Standing up for the rich

Republicans want to extend the Bush tax breaks for the super-rich. They say that this is absolutely necessary, as it’s the rich who create jobs. It sounds logical enough, right? But, recent history tells us a different story.

In 2001, when Bush first pushed these tax breaks through Congress, we were told that doing so would supercharge the economy. Here, in the words of the Christian Science Monitor, is what actually happened.

…When Congress passed the tax relief act in 2001, the US Treasury had a surplus, which economists predicted would grow to $5.6 trillion 10 years down the road. Instead, the United States has an estimated deficit this year of $1.34 trillion. If the federal government extends all those tax cuts this fall and takes no other actions, America could be looking at $9 trillion or $10 trillion in accumulated red ink over the next decade…

I know it doesn’t tell the whole story, as Bush also led us into an extremely expensive war, among other things, but here are the tax rates for America’s top earners in 2000 and 2010 respectively, along with our national unemployment rate at the outset of said year.

2000: Income tax rate of 39.6% for the most wealthy Americans.
Unemployment at 4.0%

2010: Income tax rate of 35.0% for the most wealthy Americans.
Unemployment at 9.7%

But, in spite of this, we have reason to believe that making these tax cuts permanent will somehow spark a flood of job creation not realized over the past decade, in the wake of the Bush tax cuts.

What we have seen during that time, however, is a growing gap between the rich and poor in this country. Here, on that subject, is a clip from the Associated Press.

…The income gap between the richest and poorest Americans grew last year to its largest margin ever, a stark divide as Democrats and Republicans spar over whether to extend Bush-era tax cuts for the wealthy.

The top-earning 20 percent of Americans – those making more than $100,000 each year – received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent made by the bottom 20 percent of earners, those who fell below the poverty line, according to the new figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968…

Fortunately, though, a majority of Americans realize this, and want the Bush tax cuts for the wealthy to expire. You wouldn’t know it to listen to our President, though. He, it would seem, would love to extend the cuts, if only there were a way to pay for them… And, what’s worse, he may agree to extend them even though we clearly can’t.

I want to say more, and do my part to stir up the revolution, but the heat from the laptop is beginning to burn through my gut, upon which it’s precariously balancing. So, that’ll have to be it for tonight.

[Tonight’s post was brought to you by earmark accepting anti-earmark Republicans, and those Teapartying members of Congress who, although having campaigned against Obamacare, now really want their government-run healthcare.]

update: The burning, as it turns out, wasn’t coming from outside my gut. It was coming from inside. I think my body is producing excess bile.

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14 Comments

  1. Posted November 16, 2010 at 10:46 pm | Permalink

    I think a clip from the recent piece by Frank Rich is probably called for…

    …On last Sunday’s “60 Minutes,” Obama was already wobbling toward another “compromise” in which he does most of the compromising. It’s a measure of how far he’s off his game now that a leader who once had the audacity to speak at length on the red-hot subject of race doesn’t even make the most forceful case for his own long-held position on an issue where most Americans still agree with him. (Only 40 percent of those in theNov. 2 exit poll approved of an extension of all Bush tax cuts.) The president’s argument against extending the cuts for the wealthiest has now been reduced to the dry accounting of what the cost would add to the federal deficit. As he put it to CBS’s Steve Kroft, “the question is — can we afford to borrow $700 billion?”

    That’s a good question, all right, but it’s not the question. The bigger issue is whether the country can afford the systemic damage being done by the ever-growing income inequality between the wealthiest Americans and everyone else, whether poor, middle class or even rich. That burden is inflicted not just on the debt but on the very idea of America — our Horatio Alger faith in social mobility over plutocracy, our belief that our brand of can-do capitalism brings about innovation and growth, and our fundamental sense of fairness. Incredibly, the top 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.

