David Post: A two-month tax policy
By David Post
The Tea Party has taken its cue from Nancy Reagan. Her solution to the drug problem was, ěJust say no!î It didnít work for drugs. But it works for the Tea Party, which is driving the Republican Party and turning the Democrats into wimps.
Last Christmas,the Bush tax cuts were about to expire. Had Congress done nothing, those tax would have expired and reduced future deficits by trillions of dollars. The Tea Party ó which has yet to be formally introduced to the concept of ěcompromiseî ó just said no! President Obama wanted to let the tax cuts for those earning more than $250,000 expire. The Tea Party just said no.
Former President Clinton opposed the Bush tax cuts when they were enacted 10 years ago. He has argued that 90 percent of the benefit went to the top 2 percent of taxpayers. Today, federal tax revenues are at their lowest levels as a percentage of GDP since before World War II, including every recession in the last 70 years.
Last Christmas, President Clinton said that the time wasnít right for those tax cuts to expire. His opinion carried a great deal of weight, so Democrats agreed to extend the Bush tax cuts for two more years. Sweeteners were tossed in to make Democrats happy. The employeeís share of the payroll tax was reduced by 2 percent for one year, saving the average family about $1,000, and unemployment benefits were extended.
The cost was about $1 trillion over two years. Did the deficit hawk Tea Party even suggest that those cuts be paid for with other budget adjustments? No. Instead, they argued that increasing taxes on the wealthy would kill jobs.
Last August, ignoring whatever moral leadership the U.S. has or should have in world financial markets, the Tea Party just said no to increasing the debt limit so the U.S. could pay its bills. That has never happened. But just say no works. The Democrats demanded that tax increases be part of the solution. The Tea Party just said no.
An hour before the U.S. would have defaulted and pushed world financial markets into unchartered territory, the Democrats agreed to almost $2 trillion in unspecified, to be determined, budget cuts.
This Christmas, last yearís payroll tax cut will expire, reducing the average familyís income next year by $1,000. The Tea Party? Just say no. Unless it is paid for. President Obama proposed paying for it with a tax surcharge on millionaires, the top two-tenths of 1 percent of all taxpayers. Most of the country agreed. But the Tea Party just said no unless paid for without any tax increase. (Why didnít the Tea Party protect the budget demand that last yearís $1 trillion tax cut benefitting the rich be paid for?)
The Tea Party also demanded an expedited ó meaning reduced environmental impact analysis ó construction of an oil pipeline from Canada to the Texas Gulf Coast. This pipeline didnít go through the normal legislative and appropriation process. In years past, adding a spending measure to an related legislation was called ěpork,î or in more recent years, the more benign term,ěearmark.î Last January, bowing to public pressure, Congress swore off earmarks but changed the term to be ějob creation.î
President Obama said he would veto any bill that included the oil pipeline on a hurry-up basis without adequate an environmental impact study. The Tea Party just said no: no employee tax cut without the pipeline.
With the clock ticking toward the Christmas recess, President Obama and the Democrats tried to say no but just couldnít. In a rare bipartisan vote, the Senate agreed to a two-month tax cut, about $160 per family. And the pipeline.
The Bush tax cuts were a 10-year deal. The Bush tax cut extension last December was a two-year deal. The debt limit deal last summer was a 15-month deal. Today, with budgetary problems that will take decades to resolve, Congress is crafting tax and budget policy two months at a time.
The tax cut and pipeline were paid for, along with other budgetary adjustments, by reducing student loans for college students and unemployment benefits. In other words, students and the unemployed are picking up the tab since the wealthy canít afford it.
February will be here before we know it. Fortunately, February 2012 has an extra day to deal with another buzzer beater. Whatís going to happen? Watch Nancy Reagan. She, with the beautiful eyes, doesnít blink.
Just say no.
David Post is a co-owner of the Salisbury Pharmacy and an adjunct professor at Georgetown University.