“Acting As Political Human Shields”: The Upper Middle Class Needs To Stop Coddling The 1 Percent
The most criticism I’ve ever received as a writer came from articles suggesting that we curtail tax expenditures that mainly benefit the rich, like the mortgage interest deduction or 529 college savings accounts. (Okay, second-most — the top hate mail–getter, by a large margin, was a quite different issue.)
Why? As President Obama himself found last week, the last people you want to piss off are members of the upper middle class, who are set to a hair trigger when it comes to their personal government handouts. As Paul Waldman writes, they may be “the single most dangerous constituency to anger,” because a) unlike the 1 percent, they are relatively numerous; and b) like the 1 percent, they have a lot of disposable income, which politicians love.
On one level, this is an understandable reaction to a threat to personal economic interest. But on another, members of the upper middle class are being played for fools. They are acting as political human shields for the top 1 percent, which claims more of these benefits proportionally speaking and has been raking in essentially all the benefits of economic growth. The upper middle class (let’s define this as the top income quintile, minus the top 1 percent) ought to demand a lot more than it is getting.
To start, let’s get one thing straight. Tax expenditures are indeed government benefits, economically identical to direct government spending. Preferential treatment in the tax code is just another way of jiggering the national economic structure to direct benefits to one group or another.
Not all tax expenditures are equally terrible. According to a CBO analysis, exclusions for health care and pensions are spread relatively equitably across the population, while the Earned Income Tax Credit and Child Tax Credit are major bulwarks against poverty.
However, the big deductions are unfairly skewed. Two-thirds of taxpayers can’t even use the mortgage interest deduction, because you have to itemize your deductions to get it; other countries manage high rates of homeownership without the subsidy. Overall, 1 percenters get 15 percent of the mortgage interest deduction, 30 percent of the state tax deduction, and 38 percent of the charitable contribution deduction.
Preferential tax rates for capital gains and dividends, meanwhile, are even worse. Over two-thirds of the benefits go to 1 percenters. The supposed idea is to incentivize investment and thus economic growth, but there is zero evidence this actually happens. Close analysis of the Bush administration’s cut on dividend taxes finds that it did not change anything except payouts to shareholders. Longer-term studies on capital gains tax rates finds no relationship to investment or broader economic growth. The major effect is a booming industry in legal chicanery allowing people to reclassify regular income as capital gains.
Meanwhile, over the last generation, 1 percenters have been capturing the vast bulk of economic growth, a trend that is only getting worse. Indeed, according to a new analysis at the Economic Policy Institute by Mark Price and Estelle Sommeiller, from 2009 to 2012 1 percenters literally received more than all the income growth. Because the incomes of the 99 percent fell on average, 1 percenters got 105.5 percent of real income growth. Policies that benefit the very top over everyone else are clearly to blame.
Clearly, that’s no good for anyone who isn’t in the 1 percent, including the merely affluent. But with the middle class lacking much punching power, and the poor largely ignored by everyone, the upper middle class really ought to be asking for more than the preservation of their existing government benefits. At the very least, the upper middle class could demand a cut of economic growth.
And if the upper middle class were willing to ally with the bottom and the middle, there’s reason to think it would be able to keep the structure of its current benefits (that is to say, access to college instead of merely some money to pay for it) while cutting everyone in on economic growth. Taxes might go up somewhat, but that would likely be compensated by better wages and universal benefits.
On the other hand, if the upper middle class can manage nothing but a hysterical defense of its own welfare handouts, and the American system keeps brutalizing the bottom half of the income ladder, a genuine mass movement could appear, as it has in the past. Such movements are not likely to be especially concerned with the upper middle class.
By: Ryan Cooper, The Week, February 2, 2015
“It’s Not Him, Republicans, It’s You”: Mitt Romney Isn’t Running, But His Specter Still Haunts The GOP
I’ll have to admit that I’m a bit surprised Mitt Romney decided not to run for president, given the man’s almost superhuman optimism and persistence. But according to various reports, the torrent of criticism Romney received when he made it clear he was considering a run had a real impact on his final decision, even though in his statement he talked about his faith in “one of our next generation of Republican leaders” (take that, Jeb!) to win back the White House.
