Weekly Funnies

The Poor Will Be the First Over the Fiscal Cliff

Bryce Covert on November 14, 2012 - The Nation

 

The fiscal cliff may not be a real cliff, but jumping off it could be a catastrophe for the poor.

Absent action from Congress and President Obama, come January 1, 2013, the Bush tax cuts, Obama’s payroll tax cut and extended unemployment insurance expire just as spending cuts from the sequester kick in. (To recap, in order to get Congress to lift the debt ceiling last year, President Obama formed a Congressional committee that was supposed to recommend ways to cut $1.5 trillion from the deficit. If it failed, “sequestration” would kick in—$1 trillion in automatic spending cuts split evenly between defense and non-defense spending, with Social Security, Medicaid and Medicare mostly protected, coinciding perfectly with the other expirations on January 1. The committee never came through, so now we’re facing down the cuts.)

It’s not a pretty picture, although some have found silver linings. My Roosevelt Institute colleague Mark Schmitt is hopeful that real tax reform waits on the other side of the big leap.

Jonathan Chait argues that the impact will be gradual enough that Obama can delay or cancel out most of it. Some Democrats, including Representative Peter Welch of Vermont and Howard Dean, think it’s worth going over the cliff in order to force Congress’s hand in getting the budgetary house in order.

These are all potential upsides of going over the fiscal cliff, but the downside for the country’s poorest would likely be very harsh. First, the budget cuts from sequestration will hit the poor incredibly hard—even if they will not represent a majority of the revenue raised. The term “non-defense discretionary spending” will warm few cockles of the heart. But it’s an incredibly important portion of the budget. Ethan Pollack of the Economic Policy Institute broke it down in the graph below:

As you can see, this money represents public investment: in education, transportation, children’s health, etc. And many of these programs directly impact the poor. Housing assistance, child care and education, nutrition assistance, home heating assistance and income security for the blind, disabled and aged all together make up 17 percent of this spending—more than the largest category in that chart. This money goes to job training, Title X family planning services and Head Start, among other things. It’s anything but discretionary for those who rely on these critical programs.

And they’ll get pummeled by these automatic cuts. According to a letter from the Obama administration released in July, the cuts will mean nearly 100,000 children losing Head Start services and the elimination of child care assistance for 80,000 others, for starters. That’s a lot of pain and suffering on the other side of the cliff.

But the impact on the poor doesn’t stop there. They’ll also be hurt by the tax cuts that are set to expire at the same time. Overall, the loss of the Bush tax cuts for income, capital gains and the estate tax will hit rich people harder, as the top 20 percent would see their effective tax rate increase an average 5.8 percentage points, while the bottom 20 percent would see an increase of only 3.7 points. But the Child Tax Credit and Earned Income Tax Credit, credits aimed at low- and moderate-income Americans, were expanded under the 2009 stimulus, with the former aimed in particular at low-income families. Those expansions will expire, too, if we tumble over the cliff.

This all means that while the richest will experience a larger increase in rates, the poor will actually feel the biggest hit to their bottom lines. The bottom 20 percent of Americans will see their taxes go up by an average of $209, reducing their after-tax income by nearly 2 percent. The top 40 percent, however, will only see their after-tax income dinged by .1 percent. That’s a lot of money to come from those already struggling to make ends meet.

There’s another group of vulnerable people who get smacked as well: the unemployed. As the recession began in June of 2008, President Bush signed into law the Emergency Unemployment Compensation program, which has since been reauthorized ten times. The National Employment Law Project reports that the unemployment rate is more than 40 percent higher now than when it was first enacted, and the percentage of the unemployed who have been out of work for more than six months has jumped by over 20 points. If Congress doesn’t reauthorize the EUC and the extended benefits expire along with everything else, 2 million workers currently collecting federal benefits will be cut off immediately and a million more will run out of state benefits by the end of the first quarter in 2013. That’s an actual cliff, not a gradual slope.

If a “grand bargain” is reached to avert some of this chaos that includes cuts to the social safety net, including the entitlements that are currently protected from the sequestration, poor people will of course still get hit hard. So that’s even more reason to favor solutions such as raising taxes on high income so that we can do what Katrina vanden Heuvel suggests will put us on a sustainable path: invest in our country. Revive manufacturing and lead in green jobs, invest in public education and affordable college and reign in Wall Street and CEOs’ excesses. It’s what voters want—they didn’t side with austerity to fix our problems. And it’s certainly what the poorest and most vulnerable among us need.

Rebooting Our Definition of “Patriotism”

Limitless hypocrisy...

Beyond Flag Waving
by DAVID MACARAY

Which is more “patriotic”—to loyally refrain from criticizing your government’s foreign policies, no matter how brutal or peremptory they may be (including those that result in quasi-legal, immoral military adventurism that kills thousands of innocent civilians), or to loyally pony up when your government asks you to make a relatively minor economic sacrifice?

Two specific examples. Who were the more “patriotic” citizens—those anti-war protesters, both young and old, who marched in the streets during the tumultuous Vietnam era of the 1960s and 1970s, or those mega-wealthy citizens of 2012 who have renounced their U.S. citizenship and re-located to foreign countries in order to avoid paying higher taxes? Call me a starry-eyed idealist, but I like to think it’s the former.

On June 25, the New York Post reported that twice as many ultra-rich Americans as in the previous year are expected to renounce their U.S. citizenship in order to avoid higher taxes. Granted, the New York Post doesn’t have the institutional whiskers of, say, the New York Times, but the Post does provide the requisite statistics and attribution to make its story credible.

The Post reported that, in 2012, approximately 8,000 Americans are projected to renounce their U.S. citizenship in order to seek refuge in more tax-friendly countries (Costa Rica, Singapore, Cayman Islands, Antigua, et al). They compare this figure to the 3,805 Americans who did so in 2011.

The article quotes Jim Duggan, a lawyer at the law firm of Duggan Bertsch: “High net-worth individuals are making decisions that having a U.S. passport just isn’t worth the cost anymore,” he said. “They’re able to do what they do from any place in the world, and they’re choosing to do it from places with much lower tax rates.” He fails to mention that federal income tax rates are lower than they’ve been in several decades.

So, whether these fat cats live in stately mansions within gated communities in the U.S., or in stately mansions within gated communities in Costa Rica, it’s not going to make any difference to them because they don’t “belong” to either community and never will belong. In truth, the very concept of belonging to a “community” (in the sense that most of us regard that term) is meaningless to them.

Duggan’s observation that wealthy people can now “do what they do from any place in the world” is actually quite chilling. Drones can kill people anywhere, satellites can spy on people anywhere, computer viruses can be sent from anywhere, and vast fortunes can be made from anywhere. Not to be morbid, but it’s worth noting that those philosophers who predicted that “abstraction” would eventually result in the disintegration of our here-and-now world, and lead to widespread alienation, may have been right.

When I mentioned this story to a Republican friend of mine, and went on a prolonged rant about the alarming greed and selfishness of these unpatriotic bastards, he instantly seized upon what he believed to be a brilliant counter-argument. He smugly asked if my scorn was reserved only for “very successful Americans” (his words) or if I were also willing to label “unpatriotic” those Mexicans who fled their home country to seek economic gain in the U.S.

Weak argument. People escaping grinding poverty by crossing national borders is one thing, but people who, literally, have more money than they know what to do with—who already have their yachts and cars and art and luxury homes, but who would rather relinquish their national identity than share a small fraction more of their wealth with their own government—is a whole other deal. Good riddance to them.

