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If It Really Requires “Serious Cuts” To Raise The Debt Ceiling, Let’s Cut Tax Cuts For Millionaires

If It Really Requires “Serious Cuts” To Raise The Debt Ceiling, Let’s Cut Tax Cuts For Millionaires

The U.S. economy felt the first tremor of what life may be like if Congress refuses to raise the debt ceiling, with Standard and Poor downgrading the country’s debt outlook from “stable” to “negative.” 

The House GOP has been all over the media stating that they will not allow the debt ceiling to be raised without significant and meaningful cuts in the budget, despite all signs pointing to the Republicans being as desperate for the ceiling to be raised as the Democrats, the administration, Wall Street and pretty much every financial adviser in the country.

The ceiling will be raised, and it will be raised on time.  The Republican threat to hold it hostage for additional spending cuts, such as the ones proposed in the draconian Ryan budget, are all bluster. 

But still, the Republicans are demanding the credit card days be ended.  So, let’s give them what they ask for.

Illinois Congressman Joe Walsh was on This Week on Sunday, using the traditional Republican talking point that the government needs to stop relying on debt. “I wish they got as excited and animated about all this debt we’re placing at the feet and on the backs of our kids and our grandkids,” Walsh said. “If you’re going to ask this Congress to support a raise in the debt limit, there got to be something structural on the spending side because we’ve got to cut up this credit card.”

Republicans love to use the credit card metaphor, or talk about tightening the belt like the families at the kitchen table.  Families have to live within their budgets, they say.

It’s true. And when families sit and look at their budgets, and realize they have a huge, looming bill that is due, someone has to go bring in some more money.

The Republicans pushed through $42 billion in tax cuts to the wealthy last year.  That’s more money than it just “cut” from the 2011 budget last week.

If you had a massive bill due, and someone was going to repossess the family car if you didn’t catch up in payments, would you force your son to leave college to use his tuition money to pay for it?  Maybe if that were the only option available.  But you certainly wouldn’t do it while you were giving away a thousand dollars a month to your wealthy Great Uncle Mark, who is living off the interest of his stock options.

Republicans want to hold the debt ceiling vote hostage to push for cuts to Medicaid, Medicare, Social Security and programs for the low income earners.  Maybe now is the time for Democrats to threaten to hold it hostage to force multi-millionaires to pay their fair share in taxes.

After all, the GOP wants the debt ceiling raised just as badly. 

 

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photo from Gage Skidmore

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249 comments

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7:51AM PDT on Apr 23, 2011

People with millions of dollars can afford to pay more taxes! Make corporations do all their business in the USA if they send jobs overseas double tax them! They can save in taxes by keeping jobs here and not sending them overseas!

9:12AM PDT on Apr 22, 2011

Funny thing about that Moron brown . I have E-Mails from his Auto generator that states , WE Need To sacrifice ... Hmm hey Brown how about Sacrificing Your Pay Raises you politicians seem to have no problems giving yourselves wether you do any semblance of a good job. or sacrifice the Retirement you loafers gave yourselves that we couldnt get in a dream , ?? how about that , How can you EXEMPT yourselves from a law that is unconstitutional ammendment 28 remember?? ou Politicians sem to have no problems making sure that you are set for life while you drain every dime we have making sure your right wing buddies get their pockets filed. You seem to have no worries about social security because you made sutre you will be sitting pretty AT OUR EXPENSE what the hell is wrong with you . Your auto responses are a full deluxe pakage of letters and words assembled to say not much else than we have to sacrifice , What exactly have you sacrificed for the budjet? not A Dam Thing .

5:45PM PDT on Apr 21, 2011

Sorry Robert B. Much of your comment is garbage. A few comments of my own.

It is absurd to say the wealthy cannot afford to pay more tax. I'm not wealthy but I have paid more tax than average since I began working. I can afford to. I do not resent it.

By my ethical standards, it is immoral to expect someone trying to support two people on $13k to pay $1,300 in tax. ($13k is the average income of those Americans who did not pay income tax. 60 odd % of those filers are married or head of household. - 2008 data - A 10% tax has been proposed for all low income payers.).

By my standards It is not immoral for some making $1,000,000 to pay a 50% marginal rate. (Though I think it would be ill advised).

By my standards the morality of the 2,000 taxpayers whose income exceeded $1,000,000 but paid no tax is questionable.

By your standards US taxation was immoral for 50 years, some of the proudest in US history (1932 through 1986). Please note, the top marginal rate was 50% through the first six years of Reagan's presidency.

Incidentally, nowhere have I suggested a 50% marginal rate.

Your throwing in fascist etc destroys your credibility. You're foaming at the mouth. Take a valium.

4:06PM PDT on Apr 21, 2011

@James J "[social security] isn't a surplus because it's been spent."

Let's go through this in baby steps.

Social security funds are invested in US bonds a world “gold standard” of bond safety and stability.

When you buy a bond, the issuer agrees to pay interest and return your principal after some term. The issuer ALWAYS SPENDS the money received. I have a diversified bond portfolio. All the money I put in has been spent. You seem to suggest that because the money is spent, the bonds are now worthless, that bonds are not safe assets.

The federal government owes soc sec tax payers $2.6 trillion. Last year, $781 billion came in, $712 billion went out. This is a SURPLUS by any standard

My IRA includes a treasury fund. I gave $$ to a fund manager to purchase treasury bonds as I might with a Chile style pension. With current soc sec, the feds use tax $$ to purchase bonds. Technically there is a difference, practically there is none. In each case my retirement $$ are used to purchase treasuries. The difference: my IRA purchase goes through a middle man, my soc sec does not. In both cases, my $$ are spent. In each case the fed is on the hook to repay my principal at some time in the future.

