About a week ago I attended a Republican debate in Springerville. I have blogged about the Congressional District One race before, but I decided I would go see for myself what the GOP is sending us for candidates this year.
All four of the GOP candidates for the office were present, Patrick Gatti, Gaither Martin, Jonathan Paton and Doug Wade. The GOP establishment has annointed Paton, and given their track record in choosing candidates whether local Republicans want them or not (think Rick Renzi, who jumped into the district from outside and spent big outside money to defeat Louis Tenney in a primary in 2002, or Paul Gosar, who did live in the district but who also got a lot of outside money to beat several other candidates two years ago before abandoning the district this year) I suspect Paton will be their nominee. Like Renzi, he jumped into the district just to run; also like Renzi, he is bringing a lot of outside money into the district; and also like Renzi he is ethically challenged (as I discussed in this post about a month ago.)
So what kind of a GOP nominee is he? Well, he sounded very much like a career politician (a good reason for that, because he is a career politician) in most of his answers, consistently ducking and weaving while avoiding providing a lot of direct answers unless the question was a softball (i.e. "did you vote in the last election?") However, he had a couple of answers I would like to talk about right now.
I had one chance to ask a question, so I decided to ask it about the Paul Ryan budget, which Paton is on record (both in 2010 and 2012 as supporting.) The Ryan budget proposes phasing out Medicare for workers below 55 and replacing it with a series of exchanges where seniors could purchase subsidized private insurance. Of course this is exactly what is at the heart of Obamacare, but according to Republican logic, Obamacare is better than Medicare for seniors, but nothing at all would be better for the rest of us than Obamacare. So, I mentioned my age (presently 49) and the fact that I have paid Medicare taxes since I had my first job at the age of sixteen (a third of a century ago) and asked about how he felt about the Ryan budget's plan to privatize Medicare. He of course hemmed and hawed a great deal, going back and forth and finally saying it would be 'wrong' to "deny coverage to people that have been paying their entire lifetime into anything." Which was a classic dodge-- the Ryan plan does not seek to deny coverage, it seeks to change it to a privatized system. He then went on to discuss Social Security (which I had not even mentioned in my original question) and said, "I don’t believe I’m ever gonna see a dime of the money that I’ve put into Social Security, and I think most young people believe that today. We should be able to do with our own money what we want to. And I think that’s the right way to go." In other words, keep your money and invest it yourself. Which is to say, no Social Security. Exactly the same thing the Bush people were saying when they tried to privatize Social Security in 2005. Their arguments may be evolving, but make no mistake about it, the plans set forward by the Cato Institute to privatize Social Security are still intact, and Jonathan Paton's comment makes it clear that he will be on board the next time they try to privatize Social Security.
The only other thing I'd like to remind people of concerning the Ryan budget is that as bad as their plans are for Medicare and Social Security, Paton and other Republicans who have signed onto it are also supporting deep cuts in a wide range of programs that benefit virtually everyone, in order NOT to cut the deficit (as they have tried to say to sell it) but to finance deep tax cuts for billionaires. The tired old logic that low taxes on so-called 'job creators' will boost the economy should have pretty much been disproven by now, as taxes are already at historically low levels so if they really helped the economy we'd be seeing it boom right now. Instead, tax cuts only reduce tax revenue, which in turn creates deficits. Using deficits as an excuse to cut spending on programs, while at the same time pushing tax cuts for billionaires that will add back onto the deficit is pretty brazen, though I do have to admire their messaging people for convincing people not to think about the math (maybe there really IS another reason for all those cuts we've seen the GOP push in education the past few years.) But make no mistake about it. Paton is fully on board with the entire Ryan budget, including the 'cut spending to reduce the deficit and then cut taxes to blow the deficit up again' math.
There was one other answer I would like to dicuss that came from Mr. Paton, and one which left me cold. Someone asked him a question about treaties that we have entered into with other nations as well as the United Nations, and also about the second amendment. Paton first said that we should not observe 'any federal law that's unconstitutional.' Huh? I thought that it was up to the courts to decide whether a law is unconstitutional. And if they do make that determination, then the law is no longer in force. So what exactly does he mean by that? How will he determine which laws to obey and not to obey as 'unconstitutional,' since we already obey only laws which the courts have upheld or which have not been challenged. But it was the rest of his answer which really bothers me. He talked about people (presumably members of Senate, since the Senate ratifies treaties) who vote for treaties made with the U.N. and said, "we should not vote for it, and if you do vote for it, I think you’re a traitor, you’re a traitor to this country.”
Excuse me? If you vote for a law that he believes is unconstitutional, then you're a traitor? It's one thing to disagree with a law or what it says. It's quite another to accuse people who exercise their Constitutional duty to vote on whether to ratify a treaty, "traitors" if they do not vote the way he believes they should. Yeah, I know. Just what we need to fit in with the image of Arizona. Another member of Congress who goes to Washington and calls people who disagree with him, "traitors."
After going to the debate, I can only say that it is of critical importance that we NOT send Jonathan Paton to Congress!
Showing posts with label tax cuts. Show all posts
Showing posts with label tax cuts. Show all posts
Tuesday, July 24, 2012
Friday, September 04, 2009
Jan Brewer's glass house
Governor Jan Brewer has signed most of the budget, according to reports out today. She vetoed the repeal of the state property tax and at least for the moment plans to use the revenue it generates (a quarter billion a year) to plug holes still left in the budget and restore some funding to education and state services. She blamed 'a few Republicans and Democratic extremists'.
This sentence makes no sense at all. Democrats were locked completely out of the negotiations for almost eight months, including a spate in which they were told that they were really negotiating with Republicans (who were in fact actually secretly negotiating with the Governor behind closed doors) in a ploy that even Robert Robb agreed that the Democrats were negotiated with in bad faith. And even a couple of weeks ago when Democrats were allowed into the budget negotiations they were essentially told that the budget was a done deal and they could tinker around the edges in exchange for passing her sales-tax ballot initiative, most of which would go to backfill tax cuts including the property tax cut.)
It is true that the reason we got to the point that we did had a lot to do with the Governor's lack of leadership. I mean, let's face it-- Janet had far deeper disagreements with the same bunch of morons in the legislature and they always got the budget done.
You can't just blame the economy either. Many states have had a terrible economy and correspondingly tough choices to deal with in terms of the budget. For a long time, the spotlight was on California in particular. But it's been a month since the legislature and Governor Arnold Schwarzeneggar got a budget agreement hashed out.
You can blame Arizona's tax structure to a degree. In 1992 the voters passed a 'supermajority' requirement to raise taxes. This means that the legislature can only raise taxes with a 2/3 vote of both houses of the legislature plus the Governor's signature (and if the increase met a gubernatorial veto it would require an even larger supermajority to override.) Note, by the way, that California has the same requirement since the notorious 'prop 13' vote of 1978 (yes, another good conservative idea). This means that it is virtually impossible for the legislature to raise taxes, and they have never done so since then. What they have done since then, however is to cut taxes massively. For example, in the mid 1990's we had billions of dollars worth of tax cuts enacted under then-Governor Fife Symington. And to get them through the Senate he needed the help of then Senate majority whip Jan Brewer (!!)
That's right. A huge part of why we are in the budgetary toilet we are in is precisely because, after disabling the mechanism to back up on tax cuts, our legislature in the 1990's went full speed ahead. And like a driver who starts down a road which becomes a trail and eventually a stream bed that is too narrow to turn around, Arizona has gotten into a budget pickle because in the full knowledge that the tax cuts could not be reversed the legislature chose during the times of relative prosperity to cut taxes virtually every year, not adequately fund the 'rainy day fund' (in case you're wondering it ran dry earlier this year just balancing the 2009 budget) and assume that the booming economy would continue forever. Taxes were cut so that schools, state services and other areas which were left to subsist on a shoestring budget even when times were good, had to make massive cuts this year which resulted in everything from teacher layoffs (making Arizona's class sizes, already among the worst in the country, even worse) to literally putting the state capitol building up for bid and committing ourselves to paying rent on it in the future -- and in a year when the commercial real estate market is at rock bottom so we won't even get much for it.
