National Fiscal Hypocrisy Week

Welcome to National Fiscal Hypocrisy Week.

Today (Monday), Congress takes up a measure delaying by one month a scheduled 23% cut in federal reimbursements to doctors. The cut will automatically go into effect unless Congress acts. But of course Congress will act. Doctors threaten to drop Medicare patients if their rates are cut. Congress has delayed scheduled Medicare cuts for years.

The best outcome would be an agreement to contain future health-care costs by allowing Medicare to use its bargaining power with drug companies and medical suppliers to reduce rates; by allowing Americans to buy drugs from Canada; by applying the antitrust laws to health insurers; and by giving the public an option to buy their health care from a government-run public option.

Likelihood of any of this happening over Republican and DINO objections is zero.

Tuesday, the President meets with Republican and Democratic congressional leaders to begin working out a compromise for extending the Bush tax cuts. Both parties say they want to preserve the tax cuts for lower- and middle-income families. But this would cost $3 trillion over the next decade. Republicans also want to extend them permanently for the top 2 percent of earners, for an added $700 billion. The top don’t need the cuts, don’t deserve them, and won’t spend the windfall (and thereby stimulate the economy).

The best outcome would be an agreement to extend the tax cuts for the bottom 99 percent, for two years. This would stimulate the economy in the short term when it most needs it, and reduce the long-term deficit.

Likelihood of this happening over Republican and DINO objections is zero.

Meanwhile, unless Congress agrees to extend unemployment benefits by Tuesday, 800,000 long-term unemployed will start running out. Extended benefits are not only necessary given the record number and level of long-term unemployed, but they’re also one of the best means of stimulating spending. The unemployed will spend every dollar of benefits they receive.

The best outcome would be another six-month extension, at a cost of $34 billion. This would help an additional 4 million long-term jobless who would otherwise run out of benefits over the next few months. Add in a new WPA that offers work to the jobless — everything from teacher’s aides to improving public parks and installing insulation in public buildings.

Likelihood of this happening over Republican and DINO objections is zero.

Finally, on Wednesday, the President’s deficit commission will issue a report on how to reduce the nation’s long-term deficit. The initial draft was regressive — cutting $3 of spending for every $1 of tax increase, and decimating the Earned Income Tax Credit, among other things.

Robert ReichThe best outcome would be a unanimous report that focused on taming rising health-care costs (see first item above), rejected Republican calls to extend the Bush tax cuts for the wealthy (see second item above), and supported extending unemployment benefits for the long-term jobless and a new WPA (third item). Ideally, the report would also call for new investments in infrastructure and education that would grow the economy and thereby shrink the deficit as a share of GDP.

Likelihood, zero.

National Fiscal Hypocrisy Week may be carried over into next week, too.

Robert Reich

Republished with permission.

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Comments

  1. Lynn Goya says

    Can we please begin to say this right? “The best outcome would be an agreement to extend the tax cuts for the bottom 99 percent.”

    EVERYONE (100 percent of taxpayers) would get a tax break on NET income(adjusted gross after deductions) for the first $250,000 of TAXABLE income. ALL people. Income above $250,000 of adjusted gross income (after those first and second mortgages are deducted, etc.) would be taxed at the higher rate.

    $250,000 adjusted gross income = tax break
    $250,001 of adjusted gross income = tax break on $250,000 + increased tax rate on $1.

    According to Blake Ellis in Money Magazine online (read entire story here: http://money.cnn.com/2010/08/12/pf/taxes/bush_tax_cuts_almost_rich/index.htm): “people making a pinch less than the wealthiest Americans, who don’t quite qualify for the new top two tax brackets, could find themselves in an even lower bracket next year.

    “We should end up with a sweet spot in the middle of the higher income brackets,” said Robert Kerr, senior director of government relations at the National Association of Enrolled Agents. “This is an unintended benefit of the new plan that many people don’t realize.”

    The government is defining the wealthiest Americans as individuals with taxable income of more than $195,550, ($200,000 in adjusted gross income) and joint filers with taxable income over $237,300, ($250,000 in adjusted gross income).

    These taxpayers could be hit with higher tax bills next year as the tax rates for the top two brackets return to pre-Bush administration levels of 36% from 33%, and 39.6% from 35%.

    But under Obama’s tax plan, the 28% income tax bracket would be widened. According to estimates from Congress’s Joint Committee on Taxation, if your taxable income is between $171,850 and $195,550, you would fall into this “sweet spot” and be moved from the 33% tax bracket to the 28% bracket and could end up saving more than $1,000 a year.”

    No wonder Democrats always lose. There is a huge difference between 99 percent of people and 99 percent of income.

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