Political “Idjits”: Is the GOP Bound for A ‘Political Jonestown’?
Once upon a time the Republican Party included a few widely-respected leaders who valued reason and flexibility — names like Eisenhower, Javitz, Weicker and a few others come to mind. Hell, Nixon was a paragon of sanity compared to some of the loons running the GOP asylum now. if this sounds overstated, read Richard Cohen’s Sunday WaPo column “A Grand Old Cult,” in which he explains:
To become a Republican, one has to take a pledge. It is not enough to support the party or mouth banalities about Ronald Reagan; one has to promise not to give the government another nickel. This is called the “Taxpayer Protection Pledge,” issued by Americans for Tax Reform, an organization headed by the chirpy Grover Norquist. He once labeled the argument that an estate tax would affect only the very rich “the morality of the Holocaust.” Anyone can see how singling out the filthy rich and the immensely powerful and asking them to ante up is pretty much the same as Auschwitz and that sort of thing….Almost all the GOP’s presidential candidates have taken this oath, swearing before God and Grover Norquist to cease thinking on their own, never to exercise independent judgment and, if necessary, to destroy the credit of the United States, raise the cost of borrowing and put the government deeper into the hole.
Cohen notes the role of revisionist history and denial in the Republicans’ increasingly unhinged worldview:
…The hallmark of a cult is to replace reason with feverish belief. This the GOP has done when it comes to the government’s ability to stimulate the economy. History proves this works — it’s how the Great Depression ended — but Republicans will not acknowledge it.The Depression in fact deepened in 1937 when Franklin D. Roosevelt tried to balance the budget and was ended entirely by World War II, which, besides being a noble cause, was also a huge stimulus program. Here, though, is Sen. Richard Shelby mouthing GOP dogma: Stimulus programs “did not bring us out of the Depression,” he recently told ABC’s Christiane Amanpour, but “the war did.” In other words, a really huge stimulus program hugely worked. Might not a more modest one succeed modestly? Shelby ought to follow his own logic.
‘Logic’ may not be the best word to describe GOP thinking in the second decade of the 21st century. Cohen notes a similar pattern of denial with respect to Republican policies on abortion and global warning, and adds,
…Independent thinkers, stop right here! If you believe in global warming, revenue enhancement, stimulus programs, the occasional need for abortion or even the fabulist theories of the late Charles Darwin, then either stay home — or lie.This intellectual rigidity has produced a GOP presidential field that’s a virtual political Jonestown. The Grand Old Party, so named when it really did evoke America, has so narrowed its base that it has become a political cult. It is a redoubt of certainty over reason and in itself significantly responsible for the government deficit that matters most: leadership. That we can’t borrow from China.
The problem for Democrats is that, when Republicans become irrational proponents of discredited ideas and failed polices, there is not much incentive for Dems to up their game. Dems are not being challenged to respond to good arguments so much as tantrums by intellectually-constipated ideologues. The public gets cheated out of an enlightening debate and everybody loses.
What puzzles is why all of the Republicans have guzzled the Koolaid. Why hasn’t it dawned on the party’s brighter bulbs, perhaps Senator Lugar or, maybe Scott Brown or Huntsman that “Hmm, I could really separate myself from the pack of idjits by taking things to a more rational level”? All indications are that the public would like to see a little more flexibility from Republicans.
There may well come a point when the Republicans’ impressive party discipline starts to look like pointless obstructionism to swing voters. The public can see that, so far only one party is compromising. If sanity prevails, the Republicans’ unspoken meme that “we’re 100 percent right, and they’re 100 percent wrong, so we won’t give an inch” can’t play much longer without diminishing returns.
By: J. P. Green, The Democratic Strategist, July 5, 2011
Taxes and Billionaires: The “Carried Interest” Loophole Has To Go
The House speaker, John Boehner, suggests that the Republican threat of letting the United States default on its debts is driven by concern for jobs for ordinary Americans.
“We cannot miss this opportunity,” he told Fox News. “If we want jobs to come to America, we’ve got to give American businesspeople the confidence to invest in our economy.”
So take a look at one of the tax loopholes that Congressional Republicans are refusing to close — even if the cost is that America’s credit rating blows up. This loophole has nothing to do with creating jobs and everything to do with protecting some of America’s wealthiest financiers.
If there were an award for Most Unconscionable Tax Loophole, this one would win grand prize.
Wait, wake up! I know that “tax policy” makes one’s eyes glaze over, but that’s how financiers have gotten away with paying a lower tax rate than their chauffeurs or personal trainers. Tycoons have bet for years that the public is too stupid or distracted to note that in many cases they’re paying just a 15 percent tax rate.
What’s at stake is the “carried interest” loophole, and President Obama is pushing to close it. The White House estimates that this would raise $20 billion over a decade. But Congressional Republicans walked out of budget talks rather than discuss raising revenues from measures such as this one.
