By: Eugene Robinson, Opinion Writer, The Washington Post, September 19, 2011
Herman Cain Riding High: Dial 9-9-9 For Nonsense
Herman Cain is riding high in the polls. Among other things, his ascent is based upon a charming sense of humour, rousing oratorical skills, a story of moderate achievement in business, zero experience in elected office, which has allowed him to mould a perfectly zeitgest-matching conservative platform untainted by a record of no-longer zeitgest-matching political decisions, and, finally, the bold, clear proposition of the 9-9-9 tax plan. Now that Mr Cain is having a moment in the sun, what had seemed a gimmicky ploy is undergoing serious scrutiny, and we can expect Mr Cain to get hammered on the details of the 9-9-9 plan in tomorrow night’s Republican debate.
Mr Cain touts the simplicity of the 9-9-9 plan, but it is anything but simple. Even after reading about it on Mr Cain’s campaign site, I’m still not sure I understand it. I thought I knew that the plan proposed 9% income, sales, and corporate tax rates. But the corporate tax is not a simple reduction in the corporate tax rate, as I had thought, but a value-added-tax on “Gross income less all purchases from other U.S. located businesses, all capital investment, and net exports.” Anyway, the 9-9-9 plan is not what Mr Cain ultimately has in mind for American tax policy. It is but the first step of a two-step process to replace most federal taxes with a 30% national sales tax, a version of the so-called “Fair Tax”. Why not go directly to the Fair Tax, then? Why the transitional step? Mr Cain’s statement doesn’t really say, though it does seem to imply that the Fair Tax is at present too unpopular to implement. “Amidst a backdrop of the economic renewal created by the 9-9-9 Plan,” Mr Cain says “I will begin the process of educating the American people on the benefits of continuing the next step to the Fair Tax.”
Mike Huckabee, a Fox News presenter and former governor of Arkansas, plumped for the Fair Tax during the 2008 race for the Republican nomination and the plan came in for a lot of abuse by economists and commentators across the ideological continuum. Perhaps Mr Huckabee’s failure to get far with the Fair Tax explains Mr Cain’s choice to campaign on an altogether different tax plan. Perhaps the idea is that he can capture the allegiance of the Fair Tax’s many conservative fans while ducking the criticisms of the Fair Tax by pushing a fresh plan with a catchy name implying super-low rates. But this can only work if (a) the media and Mr Cain’s competition let him get away with advocating the Fair Tax while running on his transitional plan, and (b) the transitional plan stands up to scrutiny better than the Fair Tax has. And this seems unlikely.
The National Review today ran a blistering critique of Mr Cain’s 9-9-9 plan. A selection:
This tripartite scheme makes for a succinct slogan but has little else to recommend it. In particular Cain’s inability to choose between a sales tax and a VAT is puzzling. The two are very similar in their economic effects. The chief advantage of the sales tax over a VAT is that the latter is considered easier for governments to raise, because it is hidden. The chief advantage of the VAT over the sales tax is that it is easier to enforce without stimulating black markets. (Another is that it reduces the risk of taxing business-to-business purchases.) Opting for both as a transitional step means courting the danger of a VAT with none of its rewards: In the first stage, the government would get a new money machine, and in the second it would supposedly destroy that machine and opt for something hard to enforce.
The two-stage scheme is self-defeating in another respect as well. The 30 percent national sales tax, whatever its other merits, would be significantly softer on the poor than the 9-9-9 transitional step, since the larger sales tax includes a “prebate” check to all Americans to exempt the basic necessities of life from being taxed, while 9-9-9 includes no similar provision. Leaving aside whether a major tax increase on people at the bottom of the income scale is a good idea, what is the point of first raising their taxes and then cutting them?
In the last debate, only Rick Santorum noted that Mr Cain’s plan involves the danger of even temporarily handing the government “a new money machine”, a point one would expect to resonate with conservative voters. I expect we’ll hear a lot more of this line of argument in upcoming debates. More generally, the fact that Mr Cain apparently believes it is politically feasible to wipe out the entire status-quo federal tax system in order to move to the 9-9-9 scheme, and then wipe out the entire 9-9-9 scheme in order move to a 30% national sales tax seems to me to draw attention to Mr Cain’s policy inexperience and dazzling political naivete.
