Who deserves a tax cut more: the top 2 percent — whose wages and benefits are higher than ever, and among whose ranks are the CEOs and Wall Street mavens whose antics have sliced jobs and wages and nearly destroyed the American economy — or the rest of us?
Not a bad issue for Democrats to run on this fall, or in 2012.
Republicans are hell bent on demanding an extension of the Bush tax cut for their patrons at the top, or else they’ll pull the plug on tax cuts for the middle class. This is a gift for the Democrats.
But before this can be a defining election issue in the midterms, Democrats have to bring it to a vote. And they’ve got to do it in the next few weeks, not wait until a lame-duck session after Election Day.
Plus, they have to stick together (Ben Nelson, are you hearing me? House blue-dogs, do you read me? Peter Orszag, will you get some sense?)
Not only is this smart politics. It’s smart economics.
The rich spend a far smaller portion of their money than anyone else because, hey, they’re rich. That means continuing the Bush tax cut for them wouldn’t stimulate much demand or create many jobs.
But it would blow a giant hole in the budget — $36 billion next year, $700 billion over ten years. Millionaire households would get a windfall of $31 billion next year alone.
And the Republican charge that restoring the Clinton tax rates for the rich would hurt the economy — because it would reduce the “incentives” of the rich (including the richest small business owners) to create jobs — is ludicrous.
Under Bill Clinton and his tax rates, the economy roared. It created 22 million jobs.
By contrast, during George Bush’s 8 years, commencing with his big 2001 tax cut, the economy created only 8 million jobs. And as the new Census data show, nothing trickled down. In fact, the middle class families did far worse after the Bush tax cut. Between 2001 and 2007 — even before we were plunged into the Great Recession — the median wage dropped.
It’s an issue that could also be used to expose the giant chasm that’s opened between the rich and everyone else — aided and abetted by Republican policies. As I’ve noted before, in the late 1970s, the top 1 percent got 9 percent of total national income. By 2007, the top 1 percent got almost a quarter of total national income.
These figures don’t even count in taxes. The $1.3 trillion Bush tax cut of 2001 was a huge windfall for people earning over $500,000 a year. They got about 40 percent of its benefits. The Bush tax cut of 2003 was even better for high rollers. Those with net incomes of about $1 million got an average tax cut of $90,000 a year. Yet taxes on the typical middle-income family dropped just $217. Many lower-income families, who still paid payroll taxes, got nothing back at all.
And, again, nothing trickled down.
As I’ve emphasized, the U.S. economy has suffered mightily from the middle class’s lack of purchasing power, while most of the economic gains have gone to the top. (The crisis was masked for years by women moving into paid work, everyone working longer hours, and, more recently, the middle class going into deep debt — but all those coping mechanisms are now exhausted.) The great challenge ahead is to widen the circle of prosperity so the middle class once again has the capacity to keep the economy going.
In other words, this is the right issue. It’s the right time. It allows Democrats to explain what the Bush tax cuts really did, why supply-side economic is bogus, and the economic challenge ahead.
Even if Democrats feel they have to respond to the Republican charge that taxes shouldn’t be raised on anyone when the employment rate is 9.6 percent, they have a powerful fallback: Extend the Bush tax cuts for everyone through 2011, then end them for the rich while making them permanent for the middle class.
Get it, Democrats? Please don’t blow it this time.
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Wow, cool article that actually makes sense.
wow, some dilutional thinking going on here……………….how is it that continuing the practice of not taking taxes (ie: the Bush Tax cuts) from hard working people/businesses blows a hole in the budget………………..unless washington has already counted it up and spent it in advance!! When are we going to get our polititians in Washington to live in the real world?
“budget” is how the government will spend the money — including interest on the deficit.
not sure what you’re point is, nor that mine was understood………..sounds to me like the revenue that would be generated by allowing the BTC’s to expire has already been worked into upcoming budgets (in otherwords “spent”), and I think this practice is just plain wrong…………………….along with the many other budgetary gimicks being flagrantly used by the folks in Washington.
I tell you how it works, the democrats decide how much they want to spend and then pass taxes to get that much and if they cannot get it they print it.
Wow – the author of this articles presents a false dichotomy with absolutely no understanding of economics or basic fairness. Why do some democrats need to use an “us versus them” to divide up Americans against themselves? The great majority of wealthy people are self-made, they didn’t inherit their wealth, and they are quite entitled to it. I would much rather live in a country where anyone could become wealthy than one where taxes and regulations on small business, the primary vehicles for people to become wealthy, are so onerous that we become stagnant as a culture and society.
Yeah…one of the greatest economists of our time has no understanding of economics but you, Joe Shmuck Republican Defender, do. Riiiiiiight.