The Republican consensus was obviously that Romney represented failure, and they need something different if they are to win in 2016. But maybe Mitt Romney isn’t the problem. It’s not him, Republicans. It’s you.
Nobody would ever claim Romney was anything like a perfect candidate. His background as a private equity titan was particularly fertile ground for Democratic attacks painting him as the representative of the economic elite, and he had a colorful way of reinforcing that impression again and again, particularly with the “47 percent” remark.
But I actually think that if he had decided to run, he would have had a better chance than anyone of getting the Republican nomination. Every GOP primary campaign for the last half-century has begun with an obvious front-runner, and every one of those early front-runners got the nomination. Romney would have been that front-runner, as reluctant as many in the party were about his candidacy. In recent GOP races, the winner hasn’t been the one who defeated his opponents, just the one who outlasted them, as one chucklehead after another became the flavor of the month and then self-immolated (remember when Herman Cain led the primary polls in 2012?). Romney could certainly have stuck around until the end.
But now the 2016 race is truly a free-for-all, with no obvious leader. And if the only lesson Republicans take from 2012 is not to nominate a CEO (sorry, Carly Fiorina), they’ll make the same mistakes all over again.
Consider that “47 percent” remark. It made for a vivid illustration of arguments Democrats were already making, but Mitt Romney was hardly the first Republican to say it. The basic idea underlying it had been repeated endlessly on conservative talk radio and by other Republican politicians for years. If it hadn’t been caught on tape, the attacks from Democrats would have been the same, and the outcome would have been the same. Another example: when Republicans exploded with joy after Barack Obama’s “you didn’t build that” remark, Romney didn’t have to convince them to make it a huge issue; they all thought it would be a silver bullet that would take the president down, and they were all flummoxed when it didn’t. They couldn’t imagine that voters wouldn’t punish Obama for an (alleged) criticism of business owners, because they forgot that most Americans work for somebody else.
The prevailing attitude in GOP circles is that Romney failed because he was the wrong messenger. Yet almost every contender is preparing to offer voters the same policy agenda that Romney did. They may be saying now that they’ll talk about wage stagnation and inequality, but when you ask them what they’re going to do about it, their answer is the same as it has always been: cut taxes and cut regulation. It’s going to be awfully hard to convince voters that they’ve had a real change of heart. And anyone who deviates from Republican orthodoxy is already finding themselves on the defensive (as Jeb Bush is for his less-than-total enthusiasm for deportations).
It isn’t surprising that the party’s diagnosis of what went wrong in the last couple of elections won’t extend to the policies they’re offering the public; those positions are rooted in sincere ideological beliefs, and changing them would be hard. But even without Mitt Romney in the race, it looks like Republicans are going to offer a program of Romneyism. They could find themselves facing voters at a time when the economy is doing well overall, and they’re particularly ill-suited to address the structural problems that keep people anxious — two strikes against them. A fresh face is unlikely to solve that problem.
By: Paul Waldman, Senior Writer, The American Prospect; The Plum Line, The Washington Post, January 30, 2015
“Give Me Liberty And Give You Death”: How The GOP Embraced Being The Party Of Death
As part of their long-standing war on the Affordable Care Act, conservatives have filed a lawsuit willfully misreading the statute to deny upward of 10 million people subsidies to purchase insurance. This denial of insurance will almost certainly lead to significant amounts of preventable death and suffering.
