His fiscal cliff deal contains big corporate tax breaks
It was his chance to get rid of off-shore tax advantages and other corporate welfare. So, why did he insist they be part of the Jan. 1 financial rescue?
Here's the essence of the deal that the White House and Congress reached to pull America back from the fiscal cliff:
Say your family has horrendous financial problems — you're deep in debt, just paying the interest is killing you, but you keep borrowing more because you spend more than you make. At some point, the credit card companies will shut you down for nonpayment.
So, you go to a financial counselor and one of the first things he says is:
"Take a pay cut."
As insane as that sounds, it's no loopier than what Washington did last week when it laced the so-called fiscal rescue package with unexpected corporate tax breaks — an action that will cut revenue for a nation deeply in debt. After all, are not the elimination of tax loopholes a key proposal for righting America's foundering fiscal ship?
Here are some examples of how Washington worsened America's deficit and debt problems by creating new (or extending old) corporate tax breaks, thus reducing the revenue stream.
GE, Caterpillar, J.P. Morgan and other business giants will escape paying taxes on income earned from some overseas lending practices. Tax breaks and subsidies for Goldman Sachs' New York headquarters, for mining company worker safety training, for railroad track improvements, for auto race tracks, for growing algae as feedstock for biofuel, for Hollywood movies made in the United States and low-income areas, for drivers of electric scooters, for rum production in Puerto Rico and the Virgin Islands, and for industrial research and development.
The congressional Joint Committee on Taxation figures the loopholes inserted into the final deal will cost about $67.9 billion in 2013. If you make the deal's increased spending a part of the equation, the complete package over the next 10 years would put us $3.9 trillion more into debt. Our only hope is that this lunacy is quickly corrected.
Maybe you figure that Republican corporate pimps did this. But that's not correct. These breaks were crafted by Democratic Sen. Max Baucus' Finance Committee and passed by the Democratic-controlled Senate last August. The bill languished there because no one believed a Republican-controlled House would pass it.
But as negotiations on the fiscal cliff rescue package dragged into the eleventh hour, the legislation was revived — by Democrats. Citing unidentified sources, Timothy Carney, a columnist for the Washington Examiner, asserted that the Obama White House wanted a "whole slew of corporate tax credits" added to the rescue package. Republicans objected, but the White House insisted that the exact language of the Baucus bill be included in the deal, Carney said. And so it happened, as Republicans — not wanting to get blamed for dragging the country over the cliff — gave ground on that and other provisions of the final deal.
It escapes me why the Obama White House would want that pork for business in the final deal, being, as Democrats claim, the party that fights corporate tax breaks. Unless Democratic opposition to big tax breaks is just political posturing. Lord knows, the Democratic Party is willing enough to take big business campaign contributions.
It's clear now that the added revenue from President Barack Obama's demand for an income tax increase on the "wealthiest Americans" has been frittered away by the higher cost of the big business tax breaks that are the spawn of Baucus and fellow Democrats. It makes no sense.
But what does in Washington? Just as it makes no sense for a household that is in deep financial trouble to take a lower-paying job.
There's supreme irony in how we were led away from the fiscal cliff: We did it by continuing the same policies that brought us there in the first place — not just spending more than what we've got. Now we're taking in less revenue than we otherwise would have had.
As a bonus, Americans are no closer to avoiding fiscal insolvency than we were before the new year.
If this doesn't outrage Americans then I doubt that anything will. It'll make Americans look as complacent or ignorant as Illinois voters who habitually elect irresponsible politicians to run our state government. And then wonder how we got into such big trouble.