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Republican Proposals Reaffirm the Party’s Commitment to the Failed Welfare/Warfare State

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In an attempt to emulate the electoral success they enjoyed in 1994, House Republicans presented their version of the 1994 Contract with America this past week. The new document tagged “A Pledge to America” details in its 48 pages the legislative agenda House Republicans will pursue if elected to a majority this fall. Among the worthwhile proposals put forth in the document are repeal of Obamacare and the immediate cancellation of all unspent stimulus funds. Beyond that, the Republican’s campaign platform lacks creativity and courage, favors special interests, and reaffirms the Republican Party’s commitment to the failed welfare/warfare state.

Of course, no Republican agenda would be complete without the standard proposals for tax cuts. If the Republicans take the House they promise to renew the Bush tax cuts and give small business owners “a tax deduction equal to 20 percent of their business income.” Now, tax breaks are always a good thing because the private sector can allocate money way more effectively than government, but the Republicans really need to branch out from their uncreative, politically popular tax cut proposals if they are really serious about turning the country around. What good is more money in your pocket if the cost of things continues to rise? How about proposing a new monetary system to replace the Federal Reserve’s? How about proposing one that serves all the people not just the banks? Maybe we could get one that puts real restraints on the spendthrift tendencies of politicians? You know, one that provides a sound currency, backed up by a scarce commodity, which would ensure real price stability not the type the Fed provides now where prices increase over time to benefit corporate America. But, House Republicans dare not propose that because their benefactors on Wall Street would get upset and they themselves would be negatively affected because they wouldn’t have the Federal Reserve around to monetize all their deficit spending.

Next up, House Republicans are pledging to alleviate the burdens of federal regulations on business. The idea is if regulations are light businesses will prosper, hire, and our economy will return to full health. You can’t beat that logic. But, Republicans draw a line in the sand. Under their “Pledge”, they will only require “congressional approval of any new federal regulation that has an annual cost to our economy of $100 million or more”. What is so special about $100 million? Is that the monetary threshold where regulations are most effective in protecting special interests by hindering new players from entering a market while at the same time minimizing the effect on the profits of the same special interests? It is bad enough that most federal regulations on business are unconstitutional. At the very least, Congress should approve all regulations. But if Republicans were really serious about producing a prosperous economy they would talk about repealing onerous regulations which stifle competition and only serve narrow special interests.

Their proposals to “stop out of control spending and reduce the size of government” in “A Pledge to America” are so ridiculous it is embarrassing. House Republicans want to cut government spending to “pre-stimulus, pre-bailout levels”. This, they claim, will save us $100 billion in the first year and put “us on a path to begin paying down the debt, balancing the budget, and ending the spending spree in Washington that threatens our children’s future”. Question, weren’t we on a spending spree pre-stimulus – pre-bailout? In the seven years preceding the stimulus and bailouts didn’t a Republican president and Congress increase the national debt by $5 trillion – almost doubling it? I don’t understand how a mere $100 billion is going to help us eliminate a deficit that could be $2 trillion this year? This proposal is a joke.

And in a real sign that they dig the welfare state, House Republicans are pledging to “reform” Fannie Mae and Freddie Mac. They will end the government takeover, shrink their portfolios, and establish minimum capital requirements. Again, Republicans claim their proposal will save the taxpayer money – as much as $30 billion.

However, according to the Congressional Budget Office, the government bailout of Fannie and Freddie could swell to $400 billion and if housing prices continue their downward trajectory costs could hit as much as $1 trillion. In light of these massive losses for taxpayers, Republicans must be joking when they boast their reform proposals will save a mere $30 billion. They sound like Democrats. If Republicans want to renew American prosperity they should privatizing both Fannie and Freddie, end the implicit guarantee of federal bailouts, and let the free market handled mortgages.

Lastly, under their leadership the House Republicans promise that the warfare state will be safe and secure. Well, they don’t say that exactly. They cloak their speech with emotional words in an effort to make opposing them an unpatriotic act. Instead they say, “When asked to provide our troops with the resources they need, we will do so without delay”. So, does that mean Republicans are willing to give blank checks to the military industrial complex? If it does, the Republicans will be spending all of their proposals savings and then some. More importantly, as the party of war, how many more conflicts will they get our troops into?

