GOP Election Year Message: Tax Cuts for the Rich, Cut Funds for Jobless
That’s the headline:
GOP: No more help for jobless, but rich must keep tax cuts
WASHINGTON — Republicans almost unanimously oppose spending $33.9 billion for extended unemployment benefits for some 2.5 million people who’ve lost them, because they say it would increase federal budget deficits.
At the same time, they’re pushing a permanent extension of Bush administration tax cuts, especially for the wealthy, which could increase federal budget deficits by trillions of dollars over the next 10 years.
How do they justify this?
Good question. The answer: Darwinian philosophy thinly disguising a well-known bias for rich people. Poor people vote Democratic; you don’t want to give money to those people. Besides, they lost their jobs, and conservative economic philosophy says that losers don’t deserve pity or help–that’s socialist entitlement bullcrap. Rich people, on the other hand, deserve to keep the money they’ve earned–because they’re so good at investing it in stuff like making businesses that employ those jobless people (and, um, they make sizable campaign contributions, ahem).
Forget that the economic engine is driven primarily from money spent by people just like the ones who are jobless, while more money for the rich is what causes the economy to stall. Rich people can be as rich as you can make them, but none will invest in new businesses if the common folk don’t have any money to spend.
And that thing about paying for stuff and how deficits will destroy us? That just applies to Democrats, you silly. Haven’t you been paying attention?
And yet, Republicans are poised to make gains in the elections this year.
We are entering the dark ages for our country.
There is no turning back.
Wealth is too concentrated.
Citizens United gave corporations real power. No politician, Democrat or Republican, will be able to get elected without corporate say so. In five years, Social Security will be history.
It’ll still be around, but the $2.5T the rich owe the SSTF will be a forgotten fact.
“It’s just paper in filing cabinets, there was no lock box.”
Luckily (?) working for a college and then in Japan for the first 15 years of my working life I don’t actually have a lot of money paid into the system.
Thanks to the recession, SS has actually gone revenue-negative already, a few years early.
http://seekingalpha.com/article/209547-social-security-at-mid-year
I don’t see the problem here. Republicans are opposed to high taxes and wasteful spending. Democrats are in favor of high taxes and wasteful spending. The Democrats want to raise taxes and spend more money here; the Republicans oppose both. Where’s the hypocrisy?
In Japan, 3 to six months of unemployment insurance is what most people get. And I speak from experience there. It would be great to get paid for a year or more while I look for my dream job and sleep in. But that’s considered shameful and irresponsible in Japan. In America, people must have a higher tolerance for shame, because they’re talking about extending benefits past *2 years* (99 weeks).
The Republicans think higher taxes will make a terrible economy even worse. They’re right. They also think that 99 weeks is enough time to be doing nothing but looking. If you don’t have a perfect job by then, you can take what you can find. And I think they’re right about that also. By 99 weeks, it’s no longer “unemployment” and it’s starting to become “going on the dole”.
By the way, congratulations on the new Banking bill. I’m sure adding another 2300 pages of vague and threatening restrictions on investment is *guaranteed* to make businesses want to invest and expand! Jobs are sure to follow!
Oh, and regarding that last dig at Republican’s not caring about the deficit (and so being equally culpable with Democrts), here is how Obama’s spending has changed things since the Democrats took over:
“Our federal government’s spending has increased to $3.7 trillion this year from $2.98 trillion in 2008. Publicly held national debt is up by $2.4 trillion in less than two years, to about 63% percent of GDP from 40%, and is expected to reach 70% by 2012. Add in the unemployment rate, which has remained above 9.4% for over a year, and America is clearly failing economically.”
(Pete DuPont, quoted in today’s Wall Street Journal)
I think Bush did a terrible job of controlling spending, but compared to Pelosi and Obama, he was a master spendthrift.
I think Bush did a terrible job of controlling spending, but compared to Pelosi and Obama, he was a master spendthrift.
Indeed he was.
Democrats are in favor of high taxes and wasteful spending.
You really believe that? If so, why should we engage you when you come in bad faith?
If not, why are you trolling us?
