News Roundup for 10/13/11
History’s greatest president (and two Hollywood actors)
-Headline of the Day-
"Rep. Bachmann Hits Cain On Taxes: ‘I Want To Adopt The Reagan Tax Plan.’"
Shelly Bachmann must’ve heard that Herman Cain got his economic plan from a video game, because she’s totally against it. She has a better plan, she says, from one of the “great economists that I admire, Ronald Reagan.” Note to Shelly: Reagan was an actor in monkey movies, not an economist. But close enough, right?
Anyway, here’s her plan; take the current tax rates and raise them (Reagan’s rates were higher than they are today), then freak out over the huge deficits these tax rates create and raise them again. And again. And again. And again. And again. And again. And again. And again. And again. And again. And again. Make sure that at least one of these tax hikes is called “the biggest tax increase ever enacted during peacetime.”
Then enjoy a new golden age as your economy suffers through a recession and the president’s approval rating hits 35%. To make it all extra-Reagany, throw in a massive market crash so severe that will forever be remembered as “Black Monday.” Obviously, you’re going to want to schedule that one for an actual Monday.
You know, looking at this, it seems like less of an economic plan and more of a way for a sad and forgotten former-frontrunner to drop Reagan’s name at every opportunity. (Media Matters, with video)
-Cartoon time with Mark Fiore-
Hey kids, have you heard about the 99-percenters and this Occupy Everystreet business? Well, it turns out they’ve found a spokesperson!
Click for animation
Freakin’ hippie FDR! Go back to San Francisco and smoke pot, you commie! (MarkFiore.com)
"John McCain’s ideas will save billions and billions of jobs."
That’s literally what McCain argues, that eliminating regulations would increase employment, because they’re currently “costing businesses billions and billions of jobs.”
I think Mr. Cranky needs a nap. (Plum Line)
The GOP’s Idea of ‘Tax Fairness’
If anyone needs any more evidence that the Tea Party are a bunch of chumps, here you go; the Tea Party — which many say stands for “Taxed Enough Already” — supports a political party that openly argues for raising most of their taxes.
Talking Points Memo:
You can almost always count on Republican presidential candidates to be united in their opposition to more taxes for the rich. But this time around, the 2012 field is standing lockstep behind a less traditional idea: the middle class pays too little in taxes.
Thanks to a strange convergence of conservative ideological trends since President Obama’s election, Republicans now are expected to protest the entire bottom half of taxpayers’ contributions as too stingy even while they proclaim Americans are “Taxed Enough Already.” And they’ve yet to figure out a policy that will satisfy both complaints at once.
In recent months, nearly every major Republican candidate has name-checked a popular statistic that 47% of Americans who file taxes paid no income tax in 2009. Given the GOP’s anti-tax zeal you’d think they’d be celebrating. Nope!
Keep in mind, this is the same side of the aisle that argues that taxation is theft. So, by their own reasoning, they’re now arguing that government needs to steal from more people than it already does.
Republicans often argue that liberals are too governed by emotions. We saw it during the invasion of Iraq, when compassion and mercy were dismissed in favor of cold, hard facts — which turned out not to be facts at all. We saw in it in fights over Supreme Court nominations, where “empathy” became a dirty word. But this new tax argument is based entirely on emotion. The arguments aren’t based on economics, which would dictate the less money a person has, the more they should be allowed to keep and spend as a consumer. The arguments are based on a misplaced sense of “fairness,” where even those incapable of shouldering the burden should be asked to help shoulder the burden.
But it’s a petty “fairness” — like demanding the wounded help row the lifeboats. After all, here millionaires are rowing like chumps and all the wounded are doing is bleeding, which doesn’t help anyone.
Of course, this is the entire logic of the We are the 53% blog. Look at all these wounded people we’ve talked into rowing (of course, a large percentage of them aren’t actually rowing, but never mind that), now quit complaining and grab an oar. It’s also an argument that the status quo is the way things should be, that people should have to work three jobs and lose their homes and deal with cancer treatments they can’t pay for. This argument in defense of capitalism as they see it is the worst possible argument they could come up with, but “shut up and suffer quietly like everyone else!” is an appeal to emotion, not logic.
Things shouldn’t get better, things should get worse, until everyone is just as crushed as they feel (or, more likely, as they pretend to feel). That’s only fair.
