Forget about tax reform (it's a con)
This article by Jonathan Weisman in today's NY Times indicates that the Republicans are out on the campaign trail saying that the "sequestration" is going to destroy America's military and must be stopped at all costs. He focuses on Huckleberry Graham, who is nearly hysterical on subject (perhaps because he also says that there is going to be “an air and sea campaign from hell” on Iran!)
But it's clear that it's a kabuki dance leading to something I've been predicting for a while:
But the threat they created may be doing its job. Mr. Graham is openly talking about revenue increases to offset the costs. Even South Carolina’s ardently conservative House members, Mick Mulvaney, Joe Wilson and Jeff Duncan, said last week that they were ready to talk...
For now, Democrats and Republicans are waiting for the other side to blink. And the pressure may be working. Mr. Graham said the sentiment for raising revenues by closing tax loopholes or imposing higher fees on items like federal oil leases is expanding in his party.
That's quite a sacrifice, isn't it? And to think that all they want in return is draconian cuts to social programs and painful shrinkage of the safety net. They're heroes, for sure.
This is why I don't care about this ridiculous obsession with "revenues" by the Democrats. Yes, billionaires and corporations should be paying more. They can afford it right now, they are doing quite well. But the way they plan to do that is fraudulent: "tax reform" that consists of lowering rates and allegedly closing loopholes (which will only remain closed for people who can't afford lobbyists to open them again.) It's a scam.
Moreover, we don't really need to be collecting more money right now. We can borrow very cheaply and pay for infrastructure and putting people back to work, creating demand. This entire discussion of deficits is bullshit. We're in a depression.
As Krugman wrote last Friday:
“The boom, not the slump, is the right time for austerity.” So declared John Maynard Keynes 75 years ago, and he was right. Even if you have a long-run deficit problem — and who doesn’t? — slashing spending while the economy is deeply depressed is a self-defeating strategy, because it just deepens the depression.
As he also points out, this is being done in Europe and here not because any of these people care about deficits. It's being done because they want to dismantle the welfare state. And they have successfully bought off or confused just about everyone in the country --- actually, the world.
Democrats should not die on the tax hikes for millionaires hill (however that's defined.)"Tax reform" is a joke which will be killed one corporate donation and lobbyist inserted exception at a time. The safety net, on the other hand, will never be the same. They should just say no. We can run these deficits easily for the time being and when the economy does turn around we can do real tax hikes (raise rates, not "reform") on real millionaires to pay back that debt. Let's see how that works out before we start slashing away at the safety net people depend upon. There's just no good reason to do anything else.
Update: Unfortunately, the Democratic buy-in has filtered down to the community level. I got this email this morning from a reader named Bert:
Yesterday, June 3rd, 2012, I was volunteering at Lummis Day. This is a Celebration of North East Los Angeles, named for a remarkable man, Charles Lummis, who was an early City leader and envisioned a multi-cultural California back in the 1880’s. The Celebration is to further that vision.
The Democratic Party was well represented at the Community Booths and I approached Xavier Becerra’s table. I introduced myself to the woman at the table as a constituent and someone who has donated to, and written to Congressman Becerra in the past. I asked her opinion on Social Security and Medicare. What I heard was not reassuring. Briefly she said that politically unaffiliated economists, when they run the numbers, show that we cannot continue supporting these programs because the retiring population is larger than the working population that pays for them. The congressman supports them and wants to keep them, but that changes are going to have to be made. She was not specific about what types of changes and to be fair we were talking generically about Social Security, Medicare and Medicaid.
My response was that once the door is open to making adjustments, then it’s a quick slide down a slippery slope to cutting and more cutting. I told her that the $106,000 tax cap on Social Security taxes should be raised. I felt her response was non-committal, and not the response that I wanted to hear, which would've been "We will stand by these programs and fight to the death."
What I found interesting is that the Washington conversation that there is not enough money for these social programs, is at the level of the community booth. That was disappointing.
That bolded sentence is a piece of propaganda perpetrated by the financial industry. It isn't true. Seriously, do people think that someone just woke up yesterday and discovered that the baby boom was going to retire? We've been around a long time now.
For a thorough explanation of why that line of argument is completely wrong, click here.