“The Rise Of The Super Rich”: GOP Congress Really Does Make The Rich Richer
Are you rich and want to get richer? Vote Republican! The stronger the GOP is in Congress, the larger the share of wealth the top 1 percent controls, according to a new study in the October issue of American Sociological Review, which confirms what we figured all along — there’s a direct connection between the rightward shift of Congress and the upward advance of the richest Americans’ net worths.
From 1949 through 2008, the impact of a 1 percentage point increase in the share of seats held by Republicans in the House (a little over five seats) raised the top 1 percent’s income share by about .08 percentage points.
“At first glance, this might seem negligible,” said Thomas Volscho, a sociologist at CUNY-College of Staten Island who co-authored the study. But it’s not. “Given that the estimated national income in 2008 was more than $7.8 trillion, an increase of only 1 percent in Republican seat share would raise the income of the top 1 percent by nearly $6.6 billion. That equates to about $6,600 per family in the top 1 percent.”
The ASR study, “The Rise of the Super-Rich,” looks at the experience of the 1 percent from just after World War II to 2008 and identifies several other factors that have propelled the top tier’s rise. The fact that the uber wealthy have gotten richer much faster than lower-income brackets has been well documented and helped spark the Occupy movement, but this research looks at the role that policy and other variables have played.
Beyond politics, Volscho and Kelly found that the decline of private-sector union membership, and the increasing financializing of the economy — which has heightened the impact of financial-asset bubbles — were also key contributors to income inequality and the rise of the 1 percent. Over the 60 years the paper studied, a 1 percentage point decrease in union membership among private sector workers was linked to a more than 0.4 percentage point increase in the income share of the super-rich.
But the most surprising finding of the study may be the impact a GOP Congress has on income inequality. “Based on our analysis, Democrats appear to favor an economic system that produces more egalitarian outcomes even before any redistribution occurs,” the study concludes. “In essence, the market is not completely beyond the influence of politics and policy, and it is not just in the realm of explicit redistribution that political parties produce divergent distributional outcomes. Political decisions in part ‘make the market.”
Interestingly, the party affiliation of the president did not significantly impact the wealth share of the top 1 percent. Volscho told Salon he was surprised by that finding. Instead, it’s Congress that has the bigger impact. “It was surprising, but not. Because if you look at, in 1995, the Republican takeover over Congress, that’s when you started to see the spike in the top 1 percent,” he said. “They had been doing well since around 1980, but not as well as around 1995. And the stock market boom started in 1995 as well, but we took that into consideration and that had an independent effect.”
The study doesn’t get into specific policies that impact income inequality much, calling for further research on the subject, but it doesn’t take a Ph.D. to make some pretty good guesses. Republicans (with help from Democrats, no doubt) have pushed tax cuts that disproportionately impact the wealthy, opposed redistributive programs, decreased financial regulation, which allowed for the explosion of financial speculation, cut education funding, etc. “There are so many things, appointments, heads of agencies, mundane policies and regulations that filter down from Congress into government agencies that potentially can aid the very rich,” Volscho said.
But a Republican president like Mitt Romney could help in that they would “make that pro-1 percent legislation flow through so much quicker,” Volscho said. Of course, this isn’t too surprising — polls consistently show that Americans think Romney and the GOP would do more to help the wealthy. Now social science shows they’re right!
By: Alex Seitz-Wald, Salon, October 2, 2012
“True Perversity”: Mitt Romney’s Obscene Posturing As A Wall Street Critic
Among the many obfuscations of Mitt Romney last night, this was perhaps the biggest laugher of them all:
ROMNEY: Dodd-Frank was passed, and it includes within it a number of provisions that I think have some unintended consequences that are harmful to the economy. One is it designates a number of banks as too big to fail, and they’re effectively guaranteed by the federal government. This is the biggest kiss that’s been given to—to New York banks I’ve ever seen. This is an enormous boon for them. There’s been—22 community and small banks have closed since Dodd-Frank. So there’s one example I wouldn’t designate five banks as too big to fail and give them a blank check. That’s one of the unintended consequences of Dodd-Frank. It wasn’t thought through properly.
Romney—the private equity veteran running a presidential campaign funded by Wall Street, on a platform that contains a full repeal of every financial regulation over the past four years—positioning himself as an opponent of those big “New York banks” was a historic moment in presidential debate cravenness. (And a real missed opportunity for Obama to wallop his opponent).
So what exactly was Romney talking about? It’s a complicated answer, but understanding it reveals the true perversity of Romney’s posturing.
Dodd-Frank has two provisions regarding too-big-to-fail that Romney is talking about here. The first is the ability of the Financial Stability Oversight Council, created by the legislation, to name financial institutions “systemically significant.” This means they are so big that their failure could threaten the health of the financial sector, and that designation subjects them to heightened regulation and higher capital requirements.
