Coddled Long Enough: The “Buffett Rule” Vs “Class Warfare”
Over the weekend, the White House leaked word that President Obama will push a new debt-reduction idea: the “Buffett Rule.” Named after Warren Buffett, the chairman and chief executive of Berkshire Hathaway, who’s been urging policymakers to raise taxes on the very wealthy. As Buffett recently explained, millionaires and billionaires “have been coddled long enough.”
We don’t yet know the details of the proposal — most notably, what the new millionaires’ minimum tax rate would be — but Republicans are already responding with predictable disgust.
Here, for example, was House Budget Committee Chairman Paul Ryan (R-Wis.) yesterday on Fox News, making the case for coddling millionaires and billionaires for a while longer. See if you can pick up on the subtlety of his talking points.
“Class warfare, Chris, may make for really good politics but it makes a rotten economics. We don’t need a system that seeks to divide people. […]
“[I]t looks like the president wants to move down the class warfare path. Class warfare will simply divide this country more. It will attack job creators, divide people and it doesn’t grow the economy. […]
“[I]f we are just going to do class warfare and trying to get tax increases out of this, and I don’t think much will come of it…. He’s in a political class warfare mode and campaign mode.”
So, I guess I’ll put him down as a “maybe” on the Buffett Rule?
By any reasonable measure, Ryan’s arguments aren’t just wrong, they’re borderline offensive.
For a generation, Republican policymakers have rigged national tax policy to reward the wealthy, and then reward them some more. We’ve seen the class gap reach Gilded Era levels, only to hear GOP officials again demand that working families “sacrifice” while lavishing more breaks on the very wealthy.
Remind me, who’s engaged in “class warfare” and “dividing people”?
Also note the larger policy context here. President Obama wants the richest of the rich to pay a little more, but keep tax breaks in place for the middle class. Paul Ryan and his cohorts want the polar opposite — more breaks for the very wealthy and higher taxes for the middle class.
Let’s also not forget that one of the GOP’s more common tax-policy arguments is that nearly half the country doesn’t have any federal income tax burden — and they see that as a problem that needs fixing. As a practical matter, the Republican argument on this is practically the definition of “class warfare.”
I realize much of the political establishment has come to look at Paul Ryan as a wise wonk who deserves to be taken seriously, but it really doesn’t take much to realize how spectacularly wrong the far-right Wisconsinite really is.
By: Steve Benen, Washington Monthly Political Animal, September 19, 2011
John Boehner In GOP Fantasyland
One wonders why Congress convened its budget-reforming “supercommittee” at all; House Speaker John Boehner (R) on Thursday announced that he’d done all its members’ work for them.
At a speech to the Economic Club of Washington, Boehner articulated a hard-right line on taxes that even the most moderate of Democrats could never accept. Remove loopholes from the tax code, he argued, but “not for the purpose of bringing more money into the government.” Tax increases? Not a chance — they “are off the table,” Boehner said, repeating the dubious argument that planning to raise revenue many years down the road would hurt job creation now. If you’re looking for deficit reduction, Boehner barked, “the joint committee only has one option — spending cuts and entitlement reform.”
A new Bloomberg poll on Thursday reconfirmed voter anger at Washington’s inability to compromise — on budgets, on jobs policy, on long-term deficits. On the same day, the speaker gave a lesson by example of why it’s been so hard.
True, Boehner’s speech followed news that President Obama is scaling back the entitlement reforms he would favor in a long-term budget reform package, retreating from concessions he was willing to make over the summer to strike a debt deal. Both sides, then, are hardening their positions. But Obama’s remains politically braver than Boehner’s, since the president says he still wants to achieve some balance between raising revenue and cutting spending through reforms to Medicare, the protection of which Democrats are desperate to use as a campaign issue.
That is the key to deficit-cutting, drilled home in study after study: You can’t expect to fix America’s finances with tax increases alone or with spending cuts alone. Plans that lack this essential balance would fail either because their math doesn’t add up (the GOP’s Ryan plan) or because they would be reversed the second the other party took control of the government (the Congressional Progressive Caucus’s proposal…and the Ryan plan).
A deficit plan must also be balanced in another way — against premature budget austerity while the economy is sluggish, which Obama designed his latest jobs plan to avoid. Boehner said on Thursday there might be room for limited agreement with Obama. But not much, signalling disapproval of even the sorts of temporary tax cuts that would have been an obvious choice for Republicans for decades — until now.
