Thursday, December 16, 2010

Tax cuts, `Catch-22' and what's enough -- Dec. 16, 2010 column


Authors Kurt Vonnegut and Joseph Heller were at a party given by a billionaire on Shelter Island in New York. Vonnegut told his pal Heller that their host, a hedge fund manager, probably made more money in a single day than Heller had earned from his bestseller “Catch-22” in its entire history.

“Yes,” Heller responded, “but I have something he will never have…enough.”

Vonnegut wrote a poem about the conversation that appeared in The New Yorker in 2005. John C. Bogle, founder of the Vanguard mutual fund group, tells the Vonnegut-Heller story in his 2009 book, “Enough.” He was struck by what he calls “the simple eloquence” of the word enough.

“For a critical element of our society, including many of the wealthiest and most powerful among us, there seems to be no limit today on what enough entails,” Bogle writes.

I’ve been thinking about Bogle, Heller and what’s enough since Sen. Bernie Sanders of Vermont made his marathon speech last week on the Senate floor.

For nearly nine hours, Sanders, the Senate’s socialist elected as an independent, railed against extending the Bush-era tax breaks for the wealthiest Americans. To Sanders, the tax deal Obama and congressional Republican leaders agreed upon was both not enough -- and too much.

He argued that the concessions Republicans made, such as to extend unemployment benefits, were no more than they would have supported anyway. The tax cuts for the richest Americans, he insisted, were unconscionably large.

The president pragmatist said the two-year deal -- which contains the middle-class tax cut he wanted and other benefits -- was the best he could negotiate.

Sanders wasn’t having any compromise. He talked about growing income inequality, rising poverty levels – about 43 million Americans had income below the poverty line has year -- and escalating greed.

“What worries me so much about this growing concentration of wealth and income in this country is that when the rich get richer… they say: I am not rich enough. I need to be richer. What motivates some of these people is greed and greed and more greed,” he said.

Few politicians go after fat cats anymore; even Obama has pulled in his claws and purrs around business leaders. No one had stepped into the late Sen. Edward M. Kennedy’s role as a champion of society’s have-nots – until Sanders. Instead we have more politicians like Sen. Richard Burr, Republican of North Carolina, who suggest that extending jobless benefits is wrong because it discourages people from looking for work.

Sanders gave voice to the downtrodden, reading letters from ordinary Americans who are struggling to make ends meet. He criticized his Senate colleagues for listening more closely to lobbyists than to their own constituents. He was passionate, articulate and, in the end, unpersuasive.

Obama brought out the really big gun, former President Bill Clinton, to endorse the tax compromise. The Senate rejected Sanders’ attempt to raise taxes on high earners before it overwhelmingly approved the tax package, 81 to 19.

Sanders lost because pragmatism won.

Sanders said he was disappointed but gratified. More than 10,000 phone calls and 9,300 e-mails poured into his office, most supporting him.

While the tax deal does give cuts averaging $100,000 to people whose incomes are above a million dollars a year, it also contains help for the jobless as well as working people and the middle class. It extends unemployment benefits for 13 months, reduces for one year the employee portion of the Social Security payroll tax and continues tax credits that help pay for college.

Critics noted that the deal harms some workers because it provides less payroll tax relief than the recovery act did. The recovery package expires at the end of the year, and some working poor Americans reportedly will pay higher payroll taxes next year.

Other analysts who study how policies affect the poor said the tax deal offered more benefit than expected and likely was better than could be achieved otherwise.

For example, extending unemployment benefits will prevent 7 million jobless workers from losing income support, said Robert Greenstein, director of the Center on Budget and Policy Priorities. Greenstein, citing that provision and several others, endorsed the package.

Nobody said pragmatism was pretty, but it gets the job done. Sometimes, that’s enough.

© 2010 Marsha Mercer. All rights reserved.


  1. Ms. Mercer does a top-notch job in presenting the pros and cons of taxation pragmatism.

    I suspect Sen Sanders would be perfectly happy if all the wealth of the country were redistributed so all of us would have equal shares and all of us would be below the poverty level. On the other hand, it seems to me, pragmatic conservatives would be satisfied with a one million dollar cut off point for rate changes rather than insisting on unlimited annual income. This would eliminate from the argument the billionaie strawman who is beaten up by the likes of Sanders, but is irrelevant to the issue.

    Ms. Mercer, we really enjoy your work. Thank you.

  2. One wonders why Congress-persons seem to believe that the government owns all income and that reducing taxes is a government expenditure. We need a change in attitude in Washington. Perhaps the members elected in Nov will do the job. Let us hope so. We will be watching.

    We join dmcrva3 in thanking Ms Mercer for the timely and important issues she brings up and deals with so effectively each week in her column. Superb work, indeed.