A Short-Term Win For Democrats, A Long-Term Loss For Democrats?

We’re making permanent tax policies Republicans originally crafted.”

—Dave Camp, the Republican chairman of the tax-writing Ways and Means Committee in the U.S. House of Representatives

Republicans, at least those not completely ravaged by ideological stupidity, have finally been willing to embrace their substantial victory over Democrats, a victory represented by the last-minute deal to make the once-infamous Bush tax cuts permanent.

Early on New Year’s Day, Senate Republicans saw the light and accepted a Biden-engineered but Obama-blessed “compromise,” and later on New Year’s Day House Republicans—those 85 or so who for one reason or another realized they have won the tax debate—did the same.

All the while, most Senate and House Democrats couldn’t wait to get in line to vote to accept the deal (only 3 voted “no” in the Senate and only 16 voted “no” in the House), which, among other things, makes the Bush tax cuts, I’ll say it again, permanent.

Perhaps we should stop here and get Merriam-Webster‘s definition of the word permanent:

continuing or enduring without fundamental or marked change.

That’s a lot of what happened on New Year’s Day.

I watched Grover Norquist, yes, Grover Bleeping Norquist, right in front of CNN, GOP Jesus, and everyone, bless his fellow Republicans as they were about to vote to do what conservatives a decade ago only dreamed of doing: making the Bush tax rate cuts permanent for 99.3% of taxpayers.*

Did you get that? Conservatives in 2001 and 2003 couldn’t even pull that off. When right-wingers passed the original Bush tax cuts, they were only for ten years. Obama extended them for two years just before they were due to expire at the end of 2010—under Republican threats to ruin the economic recovery—and now they have been made a part of the Democratic Party canon. Bragging rights for tax cuts now belong to Democrats, which they may eventually regret.

Oh, don’t get me wrong. I’m not opposed to extending the tax cuts for most Americans. We can’t afford to jeopardize the fragile economic recovery by removing almost $200 billion a year—that’s roughly the cost of extending the cuts for the 99.3%—from the mix.

But we also can’t afford to extend the full rate cuts for that entire 99.3% permanently—at a cost of $1.9 trillion over 10 years—as doing so will serve to support the “starve the beast” tactic that radical conservatives like Grover Norquist have employed as part of their strategy to turn the country into a 19th-century small-government, rich-man’s paradise.

As I see it, Democrats may have inadvertently aided the Norquistas in their quest to some day drown government, at least part of it, in Grover’s bathtub.

There are, of course, many good things in the package passed, including a five-year extension of the 2009 stimulus expansion of tax credits for the working poor and other tax credits for the needy, including families trying to get their kids in college.

Those on long-term unemployment will get an extension for another year; doctors who accept Medicare won’t get screwed in the next year; tax breaks for wind energy and corporate research are continuing for at least another year; the Alternative Minimum Tax will be permanently indexed to inflation; the Republican-stalled farm bill will get unstalled for nine months—enjoy your cheaper milk.

Most of what Democrats got they got without having to offer significant spending cuts, which would have hurt the economic recovery. All good.

But besides the permanence of the Bush tax cuts, there are other bad things in the deal. The estate tax, which beginning on January 1 returned to Clinton-era rates (estates valued at $1 million were exempted and estate transfers over that amount were taxed at 55%), is now permanently Republican-friendly: a $5 million ($10 million for a couple) estate exemption (indexed to inflation) and a top tax rate of 40%, which, as Chris Van Hollen (D-Md) said, is a “sweetheart giveaway to the wealthiest 7,200 estates in the country.”

Capital gains taxes, which enabled the Mitt Romneys of the world to enjoy millions of dollars in income and pay only 15% in taxes on it, will rise to a mere 20% (23.8% if Obamacare taxes are figured in) for those couples making more than $450,000 ($400,000 for individuals). So, if you are Mitt Romney, you will have to find a way to live without that extra dough. Somehow I think he’ll cope.

But he may not even have to worry about coping. Bloomberg Businessweek reported the following about the increased capital gains tax in the new bill:

Many households with incomes above $500,000 won’t face the higher rates at all, because deductions are subtracted from gross income before the rates are assessed.

Finally, the deal Joe Biden brokered with Mitch McConnell does nothing but delay a fight over the sequester and over the dreaded and fast-approaching fight over the debt ceiling that Republicans have pledged to use as a tool to force Democrats to cut entitlements. We are guaranteed to go through all this nonsense again, though this time it would threaten an economic crisis that would dwarf the one we just averted.

President Obama, in his statement after the House vote on Tuesday night, said this:

Now, one last point I want to make — while I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed. Let me repeat: We can’t not pay bills that we’ve already incurred. If Congress refuses to give the United States government the ability to pay these bills on time, the consequences for the entire global economy would be catastrophic — far worse than the impact of a fiscal cliff.

Even though the President went to some trouble to explain that he will not negotiate with Congress over yet another stalemate over the debt ceiling, it is hard to see how he can avoid it, especially since Obama’s press secretary took the “constitution option” off the table recently:

This administration does not believe that the 14th Amendment gives the president the power to ignore the debt ceiling — period.

Section 4 of that amendment says,

The validity of the public debt of the United States, authorized by law, including debts incurred for payments of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.

Now, it is true that the President himself has not actually ruled out such a thing, saying this summer only that,

I have talked to my lawyers. They are not persuaded that that is a winning argument.

