Article first published as Thirty-one Cowardly Democrats on Technorati.

President Obama took the initiative earlier this month to use his bully pulpit and give the Democratic base a reason to get out and vote in November. He started the final weeks before the election out stumping and defining the differences between the parties. Democratic voters could feel the momentum start to build. But one week later, the cowardly lions on the left began their customary collapse, and with their tails between their legs decided to join ranks with the Republicans.

To his credit, the President first took the podium in Milwaukee on Labor Day and revealed his $50 billion infrastructure plan. Two days later he came out swinging in Cleveland and attacked the Republicans on everything from their obstructionism to their factitious support of small business. He focused much of his message on the $250,000 line drawn in the sand over the expiration of the Bush Tax Cuts and set the stage for an 8-week fight over who really represents the middle class.

But obviously not up for the fight, on Wednesday, 31 Democrats broke ranks and signed a letter to Speaker Pelosi advocating for the extension of all of the Bush tax cuts, including those for the top 2%. The letter starts with “In recent weeks, we have heard from a diverse spectrum of economists, small business owners, and families who have voiced concerns that raising any taxes right now could negatively impact economic growth.” In other words — we don’t have the courage of our convictions and believe that we may lose votes if seen as supporting tax increases.

The single page letter goes on to attempt to justify the cowardice, stating that the upper tax brackets include only 2%-3% of tax payers, but that “they are responsible for 25% of national consumer spending.” It states further that 70% of our economy is driven by consumer spending, therefore “this is not the time to jeopardize further growth.” Of course ALL of these statements are true, but the conclusion is a non sequitur fallacy.

People in the group in question would be reporting $250,000 or more in taxable income. By definition they would already have the money to continue their 25% of consumer spending. They are obviously not the people being adversely affected by the economic collapse or they wouldn’t be reporting such high income. Contrary to what the letter implies, most economists agree that the money saved by this group would largely be set away in savings and have no impact on stimulating the economy. Besides, as the President has articulated, the rich would still be receiving the very same tax relief on the first $250,000 as everyone else.

The letter also offers up the same tired Republican distortion regarding the overlap of the top 2% and small business. Reciting statistics stating that “up to one-third of high-income taxpayers are small business owners,” these Republicrats assert that expiring the cuts for the rich will cost jobs and harm the recovery. Of course they know better than that. They know that only 2%-3% of real small businesses fall in to this category. They know that the “small businesses” in this group are actually the largest law firms, hedge funds, and other elitists that employ very few people. This is pure “I’m not a tax raiser” politicking.

Liberals need to seriously consider whether or not there’s anything on the planet more cowardly than a congressional Democrat. This entire maneuver is because they’re worried that the mean old Republicans might spin their support of tax cuts for only the middle class into perceived support for raising taxes, even if on the rich . . . poor Democrats. So, instead of saying, “Hell yes! We support relief for the middle class,” the Democrats are willing to bow down again. Football fans will recognize their strategy in the many NFL teams who go into a “prevent” defense in the fourth quarter to protect a lead, and ALWAYS wind up losing. Democrats play not to lose while the Republicans play to win.

Democrats need to learn that public opinion follows spin, so instead of letting the Republicans do the spinning, the damn Democrats need to get out there and tell the story. The only reason the Republicans get away with adhering to a strict loyalty to the upper 2% and still get elected is because the Democrats allow them to get away with a constant barrage of fact-free propaganda. Republicans by necessity use distortion, hyperbole and outright lies to obfuscate their true agenda, but the Democrats are too afraid to expose them, fearing that public opinion may not roll their way.

Now, even on an issue where the Democrats are obviously acting on behalf of 98% of the population (whether the people know it or not), these cowardly 31 are still too timid to push the agenda. What exactly do these mice stand for?

Fortunately, at this point, Speaker Pelosi is holding strong, and still has the support of the majority of Democrats in the house. At least Madam Speaker has some conviction and fortitude. It’s high time that the rest of the Democrats get behind the President and help define why people should vote for them. After all, if the people want to elect a Republican, why would they vote for one who’s a Democrat?