More than half of every dollar we pay into taxes goes toward military spending

The Fortunate 400

The Fortunate 400 - top 400 wealthiest Americans pay an average of 11.6% in taxes. The poorest class of Americans pay 25%. In a depressed economy, this doesn't work. I couldn't care any less if the wealthy get tax breaks during a strong economy. But as long as the economy is in the tank, the wealthy need to pony up and help pull us out of the mess they helped to get us into. Once the economy produces substantial growth from which it can gain momentum, give them their tax cuts back, who cares? but the whole philosophy with that should be:

No tax cuts:
A: during a bad economic slump, and/or
B: while funding multiple wars

The dumbest thing any president did (other than riding in an open convertible) is cut taxes while embroiled in two wars. Hello budget problems in a debt based economy!

The Tea Party vs. Occupy Wall Street

Tuesday, October 25, 2011 by On the Commons

Finally, a truly populist uprising

by David Morris

 

 

Host David Gregory complained about Occupy Wall Street protestors “demonizing banks” and wondered, “Is this not a reverse tea party tactic?”

Gregory is right. In many respects Occupy Wall Street (OWS) is indeed a mirror image of the Tea Party. To the Tea Party government is the enemy. To OWS the huge corporation is the enemy. OWS wants to raise taxes on billionaires. The Tea Party wants to considerably reduce them. OWS wants to rebuild and strengthen the safety net. The Tea Party wants to weaken it.Which stands up for the majority of Americans? 

Both OWS and the Tea Party are mass movements but their attitude toward the masses couldn’t be more different. OWS and the other #Occupy protests lack leaders and a formal platform, but their demands clearly emerge from the thousands of individual grievances expressed in homemade signs and letters. Mike Konczal at Rortybomb.org did a statistical analysis of 1000 personal statements posted at We are the 99% TUMBLR and found them far less ideological than practical. Their demands effectively boil down to these. “(F)ree us from the bondage of our debts and give us a basic ability to survive.”

From his analysis, Konczal sees the outlines of a program, “Upon reflection, it is very obvious where the problems are. There’s no universal health care to handle the randomness of poor health. There’s no free higher education to allow people to develop their skills outside the logic and relations of indentured servitude. Our bankruptcy code has been rewritten by the top 1% when instead, it needs to be a defense against their need to shove inequality-driven debt at populations. And finally, there’s no basic income guaranteed to each citizen to keep poverty and poor circumstances at bay.”

As one would expect, given its longevity and political impact, the Tea Party does have leaders and a relatively clear program. Probably the best expression of that program occurred when Houston-based attorney Ryan Hecker created a website and invited people to propose ideas for a platform patterned on the Contract for America the Republicans effectively used in 1994 to gain control of the House of Representatives. Some 1,000 ideas were submitted. Ultimately 450,000 people voted online for the final 10 that became the Contract from America.

All parts of this new Contract are intended to shrink government. “Identify the constitutionality of every new law.” “Audit federal agencies for constitutionality.” Demand a federal balanced budget amendment. Reduce taxes.

Starkly absent is any mention of the dangers associated with concentrated private wealth and power.

Faux Populism vs. True Populism
Both OWS and the Tea Party might be described as populist but their definitions of populism wildly diverge. That divergence has been clear from their founding. Occupy Wall Street began on September 7, 2011 with hundreds converging on Wall Street. The Tea Party began on February 19, 2009 with a rant from the floor of the Chicago Mercantile Exchange.

CNBC Business News editor Rick Santelli loudly condemned the government’s plan to help people stay in their homes. “(D)o we really want to subsidize the losers’ mortgages”? he asked. Santelli suggested holding a tea party for traders to dump derivatives into the Chicago River. Floor traders around him cheered his proposal. The video went viral after the Drudge Report publicized it. Within days, Fox News was discussing the appearance of a new “Tea Party”. A week later coordinated protests under the Tea Party banner took place in over 40 cities.

Santelli’s insistence that those who lose their homes are “losers” who have only themselves to blame is a sentiment widely shared among Tea Party Republicans and most recently expressed by Republican Presidential candidate front runner Herman Cain. When asked about Wall Street protestors Cain, former CEO of Godfather’s Pizza declared, “Don’t blame Wall Street. Don’t blame the big banks. If you don’t have a job and you’re not rich, blame yourself.”

During a recent CNN televised Republican presidential debate held in front of a Tea Party audience, the moderator asked Representative Ron Paul what he would do if a healthy 30 year old man decided not to buy health insurance and then had an injury or disease that required hospitalization and surgery. Who would pay for that? Ron Paul said the man was responsible for his actions. He had taken a risk and would have to suffer the consequences. The moderator asked, “Should society just let him die?”. While the Congressman pondered the question, audience members vocally expressed their approval.

This lack of empathy for what OWS would call the 99% is palpable wherever Tea Party Republicans come to power,

In Michigan conservative Republicans gained control last November. The state is home to nearly 2 million people, about 20 percent of the state’s population, who depend on food stamps. Until last month, eligibility was based on income. But this year, even while the state remains mired in the worst recession since the 1930s the Republicans made it much more difficult to qualify for food assistance. Eligibility is now based on assets. Those with assets of more than $5,000 in the bank or who own a vehicle worth more than $15,000 will no longer be eligible.

For Michigan Republicans it is not enough to be poor and needy to qualify for food assistance. You must be destitute. 

In the Tea Party era, policy makers in three dozen states have proposed drug testing for people receiving benefits like welfare, unemployment assistance, job training and food stamps.

In 2011, Florida succeeded in passing legislation requiring the drug testing of welfare applicants at the urging of its Governor Rick Scott, who rode to office on a wave of Tea Party support. The roughly 113,000 Florida welfare recipients must pay for their own drug test. People who fail the test become ineligible for a year. A second failed test makes them ineligible for three years. The Economist magazine’s headlines conveyed the elation Tea Party members must have felt with their legislative victory. Drug testing in Florida: their tea-cup runneth over.

Despite Governor Scott’s rhetoric, the poor are not drug addicts. Only about 2 percent of Florida’s welfare applicants are failing the test, according to Florida’s Department of Children and Families. After adding up the savings derived from not paying welfare to this 2 percent and subtracting the cost of testing 100 percent of the applicants the Tampa Tribune concluded that Florida may save “up to $40,800 to $60,000 for a program that state analysts have predicted will cost $178 million this fiscal year.

But in Florida or Michigan or a dozen other states, it’s not about saving money. It’s about punishing those who teeter on the economic edge. It’s about making clear that we are not our brothers’ keeper.

OWS does demonize powerful banks. The Tea Party demonizes the poorest and weakest of us all.

For OWS unfairness means taxing billionaires at half the rate their secretaries pay and allowing the top 1% of the population to “earn” as much, collectively, as the bottom 60 percent. For Tea Party Republicans taxes themselves are unfair and inequality is desirable. Indeed, they want to give the 1% even a greater share of the nation’s wealth.

All Republican presidential candidates promise to lower taxes on the rich. Herman Cain has captured the popular conservative imagination with his 9-9-9 plan, a flat tax of 9 percent on the rich and corporations and the imposition of a 9 percent national sales tax on everyone. This would result in a 50-75 percent cut in taxes paid by the richest 1% while imposing a hefty new tax on the 99%. The Citizens for Tax Justice estimates that under Cain’s plan, the bottom 60 percent of taxpayers will pay about $2,000 more in taxes while the richest 1% will pay about $210,000 less.

The Tea Party vision of a future America may have been best expressed by the budget introduced last spring by Tea Party darling Representative Paul Ryan (R-WI) last spring and passed enthusiastically by the Republican House. “This is not a budget,” Ryan declared at the time. “This is a cause.”

Indeed it was, and is. Ryan’s plan would cut about $4.3 trillion from programs that primarily benefit the 99% while cutting taxes by about and equal amount, $4.2 trillion, cuts that would overwhelmingly benefit the 1%. According to Robert Greenstein of the Center on Budget and Policy Priorities Ryan’s plan “would produce the largest redistribution of income from the bottom to the top in modern U.S. history, while increasing poverty and inequality more than any measure in recent times and possibly in the nation’s history.”

