Why can't we tax Republican hypocrisy?

 by Roland Hulme

 
The Republicans are against raising taxes; except when they're not.

The Republicans are playing a losing game in Congress

Last year, the battle between Democrats and Republicans came to a head over the infamous "Bush-era" tax cuts.

These were introduced by George Bush in 2001 and 2003, and lowered people's federal tax rates across the board. In 2010, they were set to expire and that would have resulted in a leap in everybody's taxes.

President Obama put forward the idea of continuing the tax break for those making under $200,000 a year, but allowing the tax cuts for those making more to expire.

This was a compromise to give the struggling middle and working class a break, while attempting to correct the devastating federal budget deficit created, in part, by Bush's cuts.

The Republicans, of course, blew a fuse. Under their promise not to raise any taxes under any circumstances - even though this wasn't a tax "raise", just a tax break naturally expiring - the Republicans held the country hostage until the eleventh hour.

That was when Obama reluctantly handed them a "compromise" consisting of the GOP getting everything they wanted; the tax cuts continued for everybody, and the deficit be damned.

Whether or not you believe in the logic behind the Republican's hard-ball tactics, at the time we at least believed they were being consistent. The GOP looked like they were making good on their promise to balancing the budget and bridging the deficit gap without raising taxes, or allowing tax breaks to expire.

Until this week.

Because that was when another "tax break" came to expire - Obama's stimulus package that lowered the payroll taxes of working Americans from 6.2% on their dollar, to 4.2% - and the Republicans said "non."

Unless they vote to extend it, every working American will see a tax hike of 2% on every dollar they earn in 2012 - and word on the Hill is that the Republicans are going to vote against extending this tax cut and letting it happen.

Why? Because, in the words of Republican House Majority Leader Eric Cantor: "This type of temporary tax relief is not the best way to grow the economy."

Except, as any freshman economist will tell you, it is. 

The fallacy behind the Bush-era tax cuts, and the Republican economic policy in general, is that giving tax breaks to the richest Americans will have a "trickle down" effect as they money that the don't pay in taxes will be "re-invested" in the economy; creating jobs.

This is startlingly incorrect - and is based on an outdated understanding of how the American economy works.

Years ago, America was a producer, and the richest Americans would use what money they didn't pay in taxes to create new companies and drive new forms of increasing their investment.

Today, America is a consumer; and the richest Americans reinvest their money in trust funds, investment portfolios and other options - options which don't pour that money back into the economy. The rich get richer; and unlike in times past, don't benefit the economy while they do so.

In today's age, it's the middle and working class who drive the economy forward; because they spend their money. They buy things; gas, groceries, wide screen TVs, sports utility vehicles and mortgages. That's what keeps the wheels of the American economy moving.

The fairly insignificant cost of extending the Obama payroll cuts would pay hefty dividends in stimulating the economy (the overall cost will be $120 billion a year - only just over what the federal government admits is "improperly spent" every year.)

Compare that to the loss of revenue created by extending the Bush-era tax cuts to the super rich. If those cuts were allowed to expire, the gaping federal deficit would be instantly balanced for the next ten years. That's some indication of just how monstrous they are.

The fact that the Republicans are even discussing letting the Obama payroll cuts expire reveals their blatant hypocrisy regarding tax cuts, and their pathetic dependence on the same bankrupt economic policies that helped drive this country into debt in the first place.

They're indentured to the corporate billionaires of this country, ignoring the very real economic crisis that their core electorate - blue collar Americans - are struggling with. Not to mention that they've turned their back on the basic, fundamentally "Republican" economic policies that could drive the American economy forward again.

And, more than all of that, this inane action reveals the GOPs blindness to the current political climate.

The GOP are currently riding on the crest of national dissatisfaction with the Obama administration; but imagine how quickly that tide will turn when the Democrats capitalize on GOP lawmakers forcing every working American to pay hundreds of dollars more in payroll taxes in 2012.

This is the stand which might even lose them the presidency - not to mention control of both houses during the next election cycle.

The Republicans now have to decide whether they're truly the party of low taxes and fiscal responsibility; or if they're just going to come out as transparent puppets of America's corporate paymasters.

Currently, I fear it's the latter.