A Pledge to America is a wonderful reminder of why the American voters rejected the Republican Party in 2006 and 2008. Economically, all they really offer are tax breaks. In foreign affairs, they offer more war. If they are so concerned about restoring American greatness, they should be proposing: reform of the monetary system, huge cutbacks in every federal department and agency, and closing down bases and bringing the troops home to defend America. But, it seems the Republicans lack the creativity and courage to do that. They prefer instead to favor special interests and recommit to the failed welfare/warfare state.

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About Kenn Jacobine

  • Arch Conservative

    The welfare state mentality is like herpes.

    Once it shows up on the scene, it “aint never” leaving. Not until the body dies at least.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Your idea is a dream, dream-pt by people who don’t see the human sufferings and consequences of their dreams. For many, this plan would be a nightmare.

    However, I do agree with parts of your article, Kenn. The absence of any answers(at all)to what all of the displaced working families and individuals are supposed to do in your world are missing. Perhaps you see a lot of servants in America’s future? I hope to god not…

    Here are the parts I agree with:

    The Republican’s campaign platform lacks creativity and courage, favors
    special interests, and reaffirms the Republican Party’s commitment to the failed welfare/warfare state.

    under their leadership the House Republicans promise that the warfare state will be safe and secure. Well, they don’t say that exactly. They cloak their speech with emotional words in an effort to make opposing them an unpatriotic act. Instead they say, “When asked to provide our troops with the resources they need, we will do so without delay”. So, does that mean Republicans are willing to give blank checks to the military industrial complex? If it does, the Republicans will be spending all of their proposals savings and then some. More importantly, as the party of war, how many more conflicts will they get our troops into?

    I can’t tell you enough times to leave Fannie and Freddy alone. There are many socialist-style programs that work for all of the people in this country, they are for those that require a little help reaching that American dream, ownership.

    Have a nice Sunday and remember, here you don’t have to attend a church. America is a secular country.

    peace

  • Kenn Jacobine

    jeannie,

    I appreciate your sentiments, but we disagree about who is responsible for the underclass. We each are individually responsible through ourselves, private charity, places of worship, and other civic organizations. The government has no right to steal my money and give it to another. Also, the government has shown time and again its inability to help the downtrodden. Cost overruns, corruption, and disincentives to get off the dole are just a small sample of what goes wrong when government “helps” the poor. By the way, there are so many displaced working families and individuals because of government policies.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Repeat-I can’t tell you enough times to leave Fannie and Freddy alone. There are many socialist-style programs that work for all of the people in this country, they are for those that require a little help reaching that American dream, ownership.

    Just as long as you keep your distance, we’ll be safe.

    ;) lol I hope you don’t teach children this *stuff*!

  • Kenn Jacobine

    Unlike my ultra liberal colleagues in the U.S. public schools who do teach their students to love the government and depend on it to take care of you from cradle to grave, I teach my students critical thinking skills so they can determine themselves that the state is a corrupt fraud.

  • Mark

    The State is an impediment to the resolution of class conflict and the development of solutions to capitalism’s poverty problem.

    …nothing a little anarchy couldn’t cure

  • Kenn Jacobine

    Mark,
    I don’t think capitalism has a poverty problem. It has raised more out of poverty than any other economic system. We have historically had a very fluid system in terms of movements between lower, middle, and upper class. Many of the immigrants at the turn of the 20th Century came here with not much more than the shirts on their backs. They and their descendants have been generally very successful.

  • Mark

    Kenn, capitalism, at its best, is just a step along the way to eliminating poverty — it won’t get us there. Its practice has the contradictory effect of creating poverty for many as it reduces it for a few. You, a world traveler, must have seen plenty of evidence of this.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Then there will always be a teaching job for you here.

    I’m sorry to be so bold, but it is necessary.

  • Kenn Jacobine

    Mark,

    I have lived in the developing world where capitalism is hard to find. First of all, property rights, probably the number one tenet of capitalism, are totally unprotected in these countries. Secondly, you generally have the small upper class and the very large lower class. This is a result of a strict historical social hierarchy and domination in the government by the upper classes. These upper classes then perpetrate crony capitalism, nepotism and enormous amounts of corruption. Zimbabwe is a perfect example – white farms were confiscated and given to Mugabe’s cronies who in turn have caused starvation in the country. Mugabe has run the printing presses to the point where his currency is destroyed. Those that have talent leave the country thus causing more hardship.

