Class Politics:
The Pre-Holiday Money Game
The Pre-Holiday Money Game
I'd caught the audio version of Robert Reich's piece this past Wednesday on the end-of-session tax bills moving through the House and Senate, becoming one of the many dozens of things that I mean to point out but don't find the time, energy or sheer will to get to during the weekdays. Doing some random catch-up this morning, I was reminded of the tax bill versions.
As is more often the case in these years of GOP domination, the Senate is living closer to reality than the House. Trying to do something about the Alternative Minimum Tax which due to a lack of indexing for inflation has moved from something to keep the rich from avoiding paying taxes into something about to hit the middle class.
The final four paragraphs of Reich's piece sum up the situation nicely:
The underlying question is who ends up paying for Iraq, the Katrina cleanup, the Medicare drug benefit, homeland security, everything else? If the House has its way it won’t be the super rich, who will get their capital gains and dividend tax cuts extended. If the Senate gets its way it won’t be the middle class, who would otherwise be hit by the AMT. If the House and Senate compromise by giving both groups what they want, there’s only one group left.
That group is the poor and near poor. Cut more taxes on the super rich and the middle class and the only way Congress can say it’s grappling with the soaring budget deficit is to cut more programs for the poor. That means fewer food stamps, less Medicaid, and vanishing housing assistance.
Of course, this won’t be nearly enough to shrink the deficit. So in order to extend the tax breaks for the rich and to avoid the AMT, America will have to rely even more on foreigners – from whom we’re already borrowing more than $2 billion a day.
In the end it will be our kids and grandchildren who get the tab, because they’ll have to pay foreigners back. And our current political leaders? They couldn’t care less because by then they’ll be long gone.
Reich's "both" scenario (capital gains and AMD breaks staying in place) becomes a little darker when considered in the light of these two paragraphs from the CNN piece:
The Senate's GOP leaders vow that the final version of the tax cut will continue reduced tax rates for capital gains and dividends. They face virtually united opposition from Democrats, who say the alternative minimum tax should be the top priority right now, as well as lingering hesitancy among some moderate Republicans.
To add an additional complication, the budget put a ceiling on the size of the tax cut. There may not be enough room, said House Ways and Means Committee Chairman Bill Thomas, R-California, to do both the capital gains and dividends tax cuts and address the alternative minimum tax in one bill.
...which re-emphasizes that almost the only way to fit these two concerns into an integrated bill means that more social programs will be cut. The age of "I got mine. Sucks to be you, slacker." is set to continue.
One last thought on the issue of capital gains cuts: One way to look at it - and it's a perspective I can't help but see it in - is that this is a system that says that the money one invests in business (predominantly buying stocks) is more highly valued than the money earned by trading hours of one's life for cash.
How can that be justified?
Were I the believer in God the average congressperson claims to be, I'd be wetting myself when I thought about standing before my final judgement after having supported policies like this.
"Well, Lord... you have to understand that economics are complicated. Labor's cheap, but solid economic quarters are sacred..."
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