Poor job creators, how will they even live?
Democrats are looking for ways to fund President Joe Biden's Build Back Better agenda now that Senator Kyrsten Sinema from Sinema-Land opposes rolling back the huge Trump tax cuts for the wealthy that she voted against four years ago. It's hard to find a spare trillion these days, but Democrats think they can shake down the marginalized billionaire class.
Billionaires could be taxed on unrealized capital gains on their liquid assets, Democratic officials said yesterday. It would affect people with $1 billion in assets or those who have reported at least $100 million in income for three consecutive years, according to news reports. That would ensnare perhaps 700 taxpayers — or the wealthiest 0.0002 percent — but Democrats hope it would generate at least $200 billion in revenue over a decade.
It's unclear why the Times used the verb “ensnare," like Democrats are setting up bear traps for these poor billionaires. This seems like a solid plan, but there are no longer any billionaires on Wonkette's staff so what do we know? Let's consult with almost-billionaire Mitt Romney, who's forced to work past retirement age to provide car elevators for his family. The senator from Utah explained on Fox News yesterday why taxing billionaires is a terrible idea.
ROMNEY: It's not a good idea to tell billionaires don't come to America, don't start your business here.
This is a common rhetorical dodge for rich people who want to dodge taxes. Their patriotism is apparently so transactional, they won't stay in the country if taxed at a level they're unlikely to feel in any real sense. Meanwhile, no Democrat seriously suggests that working people will flee the country and settle somewhere that actually provides universal child care, paid family leave, and affordable health care.
Romney claimed that higher taxes for billionaires would convince the “Steve Jobs and the Bill Gates and people like that" to go somewhere else. Jobs and Gates both started as normal mortals who made their fortune in America, thanks to the contributions and hard work from their fellow Americans. It's not too much to ask that billionaires not abandon their countrymen because they don't like a capital gains tax. (A capital gainsplainer, if you will, is here.)
Then Romney reminded us of simpler times when Democrats didn't run against fake populists like Donald Trump but unabashed cartoon plutocrats like Romney himself. Every time Mittens opened his gold-plated mouth in 2012, Barack Obama's polls numbers improved in the Rust Belt.
ROMNEY: You're going to tax people not when they sell something but just when they own it and the value goes up. And what that means is ... these multi-billionaires are going to look and say, “I don't want to invest in the stock market, because if that goes up, I'm gonna get taxed!" So maybe instead I'll invest in a ranch or paintings or things that don't build jobs.
How does Romney think ranches even work if he claims that “investing" in them wouldn't create jobs? You can't just let the place go all Grey Gardens. You have cattle to rustle and horses to groom.
Paintings probably do require less maintenance and upkeep, but I'm imagining a rich asshole dropping a million on a painting from some artist who died broke in a rat-infested apartment and hanging it in a room of a house they visit once a year, all the while thinking, "I'm so clever for avoiding that extra tax that might've funded child care."
That's what this is all about. Senator Joe Manchin wants to put an income cap of $60,000 on the child tax credit, which is arbitrary and would penalize families making $61,000 instead of $59,500. (It would also raise taxes on families making between $60,000 and $150,000, the current cap.) That's real life and real money, while billionaires would play games with paintings and ranches rather than help less fortunate people. Of course, when you're among the wealthiest 0.0002 percent, almost everyone's less fortunate.
Romney's spiel does make another compelling argument in favor of Elizabeth Warren's straightforward soak-the-rich tax. Thanks, Senator.
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Dok is Mad About A Thing.
One of the recurring mysteries getting in the way of progress on the Build Back Better reconciliation bill is that nobody really knows what exactly the the two Democratic holdouts, Senators Joe Manchin and Kyrsten Sinema, are holding out for. They've both been extremely coy about not saying in public what top-line amount of spending they could vote for, other than "Not $3.5 trillion over 10 years."
Now, last night, Manchin did release that screed about the "fiscal insanity" of spending lots of money on social programs while raising taxes on the wealthiest Americans to pay for it, but even that wasn't terribly specific about changes he might want to make to the reconciliation package beyond insisting Congress should wait and see whether poor people stop being poor, and also we should means-test any new benefits to make sure the middle class won't support the bill since it's frozen out of getting any help.
As for Sinema, she's been even less clear. Asked whether the rest of the Democratic caucus knows where she is, she hilariously said "I'm clearly right in front of the elevator" because she's the second coming of goddamn John "turn left at Greenland" Lennon.