I will say this though-- Republicans have always been for tax cuts and 'smaller government.' So they did what they said they would. What this also shows is the hazard of electing the same party to be the majority party in the legislature for decades. In particular, since the 1992 referendum, we've had Republican governors for 11 out of 17 years and the GOP has controlled both houses of the legislature for all of that time except for a two year stint in which the senate was split 15-15 and still elected a Republican leader.
The return of the state equalization property tax, which was suspended for three years by a 2006 agreement and will return because the Governor had little choice but to veto its permanent repeal, is a small restitution of the revenue that was lost to the yearly reckless and deep tax cuts the legislature voted for every year for at least a decade. As both a parent and a homeowner I look forward to paying it this year because of how badly the revenue will be needed, but I know how inadequate a step that will be toward restoring the quality of our schools and other institutions that will take years to fix even if we get someone better in charge than the collection of incompetents running the state now.
And if Jan Brewer wants to blame someone, perhaps she should go back a few years. And look in the mirror. Because she was right in the middle, as senate majority whip, helping drive the car down that one way path to fiscal damnation.
This sentence makes no sense at all. Democrats were locked completely out of the negotiations for almost eight months, including a spate in which they were told that they were really negotiating with Republicans (who were in fact actually secretly negotiating with the Governor behind closed doors) in a ploy that even Robert Robb agreed that the Democrats were negotiated with in bad faith. And even a couple of weeks ago when Democrats were allowed into the budget negotiations they were essentially told that the budget was a done deal and they could tinker around the edges in exchange for passing her sales-tax ballot initiative, most of which would go to backfill tax cuts including the property tax cut.)
It is true that the reason we got to the point that we did had a lot to do with the Governor's lack of leadership. I mean, let's face it-- Janet had far deeper disagreements with the same bunch of morons in the legislature and they always got the budget done.
You can't just blame the economy either. Many states have had a terrible economy and correspondingly tough choices to deal with in terms of the budget. For a long time, the spotlight was on California in particular. But it's been a month since the legislature and Governor Arnold Schwarzeneggar got a budget agreement hashed out.
You can blame Arizona's tax structure to a degree. In 1992 the voters passed a 'supermajority' requirement to raise taxes. This means that the legislature can only raise taxes with a 2/3 vote of both houses of the legislature plus the Governor's signature (and if the increase met a gubernatorial veto it would require an even larger supermajority to override.) Note, by the way, that California has the same requirement since the notorious 'prop 13' vote of 1978 (yes, another good conservative idea). This means that it is virtually impossible for the legislature to raise taxes, and they have never done so since then. What they have done since then, however is to cut taxes massively. For example, in the mid 1990's we had billions of dollars worth of tax cuts enacted under then-Governor Fife Symington. And to get them through the Senate he needed the help of then Senate majority whip Jan Brewer (!!)
That's right. A huge part of why we are in the budgetary toilet we are in is precisely because, after disabling the mechanism to back up on tax cuts, our legislature in the 1990's went full speed ahead. And like a driver who starts down a road which becomes a trail and eventually a stream bed that is too narrow to turn around, Arizona has gotten into a budget pickle because in the full knowledge that the tax cuts could not be reversed the legislature chose during the times of relative prosperity to cut taxes virtually every year, not adequately fund the 'rainy day fund' (in case you're wondering it ran dry earlier this year just balancing the 2009 budget) and assume that the booming economy would continue forever. Taxes were cut so that schools, state services and other areas which were left to subsist on a shoestring budget even when times were good, had to make massive cuts this year which resulted in everything from teacher layoffs (making Arizona's class sizes, already among the worst in the country, even worse) to literally putting the state capitol building up for bid and committing ourselves to paying rent on it in the future -- and in a year when the commercial real estate market is at rock bottom so we won't even get much for it.
I will say this though-- Republicans have always been for tax cuts and 'smaller government.' So they did what they said they would. What this also shows is the hazard of electing the same party to be the majority party in the legislature for decades. In particular, since the 1992 referendum, we've had Republican governors for 11 out of 17 years and the GOP has controlled both houses of the legislature for all of that time except for a two year stint in which the senate was split 15-15 and still elected a Republican leader.
The return of the state equalization property tax, which was suspended for three years by a 2006 agreement and will return because the Governor had little choice but to veto its permanent repeal, is a small restitution of the revenue that was lost to the yearly reckless and deep tax cuts the legislature voted for every year for at least a decade. As both a parent and a homeowner I look forward to paying it this year because of how badly the revenue will be needed, but I know how inadequate a step that will be toward restoring the quality of our schools and other institutions that will take years to fix even if we get someone better in charge than the collection of incompetents running the state now.
And if Jan Brewer wants to blame someone, perhaps she should go back a few years. And look in the mirror. Because she was right in the middle, as senate majority whip, helping drive the car down that one way path to fiscal damnation.
Monday, August 17, 2009
Republicans own the Republican budget.
The latest word from the capitol is that the GOP legislature is, as it looked like they might do last week, going to pass exactly the same budget that Governor Brewer vetoed on July 1, and this time she will sign it.
She will blame this surrender, ironically enough on Democrats.
Yes, you read that right. After being frozen out of budget negotiations for months (and the proposed Democratic budget was never considered at all by the GOP leadership, by the way) the only times when Democrats were consulted was when it became clear that the GOP leadership was all tied up in knots with themselves with a deadline looming and they needed one more vote-- and then it was never the Democratic leadership, but individual Democrats (Hale and later Miranda) who they tried to get to defect and vote for a terrible budget for a price, and as I noted they were consulted literally hours before deadlines and not at any other time or with any other Democrat. Luckily neither of those two took the bait.
Zelph at AZ Netroots has a pretty good summary of all the times that Democrats were consulted at all here. As you can see the number of times when even individual Democrats were courted is a short list, and never once did the Governor bring together a 'five party' solution (herself, and the majority and minority leaders from both houses of the legislature,) something Democrats had been repeatedly asking for. You'd think she was superstitious about the number five or something.
Blaming Democrats that a bad budget passes with only Republican support because none of them actually was willing to sell out and vote for the bad budget? That would be bad enough in and of itself.
However we can go further, and point out that this isn't just a bad budget full of budget cuts. It's a bad budget full of tax cuts (especially the permanent repeal of the state property tax.) Asking any thinking person to vote for a sales tax referral when all it will do is backfill a tax cut that mainly benefits the rich and corporations who can pay good lobbyists is a sham in and of itself.
Let's be clear. This is a Republican budget, written exclusively by Republican leaders, passed with only Republican votes in a legislature where Republicans have absolute control, and if it is signed it will be a Republican Governor. This turkey will be their budget, they will own it and there will be no way one could argue otherwise. Democrats can't do anything about this budget because they've been locked out of the room for a long time. Blaming Democrats would be like blaming the person you outbid at an auction if the item you bought turns out to be junk.
But they will try it anyway.
She will blame this surrender, ironically enough on Democrats.
Yes, you read that right. After being frozen out of budget negotiations for months (and the proposed Democratic budget was never considered at all by the GOP leadership, by the way) the only times when Democrats were consulted was when it became clear that the GOP leadership was all tied up in knots with themselves with a deadline looming and they needed one more vote-- and then it was never the Democratic leadership, but individual Democrats (Hale and later Miranda) who they tried to get to defect and vote for a terrible budget for a price, and as I noted they were consulted literally hours before deadlines and not at any other time or with any other Democrat. Luckily neither of those two took the bait.
Zelph at AZ Netroots has a pretty good summary of all the times that Democrats were consulted at all here. As you can see the number of times when even individual Democrats were courted is a short list, and never once did the Governor bring together a 'five party' solution (herself, and the majority and minority leaders from both houses of the legislature,) something Democrats had been repeatedly asking for. You'd think she was superstitious about the number five or something.
Blaming Democrats that a bad budget passes with only Republican support because none of them actually was willing to sell out and vote for the bad budget? That would be bad enough in and of itself.
However we can go further, and point out that this isn't just a bad budget full of budget cuts. It's a bad budget full of tax cuts (especially the permanent repeal of the state property tax.) Asking any thinking person to vote for a sales tax referral when all it will do is backfill a tax cut that mainly benefits the rich and corporations who can pay good lobbyists is a sham in and of itself.