The biggest threat to the United States this summer probably doesn’t come from Iran or Libya but from the home-grown risk that the nation will default on its debts. We don’t know the economic consequences for America or the world, and some of the hand-wringing may be overblown — or maybe not — but it’s reckless of Republicans even to toy with such a threat.
This carried interest loophole benefits managers of financial partnerships such as hedge funds, private equity funds, venture capital funds and real estate funds — who are among the highest-paid people in the world. John Paulson, a hedge fund manager in New York City, made $4.9 billion last year, top of the chart for hedge fund managers, according to AR Magazine, which follows hedge funds. That’s equivalent to the average per capita income of 184,000 Americans, according to my back-of-envelope calculations based on Census Bureau figures.
Mr. Paulson declined to comment on this tax break, but here’s how it works. These fund managers are compensated mostly with a performance bonus of 20 percent or more of the profits they make. Under this carried interest loophole, that 20 percent is eligible to be taxed at the long-term capital gains rate (if the fund’s underlying assets are held long enough) of just 15 percent rather than the regular personal income rate of 35 percent.
This tax loophole is also intellectually vacuous. The performance fee is a return on the manager’s labor, not his or her capital, so there’s no reason to give it preferential capital gains treatment.
“The carried interest loophole represents everyone’s worst fear about the tax system — that the rich and powerful get away with murder,” says Victor Fleischer, a law professor at the University of Colorado, Boulder, who has written about the issue. “Closing the loophole won’t fix the budget by itself, but it gets us one step closer to justice.”
At a time when the richest 1 percent of Americans have a greater collective net worth than the entire bottom 90 percent, there are other ways we could raise money while also making tax policy more equitable. The White House is backing some of them in its negotiations with Congress, but others aren’t even in play.
One important proposal has to do with founder’s stock, the shares people own in companies they found. Professor Fleischer has written an interesting paper persuasively arguing that founder’s stock is hugely undertaxed. It, too, is essentially a return on labor, not capital, and shouldn’t benefit from the low capital gains rate.
Likewise, Europe is moving toward a financial transactions tax on trades made in financial markets. That is something long championed by some economists — especially James Tobin, who won a Nobel Prize for his work — and it would also raise tens of billions of dollars at a time when it is desperately needed. It makes sense.
The larger question is this: Do we try to balance budget deficits just by cutting antipoverty initiatives, college scholarships and other investments in young people and our future? Or do we also seek tax increases from those best able to afford them?
And when Congressional Republicans claim that the reason for their recalcitrance in budget negotiations is concern for the welfare of ordinary Americans, look more closely. Do we really want to close down the American government and risk another global financial crisis to protect the tax bills of billionaires?
By: Nicholas Kristoff, Op-Ed Columnist, The New York Times, July 6, 2011
“Norquistism”: Republican Zeal Runs Amok
To watch Republicans in action today, in Washington and in legislatures around the country, is to be reminded of Casey Stengel’s amazed query to the 1962 Mets, whom he had the cosmic misfortune to manage: “Can’t anybody here play this game?”
In California, in Minnesota and here on Capitol Hill, Republican legislators in divided governments seem incapable of taking half or even three-fourths of a loaf — of recognizing when they’ve won. By holding out for more when they’ve already attained plenty, they run the risk of coming away with nothing for themselves or inflicting avoidable calamity on everyone else. As Daniel Bell once said of American socialists, they act as if they’re in but not of the world.
In California, for instance, where Republicans hold just over a third of the seats in each legislative house — enough to block any tax increase, which requires two-thirds support — Democratic Gov. Jerry Brown told reporters on June 16 that he was willing to submit to voters proposals to reduce both state pensions and business regulations if Republican lawmakers agreed to let voters also decide whether to extend some tax increases. Brown’s goal was to avoid having to cut more deeply into spending on schools, universities and medical care. California businesses, which have complained of overregulation for decades, were hot for the deal, but the
Republicans refused to budge. In consequence, in the state budget passed last week, without the tax extensions, the state’s public universities will have to raise tuition roughly 10 percent (on top of another 10 percent increase that will take effect in September); and the poor will pay more for medical care. Pensions and regulations will remain unrevised.
What makes the California Republicans’ intransigence so loony — “idiotic” is, I think, not too strong a term — is that they are likely to lose legislative seats as soon as next year as a result of redistricting, and they are sure to lose legislative seats over the next decade because of their ongoing estrangement of the state’s Latino voters. When Republicans drop beneath one-third representation in the statehouse, Democrats will be able to raise taxes without their support. In other words, this may well have been Republicans’ last chance to extract concessions they considered vital. And they blew it off.
