Newt Gingrich’s Ideas Aren’t As Creative Or Effective As He Thinks
Years ago, I remember an interview in which former Speaker Newt Gingrich said he read at least one book a week. The trick to doing so for such a busy man?
Always carry what you’re reading, he recommended, even when you’re not traveling; read in doctors’ waiting rooms, in checkout lines—any place where you’d otherwise just be wasting time.
Some time after that—he was out of office by this point—I saw Gingrich in the Tysons Corner (Virginia) mall. He was in the corridor, slowly pacing in a circle … his nose buried in a book.
Impressive, I thought; he reads even while (presumably) his wife shops.
The downside to this kind of bibliophilia, for certain personalities, is that it can lead to faddishness. I’m sure you have a friend who fits the bill: Whatever he’s reading at a given moment is all he can talk about. And then he moves on.
I’ve always had the impression that Newt is a lot like that—and this Washington Post report on Gingrich the “ideas factory” gives me no reason to doubt it.
Brimming with ideas is perhaps a superior condition when compared to, say, the calcified simplicity of George F. Will (“Romney’s economic platform has 59 planks—56 more than necessary if you have low taxes, free trade and fewer regulatory burdens.”) The latter is a time-honored trope for too many conservative pundits: Get government out of the way of the market, ponder no further, and then pat yourself on the back for appreciating “society’s complexities.”
But an overheated motor of idea generation in high office is a recipe for disaster, or at least folly. As Charles Krauthammer observes, Gingrich as president would be “in constant search of the out-of-box experience.”
Then again, Gingrich seems to me to be full of lots of ideas that are not as imaginative as he thinks or, alternatively, just plain dumb. Gingrich wants to be able to fire federal judges, partially privatize Social Security and Medicare, and create a flat-tax alternative to the current code. This is comfortably in line with the positions of his GOP rivals.
Then there’s Gingrich’s now-infamous “child janitor” idea. Kids in the inner-city lack productive role-models, he says; they don’t see what it’s like for an adult to get up in the morning and go to work. This is itself a debatable proposition, but what bothers me most about it is that it’s a solution in search of the wrong problem.
When I think of Gingrich’s hypothetical poor inner-city kid, I see a bunch of problems, short- and long-term. He’s going to a lousy school—and even if he does well there, he faces long odds of a) finishing college and b) doing better than nonpoor kids who didn’t finish college. Set aside the schooling question, there’s the fact of stratospherically high unemployment rates in the inner city, and the broader, abysmal lack of opportunity for low-skilled men.
All of this is to say that cleaning bathrooms as a teenager is probably not going to change outcomes for this kid.
“Paycheck President” Gingrich really has nothing interesting to say about declining social mobility in America, about how to mitigate the ways in which the global economy and low-skilled immigrants are squeezing working- and middle-class Americans from the top and bottom.
All that time reading in malls and doctors’ offices, and he’s still well inside-the-box on the most important questions.
By: Scott Galupo, U. S. News and World Report, December 5, 2011
“Capitalists Without Customers Are Out Of Business”: Raise Taxes On Rich To Reward True Job Creators
It is a tenet of American economic beliefs, and an article of faith for Republicans that is seldom contested by Democrats: If taxes are raised on the rich, job creation will stop.
Trouble is, sometimes the things that we know to be true are dead wrong. For the larger part of human history, for example, people were sure that the sun circles the Earth and that we are at the center of the universe. It doesn’t, and we aren’t. The conventional wisdom that the rich and businesses are our nation’s “job creators” is every bit as false.
I’m a very rich person. As an entrepreneur and venture capitalist, I’ve started or helped get off the ground dozens of companies in industries including manufacturing, retail, medical services, the Internet and software. I founded the Internet media company aQuantive Inc., which was acquired by Microsoft Corp. (MSFT) in 2007 for $6.4 billion. I was also the first non-family investor in Amazon.com Inc. (AMZN)
Even so, I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate.
That’s why I can say with confidence that rich people don’t create jobs, nor do businesses, large or small. What does lead to more employment is the feedback loop between customers and businesses. And only consumers can set in motion a virtuous cycle that allows companies to survive and thrive and business owners to hire. An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be.
Theory of Evolution
When businesspeople take credit for creating jobs, it is like squirrels taking credit for creating evolution. In fact, it’s the other way around.