Let's be clear. This is a Republican budget, written exclusively by Republican leaders, passed with only Republican votes in a legislature where Republicans have absolute control, and if it is signed it will be a Republican Governor. This turkey will be their budget, they will own it and there will be no way one could argue otherwise. Democrats can't do anything about this budget because they've been locked out of the room for a long time. Blaming Democrats would be like blaming the person you outbid at an auction if the item you bought turns out to be junk.
But they will try it anyway.
Monday, August 03, 2009
Letting property tax holiday expire on schedule is NOT "raising taxes"
One of the biggest priorities (in fact, it was number one on their list of priorities) that Republicans in the legislature have pushed even with a deficit that dwarfs the Grand Canyon is the permanent repeal of the state equalization property tax.
The tax, designed to help school districts in parts of the state where there is less of a property tax base to begin with (like here in Navajo County, for example) affects all homeowners to a small degree but is mainly a tax on wealthy corporations and landowners.
Three years ago, Republicans in the legislature negotiated with then-Governor Napolitano a three year suspension of the tax. It remained on the books but was not assessed. The 'tax holiday' is now over and the equalization tax is due to come back this year.
Not surprisingly some businesses with highly paid lobbyists are complaining about this and calling it a 'tax increase.'
Which charge is complete and utter nonsense.
It is NOT a tax increase at all, even if it comes back in full force. It is a temporary tax reduction (a 'gift' from the state) ending on schedule. Three years ago this was agreed to by all parties, and if nothing is done it will revert to exactly the same rate schedule as it was being computed at then, and which it would still be if there had been no agreement on a temporary (there's that word again) suspension of the tax.
Suppose that the local grocery store where you live puts an item on sale. They advertise the sale, and tell you that it will end next Friday. So suppose that it ends as scheduled on Friday (just as they said it would) and the price reverts to what it was before the sale. Would you then be justified in storming in on Saturday and complaining to the store manager that they 'raised their prices?' OF COURSE NOT!! And if you did make that complaint they would laugh in your face (well, maybe they would be polite to you because they do want your business but you can be sure that when they met together in the back room to go over paperwork at the end of the day they'd have a good laugh at your expense.)
How is this any different? Three years ago all of us homeowers, but mainly these wealthy corporations benefitted from a temporary tax cut. What part of 'temporary' don't they understand? I understand it as a homeowner and will probably, if the tax goes by the wayside, see it reflected in my tax bill next year. But had the deal not been struck three years ago then everyone would have paid the same bill they paid then all along. So I have no right to complain.
That's the last time we should ever negotiate a 'temporary' suspension of a tax. Instead of being grateful for what they got, the wealthy corporations now think that this is their birthright, and their lobbyists have insisted on it (and the GOP legislature has complied in every version of the budget bill so far) regardless of the fiscal situation that the state is in. The tax will cover $250 million of the state's more than $3 billion deficit, so clearly allowing it to come back isn't the whole answer but it would take a nice slice out of the deficit.
And if you think they have grown used to this cut and think it is owed them, just think how ugly things will get when the Bush tax cuts expire on schedule in 2011. You ain't seen nothing yet.
The tax, designed to help school districts in parts of the state where there is less of a property tax base to begin with (like here in Navajo County, for example) affects all homeowners to a small degree but is mainly a tax on wealthy corporations and landowners.
Three years ago, Republicans in the legislature negotiated with then-Governor Napolitano a three year suspension of the tax. It remained on the books but was not assessed. The 'tax holiday' is now over and the equalization tax is due to come back this year.
Not surprisingly some businesses with highly paid lobbyists are complaining about this and calling it a 'tax increase.'
Which charge is complete and utter nonsense.
It is NOT a tax increase at all, even if it comes back in full force. It is a temporary tax reduction (a 'gift' from the state) ending on schedule. Three years ago this was agreed to by all parties, and if nothing is done it will revert to exactly the same rate schedule as it was being computed at then, and which it would still be if there had been no agreement on a temporary (there's that word again) suspension of the tax.
Suppose that the local grocery store where you live puts an item on sale. They advertise the sale, and tell you that it will end next Friday. So suppose that it ends as scheduled on Friday (just as they said it would) and the price reverts to what it was before the sale. Would you then be justified in storming in on Saturday and complaining to the store manager that they 'raised their prices?' OF COURSE NOT!! And if you did make that complaint they would laugh in your face (well, maybe they would be polite to you because they do want your business but you can be sure that when they met together in the back room to go over paperwork at the end of the day they'd have a good laugh at your expense.)
How is this any different? Three years ago all of us homeowers, but mainly these wealthy corporations benefitted from a temporary tax cut. What part of 'temporary' don't they understand? I understand it as a homeowner and will probably, if the tax goes by the wayside, see it reflected in my tax bill next year. But had the deal not been struck three years ago then everyone would have paid the same bill they paid then all along. So I have no right to complain.
That's the last time we should ever negotiate a 'temporary' suspension of a tax. Instead of being grateful for what they got, the wealthy corporations now think that this is their birthright, and their lobbyists have insisted on it (and the GOP legislature has complied in every version of the budget bill so far) regardless of the fiscal situation that the state is in. The tax will cover $250 million of the state's more than $3 billion deficit, so clearly allowing it to come back isn't the whole answer but it would take a nice slice out of the deficit.
And if you think they have grown used to this cut and think it is owed them, just think how ugly things will get when the Bush tax cuts expire on schedule in 2011. You ain't seen nothing yet.
Wednesday, July 29, 2009
Even dumber than selling the capitol
The GOP legislature has a new way to finance giving away a $250 million property tax cut and $400 million income tax cut, heavily weighted towards corporations and the wealthy who lobbied for these cuts.
They want to sell the state capitol and other state buildings and then rent them back.
So what is even dumber than that?
How about doing it right now, when the market for commercial real estate in Arizona is near its bottom?
Not only sell the capitol, but time it to make darn sure the state gets the lowest possible price for it.
Maybe they should consider taxing whatever they are smoking, because it's obviously pretty potent stuff.
They want to sell the state capitol and other state buildings and then rent them back.
So what is even dumber than that?
How about doing it right now, when the market for commercial real estate in Arizona is near its bottom?
Not only sell the capitol, but time it to make darn sure the state gets the lowest possible price for it.
Maybe they should consider taxing whatever they are smoking, because it's obviously pretty potent stuff.
Tuesday, April 07, 2009
The price of decades of Republican rule in the legislature
After decades of the legislature being under the control of the same party, we've reached the point where taxes were cut to the point where they just allowed every institution in the state to operate on a shoestring budget even in the best of times.
But during a recession like we are in now, tax revenues are down and demands are up, and there is no way they can raise taxes (thanks to the law they pushed though via ballot initiative some years ago that requires are supermajority in both houses to pass a tax increase.) In other words they ran the car into the ditch and then disabled the control mechanism.
So, ironically we've now reached the point where a Republican governor is trying to put a measure on the ballot asking voters to approve a one cent temporary sales tax increase, and even the state Republican Party is backing the tax hike.
I may have to hold my nose and vote for it, but in so doing I believe it is critically important that we point out why it has come to this-- irresponsible and reckless huge and irreversible tax cuts from the party that has run the legislature for at least thirty years.
But during a recession like we are in now, tax revenues are down and demands are up, and there is no way they can raise taxes (thanks to the law they pushed though via ballot initiative some years ago that requires are supermajority in both houses to pass a tax increase.) In other words they ran the car into the ditch and then disabled the control mechanism.
So, ironically we've now reached the point where a Republican governor is trying to put a measure on the ballot asking voters to approve a one cent temporary sales tax increase, and even the state Republican Party is backing the tax hike.
I may have to hold my nose and vote for it, but in so doing I believe it is critically important that we point out why it has come to this-- irresponsible and reckless huge and irreversible tax cuts from the party that has run the legislature for at least thirty years.
Saturday, April 04, 2009
Tax cut proposal in the face of massive budget cuts is an outrage
Three years ago the state legislature passed a temporary, three year suspension of a statewide property tax known as the equalization tax. The tax is designed to provide funding for school and community college districts that have a lower tax base relative to their population than more affluent areas.
The tax primarily affects some businesses, especially in more affluent areas.
