Showing posts with label tax reform. Show all posts
Showing posts with label tax reform. Show all posts

Thursday, September 22, 2011

Class War Indeed!


by ANDREW LEVINE
 
 
It is hardly news that American politicians use political words with little regard for their meaning or that their laxness (and ignorance) exceeds the norm even for our political culture.  Lately, Republicans have been especially culpable; witness the drivel, continuing to this day, identifying Barack Obama’s milquetoast health insurance reforms with, of all things, socialism.  But the latest Republican talking point – that it is “class war” to propose that millionaires and billionaires pay as large a share of their incomes in taxes as those who work for them — marks a new low.

Though liberals seem to have forgotten, there is a venerable – and well-corroborated – tradition in social thought that holds history to be a history of class struggles.  But even for those of us who cannot see how human history can be rendered intelligible in any other way, it is only in exceptional moments that class struggles rise to the level of class warfare.

More often, class struggles are dulled by more or less fragile truces – as, for example, the one that reigned throughout the entire capitalist world from the end of the Second World War until well into the 1970s.  Workers and their allies agreed, implicitly, not to challenge capitalism directly, and therefore not to put capitalists’ powers and privileges in question.  In exchange, they got rising standards of living and the protections of welfare state institutions, along with increasing access to educational and other cultural institutions.

But capitalism is a dynamic system that tends to upend the conditions under which it operates; and so, in time, the postwar settlement became increasingly unstable.   Sensing the feasibility of changes beneficial to their interests, capitalists took aim on the labor movement and the welfare state.

To this end, some of their more thoughtful representatives dug up long discredited justifications for advancing their interests; hence the resurgence of libertarian political theory and the unlikely – and unholy – alliance between libertarians and the theocrats who are always among us.  The Tea Party, the offspring of this alliance, causes our ruling classes cultural embarrassment.  But the unseemliness of enlisting the services of those whom they regard as social inferiors and the fact that the ambient culture has become degraded thanks to the intelligentsia they conjured into being is just collateral damage for malefactors bent on feathering their own nests.

Does any of this count as class war?  The term is surely apt for some of Margaret Thatcher’s and Ronald Reagan’s frontal assaults on the postwar “social contract” between capital and labor.  But as circumstances forced even their villainy to subside, it has become arguable whether the continuing class struggle rises to the level of full-fledged class warfare.  If so, it has been a war of attrition with few, if any, major advances attempted as the capitalist offensive has unfolded – until recently.

Even so, the consequences have been devastating for everyone not at the top of the economic pecking order.  Progress towards equality has been put on hold, and living standards have declined relative to the growth of productive capacities.  Profits rise and the rich get richer while wages remain stagnant and investment is deferred or sent abroad.  To be sure, the victims have resisted, sometimes heroically, and new social institutions have formed.  But, for the past thirty years or more, mainstream progressive politics has been almost entirely defensive, and seldom successful.   Even last winter’s monumental struggles in Wisconsin and other states, launched in response to the overreaching of Republican governors and state legislators, aimed at nothing more than a restoration of the status quo ante.

There is, of course, always the potential for more; that one thing will lead to another and that, before long, the long trek forward will resume.  But without political leadership it is hard to see how.  The one sure thing is that the Democratic Party is worse than useless for providing that leadership.  With electoral defeat in 2012 staring them in the face, Obama Democrats seem finally to be turning a new leaf.  If they stop capitulating for a while, it may even do some good.  But don’t count on a real and lasting change of course.  Obama fooled the Democratic base once; shame on those who are fooled again.

How ironic then that Republicans and their media flacks now take it upon themselves to castigate him for waging “class war.”  Would that it were so!   And would that we had liberals who did not regard that description as a reproach!

The Republicans’ hypocrisy is staggering, as is almost everything that emanates from their quarters these days.  After all, this is the first time since the beginning of the Thatcher-Reagan era that capitalists have gone so boldly on the offensive.  And why not — they smell blood.  Obama’s relentless and unrequited efforts to accommodate Tea Party obstinacy inspires them.  They may come to regret the Frankenstein they concocted if it veers too far out of control.  But because they pay the piper, the pillars of our capitalism seem to think they can continue to call the tune.

Obama, of course, is on their side too; it’s just that, fearing that his base will desert him, he has decided finally, for strategic electoral reasons, to fight back – a little.  Good for him!  But class war?   Only in the demented imaginations of ruling class flunkies.  And in our dreams!

