Showing posts with label Bowles-Simpson. Show all posts
Showing posts with label Bowles-Simpson. Show all posts

Monday, March 11, 2013

Democrats: Masters of Self-Delusion

Oh powers otherworldly, hear my prayer: Fuck, do we need more political parties to establish fair representation in the land where democracy has failed...

Losing on Every Front
by MICHAEL BRENNER


Democrats are masters of illusion – especially self-delusion. Their abject performance over the past few decades has shorn them of identity and conviction. They have lost on every front against a Republican opponent that has abandoned the mainstream for cloud cuckoo land. Their natural constituencies have been ravaged: workers, teachers, civil libertarians, the poor and almost poor, the elderly, environmentalists. Yet, today, all we hear from the Democratic faithful are cackles about the plight of the Republicans. “Is The Republican Party Obsolete?” “Can The Republicans Be Saved?” Those are the headline stories being relished by Democrats.

Landmark features of today’s scene testify to a much harsher reality. Reactionary Republicans control the majority of the nation’s governorships and state legislatures. They ruthlessly are rolling back the great achievements of twentieth century social progress. Trade unions, women’s reproductive rights, environmental protections, public education and the health of the vulnerable are being degraded. This is the outcome of the electoral debacle of 2010. That dramatic Democratic rout stemmed from the White House’s, and Democrats’ timid inability to channel the discontents aroused by the financial crisis – allowing the Tea Party and their moneyed backers to exploit popular anxiety in order to advance their own regressive agenda. What could have been an historic opportunity for ushering in an era of progressive public policy, and casting Republicans into outer orbit for a generation, instead fed the forces of reaction.

In Washington, those same elements control the House of Representatives along with the Republican minority in the Senate. Yes, Democratic candidates for the House in aggregate did win more votes than Republicans; it was gerrymandering that gave the latter their majority. But they got the chance to rig the election by the landslide in the 2010 local contests.

Most significant for the longer term is the skewing of public discourse in an ultra-conservative direction. This is true of the media, the punditocracy and inter-party debates as well. The most glaring example is provided by the fate of Social Security. It has been placed on the cutting board by both the White House and the Congressional leadership. They have locked themselves into a bipartisan consensus that mislabeled “entitlement’ programs should be looted to cover fiscal imbalances – this despite the legal reality that Social Security and Medicare draw on dedicated trust funds independent of tax revenues. That could be done by putting off indefinitely the day when contributions to the trust funds are exceeded by payouts to recipient of their earned benefits. The fund remains wholly solvent after that point, BUT instead of moneys being available to drain into the general budget, the transfer would have to be made in the opposite direction. That is the witching hour that the bipartisan alliance desperately wants to avoid. It requires reducing benefits. Nefarious? Dishonest? Yes – but it will happen.

President Obama visualizes this plunder as the central element of a “grand bargain” which he hopes will stand as his presidential legacy. Repeatedly he has moved in that direction: by offering big cuts in exchange for a mess of porridge during the budget confrontation of summer 2011; in appointing two arch critics of the programs, Erskine Bowles and Alan Simpson to head an extra-constitutional panel; in refusing to fence off “entitlements in this year’s round of hostage taking. Nancy Pelosi (a supposed liberal) just a few months ago voiced her support for cutting benefits by lowering the Cost-of-Living increment – this at the very moment she was lobbying to protect the tax breaks of the $250,000 – 400,000 earners who form her donation and support base back in California. Austerity overall has skipped across the aisle to be taken up by the Democrats as their own watchword – announced by Obama with fanfare in 2010. They have done so knowing full well that austerity is manifestly just a code word for cutbacks in domestic programs that serve primarily the “common people” who have been the backbone of the Democratic Party for almost a century.

