Atlas Juggs is distressed. And who wouldn't be? In one of her more memorable performances, she dissects Nancy Pelosi's speech upon assuming the position of Speaker of the House, and presents us with her favorite quotes. Her "money quote?" Let me present this in her own words:
"You want to know what my money quote was? My money quote was when she said 'No more deficit spending.' Do you know what that means? Let's talk... uh, libtard talk. No more deficit spending, in real English, means no more tax cuts..."
Let's pause here. Bear in mind that, editor that I am, I have helped Ms. Juggs out with some punctuation. Having said that, let's consider what she's saying: no more deficit spending means no more tax cuts.
If you cut your income without cutting your spending, you spend more than you have.
That is, you incur a deficit.
That is, you have to borrow money from someone because you decided to spend more than you have.
That "someone" you happen to be borrowing the money from would be the next generation. Today's children. They don't get to say anything about it, by the way, until it's too late and they get handed the bill.
This is what Atlas Juggs is against, the fact that Nancy Pelosi has come out against borrowing money from children so that the wealthy can pay even less in taxes. What's that, Pamela? We interrupted you? Please, pick up where you left off!
"No more deficit spending, in real English, means no more tax cuts... for the common man, for the regular guy, the guy that goes out and works his ass off for his family, for his car, for his children. No more tax cuts for him."
No more tax cuts for the common man, the guy who's out there working his ass off for his car. It's so sad. What is this guy's car going to do?
But seriously, folks, here's the deal: the "regular guy" never got any kind of meaningful tax cut. If the Federal government gave him anything with the right hand, it took it back with the left. This is a hard concept for many people to understand, particularly those in the higher income brackets, and especially those who don't receive their income in the form of a weekly paycheck. Because it's so hard to understand, I'll try to break it down.
The Good Old Days
Once upon a time -- or for the chronologically challenged, the years before 1983 -- the largest deduction on your paycheck was for Federal tax. The next largest was, for those who had a state income tax, the state tax. In third place was something called FICA, a little-understood acronym that we all understood to mean "Social Security."
That all changed under Ronald Reagan, beloved tax cutter, savior of the right wing. Reagan acted on the recommendations of a bipartisan panel headed by Alan Greenspan and increased Social Security taxes considerably: 63.6 percent. That still ranks as one of the largest tax increases in history.
Now, what of the "regular guy" that Ms. Juggs invokes? That's a big chunk of his paycheck. So big, in fact, that the deduction for Social Security was now second only to the deduction for Federal tax. And unlike Federal tax, Social Security taxes are taken from the first dime you earn.
"But everyone pays Social Security tax!" you may protest. You're almost correct. Only regular income is taxed; dividend income isn't. Not only that, but the income subject to Social Security tax is capped. In 2006, for example, the cutoff is $94,200, considerably more than any "regular guy" is likely to earn. So the tax rate varies considerably from one person to the next. Most "regular folks" -- be they burger flippers or office managers -- pay Social Security tax at the combined rate of 15.3%. (They pay half, their employer pays half.) But someone who made $188,400 in 2006 paid only 7.65% in Social Security tax. And someone who made $1,441,260 in 2006 paid only 1% in Social Security tax.
Now, back to those tax cuts. They don't affect state tax, and they don't affect Social Security taxes. (If I had, in fact, finished this post, I would have pointed out that most working people didn't notice the tax cuts since the taxes they pay the most -- payroll taxes, sales taxes, etc. -- weren't changed.)
Cut to the present. Bush has given the wealthy three huge tax cuts. The budget has not completely collapsed because the working men and women of America continue to pay more in Social Security taxes than is necessary at the moment. These excess funds are supposed to bolster Social Security against the lean times to come when the Baby Boomers retire. So, in a sense, the tax cuts for the wealthy are being paid for those earning less than $90,000 per year.
And what did those nice rich people do with their new-found excess wealth? They invented newer ways to fleece the less fortunate. All those sub-prime mortgages you've been hearing about? They did not come about because of the nobility of the wealthy. They did not come about because those at the top of the income scale wanted to lend a hand to those at the bottom. They came about because they created yet another way to extract money from the poor.
And now... well, those risky investment instruments turned out to be risky investments. And all those nice rich folks developed nifty schemes to hide their risky investments from the people funding them. And they developed nifty schemes to shield them from the risk of their risky investments. And then, when the risky investments started to go south, all the other dominoes started to fall, leaving all those nice rich folk in danger of becoming less rich.
Guess who bailed them out? Those nice folks in the Bush administration, the same folks who wouldn't lift a finger to help out you and me. And guess whose money is being used to bail out all these nice rich people?
Look in the mirror.
There were also considerable financial shenanigans