I'm back. Actually, Mrs. DWSUWF and I got back from our month long Sahara adventure over ten days ago. Yes, that is me pictured with some new friends I made in the West Africa desert a few weeks ago. It was the trip of a lifetime and, frankly, since returning I have been more interested in transcribing our travel journal/photos, rather than wading back into domestic politics. Anyone interested can find more than you want to know about our trip on the mobile blog or if you are just curious about my new friends, that story is posted here.
So what have I missed?
When I left, Charlie Rangel was promoting a revenue neutral fix of the Alternative Minimum Tax, and in my last post more than a month ago, I weighed in with some (faint) praise for the the proposal. I concluded that, on balance, the benefit of getting rid of the truly onerous AMT outweighed the negative aspects of raising taxes on the top brackets to pay for it:
This morning I heard President Bush whining that the Democratic Congress took too long to get the AMT fix to his desk:
"Bush also complained that legislation to protect middle- and upper-middle-class families "from the burden of the alternative minimum tax" came so late that it was likely to slow the processing of tens of billions of dollars in tax refunds. "When Congress wastes so much time and leaves its work to the final days before Christmas, it is not a responsible way to run this government," Bush said."
Of course this begs the question of exactly what the Republican Congress was doing about the AMT for the SIX YEARS before the Democratic Congress got something to him this year - but I wondered - exactly what actually did pass? From Jeffrey Birnbaum writing at the Washington Post:
"Had the patch not been approved, 81 percent of taxpayers with taxable incomes of $100,000 to $200,000 would have been affected by the AMT, according to the congressional Joint Committee on Taxation. Nearly half of taxpayers who earn $75,000 to $100,000 would also have been affected without yesterday's legislation. Thanks to the bill, however, 10 percent of those who make $100,000 to $200,000 and fewer than 2 percent of taxpayers who earn $75,000 to $100,000 will now have to pay the AMT. Overall, 4 million households will have to pay the tax, about the same number as in 2006...
On Tuesday, the Senate rejected a House-passed AMT patch that would have covered its cost by closing offshore tax havens used by hedge fund managers. The Senate earlier rejected a House plan that would have increased the tax rate on managers of hedge funds and private-equity firms."
It's a band-aid, not a cure. The AMT vampire still walks the earth sucking the lifeblood from middle class taxpayers. The patch is the equivalent of putting garlic around the neck of some 2007 taxpayers to keep the undead AMT ghoul at bay, just to let it slake it's blood thirst on other unprotected 2007 middle class taxpayers. And in 2008???
"Congress next year must patch the AMT again or force millions of families to pay more tax. The patch's revenue loss then will rise to $65 billion, an amount that Andrew B. Lyon of Pricewaterhouse Coopers said would be "extremely difficult" to raise."
Net net:The same number of people who got screwed by the AMT on their 2006 taxes will get screwed again on 2007 tax returns. The AMT problem has simply been pushed out of sight/out of mind over the November, 2008 election horizon. It will have to be addressed again (or not) next December after we have elected a new President and Congress. This shell game is what we got from tRepublican obstruction in the Senate instead of putting a stake through the heart of the AMT now and paying for it from higher taxes on Hedge and Private Equity funds/managers. The middle class still carries the load. And GWB and the Republicans in the Senate seem to think that this is somehow a superior solution because ??????
You got me. Whatever. The GOP needs a lot of help. I'll see what I can do.
It'll take me a while to ramp back up, but I should have DWSUWF back in full focus when we get past the holidays and in time for the Iowa/New Hampshire returns.
In the meantime, what better way to wade back in, than an all new Carnival of Divided Government? In honor of Bill O'Reilly winning the war against Christmas while we were gone, we'll be publishing the latest edition precisely at the moment of the Northern Hemisphere Winter Solstice - tomorrow, December 21, 2007 at 11:08 PM PST. There is still time to get your submission in, blog articles may be submitted for the nextcarnival of divided government using the carnival submission form, but a reminder - if your post does not include the words "divided government" - don't bother.
Wherein DWSUWF implements a self imposed Fairness Doctrine, and gives the Democratic Congress equal time.
In praise of the 110th Congress
Most of the DWSUWF “divided government” posts since last year's mid-term election have focused on the need to elect a Republican president to maintain divided government into 2009 (examples here, here, here, and here). The reason is simple. Due to structural elements in the 2008 Senatorial contest, Republican resignations, and the continuing political unpopularity of the President, an expanded Democratic majority in the Senate is a foregone conclusion and a Democratic super-majority in the Senate (60 votes) is within reach. A Democratic majority in the House of Representative is also certain to continue and will probably increase. DWSUWF has focused on the presidential race specifically because electing a Republican president is the only path to re-electing a divided government state and continuing to enjoy the benefits of divided government into 2009. As a result of this single minded focus on the 2008 presidential election DWSUWF has short changed the other side of the divided government coin - our Democratic Congress. I will attempt to address that oversight now.
