“Too Much Capital In Too Few Hands”: Populist Backlash Will Keep Increasing As Inequality Continues To Rise
Listen to a typical center-left Democrat, and you’ll hear rosy things about the economy. GDP growth is solid, unemployment is low, and even wages are starting to rise. The Clinton campaign and the Democratic Party generally will be touting these achievements even as they focus on issues of structural racism and sexism while offering government support in areas like childcare.
But there’s a big problem: overall, inequality is still rising at an astonishing rate to unprecedented levels:
Financial inequality became even wider in the United States last year, with average income for the top 1% of households surging 7.7% to $1.36 million.
Income for the richest sliver rose twice as fast as it did for the remaining 99% of households, according to an updated analysis of tax data by Emmanuel Saez, an economics professor at the University of California, Berkeley.
It’s true that the 99% is doing better than it has since the 1990s, but the gains are relatively modest. Furthermore, basic cost of living has gone way up, particularly in the areas of tuition and housing. Housing in particular is a major problem driven by inequality itself: with accumulation of capital comes the need for places to store it, and real estate is a popular piggybank for wealthy investors. This in turn drives up the cost of housing, making it more difficult to afford housing in the urban areas where most jobs are located.
The bigger problem is that America already tried the 1990s approach to prosperity, assuming that rising inequality isn’t a problem as long as everyone is doing OK. What does it matter if the rich are getting much much richer, if the fortunes of the poor and the middle class are also improving even if at a slower rate?
The answer is that it’s unsustainable in both the short and long term. Over the long term high rates of inequality shrink the middle class and increase political instability. In the short term, too much capital in too few hands leads to speculative bubbles, that in turn lead to big recessions. Recessions tend to wipe out the wealth of the middle class in a much more devastating way than that of the wealthy who have more ways to protect their money. More importantly, the wealthy recover their position much more quickly as asset values balloon back, but the jobs that sustain the middle class and the poor return more slowly–often at permanently lower wage levels when adjusted for inflation.
Automation and globalization are likely to inexorably drive the trend toward rampant inequality, exacerbated by tax policy designed to protect the wealthy and overgrown financial sector. Merely tackling structural racist and sexist inequalities will do good in their own ways for women and minorities, but they will do little to address the overall problem. Targeted government programs to help citizens with childcare and other needs will help somewhat but won’t do much to fix what’s fundamentally wrong.
Only much more aggressive policies that give workers a greater say in how companies are run to “pre-distribute” wealth, as well as much more progressive graduated tax policies that distribute uneven gains more equitably, will ultimately tilt the balance back toward the middle class where it belongs. Until then, expect to see increasingly virulent strains of populist backlash from both the right and the left until something changes. Incrementalism may be all that is possible politically, but it’s not an answer for the problems that beset us and give rise to anxious backlash. As long as inequality rises, Donald Trump, Brexit and ISIS will be just the beginning of the world’s back-to-basics nativist woes.
People don’t just want the 99% to do better. As the 1% continues to outpace everyone else, a great many people in America and the world actively want the 1% to do worse. And it’s hard to blame them for that sentiment.
By: David Atkins, Political Animal Blog, The Washington Monthly, July 4, 2016
“Republicans To Wealthy; We Just Can’t Quit You”: Giving Equal Benefits To Everyone Would Be Ridiculous
Any marginally aware citizen is familiar with what I like to call the Four Pillars of Conservatism: low taxes, small government, strong defense, and traditional values. The simplicity and clarity of these ideas allows any Republican anywhere to move into politics with a ready-made ideological program, and as long as they stay abstract, it’s reasonably popular. It’s only when you start to get into specifics that the agenda becomes problematic.
The trick is that if you’re proposing something unpopular, to speak about it in the most abstract terms possible. “Low taxes” sounds great, because who wouldn’t like to pay less in taxes? The trouble is that what Republicans actually want is to cut taxes for the wealthy. They’re perfectly happy to cut taxes for other people if the opportunity presents itself, but the value of tax cuts for the wealthy is an absolutely foundational belief.