Today, however, Politico reports it has dredged up a copy of a July 28 document that it says Manchin has been handing to Senate colleagues who want to know what his own position on reconciliation might be, if he'd be so kind. It's a brief outline of some fairly radical changes he'd like to make to Biden's first-term agenda, like slashing most of it. Look at this shit, would you just LOOK AT IT:
We'll bullet point for you if you can't read that mess above:
Families and health
- Needs based with means testing guardrails/formulas on new spending
- Targeted spending caps on existing programs
- No additional handouts outs or transfer payments
- Inclusion of S. 1783 Budgeting for Opioid Addiction Treatment Act (LifeBOAT Act)
- Sole ENR jurisdiction on any clean energy standard
- Spending on innovation, not elimination. Fuel neutral
Energy and Vehicle Tax policies:
- That CCUS be included and ensure that CCUS on coal and natural gas can feasibly qualify
- If tax credits for solar and wind are included and extended, then fossil tax credits are not repealed (eg. intangible drilling costs and credits for enhanced oil recovery)
- Vehicle and fuel tax credits shall not be limited to electric vehicles — they must include hydrogen.
- Any revenue exceeding $1.5 T shall be used for deficit reduction
- Corporate tax rate: 25%
- Corporate domestic minimum tax: 15%
- Raise the top rate on ordinary income: 39.6%
- Raise cap gains rate: 28% All in
- End carried interest
- Tax Gap, Rebate Rule, Dynamic Growth
Manchin — in late July at least — wanted the bill to be no larger than $1.5 trillion, just hacking out well over half of what the proposal called for after it had already been hacked down to Biden's agenda essentials. Worse, it appears to share the same complete misunderstanding of the Build Back Better agenda that we saw in his September Wall Street Journal op-ed, in which he called for a "pause" on the reconciliation bill until the economic effects of the American Rescue Plan became clear. Manchin really seems to think Build Back Better is another emergency stimulus package, not the thorough revamping of the social safety net and climate agenda that its proponents — including the president — see it as.
For instance, he called for debate on the package to not even start until October 1 (oh look, here we are), and insisted that none of the new spending for Build Back Better be disbursed "until all funding from COV1D legislation and [the American Rescue Plan] has been spent" and until the Federal Reserve has ended "quantitative easing" — another emergency measure to prop up the economy.
We sure hope someone has at least clarified to Manchin that this is Biden's legislative agenda for his first term, not a short-term plan to boost the economy. Has anyone told him? Senator? Have you heard?
Politico notes that the document's date, July 28, was "right before the Senate passed a bipartisan infrastructure bill that Manchin helped write," and the Senate's passage of a basic framework for the reconciliation plan.
Among other demands, Manchin insisted on a top corporate tax rate of 25 percent (Build Back Better sets it at 26.6), a top capital gains tax rate of 28 percent (higher than BBB's 25 percent), and a top marginal income tax rate of 39.6 percent, which at last everyone agreed on. He also wanted any new revenue over $1.5 trillion to go to paying down the deficit, because OMG deficit.
Manchin's beloved means tests were in there, too, insisting that all benefits be "needs based," which would turn Biden's vision of educational and family benefits for working class Americans, a means of building the economy from the middle out and from the bottom up, into a set of safety-net benefits that the middle class would resent, because why are those people getting help and I'm not? Say goodbye to broad-based family and medical leave, free community college, universal pre-K, help for caregivers for the elderly, and childcare.
And on another key part of Build Back Better, Manchin appeared to completely reject the idea that the federal government should be working to transition the US to clean energy. Instead, he insisted that coal and natural gas qualify for government assistance if they adopt carbon capture technology (those CCUS's in his memo above are for "carbon capture, utilization, and storage"), and that if the government subsidizes clean energy, it may not cut any subsidies to fossil fuels. And while he was open to tax credits for electric vehicles, he insisted that similar credits be extended to hydrogen-powered vehicles, which is a problem since, as the New York Times reports, current technology for producing hydrogen is so energy intensive that it's really a misnomer to call hydrogen a "zero emissions" fuel.
The hostage note closes with the line "Senator Manchin does not guarantee that he will vote for the final reconciliation legislation if it exceeds the conditions outlined in this agreement." Politico notes that while Senate Majority Leader Chuck Schumer signed the document and hand-wrote "will try to dissuade Joe on some of these," a spokesman for Schumer said today that Schumer
never agreed to any of the conditions Sen. Manchin laid out; he merely acknowledged where Sen. Manchin was on the subject at the time. [...] Sen. Manchin did not rule out voting for a reconciliation bill that exceeded the ideas he outlined, and Leader Schumer made clear that he would work to convince Sen. Manchin to support a final reconciliation bill — as he has doing been for weeks.
