by Charles Lemos, Mon Aug 23, 2010 at 04:29:59 AM EDT
McConnell: What are you talking about, paid for? This is existing tax policy. It’s been in place for ten years.
[yada, yada, yada . . .]
Gregory: For a final time, I’ll go back to my question which is, the extension of the tax cuts would cost $3.2 trillion. That’s borrowed money, that adds to the deficit. Do you have a plan to pay for that extension?
McConnell: You’re talking about current tax policy. Why did it all of a sudden become something that we, quote, ‘pay for’?
Earlier this month, former Federal Reserve Chairman Alan Greenspan said that the push by Congressional Republicans to extend the Bush tax cuts without offsetting the costs elsewhere could end up being "disastrous" for the economy. "I'm very much in favor of tax cuts but not with borrowed money and the problem that we have gotten into in recent years is spending programs with borrowed money, tax cuts with borrowed money," he said. "And at the end of the day that proves disastrous. My view is I don't think we can play subtle policy here."
They've already been "disastrous" turning the Clintonian budget surplus into a budget deficit. Over the past decade those tax cuts added $3.8 trillion to the national debt. President Obama's proposals are simple: in 2011 the top two income tax rates — now 33 percent and 35 percent — would revert to the levels before the Bush Administration, 36 percent and 39.6 percent, respectively. But the four lower rates would remain 10 percent, 15 percent, 25 percent and 28 percent.
Paul Krugman tells us what's at stake.
According to the nonpartisan Tax Policy Center, making all of the Bush tax cuts permanent, as opposed to following the Obama proposal, would cost the federal government $680 billion in revenue over the next 10 years. For the sake of comparison, it took months of hard negotiations to get Congressional approval for a mere $26 billion in desperately needed aid to state and local governments.
And where would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade.
It's a simple question, Mitch, how will you pay for the Bush tax cuts?