Feldstein's op-ed in the New York Times explained that "Taxpayers with incomes of $25,000 to $50,000 would pay about $1,000 more in taxes; those with incomes of more than $500,000 might pay $40,000 more." In other words, the poor must pay part of the bill for the excesses of the rich.
To be sure, the Democratic proposal says it would target "higher income taxpayers," which is not Feldstein's plan. But who'll have better lobbyists when those tax exemptions are being defined -- the rich and the corporations, or the middle class? And we learned what conservatives mean by "higher income" when the Concord Coalition suggested that anyone earning over $20,000 per year should be targeted for Social Security means testing when they retire.
That's the kind of person the Dems would be dealing with in their detailed tax negotiations.
Here's one more thing these Democrats should understand and explain: Tax breaks for items like solar power or electric cars are a good thing. They serve the public interest, which is what public policy is supposed to do. They reduce our dependence on foreign oil, protect our environment, and improve public health. That saves us money, too.
The unkindest cuts of all
The Democratic proposal also includes cuts of $250 billion to providers under Medicare. Unless they're very well designed (they won't be), that will mean problems with access to doctors and adequacy of care.
There's also a cut of $100 billion in benefits for seniors. That would affect every single person in the United States who reaches retirement age, along with those who become disabled.
Depending on how those "Feldstein tax increases" were structured, many retired Americans could see their Medicare benefits reduced -- and lose a tax deduction for paying those costs out of their own pockets.
There would also be cuts to Medicaid's prevention and public health trust fund, one of the most "Democratic" aspects of last year's health care bill. So the proposal would subvert one of the provisions in the law they just passed. This cut doesn't just target the vulnerable. It's also economically foolish, since it cuts programs that can prevent costlier illnesses later on. And the Democrats would also cut $5 billion for Medicaid's "DME," which presumably means "durable medical equipment" like crutches and wheelchairs.
It looks like Democrats will literally propose taking wheelchairs away from poor people so we can keep tax rates low for the wealthy.
Tone Deaf
The White House issued a stunningly inappropriate statement about the Committee, saying the automatic "trigger" cuts the President's defending were "agreed to by both parties to ensure there was a meaningful enforcement mechanism to force a result from the Committee." The statement went on to say:
"Congress must not shirk its responsibilities. The American people deserve to have their leaders come together and make the tough choices necessary to live within our means, just as American families do every day in these tough economic times."
That's not merely an economically silly statement, although it's certainly that. The analogy between the U.S. budget and that of a family is fatuous (how many families print their own currency, which is the world's standard?), misleading (even families will invest in their future sometimes), and ruthless (few families would argue that a balanced budget is more important than a wheelchair or crutches for Grandma).
This statement revives the troubling question of whether this White House and this President have lost their moral compass along with their understanding of economics.
It's true that the President and Congress should not "shirk their responsibilities" -- to provide jobs for the unemployed and reduce the swelling ranks of the impoverished. It's devastating that the President chose to apply those words to a lopsided, premature, and misguided exercise in austerity economics instead.
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