Republicans' True Colors

Republicans say they care about creating jobs and bringing the federal budget into balance.  Simple facts demonstrate that their true agenda is focused on increasing the wealth of the richest Americans, above all else.

It was the last Republican president who saddled us with $2.5 trillion of budget-busting costs with his irresponsible tax cuts passed in 2001 and 2003. Those cuts brought tax rates to their lowest levels in decades.  Nearly half of the cuts have gone to the richest five percent of taxpayers.  If tax cuts for the rich are the way to stimulate job growth, as forcefully advocated by Mitt Romney, why did Bush’s eight year reign produce the worst record of job growth of any president in the last 80 years? 

In fact, according to Bureau of Labor Statistics data, he is the only president since Herbert Hoover responsible for a loss in jobs during the budget cycles for which he was responsible.  In contrast, President Obama has created 3.4 million jobs since his first budget went into effect.

The explanation is simple.  Jobs are created by consumer spending, which accounts for 70 percent of economic activity.  The way to boost spending, and job growth, is to increase the purchasing power of those who need the extra cash the most and will spend it.   Through tax policy, this can be accomplished with extended unemployment benefits, payroll tax cuts, earned income tax credits and continuation of income tax cuts for the middle class, precisely what President Obama has proposed, but which Republicans have stood in the way of passing. 

Yet Mitt Romney, Paul Ryan and Congressional Republicans insist on extending tax cuts for the richest two percent of taxpayers, at a ten-year cost of $1 trillion.  And showing their true colors, they oppose extending the earned income and child tax credits , which would put more cash in the hands of working Americans struggling to get by.  Apparently the no-tax-increase pledge signed by Romney and virtually every Congressional Republican applies to the rich, but not the poor.

This election poses stark differences in values and desired outcomes.  The Democratic vision for prosperity embodied by Jim Himes, running for re-election in the 4^th Congressional District, and Chris Murphy, running for U.S. Senate, emphasizes shared sacrifice, fairness and fact-based policy to boost economic growth and security for all Americans.  Republican policy, in contrast, will continue to favor the very affluent, without regard to the impact on tens of millions of middle and lower income Americans.

Why not raise taxes on the least affluent Americans?

I have to give Eric Cantor credit for finally being honest about the Republican desire to fund tax cuts for the wealthy from the pockets of the middle class.  This came to my attention from the informative Citizens for Tax Justice, which reported on Cantor's moment of tax transparency. That was grist for my latest piece on the deceit of the Republican agenda.

Eric Cantor, the Republican House majority leader, signed Grover Norquist's "no tax pledge.” But apparently his pledge doesn’t apply to the 45 percent of workers who make so little money that they don't owe federal personal income taxes. At a private event hosted by Bank of America, Cantor said we “have to discuss the issue” of increasing personal income tax rates for these workers so that he can lower tax rates for everybody else.  The rationale: to get the economy growing again.

Cantor’s appeal continues the Republican opposition to tax relief for the middle class, despite their vigorous opposition to raising taxes on the wealthiest Americans. As these actions demonstrate, the agenda embraced by the Republican Party and fully supported by Mitt Romney is misguided and deceitful.

Cantor's remarks can only be interpreted as suggesting that the rich are over-taxed and the middle class is under-taxed. In fact, data compiled by the nonpartisan Institute on Taxation and Economic Policy shows that when all taxes are taken into account, our tax system is barely progressive. In 2011, the share of taxes paid by the top one percent (21.6%) matched their share of the country's income (21.0%).   The top one percent paid 29% of their income to taxes; the rest paid nearly the same amount, 27.5%.

Not only do the wealthy not pay higher average tax rates than others, but taxes for them are at the lowest levels in more than 50 years, thanks to Republican policies that have dramatically lowered rates on the highest income brackets, and preferentially treated investment income that goes mostly to the wealthy.

Republicans want us to believe that lowering taxes for the rich will trickle down and help the middle class. It's not true. Over the past three decades, per capita income has grown no faster in the U.S., where top tax rates were cut substantially, than in European countries that did not cut their top rates.  Long ago, President George Bush called supply-side economic theory for what it is, “voodoo economics.”

