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The Dem message to Republicans, translated

By Greg Sargent

Over the weekend, two Dem Senators each proposed their own version of a "compromise" on the Bush tax cuts. Chuck Schumer suggested raising the threshold to $1 million, rather than $250,000. And Mark Warner offered to let just the high-end cuts expire for two years while using the revenues gained to cut taxes for small businesses.

Jon Walker skewers both ideas:

I don't see how Schumer's idea does any good. Not extending the tax cuts for those over $250,000 is already very popular, raising the threshold to a $1 million would probably only gain a small amount more public support. And I don't see how it gains any votes in Congress. The Republicans already staked out a firm "all tax cuts must be protected" position, and they smell a stench of weakness wafting from the White House. I don't see how Schumer's compromise changes the dynamics.

Mark Warner's proposal is slightly better because it would at least redirect the money toward something more likely to help the economy, and, by being temporary, it would preserve most of the advantage of long-term deficit reduction gained from letting the tax cuts for the wealthy expire. Alas, Warner's "compromise" shows that he suffers from the nonsensical Washington disease that the solution to every problem is additional tax credits for "small businesses."

The larger problem is that there's no incentive whatsoever for Republicans to accept any such "deals." By signaling that their priority is to gain a compromise, rather than firmly laying down a marker and refusing to budge, Dems have already sent a clear message to Republicans: We'll give you what you want, as long as we can all find a way to call it a "compromise."

Until that basic message changes, Republicans merely have to wait Dems out. The rest is just dotting Is and crossing Ts.

By Greg Sargent  | November 15, 2010; 12:59 PM ET
Categories:  2010 elections, Senate Dems, taxes  
Save & Share:  Send E-mail   Facebook   Twitter   Digg   Yahoo Buzz   Del.icio.us   StumbleUpon   Technorati   Google Buzz   Previous: Liberals to Dem leaders: Hold a vote just on extending middle class tax cuts
Next: No mandate for GOP rule?

Comments

This is my Compromise


I agree with you - I think they should extend unemployment for a year - there is no telling what the Republicans will do with it next year - make it ONE YEAR now. I would agree to that.


And I would also agree to making the top rate 36% - (instead of the 35%)

LEAVE OUT the Clinton Temporary Surcharge, which probably has already expired.

Posted by: RedRevolution | November 15, 2010 1:10 PM | Report abuse

Schumer's proposal may sound good, but there is another problem: there probably is not much revenue at that level.

The CBO would tell the story, but I would imagine that the projected revenues would be dramatically reduced.

In New York, everything is so expensive, one million probably seems like the same as 250K seems to the rest of the country.

I'm not kidding about that.

Posted by: RedRevolution | November 15, 2010 1:13 PM | Report abuse

I have to repeat this because so many people are just not getting it.


The top effective tax rate before Bush was originally 36%.

Then Clinton put a 10% TEMPORARY SURCHARGE on top of that rate - to make an effective 39.6%.


So Bush's TAX CUT WAS REALLY FROM 36% TO 35%.


The Clinton Temporary Surcharge was thrown away. It is IMPORTANT TO SEPARATE OUT THESE TWO separate tax actions. The Reagan rate was 31%.

Posted by: RedRevolution | November 15, 2010 1:16 PM | Report abuse

Two Bills: 1) middle class tax cut either extending it or making it permanent. 2) a temporary extension on the top 10% tax cut which also extends unemployment.

Posted by: ashotinthedark | November 15, 2010 1:18 PM | Report abuse

ashotinthedark at 1:18 PM

That is just what the American People want - to kick off with the spirit of cooperation and compromise


I suppose you will enjoy it when Boehner forces the democrats to make difficult "Show Votes" just to make their elections difficult - especially when those proposals have little chance of getting through the Senate.


OK, tough guy, you want difficult votes? I'm sure Boehner has a few ready to go to throw right back at you.

How much more idiotic can the liberals be?

