“A Horrifying Worldview”: The Endless Arrogance Of Wall Street
The super wealthy apparently believe that they deserve constant deference.
Greg Sargent is rightfully stunned by the entitled petulance of Wall Street bankers who are shocked—shocked—that President Obama would do anything other than praise their indispensable brilliance:
Wall Streeters are so upset about Obama’s harsh populist rhetoric that they privately called on him to make amends with a big speech — like his oration on race — designed to heal the wounds of class warfare in this country. […]
Of course, their exaggerated weariness notwithstanding, the “wounds of class warfare” haven’t been borne by Wall Streeters, who remain fabulously wealthy even after causing the worst downturn since the Great Depression. If there’s anyone waging class warfare, it’s the radicalized representatives of the rich, who have successfully engineered government to enhance their wealth at the cost of our shared responsibilities. As such, the actual victims of class warfare are the ordinary Americans who face stagnant wages, rising costs, and a tattered safety net.
After going through the insanity of Wall Street complaints, Sargent ends his post on this note:
One wonders if there is anything Obama could say to make these people happy, short of declaring that rampant inequality is a good thing, in that it affirms the talent and industriousness of the deserving super rich. It certainly seems clear that they won’t be satisfied until he stops mentioning it at all. [Emphasis mine]
If you think the bolded section is an exaggeration, you should take some time to read Adam Davidson’s New York Times profile of Edward Conard, a former partner at Bain Capital—Mitt Romney’s investment fund—who now works as an apologist for the ultrawealthy. Conard believes three things. First, that millionaires and billionaires earned every penny of their wealth through merit and hard work:
God didn’t create the universe so that talented people would be happy,” he said. “It’s not beautiful. It’s hard work. It’s responsibility and deadlines, working till 11 o’clock at night when you want to watch your baby and be with your wife. It’s not serenity and beauty.”
Second, that immense wealth is the just reward for any and all risk taking:
“It’s not like the current payoff is motivating everybody to take risks,” he said. “We need twice as many people. When I look around, I see a world of unrealized opportunities for improvements, an abundance of talented people able to take the risks necessary to make improvements but a shortage of people and investors willing to take those risks. That doesn’t indicate to me that risk takers, as a whole, are overpaid. Quite the opposite.” The wealth concentrated at the top should be twice as large, he said.
And finally, that extraordinary income inequality is a net plus for society. Those who use their wealth for charity, Conard argues, are depriving the world of investment and gain:
During one conversation, he expressed anger over the praise that Warren Buffett has received for pledging billions of his fortune to charity. It was no sacrifice, Conard argued; Buffett still has plenty left over to lead his normal quality of life. By taking billions out of productive investment, he was depriving the middle class of the potential of its 20-to–1 benefits. If anyone was sacrificing, it was those people. “Quit taking a victory lap,” he said, referring to Buffett. “That money was for the middle class.”
For those of us who don’t see wealth as the ultimate end, who see value in other, non-monetary pursuits, and who understand the power of chance and fortune, this is a horrifying worldview. Conard seems oblivious to the fact that there are people who work hard—punishing their bodies with physical labor—in order to scrap by with the basics of life. It’s not that these people are lazy, it’s that they didn’t win the cosmic dice game that put them in a position to reach the heights of American society.
There is a disturbing corollary to Conard’s worldview, that he expresses in his conversation with Davidson—if the wealthy are supremely virtuous for their pursuit of wealth, then those who reject that choice—regardless of what they do—are unworthy of our respect or admiration:
Conard, who occasionally flashed a mean streak during our talks, started calling the group “art-history majors,” his derisive term for pretty much anyone who was lucky enough to be born with the talent and opportunity to join the risk-taking, innovation-hunting mechanism but who chose instead a less competitive life.
Given their friendship and close connections, one thing to consider is whether Mitt Romney holds views close to Conard’s. Judging from his domestic policy plans—huge income tax cuts for the wealthiest Americans, combined with tax cuts on investment income, and a dramatic reduction in social services—the obvious answer is yes, of course he does. And indeed, at the end of his profile, Adam Davidson offers the strong suggestion that Romney’s thinking has more in common with his friend than it does with any of us.
BY: Jamelle Bouie, The American Prospect, May 2, 2012
“Compassionate Conserative”: Gov. Sam Brownback’s Anti-Poor Agenda
The Kansas governor appears to be waging war against low-income families in his state.
The GOP presidential primary has offered some odd debates on who cares about the “very poor” and whether there should be a “safety net” or a “trampoline” to help people get out of poverty. Meanwhile, in Kansas, it seems Governor Sam Brownback is hoping to dig a bigger hole for the poor fall into. Between his tax plans and his approaches to school funding, Brownback’s agenda overtly boosts the wealthy and makes things harder for the poor. While many liberals speculate this to be a secret goal, Brownback is hardly making a secret of his agenda.
