Another government handout...for the rich
Another giveaway to the rich is being justified in the name of "bipartisan compromise."
TIMES ARE tough, workers are suffering, and the president says that he can't stand by any longer--he has to act.
So what's Barack Obama's proposal? A crash program to create jobs for the millions of long-term unemployed? Double spending on projects to rebuild America's crumbing infrastructure? A new government initiative to stem the surge in hunger since the economic crisis began?
No, no and no. Instead, Obama boldly met with Republican leaders in Congress and agreed to give them what they've been demanding all year--an extension of the Bush-era income tax cuts, including for the wealthiest Americans.
If you're an unemployed worker whose benefits are about to run out or a federal worker whose wages will be frozen for two years, letting the richest few--the people responsible for the crisis, mind you--continue to enjoy this bonanza while everyone else is tightening their belts may not make a whole lot of sense.
But if you're part of the Wall Street elite--the people whose opinions actually matter in Washington--Obama's decision was obvious and predictable.
That's because extending the Bush tax cuts was business as usual for Corporate America's second-favorite political party, the Democrats. No matter how they might complain about the Republicans' ties to the wealthy, the Democrats are just as serious about representing corporate interests.
So two years after a wave of hope and expectation among voters put Obama in the White House, it's obvious whose vote really counts in Washington--Wall Street's.
OBAMA'S DEAL with congressional Republicans extends the cuts in the income tax rates passed during the Bush administration for another two years--the rate cuts are due to run out at the beginning of 2011 if they aren't renewed.
The agreement is also supposed to extend unemployment benefits for the long-term unemployed, something Republicans have been blocking; cut the employee payroll tax that is taken out of paychecks by 2 percent; and revive the estate tax, though with exemptions for inheritances of up to $5 million for individuals and $10 million for couples.
But the real crowning jewel of the deal is Obama's go-ahead for continuing the bloated tax giveaways to the rich.
The tax breaks were passed in 2001 and 2003 at a total price tag of $1.3 trillion over 10 years. Though the Bush administration touted them as "middle-class tax cuts," they baldly favored the very rich over everyone else.
So, for example, a family making $52,224 a year--the middle 20 percent of all income tax filers--got a tax break worth $1,016, or a little over 2 percent. But the top 1 percent did much, much better--an average of $72,872 saved on their tax bills each year. In other words, a family in the top 1 percent saved more--much more--on their taxes alone than a family at the middle level earned in a year of work.
Now, Obama and the Republicans are agreed on lending a helping hand to the super-rich for another couple years.
It's not as if these people are hurting today. Despite the effects of the Great Recession, profits are up for Corporate America. In fact, profits surged 62 percent from the beginning of 2009 to mid-2010, according to the Commerce Department. "That's faster than any other year-and-a-half in the Fabulous '50s, the Go-Go '60s or the booms under Presidents Ronald Reagan and Bill Clinton," reported Poltico.com's John Maggs.
The key to Corporate America's success? Laying off workers and increasing productivity by making those who still have jobs work longer hours, and for less pay and benefits.
The Democrats have claimed for years that they would end the tax break for the richest 2 percent. Just a couple months ago, Obama told supporters in Albuquerque, N.M., why he opposed the Republicans' proposal to extend tax cuts for "millionaires and billionaires mostly."
"We'd have to borrow the $700 billion because we don't have it," Obama said. "We've got these deficits and debt. So we'd have to borrow the $700 billion from China or the Saudis or whoever is buying our debt, and then we'd pass off, on average, $100,000 check to people who are making a million dollars up to more than a billion dollars."
A few months later, Obama is singing a different tune.
And while the wealthy will get more money to play with, the Obama administration has nothing but cuts, cuts and more cuts for workers and the poor--all in the name of "reducing the deficit," something that doesn't seem to be a concern when it comes to the tax cuts.
With the bipartisan National Commission on Fiscal Responsibility and Reform, which finished up its work early this month, setting the terms of the debate, Congress and the Obama administration are demanding the kind of austerity measures that were commonplace in developing countries under the thumb of the International Monetary Fund.
The federal cuts to social programs are translating into gaping wounds locally, as state and municipal governments hatch schemes to balance their budgets. In Arizona, for example, legislators are eliminating life-saving medical procedures like organ transplants from the list of what is covered by Medicaid as managed in that state.
In other words, when political leaders say they'll do anything to balance the budget, they mean anything--except measures that might increase government revenues enough to actually balance the budget, like letting the Bush tax cuts for the rich run out.
By federal government estimates, keeping the tax breaks for the wealthiest 2 percent will cost $700 billion over the next 10 years. This makes a one-year extension of unemployment benefits--estimated to come to $56 billion--look like small potatoes.
Of course, it is small potatoes in dollar terms, but it means a lot more to working people struggling to survive. Patty Moreno in Texas is one of the 2 million unemployed people who is due to lose benefits by the end of December if Congress doesn't pass a law to extend them.
"I honestly never thought I would be in this position ever," Moreno told NPR. "Now, I'm in this position where I'm calling in, and they're saying, 'You know, maybe you should try welfare.' And I'm kind of thinking, 'Wow, I never thought I'd be at the point where I might have to call welfare.'"
THIS WEEK'S Democratic Party sellout was once again justified in the name of "compromise" with the Republicans. The Obama administration and Democratic leaders claim the odds are against them--and that agreeing to extend the tax cuts for the super-rich was the only way to ensure that tax cuts for everyone else would stay in place, and that unemployment benefits would get extended.
"Sympathetic as I am to those who would prefer a fight to compromise," Obama said on Monday, "it would be the wrong thing to do. The American people didn't send us here to wage symbolic battles."
Did he say "symbolic"? It's a "symbolic battle" to support extending unemployment benefits without feeling the need to reward the rich for all the nothing they do?
Then again, for the Obama administration and the Democrats in Congress, maybe it is "symbolic"--the part about not wanting to extend the tax cuts for the wealthy, that is.
Obama and the Democrats aren't compromising at all on the basic question. They're very much in agreement with most of the pro-business and anti-worker policies that Republicans promote. Both parties are firmly committed, whatever their rhetoric to the contrary when they're trying to win votes, to serving the interests of their most important supporters--Corporate America.
Meanwhile, the people who the Democrats claim to represent want something entirely different.
Despite the fear-mongering about the federal deficit and a potential government collapse if we don't demonstrate "fiscal responsibility," opinion polls show that workers have other things on their minds. An April CBS/New York Times poll found 50 percent who agreed that "the federal government should spend money to create jobs, even if it means increasing the budget deficit." And a June Gallup survey found 60 percent of the public approved of "additional government spending to create jobs and stimulate the economy."
These people are worried about the futures of their families, the people working next to them, and the unemployed person next door. And the Obama administration has nothing to offer them.