The most grievous failure has been the surrender to Wall Street. Indentured to the big financial players by their perceived need for campaign money, identifying increasingly with their fellow elites, and drawing their candidates less and less from ordinary people – the Democrats shied from holding accountable the malefactors of financial privilege. Their tepid Dodd-Frank reform legislation does next to nothing to ward off the abuses that led to the crash; and its dilution during the prolonged process of writing specific regulations has vitiated whatever potential it had. Furthermore, they left intact a regulatory culture that is user-friendly for the biggest financial players, and sealed it by appointing persons with no enthusiasm for coming to grips with them. We need only look at Neil Barofsky’s account of his ordeal as Special Inspector General to monitor TARP for a blow-by-blow account of how the appeasers and compromisers took direction from the White House to ensure that the Wall Street barons came through the crisis unscathed.

Administration officials led by Treasury Secretary Geithner used every imaginable means to derail him. The most shocking incident involved a meeting with Herb Alison, Geithner’s right hand man whom the White House had appointed as Assistant Secretary of the Treasury responsible for TARP. It was right out of the Godfather. Alison told Barofsky amiably but bluntly that unless his curbed his righteous impulses his future, and that of his new-born daughter, would be financially bleak. Barofsky calls it the “the gold or the lead conversation.” That sort of thing does not occur unless the “proposing” party knows that he has the blessing of the top man. Barofsky, like Elizabeth Warren, was treated by the Obama administration as an enemy for presuming to stand in the way of the Wall Street juggernaut. In contrast, Mary Jo White of J P Morgan-Chase, newly appointed head of the SEC, is cut in the preferred mold.

Wherever one turns the story is the same. Be it income inequality where no Democratic plan or program worthy of the name has seen light of day; the environment – where regulation has been applied with such a light touch as hardly to be felt; trade union rights – which Obama has assiduously ignored with no protest from the party’s Congressional leadership; etc. This is not to mention the should-to-shoulder defense of the historic assaults on civil liberties under the blanket justification of the contrived “war on terror.” Last week, one heard only one recognizable Democratic voice (that of Senator Ron Wyden) denouncing Eric Holder’s latest rewriting of the Constitution in declaring that the President has legal authority to assassinate American citizens on United States soil. Nancy Pelosi went so far as to express her ambivalence as to whether it even was good idea to make public such killings. This despite polls showing fewer than 1 in 4 Americans favoring strikes against Americans even in face of an imminent threat.

Is all this simply a reflection of new political realities? The opinion surveys of public attitudes on the most salient socio-economic issues show this not to be the case. And to the extent that attitudes may have become less enlightened on certain matters, to the extent that the media are indeed in the grip of right-wing dogmatists – the meekness and inarticulateness of Democrats bears much of the responsibility. Party leaders and the sympathetic commentariat are not visibly over-exerting themselves to close the gap. Much easier, and gratifying, to laugh at the antics of the buffoonish – but winning – Republicans.

Democrats’ gravest sin is not confronting the ideological onslaught against government. The Republicans have turned back the clock a century or more in painting the state as the source of evil and government as its malign agent – except of course in the burgeoning national security domain. Reviving atavistic feelings from a bygone age, they undertook a crusade to cast Washington as the great villain. Reconciling American individualism with realities of the modern world was achieved long ago – only to be undone by a relentless campaign enabled by the Democrats’ passive acquiescence over the past 30 years. The battle wasn’t lost; the enemy was never engaged. As a consequence, all progressive forces are on their heels as their feeble attempts to preserve individual programs are thwarted by having the philosophical high ground cut from under them. It is telling that after the disasters produced by the unregulated private sector, they still could not muster the gumption or moral authority to set things right. Barack Obama instead embraced Bill Clinton’s silly, yet cynical proclamation that “the era of big government is over.” He never has made the case why government is vital and indispensable. Neither he nor Congressional leaders have framed the issues of reform, and of enlightened social policy, so as to expound the message that government and civilized society are necessary complements in this day and age.

They never tied around the Republicans’ necks the historical record of their opposition to all those programs that the large majority of Americans cherish – like Medicare. They never told audiences straight from the shoulder what the basic contradiction is between the Republican vision of a refurbished Gaslight Era and the well-being Americans have taken for granted. Why haven’t they? The excuse is Republican obstructionism. But isn’t the real reason lack of conviction – especially by a White House manifestly more comfortable with the celebrity world of movers and shakers than with the people who elected him? Indeed, is it just possible that Mr. Obama believes deep down that the Republican attitude resonates more closely with the authentic heartbeat of America?

