John,
Jane Hansher's posted article ("Obama Twists Own Arm, Says 'Uncle' to Extending Bush Tax Cuts") quotes sources suggesting that David Axelrod said the Obama Administration is ready to face the new political reality and accept an across-the-board continuation of the Bush tax cuts for the middle class as well as for the very wealthy.
If true, this sadly seems to say Jonathan Rauch's thesis that divided government (no matter how chaotic and ineffectual) forces more compromise is already starting to take effect. Obama knows the Republicans can pass the tax cuts through reconcliation as they did under Bush's Presidency. Maybe that's why there was no wasting of words when he said he was "absolutely open" to negotiation on the Bush tax cuts (possibly excluding the top 1% as Reich and others recommend).
Whatever emerges under this new lame duck divide, I fear Obama's emotional makeup is no match with FDR's force of character to stand up for the common man against Wall Street and the wealthy monied interests now stealing our democracy. FDR's "stand up" inspiring words 75 years ago ring relevant now:
"There is nothing I love so much as a good fight." ... "The first (failed) theory is that if we make the rich richer, somehow they will let a part of their prosperity trickle down to the rest of us." ... "The true conservative seeks to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it." ... "These unhappy times call for the building of plans that rest on the forgotten, plans that put their faith once more in the man at the bottom of the economic pyramid."
Today, the ugly irony is that the forgotten at the "bottom of the economic pyramid" comprise nearly 80% of American households!
Jane Hansher's posted article ("Obama Twists Own Arm, Says 'Uncle' to Extending Bush Tax Cuts") quotes sources suggesting that David Axelrod said the Obama Administration is ready to face the new political reality and accept an across-the-board continuation of the Bush tax cuts for the middle class as well as for the very wealthy.
If true, this sadly seems to say Jonathan Rauch's thesis that divided government (no matter how chaotic and ineffectual) forces more compromise is already starting to take effect. Obama knows the Republicans can pass the tax cuts through reconcliation as they did under Bush's Presidency. Maybe that's why there was no wasting of words when he said he was "absolutely open" to negotiation on the Bush tax cuts (possibly excluding the top 1% as Reich and others recommend).
Whatever emerges under this new lame duck divide, I fear Obama's emotional makeup is no match with FDR's force of character to stand up for the common man against Wall Street and the wealthy monied interests now stealing our democracy. FDR's "stand up" inspiring words 75 years ago ring relevant now:
"There is nothing I love so much as a good fight." ... "The first (failed) theory is that if we make the rich richer, somehow they will let a part of their prosperity trickle down to the rest of us." ... "The true conservative seeks to protect the system of private property and free enterprise by correcting such injustices and inequalities as arise from it." ... "These unhappy times call for the building of plans that rest on the forgotten, plans that put their faith once more in the man at the bottom of the economic pyramid."
Today, the ugly irony is that the forgotten at the "bottom of the economic pyramid" comprise nearly 80% of American households!
Best,
Frank
Frank
Frank,
You say "Obama knows the Republicans can pass the tax cuts through reconcliation as they did under Bush's Presidency." I don't know about that. Democrats still have a majority in the Senate. Reconciliation is used to overcome a filibuster so the majority can vote. This does not apply for the Republicans because Democrats still will have a majority in the Senate. But the lame duck Congress can use reconciliation to pass an alternative tax plan. Democrats still have a majority in both Houses till the first of the year. They can let the Bush tax cuts expire and pass their own plan using reconciliation just like Bush did.
Here's what they should do: 1) let the Bush tax cuts expire and 2) pass the Bush tax cuts for the middle class or their own version of Bush tax cuts for the middle class using reconciliation to avoid the filibuster.
Please tell me why they could not do that? They have a month and a half to do it.
Regards,
John
John,
You're right. I wasn't aware the Democrats could let the Bush tax cuts expire and then could successfully use reconciliation with their current Congressional majority in January to pass their own bill before Republicans take over the Congress.
But it's my cynicism at work that Obama will not resort to reconciliation or will be obstructed in some unpredictable way by the Republicans from getting what he wants before 2010 ends or the new Congress takes over. Then Boehner's party is in the driving seat with reconciliation and broad-based tax cuts in 2011. [Frank: No, reconciliation can only be used to overcome a filibuster if the party using it has a majority. Otherwise, when the bill is brought to a vote, it will still be voted down by the majority. The Democrats still have a majority in the Senate going forward so reconciliation will be of no avail to the Republicans.] As most people know, Republicans used reconciliation twice for tax cuts, first in 2001 and again with cuts going disportionately in absolute terms largely to the rich in 2003. They will do it again at the first opportunity. [Yes, but they would first need a majority in the Senate to use reconciliation which they don't have.]
So, Obama is under severe pressure to "give-in," if not cave-in, (with or without the reconciliation 50 vote rule) to the Republican demand that the Bush tax cuts be extended across-the-board to all income earners. I will not be surprised if the Republicans dare to hold middle-class tax cuts hostage to cuts on the very wealthy upper class. Their "trickle down" demoguery has no limits.
