Next week Senate Democrats will introduce a bill to stave off the sequester-related spending cuts until the end of December. The bill would cut the deficit by $120 billion over 10 years to help replace roughly 10 months' worth of across-the-board sequestration cuts.
Approximately $55 billion would come from tax revenues, while a larger amount would come from spending cuts -- and the remainder would be made up from savings on debt interest.
The revenue would be derived from:
- the implementation of the so-called Buffett Rule, which sets a 30% tax rate on anyone earning over $1 millionaire a year in income -- and would raise an estimated $47 billion over 10 years.
- instituting new tax rules, ensuring that IRA accounts remain retirement funds for middle class earners and not defacto tax havens for the ultra-wealthy. (A very potent bill regarding tax havens was already introduced by Bernie Sanders last week.)
The idea was to discourage wealthy Americans from using loopholes to balloon their IRA accounts so that they can park funds and avoid taxation. Mitt Romney was accused of doing just that during the 2012 presidential campaign...but wasn't audited and convicted for tax evasion.
Yet amazingly, absent from the tax component of the bill is a hike in the tax rate on "carried interest", the major income of financial managers like Mitt Romney (carried interest is taxed like capital gains, currently at a paltry 20%.)
For some odd reason top Democratic officials (named below) are reluctant to change that very unfair tax loophole.
Why wouldn't carried interest and capital gains apply under the Buffett Rule?
Very few people earn very little over $1 million in ordinary wages. Most
people on the Forbes
Fortune 400 List earn the vast amount of their income with capital gains
and/or carried interest.
On the spending side, the Democrat's bill would split the cuts between defense and domestic spending. The details of these cuts are still vague, but one aide said that the non-defense cuts would revolve primarily around "agriculture savings." (which probably means in the Farm Bill --- and cuts to food stamps, rather than cuts to milk subsidies).
The Democratic leaders who are drafting the bill to cut food stamps and not raise Mitt Romney's taxes are: Majority Leader Harry Reid (D-Nev.), Budget Committee Chair Patty Murray (D-Wash.), Finance Committee Chair Max Baucus (D-Mont.) and Appropriations Committee Chair Barbara Mikulski (D-Md.).
Senate Democrats must find five Republican members to support their awful plan if they want to overcome a likely filibuster, the Republican obstruction tool that Harry Reid and the Democrats refused to reform.
If the Republicans agree to this, you know it's bad for almost everybody else, especially those who were the most affected by the recession --- and have already made most of the "shared sacrifices".