The only thing that has prevented the Republicans from sweeping the board entirely is their own fanaticism and crude tactics. The Democrats have become like the defenders of Constantinople who for centuries withstood one siege after another from the East only because the massed besieging armies fell victim to the Plague. The Republicans indeed are plague prone given their primitive attitude toward collective management of public facilities. The spectacle of their running around in frantic circles hardly is occasion, though, for the Democrats to stand on the ramparts giddy with laughter. After all, on each of these occasions they have lost another province or two to the barbarians.

Friday, September 7, 2012

The Capital Gains Escapades of Paul Ryan

by GERALD SCORSE
Aside from the sub-three hour marathon he never ran, the most fanciful notion to come from GOP vice presidential candidate Paul Ryan is his proposal to eliminate capital gains taxes. The idea violates a central principle of tax equity, it mocks his tax reform and deficit-cutting pretensions, and it tends to confirm what the economist Paul Krugman has been saying for the longest time—Ryan is an over-hyped petty boy, heavy on ideology but light on fiscal chops.
 
The tax principle that Ryan would flout is called horizontal equity. Simply put, it holds that people who make similar incomes should pay similar taxes. Obviously, with no tax on capital gains, there’s no hope of horizontal equity.

Not that there’s any such equity now. Capital gains (and dividends) are hugely tax-advantaged, with the tax on long-term gains currently at an 80-year low of 15%. If the Bush tax cuts expire on schedule, the capital gains levy is set to rise to 20% in 2013—still less than the tax the middle class pays on wages.

Things might have been otherwise if Ryan had voted differently as a member of President Obama’s bi-partisan fiscal commission, a.k.a. Bowles-Simpson.

The commission, you’ll recall, was charged by the president with developing a plan to attack the federal deficit and put the nation on fiscal terra firma. Led by co-chairs Erskine Bowles and Alan Simpson, the commission delivered as charged. A key ingredient in their plan was horizontal equity: equal taxes on all income, including capital gains and dividends.

Ryan chairs the House Budget Committee, and was the acknowledged policy-wonk leader of the Republicans on the commission. He’s fond of talking the talk on deficit reduction. Put to the test, he declined to walk the walk. He voted against the plan; it was his vote, essentially, that turned the promise of Bowles-Simpson into one more instance of gridlock, one more disillusion.

Coincidentally, another deficit-reduction plan came in close on the heels of Bowles-Simpson. This one issued from the Bipartisan Policy Center’s Debt Reduction Task Force, and it was co-chaired by former Federal Reserve official Alice Rivlin and ex-senator Pete Domenici. Its recommendations differed in important respects from Bowles-Simpson, but the plans had this in common: each called for horizontal equity, for equal taxes on all income.

In his acceptance speech at the GOP convention, Ryan slipped in a marathon-like mention of the Bowles-Simpson commission: “He [Obama] created a bipartisan debt commission. They came back with an urgent report. He thanked them, sent them on their way, and then did exactly nothing.”

Of course it was Ryan himself who effectively doomed Bowles-Simpson, making sure the report went to the White House without the necessary support to force a Congressional vote.
While the fiscal pretender Ryan calls for an end to capital gains taxes, others continue to call for horizontal equity.  A recent New York Times editorial scolded private equity firms for converting management fees into capital gains in order to take advantage of the 15% rate. “The best way to end this problem,” The Times concluded, “is to get rid of the special rate for capital gains. As long as income from investments is taxed at a lower rate than income from work, there will be no stopping the search for ways, legal or otherwise, to pay the lower rate.”

There’s another believer in horizontal equity too, but he’s no longer with us. President Ronald Reagan’s signature Tax Reform Act of 1986 called for equal taxes on all income. In a signing ceremony on the White House lawn, Reagan called the bill “a sweeping victory for fairness….and the best job-creation program ever to come out of the Congress.”

There’s no better time for an encore than 2012.