Even when they agree that federal spending is profligate, OWS and the Tea Party violently disagree on what should be cut. Signs and speeches at #Occupy events often target the exorbitant military spending and foreign wars. But despite the fact that the Pentagon is the poster child for government waste and incompetence, not to mention corruption, it is also the only part of the government the Tea Party considers all but off limits.

As soon as Republicans took over the House of Representatives in November 2010, they changed the rules so that military spending does not have to be offset by reduced spending somewhere else, unlike any other kind of government spending. It is the only activity of government Republicans believe does not have to be paid for. The Tea Party’s ascendance has only strengthened the Republicans’ resolve that the Pentagon’s budget is untouchable. An analysis by the Heritage Foundation of Republican votes on defense spending found that Tea Party freshmen were even more likely than their Republican elders to vote against cutting any part of the military budget.

The Use and Abuse of Government
The Tea Party hates the very idea of government, embracing Ronald Reagan’s famous dictum, “Government is the problem.” OWS also sees government as an enemy when democracy has been corrupted by money and government has been captured by corporations. The Declaration of Principles adopted by the general assembly of Occupy Wall Street in its first days makes this clear, “…no true democracy is attainable when the process is determined by economic power. We come to you at a time when corporations, which place profit over people, self-interest over justice, and oppression over equality, run our governments.”

As Nobel laureate economist Joseph Stiglitz observes government increasingly is the 1%.

Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office….When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

But OWS also knows that government is the only vehicle through which the majority can fashion rules that increase personal security and restrain unbridled greed and private power. If we give up on government we give up on our ability to collectively influence our future.

Which is why high on the list of demands by OWS protestors is to minimize the impact of money on politics and increase the number of people voting.

Tea Partiers again take the opposite position. They defend the right of global corporations to spend unlimited amounts of money to influence elections and they advocate policies that suppress voter turnout.

“Since Republicans won control of many statehouses last November, more than a dozen states have passed laws requiring voters to show photo identification at polls, cutting back early voting periods or imposing new restrictions on voter registration drives,” the New York Times reported a few weeks back.

A recent study by the Brennan Center for Justice at New York University School of Law analyzed 19 laws that passed and 2 executive orders that were issued in 14 states this year. The report concludes that these policy changes “could make it significantly harder for more than five million eligible voters to cast ballots in 2012.”

Today the Tea Party has the upper hand. With the backing of some of the world’s richest men and most powerful corporations, it has successfully converted the justifiable anger at Wall Street and government inaction into an unprecedented and ahistorical form of populism: a mass uprising against the masses. The Occupy Wall Street movement proposes a populism more compatible with other mass protests, one that doesn’t turn its back on neighbors, one that fights against massive inequality and concentrated private power, and that urges reforms that can once again allow us to have a government of the people, by the people and for the people.

US Tax Policies Benefit Rich

Tuesday 4 October 2011
by: Paul Krugman, Krugman & Co. | Op-Ed

 

 

It seems as if a number of people in the media have decided that President Obama was fibbing when he said that some millionaires pay lower tax rates than their secretaries — because, as the usual suspects triumphantly declare, on average millionaires pay higher average taxes than middle-income Americans.

This is, of course, stupid: the operative word is “some.”

And we’re not talking about one or two exceptional guys, either. Look at the I.R.S. data on returns for the 400 highest incomes in America, available at irs.gov. If you look at the numbers since 2004, you’ll see that in a typical year between 30 and 40 percent of those super-high-income players paid an average tax rate of less than 15 percent; most of them paid less than 20 percent. Bear in mind that for the very wealthy, the payroll tax — the main burden on working-class Americans — is trivial because of the cap on Social Security taxes and the fact that it only applies to earned income. And what becomes clear is that Mr. Obama’s claim that Warren Buffett’s secretary pays a higher tax rate than Mr. Buffett does is absolutely, totally true.

So why the attack? Probably because it’s such an effective line. And we can’t have populism that actually strikes a chord with the public, can we?

The Consequences of Tax Cuts

With taxes on the wealthy on the political radar, we’re going to be drowning in a vast wave of double-talk and smothered by the fuzzy math. Still, one has to try. So, a couple of notes.

One is that you have to beware of the old trick of saying “taxes,” then slipping into “income taxes.” Most Americans pay more payroll taxes (for things like Medicare and Social Security) than income taxes, but the reverse is true at high incomes. So focusing only on income taxes makes it seem as if the rich bear much more of the burden than they really do.

Another, more subtle trick involves comparing percentage changes in taxes as opposed to tax changes as a percentage of income.

The starting point is that federal taxes are indeed progressive on average (although there are billionaires who pay a lower rate than their secretaries). And this in turn means that you have to be careful about the question when evaluating a change in taxes.

Suppose that it’s 1979, and individual A is a member of the working poor, paying 12 percent of his income in taxes — basically payroll tax and not much else. Meanwhile, individual B is very wealthy, and pays 40 percent of his income in taxes — as the very wealthy did on average 30 years ago.

Now suppose that 30 years of conservative governance lead to a fall of a quarter in both individuals’ average tax rates; A’s rate falls from 12 to 9, B’s from 40 to 30.

Would it make sense to say that they have gained equally from tax cuts?

Clearly not. A’s after-tax income has risen from 88 to 91 percent of pretax income, a gain of 3.4 percent. B’s after-tax income has risen from 60 to 70 percent of pretax income, a gain of 16.7 percent. The distribution of after-tax income has become substantially less equal.

Now, right-wingers come back and say that this is what has to happen when you cut taxes. 

No, it doesn’t.

And anyway, cutting taxes is itself a choice — a choice that then leads to demands that we cut programs for the poor and middle class to close the deficit those tax cuts created.

The point is that yes, tax policy these past 30 years has been very much tilted toward benefiting the rich.

A Billionaires' Coup in the US

Friday, September 23, 2011 by The Guardian/UK
The debt deal will hurt the poorest Americans, convinced by Fox and the Tea Party to act against their own welfare

by George Monbiot

There are two ways of cutting a deficit: raising taxes or reducing spending. Raising taxes means taking money from the rich. Cutting spending means taking money from the poor. Not in all cases of course: some taxation is regressive; some state spending takes money from ordinary citizens and gives it to banks, arms companies, oil barons and farmers. But in most cases the state transfers wealth from rich to poor, while tax cuts shift it from poor to rich.

So the rich, in a nominal democracy, have a struggle on their hands. Somehow they must persuade the other 99% to vote against their own interests: to shrink the state, supporting spending cuts rather than tax rises. In the US they appear to be succeeding.

Partly as a result of the Bush tax cuts of 2001, 2003 and 2005 (shamefully extended by Barack Obama), taxation of the wealthy, in Obama's words, "is at its lowest level in half a century". The consequence of such regressive policies is a level of inequality unknown in other developed nations. As the Nobel laureate Joseph Stiglitz points out, in the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%.

The deal being thrashed out in Congress as this article goes to press seeks only to cut state spending. As the former Republican senator Alan Simpson says: "The little guy is going to be cremated." That means more economic decline, which means a bigger deficit. It's insane. But how did it happen?

The immediate reason is that Republican members of Congress supported by the Tea Party movement won't budge. But this explains nothing. The Tea Party movement mostly consists of people who have been harmed by tax cuts for the rich and spending cuts for the poor and middle. Why would they mobilise against their own welfare? You can understand what is happening in Washington only if you remember what everyone seems to have forgotten: how this movement began.

On Sunday the Observer claimed that "the Tea Party rose out of anger over the scale of federal spending, and in particular in bailing out the banks". This is what its members claim. It's nonsense.

