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Bipartisanship, part 2

© Tom Toles



  1. Mad Hatter wrote:

    If Obama and the Democrats were smart they would just..LET..ALL..THE..DAMN..TAX..CUTS..EXPIRE. Let the Republicans keep blocking everything. It doesn’t seem like it would take a PR genius to show that reducing taxes for the wealthiest hasn’t provided any jobs, that the Republicans would endanger our fragile economy and national security to continue transferring wealth to the very rich and that the pain Mr.& Mrs. Conservative Middle Class American would feel could be squarely placed at the feet of the Republicans.

    But no…they’ll wring their hands and gnash their teeth, and in the end they’ll bend over, take it from the Republicans and hope for the courtesy of a reach around. God they disgust me.

    Thursday, December 2, 2010 at 8:48 am | Permalink
  2. ebdoug wrote:

    Understand that if all the tax cuts expire as the Republcans are hoping for, Obama has no chance of reelection in 2012. “See Obama raised your taxes when he promised not to raise taxes for those under $250,000.” And if he lets the tax cuts be extended for the rich, he loses the base of the wealthy who voted him in and wanted their taxes raised. (more voted for Obama than McCain know their taxes were going up.
    He is caught between a rock and a hard place or as the cartoon says, he will have the rug pulled out from under him. We all understand that letting all tax cuts expire will get this country back on track, but a Republican will get in year 2012 and lower taxes ago, effectively never paying for Bush’s mess.

    Thursday, December 2, 2010 at 9:16 am | Permalink
  3. Iron Knee wrote:

    I’m not sure about that Eva. If the Democrats are able to get a vote on the tax cuts for everyone under $250K, and the Republicans filibuster it, how can they blame that on Obama? Can’t the Democrats say that the Republicans filibustered the tax cut and stopped it?

    Even if they don’t get a vote, it seems that it should not be a problem to make sure everyone knows that the Republicans blocked the tax cut, because they wanted tax cuts for the rich. And recent polls have shown that Americans are against extending the tax cuts for the rich by a 2 to 1 margin.

    Thursday, December 2, 2010 at 4:03 pm | Permalink
  4. ebdoug wrote:

    But a better solution has come up. The house voted and passed to extend the tax cuts to those under 250K. Now if the Senate does the same, nothing more needs to be done. The tax cuts to those over 250K (or 200K) will expire. Brilliant to divide it into two bills. Had any of us thought of that? I didn’t.
    No, everyone would not remember. Faux news would make sure that the common man knows Obama raised their taxes. Very exciting.

    Thursday, December 2, 2010 at 5:24 pm | Permalink
  5. ebdoug wrote:

    Oh, and can Obama approve the House bill and to hell with the Senate? I don’t know.

    Thursday, December 2, 2010 at 5:25 pm | Permalink
  6. Iron Knee wrote:

    Unfortunately, it doesn’t work that way.

    Thursday, December 2, 2010 at 5:42 pm | Permalink
  7. patriotsgt wrote:

    Good thinking, but the reality will be the repubs promised to block the bill in the senate and can. If the senate tries to play hardball time will run out for the session and the gov will shut down on Dec 19 until congress comes back and the newly elected are sworn in. Then the bill will have no chance as all tax rates will go up. Then they could and the house with its new repub majority will pass a bill to extend and make it retro active back to Jan 1st. The weakened majority in the senate will likely pass the bill, but add a 2 year limit. The dems cannot win this one, but if they fail to compromise they’ll be labled as the lame congress who could’nt fund the gov or pass the tax cuts.

    Thursday, December 2, 2010 at 10:13 pm | Permalink
  8. jonah wrote:

    This whole argument about tax cuts misses the point. The primary goal right now should be to create jobs and to reduce the unemployment rate. The deficit, while important, is a secondary consideration. Give everyone a tax break at least for another couple of years so that the middle and lower class spend and the rich create jobs. Ideally the really rich should get tax credits that are based on investments and not tax cuts, but I entirely disagree with the left on this one. Everyone should get a break IMO in some form.

    Friday, December 3, 2010 at 7:35 am | Permalink
  9. jonah wrote:

    And as today’s unemployment figures indicate, creating jobs should be the primary consideration. Enough about this tea party crap about government spending and high deficits.

    Friday, December 3, 2010 at 7:38 am | Permalink
  10. starluna wrote:

    I disagree with you on that one Jonah. Every economic analysis I’ve read on the subject of the relationship between tax rates among the wealthiest and job growth finds that there is no relationship. This is particularly true these days because the investments that are made by the wealthiest (500K+) are generally not going towards job creation type activity. They also do not spend money in ways that create jobs.

    If the tax code was modified to encourage large scale investments in activity that actually creates jobs, then perhaps your assertion would be more accurate. But currently, the tax code does not do that. For the wealthiest, you get more tax bang for your buck in buying derivatives than actual stock investments in a company that might hire someone to do or make something.