Robert Reich is not an economist-also not really an academic, he has no PhD. He is an lawyer and “political commentator”. True he teaches at Berkeley but is not tenured. Never has shown he understands economics.
The issue is not about cutting taxes for the rich vs middle class, it’s about raising taxes. Implications of raising taxes for the “rich” is not clear-a debatable point. This article is pure demagoguery .
AMEN to that. The lower class is biting the hands that feed them. They will learn their lessons as history has shown.
“AMEN to that. The lower class is biting the hands that feed them. They will learn their lessons as history has shown.”
aaaahahahahahaha. Good one. I love sarcasm.
The powerful rich is in the very process of finally biting the hand that feeds them a bit too hard.
The ‘lower’ working class is the ONLY class that actually generates any wealth. The parasites at the top have finally gotten to big to support. That is why the economy is going to collapse. The rich, and the way we do banking is a cancer on our society and its metastasized. The US economic system = dead man walking. I give it 2-3 years tops before we repeat what what happened in Russia.
“The great majority of wealthy people are self-made, they didn’t inherit their wealth, and they are quite entitled to it.”
That is simply not true. There is hardly any class mobility in America any more. The rich get richer, the poor get poorer. Almost no one is self made anymore….unless you mean self made as in they used their parents wealth to create their own. Actually look up the facts/statistics about reality BEFORE contributing to a discussion. Proving your world view with BS isnt the best way to show people you are right.
I’m a small business owner. I earned $1M last year. If my taxes go up, I’ll spend less on advertising, I will probably lay off at least a couple people who I’ve been employing as more of a luxury than a necessity. I earn my money. I work hard every day and have for 15 years. The rich should not be grouped together, and nor should the poor. There are self made people with high incomes like myself, and there are schmucks who inherited or got appointed big wig CEO’s at bloated billion dollar companies who don’t work any harder or smarter than anyone else. With the poor and middle class, there are lazy fools who have no one but themselves to blame for their low income, and there are wickedly smart educated hard working people who just can’t catch a break.
The reality is: the tax system in this country is not fair to anyone. Certainly, imposing an even greater burden on those who employ everyone in this country is a great way to shoot the whole country in the foot. What happened to the American dream? Do we only want it for ourselves, but we have no respect for those who have attained it?
Maybe you’d like to explain to us how returning to the Clinton top marginal tax rate (under which 22 million jobs were created) would be “shooting ourselves in the foot.”
People like the author of this article really have no fundamental understanding of economics….
“The rich spend a far smaller portion of their money than anyone else because, hey, they’re rich. That means continuing the Bush tax cut for them wouldn’t stimulate much demand or create many jobs.”
This statement alone which the author uses as a major premise for his argument to not extend tax cuts for the rich is absolutely categorically false. In addition
Nope, it’s true. The poor and middle class spend a much higher proportion of their money. The rich squirrel more of theirs away.
What do you think they squirrel it into? Oak trees? Or do they squirrel into investments; businesses use that wealth to create even more. You’re arguing society should not have wealth-creation as a goal.
(corrected) The Defining Issue: Who Should Get the Tax Cut — The taxpayers or everyone else?
Robert Reich is what’s wrong with the world.
You realize you’re not one of the 2% don’t you? Why is it so hard for some people to grasp that they’re not being dragged down by the poor? They’re being *pushed.*
We all know that Obama will never work with republicans. That’s just the way he is. He works with people who agree with him, only. The tax cuts will expire because he will not accept the idea of anyone going against what he wants to do. Even if it means that the republicans take control. That’s a plus. He is so childish that he would rather they win, so that he has someone to blame for all his failures and when he can’t get anything done, he, again, will not admit that his policies are bad, he will simply blame the republicans for saying “no”, when he should be trying to work with them because they “know” better than he does, at times. The fact that they are republicans and they have a better idea, mean that their ideas are unacceptable. In no way would he ever want to give them credit for anything, accept saying “no”!