Like all good Republicans, in order for Meg Whitman to execute her tax-reduction-for-the-rich strategy, she must reduce spending. According to Whitman’s campaign, this has to be done regardless. Citing recent spending increases, they claim that in the decade preceding the recession, “State spending had increased by nearly 80 percent.” This is true, but it’s also disingenuous. What Whitman fails to mention is that while spending did increase, so did the GDP. The whole truth is that spending rose a much more modest 30 percent when viewed as a portion of the GDP.

Of course, citing the gross increase in spending isn’t, in and of itself, a big issue. But, when it’s used to substantiate their indictment of what they term, a “spending binge,” and then they turn around and offer a GDP-based cap as the solution — well . . . the smell of burnt rubber flowing from the spin is stifling.

But, spin aside, nobody can deny that the State budget needs serious work. Pushing forward the deficit has become standard procedure, and Whitman has a plan to address it. She will “defend the two-thirds budget requirement,” her logic being that to require only a simple majority would be “nothing more than a license for Sacramento to raise our taxes.” The potential for tax increases being Whitman’s number one concern, she’ll fight to keep it from happening, even if it means perpetuating the State Legislature’s inability to develop a budget in a timely fashion.

Judging from her plan, Meg Whitman seems to be oblivious to the detrimental effects of running a state without a budget. Most people would like to avoid the State paying its bills with IOUs or cutting 200,000 worker’s salaries to minimum wage. Does Ms. Whitman understand the situation? Does she care? Maybe it’s just the fact that she had no interest in state politics prior to deciding to run for governor that leaves her so naïve. Perhaps she just didn’t notice that the state had missed its constitutional deadline for a budget 19 times in the past 25 years. It is possible, since she’s rarely even bothered to register to vote for that entire period of time, and more.

Whitman’s prior disregard to fulfill her duty as a voter might also help explain her naïveté concerning California’s budget woes. The state really had no trouble developing budgets prior to 1978 and the passage of Prop-13, which has reduced local tax revenues by an estimated $200 billion over time. These cuts hit education hard and eventually brought about Prop-98, which requires a complex calculation that typically commits 40% of the budget to education. But even though California has the 13^th lowest property tax rate in the country, Whitman, and conservatives in general, adamantly oppose any increase in taxes, even one that often results in one neighbor paying 20 times more for identical property.

No, Whitman insists that the only path to a balanced budget is through the unholy pair of both spending and tax cuts. If this seems a bit contrary, especially amidst a recession, it’s because it is. Nobel Prize-winning economist, Joseph Stiglitz, provided his analysis on the matter in 2008. According to Stiglitz, when the economy is weak, “Economic theory and evidence gives a clear and unambiguous answer: It is economically preferable to raise taxes on those with high incomes than to cut state expenditures.”

Stiglitz is very clear about state spending: “Every dollar of state and local government spending enters the local economy right away, generating a greater economic impact. The impact is especially large when the money goes for salaries of teachers, policemen and firemen, doctors and nurses and others that provide vital services to our communities.” Yet Whitman’s plan is 180 degrees off from the sage advice of this renowned economist, and most others.

Whitman will lower taxes on the rich instead of raising them, and will trump that action with deep spending cuts. Little detail is available regarding the cuts she will target, but when employee compensation and retirement forms the largest single piece of the budget pie, there’s no doubt where her axe will have to cut. One such cut that may not break the hearts of many Californians is her planned initiative for a constitutional amendment to make the State Legislature part-time. Such a move is obviously more political than practical, as the savings would be minimal.

But never fear, Queen Meg will get that budget balanced no matter what sacrifice has to be made by average Californians. She has yet to tell anyone which programs will suffer, but the Red Queen has at least given us some notice — she will be ordering “off with their heads” for more than 40,000 state employees.

So, Whitman will create jobs and balance the budget by lowering taxes on the rich and cutting workers from the state payroll. Then, with lower revenues and fewer people, she will move on to her third priority — to “fix education.” More about that in the next part of the Whitman story.

The good news about Meg Whitman is that, while she does subscribe to the same policies prescribed by Congressional Republicans, she has rejected their tactic of running on pure contrarianism and has actually formulated a plan. Her plan, which is readily available on her website, lays out her priorities and communicates with reasonable accuracy what can be expected under her leadership.

The first of Ms. Whitman’s priorities is the creation of jobs. Her campaign promise is to create 2 million private-sector jobs by 2015. Her plan to facilitate job creation is taken straight out of the conservative’s handbook — roll back regulation and cut taxes. Of course, this is exactly the recipe that created the recession that Whitman hopes to get us out of, but hey — maybe it’ll work this time.