    Friday, December 3, 2010 at 7:56 am | Permalink
  11. jonah wrote:

    Starluna, i would agree with that analysis if the economy is in a better shape than it is now. When there are so many dangers lurking ahead like EU defaults, and a korean war and a chinese and australian housing bubble, i think it is imperative that people at every income level not be constrained in any way when it comes to spending. If the deficit were so important and that was the primary reason for the rich not getting their tax cuts now then I would argue that it would be better to reduce spending than to increase income. Once these external economic forces become more manageable then the rich can pay more taxes. Right now is not the time to use the deficit as an excuse IMO. If the argument is that the rich won’t spend the money properly then the dems should ante up the trickle up strategy and use the tax cuts for the rich to further reduce the tax rate for people earning less than 250 K.

    Friday, December 3, 2010 at 8:11 am | Permalink
  12. patriotsgt wrote:

    Starluna – I would have to somewhat disagree with your assesment. I don’t know who creates the economic data that favors the lefts position, but I’ll give you a report from down where the rubber meets the road.
    I live on a street with only 17 houses, a small community if you will. Of those 17 houses 80% are 1 million$ plus price tag. My neighbor is a retired CEO of a publicly traded company. 80% of the homeowners fall into the 250k plus earning category. All of those people employ lots of other people on a fairly regular basis. They hire landscapers or gardeners who come monthly +, painters, lawn or leaf service, interior decorators, handymen who do all the home maintainence and many other small business or self employed persons. There is even a moblie car detailing guy who comes once a week and washes different cars all day.
    Without getting an exact number, my little street contributes to the emploment of at least 50 persons. Before the recession almost 100% of the homeowners hired outside contractors and it is down to 80% now. If we increase their taxes maybe the number will drop to 70% as a couple more drop out. The really wealthy will continue to employ and hire, but may not start any large renovations which could provide some employment to many. I usually hire out some work (i’m a big DIYer)and i’m not one of the really wealthy, but I have been doing more things this past year then in years past. If my taxes go up, I’ll hire out even less, but obviously be glad to chip into the pot for the common good.
    The other piece that proponents claim for the tax increase on the wealthy is this 700 bill price tag. Thats for 10 years. So it’s really a 70 bill per year price tag. Our deficits have been running (under this Pres.) at an avg of 1.3 Trillion per year. How is 70 bill going to help? It will bring the deficit down to 1.22 billion, WOW, I’m impressed. Over the same 10 years used to tout 700 bill the debt will grow by 12-14 trillion under current trends. 700 bill will trim that 12-14 trillion by 3/4 of a trillion so now we still have a 24-26 trillion dollar debt in 10 years. Whats the interest on that? Even if our current credit rating stays in place( which is doubtful)we’d be paying 3.7 trillion in interest which is about all our revenue coming in. It doesn’t make sense to me, but then I am a simple man.

    I agree with Jonah, there are much more important things then saving 70 bill per year. The gov has never been good at getting smaller and almost never does. How about they acutally creat and use a budget this year and reduce the deficit by half. I’ll gladly chip in more in taxes.

    Friday, December 3, 2010 at 8:59 am | Permalink
  13. Mad Hatter wrote:

    Sarge, I don’t want to live in your world where 80 to 90% of our people have to compete for jobs as bootlicks, toadys or servants for the aristocratic class. My great-grandfathers and grandfathers had to do that to get by but the great advances of progressivism and education for the masses in the 1900s changed that for my father and me (Ayn Rand be damned). Yeah I know….progressivism has become a very dirty word thanks to low-brow conservatives but it’s the best thing that happened for our nation and created our great middle class (think tax policy and redistribution of the wealth to provide a level playing field for all).

    Folks I also believe our lack of jobs is way more complicated than freaking tax cuts. Ever since good old Ronny Reagan and the Newt freak show, we have gradually destroyed the ability to protect and generate good paying jobs for the middle and lower classes. It’s taken 25 to 30 years to get where we are and it’s going to take a long time to recover if ever. The Right’s successful War against reason and education makes think we will never recover and we will have to get by in Sarge’s world. I’m getting pretty long in the tooth but when that seems to be inevitable I may be relocating.

    Friday, December 3, 2010 at 9:42 am | Permalink
  14. Iron Knee wrote:

    Right now, we have historically low tax rates for the rich, instituted by Bush in 2003. Since then, jobs (and the economy) have plummeted. In fact, since Reagan started lowering taxes for the rich, the gap between the rich and the poor has been increasing dramatically. These are simple, indisputable facts, and no amount of anecdotal evidence about the rich hiring fewer gardeners will change that. Not only that, but in times like the 50’s, 60’s, and early 70’s (before Reagan) when we had high taxes on the rich, we created more jobs than we ever have.