Now that Obama has taken a small step back from unmitigated awfulness, I must say that I feel a little sorry for him.  It’s not just that his strategy of appeasement at home and aggression abroad is in shambles.  The poor man had to stand before the world’s leaders at the General Assembly of the United Nations and reveal how utterly his administration and, worse still, the American Congress, fears the Israel lobby; how the American government is willing to go manifestly against American interests to do its (and the Israeli right’s) bidding.  And, in the same speech, he had to mouth on about American support for human rights and the rule of law on a day when it seemed certain that retrograde penal authorities in Georgia would go forward with the judicial murder of Troy Davis – not just in defiance of internationally accepted levels of political morality but even contrary to the judgment of many death penalty advocates in the United States who have the decency to want the state to kill only those who are incontestably guilty.

To represent the United States before the world on these matters is to bring shame upon oneself.  Obama surely deserves to be shamed, but no one – not even a hurler of drones and promoter of smog, not even a defender of war criminals and predatory banksters and a continuator and enabler of their malfeasances – should have to humiliate himself to that extent.

Thursday, December 16, 2010

Peter Orzag Goes to Citigroup

The Rest of Us are on Our Own
By DEAN BAKER

Last week we learned that President Obama intends to push for comprehensive tax reform. We also learned that Peter Orszag, who until recently headed up the Office of Management and Budget (OMB), will be taking a top job at Citigroup. These two events may seem to have little in common, but unfortunately they are intimately related.

With comprehensive tax reform, as President Obama told us, everything is supposed to be on the table. That sounds great. As everyone knows the tax code is a mess. It is full of items that may have at one time served a purpose, but now just hand money to powerful interest groups. Who could be opposed to cleaning up the muck?

If the group of people designing a new tax code really had the public interest foremost in their thoughts there is much good that could be done. The mortgage interest deduction in its current form is an utter absurdity. Most low- and middle-income people get little or nothing from this deduction. By contrast, millionaires often pocket tens of thousands a year in tax savings.

Even worse, the incentives are 100 percent wrong. We are encouraging bakerwealthy people to buy bigger more expensive homes with this tax break. Think of some of the various competing uses of public funds: extending daycare and preschool education, financing energy conservation measures, providing benefits to the unemployed. How many people would put subsidizing a more expensive home for successful lawyers and doctors at the top of this list? That is what we are doing now with the current tax code.

The same story applies to retirement savings. Most low- and middle-income people benefit little or not at all from the current pattern of saving subsidies.

This is due partly to the fact that workers can do little savings at a time when their incomes have not kept pace with inflation. However, even when they do manage to put money aside for retirement, the tax subsidy is much smaller for the vast majority of workers who are in a 10 or 15 percent bracket, as opposed to the wealthiest in a 35 percent bracket. Do we really need to hand thousands of dollars in tax breaks to persuade wealthy families to do saving they would have done in any case?

Another item crying out to be dumped on the refuse heap is the special lower tax rate for capital gains and dividend income. Ordinary workers can't ask their boss to pay them in a form that will show up on tax returns as capital gains. By contrast, CEOs can arrange to get paid in ways that will be taxed as capital gains, allowing them to pay a lower tax rate than millions of ordinary workers.

There are hundreds of other areas where the tax code is both grossly unfair and leads to major economic distortions. We might hope that these will be fixed with comprehensive tax reform, but we have to go back to Peter Orszag and Citigroup.

One item that has never featured prominently in public debate in Washington is a financial speculation tax or some equivalent tax on the financial industry. This is striking because it is potentially a source of a vast amount of revenue, more than $150 billion a year by my calculation. The bulk of this money would come at the expense of the rents earned on Wall Street. This is the reason that even the IMF, an institution not known for being hostile to banks, now advocates new taxes on the financial sector.

Why do the folks in power in Washington seem unable or unwilling to consider a financial speculation tax? Let's imagine for a moment that during his stint as OMB director Peter Orszag had been a vocal advocate of financial speculation taxes. It doesn't seem likely that under these circumstances Citigroup would currently be offering him a job that, according to the New York Times, would typically pay $2 to $3 million a year.

Orszag and others in a similar situation undoubtedly understand how the positions they take in their roles in government can affect their future career options. Since many of these officials are obviously motivated in part by the lure of such huge paychecks (i.e. they take the jobs), it is reasonable to infer that the prospect of big-paying jobs on Wall Street and elsewhere affects the positions they advocate in the Obama Administration and Congress.

In other words, President Obama is not being truthful; everything is not on the table. The items that matter most to the rich and powerful will not be called into question because their interests are being protected. As far as the rest of us – as President Obama often said on the campaign, "you're on your own."