Paul Ryan's 'New and Improved' Path to Austerity

The GOP's latest tax plan is very simple: tax the wealthy and corporations less. Paul Ryan calls it "a new Path to Prosperity budget" (Path to Austerity Part II - The Sequel). The Republicans say Obama wants the U.S. to be more like Europe, but in reality, it's the GOP that's been trying to push average Americans into austerity, forcing us to be more like the average European in countries like Greece.

So what's new about the GOP tax plan? Basically nothing. It's the "same old, same old" - - cut government services for the middle-class and poor, and give more tax breaks to profitable multi-national corporations and the top 1%.

All the Republican presidential tax proposals are basically the same: shrink government down to the size where they can drown it in the bathtub. Cut, cut, cut spending and cut, cut, cut taxes. The very wealthy don't need unemployment benefits, food stamps, Medicare, and Social Security (and so therefore, don't want to contribute); but almost everyone else does need these programs at sometime in their life.

Even Paul Ryan used Social Security death benefits to finance his college tuition, but now he says YOU have to do without.

The GOP believes (or tells you they believe) that by cutting taxes and cutting spending, we will somehow magically lower the deficit. Didn't they say the same thing during George W. Bush's term in office? Then look what happened.

The "new and improved" proposal offered by House Republicans Paul Ryan and David Camp will introduce a 2013 budget that cuts tax rates and provides for just two individual brackets of 10% and 25% - - and eliminate most U.S. taxes on American corporations' earnings from overseas operations.

The typical GOP strategy has always been to throw a small bone at low income earners to save them a little, while at the same time saving the wealthy millions.

Mr. Ryan's budget also includes an "overhaul" on Medicare and a decision to set lower 2013 spending levels than those agreed to in the debt-limit deal in August.

"Republicans are on a maddening push once again to end Medicare and raise health-care costs for seniors, while giving more special tax breaks to big oil companies and millionaires," said Rep. Steve Israel (D., N.Y.)

In an op-ed piece for the Wall Street Journal, Paul Ryan says, "Our generation's greatest domestic challenge: reforming and modernizing government to prevent an explosion of debt from crippling our nation and robbing our children of their future."

He also says "courageous Democrats have joined our efforts", but who are they?

The current tax system has six individual tax brackets, with a top marginal rate of 35%. The proposal to replace it with just two brackets, with rates of 10% and 25%, echoes proposals by some GOP presidential contenders.

Former Pennsylvania Sen. Rick Santorum would reduce rates to 10% and 28%; former Massachusetts Gov. Mitt Romney would cut current rates by one-fifth; and former House Speaker Newt Gingrich and Texas Rep. Ron Paul support some form of flat tax....all that benefit the wealthy most. Why not just lower taxes on low income earners?

The Ryan-Camp plan would scrap the Alternative Minimum Tax, or AMT, which was designed to prevent high earners from using so many deductions that they end up paying negligible taxes. The AMT isn't indexed for inflation, so it has been affecting a growing number of middle-class taxpayers. In recent years, Congress has blocked the AMT from taking full effect.

The new budget would also lower the top corporate tax rate to 25% from 35% and plunge into the debate about how to tax companies' overseas operations. U.S. companies now pay the tax rate of the country where the outpost is located and then, if they bring those profits home, often pay some U.S. taxes as well. Under the Ryan-Camp proposal, companies essentially would pay just the tax rate of the country where the profits are earned.

Paul Ryan says the corporate tax rate of 35% "will soon be the highest rate in the developed world", but he always fails to mention that the Fortune 500 companies have been only paying an average "effective" rate of 18% to 24% for decades (Does not mentioning this make him "disingenuous"?)

Republicans say the current system unfairly taxes corporations twice, hurts their competitiveness and discourages them from reinvesting in the U.S. (I say, if they don't want to pay corporate taxes, then they could un-incorporate).

The budget plan doesn't specify a tax rate for foreign earnings brought back to the U.S., but some Republicans previously have suggested exempting 95% of future foreign earnings from U.S. corporate tax and imposing a 5.25% tax on existing overseas earnings. (Great! Send jobs overseas for cheap labor AND tax them less for doing this!)

Critics say such a move would prompt American firms to avoid taxes by moving operations overseas even faster than they already are, harming American workers and reducing investment in the U.S.

