Friday, July 8, 2011

Obama and debt reduction deals

Like everyone else, I am waiting to see what comes of the negotiations among Obama, Dems and the PTR. As usual, these talks are in secret. Both parties and the President tell us that what they want is what we the people want and need. Nevertheless, none -- none! -- of them seem to be interested in letting us know exactly what they are negotiating for or against. Actually, of the three parties, only the PTR (formerly the GOP)  has given us much insight as to their position: No New Taxes -- not even any old taxes (which were removed or lapsed). Since their position, as I've stated many times, is beneath contempt, I won't go into it again.

But what is Obama willing to give away? I am very nervous about this, since he seems to be buying into the right-wing rhetoric that only debt is standing in the way of boom, and that cutting will lead to jobs and prosperity.  This makes very little sense, given the amount of cash that private industry is sitting on (waiting for demand), and given that the cuts and proposed cuts and imagined cuts have been causing the loss of many jobs in the public sector. These are very important and productive jobs: teachers, firefighters, police, infrastructure, regulation and inspection. Only the cynical right-wing policy of demeaning everything having to do with government has enabled many to overlook not only this disastrous loss of employment but also the fact that the important work these people would have done is not getting done, or getting done much more slowly and incompletely.

During the Great Depression, Roosevelt briefly and disastrously accepted this idea that trying to balance the budget and cut deficits would help the economy -- a Republican idea from the time when Republicans actually believed in balanced budgets (unlike the modern ones who, in every recent Republican administration, were more than willing to accept monstrous deficits in order to fight wars or help their wealthy patrons). This strategy simply made things worse, and for the same reasons that trying it again will make things worse.

In fact, large majorities of the American public have been making it clear in poll after poll that they favor taxing the wealthy more and cutting important -- and job-creating/preserving programs -- less. This is exactly the opposite of what the PTR claims, but they go on and on in their fantasy-land of tax cuts. (To be fair, some Democrats including, apparently, Obama, seem willing to buy into this as well.)

I hope that I am wrong, but I can see Obama mousetrapping his party by selling out once more to the intransigent Republicans. This would put his party in a bad position, since he is constantly projecting the image of himself as "above the fray" -- willing to make compromises of any and all sorts to save the (economic) Republic. If his own party subsequently demurs -- i.e. actually follows what seems to be the will of the people -- then the Dems could end up replacing the Republicans, in the eyes of the electorate, as the obstructionist  ones. Bill Clinton followed the same course -- refusing to work for his party or embrace its ideals fully -- and was rewarded with a second term, but at the expense of the loss of Congress -- the same Republican Congress that went on to impeach him.

We don't know what's going to happen until these closed-door, backroom deals (Do they still smoke cigars?) have been made. I am in the dark, as we all are, but I'm plenty nervous.


  1. The Republicans should call Obama's bluff and accept his tax increases in exchange for a lower corporate rate. It would be in line with the good ideas that came out of Simpson-Bowles. And now even Bill Clinton is in favor of lowering the corporate rate. Leads to a more efficient allocation of capital and less tax evasion. Right now some companies pay much less than others if they can afford expensive lobbyists and write in new loopholes. Simplify the tax code, get rid of so many special interest deductions and cut the overall corporate rate. It will be a win-win for everybody.

  2. There were no particularly good ideas coming out of Simpson-Bowles -- that's why the stuff they recommended has passed into limbo. Alan Simpson -- former senator from nowhere -- is one of the world's true mental lightweights. There are lots of fair and reasonable things we could do to save money (ending wars and cutting the military budget, single-payer healthcare, financial services tax and millionaire's tax, ending unneeded incentives like Ethanol and oil depletion allowances and tax breaks for offshore investments etc. etc. I've discussed them all before.

    I don't particularly care about the corporate tax -- it's largely a red herring -- but it seems to me that now that corporations are the same as actual people, per Citizens United, what exactly is the problem with taxing them?

    Let's make rich people shoulder their fair share of the tax burden in any case.

  3. It's too bad you think there were no good ideas out of Simpson-Bowles. The reason why it is in "limbo" is because they are big ticket items such as fixing the tax code, making changes to Social Security, Medicare, etc. These are painful changes but these programs need to be addressed.

    As for the "rich", I'm not sure what you define as "rich" but the top 50% of earners already pay over 90% of federal taxes. So you want to skew that even further? I know you want to remove the cap on social security taxes, but wouldn't it be "fair" if the more I put into Social Security the larger my benefit should be? I'm happy to contribute more if I am going to get more out of it. But putting in more so that it goes to other people isn't "fair".

  4. I've addressed these issues many times. There were ideas in Simpson-Bowles, just not good or new ones.

    Yes, the top earners pay a large percentage of federal taxes. First of all, that's because they earn a whole lot more than the people below them: A WHOLE LOT MORE. (You can easily check the income figures yourself; I have linked to them several times.) Secondly, the very rich don't share the BURDEN, as I've already pointed out several times. I'd say that most of them would even concede this point (e.g. Warren Buffet, Bill Gates, etc.) The puny amount they pay in taxes, in terms of their disposable income, is as annoying as a gnat is to an alligator.

    Finally, no, people who pay in more to Social Security shouldn't necessarily get more out. Once again, the rich are paying cheap change in terms of their disposable income. Also, they are simply doing their share to help others less fortunate. They should be happy to help out; many are.

    That's my view of government and morality; it's also the view of a lot of people throughout the world, especially religious ones. I guess Grover Norquist begs to differ, but I don't think much of his view of what is right and proper. Do you really want to argue this point?

  5. Yeah, you've addressed Simpson-Bowles, but I'm not convinced they're not good ideas.

    As for the burden, sure some people make a lot more than others, but how much more should they pay in taxes? If a group earns [x]% of the taxable income in the country, what percentage of the tax bill should they pay?

  6. Fair enough: we don't have to agree on everything.

    I don't think the amount a group pays in taxes should necessarily be related to the percent of taxable income that group earns. Can you think of an argument why it should? There are serious ethical issues here, having to do with social utility, disposable income, and fairness. I would be glad to discuss these issues, but not via electronic means -- or at least not just now. It's because these issues are not taken seriously that reports like Simpson-Bowles seem like just so much chin music to me.

    One of the principles of capitalism seems to be that the "worth" of something, be it an object or an idea or one's labor, is solely determined by the market place. A lot of conservatives naively believe that everyone subscribes to this axiom, but that is not so. Let me just leave it at that for the moment.