That the 9-9-9 plan would cut taxes on the rich while raising them on the poor led Bruce Bartlett to call the proposal “a distributional monstrosity”, a phrase you could imagine Barack Obama using to good effect in a general election. Why would you propose to raise taxes on the poor, making yourself vulnerable to charges of monstrous callousness, when, as the NR editors note, your ultimate plan would only cut them later? Well, you wouldn’t, if you knew what you were doing. It requires only superficial examination to see that Mr Cain’s 9-9-9/Fair Tax scheme is more an ill-considered, hand-waving improvisation than a serious plan from a serious policymaker. He’s winging it, which I supposed makes it all the more impressive that he’s been able to wing it all the way to preeminence in a few polls. But now he’s made himself a target, and an easy one at that, so I doubt Mr Cain will wing it all the way to the nomination.
By: Will Wilkerson, Democracy in America, October 17, 2011
Mainers Ask “What Side” Sens. Snowe And Collins Are On
The votes by Maine Republican Senators Olympia Snowe and Susan Collins against the American Jobs Act, which Moody’s Analytics estimated would create nearly 2 million new jobs, have sparked protests in Augusta:
The ongoing series of Wall Street protests moved to Maine’s capital Thursday as about two dozen trade workers, state employees and residents held a rally calling for passage of a federal jobs bill and a new tax to pay for it.
“They got bailed out, we got sold out,” the protesters chanted from under their umbrellas as they left the State House in the rain for the federal building a couple of blocks away to deliver their demands to the offices of U.S. Sens. Olympia Snowe and Susan Collins. Those demands included lists of projects that could be funded in Maine. […]
“Workers like us didn’t crash the economy; Wall Street did,” said Dawn Frank of Oxford, an electrician who has had difficulty finding work. “It’s been rough. It’s been rough for everybody. Let’s get Maine workers like me rebuilding our country.”
Donna Dachs, a retired teacher from Readfield, said the state’s schools, roads, bridges and ports urgently need upgrades.
And the protesters aren’t just unhappy with Wall Street — they want some answers from their senators, too:
The folks here, like Cokie Giles, President of the Maine State Nurses Association, say they want congress to pass legislation to create jobs. “The first one is good jobs with livable wages. There’s a difference between having a job and having livable wages,” Giles said. […]
Senators Olympia Snowe and Susan Collins both voted against the president’s jobs bill earlier this week. A move that angered the people gathered in Augusta. “What we’re gonna do is ask Senators Snowe and Collins what side they’re on. Are they on Wall Street’s side or are they on Main street?” Giles asked the supporters.
That’s a good question — but Snowe has already answered it. In her five-paragraph statement about her vote against the jobs bill, Snowe indicated an objection to only one of the bill’s provisions: the surcharge on adjusted gross income in excess of one million dollars a year, which would affect only one-tenth of one percent of Maine residents.
So it’s pretty clear what side Snowe is on: She sides with the richest one-tenth of one percent of Mainers, and against 99.9 percent of her constituents. It really doesn’t get much clearer than that. But just to drive the point home, Snowe spoke to group of businessmen this morning, where she courageously told themtheir taxes are too high and they are over-regulated. That probably played better with the financial elites who fund her campaigns than with the struggling working-class voters who elect her, but it is neither the problem with the economy nor the solution to its problems. Snowe also backed a balanced budget amendment, which, according to Gus Faucher, Moody’s Analytics’ director of macroeconomics, “is likely to push the economy back into recession.” Naturally, Snowe didn’t explain how she’d balance the budget — she likes to leave the solutions to others.
Jamison Foser, Media Matters, October 14, 2011
“Economic Royalists”: The Panic Of The Plutocrats
It remains to be seen whether the Occupy Wall Street protests will change America’s direction. Yet the protests have already elicited a remarkably hysterical reaction from Wall Street, the super-rich in general, and politicians and pundits who reliably serve the interests of the wealthiest hundredth of a percent.
And this reaction tells you something important — namely, that the extremists threatening American values are what F.D.R. called “economic royalists,” not the people camping in Zuccotti Park.
Consider first how Republican politicians have portrayed the modest-sized if growing demonstrations, which have involved some confrontations with the police — confrontations that seem to have involved a lot of police overreaction — but nothing one could call a riot. And there has in fact been nothing so far to match the behavior of Tea Party crowds in the summer of 2009.
