Saturday, July 30, 2011

The big question - are Republicans serious?

So, Republicans decided they'd play their brinksmanship game again. "Let's hold the fate of the country hostage! Let's demand whatever we want, and count on the Democrats to cave!"

And they've been playing BOOGA BOOGA, DEFICIT'S GONNA KILL YOU IN YOUR SLEEP! for... well, how long has it been since they lost the White House? About that long, maybe a bit longer.

So, they say that they have this big, big, big problem, a huge, horrible serious problem, and they can't possibly raise the debt limit unless that huge, horrible, very bad, very serious problem was dealt with.

But! But but but!!!

But that problem isn't worth raising any revenue over. Not one penny. Nope. Rich people gotta get richer, and pay lower taxes, and poor people gotta stay poor, and have all of their support programs cut, and, by the way BOOGA BOOGA, DEFICIT'S GONNA KILL YOU IN YOUR SLEEP!

Here's a bit of math for you - a bit of tax accounting. Let's say you're a sole proprietor or a partner in a business. Your salary each year is the amount your company gains or loses, revenue minus expenses.

Employee salaries are expenses. Keep that in mind.

Let's say you've had a good year, and you have an extra hundred grand in cold, hard cash you can do something with. You can take it home as a bonus to yourself - it's your company, you did good, maybe you deserve a reward. Or, you can hire another person or two, expand your business a bit.

What happens to that cost - *to you* - if your tax rate goes up?

If tax rates are, say, 30%, then hiring some new people with that hundred grand costs you a net of $70,000. If you'd taken that money home as a bonus, you'd lose 30% to taxes, and only get to keep $70,000.

If your tax rates go up - to 35 or 40% - what happens?

Now those new employees cost you a net of $65,000 or $60,000. See, if you'd taken the money home, you'd have paid 35% or 40% tax on it. The cost has come *down*. Sure, taking home $60,000 is better than a boot to the head, but lower taxes still make the cost higher.

Are you starting to see why we had such good growth under higher tax rates, when the top marginal rate was 70% or even more? People hired more - the cost was lower - and more people had good paying jobs so they had more to spend.

So, let's not pretend to buy into the Republican line that higher taxes on the so-called "job creators" would be hideously bad.

And lets get back to the main point.

Are the Republicans serious?

They had deals for two trillion, three trillion, maybe even four trillion, in spending cuts, and all they had to do was maybe - maybe! - bump up the top marginal rate back to where it was under Clinton. Just a few percentage points.

Well, if they're serious about BOOGA BOOGA, DEFICIT'S GOING TO KILL YOU IN YOUR SLEEP!, then a modest tax increase is certainly justified.

Hell, if they were serious about getting the deficit under control, they'd have let the tax rates go through, and then whined about how the Evil Obamonster forced them to raise taxes (as if they themselves hadn't ginned up the whole debt ceiling crisis!). They have a very good noise machine, trying to shame people into feeling bad if the government actually helps them out a bit, and trying to protect the rich at all costs.

But what's their latest response? To pass a bill that they know can't become law. A tantrum, in other words. "I'm going to hold my breath until the country turns blue!" they scream. And you know what they'll do, next. "We passed a bill! The Senate has to agree, and so does the President because we passed a bill!"

And maybe they'll even get some people to agree with them, and pretend like they've been negotiating in good faith.

Or maybe... maybe people will remember that they passed up trillions in cuts, because the deficit which was going to kill us all in our sleep wasn't actually dangerous enough to allow a modest tax increase on the people who've made out like bandits while the rest of the nation searches for decent jobs.

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