The tax is due to expire this year. And like most temporary tax cuts, it appears that some of those affected by the tax consider it a birthright to have this tax taken off the books. They are already shouting about how when it comes back it will be a tax 'increase.'
Of course that is patently ridiculous. It is no more a tax increase than it would be a 'price hike' if your local merchant put an item on sale for a few weeks and then ended the sale on schedule. Rather than being grateful for being given a three year tax holiday, these individuals and businesses are howling about a 'tax increase' they will get when the tax cut expires on schedule.
But beyond that they are lobbying the legislature to not just extend the tax holiday but make it permanent.
Which of course in 2006 when it was passed, they might have had a case, but in 2009 with the state facing a $3 billion budget shortfall and slashing funds for virtually everything in the state, and in addition we may be asked later this year to vote on a 1% sales tax statewide.
Under these circumstances giving a tax cut to a few wealthy business owners who think they should be exempt from the shared sacrifice that the rest of the state is undergoing would be not only foolish but immoral.
They do of course have some lobbyists working on the legislature. But hopeully our legislators will have the backbone to not buckle under this special interest legislation.
The tax primarily affects some businesses, especially in more affluent areas.
The tax is due to expire this year. And like most temporary tax cuts, it appears that some of those affected by the tax consider it a birthright to have this tax taken off the books. They are already shouting about how when it comes back it will be a tax 'increase.'
Of course that is patently ridiculous. It is no more a tax increase than it would be a 'price hike' if your local merchant put an item on sale for a few weeks and then ended the sale on schedule. Rather than being grateful for being given a three year tax holiday, these individuals and businesses are howling about a 'tax increase' they will get when the tax cut expires on schedule.
But beyond that they are lobbying the legislature to not just extend the tax holiday but make it permanent.
Which of course in 2006 when it was passed, they might have had a case, but in 2009 with the state facing a $3 billion budget shortfall and slashing funds for virtually everything in the state, and in addition we may be asked later this year to vote on a 1% sales tax statewide.
Under these circumstances giving a tax cut to a few wealthy business owners who think they should be exempt from the shared sacrifice that the rest of the state is undergoing would be not only foolish but immoral.
They do of course have some lobbyists working on the legislature. But hopeully our legislators will have the backbone to not buckle under this special interest legislation.
Thursday, March 26, 2009
GOP alternative budget is a joke.
After being criticized for just blindly opposing the President's budget without offering any alternatives, the House GOP today came out with an outline for an alternative budget.
Well, sort of. At a capitol hill press conference minority leader John Boehner presented the Republican budget alternative. Their 'budget blueprint' is eighteen pages mostly of platitudes and talking points with unspecified proposals to cut wasteful spending and cut the size of the government (no hard numbers or programs where spending would be cut.) Cutting government spending is a little like ending hunger or creating a permanent peace between the Israelis and the Palestinians-- it's easy to talk about but much harder when you have to figure out how to do it-- so hard that nobody seems to be able to figure out a way (certainly not house Republicans, who ran the place for six years with a President who signed everything they sent up and responded by passing budgets that featured explosive growth in government spending.)
They say they are working on the details. OK, we will see exactly what they propose to cut and by how much.
They are proposing some tax incentives to insurance companies and other entities to expand access to healthcare. Ho-hum. The same kind of do-nothing approach that didn't do anything about healthcare during the past decade and a half.
The only hard number they offered was this one: Another massive tax cut, cutting the marginal tax rate to 10% for anyone earning up to $100,000 and 25% above that. Remember of course that the Bush tax cut only cut the top rate from 39.5% to 35%-- so this proposal appears to be at least twice as large as the Bush tax cut. Now, remember that the Bush tax cut cost $1.3 trillion. So just off the cuff, I'm guessing (even assuming no inflation) that this one would cost well above $2 trillion, in fact probably closer to $3 trillion. And this is from the crew who just last week said we couldn't afford the Obama budget which they claim will cost $1.9 trillion. How do they plan to reconcile the fact that their tax cut alone looks like it will add more to the national debt than they claim Obama's plan will add? Oh yeah, it's those unspecific and unnamed spending cuts.
Yeah, I'm convinced. I'm convinced that the Republicans still don't have a plan.
Well, sort of. At a capitol hill press conference minority leader John Boehner presented the Republican budget alternative. Their 'budget blueprint' is eighteen pages mostly of platitudes and talking points with unspecified proposals to cut wasteful spending and cut the size of the government (no hard numbers or programs where spending would be cut.) Cutting government spending is a little like ending hunger or creating a permanent peace between the Israelis and the Palestinians-- it's easy to talk about but much harder when you have to figure out how to do it-- so hard that nobody seems to be able to figure out a way (certainly not house Republicans, who ran the place for six years with a President who signed everything they sent up and responded by passing budgets that featured explosive growth in government spending.)
They say they are working on the details. OK, we will see exactly what they propose to cut and by how much.
They are proposing some tax incentives to insurance companies and other entities to expand access to healthcare. Ho-hum. The same kind of do-nothing approach that didn't do anything about healthcare during the past decade and a half.
The only hard number they offered was this one: Another massive tax cut, cutting the marginal tax rate to 10% for anyone earning up to $100,000 and 25% above that. Remember of course that the Bush tax cut only cut the top rate from 39.5% to 35%-- so this proposal appears to be at least twice as large as the Bush tax cut. Now, remember that the Bush tax cut cost $1.3 trillion. So just off the cuff, I'm guessing (even assuming no inflation) that this one would cost well above $2 trillion, in fact probably closer to $3 trillion. And this is from the crew who just last week said we couldn't afford the Obama budget which they claim will cost $1.9 trillion. How do they plan to reconcile the fact that their tax cut alone looks like it will add more to the national debt than they claim Obama's plan will add? Oh yeah, it's those unspecific and unnamed spending cuts.
Yeah, I'm convinced. I'm convinced that the Republicans still don't have a plan.
Monday, March 02, 2009
Skeptical about the Governor's tax plan
It appears that Governor Jan Brewer, realizing the deep, deep hole that we've gotten into here in Arizona is asking for a special election to hike taxes.
Ignoring that the problem is as bad as it is largely because of many years of consecutive tax cuts (which she voted for, as a member of the legislature in the 1990s) and the effective disabling of the control mechanism for raising them in an emergency by the passage of the 'supermajority bill' for tax hikes (mostly by people who have since been term-limited out and now don't have to deal with the consequences of their foolishness,) there are a number of problems with her current proposal.
Obviously with a three billion dollar hole in the budget blasted by a combination of the present severe national recession and Arizona's overdependence on the sales tax which has dropped precipitously in the recession, something major needs to be done. If it isn't we are likely to see more teacher layoffs and larger class sizes, closures or restrictions on state services and universities closing campuses (which ironically will probably fit their decreased enrollment as a result of the doubling or near doubling of tuition within a few years.)
Brewer's proposal would do two things. The first would be a temporary sales tax hike. In other words, the most regressive type of tax in order to fix the budget hole. Even more ironically, they are still talking about a permanent repeal of the statewide business property tax. This tax has funded education for years but in 2006, when the economy was only at the point of developing a mild sniffle, the legislature and the then-Governor agreed to give the businesses a three year tax holiday. It is due to end this year. But the claim that the business owners are making that its return would be a tax increase is absurd. If they put an item on sale for two weeks and then two weeks later after the sale ends and the price returns to what it was before the sale they would laugh in the face of anyone who came in and accused them of raising their prices. But that is precisely what they are claiming about the fact that the tax cut they got is due to end on schedule. But it is downright insulting for them to push for this tax cut when we the consumers are being asked to raise our own taxes because the state doesn't have any money.
The second thing that Governor's proposal would do would be to allow the legislature to get their hands on dedicated taxes. Those are taxes which have been allocated by voter initiatives.
It is the second of those which disturbs me the most. As a voter I voted to tax myself to fund children's healthcare precisely because I didn't expect this legislature to fund it adequately themselves. I don't want them to take the money I chose to contribute to this and other dedicated taxes and use it to plug holes in the state budget so they can simultaneously give their friends another tax cut.
