ABOVE PHOTO: Pres. Barack Obama (Obama photo by: Ryan Rodrick Beiler / shutterstock.com)
By Earl Ofari Hutchinson
The ink was barely dry on President Barack Obama’s projected 2016 budget proposal when GOP leaders virtually declared the proposals DOA. The real issue is not the amount President Obama wants to spend on domestic and defense programs, but his audacity to once again say that some of the funding on these programs should be paid for by a tax hike on the rich. The notion that the rich don’t pay their fair share has stuck in the craw of Republican leaders and conservatives every time the President has dared suggest it and that’s been the big reason for government red ink in years past and the looming prospect of it reoccurring in the future.
Obama’s tax increases have been anything but drastic. They are little more than a marginal increase in the capital gains tax and modest proposals for closing some of the canyon-wide loopholes that permit corporations to pay little, and in some cases, no taxes on their excess profits. These loopholes also allow them to park more than $2 trillion in profits in off shore havens in Europe and the Caribbean. The GOP’s standard counter is that tax hikes will stunt job growth, business investment, and expansion, and this in turn will depress wages and consumer spending. This is a sure prescription, so the argument goes, that the economy will remain in a near financial catatonic state of slow to no growth, with the real danger of a slide downward again.
The banks are a near textbook example of why this is nonsense. They got billions via a taxpayer floated bailout, and have been Scrooge like in their lending. The Wall Street whiz kids have been even worse. They reaped a bonanza from the Bush tax cuts and still almost crashed the economy. Estimates are that banks and corporations have hoarded nearly $2 trillion in the profits that were made possible to a degree by taxpayer bailout dollars. Yet, small and medium sized businesses continue to wither on the vine due to a lack of capital. There’s another compelling reason to raise taxes on the wealthy, one that, ironically, the GOP screams about: the deficit. President Obama has repeatedly warned that the nation simply can’t afford to maintain tax cuts for the rich. They will cost the treasury $700 billion. That kind of Treasury hit ultimately means even more slashes, cutbacks and elimination of funding for education, health, energy, and public works programs to state and local governments, all of which create jobs.
Now the politics of why the wealthy should not get another tax break dime. Some polls have shown that the overwhelming majority of Americans want the tax cuts for the upper income earners ended, and the cuts for the middle class extended. So scrapping the cuts for the wealthy would be a win for the Obama administration. But the Republicans, and their biggest boosters, the U.S. Chamber of Commerce have done a master spin job in the media, pounding home the message that if the cuts for the rich are ended, all sorts of dire things will happen to the economy, and Obama would be responsible.
While this is all smoke and mirrors, it has resonance with nervous and fearful Americans worried about what tomorrow will bring in terms of their jobs and businesses. But resonance or no, it’s still bad economic and political business to keep something in place that has absolutely no proven value to the economy, let alone that cannot be sustained on the basis of cost and return.
There’s a final reason why the wealthy must pay more. Repeated polls and surveys have shown that the income inequality and wealth gap has increased by leaps and bounds during the past decade. That means there are more poor people than in years past. According to a 2010 report, the number of Americans classified as poor is one in every seven. That amounts to nearly 45 million Americans struggling to keep a roof over their heads, feed their families and clothe their children. At a time when so many persons are needy, even destitute, giving more money to people who don’t need it in the name of tax breaks is not only beyond shameful, it’s obscene. Taxes come from the public and should be used to try and put the breaks on the surge in poverty. This money should be spent on measures that will actually create jobs and boost income support programs.
The GOP cynically flips the script and blames the wealth gap and even the rise in poverty on Obama’s supposedly reckless tax and spend policies. This is more myth making. Obama’s budget has not broken the government’s fiscal bank. The deficit has been steadily reduced during his administration due to the caps he’s placed on spending. But those caps have limits, and vital programs have to be funded. The funds are in the coffers of major corporations and the wealthy. The GOP will again hammer Obama hard with the myth that taxing the rich hurts all to insure that those funds aren’t tapped.
Earl Ofari Hutchinson is an author and political analyst. He is a weekly co-host of the Al Sharpton Show on American Urban Radio Network. His forthcoming book is: From King to Obama: Witness to a Turbulent History (Middle Passage Press).
He is a weekly co-host of the Al Sharpton Show on American Urban Radio Network. He is an associate editor of New America Media. He is host of the weekly Hutchinson Report Newsmaker Hour heard weekly on the nationally network broadcast Hutchinson Newsmaker Network.
Follow Earl Ofari Hutchinson on Twitter: http://twitter.com/earlhutchinson
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