Okay, it looks as though we will live to fight another day. We can hope that the bipartisan committee, over whose deficit-reduction proposal that fight will take place, will be rational and truly help to set the country on a more even economic keel. Which means back-loading the cuts in spending to take place after we make massive infrastructure commitments that will both yank us out of this awful unemployment (as World War II yanked us out of the Depression) and lead toward a more efficient, energy-independent, competitive country.
And this proposal should include ‘revenues’ – both from closing loopholes and from higher tax rates on investment income.
Am I the only one who sees a difference between ‘raising taxes in the midst of a recession’ and ‘raising taxes on income over $1 million a year?’
Actually, most of us see that difference.
But the Tea Party doesn’t.
The Tea Party thinks that if we lay off another couple of million teachers, cops, firefighters and government workers – and perhaps skip a few Social Security payments – that won’t hurt the economy. Smaller government is always better. Look at Somalia!
But, they think, if we tax capital gains and dividends closer to the 28% that Ronald Reagan did instead of the 15% we currently do – or if we tax Exxon – it will tank the economy. Taxes are always bad . . . especially on the wealthy, because they are the job creators.
This makes no sense in theory. Millionaires won’t stop going to the mall or installing new pool heaters. It’s the lower- and middle-income folks – especially those you throw out of work – who cut back when taxes are raised. No one is proposing to raise their taxes in such a fragile economy.
And it makes no sense in fact. We have experience with this. When Clinton, inheriting a stagnant economy, raised taxes – without a single Republican vote – we went on to create 23 million new jobs. Is anyone in the Tea Party old enough to remember this?
When Bush slashed taxes for the rich, we created no new jobs. We squeezed the middle class terribly, we turned the gap between rich and everyone-else into a chasm, and we piled up massive debt (with nary a peep from Republicans about a balanced budget amendment). Surely Tea Party congressmen are old enough to remember that.
Does Speaker Boehner not know any of this? Does Minority Whip Jon Kyl really not know any of this? (In his radio address Saturday he described what Democrats want to do as ‘huge tax increases on American families.’) What is so sacrosanct about shielding hedge fund managers from paying the same tax rate as their secretaries? How does this affect American families? And doesn’t cutting Medicare and student aid affect American families?
A wide majority of Americans favor a ‘balanced approach,’ where even billionaires have to chip in a little. But Sarah Palin, who got a D in economics, knows better.
It’s enough to make one crazy. More to the point, it may be enough to even further damage the awful economy that Bush (and a Republican Congress for six of his eight years) handed us.
At which point the Tea Party will blame the massive suffering and crime that result (with fewer cops to fight it) on lazy people who just aren’t trying hard enough to find work, and a government that’s too large – we should halt unemployment benefits, cut back on food stamps, stop lending kids money for college, let our infrastructure crumble – and, if possible, lower the estate tax on billionheirs to zero. That should do the trick.
Fred C: ‘Wow, what bitterness I’m detecting the last couple of weeks. Please look to your own party for part of the blame. The Dems had control of all three branches last year and could have let the tax cuts expire. THEY CHOSE NOT TO DO THIS.’
☞ Listen: there’s a lot to be bitter about. Bullies stole the 2000 election. (And are working hard to keep the weakest among us from voting in the next one – see Friday’s comment.) A lot of people, including a lot of Americans, are dead or badly damaged as a result. We are in deep economic difficulty as a result. We have missed enormous opportunities as a result.
So while I don’t generally think of myself as bitter, I do feel frustration – and sadness – at what might have been.
As for Fred C.’s substantive point, I, too, would have liked to see us let the tax cuts expire . . . but only on income above some fairly high threshold, like $250,000. Hiking taxes on middle class income in the midst of our economic mess – that first $250,000 any of us makes, say – would have been a bad idea. And shutting off unemployment benefits would have been a worse idea. The Republicans were holding the country hostage: if we wanted continued help for the unemployed, and tax relief for the middle class until the economy recovered, we’d have to protect the wealthy. Now they’re holding us hostage again to protect the wealthy – many of whom don’t want this protection.
