Politics, tax policy converge n Seldom are the stars aligned so that good politics and good policy are exactly the same, but the Democrats and President Obama enjoy that lucky constellation in the fight to extend the Bush tax cuts. But many Democrats are so paralyzed by the success of Republican and chamber of commerce propaganda that they can’t exploit the first unalloyed political bonanza they have had in a year. Some of them, like Sen. Joe Lieberman and a timorous Arkansas Democrat or two, just go on and join the Republicans rather than correct them. It’s easier and maybe safer, at least in Arkansas. Obama’s plan, supported by Democratic leadership in both houses, would extend the full tax cuts of the Bush era except the richest 1 or 2 percent of Americans, and the richest ones would still get bigger tax cuts than everyone else, just not as much as the Republicans want to give them. That is not how the parties explain their differences, but it is a fact. Under the Obama plan, every American who earns up to $200,000 for individuals and $250,000 for couples would keep the full amount of the tax cuts next year and many of them would get additional tax benefits. Those earning above those thresholds, the richest 2 percent nationally and 1.5 percent in Arkansas, would get the same tax breaks as everyone else but for most of them it would
Ernest Dumas amount on average to much more in dollar terms. That is because the rich would get the same middle-class tax cut as everyone else, just not the extra helping they got in the 2001 and 2003 tax cuts. An example or two: Households that earn more than $1 million next year would get an average tax cut of $6,349. That is under the Obama plan, mind you, not Mitch McConnell’s. McConnell’s plan, which is backed by every Republican in Arkansas and Washington, would give them an average bonus of $104,000 next year. These are the taxpayers who already are the most pampered by the U. S. tax system. They pay an effective tax rate of under 18 percent, which is much less than average working families and less than all but the very poorest Americans. What ought to be encouraging to Democrats is that the vast majority of Americans get it. Polls show that 70 to 75 percent favor extending the full tax cuts except for the richest and least needy families. The figures may not be that good in Arkansas, where every policy initiative by Obama is filtered through a conservative lens. That
Clinton beholds our angry amnesia n Say what you will about Bill Clinton. It has surely been said already. One assertion I made about him nearly two decades ago applies for today’s purpose. I called him either the “great synthesizer,” meaning one who can outdo all others in forging a coherent whole from diverse parts, or the “synthetic man,” meaning false or bogus or fabricated. That either-or posed a false choice, of course. Clinton can be both and has been both. It was that knack for synthesizing that interested me as he came through his home state of Arkansas last week to raise money for beleaguered Democratic friends. No one can match Clinton in assessing and articulating a political climate, a rather dark and stormy version of which we currently confront in America. So Clinton came out of a restaurant and onto a Little Rock sidewalk after gracing a fundraiser for a Democratic
John brummett jbrummett@arkansasnews.com
congressional candidate who trails by 15 points for a seat being vacated by a Democrat. He ambled over to a gaggle of reporters and endeavored to explain the current mood portending a Republican tidal wave that may exceed even the one that drowned Clinton’s Democrats after two years of his presidency. One advantage Clinton holds in analyzing political mistakes, you will find, is that he probably has made them, perhaps famously. He said it was all about the “three A’s.” Those would be anger, apathy and amnesia. This raging public anger is, while justified, not a public policy, but an emotion. Allowing emotions to reign is foolish — as Clinton ought to know,
is, Obama and the Democrats want to raise taxes and the budget deficit, Republicans want to cut taxes and the deficit. There may never have been a major debate where theory and facts were all on one side as they are on the extension of the Bush tax cuts, which are scheduled by law — Bush’s law — to end Dec. 31. What about the deficit, the horror that is driving voter rage this year? The Republican plan to extend all the tax cuts forever would add $4 trillion to the national debt over the next decade. The Obama plan would cut the deficits by more than $700 billion over that period — not nearly enough but the first step in reversing the slide from balanced budgets as far as the eye could see to deepwater deficits that began with the Bush tax and