollars to a $50,000 earner, or $1,500 to a $75,000 earner, isn’t nothing.

The Democrats? They want to further lower the earner’s share to a full half – 3.1%, and they also want the reduction to apply to employers at the same 50% rate, in the hopes that more money in the pockets of consumers will spur economic activity, and that more money in the employers’ coffers might spur further hiring.  For $255 billion, you target the real job creators directly. How will they pay for that?

… with a 3.5 percent surtax on dollars earned over $1 million per year. In other words, if someone earns $1.3 million a year, she will pay the extra 3.5 percent only on the last $300,000 in earnings; that is, an extra $10,500 a year (bear in mind that this person takes home, after taxes, around $30,000 every two weeks). So it certainly raises the taxes of the very wealthiest. But it gives more money back to middle-class people, and it stimulates the economy, perhaps to the tune of 50,000 jobs a month, maybe even more.

The Republicans would have supported something like this if it was their idea, but now it’s the Democrats’ plan and must be blocked reflexively. Interestingly, they’re likely to grudgingly demand a continuation of the status quo, in which case they’re asking that the deficit be further enlarged.

Decisions, decisions.

What should President Obama do? Take it to the people.

Obama should give an Oval Office speech Wednesday night and say: “If you are an employee and make less than $1 million, or if you are an employer of any size, I am trying to give you a tax cut. If you are an employee who makes more than $1 million a year, you should write and thank your Republican senator, because the Republicans are blocking me and helping you.”

The proof couldn’t be more stark. The national Republican Party isn’t the party of low taxes. It’s the party of the superwealthy and the social warriors.

Prioritizing the Bailouts

Anyone remember Rick Santelli? He became famous for a day or two when he assailed the Obama stimulus for “rewarding bad behavior” because it included money for mortgage relief.

http://youtu.be/or-EKjfVCoA

While many tea party types cheered Santelli’s rant for exposing the Indonesio-Kenyan socialist usurper President Obama for the Leninist Hitlerite he is, as it turns out, Obama’s mortgage relief plan would spend $85 billion to help keep beleaguered Americans who were upside-down on their mortgages in their homes.

Yet as of early 2009, the federal government committed $7.77 trillion to bail out the banksters, Santelli made no noise whatsoever about rewarding their bad behavior.

This is America! How many of you people want to pay for your neighbor’s mortgage that has an extra bathroom and can’t pay their bills? Raise their hand.

Outrageous outrage! That’s what Santelli says in his infamous rant. Yet he and the traders whooping it up with him have dummied up when it comes to almost $8 trillion to bail out the “loser” banks.  Despicable people for despicable times.

The Real Looters

From a New York Times profile of how multibillionaire heir and man-of-leisure Ronald Lauder avoid paying taxes on his income.

The tax burden on the nation’s superelite has steadily declined in recent decades, according to a sliver of data released annually by the I.R.S. The effective federal income tax rate for the 400 wealthiest taxpayers, representing the top 0.000258 percent, fell from about 30 percent in 1995 to 18 percent in 2008, the most recent data available.

And the economy tanked.

“There’s real truth to the idea that the tax code for the 1 percent is different from the tax code for the 99 percent,” said Victor Fleischer, a law professor at the University of Colorado. “Any taxpayer lucky enough to have appreciated property is usually put to a choice: cash out and pay some tax, or hold the property and risk the vagaries of the market. Only the truly rich can use derivatives to get the best of both worlds — lots of cash and very little risk.”

The story praises Lauder for making charitable donations of money and art to certain causes, the philanthropic way to tax avoidance. However,

“It’s admirable when people back their charitable impulses up with donations,” said Scott Klinger, tax policy director of the group Business for Shared Prosperity. “But the tax code shouldn’t allow the wealthy the kind of loopholes that let them, essentially, force other taxpayers to underwrite donations to their pet causes.”

