Merkley takes another strong, principled stand
Carla Axtman
While the rest of the US Senate wallows in the lowest common denominator of whacko conservative economics, Oregon Senator Jeff Merkley once again is ahead of the curve, insisting on pushing back in favor of good public policy. With the backing of local business leaders, Merkley is forging ahead, insisting on a vote for a middle class tax cut while opposing tax cuts for the wealthiest Americans.
The fate of the expiring tax cuts promises to be the biggest battle in Congress before lawmakers finish work for the year. Merkley and his mostly Democratic allies argue that including tax breaks for families that make more than $250,000 would add $700 billion to the deficit over 10 years without contributing much - if anything - to the economy's recovery.
Republicans, however, are refusing to accept any proposal that does not extend all the tax cuts, insisting that any increased tax burden would strangle any recovery.
"Let me share with you what I believe our priorities need to be during the lame duck session," Senate Minority Leader Mitch McConnell said Wednesday.
"Preventing massive tax increase on families and small businesses, and stopping the Washington spending spree."
McConnell and other Republicans argue that lowering taxes on the wealthy is the shortest route to creating jobs and boosting the economy since that is the group that owns businesses and is most likely to use the extra money to expand and generate jobs.
The business leaders joining Merkley, however, disagreed.
"A tax break without more customers does absolutely nothing for my business,'' said Jim Houser, owner of Hawthorne Auto Clinic in Portland, Ore., and a leader with the Oregon Small Business Council. Merkley was joined by Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce and Frank Knapp, president of the South Carolina Small Business Chamber of Commerce.
"We need policies that actually help small businesses by restoring consumer purchasing power and spurring demand. Extending federal unemployment benefits would produce six to eight times the economic impact in terms of job growth compared to the tax cuts. And that's just one example," Houser said.
Local Chamber of Commerce chapters are in many cases not as conservative as their national counterpart, but they're not exactly a flock of bleeding heart liberals, either. The fact that these business leaders are ready to push back on the continuously damaging GOP economic policies is huge. And Merkley continues to impress as a leader, unafraid to take another strong stand for rank and file Americans.
There's no reason for Democratic leaders in the Senate and for the White House to back off on this, other than they're completely misreading the election. People want the economy fixed. Continuing the economic policies that put us here in the first place will only lead to more losses for those who are allowing this to go on.
Merkley is showing them the way. The smartest thing they could do is follow his lead. Force the GOP to block a middle class tax cut and then use it as a bludgeon for the next two years.
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12:03 a.m.
Nov 18, '10
I heard about this earlier. (I think on KPOJ.) I agree. We need to call BS on the Rethugs. I am not hopeful there will even be an opportunity for an up or down vote. But I do agree the Dems need to do a better job of reminding voters what the Reps really value. And it ain't working folks! If they (Rs) are such deficit hawks, the tax cuts should be a no-brainer. And if they really want to cut the deficit, there should be serious talk - no, make that action - around bloated defense spending. That's where most of the budget is. Not Soc Sec or human services. If the November election was a "mandate" that there needs to be an end to run away spending, as they keep saying it was, then they need to walk the walk and talk the talk.
5:13 a.m.
Nov 18, '10
Merkley takes another opportunity to grandstand.
If it is bad public policy to allow tax cuts for some to continue; then it is even worse public policy to allow the other tax cuts to remain.
Again, Kabuki Theater.
7:31 a.m.
Nov 18, '10
If this is "grandstanding", I'll take it.
The people that drive the economic engine are the middle class. If the GOP (and the Dems, frankly) are going to continue to hold them hostage so rich people can have a tax cut, that's more than worthy of a reason.
It's the height of hypocrisy for the GOP to continue to screech about debt and sluggish economy while at the same time pushing tax cuts for the rich.
11:29 a.m.