Boehner might just be gearing up for further negotiations. But the speaker’s demonstration that he and his party are still in thrall to the ideological fantasies he described on Thursday aren’t going to enhance Americans’ confidence — in their leaders, or in their economic future.
By: Stephen Stromberg, The Washington Post, September 15, 2011
Memo To Speaker Boehner: Time To Get Off “My Way Or The Highway” Hypocrisy
In a wide-ranging speech about jobs and the budget on Thursday, House Speaker John A. Boehner (R-Ohio) trumpeted the worthy goals of cleaning up the tax code and reducing long-term deficits, and he had a few promising words about how to achieve them. “If we want to create a better environment for job creation,” the speaker said, “politicians of all stripes can leave the ‘my way or the highway’ philosophy behind.”
Yet Mr. Boehner also insisted that Congress’s Joint Select Committee on Deficit Reduction has only “one option”: the Republican way.
President Obama has proposed a jobs plan, but there’s only one job the GOP wants.
Congress should remove inefficient carve-outs, credits and loopholes in the tax code, he said, but “not for the purposes of bringing more money into the government.” Tax increases “are off the table.” “Spending cuts and entitlement reform” are the only ways the joint committee can reach its $1.5 trillion deficit-reduction target.
Mr. Boehner isn’t the only one toughening his stance as the joint committee gets underway. President Obama is retreating from reforms to Social Security that he was ready to consider during the summer debt-limit negotiations. But Mr. Obama still expresses a willingness to reform Medicare, an ideological and political compromise.
Willingness on both sides is essential. Reams of expert studies have found that any deal to significantly reduce long-term deficits must achieve a balance between money-saving reforms to increasingly expensive entitlement programs and a sizable boost in federal revenue. Plans that don’t reflect this balance would fail because their math wouldn’t add up, they wouldn’t be politically durable, or both.
While planning for long-term fiscal sustainability, Congress also cannot risk enhancing economic hardship now by moving too quickly toward budget austerity. Mr. Obama’s recently announced jobs plan seeks to avoid this with new spending and temporary tax cuts that economists say will help guard against a double-dip recession. Here, too, however, Mr. Boehner indicated Thursday that the chances for cooperation with Republicans is limited, saying that he doesn’t favor “short-term gimmicks.”
Poll after poll has shown that Washington leaders’ inability to surrender ideological ground is poisoning Americans’ faith in their national leadership — perhaps even in the very institutions of government. Mr. Boehner and his party should live up to the speaker’s own standard — and leave the “my way or the highway” philosophy behind.
By: Editorial Board, The New York Times, September 16, 2011
“Love Thy Neighbor As Thyself”: Where Are The Compassionate Conservatives?
We heard plenty of contradictions, distortions and untruths at the Republican candidates’ Tea Party debate, but we heard shockingly little compassion — and almost no acknowledgement that political and economic policy choices have a moral dimension.
The lowest point of the evening — and perhaps of the political season — came when moderator Wolf Blitzer asked Ron Paul a hypothetical question about a young man who elects not to purchase health insurance. The man has a medical crisis, goes into a coma and needs expensive care. “Who pays?” Blitzer asked.
“That’s what freedom is all about, taking your own risks,” Paul answered. “This whole idea that you have to prepare and take care of everybody. . . .”
Blitzer interrupted: “But Congressman, are you saying that society should just let him die?”
There were enthusiastic shouts of “Yeah!” from the crowd. You’d think one of the other candidates might jump in with a word about Christian kindness. Not a peep.
Paul, a physician, went on to say that, no, the hypothetical comatose man should not be allowed to die. But in Paul’s vision of America, “our neighbors, our friends, our churches” would choose to assume the man’s care — with government bearing no responsibility and playing no role.
Blitzer turned to Michele Bachmann, whose popularity with evangelical Christian voters stems, at least in part, from her own professed born-again faith. Asked what she would do about the man in the coma, Bachmann ignored the question and launched into a canned explanation of why she wants to repeal President Obama’s Affordable Care Act.
According to the Gospel of Matthew, Jesus told the Pharisees that God commands us to “love thy neighbor as thyself.” There is no asterisk making this obligation null and void if circumstances require its fulfillment via government.
