How Obama's tax deal reinforces Republicans' trickle-down worldview
Republicans have long argued that the problem with the economy is too much government and too much regulation. By freezing spending and cutting taxes, is President Obama agreeing with them?
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The midterm elections offered dramatic evidence. NBC news reported shortly after Election Day, for example, that Crossroads GPS, one of the biggest Republican secret-money organizations, got “a substantial portion” of its loot from a group of extremely wealthy Wall Street hedge fund and private equity managers. Why would they sink so much money into the midterms? Because they’ve been so strongly opposed to a proposal by congressional Democrats to treat the earnings of hedge fund and private equity managers as ordinary income rather than capital gains (subject to only a 15 percent rate).Skip to next paragraph
Robert is chancellor’s professor of public policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Clinton. Time Magazine named him one of the 10 most effective cabinet secretaries of the last century. He has written 13 books, including “The Work of Nations,” his latest best-seller “Aftershock: The Next Economy and America’s Future," and a new e-book, “Beyond Outrage.” He is also a founding editor of the American Prospect magazine and chairman of Common Cause.
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In other words, the problem isn’t big government. It’s power and privilege at the top.
So another part of the solution is to limit the impact of big money on politics. This requires, for example, publically-financed campaigns, disclosure of all sources of political spending, and resurrection of the fairness doctrine for broadcasters.
It’s the same power and privilege that got the Bush tax cuts in the first place, and claimed the lion’s share of its benefits. The same power and privilege that got the estate tax phased out.
Get it? By agreeing to another round of massive tax cuts for the wealthy, the President confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he’s also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.
Obama’s new tax compromise is not only bad economics; it’s also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reenforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.
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