Nonetheless, Eric Cantor, the House majority leader, has denounced “mobs” and “the pitting of Americans against Americans.” The G.O.P. presidential candidates have weighed in, with Mitt Romney accusing the protesters of waging “class warfare,” while Herman Cain calls them “anti-American.” My favorite, however, is Senator Rand Paul, who for some reason worries that the protesters will start seizing iPads, because they believe rich people don’t deserve to have them.
Michael Bloomberg, New York’s mayor and a financial-industry titan in his own right, was a bit more moderate, but still accused the protesters of trying to “take the jobs away from people working in this city,” a statement that bears no resemblance to the movement’s actual goals.
And if you were listening to talking heads on CNBC, you learned that the protesters “let their freak flags fly,” and are “aligned with Lenin.”
The way to understand all of this is to realize that it’s part of a broader syndrome, in which wealthy Americans who benefit hugely from a system rigged in their favor react with hysteria to anyone who points out just how rigged the system is.
Last year, you may recall, a number of financial-industry barons went wild over very mild criticism from President Obama. They denounced Mr. Obama as being almost a socialist for endorsing the so-called Volcker rule, which would simply prohibit banks backed by federal guarantees from engaging in risky speculation. And as for their reaction to proposals to close a loophole that lets some of them pay remarkably low taxes — well, Stephen Schwarzman, chairman of the Blackstone Group, compared it to Hitler’s invasion of Poland.
And then there’s the campaign of character assassination against Elizabeth Warren, the financial reformer now running for the Senate in Massachusetts. Not long ago a YouTube video of Ms. Warren making an eloquent, down-to-earth case for taxes on the rich went viral. Nothing about what she said was radical — it was no more than a modern riff on Oliver Wendell Holmes’s famous dictum that “Taxes are what we pay for civilized society.”
But listening to the reliable defenders of the wealthy, you’d think that Ms. Warren was the second coming of Leon Trotsky. George Will declared that she has a “collectivist agenda,” that she believes that “individualism is a chimera.” And Rush Limbaugh called her “a parasite who hates her host. Willing to destroy the host while she sucks the life out of it.”
What’s going on here? The answer, surely, is that Wall Street’s Masters of the Universe realize, deep down, how morally indefensible their position is. They’re not John Galt; they’re not even Steve Jobs. They’re people who got rich by peddling complex financial schemes that, far from delivering clear benefits to the American people, helped push us into a crisis whose aftereffects continue to blight the lives of tens of millions of their fellow citizens.
Yet they have paid no price. Their institutions were bailed out by taxpayers, with few strings attached. They continue to benefit from explicit and implicit federal guarantees — basically, they’re still in a game of heads they win, tails taxpayers lose. And they benefit from tax loopholes that in many cases have people with multimillion-dollar incomes paying lower rates than middle-class families.
This special treatment can’t bear close scrutiny — and therefore, as they see it, there must be no close scrutiny. Anyone who points out the obvious, no matter how calmly and moderately, must be demonized and driven from the stage. In fact, the more reasonable and moderate a critic sounds, the more urgently he or she must be demonized, hence the frantic sliming of Elizabeth Warren.
So who’s really being un-American here? Not the protesters, who are simply trying to get their voices heard. No, the real extremists here are America’s oligarchs, who want to suppress any criticism of the sources of their wealth.
By: Paul Krugman, Op-Ed Columnist, The New York Times, October 9, 2011
“Occupy Wall Street” Picks Up Where The Tea Party Sold Out
The federal bank bailout masterminded by President George W. Bush and his Treasury Secretary Henry Paulson ignited the grassroots anger that created the Tea Party. But the populist group betrayed its roots when it went corporate in 2009 after the friendly takeover by Rupert Murdoch and the Koch brothers. The Tea Party sellout may be the reason why the group’s negative ratings have doubled in national polls in the last year.
The Tea Party had every right to be angry in the fall of 2008. The finance industry spent $64 million lobbying Washington in 2008, and the bankers and hedge fund managers got a great return on their investment. The feds came up with $770 billion dollars to bail out the bankers and billionaires who created the economic meltdown that led to millions of Americans losing their jobs and then their homes.
Americans were justifiability horrified at the single biggest federal welfare payment of all time. Not only did the feds bailout out Wall Street but they failed to do anything to help the millions of Americans who lost everything they had because of corporate wrongdoing. Meanwhile, Citibank used $15 million of their fed bailout bucks to buy the naming rights to the new stadium built for the New York Mets.
