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Activists urge tax hike amid ‘fiscal cliff’ talks

By Josh Richman
Monday, December 3rd, 2012 at 12:20 pm in economy, taxes.

Congress and the White House might be at loggerheads over how to address the “fiscal cliff,” but activists in California and across the nation aren’t letting any grass grow under their feet.

The Action – a broad coalition of labor and progressive groups demanding that the Bush tax cuts be allowed to expire for those making more than $250,000 per year – organized phone banks this past Saturday at 38 sites across California, including Burlingame, Daly City, El Sobrante, Los Altos, Martinez, Morgan Hill, Oakland, Palo Alto, San Francisco, San Leandro, San Lorenzo, Santa Clara, Santa Cruz, Santa Rose, Sebastopol and Walnut Creek.

The phone bank targeted California voters, who were urged in turn to call their representatives in Congress.

“For months, Republicans in Congress have held the middle-class hostage to tax cuts for the wealthiest 2 percent of Americans,” said a Friday e-mail announcing the phone banks. “The Senate has already passed legislation to keep middle-class taxes from rising, and it’s time for the House of Representatives to act. It’s time to set our priorities straight: Tax cuts for the wealthy means fewer Pell Grants, fewer Head Starts and more kids shoved into crowded classrooms.”

Former U.S. Labor Secretary Robert Reich, now UC-Berkeley professor, is helping to define the debate for Democrats (via MoveOn.org):

On Tuesday evening, members of the Sacramento Alliance of Californians for Community Empowerment will be out singing some special, re-purposed Christmas carols “to urge Congress to vote for middle class tax cuts without holding them hostage for tax cuts for the wealthy.” They’ll be at 16th and J streets at 6 p.m., performing for shoppers, commuters and people waiting in line to see former President Bill Clinton speak at the Sacramento Speakers Series – a friendly crowd, one would think.

National activism is afoot too: Several organizations are planning a Congressional Call-In Day this Wednesday, with a toll-free number, 800-998-0180, that will connect callers directly to their Congressional leaders. As the National Committee to Preserve Social Security and Medicare puts it, the goal “is to flood members of Congress with calls reminding them that Americans of all ages and political parties oppose cutting middle-class benefits to pay for deficit reduction. Our message to Congress is simple: ‘NO CUTS to Social Security, Medicare and Medicaid. They should not be a part of this deficit debate.’ ”

And there’ll be a demonstration at noon Friday outside House Minority Leader Nancy Pelosi’s San Francisco office – at 7th and Mission streets – urging her to vote against any “grand bargain” solution. California Alliance for Retired Americans, Jobs with Justice, Gray Panthers of San Francisco and other groups are expected to take part.

“We’re not broke,” said Hene Kelly the California Alliance for Retired Americans’ legislative director. “We’ve been robbed. If Congress wants to get our economy back on track we need to focus on additional investments in jobs and services that rebuild our economy. That means Congress must raise more revenue by making the wealthy and big corporations pay their fair share of taxes. Anything less would be a grand swindle of working people, not a grand bargain.”

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  • Elwood

    Obama Consults with MSNBC Hosts Sharpton, Maddow on Tax Rates

    “President Barack Obama met with several MSNBC hosts this afternoon at the White House to discuss tax rates, according to Huffington Post reporter Jennifer Bendery. The reporter wondered if an “MSNBC love fest” was going on at the White House.”

    http://www.weeklystandard.com/blogs/obama-consults-msnbc-hosts-sharpton-maddow-tax-rates_665036.html

    Well, that tells us where the chosen one’s head is at doesn’t it? He has chosen the inmates of the asylum as advisers.

  • John W

    I read Jennifer Bendery’s full story on this and then read all the snappy online comments, pro and con. One goodie was “what does Rachel Maddow know about economics?” Love or hate her, she’s got a degree in public policy from Stanford, was a Rhodes Scholar and holds a PhD. I’m guessing she knows quite a bit more about economics than the person who posed that question.

    Yeah, Obama’s meeting with the “progressives.” When a deal is reached, he’s going to have to pacify those folks in the same way Boehner is going to have to deal with the Tea Party “no compromisers” in the House. Obama also has been meeting with groups of CEO’s, Bloomberg News etc.

    Progressives, AARP, Gray Panthers etc. are telling Obama, “don’t touch Medicare or Social Security.” Hey folks! The Medicare Part A trust fund runs dry in about 10 years, at which time payroll taxes will cover only 80% of the cost. Premiums and co-pays cover only 25% of the cost of Part B and prescription drugs. The rest is paid by the general fund, not the payroll tax. Something has to give. Those who can will have to pay higher premiums, and not everything can be covered.

