What Dave Camp’s Tax Reform Proposal Tells Us About Our Political System

Most people, until a few days ago, hadn’t heard of Dave Camp, the Republican chairman in charge of the House Committee on Ways and Means. That powerful committee has, among other things, jurisdiction over Social Security, Medicare, unemployment bennies, food stamps (TANF), and federal tax policies.

And regarding those tax policies, the committee chairman has been working on tax reform for a long time. This week, to the chagrin of many Republicans in the House and elsewhere, Dave Camp, who will soon be term-limited out of his continuing chairmanship of the committee, released his work product, the Tax Reform Act of 2014. And, somewhat surprisingly, some on the left are taking it seriously, even if it is revenue neutral and has other flaws. But not so surprisingly, partly because some on the left can take the proposal seriously, is that the usual money-holding suspects on the right are pooh-poohing it.

You can see the details of the proposal all over the place (here is a relatively thoughtful conservative critique), but liberal commentator Jonathan Chait began his short analysis of the plan by saying that Camp’s tax-reform proposal,

does something remarkable: It actually reforms the tax code. It doesn’t use the pretense of reform to shift the tax burden off the rich, as Republican “tax reform” plans usually do, and it does not use hand-waving to gesture in the direction of reform without following through. Camp has actually plunged his hands into the guts of the tax code and pulled out item after item. It may be the most impressive and ambitious domestic policy proposal crafted by a major Republican in a generation.

Chait notes how folks like the writers of The Wall Street Journal editorial page have “spent decades building a shrine to the spectacular wrongness of supply-side economics,” and then he gives Camp credit for not championing that spectacular wrongness:

The evidence suggests that cutting tax rates, financed by deficits, does little or nothing to spur economic growth. But Camp’s plan doesn’t do that. It instead reduces tax rates by eliminating preferences in the tax code. Subsidies for home mortgage debt and employer-sponsored insurance, among others, would be radically scaled back. And eliminating these kinds of favoritism encourages workers and businesses to instead follow market signals, and likely to make more market-friendly decisions.

Of course, Chait, as a liberal, notices all kinds of things wrong with Camp’s plan. Camp, after all, is a Republican, so it is no surprise that no new revenues will be raised if his plan were to become law, or that “oil drillers” are taken care of while “green energy” suffers. But Chait also points out something in Camp’s plan that has pissed off Wall Street banksters:

His plan would impose a new fee on large banks (which enjoy an implicit subsidy by virtue of being so large they’re apt to receive a bailout if they fail) and caps the value of tax deductions, both goals embraced by Obama. It eliminates the carried interest loophole. It sets the top tax rate at 35 percent, not the fantastical 25 percent rate proposed by Mitt Romney, Paul Ryan, and other Republicans. Camp is actually committed to the goal of reforming the tax code in a way that maintains (rather than reduces) revenue levels, and holds the relative burden on the rich and poor constant.

The reaction to this part of Camp’s legislation is at once predictable and disturbing. Just look at this headline from Politico yesterday:

Wall Street threatens GOP on bank tax

First line: “Wall Street is warning Washington Republicans: The money spigot is turning off.”

Then: “Rep. Dave Camp’s tax proposal — which jacked up taxes on banks and threatens the bottom line of big bankerssome major private equity players in New York — has infuriated donors in high finance.”

As I say, that reaction is not surprising. But it ought to disturb all Americans, including Tea Party Republicans, whose 2009 movement began, at least ostensibly, as a populist reaction to the bailout of the financial industry, a group of greedy folks who helped wreck the economy. None of us should put up with the kind of extortion suggested by that Politico headline. None of us should tolerate the idea that people with lots of money can buy our politicians like they were buying shares in a widget company. None of us. This is our democracy we are talking about, for God’s sake.

The Politico article continues:

Lobbyists for Bank of America, Goldman Sachs and JPMorgan and others are meeting privately with lawmakers to explain what the bank tax would cost and how it would function.

Big banks want to turn Republicans against the bank tax. The situation puts the party at risk of seeing a reliable source of campaign cash dry up right in the middle of a critical election year.

And:

Without Wall Street, Republicans risk their coffers emptying. The securities and investment industry is the largest contributor — besides candidate committees — to the National Republican Congressional Committee this cycle, directing $3.5 million to the party committee, according to the Center for Responsive Politics. In the 2012 election cycle, the financial services industry ponied up nearly $9.9 million.

