All About the Rich People
The top earners are willing to blow up the house rather than have Obama touch their golden goose, the capital gains tax.
Published: July 20, 2011
Lately, when I end up in the inevitable political argument, I am often confronted with the phrase, “It’s all about the spending!” Like Barack Obama went on some sort of profligate spending spree since he got into office, compared to the previous president, whom everyone seems to have somehow forgotten.
Sure, Obama passed the Affordable Care Act—most of which doesn’t even kick in for a few years yet. Sure, there was the stimulus act, which giant swaths of Congressional Republicans voted against, and then promptly went home to their districts to take credit for when the construction projects broke ground and the building checks were handed out. But that, as we can see now, was only a temporary punch of the gas pedal for the economy, and nowhere near enough to really get the car rolling again—remember, because of the GOP, much of the stimulus was tax cuts and credits, which usually do nothing but give more money to rich people.
And that’s what this really is all about, this debt crisis: the rich people. The Paul Ryan budget that the House Republicans passed in the spring wouldn’t balance the budget for the next 30 years, but would gut Medicare and Medicaid (programs rich people don’t use or need) and lock in lower taxes, thus putting the nation’s tax burden squarely on the shoulders of the shrinking middle class and the growing poor. And the Republicans have wanted it this way for years.
Don’t believe me? Way back in 2002, the house organ of the wealthy, The Wall Street Journal’s editorial page, complained that the poor didn’t pay enough in taxes, and thus didn’t hate the government enough to want to shrink it. “Lucky duckies,” the Journal called them. If poor people paid more in taxes, the Journal’s rationale went, they’d have more resentment toward the government and then there would be tax reform—which would lower taxes more on the wealthy (who naturally have more say in government, due to lobbyists).
Whatever is the most expedient excuse for tax cuts is the one that’s spun. George W. Bush first argued as a candidate that we needed tax cuts because there was a surplus, then because “it’s your money,” and then because of high gas prices. Whatever you needed, you could get, he said, if you just passed his tax cut. After three of those (and the slowest economic growth since World War II), all those rationales have been discarded, and with a Democrat in the White House, the Republicans have now resorted to hostage taking.
New York Times columnist Paul Krugman had it correct when he pointed out that ever since Bill Clinton, the GOP has decided that no Democrat can be a legitimate leader of the United States. The GOP never had a problem with raising the debt limit under Reagan, George H.W. Bush, or George W. Of course, none of those presidents was ever interrupted during the middle of a State of the Union speech by some back-bencher Congressman yelling “You lie,” either. So whatever excuse you hear this week from the party of the worst part, you can be certain it’s not about debt or the deficit or Social Security or Medicare or what have you. It’s about rich people’s money.
Two weeks ago, President Obama was offering cuts in Medicare (in the form of raising the eligibility age), Social Security (much to the consternation of his political base), and social programs if only the GOP would accept the elimination of all sorts of loopholes benefiting the super-rich and tax increases on capital gains. And more than anything else this is why Republicans are going to the mat.
The dirty secret is that capital gains taxes—taxes on “unearned wealth”—are what allow people like Donald Trump to pay a lower tax rate than his maid or secretary. Right now the long-term rate on capital gains—investments or assets that are held for more than a year—are taxed at 15 percent, compared to the top income tax rate of 35 percent. And rather than accept everything that the president offered, which would be far more than they could ever get under a Republican president, the top earners are willing to blow up the house so he can’t touch their golden goose, the capital gains tax.
Thirty years ago Ronald Reagan did two things that led us to where we are now: He lowered the top tax rates, and he told us that tax cuts create revenue. The second of these was a lie the GOP has been perpetuating despite being proven wrong again and again, and the former has created a vicious circle of entitlement among the wealthy, who will do anything to keep their taxes from rising. As real income for everyone else slowly shrinks, these freeloaders squeeze their bought-and-paid-for Congressmen (and in this case, many Democrats are no less complicit) until we end up with zero-sum games of chicken like the one we’re in.
Sometime soon, neither side will yield.
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