They know, however, that most Americans don’t agree. So when they talk about taxes, they’re supposed to be circumspect and careful, answering questions about tax cuts for the wealthy by saying that tax cuts in general are good for everybody. Which is why it’s so surprising when one of them is candid, as House Ways and Means Committee chairman Kevin Brady was in an interview with John Harwood published today.
Brady, who is in charge of tax policy, just comes out and says that Republicans won’t accept any tax reform that doesn’t include reducing the top income tax rate. All that talk of making the tax code simpler is all well and good, but there’s one thing they will absolutely not compromise on, and that’s the top rate, which is currently paid by those making over $415,000 a year:
HARWOOD: Could you envision a tax reform that you could go along with that had many elements that you liked that did not decrease the top rate?
BRADY: That’d be difficult to accept, because I think that holds back investment, both by businesses, small businesses, and by families.
HARWOOD: Because there are some conservatives who are arguing that in the environment that we’re in now, that conservative tax reformers ought to focus on things other than the top rate.
BRADY: I’d have to disagree, and here’s why. Besides businesses investing, when individuals, after they make that dollar, they have three choices. They can spend it, they can save it, which is good as well, but they can reinvest it back in the economy. And earners, not just high earners, all along the scale do that. I want to encourage families and environments to do more of that. And so on that side of the ledger, let’s look at those pro-growth packages.
There’s a rationale here, which is that when you give rich people more money, they’re more likely to invest it, which helps grow the economy over the long run. But conservatives sell this idea not as a long-term way to sustain investment, but as a short-term strategy to bring prosperity to all. This year, every Republican running for president essentially pledged to bring back George W. Bush’s economic policies. There were differences in the details of their plans, but all of them centered on large tax cuts for the wealthy, and all promised that the effects would be spectacular.
But here on Planet Earth, there is zero real-world evidence that large tax cuts for the wealthy super-charge the economy. If it were true, then Bush would have been the most economically successful president in American history. But he was actually one of the worst, and when it comes to job creation, the last two presidents who raised taxes on the wealthy — Bill Clinton and Barack Obama — were among the best. The economy created 22 million jobs while Clinton was president, and Obama is on pace to see around 16 million new jobs created since the trough of the Great Recession in his first months in office (I discussed this at length here — with charts!).
Meanwhile, media coverage continues to suggest that Paul Ryan represents some kind of sober alternative to the presidential candidates. But he has long advocated slashing the top rate from its current 39.6 percent down to 25 percent, which would represent an enormous giveaway to the wealthy (he says it’ll be paid for by “cutting loopholes,” which are never specified). Just a month ago, Ryan was asked whether he might consider a plan that’s “distributionally neutral,” in other words, one that gives equal benefits to every income group. Here’s what Ryan said:
So I do not like the idea of buying into these distributional tables. What you’re talking about is what we call static distribution. It’s a ridiculous notion. What it presumes is life in the economy is some fixed pie, and it’s not going to change. And it’s really up to government to redistribute the slices more equitably. That is not how the world works. That’s not how life works. You can shrink or expand the economy, and what we want to maximize is economic growth and upward mobility so that everybody can get a bigger slice of the pie.
To translate: Giving equal benefits to everyone would be ridiculous. The only way to expand the economy for all is to shower benefits on the rich. But most people don’t quite understand what Ryan is talking about; all they hear is that he wants more pie for everybody. That’s how you’re supposed to talk about taxes.
And this is the key thing to understand: no matter which Republican ends up being the presidential nominee, cutting taxes for the wealthy will be at the absolute top of the agenda. Even Donald Trump, who has been happy to buck Republican orthodoxy on a variety of issues, issued a tax plan the greatest benefits of which went to the wealthy — just like every other candidate.
