I certainly don't want to talk taxes or pretend that I know the first thing about fixing the global economy but it appears that BHO has pissed off the left by caving in to the GOP on these Bush tax cuts extensions and the right's answer is that he didn't really have much of a choice. They were in essence holding these cuts hostage despite still sort of being a minority. It sure doesn't give a lot of ammunition to the "He's a Socialist/Facist/Commie/Nazi" crew but it does give a lot of ammunition to the "He's another typical politician crew." Anyway...here's the breakdown:
- A two-year extension of all Bush income tax rates.- Extensions of the Earned Income Tax Credit, Child Tax Credit, and American
Opportunity Tax Credit, all of which are refundable.- A 13-month extension of expiring unemployment benefits.
- A two-percent cut in payroll taxes — on the employee side — from 6.2% to 4.2%
- Businesses can write off all new investment expenses for at least next year.
- Reinstating the estate tax (which lapsed completely this year), but starting at estates of $5 million and at 35%. Before the lapse it started at $3.5 million and 45%.
So, what's going on here grievers? Strategy or ideology? From what I've been lead to believe, when the value of the dollar is down, tax cuts don't increase revenue. Sure, making the middle class pay more in this economy could be detrimental but what happened to the thing with the people making more than 250K?
After the jump is an excerpt from an article I read stating why this was a terrible move. Thoughts?
On taxes, Obama's last stand is no stand at all
Why the president's deal with Republicans is an abomination
BY ROBERT REICH
The deal the President struck with Republican leaders is an abomination.
It will cost $900 billion over the next two years -- larger than the bailout of Wall Street, GM, and Chrysler put together, larger than the stimulus package, larger than anything that’s come out of Washington in years.
It makes a mockery of deficit reduction. Worse, the lion’s share of that $900 billion will go to the very rich. Families with incomes of over $1 million will reap an average of about $70,000, while middle-class families earning $50,000 a year will get an average of around $1,500. In addition, the deal just about eviscerates the estate tax -- yanking the exemption up to $5 million per person and a maximum rate of 35 percent.
And for what?
Wealthy families won’t spend nearly as large a share of what they get out of this deal as will middle-class and working-class families, so it doesn’t do much to stimulate the economy.
The deal further concentrates income and wealth in America -- when it’s already more concentrated than at any time in the last 80 years.
The bits and pieces the President got in return -- extended unemployment benefits, a continuation of certain small tax benefits for the middle class -- are peanuts. After last week’s awful jobs report, Senate Republicans would have been forced to extend unemployment insurance anyway.
It’s politically nuts. Polls showed most Americans are against extending the Bush tax cuts for the wealthy.
It would have been a defining issue for the President to use to show whose side he’s on (the middle and working class) and whose side the Republicans are on (not the middle and working class). And given that the House turns over to Republicans in January, the President probably won’t have another chance like this one.
It loses him even more of his “base” -- by which I mean people who think of themselves as Democrats and are committed to the ideal of equal opportunity and don’t want the nation to become even more of a plutocracy.
It makes him look weak -- Republicans got everything they wanted. And when a President looks weak, he is weak.
House and Senate Democrats should reject this abomination.
The President should get himself new advisors.
Well everyone's bitchin and cryin about deadlock so he moved on it. As a Democrat he can't let the unemployment benefits run out (especially just before xmas- orphans waling in the distance). The Republicans are only interested in making life as fucking miserable as possible for everyone who's not a millionaire so they can take save the world from armageddon and take over in 012. Neither of the parties will compromise so Obama has to which means the liberals are going hate him anyway.
So yea, this is what it means to be a centrist.
Posted by: Mr. Kruger | December 08, 2010 at 12:28 PM
@Vandelay
"Thoughts?...From what I've been lead to believe, when the value of the dollar is down, tax cuts don't increase revenue."
First of all, you're not really "cutting" taxes by extending the rates. You're simply "not raising" them. Second of all, tax increases don't always increase revenue either. It depends on the economic climate. Certainly in a growing economy (i.e., one in the midst of a tech boom), raising income taxes will generate more tax revenue. That's because the sheer volume of income across all brackets outweighs incurring the cost of the taxation. Same principle applies to capital gains and dividends. Obama knew he couldn't get away with cutting the capital gains tax any further, so the next best thing is to threaten an increase. With the 15% rate threatening to expire again in 2013, what year do think investments (and associated revenue) will spike most in (hint: what year is the next election in)? History shows that capital gains taxation has the greatest tax revenue yield right before rate increases and immediately after reductions. At the same time, unemployment will likely not decrease much because if unemployment benefits are available -- people are more likely to stay unemployed. All in all, I don't think anyone will really win big from this deal. But I think Obama stands a better chance to gain from it than Republicans do.