But the argument is also BS. Erick Erickson, the founder of the 53-percenter blog — who claims he has to work three jobs just to get by — is not struggling, by any means. Nor are any of the Republican candidates complaining that the middle class doesn’t pull its own weight. These people — every, single one of them — live a life of relative ease that the rest of us will likely never know.
Another argument based on this phony fairness is that the wealthy did more to earn their money than anyone else — “I’m rich because I’ve worked harder. I deserve to keep it, not help pay for someone who didn’t work as hard as I did.” If Erick Erickson has ever worked harder than a guy who blew out his back on a loading dock and now collects disability, I’ll eat my hat. But I’m sure it’s a terrible chore to sit up nights thinking of idiotic things to say on CNN. You bricklayers out there have it easy.
I guess what I’m getting at is that the real driving emotion here is greed. Fairness is just a beard. They want you to pay more, not so that all things are more equal and egalitarian, but so that they can pay less. There are people out there making choices between food, medicine, and rent and these clowns are arguing that we throw taxes in there, too.
Not because they want to hold onto their money, mind you. But because it’s only fair.
News Roundup for 10/5/11
Rep. Steve King believes there’s just way too much voting going on in America
-Headline of the Day-
"Rep. Steve King Pines for the Days When Only Male Property Owners Voted."
A high-ranking member of the House Conservative Moron Caucus, Rep. Steve King, used his time on a hearing on a Balanced Budget Amendment to long for the good ol’ days when only male property owners could vote.
"As I roll this thing back and I think of American history, there was a time in American history when you had to be a male property owner in order to vote," Steve said. "The reason for that was, because they wanted the people who voted — that set the public policy, that decided on the taxes and the spending — to have some skin in the game."
See people who rent or are women don’t have that “skin in the game,” because “47 percent of American households don’t pay taxes, 51 percent of American wage-earners don’t have an income tax liability.” According to the report, “King made the disclaimer that he was only making ‘a historical observation’ about the era of property-owner-only voting, but the rest of his dialogue made it seem as though he thought the Founding Fathers might have been on to something.”
Here’s the problem with his “historical observation” — it’s not historically accurate. Or, at least, apt. The income tax didn’t actually exist until 1861, when it was first implemented to pay for the Civil War. The only people running around in stockings and powdered wigs at that point were lunatics, not founders.
The thing is that the only people in the US nowadays who aren’t paying taxes are those who never make or spend money. Everyone has “skin in the game” and if King wants to pretend that the only tax in America is the income tax, then its his prerogative as an American to pretend he’s an even bigger idiot than he already is. (Crooks and Liars, with video)
-Meanwhile, in the corporate penthouse…-
Click to embiggen
He probably already does. (McClatchy)
"IBM Projects It Will Have World’s Most Powerful Supercomputer in Two Years, Artificial Human Brain in 10."
Can you speed that artificial brain project up a bit guys? Steve King needs one now. (Talking Points Memo)
An Unsustainable Free Ride for the Wealthy
Let’s start out by talking about a flat tax. At one point, a flat tax was all the rage among conservatives. For many, it’s still a fave. When someone on the right talks about “simplifying the tax code,” what they really mean is flattening the tax rate. If everyone paid the same percentage and there were very few deductions, everything would be “fairer,” they argue. People making a lot of money are “punished for success” by being pushed into a higher tax bracket. Never mind that this “punishment” doesn’t seem to be much of a deterrent, since the total number of US millionaires is expected to double by 2020, as the income inequality between the wealthy and everyone else grows at an astonishing clip. The wealthy are gluttons for this particular punishment, apparently.
Now, keep a flat tax — the conservative favorite — in mind while you read this quote from an op-ed by Berkshire Hathaway CEO Warren Buffett, one of the richest people in the world.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
That’s right, a flat tax would actually be better than what we’re paying now. We now live in an upside-down world where an office worker is taxed at a higher percentage than the CEO of the same company. Do the wealthy still pay more in total than everyone else? Of course they do. But if we take the flat tax as a serious argument, we have to conclude that even conservatives believe the rich should pay more than everyone. They may not say so outright, but it’s the only logical conclusion to the sets of facts. Even Republicans believe that the wealthy should send more total to Washington than the average citizen.
I don’t bring this up as an endorsement of a flat tax — which I believe is fiscal insanity — but to point out just how insane our current tax rates are. If a flat tax is idiotic, then our current system is worse, by virtue of being not-flat in the wrong direction.