  • Kenn Jacobine

    jeannie,

    I don’t understand your implication #10.

  • http://thingsalongtheway.blogspot.com/ Cindy (aka He-Man)

    I don’t think capitalism has a poverty problem. It has more out of poverty than any other economic system.

    It has created more poverty than any other economic system and has done so on a massive global scale.

    You can watch this and learn something. It pretty much explains it all starting back in the 13th century. But I doubt you will.

  • http://thingsalongtheway.blogspot.com/ Cindy (aka He-Man)

    It has raised more

    I messed up that quote.

  • Mark

    Little of the developing world has been spared capitalist privatization and exploitation of once commonly held resources. Not hard to find evidence of this at all. Cindy recently posted a link to the documentary “The End of Poverty?” which does a pretty good job of marshaling examples.

    Also, I think that if you look clearly at US crony capitalism you’ll find that it isn’t all that much different from Zimbabwe’s, at least in principle.

  • Mark

    (note to self — check for new comments before posting…)

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Kenn,

    I thought that you were Libertarian, and wondered what you would say, that’s all. No implication of what?

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    I teach my students critical thinking skills so they can determine themselves that the state is a corrupt fraud.

    The irony in that statement, whether intentional or not, is exquisite.

  • John Wilson

    Yes, very revealing.

  • Kenn Jacobine

    Cindy,

    When I click on your link it takes me to Hula and a SNL skit. Please advise – I would love to watch the video you referenced.

  • Kenn Jacobine

    Mark,

    Crony capitalism is not real capitalism. Crony capitalism is a part of the welfare state. It is giving the people’s resources to well connected corporations through taxation, monetary policy, and the legislative process just like Uncle Scam does with organizations (ACORN) and individuals. All of it is wasteful and in the long run causes huge dis-locations in our economy which causes unemployment and recession.

  • kurt brigliadora

    You are right … Crony capitalism is not real , it is part of the welfare state.and all that comes with it. I think this problem can only grow; because its to expensive to get an education these days…so peeps might take the easy way out!

  • http://thingsalongtheway.blogspot.com/ Cindy

    Kenn,

    Hmmm, the link works for me, strange. So here, try this, click on my homepage and the entry The End of Poverty? is the second one down (at the moment) posted on the 24th of September.

    I am pleasantly surprised that you want to see it.

    Further re: #20. Can you describe a time that there ever was capitalism (and its gonzo accumulation) without the state? What does your vision of ‘real’ capitalism look like?

  • John Wilson

    Crony capitalism is the epitome of capitalism. How could it not be, considering our politics and business practices?

  • Cannonshop

    #23 Wrong, John-you can’t have Crony Capitalism without Government Financial and attending use of Government Force…usually to forcibly create outcomes that the free market would not produce. Effectively it’s more socialism without the mask of make-believe concern for the masses.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    socialism without the mask of make-believe concern for the masses.

    This makes no sense. But, when the game is twist and rewrite everything, it’s expected.

  • Cannonshop

    Government control of the means of production, Jeannie, usually wrapped in a mask of make-believe concern for the masses, but really, it’s all about concentrating power and providing to…

    The cronies of the people in charge.

  • Cannonshop

    If you want a nice, small but telling example, the whole Kelo vs New Haven case and situation illustrates how “Crony Capitalism” (i.e. Socialism without the left-specific marketing) works- The Crony-Capitalist uses government to change conditions in order to profit, while pretending to be capitalist, usually in exchange for financial favours to the government officials in question, though sometimes (as in places like Zimbabwe) it’s other favours-like providing armed men to intimidate or endanger opposition groups.

  • John Wilson

    The US government has been financing business since the republic was founded.

    There is simply no way to avoid capitalism evolving into crony capitalism.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Cannonshop-Make believe as apposed to none? I’ll take make-believe, at least then we could get some individual attention for our, masses

  • Cannonshop

    You prefer a lie, then, Jeannie? Uncle Sam saying “I won’t cum in your mouth” doesn’t make it any less disgusting when it happens, nor less exploitive, in fact, it’s worse because it’s not just that he’s screwing you, he’s also treating you with even LESS respect by pretending there’s something in it for you.