Posted by: RedRevolution | November 15, 2010 1:21 PM | Report abuse

One workable compromise would be to agree to extend the Bush tax cuts for people above $250K if the Republicans agree to eliminate tax expenditures and deductions totaling the same amount (roughly $700 million) that are used primarily by the above 250K crowd.

Posted by: disgruntledfan | November 15, 2010 1:22 PM | Report abuse

Until that basic message changes, Republicans merely have to wait Dems out.

~~~~

While I agree with much of what you say, I would add that there really isn't much time left.

I say let them all expire and start from scratch. Add a half a dozen new income stratification so that your 400,000th dollar of income isn't being taxed at the same rate as your 4,000,000th dollar of income.

Posted by: HansSolo | November 15, 2010 1:23 PM | Report abuse

ashotinthedark at 1:18 PM

Tick Tick tick tick tick tick tick tick


Boehner is coming in, You are going to get it the same as you give it now.


I have little idea why you want to make things more difficult for the democrats over the next few years.


The American People would prefer if the democrats did not DISRESPECT the elections this way.


But go ahead, if you think that OFFENDING the American People this way makes sense, go ahead and do it.

.

Posted by: RedRevolution | November 15, 2010 1:25 PM | Report abuse

disgruntledfan - That kind of defeats the purpose, but I like the way you think.

Posted by: HansSolo | November 15, 2010 1:26 PM | Report abuse

OK, tough guy, you want difficult votes? I'm sure Boehner has a few ready to go to throw right back at you.

How much more idiotic can the liberals be?

-------------------------------

How could voting for continuing the middle class tax cut be difficult? You either support a middle class tax cut or you don't. If you will only vote for it with a tax cut for the top 10% then you what you really support is a tax cut for the top 10% not for the middle class.


Posted by: ashotinthedark | November 15, 2010 1:33 PM | Report abuse

disgruntledfan and Hans Solo

So, the rich pay for practically the entire Federal budget right now

The bottom 50% pay virtually no Federal income taxes at all - (outside of Social Security)


So, at this point, the entire Federal budget is paid for by the upper 50% of the population.


How much more do you want to go? Do you want the upper 10% of the population to pay for Half the Federal budget ???

We are almost getting there at this point.


____________________________

Please take a serious look at where the income taxes are now - the rates are high - any higher and they get ridiculous and they hamper economic growth.


Add in all the State, county, local and school taxes - and we are talking about a major tax burden which should be REDUCED.

Posted by: RedRevolution | November 15, 2010 1:34 PM | Report abuse

Here is the good news,

"The recent rebound in mergers and acquisitions is expected to strengthen significantly next year, according to a new report, with global deal activity on track to rise 36 percent, to $3.04 trillion.

The total would be the highest amount since 2007, when the market logged $4.28 trillion in deals in the months that preceded the financial crisis.

A widespread surge in confidence will power the rally, according to the report, a joint project by Thomson Reuters and Freeman Consulting Services that included interviews with 150 executives from a broad swath of industries..."

Then there is this...

"The report also predicted that two sectors would shine in 2011 for deals: real estate and financial firms. After being pummeled by the credit crisis, many companies from these industries will need to restructure their businesses, pursue consolidation, divest assets or simply play catch-up.

“Financials seem to be the most bullish on a percentage basis,” Mr. Toole said. “This year we saw Goldman Sachs divesting its prop trading desk. … Now we’ll see it on a fuller scale.”
dealbook/nyt

Great, the slicing and dicing continues, the rich get richer, jobs in the offing? Nope.

Posted by: shrink2 | November 15, 2010 1:34 PM | Report abuse

So, at this point, the entire Federal budget is paid for by the upper 50% of the population.
--------------------------------------

Do you know what happened to the tax burden of the top 10% following the Bush tax cuts?

Here's a hint, it didn't go down.

Posted by: ashotinthedark | November 15, 2010 1:36 PM | Report abuse

