Terrorists take hostages to draw attention to their cause and to scare people into acceding to their demands. The GOP is holding the economy of the U.S. hostage in the discussions over the debt ceiling, and I think it is time for a War on Economic Terrorism.
The GOP will not bend on their ‘no new revenue’ demands during these sessions, which can hardly be called “negotiating” sessions when one side offers nothing new every day. Speaker John Boehner said. "The votes simply aren't there, and they aren't going to be there because the American people know tax hikes destroy jobs."
Really? If the American people “know” this, then the American people have been fed a lot of misinformation, dare I say from the Right. The Congressional Crier must have forgotten the 1990s, when a 1993 tax increases, bitterly opposed by the GOP, prefaced an expanding economy and employment market. Mr. Boehner also has forgotten the 1950s, when the top individual rate was 90%, and jobs were miraculously created anyway. No one is proposing anything near these kinds of rates – just a return to the rates of 2000. With the total tax burden in America at its lowest level in almost 60 years, this is far from radical. I will not make the claim that these higher rates caused job growth. I will make the claim that tax increases alone, particularly of the small magnitude being proposed, in and of themselves are not likely to destroy American business confidence.
In fact, it is so un-radical that the GOP supported the increases in principle just 4 months ago. That is not a typo. In March, Mitch McConnell, the Senate Minority Leader, and Mr. Boehner supported a plan from Republicans on the Joint Economic Committee. That would have combined 85% spending cuts with 15% revenue increases. Obama has proposed 83% cuts and 17% revenue increases. Instead of negotiating from this position, the GOP talking heads instead call Obama a “dick”. As Ezra Klein correctly noted, ” So when the GOP’s economic policy team sat down to make the strongest case they could for growth-inducing deficit reduction, they recommended a mix an 85:15 mix, not a 100:0 mix. And then, when the Obama administration agreed to an 83:17 mix, the Republican leadership walked out of the room and demanded that taxes be excluded from the deal altogether. How do you negotiate with that?”
Bruce Bartlett, a veteran of the Reagan and Bush administrations, noted yesterday:
Contrary to Republican dogma, polls show that the American people strongly support higher taxes to reduce the deficit and improve income inequality. Following are 19 different polls since the first of the year that say so.
Bruce goes on to reference (and link to) 19 polls, all from 2011, which show large chunks of the public support at least some tax increases. Indeed, the most interesting poll on Bruce’s list is a Washington Post/ABC News poll from last month that found 61% of the country believes higher taxes will be necessary to reduce the deficit.
Not only that, the current leadership raised the debt ceiling 19 nineteen times during the Bush presidency, including:
June 2002: Congress approves a $450 billion increase, raising the debt limit to $6.4 trillion. McConnell, Boehner, and Cantor vote “yea”, Kyl votes “nay.”
May 2003: Congress approves a $900 billion increase, raising the debt limit to $7.384 trillion. All four approve.
November 2004: Congress approves an $800 billion increase, raising the debt limit to $8.1 trillion. All four approve.
March 2006: Congress approves a $781 billion increase, raising the debt limit to $8.965 trillion. All four approve.
September 2007: Congress approves an $850 billion increase, raising the debt limit to $9.815 trillion. All four approve.
Among the tax increases proposed by the White House and the amount they'd raise over the next decade, I don’t see any ‘job killers’:
— Limit itemized deductions, including those for charitable contributions and mortgage interest, for families and small business owners making more than $500,000. Under current law, if a taxpayer's top income tax rate is 35 percent — the highest rate — a $100 deduction is worth $35 in tax savings. For several years, Obama has proposed limiting itemized deductions for people making above $250,000 to 28 percent, meaning a $100 deduction would be worth only $28 in tax savings at most. That would raise $293 billion. Increasing the income threshold to $500,000 would raise "in the ballpark of $210 billion," said Maryland Rep. Chris Van Hollen, one of the House Democratic negotiators in the Biden talks.
— Change the way businesses value their inventory, raising an estimated $70 billion. Current law allows businesses to lower their taxable profits — and their tax bills — by using an accounting method that can inflate the cost of goods sold. Obama proposes to phase out the practice, known as last-in, first out, or LIFO.
— Increase taxes on investment fund managers, mainly hedge funds and private equity firms, raising about $21 billion. Investment managers typically pay capital gains taxes on their fees, with a top rate of 15 percent. Obama wants to tax the fees as regular income, with a top tax rate of 35 percent.
— Eliminate about $41 billion in tax breaks for oil and natural gas companies. Obama has called for eliminating tax breaks for all oil and gas companies every year since he took office in 2009. The biggest is a deduction for production expenses that is available to all manufacturers.
The one common theme in these proposals is that they all impact a small segment of the population – those that can afford it. Some of my conservative friends are accusing Obama of class warfare by harping on corporate jets and millionaire tax breaks. These same conservative friends raised not a whimper when Michelle Bachmann accused the President this week of increasing the number of government limousines during his administration by 73%. There is no question that Ms. Bachmann wants to portray Obama as an out-of-touch privileged leader who is recklessly spending “the people’s money” to enrich his government minions. Of course, the facts do not support her claim, but that doesn’t stop her from throwing it out there. (According to the GSA’s Fiscal Year 2010 Federal Fleet Report, the largest increase in the government-owned limousine fleet was between FY 2008-2009 (46%), compared to FY2009-2010 (18%). The FY 2008-09 ‘limos’ would have been ordered by the Bush administration. The same report indicates that the term “limousine” is loosely defined, and could encompass everything from an armored vehicle to a sedan.) Frankly, by the time this baseless statement is fact-checked and debunked, she has moved onto another one.
But I digress.
I am left (no pun intended) with only one possible motive for the GOP walking away from the current negotiations. They are more invested in the primary goal of denying Obama a second term than they are with addressing the issues important to this country. Mitch McConnell stated this goal explicitly last year: “The single most important thing we want to achieve is for President Obama to be a one-term president.” If you thought that was just political rhetoric, recent actions by the GOP would prove that you were wrong. They really will allow the country to suffer in order to regain power. That should concern everyone.
Let me be clear. Raising taxes is not always the answer, and it should not be the first option; however, when we’ve financed the cost of 2 wars and CUT taxes at the same time, it is not unreasonable to me to increase rates on those that have benefitted most during a time when the tax burden as a percentage of income is at historic lows.
If Obama looks like he is not leading on this, perhaps it’s because he is one of the few adults in the conversation not jumping up and down and making ridiculous demands. Maybe that kind of behavior passes for leadership on cable TV. It does not when it comes to running a government.
As the Preamble to the Constitution says, “...provide for a Common Defense, promote the General Welfare...” When the GOP opened the session of the House in January, they famously read the Constitution aloud and entered it into the record (as if it wasn’t there already). The GOP skipped the part about slavery during the reading, but I’m thinking now that they left out the part of the Preamble about promoting “the general welfare.” Their laser focus appears to be on their power ambitions, not the public good.