That statement, obviously, assumes court involvement. But any judiciary action—and some smart people believe the courts would not even get involved in this political matter—would require time. And Mr. Obama may conclude that by educating the public on the dire consequences of a failure to raise the debt ceiling, and given the extreme unpopularity of Republicans in Congress, that he will have plenty of latitude to do what needs to be do.

Additionally—and this may be the saving grace of this deal for Democrats—Obama said on Monday:

…if Republicans think that I will finish the job of deficit reduction through spending cuts alone — and you hear that sometimes coming from them, that sort of after today we’re just going to try to shove…spending cuts at us that will hurt seniors, or hurt students, or hurt middle-class families, without asking also equivalent sacrifice from millionaires or companies with a lot of lobbyists, et cetera — if they think that’s going to be the formula for how we solve this thing, then they’ve got another thing coming.  That’s not how it’s going to work.  We’ve got to do this in a balanced and responsible way.

That rather strong statement suggests that Obama has a definite strategy in mind for dealing with Republican threats to wreck the economy in order to get what they want.  If he does, and if his strategy is successful, the bad things in the fiscal cliff deal will not look so bad.

And let us hope that what Democrats have done—setting in stone tax cuts that have partly contributed to our fiscal problems—will not someday hinder them as they attempt to protect vital government programs from those who mean to drag the country back into the 18th century.

_____________________________

*For those couples earning between $250,000 and $450,000, less generous Clinton-era tax exemptions and deductions will return, which will increase their tax liability and likely satisfy President Obama’s insistence of tax increases for the “top 2 percent”; but the tax rate cuts themselves are permanent for those couples making under $450,000, which is less than 1% of taxpayers.

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“Liberals Love Wealth”

A very thoughtful commenter, and fellow blogger (Brucetheeconomist’s Blog) who calls himself a “disaffected conservative,” appended the following to a piece I wrote on Mitch McConnell’s characterization of liberals as being “interested in wealth destruction” :

Saying liberals want to destroy wealth is absurd. I do think it is fair though to ask how much flattening of the income and wealth distribution should be a goal.

I’d like to see improved opportunities for those at the bottom of the ladder more than for those at the top rather than redistribution. That said the use of progressive taxes and social benefits for the poor is appropriate if all else fails to avoid the distribution of wealth being too inequitable.

If we could get the distribution of wealth back to where it was say in 1990 that would seem an appropriate goal to me. I don’t think any sensible person wants to perfect equality.

Any thoughts on this anyone else.

My reply:

Bruce,

Liberals love wealth. We want a lot of Warren Buffetts running around, making money, helping the country, and, uh, paying taxes.

The opportunities you (and I) seek “for those at the bottom of the ladder” can only come through investing tax dollars to create those opportunities, most of which come via education or job training. And since we have to get the tax dollars from those who have the money, “redistribution” is inevitable. How much? how much from whom? is fair to ask.

Apparently, we both agree that a grossly inequitable distribution of our nation’s wealth would not be a good thing. What about a moderately inequitable distribution? What, indeed, is a reasonable level of wealth inequality?

I don’t favor progressive taxation because I am a liberal. I am a liberal because I favor progressive taxation. I favor it because of my guiding concept of fundamental fairness (those that benefit the most from society should pay the most to maintain it as a civilized one—by 21st-century standards) and because, as I said, we need the money to do things we agree need done. And rich people have more money to spare than the rest of us.

I don’t know what a reasonable or realistic goal for national wealth distribution would be, only the ideal: a relatively equal distribution. I know that such a thing is not now, nor will ever be, possible to achieve, for a lot of reasons, including that some folks will always work harder than other folks and thus deserve more. How much more do they deserve? Beats me.

I only know that in order to provide the opportunities you and I agree are necessary, it costs a lot of money. It also costs a lot of money to keep the government doing other things for us, like inspecting our food and water; funding basic scientific research, supervising air travel; protecting us from enemies abroad and criminals at home; and keeping poor children, the sick and disabled, and the elderly from dying in the streets. In short, it costs a lot of money to keep America a desirable place to live for all.

And it is only fair—only fair—to ask those who have the resources, who for whatever reason have benefited the most from this bountiful land, to pay higher tax rates than those who have benefited less. How much higher? That is, inevitably, a political question that will always have evolving answers because of a changing polity.

But I suggest that we pay more attention to the growing divide between wealthy Americans and everyone else while there is still time to narrow the divide without recourse to more drastic measures, which will undoubtedly come when social instability becomes impossible to manage with a simple tweak of the tax code. As Justice Louis Brandeis famously said,

We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.

The relatively tiny progressivity involved in the restoration of the Clinton high-end marginal tax rates—which irritates Mitch McConnell so much he feels it necessary to slander liberals—is just one fix among many that should follow. 

Duane

Should Democrats Allow Us To Go Over That Cliff?

On Wednesday night’s edition of The Last Word, Lawrence O’Donnell, brilliantly, suggested a Democratic strategy for winning the war on taxes, in terms of getting rates raised on the top two percent of wealthy Americans.

He simply urged Democrats to let all of the Bush tax cuts expire on January 1 (go “over the cliff”) and then immediately introduce a bill to cut taxes only for those making $250,000 or less, leaving the Clinton-era rates in place for the wealthy. He argued that given the Republican Party’s undying loyalty to Grover Norquist and his tax pledge, they would have no choice but to support the Democratic proposal. How could they defend not voting for a tax cut for 98% of Americans?