Let’s be clear: Democrats, most of whom favor campaign finance reform, also take money from rich people. They have to, if they are to survive in this money-driven, anti-democratic system. But all of us, even the most rabid Tea Party “patriot” out there, ought to get angry over what money has done and is doing to our political system. An earnest Republican comes along with some ideas that are not completely based on phony trickle-down economics, and he, or rather his proposal, is shot dead on the spot by people whose guns don’t shoot bullets but big bucks.

Let me leave you to contemplate what Roll Call’s David Hawkings said about what the new reform proposal, not even considering its policy ideas, will do:

The Camp bill may be properly cited as The Tax Lobbyists’ Full Employment and Economic Stimulus Act of 2014.

Even though the measure is highly unlikely to make it onto the House floor — and will struggle to get a majority from the roster of 23 Republicans and 16 Democrats during its not-going-to-be-scheduled-anytime-soon markup at Ways and Means — law firms and K Street shops will generate countless billable hours just by parsing the bill’s language and coming up with strategies for preserving all the niche deductions, exclusions and exemptions that have only theoretically been placed in jeopardy.

If those lobbyists didn’t have connections to moneyed interests who give tons of dough to our politicians, and if our politicians worked in a system where they didn’t depend on rich people giving them tons of dough to get elected, then our politicians perhaps would properly weigh the input of those lobbyists, rather than give them all the influence that money can buy.

And shame on us—all of us—for putting up with it.

Did Mr. Obama Lose His Way Last Summer?

Jonathan Chait wrote a disturbing—no, very disturbing—piece on the so-called Grand Bargain deficit-reduction talks last summer. The piece was titled:

How Obama Tried to Sell Out Liberalism in 2011

Chait’s commentary was based on a Washington Post story—also disturbing—allegedly detailing President Obama’s failure—yes, unbelievably, that is the way the story frames it—to get a budget deal with Boehner and the Republicans, as the debt-ceiling limit was purposely and purposefully expiring.

Remember all that senselessness and stupidity we went through? Remember how Republicans yet again held the country hostage and engaged in economic jihad to protect the wealthy and cut entitlements?

It turns out that our man in the White House—who a few months earlier had made a very courageous decision to kill Osama bin Laden—may have been just as courageous in his willingness to send liberalism to the bottom of the sea.

That is, if the Post story is completely accurate. There is a weaselly “appeared to accept” at a crucial place and the story does include a pushback from the White House, most notably a denial that it ever agreed to the Republican economic fiction—a piece of trash conservatives never tire of peddling—that reducing tax rates stimulates economic growth and thus increases revenue.

The whole Post narrative is hard to believe, mainly because I don’t want to believe it. But admittedly there does appear to be a large amount of truth to it, a truth rooted in another truth we liberals have to keep relearning: Mr. Obama, for all the good he has done—and there has been a lot of good—is not Bernie Sanders.

As Jonathan Chait points out,

It has previously been reported that Obama had offered to John Boehner to make a series of cuts to Medicare, Social Security, and the domestic budget, to reduce top-end tax rates, and to prevent the expiration of the Bush tax cuts, in return for increasing tax revenue (over current tax levels) by about $800 billion over ten years.

What we didn’t know until the Post story, was,

that even the $800 billion in tax revenue offered by Boehner was not, in fact, $800 billion in tax revenue..

That $800 billion, the Post reported, “came with strings attached,” including lowering the tax rate paid by wealthy Americans. That’s right. I said lowering the rich’s tax rates. But there’s more:

Much of the $800 billion  would have to come from overhauling the tax code — not from higher tax rates. The Republicans believed lower rates and a simpler code would generate new revenue by discouraging cheating and spurring economic growth. If the White House would agree to count that money, the Republican leaders said, then they might have a deal.

As Chait points out, any agreement based on Republican tax philosophy would insure,

that the burden of any higher revenue would fall on the non-rich.

Let that sink in. Let it permeate your progressive pores. Then absorb this:

Obama, incredibly, agreed to that — he agreed to a debt reduction plan that would exempt the wealthy from any sacrifice, and indeed protect them from the possibility that their tax rates would rise when the Bush tax cuts expire.

Now, never mind that even this sellout to conservative teapartyism wasn’t enough for conservative teapartiers, as Chait emphatically notes. They want a total rout. What we should be concerned about—particularly should there be a second term for Obama—is that the President did not tell the tea party hacks to get the hell out of his office, taking their oversize teabags with them.

Jonathan Chait put the matter in about as succinct terms as possible:

The central fiscal issue in American politics is the Republican Party’s insistence on cutting taxes for the rich everywhere and always with no compromise possible. The Post’s story suggests that there was zero progress on this impediment, and Obama wanted a deal so badly he wanted to proceed as if this could be ironed out in the details.

