Democrats Go GOP on Tax Cuts

Counterpunch.org:

August 18, 2010

Meandering Into the Midterm Elections

By ANTHONY DiMAGGIO

President Obama supports letting many of the Bush tax cuts expire. He’s defending the passage of a new round of tax cuts, promised to benefit America’s middle and working classes. These cuts, however, would continue to benefit the affluent, or those individuals earning more than $170,000 a year. CNN Money reports that the tax cuts promoted by Obama for the middle class would also reduce taxes for those making between $171,850 and $195,550. This group would now fall into a “sweet spot” that would reduce their payments from the 33 percent tax bracket down to the 28 percent tax bracket. In contrast, those individuals who make more than $200,000 would see their payments increase from the 36 percent bracket to the 39.6 percent bracket.

The increase in taxes for those making more than $200,000 is misleading, however. While these individuals would legally be required to pay more in terms of their tax bracket, they would nonetheless qualify for other tax reductions under Obama’s plan.

The details are provided by the Center on Budget and Policy Priorities (CBPP). The organization reports that under Obama’s plan, “people making more than $1 million will receive more than five times the tax cut benefit, in dollar terms, as a middle class family making $50,000 to $75,000. The wealthy would qualify for cuts under the proposed extension of the income tax rate reductions and married filers’ reductions. In relation to the income tax, the CBPP estimates that those in the $200,000 to $500,000 income category would receive, on average, an 83 percent greater tax cut than those immediately below them earning more than $100,000 but less than $200,000. Those earning between $500,000 and $1 million would receive, on average, a 13 percent greater tax cut than those immediately below them making between $200,000 and $500,000. Finally, individuals earning more than $1 million would benefit from a 15 percent greater cut than those immediately below them making between $500,000 and $1 million. These numbers may sound confusing, but the major theme is really quite simple: as an individual’s (or a household’s) earnings increase into the six figures and beyond, they will be entitled to increasingly larger tax cuts under the Obama plan when compared to middle, working class, and poor Americans.

The Obama tax cuts, while clearly benefitting the middle class in many ways, will also represent a major pay day for America’s upper class. This apparently isn’t enough for Republicans in Congress, however. They complain that the rich should benefit from all the tax cuts granted under Bush, not merely some of them. They feel that any tax increases (relatively to the cuts the rich received in the last few years) are illegitimate. Nowhere is this position more clearly declared than by House of Representatives Republican Minority Leader John Boehner, who defends the Bush era tax cuts, which went overwhelmingly to the wealthiest one to five percent of Americans.

Boehner complains that “you can’t raise taxes in the middle of a weak economy without risking the double-dip in this recession…You cannot get the economy going again by raising taxes on those people who we expect to create jobs in America and to get the economy going again. If we want to solve the budget problem, we’ve got to have a healthy economy and we have to get our arms around the runaway spending that’s going on in Washington, D.C.”

The supply side notion (first advocated by the Reagan administration) claims that economic growth only comes from massive tax cuts directed toward the rich. This theory, although promising prosperity for America’s middle class and poor, has done little to deliver benefits to the masses. A careful study from the Economic Policy Institute finds that “the economy has little to show for the $860 billion in tax cuts” passed under Bush from 2001 to 2005. In this EPI report, Lee Price concludes that “by virtually every measure the economy has performed worse in this business cycle than was typical in past ones, including that of the early 1990s, which saw major tax increases.” The EPI compares the 2001 to 2005 business cycle to other cycles in history (a cycle being defined in economics as a period beginning with a contraction in national GDP, a trough period when contraction ends and expansion begins, a sustained expansion period, and a peak of growth). EPI finds that, in spite of the 2001 and 2003 tax cuts, “almost every broad measure of economic activity – GDP, jobs, personal income, and business investment, among others – has fared worse over the last four and a half years (again, 2001 to 2005) than in past cycles.”