It is unquestionably true that without entrepreneurs and investors, you can’t have a dynamic and growing capitalist economy. But it’s equally true that without consumers, you can’t have entrepreneurs and investors. And the more we have happy customers with lots of disposable income, the better our businesses will do.
That’s why our current policies are so upside down. When the American middle class defends a tax system in which the lion’s share of benefits accrues to the richest, all in the name of job creation, all that happens is that the rich get richer.
And that’s what has been happening in the U.S. for the last 30 years.
Since 1980, the share of the nation’s income for fat cats like me in the top 0.1 percent has increased a shocking 400 percent, while the share for the bottom 50 percent of Americans has declined 33 percent. At the same time, effective tax rates on the superwealthy fell to 16.6 percent in 2007, from 42 percent at the peak of U.S. productivity in the early 1960s, and about 30 percent during the expansion of the 1990s. In my case, that means that this year, I paid an 11 percent rate on an eight-figure income.
One reason this policy is so wrong-headed is that there can never be enough superrich Americans to power a great economy. The annual earnings of people like me are hundreds, if not thousands, of times greater than those of the average American, but we don’t buy hundreds or thousands of times more stuff. My family owns three cars, not 3,000. I buy a few pairs of pants and a few shirts a year, just like most American men. Like everyone else, I go out to eat with friends and family only occasionally.
It’s true that we do spend a lot more than the average family. Yet the one truly expensive line item in our budget is our airplane (which, by the way, was manufactured in France byDassault Aviation SA (AM)), and those annual costs are mostly for fuel (from the Middle East). It’s just crazy to believe that any of this is more beneficial to our economy than hiring more teachers or police officers or investing in our infrastructure.
More Shoppers Needed
I can’t buy enough of anything to make up for the fact that millions of unemployed and underemployed Americans can’t buy any new clothes or enjoy any meals out. Or to make up for the decreasing consumption of the tens of millions of middle-class families that are barely squeaking by, buried by spiraling costs and trapped by stagnant or declining wages.
If the average American family still got the same share of income they earned in 1980, they would have an astounding $13,000 more in their pockets a year. It’s worth pausing to consider what our economy would be like today if middle-class consumers had that additional income to spend.
It is mathematically impossible to invest enough in our economy and our country to sustain the middle class (our customers) without taxing the top 1 percent at reasonable levels again. Shifting the burden from the 99 percent to the 1 percent is the surest and best way to get our consumer-based economy rolling again.
Significant tax increases on the about $1.5 trillion in collective income of those of us in the top 1 percent could create hundreds of billions of dollars to invest in our economy, rather than letting it pile up in a few bank accounts like a huge clot in our nation’s economic circulatory system.
Consider, for example, that a puny 3 percent surtax on incomes above $1 million would be enough to maintain and expand the current payroll tax cut beyond December, preventing a $1,000 increase on the average worker’s taxes at the worst possible time for the economy. With a few more pennies on the dollar, we could invest in rebuilding schools and infrastructure. And even if we imposed a millionaires’ surtax and rolled back the Bush-era tax cuts for those at the top, the taxes on the richest Americans would still be historically low, and their incomes would still be astronomically high.
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
By: Nick Hanauer, Bloomberg, November 30, 2011
“Descending From The Mountaintop”: House Republicans Keeping The Faith
After preaching for weeks about the urgency of Washington taking action to create jobs, lawmakers decided to put their mammon where their mouths are. And so on Tuesday evening they descended from the mountaintop and came forth to anoint a jobs bill of biblical proportions:
“H.Con.Res 13 — Reaffirming ‘In God We Trust’ as the official motto of the United States.”
The grace of this legislation, taken up on the House floor, was not immediately revealed to all. “In God We Trust” has been the nation’s official motto for 55 years, engraved on the currency and public buildings. There is no emerging movement to change that. But House Republicans chose to look beyond the absence of immediate threats and instead protect the motto against yet-unimagined threats in the future.
The legislation “provides Congress with the opportunity to renew its support of a principle that was venerated by the founders of this country, and by its presidents, on a bipartisan basis,” supporters claimed in their analysis. “This Congress can now show that it still believes and recognizes those same eternal truths by approving a resolution that will allow today’s Congress, as representatives of the American people, to reaffirm to the public and the world our nation’s national motto, ‘In God We Trust.’ ”
The infidel opposition took a rather different view. “We are focused on jobs measures,” said Brian Fallon, spokesman for Senate Majority Leader Harry Reid. “The House Republicans will hopefully get the message to do the same, God willing.”
