Browsing the blog archivesfor the day Tuesday, November 27th, 2012.


Republican $acred Cow$

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Obama Administration

Some Republicans in Congress are putting on quite a show these days, boldly declaring independence from Grover Norquist while still refusing to raise tax rates on the wealthy. For example, Sen. Bob Corker of Tennessee was widely praised for proposing a bold compromise that amounts to the same right-wing snake oil. After oozing some conciliatory prose, Corker makes this offer —

The proposal includes pro-growth federal tax reform, which generates more static revenue — mostly from very high-income Americans — by capping federal deductions at $50,000 without raising tax rates. It mandates common-sense reforms to the federal workforce, which will help bring its compensation in line with private-sector benefits, and implements a chained consumer price index across the government, a more accurate indicator of inflation. It also includes comprehensive Medicare reform that keeps in place fee-for-service Medicare without capping growth, competing side by side with private options that seniors can choose instead if they wish. Coupled with gradual age increases within Medicare and Social Security; the introduction of means testing; increasing premiums ever so slightly for those making more than $50,000 a year in retirement; and ending a massive “bed tax” gimmick the states use in Medicaid to bilk the federal government of billions, this reform would put our country on firmer financial footing and begin to vanquish our long-term deficit.

In other words, no increase in tax rates for the wealthy; cut salaries and benefits for federal employees; pass Mitt Romney’s version of Paul Ryan’s Medicare plan; and mess with Social Security, which isn’t part of the budget.

I say they can take this “compromise” and shove it where the sun don’t shine.

I’m going to have to check on the “bed tax” issue; I thought it was something some states did to raise matching funds required to receive Medicaid dollars, and while it may be a bad way to raise money, I don’t see how you can call it “bilking.” But maybe I’m misunderstanding it. And it seems to be happening mostly in “red” states, anyway.

Anyhoo — Krugman addresses the question of why Republicans are so all-fired determined to not raise tax rates —

The contortions Republicans are going through in an attempt to avoid raising tax rates are quite something, and they pose something of a puzzle: why are they making noises about raising revenue by limiting deductions, while still screaming bloody murder at any hint of a rise in tax rates?

One possible answer is that they’re still imagining that they can pull a fast one — that they can sell supposed revenue raisers that don’t actually raise much revenue, or that they can find a way to renege on whatever agreement might be reached by appealing to the various interests with a stake in particular deductions.

That was my thinking. But there’s another possibility — a proposal is floating around that would effectively stick the upper middle class with higher taxes but protect the genuinely wealthy. Billmon describes it as turning the upper middle class into human shields to protect the wealth of the wealthy. He continues,

So what’s going on here? Well, now that Comrade Norquist has been purged from their ranks, the Republican Politburo appears to have decided that if revenues must be raised, it should be done in the way suggested by their last presidential nominee (the one whose name is currently being methodically erased from the RNC’s official records).

To this end, various GOP apparatchiks are touting the idea of using deduction caps and/or clawback mechanisms (which would deprive high-income taxpayers of the benefit of the lower rates applied to the first few chunks of those incomes) as a substitute for raising the top marginal rate all the way back to the same confiscatory level (39.6%) that prevailed during the Clinton economic hell hole years.

You may recall that during the campaign a cap on itemized deductions (mortgage interest, state income tax, charitable contributions, etc.) was offered up by He-Who-No-Longer-Exists as the solution to his $5 trillion arithmetic problem — except that whereas Mitt wanted to use the money to pay for even lower marginal rates, the GOP Politburo has now adopted the Left Deviationist line that tax increases on the wealthy are OK as long as they don’t harm “incentives” for “job creators” — i.e. don’t raise the top marginal rate.

Billmon explains all this in more detail, as does Nate Silver (lots of math!) and Josh Marshall. Those guys explain the actual proposal better than I can. But it boils down to sticking people who make $250,000 to $400,000 a year with higher taxes as a kind of bait-and switch that would allow the very wealthy to keep their current tax rates on their millions and millions.

What the bleep is wrong with these people?
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Personal note — I have sold my co op and signed a lease on a rental apartment, and I am moving on Monday (six days!) and have a ton of other work to do beside that, so posting will be a bit hit and miss over the next few days. Please do drop by and talk among yourselves, though.

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