The GOP’s Latest Tax Gimmickry: Soak The Poor
It’s one of the strangest things in our politics: The only “big” ideas Republicans and conservatives seem to offer these days revolve around novel and sometimes bizarre ways of cutting taxes on rich people.
Given all the attention that Herman Cain’s nonsensical and regressive 9-9-9 tax plan has received, the Republican debates should have as their soundtrack that old Beatles song that droned on about the number nine.
Now, Texas Gov. Rick Perry hopes to pump up his campaign with a supposedly bold proposal to institute a flat tax, which would also deliver more money to the well-off. Perry plans to outline his proposal this week, but he has already touted it as a sure-fire way of “scrapping the 3 million words of the current tax code.”
There is absolutely nothing new about this idea, and candidates who pushed flat taxes in the past saw their campaigns flat-line, most prominently businessman Steve Forbes in 1996 and again in 2000. Politically, the idea falls apart rather quickly when middle-income voters realize that its main effect is to cut taxes on the financially privileged while usually raising them on Americans who have more modest incomes.
Note to Perry: Voters are shrewd in figuring out whether tax proposals really benefit them. That’s why raising taxes on millionaires — the exact opposite of what Cain and Perry want to do — wins support from a broad majority.
But the more interesting question is: Why are today’s Republicans so enthralled by tax gimmicks? Their party, after all, was once innovative in thinking about affirmative uses of government. The Grand Old Party instituted the Homestead Act and created land-grant colleges, the interstate highway system, student loans, the Pure Food and Drug Act and even a prescription drug benefit under Medicare.
It was Richard Nixon who supported laws establishing the Environmental Protection Agency and the Occupational Safety and Health Administration. In signing the OSHA bill, Nixon called it “one of the most important pieces of legislation, from the standpoint of 55 million people who will be covered by it, ever passed by the Congress of the United States, because it involves their lives.” Yes, government regulations save lives, a view now heretical in the GOP.
Republicans have boxed themselves into a rejection of both their own traditions and the idea that government can do any good. Thus they have confined themselves to endless fiddling with the tax code. Almost everything conservatives suggest these days is built around the single idea that if only government took less money away from the wealthy, all our problems would magically disappear.
There is a history to this. The Republican fixation on taxes dates to the mid-1970s, when supply-side economics began taking hold. The late Jude Wanniski, an editorial writer for the Wall Street Journal who campaigned indefatigably on behalf of lower marginal tax rates, came up with the “Two Santa Clauses” theory. He argued that if Democrats earned support by giving voters benefits through government programs, Republicans should play Santa by giving people tax cuts.
Wanniski sold his tax ideas to Jack Kemp, one of the most ebullient political figures of his generation, who in turn sold them to Ronald Reagan. Reagan made Kemp’s 30 percent tax cut (co-sponsored with Sen. Bill Roth) a centerpiece of his 1980 campaign. The political scientist Wilson Carey McWilliams perfectly described the result in a 1981 essay. “After years of learning that ‘you don’t shoot Santa Claus,’ ” he wrote, “the Republicans decided to nominate him.”
But Republicans have a problem now. In the Kemp-Reagan days, they were selling across-the-board tax cuts. Most of their benefits flowed to the rich, but almost everyone got a piece. Today, many Republicans complain resentfully that less prosperous Americans don’t pay enough in taxes — overlooking the fact that citizens who don’t pay income taxes still shell out a significant share of their earnings in payroll, sales and (directly or through their rents) property taxes.
Reagan’s optimism has thus been replaced by crabby put-downs of the less affluent. Perry said it directly in his announcement speech: “We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.” Considering the other injustices in our society, this seems an odd and mean-spirited obsession.
“Tax the poor” is a lousy political slogan. That’s why Cain’s 9-9-9 plan and Perry’s flat tax are doomed to fail. Among conservatives, Santa Claus has given way to Scrooge.
By: E. J. Dionne, Opinion Writer, The Washington Post, October 21, 2011
Job Creation: Small Isn’t Always Beautiful
I challenge you to find a stump speech by a politician running for any office from dog catcher to president that doesn’t invoke the importance of small businesses.
That’s not necessarily a bad thing. It’s a hat tip to American entrepreneurialism, evoking images like that of Steve Jobs planting a seed in his garage that grew into an amazing Apple orchard. Besides, don’t most people work for small businesses, and aren’t such businesses the engine of job growth?
