In the last 72 hours, we've finally seen the outlines of the inevitable Democratic civil war that's been brewing over taxes and spending. Both sides argue that their way is the path to economic prosperity - and so the question is, which side represents a fact-based argument, and which side represents fact-free theorizing?
Before answering that question, let's first outline which side is which.
On one side is the Obama administration and progressive Democrats, pledging to keep its promise to let the Bush tax cuts for the very wealthy expire on schedule. Most on this side want to reinvest some or all of the recovered tax money and plow it into domestic spending that would rebuild crumbling infrastructure and economically support those hard-hit by the recession.
On the other side are conservative Democrats in Congress who are becoming increasingly brash in their declarations that either today's middle-class Americans or tomorrow's middle-class Americans (via. debt interest payments) should have to pay higher taxes or suffer through slashed services/benefits in order to prevent today's wealthy from paying any more. This is a varied group, but a nonetheless powerful one in its diverse motivations.
For instance, you have many "Blue Dog" Democrats. Afflicted with a debilitating case of Selective Deficit Disorder, these Democrats cite their devotion to deficit hawkery as reason to vote against unemployment benefits - but also defend policies like the Bush tax cuts. Democratic Sen. Ben Nelson is about the best example of this.
You also have what you might call Trickle-Down Democrats, who now openly insist their first and foremost priority is to prevent millionaires from having to go back to paying Clinton-era tax rates. A good example comes from Rep. Bobby Bright (D-AL), who told the Hill newspaper, "I don't care if it's the wealthiest of the wealthy, you don't raise their taxes."
And, of course, you also have Military-Industrial Democrats, who are saying that instead of reducing the Pentagon budget and its largesse to some of the wealthiest corporations as a way of finding new public resources, middle-income families should be compelled to pay higher taxes or endure cuts to their Social Security and Medicare benefits. Here's a good example:
Senator Daniel K. Inouye, Democrat of Hawaii and chairman of the Senate Appropriations Committee, said that he would be looking first at tax increases and changes in Social Security and Medicare to lower the deficit, and that there was "no way" Congress would make major cuts in the military while more than 100,000 troops were still at war.
Who is right and who is wrong in this debate? As they used to say in those old Major League Baseball commercials, you make the call after considering the verifiable facts.
From the stimulus debate, we know that both progressive and conservative economists agree that spending on programs like unemployment and food stamps are a far better boost to the economy than extending tax cuts. This makes sense - whereas a rich person may simply pocket a new tax break, a person on the economic brink will spend cash on necessities almost immediately. Thus, we can safely conclude that raising taxes on the wealthy and devoting those new resources to such programs would be a much better boost to the economy than simply extending tax cuts for the wealthy.
From government data, we know that tax rates are at their lowest level in 6 decades; the Bush tax cuts gave the vast majority of their benefits to the super-rich; and the Bush tax cuts are the largest single factor in our budget deficits. We also know that the Pentagon is at its highest funding level since World War II, and that this budget is so wasteful, the Pentagon has lost - yes, lost - of somewhere between $1 trillion and $2 trillion.
Finally, from the Clinton era, we know that higher tax rates on the very wealthy does not hamper the economy - as Sen. Byron Dorgan noted, "One of the most robust periods of economic growth was prior to the Bush tax cuts."
So, to re-ask the original question, which side of the Democratic civil war over taxes and spending represents a fact-based argument for economic prosperity, and which side represents fact-free theorizing? I'd say the evidence is pretty clear.
Unfortunately, new scientific studies show that stuff like facts and evidence no longer goes very far in our politics or in our mass psychology. But hey, we can still hope, right?
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Also from the article:
"From the stimulus debate, we know that both progressive and conservative economists agree that spending on programs like unemployment and food stamps are a far better boost to the economy than extending tax cuts. This makes sense - whereas a rich person may simply pocket a new tax break, a person on the economic brink will spend cash on necessities almost immediately."
You know necessities like cell phones and flat screen tv's or Louis Vitton purses and what not.
What you are obviously missing from your analysis is the effects the wealthy can have on politics if they so desire. It only takes a handful of people who are making over $10m a year to fund enough PR/donations/think tanks/talk shows/etc. to push for lower taxes. There's an easy and clear ROI on this slant and especially in "small" states with below average incomes, these proponents can easily get sway. A 5 million dollar campaign may only be one small voice in NY but in any of those lovely little red states up the middle of the country (IA, KS, MS, AL, etc) you can easily sway an election and get someone put in or pulled out of office.
Noblesse oblige est mort.
Will the neocons also win on the Bush tax cuts? Geitner says that they should expire. Problem is this administration generally starts by saying the right thing, but then negotiates its good position away to Fox News without actually getting any Republican votes. Hope Obama hangs tough for once.
Then, we had the economic downturn that actually began before 9/11 (waning days of Clinton's presidency -- that Dems tried to blame on Republicans, which is ironic). We needed a combination of spending and stimulous, that was hoped to be temporary.
The difference between GWB and Obama, is not much here. Only difference is, that while allowing the tax cuts to expire, Obama is pushing for even more, and exponentially larger Gov't. expenditures.
I didn't like Bush running up a huge deficit, and I really hate anyone else running it up higher and faster. That, dude, is the basic Republican argument -- try arguing against us, rather than straw man arguments...might bridge a gap or something.
The wholesale thievery under Bush Cheney and 6 years of Total Republican domination speaks volumes.
The difference between GWB and Obama is in domestic spending..you know helping Americans in general not just a few contributors, you know the haves and have mores that GW calls his base.
and I don't like arguing dude just facts
It is the paycheck that mattered whether it came from war, government or private jobs or farming.
Social Security and other parts of the New Deal kept the country from a revolution.
AR
S corporations, partnerships, LLC's etc are "pass-though" entities, this means the individuals report their share of the ownership of income on their personal tax return, the business itself pays no tax, so no double taxation. There is a slightly different rule for S corporations, but to keep it simple, this income reported from the business is subject to personal income tax rates and is also subject to SS and Medicare Tax, all of it, which is 15.3%. People who just have a normal job only pay 7.65%, the other half is paid by the employer. These entities file tax returns, but pay no federal taxes, they just report the income.
You can also be a sole proprietor, or a single member LLC, this means its solely your business. With this type you just report all of the income detail on your personal tax return.
Most small business owners in the US will end up reporting their income on their personal returns because of the above. Being a C corp is not really a good optoins due to the double tax.
As long as their are people who must give away the public money to get themselves elected we will be in trouble. If they can't find another way they will simply charge it to generations of the unborn until we collapse.