I'm willing to wait and see exactly what this proposal says but I'm certainly not ready to endorse this as a means to fix the state budget. Whether I do back it eventually or not will largely depend on what they do with the statewide property tax. If they make the tax cut for businesses permament, then it will probably be too much for me to swallow when they turn around and tell me they need to raid children's health care to pay for education.
Ignoring that the problem is as bad as it is largely because of many years of consecutive tax cuts (which she voted for, as a member of the legislature in the 1990s) and the effective disabling of the control mechanism for raising them in an emergency by the passage of the 'supermajority bill' for tax hikes (mostly by people who have since been term-limited out and now don't have to deal with the consequences of their foolishness,) there are a number of problems with her current proposal.
Obviously with a three billion dollar hole in the budget blasted by a combination of the present severe national recession and Arizona's overdependence on the sales tax which has dropped precipitously in the recession, something major needs to be done. If it isn't we are likely to see more teacher layoffs and larger class sizes, closures or restrictions on state services and universities closing campuses (which ironically will probably fit their decreased enrollment as a result of the doubling or near doubling of tuition within a few years.)
Brewer's proposal would do two things. The first would be a temporary sales tax hike. In other words, the most regressive type of tax in order to fix the budget hole. Even more ironically, they are still talking about a permanent repeal of the statewide business property tax. This tax has funded education for years but in 2006, when the economy was only at the point of developing a mild sniffle, the legislature and the then-Governor agreed to give the businesses a three year tax holiday. It is due to end this year. But the claim that the business owners are making that its return would be a tax increase is absurd. If they put an item on sale for two weeks and then two weeks later after the sale ends and the price returns to what it was before the sale they would laugh in the face of anyone who came in and accused them of raising their prices. But that is precisely what they are claiming about the fact that the tax cut they got is due to end on schedule. But it is downright insulting for them to push for this tax cut when we the consumers are being asked to raise our own taxes because the state doesn't have any money.
The second thing that Governor's proposal would do would be to allow the legislature to get their hands on dedicated taxes. Those are taxes which have been allocated by voter initiatives.
It is the second of those which disturbs me the most. As a voter I voted to tax myself to fund children's healthcare precisely because I didn't expect this legislature to fund it adequately themselves. I don't want them to take the money I chose to contribute to this and other dedicated taxes and use it to plug holes in the state budget so they can simultaneously give their friends another tax cut.
I'm willing to wait and see exactly what this proposal says but I'm certainly not ready to endorse this as a means to fix the state budget. Whether I do back it eventually or not will largely depend on what they do with the statewide property tax. If they make the tax cut for businesses permament, then it will probably be too much for me to swallow when they turn around and tell me they need to raid children's health care to pay for education.
Tuesday, February 17, 2009
The Republican one-page playbook
DEEP THOUGHT got an exclusive interview with an anonymous Republican Senator, who agreed to the interview on the condition that we keep his name anonymous.
DT: Thank you for coming today, Senator. Would you like some cookies?
S: Yes, thank you, and would you like some tax cuts?
DT: No, thanks. President Obama faces some huge problems. Chief among them is the economy. I noticed that like almost all of your GOP colleagues you voted against the President's stimulus plan, even after it had been watered down in negotiations with a handful of Republican RINOs.
S: It didn't include enough tax cuts.
DT: But by the end of the negotiations, almost 2/5 of the bill was tax cuts.
S: That's not enough.
DT: But Obama won the election, shouldn't he get a chance to do what he feels is necessary to fix the economy?
S: Sure, and we are willing to work with him on ways to cut taxes.
DT: Didn't tax cuts help get us into this mess? The economy prospered under the Clinton tax rates, but after Bush cut taxes in March 2001 companies built new factories overseas and outsourced millions of jobs, and the economy never did grow again after that as fast as it had under Clinton.
S: The problem was that after 2001, we didn't cut taxes enough. Bush's problem was that he wasn't aggressive enough, or he'd have pushed for another trillion in tax cuts the next year, and the year after that.
DT: And then raise them again when the economy is stronger?
S: Of course not. When the economy is good then you need to cut taxes.
DT: So when the economy is bad, we need tax cuts. But when it's good, as it was when Bush was running in 2000, you still need tax cuts?
S: Of course you do. It's sort of like breathing. You always need more tax cuts. Just repeat after me, "I need a tax cut... I need a tax cut..."
DT: Cut it out! Let's change the subject and talk about terrorism. How should the Obama administration approach the issue of international terrorism?
S: With tax cuts.
DT: How will tax cuts help?
S: They will just make things better, so much so that we won't care if terrorists attack again. We'll be able to afford our own private security guards.
DT: You maybe, I'm sure that one would be a bit out of my price range.
S: Offer the security guard a tax cut, maybe you can get a cheap rate.
DT: OK, let's talk about Iraq. George Bush completely lost his way after he started the war. How do you propose we get out of Iraq?
S: With tax cuts.
DT: TAX CUTS?!? How will they help get us out of Iraq?
S: They will cause all the people of Iraq to stop fighting and start hugging each other because they will all realize that they want tax cuts too. Remember, they're still looking for an excuse to throw flowers at us since we got rid of Saddam for them. Tax cuts would be the perfect reason for them to express their gratitude.
DT: So you are saying that tax cuts will fix Iraq. OK, what would you do about internet pornography?
S: Tax cuts.
DT: (sigh). Senator, what would you do about steroids in baseball?
S: Cut taxes.
DT: Pollution?
S: Tax Cuts.
DT: Identity theft and stock fraud?
S: A capital gains tax cut.
DT: Education and all the paperwork created by NCLB?
S: Tax cuts
DT: The flu?
S: Tax cuts are the cure.
DT: Gambling by NBA officials?
S: Tax cuts, for sure.
DT: Orbiting space junk?
S: Tax cuts.
DT: The peanut butter salmonella scandal?
S: They should have given the peanut company a tax cut.
DT: OK. Let's remember some history. What do you think about the 200th birthday of Abraham Lincoln earlier this week?
S: He is overrated as a President. There would have been no need for the Civil War if he'd just passed a big tax cut when he became President.
DT: Fine. REALLY Off-topic, I have a 2003 Dodge and it keeps squeaking at me when I turn left. Any idea on what I should do fix the problem?
S: A tax cut, definitely would fix it.
DT: Is there ANYTHING that you believe can't be cured by tax cuts?
S: Sure.
DT: What is that?
S: Death. Wait--if taxes aren't a sure thing, then maybe neither is death. On second thought, no there isn't anything that a tax cut won't cure.
DT: OK. Good-bye Senator.
S: Good-bye. Oh, yeah, did I remember to talk about tax cuts?
DT: Thank you for coming today, Senator. Would you like some cookies?
S: Yes, thank you, and would you like some tax cuts?
DT: No, thanks. President Obama faces some huge problems. Chief among them is the economy. I noticed that like almost all of your GOP colleagues you voted against the President's stimulus plan, even after it had been watered down in negotiations with a handful of Republican RINOs.
S: It didn't include enough tax cuts.
DT: But by the end of the negotiations, almost 2/5 of the bill was tax cuts.
S: That's not enough.
DT: But Obama won the election, shouldn't he get a chance to do what he feels is necessary to fix the economy?
S: Sure, and we are willing to work with him on ways to cut taxes.
DT: Didn't tax cuts help get us into this mess? The economy prospered under the Clinton tax rates, but after Bush cut taxes in March 2001 companies built new factories overseas and outsourced millions of jobs, and the economy never did grow again after that as fast as it had under Clinton.
S: The problem was that after 2001, we didn't cut taxes enough. Bush's problem was that he wasn't aggressive enough, or he'd have pushed for another trillion in tax cuts the next year, and the year after that.
DT: And then raise them again when the economy is stronger?
S: Of course not. When the economy is good then you need to cut taxes.
DT: So when the economy is bad, we need tax cuts. But when it's good, as it was when Bush was running in 2000, you still need tax cuts?
S: Of course you do. It's sort of like breathing. You always need more tax cuts. Just repeat after me, "I need a tax cut... I need a tax cut..."
DT: Cut it out! Let's change the subject and talk about terrorism. How should the Obama administration approach the issue of international terrorism?
S: With tax cuts.
DT: How will tax cuts help?
S: They will just make things better, so much so that we won't care if terrorists attack again. We'll be able to afford our own private security guards.