    “How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, “Winner-Take-All Politics.” If you want to cry real tears about the American dream — as opposed to the self-canonizing tears of John Boehner — read this book and weep. The authors’ answer to that question and others amounts to a devastating indictment of both parties…

    The G.O.P.’s arguments for extending the Bush tax cuts to this crowd, usually wrapped in laughably hypocritical whining about “class warfare,” are easily batted down. The most constant refrain is that small-business owners who file in this bracket would be hit so hard they could no longer hire new employees. But the Tax Policy Center found in 2008, when checking out similar campaign claims by “Joe the Plumber,” that only 2 percentof all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners. The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”

    Those in the higher reaches aren’t investing in creating new jobs even now, when the full Bush tax cuts remain in effect, so why would extending them change that equation? American companies seem intent on sitting on trillions in cash until the economy reboots. Meanwhile, the nonpartisan Congressional Budget Office ranks the extension of any Bush tax cuts, let alone those to the wealthiest Americans, as the least effective of 11 possible policy options for increasing employment…

  2. Trolliosis
    Posted November 16, 2010 at 11:21 pm | Permalink

    Are they extending all of the tax cuts, or just those for the rich? If all are being extended, then I don’t care. The rich won a long, long time ago. I’ll take what I can get, and keep on stockpiling the whiskey and the bullets.

  3. Knox
    Posted November 17, 2010 at 6:54 am | Permalink

    Maybe the problem is that the taxes on the rich still aren’t low enough. Maybe if we eliminated them altogether, we’d see an enormous surge in job production. We could make a 0% tax bracket called “Winner”.

  4. Posted November 17, 2010 at 7:07 am | Permalink

    I can’t believe that people are seriously having this discussion. Is the American working class really this amazingly spineless? It’s like they are perpetually frightened of angering their feudal lords.

  5. Tommy
    Posted November 17, 2010 at 9:20 am | Permalink

    Trollio – I prefer Stoli, closed garage door and car running with Billie Holiday cd’s playing.

    Peter – the answer to your question is ‘yes they are’. We’ll just bend over and take it. No France type protests here. Social Security at age 69 or 70 now? Younger workers take notice – those jobs that might have been yours due to baby boomers retiring will not be. (Sucks to be you I guess, but you won’t do anything about it).

  6. Edward
    Posted November 17, 2010 at 9:26 am | Permalink

    That’s it! I’m going to open a Monocle Waxing and Top Hat Blocking business.

  7. Meta
    Posted November 17, 2010 at 9:40 am | Permalink

    According to the news today, it looks like Dems are ready to make a deal and extend the tax cuts for the wealthy two or three years.

    Senate Majority Leader Harry Reid hinted on Tuesday that Democrats are willing to consider extending the Bush tax cuts for a few years, reports Reuters. “This is something we will take a look at,” Reid told reporters when asked about the plan that may be a prelude to a deal with Republicans. Democrats want to extend tax cuts for those pulling in under $200,000, while allowing them to expire for the wealthy. Reid said he isn’t pleased with the proposal to extend the cuts across the board. “For people to say that these upper-income tax cuts affect most small business is simply not true. My main concern is to prevent a tax hike on the middle class,” he said. But Democrats, who head into a second round of negotiations today with emboldened Republicans, may cave to political exigencies. In exchange for allowing the rich to keep their tax cuts, Democrats hope to secure unemployment benefits for the 2 million Americans set to lose them in December. Politicians on both sides of the aisle are grumbling about the potential deal. “It really strikes me as hard to explain why we would give charity to the richest people in America … and deny the basic necessities of life to people who are out of work through no fault of their own,” said Sen. Richard Durbin of Illinois. House Republican Michele Bachmann countered on that she didn’t think “the American people should have to pay for that [tax cuts] by having to have some new massive spending tied to it,” said Minnesota tea party representative on ABC’s Good Morning America. “If that’s the case, I don’t think you are going to see the Republicans go along with it.”

    http://slatest.slate.com/id/2275259/

  8. Alice Krum
    Posted November 17, 2010 at 10:27 am | Permalink

    The Republicans are saying emphatically that they will not vote to keep the middle class tax cut unless these tax cuts for the rich are extended as well.

