Not the kind from the internal Goldman Sachs emails. No, this is a shitty deal to end all shitty deals. I am of course, referring to Obama’s tax cut deal.
Has anybody looked at the details of the detail he struck? He actually went far beyond Bush’s original nation crippling tax cuts. Here are some highlights;
– The top 2% of wealthiest Americans get to stay at the 36% rate they’ve enjoyed for ten years.
– The estate tax goes down from 55% to 35%.
– Capital gains taxes get cut down to 15%
Just so that we’re clear, all of the above cuts benefit ONLY the wealthiest among us. None of these cuts benefit the middle class. The estate tax cut is even worse than it sounds. Not only did Obama cut the estate tax by 20%, but he also raised the level at which the estate tax kicks in from $1 million to $5 million. How many middle class Americans have $3 million dollar estates to hand down, do you think? Capital gains isn’t money that you earn. It’s money that your money earns. It’s stock appreciation, property appreciation, etc. The capital gains tax rate is now FAR lower than the tax rate we all pay on our paychecks.
95% of Americans don’t enjoy capital gains. WHY should any tax rate be lower than the taxes paid on earned income? That’s just crazy. Nothing should be taxed lower than your paycheck. That should be the baseline rate upon which all other tax rates are increased from.
25% of all of the tax cuts in this “compromise” benefit just the top 1% of Americans. Yeah, that’s equitable.
Did I forget to mention that this deal includes a payroll tax cut? Sounds nice, right? Here’s what it actually means; less money will be taken out of your check for your social security contribution. This will hasten the social security shortfall that wasn’t otherwise going to happen until 2037. You understand where this is going, don’t you? This is going to lead to cutting social security. This is a topic for a whole post unto itself, so I’m going to move on.
We don’t have the money to pay for these tax cuts, so we’re going to add to our already astronomical debt in order to make it happen. This growing debt significantly weakens our economy.
Now democrats will say that this deal was necessary in order to save the unemployed from running out of benefits. I say, bullshit. Unemployment benefits are a means to help people to tread water until the coast guard comes to save them. The problem with this deal is that the coast guard is never coming.
Turning this economy around requires a two pronged approach. The first part of recovery was programs like the stimulus package. The government has to step in to be the spender of last resort. When Americans have no money to spend, and corporations aren’t generating revenue because Americans are broke, that’s when the government must step in. Spending money in infrastructure projects creates jobs across a very large supply chain. The second part of an effective recovery plan is to ensure that Americans can tread water until the unemployment rate comes down. This includes programs like unemployment insurance and food stamps. These two programs not only help the recipients, but they also create exponential economic activity.
The idea is that the infrastructure projects will create jobs that cascade over a big supply chain. These jobs will in turn, generate taxable income which will ostensibly help us to pay down our debt and strengthen the federal government so that is has the resources to invest in more job creation programs. The unemployment and food stamp benefits are supposed to help people hang on until that supply chain grows enough to create jobs for the unemployed.
Obama’s deal weakens the federal government by increasing the debt twofold. We’re borrowing money to give to the rich, and we’re borrowing money to keep people on unemployment. Since there’s no further stimulus in this deal, it’s essentially all gratuitous spending with no job creation component.
Nobody is going to show up with jobs for the unemployed. The ’99ers” are going to become the “198ers”. Since I’m in the business of hiring people, let me confirm something that you already know. The longer someone is unemployed, the more unemployable they become. Hiring managers have a viscerally bad reaction to people that haven’t been able to find a job in a year. The 99ers won’t be employable until the unemployment rate dips below 5%. Once that happens, there will be a labor shortage that will make them more attractive to employers.
Nothing about this plan is going to get the unemployment rate down. Obama didn’t “save” the unemployed. He just insured that they’re going to be treading water in their current miserable state of unemployment forever. This plan just prolongs their misery. And they’re still being held hostage by republicans. I can assure you that Obama is going to have to make another appalling deal to “save” unemployment insurance by this time next year. My prediction is that the jobs report for February, when all of the seasonal retail jobs are gone, will be appalling.
This really was the grandaddy of all shitty deals.
And the worst part? Obama is now defending the bullshit republican tax policy. He’s forcing democratic house members to do the same, thereby undermining the democratic position for years to come. We’re never going to get out of this debt because there’s no one left to stand up for sound fiscal policy.
You’re burning down the house with your shitty deal, Obama. Thanks for nothing!