The EPI’s findings raise serious questions about the effectiveness of tax cuts aimed at the rich in bringing about economic recovery. The worthlessness of tax cuts for the rich in assuring middle class prosperity has been reinforced over the last few years as well. The Bush tax cuts are set to expire this year. Since the 2008 economic collapse and ensuing recession, the Bush tax cuts (in addition to the massive infusion of TARP funds for American “too big to fail” banks) have not been sufficient to push the U.S. into a serious economic recovery at a time when those who still have jobs are working harder and harder for declining wages. It was not until this year that the recession formally ended (a recession being defined as two consecutive quarters of negative growth), and economic growth has been rather anemic, at just over one percent for the second quarter of 2010.

One would think that all these negative signs would be enough to convince Republicans (and conservative Democrats) not to renew tax cuts for the wealthy. This, however, has not been the case. The Republican Party – aided by reactionary pundits in the media – continues to push tax cuts for the rich. They do this, not because these cuts promote strong recovery and prosperity for middle America, but because they subsidize Republicans’ primary constituency – the rich. Democrats have long been reliant on, and supportive of corporate power as well, so their relatively weaker support for tax cuts for the rich is not surprising either.

Rather than asking what the Democrats and Republicans should be doing to reduce the size of government (as both parties’ leaders are doing), we should be asking how the government should be expanding its efforts to help the needy during times of economic desperation. The Democratic expansion of Medicaid under the 2010 health care reform bill will certainly help America’s poor in terms of increasing the size of the social welfare state, but a far larger (and much needed) expansion in the form of establishing a universal health care, Medicare-for-all system, would do a lot more in reducing the suffering of vulnerable Americans. What also would help the country (in addition to the recent extensions of unemployment and state school funds passed by Democrats in Congress) is another stimulus, which should be passed prior to the 2010 midterm elections.

The Democratic Party has gone Republican in at two ways when it comes to the tax cuts: 1. by pushing for a market solution over expanding government social welfare services; and 2. by continuing the tax cuts to the rich, even if in a reduced form from the far larger, more extreme amount preferred by conservatives. The choice to promote tax cuts over increased social spending (on food subsidies for the poor and on a new stimulus) signals a privileging of the well off over the truly needy. Instead of helping preserve the jobs of state educators and other public employees through massive stimulus spending, the Democrats have instead chosen to grant tax cuts to those who already have jobs. Why this group should be prioritized over the unemployed is anyone’s guess. The Democratic approach signifies the party’s increasing embrace of the Republican themes that “the government is the problem,” and that the best way to promote economic recovery is to reduce government revenues, and “give the people more of their own money,” rather than use that money to help those who are the most desperate.

There are penalties to be paid for going Republican at a time when Republicans are just as unpopular as the Democrats in the public mind. The Democratic Party’s emphasis on unnecessary tax cuts, and its timidity in pushing for an expansion of government stimulus has left us in the desperate economic position we are in today. The party is willing to promote at least limited welfare spending, passing $34 billion in unemployment extension benefits, and an additional $26 billion to help states fill their deficits and stave off cuts in education and Medicare. These most recent education and Medicaid packages, however, came along with $10 billion worth of cuts in food aid to the poor. The recent Medicaid, school, and unemployment bills also total just $50 billion for the year (after adjusting for the food aid cuts), and this represents a small fraction of the hole in state deficits that needs to be filled.

The state deficits for 2010 were estimated to total $192 billion, according to the CBPP. State deficits for 2011 are estimated at approximately $120 billion. Allowing all the Bush era tax cuts to expire would produce an additional $217 billion in revenues for the federal government throughout 2010 and 2011, according to a recent study by the Brookings Institute and the Urban Institute. This amount is more than enough to plug in the $120 billion hole in the 2011 state budget deficits. It’s unlikely that the Democratic Party will take this route, however, in light of its increasing support for Republican mantras about the holiness of tax cuts as a means of economic stimulation.

Democrats could single handedly end the state budget crises that will (sadly) continue to grip the country over the next year. Instead, they will continue to meander throughout the rest of 2010, refusing to push any sort of stimulus on par with the $787 billion stimulus package passed in 2009. Democratic refusals to pass a second stimulus will all but guarantee continued economic stagnation – and possibly decline. The party’s incompetence and preference for the rich will likely come back to haunt it in the 2010 election, in which the American public will angrily (and rightly) throw out many Democrats due to their mishandling of the economic crisis.