Michael Strain of the American Enterprise Institute doesn’t deny any of this. Instead, he argues that some suffering and death may well be a price worth paying:
In a world of scarce resources, a slightly higher mortality rate is an acceptable price to pay for certain goals — including more cash for other programs, such as those that help the poor; less government coercion and more individual liberty; more health-care choice for consumers, allowing them to find plans that better fit their needs; more money for taxpayers to spend themselves; and less federal health-care spending. This opinion is not immoral. Such choices are inevitable. They are made all the time. [The Washington Post]
At a high enough level of abstraction, what Strain is saying isn’t wrong. Not all public policy can function on the basis of keeping mortality rates to the lowest possible number. Some lifesaving treatments might help so few people and cost so much that they might not be worth it. Even major infrastructure projects entail some risk of injury or death on the part of workers, but few people would argue that any such risk is unacceptable.
But the fact that the costs of the ACA might theoretically exceed the benefits doesn’t get us very far. What benefits, exactly, would accrue if millions of people were denied medical coverage because the ACA is seriously damaged or destroyed? It’s here that Strain’s argument falls apart.
One potential line against the ACA is the radical libertarian one, holding that any effort by the government to provide health care to the non-affluent represents an unacceptable level of state coercion. The problem here is that the “freedom” to die of preventable illnesses and injuries is not one the vast majority of people value very highly. A Republican Party committed to these principles would be transformed into an electoral coalition that would make Barry Goldwater’s 52 electoral votes in 1964 look robust.
Since the people responsible for the anti-ACA effort know this perfectly well, the constitutional arguments against the ACA have the advantage of not logically requiring the Supreme Court to rule the entire modern regulatory state unconstitutional. The disadvantage is that they ask the court to deny many millions of people health coverage based on liberty interests that are ludicrously trivial.
The litigants challenging the constitutionality of the ACA do not contend that the federal government cannot regulate national health-care markets. Rather, their constitutional argument boils down to an assertion that the government has the authority to assess a tax to compel people to purchase health insurance, but not a penalty. It’s pretty hard to argue that the fate of liberty in America hinges on this formal limitation on federal power.
The more successful federalist argument launched against the Affordable Care Act is similarly unattractive. Chief Justice John Roberts’ inept rewriting of the ACA’s Medicaid expansion allowed states to opt out. Republican-controlled states have eagerly rejected the large amounts of federal money on offer to insure more poor residents, something that is likely to result in the unnecessary deaths of more than 5,000 people a year.
I don’t think this particular protection of state autonomy is worth that many lives (or, indeed, a single life). But here’s the kicker: The Supreme Court’s decision does not even meaningfully protect state sovereignty. Under the court’s theory, Congress could have enacted the ACA’s Medicaid expansion by repealing the pre-existing Medicaid entirely. This, apparently, would be completely constitutional. There may be things worth 5,000 lives a year; an incoherent legal argument that doesn’t even really protect states’ rights isn’t one of them.
Strain’s arguments have similar problems. To his credit, he’s not a libertarian radical who asserts that the federal government cannot play any role in expanding health-care coverage. Rather, “universal coverage should concern itself with the catastrophic expenses associated with serious medical events that will affect a minority of the population.” The affluent, or people with good jobs, can get real medical coverage; the non-affluent might get some protection for disasters, but would have to pay through the nose for common medical procedures. Whether or not one prefers this policy alternative — which I think is far worse — there’s not a lot of meaningful protection of “freedom” going on here. The number of lives worth sacrificing so that people can choose between a few more insurance alternatives — or between the “freedom” to pay for checkups for their children or their electric bill — strikes me as “zero.”
And, of course, even this is too generous to the Republican reformers. The ACA isn’t unpopular because it provides subsidies that are too generous or because the exchanges offer insurance that cover too many things. The Republican alternatives Strain discusses will all disappear should the ACA be destroyed, because the trade-offs involved will outrage many voters. The actual Republican alternative Strain thinks it’s worth killing a lot of people for is “nothing.”
But, hey, the next upper-class Republican tax cut could be even larger, and it’s not going to be elite Republicans who pay the price. As the writer Roy Edroso puts it, Strain’s argument can be summarized as “give me liberty and give you death.” I think we can see why Republicans would prefer for the Supreme Court to do their dirty work.