What world are you living in Flynn? President Obama have been trying to work with the party of no ideas since he took office,they even say no to policies they created,you really want the republicans back in office? They will bring our country to its knees if they get back in office,have bush and history taught you anything,republicans are the flunkies for big oil,wall street ceo’s,and anyone else that has finance.If palin,odonnell,and the right wing is voted in office our country will pay dearly because we will be in more wars,no unemployment benefits,no regulations on wall street or oil companies,they will run this country into a depression like they almost did this time.I say tax-cuts for the 2% should expire as soon as possible.Wake up Mr.Flynn,I know you don’t like our President but he cares more for you and the people than the republicans!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Its only verifying data we’ve known for years… When you tax the rich, (Business owners especially) It forces them to expand their businesses in order to maintain their income. In essence, it forces them to invest in their business in order to make it more profitable either through technology or through hiring. When you cut their taxes, they do not have to work as hard to maintain their lifestyle, because their business does not have to be as productive. Further, how many HDTV’s do you expect a millionare to buy? 1,2, 200 each? How much food is a millionare going to buy? Enough to feed a community, or enough for themselves? How much are they going to spend at the local video game store, will they still run out and buy halo reach? When you tax the poor, it forces them to cut back on spending. When they dont spend, there is no demand, because they are reduced to subsistince living. They never have a chance to buy a HDTV, they dont go buy that copy of Halo Reach, they live off ramen noodles and pasta instead of buying fresh US grown produce… If anything, the poor shouldnt be taxed at all until they’re earning atleast $15,000/yr or given a symbolic “dollar tax”.
You’re wrong! I will give you an example. I’m rich. I make about $2M a year on an online business. When Obama taxes me, I’m going to lay off all 20 workers one by one. I’m not going to give my HARD earned money to scum bags who lay on their @ss and collect unemployment. That’s the hard fact. You guys are screwing yourselves.
HardWorker – sounds like you’re planning to cut off your nose to spite your face. Maybe you will now actually have to become a hard worker.
Ditto. Did your Bush-era tax break prompt you to hire those twenty workers? If not, then obviously it didn’t work.
Bull – you’re just a typical tea bag lier –
But, hey, I’d love to see you trash your business to make a point. Darwin takes care of another idot business person!
Here is something they don’t teach at Business School (or in Washington ).
Hat’s off to Dr. Kamerschen…he wins the Analogy of the Month award.
Our Tax System Explained: Bar Stool Economics
Suppose that every day, ten men go out for beer and the bill for all ten comes
to $100.
If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. ‘Since you are all such good customers,’ he said, ‘I’m going to reduce the cost of your daily beer by $20.’ Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free.
But what about the other six men – the paying customers? How could they divide the $20 windfall so that everyone would get his ‘fair share?’
They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid $2 instead of $3 (33%savings).
The seventh now pay $5 instead of $7 (28%savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 (22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
‘I only got a dollar out of the $20,’declared the sixth man. He pointed to the tenth man,’ but he got $10!’
‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a dollar, too. It’s unfair that he got ten times more than I got’
‘That’s true!!’ shouted the seventh man. ‘Why should he get $10 back when I got only two? The wealthy get all the breaks!’
‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, ladies and gentlemen, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
David R. Kamerschen, Ph.D.
Professor of Economics
University of Georgia
You, sir, and the other doctor are geniuses… Doesn’t get any clearer than this!!! Thank you and I defy ANYONE to bore holes in this reality check!!!
Thanks again!!!
MY THOUGHTS EXACTLY! BRAVO
Thank You! We need more economists describing economic cause-and-effect chains as opposed to naive, armchair pundits.
I would add that Reich’s argument about Clinton’s reign and job growth is a false cause-and-effect chain. Presidents can only influence the economy to a certain amount in certain ways; 1) it is Congress and the Senate that create the final bills, 2) some economic factors take time before they have an effect and 3) the economy is increasingly affected by outside influences. Thus, the idea that a President’s policies is wholly or mostly responsible for the economy is unscientific.
In addition, I would add that the graduated tax system promotes non-equality under the law. The Democrat party who promotes this are thus promoting legal inequality. Until we switch to a flat tax or a tax on consumption, people will continue to chaff at this legal inequality.
Lastly, the idea that each level of taxation is solely beneficial or bad oversimplifies the economic cause-and-effect chains. At many points, there are both positive and negative effects. Too high or too low and the effects turn more negative than positive.
Thank you again for posting something constructive and intelligent! Sadly, Reich will not pay attention to what you wrote as he is too busy kissing President Obama’s butt and playing sycophant politician to actually think.
You forgot to redistribute the extra earnings the tenth man got by cutting the wages and benefits of the other nine. :)
It’s easy to blow holes in this analogy. It assumes that the rich have someplace else to go. They don’t. Any other safe nation has higher taxes than the US. If they go to a country with low taxes they’ll have pay a LOT more than US taxes to protect themselves from criminals and corrupt police. The fantasy that the rich are supporting a system that benefits all of us equally is hogwash. The rich support a system that allows them to stay rich while destroying the middle class. A large and powerful middle class has driven US economic expansion since WWII, and that’s what we need now.
