In defense of the egregiously unacceptable deal President Obama is trying to strike with the elitist Congressional Republicans (and a few short-sighted Democrats), he claims he is "doing what's right for the American people, for jobs and for economic growth."
Mr. President, you are way off.
There are some desirable pieces to the deal – extension of the Bush tax cuts for the middle class, the child, earned income and small business tax credits, reprieve for millions of out-of-work Americans with 13-month extension of unemployment benefits, and even in a shorter-term, stimulative sense, the one-year reduction of the payroll tax by 2% (more below).
But, this compromise is still by and large an extension of the status quo, the postponement of pain, and a wasted opportunity, at best.
They're doing it all in exchange for more tax breaks for the economically well-to-do, who don't need the breaks. The deal includes 2-year extension of the top-tier income tax breaks and the historically low capital gains and dividend tax rates passed by Little Bush, as well as a slashing of the estate tax to an 80-year low. That's a hell of a giveaway to a mere 2 percent of taxpayers – folks whose wealth and success depend not only on the buying power of working America, but also on the structures and services funded by taxes.
Back to that 2% cut to the payroll tax – because this tax is only levied on the first $106,800 of one's salary (an extremely regressive cap), an individual making $106,800 per year in wages pays the same amount in payroll taxes as one making millions per year in wages. Design problems with the payroll tax aside, at least middle- and low-income folks would have more cash in hand to spark demand in the short-term. But, that's made so by weakening the future positions of two important safety nets for American seniors: social security and medicare.
This compromise – or sellout of the American majority, rather – continues to pay undue credence to ineffective trickle-down economic strategies. We've pretty well established over the past several decades that continually higher tax breaks for the rich don't create more jobs. (There's more money to be made with those tax breaks in the Wall Street casino, in property ownership or in offshore tax havens.)
Also, as Robert Reich put it, this deal "makes a mockery of deficit reduction." (Do we need a reminder of what Republicans purport to be their top priority?) And, this focus on immediate relief is distracting us from what's waiting at the end of this debate's dark tunnel: billions of dollars in lost revenue.
With that comes those public sector wage freezes, job cuts all the way from the federal to the state and local levels, and reduced funding for public services at a time when they're most needed. Those cuts will hit middle- and working-class taxpayers the hardest, the very people President Obama claims he is trying to protect.
Unless we want to witness the further erosion of our middle class, and yet growing division between America's rich and poor, we must take action to stop the Obama-Republican tax compromise.
Read AFL-CIO President Richard Trumka's statement in sharp opposition to this lopsided deal.
Watch this spot-on speech by Sen. Bernie Sanders (I-VT), and see if that does the trick:
It’s outrageous! President Obama has announced a tax deal with Republicans that further weakens the estate tax. In the deal, Democrats would accept the Lincoln/Kyl estate tax bill, with a $5 million exemption per spouse and 35% tax rate, for two years.
The deal would make the estate tax even weaker than it was under President Bush, and the weakest it has been in seven decades.
The deal includes some important tax credits for lower income people and an extension of unemployment benefits. But overall, this deal is no compromise. It gives away too much and gets too little in return. This deal is unacceptable.
Express your OUTRAGE: Call the President and Congress now!
CALL THE WHITEHOUSE switchboard at 202-456-1414, and the comment line at 202-456-1111.
CALL YOUR TWO SENATORS AND YOUR REPRESENTATIVE at the toll-free Congressional switchboard at 800-830-5738.
Tell the President and Congress:
This is a bad deal.
We need a tidal wave of calls! Forward the alert, then CALL your friends; blog and share this alert on your social networks.
Thank you for taking action!
Each year, CREDO Mobile / Working Assets, a long-distance and mobile phone provider – with a social and environmental conscience – allows members to submit votes to determine which charitable organizations on their ballot will receive a portion of the company's service charges as a donation.
Once again, United for a Fair Economy has made it to the ballot!