Both the President and Congress continue to take a beating in the approval polls. From a recent AP-Ipsos poll:
“Thirty-two percent approved of President Bush's performance in this month's Associated Press-Ipsos poll, about the same as last month's all-time low for him in the survey of 31 percent...: Twenty-five percent approved of the way Congress is handling its job, a slight increase from the 22 percent who approved last month, a record low in the four-year-old AP-Ipsos poll.”
Not coincidently, the President has been ratcheting up his rhetoric with a Congress-bashing offensive “surge”. Oddly enough, while both the Executive and Legislative approval ratings are pathetic, Congressional approval ratings have increased more than the Presidents during this Federal branch steel cage match. The President's Oct 30 White House remarks may explain why the administrations partisan political surge has been less than effective.
“President George W. Bush lashed out at Congress Tuesday, the third time he has done so in two weeks... Its failure to send a single annual appropriations bill to his desk, he said, amounted to "the worst record for a Congress in 20 years ... We're near the end of the year, and there really isn't much to show for it. The House of Representatives has wasted valuable time on a constant stream of investigations, and the Senate has wasted valuable time on an endless series of failed votes to pull our troops out of Iraq... This is not what congressional leaders promised when they took control of Congress earlier this year."
So - the President is complaining that spending increases have been contained due to congressional inaction, while congressional action has focused on a means to end the Iraq war and aggressive oversight of an administration guilty of criminal activity at the highest levels (Remember Scooter? Commuting an “excessive” sentence does not make Libby any less guilty or any less criminal. Criminal Obstruction of Justice was proven beyond a reasonable doubt in the office of the Vice President.) As a consequence of the “time wasting investigations” other potentially illegal activities and extra-constitutional overreach of surveillance authority have been exposed and admitted in the F.B.I, Justice Department, and N.S.A, some engaging major telecom corporations as co-conspirators.Excuse me, Mr. President, but that is exactly what congressional leaders promised at the beginning of the year. Moreover, that is exactly what DWSUWF hoped for when we advocated voting for a Democratic Congress and a divided government one year ago. Call me contrary, but include me in that 25% that think this Congress is doing a good job, even a great job. Sure, much of the good stuff in Congress is happening in spite of themselves, and purely as an artifact of gridlock and divided government. What do I care? I love this Congress.
In praise of my congressional representative.
Pollsters and pundits note that even when there is great dissatisfaction in Congress as a whole, constituents perversely tend to approve the performance of their own representative. So it follows that if I am satisfied with Congress, I must love my representative. This is true. I live in California Congressional District 8 and am represented by Nancy Pelosi. She is the best. Sure, I was a little tough on Nancy at the beginning of the year with that unseemly power grab, and I find her blind support of the corrupt Jack Murtha rather annoying, but overall she has done one hell of a job. I am more than happy to turn over some blog space to Nancy Pelosi to explain for herself what Congress has accomplished in the last 11 months:
“One year ago, the American people entrusted their hopes and their dreams, their aspirations for themselves, for their families, and for the future in this New Direction Congress. We come here today with great confidence and pride in what we have achieved and what remains for us to be done. I am proud to stand before the majority House Democratic Caucus and salute them, from our chairmen to our newest members, for their great leadership on behalf of the American people... We have begun to restore accountability by making this the most honest, open, and accountable Congress in history. We are holding the Bush Administration accountable for its failed policies in Iraq. Because our first responsibility is to make America safer, we will never stop fighting for a New Direction in Iraq. A direction that strengthens our military, refocuses on the real war on terrorism, and brings greater stability to the region. Every day we will work hard to bring our troops home safely, honorably and soon. With faith in the future, the New Direction Congress will continue to make progress for America’s children. With faith in God, I know that we will succeed. Thank you."
I'm good with that. Did we get everything we expected from this Congress over the last 11 months? Far from it. Nancy understands that, and understands that Iraq is the single biggest source of American frustration with Congress and the reason for their low approval rating. How could it be otherwise when 70% of Americans understand that the Iraq adventure was/is a mistake?
Two reasons why I know that Pelosi is doing a great job:
1) Republican reaction. Republicans tried to hold on to their majority House in 2006 by invoking the specter of Nancy Pelosi, Speaker of the House as no less terrifying than a Balrog in the mines of Moria. But now, the best they can up with is stuff like this.
2) Democratic reaction. In the meantime, on the other side of the aisle, the Democrats are so happy with Nancy Pelosi that they just can't sayenoughabouther. Republicans must just love watching the Democrats eat their own. Cindy Sheehan is even mounting an independent bid for her congressional seat. No matter, Nancy Pelosi is wildly popular with her constituents, like me.