Anthony DiMaggio is the editor of media-ocracy (www.media-ocracy.com), a daily online magazine devoted to the study of media, public opinion, and current events. He has taught U.S. and Global Politics at Illinois State University and North Central College, and is the author of When Media Goes to War (2010) and Mass Media, Mass Propaganda (2008). He can be reached at: mediaocracy@gmail.com

Euphemisms to look out for: "the Bill Collapsed"

Politico.com:

A Democratic-backed jobs and economic relief bill collapsed in the Senate on Thursday after failing for the third time to break through a wall of Republicans who rejected repeated entreaties to join in advancing the $100 billion-plus package, including aid for cash-strapped states and the unemployed.

No, the Bill didn't collapse. The Democrats pushing the bill collapsed. Big difference.

Until the Democrats actually force the Republicans to filibuster—for weeks on end if they want to—it seems to me the Democrats aren't really serious.

Democratic Party Plan to Get Palin Elected Proceeds

from aTinyRevolution.com:

Operation Elect Sarah Proceeding According to Plan

My sources in the Obama administration tell me their secret plan to make Sarah Palin president in 2012 has taken a huge step forward with the election of [Some First Name] Brown to the senate from Massachusetts. As I mentioned six months ago, Operation Elect Sarah has three key elements:

1. Fail to pass meaningful healthcare reform.

2. Fail to pass a second stimulus bill and thus doom the economy.

3. Collect giant wads of campaign contributions from Goldman Sachs.

Getting Sarah into the White House seemed like an impossible dream back in November, 2008. But these people are professionals. There's nothing they can't do.

—Jonathan Schwarz

Chris Floyd answers Juan Cole's indictment of the American Electorate

Juan Cole:

Monday, September 22, 2008

A Nation of Masochists

"I send my tormentor hurrying
hither and thither in the
service of my
suffering and desire."
- Mason Cooley (d.2002)

I have concluded that Americans, who pretend in public to be straitlaced, are in fact rabid masochists addicted to whips, black leather and the application of fists. It turns out that large numbers of people throughout the world are accidentally asphyxiated every year because they need to be choked for maximum pleasure.

The diagnosis of national masochism is the only thing that can satisfactorily explain the poll numbers in the presidential race.



Let's get this straight.

The Republican Party came to Washington, DC, in 2000 with a solid majority in both houses of Congress and on the Supreme Court, allowing them to steal the presidency, as well. If you wanted to know what a pure Republican-Party government unhindered by the Democrats, Libertarians, Greens or Socialists might look like, this was the moment.

So they came to power when there was a budget surplus bequeathed by a Democratic president.

They immediately ran up a big deficit every year since, doubling the national debt from $5 trillion to $10 trillion. You don't run big deficits of $300 and $400 billion a year in good times according to Keynes. You save the the deficit spending for a recession, when the economy needs a jolt. If you're already racking up a big deficit every year in a good economy, you have no way of making a difference during a significant downturn except by then going for a truly mega-deficit, which risks destroying the value of your currency abroad. In a service economy like that of the US, a dollar with a declining value might not even help the economy via exports very much, since the manufactured goods are being made down in Mexico now, anyway.

Note that Clinton had been talking about using the surplus to pay down the debt or to fix the looming crisis in social security.

With the government encumbered with $5 trillion in new debt before September, and now with another trillion and a half (probably when it is all said and done with), how exactly will social security be fixed?

(Hint: Republican leaders such as Ronald Reagan and Newt Gingrich hated social security, because the people are grateful to the Democrats for it. Bush tried to privatize it and McCain would have helped him; you wonder if they are trying deliberately to destroy it. Social security is the main reason for which the elderly are not now, as they were in the 1930s, the poorest and most miserable section of society.)

Then many of the Republicans came to Washington with a crooked plan to use fraudulent methods to ensure that campaign financing went almost exclusively to them through super-lobbyists like Jack Abramoff. Grover Norquist's K-Street Project aimed at guaranteeing big corporate dollars for the Republicans in exchange for their granting the corporations the right to write the legislation affecting their industry. Thus, laws governing pharmaceuticals were written by the pharmaceutical industry lobbyists and just signed off on by the Republicans.