Paul Ryan, like all Republicans, represents the interests of big corporations (like his own family's), and has been pushing the agenda to lower corporate taxes for those very same corporations that bust unions to pay their workers poverty wages, rather than paying them living wages.

Jerry D. Bumpus Sr. was a member of the United Auto Workers union for four decades and earned $28 an hour at a General Motors car-parts plant before accepting a bonus and agreeing to retire at age 60 five years ago. Now he's one of several thousand people lining up to apply for jobs at a new Caterpillar plant whose jobs start at as low as $12 an (and there is no union representing the workers.)

Politicians are fighting harder than ever to attract employers with lower taxes, streamlined regulation and other incentives. Companies like Caterpillar have been eagerly exploiting both trends.

When Caterpillar announced the closure of their old plant in Canada to open the new plant in Indiana, Canadian workers were enraged. "I've been here 25 years and they wanted to offer us a bowl of rice to work, like we were workers in Asia," says Rafeek Khan, a 55-year-old machinist at the plant. A chain-link fence had been erected to keep the workers out.

Many new hires are willing to work for lower pay when jobs are scarce (like in this recession) and that helps keep a lid on wage costs. 52,000 factories have moved overseas for cheap labor under George W. Bush. It was either that or, companies concentrating many of their manufacturing investments in states where unions are weak and wages relatively low. Now the Republicans want to reward these same companies for their "patriotism"?

Last year Boeing opened a non-union plant in South Carolina, supplementing its unionized factories in the Seattle area. Starting pay for assembly workers at the South Carolina plant is $14.35 per hour, compared with $15 in Seattle. Union employees in Washington state tend to be much more experienced and average about $28 per hour.

Harley-Davidson told unions in York, Pa., Kansas City, Mo., and Milwaukee that it would move production elsewhere unless they accepted "more-flexible working arrangements", including greater use of temporary workers. The unions complied.

Dustin Pittsford, 24, was among the thousands who lined up at Caterpillar's recent job fair for potential employees. He is currently raising two children by working at a tire store for $8.25 per hour. The Caterpillar wages of $12 an hour would be "a step up for me", he says.

"Driving down wages doesn't do anybody any good," the mayor says. He was a union member as a firefighter and his father was a UAW member.

Caterpillar proposed to cut wages at the Canadian plant by about 50%. The union refused that offer, and at the end of 2011 Caterpillar said it would lock out the workers until they agreed to a new contract.

And Paul Ryan and the Republicans want these same corporations to pay less taxes, while cutting average benefits and wages for average working Americans. Are these companies now more powerful than countries?

Many congressional Democrats agree with Republicans in that the U.S. tax code needs to be rewritten. Both sides decry the thousands of tax breaks that have been written into the code, often at the behest of industries with lobbyists.

Corporate America exploits the tax code and worker's rights with a relentless regularity - and that's one reason why there is so much government regulation and complicated tax laws - - the CEOs hire an army of attorneys and tax accountants to circumvent existing laws, while exercising a minimum of corporate governance in their quest for profits at any cost. The latest case in point: the battle over outrageous CEO pay.

The biggest differences between the Democrats tax plan and the Republican's is, the Republicans just want to starve the government of tax revenues to force spending cuts in everything but defense spending. Paul Ryan says, "Our budget delivers real spending discipline. It does this not through indiscriminate cuts that endanger our military." Yes, the corporate defense industry is very big, wealthy, and powerful, and has operations in all 50 States. See my post: Defense Spending, Bogus Parts, Transnational Mergers, Outsourcing & Budget Cuts

Paul Ryan also misleads the American public in his recent op-ed piece by saying, "With regard to tax reform, the president's latest budget calls for taking more from American families and businesses by raising rates and adding complexity to the tax code—precisely at odds with the bipartisan consensus for tax reform." He fails to mention that Obama only wants to tax these "all-American and apple pie families" who earn over $1 million a year.

The Democrats, in contrast, only want to tax those that have already had a windfall in tax breaks over the past ten years, and just want to start taxing them more fairly now. Taxes on the rich are already historically low.

Where was Paul Ryan and the Republicans during the George W. Bush years when we had un-paid two wars, tax breaks for the rich, and an "explosion of debt that was crippling our nation and robbing our children of their future"?

Here's a video I made that was dedicated to Paul Ryan and his Republican friends in congress.

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Tuesday, March 20, 2012

Paul Ryan's 'New and Improved' Path to Austerity

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