Spinning Into Taxes
Long-time CG&G readers know that my Beautiful and Talented Wife (The BTW) is a professional actor. What you don’t know is that one of The BTW’s favorite and most celebrated roles was when she played Sarah Daniels, the lead in Rebecca Gilman’s wonderful, and wonderfully controversial, play, Spinning Into Butter.
The phrase “Spinning Into Butter” comes from the now largely discredited children’s story Little Black Sambo. In that book, Sambo gives his clothes, shoes, and umbrella to four tigers so they won’t eat him. But instead on agreeing among themselves on how to divide up what Sambo gives them, the tigers chase each other around a tree so fast as they argue that they spin themselves into butter.
It’s hard not to get the sense that the debate currently being waged in Washington about whether and how to extend the tax cuts enacted during the Bush administration isn’t a real-life example of political tigers spinning themselves into butter. This time, however, the spinning is of the public relations variety.
Those who want all the Bush-era tax cuts extended, including the three provisions the Obama administration doesn’t want to extend – the top marginal individual income tax rate and the existing rates on capital gains and dividends – are running around the tree saying not extending them will be a tax increase. Those who don’t want to extend those three provisions are running around that same tree telling everyone it won’t be a tax increase because existing law won’t be changed.
The irony here is that there’s no disagreement about the numbers. This is a debate that that Frank Luntz, the PR professional who takes credit for getting Republicans to use the phrase “death tax” instead of “estate tax”, would love.
Let’s state the obvious: Anyone who ends up paying more in taxes next year than they do this year is very likely to consider the change to be a tax increase. Legislative procedure and legal definitions will be of little or no solace to them and substantive arguments made on that basis will not have much of an impact.
On the other hand, it’s absolutely true that the tax changes were put in place by George W. Bush and a Republican-controlled Congress on a temporary basis. Regardless of whether it was said at the time, the White House and Congress anticipated that, without further action, the tax provisions would revert back to their previous higher levels on January 1, 2011. The potential tax increases are already on the books and were put there by GOP lawmakers.
The spinning is going to get far more intense in the next six weeks as the tax extension is considered by the Senate. As Pete (here and here) and I (here) both posted last month, Republicans seem to be increasingly intent on filibustering the legislation needed to extend any of the tax cuts if it doesn’t include the top marginal rate, cap gains, and dividends. Democrats seem to be just as intent on forcing Republicans to go on record before the election preventing the other tax changes from going into place.
That’s the point at which the two political parties will change positions as they spin the issue. Democrats will argue that the GOP wants to raise taxes on millions middle class Americans while Republicans will say that they are just letting current law go into effect. Republicans will say that Democrats are trying to raise taxes for those earning over $250,000 a year; Democrats will insist that they are only doing what George Bush intended.
And round and round they’ll go.
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The issue is the definition
The issue is the definition of temporary. When a tax rate has been in effect for 10 years is it temporary even if Congress needs to act to keep it in place? What about tax rates that are set with no expiration date but get changed every few years -- temporary or permanent? What a silly discussion. The lack of certainty about tax policy is undermining the private sector's willingness to make decisions and damaging the economy. Just set the policy and leave it alone!
Great Idea
"Just set the policy and leave it alone!"
I agree, but how do you accomplish that without people adjusting the books for political expediency or times of crisis?
Wrong
The tax cut expiration in 2011 were *technically* put there by Republican lawmakers, but you're fibbing by not explaining that they *wanted* permanent tax cuts, but were limited by what they could pass due to *Democrat* opposition.
They chose poorly
The Republicans could have passed a much smaller, permanent tax, or they could have made the tax cut they did pass permanent by passing offsetting spending cuts. They chose neither. Instead, they chose to pass a temporary tax cut, gambling that when it came time for them to expire, they would have the votes to extend them. Oops.
Congress critters get the blame or credit for the laws they actually pass, not they ones they wanted to pass. The impending massive Bush tax increase is the responsibility of the Congressmen who passed it and Bush who signed it.
Bad History, Bad Grammar, and Who's Fibbing Here?
Well, if you're going to toss "fibbing" around, you ought to be more careful with the truth. What Republicans were aiming at was a claim of a smaller impact on the deficit than was actually the case. (This is what we also saw with Medicare Part D - making the cost of the ultimate policy seem smaller while it was being debated.) Democrats did oppose the tax cuts initially proposed, as having to great an impact on the deficit. Making cuts temporary was the GOP response, as I recall, not a Democratic proposal.
If the GOP meant to extend the cuts from the outset, they could have said so. What they did was propose temporary cuts - which some Democrats voted for and some did not - without saying to the public that it was a gimmick and that they would immediately militate to make them permanent. That's how this particular sausage got made. Only after the cuts were passed did the GOP admit widely that they mean to extend the cuts forever.
So, if what you mean by "limited by Democrat (sic)* opposition" is "The GOP deceived the public, but only because they wanted to pass legislation without the public knowing what it would actually cost" then your statement is, well, not true on its face, but true in the parlance of the modern Republican party.
*I realize that one of the GOP's many efforts to lower the level of political discourse is to corrupt "Democratic" into "Democrat", as if sneering is the path to better policy. In this case, though, let's not corrupt grammar while we're at it. "Democrat" is a noun. "Democratic" is an adjective. You have used "Democrat" as an adjective - evidence of some bad thing or other, but from where I sit, I can't tell which bad motive(s) is(are) at work.
Check your own Grammar first...
"Democrats did oppose the tax cuts initially proposed, as having to [sic] great an impact on the deficit."
You throw around opinion and call it "truth".
You have clearly not been paying attention to reports on Medicare part D, either. It has cost less than originally predicted, and now there are reports that it has lowered some other Medicare costs too.
The GOP *did* *from* *the* *outset* state that then intended to make the tax cuts permanent. Several bills were introduced to do so. Who shot them down? Democrats in Congress. Compromise to get what you can is not "deception".
My you are touchy. Democrats are Democrats.