    So, can you point me to any real evidence that letting the tax cuts for the wealthy expire will hurt employment?

    Friday, December 3, 2010 at 10:35 am | Permalink
  15. starluna wrote:

    All economists rely on the same sources of data. Indeed, as a non-economist social scientist, it is one of the things we poke fun of. That and their heavy reliance on linear regression analysis for almost every study they do. The data is almost always federal (sometimes state) data from the Census Bureau, Labor Department, and Commerce Department. The government actually does collect quite a bit of data on all of these issues, which makes this kind of analysis actually quite easy to do. It’s why it is used in undergraduate economics and statistics classes to teach basic skills. Every once in a while you will see an economist collect their own data, but that is pretty rare these days.

    The mechanisms you describe in your explanation of how the wealthy generate jobs fails to take into account that those jobs, while great for the individuals involved, are a miniscule part of the overall economy. Moreover, those mechanisms are not restricted to the wealthy. The middle and working classes also hire service workers or spend their money in the service sector. Despite the impression created by HGTV and This Old House, the majority of people still actually hire out for plumbers, electricians, painters, landscapers, etc. Moreover, the middle and working classes are as reliant on professional services (doctors, lawyers, vets, tax professionals, tutors etc) as the wealthy. They also are responsible for the majority of income of restaurants, beauty salons and barber shops, places of entertainment (movie theaters, sport games, etc), as well as basic everyday services of daily life (supermarkets, liquor stores, etc).

    Moreover, there are still larger numbers of individuals and households who are part of the middle and working classes than in the wealthy classes. The sheer volume spending by these groups in the real economy (as opposed to the finance and investment paper economy) outweighs that which is spent by the wealthy. While middle class folks may not have a mobile detailing person come to their house to wash their car, they are still utilizing car washes, which very likely hires more workers than the mobile detailing business. And even though there is some DIY home maintenance done by the middle classes, they still have to go to either their local big box home improvement store or their local hardware store, which supports a chain of jobs from manufacturing (for those products that are still made in the US) through distribution, through store employees. This does not take into account the indirect effects on ancillary support (payroll services, road maintenance for trucks, etc) just in this single example.

    The argument I was making was strictly around the relationship between the tax rates for the wealthy and jobs. The preponderance of evidence is clear. High taxes on the wealthy has no relationship to job maintenance or creation. Your neighbors will not likely change their lifestyles because they had to pay more in their marginal tax rates. They haven’t in the past and there is no logical reason to assume that somehow it would change today. However, increasing the taxes on the middle and working classes will reduce their spending in the real economy, which is where the jobs are at.

    Friday, December 3, 2010 at 10:42 am | Permalink
  16. starluna wrote:

    Mad Hatter – I agree that the jobs issue is really complex. But, I also agree with Jonah insofar as we could structure the tax code to encourage investment in activity that would result in stateside job creation. Currently, the tax code does not do that. Tax deductions and credits that are tied to real economy investments, as we had before the development of all of these creative financial instruments, might be effective way of incentivizing the wealthy to actually invest in true job creation in the US.

    Unfortunately, no one in Congress is talking about that.

    Friday, December 3, 2010 at 10:51 am | Permalink
  17. jonah wrote:

    Regarding the deficit under BHO, there are a few simple reasons why its so high. Lower tax revenue and higher expenses. For those who think that the government should have cut down spending in 2009 and early part of 2010 to balance the budget, I say poppycock. There was no way to avoid spending since everyone else was broke. The amount of money that the fed had to pump in should be ample evidence for people who talk about the trillion dollar deficit to realize that government spending was required.

    As for whether the rich deserve a tax break and whether that will create jobs, I believe buffett when he says he and his fellow millionaires don’t need the money but when it comes to creating jobs BHO should throw the kitchen sink at the problem. Green jobs aren’t going to come out of the wazoo until years later so until that time the theme should be to spend, spend spend. And as I wrote earlier creating jobs should be the focal point of any economic policy decision. I think having people unemployed for a long time is going to have severe consequences socially down the road which is not worth all the concern about a deficit that is likely to grow larger despite any austerity measures unless people find jobs.

    Friday, December 3, 2010 at 11:36 am | Permalink
  18. Mad Hatter wrote:

    Starluna – agreed. Good “investing in steel in the ground” tax policies combined with good fair trade and labor policies.

    Jonah – you’re right. The conservatives have it ass-backwards. You need to spend, spend when times are bad and save, save when times are good. I heard Dr. “Strangelove” Coburn say today that he would be pushing for austerity for the next 6 years. All an austerity program will do is spread the poverty around.

    Friday, December 3, 2010 at 11:57 am | Permalink
  19. TJ wrote:

    Mad Hatter – it’s the “save, save when times are good” part that the conservatives (and liberals in many cases) don’t get. If we didn’t take the good years and use all the excess money as if there would never be a bad year again we might not have some of these problems.