Actually, no. In what may be the most misunderstood fact about the job market, although most companies are small — according to 2008 census data, 61 percent are small businesses with fewer than four workers — more than two-thirds of the American work force is employed by companies with more than 100 workers. You can tweak the definitions, but even if you define “small” as fewer than 500 people (as the federal government does, basically), you still find that half the work force is employed by large businesses.
It’s even more stunning when it comes to payrolls: 57 percent of total compensation is paid out by companies of 500 or more employees, with most of that coming from the largest, those with at least 10,000 employees. And new research by the Treasury Department finds that small businesses — defined as those with income between $10,000 and $10 million, or about 99 percent of all businesses — account for just 17 percent of business income, and only 23 percent of them pay any wages at all.
But don’t small businesses at least fuel job growth? Sort of. It’s not small businesses that matter, but new businesses, which by definition create new jobs. Real job creation, though, doesn’t kick in until those small businesses survive and grow into larger operations. In fact, according to path-breaking work by the economist John C. Haltiwanger and his colleagues, once they accounted for the outsize contributions by new and young companies, they found “no systematic relationship” between net job growth and company size.
It’s unlikely such findings will change politicians’ speeches trumpeting small businesses. But if we want to get our job market back on track, they should inform our policy thinking. For example, it’s not only the case that start-ups are of particular importance to robust job growth. They’ve been creating fewer jobs over the last decade. Employment at start-ups fell by almost half, and those losses predated the “Great Recession” — probably one reason job growth was so lackluster over the last decade’s expansion.
Economists do not yet have a good answer as to why start-ups and surviving young companies are creating fewer jobs, but it may have something to do with “allocative inefficiency.” Too many resources flowed to financial engineering in the last decade, and too few went to R & D and innovation outside of the financial sector. The decline of American manufacturing plays a role here as well, as the sector has historically accounted for 70 percent of job-creating private-sector R & D, often in partnership with start-ups and small suppliers.
This isn’t to say that public policy should abandon small businesses. Many face distinctive hurdles compared with large businesses: they have tighter profit margins and thus less room for mistakes, they have diminished access to credit markets and, even with creditworthy borrowing records, many say they’re not getting the loans they need. Small manufacturers often have less access to export markets, and, with emerging economies growing a lot faster than advanced economies, that’s a big disadvantage.
Yet the sector’s primary lobbying group — the National Federation of Independent Business — tends to fight less for these pragmatic policies and more for the standard conservative agenda of lower taxes and deregulation. Indeed, the group has become a purely partisan operation, fighting more for Republican electoral victory than small-business growth. For example, it opposed the president’s jobs bill, even though independent analysts estimated it would significantly increase economic demand, and the federation’s own survey shows that “poor sales” — a k a weak demand — is a much bigger problem for its members than taxes or regulations.
The next time a politician tells you how he or she is for small business (which will likely be the next time you hear a politician say anything), be mindful that to the extent that size matters at all for job growth, it’s really about new companies that will start small and, if they survive, perhaps grow large. Everything else is largely noise — and too often, noise that has little to do with what this economy really needs.
By: Jared Bernstein, Op-Ed Contributor, The New York Times, October 23, 2011
How Fox News Is Really Destroying The Republican Party
Would more House Republicans rather have John Boehner‘s job or Sean Hannity’s? How many Republican presidential candidates would rather be in a Fox News studio than the White House? The wave of stunt candidates so far — Donald Trump, Herman Cain — and those who have opted out of the race to keep their TV gigs — Mike Huckabee, Sarah Palin — suggests the answer is a non-zero number. Even seemingly serious establishment candidate Tim Pawlenty has reportedly hit up Roger Ailes for a post-campaign contract (Ailes shot him down.) If the GOP‘s presidential circus this year has taught us anything it’s the allure of conservative media over Republican politics, and media seems to be winning.
Tea Partiers have two career tracks: get elected or become a pundit. And it often seems like they’re using one to audition for the other. Louisiana Rep. Tom Graves, whom his local newspaper describes as a guy with “a far noisier, more peppery style, [who has] proven quite adept at drawing free media attention,” is one of the House freshmen who, as we noted earlier, House Speaker John Boehner is having a hard time controlling, largely because the top Republican on Capitol Hill doesn’t have much to offer him. Graves, of course, is a popular guest on Fox.
