President Obama asserted Wednesday that he would rule out extension of the Bush-era tax cuts for the single bracket that applies to the wealthiest 2 percent of taxpayers – those with family incomes above $250,000, half of whom earn more than $8 million annually. Except for that exclusion, he would continue to support extension of the Bush tax cuts for all other Americans before they expire, as scheduled by the prior Bush administration, at the end of December.
That makes good sense and sound economic policy. So do the three new economic initiatives he proposed to boost business investments in research and development, spur private-sector job creation and upgrade the nation’s transportation infrastructure. All are especially needed to bolster an economy still trying to get out of the deep ditch that the last Republican administration left it in, with $12 trillion in federal debt and 8 million lost jobs.
The hostage tax-cut trick
Republicans, of course, oppose the president on each proposal, not because the proposals are not sound, but because Republicans simply will not cross the aisle to support good policies by Obama with November elections just seven weeks away – unless they get their way on a special, single issue: extension of tax cuts for the nation’s wealthiest citizens.
Republicans are content to hold everything else hostage to that one condition. They would let the Bush tax cuts expire for all other Americans, and let the business-related proposals wither – unless they can force Obama to relent on the single point of extending the tax cuts for the narrow bracket for the top 2 percent. Absent that, they will refuse to agree with Obama and the Democrats on anything.
The core Republican goals
That, in a nutshell, is the essence of what the election is about. For Republicans, the election stakes – in November and for the next few years – are not at all about economic fairness, or more or better jobs, for the 98 percent of Americans who are not rich. That includes a lot of Tennesseans. (As Sen. Bob Corker pointed out recently, the average Tennessee household earned just $43,000 in 2008, and that figure may well have dropped since then.)
Nor are the election stakes, for the GOP, about a maintenance of American manufacturing jobs and better economic environment for most businesses, now and over the long term. Nor are they about deficit and debt reduction, as we keep hearing. Nor are they about more secure health care for Americans who, until the Democrats passed health-insurance reform, had to dread denial of insurance for pre-existing conditions, or cancellation of their insurance if they got too sick, at the hands of the real death panels: insurance companies top “medical-loss” cost-control managers. No. Republicans also want to repeal “Obama care.”
For Republicans, the stakes in the pending election are really about regaining power, helping the very wealthy continue to do very well, and helping big banks, big insurance companies and big corporations – including those that keep shutting down their American plants and sending their jobs overseas – avoid rules that would rein in their most notorious business practices.
Rep. John Boehner, the Republican House minority leader who is counting on taking over Rep. Nancy Pelosi’s job as House speaker, has made that all too clear. He’s quoted often as saying that “uncertainty” in the business world about “the prospect of higher taxes, stricter rules and more regulations” is “choking” the economic recovery. His code words are crafted to conjure up the specter of big government and unfair taxes. But they really refer specifically to the GOP agenda of reversing the key achievements of Democrats over they past two years.
Sen. Alexander’s distortion
Specifically, the GOP wants mainly to extend the personal top-end tax cut bracket; maintain tax breaks for companies that off-shore jobs; continue egregious corporate tax loopholes that Obama would close to fund fairer, more productive incentives for business growth; and thwart implementation of new banking rules enacted by Democrats to rein in Wall Street and prevent another 2008-style economic meltdown.
Indeed, that agenda seems to be the GOP’s mantra. Lamar Alexander, Tennessee’s senior senator, told the Pachyderm Club here last Tuesday that the Senate would be open to supporting the Obama administration’s expanded business tax credits for research and development, but only after Congress also extends the expiring Bush tax cut for the wealthiest 2 percent of taxpayers.
He said – falsely, according to the Brookings Institution – that the top-end tax cut was vital to small business owners. In fact, the non-partisan Brookings’ analysis shows that 98 percent of small business owners do not earn enough to benefit from the top-end tax cut, which the Obama administration wants to let return to the level that prevailed under Presidents Reagan and Clinton.
The top-end tax cuts would cost the Treasury $700 billion over 10 years. Republicans cannot honestly argue for deficit reduction, or that those tax cuts are vital to boost consumer spending (the wealthy already have plenty of spending power), anymore than they can maintain the fairness fantasy of tax breaks that help corporations off-shore jobs.
Fairer tax policies
Mr. Obama’s business tax proposals, in any case, are far more constructive. They would let business write off all their capital investments in 2011, rather than spread those write-offs over several years. They would permanently extend a tax credit for research and development. And they would finance those breaks by closing loopholes that reward off-shoring of jobs.
Republicans had rather undo the progress that’s been made in corporate, banking and credit-card regulation; make it a “certainty” that business can go back to the bad old ways that ruined the economy on their watch; repeal health-insurance reforms that help Americans every day; and enrich the super-wealthy who finance their campaigns. Voters would see the GOP’s destructive agenda if they could look past the manufactured straw issues that hype Islamophobia and glamorize the practices of greedy health insurance companies.