Looking for explanations

Yesterday Senator Patty Murray and Senator Maria Cantwell voted for the cloture motion on the extension of the Bush-Era tax cuts.  Their votes were certainly not vital to the passage of the motion, the final vote was 83 – 15, but they are troubling.  Both cited the inclusion of the sales tax deduction as a primary reason for their support of the “compromise”.  News reports tell us the sales tax deduction “saves Washington state’s roughly 1 million taxpayers between $350 million and $500 million annually on their federal return….” Which sounds good.  Unfortunately, it’s not the whole story.  Only those tax payers who itemize their deductions can claim the sales tax.  The threshold to itemize deductions is fairly high (the exact number depends on an individual’s filing status); this is not a benefit for all, or even, most Washingtonians (nationally only 35% of taxpayers itemized in 2004).  In fact, the ability to itemize deductions generally benefits those with higher incomes and those who own homes.  The ongoing foreclosure crisis is shrinking the number of home owners is shrinking in Washington.  The sales tax deduction is not insignificant, but much like the rest of this “compromise” benefits those with more, more.  The deduction is popular, but popular enough to put this country further into debt?

Both Senator Murray and Cantwell voted “nay” on the original bill.  Said Senator Murray at the time, “Its passage will prevent us from making critical investments in Social Security, Medicare, and education. ‘Most insidious,’ she said, ‘the cost of the tax explodes in the second 10 years to nearly $ 4 trillion, just as the baby boomers are retiring and are beginning to receive Social Security and Medicare. ” What has changed?  Nothing, we know that the tax cuts exacerbated our problems.  We’ve had years of the tax cut and years of no net job growth.  Why support it now, when they didn’t then and they won’t in two years? How are we supposed to untangle that message? As Senator Murray warned in 2001, “It will not allow us to pay down our national debt as quickly as possible”  In fact, our deficit has exploded and this “compromise” will add nearly $900,000 billion to the deficit.  If both feel so strongly about the damage the extension will cause to our debt and the danger of Republican intransigence for the nation on this and other issues, why not say no?

__________

In 2010 Democrats campaigned on the Bush tax.  They didn’t work, they said. They crowed that the cuts blew up the deficit; that it helped to concentrate wealth in the hands of a smaller and smaller group of Americans.  They slammed their fists and said that, for the future of the county, the cuts could not be extended.  The President campaigned on ending the cuts in 2008.  Austen Goolsbee, the Presidents top economic advisor, has been all over the news saying that the President will veto any attempt to extend the cuts in 2012 because “we know they don’t work”.

So, if they didn’t work and they won’t work – why are we extending them?

Goolsbee has also been working overtime to convince us about the goodness of the “concessions” that the President won from the Republicans.  Beyond the unemployment extension, what else did the administration wrest from the Republicans?  Certainly he couldn’t be talking about the 2% payroll tax cut, which will mean less money for Social Security?  The Republicans have never met a tax cut that they didn’t want to take out to dinner and drinks.  There is no victory there – no matter how many whiteboards you use.  Oh, and no Making Work Pay Credit.  Which means a $400 ($800 for married couples) tax increase on the working poor.  Where is the good in this?  Where is the compromise?  Where’s the leadership?

This “deal” is terrible and people will answer for it in 2012.  Whether people “primary” the President (not likely) or stay home in November or not give as much as they would have.  This “compromise” will haunt Democrats for years.

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