The Republicans are pressing for corporatism on a grand scale, it seems--they want to cut government spending --especially on any program that originated as part of FDR's New Deal--and keep taxes where they are (at the lowest level since the Korean War), while continuing to make live easier for corporations.
One may detect a hint of hypocrisy. When the Bush adminstration pushed through the first in a series of tax cut bills in 2001, it was clear that the reduction in tax revenues would result in record deficits. The cots of the 2001 bill was around $1.3 trillion dollars over ten years. Republican leadership basically said "deficits don't matter anymore." Their rationale--tax cuts lead to economic growth. Their justification--they just knew it was so. Tax cuts, however, have not historically led to growth. In particular, what growth there is can be (and is) significantly distorted. What we have seen as the right's tax cut agenda has played out is that growth goes increasingly to those who already enjoy the lion's share of the benefit.
And now that the huge tax cuts have been in effect for a full decade along with the hugely increased military spending (due to the wars of choice in Afghanistan and Iraq), the deficit suddenly becomes something to do something about. We could address it by cutting back drastically on the military industrial complex. But that doesn't seem to be a very high priority in the House. We could address it by restoring the tax system to sanity--eliminating most of the Bush tax cuts and leaving in modest cuts for those in the bottom of the income distribution (and restoring the "making work pay" credit for that lower-income group as well). But that isn't even on the GOP list of possibles.
What the GOP wants to do is use the deficit situation which their own policies have created to roll back FDR's New Deal--reduce Social Security, reduce Medicare and Medicaid--while they keep funding the military, continue deregulating so that big polluters and big gamblers can continue to carve out economic gains for themselves whle leaving the rest of us holding the bag on air pollution, health problems, and the volatility and crashes associated with a casino economy.
The GOP wants corporate tax reform too. The Senate Finance Committee scolded Treasury Secretary Geithner at its meeting February 16 for not laying out a plan for "meaningful tax reform on both the corporate and individual side." BNA Daily Tax RealTime, Feb. 15, 2011 (quoting Sen. Mike Crapo, R-Idaho). Geithner's response? "I suspect that we're going to get [to] that point sooner on corporate than on individual, but we'll meet that challenge. We're trying to figure out how to build consensus now before we take that next step so that we maximize the chance that we get it done." Id.
The problem, of course, that when the GOP says it wants "corporate tax reform", what it really means is "lower corporate taxation". Obama has said he supports lowering rates while removing loopholes and special provisions. There is really not much ground for consensus between those two positions. fIn similar situations (such as the question of retaining a public option in the health care reform act), Obama has been the first to give. If he does so here, we can expect that corporations will pay even less of their hoarded profits into the fisc and even more to their top managers, adding to the inequality bubble.
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