No. There is no ironing out differences with these people. There is no compromise possible with them. They are on a mission from a very strange God and nothing short of complete capitulation can be offered to them that they will feel compelled to accept. A compromise involves concessions on both sides. It means the other side has to move your way, accept things it doesn’t want to accept. But these tea party and tea party-ish folks are willing to hold out until our side completely submits, even if it means The End.

The way to combat these people, as Mr. Obama seems to have lately learned, is expose them. Hold up their regressive and regrettable ideas to the light—the American people—and let everyone see what fanaticism looks like, what unadulterated zealotry would beget if given the fertile ground of surrender.

But having said that, I am forced to confront the most frightening line in the Washington Post story about the Grand Bargain—and one I adamantly refuse to believe is true:

White House officials said this week that the offer is still on the table.

If that is true—and I won’t believe it until I hear it from Mr. Obama himself—then the leader of the Democratic Party has not only lost his way, he has lost his political mind.

Run, Ryan, Run

Jonathan Chait, in a surprisingly persuasive piece, proposes that Paul Ryan may actually run for President after all:

When you have the power to set your party’s vision of government for the next fifty years, and nobody in the party is allowed to disagree with you, or even dodge paying fealty to you, then you already are the party leader. Ryan’s disavowals of interest never struck me as terribly strong.

Indeed.  Chait also points out that Ryan opened the door fairly wide by telling Fox’s Neil Cavuto that, “I think I want to see how this field develops.”

I, for one, hope he does run.  We need to have that national fight.

And if he does decide to enter the race, as Chait points out, he will certainly be the front runner.  In fact, I think he would, without much of a fight, become the GOP nominee.

An important consideration is that Ryan has a fairly friendly press on his side. As Paul Krugman notes, “much of the punditocracy (myself obviously not included) still has a crush on him.”  All one had to do to confirm that was watch Meet The Press last Sunday.  It was hard to take.

It is agonizing to hear the discussions of the Ryan-Republican budget plan on television for the reasons Krugman and others point out.  Ryan is always credited with courage for his efforts and Republicans in general are given good marks for solidarity. And the pundits rarely get it right about the nature of the plan, about its extremist design.

But Democrats must never tire in pointing out the obvious: The Republican plan for Medicare and Medicaid would dramatically change those programs, essentially killing Medicare.  As Steve Benen puts it:

Congressional Republicans have a plan to end Medicare and replace it with a privatized voucher scheme. The proposal would not only help rewrite the social contract, it would also shift crushing costs onto the backs of seniors, freeing up money for tax breaks for the wealthy. The plan is needlessly cruel, and any serious evaluation of the GOP’s arithmetic shows that the policy is a fraud.

Benen asks:

Which part of this description is false? None of it, but apparently, Democrats just aren’t supposed to mention any of this. One party is allowed to present this agenda, but the other party is expected to sit quietly on their hands.

Well, if Paul Ryan does make a run for the presidency, there can’t be any Democrats sitting quietly on their hands because all hands will be needed to prevent the decimation of our current social contract. Needless to say, were he to run and win, America would look very different.

And that’s why he needs to run.  We need to find out if Americans really want to live in a Tea Party Nation.

Because I like metaphors, particularly in this case, I thought I would offer yet another one, in the form of an analogy by Paul Krugman, who also takes a shot at The Washington Post and the whole “Ryan is courageous” meme:

…think of Medicare as a footbridge that is deteriorating and will eventually become unsafe. You could propose structural repairs to fix its faults; Ryan doesn’t do that. Instead, he proposes knocking the bridge down and replacing it with trampolines, in the hope that pedestrians can bounce across the stream. And the Post declares that he deserves credit for pointing out that the bridge is falling down, and proposing a solution. Um, we knew that the bridge was in bad shape — and his solution is a fraud.

Senator Ayn Rand

I found the following clip via Jonathan Chait at The New Republic.  It demonstrates, as Chait points out, just how philosophically deranged devotees of Ayn Rand are:

Get it?  If you believe people have a right to health care, then you believe in slavery.  It’s just that simple in a Randian mind.  And that is the dominant mind of the Republican Party these days.

Democrats need to make the 2012 election a referendum on this Randian philosophy.  They need to make it clear that a vote for a Republican is a vote for a party that has unmistakably embraced a dark and disturbing selfishness, which in the world of Ayn Rand and her followers, is a virtue.

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