What is true is that the Republican tax agenda has benefitted the wealthy enormously.  The Congressional Budget Office reported that from 1979 to 2007, household income for the top one percent rose 275 percent, while for bottom fifth of households, it increased just 18 percent.  As the middle class struggles with the aftermath of the Bush-era Great Recession, most of the gains are going to the ultra-wealthy. As the economy recovered in 2010, nine out of every ten dollars of additional income versus 2009 went to the top one percent. That equated to a 12% increase in income for those fortunate few, while the bottom 99 percent gained, on average, just an extra $80!

That hasn’t stopped Republicans from pushing policies, cloaked as job building, that help the wealthy even more. The House Republican leadership has introduced The Small Business Tax Cut Act, which lets most small businesses (those with less than 500 employees, hardly the definition of small) deduct up to 20 percent of their income in 2012, a $46 billion expense to taxpayers. According to the independent Tax Policy Center, nearly half of the cuts will go to people making more than $1 million. What's worse, it will do little to create jobs.  The economic impact is “so little as to be incalculable,” according to the official analysis by the Congressional Joint Tax Committee.  More reason not to believe Republicans and Romney when they talk about the wisdom of their policies for lowering the deficit and growing the economy.

Companies don't have to hire new workers to receive the credit, one of the reasons that an analysis by the Congressional Budget Office ranked business income tax cuts as the second-most expensive way to create jobs among those evaluated.  It isn't taxes (or regulation) that are keeping businesses from growing.  Rather, it is lack of demand, as reported in a survey conducted last fall by the National Federation of Independent Businesses.

What's the most tax-efficient way to create job growth?  According to the CBO, it is payroll tax cuts and unemployment insurance that put money into the hands of those who need it most, and will stimulate the economy by spending it.  Precisely the two middle class-friendly policies that Republicans have stood in the way of since President Obama took office. 

Rhetoric aside, the facts are clear:  the Republican agenda is about making the wealthy richer, not putting Americans back to work. On this point, Eric Cantor is clear: “I've never believed that you raise taxes on those who have been successful.”

GOP Hypocrisy on Student Loans

Isn't it interesting how all the Republican arguments about protecting the taxpayer fade away when it comes to delivering largess to corporations. It seems that giving subsidies is only irresponsible when it helps citizens. In this case the topic is student loans...

The hypocrisy of the Republican Party knows no bounds. Near daily, Republican leaders rail against a public option for health insurance, saying it represents an unfair intrusion into the private sector, and an unwise use of taxpayers' money.

Yet when it comes to eliminating corporate welfare paid for by taxpayers, they yell "foul." Subsidizing the private sector is acceptable, competing with it is not. Such is the case with the Student Aid and Fiscal Responsibility Act, which eliminates government payments to banks to encourage student loan lending. As it turns out, it would be a much smaller drain on the federal budget for the government to lend directly to students, rather than subsidizing banks to do the same lending. Less expensive to the tune of nearly $90 billion over the next 10 years, as forecast by the nonpartisan Congressional Budget Office.

But 17 of the 19 Republican members of the House Education and Labor Committee opposed the bill because it replaces private capital in the student lending market. Here is a clear-cut case where Congress can advance an important social goal -- encouraging higher education -- and save taxpayers billions of dollars. It's a win-win by any measure. This one, simple reform could pay for almost one-tenth of President Obama's proposed health care reform.

It's time to call the Republican leadership to account. If they are so opposed to government spending, why are they in favor of giving nearly $90 billion of taxpayer money to the private sector without getting anything in return?

McCain's Economic Illiteracy

By his own admission (to the Wall Street Journal in 2005 and The Boston Globe in 2007, see John McCain on Meet the Press) John McCain is not an expert on economic policy. If anybody doubts this, he proved it with his remarks about the recent employment report. In response to the loss of 80,000 jobs in March, McCain, in a  press release, called for lower taxes and less regulation as a solution to creating job growth.

Under the current administration, overall federal income tax rates are at historically low levels. Yet the overall growth rate of private sector employment during George W. Bush’s administration is the second worst performance since World War II (his dad gets honors for the worst performance). Contrast this with the Clinton record, where despite tax increases, job growth outpaced Bush’s record by a factor of four. This certainly dispels the Republican mantra that the only way to grow the economy is by cutting taxes.