What we have here is an extreme world view — let’s call it Norquistism — that ensures impasse, paralysis or perverse outcomes whenever control of government is divided. It’s the doctrine preached by GOP activist and lobbyist Grover Norquist, who trots around the country collecting pledges from GOP candidates and elected officials that commit them to never, ever raise taxes, no matter what they may be offered in return. In Minnesota, a state with a Democratic governor and a Republican legislature, Gov. Mark Dayton sought to raise taxes on only the relative handful of Minnesotans with annual incomes in excess of $1 million. The legislature opposed that, insisting on cuts (including to services for those with disabilities) that Dayton wouldn’t countenance. Absent a budget, most state services in Minnesota closed down on July 1; it’s not clear when, or how, some compromise can be reached to reopen the state.
In the nation’s capital, Republicans also seem to have lost their capacity for compromise — even when that compromise looks to be a GOP victory. Senate Republicans, for instance, have been urging President Obama since before he took office to finalize three trade accords — with South Korea, Colombia and Panama — and bring them before Congress. Obama has now done so, asking in return only that Republicans approve the renewal of Trade Adjustment Assistance, a program that aids workers who lose their jobs as a result of these kinds of trade deals. But Republicans are balking — boycotting last week’s meeting of the Senate Finance Committee at which these treaties were to be taken up — because they don’t like TAA. This is hardly a major program, mind you, but the GOP’s loathing of any program that provides government assistance to workers (who really shouldn’t need any assistance, as free trade is good for us all) has eclipsed its long-term commitment to American corporate priorities.
When zeal runs amok, the sense of proportion suffers. Today’s Republicans remind me of some leaders of the American Communist Party whom I got to know decades ago, after they’d left the fold. “We believed in the party line, in its infallibility, so completely,” one ex-commie told me, “that we’d forget the larger strategy for the momentary tactic.” So it was with Communists of yore; so it is with Republicans today.
By: Harold Meyerson, Opinion Writer, The Washington Post, July 5, 2011
“You Talkin’ To Me?”: Obama Calls The GOP’s Bluff
Here’s how to negotiate, GOP-style: Begin by making outrageous demands. Bully your opponents into giving you almost all of what you want. Rather than accept the deal, add a host of radical new demands. Observe casually that you wouldn’t want anything bad to happen to the hostage you’ve taken — the nation’s well-being. To the extent possible, look and sound like Jack Nicholson in “The Shining.”
This strategy has worked so well for Republicans that it’s no surprise they’re using it again, this time in the unnecessary fight over what should be a routine increase in the debt ceiling. This time, however, something different is happening: President Obama seems to be channeling Robert De Niro in “Taxi Driver.” At a news conference last Wednesday, Obama’s response to the GOP was, essentially, “You talkin’ to me?”
Obama’s in-your-face attitude seems to have thrown Republicans off their stride. They thought all they had to do was convince everyone they were crazy enough to force an unthinkable default on the nation’s financial obligations. Now they have to wonder if Obama is crazy enough to let them.
He probably isn’t. But the White House has kept up the pressure, asserting that the real deadline for action by Congress to avoid a default isn’t Aug. 2, as the Treasury Department said, but July 22; it takes time to write the needed legislation, officials explained. Tick, tick, tick . . .
“Malia and Sasha generally finish their homework a day ahead of time,” Obama said, gratuitously — but effectively — comparing his daughters’ industry with congressional sloth. “It is impressive. They don’t wait until the night before. They’re not pulling all-nighters. They’re 13 and 10. Congress can do the same thing. If you know you’ve got to do something, just do it.”
Obama’s pushing and poking are aimed at Republicans who control the House, and what he wants them to “just do” is abandon the uncompromising position that any debt-ceiling deal has to include big, painful budget cuts but not a single cent of new tax revenue.
The president demands that Congress also eliminate “tax breaks for millionaires and billionaires . . . oil companies and hedge fund managers and corporate jet owners.” Without these modest increases in revenue, he says, the government will have to cut funding for medical research, food inspection and the National Weather Service. Also, presumably, whatever federal support goes to puppies and apple pie.
In truth, some non-millionaires who never fly on corporate jets would also lose tax breaks under the president’s proposal. And it’s hard to believe that the first thing the government would do, if Congress provides no new revenue, is stop testing ground beef for bacteria. But Obama is right that the cuts would be draconian — and he’s right to insist that House Republicans face reality.
My view, for what it’s worth, is that now is the wrong time for spending cuts or tax increases — that it’s ridiculous to do anything that might slow the lumbering economic recovery, even marginally. But if there have to be cuts, then Republicans must be forced to move off the no-new-revenue line they have drawn in the sand.
Even if they move just an inch, the nation’s prospects become much brighter. This fight is that important.
