Faith, hope and tax deductions

Just a little more than two months after George W. Bush stole away to ignominious exile, Barack Obama's latest prime time press conference was another reminder that for all else that is roiling the world, be it the large issues that matter or the micro-controversies preoccupying the jabbering classes on increasingly unwatchable cable news programs, goodness it's a fine thing to have an intelligent thoughtful human being serving as president of the United States.

Several of Obama's responses during Tuesday's televised meeting with the press -- on homelessness, race, sacrifices forced on households by the economy, America's slowly but surely improving image in the world, a closing paean to persistence -- resonated as the observations of a sane and grounded man in a milieu (Washington's media-political-industrial complex) not renowned for its connection to reality, let alone good sense.

And perhaps one of the more compelling passages came after Obama was asked if he regretted making a proposal to curb tax deductions granted the wealthiest Americans for mortgage interest and charitable giving.

Short answer: "No." Then after noting that average incomes have stalled while top-level incomes have skyrocketed over the last several years, Obama focused on the criticisms leveled by some charitable organizations:

It just means, if you give $100 and you're in this tax bracket, at a certain point, instead of being able write off 36 or 39 percent, you're writing off 28 percent. Now, if it's really a charitable contribution, I'm assuming that that shouldn't be a determining factor as to whether you're given that $100 to the homeless shelter down the street.

And so this provision would affect about 1 percent of the American people.  They would still get deductions.  It's just that they wouldn't be able to write off 39 percent.  In that sense, what it would do is it would equalize -- when I give $100, I'd get the same amount of deduction as when some -- a bus driver, who's making $50,000 a year, or $40,000 a year gives that same $100.  Right now he gets 28 percent -- he gets to write off 28 percent; I get to write off 39 percent.  I don't think that's fair. 

So I think this was a good idea.  I think it is a realistic way for us to raise some revenue from people who benefited enormously over the last several years.  It's not going to cripple them; they'll still be well-to-do.  And ultimately, if we're going to tackle the serious problems that we've got, then in some cases those who are more fortunate are going to have to pay a little bit more.

The pernicious increase in the polarization of wealth, progressive taxation, fairness -- this is exactly the kind of talk that too often over the past few decades has sent Democrats scurrying in the opposite direction, frightened that someone somewhere might call them a liberal.

Old habits being hard to break, some Democrats in Washington are getting nervous at the prospect that maybe, just maybe, when Obama said he would bring change, he wasn't kidding. Perhaps most notably, Evan Bayh, a Democrat known more for carefully navigating electoral victories in erstwhile conservative Indiana than leading the charge for social and economic justice, is spearheading a bloc of Blue Dog Democratic senators who are making noises about the need to trim Obama's budget.

And Democrats are also quivering on the specific issue of tax deductions allowed the wealthiest Americans who give to charities. Senate Finance Committee Chairman Max Baucus of Montana has questioned the viability of Obama's proposal. After narrowly rejecting a resolution that criticized Obama's plan, the Senate Thursday approved an alternative version presented by Baucus that was watered down but that still calls for preserving deductions.

Senate Majority Leader Harry Reid had been reportedly withholding judgment on the charitable deduction proposal. To his credit, by the end of the week Reid took a break from bashing liberals long enough to remember that his actual job description is to carry water for the president, not appease Sherm Frederick, and Reid defended Obama's plan, saying the issue was "blown all out of proportion." 

But perhaps emblematic of the party's not-so-grand tradition of insecurity and apprehension, Nevada's two Democratic members of the House, Reps. Shelley Berkley and Dina Titus, are rejecting Obama's proposition that "those who are more fortunate are going to have to pay a little bit more." Both Berkley and Titus have announced their opposition to scaling back the mortgage interest rate and charitable tax deductions for the rich.

Berkley even went so far as to assert earlier this month that concern about reducing the size of tax deductions for the wealthy is "the number one issue" occupying the minds of her Las Vegas constituents -- a somewhat startling priority for voters in a congressional district where the unemployment rate is 10 percent and the median household income is roughly $50,000.

To borrow a phrase popularized by a famous white collar criminal whose financial shenanigans seem profoundly quaint by today's standards of comprehensive financial sector chicanery, charity is "a good thing." And as Rep. Charlie Rangel, D-N.Y. said while questioning the Obama proposal on tax deductions, "I would never want to adversely affect anything that is charitable or good."

Politicians are "for" charity.

But a reluctance to curtail tax deductions afforded the wealthiest Americans is also driven by the Democrats' traditional fear that a tax hike, any tax hike, will be seized on by Republicans and feature prominently in an attack ad in the next election. In opposing Obama's specific common sense proposal on charitable deductions, as well as their skittishness over a budget that finally begins to address priorities Washington has neglected for years, some Democrats are hewing to conventional parameters of political discourse circa, oh, 2003, and hoping to preempt criticism from the right by siding with the rich.

From Bayh and Baucus to Berkley and Titus, balking congressional Democrats will serve their constituents better if they concentrate on what the country needs, and pay a little less attention to overblown anxieties forged over decades of cowering before once-fashionable Republican narratives.

Comments

[VegasTeaRoom]

Shelley was FAAAAABULOUS at the County Democratic Reception for the State Democrat Party Central Committee last night at Paseo Del Prado. And while I am a teetsy bit surprised at her rich person leanings, I have full faith in her as a legislator.

As to rich American in particular, I think that Obama is spot on.

The alternative is resurrecting the French solution. But can we do that in all good conscience when so many Enron heads are still walking around attached.

A few percent higher tax is much more humane.

That, and I don't have to learn how to knit.

(And hit the link if you despise Richard Ziser)

[dave404]

Gleaner nailed his thoughtful post in his closing sentence;"...and pay a little less attention to overblown anxieties forged over decades of cowering before once-fashionable Republican narratives."

I have noticed a trend in all the historical financial charts I have been reviewing over the past several weeks and that is that 'normal/historical' economic trends changed during the Reagan years when the government, business and the citizens began borrowing immense amounts of money. Average personal savings went fromm 8%+ to -1%; home equity withdrawal went from about none to 85%; record after record shattered in US deficit spending...and on and on and on. I don't think we are better of for it and in fact we'll have hell to pay as we descend back to a sustainable way of life.

[VegasTeaRoom]

Reagan was also the mastermind of the movement to get the mentally ill out of managed institutional health care and moved into single residence occupancy (SRO). Once he closed the public mental hospitals he announced that the federal government was no longer in the landlord business and closed the SRO's.

VOILA, Reagan created the mass homelessness that continues today. Compassionate conservatism.

Young people today, all born after Reagan, do not know a world without people sleeping in the streets.

I hope Ronnie is Satan's poke toy.