This scam goes beyond Marx's fear that government in a business society was just a "managing committee" for the business classes. Tom Delay, from 2002 the Republican Party majority leader in the House, was too lazy even to be the managing committee! The K-Street crowd just let the business classes run the legislature directly, themselves, having the regulatory laws written to suit them.

So Abramoff, Delay, the K-Street crowd are busted. Once upon a time such a thing would have been a huge political scandal and would have haunted the party that produced it. But because US Big Media is mostly Republican-owned, it just quietly subsided as a story.

It is not just that the rap sheet against the Class of 2000, 2002, and 2004 among the Republican politicians is longer than a trans-Atlantic cable, it is that so much of the corruption took the form of a conspiracy.

All parties have people in them looking to get rich on the side. But the K Street Project and various other such scams weren't just about individual aggrandizement. They were about fixing the whole American system permanently to kow-tow to the super-rich without so much as a whimper, and to positively punish the middle classes.

After the 2002 mid-terms, even George W. Bush wanted to do a tax cut for the middle classes. But Cheney over-ruled him, insisting on another deep tax cut for the very wealthy. We won the mid-terms, Cheney said. This is our due. Deficits don't matter. "Our" due? Cheney is saying that the Republican Party is the party of the super-rich, of the 3 million at the top of American society who own 45% of the privately held wealth (as though we were Brazil), and they are the ones that will be exclusively benefited by Republican rule.

Of course, there were many other conspiracies by the pirouetting pirates of plunder.

There was the Iraq War, one of the great criminal conspiracies of modern times. Barton Gellman has how related the story of how Dick Cheney lied to Dick Armey before the vote on the war, telling him that Saddam's family was all al-Qaeda and that Saddam's evil scientists had made a suitcase nuclear bomb that he would certainly turn over to Bin Laden, and such rank horse manure as that. Dick Armey weeps, says he deserved better than to be bullshitted by the vice president of the United States.

They took us to war against a country that had not attacked the United States; they killed or maimed 33,000 Americans, and turned a whole Arab Muslim country into a burned-out hulk, displacing millions and continuously bombing the very cities that they had conquered and occupied, killing and disfiguring.

They propagandized us with implausible lies about mobile biological weapons labs and Baathist al-Qaeda, and our journalists and their corporate bosses bought them hook line and sinker, as did the public.

Cable and satellite television "news" tells us nothing of elections in India or constitutional crisis in Thailand, and barely mentions a major workers strike at Boeing. Dozens of car bombs go off in Iraq and we are told it is "calm" now. It is a vast electromagnetic form of bread and circuses, wherein hapless celebrities and philandering politicians are fed to the lions before millions of cheering plebes, by corporate moguls desperately hoping that the marks will not notice the legion of pickpockets in the arena, relieving them of their purses.

This crew in Washington thought nothing of assiduously attempting to induce the press to out a covert CIA operative working against Iranian nuclear proliferation, Valerie Plame. Their culture of lies is such that they attempt to divert attention from all the phone calls to journalists by Irv Lewis Libby and Karl Rove trying to get the press to print her name by saying that those two did not succeed. As if the attempt were not dastardly!

Why is trying to inform the Iranians of the identity of a CIA field officer assigned to spy on Iran not an act of treason? After all, you can't inform the world without also informing the Iranians. Isn't the punishment for treason hanging?

The Republican Party conducted a vast illegal spying operation on Americans and on foreign diplomats. We still don't know why exactly, and that the operation had domestic political motivations cannot be ruled out.

They imposed on us this so-called PATRIOT act that gutted the Constitution. The peaceful protesters in St. Paul at the RNC were actually charged with being terrorists, in this Brave New World.

By their incompetence and cupidity the Republican politicians deeply damaged the relief effort for one of America's great cities, New Orleans, which will never see the $33 billion pledged for its reconstruction. Not to mention that levies and bridges are breaking and falling down all around us because Cheney did not want to tax his billionaire friends to pay for the country's infrastructural upkeep.

And then they so radically deregulated and removed any oversight from the banking system that they came within hours of presiding over a 1929-style absolute meltdown of the entire financial and securities system. To cover the criminal activities of their cronies, they are now proposing to impose a fine of one trillion dollars on the middle class, to ensure that their partners in crime will receive their $25 million Christmas bonuses and be held harmless for their misdeeds.