Donald Trump scored a regular spot on Fox & Friends by claiming his researchers had found evidence Obama might not have been born in America. He’s not a big fundraiser, he’s not a policy wonk, and the majority of Americans don’t like him, but candidate after candidate has lined up to meet with him in Manhattan, not some farm in Iowa. Sarah Palin, too, pretended to run for president for months, only to opt to keep her day job as paid TV analyst, which she said would leave her “unshackled.” Mike Huckabee, who was in the top two in national polls for the first half of the year, decided to stay on the network having just built a nice mansion for himself in Florida. Fox cancelled Rick Santorum‘s Fox contract when he started running for president, but given that Santorum lost his last election in 2006, it might be nice to get that job back once he loses this one too. Michele Bachmann rose to prominence with her many cable news interviews, but in recent months, she’s been undone by her own unscriptedness, implying vaccines cause mental retardation just because a woman walked up to her and told her so. That might be something a conservative talk show host can get away with, but much harder on the campaign trail.
And then there’s Herman Cain. He’s going through a crisis of seriousness despite ascent in the polls, in no small part because he seems more interested in selling books than building a political organization that can win elections. At least, as he told Businessweek‘s Joshua Green, he’s not being greedy about it. “I’m still doing paid speeches,” Cain told Green, “But I have not raised my prices. This economy’s on life support, so I’m very mindful of those companies that would like to have me come and speak. But I’m not gonna take advantage of my newfound popularity just to put more dollars in my pocket.” Yet!
Is it any wonder why the only guy who seems to want the GOP’s nomination more than he wants a timeslot on Fox News is the one who’s already too rich to care about Roger Ailes’s money?
By: Elspeth Reeve, The Atlantic Wire, October 20, 2011
Why Democratic Strategists Have Begun To Root For Mitt Romney
It wasn’t long ago that conventional wisdom among Democratic strategists handicapped Mitt Romney as President Obama’s toughest potential Republican challenger. But lately there has been a big shift.
In fact, it is becoming clearer and clearer that Mitt Romney is the very embodiment of the political narrative that will likely define the 2012 Presidential race. Unless there is a miracle, the outcome of next year’s election will likely be determined by whom the public blames for the lousy economy.
Of course the Republicans will argue that the culprit is the “overreaching,” “innovation-stifling” big government and its leader, President Obama. Their prescription to solve the country’s economic woes: eliminate every regulation in sight, cut taxes for the wealthy and free Wall Street bankers that lead us into the promised land.
Democrats, on the other hand, will pin the blame exactly where it belongs — on the reckless speculation of the big Wall Street banks, their Republican enablers — and the stagnant middle class incomes that have resulted from the top one percent of Americans siphoning off virtually all of the country’s economic growth since 1980. They will fault the “do-nothing Republican Congress” for their insistence on defending the status quo, and their refusal to create jobs.
Earlier this summer — when Republicans had succeeded in making “fiscal responsibility” and “deficit reduction” the touchstone of American political discourse — a businessman like Romney appeared to many to be just the ticket. But the tide has turned.
Once they got the debt ceiling “hostage taking” episode behind them, the administration has used its jobs package — and its own budget proposals — to draw a sharp line in the sand. The President has demanded that Congress take action on jobs and pay for it by raising taxes on millionaires.
Then came the Occupy Wall Street Movement — and the worldwide response — that has tapped into the public’s fundamental understanding, and anger, at the real nature of the economic crisis. The fact is that one of the only people around more unpopular than politicians are Wall Street bankers.
Finally, of course, the economic facts on the ground have made it clearer and clearer that right wing economic theories that blame “bloated entitlements” to seniors who make an average of $14,000 a year — and demand “fiscal austerity” — are just plain stupid. According to the Washington Post, even the International Monetary Fund (IMF) — long the world’s leading advocate of deficit reduction and “austerity” — has now warned that “austerity may trigger a new recession and is urging countries to look for ways to boost growth.”
As the national economic dialogue has shifted, the public’s view of Mitt Romney has also come into focus. His out-of-touch “1% moments” proliferated.
On August 11, the blog Think Progress captured the now-famous video of Romney opining, “Corporations are people, my friend.” Of course, given his record of dismembering and bankrupting companies at his old firm, Bain Capital, if “corporations are people,” then Romney is guilty of murder.