All CREDO / Working Assets customers are eligible to vote, BUT if you're not a customer, you can still participate. CREDO's "Action Members" – those who sign up for their mailing list and share action alerts – are also eligible to vote. If you're not already an Action Member, see "New to CREDO? click here" at the bottom of their sign-in page to get involved.
Since 1985, CREDO has contributed more than $65 million to groups working to restore justice, defend our environment and promote sustainability here in the US and abroad.
You may have noticed that a lot of the issues we address in our quest to reduce economic inequality have taken center stage in both Congress and the media: taxes and the federal deficit, the jobs and foreclosure crises. These are significant problems that require significant solutions. And, we need all the financial support we can gather to see that solutions that address the root causes of inequality make it to the policy tables.
Please take a moment to send UFE as many of your 100 votes as you're able today.
Thank you (times a hundred) in advance for your support!
CALL THE WHITEHOUSE switchboard at 202-456-1414, or the comment line at 202-456-1111.
CALL YOUR TWO SENATORS AND YOUR REPRESENTATIVE at the toll-free Congressional switchboard at 800-830-5738.
Tell the President and Congress that you want:
- Signing and circulating our online petition, the Call to Preserve the Estate Tax;
- Submitting op-eds and/or letters to the editor of your newspaper;
- Blogging and sharing information (including this action alert) on your social networks;
- Hosting local meetings to discuss why, now more than ever, your community needs a progressive federal tax system, and to develop a plan for collective action - call us for help.
Brave New Films does it again! This time, they share the common thread between several seemingly unrelated subjects: a reality show star (if that's what they're called), expensive hotel rooms, monkeys in private captivity, and the roiling debate over the Bush-era tax cuts for the wealthy.
While the connections are loose, the video still sends a pretty powerful message about wealth, status and austerity for folks scraping by in the US. And, it's kinda funny. For those reasons, we're paying it forward. Enjoy.
Pushing on a string: Why tax breaks for the rich won’t help
By Brian Miller
Originally posted on The Hill's Congress Blog, November 22, 2010
The future of America’s middle class is at stake as the battle over the Bush tax cuts heats up in Washington. Despite the fact that a strong majority of Americans support ending the Bush tax cuts for the wealthiest, some in Congress are still hesitant. It’s at times like these that we should take a long, hard look at what got us into this economic mess.
On the eve of the Great Recession in 2007, income inequalities in America were at their highest levels since just before the Great Depression. 50 percent of all income went to the top 10 percent in 1928, leaving the bottom 90 percent to vie over the other half. That dropped to just over 30 percent during the Great Prosperity from 1942 to 1979, leaving nearly 70 percent of income for the remaining 90 percent of households, though overt racism barred many from sharing in that prosperity. The purchasing power of that broad and strong middle class became fuel for the roaring engine of our nation’s economy.
in 1980 our nation began to grow apart again – a divergence kicked off
by financial deregulation and tax cuts for the wealthy. The growing
divide was made worse by the assault on organized labor and the
weakening of social safety nets. By 2007, income inequalities had
reverted to pre-Depression levels. Mark Twain once said, “History
doesn’t repeat itself, but it does rhyme.” And so it does.
With so much money in so few hands, high stakes speculation and wild bubble rides on Wall Street destabilized our economy. When the house of cards came down, it fell right on top of middle-class Americans. Communities were ravaged – with the stripping away of jobs, homes and savings – while the Wall Street gamblers sat comfortably in their velvety casino chairs lighting another cigar.
So far the economic recovery has been very one-sided. For low- and middle-income Americans, unemployment continues to be painfully high and millions of homes are in foreclosure. On the other hand, the Dow Jones has largely recovered since it bottomed out in early 2009, while the Wall Street crowd and Big Business execs are once again rolling in extravagant bonuses. For the wealthy, the recession’s storm has passed.