Currently, the Kansas Legislature is examining Brownback’s plan to redesign education funding. The plan removes extra dollars for students who are more expensive to educate—those who must learn English or come from challenging backgrounds. Instead of providing funding based on the actual costs of education, Kansas would allow counties to raise property taxes and keep the revenue. That’s great for wealthy districts with high property values and seriously damaging for poor districts where the tax base is relatively small. The plan would likely create enormous disparities between school districts, leaving students in poor communities with few good options among traditional schools. Meanwhile, wealthy school districts can likely spend more and more to make their schools top-notch.
While low-income kids would attend schools getting outpaced by wealthy counterparts, their parents would get to pay more in taxes. That’s because the governor is also pushing a tax plan, approved by Reaganite Arthur Laffer, that would actually raise the total tax burden on those who make less than $25,000 a year. For the record, that’s more than 40 percent of filers in the state. As I wrote last week, the plan not only raises taxes on the poor but also cuts government programs that target low-income Kansans, compounding the hit. Meanwhile, the biggest tax cut in the plan would go to the wealthiest residents, those making more than $250,000.
But perhaps most galling is that Brownback will not object to a new decision by the state’s welfare officials that cuts off food-stamp benefits for U.S.-born children of undocumented workers. The decision leaves hundreds of American children without access to the program.
I should also mention that Brownback has long considered himself a “compassionate conservative.” With his level of compassion, who needs safety nets, or as Newt Gingrich would say, “trampolines”?
By: Abby Rapoport, The American Prospect, February 8, 2012
“A Huge Benefit For The Rich”: Warren Buffett Is Right
The revelation that Mitt Romney received an income of $21 million in 2010 and paid just 13.9 percent of that in federal income taxes has highlighted an enormous problem in our tax code. Income from investments (or income that is manipulated to appear to come from investments) is taxed at lower rates than income from work. And this is a huge benefit for the rich.
Technically, the breaks that Romney enjoys are available to anyone with investment income, but the vast majority of this type of income goes to the rich. We recently calculated that about a third of taxpayers with incomes exceeding $10 million get the majority of their income from investments and consequently pay an average effective tax rate of 15.3 percent.
We then looked at taxpayers with incomes between $60,000 and $65,000 and found that just over 2 percent get the majority of their incomes from investments. In fact, over 90 percent of the $60,000-$65,000 group get less than a tenth of their income from investments, and consequently pay an average effective tax rate of 21.3 percent. That’s a higher effective tax rate than those multimillionaires who get most of their income from investments.
How do multimillionaires justify their low effective tax rates? Many, like Warren Buffett, admit that there is no justification at all, and have asked the president and Congress to reform the tax code. Buffett finds it offensive that he pays federal taxes at a lower effective rate than his secretary does.
Others argue that special breaks for investment income are necessary to encourage investment. This is absurd, given that people with money invest in order to profit and that is motivation enough. But this argument is even more absurd in the case of wealthy fund managers like Romney, who use a loophole to characterize even their income from work as investment income to enjoy the lower tax rates. (This is the loophole for “carried interest.”)
Still others, including Romney himself, argue that much of their income represents corporate profits that have already been subject to the corporate income tax of 35 percent before they were paid out as stock dividends. This is nonsense. At least a third of Romney’s income took the form of “carried interest,” which is actually compensation for his work in managing other people’s money, and this is certainly not corporate profits.
Even in the unlikely event that all of the rest of Romney’s income did come from corporate stock dividends or gains on the sales of those stocks, there’s no reason to think that the corporations involved paid 35 percent of their profits in corporate income taxes. We recently studied most of the Fortune 500 corporations that have been profitable for each of the last three years and found that their average effective tax rate over the three-year period was just 18.5 percent. Thirty of these companies paid nothing at all.
Warren Buffett is right. People like him, and Mitt Romney, should pay more to support the society that made their fabulous fortunes possible.
By: Scott Wamhoff, Legislative Director of Citizens for Tax Justice, Published in U. S. News and World Report, January 31, 2012
“Discrediting The Social Safety Net”: GOP Race-Baiting Masks Class Warfare
By demonizing some, the Republicans seek to discredit the safety net for the 99 percent.
It’s commonplace to note that Newt Gingrich’s dog-whistle appellation that Barack Obama is the “food stamp president” is both racist and politically cynical. But the stereotyping of black government dependency also serves the strategic end of discrediting the entire social safety net, which most Americans of all races depend on. Black people are subtly demonized, but whites and blacks alike will suffer.