On August 29th Romney disputed an account about the expansion of his beach front home. “Romney: Beachfront home is being doubled in size, not quadrupled,” The Hill reported.
Then, just a few days ago, the Center for Responsive Politics reported that Wall Street donors had abandoned President Obama in droves and flocked to Romney.
Finally, an extraordinary photo surfaced from Romney’s days as CEO of Bain Capital, where he made massive profits while five of the companies under his firm’s direction went bankrupt and thousands of workers lost their jobs.
Apparently their difficulties in finding places to stash their profits became a joke among the young hotshots at Bain. They posed for a photograph with money stuffed in their pockets — even their mouths. There at the center of the picture was the grinning CEO, Mitt Romney, with money overflowing from his pockets and his suit jacket.
There he is — posing as the poster child for the 1%.
The picture could be the iconic image of the iconic line from the film Wall Street: “Greed is Good.”
Increasingly, many Democratic strategists have begun to feel that Romney could be the best possible opponent for President Obama next year.
Think about the way swing voters make political decisions. They don’t make their judgments about how to vote based on “policies or programs.” They evaluate the personal qualities of the candidates.
In determining who is on their side and shares their values — do swing voters choose Romney — the poster child for the 1% — or President Obama?
In the coming campaign, who is more likely to appear as an insider defending the status quo that people don’t like — and who will appear to be an outsider trying to bring change? Normally you’d have to say that the consummate “insider” is the guy who is President of the United States. Not necessarily so if his opponent is Wall Street’s own Mitt Romney.
And several factors unique to Romney make his situation even worse:
Voters want leaders with strong core values. That’s not a description of Mitt Romney who has flip-flopped on just about every position he’s ever taken in public life. When Karl Rove ran George Bush’s campaign against John Kerry he said that Kerry’s statement that he voted for the War in Iraq before he voted against it was the gift that kept on giving. Rove took a Senator with strong convictions and convinced swing voters that he had none. If Rove could do that to Kerry, think about the easy time Democrats will have in convincing America that Romney’s values shift with the wind.
Voters want to connect emotionally with their leaders. Ask Al Gore how important it is for candidates to “connect” with the voters. Romney has the personality of a statue. He just doesn’t make emotional contact.
Much of the Republican smart money is going to Romney because it thinks he is increasingly likely to be the nominee. I can understand why the Wall Street money is going to Romney — they want their guy to be President.
But I’m guessing that if he gets the nomination, by this time next year, Wall Street’s investment in Romney will look about as “smart” as all that money they put into sub-prime mortgages and credit default swaps four years ago.
Rep. Cantor: Bought And Paid For By Wall Street Investors
Why has Rep. Eric Cantor (R-VA) been “increasingly concerned about the growing mobs occupying Wall Street,” while defending the Tea Party protests as an organic movement?” It’s all about the money.
Rep. Cantor’s campaign committee and leadership PAC have been bankrolled by Wall Street since he was elected in 2000. The financial industry has been his largest contributor, increasing donations to the congressman by 1,326% between the 2002 and 2010 election cycles.
So while Rep. Cantor may believe the Occupy Wall Street movement is “the pitting of Americans against Americans,” the reality is the movement is pitting Americans against his campaign contributors.
Then, of course, there is Rep. Cantor’s wife, Diana, a fixture on Wall Street. Ms. Cantor served as a VP at Goldman Sachs, a Managing Director at New York Private Bank & Trust, and currently is a partner at Alternative Investment Management, LLC – a firm that “invests mainly in hedge funds and private equity funds.”
According to Open Secrets
Thus far in the 2012 election cycle, Rep. Cantor is the second largest recipient of financial industry donations to House members.
In the 2010 election cycle, he was the third largest recipient of Wall Street cash. In fact, ever since his election to Congress, Rep. Cantor has been in the top 16 recipients of financial industry contributions.
Up to now in the 2012 election cycle, five of Rep. Cantor’s top 10 donors to his campaign committee and leadership PAC were in the financial industry.
Rep. Cantor is currently the second largest recipient of Securities and Investment contributions (which includes hedge funds, private equity and venture capital money).
During the 2010 election cycle, six of Rep. Cantor’s top 10 donors to his campaign committee and leadership PAC were from finance related industries.
During the 2010 election cycle he was the fourth largest recipient of Securities and Investment contributions.
By: PR Watch, Center for Media and Democracy, October 18, 2011
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