The Republican Party plan

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The Republican Party has decided the president’s budget spends too much money!  They are opposed!  So on April Fool’s Day they offered their alternative plan.  The subtext here being: The trillion dollar Bush tax cuts weren’t irresponsible enough. Let’s go crazy! WOOO!

The Republican Party plan would freeze discretionary spending for five years in the midst of a recession which, by most accounts and proved by history, will countermand any sort of economic recovery, but it also cuts taxes by 10 percent for the same Wall Street executives whose actions largely got us into this economic mess in the first place.

The marquee item, however, in the Republican plan is their inexplicably regressive tax cut for the super rich. Wealthy Americans in the top three tax brackets would see their tax burden cut to a flat 25 percent from previous rates of 35, 33 and 28.  Now you might be asking, given that the Republicans are all about fiscal responsibility, how much does this Republican tax cut for the wealthiest three brackets actually cost? Some estimates, according to Steve Benen, project upwards of a $4 trillion price tag.

Again, the Republican grasp of fiscal responsibility is about as firm as their grasp of reality and sanity. It’s a world on the other side of the looking glass where nonsense is the norm.

http://www.huffingtonpost.com/bob-cesca/insane-republicans-reveal_b_182045.html

12 Comments

Filed under Republicans, The Economy

12 responses to “The Republican Party plan

  1. fnord

    The House and Senate have both passed their versions of the budget and now there will be a reckoning of the two. Let’s hope it comes out on the side of sensible. Which, frankly, I have no idea what is any longer. This foray into the other side of the looking glass is almost seeming normal again.

    Even on this side of the looking glass, I know the Republican Party has nothing that is sensible! Are they trying to ensure they will wander in the wilderness for a very long time? We need checks and balances. Someone needs to hit John Boehner over the head with reality!

  2. John Boner disgusts me every time he talks.
    What hypocrisy.
    Conservative buffoon fer sure!

  3. tosmarttobegop

    Yes it is sad to me, awaiting the chance to be what they should be. The Republicans again showed their clueless ness. Some of the proposals might have been sound if the economy was in the black and real money was such a problem that you needed a wheel barrel to carry it.

    A bit of irony is that the effect of the GOP proposed budget by cutting funding for Social security and Medicare. Then privatizing would end in the exact claim that the Republicans have of Nationalizing health
    care. The care would be metered out on the value of the patent and the effect of continuing their life to society.

    The tax cut is the same thinking that to make it easier for the King to live in his castle and eat his banquet.
    In turn the King will then be throwing more table scraps to the surfs and be happier so he would no longer be concerned about his welfare. This allows for the King to be more focused on the welfare of the surfs. The King’s life is better so not everyone is suffering in the Kingdom… the system works!

  4. tosmarttobegop

    Fnord it is that there is a refusal to admit that Reagan’nomics failed. Trickle down economic was a pie-in- the-sky dream. “ In the flows and eddies of trickle down economics it is painfully apparent that someone placed a damn upstream from me!”. They had become so pudd’n headed for so long they forgot how not to be.

  5. fnord

    They (whoever that is?) say the first step to recovery is admitting the problem! So, until the Republican Party can let go of their worship of trickle down economics and their hero Reagan, they just might remain the party of “NO!” If so, they will wander in the wilderness a very long time because the segment of their party who want to legislate morality isn’t going to win them elections.

  6. Yes sad hypocrits.
    Cut social programs for the needy so that the rich can enjoy life more.

  7. It is a nice, albeit false, belief to those who still champion the trickle down economic theory. If, indeed, those with the extra funds would invest the same in starting new businesses (direct investment) which would employ workers, etc., then there is some justification to the idea.

    However, many if not most with the extra discretionary income who do “invest” merely buy stock from existing stockholders, the money from the purchase of the shares not, in fact, going to the corporation but rather in the pocket of the prior owner; some do buy corporate bonds ( a loan to the corporation for its use in operations); some buy municipal bonds, providing capital needed by municipalities; some buy commodities; some buy T-Bills and notes; and some put their money in savings.

    There is some positive effect on the economy from each of the above activities, but the benefits don’t trickle down so much. The better course of action, IMHO, is to have the funds “trickle up” as providing additonal money to the consumer allows purchase of goods and services from the providers thereof, which translates into greater demand, theoretically providing additional employment which puts money into more pockets for spending, etc.

    Finally, what it seems to me the proposal is all about is trying to get a “flat tax” of sorts into the system, at least for those in the (now) top three brackets, diminishing the progressive nature, such as it still is, of the income tax system in the U.S. We all understand, I think, the shifting of the total burden to the lower-end taxpayers as a result of this. I really don’t want to hear all about Laffer and his infamous curve; most of the folks who promote this concept really don’t understand how it theoretically works.

  8. Speaking of Professor Laffer and his curve, it is interesting to me to note that no one promoting this has ever, to my knowledge, suggested that the tax rates were too low.

    The idea behind the Laffer curve is that there is a rate of taxation that, combined with overall economic activity, will optimize (read: maximize) tax revenues to the government. Taken to its logical conclusions, this translates into a higher rate of taxation during good economic times, with a lower rate of taxation during the bad times.

    It therefore could be argued that during the earlier part of this decade, overall tax rates were too low, as much of the economic activity occurring during those years was not in areas which would have been sensitive to increased income tax rates. Has anyone heard any politician make this argument? Didn’t think so.

