By Jay Hansen
Obama passed his first piece of legislation of 2013 a little over a week ago; he finally got his long-desired tax reform through! So, what kind of reform did he bring us? Expiration of the Bush tax cuts? Refurbishment of the payroll tax cut perhaps? Increasing capital gains? If you’ve been reading my site, especially in the past month or so, you know this article isn’t leading to a happy place.
I’m far from proud to introduce to you all, the newly created
Bush Obama Tax Cuts (source):
- Income tax rates for 99% of Americans (not even 98%, 99%) were cut by 4.6% permanently, setting them at 35%. This is now the new, permanent rate, unlike the Bush tax cuts that were only temporary.
- Taxes on the top 1% are projected to bring in approximately $62 billion per year in additional revenue
- Tax subsidies, breaks, and other “extenders” for various businesses and industries included in the plan cost $68 billion per year.
- Carried interest, the primary income generated by private equity and much of those in the financial sector, gets an exemption from this tax rate as it is not classified as “income,” and thus is not subject to the income tax rates mentioned above. Instead, the income of those in the financial sector making at or over $450,000 a year will be taxed 19.6% less than the actual income tax rate for this tax bracket (20%)
- The estate tax was cut by 15% and given a $5 million exemption for individuals and $10 million for couples (meaning only those that make over $5/$10 million are even taxed by the estate tax at all)
- The capital gains tax, a tax that hits the wealthy more than the middle class and poor, remained at 20%
- Dividends, taxes that hit the wealthy much more than the middle class and don’t affect the poor at all, were cut by a whopping 19.6% AND set to that rate permanently
- Total, this bill cost $4 trillion, all of which will be added to the deficit
- Finally, while not part of this plan, the payroll tax, a tax that affects the poor and middle class much more than the wealthy, was increased by 2% at the beginning of the year.
… There are no words.
There are no words to describe the emotion I’m feeling right now, and the mixed, tumultuous feelings I’ve had all week as I learned more and more about the details of this plan. The best I can hope for is to break this down with as much cold logic as I can.
First and foremost, my hat is really off to Republicans on this one. I mean, they’ve always been masters of framing the issue, manipulating the facts, and generally pushing the propaganda, but holy shit dude. In the past, Republicans would often talk about “raising revenues” without raising taxes. Saying as much would allow them to do something about the budget (albeit little) without angering their wealthy donors as much. Hell, Mitt Romney’s entire tax plan predicated on this idea. Yet now with this conservatively-framed plan, Republicans and Democrats have found a way to raise taxes without raising revenue, given that all revenue “raised” from this plan was also used by this plan for more tax extenders.
If you don’t believe that the right-wing in this country controlled the national conversation on this issue in the media and public forums, consider the fact that 67% of Democrats are saying they like this bill, despite the fact that it is just the Bush Tax cuts renewed again and made permanent for all but 1% of Americans, meaning the plan is more right-wing than George Bush’s, and the Democrat-created payroll tax cut was allowed to expire, meaning taxes on middle class earners will go up. If you think this bill is in any way progressive, you either don’t know anything about politics, you need to have your head examined, or you’re a lying, rat bastard. Progressives already had their victory when the Bush tax cuts expired; they were gone for good, but Obama took specific action to make sure they came back and, as I will be focusing on a lot, became permanent. Even framing it as optimistically as possible by saying that taxes went up on the top 1% of wage earners doesn’t provide me any consolidation. If you work in private equity (Wall Street), arguably the most profitable industry in the country and where a large number of our country’s wealthy work, then your taxes didn’t go up because of the cuts to dividends and policy on carried interest.
This has two extremely damning consequences. One, Republicans can now blame Obama for adding $4 trillion to the deficit already in 2013, and rightfully so because he did, even though he did it to appease the very people now blaming him for doing it! Secondly, and much more importantly, Republicans can now turn around and say “see? We told you raising taxes wouldn’t solve anything.” It’s already started. Republicans will lie and pretend that this bill actually raised revenue and use that as an excuse to never bring up raising taxes again, or at least for the next ten to twenty years. Just like he did with health care reform, he managed to squeak this bill through disguised as tiny, tiny change, so now he’s going to raise the “mission accomplished” banner and pretend the issue of taxation is completely resolved. Do I need to long-windedly explain this, or should I just point to the fact that he made 99% of the Bush Tax Cuts permanent.
Even George W. Bush had the (balks) forethought and…
Good God my fingers don’t want to type it…
But I’m STILL not to the worst part of this.
This wasn’t a compromise for anything. Normally when Obama pulls some dumbass stunt like this it’s because he’s “trying to compromise” with Republicans, which usually ends in Republicans getting 98% of what they want and, if they’re really lucky, 1% or 2% of what progressives want. That’s Obama’s idea of a fair compromise. In this situation though, he wasn’t compromising; he wasn’t negotiating. He just passed this law… just because. It wasn’t a compromise; this is what he actually believes, supports, and fought for tooth-and-nail. This is Obama’s ideology.
In reality, what’s really happened here is that on January first, the Bush Tax Cuts finally expired, and it was fantastic. The largest contributor to the deficit over the past twelve years was finally done and gone as of a week ago, yet Obama went back and retroactively compromised after progressives already won. Had they just expired, we would have returned to the Clinton era tax rates and policies that helped create the last golden age of America with record number of jobs and an economic surplus for the first time in generations. Obama took specific, deliberate action to make sure progressives didn’t get a victory. By retroactively implementing this law, Obama has gone back in time to subvert a major progressive victory.
