Welfare Queens

It's an open secret that pork-hating red states receive more money in federal spending than their Democratic brethren (Sarah Palin's Alaska is a particularly bad offender). Shankar Vedantam now has an eyebrow-raising explanation for the discrepancy:

Buried in the fine print of Newt Gingrich's "Contract With America," Richardson found an income redistribution scheme. The proportion of government spending on groups that traditionally supported Democrats fell. The proportion of government income from groups that traditionally supported Democrats rose.

"Tax rates declined more for groups that tended to vote Republican. These groups include people with incomes in the upper tail of the distribution, such as small business owners, property owners, and investors accruing capital gains. … At the same time, expenditures fell more for programs directed toward people that tended to vote Democratic. These groups included welfare recipients, inner-city residents, and individuals in the lower tail of the income distribution."

There are some unsettling implications to this, hinted at towards the end of the article (emphasis mine):

In the public mind, Republicans became the party of fiscal rectitude, and Democrats became the group that raised taxes on hard-working Americans.

The term "hard-working Americans," as Hillary Clinton reminded us, is a dog whistle, the yin to the 'lazy black people' yang. Not only are Democrats accused of taking money from hard-working Americans, remember, they're also accused of doing so to redistribute it to social parasites. The post-1994 Republicans' grievances about unfair taxes, their attacks on welfare, and especially the current unemployment benefits hostage-taking when it comes to tax cuts for the rich, is not about balancing the budget, to say the least.

Two Houses, Both a Like Indignity

The House will vote tomorrow on extending the Bush tax cuts for only the middle class. House Republicans are livid:

“This is nothing more than political chicanery and undermines the president’s ongoing discussions and efforts on tax rates,” House Republican Whip Eric Cantor said in a statement. The Virginia lawmaker called the measure “a non- starter.”

Speaking of non-starters:

According to a letter delivered to Senate Majority Leader Harry Reid this morning, Republicans will block all debate on all legislation until the tax cut impasse is bridged and the federal government has been fully funded -- even if it means days tick by and the Senate misses its opportunity to pass DADT, an extension of unemployment insurance and other Dem items.

The Republicans want to extend the tax cuts for the rich, and the Democrats don't. Both parties want to extend the middle-class tax cuts. But instead of voting on what the two parties can agree on, the Republicans are insisting they get their way, even though they're (for a few more weeks at least) in the minority. They will do this at the expense of the unemployed.

When people accuse the Republicans of sabotage for political gain, this is what they are talking about.

That Other Bipartisan Commission

It's interesting to note Alan Simpson was a member of the Iraq Study Group, whose report on how to go forward in Iraq after the 2006 midterms, was essentially ignored by President Bush, particularly regarding troop levels:

Sustained increases in U.S. troop levels would not solve the fundamental cause of violence in Iraq, which is the absence of national reconciliation. A senior American general told us that adding U.S. troops might temporarily help limit violence in a highly localized area. However, past experience indicates that the violence would simply rekindle as soon as U.S. forces are moved to another area. As another American general told us, if the Iraqi government does not make political progress, “all the troops in the world will not provide security.”

Similarly, the harsh response to the test balloon floated by the Simpson-Bowles commission--even from its own members--seems to ensure a similar stillbirth.

Yet just because the Baker report was right that violence would return once troop levels were decreased, post-surge, doesn't mean the Simpson-Bowles commission's plan is the correct one. Everyone talks a good game about bipartisanship, but on major issues like the Iraq War and the fiscal policy, the two sides are coming with with completely different premises (Our presence in Iraq is bad/good; the end goal of legislation should be helping people/shrink government) and thus spend most of the time talking past one another.

The takeaway is these bipartisan commissions only seem useful in giving ideas exposure, rather than proposing specific courses of action that will actually be realized. But we'll soon see, won't we?

The Deficit Commission

Everybody knows that any serious proposal to reduce the debt is going to involve a combination of spending cuts and tax increases, right? Right?

Why then does President Obama's Deficit Commission test balloon expect to "Broaden base, lower rates, and bring down the deficit" by bringing taxes well below their already historic lows?

For some perspective, the government could bring in almost $700 billion in revenue by allowing the Bush tax cuts on the rich to expire. Keeping the tax cuts on the books would cost that and more besides:

The cost of those tax cuts is going to go straight onto our national credit card unless we raise taxes from everyone else to pay for the $690 billion in tax breaks for the rich or we find $690 billion in spending cuts. And that means increased interest payments on the debt. When we add in the costs of additional debt service, the true price of maintaining the tax cuts for the wealthy jumps by almost $140 billion.** In total, keeping those cuts for the rich will cost almost $830 billion over the next 10 years.

To put that figure in perspective, $830 billion is enough to pay for all veterans’ hospitals, doctors, and the rest of the Veteran’s Affairs health system, plus the United States Coast Guard, plus the Food and Drug Administration, plus the operation and maintenance of every single national park for the entire 10-year period—with more than $100 billion left over.

Among the proposed spending cuts are $4.6 billion of growing foreign aid growth (even though foreign aid is and historically has made up a little less than one percent of our total budget), and plans to end in-school interest subsidies. Also:

[T]hey’re talking about raising the retirement age, because people live longer — except that the people who really depend on Social Security, those in the bottom half of the distribution, aren’t living much longer. So you’re going to tell janitors to work until they’re 70 because lawyers are living longer than ever.

Taxes in themselves should not be controversial. But they are. That's a problem, and it makes for deeply problematic proposals on tackling the budget.

Make This Post Still Timely in Two Years

Reihan Salaam's modest proposal for compromise on the Bush tax cuts:

And on taxes, Representative Ryan and his Republican allies would do well to move beyond the polarizing debate over the 2001 and 2003 tax cuts by advocating the extension of all of the cuts for two years and then allowing them to expire, as the president’s former budget director Peter Orszag recommended in his first New York Times Op-Ed column. The expiration of the 2001 and 2003 cuts would serve as a downpayment on a comprehensive tax reform proposal, perhaps modeled on the Growth and Investment Tax Plan devised by President Bush’s bipartisan tax reform panel.

The only reason this is a polarizing debate is because raising taxes, any taxes, especially taxes on the rich, is considered a cardinal sin among Republicans. "Allowing them to expire" is what was supposed to happen. It's written into the tax cuts themselves! But a very influential bloc of conservative activists has convinced itself that returning the tax code to Clinton-era levels would be The Biggest Tax Increase in American History. Why would they change their minds two years from now?

h/t Sullivan

Taxation Misrepresentation

On some level I appreciate the subversion that Grover Norquist and his anti-tax lemmings are going for in appropriating Obama's campaign imagery to attack him. Change...the tax code (or something)--it screams. It's funny. Really. Like, Bob Saget on America's Funniest Home Videos funny.

But given that the tax increases in question were built into the Bush tax cuts.... I'm not going to say it.