It's pretty well known around these here parts that my colleague jurassicpork and I disagreed on voting in the last election. For me, the thought of President Mitt Romney and Paul Ryan in the #2 spot was just unthinkable. But then, I never deluded myself in 2008 that Barack Obama was any kind of progressive dreamboat either. At best he was alwaya a moderate Republican.
This awareness doesn't make it any less distressing to hear from Ezra Klein
that the Democrats are about to cave on Medicare in exchange for a teeny-tiny increase on the top income tax rate for the top 1%:
Recall the core fight on taxes: Republicans say they’re open to more revenue, but they want to find it by closing deductions and loopholes. Democrats say that any deal needs to include more revenue, and they want to find it by letting the George W. Bush tax cuts expire for the wealthy, which would mean the top tax rate snaps back up to 39.6 percent.
But what if you do a bit of both?
REPORTER: Speaker, you did speak with the president earlier this week. Can you characterize that call? I mean, did he call — did he have any kind of counteroffer? And also, we understand that he’s just — is making clear that it’s got to be increase in rates for the wealthy or no deal. Are you willing to give a little bit, maybe just not all the way to 39.6 (percent)?
SPEAKER BOEHNER: It was — the phone call was pleasant but was just more of the same. Even the conversations that the staff had yesterday — just more of the same. It’s time for the president, if he’s serious, to come back to us with a counteroffer.
That’s from Boehner’s press conference Friday. Notice what he doesn’t say: He doesn’t say that any increase in tax rates is off the table. And Boehner is not the only one who’s gotten this question:
REPORTER: Is there no deal at the end of the year if tax rates for the top 2 percent aren’t the Clinton tax rates, period? No ifs, ands or buts? Any room in negotiating on that specific aspect of the fiscal cliff?
THE PRESIDENT: …With respect to the tax rates, I just want to emphasize I am open to new ideas. If Republican counterparts or some Democrats have a great idea for us to raise revenue, maintain progressivity, make sure the middle class isn’t getting hit, reduces our deficit, encourages growth, I’m not going to just slam the door in their face. I want to hear ideas from everybody.
You see the deal that’s becoming clear here?
Talk to smart folks in Washington, and here’s what they think will happen: The final tax deal will raise rates a bit, giving Democrats a win, but not all the way back to 39.6 percent, giving Republicans a win. That won’t raise enough revenue on its own, so it will be combined with some policy to cap tax deductions, perhaps at $25,000 or $50,000, with a substantial phase-in and an exemption for charitable contributions.
If true, this is a terrible, terrible cave-in by the Democrats. Not only does an increase in the Medicare eligibility age screw over a great many people who have been promised eligibility at age 65 and now are being told they can't have it because God forbid Mitt Romney should have to pay a few thousand more in taxes, but it also creates an older, sicker Medicare pool, this RAISING Medicare costs, rather than lowering them. But the $25,000 cap on deductions is horrific on its own. For charities that rely on largesse by wealthy individuals, the incentive for giving is significantly reduced. This means less funding for the very charities that Republicans feel should take care of the poor. For states like the one I live in, it's a complete "Fuck You."
If someone buys a home in my town for, say, $350,000 (which will get you a 3 bedroom ranch or cape on a 75' x 100' lot that needs significant updating) and puts 20% down, that means a $280,000 mortgage. As I write this, Bankrate.com is citing an average rate on a 30 year mortgage of 3.36%. So let's do the math, shall we? That person will pay $9323.80 in interest in the first year. That house in my town will probably have property taxes of about $8500. That's almost $18,000 right there -- just $7000 under the proposed cap.
Now let's say that person buys a little bigger house -- maybe a remodeled split on a slightly bigger lot. That'll run about $495K. Now let's assume again that the buyer puts 20% down or $99,000. That's a sizable chunk of change, but work with me here. So the mortgage is $396,000. In the first year, the interest on THAT puppy will be $13,186. The taxes on a house like that will be around $10,000. So the owner of this remodeled 3-bedroom split on a 100' x 100' lot will be close to the cap before deducting anything else.
The owners of these houses are not wealthy people. These are contractors and electricians and computer graphics people and owners of surgical supply stores and nurses and pharmaceutical quality control people and programmers and network administrators. These are not the 1%, and these are the houses in the "low-rent" district of my town -- the ones NOT bordering the fancy town just west of here, or in the "lake community." And yet these people, buying a house in my town in 2013, will find themselves dangerously close to the deduction cap.
Yes, a cap of $25,000 is a huge "Fuck You" to middle class people in New York, New Jersey, Connecticut, and other states with high housing costs.
And the Democrats may very well be about to sign onto it.
And the worst thing is that this may very well be the best we're ever going to get. Franklin Delano Roosevelt is turning in his grave.
UPDATE: Also, too
Labels: Democratic sellouts, Greedy Republican Bastards, Medicare, R.I.P. American Middle Class