Despite this one-sided recovery, Congressional Republicans are telling us the problem with our economy is that rich people don’t have enough money. They want to make the Bush tax cuts for the wealthiest Americans permanent, adding $700 billion to our national debt over the next 10 years, paid for with more borrowed money. Ironically, these are the same people screaming about deficits. Of course, they claim that this is about creating jobs, but those tax breaks are more likely to sit in a bank or be invested overseas.
More importantly, pouring even more money into the pockets of the wealthy simply won’t get our economy moving again, especially in a recession as deep as this. Such a top down, “supply-side” strategy for economic growth is like pushing on a string. It’s futile and a wasteful use of borrowed money. It simply won’t work without a strong middle class to pull on the other end of that string, with the purchasing power to buy the goods and services produced.
It’s time to rebuild our economic engine by putting middle-class families first. Instead of expensive and wasteful tax breaks for the very rich, we should be focused on strengthening our middle class. Obama is right to target tax cuts to those earning less than $250,000. Even better, let’s use public dollars to create jobs directly for middle-class households while making long-term investments in our communities, such as building light rail for our cities and bullet trains in major corridors, installing green energy retrofits to public buildings, and putting more teachers in our schools.
Funny thing about pulling on a string. It moves even if there’s no one pushing on the other end. That’s the beauty of demand-side economic growth strategies. With a long-term focus on revitalizing our nation’s middle class with good-paying jobs, we can sow the seeds of another – more inclusive – Great Prosperity.
Conservatives in Congress say they are worried about small businesses and farms, so they want to repeal the estate tax at a cost of $700 billion over 10 years, or slash it at a cost of $383 billion. The same officials say they are worried about the deficit, but they want to spend another $700 billion to extend the Bush income tax cuts for the wealthy.It’s outrageous!
Call your two Senators and Representative now, toll-free, at 800-830-5738.
Tell them your name, your city/town of residence, and say:
We don’t need more tax cuts for millionaires. We need a strong estate tax. I’d like the Senator to push for higher estate tax rates for multi-millionaires and billionaires, and vote against unlimited deductions for farms.
I’d also like the Senator to end the Bush tax cuts for the wealthy.
Congress should invest that money in programs that will put Americans back to work, create opportunities for our children and pay down our debt.
Ask: Where does the Senator stand on the estate tax and the Bush tax cuts for the wealthy?
Add a personal statement about who you are and why you oppose cutting the estate tax, such as, “I am a small business person, and it is a myth that the estate tax hurts small businesses,” or “I am wealthy and will gladly pay the estate tax, because I believe it’s an important part of a fair tax system.”
Your calls are important. They make more of a difference than emails, because Congressional offices count the calls.
Let us know how your three calls went by sending an email to email@example.com. Tell us the name of your legislators, and what the staffers told you.
And, about that small business myth -- UFE just held a national press teleconference with four American business owners who strongly support the estate tax. Check out our press release for more. Watch an interview with one of our speakers below!
afternoon a spirited crowd of 150 people showed up at the Bank of
America’s (BoA) main branch in Boston to kick off a campaign called
“Move Our Money" as part of a national effort to reinstate federal usury laws with a 10% cap on credit card interest rates. The event was organized by the Greater Boston
Interfaith Organization, a coalition of over 50 faith-based and secular
organizations (such as churches, synagogues, mosques, unions, and
community development corporations), with whom UFE has provided support
through our popular economics educational program.
With drums, horns, chants, whoops and hollers, the crowd responded to the call to “Move Our Money” by closing credit card, checking and savings accounts with BoA which refuses to go along with the Commonwealth of Massachusetts’ usury law capping interest rates at 18%. During the one-hour demonstration, 121 individuals and organizations divested from BoA.
Bank of America, GBIO literature points out, received a $5 billion taxpayer bailout in 2008 despite earning annual profits of $4.1 billion. In 2009, BoA awarded their investment banking employees bonuses totaling $4.4 billion, an average of $400,000 per employee. Yet they refuse to cap their credit card interest rates at 18%.