O’Donnell reminded viewers that they would have to tolerate a short period in January where their taxes would go up, but after the legislation passed they would get a retroactive refund of those increased taxes.

Now, as I say, this appears to me to be a brilliant strategy and one that has potential. My only concern is that those Bush tax cuts for everyone under $250,000 should not become permanent, but should be modified in the future, after the economy has sufficiently recovered, so as to  help get and keep our fiscal house in order.

Other than that, it may be a strategy that works, although as O’Donnell suggested, Democrats may not have the, uh, huevos to pull it off. We shall see, but it remains an interesting concept.

GOP DNA

I don’t want to say a lot of Tea Party Republicans are delusional, but I have to.

I was sent an email this morning alerting me to a new article on Tea Party Nation. The article began with this:

I actually pity the Democratic Party these days even though I think it has brought the nation to ruin because, as Joseph Curl recently noted in a Washington Times commentary, “Democrats must spend, spend, spend, and spend. It’s in their DNA.”

Hmm. If spending is in Democratic DNA, somehow Democrats must have impregnated George W. Bush with it. And somehow they must have fornicated with the Republicans in Congress during Bush’s first six years in office and deposited a big wad of that spending DNA, which then produced big, fat deficit babies.

Because under W. Bush and his Republican Congress—who inherited budget surpluses—we saw nearly unprecedented spending. And you don’t have to take my word for it:

During his eight years in office, President Bush oversaw a large increase in government spending. In fact, President Bush increased government spending more than any of the six presidents preceding him, including LBJ.  In his last term in office, President Bush increased discretionary outlays by an estimated 48.6 percent.

During his eight years in office, President Bush spent almost twice as much as his predecessor, President Clinton.  Adjusted for inflation, in eight years, President Clinton increased the federal budget by 11 percent. In eight years, President Bush increased it by a whopping 104 percent. 

Now, that wasn’t written by me or Barney Frank, but by Veronique de Rugy.  Here is her bio:

…a senior research fellow at the Mercatus Center at George Mason University. She was previously a resident fellow at the American Enterprise Institute, a policy analyst at the Cato Institute, and a research fellow at the Atlas Economic Research Foundation…She writes a column for Reason magazine and is a regular contributor to The American, AEI’s  online magazine. She also blogs at The Corner at National Review Online and at Big Government.

You can see that she has some conservative chops. Here’s more:

Between FY2002 and FY2009, discretionary spending rose 96 percent…

Some argue that federal spending during the Bush years was so high because security needs drove up the budget… Whether this is true, the overall rapid rise of discretionary spending indicates that, here too, the administration and Congress made no trade-offs in the budget. If the administration and Congress wanted more security spending and wanted to be fiscally responsible, they should have found savings elsewhere in the budget.

Wanted to be fiscally responsible“? Republicans?

Still more:

President Bush added thousands of new federal subsidy programs during his eight years in office. In 2008, there were 1,816 subsidy programs in the federal budget that spread hundreds of billions of dollars annually to special interest groups such as state governments, businesses, nonprofit groups, and individuals. The number of subsidy programs has grown by 30 percent since 2000 and by 54 percent since 1990.

Let’s turn to another source, this time McClatchy Newspapers:

George W. Bush, despite all his recent bravado about being an apostle of small government and budget-slashing, is the biggest spending president since Lyndon B. Johnson. In fact, he’s arguably an even bigger spender than LBJ.

“He’s a big government guy,” said Stephen Slivinski, the director of budget studies at Cato Institute, a libertarian research group.

The numbers are clear, credible and conclusive, added David Keating, the executive director of the Club for Growth, a budget-watchdog group.

“He’s a big spender,” Keating said. “No question about it.”

Most of you know that the Cato Institute and Club for Growth are hard-core right-wing institutions, but somehow the memory of big-spending Republicans has faded and a delusion fathered by hatred of Barack Obama has taken hold of many minds on the right.

Besides the defense buildup and Homeland Security spending under Bush and the Republicans, here’s more:

Brian Riedl, a budget analyst at the Heritage Foundation, a conservative research group, points to education spending. Adjusted for inflation, it’s up 18 percent annually since 2001, thanks largely to Bush’s No Child Left Behind act.

The 2002 farm bill, he said, caused agriculture spending to double its 1990s levels.

Then there was the 2003 Medicare prescription drug benefit — the biggest single expansion in the program’s history — whose 10-year costs are estimated at more than $700 billion.

And the 2005 highway bill, which included thousands of “earmarks,” or special local projects stuck into the legislation by individual lawmakers without review, cost $295 billion.

“He has presided over massive increases in almost every category … a dramatic change of pace from most previous presidents,” said Slivinski.

And all that is without even considering the cost of the Bush tax cuts, which are still with us and—along with other Bush-initiated spending—still doing fiscal damage that Obama and the Democrats are getting blamed for.

Let’s go back to that delusional Tea Party Nation article and read that first paragraph again:

I actually pity the Democratic Party these days even though I think it has brought the nation to ruin because, as Joseph Curl recently noted in a Washington Times commentary, “Democrats must spend, spend, spend, and spend. It’s in their DNA.”

There. I feel better.