The movement started with Rick Santelli's call on CNBC for a tea party of city traders to dump securities in Lake Michigan, in protest at Obama's plan to "subsidise the losers". In other words, it was a demand for a financiers' mobilisation against the bailout of their victims: people losing their homes. On the same day, a group called Americans for Prosperity (AFP) set up a Tea Party Facebook page and started organising Tea Party events. The movement, whose programme is still lavishly supported by AFP, took off from there.

So who or what is Americans for Prosperity? It was founded and is funded by Charles and David Koch. They run what they call "the biggest company you've never heard of", and between them they are worth $43bn. Koch Industries is a massive oil, gas, minerals, timber and chemicals company. In the past 15 years the brothers have poured at least $85m into lobby groups arguing for lower taxes for the rich and weaker regulations for industry. The groups and politicians the Kochs fund also lobby to destroy collective bargaining, to stop laws reducing carbon emissions, to stymie healthcare reform and to hobble attempts to control the banks. During the 2010 election cycle, AFP spent $45m supporting its favoured candidates.

But the Kochs' greatest political triumph is the creation of the Tea Party movement. Taki Oldham's film (Astro)Turf Wars shows Tea Party organisers reporting back to David Koch at their 2009 Defending the Dream summit, explaining the events and protests they've started with AFP help. "Five years ago," he tells them, "my brother Charles and I provided the funds to start Americans for Prosperity. It's beyond my wildest dreams how AFP has grown into this enormous organisation."

AFP mobilised the anger of people who found their conditions of life declining, and channelled it into a campaign to make them worse. Tea Party campaigners take to the streets to demand less tax for billionaires and worse health, education and social insurance for themselves.

Are they stupid? No. They have been misled by another instrument of corporate power: the media. The movement has been relentlessly promoted by Fox News, which belongs to a more familiar billionaire. Like the Kochs, Rupert Murdoch aims to misrepresent the democratic choices we face, in order to persuade us to vote against our own interests and in favour of his.

What's taking place in Congress right now is a kind of political coup. A handful of billionaires have shoved a spanner into the legislative process. Through the candidates they have bought and the movement that supports them, they are now breaking and reshaping the system to serve their interests. We knew this once, but now we've forgotten. What hope do we have of resisting a force we won't even see?

Why the Rich Should Pay Higher Taxes

Monday, August 22, 2011 by CommonDreams.org

by Paul Buchheit

 

Wealthy Americans will recoil at the suggestion, likely responding with the tired mantra that the top earners pay most of the income tax. But two points can be made in response to that: (1) federal income tax is only a small part of the burden on the middle class. Based on data from the Institute on Taxation and Economic Policy, the total of all state and local taxes, social security taxes, and excise taxes (gasoline, alcohol, tobacco) consumes 21% of the annual incomes of the poorest half of America. For the richest 1% of Americans, the same taxes consume 7% of their incomes. And (2) the richest people pay most of the federal income taxes because they've made ALMOST ALL the new income over the past 30 years. Based on Tax Foundation figures, the richest 1% has TRIPLED ITS SHARE of America's income since 1980, AFTER TAXES.

But there are better reasons why the rich should pay higher taxes.

Do we want our national parks sold to billionaires? Do we want programs for music and the arts eliminated from schools, so that only children of the wealthy can participate in them? (photo: Plashing Vole)

The very rich benefit most from national security, government-funded research, infrastructure, and property laws. Defending the country benefits the rich more, because they have more to defend. Taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for their idea-building. The interstates and airports and FAA and TSA benefit people who have the money to travel.

Over a hundred years ago, Teddy Roosevelt, facing an epidemic of inequality not unlike today, reminded us that "Great corporations exist only because they are created and safeguarded by [democratic] institutions; and it is therefore our right and our duty to see that they work in harmony with these institutions."

Here's another good reason for the rich to pay more taxes: With the drop in tax revenue, funding for the preservation of American culture is disappearing. Do we want our national treasures deprived of maintenance because of budget cuts, as is currently happening in Italy? Do we want our national parks sold to billionaires? Do we want programs for music and the arts eliminated from schools, so that only children of the wealthy can participate in them?
The 1912 book "Promised Land" by Mary Antin revealed the wonder of a Russian immigrant coming to the U.S.: "In America, then, everything was free...light was free...music was free."

Not that capitalist markets don't have their place. But the current view of democracy has gone to the other extreme, in which individualism and personal gain trump societal responsibility, and growing inequality makes community support and safeguards unnecessary for the privileged elite.

Finally, back to the tax statistics. Why should financial earnings (i.e., capital gains) be taxed less than wage earnings from actual work? The richest 10% of Americans own over 80% of the stocks, the gains from which are taxed at a 15% rate. Most wage earners pay more.

Furthermore, over the past 15 years millionaires have seen their income tax rates drop from 30% to 22%. During approximately the same time period, American economic growth declined from an annual 3.2 percent rate to 1.7 percent. Lower taxes for the rich do not lead to productivity.

Will the rich stop investing or move to another country if their taxes are increased? Not likely. They have it too good here. As Warren Buffett recently stated, "I have worked with investors for 60 years and I have yet to see anyone - not even when capital gains rates were 39.9 percent in 1976-77 - shy away from a sensible investment because of the tax rate on the potential gain."

Mr. Buffett is admitting what everyone else is beginning to realize. The rich take much more than they pay for.

Even Donald Trump Says He's Willing to Pay Higher Taxes

Trump: ‘I’d be willing’ to pay more taxes

• Posted on 08.17.11
• By David Edwards

Real estate mogul Donald Trump said Monday that he would be willing to pay a higher tax rate but most oil companies would not because they are not patriotic.

“Warren Buffet made another splash with his op-ed in The New York Times, saying it’s just not right that he, a billionaire, pays 17 percent in taxes when his secretary and receptionist pay more,” ABC’s George Stephanopoulos told Trump. “Isn’t he right about that?”

“There’s many different views on that,” Trump replied. “And I can also tell you that a lot of people will go elsewhere to do business if you start taxing them.”

“But 17 percent isn’t much for a billionaire,” Stephanopolous noted.

“But you’re going to have a mass exodus of business out of this country when you start taxing too high,” Trump explained. “But if you go back to certain companies, Exxon Mobil, the oil companies, for us to be subsidizing oil companies is absolutely insane.”

“Well it sounds like this is where you part company with the tea party and many in the House. You would be willing to close those loopholes on the oil company as part of a deficit [reduction plan],” the ABC host remarked.

“Oh, absolutely. I think the oil companies — and I’m a big tea party fan, and the tea party loves me and I get great polls in the tea party… I think when explained to the tea party, I can’t imagine anybody’s going to stick up for Exxon Mobil or some of these big oil companies that are making a fortune and paying relatively little in tax. And I think we should be taxing,” Trump answered.

“As part of a deficit reduction package, would you be willing the pay, assume for a second you pay Warren Buffet’s rate, 17 percent. Would you be willing to pay 25 percent instead of 17 percent?” Stephanopolous pressed.

“See, I would be willing to, George, but a lot of people wouldn’t be,” Trump admitted. “A lot of people would leave the country. I’m talking about big people, job-producing people. Would I be willing? Yeah, I’d be willing. I’d put country first… A lot of people will say, ‘No thank you, I’m going to Switzerland. I’m going to Germany. I’m going to here, I’m going to there.’”

“It’s very unpatriotic. They’re not patriotic. In many cases, they’re not patriotic. They’re business machines.”

Watch this video from ABC’s Good Morning America, broadcast Aug. 17, 2011.



