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“Keeping Desperation As High As Possible”: Why The Greedy Upper Class Loves The GOP

Last week, Reihan Salam took a whack at America’s upper class in Slate. His charge? That the upper class uses its considerable political clout to protect itself from competition and keep its own incomes high, thus making life harder on everyone else further down the economic ladder. And he’s not wrong!

But Salam is also a conservative, with a conservative’s standard desire for low taxes, few regulations, and a skimpy social safety net. And what he conveniently leaves out of his screed is the fact that these preferences are themselves the ultimate expression of upper-class greed and self-dealing.

Let’s start with what Salam gets right. He points out that licensing and accreditation laws protect professions like dentists, lawyers, electricians, hairstylists, and the like from competition, which raises the costs of services they provide and prevents other workers from breaking into the market. The local land-use restrictions and zoning regulations that many in the upper class favor drive up housing prices, which makes it harder for the lower class to live in good neighborhoods with good schools, or to benefit from the economic development that comes with gentrification. The upper class seems implicitly content with an immigration status quo that maximizes competition in working-class jobs while minimizing it among high-skill professions. And of course there was the recent collapse of President Obama’s proposal to raise new tax revenue from 529 college savings accounts, a self-interested revolt of the upper class if ever there was one.

However, if you read between the lines, Salam isn’t really talking about the upper class writ large here. He’s talking about the liberal upper class. The issues he cites are mainly a big deal in cities, where liberals cluster. And conservative commentary in general these days has a tendency to talk about the American upper class as if it’s populated entirely by liberal yuppies who love yoga, organic food, Neil deGrasse Tyson, and abortions, and who think that guns are barbaric and that religion is backwards.

As it happens, however, the GOP relies on the upper class even more than Democrats. Median household income in the United States is $52,250, and if you look at the 2012 election, voters below that mark broke hard for Obama, with those above going for Mitt Romney by lesser margins. This trend of the Democrats getting way more votes below the median income level has roughly held for decades. These days, strong support for Republicans really doesn’t kick in until you get close to $75,000, or roughly the top third of the income ladder.

The difference between the parties is not that one relies on the wealthy and one doesn’t. Both parties lean heavily on those voters and divvy them up in various ways. (Mainly through cultural and social issues.) But the Democrats’ coalition also includes a fair portion that’s lower and working class, that’s still fighting for attention in the party, and that occasionally gets it. Conversely, lower- and working-class voters are mostly just absent from the GOP.

This matters because the upper class also has a pretty distinctive set of economic policy preferences. According to a recent study by Pew, the most financially secure Americans — roughly a fourth to a third of the population, by Pew’s definition — disproportionately say that government can’t afford to do more to help the needy, and that poor people “have it easy” thanks to government benefits. The less financially secure think the opposite. Large majorities of those making below $75,000 say the thing that bothers them the most about taxes is that the wealthy don’t pay their fair share. Large majorities of Americans oppose cuts to everything from Social Security and Medicare to aid for the poor. They support making union organizing easier and more federal spending on education.

Hell, 57 percent of the Republican or Republican-leaning voters who do make less than $30,000 think government doesn’t do enough to support poor people.

The reason the GOP can get away with being on the opposite side on all these matters is the fact that the voting population skews upper class: Even Democrats in the top third of the income distribution are noticeably more economically right-wing than poorer Democrats or Republicans, and Republicans in the top third are really economically right-wing.

There’s a pretty straightforward argument for why the upper class tilts in this direction. As Salam notes, the policy preferences of the upper class that really stick in his craw boil down to protecting their incomes and thus making the goods and services they provide more expensive for everyone else. But the flip side of that is making sure the goods and services everyone else provides — and thus their incomes — come cheap. That’s where the GOP comes in.