What Deficit Problem?

“In short, there isn’t much of a constituency for deficit reduction.”

—David Leonhardt, The New York Times, July 5, 2011

 

Most of Morning Joe this morning involved discussions on the impending or not impending crisis brought on or not brought on by the fast-approaching drop-dead or not drop-dead date to raise the debt ceiling. Democrats claim all hell will break loose and Republicans, at least in this narrow case, don’t believe in hell.

I suppose we shall find out, one way or the other.  But behind the debt ceiling discussions and, it seems, behind nearly everything that happens these days in Washington, looms our burgeoning national debt, a problem so serious that few people actually take it seriously.

Along those lines, David Leonhardt made a point in The New York Times yesterday that bears repeating: Most people talk a good game about the long-term debt crisis we face, but not many talk a good specific game about it.

One example is the Business Roundtable, a big-business support and lobbying group. Leonhardt:

When roundtable officials talk about the deficit, they use sober, common-sense language that can make them sound more reasonable than either political party.

But the roundtable is actually part of the problem.

Rhetoric aside, it consistently lobbies for a higher deficit. The roundtable defends corporate tax loopholes and even argues for new ones. It pushes for a lower corporate tax rate. It favors the permanent extension of the Bush tax cuts. It opposes a reduction in the tax subsidy for health insurance, a reduction that was part of the 2009 health reform bill. Oh, and the roundtable also favors new spending on roads, bridges and other infrastructure.

Leonhardt points out that “a group of top corporate executives” called the Business Council, along with the roundtable,

released a 49-page plan that simultaneously warned that projected deficits would “retard future growth” and called for policies that would add hundreds of billions of dollars a year to the deficit. That’s the essence of roundtable syndrome.

You might say they, like many Americans, want it all but don’t want to pay for it. 

Labor unions, in a sort of false moral equivalency, were also the target of Leonhardt’s keyboard:

Public sector labor unions have fought changes to pensions and work rules that could lead to less expensive, more effective government. Private sector unions — along with the roundtable — have defended the huge tax subsidy for health insurance, which drives up health costs.

At least, Leonhardt says, labor unions have “been willing to push for some tax increases.”

Yes, and those meager tax increases are at the heart of Republican resistance to any solution for not just the debt ceiling problem, but the larger debt problem. 

As many have pointed out, time and time and time again, there is no balanced-budget arithmetic that doesn’t include revenue increases.  And, as labor unions insist, the first place to begin in bringing in new revenue (which should really be seen as merely a restoration of the pre-Bush revenue stream) is with those who have benefited most from the economy these past 30 years.

Yet, all we have coming from business and Republican Party leadership—whose constituency includes those who can afford modest tax increases—is just another version of the voodoo arithmetic they used to get us into this mess: cut taxes and the free-market gods will do the rest.

Meanwhile, the debt monster created by such policies looms.

Michele Bachmann Wants To Raise Taxes, But Not On The Wealthy

Michele Bachmann, billed as a “Tea Party star,” appeared on ABC’s Good Morning America this morning and said some amazing things.  But before I get to those amazing things, I want to show how George Stephanopoulos set up the interview. 

It began with these revealing graphics created from the newest ABC News/Washington Post poll:

Let’s talk about these poll numbers,” Stephanopoulos began, “that seems to be very strong support for President Obama’s position in this budget fight and a rebuke of the House Republican position.” 

Bachmann responded:

I think if you look at those numbers that would be accurate, but I don’t think that totally reflects where the American people are coming from.  First of all, if we tax 100% of what everyone made who make $250,000 or more—everything they made—that would get us about 6 months worth of revenue—

STEPHANOPOULOS: Every bit helps, doesn’t it?

BACHMANN: Well, but it wouldn’t be enough.  I think that’s what’s shocking. We could take 100% of all the profits of every Fortune 500 company and that would give us 40 days worth of revenue. We could also take 100% of everything that the billionaires in this country own and that wouldn’t be enough to solve the problem.  So it’s really a matter of having everyone involved. Part of the problem, George, is that 47% of all Americans pay virtually no federal income tax.  So, we need to broaden the base.

Let’s stop here and analyze what she has said so far:

♦ The ABC/Post poll numbers aren’t accurate because they don’t fit her view of what the American people believe.

♦ She dodges the issue of the wealthy paying more taxes by turning the conversation to an absurd idea of confiscating all profits and all wealth (no matter how accurate her numbers), a typical Rush Limbaugh trick.

♦ She argues for a tax increase on all Americans.  Yes, she did, my teapartying friends.  She just sat there in front of God and George Stephanopolous and said,

“We need to broaden the base.”

What base?  The income tax base.  Those deadbeat Americans who aren’t paying any federal income tax need to cough it up.  How else do you “broaden” the income tax base without making people who aren’t paying income taxes pay them? 

Let’s be clear: In response to a question about widespread support among Americans for raising taxes on the wealthy, a popular Tea Party Republican (potential) candidate for president insisted that instead of the wealthy, the non-wealthy ought to pay more taxes!

Nevermind that most of those who don’t pay federal income taxes are among those with low or moderate incomes, who nevertheless pay Social Security and Medicare and sales and property taxes.

But she wasn’t done:

STEPHANOPOULOS: You say that everyone has to be involved and I think that’s reflected also in those numbers. A lot of Americans look at those numbers and say it’s wrong for seniors who rely on Medicare to get cuts when wealthy people get tax cuts extended.