Of course, broad-based tax cuts are fiscally irresponsible. All studies confirm the Bush 2001-03 tax cuts dramatically reduced government revenues during 2003-10 ... thereby increasing annual deficits and the national debt. Government studies also conclude that continuing the tax cuts for the upper income earners (top 2-3%) will result in a net reduction of tax revenues of $700 billion over the next decade. In contrast, most of the tax cuts for the millions of middle-class households are spent. Their tax cuts partially compensate for income lost over last 30 years due to wage stagnation. This arithmetic reality falls dead on Republicans. In fact, they continue to spread the lies that tax cuts for the middle class are more costly than tax cuts for the highest incomes because the middle class far outnumbers the very wealthy income earners who "trickle their wealth down." The Great Depression disproved this counterfeit masquerade.
Like you, I hope Obama doesn't "give-in or cave-in" to the Republicans. When he says he's 'absolutely open' to negotiation of the Bush tax cuts, hopefully he's alluding to other fiscally responsible tax-revenue options also contained in the two 2001-03 Reconciliation Acts. For example: in addition to raising somewhere well above $250,000 the upper income level at which tax cuts will expire or to eliminating tax cuts to top 1% as opposed to top 2-3%, a number of other Bush tax cuts -- many people are unaware of -- included in the 2001-03 Reconciliation Acts could be changed or reversed such as: (a) decrease annual IRA contribution limits; (b) reduce the AMT exemption; (c) increase dividend and capital gains taxes; (d) eliminate 1st year bonus depreciation writeoff, (e) reverse repeal of estate and gift taxes, etc. Obama, for example, could ask for one or more of these concessions in return for raising the income level at which tax cuts will not be extended.
The blunt fact is that we are going to go further into crushing debt if we do not raise tax revenues in a creative and fair manner while simultaneously cutting wasteful sppending. The Republican campaign slogan of reducing spending (except Defense) and lowering taxes for all tax-filers is pure financial insanity ... compounded when you also have 30-40 states at various levels of near bankruptcy or insolvency today.
Best wishes to you and Judy,
Frank
You're right. I wasn't aware the Democrats could let the Bush tax cuts expire and then could successfully use reconciliation with their current Congressional majority in January to pass their own bill before Republicans take over the Congress.
But it's my cynicism at work that Obama will not resort to reconciliation or will be obstructed in some unpredictable way by the Republicans from getting what he wants before 2010 ends or the new Congress takes over. Then Boehner's party is in the driving seat with reconciliation and broad-based tax cuts in 2011. [Frank: No, reconciliation can only be used to overcome a filibuster if the party using it has a majority. Otherwise, when the bill is brought to a vote, it will still be voted down by the majority. The Democrats still have a majority in the Senate going forward so reconciliation will be of no avail to the Republicans.] As most people know, Republicans used reconciliation twice for tax cuts, first in 2001 and again with cuts going disportionately in absolute terms largely to the rich in 2003. They will do it again at the first opportunity. [Yes, but they would first need a majority in the Senate to use reconciliation which they don't have.]
So, Obama is under severe pressure to "give-in," if not cave-in, (with or without the reconciliation 50 vote rule) to the Republican demand that the Bush tax cuts be extended across-the-board to all income earners. I will not be surprised if the Republicans dare to hold middle-class tax cuts hostage to cuts on the very wealthy upper class. Their "trickle down" demoguery has no limits.
Of course, broad-based tax cuts are fiscally irresponsible. All studies confirm the Bush 2001-03 tax cuts dramatically reduced government revenues during 2003-10 ... thereby increasing annual deficits and the national debt. Government studies also conclude that continuing the tax cuts for the upper income earners (top 2-3%) will result in a net reduction of tax revenues of $700 billion over the next decade. In contrast, most of the tax cuts for the millions of middle-class households are spent. Their tax cuts partially compensate for income lost over last 30 years due to wage stagnation. This arithmetic reality falls dead on Republicans. In fact, they continue to spread the lies that tax cuts for the middle class are more costly than tax cuts for the highest incomes because the middle class far outnumbers the very wealthy income earners who "trickle their wealth down." The Great Depression disproved this counterfeit masquerade.
Like you, I hope Obama doesn't "give-in or cave-in" to the Republicans. When he says he's 'absolutely open' to negotiation of the Bush tax cuts, hopefully he's alluding to other fiscally responsible tax-revenue options also contained in the two 2001-03 Reconciliation Acts. For example: in addition to raising somewhere well above $250,000 the upper income level at which tax cuts will expire or to eliminating tax cuts to top 1% as opposed to top 2-3%, a number of other Bush tax cuts -- many people are unaware of -- included in the 2001-03 Reconciliation Acts could be changed or reversed such as: (a) decrease annual IRA contribution limits; (b) reduce the AMT exemption; (c) increase dividend and capital gains taxes; (d) eliminate 1st year bonus depreciation writeoff, (e) reverse repeal of estate and gift taxes, etc. Obama, for example, could ask for one or more of these concessions in return for raising the income level at which tax cuts will not be extended.
The blunt fact is that we are going to go further into crushing debt if we do not raise tax revenues in a creative and fair manner while simultaneously cutting wasteful sppending. The Republican campaign slogan of reducing spending (except Defense) and lowering taxes for all tax-filers is pure financial insanity ... compounded when you also have 30-40 states at various levels of near bankruptcy or insolvency today.
Best wishes to you and Judy,
Frank