Watch this video on iPhone/iPad

The Debt Debacle and the Decline of Empire

Sisyphus on Wall Street
By THOMAS H. NAYLOR

Underlying the endless posturing, bickering, and mean-spirited name-calling associated with the recent Congressional debt ceiling debacle were three important unstated issues – size, excessive globalization, and imperial overstretch, issues which were never even mentioned during the heated Congressional debate.

First, the United States has simply become too big to govern. Second, it has exported too many jobs over the past three decades to China, India, and the rest of the world. Third, it is engaged in too many wars and has too many military bases (over 1,000) in too many countries (153).

Just as the Kremlin found it impossible to manage 280 million people in the former Soviet Union from one central bureau in Moscow, so too are the White House and the Congress finding it increasingly difficult to control 310 million Americans from Washington, D.C. Also, not unlike the former Soviet Union, the United States has a single political party, the Republican Party, disguised as a two-party system. The Democratic Party is effectively brain dead, having had no new ideas since the 1960s.

Three years after the onset of the worst economic recession since the Great Depression, the battle rages on as to whether the government should raise or lower taxes, increase or decrease spending, or print even more money. In case you haven’t noticed, the government has been reducing taxes, increasing spending, and printing money as though it were going out of style, and it doesn’t seem to have made any difference. The economic recovery remains anemic, job growth is pathetic, and the tepid housing market shows few signs of life. Only the highly manipulated stock market temporarily responded positively to government policy.

Neither President George W. Bush’s 2001, 10-year, $1.6 trillion tax cut nor its 2003, $350 billion follow on could keep the U.S. economy out of recession. But that did not prevent the Obama administration from pushing through Congress a two-year extension of the Bush tax cuts in December 2010.

Keynesian economics supporters rallied behind President Obama early in 2009 to gain Congressional approval for an $800 billion economic stimulus package. Although it may have helped prevent the loss of even more jobs, the stimulus package does not appear to have increased the number of new jobs significantly. The President’s $3.73 trillion budget request and projected $1.5 trillion deficit are more of the same. The spending cuts mandated by Congress recently as part of the deficit reduction bill are likely to result in even more job losses. However, they were insufficient to forestall a U.S. credit rating downgrade by S&P.

Following in the footsteps of his predecessor Alan Greenspan, Federal Reserve Chairman Ben Bernanke has kept the U.S. economy, and indeed the global economy, awash with money freshly printed by the government’s high-speed printing presses. He has primed the monetary pump with near-zero interest rates, loans to poorly managed mega financial institutions worldwide, and government bond purchases worth hundreds of billions of dollars. Unfortunately the impact of all of this intense monetary policy activity on the housing market and the job market has been virtually nil.

What Bush, Bernanke, and Obama have failed to realize is that they have been engaged in a myth of Sisyphus struggle with Wall Street, which has presided over a thirty-year strategy of exporting real American jobs to Asia and elsewhere, all in the name of maximizing shareholder wealth. So many high-paying manufacturing and professional service jobs have been offshored that there are not enough people left who can afford to buy all of the Chinese plastic yuck that must be sold to sustain the American economy.

The neocons scream for more tax cuts, the liberal Democrats demand more government spending, and the monetarists call for even greater increases in the money supply, and it’s not going to make one whit of a difference. Sometimes when you make your bed, you actually have to lie in it. The effects of a thirty-year exodus of American jobs to the rest of the world cannot be reversed overnight.

It’s as though our national economic policy for the past decade has been under the control of three blind mice – Bush, Bernanke, and Obama. “See how they run. Did you ever see such a sight in your life?”

Driving the nation’s trillion-dollar plus military and national security budget is a foreign policy based on full spectrum dominance, imperial overstretch, might makes right, and the proposition, just be like us. One result flowing from this insidious foreign policy is the never ending, highly racist war on terror (Islam) which has given rise to immoral, illegal, undeclared wars in Afghanistan, Iraq, Libya, Pakistan, Palestine (via Israel), Somalia, and Yemen. Weapons of mass destruction, the strategic missile defense system, the Cold War relic NATO, pilotless drone aircraft, outrageously expensive F-35 fighter jets, and 1.6 million American troops are all part of the program.

Size, a moribund economy, and excessive militarization were three of the major forces contributing to the demise of the Soviet Union in 1991. But the United States may be well on its way to replicating Soviet mistakes in an American setting. We have spent so much time, energy, and other valuable resources fighting the threat of terrorism that we have diverted our attention, our energy, and our resources from fixing our severely broken economy.

One major unstated conclusion of the debt ceiling debate must surely be that we can no longer afford a continuation of the military madness. It is not in our self-interest to keep perpetuating the myths, half-truths, and out-right lies that have fueled the war on terror since it was launched by President George W. Bush in 2001.

If we were to look back into the eyes of our old adversary, the Soviet Union, we just might see a mirror image of ourselves. We have become much more nearly alike than most Americans would care to admit.

The Tax Question

What's Fair?By ANDREW LEVINE

Who knows what, if anything, congressional Tea Partiers and their fellow travellers had in mind when they signed on to Grover Norquist’s “no new taxes” pledge. Those not in the grip of obscure theocratic doctrines probably thought that the pledge is in line with libertarian positions to which they nominally adhere. But this thought is more aspirational than real.

In recent decades, a few economists and philosophers have found ways to refashion long discredited libertarian positions; what they have come up with, though flawed, is at least not obviously untenable. And because libertarianism draws on intuitions that capitalist institutions reinforce, their views can seem appealing to otherwise reasonable people. No doubt, this is why, lately, as a bipartisan war on the remnants of capitalism with a human face has gained momentum, libertarian views have come back into the fold.

But no thought out libertarian position justifies the Norquist pledge. The reason why is plain: most libertarians are not anarchists -- they acknowledge a need for at least a minimal state, one that establishes law and order and national defense. Most libertarians also think that there are at least some goods in addition to security that markets cannot supply and that states can legitimately provide. For states to discharge these functions, they require revenue, most of which they obtain through taxation. How much revenue a state needs depends on particular circumstances; therefore the nature and extent of the tax system thoughtful libertarians would support must be sensitive to prevailing conditions. There is no level that can be identified in general, and therefore no way to justify the precise level that pledge-takers regard implicitly as acceptable.

Unless, miraculously, the Bush-Obama tax structure is just right (or perhaps a tad too high) – perhaps due to the interventions of the God of Republican nomination-seekers -- those who take the Norquist pledge place themselves in the grip of an arbitrary constraint. Why would they do that? Surely, not, as liberal pundits claim, because they are committed to a minimal state; “no new taxes” can only get to that (or any other) result by sheer luck. The conclusion is therefore inescapable: insofar as they are not simply doing the bidding of their paymasters, they must think that there is some electoral advantage – either for themselves or for the Republican party – in assuming a stance that is preposterous on its face. They may present themselves as principled political actors but in fact they are only guileful and opportunistic.

The moralistic babble emanating from Democratic quarters is less noxious, but no less confused. Obama Democrats say that they want sacrifices to be shared because it would be unfair if they are not. That is a fine idea, but what it comes down to in practice is that they will endorse the attrition of New Deal and Great Society programs provided plutocrats (“shrewd businessmen” in Obama speak) and corporations (“people,” in the view of his most likely rival) don’t get off scot-free. This position is not only shamefully tepid; it is myopic.

Lets stipulate that, as philosopher John Rawls famously put it, justice is “the first virtue” of social institutions as truth is to scientific theories; and lets further agree to think of justice as fairness rather than, say, adherence to irrefragable property rights. as some libertarian philosophers insist. Then fairness matters preeminently; and, insofar as there is a problem we collectively confront, it follows that everyone should contribute his or her fair share towards its solution. A general commitment to fairness leaves open what this entails in practice, but let that pass.