By: Scott Lemieux, The Week, January 29, 2015
“What Happens If The Dog Catches The Car?”: GOP Faces Health Care Challenge It’s Totally Unprepared For
We don’t yet know what the Supreme Court will do in the King v. Burwell case, but we have a fairly good sense what will happen if the Supreme Court sides with Republicans. In effect, there will be chaos that could do considerable harm to insurers, families, state budgets, the federal budget, hospitals, and low-income children.
It sounds melodramatic, but the fact remains that if the GOP prevails, more Americans will literally go bankrupt and/or die as a result of this ruling.
With this in mind, I couldn’t help but find some sardonic humor in the House Republicans’ request for information from the Obama administration yesterday.
Senior House Republicans are demanding that the Obama administration reveal its contingency plans in the event that the Supreme Court scraps Obamacare subsidies in three dozen states. […]
“Specifically, we are examining the extent to which the Department of Health and Human Services (HHS), and other relevant agencies of the federal government, are preparing for the possible consequences of the Supreme Court’s decision in the case of King v. Burwell,” wrote the lawmakers.
The fact that the GOP lawmakers didn’t appreciate the irony was itself unfortunate, but the simple truth is that the underlying question – what happens if the Supreme Court takes this stupid case seriously and guts the American health care system? – is one Republicans should be answering, not asking.
If we had a normal, functioning political system, represented by two mainstream governing parties, the solution would be incredibly simple. If the Supreme Court said the language in the Affordable Care Act needed clarification, lawmakers would simply approve more specific language before Americans felt adverse consequences. The legislative fix would be quite brief and the whole process could be wrapped up in an afternoon.
No one, in this scenario, would actually suffer.
But in 2015, Americans don’t have the benefits of a normal, functioning political system, represented by two mainstream governing parties. On the contrary, we have a dysfunctional Congress led by a radicalized, post-policy party that has no use for governing, and which welcomes adverse consequences no matter how many Americans suffer.
And the question for them is what they intend to do if, like the dog that catches the car, Republican justices on the Supreme Court rule their way in the King v. Burwell case. Sahil Kapur had a terrific report on this overnight.
Many Republicans would view it as a dream come true if the Supreme Court were to slash a centerpiece of Obamacare by the end of June. But that dream could fade into a nightmare as the spotlight turns to the Republican Congress to fix the mayhem that could ensue.
“It’s an opportunity that we’ve failed at for two decades. We’ve not been particularly close to being on the same page on this subject for two decades,” said a congressional Republican health policy aide who was granted anonymity to speak candidly. “So this idea – we’re ready to go? Actually no, we’re not.”
Republican leaders recognize the dilemma. In King v. Burwell, they roundly claim the court ought to invalidate insurance subsidies in some three-dozen states, and that Congress must be ready with a response once they do. But conversations with more than a dozen GOP lawmakers and aides indicate that the party is nowhere close to a solution. Outside health policy experts consulted by the Republicans are also at odds on how the party should respond.
Republicans could approve a simple legislative fix, but they don’t want to. Republicans could introduce their ACA alternative, but they don’t want to do that, either. They could encourage states to create their own exchange marketplaces, largely negating the crisis, but they don’t want to do that, either.
So what do GOP lawmakers want? They haven’t the foggiest idea.
Kapur talked to a GOP aide who works on health care policy on Capitol Hill who said, “Our guys feel like: King wins, game over, we win. No. In fact: King wins, they [the Obama administration and Democrats] hold a lot of high cards. And we hold what?”
Millions of families who would be screwed by Republican victory in this case will be eager to hear an answer to that question.
By: Steve Benen, The Madow Blog, January 29, 2015
“Rand Paul’s Prevarication Problem”: Afflicting The Afflicted & Comforting The Comfortable
Last week I called Sen. Rand Paul the most interesting man in Republican politics, and I still think that’s true. I also expressed some anxiety about the threat he could pose to the Democratic presidential nominee in 2016. That’s subsiding. In the last week Paul’s been caught in some big fibs, degrading struggling workers while defending the Koch brothers. That’s an interesting guide to his values.
