Posts Tagged ‘bush-era tax cuts’

h1

An End to the “Obama is a Radical Socialist” Meme

12.08.10

Given the fact that Obama agreed to extending the Bush-era tax cuts for everyone – including for the richest 1% of Americans – I’d be curious to hear the explanation for people who still hold the belief that he’s a socialist.

I’m sure that they’d point to the debt and how he’s done nothing about it.  Or bring up the stimulus again (even though I don’t hear them screaming about socialism at the moment when – gasp – nearly a trillion dollars added to the deficit to help get the economy going sounds a lot like the stimulus plan). Or maybe they’ll mention that unemployment is at roughly the exact same place that it was when he took office and claim that his goal is to have everyone living off the government’s dime so that he can control everyone.  Or they might say that this is all a tactic to improve the economy so that he can win re-election in 2012 and then he’ll implement all of the truly devastating aspects of his socialist agenda onto the American people.

The reality is that people who perceive Obama as a weak, un-American, Muslim, socialist/fascist “other” will continue to do so regardless of what he says and regardless of what he does.

  • He can cut taxes (which he’s already done before to the tune of nearly $300 billion as part of the Recovery Act);
  • increase the number of troops fighting in Afghanistan;
  • continue to keep troops in Iraq to support the nation-building there;
  • say he’s against DADT but seek out an appeal when a court finds it unconstitutional;
  • declare an end to torture in America yet protect all of those involved in that disgusting enterprise;
  • and, back off on his moratorium for Israelis building settlements in the Gaza Strip.

Yet, he’s a leftist radical?  Not just some annoying liberal, but radical.  Really?  In what Beckian nightmarish world, exactly?

(And as for all the Internet emails about how Obama is actually a Muslim and doesn’t recite the Pledge of Allegiance and was sworn in on a Koran or something — please, stop getting your information from mass emails of which you don’t know the source.  Do some investigation of your own and at least get your facts straight.)

What’s interesting about this deal is that the most grief he’s taking is from the left, not the right.  The conservatives might not be stoked about some of the elements of the deal, but overall they seem relatively cool with it.  After all, they did get the one thing they wanted: making sure that Americans making over a million dollars a year (the new definition of millionaire, by the way, is not for people who have a million dollars, but rather those who make seven figures annually) get $100,000 extra in their pockets.

Sure, they lost on the whole making sure the unemployment extension was paid for, but that wasn’t really that big of a deal.  It’s not like they weren’t going to eventually agree to unemployment benefits — their base might want fiscal austerity during elections, but much like the whole lack of atheists in a foxhole, you’ll be hard-pressed to find someone who has been unemployed for over a year with a family to feed saying no to extending unemployment just because it’s paid for by the deficit.  National concerns become rather minuscule when faced with the personal stresses of being able to put food on the table.

Idealists on both sides lost this one.  Regardless of the health of the short-term economy, the progressives wanted to win this battle against the conservatives.  They wanted some justice for the decade-long tax holiday the rich had been enjoying at the expense of the overall national debt.  And no matter what they got in return — college tax credits, tax rebates, 13 more months of unemployment benefits — the true leftists feel like they lost big time with this deal.  They probably feel betrayed by this president who was supposed to be some progressive savior — while others still wax hyperbolic about how much of a socialist radical he truly is.

Seems like both were wrong about him after all.  He’s still the left-of-center pragmatist who puts governance over ideology every single time.  Just like he’s always been.  And you can still dislike him all you want — but at least dislike him for what he really is and what he’s really done, not for what you project onto him to be.

Image courtesy of Wikipedia Commons.

h1

Who Won in the Political Battle over Tax Cuts; and the Nature of Compromise

12.07.10

After scoping out the vast spectrum of reactions to the tax cut package that just passed through government, I’m left wondering where I stand on things.  I am still relatively new to this whole politics business and I find myself going “yeah, but” to both sides of the arguments (on the factual stuff, not the value-based ideology that gets tossed around a lot these days).

From what I can see, these are the major elements of the legislation:

  • 13 months of unemployment extension
  • 1 year of lower payroll taxes
  • EITC expansion
  • College tax credits
  • Estate tax reinstated but only affects the.25 percent of estates – those inheritances that are worth over $5 million
  • Tax rebates for the middle and lower classes

All of it adds up to about $700 billion added to the deficit.  For those keeping score at home, that’s roughly the size of the Recovery Act (aka, the stimulus).

So, where do I stand on this?