The reason the US is running trillion-dollar deficits now is three-fold:
1) We’re in the last year of the Bush tax cuts, where all taxes are at historical minimums (eg. Steinbrenner’s estate will pass to the next generation untaxed).
2) The two wars in the mideast
3) The serious recession and 10%+ unemployment and 20% under-employment.
and America is clearly failing economically
We started failing in 2001, but 15 trillion of public and private debt issued 2001-2007 covered up the core problems for a while.
If you are interested in actual debate and not just exhibiting butthurtedness, we can go over some of the challenges facing the US economy.
Foremost is that everyone is in debt up to their eyeballs. Wages are under pressure thanks to the uncertain job situation and a decade+ of outsourcing and offshoring to India, China, and other low-wage countries like Mexico.
The Republicans think higher taxes will make a terrible economy even worse. They’re right.
No, they’re wrong. Corporate cash is at an all-time high. The rich have so much money now they don’t know what better to do with than lend it to the gov’t at 3%.
Supply-side is a crock when the middle-class and below have no access of wealth-creation that the rich do.
They also think that 99 weeks is enough time to be doing nothing but looking.
This is not just a Republican thing. Both your favorite enemy Pelosi and the Chairman of the Senate Finance Committee (Baucus) have both said that 99 weeks should be enough for anyone.
>> Democrats are in favor of high taxes and wasteful spending.
> You really believe that? If so, why should we engage you when you come in bad faith?
That was poorly phrased. But even you would agree that (generally) the Democrats are in favor of higher levels of Government spending (and a more active role in general for Government) and they are usually willing to raise taxes in order to support that level of spending. The Republicans (or libertarians, anyway) think Government should do less and charge less for it.
I agree that the high level of debt in the US economy is a problem, but things like the 900 billion dollar stimulus and the huge 2009 budget have made it much much worse.
And you don’t think raising taxes will affect investment or consumer spending in a bad way? I admire your optimism, but there’s no historical support for it.
I admit to being stunned at agreeing with Pelosi and Baucus about *anything*.
Seriously, I’m not trolling, but I can’t see an opinion that effectively calls *me* a liar without replying. And I’m interested to see how people respond.
At least a couple of pieces of hypocrisy on the part of the GOP publicity team here.
First, they are pushing the idea that deficits are harmful, even catastrophic, after saying for years that they aren’t so bad or didn’t matter so much–they switched tunes immediately after they lost control of the process. Now, I do not disagree with them about deficits being bad. I hate deficits, and don’t like Obama’s any more than Bush’s–I simply acknowledge the need for stimulus spending, as I acknowledged the need to pay for a war in Afghanistan soon after 9/11. But the GOP has flip-flopped: it was literally “deficit under Bush, no big deal” one day, and the next day “Oh my god, Obama is spending us blind!” You can talk about how much Obama is spending right now, but the GOP is complaining about a number dwarfed by Bush’s prior spending–which they themselves voted for and defended. That’s hypocritical.
Second, Obama’s spending is atypical and would not have happened even close to what it is now if he wasn’t looking into an economic abyss that Bush handed him after Republican economic policies put us there. Unless you wish to hold that Obama would have spent that much money that quickly had the economy been OK–and unless you’re truly on the extreme fringe you won’t honestly be able to say that, and in neither case would you be correct.
And third, if you think that Bush and the Republicans did not engage in wasteful spending, then you are either not thinking it through or are indeed on that extreme fringe. Try keeping a straight face and claiming that there was no wasteful spending throughout the Iraq War–even if you believe the war was necessary and worth the expenditure (I’d love to see that argument as well), waste was rampant, and billions of dollars literally just vanished, unaccounted for. Or take the fact that Bush and the GOP did not fund their Medicare expansion, which was in large part a giveaway to the phrama industry, even as they campaigned to truncate or even eliminate the program. Or a boatload of other spending, not to mention massive earmarks and other waste and corruption that littered the years when the GOP held the executive and legislative.
I would not dare say that there is no wasteful spending in Obama’s budget, but I would like to see where he is spending so much more where Bush was not, and how that spending, specifically, is wasteful. That is your thesis, after all, yes?
Not to mention that of current outlays, a great deal of that money was actually spent by Bush but shows up as “Obama” spending.
