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Drive Off The Cliff: It's Really Better That Way

I love this clip from The Simpsons. It perfectly describes why Republicans and their attendant Villagers are pushing so hard and loudly to 'do a deal' before December 31st. Here's the money quote from Mr. Burns:

Think of the economy as a car, and the rich man as the driver.

If you don’t give the driver all the money, he’ll drive you over a cliff.

That's exactly what Republicans are threatening. I know there have been a lot of posts about this so-called cliff, but I think it's worth listing what happens on January 1st if Democrats do absolutely nothing:

  • The top tax rate for individuals goes up by about 4 percentage points.
  • Capital gains rates increase to 20 percent.
  • Dividends are taxed as ordinary income, rather than at the Bush-era 15 percent capital gain rate.
  • Estate tax rates return to 2001 levels, and the taxable cap returns to $2 million instead of $10 million.
  • Payroll tax holiday expires

Some of these consequences aren't great for the middle class, which is why House Democrats are pushing so hard to force a vote on the Senate bill extending those tax cuts while allowing the upper-income tax cuts to expire.

Still, the White House is signaling that they're comfortable with waiting until January, and rightly so. Anything they can do in December, they can do in January, retroactive to January 1st. But by waiting until January, Democrats will be dealing from a position of pure strength then, because any vote in January will be a vote to cut taxes, not increase them.

The real sticking point, by the way, is the estate tax, which no one is talking about. It's not just a problem with Republicans, but also Blue Dog Democrats. Senator Mary Landrieu (D-LA) is one of those who refuses to vote on any package that doesn't preserve estate tax levels at a $5 million cap and 35 percent tax rate. Evidently Senator Landrieu is fine with establishing a permanent plutocracy in this country, because nothing is more helpful for that than the current ridiculously low estate tax rates and high estate exemption of $10 million.

We've already seen rumbles that Republicans intend to hold the debt ceiling hostage yet again. This practice has to be stopped and it has to be stopped now. As long as they think they have some leverage, Republicans will continue to try and cut Medicare, Medicaid and Obamacare while holding the debt ceiling hostage to do it. Democrats have to be pushed to stand firm, and if the tea party is pushing Republicans to jump into the abyss, so be it.

As for sequestration, it will certainly be better to look at the budget in light of more guaranteed revenue right now than it will to start playing trade-off games with it. Sequestration was a Republican idea, and they should own it outright.

When the new Congress convenes in January, the tea party will have less leverage and Democrats will have all of the messaging on their side. There is no upside for Republicans. They need to learn this early on.

It is not 2009. There is no reason to continue to put up with their nonsensical Lucy and Charlie Brown football-snatching game. They need to learn that the voters, not the billionaires, will decide this debate.

If you want to push Congress to extend the middle class tax rates, you can join the action here.



Romney Tax Plan REVEALED

There are a lot of variables at hand in a serious discussion of tax policy.

The Romney/Ryan team have been widely criticized for a lack of specificity in their tax proposal. To be honest, they just haven't had time. The distractions of the campaign are seemingly infinite--the plane rides, the rallies, sleeping, eating.

Finally, they've broken down the specifics of the plan in an easy-to-understand way. Give it a listen. Do the fundamentals serve the immediate jobs crisis rather than just pay lip service to a short term deficit problem? Will homeowners, donors to charity, and workers be protected?

Hear them out. Our nation is like a car, we're all barreling down this highway together. What might it be like if we hop in Mitt's handy roof-top carrier and hang on for a ride?



romney_tax_cut_rich.png

One day after branding President Obama "really out of touch with what's happening in America," Mitt Romney marked his Florida primary victory by declaring, "I'm not concerned about the very poor." Of course, back in December Romney announced that "I'm concerned about the poor in this country," adding, "We have to make sure the safety net is strong and able to help those who can't help themselves."

If Mitt Romney's latest statement seems like a contradiction, at least it's a more honest one. After all, his proposal to slash $700 billion in Medicaid spending and send what's left as block grants to the states would devastate the program serving nearly 60 million poor and elderly Americans. But as it turns out, his 59 point, 162 page economic plan isn't very concerned with the middle class, either. Over the next decade, that budget-busting blueprint would drain $6.6 trillion from the U.S. Treasury and divert most of it into the pockets of the richest Americans.

On Wednesday, Romney explained his devil-may-care attitude towards the 46.2 million Americans now living in poverty and the 51 million more with incomes less than 50 percent above the poverty line:

"I'm not concerned about the very poor. We have a safety net there," Romney told CNN. "If it needs repair, I'll fix it. I'm not concerned about the very rich, they're doing just fine. I'm concerned about the very heart of America, the 90 percent, 95 percent of Americans who right now are struggling."

That's an odd statement for Mitt Romney to make, and not merely because he previously declared himself part of "the 80 to 90 percent of us" who are middle class. Romney's own economic plan says otherwise. Romney's isn't worried about fixing the safety net; he wants to shred it. And in December, Chris Wallace of Fox News called him on it.

WALLACE: But you don't think if you cut $700 billion dollars in aid to the states that some people are going to get hurt?

ROMNEY: In the same way that by cutting welfare spending dramatically, I don't think we hurt the poor. In the same way I think cutting Medicaid spending by having it go to the states run more efficiently with less fraud, I don't think will hurt the people that depend on that program for their healthcare.

It's not just that Romney's block grant program would lead governors to begin "capping enrollment, thinning benefits, increasing co-payments, and so on" in the future. As Ezra Klein explained, they are already doing that now:

Twenty states implemented benefit restrictions in the past year. In fiscal year 2010, 39 states implemented Medicaid provider rate cuts or freezes (up from 33 in fiscal year 2009), and 37 states have provider rate restrictions planned for the next fiscal year.

And as the Kaiser Family Foundation determined last year, the Ryan plan championed by Mitt Romney and virtually every Republican in Washington to repeal the Affordable Care Act would certainly hurt working Americans as well:

"By 2021, between 31 million and 44 million fewer people nationally would have Medicaid coverage under the House Budget Plan relative to expected enrollment under current law."

Then there's Mitt Romney's tax plan.

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