"I know well many of the mega-rich and, by and large, they are very decent people," Buffett goes on. "They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering." He calls on Washington to "stop coddling the super-rich."
And he’s right for several reasons, not the least of which is that if we increase taxation rather than cut spending, the wealthy will actually be better off. Republicans have tried to repeal the law of supply and demand, but reality is a stubborn thing and will not be dismissed by wishful thinking — no matter how earnest all that wishing may be. If the government spends more, this has the effect of increasing demand — including demand for labor — and the increased employment and consumer spending will send money all the way to the top (money gushes up, it doesn’t “trickle down”). In the meantime, tax revenues for the lower brackets will also increase as people become better off. Wealth isn’t created by tax cuts, wealth is created by working and spending and borrowing. In fact, borrowing probably makes up the biggest chunk of wealth creation, since it’s the source of all interest. If you want a quick explanation of this, check out the "run on the bank" scene in It’s a Wonderful Life — “The money’s not here. Why, your money’s in Joe’s house…” If we increase demand to the point where people spend, that’s great. If we increase it to the point where people feel safe enough to borrow, that’s even better. And maintaining a stupidly bass-ackward rate of taxation just isn’t doing the job.
Would raising taxes on the wealthy be political suicide? Not at all. Polling shows it’s only slightly less popular than free beer. And, despite the claims of Republicans that these tax hikes would hit the upper middle class, the fact is that just 3% would see their taxes go up if the increase were set at households earning $200,000 or more, as President Obama has proposed in the past. And the increased revenue from the tax hikes, combined with the increased tax revenues from higher wages and employment spurred by government spending, would go a long way toward reducing our deficit. Republicans want to run government like a business? Fine. Just remember the old business dictum; “It takes money to make money.”
When your tax burden is so weighted toward people at the bottom of the economic ladder that a flat tax would actually be an improvement, then something is really out of whack. This needs to be fixed, because the current system heads no place but down and everything we’re seeing happen to the economy today will only get worse. It’s clearly unsustainable.
A Free Ride for Corporations and the Wealthy
It’s a terrible thing to be a wealthy person in America. In addition to having to associate with the rabble occasionally, one must also pay taxes. The taxes in America are incredibly high, especially on the wealthy, very wealthy, and stupid wealthy. People with piles of money are an oppressed minority, scorned by the public and taxed to near-starvation. Woe be unto the corporate boardroom set, for their lot is misery and affliction their companion.
Consider this chart showing the terrible tax burden the very wealthy carry, courtesy of Dave Gilson at Mother Jones:
Look at how much the rich are paying in… Oh wait, that says “savings.” Never mind.
In fact, to dial in a little bit, here’s a comparison of what the average resident of the Park Avenue Helmsley Building — who earns $1.2 million a year on average — pays and what a janitor in that building might pay:
So, the guy living at a posh Park Avenue address pays a lower percentage of his income than the guy vacuuming the halls.
Now, the most common argument here is that the millionaire is a “job creator.” But the fact of the matter is that it’s consumers, not employers, who create jobs. Where the janitor likely spends most of the money he earns — creating demand and with it jobs — the millionaire doesn’t. You could argue that what money the millionaire spends is probably more than the janitor spends and you’d probably be right. But there are a lot more people in the janitor’s tax bracket than in the millionaire’s — taken as a whole, the janitors are going to create a lot more jobs than the millionaires ever will. So giving the biggest tax break to the rich guy makes no sense. There’s a logical reason for progressive taxation and the current tax code sets that logic on its ear. Not only is this as unfair as you likely believe it to be, but it’s also counterproductive.
And corporate taxes? Let’s take a look at one last chart:
Yes, the US has a corporate tax rate of 35% — on paper. The fact is that there are so many loopholes, dodges, and credits that no one actual pays that rate. If you want to discuss reality, then the effective corporate tax rate in the US is somewhere around seven or eight percent — stupidly low. The next time someone complains about the high corporate tax rate, go ahead and point out that they’re a moron. In the real world, corporations are barely taxed at all in this country.
Which is again counterproductive. Corporations are consumers, but they’re reactive ones; their consumption is driven by your consumption. If everyone’s spending more money, corporations spend more money to meet your demand. If everyone’s spending less, the opposite is true. Again, we’re putting the greatest tax burden on the people who actually create jobs and giving the lightest burden to those who only react to demand. This makes no damned sense at all.
