Why the Tax Deal Is an Abomination

Obama Extends Bush Tax Cuts

The deal the President struck with Republican leaders is an abomination.

It will cost $900 billion over the next two years — larger than the bailout of Wall Street, GM, and Chrysler put together, larger than the stimulus package, larger than anything that’s come out of Washington in years.

It makes a mockery of deficit reduction. Worse, the lion’s share of that $900 billion will go to the very rich. Families with incomes of over $1 million will reap an average of about $70,000, while middle-class families earning $50,000 a year will get an average of around $1,500. In addition, the deal just about eviscerates the estate tax — yanking the exemption up to $5 million per person and a maximum rate of 35 percent.

And for what?

Wealthy families won’t spend nearly as large a share of what they get out of this deal as will middle-class and working-class families, so it doesn’t do much to stimulate the economy.

The deal further concentrates income and wealth in America — when it’s already more concentrated than at any time in the last 80 years.

The bits and pieces the President got in return — extended unemployment benefits, a continuation of certain small tax benefits for the middle class — are peanuts. After last week’s awful jobs report, Senate Republicans would have been forced to extend unemployment insurance anyway.

It’s politically nuts. Polls showed most Americans are against extending the Bush tax cuts for the wealthy.

It would have been a defining issue for the President to use to show whose side he’s on (the middle and working class) and whose side the Republicans are on (not the middle and working class). And given that the House turns over to Republicans in January, the President probably won’t have another chance like this one.

It loses him even more of his “base” — by which I mean people who think of themselves as Democrats and are committed to the ideal of equal opportunity and don’t want the nation to become even more of a plutocracy.

Robert ReichIt makes him look weak — Republicans got everything they wanted. And when a President looks weak, he is weak.

House and Senate Democrats should reject this abomination.

The President should get himself new advisor.

Robert Reich

This article first appeared on Robert Reich’s Blog. Republished with permission.

The video below was added to this post because Keith Olbermann echo’s Robert Reich’s assessment of Obama’s tax “deal”. It’s worth listening to.

Visit msnbc.com for breaking news, world news, and news about the economy

Published by the LA Progressive on December 8, 2010
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About Robert Reich

Robert B. Reich is Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written eleven books, including The Work of Nations, which has been translated into 22 languages; the best-sellers The Future of Success and Locked in the Cabinet, and his most recent book, Supercapitalism. His articles have appeared in the New Yorker, Atlantic Monthly, New York Times, Washington Post, and Wall Street Journal. Mr. Reich is co-founding editor of The American Prospect magazine.

Reich has been a member of the faculties of Harvard’s John F. Kennedy School of Government and of Brandeis University. He received his B.A. from Dartmouth College, his M.A. from Oxford University, where he was a Rhodes Scholar, and his J.D. from Yale Law School.