on lemmings and the republican base

            You have to wonder just how blatant GOP hypocrisy has to get before even the most  troglodytic of its base begins to scratch their oversize craniums and say, “run that by  me again.”

            We could choose examples from any number of areas: military (support the military-industrial complex, ignore veterans); justice system (beware “activist” judges unless they are our “activist” judges—see Roberts, Scalia, Thomas et al); health care (decry rising medical costs but make sure nothing prevents big Pharma for charging four times in America what it charges for the same drugs in Canada); financial system (rail against “big bank bailouts” but block legislation that would have made big banks pay for their own bailouts).  And that ignores the most obvious Republican hypocrisy of late—the 24/7 screeching about the criticality of reducing the budget deficit, intoned in chorus with 24/7 screeching about the criticality of tax reduction—especially for the high income sectors of the economy.  Is it really possible that only Progressives can see the disconnect there?

            We recently had the spectacle of Mitch McConnell and his lock-step minions literally holding the unemployed hostage to insure the preservation of a lower tax rate for the richest 5% of Americans.  As I noted in an earlier blog, their argument was that unemployment benefits could not be extended without finding a corresponding amount of money to cut from somewhere else in the budget (defense spending being exempted from that).  Failure to do so, the GOP argued out of one side of its mouth, would clearly add to the budget deficit.

            Letting the marginal tax rate on the wealthiest 5% of Americans rise to Clinton era levels would have added 900 billion dollars to the Treasury over the next 10 years, which, logic suggests, would lower the budget deficit by a similar amount.  From the other side of its mouth, the GOP mumbled something about that not being important because raising taxes would prevent our wealthiest from creating all the new jobs they haven’t been creating for the past 8 years.  Under the lower tax rate that had to be preserved.

            Nor were the unemployed the only group held hostage.  Had Obama not capitulated, the 95% of Americans who don’t make more than 250K a year would have seen their taxes go up as well.  That means the lower income earners—who put nearly every dollar they make back into the economy—and the middle income earners—who put most of their earnings back—would have had fewer dollars to do that with.  No matter.  The wealthiest, who simply invest most of what a lower tax rate saves them in accounts (often off-shore) that benefit no one but themselves, were protected.

            That particular hypocrisy has been well-documented, even by some conservative pundits.  Less commented on was the fight McConnell et al staged to insure that the reinstated estate tax would be as low as possible.  Republicans pushed up—to 5 million dollars—the amount that would be excluded from the tax, and pushed down—to 35% from the 55% under Clinton—the rate at which the amount over 5 million would be taxed. 

The justification from the GOP on this?  Why, clearly taxing a man’s estate represents double taxation.  John Q. Richguy already paid taxes on whatever money was in his estate.  True enough in theory—though in practice John Q.’s army of accountants and tax lawyers probably sheltered most of his estate.  Even that begs the issue however.  When the estate is passed on to the inheritor—John Q. Richguy II—sonny boy is receiving income on which HE never paid taxes.  Taxing pappy twice would be no good, but taxing pappy when he earns his income, then taxing sonny when he inherits his income is two separate things.

The effect on the budget deficit that Republican changes in the estate tax provision produce?  In the near term, the next 5 years or so, it adds about 140 billion to the deficit we MUST reduce.

All this GOP obfuscation took place in the Senate.  On Dec. 22, what portends an even greater level of hypocrisy took place in the House.  On that day, Republican House leaders released the “budget rules” they intend to adopt when they take over the House in January. 

Before getting to the GOP plan, a little history.  In 2007, Democratic majorities in the House and Senate adopted (actually, re-adopted what had been in place under Clinton) what was referred to as “pay-go.”  Pay-go meant that tax cuts or increases in entitlement spending  had to be offset by tax increases or entitlement cuts.  So if you wanted to increase federal Medicaid support, you had to pay for it with tax increases or corresponding cuts in other entitlement programs.  Similarly, and probably more importantly, if you wanted to cut taxes, you had to make offsetting cuts in entitlement programs.  Essentially, these were zero sum rules.

Under the new GOP rules, there have to be offsets for any entitlement increases, but not for tax cuts.  More perversely, you can only offset an increase in one area of entitlement spending by decreasing it in another entitlement.  In other words, if you increase Medicaid spending you have to decrease Medicare spending (or some other entitlement—veterans’ programs would be a likely GOP target).  Under the new Republican rules, you couldn’t pay for that increase in Medicaid spending by raising taxes.

It gets worse.  The rules direct the leader of the House Budget Committee to ignore several costs when computing the budget impact of certain actions.  For example, making the Bush tax cuts permanent would cost the Treasury in excess of a trillion dollars by approximately 2030, but the House Budget Committee is forbidden to take that cost into consideration when it considers the affordability of any legislative actions.  Similarly, the cost—also estimated in the trillions—of repealing the health reform law could not be factored into new budget considerations. 

What these new rules reflect is the Republican mantra, chanted now since Reagan, that the only thing needed to propel the economy forward is a never-ending string of tax reductions or eliminations.  Sanctifying tax cuts and demonizing spending has rallied the Republican base for 30 years, so it should probably be no surprise they’re still doing it.  Wouldn’t it be nice if  the rural red state voters who think of themselves as the Republican base would finally realize that there are two Republican bases—the mostly lower and middle income rural red staters who continually elect Republicans, and the wildly wealthy top 5% whose interests the party will do anything to further?  Wouldn’t it be nice if the Joe the Plumber’s of the world would finally see that the most consistent effect of “trickle down economics” has been an inexorable “trickling up” of the nation’s wealth?

But that’s clearly asking too much.  Lemmings, after all, follow their leader off the cliff because they steadfastly keep their eyes down and see nothing but the lemming butt in front of them.