As for Obama’s spending, the stimulus spending has been a great success. If you doubt that, then take a look at how job loss/creation was affected; the change is so sharp and so exactly pivoting on the Stimulus that it would be painfully difficult to say there isn’t a direct connection–especially since no other conditions can explain the reversal. If ANY expenditure made by the government eventually ends up saving more than it cost in recaptured revenues, this would be the one.Even if the job losses under Bush had not continued to race to the abyss and stayed at 700,000+ jobs lost every month, then we would still have more than five to six million fewer jobs today relative to where Obama’s stimulus has brought us, and the economy would be far worse off than just the tax dollars those jobs are now paying and will continue to pay annually.
So, hypocrisy? You bet. An unnecessary war which has cost us trillions, an economy run into the ground ending in a massive bailout amounting to corporate welfare/blackmail… versus emergency stimulus spending which has saved millions of jobs? Had Obama not spent that money, the same GOP strategists would be attacking him mercifully for the horrific (even by current standards) economic hole we’d be in right now.
Tell me, after 9/11, if I criticized Bush for spending money on homeland security and going after the Taliban in Afghanistan via deficit spending, what would a right winger say to that?
The tax cuts for the rich, if extended, will cost several times as much as Obama’s stimulus–and these cuts were shown not to have had any positive effect–they did not spur the economy, did not pay for themselves. So what are they good for, if all they achieved was to give more money to people who already have money and are not even investing all they have in the U.S. economy?
Tax cuts and spending both cost money. Spending assures the money is going to productive means, injected into the economy and used to create jobs and stimulate economic growth. Tax cuts for the wealthy and for corporations are, at best, a bank shot, where one only assumes the money will be spent to spur the economy.
Now, tax cuts for the middle class and the poor I am 100% behind, as I see that money going straight back in to the economy, one way or another. Perhaps you and I can agree on that. Even Obama does not want to stop the middle class tax cuts that got passed under Bush (though Greenspan does). But for wealthy people and corporations? They are flush already and the money in their pocket is perhaps the poorest bet. 38% of the Bush tax cuts [PDF] went to the top 1%; more than half went to the top 5%, and about three quarters went to the top 20%. The bottom 60% saw a shade over 12% of the tax cuts. You want to extend that bottom 12%, I’m with you. The top 75%? A complete waste, from the standpoint of the national economy. We need that money as revenue, and it ain’t doing no good where it’s going to now.
Bold assertion there. You seem certain. So, evidence, please. Bush’s tax cuts cost us more than $2 trillion in revenue. Extending them another 10 years will cost another $2.2 trillion. From your writing, you seem to feel that this kind of loss to the treasury is a bad blow. So justify it. Demonstrate how the Bush tax cuts made the economy soar. Point out where four and a half trillion dollars come from these tax cuts. For the Obama stimulus plan, I show a direct correlation with job growth, and the evidence is striking. Show me evidence that the tax cuts did anything similar.
As Troy said, taxes are at an historic low–and the economy is as well. Show me how there’s no correlation between the two. Show me any evidence whatsoever that letting tax rates for the wealthiest go back to very low levels as opposed to ridiculously low levels will crush the economy.
Make me a believer.
And you don’t think raising taxes will affect investment or consumer spending in a bad way? I admire your optimism, but there’s no historical support for it.
The Republicans were all “OMG more taxes are going to destroy the economy!!” in 1993 when Clinton got his tax increases through the Democratic congress without a single Republican vote.
7 years later the nation’s finances were in the best they’d been since Carter if not Nixon.
There are IMMENSE producer surpluses in the system. Taxes just redirect these surpluses from rentiers to government.
The modern economy the middle class faces features us getting chiseled by rentier capitalism at every turn.
Insurance companies. Medical providers. Energy companies. The landlord or the bank. Hell, even soft drink companies — two thirds of Coke’s sales go to overhead and profit.
Honest capitalism with honest profit margins is a quaint memory, almost.
I agree that the high level of debt in the US economy is a problem, but things like the 900 billion dollar stimulus and the huge 2009 budget have made it much much worse.