You'd think that the passing HCR would have taught the dems something...but noooo. Let's do it all over again with tax cuts for the wealthy.

Posted by: iconografer | November 15, 2010 1:37 PM | Report abuse

Without defining what a "small business" is, it's pointless to talk about it. Currently, "small businesses" are not defined by the number of their employees, or their yearly revenue, but by the number of owners.

So, Koch Industries or Cargill are currently considered to be a "small business" because they are owned by a very small number of people. It doesn't matter that each of them have thousands of employees or revenues in the billions of dollars a year.

You wonder why Republicans are taking such a stand on extending the Bush tax cuts for those making over $250,000 because of it affects "small businesses"?

Posted by: GeraldWeinand | November 15, 2010 1:38 PM | Report abuse

ashotinthedark - Most of us here are using Kevin's wonderful troll blocker. It allows us to ignore SaveTheRainForest and is about the only thing that makes this blog's comment section readable.

If you keep posting his nonsense (I'm guessing that is who you are responding too, I can't see his drivel) it makes ignoring him more difficult.

Posted by: HansSolo | November 15, 2010 1:41 PM | Report abuse

If you keep posting his nonsense (I'm guessing that is who you are responding too, I can't see his drivel) it makes ignoring him more difficult.

Posted by: HansSolo
----------------------------------------

Fair enough, HansSolo. I'll refrain from responding from now on.

Posted by: ashotinthedark | November 15, 2010 1:48 PM | Report abuse

ashotinthedark - Well, I didn't mean you shouldn't respond to anyone, just STRF.

You should really get Kevin's troll blocker. If I never see another PLRA (Plum Line Ret@rded @sshole) post again it will be too soon.

Posted by: HansSolo | November 15, 2010 1:51 PM | Report abuse

from previous posting.

There was no tax hike in '37 on the top tax rate.

http://top-federal-tax-rates.findthebest.com/

Posted by: mikefromArlington | November 15, 2010 1:53 PM | Report abuse

All, check out this polling, no mandate at all for GOP:

http://voices.washingtonpost.com/plum-line/2010/11/no_mandate_for_gop.html

Posted by: Greg Sargent | November 15, 2010 1:55 PM | Report abuse

ashotinthedark - Well, I didn't mean you shouldn't respond to anyone, just STRF.

You should really get Kevin's troll blocker. If I never see another PLRA (Plum Line Ret@rded @sshole) post again it will be too soon.

Posted by: HansSolo
------------------------------------
I meant refrain from responding to the troller.

I do have Kevin's troll blocker on the computer I use most of the time but not on my fancy new iPad that I use from time to time.

Posted by: ashotinthedark | November 15, 2010 1:57 PM | Report abuse

What is getting "translated?"


Sure seems like the point of this is that the democrats "translate" the message of the election to this:

Democrats to the American People: We are ignoring you.

This is very much like a little kid putting their fingers in their ears and singing LA LAA LAA LAAA LAAA LAA LAAA

Posted by: RedRevolution | November 15, 2010 1:57 PM | Report abuse

@mike

In 1937, big increases in tax on businesses and investment income. Disproportionately affects the rich.

Higher marginal rates vs this, distinction without a difference, IMO.

Posted by: sold2u | November 15, 2010 2:01 PM | Report abuse

mikefromArlington - There was in '35, it went from 63% to 79% (roughly). But that was on income over $5,000,000, an astounding amount given the value of the dollar back then.

The top marginal tax bracket can be very misleading. People hear 79% and they think "ZOMG!" But if that tax only hits amounts in excess of 5 million, or, I don't know, 100 million in today's currency, then that number can mean less than it otherwise would.

Posted by: HansSolo | November 15, 2010 2:05 PM | Report abuse

@mike

in 1937, taxes went up on undistributed profits, business, and investment income, disproportionately affecting the rich.

Higher MT rates vs higher investment / business income - distinction w/o a difference, IMO.

Posted by: sold2u | November 15, 2010 2:05 PM | Report abuse

mikefromArlington

Here is a better link showing the same, and more, information:

http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=543

Posted by: HansSolo | November 15, 2010 2:06 PM | Report abuse