    I love hostage negotiations.

    http://tpmdc.talkingpointsmemo.com/2010/11/gops-top-tax-guy-republicans-will-block-permanent-middle-class-tax-cut.php

  9. Stephen
    Posted November 17, 2010 at 12:44 pm | Permalink

    What the world needs is a pissed off, poor, hacking Super Hero who takes it upon himself to erase fortunes and level the playing field.

  10. Meta
    Posted November 17, 2010 at 1:01 pm | Permalink

    This comes from Eric Alterman.

    NEW YORK – Obama Wimps Out on Tax CutsThe president is ready to compromise on the Bush tax cuts and extend them for the rich. Eric Alterman wonders why Obama can’t manage to defend a campaign position that’s both popular and fiscally sound.

    It’s happening again. Barack Obama is punching the Republicans in the fist with his face. Almost in spite of themselves, Democrats won the public-opinion battle over extending the Bush tax cuts for Americans making a quarter of a million a year or more with strong majorities supporting their position. They did not have the nerve to hold this vote before the election, and now the nervous nellies appear to be getting ready to throw in the towel (or at least most of it). President Obama, on the other hand, ran for office on a pledge to extend the existing tax rates for families making less than $250,000 a year, while letting the tax cuts for those making over that number expire. The number of Americans lucky enough to earn this kind of money constitutes barely more than 2 percent of the population, though one can imagine they provide a much more impressive proportion of the funds that go into financing election campaigns, whether directly or by stealth.

    But with the tax cuts poised to expire Dec. 31, The Washington Post reports that “Obama has opened the door to a compromise with Republicans, signaling a new willingness to accept tax breaks for the wealthy.” He is doing this, meanwhile, as the Republicans continue to stand united against the extension of unemployment benefits for Americans making not $250,000 a year, but nothing.

    Put the words “Obama” and “compromise” into a Google search and the result is, I’m not kidding, almost 9 million hits. Why is this? White House senior adviser David Axelrod told The Huffington Post that “we have to deal with the world as we find it.” And from where and whence did this “world” arrive? The Post reports, “In the days after the election, that cold reality appeared to have overtaken the harsh rhetoric of the campaign trail. A consensus was quietly emerging on taxes, with key lawmakers and senior aides saying both parties were preparing to accept a temporary extension of all the cuts to defuse a brutal, drawn-out fight.”

    Read the rest.
    http://news.yahoo.com/s/dailybeast/20101117/ts_dailybeast/11019_obamawimpsoutwithpossiblebushtaxcutcompromise

  11. Tommy
    Posted November 17, 2010 at 3:53 pm | Permalink

    I do not think that Mr. Obama will win the nomination for the Dems; don’t know who will, but if he and his fellow dems are too dumb to realize that those on the other side of the aisle will be getting what they want (tax cuts extended) and will then hammer the Dems for increasing spending (in this case for additional unemployment benefits) then they really are as stupid as they appear to be.

    Let the cuts expire – across the board; the world will not end. I am in that middle class who is supposedly benefitting right now – frankly I haven’t noticed any difference.

  12. Robert
    Posted November 17, 2010 at 3:57 pm | Permalink

    The thing I like most about Republicans is their clairvoyance. They can’t see what is going on right in front of their eyes real good, but boy can they tell you all about what WILL happen in the future, or what WOULD HAVE happened in an alternate reality…and they can tell you about these things in amazing detail. Never mind that history has shown that their predictions are always wrong. You have to keep in mind, those were Republicans from the past which made those predictions. They aren’t REAL Republicans. Only current Republicans are REAL ones. Well, OK, some are the same people from before, but those are just Republicans which hadn’t quite figured everything out yet. They had one or two details wrong. It was just unfortunate that it was those exact details which were the important ones at the moment. Had it been any of the other infinite details they would have gotten it perfectly right. Either way, the only REAL Republicans are the ones from the present. They have all the details figured out perfectly…I mean regarding the future and worse alternate realities we only avoided because of them, not the shit that’s going on right in front of them – You know, like PDA’s and crap like that.

