Despite Pledging To Lower Deficit, House GOP Adopt Rules That Benefit The Wealthy At Deficit’s Expense
"Despite Pledging To Lower Deficit, House GOP Adopt Rules That Benefit The Wealthy At Deficit’s Expense"
One of the rallying cries of Republicans as they campaigned during the last election cycle was their call to rein in the budget deficit and lower U.S. debt. Rep. Paul Ryan (R-WI), the incoming House Budget Committee chairman, has long claimed that his goal is to battle the federal budget’s “large and chronic deficits.”
Yet this stated goal of reducing the deficit has been hypocritically undermined not only by the GOP’s pledge to repeal health care, but also by the majority’s adoption of new rules for the chamber — passed along party lines yesterday — that featured a major change in how budgeting is done. The rules replaced the former “pay-go” rules (which require all spending increases to be offset with spending cuts or tax increases) with a new rule that Republicans are referring to as “cut-go” (which would require that new spending be offset by spending cuts but not by tax increases). Attempting to justify these rules, Ryan told Bloomberg, “We didn’t come here to raise taxes. We came here to cut spending and the rules should reflect that.”
The Republicans certainly have a right to have ideological opposition to raising taxes, but their rules undermine their stated goal of battling the budget deficit. In fact, the new rules would largely benefit some of the richest Americans and biggest corporations who benefit from tax havens, loopholes, and cuts found in the federal tax code. Here are some of the people that will benefit at the expense of the deficit:
– Rich People And Corporations Who Benefit From Offshore Tax Havens: As U.S. PIRG’s Nichole Tichon notes, under the new rules, “attempts to shut down off-shore tax havens cannot be considered in discussions of deficit reduction. These havens cost taxpayers an estimated $100 billion per year and go to those who benefit from access to American markets, workforce, security and infrastructure but pay little or nothing as they ship profits overseas.” According to the GAO, over 80 percent of “of the biggest U.S corporations maintain revenues in offshore tax haven countries. The names on the list are familiar: American Express, A.I.G, Boeing, Cisco, Dow, Hewlett-Packard, J.P. Morgan Chase and Pfizer – among others.”
– Big Corporations That Benefit From Tax Expenditures: Under the new rules, “tax expenditures that flow to BP, Exxon and others in the oil and gas industry are off the table.” The government has currently set up a network of tax expenditures and other subsidies to Big Oil that cost the American taxpayer billions of dollars every year. Ending these subsidies would save an estimated $45 billion over ten years. The CAP paper “Cracking the Code: A Closer Look at Tax Expenditure Spending” notes that “special credits, deductions, exclusions, exemptions, and preferential tax rates provide more than $1 trillion in subsidies intended to support public objectives,” yet are ineffective and should be reduced or eliminated.
– Rich People That Benefit From Loopholes In The Tax Code: Under the new rules, “ill-advised loopholes carved out of the tax code that let multi-millionaire hedge fund managers pay dramatically reduced tax rates – far less than the average American – are exempt from discussions on solving our deficit problem.” In 2008, these loopholes “that largely benefit rich taxpayers and companies cost the government $20 billion a year even as the pay gap between chief executives and employees has widened.”
– Rich People That Benefit From Huge Tax Cuts: The new rules direct “lawmakers to ignore the budgetary impact of making permanent the income-tax cuts that Congress extended for two years in a compromise with President Barack Obama last month.” The Bush tax cuts for the richest 2 percent are expected to cost $690 billion over the next ten years.
It is increasingly clear that the Republicans are more concerned about reducing taxes on the wealthiest Americans and slashing spending on crucial programs that invest in America and protect the most vulnerable than they are about reducing the deficit. But if the Republicans truly want to “listen to the American people,” as they claim, they would not rely on rules rigged in favor of the ultra-wealthy. A new 60 Minutes/Vanity Fair poll finds that 61 percent “of Americans said that increasing taxes to the wealthy should be the first step toward balancing the budget.”