Even before taking office, President Obama made it clear that he intended to extend the Bush tax cuts for the lower- and middle-class, while allowing them to expire on schedule for the richest Americans in 2011. Conservatives, however, have been apoplectic about this decision, arguing for making all the tax cuts permanent “right now,” and fearmongering about the effect the expiration will have on small businesses.
Today, Rep. Eric Cantor (R-VA) appeared on CNBC to make his case for extending all the tax cuts. “We’re all about trying to keep the current law as it is and not allow this administration to raise these taxes,” because of a desire to “commit ourselves to help small business,” Cantor said.
Most Democrats are on board with the President’s plan to allow the cuts to expire for the richest Americans. “President Obama has indicated that he wants to extend those tax cuts for those with $250,000 in income and below,” said Sen. Byron Dorgan (D-ND). “So I think Congress will work very hard to get that done.” Sen. Evan Bayh (D-IN), however, said that Cantor’s position is “exactly right”:
We don’t need to raise taxes now. Eric is exactly right. If we’re going to deal with those things, we ought to wait until the economy has a full head of steam going, jobs are being created, several hundred thousand a month, then you can deal with some of the long-term issues. That ought to start with spending restraint, then we can deal with some of the long-term issues. We don’t need added uncertainty, added burdens on business right now.
Sen. Judd Gregg (R-NH), not surprisingly, jumped on board, saying “if you want to do something to stimulate the economy, you could make it clear that tax rates aren’t going to go up at the end of the year.”
First, this trio is hiding behind small businesses to argue for extending tax cuts for the richest segment of the population. Fewer than 2 percent of the small businesses in the country face either of the top two tax brackets, while 34 percent are in the lowest tax bracket and 14 percent actually qualify for the Earned Income Tax Credit, which is available to low-income working people.
So Bayh is joining Cantor and Gregg in going to bat for the richest two percent of the country at a time when income inequality is the worst its been since the 1920’s. According to the latest data, “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007.” The top 1 percent of families now receive nearly 25 percent of the country’s income, after earning less than 10 percent in the 1970s.
This year alone, the Bush tax cuts will give millionaire’s more in tax breaks than 90 percent of American households make in total income. That’s the conservative agenda to which Bayh is giving his explicit approval.