Obama's New Christmas Carol: Deck the Halls with Windfalls for the Wealthy
December 8, 2010 · By Karen Dolan
A breakdown of what was gained (not much) and what was lost (a lot) in the Obama Tax Compromise.
"Isn't it wonderful to be in a city of misplaced priorities and ass-backward judgments" says retiring Representative David Obey (D-WI) of the Obama/Republican Tax Breaks for the Rich deal teached Monday night. Obama "negotiated" with Congressional Republicans to produce a roughly $800 B so-called "Second Stimulus" package which lines the pockets of the richest 2% and contains precious little stimulus for the rest of us. The rich get richer, the poor are granted a few more months to survive. Ass-backward, back-assward and every ass and back in between.
First, let's start with what Obama got right: Obama did obtain agreement on a 13-month extension of federal unemployment benefits. This is desperately needed and very stimulative. Mainstream economist Mark Zandi points out that for every $1 spent on Unemployment Insurance, at least $1.61 is put back into the economy. The extension of tax breaks, such as the Earned Income Tax Credit, the Child Tax Credit and the College Tuition Tax Credit indeed help low-income families and stimulate the economy. Good. The very least that we needed. This "negotiation" allowed for a release of those held hostage by Congressional Republicans-- America's working families and jobless.
But at what price and was it necessary to give new yachts to the wealthy so that the rest of us can survive? The Paris Hilton's and Helmsley pooch Trouble get at least 2 more years of $25,000 in tax breaks.
And, well, that's not all these needy millionaires and billionaires get out of this deal. No siree.
The Bush-era temporary elimination of the Estate Tax is set to expire on Jan. 1 2011, re-imposing the levy of up to 55% on estates valued at more than $1 million. In the deal however, instead of letting the Estate Tax to reinstate fully and pump much needed revenue into our hurting economy, there would be $10 million exemption per couple and a lowered tax rate of only 35% for two years.The deal would make the Estate Tax even weaker than it was under President Bush, and the weakest it has been in seven decades. As OMB watch explains, Obama has done for rich inheritors what Bush tried, but failed to do...significantly weaken the Estate Tax and create a smooth path to its elimination. Merry Christmas Ms. Hilton..and your little dog too..
Further, Obama replaces the progressive Making Work Pay tax credit from the 2009 Recovery Act with a regressive reduction in Social Security payroll tax. The Making Work Pay tax credit benefited households earning up to $75,000 and was highly stimulative. But the payroll tax holiday now proposed is skewed toward the wealthy and is far less stimulative. A low-income family will receive less relief than they did from the Making Work Pay credit, a middle-income family could save $800, but a couple earning over $220,000 will receive an additional windfall of about $4,000.
There is no money for a public jobs program.There is no money for stimulative aid to state and local governments. There is no money for an extension of the highly stimulative jobs emergency fund which funded jobs for poor people struggling to find work through the Temporary Assistance for Needy Families federal program.
But, Obama insists, he needed to negotiate in this way to get federal unemployment benefits extended for millions of Americans.
The truth is that the White House gave away the farm almost a month ago, well in advance of the deal cut this week. In an interview with The Huffington Post, Obama advisor David Axelrod essentially tipped Obama's hat that tax cuts for the rich would be a-ok with the Administration. This, after a September interview in which now House Speaker-Elect, John Boehner had said he wouldn't let the tax cuts for the rest of Americans expire if no deal was cut for extension of tax cuts for the rich.
Opposition rings loudly from House and Senate Democrats and outrage from Obama's base is palpable. To answer his critics from the center and the left, Obama almost whines "What else did you want me to do?"
Mr. President, we want you to hold true to your campaign promise to let the extra tax cuts for the nation's wealthiest 2% expire. We want you to go to the mat for our nation's millions of jobless and not betray the middle class on the way. We want you to lead the fight to create jobs. We want you to lead the fight for a progressive tax system which makes an American economy that works for all of us. We want you to lead and not capitulate to reckless demands by Republicans shamelessly holding middle and lower-income Americans hostage.
We want you to be the President for the 98% of us who need you. That's what we want you to do.
- estate tax
- Bush Tax Cuts
- Obama Tax
- The Economy
- Earned Income Tax Credit
- Child Tax Credit
- College Tuition Tax Credit
- Making Work Pay Tax Credit
- help the needy
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