Nov 18, '10
I agree that the middle class is the life blood of a free Republic and strong economy and that both parties have enacted policies that reduce the numbers in the middle class. We need government to spend less and allow everyone to keep their tax cuts as well as increase personal deduction limits to offset inflation. We are more important than the government not vice versa.The upper middle class 250K+ has taken a hit as well economically and are getting by on less carrying the same debt as before. This is no time to increase taxes on anyone. Especially when that money is only being used for corporatist & statist policies.
2:44 p.m.
Nov 18, '10
It is absolutely the time to increase taxes on the upper quantile.
2:51 p.m.
Nov 18, '10
250k is not big money and is middle class if you adjust that money for inflation. Never mind the fact that taxing one group over another is nothing more than peasant politics.
3:10 p.m.
Nov 18, '10
That you view making a quarter million a year (four times the median income for Oregonians in 2008) as "middle-class" is your prerogative, but not many would agree with your characterization, and rightfully so.
4:14 p.m.
Nov 18, '10
My point is this. Wealth is relative. You are in fact rich compared to most people living in the developing world while your costs are very similar. You would not be considered middle class to them at all. You don' feel rich, your 15-25k car does not seem like much, but the fact is, others feel like you are not paying your "fair share" according to their own perspective. Some of them in fact want half of what you earn, they would take all of it over 5k a year if they could, but they can't get their governments to force that on you yet as you live here. I bet you would not consider that fair. Like most of us, you are probably just getting by in this downturn, but to the poor, you are greedy and rich and need to pay your "fair share" back in 1798 that was 3% under Kennedy it was 90% today its probably 40% or so. Interesting how perspective changes justice and fairness.
4:27 p.m.
Nov 18, '10
Well you are certainly free to argue that we should be driving down middle class income to "developing country" levels if you feel the need to square your take on 'objectivist' vs. 'relativistic' perspectives.
4:43 p.m.
Nov 18, '10
"Wealth is relative." You gotta love that. It is so Republican.
4:54 p.m.
Nov 18, '10
Oh there you go again with that stuff. Lets try not to label people and stick the facts please. Do you not believe that people in the third world look at you as rich and do you not believe in your own mind that you are not rich? Is this not some form of relative assessment of wealth? You propose that everyone sees everything the same? I suppose if they are on mushrooms they might, but I am not sure about that.
2:32 a.m.
Nov 19, '10
"... if you adjust that money for inflation."
Huh? Does inflation go up if you're rich?
As for "middle class", I understand that nearly 90% of American think they're in the middle class - but middle means middle.
If you're over $150k, you're in the top 5% -- that's not in the "middle" range. Nevermind $250k.
Source
11:49 a.m.
Nov 19, '10
That is very sad as 150k if we were running our game right should be middle class. The fact is taxing them down to a lower income is not going to help us at this point. 250k used to considered rich back in 1950, that is now 1.7million dollars adjusted for inflation. I think the term you are looking for is average income. You want to tax people more who make an above average income. 250k in modern dollars does not meat any definition of rich in a historical perspective in the last half century. Upper middle class, yes, but not someone who rubs shoulders with Bill Gates etc. It is not rich. My point is the term is relative and we should not punish people for success.
12:08 p.m.
Nov 19, '10
You sound like the guitarist of Spinal Tap... if only we relabel it eleven, then it will be one louder.
7:39 a.m.
Nov 18, '10
Kurt, that's ridiculous!
All tax cuts are not created equal, in terms of their effect on the economy and their cost. Tax cuts on working families get spent--that stimulates the economy. Tax cuts on the wealthy don't, and, as Jeff's guests so correctly pointed out, they don't "create jobs," either.
From a cost/benefit analysis, a case can be made for the tax cuts the Dems want to continue. The tax cuts the GOP are holding out for don't even pass the smell test.
7:54 p.m.
Nov 18, '10
Jay I was never in favor of the tax cuts in the first place in light of running two wars. it wasn't good policy then, it is even worse policy now to try and bifurcate the issue. Either keep them all or let them all expire. If the argument is as Merkley states, bad public policy due to the deficit, then it must apply to the entire equation.