BACHMANN: Well, and I think that again President Obama was the one who was behind the tax cut extension bill in December. That was his position.  And I would agree with senior citizens. We’re very concerned.  And I think that’s why a better name maybe for the Paul Ryan budget would be the “55 and under plan.”  Because no one 55 years of age or older will see any change whatsoever to Medicare. That’s an extremely crucial piece of information.

So, we don’t want any senior citizen to feel, or near senior citizen—I’m 55 years old, and so it wouldn’t apply to me either—and so there are no changes to people who are 55 years or older…

Besides the disgusting chutzpah of blaming Obama for the tax cut extension for the wealthy—when Bachmann and her Republican friends were holding hostage the unemployed and the economy last December—here we see, as Bachmann laid it out, the strategy for attacking Obama during the 2012 campaign season and defending the Republican “kill-Medicare and maim-Medicaid” budget plan:

♦ Claim Obama agrees that cutting taxes for the wealthy helps the economy since he signed off on those tax cuts.

♦ Claim that the Republican Party is really the party looking out for seniors since the GOP plan would leave a relatively generous Medicare benefit package in place until those seniors die, no matter how much hurt it places on those under 55.  Thus, Bachmann labels this “an extremely crucial piece of information.” 

It’s “crucial” because those 55 and older show up and vote in droves both in mid-term elections (around 60%) and presidential elections (around 70%).  And those who show up tend to vote for Republicans (in 2010, 59% of them). In fact, in 2010, even though voters 65 and older make up only 13% of the population at large, they accounted for a staggering 21% of the 2010 electorate. 

And the wealthy, of course, are part of the mix, too. A Project Vote study reported that in 2010:

The number of ballots cast by Americans from households making over $200,000 a year increased by 68 percent compared to 2006.

It’s not hard to understand how Republicans are planning their path to victory in 2012.

But despite Bachmann’s extremely crucial piece of information, Democrats have their own, which they need to broadcast night and day:

Republicans will stop at nothing to defend their rich constituents and they want to solve all of our budget problems on the backs of the poor, the disabled, and the working class.

Just think about this: The nonpartisan Congressional Budget Office estimates that those unfortunate folks under 55 today, if the GOP has its way with its budget plan, would be expected to fork over more than two-thirds of the cost for their health care by the year 2030, even while paying current Medicare benefits for those currently 55 and over.

If that crucial piece of information doesn’t get the young and non-wealthy out to vote next year, then nothing will.

Senator McCaskill And The Budget

I e-mailed Senator Claire McCaskill a couple of days ago. Here’s what I wrote:

Please—please—do not make any more cuts in the budget (Democrats have made plenty) without getting something in return from the Republicans, like some concessions on taxes.  We can’t balance the budget without addressing the shortfalls in revenue.

Republicans have starved the government, causing a lot of the “crisis” today.

And as a Democrat, you have to believe that we can’t balance the budget by drastically reducing spending important to your constituents, particularly the most vulnerable among them.

I ask you, therefore, to lead the way in defending the least among us, as well as working and middle class Americans. Compromise with the Republicans, yes.  But don’t cave in.  Get a commitment from them that revenues have to be on the table before you agree to any more cuts.

And as the President suggested today, force them to remove the non-fiscal nonsense from the spending bills.

Thanks

Because this is the Internet, I have the luxury of posting her complete reply below (I also left in the writing errors), which was designed not as an answer to my specific question, but as a generic answer to “the way things are run in Washington.”  In other words, this response is a political response, which I fully understand with an election looming next year.

However, while I didn’t expect a personal reply from a busy U.S. Senator, I also didn’t expect a reply that essentially boasts about her lack of loyalty to the Democratic Party and misrepresents why people like me voted for her in the first place.

You will also notice that nothing in her response addresses my revenue concerns, although she does mention her joining together with “Republican Senator Bob Corker of Tennessee to introduce legislation to hold all government spending to 20.6% of gross domestic product (GDP), the historical average over the last 40 years.” 

How hard would it have been, in that context, to at least mention the irresponsible Republican defense of tax cuts for the wealthy?

In any case, read it and weep liberals.  But remember that the moderate Senator McCaskill is the only horse we have in the upcoming race.  The alternative is unthinkable.

March 11, 2011 

Dear Mr. Graham,

Thank you for contacting me regarding the way things are run in Washington.  I appreciate hearing from you, and I welcome the chance to respond.

Missourians do not want a rubber-stamp for any President or party leader.  They want their representatives in Washington to represent their interests.  We are the Show-Me State, after all. As your Senator, I have worked to be an independent voice for Missouri.  I think my record bears that out; I vote against my party more often than almost any other Senator.

Most importantly, Missourians sent me to the Senate with a clear priority: address the size of our federal government and Washington’s runaway spending.  Missourians, like me, recognized that political jockeying had led to billions of dollars in pork-barrel spending, and that Washington was continuing to push off making tough decisions to put America on stable fiscal footing.  That is why since day one of my time in the Senate, I have fought on behalf of Missourians to get our Nation’s fiscal house in order.

