If there was ever any question about why Congress has such a low approval rating, consider the following statement:
“Despite our inability to bridge the committee’s significant differences, we end this process united in our belief that the nation’s fiscal crisis must be addressed and that we cannot leave it for the next generation to solve.”
It was made jointly by Sen. Patty Murray (D., Wash.) and Rep. Jeb Hensarling (R., Texas), the co-chairs of the the Joint Select Committee on Deficit Reduction – known paradoxically as the “super committee” – seconds after announcing they had failed to come up with a bipartisan plan for reducing the federal deficit by $1.2 trillion over the next ten years. As a result, instead of a nice piecemeal approach of mutual sacrifice – one that would comprise both necessary cuts to domestic programs and an expiration of tax breaks for the richest Americans – discretionary spending will get slashed in 2013 (without any attendant increase in revenue), putting the country on what National Journal economics correspondent Jim Tankersley has called “autopilot towards austerity.”
Not for nothing, but boasting of unity and a shared commitment to the next generation under circumstances like that is the kind of patronizing hubris that only a politician would have the nerve to mount.
To be fair, it’s been widely reported that Democrats, in typical conciliatory fashion, were willing to bend over backwards for a deal, offering to back significant cuts to domestic programs, including both Medicare and Medicaid, even though an overwhelming majority of Americans oppose such cuts. By contrast, their one caveat – ending Bush tax breaks for the wealthiest individuals and families – is supported by 91 percent of all Democrats and more than half of Republicans (not to mention 68 percent of nonpartisan voters). Under a proposal the Democrats have been pushing unsuccessfully since 2010, the Bush tax cuts would be extended next year to everyone except individuals making $200,000 a year and married couples making less than $250,000. According to the Congressional Budget Office, doing so would cut $800 billion from the federal deficit over the next decade – a significant chunk of the $1.2 trillion goal sought by the super committee.
But none of that matters much to the majority of Republicans, who have raised obstructionist tax policy to the level of religion and refuse to loosen their grip on the decaying corpse of voodoo economics. For that you can thank the super committee’s “13th member”, Grover Norquist – founder of the group Americans for Tax Reform and one of the most powerful and divisive non-politicians in American politics today.
A Washington lobbyist and anti-tax crusader, Norquist founded ATR in 1985. A year later he created the Taxpayer Protection Pledge, and the GOP has never been the same since. Signers of the pledge — and there are lots of them — promise never, under any circumstances, to raise marginal tax rates on businesses or individuals and to oppose reductions in tax expenditures or deductions without eliminating a tax of equal value somewhere else.
That last bit basically prohibits ending tax breaks, no matter how ill advised, with the goal of reducing the deficit. Eliminate a tax expenditure, and you better find a way to waste the savings, or else. Under Norquist’s menacing eye, it’s basically impossible for the federal government to raise any cash without borrowing it.
Beyond that the rules of the pledge are pretty simple: sign it and you gain the support of Norquist and his wealthy backers; don’t sign or violate its principles and expect to get challenged in the next primary. In the 2012 Congress, 41 Republican senators and all but six GOP House members have signed Norquist’s pledge, including all six Republicans on the super committee. (And we wonder why it’s so hard to pass thoughtful economic policy).
Among the departments facing the ax in 2013, the Pentagon will see a combined $1.05 trillion in cuts to its base budget over the next decade ($600 billion of it a direct result of the failure of the super committee). Defense Secretary Leon Panetta has described this as a “doomsday” scenario (an exaggeration, by all accounts), but the fact that the GOP would rather see the Pentagon risk a hit during a time of war rather than raise taxes on their millionaire donors is, dare I say, unpatriotic.
While war spending will be exempt from the cuts, that hardly matters since we haven’t been paying for the wars anyway, thanks, once again, to the Norquist vanguard.
Earlier this year the Eisenhower Research Project at Brown University released a report placing the cost of the wars in Iraq and Southeast Asia at $4 trillion and climbing, much of which has been borrowed from countries like China. Roughly 40 percent of the cost of the initial invasion of Iraq alone was taken on credit, and Iraq marked the first time we’ve financed a war by going into foreign debt since the American Revolution. During every other conflict Congress raised funds to support the war effort, at least in part, by hiking taxes. According to the Eisenhower Research Project, we’ve already paid $185 billion in interest on our war debt, and that number is likely to grow to $1 trillion through 2020.
Meanwhile America’s tax burden has continued to decline amid GOP calls to cut more, more, more. According to IRS data, between 1995 and 2008, the top 400 taxpayers have seen their tax rates drop 40 percent. In 2009, taxpayers shelled out an average of just 9.2 percent of their personal income on federal, state and local income taxes – the lowest amount since Truman was president – and tax revenues are currently at their lowest level in 60 years. From all available evidence, Americans have been on something of a tax holiday.
Just to make sure I called someone who I know has given a lot of thought to this topic. My father knows a thing or two about taxes. As a retired small business owner, he’s certainly paid his fair share — all while struggling to keep his Philly-based apparel manufacturing company above water, and U.S. based, as he watched the rest of his industry jump ship and move overseas. For his trouble he was subjected to audits by three federal agencies, including the IRS – all without merit – before he was finally forced into “retirement” when the last of his customers decided the “Made in USA” label wasn’t worth the money they could save in Pakistan.
He’s also something of a math whiz and middle-class crusader, so it didn’t surprise me when he spent some of his new-found free time last year generating a comprehensive analysis of the federal tax burden on American wage earners from 1945 through 2010 (golf never was Dad’s thing). After digging through 65 years of historical tax rates and adjusting income to 2010 dollars he charted the evolving tax burdens on four brackets of wage earner ranging from the middle class to the well off.
What he found isn’t exactly groundbreaking (it’s long been known that the rich get better tax breaks than middle-income earners — after all they can afford to lobby for them); but seeing it on paper is just about guaranteed to give any working American that’s ever filed a Form 1040 a bad case of agita.
Contrary to popular belief, all of us are paying less in taxes as a percentage of our wages than we have at almost another time in the past 65 years; but no one has done better than the very rich. Taxpayers who make $500,000 a year (adjusted to 2010 dollars) have seen their tax burden drop like a lead balloon, from a high of more than 80 percent in the 1960s to 35 percent in 2010.
Those individuals making $250,000, meanwhile, are paying less in taxes now than every single year except two: 1991 and 1992, and they faced half the tax burden in 2010 that they did in 1980.
The middle class, however, has hardly gotten a tax break at all. Dad’s analysis shows that wage earners making the equivalent of $50,000 a year are facing the same tax burden they did in 1965 and only a fraction less than they did in the years following World War II.
The message in the data is pretty clear: While Norquist and his minions claim to be representing the average American taxpayer, it’s the most wealthy among us who benefit from their efforts. And while little Grover was just a twinkle in his mother’s eye when this whole mess got started, with he and his vanguard running around Capitol Hill, pledges in hand, average American citizens can expect little help from our elected officials.