And on a sidebar, why is the dollar down so much? Because if it is, your first measure should be to -- QUIT FUCKIN' PRINTING MORE DOLLARS.
I'll have more to say in regards to Reich's retarded article later.
Posted by: Jack Klompus | December 08, 2010 at 05:00 PM
Klompus:
Certainly in a growing economy (i.e., one in the midst of a tech boom), raising income taxes will generate more tax revenue.
Very true... which is why, instead of hacking and slashing taxes during the economic salad-days of the Clinton and Bush II years, they should've been kept where they were (or even, dare I suggest, raised). A smart guy named Keynes suggested this decades ago, too -- but the Chicago School folks have been running the economic show for the past while, and that hasn't really worked out too well for most of us non-millionaires.
Posted by: H.E. Pennypacker | December 08, 2010 at 07:36 PM
"Very true... which is why, instead of hacking and slashing taxes during the economic salad-days of the Clinton and Bush II years, they should've been kept where they were (or even, dare I suggest, raised)."
Clinton raised the income tax rates in 1993 after the recession ended and kept them there for the rest of his presidency. It was the capital gains tax that got slashed (in '97). And so by 1999, venture capital investments increased six-fold over 1995 levels.
"A smart guy named Keynes suggested this decades ago, too -- but the Chicago School folks have been running the economic show for the past while, and that hasn't really worked out too well for most of us non-millionaires."
Hold on. The economic policies of both the Bush 43 and Obama administrations have been nothing but Keynesian. The whole idea behind stimulus spending comes from Keynes' theory. Even the Bush tax cuts are Keynesian - because their original intent was to put more disposable income in peoples' pockets to encourage more consumption. What about TARP and Omnibus (Recovery Act)? Textbook Keynes.
Posted by: Jack Klompus | December 08, 2010 at 08:42 PM
My biggest concern with this is symbolic. I've always respected Obama for being able to make unpopular decisions, provided he could demonstrate long term value in them. What bothers me are the bad timing, the sketchy value and that this was about as pussy a maneuver as he could have done.
At a time when his party is on its heels and the Fellowship of Failed Logic has decided to just say no to even the most reasonable and sensible solutions proposed by the opposition, he had an opportunity to draw a hard line and remind everyone who the boss is. Instead, he chose to stand down on his most significant campaign promise and acquiesce to the fucking minority.
If he thinks this is going to foster an environment of productivity, he's dead wrong. He's just enabling his inferiors to feel like sticking to their BB guns is a successful strategy. And for what? For the continuance of an economic policy that has a clear track record of not working.
Congratulations, President Ham Wallet. Why don't you apply for Kenyan citizenship for an encore?
Posted by: Assman | December 08, 2010 at 10:51 PM
Pretty much my thoughts exactly Assman (except as already noted, I have no idea what works and doesn't but he sure seems to have deviated from what he believes will work).
Posted by: Vandelay | December 09, 2010 at 11:59 AM
"from what he believes will work"
Which is? Spending?
Posted by: Jack Klompus | December 09, 2010 at 12:05 PM
Which is? Spending?
His tax plan?
Posted by: Vandelay | December 09, 2010 at 12:43 PM
"His tax plan?"
Which is what?
Posted by: Jack Klompus | December 09, 2010 at 12:49 PM
Instead, he chose to stand down on his most significant campaign promise and acquiesce to the fucking minority.
Q: Where are the 60 votes going to come from to back up this "stand" you site?
A: They're not coming- at all or at anytime.
Instead, he got the unemployed the benefits they need to keep food on the table and a roof over their heads and he got tax cuts for the working poor AND middle class. Republicans hate him for that and extending unemployment benefits in a recession. Liberals hate him for giving tax cuts to the uber-rich and not being dickhead. In the end, everybody gets tax cuts and a turkey on the table.
If this is such a huge problem for so many ppl why didn't use their vote to deal with it during the election? It's too late once they're in.
Posted by: Mr. Kruger | December 09, 2010 at 02:04 PM
Which is what?
Really?
Posted by: Vandelay | December 09, 2010 at 02:08 PM
Q: Where are the 60 votes going to come from to back up this "stand" you site?
A: They're not coming- at all or at anytime.
So, high level thought here... why are 60 votes required to pass legislation now? Is that reasonable? And if the minority is consistently taking the stance that they should get their way, don't you then have the moral high ground on the issue?
Instead of calling in pussy that morning, he should have let the filibuster begin and taken the talking point that says, "These Republicans are actively filibustering a bill that will prevent 95% of you from getting a tax increase in a few days."