You seem to think the $3.6T the government spent just disappeared without any secondary effect. Every dollar of that went out as somebody’s paycheck or transfer payment paying for a medical procedure (Medicare), retirement (SS), or rent (Section 8).
To understand what has happened to us since Bush left you need to understand what this chart is saying:
http://research.stlouisfed.org/fred2/series/CMDEBT?cid=97
Total household consumer debt rose — doubled, actually — from 2001 to 2008. Most of this debt was mortgage debt, either home purchase(s) or home equity borrowing.
http://www.ritholtz.com/blog/2010/07/the-4-trillion-dollar-question-2
This produced a fake economy 2003-2007 populated by real estate speculators, agents, loan brokers, plus HUNDREDS of billions of debt-dollars a year being “pulled out” of houses (actually just more debt) that went for luxuries and otherwise stimulated the general economy. Home equity borrowing was FIVE HUNDRED BILLION dollars at the peak (2005).
Divided by $50,000/yr McJobs, that’s TEN MILLION jobs funded by nothing but phantom income. THAT’S why the economy tanked in 2008 — the home ATM ran out of money.
No doubt there is great amounts of waste, fraud, and abuse in the SIX TRILLION government (at all levels) is spending now. The key thing tho is that without this spending TENS OF MILLIONS of Americans will be screwed more than they are now.
I think the economy is fundamentally broken and neither major Party (nor any of the minor parties) has any idea of how to fix it. The Democrats may have a slightly better program but the country is simply too divided and too bamboozled by the propaganda mills and media outlets to fight for it.
The US is completely and totally screwed. Collectively we’re not broke — the upper 5% owns 90% of everything, but the masses have been successfully disempowered.
Democrats have been party to this process too, with NAFTA and a general failure to actually fight for a coherent policy alternative when out of power 1994-2006.
One more thing on:
And you don’t think raising taxes will affect investment or consumer spending in a bad way
Most “investment” these days bogus, in that it is simply money going into real estate valuations or speculation in commodities.
Whether we pay $50,000 or $200,000 for an empty lot, the actual wealth creation is the same — ZERO.
There is already too much “investment” in productive assets.
http://research.stlouisfed.org/fred2/series/TCU
shows existing industrial capacity is being idled at historic levels, about what the worst of the 80s recession was. What investment is needed here?
I agree with you that we need to cut government spending by hundreds of billions of dollars. But don’t kid yourself that that won’t be a MASSIVE shock to the current system, especially all the middle-class jobs that government spending funds — social services, law enforcement/criminal justice, military, defense industry, medical care.
We could cut $100B from each of these areas. Say for each $100K we cut we’ll lose one government job. That’s six million jobs you just cut. And it doesn’t end there, since government paychecks don’t disappear when deposited, they enter the local community and thus indirectly support 2 or 3 other local jobs.
I don’t really have any solid answers to solve the economic challenge. We have too many people and not enough middle-class jobs.
The choice we face is either moving to a Mexican-style oligarchy or the Euro model of high-tax high-service (as demonstrated by the Scandinavian countries and Germany).
Politically, we’re clearly heading towards the former option if the Republican Party gets back into power and ever starts walking their talk.
As for tax increases on the middle class, I believe even that is really orthogonal to wealth creation, since I think the argument that “all taxes come out of rents” is supportable.
AFAICT, a higher tax level does not, in the end, result in lower consumption or investment. It comes out of land values and corporate profit margins. See the economy of Norway and other high-tax / high-service systems for a real-world demonstration.
MSFT had $60B in gross sales, $20B in profits and paid a $5B tax from that, leaving them with $15B of cash to join the $50B in cash and investments it already has on its books.
Doubling the rate MSFT pays would not effect their business model or employment level in the slightest. They have so much money they don’t know what to do with it. Ballmer is certainly not going to add productive capacity, they’re already too big to manage their existing plant all that well.
How about XOM? $140B in after-tax profits since 2005. If our economy was on the model of Alaska or Norway’s, much of that resource-rent profit would have been sequestered in a permanent pension fund or other social spending instead of just pocketed by the already immensely wealthy.
@Geoff K
Looks to me like you are wrongfully framing again: What Democrats would call investing in the American people Republicans call wasteful spending.
