I was not one of those who voted based primarily on a promise to reduce the deficit. Mainly I didn't because I didn't and don't believe a lot of the promises by the Republicans and Tea Partiers, who seemed to mention it all the time.
Republican Lip Service to Fiscal Responsibility
As Rachel Maddow pointed out Monday, the very first issue the Republicans seem to have planned will be tax cuts for the rich—which will add $700 billion to the deficit over the next ten years. So much for the party of fiscal responsibility.
Republicans have billed themselves as everything good related to money. They tell us they are the party of fiscal responsibility, of economic prosperity, and of jobs. The historical record doesn't bear that out.
The New York Times laid it out clearly in a 2008 article where they observed that since 1929 there have been about 40 years under Republican presidents and 40 years under Democratic presidents, and so they followed what would happen to money if you invested it only under one or the other. If you had taken $10,000 and invested it in an S&P stock market index fund in 1929, allowing it to grow only when there was a Republican president, it would be worth $11,733 today, that is, it would have grown on average 0.4% per year. But that includes the Great Depression under Hoover, so they computed it also without counting him and it came out to $51,211, which is 4.7% per year. It might seem a tidy sum until you see that if you did the same under only Democratic presidents, your money would be worth $300,671, which is 8.9% per year. The Times article has some really nice graphics to illustrate this.
As Former U.S. Representative Richard Gephardt (D-MO) has been known to say, “if you want to live like a Republican, you have to vote for Democrats.”
Sunset of the Bush Tax Cuts
Although I didn't vote for someone making wild promises about deficit control, I do worry about that deficit. I have also heard speculation that the plan by the new Republican-led House will be to increase their bargaining leverage by allowing the Bush tax cuts to expire. For those who don't understand why this matters, the Republicans are in a bit of a bind right now. Their filibuster power in the Senate is useless if it doesn't have legislation to stop. Right now, the Bush tax cuts will expire without any intervention, so there is nothing to filibuster.
The Republicans may be hoping that if the cuts do expire, people will perceive this as a tax increase and blame it on Obama. That would be untrue, but that has never stopped them. In fact, the reason the tax cuts are expiring is that the Republicans wanted to skirt a rule that would have allowed blocking of the cuts if the would significantly increase the budget beyond a ten-year time horizon. Yes, that's right—ten years ago, the Republicans knew these would increase the deficit and passed them anyway by using a technique designed to avoid having this problem confronted directly. Now it's time for them to expire because of action taken by Republicans to dodge deficit scrutiny and, not surprisingly, there is controversy again about the fact that they grossly increase the deficit. And they want to pin the blame on Democrats.
And did I mention the rule the Republicans dodged in installing the Bush tax cuts the first time was something called the Byrd Rule, due to the late U.S. Senator Robert Byrd (D-WV)? Yes, that's a Democrat trying to hold the line against deficit bloat. Republicans put their heads together and came up with a way around it, though.
Right now, Obama wants the Republicans to compromise and allow tax cuts on people making less than a quarter million dollars to be extended. The Republicans are the Party of No, of course, and don't want that. So it won't happen. But they won't get their tax cut for rich people that way either, and Obama won't compromise on that. The tax cuts will then expire. That's when the complicated part happens.
The Republicans appear to hope that if they allow the entire package to expire, voters will cry foul and say that it's Obama who has sold them out by not compromising. They're gambling that poor people will take a tax cut for the rich if there's something in it for them, too, even if it increases the deficit by a huge amount in total contradiction of the platform the Republicans ran on. Hard to imagine. And somehow they will blame it on the Democrats.
But also, once the tax cuts expire as a block, Obama will want to fix it for people earning less than than $250,000, as he's promised he would do. That will require legislation and the Republicans will be back in business with the House in their control and the Senate able to veto results they don't like. They'll be in the perfect position to hold lower-earning citizens hostage for a little payola to the rich in exchange for a tax cut.
A Possible Way Forward
I don't know about you, but personally my economic situation is not great. I have various debts I've been working for years to pay off. My contract with my employer doesn't let me talk about how much money I make, but it's probably okay for me to say it's way less than the quarter of a million dollars Obama is talking about protecting!
Still, though it would be really inconvenient if my taxes went up, I would find a way to survive it. I don't know how. I would and could make it happen for the sake of the common good. That's why I know the people making way more than me can survive it. I find myself wondering if perhaps a lot of us who make less than $250,000 (but still enough to get by) should send mail to Obama saying he should consider lowering the point where he wants to draw the protective line to $150,000 or even $100,000. If he got a lot of mail from us saying we could survive it, the people making more than us who were complaining wouldn't have as much to complain about.
Obama is a great persuader when he puts his mind to it. He could sell it to the American people as a call for personal patriotism, like was done in World War II, to get us out of our debt problem now, rather than leaving it to our grandchildren. He could ask people to pitch in for the cause. He could even send flag lapel pins to everyone who got their taxes raised. Let's see if the rich have it in them to wear their patriotic lapel pins while at the same time whining they don't want to be inconvenienced.
The Republicans are always talking about love of country. But I've always thought love was not about flowers and puppies as much as it is about sacrifice. They ask sacrifice of our less-well-paid citizens by letting them be the ones whose kids go into battle. It's time for them to ante up and start investing in the country they purport to love so much instead of optimizing their cash flow by offshoring accounts and outsourcing workers. Let's make paying taxes a matter of national pride, too.
How would that be for a tax compromise? Lessening the federal deficit and tightening our belts, just like the Republicans asked for. And doing it all while wearing an all-important flag lapel pin. I'd say that's meeting them more than halfway.