Fixing Sequestration (for the rich only)
by Linda Beale
Fixing Sequestration (for the rich only)
Once again, Congress has demonstrated that it notices mostly what affects rich people and can’t quite identify with ordinary Americans. And that it will not pass either spending laws or tax laws (which include a wealth of spending laws through the tax expenditure mechanism) that equitably deal with the misallocation of resources between the wealthy few and the rest of us. Tax policies operate for the high and mighty: once again, inequality is the real characteristic that matters.
The sequestration–a response to the GOP-led desire for austerity, shrinking government, and otherwise ensuring that rich people and major businesses don’t have to pay much in taxes–was ridiculous from the outset because it cut programs across the board, at a time of significant unemployment, without prioritizing programs that support the safety net or ensure education (like Head Start) or protect critical infrastructure or other needs. The only reasons it made some sense was that (1) it would finally lead to some cuts in our engorged military spending and (2) it should have permitted Congress to develop enough spine to refuse to make the Bush tax cuts permanent for anybody but those ordinary Americans making $100,000 or less.
But we all know that latter wise move didn’t happen. Congress made the ridiculous-when-they-were-enacted and more-ridiculous-still-when-they-were-made-permanent Bush tax cuts permanent for the vast majority of Americans, leaving only a smattering of wealthy Americans subject to imperceptibly higher taxes. Businesses got another extension of the equally wasteful Bush tax cuts enacted in the Bush Administration’s giveaway mode–the R&D credit (often enacted retroactively like this extension was, whose ostensible purpose is to incentivize US-based research, which a retroactive credit by definition cannot do), the active financing exception for the Banksters that got us into the Great Recession to start with, and all the rest.
So we ended up with across-the-board cuts that could not reasonably be expected to work out well for the economy–especially when Keynesian theory (the only kind of economic theory that hasn’t been roundly disproven by actual facts) suggested that we should be continuing to increase government spending to make up for the gaps in the economy from MNE hoarding of their cash offshore and consumers drawing back because of the steady decline of their spending power from job cuts and real salary decreases. IN fact, these damaging cuts were never actually expected to go into effect–Dems hoped (rather naively) that the sequester would force Republicans to support more reasonable tax increases. Repubs hoped (rather reasonably, in retrospect) that they could blame any problems on the Dems and claim credit for protecting ordinary Americans by not increasing taxes, and of course they’ve been claiming for the last months that any complaints about the problematic impact of the sequestration cuts are “exaggerated,” and “they have relished the success of forcing visible spending cuts on a Democratic administration.” Alex Pareene, Senate fixes the (part of the) sequesteration (that affects rich people)!, Salon.com (Apr. 26, 2013).
Few in Congress were ever willing to stop the gravy trains for the rich–carried interest for private equity, publicly traded “master limited partnerships” for oil and gas pipeline companies that are excepted from the ordinary treatment of publicly traded partnerships conducting businesses as corporations subject to an entity level tax; so many tax expenditures that favor Big Business that very few companies actually pay any tax on their huge profits; the assignment of income benefit of a stuck in the last century transfer pricing tax system that allows some of today’s biggest companies (Google, Microsoft, etc.) to transfer their indispensable intangible properties offshore to avoid US taxation of profits attributable to the support provided by this country, while nonetheless retaining 100% ownership and control; and of course the biggest boondoggle of them all, the preferential rate for capital gains coupled with an absurdly lenient estate tax, that together allow the rich to live richly during their lifetimes and then pass their estates with negligible tax cost and substantial tax benefits (from the “step up in basis at death” that, for example, allows heirs of master limited partnership interests to restart the perpetual tax-free profits machine).
But hark, what is this? The reductions caused by the sequester affected the ease with which rich people can get on a plane and fly to their business and vacation destinations! Such suffering. So incomprehensible how we could allow it. The Senate swiftly moves into action–this was something they hadn’t anticipated–that the sequester could actually bother some of their own class. Suddenly, They acted. In just a short time last night, with unanimous consent, the Senate voted to “let the FAA transfer some money from the Transportation Department to pay air traffic controllers.” See Alex Pareene, Senate fixes the (part of the) sequesteration (that affects rich people)!, Salon.com (Apr. 26, 2013). The House was expected to act today.
At the beginning of the sequester, most of the Republican politicians who had pressed for even much larger cuts, insisting there was much dross in the federal government, pooh-poohed any complaints that the sequester was leading to real pain for ordinary Americans. That story changes only when the rich feel any squeeze at all. As Pareene implies in his story, the media is too much of the time an unquestioning go-along in this conning of the American people:
the story of Congress hurriedly making sure the well-off minority of Americans who fly regularly don’t get briefly inconvenienced — while ignoring the costs of brutal cuts on programs for low-income Americans facing housing or hunger crises — is treated as a wonderful and encouraging display of bipartisanship.
cross posted with ataxingmatter111
I know it is tiresome to listen to — it is the only thing I ever have to say — but if you want to stop America from being looted top to bottom you want America to re-unionize …
… and in a much more people powerful version than before: legally mandated, sector-wide labor agreements.
It just physics: without fully financed and by far the majority of the votes progressive opposition the looting will continue without opposition. Look at it as a version of Parkinson’s Law: any force naturally expands until something opposes it.
People are not stupid. It is possible to explain the need and the solution to them — with the successful use of this labor market setup for pushing 70 years around the world to reassure them (including in French Canada right next door!).
A few years back Northwest Airlines squeezed a billion dollars in give backs out of flight crews. Following year Northwest awarded a billion dollars in give backs to 1,000 execs. Supermarket unions all over the country are going to two-tier contracts, reducing what was once a path to the middle class to closer to Wal-Mart slave struggle for new employees. Airline and supermarket employees would kill for sector-wide collective bargaining.
But, somebody has to tell them about it so they can bring political pressure.
******
My crackpot psychological (read, evolved social instinct theory): human males (instinctive hunting pack cooperators) find it difficult to think of any new direction except in “shared thinking” terms. If it is not already on the “social” agenda they will not think through what I wrote above for one millisecond.
It took an (instinctively individual gather) female US senator to raise the specter of a $21.70/hr minimum wage to catch up with productivity gains since the minimum was $10.50/hr under (megalo male) LBJ. Similarly I remember reading somewhere in Kuttner’s book A Presidency in Peril: “Why do women always have the balls?”
Elizabeth Warren: Minimum Wage Would Be $22 An Hour If It Had Kept Up With Productivity
It’s sector-wide contracts or its goodbye America. So talk it up ladies — please! — and give the men something to think socially about. 🙂
It’s not being viewed as “bipartisanship.” It’s being viewed as calling out the tax and spenders for their usual game of cutting essential services, rather than fat, when they don’t get the tax money they want.
Apparently that’s not working anymore.
Sammy
trouble is, fat for you is essential services for me. and what your side can’t seem to understand is that those folks who put on uniforms and fought to keep you free have a right to some essential services.
and what your side is really too stupid to understand is that if those people don’t get some essential services they are not going to be there when you need them.