The Cut That Isn’t a Cut

As you may have heard, President Barack Obama and the Republicans (who, oddly enough, are not, technically, in power yet), have struck a deal extending the Bush Tax Cuts For The Wealthy (their official name) for another two years. In return for these tax “cuts”, the Republicans have agreed to extend unemployment benefits for currently unemployed people for another thirteen months along with a few other helpful things for the poor. The stage has been set to make this a campaign issue for 2012. Do you support extending tax “cuts” for millionaires and billionaires who don’t need them? Or do you finally agree that rich people do not use their tax savings to create jobs? But is anybody really going to be paying less in taxes because of this? Not necessarily.

In Washington, DC, and only in Washington, DC, a “cut” is merely a decrease in the amount by which they originally intended to increase spending. Or, as applied to tax rates, a decrease in the amount by which they intended to increase them. If they originally budgeted that they would increase spending for, well, anything, by $100,000,000, and they decide that they would only increase spending for that thing by $90,000,000 in that fiscal year, they would tout that as a “cut” of “$10,000,000.” They’re still going to increase spending by $90,000,000, but they’re going to call that a “cut” because they were originally going to spend more. I shit you not. That decision about how much they would spend for that fiscal year may have been made four or five years before in a previous budget resolution. When they produce a budget, it’s not just for this year but for the next ten years or so, so that it looks like there’s some structure and purpose to what they’re spending our money on. It’s all fiction because no President or Congress can bind a future President or Congress. They can always pass a law saying they’re going to ignore the law they passed before. If everyone signs off on it, it’s legal. And they may have paid little attention to that program (for whatever reason, because it’s only our money) until they needed to squeeze a few more “cuts” to be able to heft a big thick sheaf of papers in front of the cameras. But if it makes for a good headline (“Congress Cuts Spending By $5 Billion”), they’ll do it and pat themselves on the back for a job barely avoided. But they’re still spending more money.

The Bush Tax Cuts, by Republican design, were set to expire at the end of this year and, by law, the income tax rates would revert to what they were ten years ago (also known as “The Before-Time”). Each year they produced a budget since, they had to base it on the Bush Tax Cuts expiring on schedule. This is how the law read. They could not just assume that they would extend them later, so there would be less money available to spend. Remember, at the time they passed those tax cuts, they were not putting the wars in Iraq and Afghanistan on the annual budget. Those wars were funded by emergency spending bills despite the highly publicized fact that they saw no end to the war in Iraq (Bush even said he didn’t care that much about the guy who attacked us) , but they kept funding it (illegally) as if it were a surprise they could not foresee. So, in contradiction to what incoming Speaker of the House of Orange John Boehner says all the time, there was never any “uncertainty” about the tax rates for next year. By law they were going to go up and everyone in Congress knew it, including Boehner. The only reason I can think of that makes sense for why any “uncertainty” would exist is if Republicans were telling businesses and rich people that once they got in control of Congress, the tax cuts would be made “permanent”. (Again, a fiction, also known as a “lie”, because any future Congress could raise them again.) Since they failed to get control of both Houses (as planned), they couldn’t be “certain” the tax cuts would be extended. It’s the only explanation that makes sense. In other words, they created the very “uncertainty” they claimed existed out there.

Since the tax rates would have gone up next year, any extension of the current rates will be called a “cut” because without the extension, they would have gone up. You’re not gonna see more money in your pay check because they “cut” taxes. You just avoided seeing less in there because they almost didn’t.

[Cross-posted at Pick Wayne’s Brain]

7 thoughts on “The Cut That Isn’t a Cut

  1. “It’s all fiction because no President or Congress can bind a future President or Congress.”

    Excellent post, Wayne.

    Obama sold us out to the lowest bidder, the Republicans. If Obama couldn’t stand up and fight with us this time (it would have been an easy win for him), then I have little hope that he will fight to protect Social Security. Obama didn’t fight for the public option and he didn’t fight hard enough for real financial reform. What a disappointment. I knew he wasn’t a liberal but I thought he would govern closer to the middle. Instead, he appeases the right and then whines that the “Republicans held the poor hostage” as if he didn’t have any other choice. There are still 2 million unemployed that will be without benefits. I can now appreciate the bumper sticker “How’s that Hope and Change working for you?” but for a different reason.

    I will not be volunteering for Organizing for America in 2012. Obama is turning out to be “Bush Light”. Up until January 2008, I was a strong Bill Richardson supporter. When he dropped out, I had to choose between Edwards, Clinton and Obama and I chose Obama because of “Yes WE can” vs Hilary’s “Yes I can”. One more thing, when will the wars stop?

    This thread should be pasted to the top of the page.

  2. I’ve already read in at least a couple of places that this is a “700 billion dollar” tax giveaway to the wealthy. That figure was from a CBO estimate based on a ten year scenario. So right now, this is a 140 billion dollar tax giveaway. I wish people would start getting it right.

    Obama just couldn’t stand the thought of unemployment benefits expiring on so many people right at Christmas time, and he did want the cuts for all but the top bracket.

    So he’s made a deal with the Republicans. I still haven’t heard or read that the Democrats, particularly the House, are going to agree to this.

  3. “irresponsible to raise taxes on people in a recession” was the fickle argument they used to justify kicking the American people in the ass once again. “adding to the deficit” was another one, yet they have no problem doing that in light of those tax credits.

    Doesnt anyone find it kind of sinister that they held 2 million+ people and their families hostage to get what they wanted, more money for themselves?

    And of course we knew all along this whole line of bs was going to be blamed on Obama, just like everything else. What if he had stuck to his guns? The credits would have expired, raising taxes for everyone and the unemployed would have been left flailing in the wind. And he still would have been blamed.

    I think he did the best he could in light of what he was up against. Those hard asses would have let people become homeless and hungry over those credits and Obama wasnt going to let that happen.

    I totally agree that the voters fell for the bs and elected these devils in the midterms. Their agenda wasnt whats best for the American people, only what best for them and their pockets, and to embarass Obama. That doesnt include any of the little people who voted them in.

    They will realize that, but a little too late…

  4. Thanks for this excellent post Wayne. President Obama may or may not play chess, but I’ll bet he really sucks at poker.

  5. I’m too lazy to look for the actual numbers, but it can be (and has been) proven that, over the era of the Bush tax cuts, the wealthiest beneficiaries of those cuts produced an overall negative number of jobs.

    How in their right mind can anyone possibly argue to extend such an easily-proven disaster of a tax policy?

    And Wayne’s right – well, he’s usually right anyway – in particular about this “uncertainty” bullshit that all of the Rs are getting away with. Since the cuts were initiated, the wealthy – or their accountants, at least, have known precisely what their tax rates would be when these cuts expired. It’s a no-brainer that no one in the media seems to have thought of.

    Gotta go to bed, goodnight.

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