The essence of worker bargaining power is the ability to tell an employer “no.” That forces business owners to offer a better deal, driving up wages and benefits. A broad and generous welfare state gives workers leverage in that regard. It also helps boost aggregate demand, getting us closer to the full employment that really gives workers an edge. In short, the income of the working class is inversely proportional to its level of economic desperation. The effect of conservatives’ preferred economic policies — from slashing spending to imposing work requirements for aid — is to keep that desperation as high as possible. And of course, the upper class certainly doesn’t want to shoulder the taxes necessary to make such a system work.

The thing to remember is that, when it comes to what to do with the working class, the interests of the upper class and the super-rich cohere. Whether you’re a corporate CEO, a small-business owner, or just a well-heeled professional who consumes a lot of high-end goods and services, it benefits you to keep the labor of everyday Americans as cheap, compliant, and disposable as possible. It’s true, as Salam notes, that the truly rich aren’t quite as desperate to defend their interests as the upper class is; if you’ve got Mitt Romney’s dough, you can put up with more taxes, regulations, and workers demanding dignified pay and good benefits.

But that just bolsters the point that the fervent bastion of the economic right is the upper class. They’ve got the most to gain by slashing taxes, cutting regulations, scrapping government aid programs, and busting unions.

As Salam acknowledges, he doesn’t want high taxes on the wealthy, or for America to go down the road of the big European welfare states. His fellow reform conservatives and the Republican Party agree with him in this regard. Salam then says of the upper class: “I sensed that their gut political instincts were all about protecting what they had and scratching out the eyeballs of anyone who dared to suggest taking it away from them.”

But aren’t conservative economic policies the perfect expression of that exact impulse?

 

By: Jeff Spross, The Week, February 3, 2015

February 6, 2015 Posted by | Economic Inequality, GOP, Upper Class | , , , , , , , , | 1 Comment

“Magically Becoming Irish”: If Corporations Are People, Shouldn’t They Have To Expatriate Like People?

It’s a common complaint among American expatriates: no matter how far away you go, you can’t escape Uncle Sam’s taxes.

But that’s not the case with American corporations that move their putative “headquarters” overseas, as President Obama noted the other day:

In his toughest comments yet on the subject, he accused big US corporations of trying to play “the system” by “magically becoming Irish” through so-called tax inversion deals.

“I don’t care if it’s legal, it’s wrong,” Mr Obama said. “It sticks you for the tab to make up for what they’re stashing offshore.”

There has been a raft of such deals in recent months which have seen big American companies become “Irish” for tax purposes through buying smaller firms registered here. The same trend is happening in the UK and Switzerland. Fears America is losing out on taxes have made the deals controversial.

It’s understandable if businesses have a different tax code that subjects them to different rules to a certain extent, though shady tax dodging is still an enormous moral and financial problem.

But the issue starts to become even more open and shut once we start claiming that corporations are people. If a corporation has “free speech rights” to buy elections, then it should be subject to American taxes even if it “moves” overseas just like actual American people are. If a corporation like Hobby Lobby has personal “religious rights” not to cover its employees’ contraception, then it’s enough of a person to pay expatriate taxes if it decides to move to Ireland.

It has to be one or the other. You can’t become a person when it’s convenient to your bottom line, but not when it isn’t.

 

By: David Atkins, Washington Monthly Political Animals, July 26, 2014

July 28, 2014 Posted by | Corporations, Personhood, Tax Evasion | , , , , , | Leave a comment

“The Piketty Panic”: Out Of Ideas, Conservatives Are Terrified

“Capital in the Twenty-First Century,” the new book by the French economist Thomas Piketty, is a bona fide phenomenon. Other books on economics have been best sellers, but Mr. Piketty’s contribution is serious, discourse-changing scholarship in a way most best sellers aren’t. And conservatives are terrified. Thus James Pethokoukis of the American Enterprise Institute warns in National Review that Mr. Piketty’s work must be refuted, because otherwise it “will spread among the clerisy and reshape the political economic landscape on which all future policy battles will be waged.”