Gingrich persists because it’s a dependable applause line, and because his political fortunes keep rising. Compare that to September, when Mitt Romney attacked then-candidate Rick Perry for calling Social Security a “Ponzi scheme.” Perry backtracked, insisting that he only wanted to bolster the program and ensure its solvency. But in his 2010 book “Fed Up,” Perry made his opposition to Social Security clear, calling it “a crumbling monument to the failure of the New Deal.” Scrapping entitlements is a core tenet of contemporary fiscal conservatism, but most of the time politicians only get away with attacking the most vulnerable ones: Medicaid, food stamps and welfare cash assistance, which are means-tested and thus associated with the black (read: undeserving) poor, although whites make up a far greater share of food stamp recipients. Government welfare programs with Teflon political defenses — Medicare and Social Security — are nearly universal entitlements and thus associated with “regular” (read: white) Americans.
“Ending welfare as we know it,” as Bill Clinton and congressional Republicans did in 1996, is one thing. “Ending Medicare,” Republicans were last year reminded, is something else altogether. “Keep your government hands off my Medicare,” declared a 2009 Tea Party town hall attendee who today might very well be an ardent supporter of Gingrich’s assault on food stamps. It is a political lesson that free-market fundamentalists have to relearn with some frequency. It was only 2005, after all, when President George W. Bush launched his ill-fated proposal to privatize Social Security — a setback he later called his greatest failure.
Yet as more government programs of any sort are framed as pernicious, laissez-faire ideologues are again emboldened to get rid of everything.
As recently as November 2009, the New York Times reported that stigma around food stamps had faded; the program received strong bipartisan support as millions of newly impoverished Americans reached out for food assistance. But temporarily cautious politicians had only stashed the old playbook on the top shelf, and the revival of welfare queen demagoguery made for quick political results. Nationwide, state legislatures are moving to impose drug testing of welfare, and even unemployment insurance, recipients.
“If you go apply for a job today, you are generally going to be drug-tested,” Florida Gov. Rick Scott said in October 2010. “The people that are working are paying the taxes for people on welfare. Shouldn’t the welfare people be held to the same standard?”
And and then came the push for cuts. Few noticed in April 2011 when House Budget Committee Chairman Paul Ryan, R-Wis., proposed cutting $127 billion from the food stamp program. The same went for the proposed dismantling of Medicaid, the healthcare entitlement for the nation’s poorest, which would be transformed into a block grant to the states with no coverage requirements. Everyone was focused on Ryan’s audacious proposal to privatize Medicare, and conservative pundits were eager to sink the popular entitlement under the banner of pragmatic fiscal seriousness. “The Ryan budget,” David Brooks wrote at the time, “will put all future arguments in the proper context: The current welfare state is simply unsustainable and anybody who is serious, on left or right, has to have a new vision of the social contract.”
Republicans quickly backtracked. But the effort to dismantle the “poor black people” entitlements continues unabated. In Pennsylvania, Gov. Tom Corbett this month announced that people under 60 with more than $2,000 in savings or other assets — cars and homes generally excluded, savings very much included — will be barred from receiving food stamps. The move elicited widespread criticism from anti-hunger advocates but little concerted political resistance. Corbett’s administration also cut 88,000 Pennsylvania children from Medicaid.
But politicians have more trouble getting away with criticism of less stigmatized benefits. Corbett suggested on the campaign trail that “The jobs are there. But if we keep extending unemployment, people are just going to sit there.” Democrats pounced and he rushed to issue a clarification, though a conservative think tank eagerly backed up his original position.
Unemployment benefits, however, are on the political cusp: Once somewhat invincible like Social Security and Medicare, some states have made cuts amid the campaign of stigmatization. In South Carolina, state-funded jobless benefits were reduced from 26 to 20 weeks. Republican state Sen. Kevin Bryant blogged, “I’m disappointed that we have a significant segment of our society leeching [off] the system.” Arkansas, Missouri, Michigan and Florida have also reduced benefits. Yet it was just two months ago that Republicans suffered their greatest embarrassment of 2011 after nearly blocking the extension of unemployment benefits.
Welfare was “reformed” in 1996 because politicians, and many white Americans, were convinced the program’s beneficiaries weren’t meritorious. Indeed, the entire history of the American safety net is one of programs losing popularity as they are associated with poor black people. Initially blacks were largely excluded from New Deal welfare. It was when the War on Poverty broke down racial barriers that white public opinion turned against it. “Increasingly associated with Black mothers already stereotyped as lazy, irresponsible, and overly fertile,” writes Northwestern School of Law’s Dorothy Roberts, “it became increasingly burdened with behavior modification, work requirements, and reduced effective benefit levels.”
The same was true for public housing, which once received broad-based support. But in the 1950s, whites moved to segregated suburbs and blacks were left behind, and the projects became unpopular and underfunded. Housing benefits for upper-income Americans, like the mortgage interest rate deduction, are not, to be sure, subject to such negative stereotypes, and neither are the billions in federal and state dollars that have been spent on highways and federally subsidized mortgages for disproportionately white homeowners.