National surveys show that large majorities of Americans favor ending federal tax freebies for bankers, billionaires, hedge fund managers, and corporate jet setters. The public also wants to end tax giveaways for the oil companies and the Benedict Arnold corporations that send American jobs overseas. But few people in Washington listen, the Tea Party punted, and thousands of courageous Americans are taking to the streets.
To add fuel to the fire, the Bank of America announced this week that it would charge consumers $5 a month to use their own debit cards. After the Tea Party became a subsidiary of corporate America, it was just a matter of time until somebody rushed into the vacuum to channel the hostility that exists towards big business.
By: Brad Bannon, U. S. News and World Report, October 6, 2011
Obama’s Tax Plan Is Common Sense, Not Class warfare
“Class warfare!” scream the Republicans, in a voice usually reserved for phrases such as “Run for your lives!”
Spare us the histrionics. The GOP and its upper-crust patrons have been waging an undeclared but devastating war against middle-class, working-class and poor Americans for decades. Now they scream bloody murder at the notion that long-suffering victims might finally hit back.
President Obama’s proposal to boost taxes for the wealthy by $1.5 trillion over the next decade is a good first step toward reforming a system in which billionaire hedge-fund executives are taxed at a lower rate than are their chauffeurs and private chefs.
Republicans whine that, since they oppose raising taxes on the rich — and control the House of Representatives, which can block such legislation — Obama’s proposal should be seen as political, not substantive. This is just a campaign initiative, they say, not a “serious” plan to address the nation’s financial and economic woes.
But that’s pure solipsism: Whatever does not fit the GOP’s worldview is, by definition, illegitimate. By this standard, Obama could propose only measures that are in the Republican Party’s platform — which obviously would defeat the purpose of being elected president as a progressive Democrat in the first place.
Outside of the Republican echo chamber, polls consistently show the American people consider unemployment to be the nation’s most urgent problem, not deficits and debt. Obama was on target with the American Jobs Act he proposed this month; the only question was what took him so long.
Americans do have long-term concerns about debt, however, and by large margins they see an obvious solution: a balanced combination of spending cuts and tax increases. In other words, they want precisely the kind of approach that House Speaker John A. Boehner (R-Ohio) rejected during the debt-ceiling fight — and that he vows to reject again.
Why did Republicans begin squawking about class warfare even before Obama had a chance to announce his proposals? Because by calling on the rich to pay “their fair share” of taxes, the president has hit upon a clear and simple way to illustrate how unequal and unfair our society has become.
Since the beginning of the Reagan years, the share of total income captured by the top 1 percent of earners has doubled while the share taken by the bottom 80 percent has fallen. The rich are getting richer at the expense not only of the poor but of the middle class as well.
Studies demonstrating this trend tend to be dry and, let’s face it, sleep-inducing. But the perverse disparity in tax rates between the super-rich and the rest of us is enough to grab anyone’s attention.
The very wealthy earn much of their income through dividends and capital gains, which are taxed at 15 percent. This low rate would apply specifically to a wildly successful hedge-fund manager who made, say, $50 million last year. By contrast, an insurance company executive who made $500,000 — just 1 percent of what the hedge-fund manager took home — would pay a top marginal income tax rate of 35 percent. Even a teacher who made just $50,000 — 0.1 percent of the hedge-fund haul — would pay a top marginal rate of 25 percent.
Obama proposes tax legislation that would erase this disparity. He also vows that, unless Congress enacts comprehensive — and fair — tax reform, he will allow the Bush tax cuts for households earning more than $250,000 a year to expire at the end of 2012.
The overall plan that Obama announced Monday would cut deficits by about $4 trillion over the next 10 years — without gutting programs that bolster the middle class and aid the poor. New tax revenue and money saved from ending the wars in Iraq and Afghanistan make up most of the total.
Obama’s proposed savings in Medicare and Medicaid are modest and tailored so that their impact is progressive. The president correctly decided that ensuring Social Security’s long-term solvency should proceed on a separate track. All this should be heartening to those who really want to preserve these vital programs.
The headline from Obama’s plan, though, is the call for wealthy Americans to pay taxes like everybody else. If Republicans believe the current system is fine, Obama said, “they should be called out. They should have to defend that unfairness. . . . They ought to have to answer for it.”
We’ve already heard their answer.
And we’ve heard Obama’s retort: “This is not class warfare. It’s math.”
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