    The Social Security trust fund runs dry in 20 years, at which point payroll taxes will cover only 75% of scheduled benefits. By law neither Medicare Part A nor Social Security is allowed to take from the general fund or borrow to pay benefits. SS can be fixed fairly painlessly by changing the way cost-of-living adjustments are calculated. That will both stretch out the trust fund and reduce the annual general fund cost of redeeming the trust fund Treasury bonds. I agree with Republicans that SS shouldn’t be fixed by lifting the cap on payroll taxes. That would be a killer for people who earn more than the cap but aren’t rich by anybody’s definition.

  • Publius

    RE# 1&2

    These 2 together with Obama couldn’t figure their way out of a paper bag.

    Sounds Like a bad joke-

    What do you get when a Community organizer, a Race Baiter, and an Angry young man meet in the White House?

  • John W

    Re: #3

    Thank you for sharing.

  • Elwood

    Obama stamps foot, demands no-limit credit card

    “If Congress in any way suggests that they’re going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation… I will not play that game,” Obama huffed to a room full of business executives, whose own prosperity rests on proper management of their budgets and on staying within their credit limits.”

    http://dailycaller.com/2012/12/05/obama-stamps-foot-demands-no-limit-credit-card/

  • John W

    Debt ceiling increase history:

    Both parties have demagogued the debt ceiling when the other party was in power, even though the ceiling is raised to pay the bills for money already spent. Obama did it when in the Senate.

    But only once, in 2011, was it dealt with in a manner that threatened default on debt and other obligations. Now, the GOP wants to make a monthly or quarterly spectacle of it, as leverage to get their demands met on an installment basis. Good idea if you want to give the country a heart attack and start a depression. But then, Republicans are rather good at starting depressions or near depressions (Hoover, Bush 43).

    Reagan through Obama, debt ceiling raised 44 times. That’s 34 times under three Republican presidents (20 years) and 10 times under two Democratic presidents (12 years).

    Of the $15.5 trillion cumulative debt ceiling hikes under these presidents, 55% ($8.5 trillion) was under GOP presidents, while 45% ($7 trillion) was under Democrats. Actually, it’s more like 60/40 if you attribute to Bush the $800 billion hike that had to be passed during Obama’s first full month in office to cover part of the Year 1 deficit inherited from Bush.

    Reagan: 18 times. Tripled ceiling from $935 billion to $2.8 trillion.

    Bush 41: 9 times (in four years). Increased ceiling by 48% to $4.1 trillion.

    Clinton: 6 times. Increased ceiling by 43% to $5.95 trillion

    Bush 43: 7 times. Increased ceiling by 90% to $11.3 trillion. $12.1 trillion if you include the increase immediately after Obama took office. This is despite inheriting a large Year 1 budget surplus.

    Obama: 4 times, Increased ceiling 45% to $16.4 trillion. Unlike Bush 43, who inherited a budget surplus for his first year in office, Obama inherited a $1.2 trillion deficit.

  • Publius

    RE#6

    “that threatened default on debt and other obligations.”

    You are factually incorrect. Under the 14th amendment; the responsibility of the government is to pay off the debt incurred. The government collects more than enough revenue to service the debt and pay all pension obligations incurred by the federal government. Though I disagree, the Supreme Court has deemed that Social Security is not a pension or a debt incurred, but a promise to pay. When Barrack Obama uses the argument that the U.S. will default on its debt obligation he is misleading the American public, this is a fear tactic. Nowhere in the 14th amendment does it say that the government is obligated to keep borrowing money to fund benefit programs and daily operations.
    The Democrats are politicizing the debt ceiling just as much as the Republicans. The argument is not honoring debt, but how much we borrow to fund our government. Rather than make tough decisions both parties have historically kicked the can down the road and simply raised the ceiling on borrowing. I believe we are now at breaking point when it comes to borrowing, and personally I am glad that there is an opposition party that will use the debt ceiling as a political tool. Borrowing money in my children’s and grandchildren’s (if I am to be that lucky) names in order to pay for a wasteful, bloated Federal government is not what we as a country are about and I agree with the President that it is “unpatriotic” to do so. You want to blame Republicans when all of Washington is to blame, but you still want to keep on borrowing and spending. To what end? Does it matter who got us to this point? The harsh reality is that we here.
    Different historians will blame the great recession and great depression on different people. If you want to blame Republicans then you also must yield a simple truth. The greatest economic recoveries in American history were under the Republican presidents Eisenhower and Reagan. The Democrat FDR had 4 terms to correct the evil deeds of Republicans and failed. Barrack Obama is now on his second term and has failed thus far only time will tell if he will succeed. If Republicans and their policies got us into this mess then historically speaking it will take a Republican leader to get us out of this mess.

  • John W

    Publius,

    What you said about Social Security and the Supreme Court is correct. By “debt and other obligations,” I was referring to commitments that have been made, whether or not constitutionally binding under the 14th Amendment. That would include everything from paying the invoice from the vendor who makes military uniforms to paying utility bills, to paying military and civilian government salaries, to paying doctors for services rendered under Medicare or VA to, yes, paying statutorily scheduled Social Security benefits. “Default,” in the eyes of the world, is not limited to failure to pay off bonds and pensions “for services in suppressing insurrection or rebellion.”