Or take public schools. If all of our children, black and white, rich and poor, were in one big system, that system would get ample support. But since many poorer students of color are segregated into separate, unequal and low-performing districts, policy solutions like charters and an obsession over standardized testing that would never pass muster in a wealthy district are advocated as pragmatic solutions.
Count yourself lucky that rich people still (for the meantime) breathe the same air as everyone else.
Rick Santorum has declared, “I don’t want to make black people’s lives better by giving them somebody else’s money.” (He now says that he said “blah” people.) On Social Security, Santorum is making what appears to be a safe argument for reform: cutting rich people out of the program. Right now, Social Security belongs to everyone. Cutting rich people out is the first step to making it a program for the poor. Making something a program for the poor — see food stamps, Medicaid and welfare — is the first step toward eliminating it. While crazy Newt Gingrich talks about black people and food stamps, Mitt Romney (whom Brooks, of course, calls “serious”) resurrects a big idea: privatize Medicare. That, of course, is why conservatives so fear single-payer universal healthcare: They know that once we got it, we would never let them take it away.
If some whites reap some cold comfort from Gingrich’s performance, the racial hostility on display comes at a much higher cost to the American people as a whole. We have long since traded the possibility of a decent society for fear and resentment. So watch out for the next attack on “the food stamp president.” The entitlement they end might be your own.
By: Daniel Denvir, Salon, January 27, 2012
MItt Romney, Money And “Quiet Rooms”: Mr. 1 Percent Is Clueless About Inequality
The GOP primary keeps getting funnier. Just as Newt Gingrich was telling a South Carolina Romney supporter “I agree with you” that attacking Mitt Romney’s Bain Capital career could help Democrats on Wednesday, his friendly Super PAC “Winning the Future” released the long version of its hit piece “When Mitt Romney Came to Town.” I thought MoveOn did a bang-up job last week with an ad profiling a pair of older Kansas City steelworkers left jobless thanks to Bain; this ad is so slashing MoveOn might have thought twice about releasing it. If you haven’t seen it, it’s here. Clearly, Gingrich is trying to have it both ways: Mollifying wealthy GOP donors horrified by his attacks on capitalism while continuing to bloody Romney. We’ll see how well it works.
Romney continues to insist Democrats, as well as some of his GOP rivals, are practicing “the politics of envy,” and on NBC Wednesday made what might be his dumbest remark yet. Asked whether there was ever a fair way to discuss income inequality, the GOP front-runner replied:
I think it’s fine to talk about those things in quiet rooms and discussions about tax policy and the like. But the president has made it part of his campaign rally. Everywhere he goes we hear him talking about millionaires and billionaires and executives and Wall Street. It’s a very envy-oriented, attack-oriented approach and I think it will fail.
Maybe Mitt wants to confine talk of inequality to “quiet rooms” because he’s seen the Pew Research Center data showing that Americans think conflict is growing between rich and poor. Two-thirds of Americans see that conflict, up 50 percent since 2009. While African-Americans are still more likely than whites to see that conflict, the percentage of whites who agree tripled. Credit Occupy Wall Street for hiking consciousness about the gap between rich and poor, but credit the GOP for creating the conditions that allowed income inequality to soar, and the top 1 percent to gobble up 40 percent of the nation’s wealth.
A sly Sarah Palin called for Romney to release his tax returns on Sean Hannity’s show last night, to Hannity’s seeming distress. Palin defended Rick Perry’s “vulture capitalism” attack even as Hannity kept trying to get her to declare it unfair. She’s gone rogue again! We can only dream that Romney releases his tax returns. I think he’s less scared about showing his staggering wealth than revealing the scandalously low tax rate he pays, given how much of his income comes from investment and is thus subject to lower capital gain taxes. (I’m sure we’d also learn a lot from the tricks Romney’s accountants use to keep his effective tax rate even lower.)
Palin also demanded that Romney substantiate his claims to have created 100,000 jobs while at Bain, calling it a “come to Jesus” moment. What is she up to? Her snow-machine-driving husband Todd endorsed Newt Gingrich last week, to great derision, but it did raise questions about what the nominally neutral ex-V.P. nominee is thinking. She’s not thinking good thoughts about Mitt Romney, that’s for sure.
Meanwhile, the man who foisted Palin on the world, John McCain, today accused Romney’s anti-Bain attackers as supporting “communism.” But BuzzFeed recalls that in 2008, McCain himself attacked Romney’s Bain days. “He presided over the acquisition of companies that laid off thousands of workers,” McCain complained back then, and campaign manager Rick Davis told the National Journal:
“He learned politics and economics from being a venture capitalist, where you go and buy companies, you strip away the jobs, and you resell them. And if that’s what his experience has been to be able to lead our economy, I’d really raise questions.”
By: Joan Walsh, Editor at Large, January, 12, 2012
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