Democrats & Liberals Archives

Let's Eat Cake

Congress is debating the best way to pay for $200 billion worth of reconstruction in the wake of Hurricane Katrina. Republicans want to cut $35 billion from food stamp programs, Medicaid, Medicare, and scores of smaller programs that give Americans a hand up when they need it (no mention of where the other $165 billion will come from), and Democratic strategists believe the party can ride to victory in 2006 by opposing those cuts and calling Republicans big heartless meanies. Not gonna happen.

My DLC roots are showing, but let's face it, even though President Bush's economy is a shambles, it's not the Hoover Depression and there aren't armies of impoverished families camped out on the Mall. The fact is, Americans want lower taxes and less government spending. Even among Democratic voters, the majority favor spending cuts to balance the budget.

The good news is, Democrats can have our cake and eat it, too. Congressional Democrats already voted unanimously last year to make the middle-class tax cuts permanent. This is something we can't stress enough: Democrats love tax cuts that benefit working Americans.

On the cost cutting front, Democrats are proposing alternatives like letting the dividend, capital gains, and inheritance tax cuts lapse, and cutting pork-barrel spending and taxpayer subsidies to the $7 billion per month oil industry. But, of course, that undermines the Republican leadership's agenda of enriching the rich and dismantling programs that help working folk, so they're not even considering it.

Now, I don't usually strategize for the Democratic Party (I mean, who am I, right?) so just consider this a bit of vanity from a Democrat who's interested. It seems to me there's enough of a dissatisfied fiscal conservative bloc in the Republican Party -- guys who should be our allies on this issue -- that a deal could be made to strengthen, streamline, and cut costs in the food stamp program, Medicare, and Medicaid -- like we did with welfare in the 90s -- in return for dropping the dividend, capital gains, and inheritance tax cuts that only benefit the wealthy.

Sure, the Republican leadership won't go for it, but if Democrats present a viable alternative that undercuts Republican accusations of being big-government big spenders, we can really dig in and stick it to 'em in the court of public opinion -- or maybe even create another bi-partisan Gang of 14 and actually start balancing the budget.

As it is, the Republican leadership is Hell-bent on making the poor -- those who suffered the most from Katrina -- shoulder the burden of paying for it, while the rich get an almighty big kickback. There are a lot of Republicans who don't want that kind of albatross hanging around their necks come election day, so we may find some unexpected allies for a reasonable compromise that actually strengthens programs for working Americans and gets the wealthy to pay their fair share.

This is an excellent opportunity for Congressional Democrats to demonstrate that we are the party of social justice AND fiscal responsibility. It'll be interesting to see what they make of it.

Posted by American Pundit at October 18, 2005 9:36 AM
Comments
Comment #86399
The fact is, Americans want lower taxes and less government spending.

As long as they in the abstract. They want lower taxes — for themselves, and spending cuts — that affect someone else.

The Orwellian logic surrounding the inheritance tax is a good example. No matter how you slice and dice it, here’s a tax that affects only wealthy people. But Republicans basically lied through their teeth (and the media failed to report it) by portraying the “victims” of the tax as small shop owners and family farmers, when the vast, vast tax revenues from the tax came from the super-rich.

Sorry folks, we all have to pay taxes, and we have to spend money on government.

a deal could be made to strengthen, streamline, and cut costs in the food stamp program, Medicare, and Medicaid .

Please tell me, how to your “strengthen” something when you “cut costs?” Or is this just more Orwellian logic here?

Posted by: steve at October 18, 2005 10:27 AM
Comment #86414

AP:

You talk about sticking it to the Republicans in the court of public opinion. I hope in your strategy, you also look at what is best for the country, rather than just what is best for Democrats in the 06 elections.

The wealthiest should pay the most in taxes, but not in the way the Democrats see it. A flat tax means the wealthiest pay the same percentage as everyone else, but….since they have more, they pay more. The “death tax” or inheritance tax is simply a way to take a second bite at the apple by taxing certain people more than others. That is just inherently unfair, despite the fact that it brings money in to the federal coffers.

