Saturday, June 9, 2012

Why No Tax "Reform" Is Worth Spending Cuts

By @KYYellowDog

Digby is not fooled by partisan electioneering; she lets us know the plans to kill Social Security and Medicare and eliminate social spending are speeding along with bipartisan approval.

And their latest trick to distract us is bogus "tax reform."

That's quite a sacrifice, isn't it? And to think that all they want in return is draconian cuts to social programs and painful shrinkage of the safety net. They're heroes, for sure.

This is why I don't care about this ridiculous obsession with "revenues" by the Democrats. Yes, billionaires and corporations should be paying more. They can afford it right now, they are doing quite well. But the way they plan to do that is fraudulent: "tax reform" that consists of lowering rates and allegedly closing loopholes (which will only remain closed for people who can't afford lobbyists to open them again.) It's a scam.

Moreover, we don't really need to be collecting more money right now. We can borrow very cheaply and pay for infrastructure and putting people back to work, creating demand. This entire discussion of deficits is bullshit. We're in a depression.


Democrats should not die on the tax hikes for millionaires hill (however that's defined.)"Tax reform" is a joke which will be killed one corporate donation and lobbyist inserted exception at a time. The safety net, on the other hand, will never be the same. They should just say no. We can run these deficits easily for the time being and when the economy does turn around we can do real tax hikes (raise rates, not "reform") on real millionaires to pay back that debt. Let's see how that works out before we start slashing away at the safety net people depend upon. There's just no good reason to do anything else.

Update: Unfortunately, the Democratic buy-in has filtered down to the community level. I got this email this morning from a reader named Bert:

Yesterday, June 3rd, 2012, I was volunteering at Lummis Day. This is a Celebration of North East Los Angeles, named for a remarkable man, Charles Lummis, who was an early City leader and envisioned a multi-cultural California back in the 1880’s. The Celebration is to further that vision.

The Democratic Party was well represented at the Community Booths and I approached Xavier Becerra’s table. I introduced myself to the woman at the table as a constituent and someone who has donated to, and written to Congressman Becerra in the past. I asked her opinion on Social Security and Medicare. What I heard was not reassuring. Briefly she said that politically unaffiliated economists, when they run the numbers, show that we cannot continue supporting these programs because the retiring population is larger than the working population that pays for them. The congressman supports them and wants to keep them, but that changes are going to have to be made. She was not specific about what types of changes and to be fair we were talking generically about Social Security, Medicare and Medicaid.

My response was that once the door is open to making adjustments, then it’s a quick slide down a slippery slope to cutting and more cutting. I told her that the $106,000 tax cap on Social Security taxes should be raised. I felt her response was non-committal, and not the response that I wanted to hear, which would've been "We will stand by these programs and fight to the death."

What I found interesting is that the Washington conversation that there is not enough money for these social programs, is at the level of the community booth. That was disappointing.

That bolded sentence is a piece of propaganda perpetrated by the financial industry. It isn't true. Seriously, do people think that someone just woke up yesterday and discovered that the baby boom was going to retire? We've been around a long time now.

For a thorough explanation of why that line of argument is completely wrong, click here.

And even the Democrats who are not completely behind budget deform are aiding the cause with the lamest of arguments.

Digby again:

... which of the above arguments would you want to make, the one that simply says, "we want tax cuts for everybody!" or the one that says "we want to draw-down-future-budget-deficits with both-higher-taxes-and-lower-spending without making-radical-changes-to-the-safety-net (while also breaking the GOPsantitaxabsolutism)?

Right. One side is staking out a negotiating position. The other side is trying to be all things to all people. Which one do you suppose is likelier to win?

Deficits shouldn't be a priority right now. The economy is very weak. So, let the GOP argue for their tax cut extension. The Democrats should argue for protecting all programs that benefit real people. If there has to be a deficit deal (and honestly, there shouldn't be one at all) they can cut useless defense spending. That's your compromise. If they won't go along, then just agree to extend the tax cuts for two more years and protect the programs. This whole fiscal cliff nonsense is a kabuki pageant and from the sound of the dialog, the Democrats are playing the role of the designated losers again. They are good at it, you have to admit.

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