Every independent, bipartisan, blue-ribbon panel that has looked at the deficit problem has reached the same conclusion: The gap between spending and revenue is much too big to be closed by budget cuts alone. With fervent conviction but zero evidence, Tea Party Republicans believe otherwise — and Establishment Republicans, who know better, are afraid to contradict them.
The difficult work of putting the federal government on sound fiscal footing can’t begin as long as a majority in the House rejects simple arithmetic on ideological grounds.
“I’ve met with the leaders multiple times,” Obama said, referring to House Speaker John Boehner and Senate Minority Leader Mitch McConnell. “At a certain point, they need to do their job.” The job he means is welcoming fantasy-loving Republicans to the real world, and it has to be done.
The stakes are perilously high, but Obama does have a doomsday option: If all else fails, he can assert that a section of the 14th Amendment — “The validity of the public debt of the United States, authorized by law . . . shall not be questioned” — makes the debt limit unconstitutional and instructs him to take any measures necessary to avoid default.
Maybe that’s why, in this stare-down, the president doesn’t seem inclined to blink.
By: Eugene Robinson, Opinion Writer, The Washington Post, July 4, 2011
“We Hold These Truths To Be Self Evident”: Real Patriots Pay Taxes
Some of our nation’s biggest corporations are planning a tax holiday and they want you to pick up the tab.
Actually, you already pay for their routine tax avoidance through the use of tax havens in Bermuda, the Cayman Islands and elsewhere. These accounting acrobatics cost the U.S. Treasury $100 billion a year. Now they want Congress to pass a special tax holiday for money they “repatriate” back to the United States.
There’s nothing patriotic about this repatriation being pushed by Google, Cisco, Pfizer and other companies in the Win America campaign. To sell the tax holiday, they claim it will produce a burst of jobs and investment. In fact, Congress passed a “one-time-only” tax holiday in 2004 with similar promises. Instead, it produced a burst of shareholder dividends and stock buybacks, which goosed the pay of CEOs.
Corporations laid off workers and shifted even more income and investment to offshore tax havens in the wake of the 2004 tax holiday.
“Why should we reward firms for successfully gaming the tax system when we in turn are called on to make up the missing tax revenues?” Edward Kleinbard, former chief of staff of Congress’s Joint Committee on Taxation, told Bloomberg. “Much of these earnings overseas are reaped from an enormous shell game: Firms move their taxable income from the U.S. and other major economies — where their customers and key employees are in reality located — to tax havens.”
A favorite accounting trick is transferring a patent from the U.S. parent company to a subsidiary — often a shell company — in a tax haven. Profits from the patent go largely untaxed offshore while the costs of development, marketing and management remain in the U.S., where they are taken as tax deductions.
Pfizer was the largest beneficiary of the last tax holiday, bringing $37 billion back to the United States and paying just $1.7 billion in federal corporate income taxes. It laid off 10,000 American workers in the following months. The U.S. is the world’s most profitable drug market and yet over the last three years, Pfizer — maker of Lipitor, Viagra and much more — has reported $7.9 billion in U.S. losses while claiming $37.8 billion in profits in the rest of the world. Pfizer, like the rest of Big Pharma, is heavily subsidized by taxpayer-funded research at the National Institutes of Health and elsewhere. It should not be rewarded with another tax holiday.
Bloomberg reported that “Google reduced its income taxes by $3.1 billion over three years by shifting income to Ireland, then the Netherlands, and ultimately to Bermuda.” What a corporate ingrate. Google would not exist without the Internet, and the Internet grew out of U.S. government research beginning in the 1960s. In the 1990s, the U.S. National Science Foundation funded the Digital Library Initiative research at Stanford University that Larry Page and Sergey Brin, now billionaires, developed into Google. Brin was also supported by an NSF graduate student fellowship.
Increasingly, U.S. multinational corporations want to benefit from government spending on education, infrastructure, research, health care and so on without paying for it. Today, large corporations pay, on average, 18 percent of their profits in federal income taxes and as a group contribute just 9 percent toward federal government bills, down from 32 percent in 1952. The Congressional Joint Committee on Taxation says a new tax holiday would cost $79 billion.
A dozen national and state business organizations led by Business for Shared Prosperity recently wrote members of Congress urging them to oppose the tax holiday. The letter said, “When powerful large U.S. corporations avoid their fair share of taxes, they undermine U.S. competitiveness, contribute to the national debt and shift more of the tax burden to domestic businesses, especially small businesses that create most of the new jobs.”
There is no excuse for repeating a policy that’s a proven failure. It would be even worse this time around, as corporations would redouble their efforts to shift profits overseas in anticipation of the next tax holiday. Congress should close the tax loopholes that reward companies for transferring U.S. profits, jobs and investment abroad — not encourage them.
Real patriots pay their fair share of taxes. They don’t run out on the bill.
By: Holly Sklar and Scott Klinger, CommonDreams.org, July 4, 2011
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