Fair...But Balanced?

As I've been out of town on business with limited computer access , I haven't been able to comment on recent events in a timely manner. But I'm here now... (smile)

Despite all the posturing and protesting on by various Senators and Congress members, it appears that President Obama's recommended compromise of extending the Bush-era tax cuts to all incomes for two additional years in "exchange" for an additional year of unemployment benefits will eventually pass. The fact that few politicians - and citizens in general, perhaps - are happy about all aspects of the recommendation means that it is a good start.

Nonetheless, I'm still not convinced about the benefit of extending the tax cuts to those in the upper-income brackets. However, just as some question the material effectiveness of the Bush/Obama stimulus package over the last two years, I can also respect the argument that conditions could have been much worse over the last eight years without the presumed reinvestment of Bush tax cuts by the upper class. I don't understand, though, why Obama did not push for two more years of unemployment benefits to balance out the benefit to those who are working or otherwise living comfortably.

It will be interesting to see what happens in December 2012 when this issue is brought to the table again. Conservatives will surely see the current tax cuts as a new baseline from which future spending cuts - and, of course, even deeper tax cuts - should be made. Progressives will see the tax cuts as the temporary measure they were meant to be and will bristle at what they see as the continued loss of an estimated $70 billion in annual tax revenue.

Unfortunately, the cuts that will be made - at least if Republican politicians have anything to say about it - will likely happen to programs involving those who most need the help (e.g. Social Security, Medicaid/Medicare, welfare). I've previously shared my skepticism about an increase in charity by upper-income households. U am also concerned that the objects that some desperate "entrepreneurs" may pull out of their proverbial bootstraps may turn out to be morally and legally unacceptable.

Now if Social Security and welfare are going to indeed take a hit, let's look at other supposed "sacred cows" that conservatives may favor such as defense (as recommended by the bi-partisan Bowles-Simpson commission) as well as capping the tax benefit of mortgage deductions and dividend interest.

Playing The Percentages

I read an article recently which, in defense of extending the Bush-era tax cuts to the wealthy, claimed that those in the upper-incomes pay seventy-something percent of all taxes. For the sake of argument, let's say that they pay 75%.

I'm reminded of my college sociology class where the professor said that despite stereotypes, people would be "shocked" to hear that white people actually make up the majority of prisoners in the penal system.  My first thought was, "That's because there's more white people in the country. Duh!"

By the same token, it would make sense to me that the wealthy pay 75% of the country's taxes as they bring in (at least) 75% of the country's revenue. "Duh!" We're not even accounting for international tax shelters and other options to which the lower and middle classes don't have access.

At best, fiscal conservatives may say that the lack of upper-income tax cuts on financial and employment recovery was due to concern about fighting two wars during the first six years and insecurity about presumably "anti-business" Democratic goals during the last four years.

At worst, I believe that the wealthy, just like most everyone else in these economic times, simply held onto their money to preserve their standard of living.

In the end, it would appear that Democratic Congress members from moderate-to-conservative states who, fearing a later Tea Party-fueled backlash, will not cap an extension of the Bush-era tax cuts during the upcoming lame duck session. Given that the Bush/Obama stimulus packages have had all of two years to work, it will be interesting to see how rapidly the extended tax cuts "trickle down" for the greater good over the next two years.