Democrats to Preserve Bush Tax Cuts for Middle Class

[Pangloss]

With the Finance Reform bill on a smooth track (well-supported by Republicans who know a popular measure when they see one), word began to spread today that the next item on the agenda will be the budget. With that word came a reminder of something that the Obama administration campaigned on -- a desire to preserve the middle-class portion of the Bush tax cuts.

 

The reasons aren't hard to find. From 2001 to 2007, the most recent economic boom period, 2/3rds of the increase in revenue went to the top 1% of earners. During the same period middle-of-the-road income was completely flat. (source) Those of us in the moderate middle dislike even a hint of income redistribution, but when we see the kinds of get-the-rich-richer-quick schemes that promulgated during that period, AND in the end hurt US a lot more than they hurt their "investors", we become just a weeeeee bit more malleable on the subject. (I mean WTF is a "synthetic collateralized debt obligation" anyway?)

 

Interestingly, at least one Democrat on the Senate Budget Committee thinks that we can actually be a lot more aggressive in reducing the deficit while still preserving this tax cut for the middle class. In fact he's none other than the chairman of that committee -- Senator Kent Conrad.

 

http://www.google.com/hostednews/ap/article/ALeqM5gHAZ8shLcqCPFkexBzGo_Oi26xnQD9F73QAG0

 

A top Senate Democrat Tuesday outlined a budget plan to cut the deficit below levels projected by President Barack Obama.

 

The hope is to wrestle the deficit down to $545 billion in five years, in part by aggressively curbing spending on the domestic programs Congress funds each year. The deficit hit a record $1.4 trillion last year.

 

Like Obama, Conrad would extend middle-class tax cuts passed during President George W. Bush's first term but let those for upper-income taxpayers expire.

 

"Our budget plan significantly cuts spending and deficits and takes critical steps to put the nation back on a sound fiscal course," Conrad said. "It includes measures to strengthen the economic recovery. It cuts taxes for the middle class."

 

Conrad's plan will freeze overall annual spending for domestic agency budgets at current levels for the next three years. It also would allow for a subsequent budget bill that could evade filibuster, just changes to a Senate-passed health care bill were passed last month despite the election of Republican Scott Brown of Massachusetts, who took away the Democrat's filibuster-proof majority.

 

My my, a serious financial plan, a break for my wallet, and even support from Republicans. Tell me again what it is I'm not supposed to like about the moderate side of the Democratic party?

[john5746]

It makes sense to me on the face of it. Although the wealthy are able to jump through loopholes much easier than the middle class, so revenue won't be as much as they think.

 

An argument against this is the investor class will reduce their investments in businesses, which will reduce jobs. I really think the investment class expects too much money off the top. Maybe we should outsource CEO and big investors that have a more reasonable outlook on pay/performance?

[D H]

I think the Republicans have yet to learn the lesson of their efforts to abandon a big tent philosophy. The religious right-driven scheme to move that party an ideological pup tent philosophy will drive many of us to reconsider our move away from the Democrats in the 1980s to 1990s -- particularly so if the Democrats can keep their loose cannons at bay.

[Mr Skeptic]

The hope is to wrestle the deficit down to $545 billion in five years, in part by aggressively curbing spending on the domestic programs Congress funds each year. The deficit hit a record $1.4 trillion last year.

 

...Ow! That's going to add up. What happened to PAYGO?

 

I like this version of the story a little better:

http://thehill.com/blogs/on-the-money/budget/93431-senate-dems-budget-cuts-deficit-by-70-percent-calls-for-jobs-bill

The proposed budget's two major priorities of deficit reduction and job creation

appear aimed at winning over Democratic lawmakers facing stiff challenges from Republicans in November's midterm elections

. The economy and the budget deficit were the top two issues for independent voters in a Gallup poll earlier this month.

House Democratic leaders have shown some reluctance to move ahead with a budget resolution this year, wary of forcing vulnerable members to vote for a budget that would lead to large deficits.

 

Mmmm, cynicism.

[SH3RL0CK]

IMO, the problem isn't whether or not these tax cuts are maintained. Regardless, the root problem isn't fixed. The problem is that government cannot stop spending.

 

I think both Democrats and Republicans have yet to learn that big government spending on pork doesn't buy as many votes as they think. With the possible exception of the new Health Care Bill (as we have yet to see how that will play out), when was the last time you voted for a particular candidate because they supported a new spending program (I cannot think of any for myself)? Any instances of when you voted against a candidate because of this (I can think of several)?

 

Perhaps true fiscal conservatism would serve well whichever party actually adopts it (but I won't be holding my breath for this to happen).

[bascule]

Obama promised us this... if they were to reverse these tax cuts, he'd be violating his campaign promises. Unfortunately, many members of the tea party think Obama has raised taxes when in fact Obama lowered taxes for 98.6% of Americans

[toastywombel]

IMO, the problem isn't whether or not these tax cuts are maintained. Regardless, the root problem isn't fixed. The problem is that government cannot stop spending.

 

I think both Democrats and Republicans have yet to learn that big government spending on pork doesn't buy as many votes as they think. With the possible exception of the new Health Care Bill (as we have yet to see how that will play out), when was the last time you voted for a particular candidate because they supported a new spending program (I cannot think of any for myself)? Any instances of when you voted against a candidate because of this (I can think of several)?

 

Perhaps true fiscal conservatism would serve well whichever party actually adopts it (but I won't be holding my breath for this to happen).

 

Here is an idea of how much money pork barrel spending costs each year,

That's the assessment of Citizens Against Government Waste (CAGW), which has been crunching the numbers on congressional pork each year since 1991. Its annual "Congressional Pig Book," released this week, reports $13.2 billion in pork-barrel spending for the current fiscal year, down from $29 billion in 2006.

 

http://www.csmonitor.com/2007/0309/p02s01-uspo.html

 

So here is the cost of the total federal budget for fiscal years 2006 and 2007 for comparison

 

2006: 2.66 trillion

2007: 2.77 trillion

 

http://en.wikipedia.org/wiki/2006_United_States_federal_budget

http://en.wikipedia.org/wiki/2007_United_States_federal_budget

 

Obviously pork barrel spending is not the problem, considering it only accounts for 1.1% percent of spending in 2006 and 0.4% percent in 2007.

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Nice op btw Pangloss. This is a good example of what many Americans, including myself believe. We can cut the budget in so many places yet still offer effective social programs.

[Pangloss]

Mmmm, cynicism.

 

Delicious!

 

Yeah I hear ya, but we gotta have hope some time, right?

 

 

Nice op btw Pangloss. This is a good example of what many Americans, including myself believe. We can cut the budget in so many places yet still offer effective social programs.

 

(cough) Not precisely my thinking, but thanks.

 

Unfortunately I suspect that you're right that "pork barrel" spending isn't the problem, but I'm not sure Kent Conrad can realize the savings he needs to cut a trillion dollars from the budget in five years just by holding the line on bureaucratic spending either. The real money is in those social programs, and (now to a much lesser extent) defense.

 

In my opinion we can cut defense spending, but not by as much as people would like and probably not by enough to rescue the budget deficit. Bottom line: Social spending is going to be lowered or taxes are going to be raised (or more likely some combination of the two).

 

That having been said, if we really can recover the budget with just a little belt-tightening, as Conrad seems to think, I'm all ears.

[Mr Skeptic]

Delicious!

 

Yeah I hear ya, but we gotta have hope some time, right?

 

It does show that they are listening to what the people want, so I guess that's a good thing. Kind of like how charitable donations are nice regardless of the reason for them.