Er, sorry Bob. The analogy stands. The rich don’t have to leave the US to take their money out of the economy and place it somewhere more advantageous. If you really believe that there is no place in the world with no greater benefits for wealth than the US, you are living in a fool’s paradise. What is destroying the middle class is the federal government, particularly the current version, and it’s incredibly misguided, nonsensical policies and legislative initiatives that reward sloth, cronyism and partisanship, and punish initiative, free enterprise and an entrepreneurial spirit.
Just a note: Kamerschen didn’t write this. Look it up in snopes. http://www.snopes.com/business/taxes/howtaxes.asp
Hmmm- that’s how it works except that no one gets beat up, and they all show up the last night.
Nice try at creating a fiction to back up your beliefs though. As a conservative, I’ve found that more and more supposed “conservatives” are using similar ridiculous, moronic stories to back up their beliefs. I guess it’s easier than using numbers and science, but it really makes you look foolish to anyone who can think beyond political bumper stickers.
Barefootted – You should do a little research before you quote someone. David Kamerschen did not write the “bar stool” quote. http://davidk.myweb.uga.edu
The simple truth is if the 3% tax cut ends for those making over a quarter million, it will not derail the recovery. Stock market is up, posting the best September since 1934. While stocks will likely dip in October to offset the run-up they will not give back all the ground they have made pushing a double dip into the less likely category. There is real economic growth happening all over the world and steady (and slow) growth for the US and the more industrialized nations.
It is very upsetting that unemployment is as high as it is, but employment numbers will go up as the stock market holds it’s ground. Small business will add jobs, and the loss of a 3% tax cut for those making over a quarter million a year will not change that. It is a small step to fixing the deficit and an appropriate one at this time. Slashing the budget does need to happen as well, but that is what should happen later not sooner. The only Fed spending that could be cut in the near term is money that curently goes back into the economy. Cuts would add to unemployment and slow consumption. It would drag on the GDP and damage the recovery to the economy. Those cuts DO need to happen, just unfortunately not now, but we do need to hold Washington accountalbe for those big spending cuts in 2012,2013 and beyond. I hope all (democrats and republicans) will remember that once the economy is healthy.
This whole argument still IGNORES the fact that 47% of Americans don’t pay their fair share. ZERO is NOT a fair share, folks! I propose there is a minimum tax that EVERYBODY pays! We need to INVEST in AMERICA, and that means you need to start paying YOUR way too! I look forward to the day when there is NO ZERO TAX BRACKET FOR ANYBODY!
“Gee, won’t people who get something for free, vote for those people who give them something for free?”
No, not if they have a brain in their head! The reality is that modern SLAVERY exists, and it exists because of people like OBAMA who ENSLAVE those whom they make DEPENDENT! If you are DEPENDENT on gov’t subsistence, then you are a SLAVE!
Break the bonds of dependency! Become self sufficient! IT IS THE ONLY PATH TO TRUE FREEDOM!
News flash: They DON’T have a brain in their heads!
Tyler said: ” When you tax the rich, (Business owners especially) It forces them to expand their businesses in order to maintain their income.”
Whoa ~ Has Tyler read “Animal Farm”? You can’t just SAY something to make it true; what you’ve written here is a complete and utter falsehood. You know it emotionally and you know it intellectually.
If you confiscate wealth by taxation, you stifle growth, you stifle job creation, and you contract the economy. Those, Tyler, are the FACTS.
The problem with the economy was started with the liberal home loan programs initiated and forced on banks by Barney Frank and crew. Why blame the rich?
For all of you dupes who have no knowledge of American History. As early in American history as 1879 there was definitive proof that the American dream was a mirage. In 1879 the managers of America’s largest businesses were children of parents with college degrees who were in top management before them. The wealthiest families in America got that way the same as in other countries by: 1. inheritance; 2. marriage; or, 3. theft. Hard work, thrift, and luck trailed the other categories by large margins. Time to wake up and smell the greed!
Please… When did we lose touch with reality, Robert?
I could get used to having the “rich” cover my backside while I sit around and complain I haven’t been given the same luxuries and breaks but, for some reason, I just can’t jump on board this pity party (Yes!! The democratic party of pity) train. I was raised better than that. I was taught to “EARN” my keep, not expect it.
This nonsense you toss around in the liberal media is ridiculous! You might as well strap a sign to your back saying “Will sit on my couch and expect anyone with a brain, a dream, and the drive to achieve it, to pay for my sorry, lazy butt!!!” If you had the stones to actually say this rather than make the ones who actually do something with their lives the villains, at least I could say you are an honest loser!!!
By the way, I am NOT in the top wage earner category. Not even close so don’t try and justify my rebuttal with your canned response of me being the “typical rich guy”, unwilling to help your poor, less fortunate self. I know!!! Why don’t you use the “race” card? That is usually response in the bag number two, right? Better yet, let’s just blame Bush!!!