    Friday, December 3, 2010 at 2:15 pm | Permalink
  20. Jason Ray wrote:

    I won’t repeat my post on another thread about these same issues, but did want to comment on tax “cuts” impacting behavior.

    The concept espoused by the Republican leadership that generic tax reductions to wealthy people lead to economic growth is hard to defend. I work for a company with, as we put it, three of the top two economists in the world (they all have Nobel Prizes and disagree about who the top two really are) and they have all said as much.

    The key bad assumption in the Republican leadership position is the assumption that if these people kept more income they would put it in play in a way that would help job creation. The reality is that after a certain level of income and assets more money does NOT get spent, and general investment (which is where the money actually goes) doesn’t translate to jobs – it does translate to wealth creation, but the wealth that’s created motly goes back to the same rich people. You think all those credit default swaps and subprime loan resales created a lot of jobs for the average American?

    What DOES work to create jobs is tax incentives targeted to create jobs directly (like the energy tax credit A.K.A. the “Cash for Caulkers” program), lowering the entry barriers to key markets, expanding the markets for job-creating industries, and tax credits for taking ACTION that help the U.S. job environment like buying locally, hiring locally, etc.

    Hopefully some day we can move past the sound bite debate of “tastes great” vs. “less filling” and address some of the factual issues.

    Friday, December 3, 2010 at 3:26 pm | Permalink
  21. patriotsgt wrote:

    Sorry, i wrote a lengthy response including a rant but it didn’t upload up when I hit the submit button so here’s the much shorter version.

    Jason Ray and Jonah – I think tax incentives to create jobs is a great way to go, I don’t know why they aren’t proposing that.

    Starluna – I concur with your final paragragh in post 15. There is merit in what you wrote. I guess the point I was driving at is People keep saying tax cuts for millionaires. People netting 250k up to 5-600k are not millionaires but the bottom of the upper class or even top of the middle class. IMO the dems should have proposed 1) make permanent the current tax rates for middle/lower income earners. 2)extend current rates for those earning 250k to 999k for 2-3 years. 3) extend rates for those earning 1Mill + for one year.
    Then when that rate comes up for debate next year it won’t be tangled up with the whole package.

    Mad Hat- I really object to your derogatory name calling of some of our finest people out there. bootlicks, toadys or servants are not what I would call small business persons earning a living. Since I’m a Soldier and it only takes a GED to join I guess I’m a bootlicker along with all our service men and women. Unfortunately, the reality is not everyone wants to or is capable of earning 100k. They are capable of making a decent living, yes sometimes serving the crummy rich. Since I’m both a Soldier and a small business owner I guess I’m a bootlick and toady, but I constantly encourage Soldiers and others I work with to take advantage of the abundant education opportunities available and improve their lot in life and make something of themselves. I do this for my servants so to speak.

    Friday, December 3, 2010 at 7:27 pm | Permalink
  22. Iron Knee wrote:

    I am learning a lot from this discussion! Thank you.

    Also, Jason’s comment over here:

    Friday, December 3, 2010 at 8:18 pm | Permalink
  23. Jonah wrote:

    felix salmon has an interesting blog on the topic of creating jobs.

    Saturday, December 4, 2010 at 9:01 am | Permalink
  24. Mad Hatter wrote:

    Sorry to get your dander up. I come from working lower class (my grandfathers and great-grandfathers were sharecroppers and coal miners) so I have nothing but respect for working people. But if we become a nation where the only jobs available to the working class is to maintain the aristocrat’s homes and properties then yes we are then no better than bootlicks, etc.

    I have to admit that I have a deep-seated distrust of the wealthy and powerful which I see represented by the Republican Party. As I was coming up, I saw people like your neighbors keep their little boys out of the draft by using their wealth and influence to send them to colleges or other even nefarious ways. Those of us that couldn’t afford that got drafted. I also saw that same influence in the working world but thanks to the GI Bill and the American taxpayer I was able to get an education and compete with their little boys for good paying jobs. Just don’t want to see us going back to their “Good Old Days”.

    Saturday, December 4, 2010 at 1:22 pm | Permalink
  25. Mad Hatter wrote:

    The last post was in response to Sarge.

    Saturday, December 4, 2010 at 1:23 pm | Permalink
  26. patriotsgt wrote:

    Mad Hatter – I appreciate your response and I fully agree we need to keep opportunity alive for those so inclined to use it. I to have come a long way from my roots. When I finished public HS my father told me there was no money for college I’d have to enter the working world and pay my own way, which I did. I held many different jobs while I was maturing and yes, some of them we’re bootlick lowpaying jobs.
    But, what that tells me is if you want to improve your life the opportunities are still there and have been. Now, getting folks to use them is another matter.

    MH – Thanks for your Service.

    Monday, December 6, 2010 at 7:00 am | Permalink