And in the wake of the greatest and most sustained act of systematic plunder since the Mongol hordes appropriated to themselves the riches of everyplace in Asia from Beijing to Isfahan, the reaction of the supine and slave-like American voting public is to scratch their heads and have a hard time deciding if they would like more of the same.

Despite his aristocratic prerogatives and connections in high society, even the Marquis de Sade himself was brought down by a lowly maid, who complained to the police of his cutting her while having his way with her, leading to his arrest.

In contrast to that plucky domestic servant, the American public appears to enjoy being lacerated while being badly used, moaning with delight at each new act of abuse and abasement, while, blue-lipped, gasping for air.

One worries for our children, threatened with the fate of the homeless street children so common in the sort of third world country into which we are being turned by our managing committee.

But, well, if you are determined to bend over on November 4, at least I hope you enjoy pain. In that case, you are going to be ecstatic.

posted by Juan Cole @ 9/22/2008 12:59:00 AM

At 8:24 AM, Chris Floyd said...

Professor Cole, I deeply respect your wisdom and draw on your work constantly, but I have to say that there is a simple answer to your question, and it doesn't involve whips, black leather or the application of fists.

After very effectively laying out the case against the Bush Administration -- a sharp, succinct and true bill of indictment -- you then say:

..."the reaction of the supine and slave-like American voting public [to all this] is to scratch their heads and have a hard time deciding if they would like more of the same."

Why is this? Because in very many, very important respects, "more of the same" is all they are being offered -- by BOTH parties.

You eloquently describe the flagrantly criminal activities of the Bush Administration, each of them crying out for impeachment...so where are the bills of impeachment introduced by Senators Obama and Biden? Where are the high-profile, Watergate-style Senate hearings into the Administration's high crimes launched by the Democratic-controlled Congress? Where are the federal marshals rounding up Administration minions who defy subpoenas and refuse to testify before Congress? When have we seen Obama or Biden leading public crusades denouncing the heinous practice of official torture or aggressive war, putting themselves out in front of these issues? Where are Obama's pledges to relentlessly pursue prosecution of these still-fresh crimes once he comes to office, without fear or favor?

Where, in short, are the indications that the malefactors of the Bush Administration will face even the slightest tincture of justice for their crimes if Obama is elected? And if they do not, then the situation will indeed be "more of the same."

Where was Obama when the time came to stand up against the illegal surveillance of American citizens that you have rightly and eloquently decried? He was standing on the other side, with Bush and Cheney, voting to legitimize tyrannical powers and immunize lawbreakers. More of the same.

What does Obama offer us as his future foreign policy? He will "withdraw combat troops" from Iraq, he says, as long as "conditions on the ground" are right. This is also what Bush and McCain say is their policy, and their ultimate goal. But Obama, like those two, plans to leave an unspecified number of U.S. troops in Iraq, in those impermanent permanent bases. More of the same.

Obama proposes expanding the War on Terror to Pakistan's hinterlands -- a policy already being adopted by Bush and promoted by McCain. More of the same. He also supports expanding the war in Afghanistan itself, with more troops (and more blunderbuss airstrikes to support these troops). More of the same. Obama has declared his fast intent to bring Georgia and Ukraine into NATO, baiting the Russian bear just like Bush and McCain, and reigniting the Cold War. More of the same.

Like Bush and McCain, Obama too rattles the nuclear sword at Iran, vowing in no uncertain terms that he will never take ANY option "off the table" against Iran. More of the same. Like Bush and McCain, Obama has declared his support for the hardest-line Israeli policies against Palestine, and he too refuses to have any truck with the democratically-elected Hamas government. There is virtually no chance whatsoever that an Obama administration would be substantially different in any way from Bush and McCain. It will be, in every important respect, more of the same.

Like McCain, Obama proposes an even larger military machine, one even more ready to strike anytime, anywhere, all over the world, to any perceived "threat" to the ever-unspecified "American interests." More of the same. Like McCain and Bush, Obama says nothing about rolling back America's vast empire of military bases -- those provocative and intrusive imperial outposts that produce so much of the kind of grievous blowback that Chalmers Johnson, among others, has documented so well. More of the same. Like Bush and McCain, Obama has been completely silent about America's direct involvement in the horrific conflict in Somalia -- another botched and murderous job like Iraq. More of the same.