    Specifically regarding Social Security, Congress could pass a law tomorrow that would immediately and permanently terminate benefits to current and future retirees. They could do the same for Medicare. They might even be able to cancel the $2.6 Trillion bond debt in the SS Trust Fund (since that is not public debt), thus reducing our national debt. However, this would be done by passing a law, not by suspending payment because of failure to raise the debt limit to pay obligations already incurred pursuant to laws passed by Congress.

    I’m as hawkish as you about getting our fiscal house in order and not passing unmanageable debt to the next generations. I, too, hate bloated bureaucracies. I’m eligible for both Social Security and Medicare and am prepared to accept cuts that would affect me, not just people under 55. But getting the fiscal house in order cannot be achieved with spending cuts alone. Revenue has to be a significant part of the fix. Eventually, middle income people, not just the top 2% are going to have to participate in that. The Bush tax cuts might have been a fine idea if they had figured out how to cut a corresponding amount of spending. We didn’t do that. We financed those cuts with debt and had a grand old time. Now, we face the consequences.

    By the way, when we speak of not passing debt to the next generation, “debt” has many forms. Deferred upkeep of infrastructure (roads, airports, bridges, military systems etc.) places as much burden on the next generation as does the obligation to pay Treasury bonds.

  • Publius

    #8

    “The Bush tax cuts might have been a fine idea if they had figured out how to cut a corresponding amount of spending. We didn’t do that. We financed those cuts with debt and had a grand old time. Now, we face the consequences.”

    Government revenue increased every year after the Bush tax cuts until the crash of 2007. The Bush Tax cuts did not “cost” us anything, runaway government spending (under Bush and Obama), bailouts, (under Bush and Obama) entitlement spending (under Bush and Obama), and two wars (under Bush and Obama) were the cost drivers.

    After the unchecked growth of the federal government over the past 10 years, there has to be a contraction to restore the delicate balance that allows for economic freedom in our society.

    The Democtratic mantra of taxing the rich will not solve anything. The revenue raised from the tax increase will run the government for 8 days. This argument is pure politics.

    In the long run going over the cliff is the best thing for this country. We can start cutting debt and all will feel the pain caused by our over grown federal government.

  • Elwood

    Obama’s tax plan can’t pass Dem controlled Senate:

    “The White House on Thursday dismissed as political mischief Senate Minority Leader Mitch McConnell’s offer to bring President Obama’s fiscal cliff plan to a vote on the floor, conceding the proposal would not receive the 60 votes needed to overcome a filibuster.

    “We don’t have 60 votes in the Senate,” White House press secretary Jay Carney said, adding the White House was “very confident” that Democrats support the principles outlined in Obama’s plan, which has met with derision among Republicans.

    http://www.nationaljournal.com/blogs/influencealley/2012/12/white-house-swats-away-mcconnell-s-suggestion-06

  • John W

    Re: #9 Government revenue increased every year after the Bush tax cuts until 2007. The Bush tax cuts did not “cost” us anything.

    CBO estimated income tax revenues 2001-2011 were $1.6 trillion less than if the cuts had not occurred. The cuts were not in full effect until 2003.

    The first Bush tax cuts were in 2001, followed by more cuts in 2003. Revenue from individual income taxes fell from $994 billion in 2001 to $858 billion in 2002 to $794 billion in 2003. PS: I loved the 2003 cuts. Came at just the right time to reduce taxes on a “windfall” that year.

    In 2004, revenue from individual income taxes barely budged (less than 2%), even though this was the first year after the 2003 tax cuts were in full effect. Fueled by the housing bubble, the only spike in revenue occurred 2005-2007. Revenue started dropping in 2008 and, by 2009, was about 8 percent below the 2001 level. $915 billion in 2009 versus $994 billion in 2001.

    Feel free to fact check me.

    Source: OMB Historical Tables. Table 2.1.

  • John W

    Re: #10

    Soooo? Just the usual stunt both parties engage in.

    The Dems only have 53 votes, including the two Independents. And I’m pretty sure no Republicans would vote for Obama’s proposal, which was designed to start the negotiations, not to be voted on. Nobody’s going to vote on a proposal that is not the product of a negotiated fiscal cliff deal between the White House and Dem/GOP leaders in the House and Senate. I don’t imagine there would be very many votes for Boehner’s proposal either.

    Some people have predicted that the House will pass two fiscal cliff bills (assuming anything gets done). The first will be a version that the House Tea Party wing likes and will be passed with few if any Dems. The second will be a version that the Dems like and will be passed with mostly Dem votes, with a relatively small number of votes from more moderate GOP House members (40 House GOPers have spoken in favor of increasing taxes). Then, the Dem-controlled Senate will vote down the first version and pass the second.

    Or, we’ll just do Thelma & Louise and watch the stock market fall like a rock.