“A Nation Of Takers?”: Demanding Cuts In Public Assistance To The Poor, While Ignoring Public Assistance To The Rich
In the debate about poverty, critics argue that government assistance saps initiative and is unaffordable. After exploring the issue, I must concede that the critics have a point. Here are five public welfare programs that are wasteful and turning us into a nation of “takers.”
First, welfare subsidies for private planes. The United States offers three kinds of subsidies to tycoons with private jets: accelerated tax write-offs, avoidance of personal taxes on the benefit by claiming that private aircraft are for security, and use of air traffic control paid for by chumps flying commercial.
As the leftists in the George W. Bush administration put it when they tried unsuccessfully to end this last boondoggle: “The family of four taking a budget vacation is subsidizing the C.E.O.’s flying on a corporate jet.”
I worry about those tycoons sponging off government. Won’t our pampering damage their character? Won’t they become addicted to the entitlement culture, demanding subsidies even for their yachts? Oh, wait …
Second, welfare subsidies for yachts. The mortgage-interest deduction was meant to encourage a home-owning middle class. But it has been extended to provide subsidies for beach homes and even yachts.
In the meantime, money was slashed last year from the public housing program for America’s neediest. Hmm. How about if we house the homeless in these publicly supported yachts?
Third, welfare subsidies for hedge funds and private equity. The single most outrageous tax loophole in America is for “carried interest,” allowing people with the highest earnings to pay paltry taxes. They can magically reclassify their earned income as capital gains, because that carries a lower tax rate (a maximum of 23.8 percent this year, compared with a maximum of 39.6 percent for earned income).
Let’s just tax capital gains at earned income rates, as we did under President Ronald Reagan, that notorious scourge of capitalism.
Fourth, welfare subsidies for America’s biggest banks. The too-big-to-fail banks in the United States borrow money unusually cheaply because of an implicit government promise to rescue them. Bloomberg View calculated last year that this amounts to a taxpayer subsidy of $83 billion to our 10 biggest banks annually.
President Obama has proposed a bank tax to curb this subsidy, and this year a top Republican lawmaker, Dave Camp, endorsed the idea as well. Big banks are lobbying like crazy to keep their subsidy.
Fifth, large welfare subsidies for American corporations from cities, counties and states. A bit more than a year ago, Louise Story of The New York Times tallied more than $80 billion a year in subsidies to companies, mostly as incentives to operate locally. (Conflict alert: The New York Times Company is among those that have received millions of dollars from city and state authorities.)
You see where I’m going. We talk about the unsustainability of government benefit programs and the deleterious effects these can have on human behavior, and these are real issues. Well-meaning programs for supporting single moms can create perverse incentives not to marry, or aid meant for a needy child may be misused to buy drugs. Let’s acknowledge that helping people is a complex, uncertain and imperfect struggle.
But, perhaps because we now have the wealthiest Congress in history, the first in which a majority of members are millionaires, we have a one-sided discussion demanding cuts only in public assistance to the poor, while ignoring public assistance to the rich. And a one-sided discussion leads to a one-sided and myopic policy.
We’re cutting one kind of subsidized food — food stamps — at a time when Gallup finds that almost one-fifth of American families struggled in 2013 to afford food. Meanwhile, we ignore more than $12 billion annually in tax subsidies for corporate meals and entertainment.
Sure, food stamps are occasionally misused, but anyone familiar with business knows that the abuse of food subsidies is far greater in the corporate suite. Every time an executive wines and dines a hot date on the corporate dime, the average taxpayer helps foot the bill.
So let’s get real. To stem abuses, the first target shouldn’t be those avaricious infants in nutrition programs but tycoons in their subsidized Gulfstreams.
However imperfectly, subsidies for the poor do actually reduce hunger, ease suffering and create opportunity, while subsidies for the rich result in more private jets and yachts. Would we rather subsidize opportunity or yachts? Which kind of subsidies deserve more scrutiny?
Some conservatives get this, including Senator Tom Coburn, Republican of Oklahoma. He has urged “scaling back ludicrous handouts to millionaires that expose an entitlement system and tax code that desperately need to be reformed.”
After all, quite apart from the waste, we don’t want to coddle zillionaires and thereby sap their initiative!
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, March 26, 2014
“Hatred, The New Republican Exceptionalism”: The GOP Just Screwed Ukraine Out Of Billions To Hurt Obama
You know those people who carry on all the time about how the United States looks weak to the world, and how we have to do everything we possibly can to help poor Ukraine stand up to the evil Vladimir Putin? Well, guess what they just did? They just made the United States look weak to the world—and they actually just reduced (yes, reduced) the amount of global aid that can flow to Ukraine to help it stand up to the evil Vladimir Putin.