If we can streamline the food stamp program, Medicare, and Medicaid, while cutting pork barrel spending and entitlements, then I’m all for it. Lets start with the Transportation Bill and unload a bunch of the crap in it.

The reality is that we have enough money to do what is required. What we do NOT have is the political willpower to do those right things, and this lack of willpower exists on both sides of the aisle.

Perhaps David Remer’s anti-incumbency ideas come into play here.

Posted by: joebagodonuts at October 18, 2005 11:24 AM
Comment #86438
[The inheritance tax] is just inherently unfair

And poverty, not having health care, and substandard housing aren’t?

If we can streamline the food stamp program, Medicare, and Medicaid, while cutting pork barrel spending and entitlements, then I’m all for it.

What does “streamline” mean?

Posted by: steve at October 18, 2005 12:48 PM
Comment #86440

joeBOD,

Let’s assume that we can balance the budget your way. Now what?

We’ve balanced the budget and wealthy people (and I’m one of them) got to keep what’s ours/theirs. Right now, poverty stands at 13.1% of the population (just over 1 in 8). Looking at the 2000 census, the numbers are interesting. What do the poor look like? They’re citizens (85%), children (35%) and seniors (just over 10%). If you add the people who earn 30% over the poverty line, that’s 15% of America. If we go to 50% over the poverty line, that’s 20% of the population, one in five indviduals.

By removing the welfare state, most forecasts place our overall poverty rate at close to that 20%.

So…what’s democratic about having 7% of the population live below poverty level for the benefit of the top 2%? And, in direct response to your post, how is that ‘best for the country’?

Posted by: CPAdams at October 18, 2005 12:52 PM
Comment #86441

sorry, here’s the link
test

Posted by: CPAdams at October 18, 2005 12:54 PM
Comment #86442

JBOD,

If AP used the term “plutocrats” in place of “republicans,” would that satisfy you?
Did you know that the ultra wealthy 500+/- families that benefit from the inheritance tax suspension don’t pay anywhere near as much as a percentage of their income than you likely do?
Don’t be fooled by their sales pitch. Those families own over a trillion dollars worth of assets, with billions of dollars of hidden income streams. Yet, they still fight to make us pay more taxes while they pay less and less. Those people never paid their first “bite at the apple” I’ll never understand why so many people ignore that.

Posted by: Dave at October 18, 2005 12:54 PM
Comment #86443

Why is the double-taxation argument used as though it is some sort of get-out-of-jail free card? Is it in the 5th amendment? Is it because we’re so bad in math, that we can’t multiply 3 numbers together? Can I complain about going through 2 layers of security the next time that I get on an airplane? If my daughter’s diaper needs to be changed twice within 2 in a row, should I hold off on the second time? Let me know when someone’s marginal tax rate is over 100%, but otherwise, the more money I make the more disposable income I have.

Oh yeah, no more than one person can reply to this post. If someone else wants to reply to me, they have to wait until I post again. I mean, you wouldn’t want one of my posts to be subjected to a double-reply. Oh, sure it would be nice to have an intelligent discussion, but following my logic is far more important.

Posted by: Mike at October 18, 2005 1:25 PM
Comment #86448

Steve:

Streamline was AP’s word, I simply cut and pasted it. My definition is to make the food stamp program, Medicare, and Medicaid work more efficiently.

CPAdams:

I have no idea—-not a single one—-as to what your percentages mean.

Dave:

What part of flat tax did you not understand. In a flat tax scenario, the plutocrats—or whatever you wish to call them—would pay the same percentage as everyone else, so you wouldnt have the concern of them paying less and less. (By the way, my idea of flat tax would entail a bell curve, not totally flat).

