Ackerman makes sense opposing tax bill

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Sounding uncharacteristically belligerent, especially during his annual holiday party, U.S. Rep. Gary Ackerman (D-NY) provided insights into why he stood earlier the same day with the Democratic caucus to oppose Obama on the tax cut plan the president negotiated with Republicans.

“We understand the math, the risk and the challenge…. what will happen Jan. 1,” Ackerman told some 200 supporters at the US Merchant Marine Academy, Thursday, Dec 9.

“There are some good things in the bill, but the list of needs for 98 percent of the people is so long and so great. And there is so much money and the deficit is so deep, it will mean we can’t take care of seniors with COLA, we have to take away health care because will cost too much, we can’t be more generous with veterans, the fighting people who we brag about.”

“What about our obligation to them, whose families are breaking apart because of the mess we’ve gotten ourselves into?” he said.

The “mess” in Iraq and Afghanistan has cost thousands of lives, tens of thousands of veterans whose wounds will require a lifetime of medical care, and has drained the treasury of $2 billion each week since 2003.

The Obama “compromise” – extracted in order to get the Republicans to continue the tax cuts for 98 percent of Americans, and to fund an extension of unemployment benefits to some 2 million families who would otherwise lose them, leaves “no money for the disabled because we want to add to the deficit,” Ackerman said.

Extending the Bush tax cuts to incomes over $250,000 –  a bonus for the top 2 percent since everyone will get the tax cuts extended on the first $250,000 – is unfunded (we don’t have the money to pay for it), so would add $700 billion to the budget deficit, “that will be charged to our children. But they don’t care, they just want it in there.

“The Republicans insist we have to find money to pay for unemployment benefits – who don’t have food, let alone money for Christmas presents – but we don’t have to fund the tax cuts for wealthiest. That to me is a problem,” said Ackerman, who apparently is alone among Long Island representatives in holding firm.

Republicans will further use the explosion in the budget deficit to defeat spending for infrastructure and jobs creation.

Ackerman also explained the House Democrats’ political calculation, recognizing that the Republicans will control the House and there will be only a slim Democratic majority in the Senate.

“More Republicans march to the beat of a single drum,” he said.

But the answer to that predicament, he said, “is that the president in the White House should threaten to veto. They have to bring the bill. Yes, they are more determined to get tax deal for rich. So if they blow up the deal, they can’t get what they want unless we’re on board.

“From where I sit on the floor of House, I saw a deal between the president and the not-yet majority, with a lot of us not at the table, including our [Democratic] leadership. The president was anxious to make a deal.

“I believe in compromise. But it is not a compromise if one side says ‘You have to give half and I get all that I want.’ That’s total capitulation.

“We understand the math, the risk and the challenge…. what will happen on January 1.”

But, he said, “Their side of the aisle will have a problem, because purists who elected the whole class, they don’t want to add to deficit, and will vote ‘no’ also. So will the Democrats.

“My constituents [want me] to get in there and fight. It’s the movie ‘Rocky’ – he knows he can’t win, the odds are against him, but he gets into the ring and fights the fight,” Ackerman said, to applause.  “I’m going to fight.”

Especially in keeping with the theme of the season, he noted, this fight is less about politics than about moral values . “That’s the fight we have to fight.

“So many have the mentality of ‘last one aboard, pull up the ladder’ and ‘I’ve got mine.’ It’s hard for people to even begin climbing the ladder, if the rungs in the middle are missing. That’s what we have today. That’s not a socialist message of redistributing wealth. Instead, it is recognizing that as a tide rises, it should cause all ships to rise, and that’s not happening now.”

But this political battle over tax cuts, he said, it comes down to a belief, “We are our brother’s keeper.

“It’s the message of this season: Moses, Mohammed, Jesus, the same message: You are your brother’s keeper; take care of people who need taking care of. Even the rich. but they don’t need a total free ride.. 

“That’s the holiday message and a political one,” Ackerman said.

In the days since the Democrats showed uncharacteristic spine, the White House has also gone on the offensive to justify the compromise, doing what Obama should have done in conjunction with Democrats, before denigrating them.

• An About 2 percent Employee-Side Payroll Tax Cut: The agreement includes an about 2 percent, employee-side payroll tax cut for over 155 million workers – providing tax relief of about $120 billion next year.

• Extension of Unemployment Benefits:  The framework extends emergency unemployment benefits at their current level for 13 months, preventing an estimated 7 million workers from losing their benefits as they search for jobs.

•The Child Tax Credit: The $3,000 refundability threshold established in the Recovery Act for the Child Tax Credit will be extended under the framework, ensuring an ongoing tax cut to 10.5 million lower-income families with 18 million children.

• The Earned Income Tax Credit:  The framework continues a Recovery Act expansion of the Earned Income Tax Credit providing up to $630 for families with 3 or more children, and reduces the “marriage penalty” faced by working married families. Together, these enhancements to the EITC will help 6.5 million working parents with 15 million children.

• The American Opportunity Tax Credit: The new American Opportunity Tax Credit – a partially refundable tax credit that helps more than 8 million students and their families afford the cost of college – would be continued under the framework.

• 100 Percent Expensing: The framework agreement includes the President’s proposal to temporarily allow businesses to expense 100 percent of their investments in 2011, potentially generating about $50 billion in additional investment in 2011.

But is this a Faustian bargain? A poison pill?

The reason Democrats are rebelling is because Republicans will use the $900 billion that will be added to the budget deficit to force cuts in social services, Medicare and Social Security (but heaven forbid, cutting the Defense budget, or ending the $2 billion a week hemorrhage from the Treasury for the unfunded wars in Iraq and Afghanistan).

More troublesome is that if the Republicans are holding 98 percent of Americans hostage in order to extract tax cuts for millionaires and billionaires, what will they hold hostage in exchange for increasing the debt ceiling?

That dance is coming up in just a few months, when Republicans will not just hold hostage middle class Americans and the 2 million families facing destitution when their unemployment benefits cut off, but the entire U.S economy, and with it, the rest of the world economy too. 

Here’s what I am willing to give up: Let the Bush tax cuts expire and the Obama Administration instead pursue reform of the tax code that simplifies, lowers tax rates and removes most of the tax deductions andloopholes.

Just putting a few bucks into people’s pockets won’t do anything to increase employment – most of the crap people buy is manufactured in China (thank Republicans for refusing to eliminate the loophole that lets American companies get tax credits for shipping jobs overseas).

Instead, the federal government ought to use the increase in tax receipts to invest in America’s future – in infrastructure, in replacing the obsolete electric grid with a smart grid, in Research & Development, in investing in clean energy and energy independence. These solutions not only will create jobs (generating income tax revenue), but will ultimately lower Americans’ out-of-pocket expenses, providing more discretionary money which will further expand the economy. An expanding economy will be the rising tide that lifts all boats, including giving the wealthiest 2 percent more income and wealth.

Meanwhile, Obama’s bad bargain just sets the stage for a worse one down the road.

Democrats should hold out for true compromise – which actually includes them in the process – and takes the best of both sides’ ideas.

That’s not likely to happen. Then we will see what transpires in the next Congress, and whether Democrats come to rue this day, just as they were made to eat TARP.

 

Karen Rubin, Columnist

 

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