    Gilded shackles are still shackles, theft-by-deception is still theft, using roofies instead of a knife it’s still rape, and dressed up like make-believe caring, you’re still being extorted and stolen from.

    New packaging doesn’t make the product any less shoddy, Jeannie, nor does the claim of “I’m doing it to you for your own good” any less an assault.

    I would say it’s actually WORSE, because you’re supposed to be Grateful for what they have taken from you, including your dignity, in exchange for an empty and meaningless promise.

  • Jordan Richardson

    Well. There’s a visual…

  • Cannonshop

    #31 You’re welcome.

  • Cannonshop

    Corruption=Corruption=Corruption, it’s just more offensive when it’s dressed up like a benefit to me.

    “Too big to fail”=”Corporate Socialism”=”Crony ‘Capitalism’.”

    They’re all about taking power from “We the People” and giving it to the well-connected, those whose influence in GOVERNMENT is greater than the rest of us, on the taxpayer dime, usually dressed up like a make-believe figure (Santa Clause comes to mind-Patron of theives, you know…)

    I don’t believe in “Too good to be True”, I don’t believe in the Easter Bunny or Santa Clause and I don’t believe the last three years have resulted in reforms that will benefit anyone but the well-connected individuals who can buy a Congressman and the dead corporate entities at the expense of the tax-PAYER.

  • Kenn Jacobine

    Cindy,

    The problem is I am overseas and it says that the video I am looking for is not available on Hula internationally. I have bookmarked it and will view when I return to U.S. at Xmas.

  • Kenn Jacobine

    Cindy – #22

    I can’t give you an example that matters where capitalism has existed without the state. I think it is because man has an innate need to control others. Thus, that is why a small, limited government is necessary for the well-being, prosperity, and happiness of society. In my ideal world, the government protects us against aggressors both foreign and domestic. It protects property rights and sets up an impartial court system to decide disputes.

    Charity would take care of the underclass. it is amazing the amount of charity we have today in our mixed system. With a truly free market there would be more prosperity, less unemployment, and even more giving.

    If capitalism is so bad, why have folks from all over world always come to the U.S.? Why have communist/socialist systems had to build walls to keep people in?

  • zingzing

    “Charity would take care of the underclass. it is amazing the amount of charity we have today in our mixed system. With a truly free market there would be more prosperity, less unemployment, and even more giving.”

    and with a fresh shipment of unicorns from our friends in the tropics, we could all ride side-saddle and visit the leprechauns of the green, green valleys for our bags of gold.

  • Baronius

    Zing, what about that proposition is so tough for you to accept: prosperity, employment, or charitable giving? An economy with fewer governmentally-created inefficiencies would be able to hire more people and produce more goods. Increased prosperity and reduction of taxes would allow greater charitable giving. Please articulate why this is unrealistic.

  • Baronius

    Cannon – I don’t think you’re making any headway, but you’re making the right case, and making it well.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    I still see absolutely nothing to replace all that you whine about.

    I’ll give credit to your extreme nut-cases on the right, we will hold on to the power for a few more years, thanks!

    We’ll get a lot more done to further social justice.

    :D

  • http://thingsalongtheway.blogspot.com/ Cindy

    34 Kenn,

    I am downloading the video from HULU (which I have discovered how to do). Next I will try to post it to my blog and see if it will run there. (Which I have not tried yet with a Hulu acquired video.) Stay tuned.

    65 – I could say some things, but I would prefer to wait until you see the video. If any exchange takes place in a meaningful way, it will be because you come to your own conclusions, not because you come to mine.

  • http://thingsalongtheway.blogspot.com/ Cindy

    oops, that of course is 64 not 34

  • Kenn Jacobine

    Thanks Cindy – let me know.

  • http://handyfilm.blogspot.com handyguy

    Zing, #36: I fell off my chair laughing. Thank you.

    Baronius, #37: You’re making an ideological assertion. No concrete results to back it up. It is an idealistic fantasy world Kenn posits — not something that has ever actually existed.