    Given the estimated revenue loss from the GOP proposal, I’d suggest that the attempt to make the highest three brackets equal at a flat 25% top rate violates the underlying concepts illustrated by Laffer. IIRC, Laffer himself said in late 2007 or early 2008 that the overall rate (an average rate, in this case) was “just about right”. If this rate is now too high, as might well be true, under Laffer’s theory, then an adjustment to the average rate would be needed; an adjustment, however, not all centered around the top three brackets, but rather throughout all brackets.

  9. I would suggest to the GOP (if it really wants to be “out in front”) the following idea as to changes in the IRC as it relates to income taxation of capital gains.

    The idea of a different form of treatment of long term capital gains (in particular in the U.S.) has always been that it encourages investment in new businesses or new PPE (plant, property and equipment) of existing business, creating new jobs, etc., as a result thereof. Thus, the thinking goes, folks should be encouraged to make these investments by taxing the same differently than other forms of income subject to income taxation.

    To truly encourage this type of investment, I propose that the initial investors whose money actually goes into the business get the special treatment. Thus, the initial investor should not be taxed at all on the ultimate sale of his stock, etc., at a gain. If he takes a loss, he gets to take the deduction on the basis of current law.

    Otherwise, a subsequent purchaser (whose money does not go to the corporation, business, etc.) upon future sale of the stock, etc., will pay taxes on his gain at ordinary rates. Why? The subsequent purchaser is purchasing the stock, etc., for its future income potential, and thus should be taxed on this basis. To be congruent, upon disposition of the stock, etc., as a loss, the investor should get a total deduction of the loss as an ordinary loss for tax purposes.

    In the case of other “capital assets”, such as art and other collectibles, the same result should obtain. If the holder of the art was the first purchaser of the piece from the creator, any gain realized on subsequent sale should not be taxed; the gain subsequent owners realize should be taxed as ordinary income. Real estate: same rules; the original owner gets the special treatment; others don’t.

    I can hear the howls of protest now; there won’t be a market for the capital assets given the confiscatory taxation on sale. BS; if it is stock, and the issuing corporation is successful, the future income stream (both dividends and appreciation) will be the basis for subsequent purchase, as it now is. If it is a successful business, the acquisition thereof is based upon its anticipated future success, as these acquisitions are now made.

    I’d propose elimination of income taxes on dividends, too, as dividends are paid from after-tax earnings of a corporation. Or, if this is too radical, then the dividend should be taxed at a rate which is the difference between the U.S. tax rate paid by the corporation on its earnings generated (averaged if the dividend is from accumulated earnings over a number of years) and the applicable marginal income tax rate of the holder of the stock in the year of the receipt of the dividend. Note that this builds upon the current notion of a “qualified dividend” under existing law.

    If the GOP is serious about the “high” rates of taxation on upper-income taxpayers inhibits their abilities to invest in new productive assets, then its members ought to grab onto this concept and run with it. I’ll not be holding my breath, however.

    BTW, if anyone makes the argument that such a scheme of income taxation will be detrimental to pension plans, for example, I’d point out that such plans already don’t pay income taxes. If the argument is made that this will hurt the investment of insurance company reserves, I’d point out that as insurance companies often invest in new issues of stock, the companies would be the first owners, and would benefit from not being taxed on the capital gains. 401(k) plans pay no income taxes while holding assets purchased by the participants’ contributions; IRAs don’t pay income taxes, either, so long as no prohibited transactions are engaged in by the IRA. I don’t see where my proposal harms these in any way.

  10. iggydonnelly

    I wonder if the GOP political strategy is to find a salesman as charismatic as Regan was. I think they can’t give up on the “trickle down” philosophy for reasons that are unclear.

    I don’t think Newt Gingrich is going to fill the bill as salesman, ditto on Sarah and Bobby. Who will be the likely torch barer for the Regan mantra? I am not seeing any viable candidates.

  11. lilacluvr

    I see no leaders in the current crop of Republicans. I think they thought if they put Micheal Steele in as RNC chairman, that he would bring in the minority voters. I just don’t see that happening. In fact, he has seemed to push away even more Republicans than before.

    The most likely, in my opinion, would be Mitt Romney. But even then, doesn’t he look like one of those Wall Street CEO’s? That, alone, I think will drive people away from him. That, and the the fact he will certainly dive into the Radical Religious Right wing of the party to get the nomination.

    Newt Gingrich is laughable at the moment. But he did recently convert to Catholicism and with his new wife by his side, he is now ready for those family values photo ops. But if you listen to Newt for any length of time, all the old ideas flow out his mouth and so he really has nothing to new to bring to the table. Plus, there are too many videos of him during the Clinton years that can now be used against him.

    I would say, at this point, the GOP is in deep trouble. Either they take a good hard look in the reality mirror and figure out what their problem is, or they will be destined to be in the wilderness for many, many years to come.

    But one thing Democrats can count on, Republicans are so full of arrogance that they never look at themselves objectively. They truly believe they are the lonly ones who are right. That, and of course, God is on their side.

    But isn’t the primary going to be fun to watch? All of them are going to be backstabbing and going for the jugular in their opponents – all the while holding that fake smile on their pretty, made up faces. And on these grounds, Sarah Palin will come out on top – you betcha.

  12. Now some of sweet Sarah’s own party would prefer Ted Stevens as the next Gov.
    Sad, just sad.