It's from a mid-August report by the Center on Budget and Policy Priorities "High-Income People Would Benefit Significantly From Extension of 'Middle-Class' Tax Cuts", by Chuck Marr and Gillian Brunet. Along with a segment on Democracy Now! this morning with David Cay Johnston, it sheds significant light on just how deeply conservative the entire discussion of taxes specifically and the economy generally remains. In turn, this is but another indication of just how far Obama is from having brought about any significant movement toward a progressive reframing of issues. (On another topic, last night, Megan McCain criticized his similar failure to lead on gay issues on the Rachel Maddow Show--not just gay marriage, but even DADT. And Democracy Now! also had a segment on his doubling down in support of protecting Bush-era torturers & the exapansion of the "state secrets" doctrine, so there's an unmistakable pattern here.)
As the CBPP report explains:
A fact generally overlooked in the debate over whether Congress should extend the high-income Bush tax cuts - i.e. those targeted exclusively at couples making over $250,000 and single individuals making over $200,000 - is that these households will still receive substantial tax cuts if Congress extends the so-called "middle-class" Bush tax cuts while letting the high-income tax cuts expire as scheduled.
This is because the 2001 tax law's reductions in the lower tax brackets benefit not only people whose incomes fall within the lower brackets but also those whose incomes exceed those brackets. In fact, high-income people actually receive much larger benefits in dollar terms from the so-called "middle-class tax cuts" than middle-class people do.[1]
Specifically, recent estimates from the Joint Committee on Taxation show that extending just the middle-class tax cuts would provide more than $6,300 in tax cuts to households with incomes above $200,000, on average, compared to $1,132 in tax cuts for households with incomes between $50,000 and $75,000. The Joint Tax Committee estimates show:
Households with incomes exceeding $1 million will receive an average tax cut of $6,349 in 2011 if the middle-class tax cuts are extended while the high-income tax cuts are allowed to expire. (They will receive an average tax cut of nearly $104,000 if the high-income tax cuts are extended as well.)
The story is similar, if not quite as dramatic, for households that make between $500,000 and $1 million. They will receive an average tax cut of $6,701 if the middle-class tax cuts are excluded (and of $17,467 if the high-income tax cuts are also extended).
For all other income categories, by contrast, the size of the tax cuts are about the same whether the high-income tax cuts are extended or not. Even for households with incomes between $200,000 and $500,000, the effects are similar. The Joint Tax Committee figures show that they would receive an average tax cut of $6,743 if only the middle-class tax cuts are extended, and of $7,152 if the high-income tax cuts are extended, as well.
But it gets significantly worse:
The middle-class tax-cut package the Joint Tax Committee analyzed does not extend the reduction in the tax rate on dividends for couples with incomes over $250,000 (and singles over $200,000). President Obama has proposed, however, that the dividend top rate for high-income people be permanently set at 20 percent, rather than being allowed to return to its pre-2001 level of 39.6 percent. If Congress follows that approach and incorporates this proposal into a middle-class tax-cut package, the average tax cut that high-income households will receive from enactment of such a package will be considerably larger than the figures just cited, and the dollar amount by which the average tax cut going to high-income households exceeds the average tax cut for middle-income households will be significantly larger, as well.
Now let's turn to Democracy Now! and see how David Cay Johnston frames things very differently than you'll normally hear it framed. Johnson, by the way, considers himself a libertarian, but in the old-school sense of not cottoning much to state-created & supported private fortunes. Here's how the interview starts:
I'm listening to Dick Durbin and Chris Dodd, Senators who I want to believe get this political moment, plead in favor of this bailout. All day, Senators have been railing against the need to vote on this bill, deeming themselves 'angry' at the mess we're in, and then discussing why it is the most important patriotic vote possible to vote 'yes' on this $700 billion bill. I'm seeing progressive economist Dean Baker call this a $700 billion give-away to Wall Street, and Paul Krugman arguing it won't cost the taxpayer anything. This is a complex situation, and I am not a financial expert. But I don't think analyzing this situation requires financial expertise, it requires common sense, a willingness to see through elite bullshit, and a skeptical eye towards wealthy strongmen who argue that politics is hijacking our economy. In fact, it's not clear to me that financial expertise is particularly useful in determining whether this bailout should go forward. For instance, it doesn't take financial expertise to understand that the Senate's choice to make a millionaires tax to pay for the bailout a voice vote, so no Senator would have to go on record, is evidence that this is a rotten deal put forward by those in thrall to a rotten ideology. But there are financial experts on our side. David Cay Johnston, the Pulitzer prize winning author of Perfectly Legal and Free Lunch, notes:
There's a new study out by two economists with the International Monetary Fund. IMF policy. They published a study, in which they study 42 banking crises around the world over the last 37 years. And they concluded essentially this: bail-outs don't usually work; they often make things worse; and they are fundamentally a transfer of wealth from everybody to bankers and their customers.
This bailout is a really bad idea, and it's one that's going to cost us a lot for a very long time. There are various groups of people who have pushed this bailout; the most corrupt are the Bush faction, followed closely by the Wall Street kleptocrats, and of course, the wealthy Democratic donor class (who cut the $50k and over checks to the party). But people like Barack Obama, and yes, progressive economists Paul Krugman, James Galbraith, Robert Kuttner, Joseph Stiglitz, and Jared Bernstein have decided that it is on balance more worth it to get this done than not. And like it or not, that's where we're going.
Yesterday, both Amy Goodman (Democray Now!) and Bill Moyers had David Cay Johnston on to talk about his new book, Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and StickYou with the Bill). This is a book about Reagan's real legacy--or one of them, anyway. (9/11, obviously, was another.) And while I would disagree with Obama's characterization that Reagan was really the prime mover involved, he was most definitely the front man, which is why it is impossible for many high-information activists to go quietly with the idea of sweeping it all under the rug.
From Democracy Now!:
DAVID CAY JOHNSTON: Well, I was struck, listening to the program from Kenya [previous segement], where they talked about the president and his power to give money to people, give land, and that's why many people identify with it. We have created in the United States, largely in the last thirty years, a whole series of programs-a few of them explicit, many of them deeply hidden-that take money from the pockets of the poor and the middle class and upper middle class and funnel it to the wealthiest people in America. And among the biggest recipients of these subsidies are the wealthiest family America, the Waltons; George Steinbrenner; Donald Trump; a whole host of healthcare billionaires. And these are policies that either have not been reported on or the news reporting on them generally has not informed people about what they really are.
JUAN GONZALEZ: Well, I was struck-you have numerous chapters in the book on the various aspects of this transfer, but I was especially struck by your material on the New York Yankees and Steinbrenner and Joyce Hogi, who you mention in the book, who I know well, and this whole issue of sports teams across America and how the public is subsidizing them. Could you elaborate on that part of it?
DAVID CAY JOHNSTON: Sure. George Steinbrenner is getting over $600 million for the new Yankee Stadium in New York. The New York Mets are getting over $600 million. In fact, the City of New York gave them money to lobby against the taxpayers to get more money. Rudy Giuliani gave $50 million to the two teams for that purpose.
That last part is the real killer--Guiliani gave the Yankees and the Mets $50 million of taxpayer money to lobby against the taxpayer's own public interest.
STATE BLOGS