In this election, just like in every other election, Democrats will charge that Republicans only want to help the rich. It’s an effective attack, mostly because it’s true. Or to be more generous, Republicans want to help everyone, it’s just that they really want to help the rich, and they see helping the rich as the best way to help everyone else. But it’s possible that the Democratic attack could be particularly potent this year in winning over independents and even a few Republicans. The Republican Party has spent the last year in a brutal argument about their own perfidious elites, who supposedly look with scorn on the masses in their party. And after all that, the centerpiece of their economic plans for the future is still cutting taxes at the top.
When a party advocates something that politically dangerous, it isn’t because they’re stupid. It’s because they believe in it, down the marrow of their bones.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, April 12, 2016
“It’s About His Vision For America’s Future”: Why Ben Carson’s Problem With The Truth Really Matters
Ben Carson’s campaign turned into a kaleidoscope of oddities last week: The retired neurosurgeon made fanciful claims about the purpose of Egyptian pyramids and the political experience of the Founding Fathers. He insisted that he was, in fact, a violent youth, but admitted that he wasn’t, in fact, offered admission to West Point—both key highlights of his autobiography. But amid all the attention being paid to his personal background, it’s easy to overlook what Carson is actually running on. Of all the GOP candidates, Carson has put forward the most radical ideas for overhauling country’s entitlement programs. And while he’s lately begun to clumsily retreat to more moderate alternatives, they don’t add up any more than his attempts to explain the factual holes in his autobiography. While his past will surely provide rich fodder for Tuesday night’s third GOP debate, it’s what Carson proposes for America’s future that truly needs more critical attention.
Carson originally proposed to scrap Medicare and Medicaid entirely—a genuinely radical idea, and one with massive policy and political risks. Under his plan, every American would receive a cradle-to-grave health savings account with an annual $2,000 government subsidy, which family members could share. But after the third debate two weeks ago, Carson began running away from that old idea, which had been coming under increasing attack by fellow Republicans, particularly Donald Trump. “Ben wants to get rid of Medicare, Trump said last week. “You can’t get rid of Medicare. It would be a horrible thing to get rid of.”
Carson has begun to roll out an alternative that avoids the political liabilities of blowing up the entire system. But his account of the changes he’s made has been as confusing as the West Point saga. A few days before the last debate, Carson was already claiming on Fox News Sunday that his original plan for entitlement reform had been “gone for several months now.” That confused host Chris Wallace, who—like most of those watching—had definitely not been under that impression. Though he remains hazy on the details, Carson’s new scheme could also be massively disruptive, not only undermining care but also running up costs for the government.
Under Carson’s new plan—at least, from what can be sussed out from his statements—the traditional government programs would stay in place, but people would have the alternative to opt out with private Health Savings Accounts they could use to purchase their own coverage. Unlike his original plan, however, not everyone would get a subsidy in this one. Many of the details remain murky, and Carson’s campaign says a full-blown proposal is forthcoming. But based on his remarks so far, Carson seems to be suggesting that if you qualify for Medicare or Medicaid, you could choose to have the government money that would have paid for your health care to go directly to a private savings account instead. “I would never get rid of the programs. I would provide people with an alternative,” Carson said on Fox News Sunday. “I think they will see that the alternative that we’re going to outline is so much better than anything else that they will flock to it.”
But Carson’s alternative could create a whole host of problems. Those who pick HSAs would likely face very high deductibles and co-pays, which could lead them to forgo necessary care. At the same time, the cost of government health programs could end up rising as well. Healthier people would likely opt out if they could receive cash in private accounts, while sicker people would probably stick with traditional Medicare and Medicaid. “The new plan runs the risk of costing the government more than the current system, since people could game a two-choice system, sticking with a savings account when their spending is low, and switching to a government program once their medical costs rise,” writes The New York Times’s Margot Sanger-Katz.
If Carson’s original plan took a sledgehammer to Medicare and Medicaid, his alternative risks seriously weakening the programs. Despite his medical credentials, Carson seems confused about the very basics of the health care system. In a recent interview, he said that Medicare and Medicaid fraud was costing taxpayers “half a trillion dollars,” a truly astonishing estimate given that the total cost of both programs is $980 billion, as Mother Jones’s Kevin Drum points out. (Experts estimate that the real cost of Medicare and Medicaid fraud could be about $98 billion.)
