Robert Reich: Obama's Tax Deal Confirms the Republican's Worldview

[amborin]

America’s Future in the Global Economy: This Week’s Words and Deeds

Thursday, December 9, 2010

On Monday, the same day the White House was finalizing its $900 billion tax deal with Republicans, the President gave an important address ..... about the challenges America faces in the global economy. The United States has gone from 1st to 9th place among nations in the percentage of its population that graduates from college, he noted. We now rank 24th in the portion of our children who have a high school degree. Our infrastructure is crumbling.

“The most competitive race is between America and our competitors around the world,” he said. “In the race for the future, America is in danger of falling behind.”

But the President’s tax deal makes it harder for the United States to get back on top. By extending the Bush tax cuts to the wealthy, shrinking the estate tax, and freezing discretionary spending (on everything except defense), he’s leaving almost nothing for education and infrastructure.

And by embracing deficit reduction while agreeing to $900 billion in tax breaks — the lion’s share for the rich — he’s making education and infrastructure spending sitting ducks for a Republican congress intent on shrinking the size of government.

snip

***********************************************************************

Why the Tax Deal Confirms the Republican Worldview

Wednesday, December 8, 2010

Apart from its extraordinary cost and regressive tilt, the tax deal negotiated between the President and the Republicans has another fatal flaw.
It confirms the Republican worldview.

snip

The solution is to reorganize the economy so the benefits of growth are more widely shared.
Exempt the first $20,000 of income from payroll taxes, and apply payroll taxes to incomes over $250,000. Extend Medicare to all.
Extend the Earned Income Tax Credit all the way up through families earning $50,000.
Make higher education free to families that now can’t afford it. Rehire teachers.
Repair and rebuild our infrastructure.
Create a new WPA to put the unemployed back to work.

Pay for this by raising marginal income taxes on millionaires (under Eisenhower, the highest marginal rate was 91 percent, and the economy flourished). A millionaire marginal tax of 70 percent would eliminate the nation’s future budget deficit. In addition, impose a small tax on all financial transactions (even a tiny one — one half of one percent — would bring in $200 billion a year, enough to rehire every teacher who’s been laid off as well as provide universal pre-school for all toddlers). Promote unions for low-wage workers.
But here’s the obstacle. As income and wealth have risen to the top, so has political power. Money is being used to bribe politicians and fill the airwaves with misleading ads that block all of this.

snip

Get it? By agreeing to another round of massive tax cuts for the wealthy, the President confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he’s also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.
Obama’s new tax compromise is not only bad economics; it’s also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reenforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.

************************************************************



The President’s Last Stand Is No Stand At All: Why the Tax Deal is an Abomination

Tuesday, December 7, 2010

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.

snip

The deal further concentrates income and wealth in America — when it’s already more concentrated than at any time in the last 80 years.

snip

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.

snip

It makes him look weak — Republicans got everything they wanted. And when a President looks weak, he is weak.

snip

**************************************


http://robertreich.org/

[TexasObserver]

1. "The President’s Last Stand Is No Stand At All"