Mike:

It doesn’t make sense to me to tax those who have been more successful financially at a significantly higher rate. Look at what Sweden used to do—-they taxed their wealthiest at extremly high rates, and therefore the wealthiest simply established residencies elsewhere.

By taxing everyone the same percentage, you will collect more from those who have more to give, and still leave them with their higher disposable income.

Posted by: joebagodonuts at October 18, 2005 1:43 PM
Comment #86449

Joe,

I thought that your objection was that they were taxed twice. Is it that they’re taxed more, or is it that they’re taxed more times? I mean, they’re both bogus points, but through some sort of bait and switch technique, you may be able to meld them together to win the argument.

Okay, there’s officially no objection to double taxation, is there? No one wants to pretend that it’s forbidden under the 5th amendment? I’m lifting my rule about multiple replies. Joe has declared that everyone SHOULD pay the same percentage, and that’s the end of that.

I believe that money is more likely to be spent by people who need to spend it, and more likely to be saved by people who do not need to spend it. I believe that the economy grows when money is spent. I believe that it is misleading to include the increases in payroll tax revenue in order to prove that Reagan’s tax cuts increased revenues.

Halliburton and Enron may be manipulating our tax system with their off-shore corporate offices, but Dick Cheney and Ken Lay are still living large in the US, spending their money here. I think that even if Bush didn’t let them in his administration, they’d still be living in the US. Do you actually believe that we are getting close to some sort of reverse immigration boom? You seem to be concerned with problems which do not exist at the expense of problems which actually do exist.

Posted by: Mike at October 18, 2005 2:05 PM
Comment #86450

Harsh punishment for those who succeed, all in order to support somebody elses beliefs.
Only in the US.

Good points JBOD, but you have to remember that being fair doesnt get votes.

Posted by: kctim at October 18, 2005 2:14 PM
Comment #86454
Look at what Sweden used to do—-they taxed their wealthiest at extremly high rates, and therefore the wealthiest simply established residencies elsewhere.

Sweden still taxes their wealthiest at extremly high rates, and the vast majority of wealthy Swedes did not move elsewhere.

I ask this: If the U.S. raised its marginal income tax rate up to, say 45%, where would these hypothetical people trying to avoid these taxes move to? Would they renounce their U.S. citzenship?

Posted by: steve at October 18, 2005 2:17 PM
Comment #86458

Mike:

I’ve stated my disagreements. I’ll restate them again to make them more understandable for you.

Whether you tax certain people at a higher rate, or you tax them twice, the outcome is the same. You have taxed them at a higher percentage. As I said, I favor a relatively flat tax (as stated, i’d modify it slightly at the high and low ends). Taxing the wealthy simply because they have the money to afford the tax is not a good reason to tax them. If you apply that philosophy to the game of basketball, Shaquille O’Neal should only get one point per basket because he has so many advantages and he scores so many points. He should in effect be penalized because he is so good.

By the way, despite what some die hard liberals want us to believe, America is such a great place to live that most people are not looking for reasons to leave. Even with high taxes, Americans would stay, and foreigners would still want to enter.

Bottom line: Everyone pays roughly the same percent, those with more money pay more real dollars, and the Fed govt takes in the same amount in tax revenue. Thats what I’d like to see.

Posted by: joebagodonuts at October 18, 2005 2:27 PM
Comment #86471

OK joeBOD,

I’ll make it simple so you can understand. If we do things your way - flat tax, “streamline medicare and food stamps”, eliminate the inheritance tax - we’ll make a few people richer and about ten times as many people poorer.

We’ll end up helping up to 5 million at the expense of 54 million people. What’s democratic about that? And why is that what’s ‘best for the country?’

The punchline about the income tax and the inheritance tax, of course, is that they were both started by the Republican party.

Posted by: CPAdams at October 18, 2005 3:35 PM
Comment #86474

CPAdams:

I don’t see that a flat tax, along with improving the efficiency of several programs and eliminating the inheritance tax makes “about ten times as many people poorer” as you state. I fail to see how you arrived at that premise.