Good question.  Clearly there was compromise on the side of the Democrats in that they were against extending the tax cuts for the rich (who still would feel some of the effects of those proposed tax cuts, regardless, since all of their income under $250,000 would’ve continued to be taxed at the lower rate) and yet the tax cuts across the board is what got passed. Also the estate tax being reinstated but at a lower rate than before and only for a small amount of inheritances. Mark a couple in the win column for the GOP.

But there was compromise on the other side, too.  13 months of unemployment extension is a big deal, especially considering that it was paid for by the deficit, which is precisely what the Republicans did not want.  Throw in the college tax credit and the rebates to the middle- and lower-classes, and those are some wins for Democrats.

For those truly worried about the debt, well, it seems like those are the ones without any real silver lining other than perhaps the Bush-era tax cuts were extended temporarily instead of permanently, so there’s still a chance that the deficit-funded cuts could expire in two years.

There will be Democrats angry about this.  There will be Republicans angry about this.  It seems like from what I’ve read, the Democrats feel the most shafted.  Part of me agrees with that group; but, then part of me wonders: what exactly is compromise? You give up something and the other party gives up something, so you each get something but not everything you want.  Does it have to be an even split to be a successful compromise? Do you still have to feel like you “won” for it to be a negotiation you can live with?  And when it comes down to things like tax cuts versus unemployment benefits, are these exactly apples to apples?  Meaning: can you really trade one for the other and have it even be something you can weigh as one being equal enough to the other for their trade-offs to feel fair?

You can also define compromise as everyone being equally as disappointed.  It’s the cynic’s view of everyone getting something: everyone didn’t get something.  Which is fine so long as you also note that you’re not the only one who didn’t get something rather than just focusing on the items that you wanted but didn’t receive.

Either way: what’s done is done.  Some see a long-term strategy at play that, when spelled out, does make sense. But, is it a planned method to the madness, or is it just an attempt to find a pattern in the chaos?  I guess we’ll find out in a couple years, won’t we?

h1

Obama and Republicans Compromise on Tax Cuts to Keep Everything at Status Quo

12.03.10

With Obama essentially conceding the tax cut extensions for everyone including the richest Americans, he’s given into the situation that the Republicans set up into where he’s damned if he does, damned if he doesn’t.

If he pushed for the tax hikes against the rich, then he’s the socialist that they claim he is; but, if he extends the tax cuts and adds $700 billion to the national deficit, then he’s the spend-happy left-winger who has no regard for the massive debt that they claim he is.

Let’s just look at the facts of the story:

QUICK RECAP:

Republicans are all for fiscal austerity when it’s for a $56.4 billion tab that affects the middle class but not when it’s a $700 billion bill for the top one-percent, wealthiest Americans.

I still don’t get how anyone can say that the GOP is the fiscally responsible party doing the bidding for the average American based on these positions they’ve taken.

Now, there will be negotiations in the final bills that are passed.  The one thing different about the tax cut extensions that will most likely end up passing would be that the GOP wants them to be permanent while the current plan would have them be temporary — probably two to three years long, at which point I’m sure we have this same argument to look forward to (unless it’s a Republican president at that point, which could be what the GOP is planning on so that they can then make them permanent at that time).  Dems are also looking to add in help for people paying back tuition and for small businesses who hire the unemployed.

These concessions by Obama haven’t gone over well with his fellow Democrats in Congress:

Sen. Tom Harkin, D-Iowa, said he would oppose legislation that cuts taxes for upper-income taxpayers, even if it includes an extension of unemployment benefits and the accompanying tax cuts for the poor that the administration is seeking.

I get Harkin’s frustration, but he’s doing nobody any favors by digging his feet in to combat the Republicans digging theirs in.

So after all of this political theater, I predict:

  • Tax cuts extended for everyone

  • Unemployment benefits extended for another year

  • GOP continues to blame Democrats for being spend-happy liberals

  • Debt and deficit keeps ballooning out of control because no one in either party will take the political heat associated with the anger and negativity that will come from all sides when the drastic cuts and tax hikes that are necessary to balance the budget need to be made

Pretty much status quo.

Photo courtesy of snty-tact via Wikipedia Creative Commons.

h1

More Politics, Less Governing: Obama Attempts to Appease GOP Yet Again

12.02.10

In another effort to work with the lock-step Republicans on balancing the budget and cutting spending, President Obama unveiled a plan to freeze government workers’ wages for two years.

Apparently this move would save $5 billion out of the $1.3 trillion annual deficit.  If I do some quick math, that amounts to a whopping .38% spending cut.  (Yes, that’s a decimal point in front of the 38.)