The bottom line is this. Anyone who has earned their keep just doesn’t need the additional liability of folks with your mentality. If they want people to support, they have children or open businesses. YOU are NOT their child or their employee! Quit sucking your thumb and go make something of yourself. Liberal journalism is not a job, rather a cult and/or government position. You get paid to parrot, not report. In school, we called this cheating and failed our classes if we did it. From this view, you are already in the welfare system. Getting paid for nothing!!! Think about it for one second before you fall back into your entitlement mode.
Actually, the people I see sitting around expecting government handouts are the rich with their lobbyists. The people I see working their fingers to the bone are the poor and middle class (until their jobs get sent offshore). The idea that anybody wants to collect unemployment is ridiculous and impractical. The system makes it very hard to qualify for unemployment and it doesn’t begin to pay living expenses, so there is no incentive to turn down a job opportunity, should one actually arise.
You’ve created a strawman Mr Reich. There is no proposal to give only the rich a “tax break”. The proposals are (1) allow all of us to retain President Bush’s tax break (not Mr Obama’s, as Nancy Pelosi believes) or (2) everyone except those earning more than $250k (more or less). Only an idealogue like you would consider me retaining my current tax rate as “giving me a tax break.”
If Mr Obama chooses to raise the taxes significantly on those who pay the rest of us, there will certainly be ramifications — there already are such ramifications, in the form of not hiring employees. More will come in the form of higher prices as small business owners find their taxes RAISED by Mr Obama, when those owners pass that expense on to their customers.
I suggest you take a course in intellectual honesty then a course in economics at the hands of the esteemed Walter Williams, or learn what John F Kennedy taught us back in his day — high taxes stifle business and reduce overall government income from taxes. What we need is less spending, not higher taxes.
He’s not raising the tax rate. He doesn’t even have to *act.* The fight is over letting the Bush tax cuts expire – the way they were always *designed* to expire, thus returning the tax rates to what they were under Clinton.
You’ve HAD your tax break and are now whinging about not getting a bigger one. Have you no shame?
What Are the Republicans Really Up To?
Too many people are getting hung up in the tax cut issue without looking at what the Republicans are doing.
The real Republican strategy re deficits and extension of Bush tax cuts consists of a mixed message that deficits are bad, Federal debt must be reduced, and the Bush-era tax cuts of 2001 and 2003 must be extended.
What the Republicans do not mention is that the Bush-era tax cuts of 2001 and 2003 were deliberately enacted in 2001 and 2003 by the Republicans to expire at the end of 2010. This enabled them to use the reconciliation process instead of identifying budget reductions to offset the reduced Federal tax revenues at the time they were enacted.
The Republican leadership did propose savings; .i.e. offsetting budget reductions of $1.3 Trillion to extend the tax cuts for another ten years. A good start but it does not cover the estimated $3.1 Trillion Dollar cost of extending the tax cuts; nor have the Republicans submitted the proposed $1.3 Trillion Dollars of reductions to the independent Congressional Budget Office for analysis of the projected savings amount.
While various party leaders continue to espouse the “Deficits are Bad” and “Federal Debt must be Reduced” mantras, they continue to identify the specific budget reductions necessary to offset the $3.1 Trillion Dollar cost of extending the tax cuts. Once again, they will use the reconciliation procedure, the one they accused the Democrats to use in the health care bill, to enact a tax cut extension.
The Republicans fail to understand than many Independents and Democrats, as well as Tea Party advocates also agree that deficits are bad and that Federal debt must be reduced. The problem is in determining what budget offsets the Republicans are recommending and explaining them in something other than three-word or five-word sound byte comments.
It the real Republican goals are extending the Bush cuts for the rich (and possibly the middle class), and using the popularly unnamed “reduce entitlements” sound byte for the offsetting budget reductions.
Of course, the Republicans are really talking about extending full Social Security retirement to age 70, and applying means testing to Social Security retirement and Medicare beneficiaries.
The Republicans blithely ignore the accumulated surplus American employer and employee payroll tax contributions of $2.5 Trillions Dollars (held as U.S. Treasury securities) to pay for Social Security benefits as their personal piggy bank rather than the Social Security Trust Fund (much like the Bernie Madoff school of fiscal integrity and prudence).
Subject: What Are the Republicans Really Up To?
This submission corrects the sixth paragraph in the above submission
Too many people are getting hung up in the tax cut issue without looking at what the Republicans are doing.
The real Republican strategy re deficits and extension of Bush tax cuts consists of a mixed message that deficits are bad, Federal debt must be reduced, and the Bush-era tax cuts of 2001 and 2003 must be extended.