spending policies in 2001. McConnell & Co. and the Republican candidates who parrot them everywhere, including Arkansas, offer two arguments: Restoring something close to the 2001 tax rates for the richest people will hurt struggling small businesses and force them to reduce workers, and taking more taxes from anyone, even multimillionaires, when the economy is growing so slowly is terrible strategy. The Obama tax plan would have virtually no negative effect on small businesses. Only 3 percent of small business owners would have their taxes increased and nearly all of those are people in the $250,000 to $500,000 tax bracket, as Rep. John Boehner, the House Republican leader, acknowledged Sunday. Those people would pay an average of $400 a year in extra taxes, hardly enough to make them start laying off people. And businesses pay income taxes not on gross incomes but on
profits, what is left after payroll and expenses. It would have no effect on hiring or firing. What history can they cite that modest taxes on the richest Americans hurt the economy? President Clinton raised tax rates on the wealthy slightly in 1993 when the country was struggling out of a recession. Republicans predicted the next depression. It produced the first string of balanced budgets in modern times and the longest and most robust period of economic growth and the best jobs record in history. And what happened when Bush cut taxes on the rich, not once but three times? It led to the worst jobs and general economic record for any eight years since the Great Depression. You can take the same analogies as far back as the enactment of the income tax nearly a century ago. Unless they are confiscatory, taxes on people of great wealth do not stunt demand like they do for the middle class, which spends, not saves, when taxes are cut. And remember, even when the top marginal tax rate of 2001 is restored it will still be close to the lowest since the 1920s. Don’t get me started on the restoration of a small estate tax, another part of the Obama plan. A grand total of 82 estates in Arkansas in 2007 and 83 in 2008, the richest three-tenths of one percent of the thousands of estates left by deaths, owed even a dime of taxes on the largely untaxed inherited wealth. That is the infamous “death tax.” If you were Blanche Lincoln, Chad Causey, Joyce Elliott, David Whitaker or Mike Ross, wouldn’t you love to take the field against those dour Republican candidates on exactly this issue and maybe nothing else?
having allowed them to overcome him time and again, most recently in his wife’s presidential campaign. He has come back from that, of course. He always comes back. Emotions are used best, in politics and in life, in a contained and channeled way, mixed with logic and reason. Apathy exists currently in two parts. It is found among new voters who came to the polls to elect Barack Obama but are now disengaged if not feeling betrayed. It also is found among independent-minded Americans who are sick of the political polarization and dysfunction. With those groups either sitting out or dropped out, the dominant passion comes from the Republican base or on its rather extraordinary right flank. Amnesia is the factor that Clinton seemed most to enjoy explaining. It is his word for the condition affecting voters who have decided they want to throw out Democrats because these Democrats have not had as much success as desired in repairing the mess they inherited. It is his word for the apparent intention of voters to reinstall those who made the mess in the first place, meaning the Republicans. He used “amnesia” because “insanity” doesn’t start with “a.”
Clinton said Republicans would take us back to the unregulated business climate and fiscal profligacy that put us in the very mess through which the bailouts and stimulus have cushioned and sustained us. He contended the Democratic policies have been successful, to the extent that matters would have been much worse, wholly catastrophic, without them. That is less than ideal as a political message. Still, I predict we will hear more along this line from Democrats — that anger is not a public policy and that people need to snap out of their apathy and amnesia to season their well-warranted anger with reason and remembrance. I do not think it will resonate. I simply think we will be hearing it. Clinton knows the score. He admitted that the incumbent Democratic senator in Arkansas, Blanche Lincoln, is in big trouble. He said that if she got only one vote, it would be his. Alas, she founders there as well. He actually votes in New York. John Brummett is a columnist and reporter for Stephens Media’s Arkansas News Bureau. You can read additional Brummett columns in The Times of North Little Rock. www.arktimes.com • SEPTEMBER 16, 2010 15