    To just claim that genuinely sufficient rivers of charity would magically appear after taxes are lowered is, well, stupefying. Not to mention the increased suffering caused by the elimination of [or at least severe cuts in] welfare you would also like to see.

  • Baronius

    So Handy, you don’t want me to cite facts, and you don’t want me to go to theory. You’re open minded to anything unless it’s documented or non-documented. That’d be tough if I let you dictate the terms of my comments, but fortunately I don’t.

  • http://handyfilm.blogspot.com handyguy

    That is sophistry, not an answer, the equivalent of “I know you are, but what am I?”

    If you cite relevant facts that help support a theory, both you and I know that’s the most valuable sort of communication here.

    Playing word games is not.

    Citing very selective bits of facts to slap down one small part of someone else’s argument, then pretending that is sufficient, is pretty trivial minded.

    Asserting that something is valid because it conforms to Conservative Orthodoxy and all such orthodoxy is automatically valid — well, if that makes you feel good, go right ahead, but don’t pretend it means anything.

  • zingzing

    “Zing, what about that proposition is so tough for you to accept: prosperity, employment, or charitable giving?”

    reality, baronius. if i had more money, that would allow me to buy a bunch of red ferraris, italian villas and asian whores, but it doesn’t necessarily mean i will. still, that’s more likely than me suddenly coming into money and deciding to give it to the needy.

    the rest is alright by me. (don’t worry though, the drugs will eventually wear off.)

    you’re positing that one thing (less government) will mean a whole bunch of other things (more jobs, more money, less suffering, more charity). that’s not absolutely true. all less government means is less government. the probability of those other things happening is difficult to figure. will having one less person working in the social security office create two jobs in the private sector? prolly not.

  • zingzing

    “still, that’s more likely than me suddenly coming into money and deciding to give it to the needy.”

    that is, given the data we have. people are selfish. i wouldn’t necessarily get a red ferrari. probably a nice bmw or something. maybe a jag. and only one italian villa. if you moved it to portugal. i won’t tell you what i’d do with the asian whores.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    suddenly coming into money and deciding to give it to the needy.

    Isn’t that the idea behind the big lie called, Reaganomics?

  • Baronius

    Zing, first of all, most people are better than you think you’d be. I’ve known a few wealthy people over the years, and I can only think of one who was selfish with his money (and I didn’t do his books, so who knows?).

    Secondly, private charity is much more efficient than governmental charity. The money doesn’t go toward the operation of a bureaucracy. Local charities are more flexible. They’re not going to misdirect money based on some think tank’s scheme. They’re also capable of being a lot stricter.

  • Cannonshop

    #39 When someone tells me that they’re HAPPY about being lied to? yeah, Jeannie, that gets to me, your reply in #29 reminds me of a girl I knew in an abusive relationship-she stayed with a man who beat the shit out of her routinely, because he said the nicest things right after he did it.

    The mindset reflected is VERY similar.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    #30 really pissed me off and I’m saying right now, to whoever is in charge, erase it.
    Misogyny doesn’t belong on the inter-net(BC can do something about content)!

    JD

  • http://jeanniedanna.wordpress.com/ jeannie danna

    #51 too, in fact is this Cannon? If it is you should stay the hell away from me.

  • Cannonshop

    Is it misogyny to be upset when someone sits there and endorses their abuser, Jeannie?

    If it is, you have a funny definition. Misogyny is hatred and scorn of WOMEN. You can look it up in the dictionary if you are confused by the ad-copy.

    Let me simplify it for you: in #29 you expressed GRATITUDE that you are being LIED TO AND EXPLOITED… now how sick is that?

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Doc? Can you look at these comments? I’ll send the link if you want. Thanks

    #54, is OK, but I’m not going to be derogated right here by these filthy words. There is free-speech, and then there is thiscrap.

    #30 & #51, Some ass beats his wife-up in it.

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    Jeannie, I can see how those comments might cause offence, but there’s nothing about them that warrants deletion. Cannon was just employing a particularly graphic metaphor. I got his point, even if you didn’t.

  • http://blogcritics.org/writers/alan-kurtz Alan Kurtz

    Will wonders never cease! Have the BC censors finally stopped taking their marching orders from Mrs. Danna?