What the Republicans do not mention is that the Bush-era tax cuts of 2001 and 2003 were deliberately enacted in 2001 and 2003 by the Republicans to expire at the end of 2010. This enabled them to use the reconciliation process instead of identifying budget reductions to offset the reduced Federal tax revenues at the time they were enacted.
The Republican leadership did propose savings; .i.e. offsetting budget reductions of $1.3 Trillion to extend the tax cuts for another ten years. A good start but it does not cover the estimated $3.1 Trillion Dollar cost of extending the tax cuts; nor have the Republicans submitted the proposed $1.3 Trillion Dollars of reductions to the independent Congressional Budget Office for analysis of the projected savings amount.
While various party leaders continue to espouse the “Deficits are Bad” and “Federal Debt must be Reduced” mantras, they have failed to identify sufficient specific budget reductions necessary to offset the $3.1 Trillion Dollar cost of extending the tax cuts. Once again, they will use the reconciliation procedure, the one they accused the Democrats to use in the health care bill, to enact a tax cut extension.
The Republicans fail to understand than many Independents and Democrats, as well as Tea Party advocates also agree that deficits are bad and that Federal debt must be reduced. The problem is in determining what budget offsets the Republicans are recommending and explaining them in something other than three-word or five-word sound byte comments.
It the real Republican goals are extending the Bush cuts for the rich (and possibly the middle class), and using the popularly unnamed “reduce entitlements” sound byte for the offsetting budget reductions.
Of course, the Republicans are really talking about extending full Social Security retirement to age 70, and applying means testing to Social Security retirement and Medicare beneficiaries.
The Republicans blithely ignore the accumulated surplus American employer and employee payroll tax contributions of $2.5 Trillions Dollars (held as U.S. Treasury securities) to pay for Social Security benefits as their personal piggy bank rather than the Social Security Trust Fund (much like the Bernie Madoff school of fiscal integrity and prudence).
Ahem, where do I begin?? Screw you, you’re 250k plus per year income after deductions & the multi-million dollar yacht you rode on!! lol… I don’t expect empathy from the uber-rich on my “trials & tribulations” my problems with foreclosures & unemployment all around my city & neighborhoods.. But don’t expect my support so you can save some tax money & buy another house in Lake Tahoe or a new boat! Pound sand buddy!!! Im done with the trickle down Reagan-omics!! We all know only bullsh*t trickle downs…. now I expect a most compelling argument from anyone in the 2% top income tier who will benefit from this tax-break extension… But guess what, I don’t care!!! There folks with Master’s degrees unemployed & losing their homes surviving on their life savings & when we compare their pain with yours, it just doesn’t add up.
The people that baffle me are the ones who are not in that income tier & yet defend them?? lol.. stuck on stupid or delusional I guess?
Deuces! >#
Sadly, you have bought into the Democrats’ class warfare/class envy/class baiting/class demogoguery strategy lock, stock and barrel. Enjoy your vote for further American economic devolution. Two years hence, let’s see if you buy the same garbage again, or manage to wise up.
Do the math, people. If I am making $15,000 a year (which I am) and am taxed 10% ($1,500), I now have $13,500 to live off of. If you are making $250,000 a year and are taxed 40% ($100,000), you still have $150,000 to live off of for that year. If someone will give me $250,000 a year, I will happily pay 40%, even 50%, on that amount of cash.
Sarah ~ I’m concerned that you’d say “give”. I’m sure you mean “earn”, right?
America is a ladder that allows you to climb to whatever height you choose to climb to. Don’t tell me you can’t, because you can. I was raised by welfare-drawing, alcoholic parents who never had two dimes to rub together.
I looked beyond my upbringing and said “I can do better” and I have.
Now, you look at yourself in the mirror and tell yourself that you can do better too, and it will happen. We don’t get the future we deserve, we get the future we build for ourselves.
As a small business owner, I agree with “Hard Worker’s’ Comments.
First off, will these people (professors, politicians) stop placing the small business owners & people who make a few hundred thousand dollars and provide jobs & stimulate & drive our economy in the same category as Wall Street hedge fund managers that make millions & billions !
Every time my business makes a sale, I literally put about 30+ people in other industries to work. If I am taxed at a higher rate & become less profitable, assuming the same income in the up coming year my decision becomes, Due to the higher taxes I now have to pay, do I accept less net or cut back somewhere. I already know who Im going to have to fire if this happens, because as the gentleman “hard worker pointed out” you cant help but have feelings of giving my hard earned money to scumbags who lay on their ass.