Again, that was where Manchin was in July, and Joe Manchin can be notoriously difficult to pin down. It's not terribly encouraging that Politico reports Manchin is still handing out copies of his list to colleagues, though, and it's difficult to imagine Democrats caving to all his demands from July, particularly the remaking of much of Build Back Better into means-tested programs that wouldn't help the middle class, or the insistence on propping up fossil fuels in the face of the climate crisis.
Since the document was published this morning, Manchin has very helpfully clarified to reporters that he is not now nor has he ever been a liberal, that he believes "in my heart" that the US can't possibly afford to spend more than $1.5 trillion (despite all of it being paid for), and that America shouldn't become "an entitlement-based society." Guess we shouldn't be too surprised: Since the 1980s, the very wealthy and huge corporations have been entitled to everything they ask for, so if progressives want to change that, he explained, they should "elect more liberals."
From your lips to the Cosmic Whatever's ear, Mr. Senator. We need to expand the Democratic majority in the midterms, that's for damn sure.
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Trying to get 'Republican obstructionist' points is irrelevant when everyone blames Dems anyway.
Americans sometimes believe some weird things, like thinking the moon landings were faked, that a malaria drug can cure COVID-19, or even that you can sit in a bathtub as the water goes out and not be sucked down the drain, a pernicious myth that has led to countless tragedies. So it shouldn't be too surprising that a new Politico/Morning Consult poll shows that if the US were to default on its national debt, more Americans say they would blame Democrats than would blame Republicans.
The poll, taken between September 18 to 20, asked respondents, "If the United States were to default on the national debt, would you tend to blame the Democratic party more, the Republican party more, or both parties equally?" Thirty-three percent said they would blame Democrats, and only 16 percent would blame Republicans. Irritatingly, a whopping 42 percent said they'd blame both parties equally.
That's just kind of maddening to people who've been paying even the least bit of attention. Mitch McConnell, after four years of routinely suspending the debt ceiling to add some $8 trillion in debt for Donald Trump, has instructed Senate Republicans not to agree to any increase in the debt limit now that a Democrat is in office. It's a cynical political move that merely threatens to throw the US economy back into recession, probably taking the rest of the world with it. So this is absolutely not in any sense a "both sides" thing.
Happily, it's fairly safe to say that this polling shouldn't really be giving Republicans any ideas about riding this debt thing to victory in the 2022 midterms, for several reasons. For one thing, most people are not political junkies who watch Rachel Maddow and know that the debt limit is a stupid law passed because Congress was cheesed at getting involved in World War I just months after Woodrow Wilson campaigned on the slogan "He kept us out of war." The debt limit has never once prevented deficit spending or reduced that national debt, but nobody's paying attention but us geeks.
As a rough barometer of how much Americans pay attention to politics in a non-election year, we'd also note that in the same poll, nearly a quarter (23 percent) of respondents said they knew "nothing at all" about the recent California recall election.
But most Americans do know that Democrats have the presidency and slim majorities in Congress, so if they're asked about virtually anything involving government, of course they'll say "Democrats" or "both sides."
That's certainly the analysis put forward by Sen James Lankford (R-Oklahoma), who seemed fairly tickled Democrats might take the blame for his party's fuckery:
"The American people will say, 'I'm mad at everybody'," Senator James Lankford told Reuters. "But I don't know that it becomes the fault of the group that's in the minority in the House, in the minority in the Senate and not in the White House."
That said, there's not much chance Republicans will get the chance to blame Democrats for crashing the economy, because everyone in both parties knows, as we've discussed earlier, there's no way in hell Democrats are going to allow a default.
This week, House Democrats passed a bill suspending the debt ceiling through the end of December 2022 and also funding the government for three more months, to prevent a government shutdown and an eventual debt default. Now that bill goes to the Senate, where McConnell is likely to block it. But for all the talk of fiscal Armageddon if the US defaults on its debt, it's just not going to happen, because Democrats are the good responsible Student Council kids who actually care about governing.
If they really can't get 10 Republican votes next week to avoid a filibuster, Democrats will raise the debt limit via the budget resolution process. As the Source of All World Knowledge explains, that's perfectly cromulent under the weird Senate rules governing reconciliation, and wouldn't get in the way of Democrats' also using reconciliation to pass the Build Back Better bill this year as well.
So why haven't Dems just gone ahead and raised the damn thing, to take it out of the news? The reasoning we've seen is that Dems want to give Republicans a chance to be bipartisan first (and to have a talking point about Republican obstruction when R's filibuster). Also, a bipartisan bill would allow the debt limit to be suspended, while reconciliation would require the ceiling to be raised to a specific number, which Republicans could then wave around in campaign ads about those spendy spendy Dems next year. Maybe someone would care?