Obama supports the $700 billion theft of American tax money to be ladled out to the cruel and stupid wastrels of the elite, albeit with a few mild caveats about "oversight" -- no doubt the same kind of rigorous "oversight" we have seen from the Democrats throughout the Bush Administration. But the end result will be, yes, more of the same: vast amounts of public money spent to coddle elites and protect them from the consequences of their actions, while millions of ordinary people suffer lasting hardship.

What's more, Obama's own hands as president would be tied by the massive commitment of public funds to the bailout. More money for education, for infrastructure, for affordable health care, for a "Manhattan Project" on global warming? Sorry, can't afford it; we're too busy paying off Wall Street's debts, and expanding the military, and spreading the War on Terror into Pakistan, and maintaining tens of thousands of "non-combat" troops in the hostile environment of a country we destroyed in a criminal act of aggression that no one is going to be held accountable for. But don't worry, there is still enough money left for us to eavesdrop on your emails whenever we feel like it. So that's OK, right?

The Obama campaign has been a massive, historical failure in terms of offering anything like a genuine alternative to the dysfunctional and destructive system we have now. This is not to say that an Obama administration would not be different in numerous and not insignificant ways from a McCain regime. But that is not the issue here. The question is why the election is still in doubt, why McCain may very well win it, even though he represents a continuation of policies that most Americans have thoroughly rejected. And I repeat, this is not because Americans are masochists, or suffer from some other collective character flaw. It is because they see both candidates offering more war, more meddling in the affairs of other nations, much much more of the military-industrial complex, more coddling of the rich, less liberty for our citizens and a bleaker future for our children as they spend decades paying off the debts of the rich and facing the terrible storms of blowback from the imperial adventures that both candidates support.

It is so unreasonable that many people would feel hesitant about such a "choice"? Who should really be castigated here, especially in such harsh and lurid terms? The American people? Or those who failed to offer them a clear and genuine and substantive alternative to "more of the same."

Failure to impeach Bush will haunt Democrats and the country

Weldon Berger in BTCNews:

Nearly a decade of investigations, a lurid final report and a concerted campaign for impeachment left Bill Clinton among the more popular American presidents, with the majority of Americans unconvinced of any need to impeach or remove him from office. Nearly a decade of no investigations, with no coherent summary of misdeeds and no institutional effort to impeach, has left George Bush among the most unpopular of all presidents with a large minority, possibly a plurality, of Americans believing he deserves impeachment.

Clinton was impeached for personal reasons, on both sides of the equation: it was his personal behavior that provided whatever basis for the charges existed, and the desire to impeach him was intensely personal as well. However much impeachment proponents dislike Bush and Cheney—often considerably—the rationale for impeaching them is their official behavior. Consequently, any indictment of the two, whether for repeatedly breaking the law with respect to warrantless surveillance, or violating the Geneva conventions, or politicizing the Department of Justice or any of a number of other crimes, would constitute an indictment of their Congressional enablers as well.

No doubt that’s among the reasons some Democrats in Congress are dead set against the idea, since many of them can be counted among the enablers. But in the long run, Democrats are missing an opportunity to methodically expose the scofflaw nature of the Republican party and to decertify it as a legitimate participant in governing the country until it reconstitutes itself in a more palatable form (or until Democrats implode, whichever happens first).

Nancy Pelosi recently restated her opposition to impeachment, saying that it would be divisive. As I noted at the time, she’s absolutely right. On one side of the divide would be those who support the Constitution and the rule of law, and on the other, whether from party loyalty or personal philosophy, those who don’t. It’s a division that, were it to be explicitly drawn, would benefit the country and those Democrats who stand on the better side of it even if impeachment were to fail, which is possible, or if impeachment succeeded and the Senate voted, as is all but certain, to acquit.

Should the next president be a Democrat, he or she would benefit considerably from serving with a Congress in which Republicans were stigmatized by having been forced to side with Bush and Cheney against the Constitution and Democrats were clearly identified as standing with it. A Republican president would be constrained by the same circumstances.