Barry O characterizes SS an obstacle to future growth. SS is a minority fraction of total debt. Most debt built up during tax cut/ high deficit spending periods (Reagan, Bush 2). If debt slows growth, it can be ascribed to tax cuts not SS.

6:00AM PDT on Apr 21, 2011

David C--The federal income tax (and yes, soc sec) is the most uniform tax in the US, many other taxes are local and their level will be dependent on individual location decisions (Chicago vs Miami for example). Noone should be required to more in taxes. The top 1% may have certain pockets of super wealthy non-productive people (Gearge Clooney, Joy Behar, sports "stars" and yes, Wall Street types) but to confiscate anyones' productive income at 50% or so is immoral. Care2 should focus on making children pay attention in school, work hard and not foster the victimization of society. Finally, begin to read Arthur Laffer...his studies are fact based and not twisted with hyperbole and baseless assertions: like the top 1% can afford to pay more in taxes. This is absurd...confiscating someone's income because the political class deems it necessary is fascist and indicative of the fatalist socialist meanderings found in these messages. Here's the path to a reduction in taxes: everyone works as hard as they possibly can from age 5, yes in SCHOOL, through age 60.

10:19PM PDT on Apr 20, 2011

David C, those SS bonds are debt, and you probably didn't know it but the US has a debt problem.

It isn't a surplus because it's been spent.

If it had been invested into growth the program would be in much better shape. Chile did this that and the social security invested into growth has ad huge benefits, both for their retirement fund and their economy, both have outpaced the US by leaps and bounds.

Spending SS tax and replacing it with debt was a ponzie scheme. That the democrats set it up that way from the beginning has cost the social security system and the retirees trillions of dollars.

6:23PM PDT on Apr 20, 2011

The only thing the LESS TAX money was invested in is HIgher Bonuses and shipping jobs overseas. They have HAD less tax than they ever have for 10 frikking years. There was no growth in labor that can feed a family. And now you want to complain because we dont want another 10 years of it? They aren't investing in anything that creates jobs. For the 10 years period we have seen job DEPLETION...not growth. Nafta should have never been implemented. It has done NOTHING but kill American jobs and DRASTICALLY increase corporate profit.

6:12PM PDT on Apr 20, 2011

James J. People pay soc sec tax, the $$ are invested in T bonds. The government gets to use the money just as they would when anyone purchases a bond. Whar did you think should be done - have the government buy stocks? or deposit it with Bank of America?. Can you imagine the howls if the government held a trillions of $$ in the stock market?

SS has been in surplus for 76 years. It has a hell of big balance in T bonds. Are you suggesting the government should default on those bonds? I really don't understand your position when you talk about loss. It's like saying you pay for an annuity but you may not collect it because that would reduce the insurance company's net worth.

Show me the data that says you can't get growth with higher taxes than today's. It grew after WW2. It grew after Clinton increased taxes. Obviously excessive taxes are bad. I see no evidence that the Clinton levels were bad. Do you have any? You make a lot of statements but you never back them up with data. Oh and don't use Reagan years. The deficit was roaring up. Much of the economic growth in the 80's was credit card spending - massive increases in defense spending increased the GDP - they also increased the deficit.

5:56PM PDT on Apr 20, 2011

@Barry Obama As I've said before, I think taxing the rich 100% would be stupid. I think 90% would also be stupid. I have in mind rates closer to those in the Clinton years.

I'm well aware of the capital gains tax remuneration issue. The CEO of Oracle was paid $250k plus $60 million in options. But I'm skeptical that low cap gains tax does anything significant for innovation. How often has Apple gone to the market for capital needed to expand? This is a serious question - I don't know.

I do know that HP, Apple, Microsoft, Intel, Cisco were founded when the tax rate was 25%? (30%?), that the internet surge, all those new high tech companies, occured with a high cap gains tax. My gut feeling is that low tax just turned Wall Street into a casino for the wealthy. I'm skeptical it enhances investment in new technology - that seems to come most often from venture capitalists. An IPO comes when the company is ready to fly. I have no data on any of this. As I said it is just an impression.

The low cap gains tax is how the very wealthiest Americans, those elite 400, paid only 17% of their income in federal tax.

I don't know what you mean re the 2 trillion entitlement monkey slowing growth. Are you suggesting that the $$ middle and low income people paying soc sec tax have invested in T bonds shouldn't be repaid?

5:11PM PDT on Apr 20, 2011

@ David C "Your point is that we can have 4% economic growth at a 90% top tax rate?" Yes, that would be true if we didn't have a $2.162T entitlement monkey on our backs. Again, please excuse me for being inarticulate, repetitive or both. Like almost all taxpayers in the upper 2% the largest part of my income is capital gains. From WWII through the late 60's cap gains tax was 25% maximum. Most people in the upper income brackets can easily arrange to be compensated through stock or stock options - Bill Gates "only" gets paid $1M per year - his income from cap gains is hugely larger - what does he, or Warren Buffett or Eric Schmidt care if you tax ALL the regular income at 100% - pardon the vulgarity, but as they say on Wall Street that's "mice nuts". So go ahead and tax income like it was in the 50s and 60s - it's no big deal - either for the payer or payee (IRS). As I mentioned several times, the net tax receipts from raising the top tax bracket to 100% won't make a dent in the deficit or the dent. Now let's discuss capital gains. Obviously any major cap gains tax hike will kill our economic system. Innovative companies like Apple, Google, Cisco etc, etc are able to raise capital because while the risks for the investors are high - so is the potential for high return. Why should I risk putting my money in video content delivery technology from Harmonic(HLIT) when the taxman would take 50,60,70%??? Where is HLIT then going to get money to hire the engineers it needs?

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