Obama got a big straw; one that can reach all the way back to the very end of last year, and did this to progressives:
The Bush Tax cuts had already expired. Progressives had already won. Yet Obama claims he did this plan as a “compromise” with Republicans. You don’t compromise with expired food in your fridge, Obama; you throw it out! If something has noticeably gone past its expiration date, you don’t wonder if you should eat it or not. And yet, here we find Obama, eating on the moldy-ass remains of a can of Bush’s Baked Beans from twelve years ago. Also like with food, Obama’s going to regret it later when he’s sitting on the toilet with intestinal problems, because you know Republicans are going to blame him for passing a bill that cost trillions of dollars, did not cut spending, and raised taxes despite the fact that these tax policies are of Republican ideology.
Near as I can tell though, Obama seems to enjoy that after-effect. Like I said earlier, this has to be Obama’s real ideology, because progressives had already won. There was no need for this bill from the progressive perspective. The only answer is that Obama is not just center-right as I’ve often written, but at least on taxation he’s a full-blow conservative. Had he not passed this bill we’d be at the Clinton era tax rates, and Clinton is often regarded by history as some great centrist in terms of his final product in negotiations and compromises. So based on that alone, he’s at least further right that Clinton, no questions asked, and I find it impossible to argue otherwise now. Worse than that, though, is Obama’s record compared to Bush’s. In the past I’ve seen countless parallels drawn between Obama and Reagan because they were so similar on policy despite the fact that Reagan is worshipped by the GOP, often when accompanied by the point that Reagan couldn’t get nominated in the Republican Party of today. Now though, I’m seriously starting to wonder if Obama is even more right-wing than Bush. It’s a long, complex question I’ve been pondering for days and hope to explore in a separate article, but I’ll just remind you of one for now; Bush passed these massive tax cuts with an expiration on them. Sure, Republicans were probably just going to keep renewing them forever and ever given the option, but at least he faked concern over the budget. Obama has made these exact same tax cuts permanent. Even John Boehner, Speaker of the House, agrees and points out that with a Republican controlled House, Senate, and Presidency they couldn’t even get these tax cuts made permanent. Not even they could get a tax policy bill through this right-wing, and he is overjoyed that Obama has done it for them. Think about that; we elected Obama to end the Bush tax cuts in 2008. In 2010, he renewed them for two more years. Then in 2012, he didn’t just renew them, he made them permanent, set-in-stone, black-and-white, clear as day.
But this is kind of representational of what Obama has really been as a President, especially for progressives. He hasn’t done much of anything as far as significant change goes for progressive ideology; he’s just held back the dam of conservative ideology from completely collapsing. All he’s done is extend and pretend; just hold back the flood, don’t do anything to fix or improve the dam. Continue almost all the same policies of the last administration and just do tiny fixes here and there on our side of the dam without actually repairing the dam. Obama stuck his finger in the leaking hole of the dam in 2009, and he’s just been holding it there ever since without any more permanent solutions. Come 2016, we need someone who will fix the dam. And before you say it, Mitt Romney would not have fixed the dam. John McCain would not have fixed the dam, Newt Gingrich would not have fixed it, Rick Santorum would not have fixed it. Hell, Joe Biden wouldn’t have fixed it, Hilary Clinton likely wouldn’t have fixed it, and there are very few candidates out there that would be willing to do so.
Primaries will never be as important as they will be in 2016. Democrats better bring their best candidate to the table or we’re going to be flooded by this continuation of conservative tax policy started by Bush and maintained by Obama.
But what still really burns me after all of this is that what tiny change he did promise progressives he still didn’t even deliver upon. Throughout the campaign he did nothing but talk and talk and talk about raising taxes on those people making above $250,000 (the top 2%) a year, even calling it the central campaign issue. After the election he even promised a veto on any bill that didn’t. So, a bill comes to him that still continues them for 99% of Americans, raising them on only about half of the people he promised, and not only did he not veto it, he signed it and proclaimed it a huge victory. This is one of two veto threats Obama has already broken this year (the other being on the NDAA), and it’s not even half-way through January.
It’s going to be a long, rough four years for progressives.
I’ve had my reservations about saying this for several years, but it’s time to automatically start regarding Obama as the opposition. When we are about to go into political situations or big-ticket issues, we need to be of the assumption that Obama will oppose us (us being progressives), and treat each and every issue as we would with a Republican President, because that’s all Obama has really become; I’m as sure of this as death and taxes. I once heard it put very well when someone said “I don’t mind Obama so much. He’s the best Republican president of my lifetime.” And it’s true, there are a few minor things here and there he’s done very well on such as repealing Don’t Ask, Don’t Tell, Supreme Court nominations, and general feminist issues. Outside of that though, what great change has he really delivered upon for progressives? His “health care” reform was nothing more than “health insurance” reform and was initially drafted by the right-wing think tank The Heritage Foundation. His financial reform was a joke and did nothing to prohibit or restrict the risky behavior that led to the economic collapse in the first place. Now he’s essentially fully adopted the Republican position on taxation, which is, in his own words, one of the central issues we elected him to change.
I’m going to post this video again, because if you listen to it about twenty times or so and close your eyes, you can actually start to see Obama saying this to his own progressive base that is responsible for his re-election.