Writing in The Atlantic last week, James Kwak had the best analysis of the failure of the ludicrously-named Supercommittee: the committee may have failed, but the Republicans won. Indeed, as Kwak says, they had already won.
“In 1994, Newt Gingrich — the man who is now the frontrunner in the Anyone-But-Mitt race — led the conservative bloc to a sweeping electoral victory, definitively wrenching the party out of the grasp of “moderates” like George H.W. Bush. At the time, the top income tax rate was 43.7 percent and the top capital gains tax rate was 29.2 percent, set by the Tax Reform Act signed by President Reagan in 1986.” Obama wants to make the top tax rate on capital gains and dividends permanent at 18.8 % (15% set by the 2003 tax cut, plus 3.8% for Medicare payroll tax); to keep the estate tax exemption at $3.5 million, not $1 million as it was before 2001; and to kill permanently the Pease and PEP (personal exemption phaseout) provisions that were suspended by the 2001 tax cut, would be killed permanently.
To pay for these cuts on the wealthiest Americans, Obama will cut government programs–cut Medicare, cut defense, postpone retirement, on and on. “In short,” says Kwak, “if Newt Gingrich, Dick Armey, and Grover Norquist had a master plan to turn the United States into a low-tax, small-government society back in 1994, it’s safe to say they are ahead of schedule.”
And even so, they are not content. Pressed by the Tea Party insurgents on their right, they are now demanding that that tax rates on the rich go down to 28%. Is this what Americans really want–low taxes on John Paulson and the Koch Brothers in excahnge for shitty schools? I don’t think so.
This is what halted the Republicans in 1994: they didn’t know when to stop. Afflicted by overreach, they shut down the government. In doing so, they saved Bill Clinton‘s presidency. Mark my words: they’re going to save Barack Obama‘s as well.