A stark look at class warfare in Congress.
Image from Flickr via sarflondondunc
By David Morris
By arrangement with On the Commons
Is Congress inconsistent when they sometimes support using revenue offsets and indexing to inflation and sometimes don’t? Not at all. They’re actually very consistent. When capital comes asking for gifts Republicans act like Santa Claus. When labor is asking they conduct themselves more like Scrooge.
Consider the Republicans’ different approach to the estate tax, the minimum wage, and jobless benefits.
When George Bush came to office the federal government taxed the value of estates over $675,000. Congress immediately raised the exemption to $1 million and in 2009 to $3.5 million. In 2010 Congress (when Democrats controlled both houses but Republicans still wielded clout due to Senate rules) boosted it again to $5 million and in 2012 indexed the exemption to inflation. This year an individual will pay taxes only for the value of an estate over $5.25 million. A couple will receive an exemption of $10.5 million.
Over sixteen years full time workers earning the federal minimum wage have seen their income rise by 40 percent, to $15,000. During that time the cost of living rose by 45 percent.
In sum, over thirteen years Congress increased the estate tax exemption almost 800 percent and then indexed it to inflation. During that time the cost of living rose by 32 percent.
From 1997 to 2007 Congress refused to raise the minimum wage a penny. Then in 2007 it reluctantly raised it by $2.10 over three years. Since 2009 Congress has again refused to revisit the issue. Today and for the foreseeable future any proposal to index the federal minimum wage is dead on arrival.
In sum, over sixteen years full time workers earning the federal minimum wage have seen their income rise by 40 percent, to $15,000. During that time the cost of living rose by 45 percent.
Ten states automatically increase the minimum wage to keep pace with inflation. But last year Congress all but erased the impact of those increases when it refused to extend the 2 percent payroll tax reduction. The increased dollars subtracted from workers paychecks almost completely offset the dollars added to paychecks from the indexing of the minimum wage.
Congress takes the same mean spirited and miserly approach to the long term unemployed. In 2009, as part of its stimulus package, Congress extended jobless benefits to as much as ninety-nine weeks. In 2012 it slashed the maximum to seventy-three weeks and for all but a dozen of the highest unemployment states, to sixty-three weeks. This was done even though unemployment remained at the highest levels in a generation and about 43 percent of the nearly 13 million unemployed were out of work for more than six months, double the rate of any other economic downturn since the Great Depression.
The average unemployment benefit is $300 per week.
In 2014 Republicans insist they won’t support an extension of jobless benefits without comparable reductions in spending. GOP leader Mitch McConnell (R-KY) insists, “There is no excuse to pass unemployment insurance legislation—without also trying to find the money to pay for it so we’re not adding to a completely unsustainable debt.”
No principle is involved here unless the eagerness to engage in class warfare is a principle.
Republicans do not apply the offset principle to deficits created by reducing taxes. “You do need to offset the cost of increased spending and that’s what Republicans object to”, asserts Senator Minority Whip Jon Kyl (R-AZ). “But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans.”
At the end of 2012 corporate tax breaks that cost the Treasury upwards of $50 billion a year expired. Congress is expected, as it has done many times in the past, to extend the tax breaks and to do so retroactively. No one is talking about the need for offsets.
But even here Republicans demonstrate their consistency in favoring the wealthy. At the end of 2011 the payroll tax reduction expired. Republicans flatly refused to extend it through 2012 without offsetting the loss of revenue. After a protracted battle they reluctantly abandoned their principled effort. As Brian Beutler wrote in TPM the “development represents a dramatic reversal for GOP leaders, who nearly allowed the payroll tax cut to lapse in December in part because of their insistence that the package be financially offset.”
No principle is involved here unless the eagerness to engage in class warfare is a principle. Support for the working class must be offset with other revenue because it increases the deficit, but tax cuts for billionaires, which increase the deficit just as much if not more, do not. The minimum wage should be raised at most every decade and god forbid it should rise automatically with inflation, but the estate tax exemption should be raised every year and indexed to inflation.
David Morris is co-founder and vice president of the Minneapolis- and DC-based Institute for Local Self-Reliance and directs its Public Good Initiative. His books include The New City-States and We Must Make Haste Slowly: The Process of Revolution in Chile.