Gang War On Capitol Hill

Usually when we hear about congressional "gangs" that are going to solve some intractable problem, it signals a bunch of corporate whores from both sides of the aisle getting together to cut out the give and take of politics and negate the expressed will of the voters-- senators from conservative states. But now the Congressional Progressive Caucus has its own gang, the Gang of Six doing the exact opposite-- working to make sure the expressed will of the voters is exactly what doesn't get ignored in the lame duck debate when it comes to the Obama-Boehner Grand Bargain, a Grand Bargain needed to fix a series of problems entirely created by the GOP.

[I]t was the Republicans who forced a series of budget moves over the last decade that now are bringing the government to a breaking point that threatens sweeping tax increases and indiscriminate spending cuts that could plunge the country back into recession.

Part of it was a political gimmick, working the rules of the Senate to push through sweeping tax cuts in a way Republicans later would lambaste when President Barack Obama’s Democrats used the same tactic to enact the new health care law. The legislative gimmick got the tax cuts through Congress, but it made them the first such tax cuts with an expiration date. Those temporary tax cuts are expiring.

And part of the Republican approach was by design, risking the first-ever default on U.S. debt to force a change in Washington and rein in runaway deficits. That 2011 showdown led to the automatic spending cuts that will start going into effect Jan. 2 – and which none really wants in their current form.

The Members of this gang are 6 of the most pro-family Members of Congress: Raúl Grijalva (D-AZ), and Barbara Lee (D-CA), Keith Ellison (D-MN), John Conyers (D-MI), Michael Honda (D-CA), and Jan Schakowsky (D-IL). Late last week, they released a document, the Progressive Principles for Tax Reform, a progressive framework for the coming tax reform discussion that emphasizes raising significant revenue, protecting working families and the vulnerable, and requiring corporations and the wealthy to pay their fair share.

The “Gang of Six” plan calls for positive revenue from corporate tax reform and opposes a territorial system that would encourage Big Businesses to move profits and jobs overseas. The plan also asks for the wealthiest Americans to pay more in income tax, while working to strengthen tax credits that help middle class families.

“The extremism in the Republican Caucus has pushed millions of Americans deeper into poverty and leaves middle class families teetering on the edge, but progressives in Congress will continue to respond to radical Republican proposals with genuine discussions based on the realities about our country’s future.” The introduction of the Progressive Principles for Tax Reform lays out a simple explanation for what progressive Members of Congress would like to accomplish with tax reform and why:

The primary goals of comprehensive tax reform should be to progressively raise sufficient revenue to (1) make investments that will grow the economy, and (2) set us on a path for long-term deficit reduction. Low-and moderate-income Americans are already contributing to deficit reduction through the Budget Control Act spending caps and are likely to be asked to sacrifice more. Progressive tax reform is the only way that wealthy Americans can share significantly in that sacrifice.

Rather than use the 1986 tax reform as a model, we should be taking cues from our last five balanced budgets (1969 and 1998-2001), which all required above average revenue. During these years of balance, federal revenue averaged 19.5% of GDP, substantially higher than the previous 40 year average (18% of GDP) and the pre-recession level (18.5% of GDP). However, with demographic shifts, the desperate need for job-creating investments, and the size of our current deficits, our revenue will need to be higher than even these historical levels to achieve balance.

The writing is on the wall: a revenue-neutral approach to tax reform-– on either the corporate or individual side of the tax code-– is not an option. Further, so-called “dynamic scoring,” that imagines revenue out of thin air and is widely refuted by respected economists of all political affiliations, cannot be used to shirk the requirement for revenue in deficit reduction proposals.

They insist the plan be revenue positive by emphasizing making the corporate tax code more efficient by eliminating wasteful and counterproductive loopholes, broadening the base, and reducing the bias towards overseas investments; and that it promote responsible corporate behavior by incentivizing corporations to hire disadvantaged workers, investing in distressed communities, bringing jobs home from overseas, by helping small businesses by promoting clean energy and energy efficiency and by eliminating tax loopholes that encourage reckless and undesirable behavior such as the overuse of debt financing and tax sheltering, and explore commonsense revenue streams like putting a price on carbon pollution or enacting a small financial transactions tax to reduce market volatility and by repealing the more than $95 billion in special tax breaks for Big Oil and Gas.

They conclude by calling for the reexamination of expenditures that benefit the wealthy and insist that economic policies readjust towards a more equitable goal for working families, the poor and seniors. "Tax policy," they point out, "is economic policy and tax expenditures are a form of spending. We must prioritize our spending through the tax code to remove expenditures that disproportionately benefit the wealthy, while protecting those that create ladders of opportunity, reward work, and protect the poor.

Subsidies that disproportionately benefit the wealthy should be made fairer and more efficient by targeting them better, such as by transitioning to tax credits. At the very least, we should cap the benefit of itemized deductions for families with incomes over $250,000 at 28%, as outlined in the President’s budget. Only one-third of taxpayers itemize their deductions because the majority of Americans claim the standard deduction. Further, the value of a deduction corresponds to an individual’s marginal tax rate, making itemization highly regressive.

We support tax expenditures that increase access to health care, homeownership, and a secure retirement. Tax credits that benefit seniors, the poor, or working families-– such as the child tax credit-– should also be protected with their refundability maintained. We support maintaining the improvements made under the American Recovery and Reinvestment Act to tax credits targeting working families, including the Earned Income Tax Credit, the Child and Dependent Care Credit, and the American Opportunity Tax Credit. In addition, as our economy continues to recover, we support tax credits to create consumer demand and assist low- and middle-income families such as the successful Making Work Pay tax credit.

We also must not fall for the trap of agreeing to a tax reform framework that sets a goal of locking in regressive and costly rate reductions while leaving for later which tax expenditures would be targeted. This would either result in lower overall revenue or would put at risk tax expenditures that benefit the poor and the middle class, and neither is acceptable.

But that isn't how the Republican gang sees it-- and it isn't what the wealthy predators who pay for their careers-- and the careers of plenty of corrupt Democrats as well-- see it either. Over the weekend, the L.A. Times reported on the Republican outline for a deal to avert the so-called "Fiscal Cliff," a term invented as a weapon of terrorism to stampede Americans into giving up their rights and their children's futures to the Austerity-mad plutocrats. Miss McConnell finally blurted out what the GOP wants-- "specific cuts to popular safety-net entitlement programs-- Medicare and Social Security... McConnell said his party would like to increase the Medicare eligibility age and ask wealthier Americans to pay higher Medicare premiums. He also suggested paring back the cost-of-living increases given to Social Security beneficiaries, a nonstarter for many Democrats." On Sunday, Paul Krugman put Miss McConnell's toxic agenda under a microscope.

[I]f we take all of McConnell’s ideas together, we get a bit more than $300 billion. Getting this would, by the way, impose substantial hardship-- seniors would be forced into inferior private insurance, and there are good reasons to believe that the true inflation rate facing seniors is actually higher, not lower, than the CPI. Still, what we’re looking at overall is a saving equal to only about one-fifth of what Obama is proposing to raise by higher taxes.

And that’s it; has anyone heard even a peep from the GOP about what else they’d like to cut?

This is pathetic-- and these people are definitely not serious.

There's a game of chicken here inasmuch as both the corporate Democrats and the entire GOP want to eliminate the home interest deduction but what the other party to suggest it. But are petrified of alienating middle class homeowners. Instead we have anti-family reactionaries like Bob Corker parading themselves on the idiotic Sunday talking heads shows and demanding "very painful cuts" to programs Republicans have always hated and opposed, like Medicare, Medicaid and Social Security.