Loophole kabuki: Shumer's clever strawman
by digby
As Atrios says, you've got to love the framing of this article:
WASHINGTON — Senator Charles E. Schumer of New York, the Senate’s third-ranking Democrat, threw cold water Tuesday on what had been an emerging consensus for a bipartisan deficit- reduction plan — an overhaul of the tax code that lowers top income tax rates but raises more revenue. Mr. Schumer’s position greatly complicates efforts to win bipartisan support for a deal before January, when the “fiscal cliff” of tax increases and automatic spending cuts goes into effect.
That bastard, coming along and ruining everything.
But the meat of the article is interesting, because it shows that Shumer is doing no such thing:
In a speech to the National Press Club, Mr. Schumer was set to say he rejected the idea of a tax code overhaul as “little more than happy talk.” Taxes could not be changed to bring in more revenue, lower the top tax rates and still protect the middle class from tax increases, according to excerpts from his speech.
Instead, he will say, the top two income tax rates should be frozen, and any additional revenues generated by closing loopholes and curtailing or eliminating tax deductions and credits should be devoted to deficit reduction.
“It is an alluring prospect to cut taxes on the wealthiest people and somehow still reduce the deficit, but you can’t have your cake and eat it, too,” Mr. Schumer’s prepared remarks said. “The reality is, any path forward on tax reform that promised to cut rates will end up either failing to reduce the deficit or failing to protect the middle class from a net tax increase.”
I think the concern with the deficit at the moment is counter-productive to say the lease, but if they're going to do it, I'm all for keeping tax rates as they are and putting all that money they project from "closing loopholes" toward deficit reduction. Since I think the probability that much money will ever be produced (or produced for very long) that may be the best we can hope for.
As I've written many times, "tax reform" as currently conceived is a scam which will end up starving the government of needed funds and giving the rich even more of a tax break than they already have. The simple fact that so many little Paul Ryans are in favor of it should be a tip off that they are really trying to turn the US into a tax haven for the rich.
Ryan said so explicitly:
As Mother Jones explained:
James Henry, a former chief economist at McKinsey & Co., describes offshore tax havens like the "bar scene in Star Wars." He explains, "Dictators and kleptocrats used them to conceal stolen loot. Arms dealers and drug dealers use them to launder their deals. Google and Apple and Pfizer use them to park their intellectual property and pay themselves tax-free royalties. Banks use them to park lousy loans and stash the offshore accounts and assets under management of their wealthy individual clients, many of which are paying zero taxes back home…And so on."
When I say he wants to turn America into a dystopian hellscape I'm not exaggerating. So, when you have someone like Ryan endorsing "tax reform" I'd say watch your wallet. And start looking for a gated community --- with armed guards.
Unfortunately, Shumer is batting at a straw man as far as the so-called fiscal cliff is concerned. There's not been a whole lot of serious talk about tax reform in this round, so I don't know why he's bringing it up unless it's to set up a deal whereby the Republicans agree to some loophole closing in exchange for some benefits and program cutting. That's the vaunted "balanced approach" everyone (except the people) are looking for.
Everyone who's speaking publicly is sending up trial balloons and publicly negotiating right now, so it's almost impossible to know what their real position is going to be. However, if we take them at their word, it's not hard to see what they are doing. They want to "tweak" Social Security, find "savings" in Medicare, "streamline" Medicaid, and "cut out the fat" in various other vital programs to the tune of four trillion dollars or so, all of which will come out of the hides of average citizens in the form of less money, less security, fewer services. Oh, and they're going to ask the rich to "pay a little bit more" too, which Chuck Shumer is saying will come from closing some loopholes in the tax code. This is what they mean by shared sacrifice. Just so you know.
.