The ink was barely dry on President Obama's projected 2016 budget proposal when GOP leaders virtually declared the proposals DOA. The real issue is not the amount Obama wants to spend on domestic and defense programs. But his audacity to again say that some of the funding on these programs should be paid for by a tax hike on the rich. The notion that the rich doesn't pay their fair share has stuck in the craw of GOP leaders and conservatives every time Obama has dared suggest that the rich don't pay enough and that's been the big reason for government red ink in years past and the looming prospect of that happening again in the future.
Obama's tax increases have been anything but drastic. They are little more than a marginal increase in the capital gains tax and modest proposals for closing some of the canyon wide loopholes that permit corporations to pay little, and in some cases, no taxes on excess their profits. It also allows them to park more than $2 trillion in profits in off shore havens in Europe and the Caribbean. The GOP's standard counter is that tax hikes will stunt job growth, business investment, and expansion, and this in turn will depress wages and consumer spending. This is a sure prescription, so the argument goes, that the economy will remain in a near financial catatonic state of slow to no growth, with the real danger of a slide downward again.
The banks are a near textbook example of this nonsense. They got billions from the taxpayer floated bailout, and they have been Scrooge like in their lending. The Wall Street whiz boys are even worse. They reaped a bonanza from the Bush tax cuts and still nearly crashed the economy. Estimates are that the banks and corporations have hoarded nearly two trillion dollars of profit made possible to a degree by taxpayer bailout dollars. Yet small and medium sized businesses still wither on the vine for lack of business loans. There's another compelling reason to raise taxes on the wealthy. One, that ironically the GOP screams about. It's the deficit. Obama have repeatedly warned that the nation simply can't afford to retain the cuts for the rich. They will cost the treasury $700 billion. That kind of Treasury hit ultimately means even more slashes, cutbacks and elimination in and of funding for education, health, energy, and public works programs to state and local governments, all of which create jobs. Now the politics of why the wealthy should not get another dime from the tax breaks.
Some polls have shown that the overwhelming majority of Americans want the cuts on the upper income earners ended, and the cuts on middle income earners extended. So scrapping the cuts for the wealthy far from being a political lose-lose for the Obama administration is a win-win. But the GOP and its big booster, the U.S. Chamber of Commerce have done a media and public master spin job and pounded home the message that if the cuts are ended then all sorts of dire things will happen to the economy, and Obama will and should get the blame for it.
This is smoke and mirrors bluster but it has resonance with so many Americans nervous and fearful about what tomorrow will bring in terms of their jobs and businesses. But resonance or no, it's still bad economic and political business to keep something in place that has absolutely no proven value to the economy, let alone that cannot be sustained on the basis of cost and return.
There's a final reason why the wealthy must pay more. Repeated polls and surveys have shown that the income inequality and wealth gap has leaped during the past decade. That means there are more poor people than in years past. According to a report in 2010, 1 in 7 Americans were classified as poor. That's nearly 45 million Americans. At a time when so many persons are needy, even destitute, doling out another round of money to a handful of high income earners who don't need the money is beyond shameful, it's obscene. Tax dollars are public funded resources. They should be used to try to put a brake on the surge in poverty. That takes money, money to spend on measures that will actually create jobs and boost income support programs.
The GOP cynically flips the table and blames the wealth gap and even the poverty rise on Obama's supposedly reckless tax and spend policies. This is more myth-making. Obama's budget has not broken the government's fiscal bank. The deficit has been steadily reduced during his administration due to the caps he's placed on spending. But those caps have limits, and vital programs have to be funded. The funds are in the coffers of major corporations and the wealthy. The GOP will again hammer Obama hard with the myth that taxing the rich hurts all to insure that those funds aren't tapped.
Earl Ofari Hutchinson is an author and political analyst. He is a weekly co-host of the Al Sharpton Show on American Urban Radio Network. His forthcoming book is: From King to Obama: Witness to a Turbulent History (Middle Passage Press).
He is a weekly co-host of the Al Sharpton Show on American Urban Radio Network. He is an associate editor of New America Media. He is host of the weekly Hutchinson Report Newsmaker Hour heard weekly on the nationally network broadcast Hutchinson Newsmaker Network.
Follow Earl Ofari Hutchinson on Twitter: http://twitter.com/earlhutchinson