Well, today's Wall Street Journal laid out the warp and woof of the "Gang of Six" solution to the mounting deficits and debt problems, even as the front page of the Journal reported ('Layoffs Deepen Gloom') that job losses are even greater with companies at their lowest hiring levels in months. As the article noted:
"Consumer spending is a central worry.." and businesses are worried about the "effects of a challenging economy on consumer spending habits
In other words, unemployment is increasing again because of alling aggregate demand, because mainly the consumer demand is not keeping pace. In response, nervous companies (like 'Cracker Barrel') are paring down their work forces not increasing them. So, if this is the case, why on Earth would any sane politico - Reep or Demo- institute a deficit reduction program that ensures an even more challenging economy, and consumer spending tightening even more - with further employer retrenchment? Why do that?
Well, people need to ask the Gang of Six, the coalition of 3 Repub Senators and 3 Dem counterparts (all conservative) who put this mish mash plan together. These turkeys are actually claiming it will deliver tax revenues (about $1 trillion) even as it ensures large tax cuts for the wealthiest stay in place. I would like to know where these meatheads took their math courses, if they took any at all. Sounds like VOODOO math to me, the type that used to be prevalent with Arthur Laffer's moronic Laffer curve during the Reagan supply side era. (Which alas, got reincarnated during the Bush II era to our nation's collective detriment).
So what else is on tap in this insipid plan? According to the Journal (The Gang of Six Play, editorial, p.A16):
- The home owners mortgage interest deduction will be removed.
- No fix for the AMT (Alternative Minimum Tax) which will crunch at least 30 million ordinary earning Americans at great extra cost
- Extending the Bush tax cuts for the wealthiest beyond 2013.
- Cutting Medicare by $650b
- Cutting Social Security by $250 b
- removing the child tax credit for average wage earners - no more claiming kid deductions
Most interesting is the AMT change. For those who aren't aware, the AMT was added to the tax code in 1969, as a sort of parallel code with its own rates and tough rules limiting what can be deducted. The AMT was originally intended to make sure the very wealthy didn't avoid paying taxes entirely. However, it never achieved that goal since the super-rich have clever advisers who are always two or three steps ahead of the IRS. Instead it has gradually ensnared more and more average Americans, ratcheting their taxes upward.
Fortunately, over the past ten years or so, congress has provided last minute AMT patches to rescue middle class tax payers. Those not rescued often pay an additional 15-20% in income taxes. That is significantly less money in their pockets, meaning they will tighten their belts even more...meaning companies looking for free-spending consumers will have a lonnnng wait! And in return, they'll shutter doors and lay off workers!
This a prime example of how government rarely ever really cuts taxes for anyone but the rich and powerful. Four years ago the Tax Policy Center noted that because the Bush tax cuts didn't include any provisions to rein in the AMT, the U.S. Treasury Dept. forecast that the number of households paying it would soar from 1.3 million in 2000 to 35.6 million by 2010.
By 2011, 36.4% of all taxpayers would be paying the alternative tax, estimates the Tax Policy Center, and it would add an average of $3,751 annually to their tax bill.
The fact is that the Bush tax cuts (which the Gang of 6 wants to extend beyond 2013)are of little or no use to the hoi polloi. They get back virtually nada and what they do get back (an average pittance of maybe $350 a year for middle income earners) is eaten away by the AMT or Alternative Minimum Tax. (See Perfectly Legal: The Covert Campaign To Rig Our Tax System to Benefit the Super Rich and Cheat Everybody Else, 2003, by David Cay Johnston'.) Note especially (p. 113) Johnston notes how the AMT in 2000 pulled in only $9.6 billion, but in 2010 would've taken in $141.4 billion- all out of middle class hides. Thus, in 2010 alone, "8.6 million middle income households were denied their entire Bush tax cuts because of the AMT"
In other words, what we have with the compliments of the Gang of Six is robbing from the poorer and giving to the wealthier...probably so they can purchase more gold-embossed his and hers toilets!
Any math halfwit, who's taken only elementary arithmetic, can see the only serious way to make "ends meet" is to repeal the Bush tax cuts. Indeed, with budget deficits now exploding and ever more demands on national resources, there is no other alternative.
While the GOOPers keep on with their spending cuts fetish, any math person knows that it will not meet the country's demands...especially if it aims to stay in Afghanistan and Iraq even more years.
Thus, the Gang of Six plan is one which, to me, is dead in the water. As desperate as Mr. Obama may be for a debt ceilng raise solution, this is not it. Nor is this any kind of a "compromise" (which topic Mr. Obama gave a clever discourse on to some university students some days ago). What we have on offer now is a giveaway by his side, not a compromise. To employ his own jargon, it is carrying a gallon of water nine-tenths of the way up a steep hill while the Reeps cackle like the jackals they are- then switching hands and carrying it the rest of the way! Mr. Obama needs to understand earlier rather than later that the Reeps are incapable of compromise, only "date rape" - as Grover Norquist (the Repukes' real leader) quaintly put it some years back.
There is a better "medicine" available for what ails the nation than this Gang of Fools pseudo -solution tilted toward corporatism and the rich. One does not ingest strychnine to get rid of wasting disease or starvation! Unless, of course, he really wants to kill the patient...the sole aim of the reptiles.
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