In previous Republican debates, candidates have treated questions about the factual reality of their policy ideas as an inconvenience to be brushed aside—or as evidence of a media conspiracy to smear conservatives. But it wouldn’t be surprising on Tuesday night, given Carson’s standing in the polls and the scent of his blood in the water, if other Republican candidates go after him on Medicare and Medicaid far more aggressively. Carson won’t be the only likely target: Former Florida Governor Jeb Bush and Senator Marco Rubio have both embraced House Speaker Paul Ryan’s contentious “premium support” proposal, which would give seniors a set amount of money to buy private insurance or traditional Medicare.
Carson’s original idea to overhaul Medicare was far more comprehensive, however, and his new idea is significantly more confusing than his rivals’. Though he’ll likely spend much of Tuesday night defending himself on other scores, his credibility is also on the line when it comes to his policy proposals. We had a preview of what’s to come in the last debate, when Carson was pressed to explain his wild-eyed idea to scrap the current tax code in favor of a ten-percent flat tax. He responded by denying that this was ever his position to begin with, then refused to accept the basic facts behind the idea.
He’s already started to use the same cop-outs when it comes to his health-care ideas, acting as if he had never proposed to get rid of Medicare. This, ultimately, is why Carson’s trouble with truth-telling really does matter: His fuzzy relationship with the facts doesn’t stop with his youth.
By: Suzy Khimm, Senior Editor at The New Republic; November 9, 2015
“The GOP’s Deranged List Of Debate Demands”: Somebody Save Us From Reporters Asking Rude Questions
The Republican debates have been a disaster for some candidates, a boon for others and an uninspiring spectacle for the nation to witness. But don’t blame it all on the moderators.
Not that the questioners are blameless, mind you. It’s true that some of the queries at last week’s CNBC encounter seemed designed to provoke rather than elucidate. Ted Cruz’s memorable characterization of the questions sounded like a parody: “ ‘Donald Trump, are you a comic-book villain?’ ‘Ben Carson, can you do math?’ ‘John Kasich, will you insult two people over here?’ ‘Marco Rubio, why don’t you resign?’ ‘Jeb Bush, why have your numbers fallen?’ ” But the moderators, using different words, really did ask those things.
They weren’t crazy questions, though, even if they should have been framed in a less confrontational way.
Trump was asked about the central argument of his candidacy, which is that his brains, energy and competence would allow him to accomplish improbable feats such as building a wall along the southern border and making Mexico pay for it, deporting 11 million illegal immigrants and cutting taxes without increasing the deficit. “Is this a comic-book version of a presidential campaign?” was not the best way to phrase it, but the question was certainly germane.
Carson was asked about math because his proposal for a flat income tax of about 15 percent doesn’t come close to adding up. Kasich was asked his opinion of front-runners Trump and Carson because he had begun the evening with an unprompted attack on the two outsiders as unqualified to be president.
Rubio was asked to respond to an editorial in Florida’s Sun Sentinel newspaper that cited his absenteeism from Senate floor votes and called on him to resign his seat. The paper’s stance was “evidence of the bias that exists in the American media today,” he said, omitting the fact that the Sun Sentinel endorsed him in his 2010 Senate race.
And as for Bush’s anemic poll numbers, the fact is that he was once considered a strong favorite to win the nomination. The plan was for a “shock and awe” campaign that would overwhelm the field. So far, it has fizzled.
An argument could be made that such horse-race questions are a waste of valuable airtime. But the other lines of inquiry that Cruz blasted in his soliloquy were substantive and legitimate — and apparently made the candidates uncomfortable. Time to put an end to that.