DT: You maybe, I'm sure that one would be a bit out of my price range.
S: Offer the security guard a tax cut, maybe you can get a cheap rate.
DT: OK, let's talk about Iraq. George Bush completely lost his way after he started the war. How do you propose we get out of Iraq?
S: With tax cuts.
DT: TAX CUTS?!? How will they help get us out of Iraq?
S: They will cause all the people of Iraq to stop fighting and start hugging each other because they will all realize that they want tax cuts too. Remember, they're still looking for an excuse to throw flowers at us since we got rid of Saddam for them. Tax cuts would be the perfect reason for them to express their gratitude.
DT: So you are saying that tax cuts will fix Iraq. OK, what would you do about internet pornography?
S: Tax cuts.
DT: (sigh). Senator, what would you do about steroids in baseball?
S: Cut taxes.
DT: Pollution?
S: Tax Cuts.
DT: Identity theft and stock fraud?
S: A capital gains tax cut.
DT: Education and all the paperwork created by NCLB?
S: Tax cuts
DT: The flu?
S: Tax cuts are the cure.
DT: Gambling by NBA officials?
S: Tax cuts, for sure.
DT: Orbiting space junk?
S: Tax cuts.
DT: The peanut butter salmonella scandal?
S: They should have given the peanut company a tax cut.
DT: OK. Let's remember some history. What do you think about the 200th birthday of Abraham Lincoln earlier this week?
S: He is overrated as a President. There would have been no need for the Civil War if he'd just passed a big tax cut when he became President.
DT: Fine. REALLY Off-topic, I have a 2003 Dodge and it keeps squeaking at me when I turn left. Any idea on what I should do fix the problem?
S: A tax cut, definitely would fix it.
DT: Is there ANYTHING that you believe can't be cured by tax cuts?
S: Sure.
DT: What is that?
S: Death. Wait--if taxes aren't a sure thing, then maybe neither is death. On second thought, no there isn't anything that a tax cut won't cure.
DT: OK. Good-bye Senator.
S: Good-bye. Oh, yeah, did I remember to talk about tax cuts?
Thursday, April 17, 2008
What part of 'temporary' don't they understand?
Yesterday Governor Napolitano vetoed a bill passed by the legislature which would have made permanent a temporary property tax cut that was passed in 2006 and is due to expire in 2009.
As the Governor noted, economic conditions have deteriorated in Arizona sharply since 2006. Arizona's economy is much more tied to the housing industry than most, so the mortgage meltdown has had severe repercussions here. We face a combined $3 billion state budget deficit over the next two years, so adding another quarter billion to that next year by extending the property tax cut would be, as she noted, "the height of fiscal irresponsibility." Over-reliance on the sales tax has compounded the problem-- in a recession people spend less so sales tax revenues are down (whereas, for example, a property tax tends to be a much more reliable and stable source of revenue.)
Advocates for the Republicans in the legislature and some in the business community (who were the beneficiaries of the tax cut) have howled that she is 'raising taxes.'
That is a competely stupid argument.
If a supermarket sells a bottle of pop for $1.39, but runs a managers special in which they announce, "THIS WEEK ONLY-- $.99" for the bottle of pop, then they are doing their customers a favor for a week. If the sale ends on schedule and the price returns to $1.39 (the normal price of the pop) it would be ridiculous to storm up to the store manager and claim that by ending the sale on the day they said they would, they are raising prices. Yet that is what advocates of extending the tax cut are doing. Instead of being grateful for the three years they don't have to pay their property tax, they are instead complaining that when it expires on schedule, they will see a 'tax increase.' Maybe they would be happier if it hadn't ever been passed at all, I suppose.
This argument, of equating the scheduled end of a temporary reduction in taxes with a 'tax increase' is breathtaking in its stupidity. But we will hear exactly the same argument nationally over the next couple of years as the Bush tax cuts (you know, the ones that were supposed to give us such a great economic success story this decade) expire.
As the Governor noted, economic conditions have deteriorated in Arizona sharply since 2006. Arizona's economy is much more tied to the housing industry than most, so the mortgage meltdown has had severe repercussions here. We face a combined $3 billion state budget deficit over the next two years, so adding another quarter billion to that next year by extending the property tax cut would be, as she noted, "the height of fiscal irresponsibility." Over-reliance on the sales tax has compounded the problem-- in a recession people spend less so sales tax revenues are down (whereas, for example, a property tax tends to be a much more reliable and stable source of revenue.)
Advocates for the Republicans in the legislature and some in the business community (who were the beneficiaries of the tax cut) have howled that she is 'raising taxes.'
That is a competely stupid argument.
If a supermarket sells a bottle of pop for $1.39, but runs a managers special in which they announce, "THIS WEEK ONLY-- $.99" for the bottle of pop, then they are doing their customers a favor for a week. If the sale ends on schedule and the price returns to $1.39 (the normal price of the pop) it would be ridiculous to storm up to the store manager and claim that by ending the sale on the day they said they would, they are raising prices. Yet that is what advocates of extending the tax cut are doing. Instead of being grateful for the three years they don't have to pay their property tax, they are instead complaining that when it expires on schedule, they will see a 'tax increase.' Maybe they would be happier if it hadn't ever been passed at all, I suppose.
This argument, of equating the scheduled end of a temporary reduction in taxes with a 'tax increase' is breathtaking in its stupidity. But we will hear exactly the same argument nationally over the next couple of years as the Bush tax cuts (you know, the ones that were supposed to give us such a great economic success story this decade) expire.
Thursday, August 09, 2007
President blames Congress for bridge collapse, proposes corporate tax cuts as the cure.
It's hard to believe, but President Bush blamed Congress for the bridge collapse last week at the same time that he pushed for new corporate tax cuts.
President Bush said yesterday that he is considering a fresh plan to cut tax rates for U.S. corporations to make them more competitive around the world, an initiative that could further inflame a battle with the Democratic Congress over spending and taxes and help define the remainder of his tenure....
Bush also warned China not to start a trade war, blamed Congress for not doing more to shore up infrastructure such as the bridge that collapsed in Minneapolis last week, and pushed back against Democratic presidential candidates who are promising to renegotiate the North American Free Trade Agreement.
Yeah. OK. We clearly need a lot of money to pay for upgrading and maintaining our infrastructure, whether it is bridges or other elements (like the steam pipe that blasted a hole in Manhattan last week). How is a corporate tax cut going to do anything about that?
I might take him seriously about claiming that 1. it's up to Congress to come up with the money to fix it, 2. we need more tax cuts now, and 3. we have to hold the line on spending, if he wasn't going to change the dial again and ask for another hundreds of billions for Iraq next month.
This guy doesn't understand the meaning of chutzpah.
President Bush said yesterday that he is considering a fresh plan to cut tax rates for U.S. corporations to make them more competitive around the world, an initiative that could further inflame a battle with the Democratic Congress over spending and taxes and help define the remainder of his tenure....
Bush also warned China not to start a trade war, blamed Congress for not doing more to shore up infrastructure such as the bridge that collapsed in Minneapolis last week, and pushed back against Democratic presidential candidates who are promising to renegotiate the North American Free Trade Agreement.
Yeah. OK. We clearly need a lot of money to pay for upgrading and maintaining our infrastructure, whether it is bridges or other elements (like the steam pipe that blasted a hole in Manhattan last week). How is a corporate tax cut going to do anything about that?
I might take him seriously about claiming that 1. it's up to Congress to come up with the money to fix it, 2. we need more tax cuts now, and 3. we have to hold the line on spending, if he wasn't going to change the dial again and ask for another hundreds of billions for Iraq next month.
This guy doesn't understand the meaning of chutzpah.
Monday, January 08, 2007
There are times when a tax hike is needed, and this could be one of those times.
Republicans are flabbergasted that some Democrats are suggesting rolling the Bush tax cuts back to the Clinton rates, particularly on the wealthy. And this could be accomplished easily just by letting the expiration dates already written into the Bush tax cuts come and go without taking any action at all. In fact, some have even proposed specifically increasing taxes on the wealthy.
And why not?