One of the first priorities I set in Congress was to end the corrosive and corrupting practice of political earmarking of federal dollars.  I’m one of only a few Senators who has have never requested an earmark and one of only two Democrat Senators who refuse to seek them today.  For years, the earmarking process has been shielded from oversight and accountability, with funding for pet projects often being awarded based on political influence instead of merit.  I frequently oppose spending bills that are bloated with earmarks and have introduced legislation to ban earmarks.  I voted against the 2009 Omnibus Appropriations Act and the Consolidated Appropriations Act of 2008 and opposed an omnibus appropriations bill initially offered to fund government for this year that was, astonishly [sic], laden with earmarks.  In fact, I have never voted for one of these combined “omnibus” appropriations bills that spend too much and are packed with earmarks.

Since 2007, I have also consistently voted to reform and, more importantly, end earmarking. Most recently, in November 2010, I joined Senators Tom Coburn (R-OK), John McCain (R-AZ), and Mark Udall (D-CO) in forcing a vote on legislation that would ban earmarks through FY 2013.  In a landmark breakthrough, as a result of efforts like this and a clear message from Americans like you to end earmarking, Senate Appropriations Committee Chairman Daniel Inouye recently announced that no earmarks will be included in appropriations bills this Congress.  Congress needs to be honest when it comes to spending taxpayer dollars, and this is a good first step towards that goal.

You will also be interested to know that I have worked hard over the last few years to install controls in the Senate to reign [sic] in spending in a broader way.  In 2009, I introduced a Pay-As-You-Go (PAYGO) bill (S. 1600) that would trigger across the board spending cuts unless all new direct spending or tax cuts are deficit-neutral (in other words, if politicians want to spend more, they can only do it if they can identify resources to pay for it).  I am pleased that the Senate went on to enact a similar version of my bill.  Also, early in 2010, Republican Senator Jeff Sessions of Alabama and I joined together to introduce legislation to impose caps on discretionary spending for the next three years.  Unfortunately, this bipartisan bill, fell one vote shy of the 60 votes needed to move it forward.  Senator Sessions and I felt so strongly about this amendment, however, that we forced the Senate to vote on it four times and will continue to seek to get it passed — the Senate cannot be let off the hook on controlling spending and just like long term and consistent efforts to end earmarks have finally led to success, I hope a similarly sustained effort will lead to victory on capping spending on a bipartisan basis.

I was also pleased to support efforts to create a fiscal task force to study spending and our deficit.  This ultimately led to the creation of a bipartisan Fiscal Commission.  The report and recommendations of that commission, which won significant bipartisan support and was praised as courageous, represents an important marker in establishing a path to addressing the fiscal crisis in America and I am closely studying the recommendations.  I was particularly pleased to see the commission provide a comprehensive path to fiscal order.

As the 112th Congress opens, I will continue to fight to pass spending caps and work to see the recommendations of the Fiscal Commission fully considered.  Earlier this year, I also embarked on another bipartisan effort to limit spending when I joined Republican Senator Bob Corker of Tennessee to introduce legislation to hold all government spending to 20.6% of gross domestic product (GDP), the historical average over the last 40 years.  This would decrease our federal spending by nearly $400 billion.  I am proud that the bill also eliminates oft-used budget gimmicks in order to take into account the true reality of our fiscal situation. I assure you that I will continue to seek other ways to address federal spending, with Republicans and Democrats who are willing to work together to address our nation’s debt crisis.

If the government is going to live within its means, I also believe we need to cut waste out of federal spending.  I have taken a hard line against any waste, from earmarks to no-bid contracts.  That is why, as Missouri’s former state Auditor, I came to the Senate and set my sights on fighting fraud, waste and abuse in government contracting.  In 2007, I worked alongside my colleauge [sic], war-hero Jim Webb, to create a modern day Truman Commission that would root out waste in war contracting.  The Commission on Wartime Contracting has been hard at work for three years now and the final report of their investigation is due this year.  In 2009, I was also made Chair of the Senate Subcommittee on Contracting Oversight, a new Subcommittee I worked to create because of the clear need for more investigation into abuses in federal contracting.  From this post, I initiated an investigation into the waste and abuse at the hallowed ground at Arlington National Cemetery and demanded improved accountability of spending in Iraq and Afghanistan, among many other things.  I have been to able to pass legislation as a result of these efforts to address the crisis at Arlington, provide controls on private security contracting and limit loopholes in law that provide for unlimited sole source contracting to certain companies and this work continues.

I have supported other anti-waste initiatives as well, such as co-sponsoring a bill to create a line item veto and voting to establish “sunset commissions” to identify and eliminate government programs that are no longer effective.  Finally, I have worked consistently to protect whistleblowers both within and outside government who expose wasteful spending and to empower our nation’s primary fraud fighters, inspectors general.  In my first year in the Senate we, in fact, won a major strengthening of whistleblower laws for those who report waste at government contractors working for the Defense Department.

I want you to know that it hasn’t been an easy fight.  My fiscal reforms have received criticism from Senate colleagues and countless special interest groups since the day I arrived in the Senate in 2007.  But Missourians didn’t send me to Washington to make the easy choices. They sent me to be an independent voice for Missouri, and they are loud and proud about the need for fiscal responsibility.  Well, the buck stops here, and I will continue to fight tooth and nail to reign [sic] in our out-of-control federal spending.

Again, thank you for contacting me. Please do not hesitate to contact me in the future if I can be of further assistance to you on this or any other issue.

