Sen. Coburn's Gimmicky Plan Gives Big Oil A Free Pass
If you're looking for a serious deficit-reduction proposal that spares no sacred cows, you can keep looking. With the release of his 621-page "Back in Black" budget proposal, Sen. Tom Coburn (R-OK) shows that he may talk a good game, but he relies on the same gimmickry and special-interest favoritism he denounces. And for all his talk about the middle class bearing burdens while "the wealthy and powerful" are coddled by Congress, he increases the burden on those who are least-equipped to carry it, while maintaining massive tax breaks for his favored elites.
The cruelty of Coburn's proposal is not news: Among other things, he wants to raise the retirement age and reduce benefits for Social Security and Medicare recipients and slash Medicaid. There are other examples, of course, but once you know that someone — a doctor, no less — wants to force elderly janitors and waitresses whose bodies have broken down from years of strenuous labor to work longer, and to cut their benefits once they are finally allowed to retire, you have a pretty clear picture of his warped worldview.
So let's move on to the gimmickry and show-boating that pads Coburn's page count. Coburn devotes four full paragraphs to ending "Dog and Pony Show Tax Breaks," which he says would save a mere "$30 million over the next ten years." Talk about a dog and pony show! Coburn spends four more paragraphs ending the "Tackle Box Tax Break," for a total savings of only $11 million over ten years. And another four cutting a "Tax Break For Eskimo Whaling Captains," at a total savings of only $4 million spread over ten years, or $400,000 a year. The federal government will take in about $2.6 trillion in 2012, so an additional $400,000 in revenue would be an increase of about 0.00002 percent. That isn't even a trivial savings — it aspires to be trivial. As Douglas McIntyre writes:
Coburn's plan is undermined by his attention to useless detail, diffusing the potential power of a few important ideas. Reduction of the costs of limousines does not belong in any serious federal budget document, ... particularly when it is nearly adjacent to details of how Washington "would reduce the federal workforce by 15 percent, or 300,000 federal employees, over ten years." Coburn would have been better off with an explanation of how the government will pay for the unemployment insurance costs for all of those people.
All that detail isn't really "useless," of course. It's there to make Coburn look like he has left no stone unturned in his tireless quest to balance the budget — and to distract attention from things that aren't in the proposal, like an elimination of unnecessary tax benefits for his favored companies.
Coburn's changes to portions of the tax code affecting the energy industry are particularly illuminating. The Oklahoma senator cuts more than $50 billion in tax credits for renewable energy — including credits that go to consumers. He spends more than ten paragraphs spelling out cuts to ethanol credits, and a whopping 28 paragraphs on cutting energy efficiency tax credits, explaining:
In short, taxpayers are paying consumers in the short-term to save more money in the long-term. Federal tax credits for energy efficiency measures double the financial benefit of purchasing more efficient products or upgrading appliances or equipment and essentially pay individuals or companies to take steps a savvy consumer would likely take anyway.
That's just another indication of the narrowness of Coburn's worldview: It apparently hasn't occurred to him that there are people who cannot afford the short-term costs of purchasing new efficient appliances without help, so no matter how "savvy" they are, they won't be able to save money in the long term. Savvy consumers with disposable income — like, say, Tom Coburn and his colleagues — may not need those tax credits, just as wealthy United States senators with great health care can easily postpone retirement for a few years. (Unless, of course, their less-fortunate constituents tire of being told to eat cake and vote them out of office.) A senator who does not, or will not, understand that his good fortune is not shared by most Americans simply cannot claim to represent his constituents.
Now, about the cuts that aren't in Coburn's proposal: He slashes credits for renewable energy, and credits that help consumers buy energy-efficient appliances, but some tax breaks that affect the energy industry remain in place. In particular, oil companies fare quite well. Coburn cuts only two oil company tax credits, the Enhanced Oil Recovery Credit and the Marginal Well Tax Credit — both of which Coburn says are "currently inactive," as they only apply when the price of oil is low. Meanwhile, he leaves in place tax breaks that provide $21 billion in savings for the five biggest oil companies. Those companies combine for about $90 billion in profits each year, and Coburn wants to keep giving them $2 billion a year in tax breaks, even if it means eliminating a tax credit that helps his constituents save money by purchasing more efficient appliances.
It probably won't surprise you to learn that the oil & gas industry, led by Koch Industries, has been Coburn's third-largest source of campaign funds. If that does surprise you, here's an explanation of how things work, courtesy of a longtime observer of Congress:
Many tax preferences are little more than corporate welfare, designed compensate for our country's high tax rate. Inevitably, these exceptions tend to favor those companies and groups with close ties to lawmakers and access to the most experienced lobbyists. Without such access, small businesses and the middle class often bear the burden of the high standard tax rates while the wealthy and powerful receive a vast array of deductions, credits, and other preferences created by Congress.
Who wrote such a clear description of the rigged system in which a powerful senator retains unnecessary tax breaks that benefit his big donors while forcing his constituents who lack such access to pay the price? You guessed it: Sen. Tom Coburn, in the very same "Back in Black" budget document.
Speaking of lack of access: Coburn would slash $65 billion from the Earned Income Tax Credit over ten years by limiting the benefit to more than five years to "help ensure the program acts primarily 'as a safety net for workers experiencing temporary income and employment shocks.'" That may not sound particularly nasty until you remember that for low-income workers — you know, the folks who depend on the EITC — wages have long been stagnant. That stagnancy, combined with persistent high unemployment, makes this a remarkably cruel time to take the EITC away from hard-working Americans, but the money for Exxon's tax breaks has to come from somewhere.
It's bad enough that at every turn, Coburn slashes benefits and tax credits for working-class Americans while leaving in place billions in breaks for his enormously profitable campaign donors. Adding insult to injury, Coburn does so while regularly paying lip service to fairness. He writes of "small business and the middle class" bearing undue burden, and of the well-connected wealthy and powerful getting special treatment. He calls for "sweeping tax reform that creates a level playing field" and the removal of "some of the most egregiously unfair, unwarranted tax preferences in the code." But his plan further burdens the middle class and the poor, while maintaining significant tax advantages for the wealthy.
One final glaring example: Coburn proposes to cut Social Security benefits and raise the retirement age, ostensibly to "preserve" the program for the future. But there's an easier, more effective way to preserve the program — one that "levels the playing field" and doesn't increase the burden on the poor and middle class. We could simply eliminate the cap on income subject to the payroll taxes that fund Social Security. Currently, those payroll taxes do not apply to annual income above (roughly) $100,000. So a CEO who makes $20 million a year pays the same amount into Social Security as a police officer who makes $100,000. Not the same percentage of his income — the same amount, and, therefore, a much smaller percentage of income. This is a huge tax benefit to the wealthy. And, as it happens, eliminating that cap — and thus taxing everyone at the same rate for Social Security purposes — would, by itself, keep the system solvent for 75 years. No benefit cuts necessary and no increase in the retirement age. It's an obvious, simple solution that meets Coburn's stated values. But Coburn doesn't want to do it. His talk of fairness and level playing fields and relieving the middle class of undue burdens is all talk.
True, in comparison with the economic flat-earthers whose fantasies of balancing the budget without increasing revenue dominate the modern Republican Party, Coburn might seem reasonable. But that's just a sign of how far 'round the bend the public discourse has gone. At any other time since the Great Depression, Coburn would be dismissed as a crank. In the Eric Cantor/Sarah Palin GOP, he's seen as a voice of reason.