Opposition to the last minute deal still under negotiation in the Senate is growing among many liberals, and now an an important labor organization is calling on Democrats to "hold the horses." Sam Stein reports Fiscal Cliff Talks: AFL-CIO Urges Lawmakers To Put Brakes On Deal
Richard Trumka, president of the AFL-CIO, tweeted his opposition to a proposal that would raise tax rates only on incomes above $400,000 for individuals and $450,000 for couples, while inviting future debt-reduction standoffs just months down the road.
"Its not a good #fiscalcliff deal if it gives more tax cuts to 2 percent and sets the stage for more hostage taking," Trumka wrote.
AFL-CIO officials added that Trumka supports a fallback option, which would include an extension of lower Bush-era tax rates below $200,000 for individuals and $250,000 for couples, as well as an extension of unemployment insurance and a pledge to deal with the sequestration spending cuts in the coming weeks.
It remains to be seen whether House Republican will support the bill which Newt Gingrich just called ridiculous because no one knows what is in it. Newt thinks President Obama ought to tell the Treasury Department to delay changing withholding for 90 days so this proposal can be examined with hearings so everyone knows what is in it.
Stein wonders if the AFL-CIO might persuade "some liberal Democrats to pause on the current deal or even vote no."
Another AFL-CIO official is reported by Stein to have said:
"We are very concerned about a situation which seems like we have a couple hundred billion of dollars of concessions made on one hand -- some of which will be permanent -- and on the other hand, we are going into a further and further round of fake fiscal crisis -- the debt ceiling, the sequester -- in which we are going to hear, of course, from the same fiscal hypocrites that we have to cut this and that," the official said. "We just gave away $300 to $400 billion [by giving in on the tax rate threshold]. If we had an actual fiscal crisis, that would be the first place to look for the money."
This afternoon William Branigin reports in the Washington Post blog that Harkin blasts very bad deal saying no deal is better than a bad deal.
On the Senate floor Monday morning, Sen. Tom Harkin, a liberal Democrat from Iowa, said he was “disturbed” to hear that Democratic negotiators had agreed to raise the threshold for the income tax rate increases to $450,000, from $250,000, and to maintain estate taxes at their current level.'Harkin later told CNN that he and fellow liberal Democrats will meet to discuss strategy this morning and may block the deal from moving forward. “They think Republicans may object? We may object,” Harkin said.
“This is one Democrat that doesn’t agree with that — at all,” Harkin said. “I just think that’s grossly unfair.”
He added: “If you make $250,000 a year, you’re not middle class. You’re in the top 2 percent of income earners in America…. If we’re going to have some kind of deal, the deal must be one that really does favor the middle class — the real middle class, those that are making 30, 50, 60, 70,000 dollars a year. That’s the real middle class in America. And as I see this thing developing, quite frankly, as I’ve said before, no deal is better than a bad deal, and this looks like a very bad deal the way this is shaping up.”
CNN reports that The Progressive Change Committee has come out against this bill as well. What a sad and depressing way to end the year.
5:14 PM PT: This is from the last half of a post I did earlier this morning on David Brooks.
Jeffrey Sachs has a far gloomier view suggesting that the only thing worse than not reaching a deal, would be reaching a deal, as any deal we could reach with Republicans will mean Republicans have fundementally won by capping the size of government at a lower level than is possible for it to be viable as a progressive force. In Going Over the Cliff Is the Only Way to Save the Government argues if we reach a deal that extends Bush tax cuts for anyone "the federal government and the long-term purpose of the Democratic Party are both likely to be ruined for years to come," but only if if fails can we go back to "using government to promote the public wellbeing."
Sachs argues that the Bush tax cuts were never even remotely affordable if we want to sustain a modern government that provide any reasonable level of social spending.
The main point is this. If no deal is reached, the Bush tax cuts end. We would return roughly to the tax schedule of the end of the 1990s, when the macro-economy performed reasonably well and the budget was near balance. Federal government revenues would rise by around 2.5 percent of GDP per year compared with the current tax schedule. According to the CBO, the federal tax system would collect 20-21 percent of GDP in the second half of this decade. This is a bare minimum of what's needed for effective government.