Making medicare and foodstamps etc more efficient only helps everyone, assuming that we truly mean making it more efficient. I’m not using efficiency as a code word for elimination. AP’s commentearlier was “to strengthen, streamline, and cut costs in the food stamp program, Medicare, and Medicaid…” . In doing so, we actually make it so the government needs less money to provide the same level of services, which is a good thing for all.

The flat tax by itself should be a revenue neutral policy, as I see it. Now of course that’s theory—-some times it might bring in a bit more, and other times a bit less, but it should average out to revenue neutral.

So that leaves the inheritance tax. One source I found states that 1% of the government’s overall revenue came from inheritance tax collections, so its not a big amount of money in terms of the overall budget. Whether its in or out, its not big piece of the puzzle. I prefer it to be out.

I look forward to better understanding your premise. I hope I’ve been able to make my thoughts a bit clearer.

Posted by: jeobagodonuts at October 18, 2005 3:54 PM
Comment #86479

If a business ran its finances like the Republicans did, it would run itself into the ground. Doesn’t that bother you people?

Posted by: Stephen Daugherty at October 18, 2005 4:11 PM
Comment #86481

it’s just silly of you to defend all this inheritance tax stuff, joeBOD. unless, of course, you are a scion of the aristrocratic class.

given the continued rise in health care costs and the decline in people covered by health care plans on the job and in retirement, the preponderant probability is that most of us will have our life savings go to pay for medical care in our old age.

it’s important to defend principles and i applaud you for that. but i think principles must have some grounding in reality.

i think we’ve seen the era of the robber baron when the poor were dirt poor. it troubles me to suggest that anyone but the wealthiest were better off in that era. i believe that the policies you support lead us back in that direction and by defending such policies, you defend our society before FDR’s programs.

joeBOD, what do you think was the greatest era for our society?

Posted by: CPAdams at October 18, 2005 4:17 PM
Comment #86488

joeBOD,

i do hear streamline as double speak for eliminate. Given all the neocon bravado about drowning the government in a bathtub, it’s hard for me not to hear it that way. i apologize for reading into your words, but not many conservatives seem to support your view.

where i’m looking at things, Bush’s tax cut was primarily for the benefit of the rich(i know i’ve enjoyed it).

now that our government is drowning in a bathtub of pork, iraqi sand and hurricane water, it’s a luxury we cannot afford - take it back. so in my mind, Bush is keeping the tax cut either because he is indifferent to the problems of poor Americans or that he can’t repeal it because doing so would be politically disasterous.

regardless, both reasons are offensive to me.

Posted by: CPAdams at October 18, 2005 4:36 PM
Comment #86489

It’s not easy for everyone to live at the expense of everyone else.

Posted by: d.a.n at October 18, 2005 4:45 PM
Comment #86490
If a business ran its finances like the Republicans did, it would run itself into the ground. Doesn’t that bother you people?

Just don’t forget that Democrats helped.
Don’t blame it all on Republicans.
Democrats are spending too, because they know most will blame the Republicans, and the Democrats will get their turn next to use and abuse the nation, and so on, and so on.

Posted by: d.a.n at October 18, 2005 4:47 PM
Comment #86528

CPAdams:

Perhaps you missed it but I cited a source that said the inheritance tax brought in 1% of the total tax revenue. What do you think that 1% is going to do to impact the high cost of medical insurance? For that matter, I havent seen you address any solutions to the high cost of medical insurance other than to say we need to tax the wealthy at a higher rate.

If your only solution to a problem is to take more money from those that have it, and use that money for those that don’t….well, that solution falls flat on its face eventually. In time, it simply cannot succeed.

This conversation, however, didn’t begin as a discussion of health insurance. What I talked about was that one primary solution is to make our government programs more effective. There is so much waste that if we can simply carve 5-10% of the waste away, we can gain lots of money. Secondly, bringing revenue in by having a good economy is the second leg of the stool. The economy has gone up after the tax cuts were implemented….coincidence?

