10 Reasons the Final Proposal of Obama's "Deficit Commission" Is Still a Huge Scam
Stay up to date with the latest headlines via email.
The co-chairs of the Presidential Deficit Commission released the final draft of their report today, and it's now scheduled for a Friday vote by members of the Commission. We're being told that it's a fairer and more reasonable document than its predecessor. It's nothing of the kind. In many ways this document is worse than the draft that preceded it, and those much-lauded "compromises" evaporate in the cold light of reality. This new draft is lipstick on a piggy-bank robber, window dressing on a plan that still benefits the rich and bleeds everybody else.
This proposal is still designed to cripple government's vital role in society. It still places a greater financial burdens on the lower- and middle-class Americans while easing those of the wealthy who can most afford it. It adds up to the most profoundly right-wing policy prescription the nation has seen in decades. Democrats who lack the political courage to oppose it will be remembered for it for a long time to come.
There are ways to balance the budget responsibly, and there are ways to use the balanced-budget issue to push a harsh ideological agenda. This proposal still does the latter. Here are the ten reasons this proposal remains unacceptable and must be opposed:
1. It's still a massive tax giveaway for the rich.
Imagine the outcry if a deficit-cutting commission recommended spending more money on government programs. Then imagine they recommended spending that money on programs that weren't needed and only benefited the wealthy.
Spending's only one-half of the deficit problem, and tax revenue's the other. When it comes to tax revenues, that's exactly what this proposal does. In the name of "deficit reduction," they actually propose cutting taxes on the wealthiest Americans. Its defenders point out that the proposal also ends all sorts of itemized deductions - but those deductions primarily help the middle class. The proposal's defenders will point out that it no longer eliminates vital middle-class tax breaks (like mortgage interest deductions) altogether, which is true. But it would force "Congress and the President" to decide which of these deductions is retained and at what levels. And if would force them to be offset with increased tax rates elsewhere, which the authors know is politically almost possible.
Defenders also point out that they propose to tax capital gains and dividends as ordinary income. But Wall Street law firms are no doubt already developing workarounds and, in any case, the net effect is a massive tax break for the wealthiest Americans. And, since this is supposed to be a deficit-reducing Commission, how are they going to pay for such a big giveaway?
The wealthy are even given a break on the payroll tax used to fund Social Security. The plan's defenders boast that it would raise the payroll tax cap to cover 90% of all income. But that was the percentage the tax covered tin the 1980s, before the explosion in very high-end wealth distorted the entire economy. This plan doesn't return to that 90% level until 2050! That's a forty-year wait before we fund Social Security with as much high-end income as we did twenty years ago.
In a little-noticed observation, the actuaries who reviewed this proposal observed that "lower marginal tax rates are expected to have a large effect on (this tax) ... reducing revenue ... by roughly 20 percent." The net effect will be to " increase the long-range ... actuarial deficit ..." Got that? This Commission insisted on attacking Social Security, to "save" it, and their tax breaks for the wealthy are making its deficit worse.