So since this is clearly not remotely going to make or break us in terms of the budget given the massive hole we’re in — and it’s also a temporary fix so it’s not something that will cure the long-term debt — there can only be a couple reasons to do this:

  1. Appeasing the Republicans.
  2. Showing the American people that Dems/Obama are serious about our fiscal health.

It’s not a big enough move to actually put any sizable dent in our deficit so it’s all for show.  And I just don’t see how either groups of people will care whatsoever: those who voted for Republicans on November 2nd have already said they don’t think that Obama and the Dems have any interest in doing much with regard to curbing government spending, and the Republicans have shown that they have no interest in working with Obama since they’ve already declared that their number one priority is making him a one-term president.

At the same time, a majority of Americans do want the Dems and Repubs to work together.  But over the past two years, nothing that Obama has done to appease the Republicans has worked.  I mean, he put over $200 billion in tax cuts in the Recovery Act — yes, to stimulate the economy, but also to appeal to conservatives — and yet still people believe that he raised taxes during his time in office.  It’s unsure exactly what “work together” means to people — if it means the Dems just doing things the way the Repubs want them to, well then, that’s not exactly the definition of compromise.

The issue remains: What did the Democrats get for this? It’s not like this is really helping solve any immediate problems, so the American people don’t stand to feel the benefits of 2 million Americans getting their wages frozen; it’s just a political move.  And at the moment it seems like they’ve gotten nothing except approval from the Republicans, which isn’t much of a compromise whatsoever (even if it’s been rare lately) — it’s a concession.

The idea is that it puts the ball in the GOP’s court to offer a concession of their own on the next issue.  But, I seriously doubt that this will affect the GOP’s stance on the Bush-era tax cuts set to expire at the end of the year, which would mean that the Dems just gave up something for nothing.  Not that this is a zero-sum game even though the Republicans play it as such; so, even if it doesn’t feel like the best thing for the Dems now, as long as it ends up moving America in the right direction it could end up being the right play.

I just don’t know that it looks like that’s the case here.

h1

Why the Bush-era Tax Cuts Should Expire for the Richest Americans

07.25.10

The Bush Tax Cuts are set to expire at the end of this year.  The Republicans want to continue them; the Democrats want to let them end.

NY Times:

Democratic leaders, including Mr. Obama, say they are intent on letting the tax cuts for the wealthy expire as scheduled at the end of this year. But they have pledged to continue the lower tax rates for individuals earning less than $200,000 and families earning less than $250,000 — what Democrats call the middle class.

To put this in perspective, this means that the Democrats — the party typically in favor of higher taxes to pay for their penchant for more government programs — aim to keep the tax cuts for nearly 98% of Americans, while letting the unfunded, deficit-increasing Bush tax cuts lapse for the richest of earners.

This seems like the best course of action for a number of reasons:

  1. The one group of people that don’t need financial help right now are the top 2%, the richest Americans who despite the economic recession that has left millions jobless — and even threatened with being denied continued unemployment benefits — the rich, while having lost wealth, have already rebounded.  In fact, the “millionaire class held a larger percentage of the country’s wealth [in 2009] than it did in 2007,” meaning that the rich are richer now than before the recession, at which time the top 1% of raked in 24% of the nation’s income.
  2. I don’t find higher taxes on the wealthy to be a form of punishment regardless of the economic climate.  It’s like Warren Buffet said: “If you’re in the luckiest 1 percent of humanity, you owe it to the rest of humanity to think about the other 99 percent.”  No one gets to the top alone.  And no one at the top should ever forget about everyone else in the middle and at the bottom.
  3. The overwhelming majority of Americans, those making under $200,000 per year, the supposed middle-class and below, the group most affected by the sub-10% unemployment rate (but by some accounts could be upwards of 20%), can’t handle having their taxes raised.  They simply can’t afford it.  (Now, one could argue that $200,000 per year earners could afford it, but arguing about where the middle class to upper class cut-off lies is a different blog post.)
  4. It’s estimated that the tax cuts on the top 1% could cost upwards of $40 billion.  Since this action now falls under the Pay-As-You-Go rules, the cuts can’t simply be paid for by adding to the deficit.  For those who want to continue the tax cuts, I find it appalling that resources would be found to spend that kind of money on millionaires, meanwhile millions of people still can’t find work.  There has to be countless better ways to spend $40 billion during a time of record national debt than handing it over to the richest people in the country.

This is a society.  We work together.  We need each other. We don’t live in a vacuum, where we are only affected by our own choices.  Individual responsibility is extremely important, but we are a collective, as well.   And right now, the rich don’t need the help; everyone else does.