Lets also concede that the deficit is a problem of this sort, leaving aside all the ways that Wall Street recklessness created the conditions for it, and how the Obama administration collaborated with the Republican leadership in contriving it. Lets even ignore how eminently fixable the problem is. There is no need for radical solutions: the long term deficit would be even less of a problem than it was a decade ago if we restored the tax structure of the pre-Bush years, cut military and other “national security” spending to pre-9/11 levels and, for good measure, enacted genuine health care reform so that costs come into line with those of other advanced countries.

Finally, lets concede that the long-term deficit problems we confront constitute an immediate “crisis.” This has become conventional wisdom at least since Obama signaled in his 2010 State of the Union address that he’d join Republicans in promoting the idea. It is patently false, but let that pass too.

In other words, contrary to almost all the relevant facts, lets suppose that our deficit problems are like the problems people face in the aftermath of a natural disaster – that they affect us all equally, and that we must resolve them together. Then indeed it would be unfair for the rich – or any other sector of the population -- to shift their fair share of the costs of dealing with the deficit onto others, just as Obama and other leading Democrats proclaim.

To be sure, it isn’t clear what a fair distribution of burdens would look like in this case; the idea floated by Obama – from which, true to form, he is sure to retreat -- that a dollar of taxes should balance a dollar of spending cuts is every bit as arbitrary as acquiescing to the existing tax structure while categorically rejecting any and all “revenue enhancements.” But this too is not the main problem.

The main problem with what the Democrats are promoting is that it is confused: because in ascertaining what fair taxation involves, it is indefensible and misleadingly myopic to focus, as they do, just on taxes themselves. To do so is to fall back into the spontaneous – and indefensible – libertarianism to which Republicans implicitly appeal, according to which justice is not about fairness, but about accommodating to property rights that are somehow given before considerations of fairness kick in. In proper libertarian fashion, Obama’s position regards taxation as a (justifiable but unfortunate) imposition upon a morally defensible economic system constituted by capitalist market relations.

In reality, taxation is only one aspect of a larger economic system in which property rights, public policy, and the means through which the state finances itself are joined together into a seamless whole. It is this entire system, not one of its integral parts taken in isolation, that is the proper unit of analysis in ascertaining the justice (or fairness) of the distribution of burdens and benefits.

What justice requires with respect to economic systems is among the most investigated issues in social philosophy. But because all plausible views appeal to a core notion of fairness, according to which like cases should be treated alike, and because they all adhere to the fundamental conviction, inherent in the idea of morality itself, that, where moral principles obtain, all persons count equally, they all share one very general feature: that there is a presumption for equal treatment and therefore, where the distribution of burdens and benefits is at issue, for equal distributions.

This does not mean that justice requires equal distributions; only that equality is, as it were, the default position from which deviations must be defended. Presumptions can be and typically are overridden.

Needless to say, there is no general consensus on what must be the case for inequalities to be justifiable. But it is extremely unlikely that tax increases for the well-off equaling the dollar amount of cutbacks in services suffered by the poorly off could follow from any defensible view.

Thus there is no conception of equality or theory of justice from which Obama’s position follows. His moralizing is not principled; it is meretricious. It has less to do with just taxation, than with getting the victims of an unjust economic regime to go along with policies that, except for being more flexible, are in line with those Republicans favor.

In the distant pre-Clinton past, when Democrats were more generous in spirit and less philosophically confused, the conventional wisdom was that equality is indeed an estimable value but that “efficiency” – in other words, high levels of productivity -- is too. It was then thought that these ideals are sometimes at odds, presumably because egalitarian social policies give rise to an incentive structure that discourages productive labor. The problem, then, is to strike a balance between two partially conflicting ideals by trading off efficiency for equality and vice versa.

This very salutary and progressive view was not without its problems, in part because efficiency and equality are not as much at odds as is widely supposed. But there is no need to delve into that issue here because it is plain that the principal beneficiaries of today’s tax policies are hardly incentivized to work hard to advance the real economy. In this stage of capitalism, the generation of real wealth has given way increasingly to the remunerative but socially useless and ultimately parasitical task of making money out of money.

Thus if fairness is the issue and if myopia is overcome, what is called for are policies vastly more far-reaching than the Democrats’ starting-point negotiation position, and more far-reaching too than the far saner positions Democrats used to advance. But, of course, anything like that is entirely off the table in Obama’s bipartisan America.

Rick Perry: Tax the Poor!

(This whole "poor little rich people" attitude copped by politicians like Ricky Perry sucking up for campaign funds has gotten sickeningly old. If you have been fortunate enough to have become a billionaire, then part of the burden of funding society's continuing progress falls to you, you greedy assholes! Billionaire Warren Buffet understands it. Billionaire Mark Cuban gets it. But not greedy and sinister weasels like the Koch Brothers with their corporate lobbying groups ALEC and the US Chamber of Commerce. They don't create jobs, they offshore them to countries with exploitable cheap labor; they don't pay their share of taxes, they hide their profits in tax havens overseas; and they screw poor and middle class people so they can increase their profits by a mere fraction of a decimal point--reaping millions of dollars which mean nothing to a billionaire, but would mean so much spread out over a poverty stricken neighborhood. 

History has proven that when the uber wealthy have paid higher taxes, the economy has flourished--direct correlation. And when they pull their robber baron "fuck the little man" bit, they destroy a generation's growth and progress. They don't care one little bit about the exponential damage they do.

See, these lovely douchebags consider themselves the "royalty" of this modern age. They think--no, they KNOW they are better than you, me, our families, our friends, and they don't mind that we suffer when they gamble huge fortunes and lose OR gamble against us and win. We lost our savings, our homes, our jobs--all of which wound up as an insignificant line of black ink on some ledger or spreadsheet. And if some of us little people have to suffer or worse for them to profit, then such is our cost for them to play their game. Can't make an omelet--or better yet, a "cake" without breaking some eggs, right?

I heard a nationally syndicated radio talkshow host say this is 1984 and "the answer to 1984 is 1776." Well, that's neat and patriotic, I suppose. But--and everyone loves to dog the French--I say we answer "1984 with 1789." Here's our symbol, they can choke on their cake. 

We can do this peacefully--it's how things should be done--but when these billionaire fake monarchs start playing rough, we do to them just like the French peasants did starting in 1789 to the exact same kind of rich people, and for the next 10 years. Those wealthy idiots underestimated the poor and middle class to the point of mocking them. Their heads filled many, many baskets when it was all said and done. 

Like I said, a peaceful, bloodless revolution is our best chance to dethrone these kings and queens of nothing. But you have to have a plan B. Oh, and millionaires aren't considered by the billionaires to be in the same class as the billionaires, so the millionaires better not think they aren't going to be handled just like we will be. 

If I wasn't on a watchlist, I sure am now. EAT THE RICH! --jef)

Monday 15 August 2011

by: Ruth Marcus, The Washington Post Writers Group | Op-Ed 

"We're dismayed at the injustice that nearly half of all Americans don't even pay any income tax."

-Texas Gov. Rick Perry, presidential announcement       speech, Aug. 13, 2011.

Washington - Really? Of all the ills in the world, of all the problems with the economy, all the difficulties with the tax code, this is the one that Perry chooses to lament?

Perry's statement conjures visions of America as Slacker Nation, where the overburdened wagon-pullers drag an increasingly heavy burden of freeloaders. His number is correct but, like other conservatives who have seized on the statistic, Perry draws from it a dangerously misleading lesson.

The nonpartisan Tax Policy Center estimates that 46.4 percent of households will owe no federal income tax in 2011. This is, for the most part, not because people have chosen to loaf. It's because they are working but simply don't earn enough to owe income taxes, based on the progressive structure of the tax code and provisions designed to help the working poor and lower-income seniors.