In a dissenting analysis of the legislation, a group of House Democrats took a similarly skeptical stance. “Today we face the highest budget deficit in our nation’s history, a national unemployment rate of nearly 9 percent, and an ongoing mortgage foreclosure crisis,” they wrote. “American forces are deployed in combat on several fronts. . . . Yet, instead of addressing any of these critical issues, and instead of working to help American families keep a roof over their heads and food on their tables, we are debating whether or not to affirm and proliferate a motto that was adopted in 1956 and that is not imperiled in any respect.”
Then there’s the matter of whether Republicans violated their own promises by bringing up a ceremonial resolution and taking the God bill to the floor without a hearing. House GOP rules forbid suspending House rules to pass a bill if it “expresses appreciation, commends, congratulates, celebrates, recognizes the accomplishments of, or celebrates the anniversary of, an entity, event, group, individual, institution, team or government program.” (It might be argued that God, though an entity, is exempt from the provision.)
So what, pray tell, are Republicans up to? They can tell their constituents that they are doing the Lord’s work in the devil’s town. Because it is still too early to complain about efforts by the ACLU to snuff out Christmas, the In-God-We-Trust legislation provides a stand-in straw man. There’s certainly some appetite for this: Internet rumors proliferated after President Obama’s inauguration warning that he was seeking to remove “In God We Trust” from U.S. coins.
But it also conveys an impression to independent voters that, at a time of economic crisis, Republicans continue to focus on God, gays and guns.
Of course, there may be innocent explanations for the In God We Trust bill. “God” and “job” are both three-letter words with the same vowel. House Republicans may have been confused by the similarity, much like the dyslexic agnostic who wonders if there is a dog.
Notably, the House majority saw no need to protect the nation’s other motto, the one from the Great Seal of the United States that also appears on currency: e pluribus unum. But give the GOP credit for its tenacity: To continue to pursue social policies even while the nation cries out for economic relief requires the patience of Job — not to be confused with jobs.
In support of the God bill, the legislation’s champions quoted John F. Kennedy: “The rights of man come not from the generosity of the state but from the hand of God.” But they left out a better-known Kennedy passage, from his inaugural address: “let us go forth to lead the land we love, asking His blessing and His help, but knowing that here on earth God’s work must truly be our own.”
By: Dana Milbank, Opinion Writer, The Washington Post, November 1, 2011
“In God We Trust”: In Congress We Stagnate
The House Republican leadership is determined to keep the chamber’s schedule to important matters, freeing up congressmen to do more important things, such as attend committee hearings and spend time in the district. That is largely a good idea, as long as it doesn’t keep members from spending time together and learning to work together.
What, then, possessed House leaders to allow the following onto the Tuesday schedule for bills to be considered “under suspension” of the rules?
“Reaffirming ‘In God We Trust‘ as the official motto of the United States and supporting and encouraging the public display of the national motto in all public buildings, public schools, and other government institutions,” the resolution says.
Seriously? Is there any practical importance of this resolution? They surely can’t force schools or even government institutions to display the motto. Schools in particular might be reluctant to do so, rightly worried about offending students and their families who worship different gods or no God at all. Let them worship learning. Let them trust in scholarship and study.
But that isn’t the point of the resolution—and bills considered “under suspension” (meaning they didn’t got through the committee process and require a supermajority for passage) don’t tend to have serious policy implications. They are all about campaigning, often to convince a voter group—in this case, religious voters—that Congress is on their side. And they are also meant, at times, to convince voters that the other party isn’t on their side.
If Congress wants to earn the trust of voters, it might try something that requires a bit more heavy lifting—passing legislation meant to create jobs, for example, or coming to a compromise on legislation to avert the automatic cuts in domestic and defense spending set to occur if the so-called “super committee” cannot find an alternative. “In God We Trust” might be a nice slogan on a coin. But when it comes to healing the ailing economy, the vaunted phrase is barely worth the dime it’s engraved on.
By: Susan Milligan, U. S. News and World Report, November 1, 2011
The Ideological Fantasies Of Inequality Deniers
Rising income inequality, like climate change, is an ideologically inconvenient issue for conservatives. They would prefer not to discuss it altogether. If forced to discuss it, they will generally either deny its existence or simply carry on as if it doesn’t exist.