I do believe that taxes are the price we pay to live in our great country, but when the system bites the hand that feeds it, it is likely to get bitten back. If I end up paying more taxes through this distribution of wealth plan Im being forced to take part in funding, there will be less people getting work from me. And by the way, I am conservative overall, but I spend WAY more at malls, best buy, car dealerships, travel, etc than my friends who have less & I do it more frequently. People with money spend more & stimulate the economy.
Most of that junk you’re buying is now made overseas so your spending isn’t stimulating the economy as much as you think. Those retail businesses need to see volumes of shoppers to stay in business. Your little contribution alone won’t cut it. That’s why our economy is imploding, the middle class is shrinking and it’s the middle class that drives overall consumption.
I bleive in “trickle up” that is “What’s good for the Middle Class is good for the economy and country”. “Trickle Down” failed under Bush. Giving the richest in the coutnry yet more tax breaks won’t stimulate the economy, just increae the defecit. Extending the “Middle Calss” tax breaks will stimulate consumer dmeand and the economy. Middle class consumer spending drives the economy, not rich people moving money into off shore investments.
This is great! We are very concerned about the top 2%. What a great country!
I think we have made it as a people to be so loving and caring! We are gettting close in our house hold to making that $250K. We get to so much traveling with the income. Every year we take long vactions in Europe. I can not wait to get in the over 250K range. I thought we had enough. But I would like to get a “new” BMW. Grred is good!!!
Thanks to the people saving the dream….
Good Lord, yet more disingenuous blubbering from the left. Reich conveniently excludes Freddy, Fannie, Barney Frank, Chris Dodd–and even himself–from the ranks of, “Those whose antics have sliced jobs and wages and nearly destroyed the American economy.” What a crock of excrement. Reich conveniently forgets that the only reason “the economy roared” during Clinton’s years is that the Republican’s 1994 victory forced Clinton to the middle and the choices that led to economic growth during a unique period of unusual economic and financial circumstances that likely will never be repeated, at least not in the foreseeable future. Of course, Reich makes no mention of Obama’s disastrous record of non-job creation (maybe he assumes that we readers all blame Republicans). He also fails to mention that those gaining the most from the Bush tax cuts continue to pay the extreme lion’s share of taxes–nor does he mention the near-50 percent of Americans who pay NO federal income tax, thanks to the generous entitlements his party have shepherded into law over the past two decades. Reich has no credibility. He’s just another left-wing revisionist trying to sell us a Democratic political version of the Yugo.
If you extend tax breaks to people who make less than 250,000, It also helps people who make over 250,000. It’s equal protection under the law. A millionaire pays the same rate on his first 250,000 than the guy who makes 250,000. This seems to be how the rich try to get sympathy for so called “draconian tax rates”. Well we all pay the same rate for the tax level you are in. It is the money that is being taxed not the person. If the wealthy have most of the money, it makes sense that they should pay most of the tax. These so called “Americans” made their money in America and owe the system for that. I hope the Democrats hold the republic-cons feet to the fire on this one. If the democrats are smart(HA ha right). they will bring this to vote and force the republic-cons to votes against tax breaks.
The beer story is interesting about the drinker in the bar. It might be improved if the beers were bombs and some of the people don’t want to buy them but had to because the guy with all the money gets his way (and he makes profit on the bombs).
…. one thing to keep in mind, Mr. Reich, is that “the rich”, mostly, are people who own successful businesses here in America …. there are some inherited wealth situations, but mostly they are people who built up and own successful businesses …. before you set upon them with Dobermans and pitchforks, keep in mind they are the people who really shovel the coal into the furnace of the American economy capital-wise …. this is not to diminish the importance of the labor component, believe me they are well represented in American government today …. the capital structure of this nation is currently functioning in a semi-damaged mode, mainly due to the gross mismanagement of Fannie Mae over a period of years …. it was a situation of a very very big crooked principal (Fannie Mae) working with some pretty big crooked brokers (Bear Stearns & Lehman Brothers, mainly) …. Wall Street took care of the crooked brokers and made an example of them …. but the big liberals who really control Fannie Mae are in Washington, like you —- and all you’ve done with the Fannie Mae mess is essentially try to cover it up, p.s. while continuting to do much of the exact same things that casued the problems in the first place, like 125% Refi’s for example, albeit on a smaller scale; and instead of using the crooked brokers – you’re using the Federal Reserve now, and that’s not good, not good at all actually
Wall Street has given you a suggestion of something you liberals could do, that would really benefit your constituents and also be palatable to the Republican side —- allow depreciation on owner-occupied homes, and shorten the depreciation schedules for commercial and investment real estate. Think about doing it sooner rather than later, because the day is going to come when Fannie Mae is not going to be allowed to keep stuffing more and more junk paper into the Federal Reserve. The Federal Reserve is powerful, but it is not some kind of blimp the size of the Milky Way Galaxy. It’s capacity is finite, and you people are pushing it. If you want to destroy the dollar, think twice, because the most likely outcome is a Weimar Republic type situation. Housing values need to be strengthened as much as possible, and in some ways that is easier said than done. It will have to be done gradually in graded increments.