You asked about eras—allow me to answer a little differently. At one point, people were embarassed to have to accept government help and charity. They chose to work at almost any kind of job in order to not have to take a handout. Today, many people see the handout as a right, and they come to expect it. There will always be a segment of society that needs help, and a compasionate society needs to be there to give that help.

But when it becomes a deterrent to working, then it is no longer helping someone. It may help in the short run, but not in the long run.

So, CPA, as far as eras, I’d go with earlier generations who did everything they possibly could to be self sufficient, and used the government or charities as a last resort. I would choose them over the current generation that falls down and simply waits to be picked up.

Posted by: joebagodonuts at October 18, 2005 9:43 PM
Comment #86533

I say let’s go back to those wonderful days of
robber barons, monopolies, child labor, sharecroppers, and company stores. It seems to
me that that’s what we are headed for, especially
if this administration has its way. Then let the
lower classes eat cake if they have no bread.
Most of the plutocrats I know would starve if they had to grow their own food. What this country needs is another Robespierre.

Posted by: Disgusted in GA at October 18, 2005 10:12 PM
Comment #86556

The obvious answer to paying for the cost of Katrina is an Oil Windfall Profit tax. Since this thread seems to be an exercise in mathmatics, YOU do the math.

20 Million bbl. of oil per day American usage
$30 per bbl… the average price of oil variance between 2004 and 2005
$20 per bbl… the amount of the variance that is pure profit
20M X 365 X $20 = $146Billion
50% windfall profit tax on $146 Billion = $73 Billion and we’ve got ourselves a fine little start to fixing the problem.
Of course, THAT will only happen over dubya’s dead body, but I can live with that too.

Posted by: Thom Houts at October 19, 2005 3:45 AM
Comment #86567

Thom:

What is your source for claiming $20 per barrel is pure profit? Note that I am not calling it a false claim, but rather am asking for a source since the claim doesn’t ring accurate to me.

We know that Katrina for instance has raised the costs of oil to the refineries. this increase would not then be profit, but would instead be cost.

I’m assuming it comes from the petroleum industry itself, or perhaps from some source that tracks the petroleum industry. Thanks for providing this information to help me get started on my own reading of it.

Posted by: joebagodonuts at October 19, 2005 7:28 AM
Comment #86586

Interesting. Frankly, I expected to get my head taken off by my more liberal colleagues. :)

Please tell me, how to your “strengthen” something when you “cut costs?” Or is this just more Orwellian logic here?

I thought I made that pretty clear. Here’s the rest of the sentence:

“a deal could be made to strengthen, streamline, and cut costs in the food stamp program, Medicare, and Medicaid — like we did with welfare in the 90s — in return for dropping the dividend, capital gains, and inheritance tax cuts that only benefit the wealthy.”

Posted by: American Pundit at October 19, 2005 9:39 AM
Comment #86647

In general, I agree with AP, but I do have a problem with the inheirtance tax portion, so I’ll throw this scenario out to see where others engage:

My father has a successful business venture where I work. It nets him an average of $200,000/ year in income. I currently make about $80,000. When he dies, he’ll give it to me. If I run it as well, I have the opportunity to make approximately the same amount of money. I will also have to replace me with someone making about $125,000 who will have no claim on the assets of the company.

The business is worth on paper approximately $8 million dollars. How much should I pay in inheiritance tax?

Posted by: Rob at October 19, 2005 3:06 PM
Comment #86752

Rob, you need to talk to a tax lawyer, but I don’t think inheritance taxes apply at all in the case of you taking over the company.

BTW, Republicans just dropped all the proposed food stamp cuts and dairy subsidy cuts etc.

I’m starting to think Democrats may be on to something with the strategy of just stepping back and letting the Republican Party destroy itself.

Posted by: American Pundit at October 20, 2005 5:19 AM
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