OBAMA AND THE WELFARE STATE HE CREATES FOR BANKSTER CLASS, AND HIS LA RAZA ILLEGAL VOTERS
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The $858 billion price tag of the bill will be paid for by further and deeper cuts to social spending. Even as Democrats and Republicans finalized the hand-over of hundreds of billions to the very rich, they are drafting plans for deep cuts to Social Security, Medicaid, and to the jobs of government workers… AND DREAM ACT AMNESTY FOR MORE ILLEGALS TO KEEP WAGES OF LEGALS DEPRESSED!
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This week at a Washington meeting with 20 leading US corporate CEOs, Obama pledged to reduce the federal deficit through spending cuts, while introducing “tax reform”―a euphemism for further lowering tax rates for the rich and corporations.
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The $858 billion dollar bill will overwhelmingly benefit the very wealthy. (See, “Tax law will overwhelmingly benefit the wealthy”). It will be funded entirely by government borrowing, which will immediately be used to demand new cuts in social spending that benefits the working class.
Obama signs tax windfall for rich
By Tom Eley
18 December 2010
On Friday President Obama signed into law a package of tax cuts that will funnel hundreds of billions of dollars to the richest Americans, after the Democratic Party-controlled House of Representatives on Thursday passed without changes the bill worked out between the White House and Congressional Republicans.
The $858 billion dollar bill will overwhelmingly benefit the very wealthy. (See, “Tax law will overwhelmingly benefit the wealthy”). It will be funded entirely by government borrowing, which will immediately be used to demand new cuts in social spending that benefits the working class. Obama made this intention clear in a jovial bill-signing ceremony that was attended by leading members of both parties.
"In some ways this was easier than some of the tougher choices we're going to have to make next year," Obama said. “There will be moments, I’m certain, over the next couple of years when the holiday spirit won’t be as abundant as it is today,” Obama quipped to the laughter of those in attendance in an auditorium at the Executive Office Building in Washington.
“Tough choices” is the euphemism used in ruling circles to refer to cuts in popular programs such as Social Security, the federal retirement program, and Medicare, the health insurance program for the elderly.
The tax bill passed the House by a margin of 277-148, with Democrats supplying one more vote than Republicans―139 and 138, respectively. One hundred twelve Democrats voted against, joined by 36 Republicans who objected that the bill did not immediately make permanent the tax cuts for the rich. The bill had cleared the Senate in even more lopsided fashion, passing 81 to 19 with overwhelming Democratic support.
Liberal Democrats’ effort to affect the appearance of opposition fell flat when an amendment to the bill that would have reduced the estate tax rate to 45 percent (instead of 35 percent in Obama's bill) on fortunes of more than $3.5 million (instead of $5 million), was voted down 233 to 194. Both proposals are generous to the rich―the estate tax was due to automatically reset this year to apply to estates of greater than $1 million at a rate of 55 percent.
No one expected that the amendment would actually pass, with the Democratic Party's House leadership repeatedly promising that they only wanted a “discussion” and would not hold up the whole package. The resulting debate allowed Democratic representatives to grandstand for several hours as defenders either of the working masses or of fiscal restraint, delaying the bill’s inevitable passage until past midnight.
The spectacle of “progressive” Democrats railing against tax cuts that their own president and party leadership had already approved brought to a pathetic end nearly a decade of posturing at opposition to the Bush tax cuts, which were put in place in 2001 and 2003. If any more proof were needed, the extension of the Bush tax cuts by a Democratic Party-controlled White House and Congress demonstrates that it, no less than the Republican Party, are an instrument of the US financial elite.
The $858 billion price tag of the bill will be paid for by further and deeper cuts to social spending. Even as Democrats and Republicans finalized the hand-over of hundreds of billions to the very rich, they are drafting plans for deep cuts to Social Security, Medicaid, and to the jobs of government workers. They are also planning to to implement new taxes that target the working class, including consumption taxes and applying income taxes to employee medical benefits.
This week at a Washington meeting with 20 leading US corporate CEOs, Obama pledged to reduce the federal deficit through spending cuts, while introducing “tax reform”―a euphemism for further lowering tax rates for the rich and corporations. Earlier in the month, his bi-partisan National Commission on Fiscal Responsibility and Reform suggested balancing the budget through a far-reaching assault on social spending, while at the same time proposing a cut in the top-end tax rate by as much as one third. This week 22 senators, including 12 Democrats, pledged to implement similar proposals over the coming two years.
As has been the case in Greece, Ireland, Portugal, and Spain, the financial markets are already clamoring for social spending cuts.
On Monday, the credit ratings firm Moody’s responded to word of the Obama-Republican tax deal with a warning that the US credit rating could be downgraded. The tax cuts’ “negative effects on government finance are likely to outweigh the positive effects of higher economic growth,” Moody’s wrote. “Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the U.S. government's AAA rating during the next two years." Yields on US Treasury bonds increased.
Markets responded to the tax bill in muted fashion, but only because analysts had little doubt that the House Democrats would end their charade of opposition. However, the tax deal coupled with Obama’s promises to carry out the dictates of the corporate and financial elite has financial experts predicting the historic 21-month run-up in share values will continue in 2011 and may well bring the Dow Jones Industrial Average to new record highs.