The GOP has always proposed tax cuts, at least for the past couple of generations since I can remember. When the economy was booming and we had a surplus, they wanted tax cuts. When it was in a recession, they wanted tax cuts. When it was rebounding from the recession, they wanted tax cuts. Inflation? The answer was tax cuts. Unemployment? Tax cuts. Tight job market? Tax cuts. In fact for at least a generation, whatever condition the economy was in, the Republicans have always proposed tax cuts. Name the economic malady, and the GOP has exactly one answer for it, tax cuts. And when it happened that those tax cuts came the wealthy made out like bandits (surprise)?, the middle class got small amounts (myself, I got enough from the Bush tax cuts to fill the tank a couple of times) and the poor in many cases got nothing.
When taxes have been raised, either at the Federal level (i.e. the 'read my lips' tax hike of 1991 or the 1993 tax hike that was central to the Clinton economy) or at the state or local level (often to replace lost Federal revenues that were withheld in the wake of Federal tax cuts) those taxes tended to be raised 'across the board.' In other words, the net effect over the past couple of generations has been not to eliminate taxes, but rather to shift taxation from the wealthy onto the middle class and the poor.
What about the promises that lower taxes would help the economy? The argument goes something like this-- when wealthy individuals and businesses have more money then they can invest it, and the investment will create more jobs. And more jobs will mean more prosperity for everyone. How has that worked out?
Well, let's look at the record:
In another study that tells us something that we already know, the Bureau of Labor Statistics has confirmed that job growth under George W. Bush is pretty puny.
WASHINGTON (AP) -- The economy has cranked out fewer jobs under President Bush -- by millions -- than it had by the same point in the presidencies of Ronald Reagan and Bill Clinton...
Under Bush, the economy produced 3.7 million new jobs from January 2001 through December of last year based on nonfarm payroll figures collected by the Labor Department's Bureau of Labor Statistics.
Republicans try to blame Clinton of course:
Commerce Secretary Carlos Gutierrez counters, in an interview, "It's just a matter of timing and when we started getting out of the recession that the president inherited."
Let's torpedo that explanation right off the bat: In eight years Clinton's economy (including the 1993 tax rates) created 20 million jobs, for an average of 2.5 million per year. In the first two years of Bush's economy (which incidentally the economy did not show negative growth until after the first Bush tax cut was passed in March 2001) we lost 3 million jobs. So even if we assume that in the succeeding four years 6.7 million were created (replacing the three million lost plus the 3.7 million net gain) you have the creation of just under 1.7 million jobs per year. And that's being as generous as I can to Bush, starting him from the low point of the recession, both timewise and jobwise. Even with that, his economy still doesn't come close to Clinton.
What about the jobs that all that money flowing into large businesses created? Well, it did create them. Remember how the economy, though it was slowing, did not show negative job growth until after the March 2001 tax cuts? There is a simple explanation for this. The large corporations that got the bulk of the benefit from the tax cuts did use it to create jobs. In Asia-- where labor is cheaper than in America (funny how 'free marketeers' who backed the 2001 tax cuts on the basis of job creation didn't see that result coming). At the cost of a deficit, America helped finance the movement of millions of jobs out of the country. And most of that outsourcing occurred within those first two years of the Bush tax cuts as companies took full advantage of their new windfall and 'invested' it. The economy in Mumbai and Shanghai is much stronger for it today.
What about unemployment? Conservatives always like to cite the unemployment reports. It reached a low of 4.0 % during the last year of Clinton's term-- 2000, then went up to 6.0 % during 2003 and has since declined to 4.6%. Isn't that proof of hiring?
Sure, it is. But consider that during Clinton's first year of 1993, it averaged 6.9%. It dropped down to 4.0%, representing a decline of 2.9%. In the case of Bush, it has gone up a net of 0.6%. If you again look back to 2003, it has dropped by 1.4% in the succeeding four years-- so again, not as fast as it did under Clinton (though barely less) even if you give the Bush administration the complete benefit of the doubt and start measuring from the worst it got and just measure the decline). So even using what has lately been the favorite measure of conservatives, Bush still doesn't come off as good as Clinton.
This means at best the Bush tax rates have not done anything compared to what the higher Clinton tax rates did for the economy, and at worst, they have hurt the economy.
And the real irony is that by creating deficits they will require that we raise taxes in the future just to pay back. As interest rates rise, expect that interest payments on the national debt will again be a significant drag on our economy. And when that day comes, expect some statement about 'across the board sacrifice.' Translation is this: The debt was run up giving tax cuts to the rich while continuing to spend like mad, especially in the area of corporate welfare; but paying it back will require that the tax increases fall disproportionately on the middle class.
Meanwhile, we continue to pour hundreds of billions down an endless black hole in Iraq, fighting a war that while we have been told of 'sacrifice,' none of us, except of course for the military members fighting the war and their families, have had to actually worry about. This is the first time in history that taxes were not raised to finance a war, In fact, if the financial costs of the Iraq war (about $320,000,000,000.00 and counting) were distributed evenly among all current American citizens, we would each owe just over a thousand dollars in extra taxes. But the Bush administration has defined for most people the meaning of 'sacrifice' to mean putting a yellow ribbon decal on your vehicle, and some future generation will have to actually worry about the dollar cost of this war (compounded by that time by interest, of course.)
So I would posit that at this time, 1) the tax cuts we've had in the past have done nothing, and 2) right at the moment given the deficit and the cost of the war, increasing taxes makes a lot of sense.
And why not?
The GOP has always proposed tax cuts, at least for the past couple of generations since I can remember. When the economy was booming and we had a surplus, they wanted tax cuts. When it was in a recession, they wanted tax cuts. When it was rebounding from the recession, they wanted tax cuts. Inflation? The answer was tax cuts. Unemployment? Tax cuts. Tight job market? Tax cuts. In fact for at least a generation, whatever condition the economy was in, the Republicans have always proposed tax cuts. Name the economic malady, and the GOP has exactly one answer for it, tax cuts. And when it happened that those tax cuts came the wealthy made out like bandits (surprise)?, the middle class got small amounts (myself, I got enough from the Bush tax cuts to fill the tank a couple of times) and the poor in many cases got nothing.
When taxes have been raised, either at the Federal level (i.e. the 'read my lips' tax hike of 1991 or the 1993 tax hike that was central to the Clinton economy) or at the state or local level (often to replace lost Federal revenues that were withheld in the wake of Federal tax cuts) those taxes tended to be raised 'across the board.' In other words, the net effect over the past couple of generations has been not to eliminate taxes, but rather to shift taxation from the wealthy onto the middle class and the poor.
What about the promises that lower taxes would help the economy? The argument goes something like this-- when wealthy individuals and businesses have more money then they can invest it, and the investment will create more jobs. And more jobs will mean more prosperity for everyone. How has that worked out?
Well, let's look at the record:
In another study that tells us something that we already know, the Bureau of Labor Statistics has confirmed that job growth under George W. Bush is pretty puny.
WASHINGTON (AP) -- The economy has cranked out fewer jobs under President Bush -- by millions -- than it had by the same point in the presidencies of Ronald Reagan and Bill Clinton...
Under Bush, the economy produced 3.7 million new jobs from January 2001 through December of last year based on nonfarm payroll figures collected by the Labor Department's Bureau of Labor Statistics.
Republicans try to blame Clinton of course:
Commerce Secretary Carlos Gutierrez counters, in an interview, "It's just a matter of timing and when we started getting out of the recession that the president inherited."
Let's torpedo that explanation right off the bat: In eight years Clinton's economy (including the 1993 tax rates) created 20 million jobs, for an average of 2.5 million per year. In the first two years of Bush's economy (which incidentally the economy did not show negative growth until after the first Bush tax cut was passed in March 2001) we lost 3 million jobs. So even if we assume that in the succeeding four years 6.7 million were created (replacing the three million lost plus the 3.7 million net gain) you have the creation of just under 1.7 million jobs per year. And that's being as generous as I can to Bush, starting him from the low point of the recession, both timewise and jobwise. Even with that, his economy still doesn't come close to Clinton.
