The tax deal that Senate Democrats settled for is, sadly, a very bad deal.
It gives to the wealthy, and takes from working families.
Many of those who disagree with that assessment are urging that we "see the bright side" and shush our "quibbles" about this tax deal and its significant and long term consequences.
In my view, those who are urging critics of this deal to "hush up" simply don't have their facts or their priorities straight.
[*Please note that while events may speed past this diary, I think you'll find it worth reading. This debate is not over.]
The United States is in the fifth year of a massive jobs crisis.
What's worse, labor force participation has shrunk to 1981 levels; millions of Americans who used to work have given up working or looking for work altogether and many who would like to work are instead using programs like food stamps.
Fact is, the jobs that have been created in the last four years are low wage jobs: 60% of the jobs lost in the Bush recession were medium wage, while 60% of the jobs created under President Obama's stewardship of the recovery have been low wage.
1. The United States is in the midst of a jobs crisis, not an unemployment benefits crisis
Providing an extension of unemployment benefits is the right thing to do, and Congress, even the GOP-dominated House of Representatives, has extended those benefits repeatedly during this recession. However, unemployment benefits are not jobs. Unemployment benefits, while they deservedly help those in need, only work at the very margins to help create jobs. They were always the component of this package most likely to pass.
Those who point to the flawed Biden-McConnell tax deal's extension of unemployment benefits as somehow its saving grace, while well-intentioned, have it completely, and sadly, backwards.
The best way to help the unemployed is to invest in our national infrastructure and begin to create good-paying jobs with benefits again. To do that, we need revenue and a robust stimulus. We also need to get our priorities straight.
2. This tax deal contains an instant, regressive anti-stimulus in the form of a 2% increase in payroll tax for all income up to $113,700.
Obama's reported initial proposal contained an insufficient $200 billion in stimulus. The current plan does not.
Instead, with this tax deal, effective taxes are going up on every dollar earned for 98% of workers. 2% will be lopped off of working people's paychecks, instantly dragging our economy.
While the extension of tax credits for the working poor will continue to benefit 13 million low-income families, that does not make up for the immediate, regressive impact of this payroll tax increase.
In fact, due to this component of the deal, effective taxes for those making under $100,000 per year, at a 2% increase, will go up more than three times the rate of taxes for those making $400,000 per year, at just a 0.6% increase. Doctors and lawyers will do quite fine under this plan.
I was opposed to using the payroll tax for stimulus in the first place for this very reason. At some point, the bill would come due in black and white on a pay stub. I did not realize, however, that Democrats would agree to create this kind of clear inequity when Congress inevitably reinstated the full payroll tax.
If you think the GOP and the establishment media won't make hay with this component of the Biden-McConnell deal, I've got a bridge I'd like to sell you.
3. The change from $250K to $450K is being misreported and misunderstood
Obama's pledge was that while extending Bush tax cuts for all income under $250K per year, he would return to Clinton-era rates for all income over $250K. This was not a particularly radical proposal. (Reminder, all of us lived with these tax rates under President Clinton.)
This meant that a family with an income of $300,000 per year would have had to pay a small percentage increase, around 3%, on $50,000 of that income, while still receiving the Bush Tax Cuts on the first $250K of their income. All things being equal, they would have had to pay about an extra $1,500 in federal taxes. Not that much.
Now, under this tax deal, the wealthiest American families will receive the Bush Tax Cuts for every dollar they earn between $250,000 and $450,000 per year. People making $800,000 per year, for example, clearly the top 1%, will only have their taxes go up the income over $450,000. That's money that could have been used to invest in jobs and education that won't be.
This is a widespread misconception about the Biden-McConnell deal. Under Obama's $250K campaign promise, people making $300K would have seen a modest increase in their marginal income tax and begun to pay their fair share. Taxes for the wealthiest would have started to go up right at $250,000 per year. Under the Biden-McConnell deal, the very wealthiest get $200,000 extra income covered by the Bush Tax Cuts.
Finally, and in my view, perversely, families with incomes between $250,000 and $450,000 per year will be classified as middle class.
Having lambasted the Bush tax cuts as reckless when they were first introduced, Obama and the Democrats have now conceded that, under no circumstances, should anybody but members of the one per cent—the very richest Americans—be asked to pay higher income tax rates. Well-off Yuppie couples—ad executives or lawyers, say, who pull down $200K a year each—are to be treated like janitors and cops.The disagreement about the $250K threshold isn't a quibble, it's a fundamental disagreement about a principle, fairness, and the shape of the kind of society we want to build. On a basic level it's about whether the Clinton tax rates or the Bush tax rates help properly fund our government.
4. Accepting this tax deal, and its premise that the Bush Tax Cuts should largely be made permanent, means accepting two Americas, those who have, and those who, increasingly, have very much less.
The President and his apologists will tell you that when the economy picks up, and things get rolling again, that there should be enough money in revenues here somewhere to fund our government despite the fact that we have largely made permanent Bush Tax Cuts that we all opposed one short decade ago.
But at what cost? What America are they talking about? What is this President doing to address rising economic inequality other than to slightly soften its hard edges?
Because 50 million Americans in poverty, nearly 1 in 4 of our children, is not acceptable. And that's today.
What is the cost of an America where under this tax code $5 and $10 million dollar estates are exempt from the Estate Tax, but 1 in 10 Californians are out of work?
What is the cost of an America where under this tax code Mitt Romney pays a lower percentage in taxes than working people who fight fires or teach in our schools?
What is the cost of an America where banks don't have to follow the rules but homeowners and students do?
What is the cost of an America where unions are under attack but the President is giving tax breaks to CEOs and executives?
Are we supposed to say that because some people in D.C., many of whom will directly benefit from this tax code, did not think a better and more just deal was possible that we must all accept whatever deal emerges and call it a day?
Are we supposed to believe that a vast apparatus of micro-targeting and activism can be mobilized to re-elect this President, but not used to win passage of legislation that we know will directly create jobs, help eradicate poverty, and reduce economic inequality?
In my view, we should reject this deal and make our arguments clearly and without prejudice.
In doing so, we can proudly stand up for the kind of policies that we know will build an America with good jobs and justice for all.
I'm not alone in thinking that path does not start with tax breaks for the rich.