To start your weekend on a boiling mad note, read what Talking Points Memo published this afternoon regarding the details of why Republicans bolted Thursday from the deficit-reduction talks being conducted by Vice President Joe Biden:
Democrats want to close tax loopholes that benefit oil companies, and eliminate a tax preference that gives corporate aircraft a friendlier depreciation schedule than commercial aircraft. Additionally, [Maryland Democratic Rep. Chris] Van Hollen said, Democrats were proposing to phase out tax deductions and certain credits for people making more than $500,000 a year. These would be paired with a reduction in the tax burden on lower earners, by eliminating existing limitations on their deductions.
“Folks with over $500,000, we’re going to phase out your deductions and some of your tax credit,” Van Hollen said.
The Republican response, as widely reported, is that there would be no discussions on raising the nation’s debt limit if “tax increases” were on the table—even if those “tax increases” were actually such things as eliminating an inequity that allows someone buying a private jet to get a better tax deal than an airline buying a jet to ferry us regular folk around the country.
Keep in mind that this is happening even as some key voices that the right would normally listen to are telling Republican congressional leaders their mindless rigidity is at least inane and at worst calamitous to the economy.
One such voice is Bill Gross of the Wall Street investment firm PIMCO, who writes in his July Investment Outlook that a too-quick move to austerity by Washington “could stultify economic growth.” Instead, “immediately … government must take a leading role in job creation,” he writes. “We should not rely solely on job or corporate-directed payroll tax credits because corporations may not take enough of that bait, and they’re sitting pretty as it is. Government must step up to the plate, as it should have in early 2009.”
That would mean acting now on an infrastructure bank to improve the nation’s transportation networks, water systems and other public facilities. It would also include green energy and other investments that would lay the foundation for future private-sector growth and innovation. “In times of extremis, pushing on the private sector string is ineffective, especially within the context of a global marketplace that offers alternative investment locations. Government must temporarily assume a bigger, not a smaller, role in this economy, if only because other countries are dominating job creation with kick-start policies that eventually dominate global markets.”
David Stockman, director of the Office of Management and Budget under President Reagan, was critical of both parties in the budget debate in a Bloomberg interview today, and his willingness to accept slower growth to close the budget deficit is untenable given 9 percent unemployment. On the other hand, he called Cantor’s position in walking away from the talks over ending tax breaks for millionaires and billionaires “preposterous, because it defies fourth-grade math.”
“Revenues are 15 percent of GDP, the lowest since 1948, so I say Eric Cantor should be sat on a dunce chair, and be told to keep his Pinocchio nose in the corner for the rest of his term. He’s lying. There’s no way this problem can be addressed without spending cuts, real ones, and major revenue increases.”
He added later, “When they take taxes off the table, they are putting default on the table.”
I’ve held back using the “T”-word, but let’s be blunt: Being willing to precipitate a second global financial crash to protect the tax deductions of people wealthy enough to buy private jets is an intolerable form of economic and political terrorism on the part of the conservative leadership in Congress. President Obama should stand firm and say no to a deal that would condemn the middle class to more joblessness and less economic security and asks nothing of the top 2 percent.