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GOP hammers Obama again with ‘taxing the rich’ myth

Earl Ofari Hutchinson

The ink was barely dry on President Obama’s projected 2016 budget proposal when GOP leaders virtually declared the proposals DOA. The real issue is not the amount Obama wants to spend on domestic and defense programs, but his audacity to repeat that some of the funding for these programs should be paid for by a tax hike on the rich. The notion that the rich don’t pay their fair share has stuck in the craw of GOP leaders and conservatives every time Obama has dared suggest it.

Obama’s tax increases have been anything but drastic. They are little more than a marginal increase in the capital gains tax and modest proposals for closing some of the canyon wide loopholes that permit corporations to pay little, and in some cases, no taxes on their excess profits. The GOP’s standard counter is that tax hikes will stunt job growth, business investment and expansion, and this in turn will depress wages and consumer spending. This is a sure prescription, so the argument goes, that the economy will remain in a near-catatonic state of slow- to no-growth, with real danger of a slide downward again.

The banks are a near-textbook example of this nonsense. They got billions from the taxpayer — floated bailout, and they have been Scrooge-like in their lending. The Wall Street whiz boys are even worse. They reaped a bonanza from the Bush tax cuts and still nearly crashed the economy. Estimates are that banks and corporations have hoarded nearly two trillion dollars of profit made possible to a degree by taxpayer bailout dollars. Yet small and medium-sized businesses still wither on the vine for lack of business loans. There’s another compelling reason to raise taxes on the wealthy: the deficit. Obama has repeatedly warned that the nation simply can’t afford to retain the cuts for the rich, as they will cost the treasury $700 billion. That kind of Treasury hit ultimately means even more slashes, cutbacks and elimination of funding for education, health, energy, and public works programs to state and local governments, all of which create jobs.

Some polls have shown that the overwhelming majority of Americans wants tax cuts for upper-income earners ended, and the cuts on middle-income earners extended. So scrapping the cuts for the wealthy is far from a political lose-lose for the Obama administration. But the GOP and its big booster, the U.S. Chamber of Commerce, have done a media and public master spin job and pounded home the message that if the cuts are ended, all sorts of dire things will happen to the economy, and Obama will and should get the blame for it.

This is smoke-and-mirrors bluster but it has resonance with so many Americans nervous and fearful about what tomorrow will bring in terms of their jobs and businesses. But resonant or no, it’s still bad economic and political business to keep something in place that has absolutely no proven value to the economy, let alone something that cannot be sustained on the basis of cost and benefit.

There’s a final reason why the wealthy must pay more. Repeated polls and surveys have shown that the income inequality and wealth gap has widened during the past decade. That means there are more poor people than in years past. According to a 2010 report, 1 in 7 Americans were classified as poor. That’s nearly 45 million Americans. At a time when so many persons are needy, even destitute, doling out another round of money to a handful of high-income earners who don’t need the money is beyond shameful — it’s obscene. Tax dollars are publicly funded resources. They should be used to put a brake on the surge in poverty. That takes money, money to spend on measures that will actually create jobs and boost income support programs.

The GOP cynically flips the table and blames the wealth gap and even the poverty rise on Obama’s supposedly reckless tax-and-spend policies. This is more myth-making. Obama’s budget has not broken the government’s fiscal bank. The deficit has been steadily reduced during his administration, owing to the caps he’s placed on spending. But those caps have limits, and vital programs have to be funded. The funds are in the coffers of major corporations and the wealthy. The GOP will again hammer Obama hard with the myth that taxing the rich hurts all, in order to ensure that those funds aren’t tapped.

Earl Ofari Hutchinson is an author and political analyst.