On the tax cut chopping block are the $800 pre-paid minimum tax to form an LLC and a cut to capital gains, which California currently treats as regular income. She also supports increased credits for both R&D and agricultural investment in water conservation. On their own, these changes all have some merit, but when taken as part of a bigger picture, they quickly lose much of their luster.

Certainly, when looking to spur innovation, credits for R&D make a good deal of sense. But to think that a large number of new businesses would be created because owners wouldn’t have to pre-pay $800 seems a stretch. On capital gains, Whitman just wants the tax eliminated. Her website calls it, “double taxation at its worst,” yet previously taxed money is routinely taxed again, as in the case of sales tax. The only real difference to make capital gains “the worst” is that it applies almost exclusively to the rich.

The Whitman plan suggests that California’s treatment of capital gains needs to be aligned “with other competing states,” and mentions nine that have no capital gains tax. What it doesn’t mention is that none of those 9 states have state income tax, and that all of the other 41 tax capital gains as regular income — just like California. She also fails to mention that, amongst her nine-with-which-to-align, only Wyoming has lower property taxes than California, and some, like Texas tax property at nearly three times the California rate.

Whitman’s position on capital gains should come as no surprise. She is a supply-sider and aggressively supports tax cuts for the rich, no matter how regressive they are. The cut to capital gains is without doubt the largest piece of the Whitman tax plan, and while it may indeed spur some economic activity, one thing is certain — it will trim billions from the tax bills of the wealthy, including Whitman herself.

Of course, cuts to capital gains taxes are very popular with conservatives, and are always touted as great stimulators of investment. The problem is that most economists disagree, and the historical record supports their position. As far back as 1980, conservative economist, Larry Summer’s definitive study concluded that eliminating federal capital gains would raise U.S. output by only 1 percent over the next 10 years. His conclusion is strongly supported by empirical data.

Past cuts in the federal rate refute the conservative myth and support Summers. The rate was dropped in 1978, and turned the prior year’s 5.8% growth into a decline of 1% over the following 18 months. It was cut again in 1981, and instead of the prior year 3.5% growth, the following year dropped 2.8%. Of course, this might be coincidence, but it is a bit odd that when the rate was increased in 1976 and 1982, it was followed both times by improved growth. It’s also interesting that Whitman promotes the cut as a job creation effort, yet for each of the adjustments mentioned above, unemployment climbed when capital gains were cut and vice versa.

The fact of the matter is that the theory behind the stimulating effect of cuts to capital gains tax is flawed. Very little of the money saved by the wealthy is actually returned as investment in job-creating activities. Just like the cuts to the marginal rates in the 80s and both variety of cut under G.W. Bush, when the tax burden on the rich is reduced, the money is often saved or spent on economically meaningless items like art work and sports cars. If the net effect of tax cuts directed at the rich had any positive impact on job creation, the Bush era would not have been the slowest period of job growth of any cycle since 1945.

Meg Whitman wants voters to believe that she has the experience and the plan to create jobs in California, yet she offers nothing more than the same old tried-and-failed conservative voodoo. The national jury is in on Whitman-style policies, and the finding is that they best serve only one purpose — to further concentrate wealth amongst the most affluent. Middle class voters need only look at the historical record to understand this truth. Like the federal policies of the past 30 years that have concentrated more wealth in the upper 1% than is held by the bottom 90%, the only way Whitman’s plan creates jobs is when the middle class becomes willing to work for scraps so that the economic elite can bask in their opulence.

But, unlikely as it is, that capital gains tax cuts will spur job growth, it’s certain that they will reduce State tax revenues. Looking back to just before the economy crashed, California took in $10.8 billion in capital gains tax revenue in 2007. Voters might wonder how the State can forgo such revenue when faced with deep deficits, but they need not worry. Meg Whitman has that figured out too. Whatever shortfall may still remain after all the wonderful new economic activity generated by her tax cuts will be fully offset by cuts in spending.

So in short, Whitman proposes to combat a $20 billion deficit by eliminating billions more in tax revenue and making up the difference with spending cuts. How will she do that?

More about that in Part 3 — a look at the Whitman spending plan.