The tax deal struck by President Obama and the Republicans would extend the Bush tax cuts for the wealthiest 2 percent of Americans, who got the lion's share of those tax cuts when they didn't need them at all. It would do so just to get Republicans to lift their filibuster threat and allow extended tax cuts for middle-class Americans, and renewed aid to the unemployed, before the Bush tax cuts expire in three weeks.
Ironically, this obscene ransom deal - we have to give more money to the rich in order to help ordinary Americans - is being described as "a grand bargain." But it can't be "grand" when it stinks so badly.
Actually, this is a perverse, unjust and needlessly expensive scam. It's one that Democrats should seriously consider walking away from, and leaving their weak deal-making president in a lurch. Obama needs the lesson. The Republican leadership has bluffed him out of the game.
A ransom for the rich
Republicans set up this scenario to make the rich richer up by vowing to filibuster and kill the Democratic proposal to extend the Bush tax for just - and we say just guardedly - the 98 percent of America's with household income, after deductions, of up to $250,000. The Republicans effectively are holding extended tax cuts for ordinary American households hostage to their demand to keep the unaffordable and unjust tax cuts for the top 2 percent intact.
How they can do that, and then turnaround with a straight face and say that it's Obama and the Democrats who would deny tax cuts to the vast majority of Americans if they refuse to give the rich their fix, is ludicrous.
Here are the pertinent figures under the Bush-era tax cuts:
• The bottom quintile, or 20 percent, of Americans, with a household income of up to $19,356, would keep getting an average Bush tax cut of $69.
• The lower-middle class quintile, with a household income of $19,356 to $37,493, would continue to get an average Bush tax cut of $583.
• The middle middle-class quintile, the "real" middle class by household income (from $37,493 to $65,656) would continue to get a Bush tax cut of up to $1,016.
• The top-middle-class quintile, those in the top 60-to-80 percent of earners with a household income of $65,656 to $111,659, would continue to get a tax cut of up to $2,124.
• The top 20 percent of earners, those with incomes of $111,599 into the stratosphere, would get an average tax cut of up to $9,018.
But this is where the figures get deceiving, and ordinary Americans get the shaft.
That $9,018 is just an average for people whose income ranges from $111,599 to the infinity of a billionaire's income.
• Americans in the top 1 percent of income, above $599,181, would get an "average" Bush-era tax cut of $72,446 per household. But that, again, is just an average of the unfair Bush tax breaks for the lavishly rich in a category that ranges further into the infinity of a billionaire's income.
• Americans in the top tenth of 1 percent would continue to get the lion's share of the Bush tax cuts: Their "average" tax cut is $371,650 per household.
It's so huge because the Bush-era tax cuts mainly enrich - through cuts on dividends and capital gains taxes - the already richest Americans, those who have large amounts of money to invest. It is the size of their wealth, and the size of the dividends and capital gains tax cuts, that so enrich them. Indeed, this narrow slice of ultra-rich got 43 percent of the benefit of the Bush tax cuts on investment income.
And these - these - are the very tax cuts that average earners not only fail to benefit from, but also fail to see or appreciate when Republicans say that they "just want the Bush tax cuts to continue for all Americans" - meaning, specifically, the people rich enough to contribute large amounts to their campaigns (George W. Bush famously called them his "base" at a black-dinner) .
Enriching the GOP base
These stratospheric figures suggest why the top 1 percent of American taxpayers now possesses 24 percent of the nation's wealth, a modern record for concentration of wealth, while the incomes of the lower-middle class, the middle-middle class (the average Tennessee household earned $43,000 in 2008, according to Sen. Bob Corker's debt review), and the upper-middle classes dwindle due to stagnant wages against inflation, recession and the hollowing out of America's vaunted "middle-class" jobs to outsourcing.
Republicans aren't fighting for tax fairness for "ordinary Americans," or for "all Americans," as they claim. They're not particularly fighting for most of the upper 2 percent of Americans whose incomes are above $250,000 per household (after deductions).
They are fighting, specifically, for the ultra-rich. And their claim that this group contains the "small business" class that provides many jobs is also false. Just 3 percent of taxpayers with incomes above $250,000 run small businesses, according to most economic analysis.
If made permanent, the Bush-era tax cuts for the richest 2 percent would cost $700 billion over the next 10 years, but most of that would be for the top tenth of one percent. That amount would be added straight to the deficit, and the national debt.
The payback will burn
Republicans, who otherwise profess to be so eager to cut the deficit spending and the $14 trillion accumulated national debt, would be ever so willing to cut Social Security, Medicare, education spending and other vital programs to begin bringing down the debt (built mainly by former Republican presidents Ronald Reagan and the two Bushes).
But first they want to secure the ungodly rich tax cuts for the ultra-rich, their donor base. They had to have the tax cut for that specific bracket before they would agree to extend unemployment benefits for people who lost their job in the Great Recession that came on the last Bush watch; before they would consider keeping the Bush tax cuts for the middle class; and before they would consider creating Obama's plans for a Social Security tax break for a year in the doldrums from the recession.
To call this a "grand bargain" is a lie. It is built on a scam, a scam to further enrich this nation's multi-millionaires and billionaires by keeping a tax cut that was never justified in the first place. Republicans, and Obama, should be deeply ashamed. Surely, the super-rich will be laughing at the Republicans' scam for their Christmas largesse.