What about the jobs that all that money flowing into large businesses created? Well, it did create them. Remember how the economy, though it was slowing, did not show negative job growth until after the March 2001 tax cuts? There is a simple explanation for this. The large corporations that got the bulk of the benefit from the tax cuts did use it to create jobs. In Asia-- where labor is cheaper than in America (funny how 'free marketeers' who backed the 2001 tax cuts on the basis of job creation didn't see that result coming). At the cost of a deficit, America helped finance the movement of millions of jobs out of the country. And most of that outsourcing occurred within those first two years of the Bush tax cuts as companies took full advantage of their new windfall and 'invested' it. The economy in Mumbai and Shanghai is much stronger for it today.
What about unemployment? Conservatives always like to cite the unemployment reports. It reached a low of 4.0 % during the last year of Clinton's term-- 2000, then went up to 6.0 % during 2003 and has since declined to 4.6%. Isn't that proof of hiring?
Sure, it is. But consider that during Clinton's first year of 1993, it averaged 6.9%. It dropped down to 4.0%, representing a decline of 2.9%. In the case of Bush, it has gone up a net of 0.6%. If you again look back to 2003, it has dropped by 1.4% in the succeeding four years-- so again, not as fast as it did under Clinton (though barely less) even if you give the Bush administration the complete benefit of the doubt and start measuring from the worst it got and just measure the decline). So even using what has lately been the favorite measure of conservatives, Bush still doesn't come off as good as Clinton.
This means at best the Bush tax rates have not done anything compared to what the higher Clinton tax rates did for the economy, and at worst, they have hurt the economy.
And the real irony is that by creating deficits they will require that we raise taxes in the future just to pay back. As interest rates rise, expect that interest payments on the national debt will again be a significant drag on our economy. And when that day comes, expect some statement about 'across the board sacrifice.' Translation is this: The debt was run up giving tax cuts to the rich while continuing to spend like mad, especially in the area of corporate welfare; but paying it back will require that the tax increases fall disproportionately on the middle class.
Meanwhile, we continue to pour hundreds of billions down an endless black hole in Iraq, fighting a war that while we have been told of 'sacrifice,' none of us, except of course for the military members fighting the war and their families, have had to actually worry about. This is the first time in history that taxes were not raised to finance a war, In fact, if the financial costs of the Iraq war (about $320,000,000,000.00 and counting) were distributed evenly among all current American citizens, we would each owe just over a thousand dollars in extra taxes. But the Bush administration has defined for most people the meaning of 'sacrifice' to mean putting a yellow ribbon decal on your vehicle, and some future generation will have to actually worry about the dollar cost of this war (compounded by that time by interest, of course.)
So I would posit that at this time, 1) the tax cuts we've had in the past have done nothing, and 2) right at the moment given the deficit and the cost of the war, increasing taxes makes a lot of sense.
Saturday, January 06, 2007
Minimum wage increase
It has been great watching the new Congress over the past couple of days. And I am glad that the House is likely to pass an increase in the minimum wage (from $5.15 to $7.25) and the Senate seems likely to follow (though the Senate bill is likely to include some tax breaks for small businesses in order to counteract the effect of up to a 40% increase in labor costs). And it is worth noting that the Democratic Congress is getting this done as one of its first orders of business after the Republican Congress for at least the past four years has pawed around the issue and either failed to take action or come up with excuses for why they couldn't.
In fact, as long as this is what the tax breaks are for, I don't have a problem with them. However, there needs to be one other provision in the bill then. That is because of the fact that the 40% increase in labor costs is only to adjust for the rise in inflation accumulated and compounded over the decade since the last time minimum wages were increased. So in effect these same businesses, if they are still paying people minimum wage, have been the beneficiaries of ten years of what amounts to decreasing labor costs. I can understand that having to 'eat' it all in a year or two might be difficult, and that some of these businesses may just be starting into business now. However, in order to prevent the situation from repeating itself (which it has-- and on the whole to the detriment of the workers as minimum wages have since the 1950's not increased as fast as inflation) there should be a periodic adjustment in minimum wages. There have been proposals to index the minimum wage to the same cost of living indicator that is used for the salaries of members of Congress and for Social Security payments, and I agree with that proposal.
In fact, as long as this is what the tax breaks are for, I don't have a problem with them. However, there needs to be one other provision in the bill then. That is because of the fact that the 40% increase in labor costs is only to adjust for the rise in inflation accumulated and compounded over the decade since the last time minimum wages were increased. So in effect these same businesses, if they are still paying people minimum wage, have been the beneficiaries of ten years of what amounts to decreasing labor costs. I can understand that having to 'eat' it all in a year or two might be difficult, and that some of these businesses may just be starting into business now. However, in order to prevent the situation from repeating itself (which it has-- and on the whole to the detriment of the workers as minimum wages have since the 1950's not increased as fast as inflation) there should be a periodic adjustment in minimum wages. There have been proposals to index the minimum wage to the same cost of living indicator that is used for the salaries of members of Congress and for Social Security payments, and I agree with that proposal.
Wednesday, January 03, 2007
President's budget challenge-- sorry, Mr. President, we've already seen your 'fuzzy math'
Today, President Bush challenged Democrats on spending.
Well, there are certain areas where I would be all for a spending cut. Starting with the third of a trillion dollars we have dumped into Iraq since the war began. That is the first place where government spending should be slashed. Maybe we can get it to zero before the President leaves office-- wouldn't that be an accomplishment?
He claims he has a plan to balance the budget by 2012. Hmmm... Didn't he start with a balanced budget? No, actually he didn't. He actually started with a suplus well into the hundreds of billions of dollars. He also says he wants to preserve the Bush tax cuts (which would take a positive vote by Congress to extend; if Congress does nothing then they will expire on schedule and revert to the Clinton tax rates, which helped produce that surplus).
The President said he doesn't want 'politics as usual' and warned Congress against passing bills that are 'political statements.' Then he said that he wants a line-item veto. Um, excuse me Mr. President, you might recall that some years ago Congress did pass a line item veto. It was determined to be unconstitutional by the Supreme Court after two Republican lawmakers sued when Bill Clinton actually used it to veto a couple of their pet projects. So, you are asking for something that has already been declared unconstitutional, apparently for appearances. What was that about bills that are 'political statements?'
"We need to reform Social Security and Medicare and Medicaid so future generations of Americans can benefit from these vital programs without bankrupting our country," he said.
I have an idea for reforming Medicare. How about scrapping the turkey of a drug bill that your party passed and you signed three years ago, Mr. President? You know, the one that gives away trillions of tax dollars to pharmaceutical companies and really hasn't made prescription drugs any cheaper for American seniors?
As for Social Security, that could be fixed by eliminating the $90,000 cap on Social Security wages subject to taxation. How about it, Mr. President? Obviously the American people didn't like your privatization plan last year, so how about something different?
Well, there are certain areas where I would be all for a spending cut. Starting with the third of a trillion dollars we have dumped into Iraq since the war began. That is the first place where government spending should be slashed. Maybe we can get it to zero before the President leaves office-- wouldn't that be an accomplishment?
He claims he has a plan to balance the budget by 2012. Hmmm... Didn't he start with a balanced budget? No, actually he didn't. He actually started with a suplus well into the hundreds of billions of dollars. He also says he wants to preserve the Bush tax cuts (which would take a positive vote by Congress to extend; if Congress does nothing then they will expire on schedule and revert to the Clinton tax rates, which helped produce that surplus).
The President said he doesn't want 'politics as usual' and warned Congress against passing bills that are 'political statements.' Then he said that he wants a line-item veto. Um, excuse me Mr. President, you might recall that some years ago Congress did pass a line item veto. It was determined to be unconstitutional by the Supreme Court after two Republican lawmakers sued when Bill Clinton actually used it to veto a couple of their pet projects. So, you are asking for something that has already been declared unconstitutional, apparently for appearances. What was that about bills that are 'political statements?'
"We need to reform Social Security and Medicare and Medicaid so future generations of Americans can benefit from these vital programs without bankrupting our country," he said.
I have an idea for reforming Medicare. How about scrapping the turkey of a drug bill that your party passed and you signed three years ago, Mr. President? You know, the one that gives away trillions of tax dollars to pharmaceutical companies and really hasn't made prescription drugs any cheaper for American seniors?
As for Social Security, that could be fixed by eliminating the $90,000 cap on Social Security wages subject to taxation. How about it, Mr. President? Obviously the American people didn't like your privatization plan last year, so how about something different?
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