  • http://blogcritics.org/writers/dr-dreadful/ Dr Dreadful

    [rolls eyes]

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Well, at least this one screwed up enough courage to finally use his own name.
    Doc doesn’t take orders from me or you, Alan.

    Congratulations for your new-found balls! :D

  • http://jeanniedanna.wordpress.com/ jeannie danna

    OMG, should they censor that? No…lol

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Cannon, spreads half-assed lies and half-baked accusations, no links, no proof, just a lot of hot air. Then runs away when he gets questioned, and especially when he is wrong.

    A complete waste of time…yawwwn.

  • http://handyfilm.blogspot.com handyguy

    Meanwhile, back in the more or less real world…

    CBO director Doug Elmendorf testified before Congress today, providing estimates of the effects of extending, partially extending, or not extending the Bush tax cuts. Ezra Klein provides a summary and a graph:

    …the bottom line is that extending the tax cuts indefinitely would hurt the economy. The less you extend the tax cuts, the less damage you do to the economy.

    So the very best thing to do is neither the preferred political solutions of the GOP or the Dems — but instead to let all the tax cuts lapse for everybody.

  • http://blogcritics.org/writers/alan-kurtz Alan Kurtz

    The mistake you made this time, Mrs. Bluenose, was doing it out in the open, instead of going behind people’s backs the way you normally do. When you demand that comments be censored, it’s better done privately by email than publicly in the threads. That way, on the off chance you get turned down, as happened today for probably the first time, you don’t wind up with egg on your face for all to see. You obviously don’t have as much influence around here as you think.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Meanwhile, back in the more or less real world…where DINOS roam free…like chickens, afraid to move forward. cluk, cluk, cluk

    Thank your *party* but don’t blame Obama!

  • http://jeanniedanna.wordpress.com/ jeannie danna

    And I’m going to follow, Kurt…

  • http://jeanniedanna.wordpress.com/ jeannie danna

    #63 is delusional.

  • John Wilson

    Handyguy: you may find this article interesting, it says the same thing you say, except in 2003 when we can gauge the accuracy of the method by looking at the subsequent history:

    Center on Budget and Policy Priorities

    The Decline of Corporate Income Tax Revenues


    Summary

    A weak economy, new tax breaks, and aggressive tax sheltering have pushed corporate income tax receipts down to historically low levels, both relative to the size of the economy and as a share of total federal revenues. According to the most recent budget projections of the Congressional Budget Office, corporate revenues will remain at historically low levels even after the economy recovers, and even if the large new corporate tax breaks enacted in 2002 and 2003 are allowed to expire on schedule.

    Deficits over the next decade are now projected to be enormous in size. A joint analysis by the Center on Budget and Policy Priorities, the Concord Coalition, and the Committee for Economic Development projects deficits totaling $5 trillion through 2013. An analysis by Brookings economists reaches a very similar conclusion, while Goldman Sachs projects deficits totaling $5.5 trillion.[1] Despite the deteriorating fiscal outlook and the historically low corporate revenue collections we already face, Congress nonetheless seems poised to shower more tax breaks on corporations that would cause deficits to grow substantially larger over time (see box).

    * Treasury Department figures show that actual corporate income tax revenues fell to $132 billion in 2003, down 36 percent from $207 billion in 2000.
    * As a result of these low levels, corporate revenues in 2003 represented only 1.2 percent of the Gross Domestic Product (the basic measure of the size of the economy), the lowest level since 1983, the year in which corporate receipts plummeted to levels last seen in the 1930s.
    * Corporate revenues represented only 7.4 percent of all federal tax receipts in 2003. With the exception of 1983, this represents the lowest level on record (these data go back to 1934).

    Corporate Tax Cuts on the Congressional Agenda

    Pressure to cut taxes for corporations is likely to intensify this fall as Congress takes action to comply with a recent ruling by the World Trade Organization that tax subsidies provided to U.S. exporters violate trade agreements. The WTO authorized European countries to impose sanctions of $4 billion a year on U.S. exports if these subsidies are not eliminated.