While GBIO’s Debt to Assets (D2A) financial literacy program teaches folks how mortgages and other loans work, how to avoid predatory lenders, and how to maintain a high credit rating, they have also invited UFE to provide D2A participants with an accessible big picture analysis of the economy. Together we explore how changes in financial regulations, tax laws, and spending decisions have enabled a relatively small group of wealthy investors and financial sector management to accumulate vast wealth, pushing economic inequality to heights not seen since just before the Great Depression.
The relaxing of the rules that permit banks and credit card companies to raise interest rates to what just a few decades ago would have thrown them in jail for usury, is directly addressed by GBIO’s long term campaign: 10 percent is enough! Since Massachusetts has a law that caps interest rates at 18% for banks chartered in the state, the current phase of the campaign is demanding that BoA (based in North Carolina) agree to abide by the Massachusetts cap.
Shortly after the election, one of our supporters asked me what we as a progressive community needed to be doing now. In addition to things like building capacity to influence the broader media and shape the public dialogue, raising more money for organizing efforts across the nation, and pushing for reform to turn back the effects of the Citizen’s United case, I also suggested three core messages that we need to hammer at every opportunity to build a progressive tax majority. They are:
No man / woman is an island. As communities, our prosperity is bound together and dependent upon each other. The prosperity of others in our community impacts our own wellbeing. The recent foreclosure crisis is a classic example as the collateral damage of large-scale foreclosures in communities took down the value of all the homes in the area, including those who had been paying their mortgage, sending them underwater as well. Similarly, better schools doesn't just help the students, it has positive ripple effects across the entire economy. We rise together and we fall together.
The wealth of the most affluent is because of, not in spite of, the tax system and the public investments it makes possible. As long as people believe that the wealthy in our society achieved their status through hard work, smarts, and entrepreneurship alone, they (including those who are not wealthy) will resist any form of progressive taxation as an affront to their hard work and "American values." We must continually point out the ways in which public investments, including roads, courts, public education, parks, and more, make it possible for businesses in our nation to succeed and the wealth that is created for those at the top. Once this is grasped in a deeper way, people will be more open supporting progressive tax policies.
Inequality is bad for everyone. Our communities are stronger when prosperity is broadly shared. Over the past few years, there has been growing evidence validating what progressives have known intuitively all along, that inequality leads to higher crime rates, disintegration of communities, hopelessness and its spin-offs (poor health, obesity, etc), and more. A more broadly shared prosperity can be achieved on the front end through a higher minimum wage, living wage ordinances, caps on CEO pay, steeply progressive taxes that discourage huge paychecks at the very top, etc. On the back end, it can be achieved through progressive taxation, a strong safety net, etc. However we get there though, our communities will be stronger as a result.
Dean Baker, intrepid economist at the Center for Economic Policy & Research (CEPR) who scrutinizes mainstream media reporting on the economy, has this gem about the little-discussed impact of health care costs on the deficit.
"If the United States paid the same amount per person for health care as any of the 35 countries with longer life expectancies, we would be looking at huge budget surpluses for the indefinite future."
Baker points readers to CEPR's "Health Care Budget Deficit Calculator," which allows users to compare baseline federal deficit projections by the Congressional Budget Office (CBO) against the projected deficit under the CBO's "Low Health Care Cost" calculations.
Chart h/t Center for Economic & Policy Research
If you're curious to see how we stack up against the rest of the developed world, CEPR's calculator also lends a glimpse into what our projected deficits would look like if we spent the same amount of money per person on health care as they do in 30 other countries.
The main point here is that, while deficits aren't to be ignored, there are other puzzle pieces that are being brushed aside in the national debate. In this case, we're forgetting that inefficiencies, inequities, and the allure of private profits in health care are doing some major damage to our federal budget. Let's stop forgetting, start learning and sharing the important information that's going to move us in a better direction, and turn our lawmakers' attention to solutions that work for all of us.
Baker's daily posts can be seen in his Beat the Press blog on the CEPR website.
For more good sense on deficit madness, read Robert Kuttner's "What Planet Are Deficit Hawks Living On?"