However —- by allowing depreciation of owner-occupied homes, a major flaw in the U.S. Tax Code would be removed. There is no good reason why investors can depreciate houses, but owner-occupants can not. They are investors too, and the change would reflect the economic reality that the physical improvements of houses, i.e. the wood, the roof, the masonry, the driveway, the plumbing, the wiring, the fixtures, and all that —- actually does physically depreciate. And good tax policy must reflect the reality of the underlying economics. This would be a real improvement to the Tax Code, and it would benefit the whole range of U.S. homeowners, and it’s reasonable. People listen to you and your friends there on TV, why don’t you start pushing it ?
I say we get rid of taxes and replace it with the “Help your fellow man” tax. I have amazing skills with electronics and mechanical things, but i’m forced to accept unemployment because of a lack of “experience” or a piece of paper that says I can regurgitate information 7 years running. Nevermind actually having the ability to perform a job above expectation, unlike the people we put into office every term. Everyone I know expects to get scumbags in office, and every year we do. Why must it be reduced to a “lesser of two evils” deal? Where’s the jerk off that actually knows what he’s doing?
I’m angry at obama for not doing what was within his power to do. Granted he’s made some accomplishments, but if it were me i’d have the government under a microscope. 50 billion in roads, rails, and runways will give back so much! What kind of moron would throw 50 billion at solar power? More roads will help the economy! /sarcasm. Construction jobs are temporary, solar power is not, except for the people who are confused at night and don’t know where the sun went.
I’m moving to brazil the second I get the chance – a place that still has opportunities for those who like to use their hands and actually leave something helpful behind instead of trying to be clever. I actually plan to help whatever community I land in get off the grid entirely. I have the ability and the knowledge, and the only place I can do for me and my own right now is Brazil.
When I die, I’ll go knowing I left something for my children and the neighborhood they’ll grow up in and raise their kids in – NOT SCREWING IT UP BEYOND ALL RECOGNITION. WHO CARES ABOUT MONEY? WHAT ABOUT THE G0D D@MN CHILDREN AND THE FAMILIES THEY NEED, TO STOP THEM FROM TURNING INTO PSYCHOPATHS?!?!?!?!?!?!
Y’all are splitting hairs about yourselves. I just want to be able to live comfortably, which means my kids will live comfortably, in privacy. And to anyone who wants to poke at my comment, we’ve been eating rice (NO BEANS) for the last 3 months. I thank god I have a mother who raised me with some love and compassion.
People who have made it think anyone can, therefore poor = lazy. I can tell you that there are plenty of hardworking poor, and that they are working so hard right now that they do not have time to participate in this circus.
To the professor’s threat that we could tax the rich right out of this country: What about the fact that for the past 20 years those same people sold our work right out of the country to the lowest bidder?
Robert Reich is a breath of fresh air in a land of Wall Street hacks and smelly political winds.
Until 1913 there wasn’t even an income tax! Since then taxes have quietly been pushed more and more too the poor, with regressive taxation of goods and services a politician’s favorite, and why not….they’re fleabites to the rich, but to the poor they force them to choose between buying bread or buying medicine.
Tax the rich right out of this country…ha! Let them go and enjoy the riches of the tax haven of North Korea or Vietnam. The communist nations always have no taxes for the rich…they’re paradises ya know.
Reich is into class warfare, right there in the trenches with the Clintons. Don’t buy into it; it’s garbage. When’s the last time you got offered a job from a street person? It take MONEY to build businesses and hire people, and if you take that away; what you get is what we are seeing now.
Obama Depression.
that’s a really great idea
chase out all the investors, and the “people” who remain can riot over the food stamps, until they figure out that the stores are empty
then it will be hand-to-hand fighting with hammers and sickles for the government Spam and bug-infested cereal that will be tossed out from Federal dump trucks, until that runs out
sure, chase out all the investors and see what happens
I am amazed at the numerous comments from my fellow conservatives who advocate for keeping the things that drove us to the conditions we are in. The economy buckled because of the policies we have in place.
ALL of the suggestions for keeping things as they are ignore the fact that it didn’t work. To use a cliche “insaninty is defined by those who do the same thing over and over expecting a different result”.
So don’t mock Reich, don’t stick your head in the sand, suggest a way to improve the condition. Because you know we wouldn’t be having this conversation if the policies of old worked. It is easy to cast stones, trying casting out some ideas.