The underlying facts, like the facts of climate change, are stark. Over the last few decades, income growth for most Americans has slowed to a crawl, while income for the very rich has exploded. That’s a reversal of the three decades following World War II, when all income groups got richer, with the poor and middle class rising at a faster rate than the rich. Crucially, the Congressional Budget Office’s new analysis shows that changes in government policy over this period have made inequality worse. (In CBO-speak: “The equalizing effect of transfers and taxes on household income was smaller in 2007 than it had been in 1979.”)
We’re not having a debate about how to reverse or even stop the growth of inequality. Nobody has a real plan to do that. The Democratic plan is to slightly arrest the growth of inequality by hiking taxes on the rich a few percentage points, so as to minimize the need to cut the social safety net. The Republican plan is to slash taxes for the rich and programs for the poor, thereby massively increasing inequality.
That is a hard position to defend in the context of exploding inequality, and conservatives would rather not defend it. Instead the right’s response has been to persistently deny or ignore the facts. Rick Perry, pressed by a reporter to explain why he was proposing a tax plan that would widen income inequality further, replied, “I don’t care about that.” The Wall Street Journal editorial page today dismissed the Tax Policy Center, whose calculations persistently show the ways in which various Republican tax proposals would widen inequality, as “liberal.” It didn’t even pretend to dispute the substance of the calculations. Eric Cantor gave a speech about income inequality centering on stories about how his grandmother worked hard and pulled herself up by the bootstraps in the old days. It was a nice speech if you like stories about plucky grandmothers. It failed to grasp the central dilemma, which is that it was a lot easier for poor people to move up sixty years ago, when tax rates on the rich happened to be far higher, than it is today.
Ah, but here comes Paul Ryan, fawned over in the media as “the GOP‘s strongest policy wonk,” to take the issue head on in a speech before the Heritage Foundation, hyped in advance by conservatives as a definitive statement of right-wing thought. Ryan’s speech is the portrait of a mind in the grips of an ideological fantasy, refusing to confront inconvenient facts.
Ryan establishes the tone of his argument by accusing President Obama of attacking “straw men,” and then proceeds to build a series of his own straw men, beginning in the very same sentence:
[Obama] is going from town to town, impugning the motives of Republicans, setting up straw men and scapegoats, and engaging in intellectually lazy arguments, as he tries to build support for punitive tax hikes on job creators. … he has launched his second campaign by preying on the emotions of fear, envy, and resentment. …Also according to the President’s logic, spending restraint is incompatible with a strong, well-functioning safety net.
Right, so Obama favors “punitive” tax rates, he promotes resentment of the rich, and he opposes any spending restraint whatsoever. Ryan produces no evidence to support these statements, because none exists. In reality, Obama never attacks the rich, he constantly insists that he respects economic success and merely wants to lessen the burden of budget cuts on the most vulnerable, and he agreed to reduce spending by more than a trillion dollars just this last summer. Ryan repeatedly accuses Obama of favoring “equality of outcome,” which is absurd.
Here is the closest Ryan comes to addressing Obama’s actual argument, which is that requiring somewhat higher taxes on the rich will reduce the scale of cuts required on programs for the poor and middle class:
The President has been talking a lot about math lately. He’s been saying that “If we’re not willing to ask those who’ve done extraordinarily well to help America close the deficit… the math says… we’ve got to put the entire burden on the middle class and the poor.”This is really a stunning assertion from the President. When you look at the actual math, you quickly realize that the way out of this mess is to combine economic growth with reasonable, responsible spending restraint. Yet neither of these things factors into the President’s zero-sum logic.
It’s “stunning,” says Ryan, because it relies on zero-sum math. More tax hikes on the rich means less spending cuts. Ryan finds this stunning because he believes in supply-side fairy tales in which cutting taxes for the rich will produce enormous growth. Never mind that the last two presidential administrations have disproved the supply-side theory about as conclusively as a real world experiment can do. (Bill Clinton raised taxes on the rich, conservatives predicted disaster, and instead we experienced a long boom; George W. Bush lowered taxes on the rich, conservatives predicted a huge boom, and instead we got an weak recovery with no income growth for anybody save the very rich.)
Ryan likewise assails Obama’s calculations by trying to persuade his audience that there’s really not much money to be raised by taxing the rich:
And his math is no better on the tax side. Let’s say we took all the income from those the President calls “rich” — those making $250,000 or more. A 100 percent tax rate on their total annual income would only fund the government for six months. Just six months!
