By Bill Knight
GateHouse News Service
Oct 04, 2010
Republicans hope to give $10 trillion to the rich in the next decade, including making permanent Bush’s tax cuts, set to expire this year. President Obama favors returning tax rates for the wealthiest Americans to what they were in the 1990s. Specifically, Obama would restore the tax rates for the top 1.9 percent — for individuals with $200,000 annual income and households with $250,000 annual income, which could generate $238 billion more next year alone.
For the top rate, the rates would go back from 35 to 39.6 percent. The next highest bracket, 33 percent, would revert to 36 percent.
Republicans claim their tax package, typically misnamed “The Economic Freedom Act” (HR 5029), will create jobs. The bill would hand out $6.9 trillion in tax cuts for the rich and big business over 10 years, when the beneficiaries also would get an additional $3.1 trillion from extending Bush’s temporary tax cuts. Of all that money, 62 percent would go to the top 1 percent of earners, according to an analysis by Citizens for Tax Justice.
The “trickle-down” theory isn’t new. It’s been around since Ronald Reagan — and decades before.
In 1896, Democratic presidential contender William Jennings Bryan said, “There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous, their prosperity will find its way up and through every class that rests upon it.”
On Sept. 23, what passes for Democrats today postponed a pre-election showdown over Republicans squawking about budget deficits and national debt while worsening them with tax breaks for the rich, and over the GOP directly defending gifts for about 5 million wealthy Americans while leaving out the other 300 million of us.
Jack Metzgar of the Chicago Center for Working Class Studies explains the GOP’s tortured rationale for helping those who don’t need help: “Their theory is that rich people create jobs by investing in companies: little ones they own themselves or big ones they own stock in.”
The problem, of course, is that they haven’t and they aren’t — even though they could.
The 3,000 largest publicly traded U.S. companies are sitting on “$2.9 trillion in cash and short-term investments,” according to Business Week magazine. Meanwhile, workers, consumers and most state governments are struggling to pay bills and provide for basics.
The nonpartisan Congressional Budget Office (CBO) analyzed 11 options for stimulating the economy and concluded that extending Bush’s tax cuts was the worst — the lowest “return on investment” of any option. Besides being inefficient, the Republican scheme would shake investor confidence in the economy, House Majority Leader Steny Hoyer (D-Md.) told Press Associates — especially in the government’s ability to control its deficit. Hoyer said the GOP’s new tax cuts — including eliminating capital-gains taxes and allowing businesses to immediately write off the total cost of new equipment — would make a bad situation worse.
Bush’s tax cuts for the rich “are expensive for the economy,” Hoyer added.
Even Republican Alan Greenspan, former chairman of the Federal Reserve, argues for letting the temporary tax cuts expire — all of them.
Democrats propose increasing aid to the unemployed for about $34 billion, creating 300,000 to 600,000 jobs in the next 15 months, and also increasing aid to the states for some $26 billion, adding another 80,000 to 180,000 jobs next year.
Compare that to Republicans’ cutting taxes for the elite, costing $70 billion and creating — in the rosiest of scenarios — 70,000 to 210,000 jobs.
Exactly! The GOP’s tax cut for the rich would cost twice as much and — at best — create one-sixth or one-eighth the number of jobs.
If the government wants to help the economy, the CBO says, it would be better to spend the money building roads and bridges, cutting payroll taxes, or helping states. Tax Policy Center co-director William Gale says the Bush tax cuts were never intended to be assistance for a bad economy anyway. When they passed in 2001, the economy was booming and the federal government was running a surplus.
Now, it’s GOP politics. U.S. Sen. Dick Durbin (D-Ill.) said, “We are not going to pass what needs to be passed to change this either in the Senate or in the House before the election.
“There’s no evidence of any bipartisan spirit to deal with the bigger issues,” he added.
Bryan, the great populist, more than 100 years ago framed the fight as one between “the idle holders of idle capital and the struggling masses who produce the wealth and pay the taxes of the country. Which side shall the Democratic Party fight: upon the side of the idle holders of idle capital, or upon the side of the struggling masses?”
Contact Bill at bill.knight@hotmail.com.