The big banks hate this requirement, for obvious reasons—they come under increased scrutiny and restrictions. So Republicans have been dutifully attacking it. (Romney’s running mate, Representative Paul Ryan, repeatedly blasted it before joining the ticket). The GOP argument, as you heard Romney deliver it, is that by giving them the “systemically significant label, the government is officially “designating” banks as too-big-to-fail—a very bad-sounding thing indeed!
But this is nonsense—these firms are too big to fail. The FSOC designation doesn’t make them so, and is in no way a “kiss” to the big banks—again, it subjects them to higher regulation. Romney and his party would prefer to repeal this provision, full stop, and thus effectively stick their heads in the sand about too-big-to-fail institutions. It’s like saying a doctor who diagnoses someone with cancer has given it to him.
Interestingly, a key feature of this provision is that FSOC can name non-banks as systemically significant, and just this week news broke that AIG is on the verge of receiving this label. Republicans on the House Financial Services Committee have been trying to amend Dodd-Frank to protect AIG from that designation, which to me raises an interesting question about Romney’s timing here.
In any case, when Romney spoke about “guaranteeing” a bailout, and of “blank checks,” he’s echoing another GOP complaint about the resolution authority provision of Dodd-Frank. That gives the federal government the power to wind-down big banks in the event of a failure. The idea is to dissolve the bank, without taxpayer money, not save it—Rep. Barney Frank has called this a “death panel” for big banks. (Pat Garofalo wrote on this issue for us here).
Banks also hate this provision, preferring instead the inevitable ad hoc, blank-check bailout that we saw in 2008. So Republicans have been going after resolution authority—the 2012 Ryan Budget would repeal it—by arguing that the provision somehow guarantees bailouts. This is the same flim-flam as before: the bailout is going to happen either way if the firm is too big to fail, and by repealing resolution authority, you take away the increased power of the government under Dodd-Frank to deal the problem. (Former Treasury Secretary Hank Paulson said he “would have loved to have had” resolution authority in 2008 instead if issuing straight-up bailouts).
Many progressive critics have legitimate complaints about the failure of Dodd-Frank to be tougher in dealing with too-big-to-fail firms, but to be absolutely clear, that’s not what Romney and the Republicans are trying to do. They’re trying to get rid of the limited reforms that have been made. To do it while preening as tough-on-Wall-Street politicians is deeply, deeply cynical.
By: George Zornick, The Nation, October 4, 2012
“Campaigns Are Like Decathlons”: Romney’s Debate Performance Will Light Fire Under Obama Supporters
A mutual friend told me in 2007 that Barack Obama believed campaigns are more like decathlons than single event contests. In this scenario a candidate doesn’t have to win every event, but has to do well enough for their strong performances to carry them over the top. If that is true Barack Obama did fine in his first presidential debate with Mitt Romney, but he didn’t win. In the long run Romney’s strong performance may be just what Democratic troops need to light a fire under them to volunteer even more for campaign field efforts where the Obama campaign is surely superior.
The president seemed overcoached in his first debate. Maybe the instruction was to stay warm, communicate the facts, and keep from letting any disdain for Romney seep through. If so, that worked, but Barack Obama didn’t give the audience enough energy. He let opportunities to challenge Romney slide by. At one point Romney claimed to be unaware of tax advantages for offshoring plants and lamented not knowing about them. “Maybe I need a better accountant,” he said. That was a great opportunity for President Obama to talk about Romney’s business record offshoring jobs or tax strategies. The president looked at his opponent with a knowing smile as if he knew there was fresh meat on the ground but chose not to pounce.
Despite Mitt Romney lying about his economic plans, the Republican will get a second look from voters this week. Romney was aggressive and he needed to be. Donors who were looking for the exits will probably settle back down. The media loves a horse race, and Romney just excited the Fourth Estate too. Good for him, but maybe good for Democrats too.
As polls got better recently, the whiff of overconfidence began to seep into Democratic groupthink. I plead guilty myself. For Democratic activists who spend a lot of time reading favorable articles about the president and watching TV shows that tend to take his side discounting Mitt Romney was becoming a favorite past time. Romney’s awkwardness and mistakes made it easy. But the likelihood of a Democratic blowout is remote. The demographic and ideological math just doesn’t support it. Democrats will have to gut out this Election Day with sweat and shoe leather just like the last one and the scare we got last night probably helps more than it hurts.
By: Jamal Simmons, U.S. News and World Report, Debate Club, October 4, 2012
“Romney’s Personality Shift”: Overnight He’s A Practical Moderate, Terribly Concerned About The Middle Class
The strangest aspect of Wednesday night’s debate was Mitt Romney’s decision to change his tax policies on the fly. Having campaigned hard on a tax proposal that called for $5 trillion in tax cuts, he said flatly that he was not offering a $5 trillion tax cut.
“I don’t have a tax cut of the scale that you’re talking about,” Romney said, even though that is exactly the tax cut he has proposed.
Was Romney for his tax plan before he was against it?
