Pick Wayne's Brain

December 6, 2010

The Cut That Isn’t a Cut

Filed under: Commentary — Tags: , , , , , , , — Wayne A. Schneider @ 10:20 PM

As you may have heard, President Barack Obama and the Republicans (who, oddly enough, are not, technically, in power yet), have struck a deal extending the Bush Tax Cuts For The Wealthy (their official name) for another two years. In return for these tax “cuts”, the Republicans have agreed to extend unemployment benefits for currently unemployed people for another thirteen months along with a few other helpful things for the poor. The stage has been set to make this a campaign issue for 2012. Do you support extending tax “cuts” for millionaires and billionaires who don’t need them? Or do you finally agree that rich people do not use their tax savings to create jobs? But is anybody really going to be paying less in taxes because of this? Not necessarily.

In Washington, DC, and only in Washington, DC, a “cut” is merely a decrease in the amount by which they originally intended to increase spending. Or, as applied to tax rates, a decrease in the amount by which they intended to increase them. If they originally budgeted that they would increase spending for, well, anything, by $100,000,000, and they decide that they would only increase spending for that thing by $90,000,000 in that fiscal year, they would tout that as a “cut” of “$10,000,000.” They’re still going to increase spending by $90,000,000, but they’re going to call that a “cut” because they were originally going to spend more. I shit you not. That decision about how much they would spend for that fiscal year may have been made four or five years before in a previous budget resolution. When they produce a budget, it’s not just for this year but for the next ten years or so, so that it looks like there’s some structure and purpose to what they’re spending our money on. It’s all fiction because no President or Congress can bind a future President or Congress. They can always pass a law saying they’re going to ignore the law they passed before. If everyone signs off on it, it’s legal. And they may have paid little attention to that program (for whatever reason, because it’s only our money) until they needed to squeeze a few more “cuts” to be able to heft a big thick sheaf of papers in front of the cameras. But if it makes for a good headline (“Congress Cuts Spending By $5 Billion”), they’ll do it and pat themselves on the back for a job barely avoided. But they’re still spending more money.

The Bush Tax Cuts, by Republican design, were set to expire at the end of this year and, by law, the income tax rates would revert to what they were ten years ago (also known as “The Before-Time”). Each year they produced a budget since, they had to base it on the Bush Tax Cuts expiring on schedule. This is how the law read. They could not just assume that they would extend them later, so there would be less money available to spend. Remember, at the time they passed those tax cuts, they were not putting the wars in Iraq and Afghanistan on the annual budget. Those wars were funded by emergency spending bills despite the highly publicized fact that they saw no end to the war in Iraq (Bush even said he didn’t care that much about the guy who attacked us) , but they kept funding it (illegally) as if it were a surprise they could not foresee. So, in contradiction to what incoming Speaker of the House of Orange John Boehner says all the time, there was never any “uncertainty” about the tax rates for next year. By law they were going to go up and everyone in Congress knew it, including Boehner. The only reason I can think of that makes sense for why any “uncertainty” would exist is if Republicans were telling businesses and rich people that once they got in control of Congress, the tax cuts would be made “permanent”. (Again, a fiction, also known as a “lie”, because any future Congress could raise them again.) Since they failed to get control of both Houses (as planned), they couldn’t be “certain” the tax cuts would be extended. It’s the only explanation that makes sense. In other words, they created the very “uncertainty” they claimed existed out there.

Since the tax rates would have gone up next year, any extension of the current rates will be called a “cut” because without the extension, they would have gone up. You’re not gonna see more money in your pay check because they “cut” taxes. You just avoided seeing less in there because they almost didn’t.

[Cross-posted at The Zoo]

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1 Comment

  1. Wayne I voted for the president and will (by default) again, but I am eternally grateful he wasn’t around negotiating the British surrender to end the Revolutionary War. We’d still be carrying pictures of the Queen. My dad, UMWA negotiator extraordinaire, would have destroyed the Republicans over the tax breaks for the wealthy.

    Comment by Cletis — January 24, 2011 @ 9:12 AM


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