Sincerely, 

Claire McCaskill
United States Senator

Mitch McConnell: No New Taxes, Take It Or Leave It

It’s clear from the election last year, we will not be raising taxes,” Republican leader Senator Mitch McConnell said this morning on Morning Joe. He was responding to a question about the budget.

That unequivocal statement is why, my friends, the battle will go on.  Until the GOP leadership moves off that position, nothing of substance will happen.  I hope.  Democrats, especially President Obama, haven’t exactly shown themselves to be competent negotiators.

McConnell also said, when asked why the Republican Party doesn’t take the lead with regard to entitlement reform, that it was because “I’m not the President.”  He said he has told President Obama both publicly and privately that divided government is the time to get something done and, “We’re ready to go.”

Ready to go? Hardly. Oh, they’re ready to go on spending cuts. If Democrats let them, radical Tea Party Republicans will suck the marrow out of the budget. But responsibly raising taxes to pay for the government people say they want? Not a chance, McConnell said.  That’s some compromise offer.  If Democrats agree in any way to this bargain, they deserve permanent exile.

McConnell used the example of the Reagan-O’Neill compromises in the 1980s and, most egregiously, the Clinton and congressional Republican compromises in the 1990s that led to budget surpluses as examples of how things can get done during times of divided government.

Except, naturally, McConnell ignored one teeny, tiny, tittle of a fact.  What he doesn’t mention, and Democrats shouldn’t let him ignore, is that in 1993, Clinton and the Democrats raised taxes responsibly to pay for government. Imagine that. Asking the American people to pay for the government they have voted for over the years. How novel that sounds today.

That law, known widely as the Deficit Reduction Act of 1993, received exactly ZERO Republican votes. ZERO. And what followed that responsible legislation was years of prosperity and job growth.

The GOP confirmed its fiscal irresponsibility via the infamous cuts in 2001 and 2003 that essentially repealed the 1993 law and set us back on the road to massive deficit spending.  And if Democrats let the Tea Party have its way, the home-bound chickens from that malgovernance will roost in a much smaller and less effective government hen house.

As I said, if Democrats yield to the my-way-or-no-way Republicans, led by anti-government teapartiers, then the Democratic Party deserves the dissolution it most surely will suffer.

The Case Against Mitch Daniels, Part 1

Indiana Governor Mitch Daniels is running for president.

Oh, he hasn’t said so for sure, but he is.  I watched him on the Fox-Republican “News” Channel yesterday and you can just see it in his nervous eyes. 

But one of the real reasons I am certain he is running is because he took the trouble to downplay his time serving as a W. Bush official. Unfortunately for him he was Bush’s first Budget Director. He served the administration for almost two and a half years, when drunken conservatives were spending Clinton surpluses on millionaires and billionaires and two wars and a Homeland Security behemoth and a new entitlement program, Medicare Part D.

As the Indianapolis Star reported in 2005:

Bush gave Daniels the nickname “The Blade,” but the administration’s tax cuts combined with an economic downturn put Daniels in the awkward position of watching a $236 billion annual surplus turn into a $400 billion deficit during his 29-month tenure.

Whoops!  But don’t worry. It wasn’t his fault.  He told Fox,

…nobody was less happy than I to see the surplus go away, but it was going away no matter who was the president.

Ha. That’s funny. But it gets better. He said to NPR’s Steve Inskeep this morning:

DANIELS: Look, I was proud to serve in that administration, but that surplus was going away, and it wouldn’t have mattered who was president, let alone in the supporting role of budget director. We had the collapse of the bubble, the recession…

INSKEEP: After 9-11.

DANIELS: Then 9-11, with all the costs that came with that, the whole new category we call Homeland Security and two wars — so, I mean, that deficit [sic] was going away and it wouldn’t have mattered who was in any of those jobs.

Another laugher. But this time with a twist. That “[sic]” NPR had to insert in the transcript tells a tale. A nervous tale.  He meant surplus, obviously, but deficits and his role in creating them are on his mind. The man is a little worried about how his role in the Bush administration’s mismanagement of the economy will play in Peoria.

I want to note that Inskeep should have asked him why, with all the massive government spending the Bush administration believed was necessary, didn’t Daniels advocate actually paying for some of that stuff?  Maybe someday out on the campaign trail we’ll get an answer to that question.

But Inskeep did get close:

INSKEEP: Would you not have, would you not have approved of those tax cuts?

DANIELS: I did approve of the tax cuts. And by the way, they were widely credited — and still are, by honest people, with the shallowness and the swiftness of recovery from that recession.

Like a good conservative, he did approve of the tax cuts. But what about that business about the “shallowness…of recovery“?  I, for one, won’t argue with that anxiety-induced admission.  But he’s clearly nervous talking about this issue.  That’s not good for  a man George Will claims has the “charisma of competence.”

But I want to continue on with what he said next:

That was lucky by the way, it’s only fair to say, President Bush never proposed those tax cuts as a stimulus as we now see matter, ’cause nobody knew we had a recession starting up. But the timing was somewhat lucky.

Now, let’s look at what Bush’s budget czar is saying here:

1) The Bush tax cuts had a positive effect on the economy: “they were widely credited…with…the swiftness of recovery from that recession.” 

There is a dispute whether those tax cuts had anything to do with the recovery. But let’s move on:

2) The tax cuts, which have deprived the treasury of at least $2 trillion and counting, were not intended as government stimulation of economic growth: “That was lucky by the way…President Bush never proposed those tax cuts as a stimulus.”

