Robert Costa has the details below of the tax deal that was just supposedly agreed upon in the Senate. From the sound of it, it seems that we would get certain tax increases and spending increases such as the unemployment-insurance extension and other tax credits, in exchange for no spending cuts. I understand now why the president seemed so happy during his 1:30 p.m. press conference.
Regarding the press conference, I thought the level of inconsistency coming out from the president’s talking points was even greater than usual. For instance, he talks about how such a deal would protect the middle class from tax increases, and yet fails to acknowledge that the payroll-tax increase will hit this class of taxpayers. Further, he claims he wants the well-connected and big businesses to pay more in taxes and shoulder more of the cost of government, and yet many of the tax credits he mentioned are directly or indirectly benefiting big companies. Education tax credits benefit banks, and energy tax credits benefit big businesses too. Here is Tim Carney on the issue:
Obama said the deal would extend green-energy tax breaks, but in the same speech said he wanted to make sure “the biggest corporations can’t take advantage of loopholes,” and he opposed tax breaks going to “companies with a lot of lobbyists.”
But green-energy tax credits are corporate welfare for rich people and big corporations who have lots of lobbyists.
Consider General Electric, a chief beneficiary of and lobbyist for green-energy tax credits. This company paid $0 corporate income in 2011 and is the number one U.S. manufacturer of wind turbines. The wind-energy tax credit is set to expire tonight, and presumably that’s one of the green-energy tax credits he’s extending. Oh yeah, GE spends more on lobbying than any other corporation — $120 million so far in Obama’s administration.
The lobbying force for these green-energy tax credits is robust, and full of rich people and the largest corporations, as I reported in my column today.
And then there is the question of sequestration, which looks like it will be addressed later. The president announced that he is willing to revisit them but only if the changes are “balanced,” meaning a mix of spending cuts and revenue increases. I find this part particularly outrageous because the sequester cuts shouldn’t be on the table.
The alleged brutality of the cuts is one of the biggest myth of 2012. For the most part, the sequestration “cuts” aren’t really cuts at all. According to the Congressional Budget Office, discretionary spending would grow from $1.047 trillion to $1.234 trillion without sequestration. With the sequestration cuts in place, it will instead grow from $1.047 to $1.147 trillion. Medicare, which also faces cuts in the sequestration process, follows a similar trend. That means that going through with sequestration is just the beginning. It won’t make a dent in the size of our debt, and more cuts will be needed in the future.Yet both sides oppose fulfilling the deal they agreed upon.
The U.S. just completed its fourth consecutive year of running an annual deficit over $1 trillion. Its gross debt-to-GDP ratio is already over 100 percent, and it’s going to get worse. Without changes, spending on Social Security, Medicare and Medicaid will soon consume half of the federal budget, squeezing much else out in the process. Not cutting spending shouldn’t be an option, and yet it looks like that’s exactly where we are heading.