Frankly, we think it would probably be better for Dems to just pass the debt limit increase by reconciliation right now and get all the gloom and doom scenarios off the news sooner, because if that Politico/Morning Consult poll demonstrates anything, it's that voters aren't really paying attention to any of this crap anyway, so how about removing it from the conversation altogether. Whatever small political points might be gained by painting Republicans as obstructionists probably won't outweigh the effects of pundits fretting about default, and in a year, nobody is likely to remember any of it anyway.
But we are not political consultants, so we guess it may be another week or so until Democrats get there.
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Go on, House Dems, take another bite.
The House Ways and Means Committee passed a package of tax increases on the rich and tax benefits to help working families and renewable energy; the bill will now go to the Budget Committee, where it will be incorporated into the $3.5 trillion (over 10 years) Build Back Better reconciliation bill that Democrats hope to pass by the end of the month. There's some good stuff in here! As we noted yesterday, the tax increases could be more aggressive, especially in taxing the most nauseatingly wealthy Americans, but there's still hope that the tax increases can be toughened up as the bill moves forward.
The tax package passed out of committee on a nearly straight party-line vote of 24-19, with one Democrat, Stephanie Murphy of Florida, voting against it because she thinks the reconciliation package is too expensive overall. Murphy said she supports much of what's likely to be in the final bill, but that she's "optimistic" the final bill will be more "fiscally responsible," so there's her eventual reelection ad we guess.
Let's take a look at what's in this puppy, and what isn't but should be!
Taking From the Greedy
The package would raise a total of $2.1 trillion over 10 years, as estimated by the Joint Committee on Taxation (JCT), which only looked at parts of the bill that directly increase taxation. The bill's sponsors say the rest of the $3.5 trillion cost of Build Back Better would be covered through improved tax collections by the IRS (the bill ups the agency's budget), by savings on prescription drugs for Medicare, and through economic growth spurred by the legislation. Among the revenue enhancers, we've got:
- Increased top corporate tax rate on income above $5 million, from 21 percent to 26.5 percent.
- Increased top individual income tax rate from 37 percent to 39.6 percent (where it was before the 2017 tax cuts).
- Increased top capital gains tax, from 20 percent to 25 percent (Joe Biden had called for a top cap gains rate of 39.6 percent, since the super-rich get most income from investments, not taxable wages).
- A new three percent surtax on individual income above $5 million, which is nice except for that thing where few rich people get wages in that range. But some do.
- The portion of estates that are exempt from the estate tax would go back to its pre-2017 level of $12 million for a married couple; Trump had doubled that to $24 million. It had been set to expire in four years, the bill advances that expiration to the end of 2021.
- Higher taxes on overseas earnings of US companies.
Giving To The Needy
The Ways and Means package also bakes up some of those income redistribution cakes we like; while other committees will be writing legislation for social spending like universal pre-K education, free community college, paid family leave and the like, this bill covers several taxy-spendy items like:
- Extending though 2025 the poverty-reducing expanded child tax credit that started this year, and also permanently making the credit fully refundable. That means families with the lowest incomes will be able to receive the full credit; in the past, the very poorest families, who didn't pay much or anything in federal taxes, couldn't benefit from the credit.
- Making permanent the expanded subsidies for Obamacare health insurance premiums, which were expanded in the American Rescue Plan earlier this year.
- Expanding the low-income housing tax credit.
- Allowing the Department of Health and Human Services to negotiate prescription drug prices (this is a little confusing; another committee yesterday failed to pass that, but it's in the Ways and Means bill. Expect further wrangling).
- Increased funding for the IRS to collect taxes that are going uncollected now.
- Extension of tax credits for renewable energy and zero-emissions vehicles.
As we noted yesterday, Ways and Means wussed out on several measures that could make the super-rich pay a little more of their fair share, like the far lower increase in capital gains taxes than what President Joe Biden had requested. And by Crom, we are going to keep ranting about the need to close the "step up in basis" loophole that allows wealthy people to pass on investments to their heirs without paying anything close to the amount in capital gains taxes that would apply if the assets had been sold before death. Lucky you, we're not going to explain how it works again, since we did that here.
Fortunately, The Hill reports that Senate Finance Committee Chair Ron Wyden (D-Oregon) is still hot to close that loophole in the Senate version of the reconciliation bill, so the idea is far from dead at this point.
Now the tax part of the bill heads to the House Budget Committee, which has the responsibility of stitching together all the parts of the reconciliation package being written by various House committees; once that's done, the full House will do amendments and further tweaking, like deciding whether to roll back the 2017 tax law's $10,000 cap on deductions for state and local taxes, among other things.
Then the Senate does its version, Joe Manchin pouts, and eventually something should get passed, and damned if we know what that'll be, but we'll keep you kids updated as it happens.
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