Hmm. Just lucky?  Doesn’t Mr. Daniels know that the First Law of conservative economics is that tax cuts = economic growth?  And if he thinks they weren’t designed to enhance economic growth, what was their purpose?  To destroy our fiscal health?  Huh?

And surely he knows that George Bush did in fact sell the 2003 tax cuts as stimulative. Bush said the following, when he was signing into law the final phase of the Bush tax cuts:

By insuring that Americans have more to spend, save and invest, this legislation is adding fuel to an economic recovery. We have taken aggressive action to strengthen the foundation of our economy so that every American who wants to work will be able to find a job.

It’s obvious Governor Daniels wants to run for president and wants us to forget his time and part in the previous mismanagement of our nation’s finances.  I don’t blame him for that. But the Bush tax cuts were a big piece of that mismanagement and are responsible for a big chunk of our debt, and their legacy continues.  Yet Daniels, who sees the debt problem as the new “Red Menace,” has learned exactly nothing from his previous role in the mismanagement of the economy:

INSKEEP: Uh, is the problem grave enough that those tax cuts should be allowed to expire? They’ve now been extended through 2012.

DANIELS: I think it’d be a catastrophic mistake…I think raising taxes right now in a very fragile economy, still, would be a real mistake.

Let’s see here.  Back in 2001, when we had budget surpluses, Republicans, including Daniels, argued that was the time to cut taxes. “Give Americans their money back,” they insisted.  Now, when we have enormous deficits, we must keep the cuts in place.  “We can’t afford to raise taxes,” they insist.

Perhaps you guessed by now that there is never—never—a time in which conservative Republicans believe taxes should be such that they pay for the size of government Americans have come to love.  And Daniels, who is widely praised as the best hope to defeat Obama in 2012, represents everything that got us to this point of unsustainable debt.

He also represents everything that is wrong with conservative thinking on today’s hot topic, public sector unions.  As NPR pointed out this morning, it didn’t take Daniels long to establish himself as a full-tilt conservative union-buster:

In 2005 on his first day in office, Indiana Gov. Mitch Daniels signed an order ending collective bargaining with public employee unions. He said it freed him to turn over some state jobs to private contractors.

If that doesn’t energize the labor movement against him, nothing will.

But beyond that, should Daniels decide to run, as I believe he will, Democrats need to hang the Bush tax cuts around his Bush-administration neck and make him defend them again and again, even while he hypocritically tries to convince voters that a deficit menace is our nation’s biggest threat.

You just can’t claim you’re serious about the debt problem and take taxes off the table.

The Missouri Budget Crisis And The Year 1985

Yesterday’s editorial in the Joplin Globe included this bad news for Missourians:

The state faces a $500 million to $700 million budget deficit for fiscal year 2012 that must be resolved by the Legislature and Gov. Jay Nixon. There is little hope for substantial federal funding to offset that shortfall.

The only news worse than that is what the Globe editorial said in response to that bad news:

We urge our governor and legislators in the upcoming legislative session to continue to make the painful choices necessary to keep Missouri state government living well within its means.

Let’s keep it that way with responsible state and local government and the acknowledgment from our residents that government is not a cure for all that ails society today.

Where does one start with such, well, with such reactionary Republican ridiculousness?

Okay, I’ll start with being the first resident to acknowledge that government is not a cure for all that ails society today.  There.  That’s done.

Now, to the “painful choices necessary to keep Missouri state government living well within its means” nonsense. 

It has become obvious that conservative governance in this state, as well as in the country at large, has undertaken a “starve the beast”—the government is always the beast—strategy.   Nationally, we are paying less in federal taxes as a percentage of GDP than at any time since 1950, which is illustrated nicely by this graph:  

Notice the increase in revenues resulting from the famous 1993 tax increase (which created budget surpluses) and the decline in revenues resulting from the Bush tax cuts (which created massive deficits).  And notice that the conservative strategy of starving the beast is working to the extent that nearly everyone is now talking about entitlement cuts and other government-reducing exercises.

As for the states, according to the conservative Tax Foundation, there are only 15 states with a lower combined tax burden than Missouri.  But more disturbing is, in the words of  The Missouri Budget Project, “the erosion of Missouri’s revenue base since 1985”:

Missouri General Revenue spending as a portion of the economy is below the 1985 level.  The Hancock Amendment to Missouri’s Constitution restricts state general revenue growth to the ratio of general revenue to personal income that existed in the 1980s. The ratio of the two measures provides a picture of how far Missouri state general revenue has declined when compared to the state’s economy. State general revenue in FY 2010 was just 3.124 percent of state personal income, well below what it was in 1985 and nearly $2 billion below the Hancock “lid.” 

Here’s the chart:

Let this sink in:

State general revenue in FY 2010 was just 3.124 percent of state personal income, well below what it was in 1985 and nearly $2 billion below the Hancock “lid.”

Was Missouri an unfit place to live in 1985?  Were businesses and people fleeing the state? Were things so bad that we can’t see our way to go back to the revenue percentages of that time? 

Of course not.

That $2 billion would solve the “crisis” we face now, without the Joplin Globe fretting over “painful choices,” which really means painful budget cuts that naturally hurt the most vulnerable among us.

How about an editorial on that?

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