There's a day to take it on the chin to get the right thing done, then there's a day that you remind everyone that you're the head MFer in charge and that the Republican talking point - on this particular issue - is misleading.
If this is such a huge problem for so many ppl why didn't use their vote to deal with it during the election?
We voted on this one in 2008. Obama went around the world saying that he was stopping the tax breaks for the over $250k threshold and keeping the rest. We overwhelmingly agreed. In the last election, we voted on TARP, unemployment and the watered down health care bill.
Posted by: Assman | December 09, 2010 at 03:21 PM
"Instead, he got the unemployed the benefits they need to keep food on the table and a roof over their heads and he got tax cuts for the working poor AND middle class. Republicans hate him for that and extending unemployment benefits in a recession. Liberals hate him for giving tax cuts to the uber-rich and not being dickhead. In the end, everybody gets tax cuts and a turkey on the table."
Couple of clarifications:
(1) the unemployment extension was an extension of the current program, not the length of time a person can receive unemployment benefits. So if you've been on unemployment for 83+ weeks, this does nothing for you.
(2) The only tax "cut," per se, was the 2-point reduction in the payroll tax rate. Everything else was either a hike or a status quo. And he most certainly did raise taxes on the rich. What do you think the estate (deeath) tax is?
I don't see this as such a big deal either, though. It's still temporary, for one. So now it gets to be an election year topic, which actually works in Obama's favor. And the things that Obama got are worth more than what the Republicans got, so he defintely "won." Besides, raising the income tax on the rich is a waste if you're truly concerned about class warfare. The Estate Tax is the biggie, and although he didn't get 55% at 1 million exempt, he still got 35 at 5. That's gonna force a lot of families to start investing, consuming, or make peace with the government taking a third of their family trusts. The next best thing he would gone after was capital gains, but he knew better given the timing.
I'm sure it would have been nicer for the Left had Obama given Boehner a Deez Nutz phone call instead, but it's not always that easy.
Posted by: Jack Klompus | December 09, 2010 at 03:42 PM
So now it gets to be an election year topic, which actually works in Obama's favor. And the things that Obama got are worth more than what the Republicans got, so he defintely "won."
Not if you consider that, in said election, Obama needs full support from Democrats.
The point is... what happens on paper is rarely what matters in elections. You, a few of us and maybe a handful of Americans are going to bother understanding what the tax bill means.
When we vote, we're going to ask, "Is the president a pussy" and "is he making me money?" One out of two is still failing.
Posted by: Assman | December 09, 2010 at 04:00 PM
"We voted on this one in 2008. Obama went around the world saying that he was stopping the tax breaks for the over $250k threshold and keeping the rest."
Is this the first campaign promise that hasn't come to fruition? And furthermore, what's so important about raising other people's taxes? It's not going to be a net gain for the people making under 250K. If he wanted to generate more tax revenue, he'd lower rates and eliminate special interest loopholes. It's the tax EXEMPTIONS (loopholes) that allow the rich to escape paying their fair share, not the tax rates. Unfortunately those loopholes are very handy in getting people elected.
Posted by: Jack Klompus | December 09, 2010 at 04:04 PM
"When we vote, we're going to ask, "Is the president a pussy" and "is he making me money?" One out of two is still failing"
One out of two will be PLENTY when the other question is, "So how do we feel about four years of Huckabee in the oval office?"
Posted by: Jack Klompus | December 09, 2010 at 04:06 PM
So, high level thought here... why are 60 votes required to pass legislation now? Is that reasonable?
60 votes to avoid a filibuster. I think the idea is that a lot of ppl are going to stranded with no source of income unless it the bill goes through now. Hence the expeditious fashion of all this. That said, extending benefits to folks who are threatened with homelessness is no-brainer and most assuredly carries residual political benefits.
So if you've been on unemployment for 83+ weeks, this does nothing for you.
you get up to 99 weeks (in states with high unemployment) then you go into the federal unemployment compensation program. when that allotment is used up you're done.
We voted on this one in 2008.
I'm talking about this last congressional election where the Dems lost the House. If that didn't happen we wouldn't be discussing this issue. Politics is the art of creating a perception. And in this case it looks everyone got a little something they wanted.
Posted by: Mr. Kruger | December 09, 2010 at 04:58 PM
the Bush tax cuts are Keynesian
Uh... no. They're not.
Posted by: H.E. Pennypacker | December 10, 2010 at 05:51 PM
"Uh... no. They're not."
That's a quite an elaborate dissent there. So allow me a lengthy retort: Yeah-huh.
Posted by: Jack Klompus | December 10, 2010 at 09:41 PM