Bachmann knows a lot about compassion. She makes much of the fact that she and her husband took in 23 foster children over the years. But what of the orphaned or troubled children who are not lucky enough to find a wealthy family to take them in? What of the boys and girls who have stable homes but do not regularly see a doctor because their parents lack health insurance?
Government can reach them. But according to today’s Republican dogma, it must not.
Rick Perry, Mitt Romney, Bachmann, Paul and the others onstage in Tampa all had the same prescription for the economy: Cut spending, cut taxes and let the wealth that results trickle down to the less fortunate.
They betrayed no empathy for, or even curiosity about, the Americans who depend on the spending that would be cut. They had no kind words — in fact, no words at all — for teachers, firefighters and police officers who will lose their jobs unless cash-strapped state and local government receive federal aid. Public servants, the GOP candidates imply, don’t hold “real” jobs. I wonder: Do Republicans even consider them “real” people?
Government is more than a machine for collecting and spending money, more than an instrument of war, a book of laws or a shield to guarantee and protect individual rights. Government is also an expression of our collective values and aspirations. There’s a reason the Constitution begins “We the people . . .” rather than “We the unconnected individuals who couldn’t care less about one another . . . .”
I believe the Republican candidates’ pinched, crabby view of government’s nature and role is immoral. I believe the fact that poverty has risen sharply over the past decade — as shown by new census data — while the richest Americans have seen their incomes soar is unacceptable. I believe that writing off whole classes of citizens — the long-term unemployed whose skills are becoming out of date, thousands of former offenders who have paid their debt to society, millions of low-income youth ill-served by inadequate schools — is unconscionable.
Perry, who is leading in the polls, wants to make the federal government “inconsequential.” He thinks Social Security is a “Ponzi scheme” and a “monstrous lie.” He doesn’t much like Medicare, either.
But there was a fascinating moment in the debate when Perry defended Texas legislation that allows children of illegal immigrants to pay in-state tuition at state universities. “We were clearly sending a message to young people, regardless of what the sound of their last name is, that we believe in you,” Perry said.
The other candidates bashed him with anti-immigrant rhetoric until the evening’s only glimmer of moral responsibility was snuffed out.
By: Eugene Robinson, Opinion Writer, The Washington Post, September 15, 2011
The GOP Magical World Of Voodoo ‘Economists’: Repeal The 20th Century
If you came up with a bumper sticker that pulls together the platform of this year’s crop of Republican presidential candidates, it would have to be:
Repeal the 20th century. Vote GOP.
It’s not just the 21st century they want to turn the clock back on — health-care reform, global warming and the financial regulations passed in the wake of the recent financial crises and accounting scandals.
These folks are actually talking about repealing the Clean Air Act, the Clean Water Act and the Environmental Protection Agency, created in 1970s.
They’re talking about abolishing Medicare and Medicaid, which passed in the 1960s, and Social Security, created in the 1930s.
They reject as thoroughly discredited all of Keynesian economics, including the efficacy of fiscal stimulus, preferring the budget-balancing economic policies that turned the 1929 stock market crash into the Great Depression.
They also reject the efficacy of monetary stimulus to fight recession, and give the strong impression they wouldn’t mind abolishing the Federal Reserve and putting the country back on the gold standard.
They refuse to embrace Darwin’s theory of evolution, which has been widely accepted since the Scopes Trial of the 1920s.
One of them is even talking about repealing the 16th and 17th amendments to the Constitution, allowing for a federal income tax and the direct election of senators — landmarks of the Progressive Era.
What’s next — repeal of quantum physics?
Not every candidate embraces every one of these kooky ideas. But what’s striking is that when Rick Perry stands up and declares that “Keynesian policy and Keynesian theory is now done,” not one candidate is willing to speak up for the most important economic thinker of the 20th century. Or when Michele Bachmann declares that natural selection is just a theory, none of the other candidates is willing to risk the wrath of the religious right and call her on it. Leadership, it ain’t.
I realize economics isn’t a science the way biology and physics are sciences, but it’s close enough to one that there are ideas, principles and insights from experience that economists generally agree upon. Listening to the Republicans talk about the economy and economic policy, however, is like entering into an alternative reality.