As the Tax Policy Center's Roberton Williams explains, "a couple with two children earning less than $26,400 will pay no federal income tax this year because their $11,600 standard deduction and four exemptions of $3,700 each reduce their taxable income to zero. The basic structure of the income tax simply exempts subsistence levels of income from tax."

Does Perry truly see this as an "injustice"? Does he believe his "dismay" should be alleviated by raising the tax burden on these households?

Consider: Of those households who do not owe income taxes, about a third earn $10,000 a year and a slightly smaller share earn between $10,000 and $20,000.  More than three-fourths earn $30,000 or less.

In addition, the notion that these households pay no taxes is flat-out wrong. They pay -- leaving aside state and local sales, income and property taxes -- federal gasoline and other excise taxes and, most significantly, payroll taxes on every dollar they earn. These taxes are regressive. Everyone pays the same share, regardless of income, so they hit the poor hardest, and counterbalance the progressivity of the income tax code.

Indeed, factoring in payroll taxes alone, the Slacker Nation picture looks very different. Two-thirds of the households that pay no federal income tax still ante up for payroll taxes. Fewer than one in five -- 18 percent of all households -- pay neither income nor payroll taxes. Nearly all of these are elderly (10 percent) or have incomes below $20,000 (7 percent.)

Assuming Perry isn't worked up about Slacker Grandmas, the relevant "slacker share" -- people who are supposedly comfortably ensconced on that wagon the rest of us are pulling -- is in single digits rather than "nearly half."

And, of course, they pay other taxes. An analysis by the Congressional Budge Office, taking into account all federal taxes, found that in 2007 even the poorest one-fifth of households, with average income (including government benefits) of $18,400, paid 4 percent of their income in federal taxes. By contrast, the middle fifth (average income $64,500) paid 14 percent of income and the top fifth (average income $264,700) 25 percent.

In short, the wealthy pay a greater share of their income in taxes -- but the poor don't, as Perry implies, pay nothing.

About those rich people. Perry seems to believe it is wrong to ask more of them. "'Spreading the wealth' punishes success while setting America on course for greater dependency on government," he said.

Perry needn't worry. In the last several decades the wealth hasn't been spread so much as concentrated -- at the top. The share of total income going to the top 1 percent of income earners more than doubled from 9 percent in 1970 to 23.5 percent in 2007. (The Great Recession has since narrowed the gap.)

And while, as noted above, the rich pay a greater proportion of their income in taxes, the share of total taxes paid by the richest Americans is commensurate with their share of national wealth.

Examining the total tax burden -- state, federal and local -- Citizens for Tax Justice calculated that the top 1 percent of households (average income $1.3 million) earned 20.3 percent of income and paid 21.5 percent of taxes in 2010.

The tax code is studded with a costly bevy of deductions and preferences -- mortgage interest, employer-sponsored health insurance, retirement savings -- that benefit wealthier taxpayers over those with modest incomes.  If Perry wants to go after injustice in the tax code, he'll find ample targets. Failing to tax poor people enough isn't among them.

The Wilful Ignorance That Has Dragged the US to the Brink

Tuesday, August 2, 2011 by The Independent/UK

The Tea Party version of the American Revolution is not just fundamentalist. It is also Disneyfied, sentimentalised, and whitewashed

by Sarah Churchwell

Here's a monumental historical irony: a moment in the origins of the United States that every American schoolchild learns to view with pride, the Boston Tea Party, has now become a symbol of our (inter)national shame. In one sense, it is difficult to know what to say in response to the utter irrationality of the Tea Party's self-destructive decision to sabotage the American political process – and thus its own country's economy, and the global economy.

Last week, while the US government was locked in stalemate and risked defaulting on its national debt for the first time in its history (and thus also defying the Constitution that Tea Partiers supposedly hold sacred, which declares in the 14th Amendment that it is illegal for Congress to default), Michele Bachmann instructed her followers not to listen to those who attempted to "scare" them with untruths that the US would default if it didn't raise the debt ceiling. When, of course, that is precisely what it would have done. But the Tea Party has never let facts get in the way of its belief system, and now that belief system is genuinely threatening the wellbeing of the nation they claim to love.

Mottos are supposed to express a philosophy: in so far as the Tea Party can be said to have anything so exalted as a philosophy, their motto is quite telling. They are one of the most inaccurately named movements in American political history, but that inaccuracy is itself emblematic of the party's adamantine ignorance. Any American schoolchild can tell you the motto of the historical Boston Tea Party from which they take their name and – they mistakenly believe – their inspiration: "No taxation without representation."

Impatient with those extra two words, evidently, the Tea Party has truncated this proposition to something simpler: "No taxation." Never mind that the US has among the lowest levels of taxation in the developed world, matched only by Mexico and Chile (are these the nations the Tea Party would like to emulate?). Never mind that the nation's actual Founding Fathers were perfectly prepared to pay taxes – they just thought those taxes should purchase them a democratic voice in their own government.

The motto that came out of the Constitutional Convention was not "In God We Trust": it was "E Pluribus Unum," out of many, one. The phrase "In God We Trust" emerged from the American Civil War, but it wasn't put on US currency until the Cold War, in 1955. The following year, the same year he signed the Civil Rights bill into law, Eisenhower made it the nation's motto.

In other words, In God We Trust is an act of revisionist history and retrospective religiosity, reinserting religion into our national history. But the attempt to create one from many has led to Civil War more than once (the American Revolution was a civil war), and parts of the South regularly seceding (the South and other states threatened to walk out of the Constitutional Congress, did secede in the 1860s, and revolted again in 1944, with the so-called 'Dixiecrats.')

Texas was forever threatening to secede. The Tea Party could secede with my blessing: E Pluribus Unum is clearly not a motto that they are prepared to embrace – despite their supposed reverence for the Founding Fathers and the American Constitution.

Anyone who followed last year's midterms and knew anything about American history already realised this. Tea Party candidates kept invoking semi-mythical figures such as Paul Revere, who was not a Founding Father at all: in fact, most of Revere's supposed story was a legend written by Henry Wadsworth Longfellow in 1860 to rouse popular sentiment on behalf of the Union cause in the Civil War – in other words, to maintain the spirit of E Pluribus Unum and fight against divisive polarisation.

Tea Partiers love mentioning Thomas Paine because they think they share his "Common Sense" (otherwise known as a sense held in common) but they haven't bothered to read it, and are clearly unfamiliar with essays such as "Public Good", in which Paine wrote that, especially while at war (as America currently is, of course): "To have a clear idea of taxation is necessary to every country, and the more funds we can discover and organise, the less will be the hope of the enemy."

As Harvard historian Jill Lepore argued last year in her brilliant The Whites of their Eyes: The Tea Party's Revolution and the Battle over American History, none of the people voting for the Tea Party candidates knows any of this because they haven't studied American history since grade school, when all American schoolchildren learn a simplified, cartoon version of the American Revolution (which we would never call the "War of Independence").

It is a Sesame Street version of the American constitution and politics, a myth that is being treated as the alpha and omega of our political and legal reality. This is one reason why it has a quasi-religious aspect: it's a myth of genesis, it's a creation myth about America that is just as simple as the idea that God created man and woman: the Founding Fathers created America.

The Tea Party version of the American Revolution is not just fundamentalist: it is also Disneyfied, sentimentalised, and whitewashed. It rests on a naïve, solipsistic and exceptionalist faith that for America it will all work out in the end, because America is "the greatest nation in the world". They take solace in tautology: America is great – this they know – because Fox News tells them so.

Their goal, as others have said, is to roll back the clock a century and more. In 1892, when the robber baron and corrupt financier Jay Gould died, Mark Twain wrote a scathing epitaph: Gould, he said, "reversed the commercial morals of the United States. He had put a blight upon them from which they have never recovered, and from which they will not recover for as much as a century to come. Jay Gould was the mightiest disaster which has ever befallen this country."

