Hey Blue Dogs: It’s Time For The Rich to Pay Back Those Tax Loans
The whiny rich and their toadies, especially the Blue Dogs, don’t want a tax increase. I say it’s time for them to pay back the enormous loans they have gotten over the last 30 years. Everyone knows that tax cuts in times of deficits are just loans. Eventually they have to be paid back. We can do it with tax hikes, or by running surpluses, or by cutting expenditures, but they have to be paid. Otherwise, we run up our interest expense, and crowd out private borrowers. For years, the US has been running huge deficits (except for a year under Clinton), all the while cutting taxes for the rich.
The rationale for those tax cuts was that rich people would use that money for investment in productive enterprise, directing it as only they with all their personal brilliance and their genius advisors can do. Then there would be all these new jobs in these new industries, ordinary people would have income and there would be capital gains and more taxes paid, so the tax cuts would pay for themselves. This absurd theory had the obvious outcome: staggering increases in the national debt.
Even St. Reagan and his holy acolytes realized that their tax cuts were unsustainable, and they engineered some tax hikes for corporations and individuals. But that wasn’t enough for republican deficit hawks. They couldn’t raise taxes on their rich supporters, so they had to get that money from workers. That led to the social security tax increase in 1983. As Paul Krugman explains:
In 1980, according to Congressional Budget Office estimates, middle-income families with children paid 8.2 percent of their income in income taxes, and 9.5 percent in payroll taxes. By 1988 the income tax share was down to 6.6 percent — but the payroll tax share was up to 11.8 percent, and the combined burden was up, not down.
The tax cuts didn’t create any new jobs or any new industries. Instead, the brilliant rich and their genius advisors resorted to financial engineering to make money by piling debt on existing companies, cutting jobs to pay for the increased interest load, off-shoring in the hunt for cheap labor, and the whole litany of republican strategies to bring success for the chosen and disaster for everyone else. And, as a precursor to this financial crisis, they worked over the Savings and Loans at enormous costs to taxpayers, paid for with more deficits.
This financial nonsense reached an unsustainable peak under Bush the last, beginning with more tax cuts on the theory that “it’s your money, you should have it”, followed by wars, tax subsidies and outright corporate welfare, refusal to enforce tax laws, tacit permission for use of tax havens, all supported by asset bubbles. When the bubbles popped, the rich handed the cleanup bill to taxpayers, this one much bigger than the S&L invoice.
That’s just fine with Blue Dogs and their republican friends. Tax the rich to pay for the disaster they inflicted on the rest of us? Horrors. It’s great for the Blue Dogs, what with all the new money flowing their way, and all their new friends in the lobbying game and the unspoken promises of the money on the other side of the revolving door.
Their love of budget neutrality while insisting on increased pay to their doctor constituents is a serious threat to health care reform. But taxes aren’t the only possible road to budget neutrality. What about spending cuts? What programs in the budget are they willing to cut out? Perhaps an aircraft carrier group? We’re building a new class of these dogs at a price of $14bn for the aircraft carrier and who knows what else for the rest of the group.
How about reducing farm welfare for the richest farmers? How about cutting out depletion allowances for oil giants? That’s just a subsidy for continued burning of oil, which isn’t a reasonable thing to support.
Jim Cooper, I’m looking at you. You’re supposed to be the great budget hawk. You know more than anyone about budget issues after all those years on the House Budget Committee. You know we need to fix healthcare, and we need to limit the impact on the deficit. You know that deficit was caused by rich people’s games.
So, Congressman Cooper, are you ready to call in those tax loans to the rich? If not, name the programs you and your Blue Dog buddies will cut.
If neither, at least you could try to get the blue toad caucus out of the way of the serious people trying to fix serious problems facing millions of Americans.