bush tax cuts

A new report by the Congressional Budgeting Office finds the following:

CBO finds that, between 1979 and 2007, income grew by:

• 275 percent for the top 1 percent of households,
• 65 percent for the next 19 percent,
• Just under 40 percent for the next 60 percent, and
• 18 percent for the bottom 20 percent.

Actually the bottom 20% hasn’t even kept up with cost of living and inflation. And why does the #OWS movement matter? Take a look at this in graph form, which shows the percentage of income after federal taxes and transfers:

During the period of this study the White House was mostly controlled by the Republican Party. The 2007 data also show the results of the Bush tax cuts, which benefited the top earners far more than anyone else.

If more Americans would take the time to look at the actual numbers instead of listening to talking heads then maybe they would realize that their financial hardship is because of the taxcuts our leaders love giving the rich. We constantly hear the Republican presidential field and Republican leaders say that tax cuts to the corporations and richest Americans will spark job growth, but the fact remains that this dismal job market occurred under these type of tax cuts. The last time we were even close to this the only solution was to raise taxes on this percentile. The President who decided to do that was Ronald Reagan.

I have been tied up the last several days helping my sister get her new house ready so I am a little behind the news. Today I find out the wingnuts have decided to launch their own response to Occupy Wall Street, a movement called the 53%. These are Republicans against the 47% of Americans that make too little to actually have to pay income tax. Today Steve Benen brought up the most interesting point about this group:

There are all kinds of problems with the right’s approach here, including the fact that they seem to want to increase working-class taxes and also seem entirely unaware of the fact that it was Republican tax cuts that pushed so many out of income-tax eligibility in the first place.

In a rapidly growing "movement" on the right we now see Republicans going against their own policies and beliefs. First off they want to raise taxes in the middle of a recession, but only on those that will stimulate demand. We already know that Republicans fail big time in basic economics. They have no comprehension that increased demand means a need for more supply. When you need more supply you need people to make that product and that boils down to hiring. Nope, Republicans believe that if business owners have more money they will just hire and put out product regardless if they are moving inventory or not.

But the biggest thing Benen points out is that the right is now against the Bush tax cuts. That's exactly what created the 47%. So why is the right now so against the tax cuts they championed just months ago? It sounds like another case of partisanship before country or even logic if you ask me. It also sounds like the minions of the right are following the cult leaders out there. Drink thy Kool Aid little tools and don't whine if you win and your taxes go up - that's what you are now fighting for!

Yes the headline is harsh, but so are the actions of the GOP. Tonight President Obama is to ask for an extension of the payroll tax cuts and even increase them. Hasn’t the right been telling us that tax cuts are what keeps the economy rolling? Well apparently not now:

Congressional Republicans over the past year have threatened to both shut down the government and default on U.S. debt in order to prevent tax hikes. But in January, without congressional action, payroll taxes are set to increase by 50 percent on millions of American workers. The GOP response? A resounding meh.

When President Obama travels to Congress on Thursday to deliver a major jobs speech, he'll be encountering a species previously considered mythical on Capitol Hill: Republicans who don't support tax cuts.

The one-year payroll tax cut was passed as part of the deal that extended Bush-era tax rates through 2012, and Republicans routinely described the potential expiration of that cut as a "tax hike." While the payroll tax cut applies to no more than the first $106,000 in income, the Bush tax cuts disproportionately benefit the wealthy. But the key difference between the two is the author: The payroll tax is Obama's and his alone.

And if you continue reading the article you’ll find quotes from tons of Republicans in Congress, like this one:

"My personal view is that the debt is already impacting the economy," said Sen. Jeff Sessions (R-Ala.) "If your debt is this large, I think you've gotta be very careful about adding debt." HuffPost asked whether that view put the GOP in the unusual position of advocating that taxes go up on millions of people in January, when the one-year cut expires.

With the deal announced to raise the debt ceiling and instill trillions in cuts during a recession, it is time to declare the that the right owns the economy.

So just how bad is this deal? Here's Paul Krugman's take:

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status.

Start with the economics. We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond.

So yes, the right owns this economy and they will continue so. Again from Krugman's article today:

And then there are the reported terms of the deal, which amount to an abject surrender on the part of the president. First, there will be big spending cuts, with no increase in revenue. Then a panel will make recommendations for further deficit reduction — and if these recommendations aren’t accepted, there will be more spending cuts.

Republicans will supposedly have an incentive to make concessions the next time around, because defense spending will be among the areas cut. But the G.O.P. has just demonstrated its willingness to risk financial collapse unless it gets everything its most extreme members want. Why expect it to be more reasonable in the next round?

Again – mixed messages!

The White House is sharply denying the Huffington Post story I noted below claiming that David Axelrod signaled a willingness to accept a temporary extension of all the Bush tax cuts, claiming that their position remains unchanged.

Axelrod emails:

There is not one bit of news here. I simply re-stated what POTUS and Robert have been saying. Our two strong principles are that we need to extend the tax cuts for the middle class, but we can't afford a permanent extension of the tax cuts for the wealthy.

And White House comm director Dan Pfeiffer adds:

The story is overwritten. Nothing has changed from what the President said last week. We believe we need to extend the middle class tax cuts, we cannot afford to borrow 700 billion to pay for extending the tax cuts for the wealthiest Americans, and we are open to compromise and are looking forward to talking to the Congressional leadership next week to discuss how to move forward. Full Stop, period, end of sentence.

The wording in the original HuffPo interview with Axelrod sure makes it sound like they are caving. Now the author of the post could have taken his words out of context, but if not then we really need to look at how good of a communicator David Axelrod is.

Again – mixed messages don’t do a damn thing except to piss off more people. The President needs to take care of this problem before it becomes a costly issue in the 2012 race.

It has been a growing problem in this nation for decades and it continues to increase every year – income disparity:

The income gap between the richest and poorest Americans grew last year to its widest amount on record as young adults and children in particular struggled to stay afloat in the recession.

The top-earning 20 percent of Americans - those making more than $100,000 each year - received 49.4 percent of all income generated in the U.S., compared with the 3.4 percent earned by those below the poverty line, according to newly released census figures. That ratio of 14.5-to-1 was an increase from 13.6 in 2008 and nearly double a low of 7.69 in 1968.

A different measure, the international Gini index, found U.S. income inequality at its highest level since the Census Bureau began tracking household income in 1967. The U.S. also has the greatest disparity among Western industrialized nations.

The census also shows that those making over $180,000 a year (the top 5%) saw an increase in income last year, while those making less than $50,000 saw their income decline. Like wise lower-skilled adults from 18 to 34 saw the largest increase in poverty levels last year.

A very interesting op-ed in today’s LA Times starts with:

Congress should let the Bush tax cuts expire for the wealthiest Americans and use the additional tax revenues that are generated to invest in infrastructure and research.

Now you probably think this is some whack, socialistic liberal or something. Of course you would be wrong. This piece is written by Garrett Gruener, a venture capitalist and founder of ask.com.

Gruener brings up some very interesting facts, you know, those pesky little things the GOP tries to deny. Here’s one that really sticks out:

The supply-side, trickle-down economic policies of the last decade benefitted people like me, but the wealth didn't trickle down. So while we did quite well, people who live from paycheck to paycheck didn't.

When inequality gets too far out of balance, as it did over the course of the last decade, the wealthy end up saving too much while members of the middle class can't afford to spend much unless they borrow excessively. Eventually, the economy stalls for lack of demand, and we see the kind of deflationary spiral we find ourselves in now. I believe it is no coincidence that the two highest peaks in American income inequality came in 1929 and 2008, and that the following years were marked by low economic activity and significant unemployment.