Like all the GOP contenders, Paul is now talking piously about the problem of poverty, which modern Republicans have discovered because Barack Obama hasn’t made it go away. You can almost hear the briefing from a Frank Luntz type: “He’s the first black president, and he hasn’t ended poverty! Not even black poverty!” It also lets them slyly play on the notion of Obama as a privileged, uppity Ivy Leaguer – a “snob,” in Rick Santorum’s parlance — who doesn’t care about the poor or working class.
Whatever you say, Mitt Romney.
I still give Rand Paul some credit for identifying the criminal justice system as a source of black disadvantage. And if he ever figures out something meaningful to do about it, I promise to revise my thinking about him as mostly an opportunist. But when it comes to policies that might ease either poverty or the suffering of the working and middle classes, Paul learned at his father’s knee that government is the bad guy – and that slackers and moochers are playing the system and exploiting the rest of us.
That’s why he shamefully claimed that most recipients of Social Security Disability Insurance are faking it. “Over half of the people on disability are either anxious or their back hurts,” he told New Hampshire voters. The Washington Post fact checker showed the “back pain” disability category he cited included everything from muscle strain to amputations, while the “anxiety” number included conditions like bipolar disorder and schizophrenia. He got three Pinocchios for that one.
A few days later, asked whether he supports a time-honored GOP alternative to welfare, the Earned Income Tax credit for the working poor, he insisted the program is fraud-ridden – which it is not. Speaking to the Koch Brothers’ Freedom Network Chamber of Commerce event Sunday, Paul claimed the EITC has a “fraud rate” of 25 percent that costs taxpayers “$20 billion to $30 billion a year.” He cited a report from the Government Accountability Office, but Factcheck.org found “that’s not what the report said.”
The program did have an “improper payment rate” of 24 percent, but that includes worker filing errors and IRS paperwork problems that are largely attributable to the complexity of the tax law itself. Such payments cost $14.5 billion, less than half of Paul’s high end estimate.
Of course those slackers and moochers stand in sharp contrast with those hardworking and honest Americans, Charles and David Koch (who just revealed they’ll spend $900 million on the 2016 races). Paul took up their cause a couple of days later on Fox Business Network, defending them from “liberal haters” and claiming their advocacy “has nothing to do with government.” Paul went on:
I defy any of the liberal haters that are out there to find one instance when they have ever asked for a subsidy or a special government break. I have never heard of any and what they’re wanting is to be left alone, like most businesses in our country.
The folks at American Bridge took up the challenge, and found dozens of ways the Kochs have “asked for a subsidy or a special government break.” Last year in particular Koch Industries ramped up its lobbying efforts, according to OpenSecrets.org, spending $4 million in the third quarter of 2014 alone, largely on issues of “the environment, oil and financial policy.” An energy and environment trade publication found “that amount of lobbying money makes Koch Industries one of Washington, D.C.’s biggest influence spenders so far this year, outranking energy competitors such as Exxon Mobil Corp.”
But it didn’t start in 2014. A 2011 report by the Center for Public Integrity found that Koch Industries “spends tens of millions of dollars to influence every facet of government that could affect its global empire,” working through trade organizations whose names – the National Environmental Development Association, for instance — obscure their goals. They’ve lobbied heavily against carbon control and the use of lower-carbon fuels, and against federal regulation of toxic chemicals. They also pushed unsuccessfully to protect the expiring Bush tax cuts.
It’s good to know that Paul will trounce sick and struggling working people and come to the aid of gazillionaires. That doesn’t make him “the most interesting man in politics;” it makes him a standard issue Republican. Ralph Nader has told the left it should support Paul in 2016 because of his anti-war rumbling (though lately he’s criticized his wobbling on the issue), but anyone who takes Nader’s advice after 2000 probably isn’t serious about issues of war or justice anyway.
By: Joan Walsh, Editor at Large, Salon, January 29, 2015
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