Uh, has anybody told Ryan that there are only twelve months in a year? Because six of twelve months is not a trivial percentage. Another way to put this is that the richest 1 percent of taxpayers earn 17 percent of the nation’s income, and federal spending accounts for a little over 20 percent. Obviously, taking all the income from the top 1 percent would be a terrible idea, but taxing a decent chunk of their income clearly can get you pretty far.
Ryan likewise insists that the debate over rich investors who pay lower tax rates than the middle class is contrived:
Obama quotes Reagan as saying that bus drivers shouldn’t pay a higher effective tax rate than millionaires. Well, that’s a no-brainer. Nobody disagrees with that.
Nobody disagrees with that? How about Paul Ryan? His tax plan from 2010 would exempt all investment income from taxes, meaning that large segments of the rich would pay nothing at all. The average federal tax rate on households earning more than a million dollars a year, under Ryan’s plan, would be well under 13 percent, compared with a 19.5 percent average federal tax rate for households earning $50,000 to $75,000 a year.
Ryan concludes his speech with a ringing endorsement of equality of opportunity, which he contrasts with the stagnant, European-style class-bound society that Democrats crave to replicate:
Telling Americans they are stuck in their current station in life, that they are victims of circumstances beyond their control, and that government’s role is to help them cope with it — well, that’s not who we are. That’s not what we do.Our Founding Fathers rejected this mentality. In societies marked by class structure, an elite class made up of rich and powerful patrons supplies the needs of a large client underclass that toils, but cannot own. The unfairness of closed societies is the kindling for class warfare, where the interests of “capital” and “labor” are perpetually in conflict. What one class wins, the other loses.
The legacy of this tradition can still be seen in Europe today: Top-heavy welfare states have replaced the traditional aristocracies, and masses of the long-term unemployed are locked into the new lower class. …Whether we are a nation that still believes in equality of opportunity, or whether we are moving away from that, and towards an insistence on equality of outcome.
It’s a compelling vision. Unfortunately, Ryan’s understanding of reality is a complete inversion of actual reality. “Equality of opportunity” bears no relation to the reality of the American economy or any economy. Parents can benefit their children by giving them money, better schools, better home environments, tutoring, camp, and other advantages. Opportunity is overwhelmingly unequal. One result is that rich kids perform far better in school than poor kids. But that is not the only result. Poor kids who beat the odds and get high test scores are less likely to complete college than rich kids with middling or even low test scores. Poor kids who beat those odds and graduate from college are still less likely to grow up to be rich than rich kids who did not graduate from college. I’m not sure if there’s a perfect solution, but pretty sure Ryan’s plan to slash Pell Grants is not going to help.
Ryan’s decision to cite Europe as a place where people can’t move beyond their birth station is especially unfortunate. In fact, social mobility in Europe is higher than in the United States, a fact even Rick Santorum has acknowledged.
The way to understand Ryan is that he’s deeply influenced by the theories of Ayn Rand, who believed that the root of all evil lay in attempts to alter the wealth distribution created by the free marketplace. Rand may have been a deranged cult leader, but she did live at a time when the fear of the poor devouring the rich had an actual real-world basis. She escaped communist Russia for the United States, Franklin Roosevelt — while not a reprise of the communists, as she mistakenly believed — really did denounce the rich and impose confiscatory tax rates. The world of Rand’s imagination bore a slight resemblance to the world she inhabited, but it bears no resemblance to the contemporary United States.
Ryan cannot process the realities of this world because they are so at odds with the imagined world of his ideology. After his speech, he was asked about the CBO’s report on inequality, and he brushed it off, falling back on Rand-esque lingo the virtuous rich (“takers”) and parasitic poor (“makers”):
“Let’s not focus on redistribution, let’s focus on upward mobility,” he said. “If these studies are used as justification for erecting new and more barriers for making it harder for people to rise, all that will do is reduce our prosperity in this country.”“We’re coming close to a tipping point in America where we might have a net majority of takers versus makers in society and that could become very dangerous if it sets in as a permanent condition.
Don’t confuse Paul Ryan with the facts. If studies run up against Ryan’s ideology, then the studies must give way.
By: Jonathan Chait, Daily Intel, New York Magazine, October 26, 2011
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