    Fox News, for example, has by far the worst record for reporting facts, but only those from the present or past. They’re batting 1000 on getting those facts right which would have happened in an alternate reality, or which are going to happen in the future. If only they didn’t have to pander to that portion of the population which are obsessed with this dimensions and those irrelevant facts one might find here in the present or past.

    Sure things went to shit when Republicans were in charge, but they would have gone to way more shit if they weren’t in charge. You would know that if you could see into alternate realities like they can.

    Bush’s greatest accomplishments are all those things that DIDN’T happen, you know, like all those attacks that would have happened if it weren’t for him “keeping us safe” (starting 9/12/2001 of course). You could tell just from looking at him and listening to him that Dubya’s mind was focused on alternate realities where it should be. It must have been such a burden for him. That must be what explains those repeated claims of it all being such “hard work” which I never heard any other president say. They weren’t burdened with the ability to see the future and alternate realities… or into people’s souls, as Bush did Putin’s for example.

    As impressive as all this GOP-ESP is to me, I think I am most amazed at how Bush was able to keep us safe for many years before he was even in office. That was the most incredible thing if you ask me.

    Sure the tax cuts were made just before everything went to shit, but the tax cuts actually kept things from being even worse. Didn’t you know that? Oh yeah, that’s right, you don’t have their clairvoyance. I keep forgetting that the rest of us don’t have that magical insight. Boy, I’m glad they’re back in charge of congress. That was a close one.

  13. Posted November 17, 2010 at 9:02 pm | Permalink

    Yes, that’s a good point, Robert. Things would have been much worse if not for the Bush tax cuts… Also, if he hadn’t allowed 9/11 to happen, I’m confident that a much worse attack would have taken place.

    And, if you’d asked me a few weeks ago, I definitely would have said that Obama should run again. Right now, I’m not so sure. I think I’d prefer to have two years of kick ass “I don’t care if I get reelected” Presidency than another 6 of compromise.

  14. Anonymous
    Posted November 17, 2010 at 9:20 pm | Permalink

    Check this out from Open Secrets.

    Members of Congress are enjoying their own financial stimulus.

    Despite a stubbornly sour national economy congressional members’ personal wealth collectively increased by more than 16 percent between 2008 and 2009, according to a new study by the Center for Responsive Politics of federal financial disclosures released earlier this year.

    And while some members’ financial portfolios lost value, no need to bemoan most lawmakers’ financial lot: Nearly half of them — 261 — are millionaires, a slight increase from the previous year, the Center’s study finds. That compares to about 1 percent of Americans who lay claim to the same lofty fiscal status.

    And of these congressional millionaires, 55 have an average calculated wealth in 2009 of $10 million or more, with eight in the $100 million-plus range.

    “Few federal lawmakers must grapple with the financial ills — unemployment, loss of housing, wiped out savings — that have befallen millions of Americans,” said Sheila Krumholz, the Center for Responsive Politics’ executive director. “Congressional representatives on balance rank among the wealthiest of wealthy Americans and boast financial portfolios that are all but unattainable for most of their constituents.”

    In 2009, the median wealth of a U.S. House member stood at $765,010, up from $645,503 in 2008. The median wealth of a U.S. senator was nearly $2.38 million, up from $2.27 million in 2008.

    For all members of Congress regardless of chamber, median wealth in 2009 reached $911,510, up from $785,515 in 2008. This spike in personal wealth represents a notable rebound from the period between 2007 and 2008, when overall congressional wealth slipped by more than 5 percent. Federal lawmakers’ personal wealth climaxed in 2007 — the pinnacle of nearly a decade’s worth of steady asset value expansion.

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