Not only are we increasing deficits with this insane, bass-ackward tax code, but we’re holding the economy back. The time to kick supply-side economics to the curb has long since passed.
At This Point, Supply-Side Economics Could Hardly be a Bigger Failure
Cut taxes and you create jobs. Cut taxes and you create jobs. Cut taxes and you create jobs…
Say it over and over and it becomes true. Never mind that supply-side reasoning sets basic economics on its head and argues that it’s not demand that drives employment, it’s low taxation. Cut taxes, create jobs, end of story. It helps that the argument behind supply-side economics almost seems logical; if taxes are lower, businesses can afford to hire more. I say “almost logical” because that’s the problem — it fails to consider history and the facts, considering instead the world the way supply-siders wish it was. It isn’t rational.
Demand drives job growth, because employers hire people they need. More demand, more need for workers. A bakery that can’t keep up with demand for its bread hires more bakers. It will not hire more bakers than it needs. And if taxes are so low that the bakery is flush despite weak demand, they still won’t hire more bakers if they don’t need them. Who’s going to hire employees to sit around and do nothing, simply because you can afford to? You take that extra money and you put it where it belongs — in your pocket. You’re a business, not a jobs program or a charity.
But that’s supply-side economics and job growth in a nutshell; cut taxes and businesses will hire people they don’t need, simply because they can afford to. It pretends that employers are in the business of employment, not in the business of making money. If my taxes go down, while demand for my product or service remains unchanged, then I’m going to pocket those tax savings. Because I’m in the business of making money.
And that’s the purpose of supply-side economics. All that stuff about hiring because you can afford to is a rationalization, a smoke screen. It’s about getting more money to big business and serving the investor class and that’s it. The fact of the matter is that businesses employ as few people as they can get away with. And if taxes are down and demand is down or flat, then that tax break pads out the profit margin.
Want to see it happening in the real world? OK, here ya go…
Last week, the New York Times reported that, despite making $14.2 billion in profits, General Electric, the largest corporation in the United States, paid zero U.S. taxes in 2010 and actually received tax credits of $3.2 billion dollars. The article noted that GE’s tax avoidance team is comprised of “former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.”
After not paying any taxes and making huge profits, ThinkProgress has learned that General Electric is expected to ask its nearly 15,000 unionized employees in the United States to make major concessions.
This year, 14 unions representing more than 15,000 workers will negotiate a new master contract with General Electric. Among the major concessions GE has signaled that it will ask of union workers is the elimination of a defined contribution benefit pension for new employees, a move the company has already implemented for its non-union salaried employees. Likewise, GE is signaling to the union that it will ask for the elimination of current health insurance plans in favor of lower quality health saving accounts, a move the company has already implemented for non-union salaried employees as well.
So, we cut GE’s taxes to the bone and they’re asking workers to take pay and benefit cuts. Supply-side economics would argue that this should result in a hiring binge and all those tax savings “trickling down” to the workers. But instead, the company is trying to screw its workers. Why? Because they’re in the business of making money, not the business of employment. To assume anything else is to engage in wishful thinking and fantasy economics.
And this fantasy economics isn’t just hurting workers’ paychecks. Yesterday, McClatchy reported the obvious — that through the floor taxation is responsible for budget shortfalls in state after state after state. It turns out you can’t fund government with happy talk about the good times right around the corner. Here we see another promise of supply-side economics fail to materialize. This time, the promise that cutting taxes increases tax revenues.
At this point, anyone still clings to this supply-side fantasy is a gullible fool. That is, anyone who isn’t rich or isn’t a politician being bankrolled by the rich. I’m talking to you, teabaggers, talk radio zombies, and objectivist Libertarian Utopian moonies. We’re watching this scheme fail all around us. The real world is finally intruding on the supply-side fantasy world. None of this stuff works. We have proof. And that proof is called “America.” This trickle-down BS is bringing us to the point of disaster, where wages are stagnant, unemployment is high, government is all but unfunded, and the middle class is taking it in the shorts. We’ve cut taxes for the rich and cut taxes for corporations and cut taxes for Wall Street, over and over, and all we got in return was screwed. It just plain doesn’t work. And we’ve been at it long enough to know that doing more of it doesn’t make it work any better.
We tried it your way, supply-siders. Now it’s time to go back to recognizing that the term “supply and demand” actually means something. It’s time to go back to the real world.