It has been a century and we have surely not recovered: but we have managed to create an even mightier disaster. It remains to be seen whether we will recover, but it is long past time to stop making declarations of independence. We need to get back to work forming a more perfect union – or any union at all.

The Tax Burden of the Very Rich

Saturday, July 23, 2011 by CommonDreams.org

by Christopher Brauchli

When there is an income tax, the just man will pay more and the unjust less on the same amount of income.
— Plato, The Republic

The purpose of this piece is to identify for readers how an unjust tax system treats the very wealthy. Once that is understood it is easy to understand Senator Orin Hatch’s recent comments.

In a little noted speech the Senator said that the poor need to “share some of the responsibility” for lowering the deficit and observed that the rich are paying too much in taxes.” In his remarks he observed that “The top 1 per-cent of the so-called wealthy pay 38% of all income tax, the top 10 percent pay 70 percent of all income tax and the top 50 percent pay almost 98 percent of all income tax.”

Those were facts of which many, including this writer, were unaware and it immediately created feelings of compassion for those paying that much. Of course, compassion is slightly tempered when one learns that in 2007 the top 1 percent received between 21 and 23 percent of all U.S. income depending on what studies you read. It is also slightly tempered when one realizes that the bottom 50 percent earned only 12.3 percent of all U.S. income. Nonetheless, the rich are obviously paying too much and that explains why Republicans don’t want them to pay more.


IRS statistics released in May of this year reflect that in 2008, the most recent year for which statistics are available, the average income among the top 400 Americans was $270.5 million.

In 2008 someone with that income would have paid about $50 million in taxes. (The effective rate on that income is about 18.1%.) Of course, if you are someone who has net taxable income of $60,000, after deductions and exemptions, and are, therefore, in the 25% tax bracket on all your income in excess of $34,500, you may wonder why you are in a much higher bracket than someone who earns $270.5 million. There is a perfectly logical explanation for this seeming (but not actual) inequity.

The main reason that the tax rate in the United States for the rich is low is that being rich, many of the rich do not need to work. It has long been accepted by Republicans in Congress, among others, that unearned income should receive more favorable treatment than earned income.

According to the IRS, in 2008 only 8 percent of the income of the top 400 earners in the country came from salary and wages. Close to 10% came from dividends and about 56% came from capital gains. Happy to help those who have prospered, either through their own efforts or through a wise choice of ancestors, Congress decided that people who receive dividends should only pay 15% tax on those dividends. Similarly, Congress thinks that capital gains, subject to a few non-onerous rules, should only be taxed at 15%. There is another group with very large incomes that also pays tax at the 15% rate. Those are hedge fund managers.

Like the VERY RICH, among whom many hedge fund managers find themselves, money that hedge fund managers get from investors for managing their money is treated like capital gains and is taxed at only 15% even though to the unsophisticated observer money paid to them looks for all the world like the sort of money that the typical wage earner gets, except for its considerably larger amount than what most wage earners receive. (One commentator pointed out that if hedge fund managers paid taxes like the people earning $50,000 or even $100,000, the national deficit would be reduced by $44 billion in the next 10 years. In 2008 the top 25 hedge fund managers “averaged”: $1.01 billion in annual income. )

In 2011, the only worker who will pay as low a rate as the folks described above is the worker whose taxable income is less than $34,500. Workers with taxable income between that and $69,675 will find themselves in the 25% tax bracket and from there the rates go up to 35% which is more than twice as much as the rate at which the person with $1.1 billion in dividends and capital gains is taxed. There are, of course, many adjustments made in calculating taxable income and the actual percentages vary taxpayer by taxpayer. But the long and the short of it is that the taxpayer who wants the satisfaction of paying taxes at the same rate as the really rich should keep his or her taxable income under $34,500. For many, that will not be difficult.

It is possible that readers of this column will not understand why Mr. Hatch thinks the poor should do more. It is even possible that they will not find the foregoing an adequate explanation for why Republicans do not think taxes on the wealthy should be raised. They are not the only ones who are puzzled.

The American people will be in a funk until we fix the economy.

Feelin' Bad
Harold Meyerson | May 11, 2011

Americans are in a funk. Nearly two years into our economic recovery, nobody save the rich seems to be experiencing it. According to a New York Times/CBS News poll in April, Americans are more pessimistic about the economy than at anytime since the first two months of Barack Obama's presidency, when employment was falling like a stone.

Tens of millions of Americans believe that the American economy -- which was the marvel of the world and spawned the world's largest and most vibrant middle class -- isn't coming back. Confirmation of their pessimism is everywhere around them. Corporations are swimming in cash, but they're not rehiring workers or raising their pay. The share of Americans who are working continued to shrink in 2010 and is now at its lowest level since 1983. The share of working-age women in the workplace rose until 1995, when it hit a plateau. The share of working-age men who are employed has declined from 85 percent during the 1950s to 65 percent today.

Many of the jobs that Americans previously held have gone abroad. New data from the Commerce Department show that U.S.-based multinational corporations cut their domestic workforce by 2.9 million during the 2000s while raising their employment abroad by 2.4 million. That doesn't include the millions more overseas who work for foreign contractors making American consumer goods, like iPhones and laptops, for American companies, like Apple. And, to the nearly 3 million domestic jobs that multinationals directly eliminated, we need to add all the further jobs cut by their domestic suppliers and the merchants who sold those workers goods and services.

This net job drain is something new. In the 1990s, multinational companies added 4.4 million jobs within the U.S. But that was before China opened its doors to our manufacturers (or, rather, before Congress threw those doors open even wider by voting for permanent normalized trade relations with China). That was before Asian markets really started to boom and before mercantilist Asian nations made generous offers that American companies couldn't refuse.

Since the business of America is increasingly conducted abroad, many conventional remedies for curing a sick economy have fallen flat. The Federal Reserve's most recent efforts to put more money into the economy failed to overcome the multinationals' reluctance to invest at home. Meanwhile, as jobs have fallen prey to corporate flight and automation and private-sector unions have all but disappeared, pay has stagnated or declined.

Not surprisingly, Americans are taking out their discontent on our political elites. The president's approval rating has fallen into the mid-40s. Republicans don't much like any of the dozens of GOP presidential candidates. Save for a few years of near full employment in the late 1990s, the economy, as most Americans experience it, has either been treading water or sinking for decades, and neither party has done much to fix it. Both parties' leaders still support free-trade agreements -- indeed, they are pushing to enact three new ones. It's as if they haven't heard about the Commerce Department's numbers on net jobs lost to offshoring or the overwhelming evidence of mass wage stagnation in sectors open to global competition.

It's an axiom of modern democratic politics that political leaders should lay out a plausible path to a brighter tomorrow. At the moment, no one is really doing that. The Obama administration has thrown in the towel on the one genuine remedy to the private sector's failure to create jobs -- a public jobs program -- after its initial stimulus proved too small, slow, and indirect to convince the public that it actually worked. The Republican road to prosperity, which relies on ending Medicare and starving Medicaid, has won mercifully few adherents.

In fairness to our pols, the problems of the American economy are so deeply embedded in the very nature of American capitalism that they are not susceptible to easy or even moderately difficult solutions. Still, it would be nice if some enterprising leaders took these problems seriously enough to propose some fundamental policy changes. They could start by rewriting the tax code so that it rewards domestic production, punishes offshoring, and taxes income derived from investing in far-flung multinationals at a higher rate than it does wages. Such measures could begin rebuilding our private-sector economy before it's winnowed down to just Wall Street and Wal-Mart.

Until that rebuilding commences, Americans are likely to stay in a funk. Understandably so.