11:29 a.m.
Nov 19, '10
Not all tax cuts are equal. As Chuck Sheketoff points out in a post today that small businesses, the engine of our economy, needs customers not tax cuts. Which is where the middle and lower income brackets cuts come into the equation. This is why at a minimum a temporary extension of the cut on the first $250k of income is needed while we are in a demand-side down-turn (one could argue that until constant dollar wages start growing for lower and middle class wage earners it should be permanent).
But incomes above $250k absolutely need those cuts to expire, not just to help offset the extensions for lower income brackets as it impacts the fiscal situation via lower revenue, but because that idled capital is NOT creating jobs when the problem is demand-side driven.
12:20 p.m.
Nov 18, '10
It makes sense to leave the tax cuts for the middle class in place because they are likely to spend the additional money and stimulate the economy. Give tax cuts to billionaires and they just sock the money away.
9:16 a.m.
Nov 18, '10
Good post Carla. I think there are a couple of points to keep in mind about the tax cuts that Bush scheduled to expire just now. First, those with taxable incomes over $250K will get tax cuts, the same rate as those under $250K. In dollars, someone with taxable income of $260K will get more money than say someone at $220K. Those high wage earners over $250K just won't get the additional tax break the Republicans are insisting on.
Second, one part of this discussion that is widely misunderstood – or intentionally mis-characterized – is about how taxes actually work for a business. If you’re a business owner and you file your business income on your personal tax return, that’s the NET PROFIT you’re taking out of the business, not the GROSS INCOME of the business. So take a business for example that does over 1 million dollars in GROSS annually… but the NET PROFIT they take home at the end of the day as the owners is far less than $250K dollars a year. This point is important because it means if a business is doing well and bringing in income and the owner plows that income back into raw materials or equipment or hiring, that money doesn’t pass through onto taxes… so it doesn’t matter a single penny what the tax rate is. (And, as you can see, retaining the higher tax rates actually provides an important incentive for a business owner to increase hiring and make other investments in the business.) Additional tax breaks for the very wealthy should be reserved for times of full employment and budget surpluses, not the kind of deficit conditions we find ourselves in now.
12:25 p.m.
Nov 18, '10
"And, as you can see, retaining the higher tax rates actually provides an important incentive for a business owner to increase hiring and make other investments in the business."
Exactly. That's what happened during the 1950s and '60s, when top marginal rates were almost three times what they are now. If you're going to pay tax at a rate of 90% it makes sense to plow more money back into the business. If it's only going to be taxed at 30%, you might as well buy a new Bentley and a villa in Tuscany.
Trickle-down has not worked for the great majority of Americans. Thirty years of experience proves it.
4:16 p.m.
Nov 18, '10
Are you suggesting a 90% tax rate would be good and would stimulate growth?
4:39 p.m.
Nov 18, '10
Are you suggesting that the Bush tax cuts actually stimulated growth?
5:00 p.m.
Nov 18, '10
To be honest the economy was in a free fall so it is hard to tell if is stimulated growth and it takes 3 to 5 years to see any results from tax breaks and there are many factors, pure growth or retraction cannot be attributed to only one policy there are hundreds of policies to take into consideration. I bet the people who spent that money on things they like spent it a lot better than the government would have. Poor or "Rich" people are more effective with their own money than government has ever been.
5:01 p.m.
Nov 18, '10
If you disagree with that, please feel free to hand all of your assets over to the government asap.
5:20 p.m.
Nov 18, '10
Given I signed and FHA loan to buy a house last year, your comment is rather amusing.
5:22 p.m.
Nov 18, '10
Really?
So AIG was more effective with their money than the government?
Who knew?
5:46 p.m.
Nov 18, '10
Well its a free world I guess. I you want to hand your assets over to the government because of AIG, go for it! Sounds more like a preschool policy than a way to run a nation but each to his own. I have actually work now,so chat with you later guy.