The deal was this: The Obama administration’s aid package to Ukraine placed before the Senate included some long-sought International Monetary Fund reforms. These reforms, which the administration agreed to in 2010 with the leading nations of Europe, and which those nations have already signed off on, would have helped Ukraine get more money from the IMF after this quick tranche from the United States ran dry. It’s complicated, but in essence, the reforms shifted money from one narrow spending category to a broader one that could be tapped by countries for projects like building and sustaining democracy, of which Ukraine is in rather desperate need. So while there wasn’t a specific dollar figure on the table, the IMF reforms could potentially, a Senate Democratic aide explained to me, have led to several billion more in aid to the country.
What’s to object to? To Republicans, this: The reforms include an increase in the U.S. contribution quota to the IMF of $63 billion. They would also give more voice to emerging nations. Now, these two measures are offset by the facts that 1) the overall U.S. expenditure on the IMF wouldn’t go up, because the U.S. would be allowed to decrease other commitments by a like amount, and 2) the U.S. would still have enough voting shares at IMF meetings to retain the veto power it has currently.
But those points don’t matter on the right, of course. Over there, it all spells a diminution of American power, the hated global governance, like Pat Buchanan’s old warnings about sending our boys out to global hotspots donning light-blue (i.e. United Nations) helmets. John McCain and Bob Corker, to their credit, supported the aid with the IMF reform tacked on. But most Republicans didn’t, and even though the full package easily passed a procedural vote, Democrats were getting the strong sense that an aid deal with the IMF stuff included wasn’t going to make it.
And so, it emerged this week that the Obama administration and Senate Democrats apparently backed off their demand for the Ukraine aid bill on Capitol Hill to include the reforms. On Monday, John Kerry visited Congress and threw in the towel. Better to have whatever we can get now than fight over this and delay matters. Or worse, lose altogether, because there was no chance that the House would ever have passed the IMF-laden version.
Let’s take stock of this. The Crimea/Ukraine crisis broke. Republicans immediately were all over Obama for being weak. The whole thing was his fault. We are all Ukrainians now. We had to stand with Ukraine to send a strong message to the malefactor Putin.
So what happens when the bill reaches them? The Obama administration tries to live up to an agreement it made—with our friends, our closest allies—four years ago at an opportune moment to press the issue, thinking that the idea that the reform would be of use to Ukraine might help matters. But as with everything, opposition to Obama is more important than anything else. If he’s for it, they’re against it. If Ukraine gets less money because of that, well, tough cheese for them.
And so it happens that the people who caterwaul about America being weak in the world become the very people who make it weaker. What does the world think as it watches this? Maybe some think merely that Obama is weak. But I’d wager most don’t. I’d wager most Europeans and others reach the right and reasonable conclusion: That American partisan dysfunction, driven far more by Republicans than by Democrats, now weakens not just our ability to carry out domestic politics but our foreign-policy aims as well.
Nothing like this has happened in decades. Yes Democrats—and several moderate Republicans, let’s remember, like John Sherman Cooper and Jacob Javits—blocked funding for the Vietnam War. But at least they were acting in accord with their long-stated principles and goal of ending that war. Today, Republicans are opposing their own stated principle of helping Ukraine as much as possible. Sen. Ted Cruz even went so far as to say that the proposed IMF reforms weakened the U.S. and strengthened Russia (I asked his spokesman to explain why this was so, and he wrote me back but never delivered an answer). In fact, Russia, Reuters has reported, is on record urging the IMF to adopt the reforms without U.S. support, and small wonder: Doing so would mean the end of the U.S. veto. So the Obama administration position of buying into the reforms is clearly something Russia doesn’t want to see.
Except for the very early days of the Cold War, politics never really quite stopped at the water’s edge. But politics did soften at the water’s edge. Not anymore. The Republicans are dug in, and as a result they are causing the very decline in standing and prestige that they are blaming on Obama. This jumps the shark from hurting the president to hurting the country. Hope they’re proud.
By: Michael Tomasky, The Daily Beast, March 26, 2014
“Wealth Over Work”: We’re On The Way Back To “Patrimonial Capitalism”, Where Birth Matters More Than Effort And Talent
It seems safe to say that “Capital in the Twenty-First Century,” the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year — and maybe of the decade. Mr. Piketty, arguably the world’s leading expert on income and wealth inequality, does more than document the growing concentration of income in the hands of a small economic elite. He also makes a powerful case that we’re on the way back to “patrimonial capitalism,” in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.
To be sure, Mr. Piketty concedes that we aren’t there yet. So far, the rise of America’s 1 percent has mainly been driven by executive salaries and bonuses rather than income from investments, let alone inherited wealth. But six of the 10 wealthiest Americans are already heirs rather than self-made entrepreneurs, and the children of today’s economic elite start from a position of immense privilege. As Mr. Piketty notes, “the risk of a drift toward oligarchy is real and gives little reason for optimism.”