    Repealing these export subsidies would raise about $50 billion in revenues over ten years, which creates an opportunity for supporters of corporate tax cuts to push for at least that much in new corporate tax breaks. Indeed, both the measure that the Senate Finance Committee adopted on October 1 (S. 1637) and the measure introduced by House Ways and Means Chairman Bill Thomas (H.R. 2896) would provide significantly more than $50 billion in new tax cuts to corporations.

    The Thomas bill would provide corporate tax breaks totaling $200 billion over ten years while offering revenue-raising offsets of only $72 billion. As a result, the package would cost $128 billion over the decade. Moreover, the measure includes a number of tax cuts that artificially expire before the end of the ten-year period; as a result, the true cost of the bill, assuming extension of these tax breaks (many of which, such as the popular research and experimentation tax credit, are sure to be extended) is substantially higher than the reported $128 billion.

    The package adopted by the Senate Finance Committee on October 1 is ostensibly deficit-neutral, with revenue-raising provisions in the bill that appear to equal the cost of the bill’s new corporate tax breaks over the 2004-2013 period. But the bill’s appearance of revenue neutrality rests upon gimmicks. Several of its new tax cuts do not become fully effective until late in the decade, which makes their cost in the ten-year budget window much smaller than the cost of continuing these tax cuts indefinitely. The result is a serious mismatch over time between the revenue raised by the “offsets” in the bill and the revenue lost by the tax cuts. This can be seen in Joint Tax Committee figures showing that the measure would lose more than $9 billion in the second half of the ten-year period and lose more than $4 billion in 2013 alone. Over the long run, the bill is not deficit neutral and would produce sizeable revenue losses, thereby enlarging long-term deficits that already are frightening in size.

    Concerns about the corporate tax-cut measures under consideration in both the House and Senate extend beyond their high cost. Although a detailed analysis of these measures is beyond the scope of this paper, both bills would further erode the corporate income tax base and potentially distort the allocation of economic resources. In an attempt to satisfy competing business interests, these bills offer dozens of targeted tax breaks for U.S. manufacturers and U.S. multinational corporations; tax breaks targeted in this manner can create economic inefficiencies by favoring certain activities over others that may be economically superior but less profitable once the tax break is factored in. Both measures also provide a temporary tax reduction for the repatriation of overseas profits. This type of tax amnesty rewards firms that have sheltered funds overseas and potentially encourages more sheltering, as multinationals assume that the tax amnesty will be repeated in the future. Further, provisions in the Thomas bill would weaken current anti-abuse rules, creating new opportunities for U.S. multinationals to shelter profits overseas.

    He was right, of course.

    This also goes to another point I was making elsewhere at BC about declining corporate taxes.

  • John Wilson

    Also, the CBO says that Tax Cuts are inefficient stimuli, the best are unemployment payments.

    Tax Cuts vs. unemployment payments


    The Congressional Budget Office says that extending the Bush-era tax cuts through 2011 would boost economic growth.

    But CBO director Douglas Elmendorf says that (tax cuts) would provide the “least bang for the buck” when compared with (in order of impact): extending unemployment benefits, reducing payroll taxes, increasing business investment tax credits, providing more aid to states and investing in infrastructure.

    Extending the Bush tax cuts permanently (through 2020) would create “large negative effects” – drag down economic growth – if they were deficit financed because larger deficits would “crowd out” private investment.

    “In sum, and as CBO has reported before, permanently or temporarily extending all or part of the expiring income tax cuts would boost income and employment in the next few years relative to what would occur under current law. However, even a temporary extension would add to federal debt and reduce future income (economic growth) if it was not accompanied by other changes in policy.

    “A permanent extension of all of those tax cuts without future increases in taxes or reductions in federal spending would roughly double the projected budget deficit in 2020….Without significant changes…federal debt would be on an unsustainable path that would ultimately reduce income (economic growth).”

  • http://handyfilm.blogspot.com handyguy

    I understand the Dems’ position, but they are disingenuous about it: extending the tax cuts for the wealthy will cost $700 billion — but they fail to note that extending the tax cuts for lower earners will cost a lot also — a couple trillion over 10 years.

    Under cover of the recommendations from the President’s deficit reduction committee after the election, maybe some common sense will prevail: extend the cuts for everybody for one year, for the middle class for two years, then they expire for everybody for long-term deficit reduction.

    Borrowing money to extend tax cuts long term — for anybody — is insane.