5:54 p.m.
Nov 18, '10
Well so much for your argument that the private sector is more effective with money than the government.
BTW, I gladly hand over money to the government to educate my kid, build roads for me and the business I work for to use, the electrical grid that powers my home and the business I work for, enforce traffic laws, etc. etc.
Since you think that handing over money for that is a slave mentality, then why aren't you leaving for places of rugged, unfettered freedom where you are 100% your own sovereign and not beholden to or responsible to maintain a society in any way (after all, you can't work with anyone else to better your lot, because according to you that is collectivism)... so why aren't you heading for more unfettered lands like say... the Sudan?
10:05 a.m.
Nov 19, '10
A fool and his money will soon part. That is fine for you, but I only ask that you keep your failed policies off my life. #1 Voluntary cooperative work is not collectivism. You are showing your lack of knowledge. #2 Most of the people who scream about making other people pay their fair share, pay little themselves and give almost nothing to Charity. Think about that.
11:30 a.m.
Nov 19, '10
Sorry, you want to live in our society, you need to help pay for it.
As I said up-thread, you don't want to pay for the civilization that you live in, then leave.
11:35 a.m.
Nov 19, '10
what you mean really is If I don't want to pay for the civilization the way you want it to be, then leave. Lets keep it real ok... I never advocated not paying for roads or police or fire departments. The fact is you have endless maze of programs you want and you want other people to pay for it.
12:10 p.m.
Nov 19, '10
What parts of a civilized society you don't think we should not eliminate?
Be specific.
2:29 p.m.
Nov 19, '10
Roads, Police, Fire Department, The later two could be privatized if needed and have been done successfully in the past. We create governments to protect our natural rights, our lives, liberty and property. We do not create governments to raise our children, provide for our neighbors, no matter how noble this may seem, it is not the proper role of government. When we let it enter those areas, history has shown us that tyranny results. When we speak of social contracts, it is not in the context that is presented today that we are born slaves to the financial desires of our no producing & non charitable neighbors, but rather we as citizens must pay a fair amount towards these basic functions of government in it's capacity of protecting life liberty and property.
2:48 p.m.
Nov 19, '10
So you want private police and fire departments.
Wow. Just wow.
6:53 p.m.
Nov 19, '10
Sure, they have worked well in the past and sometimes not so well. It depends on how it is implemented. Something to think about anyway. Keep in mind some airports are getting rid of government TSA screeners because they are less accountable than private screeners. There are benefits to privatization of some duties if we keep accountability. There are also problems if we do not. Such as when Thatcher gave the national utilities to a private company years ago. Just keep an open mind. The fact is most people want similar things, they just disagree on how to achieve those things. Much of that is related to how we view human nature.
8:19 p.m.
Nov 18, '10
the free fall came after the tax cuts, and with the 2 wars being binged on. direct cause & effect. prior to this, we had a huge surplus that the Rs decided to spend rather than save.
9:54 a.m.
Nov 19, '10
I suppose if you are riding the party horse that will work, but the collapse was years in the making. The Dot Com Bust and the housing bubble, fractional reserve lending, fiat currency, war, social security and government employee expenses, the list is endless if you wish to look at it from a realistic perspective. Economies to do not collapse overnight nor are the built overnight. Your explanation is part of the problem regarding the wars, but the idea that we should tax people to prosperity and that would have saved us is a far stretch to be kind.
11:22 a.m.
Nov 18, '10
Can't remember who said this last night on the picture box...
The message the WH should be inundating the public with: "We will not borrow another dollar from China to fund tax cuts for the rich."
11:19 p.m.
Nov 18, '10
Sometimes I'm amused at how emotional people get about politics.
11:58 p.m.
Nov 18, '10
Isn't amused an emotional state? ;)
8:23 a.m.
Nov 19, '10
Indeed, Mitchell! :)