Indeed. And if you want to feel even less optimistic, consider what many U.S. politicians are up to. America’s nascent oligarchy may not yet be fully formed — but one of our two main political parties already seems committed to defending the oligarchy’s interests.
Despite the frantic efforts of some Republicans to pretend otherwise, most people realize that today’s G.O.P. favors the interests of the rich over those of ordinary families. I suspect, however, that fewer people realize the extent to which the party favors returns on wealth over wages and salaries. And the dominance of income from capital, which can be inherited, over wages — the dominance of wealth over work — is what patrimonial capitalism is all about.
To see what I’m talking about, start with actual policies and policy proposals. It’s generally understood that George W. Bush did all he could to cut taxes on the very affluent, that the middle-class cuts he included were essentially political loss leaders. It’s less well understood that the biggest breaks went not to people paid high salaries but to coupon-clippers and heirs to large estates. True, the top tax bracket on earned income fell from 39.6 to 35 percent. But the top rate on dividends fell from 39.6 percent (because they were taxed as ordinary income) to 15 percent — and the estate tax was completely eliminated.
Some of these cuts were reversed under President Obama, but the point is that the great tax-cut push of the Bush years was mainly about reducing taxes on unearned income. And when Republicans retook one house of Congress, they promptly came up with a plan — Representative Paul Ryan’s “road map” — calling for the elimination of taxes on interest, dividends, capital gains and estates. Under this plan, someone living solely off inherited wealth would have owed no federal taxes at all.
This tilt of policy toward the interests of wealth has been mirrored by a tilt in rhetoric; Republicans often seem so intent on exalting “job creators” that they forget to mention American workers. In 2012 Representative Eric Cantor, the House majority leader, famously commemorated Labor Day with a Twitter post honoring business owners. More recently, Mr. Cantor reportedly reminded colleagues at a G.O.P. retreat that most Americans work for other people, which is at least one reason attempts to make a big issue out of Mr. Obama’s supposed denigration of businesspeople fell flat. (Another reason was that Mr. Obama did no such thing.)
In fact, not only don’t most Americans own businesses, but business income, and income from capital in general, is increasingly concentrated in the hands of a few people. In 1979 the top 1 percent of households accounted for 17 percent of business income; by 2007 the same group was getting 43 percent of business income, and 75 percent of capital gains. Yet this small elite gets all of the G.O.P.’s love, and most of its policy attention.
Why is this happening? Well, bear in mind that both Koch brothers are numbered among the 10 wealthiest Americans, and so are four Walmart heirs. Great wealth buys great political influence — and not just through campaign contributions. Many conservatives live inside an intellectual bubble of think tanks and captive media that is ultimately financed by a handful of megadonors. Not surprisingly, those inside the bubble tend to assume, instinctively, that what is good for oligarchs is good for America.
As I’ve already suggested, the results can sometimes seem comical. The important point to remember, however, is that the people inside the bubble have a lot of power, which they wield on behalf of their patrons. And the drift toward oligarchy continues.
By: Paul Krugman, Op-Ed Columnist, The New York Times, March 24, 2014
“The Dick Morris Award For Pre-Election Hype”: Pre-spinning Elections Is Even More Obnoxious Than Spinning The Results
I know I have zero influence over the rhetoric deployed by Reince Priebus, but still, I’d like to start a backlash against this particular formulation by the RNC chairman:
The way Republican National Committee Chairman Reince Priebus sees it, 2014 won’t be an average election for the party out of power. It’ll be a “tsunami” wave election.
At a Christian Science Monitor Breakfast on Tuesday Priebus said Republicans would see massive gains in the 2014 election, especially in the Senate.
“I think we’re in for a tsunami election,” Preibus said. “Especially at the Senate level.”
“Wave elections” are big-trending events beyond normal electoral expectations. We have two recent examples in 2006 and 2010. “Tsunami” elections, if the term means anything at all, means really big wave elections. 1974 and 1994 are pretty good examples; 2010, at least at the state level, might qualify as well.
It will be normal, not a “wave,” for Republicans to make sizable gains in the Senate this November, if only because of inherently pro-Republican midterm turnout patterns, the tendency of the party holding the White House to lose seats in midterms (especially second-term midterms), and an insanely pro-Republican landscape of seats that happen to be up. If Republicans pick up eight or nine Senate seats, that might represent a “wave.” They’d have to exceed that significantly before we can talk about any sort of “tsunami.”
So cut out the crap, Reince. Pre-spinning elections is even more obnoxious than spinning the results, unless you are angling for the Dick Morris Award for pre-election hype.
By: Ed Kilgore, Contributing Writer, Washington Monthly Political Animal, March 18, 2014
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