As for less regulation, the cause of the current financial market distress appears to be completely lost on the Republican nominee for president. More, not less, regulatory oversight of the subprime mortgage market could have reigned in the excesses of the imprudent lending and financing practices that are the very cause of the economic downturn that McCain believes less regulation would alleviate.

Regulation serves the purpose of policing markets where the actions of individual players can harm more than just themselves. Surely the current situation, where the reckless actions of companies like Bear Stearns are driving the economy into recession and seriously threatening the stability of financial markets, is proof positive of the need for regulation.

So when John McCain says “The American people cannot afford the Democrats and their economic leadership”, you might want to think twice. It’s time to put somebody in the White House who will put aside dogma in favor of an informed economic policy. Clearly that person is not John McCain.

What is happening to our country?

It is time for Americans to start asking ourselves, “what is happening to our country?” As I look around, there are so many signs that President Bush, his administration and the Republican leadership are systematically destroying the values and well-being of our nation through their arrogance, greed and incompetence.

Facing a cost of $200 billion for reconstruction in the aftermath of Katrina, Bush refuses to reconsider his ideological obsession with tax cuts for the wealthy. Don’t be fooled – “no tax increases” doesn’t just mean no new taxes, it means sticking with his plan to make earlier rounds of tax cuts permanent. Burdening future generations with the cost of his largess to the wealthy, through record-breaking deficits, doesn’t seem to concern him. How can we trust a political party where 222 of its congressmen and 46 of its senators have categorically refused to raise taxes (by signing Grover Norquist’s tax pledge)? How is that a sign of fiscal responsibility?

At the core of some of our most challenging security and economic issues is our lack of energy independence. But Bush has shown zero leadership on energy – his is a policy of avoidance – looking for a few barrels of oil in Alaska and relaxing environmental standards. Instead of sending people to Mars (as NASA wants to do), our national quest should be a radical reduction in our dependence on oil, using economic incentives – including a national gas tax – to fund research and encourage conservation.

I am concerned with more than just economic security. Bush policies have deeply damaged the credibility of the United States as a protector of human rights. The very values we are fighting for in the war on terror are being systematically violated. Widespread abuse and torture of prisoners is met with indifference and no accountability, even as it turns those who might be sympathetic to the U.S. away from us. Wholesale disregard for due process (we have held prisoners in Guantanamo for more than three years without bringing charges) is acceptable, because President Bush and Donald Rumsfeld have decided they are guilty. Through “extraordinary rendition”, we secretly send suspects, including our own citizens, for interrogation to countries, including Syria, that we know engage in torture.

We agonize about how we are going to protect ourselves against terrorist attacks on our soil, yet the Republicans whom we have put in charge of our executive and legislative, and soon perhaps, judicial, branches of government are beholden to the National Rifle Association, which stymies every reasonable way to restrict access by criminals (including terrorists) to firearms. That’s an organization which invites speakers who profess, “I want burglars dead…no court case. No parole. No early release. I want ‘em dead. Get a gun, and when they attack you shoot ‘em.” (as quoted in The New Yorker, 8/1/05). It is disgraceful that our president, and the majority of our national leaders (Democrats included), take their direction from an organization with so little respect for our values.

If you are disturbed by where our country is heading, I urge you to speak out.

Katrina getting in the way of tax cuts, no way!

President Bush stated that the federal government will do its share to help the victims of the Hurricane Katrina disaster. But, he also spoke of the importance of having the American people do their share by contributing privately.

While I support charitable contributions, and have myself contributed to the relief effort, perhaps the need for private support would not be so great if President Bush had not given billions of dollars of tax breaks to the very wealthiest Americans, gutting federal resources. As if a deficit exceeding $400 billion (one of the highest on record) is not enough of a wake up call for more prudent fiscal management, the administration and Republican leadership is still pushing for a permanent repeal of the estate tax, an additional $745 billion gift over ten years to the richest Americans.

The next time Bush calls for private support, perhaps he should address just the recipients of his largess, since for the vast majority of Americans, household incomes have failed to increase over the past five years, as reported by the Census Bureau. That’s a new record, neatly coinciding with the term of the Bush presidency.