The Republicans held the government hostage til the last minute last week, averting a shutdown one-hour before the deadline with a "solution" that basically gave them what they had demanded. Obama then says he is going to offer his own spending plan, and that it will include the entitlements that are the object of all this tax-cuts-for-the-wealthy deficit creation and deficit blather from the right.
( One can't help suspecting that Obama's position is just a reflection of the economic advisers he has surrounded himself with, from Max Baucus's former aide Messina--favorable to tax cuts to the wealthy, including the estate tax repeal enacted under Bush-- to Tim Geithner and the rest of the crew.)
Obama, in other words, has failed to show any leadership for a progressive vision and has allowed the historically illiterate and factually compromised arguments of the "starve the beast" radical right to take center stage. He should have used his bully pulpit to relegate it to the "bats in the belfry" wings.
All you have to do is look at the makeup of the Deficit Commission to be convinced that there was never a progressive vision there in the first place. As Citizens for TAx Justice points out, a key business leader was Dave Cote, CEO of Honeywell. Honeywell is one of those corporate citizens that manages to earn significant U.S. profits but pay miniscule U.S. taxes. See Dave Cote, Member of President's Deficit Commission, CEO of Corporate Tax Dodger Honeywell, Citizens for Tax Justice, Apr. 12, 2011.
That's the tax system that Paul Ryan wants to "reform" by cutting big multinational corporations' taxes even more (as well as their wealthy shareholders' and managers' taxes).
As CTJ reports, Obama in his State of the Union was already singing the line that the radical right wrote--"reform" corporate taxes in a revenue neutral way--ie, use the cleanup of some of the ridiculous corporate tax giveaways in the Code to fund a corporate tax rate cut (taking from corporations and giving it back to them). CTJ notes that "[i]t is unclear why President Obama has not called on Congress to use corporate tax reform to raise revenue and reduce the deficit. A report issued by the Treasury in 2007, under the Bush administration, concluded that the share of profits paid in taxes is actually lower for U.S. corporations than it is on average for corporations of other OECD member nations."
We are spending trillions on militarization while cutting taxes for the elite who have so much influence in Washington and who own most of the financial assets. A corporate rate reduction is uncalled for. Instead, Congress should reinforce corporate taxation by enacting a "manage and control" definition for domestic corporations, enacting various provisions to discourage expatriation of corporate assets (including elimination of deferral and the active business offshoring subsidies, including the active financing exception devoted to offshore finance subsidiaries along with complete revamping of the way we tax corporations when they move fungible intellectual property offshore that they would never sell to a third party).
GOP policies are almost unilaterally responsible for the current deficits. Some of it was done intentionally, like not paying for wars of choice and providing tax cuts in reliance on the Laffer myth that tax cuts create higher tax revenues. Some of it was done naively under ideological adherence to faith in a distorted economic world-view that expected essential players to self-regulate in a casino capitalist system.
And the GOP is now using the deficits it created to justify undoing programs that we have put in place over decades to protect the vulnerable and to provide a strong foundation for solid economic growth. The programs the GOP wants to destroy are the ones that ensure that ordinary Americans who lose their jobs and can't get another one can still pay for food, shelter and other necessities through unemployment compensation. They are the ones that guarantee that elderly Americans can have decent health care, through the highly efficient single payer system of Medicare supplemented by Medicaid. They are the ones that ensure that retirees won't be subject to the volatile winds of the casino markets, but will be able to have a steady flow of income from required savings through Social Security.
Instead of howling about the deficit that GOP policies created or cutting programs vital to the social safety net and to human capital development, Congress should set about further reforms to undo those tax policies that are primarily responsible for the difficult economic straits ordinary Americans find themselves in. Elliminate all of the Bush tax cuts for the rich. Eliminate loopholes in the corporate tax provisions. Quit "patching" the alternative minimum tax--let it clawback the Bush tax cut from those that are in the upper 30% of the income distribution (the group that pays most of the AMT). And eliminate the capital gains preference, either in the regular tax or by treating it as a preference in the AMT.
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