Protecting the assets of the super rich seems to be the primary goal of the Senate Republicans and President Obama in this lame duck session of Congress.
The tax package that the Senate will consider this week would give 25 percent of its benefits to only 2 percent of the population -- the super rich. The New York Times reports that the proposed estate tax provision would benefit only 3/10s of one percent of the American people.
The costs of the proposed tax breaks for the wealthy are staggeringly large. Cutting the estate taxes of America's 6,600 richest families, for instance, will cost $23 billion. Extending the Bush tax cuts to those who make more than $250,000 annually would add another $700 billion over the next decade. Put into perspective, the total U.S. national debt in 1980 was less than $990 billion.
So, how do the Senate and President propose to pay for these tax benefits? They would add the costs to the national debt. But ultimately, Americans must service and pay down that fiscal obligation. If the fiscal recommendations of President Obama's Simpson-Boyles Deficit Commission are adopted, the federal government would increase taxes, reduce public services, make people work longer before they can get Social Security and cut Medicare benefits. The political burden of imposing those reforms would be worsened by adding another $700 billion of debt.
In sum, the 98 percent of the population that makes less than $250,000 will pay the costs for most of the benefits for other 2 percent -- the very rich.
The politics of this great wealth transfer are reminiscent of the Wall Street bailout in 2008. As then, an outgoing Congress is being threatened with collapse of the economy unless this legislation is enacted immediately. When the House rejected the first version of the TARP bill in 2008, President Bush loaded the second draft with more than $100 billion of additional pork projects. Now, the President is loading up this tax bill with pork to sway the House vote before Congress adjourns.
Both the President and Senate, moreover, are playing pretend hostage for the benefit of voters. Senator Mitch McConnell, the Republican Minority Leader, pretends that unless the President agrees to tax cuts for the rich, he will stop a Senate vote on extending unemployment benefits for millions of jobless workers.
The President pretends that McConnell and Senate Republicans are so strong that he must make this giveaway to the rich if there are to be any jobless benefits. Last week, Vice President Biden told the House of Representatives, who were left out of the negotiations, that this deal is the best that the Administration could do. "Take it or leave it," Biden taunted.
"Leave it," responded House Democrats. Last Thursday, Representatives Peter DeFazio, Marcy Kaptur and others proposed a resolution in the House Democratic Caucus to keep the Obama/McConnell deal off the floor for a vote until its terms were changed. They won and the President re-opened negotiations.
Amazingly, Obama continues to pretend that he is powerless in the face of the GOP opposition. Instead, he is attacking fellow Democrats who oppose his capitulation to the Senate Republicans. The Office of President seems to be shrinking Barack Obama.
Late last week, the White House put out the spin that the deal is really an economic stimulus package. If so, it could hardly be less so. Economist Mark Zandi of Moody's Economy.com estimates that making the Bush tax cuts permanent will provide only 31 cents of stimulus for every $1 dollar spent. If the President really wanted a stimulus, he would urge that Congress take those billions of benefits for the rich and invest them in food stamps and extended unemployment benefits, which create more than $1.60 of benefits for every $1 invested.
Early on in this Administration, Barack Obama was praised as a 21st Century Franklin Delano Roosevelt, who also took the reins of government during an economic crisis and faced an intransigent Republican Party.
If FDR were President, I think that he would have used this issue as the opening for his next Presidential campaign -- defining the Republican Party as craven servants of the very, very, very rich -- and forcing his vision into law. FDR liked nothing better than skewing Republican greed.
This President is different, however, seemingly unwilling to battle the GOP over major issues of principle. If, as he claims, he is powerless, a Samson shorn of his hair, it is only because he did the clipping.
P.S. Are you as tired as I am of the constant whine of Warren Buffet and Bill Gates about how under-taxed they are? If they believe they owe more, I suggest that they send a check to the Internal Revenue Service. The address is:
Internal Revenue Service
10th St & Pennsylvania Ave, NW
Washington, DC 20004