  • John Wilson

    Yes, handy is right. All the temporary tax cuts should be ended.

    Those cuts were never intended to have any stimulative effect. They were purely to “give the money back to the tax payers” who created the yearly surpluses of the latter Clinton years. Greenspan had the idea that the surpluses represented a financial danger (imagine that!), Bush wanted to do a favor for his rich friends and Greenspan had roundheels for republicans.

    Of course, they could have done something constructive like pay off part of the National Debt, but I’m guessing they thought that would just put money in the bank for a future democrat administration: better to spend the money now.

  • zingzing

    baronius: “Zing, first of all, most people are better than you think you’d be.”

    i don’t really think i’d be like that. i don’t care for cars (like most people of my generation), and i don’t have any use for opulence, whether in portugal or not. there might be a kernel of truth in the asian whores thing. i wouldn’t (yet) know.

    “Secondly, private charity is much more efficient than governmental charity.”

    some of them are. but some of them are just scams. you can bet your ass that if we were to see the end of state welfare, and we were then to see a giant upswing in charitable activity and organizations (not that that’s necessarily going to happen because the first happens), we would also see scammers trying to get in while the getting’s good.

    also, if you could show me a precedent for your less gov’t equals more charity thing, i’d love to see it. less gov’t does mean less gov’t, but nothing else necessarily follows. where has state welfare been dismantled, only for the poor to be propped up by the charitable rich? empathetic compassion is a rare thing. (tax breaks, however, are a little more persuasive, but only to the limit allowed.)

  • Baronius

    Zing, governments rarely pull back services. They typically expand their benefits until they go broke. When they collapse, the society falls into lawlessness, and no amount of charity can compensate for that. (I’m thinking about the FSU.) I’m trying to think of a government that has gone from the promise of cradle-to-grave care to something less, and it wasn’t caused by regime collapse, and I can’t think of any.

  • http://jeanniedanna.wordpress.com/ jeannie danna

    Anarchists have infiltrated your party, Baronius. Who died and made DeMint King?

  • http://jeanniedanna.wordpress.com/ jeannie danna

    We are not losing, Congress, no matter how much you pray…

  • zingzing

    “Zing, governments rarely pull back services. They typically expand their benefits until they go broke.”

    so how is it that you know what less gov’t will bring? and in the case of these countries that go broke and “fall into lawlessness,” could you name one that did so because they gave too much money to their people? and in the case of “regime collapse,” have the rich ever stood up and made sure that the poor were ok through it all?

    “I’m thinking about the FSU”

    got me. that could mean 100 different things.

  • http://thingsalongtheway.blogspot.com/ Cindy

    Kenn,

    I was able to find a 1 month free trial account to host the video. It will be available for about another 28 days. I don’t anticipate any problems that I haven’t already solved. But, if there are any, just let me know and I will find a work-around. Enjoy! :-)

    The End of Poverty? (temporary)

  • Kenn Jacobine

    Thanks Cindy, I will watch this weekend.

  • Irene Athena

    Cindy, I watched The End of Poverty? which you posted on the previous page– I’m putting the link up again so people won’t have to flip back and forth if a conversation gets going.

    I was glad to see Chalmers Johnson being interviewed. His “Sorrows of Empire” was an eye-opener for many on the real motivation between wars to “liberate” peoples who were actually going to be further exploited by them. This film opens peoples’ eyes to other shady practices that are justified as being economically “liberating” for third world countries.

    One thing that does bother me, and it might turn potentially helpful people off to seriously considering its claims, is that the film seems to be as much a vehicle for anti-Christian sentiment as it is for championing the cause of the world’s oppressed.

    For example, no mention is made of the fact that the abolitionist movement, as early as the 1700’s, was largely a reaction among Christian activists to the injustice of slavery.

    Edmund Burke said that the only thing evil requires to triumph is that good men do nothing. I would add that evil gets an extra power-boost when good men are set to fighting among themselves, being distracted from the real enemy.

    Anyway, Cindy, thanks for going to the trouble to download and post the thought-provoking link.

  • Irene Athena

    Zing, FSU means Former Soviet Union, I think. Clues for another example of what Baronius was talking about is: “Bread! Circuses! Goths!”