Such a good piece by Paul Begala over at the Daily Beast. In part:
. . . As the economy teeters on the precipice of a double-dip recession, as millions of Americans search in vain for a job, as tens of millions of homeowners are underwater, as poverty soars and the middle class is hammered, the Speaker of the House is pushing a proposal that-let me repeat Greenstein’s analysis-‘could well produce the greatest increase in poverty and hardship in modern U.S. history.’ Deep cuts in every domestic priority-from education for disabled children to food safety to homeland security to clean air and water. Followed by painful cuts in Social Security, Medicare, and Medicaid. But not a dollar in new revenue. Not one corporate loophole closed, not one billionaire asked to pay one penny in higher taxes. . . .
. . . Seems to me the GOP seeks a banana republic: a toxic blend of right-wing populism, anti-intellectualism, debt defaults, and an end to the ladder of economic opportunity. They would divide us into a few Haves and a lot of Have-Nots. And they would slowly crush the heart of progressive America-the rising middle class created by Democratic economic policies of education and empowerment. All while preserving, protecting, and defending a tiny oligarchy of millionaires and billionaires.
The right wing should ditch the tricorn hats and replace them with mirrored sunglasses. They truly are Banana Republicans.
THE DRIVE FOR 54.5
In the midst of this mess, a step in the right direction. Check out the savings that will result from a more fuel efficient fleet of cars and light trucks.
Needless to say, we should have been much further along in this process than we are. Does anyone think Gore’s energy and environmental policies would have been as retrograde as Bush’s for 8 years? (There’s that bitterness again.) But at least we’re now moving in the right direction.
One of you sent me this:
Coburn Speaks Truth
I am sitting here watching Senator Coburn on the floor of the Senate speaking the truth that I brought up yesterday with the Boehner bill (and Reid’s too) – that they’re scams.
That there are no cuts.
The claim of “cuts” is a lie.
This path will lead to a credit downgrade and ultimately bankruptcy.
He’s not pulling his punches – at all. And Kerry is trying to argue against fixing the problem and that “we need more time.”
Well, no, we don’t. We’ve had four years since the crisis became emergent. Both House and Senate have refused to deal with the issues.
Sorry Kerry, your side has had the gavel and yet your answer is simply to print up more hot checks and lard up the debt. It’s a scam and a fraud.
I didn’t think I’d heard someone speak the truth in the Senate or House – that they were all liars.
Thank you Senator Coburn.
☞ I missed his remarks, but I do think that just as we chose not to go further into debt to fight World War II – we just couldn’t afford it, with the Depression and all – we should not go any further into debt now to win the war on our crumbling infrastructure / lack of competitiveness / energy dependence. Was it really so bad losing World War II?
I’m with Coburn: now is the time to lay off millions of teachers and cops and fire fighters, cut off unemployment benefits and student loans, cut back on maintenance programs for our roads and dams and bridges, cut back funding for research.
Some say that will bring on even worse economic times, falling tax revenues, more foreclosures, an even higher deficit and a downward economic spiral.
They say we should make long-term cuts NOW, but not have those cuts kick in any time soon, until after we win the war.
But they’re elitists. They don’t have Sarah Palin’s native common sense. She can see the economy from her porch. Who can’t! It’s all around us!
I’m with Coburn: the way to avoid the downward spiral of depression as we slash employment and government spending is to keep taxes at historic lows for the very wealthy, lest we make the same mistake we made from 1941 to 1960, when they paid 90% on dividends and 36% on long-term capital gains and the economy didn’t grow at all. (And thank God we didn’t build the Interstate Highway system back then, either.)
The truth of course is that, even with 90% and 36% tax rates the economy boomed from 1941 to 1960, and we DID win the war and DID build the Interstate Highway System. Kennedy was wise to lower the rates to 70% and 28% and Reagan was wise to lower them further. But that was AFTER we had shrunk the deficit from 121% of GDP to 30%.
I’m not suggesting we go back to tax rates anything like those we had under Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford or Carter tax rates. But would it be so terrible if we taxed dividends and capital gains at closer to the 28% rate that Reagan signed into law? Or the Clinton/Gore rates, when we tamed the deficit and added 23 million new jobs?
It’s all going to turn out fine in the end, because I just can’t believe ignorance and selfishness will carry the day.
Tomorrow (or soon): Your Comments on the Flag
Quote of the Day
[It would be splendid if someday] economists could manage to get themselves thought of as humble, competent people, on a level with dentists.~John Maynard Keynes
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