Representatives from all the leading campaigns except one — that of businesswoman Carly Fiorina — met at an Alexandria hotel Sunday night to try to wrest control of future debates from the television networks and the Republican National Committee. The meeting was the brainchild of neurosurgeon Carson, who is running a strong second to Trump in national polls and leading him in first-in-the-nation Iowa. After Trump’s campaign joined in calling for the summit, the others had no choice but to come along.
Carson’s original idea was apparently to have all candidates onstage, including those relegated to the undercard, and for each to give a five-minute opening statement. This would take well over an hour and turn a “debate” into a string of little stump speeches. The fact that television executives would never agree to such terms did not bother Carson’s advisers, who have suggested that the debates be streamed on the Internet instead.
Republican attorney and power broker Ben Ginsberg — who no longer has a horse in this race, following Scott Walker’s withdrawal — chaired the meeting. Ginsberg suggested the hosts be required to make a long list of promises, including not to “ask the candidates to raise their hands to answer a question” or “have reaction shots of members of the audience or moderators during debates.”
The RNC decided last week to “suspend” a planned February debate to be hosted by NBC News — CNBC’s parent network — and Telemundo. Bush’s representative reportedly argued that the party should not turn its back on the only Spanish-language network scheduled to participate in a debate. According to Post reporter David Weigel, quoting an attendee, Trump’s campaign manager shot back that if Telemundo were included, “Trump walks.” Sources later told The Post that Trump had decided to negotiate with the networks on his own.
In past cycles, the RNC was the final arbiter. But the party is in chaos and the candidates, led by Trump and Carson, are driving the bus. We’ll face down Vladimir Putin and the leaders of Iran, the contenders all say, but somebody save us from reporters asking rude questions.
By: Eugene Robinson, Opinion Writer, The Washington Post, November 2, 2015
“A Strategy With A Shelf Life”: Rubio Calls Clinton A ‘Liar’, But He Can’t Back Up The Attack
Stylistically, Sen. Marco Rubio (R-Fla.) soared in this week’s debate for Republican presidential candidates. Substantively, however, it was a very different story.
Responding to questions about his messy personal finances, for example, Rubio simply denied reality. Pressed on the effects of his far-right tax plan, Rubio ran into similar problems.
But one of the more jarring moments of the debate came when the Florida senator went after Hillary Clinton, complaining about her recent appearance at his party’s Benghazi Committee hearing. From the transcript:
“She spent over a week telling the families of those victims and the American people that it was because of a video. And yet the mainstream media is going around saying it was the greatest week in Hillary Clinton’s campaign.
“It was the week she got exposed as a liar. It was the week that she got exposed as a liar.”
This is generally the kind of rhetoric one might expect from Louie Gohmert, Steve King, or some other House GOP extremist, not a senator seeking the nation’s highest office.
But more important is the fact when a national candidate goes after a rival with the word “liar,” he’d better be able to back it up – and in this case, Rubio can’t. The Washington Post’s Glenn Kessler fact-checked the senator’s attack and found “he does not have enough evidence” to back up his attack.
The Washington Post’s Greg Sargent emphasized a key detail: “Early intelligence on what caused the attacks was conflicting and erroneous, with some intel concluding the attacks had occurred in the context of the protests, and other intel concluding they were terrorism. Clinton’s private statements about terrorism did not reflect certainty; they tracked with information that was coming in at the time; the administration’s public suggestions about the video also tracked with contradictory information. The Republican-led probes have also concluded this — including one signed by Rubio, a member of the Senate Intelligence Committee.”
But Rubio casually threw around the word “liar” anyway, probably because (a) he assumes far-right activists will enjoy the red meat; and (b) the senator figures he can get away with it.
The GOP candidate should realize, though, that throwing around false attacks, and counting on voters to ignore fact-checking pieces later, is a strategy with a shelf life. Mitt Romney tried the same thing, and it didn’t work out especially well for him.
For that matter, Rubio may think he can throw around falsehoods with impunity now, but I have a hunch Hillary Clinton might have some effective pushback should these two meet next fall.
By: Steve Benen, The Maddow Blog, October 30, 2015
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