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Tax law will overwhelmingly benefit the wealthy
By Tom Eley
18 December 2010
The claim by President Obama and Congressional Democrats that the new tax law is an economic stimulus that will benefit working class people is a lie. It is a law tailored to benefit the extremely wealthy.
At a cost of $150 billion over the next two years, it maintains George W. Bush’s reduction in the high-end income tax rate―for those taking home over $250,000 for married couples and $200,000 for individuals―at 35 percent.
According to the Center for Tax Justice, the wealthiest one percent of taxpayers will pocket almost $77,000 per year more as a result of the deal. The top 1 percent would take home over 25 percent of the total tax cut; the bottom 60 percent would share less than that, about 20 percent.
Despite White House protestations to the contrary, there is no reason to believe that Democrats will reverse these tax cuts in two years’ time, when Republicans will control the House of Representatives. Over the next ten years, the perpetuation of the high-end income tax rate reduction will cost $700 billion, according to the Congressional Budget Office, far more than was allocated for infrastructure improvements in Obama’s 2009 stimulus package, the American Recovery and Reinvestment Act.
The law also includes a number of measures designed to secure the hereditary prerogative of what is, in all but name, an aristocracy. It increases the size of fortunes exempt from the estate tax to $10 million for couples and $5 million for individuals. For fortunes beyond those thresholds, the law will reduce the tax rate to 35 percent.
The rate was going to reset to 55 percent after this current year’s “holiday” in which the rich could pass on their estates without any taxation. To further sweeten the deal for the rich, the bill includes a measure that will allow multi-million dollar estates settled in 2011 for deaths taking place in 2010 to take advantage of the zero percent tax rate.
The law also allows the $5 million exemption to apply to gifts and “generation-skipping investments,” making it “much easier for wealthy taxpayers to make gifts during life to grandchildren," according to estate attorney Beth Kaufman of Caplin and Drysdale in a comment to the Wall Street Journal.
The package also perpetuates for two years the all-time low tax rate on capital gains and dividends at 15 percent, along with a number of additional tax write-offs for corporations.
In an attempt to provide a degree of political cover for Obama and the Democrats, the bill includes a few measures that ostensibly benefit those outside of the richest one percent of the population.
The law extends tax cuts introduced in the Bush years for middle and lower income Americans. The working population has realized a much smaller share of the overall tax cut, however, and the money withdrawn from the public coffers will be offset by cuts to social spending. For months the Democrats called for maintaining the tax cuts for all households except for the wealthiest, but have now made into law the Republican position.
The law also extends funding for federal long-term unemployment benefits for millions of workers for another 13 months at a cost of $56 billion, about a third of the price of the two-year income tax give-away to the rich. Hundreds of thousands of workers have lost their benefits since the November 30 expiration of extended unemployment benefits. Repeatedly held hostage by the Republican opposition and Democratic indifference over the past year, extended federal benefits will almost certainly expire at the beginning of 2012 with Republican control of the House.
The law also includes a one year Social Security tax cut, by which the payroll tax rate will be reduced from 6.2 percent to 4.2 percent on the first $106,800 of a worker’s wages.
According to an analysis by the Tax Policy Center, 51 million households―a third of the total―will be worse off as a result of the tax package. This is because for those with the greatest need--couples making less than $40,000 or individuals making less than $20,000―the Social Security tax break will not offset the tax break it is replacing, the Making Work Pay credit, resulting in an average household loss of $210 per year for 45 million households.
Another 6 million households will loser their Making Work Pay credit and will receive nothing in compensation through the Obama-Republican plan because they are state or local government employees who do not contribute to Social Security.
Perhaps most significantly, cutting Social Security payroll taxes sets the precedent for further attacks on the federal retirement program. The bill marks the first time in the 75-year history of the program that Congress has intervened to cut the payroll tax rate, and there is a campaign already underway to lengthen the tax “holiday.” This would have the effect of accelerating Social Security’s insolvency. The program is currently not predicted to become insolvent for several decades.
The law has specific benefits for the Wall Street elite, whose reckless financial speculation triggered the global economic collapse. “[A]mong the big winners are private-equity and hedge-fund executives who prevailed in their battle against ‘carried interest’ provisions that would have taxed their earnings at higher ordinary-income rates rather than as capital gains,” the Wall Street Journal notes.
In other words, the law shelters the most lucrative forms of speculative wealth accumulation on Wall Street from the personal income tax by defining these as capital gains, a form of wealth accumulation historically associated with productive investment.
The law also puts in place a two-year repeal of two laws already on the books that sought to limit the ability of the extremely wealthy to claim tax write-offs, the Pease Limitation and the Personal Exemption Phase-out (PEP).
The net effect of the law is an acceleration of the redistribution of wealth from the working class to a tiny layer of the financial elite. This takes the immediate form of tax cuts for the wealthy, but the resulting deficit spending will be paid for through unprecedented cuts to social spending.
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OBAMA IS THE BIGGEST CON JOB SINCE RONALD REAGAN… !
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