More than two weeks after President Barack Obama announced his decision to make a tax-cut deal with Republican leaders, the shock waves continue to buffet many Democrats and others who are stunned by the grim implications.
While the president used political muscle to push the measure through Congress, realization grew that the momentous impacts will span the realms of tax fairness, the social compact and American politics.
All year, the White House had maintained a solid case for insisting that extension of the Bush tax cuts should not reach top rungs of the economic ladder — individuals with annual incomes above $200,000 and couples bringing in more than $250,000 a year.
But as the winter solstice neared, the president tossed that solid case overboard. And he gave lots of booty to the GOP on capital-gains taxation and the estate tax.
Noting the estate-tax sweetheart deal, House Speaker Nancy Pelosi pointed out: “We have a proposal before us that gives 6,600 families in America $25 billion and holds the rest of the provisions in the bill, (such as) low-income tax cuts, hostage to that blackmail.”
In contrast to moldy stereotypes about wealthy Marin, strong belief in progressive taxation is widespread in the county.
The reasons include idealism and the understanding that it makes social sense for the rich to pay their fair share.
After all this time, trickle-down economics has little credibility outside of ideological claims that reducing taxes for the wealthy and corporations will create jobs.
Amy B. Dean, a former president of the South Bay AFL-CIO Labor Council, is correct when she calls such measures “handouts for the powerful given on blind faith.”
Yet Washington is now bent on providing more of such handouts — while corporate profits are at record highs, and huge income gaps between the rich and the rest of us are the widest in our lifetimes.
Less obvious is the grim fact that the cave-in on Bush tax cuts for the wealthy sets the stage for another pernicious agenda in the next two years — undermining Social Security.
A former longtime BusinessWeek columnist, Robert Kuttner, has it right when he warns: “The deal that Obama made with the Republicans just gave deficit hawks new ammunition by increasing the projected deficit by nearly $900 billion over a decade. Social Security will be in the crosshairs.”
The presidentially appointed deficit commission, Kuttner notes, has just laid out a “blueprint” that would do real harm to Social Security — while the Obama-GOP tax deal “increases the deficit, adding to the artificial hysteria that Social Security is going broke.”
I revere the New Deal legacy that gave our country Social Security and other key aspects of the social compact. President Franklin D. Roosevelt fought for economic fairness. Before the end of his first term, FDR denounced “the economic royalists.” He said: “They are unanimous in their hate for me — and I welcome their hatred.”
He did not say, “They hate me — and I want them to like me.”
But now, the bleak truth is painfully real in a comment from the California Democratic Party’s chairman John Burton: “What some might call … a ‘deal’ or ‘compromise,’ I would call capitulation to the Republicans.”
Tax fairness and Social Security are at stake.