If we make the Bush tax cuts permanent, at the $400,000 threshold, then we will only be able to collect 18.5 percent of GDP in the second half of this next decade -- 2.5 percent less than if we let the Bush tax cuts expire. (Early rumors this morning is that the Democrats have already conceded to make the threshold at least $450,000, and may go up to $550,000.)
Let's be clear. In an ideal world, there are better and more progressive ways to get to 21 percent of GDP in federal tax revenues than by personal income taxes alone. A partial list would include: a wealth tax on large fortunes (e.g. 1 percent on net worth above $5 million); an end to tolerating tax havens like the Cayman Islands; an end to the tax deferral of overseas corporate income; a crackdown on abusive transfer pricing; and a tax on carbon emissions). The problem is that neither the Administration nor the Congress is proposing these measures, and in the meantime, a deal now that extends the Bush tax cuts will be a severe loss of revenues for years to come without any offsetting gains.
If the deal is reached, therefore, the Republicans have won: they have locked in a federal tax system that collects so little total federal revenue that government can afford almost nothing aside from the military, interest payments, retirement programs and health care. Say goodbye to the rest: science, technology, education, job training, infrastructure, a functioning justice system, community development, renewable energy, environment, and more. ...In short, something terrible would have to give. Either we'd have to gut life-sustaining programs for the poor (Medicaid, Food Stamps, etc.), or gut civilian government (education, science, environment), or bust the budget with trillions of dollars more in public debt.
I guess the only good news from Jeffrey Sach's perspective would be to hope for that the talks complete collapse, and, as a nation, we withdraw from our addiction to excessively low taxes with two quarters of recession, but emerge a healthier nation. The CBO scoring on the failed talks scenario does predict that after two quarters of mild recession the economy roars back to 5% plus growth rats by around 2016 if I remember correctly. Global confidence will be restore by our returning to the Clinton model of balanced budgets and prosperity. Instead, we seem to be choosing to go into slash and burn austerity mode.
Alternatively, Democrats will need to keep in mind that if we agree to make the Bush tax cuts on those earning less than $400,000, we need to go into a full court press to find other ways to raise tax revenues, or face the music that the GOP as won, and start slashing spending everywhere, starting immediately with the debt-ceiling crisis.
The GOP may have outsmarted us on this one. Despite the funny jokes David Brooks makes about them not knowing what they want, they seem to be more committed to their vision of "starving the beast of government" than we progressives are to making sure we have enough revenues to sustain it. At this point they seem to be on the edge of a major victory locking in permanent tax cuts that were meant to be temporary when no other prospects for replacement revenues on the horizon until we regain control of the House.
5:19 PM PT: As an increasing number of progressive announce opposition to this deal, I'm increasingly feeling we may be on the edge of a historical blunder here.
Robert Reich is on CNN opposing it, and here is a link to our own Kid Oakland, apparently announcing his opposition. The 250K pledge is important
To which I appended this comment. http://www.dailykos.com/...
Going back on that modest pledge not only makes no sense, but it sends a clear message to every activist who knocked on doors, made phone calls and turned out voters all while explaining this simple campaign pledge for fairness in our tax code.
I am left wondering if there are Democrats in Congress principled enough to stand up and say.
Not now, not this time, Mr. President. This time things are going to be different. America can't wait to take much needed first steps towards economic justice.
I agree with what you write here kid oakland but (19+ / 0-)
am concerned that our situation may be even worse than simply breaking a promise, or giving up our last bargaining leverage for the upcoming debt-ceiling crisis.
From what I gathered from a little notice article by Jeffrey Sachs yesterday is that by only getting $600 or $700 billion in revenues, rather than $1.6 trillion we Democrats are locking in Bush era tax revenue permanently, rather than going back to our last successful progressive Democratic model created by President Clinton.
Sachs says by agreeing to limit revenues to only 18.5% of GDP or there about, we will have no possible way of sustaining our social programs, so will have no choice but to agree to slashing major additional cuts to our social programs, which are already woefully inadequate.
How tremendously sad, tragic, and dispiriting. The human suffering will be even greater than what we've seen.
7:50 PM PT: A special thanks to everyone who rec'd this post as you helped put me over 32,000 accumulated recommendations today.