ashotinthedark: "I do have Kevin's troll blocker on the computer I use most of the time but not on my fancy new iPad that I use from time to time."

Ah. Another rich liberal. ;) I wish *I* had an iPad. Just sayin'.

If Apple opened up and allowed more browsers on the iPad, you'd be able to use Troll Hunter on that, too. I'll look into what's available.

But, I often browse through the forums on my ancient 1st generation iPhone. I miss the names being posted at the top and clickable links most of all.

Posted by: Kevin_Willis | November 15, 2010 2:19 PM | Report abuse

Kevin: "Ah. Another rich liberal. ;) I wish *I* had an iPad. Just sayin'."


Thanks to all those taxes Obama passed on the rich and passing all that money down to us welfare recipient non-contributing members of society I have all sorts of new toys. Wait that never happened.

I jest...Actually I arranged a deal where I get 10 cents for every time skip uses liberals hate and wealth in a sentence. Voila, new iPad in one week. I kid again.

In all seriousness, I've been very blessed this year and I have used that blessing to stimulate the economy as much as a I can.

Posted by: ashotinthedark | November 15, 2010 2:29 PM | Report abuse

ashotinthedark: "I've been very blessed this year and I have used that blessing to stimulate the economy as much as a I can."

Good deal. I checked--still no way that I can find to use userscripts on an iPad. One day . . . but, as time goes on, anecdotes like that make me feel like deeper middle class tax cuts (and a more progressive tax structure on the wealthy) would be more stimulative of the economy than traditional supply-side, across-the-board cuts in marginal tax rates. And I'm an old school supply-sider, but if trickle-down worked as I had always assumed, I just feel like the economy would be in better shape right now, re: employment.

And yet, if I had more money in my pocket, I'd be stimulating the economy, too. The lower and middle classes just have more of an impetus to spend, and spend now, and there's an awful lot of them, so all that spending could lead to more jobs . . . and just create a virtuous circle. Plus, in that scenario, I've got an iPad. ;)

Posted by: Kevin_Willis | November 15, 2010 2:38 PM | Report abuse

Kevin: "And I'm an old school supply-sider, but if trickle-down worked as I had always assumed, I just feel like the economy would be in better shape right now, re: employment."

Whether or not trickle-down worked at some point, the Bush tax cuts did not trickle down at all. Unless someone can provide me with some reason why circumstances have changed such that things would trickle down, I just can't justify believing in the concept. That case becomes even harder to make when you add the fact that businesses are generally sitting on lots of money at the moment.

I completely agree that the middle class tax cuts would probably quickly be spent. Isn't that what happened when everyone got their checks from Bush? I can tell you that my wife and I would probably use the money to furnish the house we are hoping to buy in the next few months. Although, at this point, with two incomes and no children as of yet (at least none that I know of), we are more upper middle class than middle class.

Posted by: ashotinthedark | November 15, 2010 2:48 PM | Report abuse

HansSolo | November 15, 2010 1:51 PM

This comment is "intent to harass" and you should be banned

Posted by: RedRevolution | November 15, 2010 3:03 PM | Report abuse

Let the tax cuts expire. Everyone has seen the figures of how much doing so will reduce the current national debt.

The amount increase for lower income (below $250 for sure, probably below $100 even) will hardly be noticeable. But the amount we'll make from the multi-million dollar rich supporters of Republicans will make the difference.

Posted by: ABurstofLogic | November 15, 2010 6:57 PM | Report abuse

What would happen if they expire:

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/13/AR2010111302076.html

So something has to be done.

Why does everyone forget that they are ''expiring'' because they violate budget rules? The Budget Act and Byrd Rule prevent measures that increase the deficit as much as the Bush tax cuts did so had to be enacted as ''temporary'' measures.

Sort of silly to worry about the upper upper tier given how well they've done and what little job creating investment has actually occurred.

Posted by: Clear_Eye | November 15, 2010 9:32 PM | Report abuse

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