Theirs is a magical world in which the gulf oil spill and the Japanese nuclear disaster never happened and there was never a problem with smog, polluted rivers or contaminated hamburger. It is a world where Enron and Worldcom did not collapse and shoddy underwriting by bankers did not bring the financial system to the brink of a meltdown. It is a world where the unemployed can always find a job if they really want one and businesses never, ever ship jobs overseas.
As politicians who are always quick to point out that it is only the private sector that creates economic growth, I found it rather comical to watch the governors at last week’s debate duke it out over who “created” the most jobs while in office. I know it must have just been an oversight, but I couldn’t help noticing that neither Mitt Romney nor Perry thought to exclude the thousands of government jobs included in their calculations — the kinds of jobs they and their fellow Republicans now view as economically illegitimate.
And how wonderfully precise they can be when it comes to job numbers. Romney is way out front when it comes to this kind of false precision. His new economic plan calculates that President Obama would “threaten” 7.3 million jobs with the ozone regulation that, in fact, the president had just canceled. By contrast, Romney claims his own plan will create 11 million jobs in his first term — not 10, not 12, but 11 million.
When you dig into such calculations, however, it turns out many are based on back-of-the-envelope extrapolations from industry data that totally ignore the dynamic quality of economic interactions.
One recent example comes from the cement industry, which now warns that new regulations limiting emissions of sulfur dioxide and nitrogen oxide could close as many as 18 of the 100 cement plants in the United States, resulting in the direct loss of 13,000 jobs.
Then again, where do you think all those customers of the 18 plants will get their cement? Do you think they might get some of it from the other 82 plants, which in turn might have to add a few workers to handle the additional volume? Or that a higher price for cement might induce somebody to build a modern plant to take advantage of the suddenly unmet demand? Or perhaps that higher prices for cement will lead some customers to use another building material produced by an industry that will have to add workers to increase its output? And what about the possibility that the regulation will encourage some innovative company to devise emissions-control equipment that will not only allow some of those plants to remain open but generate a few thousand extra jobs of its own as it exports to plants around the world.
Such possibilities are rarely, if ever, acknowledged in these “job-scare studies.” Also left out are any estimates of the benefits that might accrue in terms of longer, healthier lives. In the Republican alternative universe, it’s all costs, no benefits when it comes to government regulation. As they see it, government regulators wake up every morning with an uncontrollable urge to see how many jobs they can destroy.
If consistency is the hobgoblin of small minds, then these Republican presidential candidates are big thinkers, particularly on fiscal issues.
In the Republican alternative universe, allowing an income tax cut for rich people to expire will “devastate” the U.S. economy, while letting a payroll tax cut for working people to expire would hardly be noticed. Cutting defense spending is economic folly; cutting food stamps for poor children an economic imperative.
My favorite, though, is a proposal, backed by nearly all the candidates along with the U.S. Chamber of Commerce, to allow big corporations to bring home, at a greatly reduced tax rate, the more than $1 trillion in profits they have stashed away in foreign subsidiaries.
“Repatriation,” as it is called, was tried during the “jobless recovery” of the Bush years, with the promise that it would create 500,000 jobs over two years as corporations reinvested the cash in their U.S. operations. According to the most definitive studies of what happened, however, most of the repatriated profits weren’t used to hire workers or invest in new plants and equipment. Instead, they were used to pay down debt or buy back stock.
But fear not. In a new paper prepared for the chamber, Republican economist Douglas Holtz-Eakin argues that just because the money went to creditors and investors doesn’t mean it didn’t create jobs. After all, creditors and shareholders are people, too — people who will turn around and spend most of it, in the process increasing the overall demand for goods and services. As a result, Holtz-Eakin argues, a dollar of repatriated profit would have roughly the same impact on the economy as a dollar under the Obama stimulus plan, or in the case of $1 trillion in repatriated profit, about 3 million new jobs.
It’s a lovely economic argument, and it might even be right. But for Republican presidential candidates, it presents a little problem. You can’t argue, at one moment, that putting $1 trillion of money in the hands of households and business failed to create even a single job, and at the next moment argue that putting an extra $1 trillion in repatriated profit into their hands will magically generate jobs for millions.
It took a while, but even Richard Nixon came around to declaring himself a Keynesian. Maybe there is still hope for Perry and the gang.
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