Romney’s willingness to remake himself one more time brought into sharp relief a central flaw of his candidacy: Having campaigned as a moderate when he ran for governor of Massachusetts, he veered sharply to the right to win the Republican presidential nomination. Now, with the election just weeks away and polls showing him falling behind in the swing states, he has decided that he needs once again to sound moderate, practical and terribly concerned about the middle class — and that is the person he sought to be in Denver.
The candidate who has repeatedly attacked regulations was quick to insist: “Regulation is essential. … You have to have regulations so that you can have an economy work.” Romney then reiterated his criticism of the Dodd-Frank Wall Street reform legislation. But this scourge of big government during the primaries took care to let everyone know that he was not about to turn the United States into an Ayn Rand utopia.
Having hidden his Massachusetts health care plan behind “Repeal Obamacare” rhetoric in the primaries, Romney warmly embraced his own plan — without explaining why repealing a national health care system modeled on his plan would in any way be consistent with his sloganeering against the president’s central achievement.
Romney certainly proved his ferocity in Denver, drawing on the persona that had dispatched Newt Gingrich during the primaries. He relentlessly attacked President Obama on the economy, the budget deficit, health care and just about anything else the president has touched. Romney repeatedly used the word “crushed” to describe the impact of the president’s policies on Americans’ well-being.
“We know that the path we’re taking is not working,” Romney said late in the debate. “It’s time for a new path.”
In the early going, Obama seemed reluctant to go on offense and backed away from several opportunities to engage Romney. The president appeared far more interested in explaining than attacking, more concerned with scoring policy points than raising larger questions about his opponent’s approach. The words “47 percent” did not come up.
Obama did return repeatedly to a central point: Romney’s vagueness in his proposals on taxes and health care. He charged that Romney was hiding the details of those plans because they would prove unpopular with and harmful to the middle class. Several times, using different language, Obama effectively asked: If Romney’s ideas were genuinely helpful to average voters, wouldn’t he be shouting their particulars from the rooftops? And at several points Obama spoke of the baleful impact that the budget cuts proposed by Rep. Paul Ryan, Romney’s running mate, would have on Medicare, student loans and community colleges.
Still, Obama chose not to put Romney on the defensive, instead telling voters what he himself had done and why. Obama was more deferential than Romney was to moderator Jim Lehrer and was more willing to let Lehrer interpret the remarkably loose debate rules.
Only in the last minutes did Obama find a stronger voice in describing his achievements. He contrasted his willingness “to say no to some things” with Romney’s refusal to say no to “the more extreme parts of his party.”
Romney entered the debate facing a skeptical pundit class and a party faithful that perceived his campaign as floundering. This he reversed on Wednesday. By going on the attack, he won himself strong press notices and shouts of joyous relief from his own camp. Obama, by contrast, surprised many of his supporters by not even repeating criticisms of Romney he has made in his own stump speeches.
But Romney’s relentlessness may not play as well with swing voters. His decision to change his tax plan on the fly, rather than to defend it, will provide fodder for further Obama attack lines on how it would affect middle-income voters. And his obvious pivot to a new political persona — or, perhaps more precisely, his reversion to his older, more moderate self — will lead to more questions about who the real Mitt Romney is.
BY: E. J. Dionne Jr., Opinion Writer, The Washington Post, October 4, 2012
“Meaningless Assurances”: Mitt Romney’s Short-Lived Immigration “Dream”
Mitt Romney raised eyebrows this week with an apparent Etch A Sketch on immigration policy: after months of silence on President Obama implementing many of the goals of the DREAM Act through deferred action, the Republican said he wouldn’t deport immigrant youths who are currently taking advantage of the administration’s policy.
That sounded like a step in a more progressive direction, but it left unanswered questions, most notably whether a Romney-Ryan administration would leave the existing policy in place.
Dreamers” being helped by Obama now would be temporarily secure, but what about in the near future?
Today, we got an answer.
Mitt Romney would not revoke temporary deportation exemptions granted to young illegal immigrants under an executive action by President Obama, but he also would not issue new protective documents if elected. […]
Responding to a Globe request to clarify Romney’s statement to the Denver Post, Romney’s campaign said he would honor deportation exemptions issued by the Obama administration before his inauguration but would not grant new ones after taking office.
That means the number of people who would benefit from Romney’s non-reversal could be minute.
Suddenly, Romney’s move towards a moderate posture looks a whole lot less impressive.
In practical terms, what the Republican is saying here is that those who’ve already received a temporary exemption from deportation can stay until that reprieve expires after two years. But that’s literally it — no other exemptions will be issued, no other immigrants will be protected, no future extensions will be made.
To hear Romney tell it, everything will work out fine — he’ll get elected, convince Congress to pass a “full immigration reform plan,” sign it, and everyone’s needs will be met.
But since he still refuses to tell anyone what’s in his “full immigration reform plan,” the assurances are meaningless.
By: Steve Benen, The Maddow Blog, October 3, 2012
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