Anyone who can piss off the activists of both parties, hold her leadership role, show real results in Congress, while continuing to fight the good fight on Iraq is doing something right. Leadership is not a popularity contest. Nancy Pelosi is providing real leadership for the loyal opposition in a divided government that accurately reflects a divided country.
In (faint) praise of HR Bill 3996
On November 9th, the House of Representatives passed HR Bill 3996 - The Temporary Tax Relief Act of 2007 [PDF]. I was quite pleasantly surprised by this bill, particularly given how the Republicans invoked the image of Charlie Rangel chairing Ways and Means as a bogeyman to be feared almost as much as the great satan Pelosi herself before the midterms.
As a small "l" libertarian leaningDemocrat Republican, I put more emphasis on practical political results vs. strict adherence to Libertarian Party dogma. This means that I will support a compromise bill that provides incremental libertarian improvement, even very small incremental improvements. Dale Franks "neolibertarian" description is a useful rule of thumb in this regard:
"When given a set of policy choices,
* The choice that maximizes personal liberty is the best choice.
* The policy choice that offers the least amount of necessary government intervention or regulation is the best choice.
* The policy choice that provides rational, market-based incentives is the best choice."
The bill is an attempt to undo the damage from a particularly onerous and badly implemented bit of past government action. Specifically the Alternative Minimum Tax (AMT), which (in concert with inflation) continues to drive more and more of the American middle class into carrying a higher tax burden than was intended HR 3996 is a reasonable effort to fix problems in the tax code that are hurting a lot of people in the middle class. It allows the majority of taxpayers, including all the middle class (upper, middle, lower) to get off of the automatic annual AMT tax increase escalator and does so in a revenue neutral manner. Republican critics attack the bill on the basis that it imposes a surtax on income above $200,000 in order to meet PAYGO requirements (no new deficit increasing bills), and will be a net tax increase if the Bush tax cuts are permitted to expire on schedule in total. This is an unlikely scenario, and in any case is a red herring argument when applied to this bill. Issues related to extending the Bush Tax cuts should and will be addressed when that legislation is considered, and not be imposed on this bill.
Rangel spokesman Matthew Beck defends the bill against its critics:
"That sort of reaction from many advisers "ignores that this bill would provide overwhelming tax relief to more than 91 million families," said Matthew Beck, spokesman for the Democratic membership of the House Ways and Means Committee. Under Mr. Rangel's proposal, that many families would receive substantial tax relief, Mr. Beck said, while some 1.7 million taxpayers would see an increase in their tax liability. The tax relief would extend to small-business owners, Mr. Beck added. Criticism "also ignores a significant reduction in the corporate-tax rate," which has been advocated by Treasury Secretary Henry Paulson, Mr. Beck said. Corporate-tax rates would be lowered to 30.5%, from the current rate of 35%, but many companies would lose deductions they currently enjoy."
The apparent Republican case is that the AMT should be repealed, without any revenue offsets to maintain a tax neutral result. Given the wild out of control spending of the last six years of single party Republican control in Washington, an additional overall tax cut here, (as is seemingly being advocated by the Republicans attacking the bill) would just push more of the burden on to the next generation to pay for it. At some point the piper will be paid in either taxes or inflation, and the Republicans seem only to happy to have the cost of their war and new entitlement programs paid by our children and grandchildren.
Is the bill perfect? Far from it. My strong preference would be for a radical overhaul of the tax code, applying as flat a tax as politically feasible with as few exceptions as possible. That option is not in the cards. HR Bill 3996 is incrementally better than what we have now. Sometimes, incremental improvement is as good as a small "l" libertarian can hope for. Sure, it would be great to see all income taxes flattened and lowered, but Rangel is a Democrat after all. It is not like the Republicans even made an effort to get rid of the AMT during their 6 years of big spending, big deficit, big government single party control. In fact, the disingenuous Republican argument ignores the fact that the Republican controlled Congress was only too willing to let AMT creep raise additional revenue to partially fund their earmark and spending explosion in the first six years of the administration.
I'm back. Actually, Mrs. DWSUWF and I got back from our month long Sahara adventure over ten days ago. Yes, that is me pictured with some new friends I made in the West Africa desert a few weeks ago. It was the trip of a lifetime and, frankly, since returning I have been more interested in transcribing our travel journal/photos, rather than wading back into domestic politics. Anyone interested can find more than you want to know about our trip on the mobile blog or if you are just curious about my new friends, that story is posted here.
Technorati tags: divided government, AMT, 2008 election,libertarian,Democrat,Republican, George Bush, Charlie Rangel,tax,Congress.