As Ezra Kline said last week, for every dollar in tax cuts for the rich it results in 50 cents in stimulus for the economy.
(This is why, by the way, the Bush tax cuts have cratered the economy they litteraly wiped out demand like a sponge. Yet the Republicans keep pushing them.)
Every dollar spent on unemployment during a demand recession results in $1.60 in stimulus. Every dollar invested in what Republicans call wasteful spending on infrastructure, results in $1.50 in stimulus.
In hindsight, Bush’s tax program looks as if it was tailor made to aid the rich and break the backs of the middle class by cratering the economy and making sure that there was nothing left to repair it.
Why would anyone, who is not a billionaire, be for the Republicans? They are systematically attempting to destroy global civilization for the sake of greed and power for a very few. It’s really quite simple. It’s diabolical.
@Geoff K
One more thing:
“Reagan proved, deficits don’t matter anymore.”
Who said that, and when?
Dick Cheney after passing the Bush tax cuts.
The point is reinforced: deficits don’t matter when you are giving to the rich, they only matter when formerly middle class Americans are desperate for the cash.
The prosperous America we grew up with, is gone. Thank you Republican party.
The Dems campaign program should be:
Republicans can’t be trusted with managing the economy.
Then throw up the charts, with employment growth during the various presidencies and the old bikini chart, for starters.
@Tim Kane
Bush’s tax program looks as if it was tailor made to aid the rich and break the backs of the middle class by cratering the economy and making sure that there was nothing left to repair it.
The core problem is that modern economic theory is missing the central fact that the dominant “investment” everyone is required to make is investment in living space.
Real Estate bubbles have come and gone for centuries yet we’re always surprised by how they bust everyone out after the run is over.
When everyone gets more money, all that’s going to happen is rents and land values will go up. . Hand out $1000/child tax credits, rents and land values will go up. Interest rates go down, land values go up! It’s a treadmill!
I didn’t understand this dynamic in 2000-2001, really — I only discovered Henry George’s arguments (http://en.wikipedia.org/wiki/Progress_and_Poverty) in late 2002.
Had I had this understanding in Dec 2000, I would have rushed out to buy a home right then since the coming Bush tax cuts would clearly be stimulus to housing values. And the 2001 & 2003 tax cuts did start inflating housing costs, along with falling interest rates and the near-total deregulation of the lending industry, setting us up for a doozy of a repeat of the S&L crisis.
Economies don’t need tax cuts to function more efficiently. We got the great dotcom R&D boom in the teeth of Clinton’s tax rises of 1993. That should be enough evidence for anyone.
As should the success of the Norwegian economy with their very high taxes. Richest nation on Earth, richer than Saudi Arabia. Their substantial oil wealth has helped, but their very wise governance is an example to us all (neither the UK nor the Netherlands managed their share of the North Sea oil half as well as the Norwegians). Their government holds around $200,000 per household in their pension fund, all from retained oil severance taxes and royalties. This is 10X the size of Alaska’s Permanent Fund on a per-household basis.
This is why, by the way, the Bush tax cuts have cratered the economy they litteraly wiped out demand like a sponge. Yet the Republicans keep pushing them
this isn’t really what happened. Tax cuts are stimulatory, too, but the problem is that they’re untargeted so their first-order effect is to just boost rents and land values.
Every dollar spent on unemployment during a demand recession results in $1.60 in stimulus
This is true as far as it goes perhaps but UI is funding consumption and is just kicking the can down the road.
A nation can’t consume its way to wealth-creation. We’ve got a hollowed-out economy now, with the top 5% owning around 90% of the capital. We’re almost right with Mexico on the Gini index.
http://en.wikipedia.org/wiki/File:Gini_since_WWII.svg
Outsourcing and offshoring is whittling away at the middle-class ability to be a productive citizen of this country.
One thing I really, really don’t understand is where all the government spending is going. Assuming there’s $5T of gov’t spending (actual total spending is $6.5T, but some of that is transfer payments from Federal to state I guess), at $50,000 per job that should be 100 million jobs supported by the gov’t, almost one per every household. The math just doesn’t make sense on that.