So when you joke and mock the Occupy protesters for being a bunch of unwashed nouveau hippies with no point or direction, consider for a moment that the system is now rigged in favor of the very rich – especially those who make money from money.  When you look at the taxes withheld from your paycheck each week, or fill out your 1040 on TurboTax, remember that you pay a larger share of your income to the IRS than the superwealthy.

From Birthers to #Occupy and the Great Rejection

It’s somewhat astonishing to consider how our President with a funny name continues to engender a new and unique kind of hatred and derision among a certain population in this country. It’s not so much about his policies, (most of which they’d be misinformed about, anyway), but about the nature and location of his birth.

I’m convinced that someone could dig up a Super8 movie of Barack Obama being born, which also shops the sign indicating that the hospital is in Hawaii, with Diamond Head in the background, and still, that wouldn’t satisfy the incredibly stupid.

Despite the fact that President Obama asked the State of Hawaii to release his long form birth certificate in April 2011, dead-ender birthers still exist, and are making some distinctly ignorant noise about prohibiting Obama from appearing on ballots in 2012.  Late last week, a group of birthers, led by a California lawyer, tried to get Obama removed from the ballot in New Hampshire. When that state’s Ballot Law Commission refused to do so, birthers in the gallery started yelling “traitor!” and “treason”, because those are now shorthand for “I disagree with you!”

In the comparatively short time I’ve been paying attention to politics, the vitriol with which we attack the other side – of an issue, of an aisle – has reached quite literally comical levels. Birtherism is a mere symptom of our penchant to delegitimize our opponents, and I think it began in earnest during the Clinton administration. Our 90s two-termer carved a middle way between liberalism and conservatism, which often enraged both groups. Those on the right, however, didn’t just attack Clinton’s beliefs or policies; they attacked the very notion that he was fit to serve at all. That this draft dodging, pot-smoking, hippie womanizing liar would dare to co-opt certain Republican platform planks, and that his uppity wife might want to get involved in reforming a horribly broken health care insurance system were too much; he had to be not just opposed, but destroyed.

Just ask Ken Starr.

So, when genuine issues about the 2000 vote in Florida arose, the left retaliated against George W. Bush, whom they still consider to be the worst President ever, brought into office on gold-plated rails thanks to a corrupt, politicized conservative Supreme Court that suddenly discovered the 14th Amendment’s “equal protection clause”.

Bush won re-election in 2004, but not before a group supporting him took John Kerry’s Vietnam heroism and defiled it with lies. Kerry couldn’t just be defeated – he had to be destroyed as a person.

So, when you have a multicultural President in uncertain economic times, the crazies come out in full force. He’s a communist usurper who wasn’t born here, is an Indonesian/Kenyan Marxist hell-bent on turning Bill Ayers into the Emperor of the Politburo. It’s the second revenge of the Bushists.

Or something.

The 2012 Republican field of arguably viable candidates runs the gamut from “batsh*t insane” to “completely insincere panderer”. They have a unique opportunity to re-brand themselves and mount a serious challenge against an embattled President with very bad poll numbers and a crap economy, yet they can’t get that together.  Mitt Romney appears to be the least offensive, least insane, likely nominee. In 1996, it wasn’t much different, what with Bob Dole emerging as the least repugnant from a cast including Christianist Alan Keyes, “Single Issue Steve” Forbes, and Nazi apologist Pat Buchanan.

The tit-for-tat is phenomenal in that the same crowd that impeached Clinton over perjury in a sexual harassment civil lawsuit are now denying the very existence of “sexual harassment” as a societal ill, a crime, or a tort.

The vitriol and the deepening of socioeconomic and political cleaves that’s taken place over the last 20 – 30 years, and the lingering nature of the Great Recession and the 2008 bailouts have left us with a fundamentally broken national political system. The Occupy movement, which belongs to no one, seems to be articulating a Great Rejection in our politics and economy – a post-Reaganist re-engineering of societal priorities seems to be in order.

It’s a shame political disingenuousness isn’t an exportable good or commodity. At least then, we’d put a dent in the trade deficit.

 

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