Well, good luck with that. The really striking thing about the debate so far is that the right seems unable to mount any kind of substantive counterattack to Mr. Piketty’s thesis. Instead, the response has been all about name-calling — in particular, claims that Mr. Piketty is a Marxist, and so is anyone who considers inequality of income and wealth an important issue.

I’ll come back to the name-calling in a moment. First, let’s talk about why “Capital” is having such an impact.

Mr. Piketty is hardly the first economist to point out that we are experiencing a sharp rise in inequality, or even to emphasize the contrast between slow income growth for most of the population and soaring incomes at the top. It’s true that Mr. Piketty and his colleagues have added a great deal of historical depth to our knowledge, demonstrating that we really are living in a new Gilded Age. But we’ve known that for a while.

No, what’s really new about “Capital” is the way it demolishes that most cherished of conservative myths, the insistence that we’re living in a meritocracy in which great wealth is earned and deserved.

For the past couple of decades, the conservative response to attempts to make soaring incomes at the top into a political issue has involved two lines of defense: first, denial that the rich are actually doing as well and the rest as badly as they are, but when denial fails, claims that those soaring incomes at the top are a justified reward for services rendered. Don’t call them the 1 percent, or the wealthy; call them “job creators.”

But how do you make that defense if the rich derive much of their income not from the work they do but from the assets they own? And what if great wealth comes increasingly not from enterprise but from inheritance?

What Mr. Piketty shows is that these are not idle questions. Western societies before World War I were indeed dominated by an oligarchy of inherited wealth — and his book makes a compelling case that we’re well on our way back toward that state.

So what’s a conservative, fearing that this diagnosis might be used to justify higher taxes on the wealthy, to do? He could try to refute Mr. Piketty in a substantive way, but, so far, I’ve seen no sign of that happening. Instead, as I said, it has been all about name-calling.

I guess this shouldn’t be surprising. I’ve been involved in debates over inequality for more than two decades, and have yet to see conservative “experts” manage to dispute the numbers without tripping over their own intellectual shoelaces. Why, it’s almost as if the facts are fundamentally not on their side. At the same time, red-baiting anyone who questions any aspect of free-market dogma has been standard right-wing operating procedure ever since the likes of William F. Buckley tried to block the teaching of Keynesian economics, not by showing that it was wrong, but by denouncing it as “collectivist.”

Still, it has been amazing to watch conservatives, one after another, denounce Mr. Piketty as a Marxist. Even Mr. Pethokoukis, who is more sophisticated than the rest, calls “Capital” a work of “soft Marxism,” which only makes sense if the mere mention of unequal wealth makes you a Marxist. (And maybe that’s how they see it: recently former Senator Rick Santorum denounced the term “middle class” as “Marxism talk,” because, you see, we don’t have classes in America.)

And The Wall Street Journal’s review, predictably, goes the whole distance, somehow segueing from Mr. Piketty’s call for progressive taxation as a way to limit the concentration of wealth — a remedy as American as apple pie, once advocated not just by leading economists but by mainstream politicians, up to and including Teddy Roosevelt — to the evils of Stalinism. Is that really the best The Journal can do? The answer, apparently, is yes.

Now, the fact that apologists for America’s oligarchs are evidently at a loss for coherent arguments doesn’t mean that they are on the run politically. Money still talks — indeed, thanks in part to the Roberts court, it talks louder than ever. Still, ideas matter too, shaping both how we talk about society and, eventually, what we do. And the Piketty panic shows that the right has run out of ideas.

By: Paul Krugman, Op-Ed Columnist, The New York Times, April 24, 2014

April 26, 2014 Posted by | Economic Inequality, Income Gap | , , , , , , , , | Leave a comment

“He’s No Aberration”: Tom Perkins Is Willing To Say What The Rest Of The Ultrarich Are Secretly Thinking

Tom Perkins incensed the Internet (again), when he suggested Thursday that only taxpayers should get the right to vote and that the wealthiest Americans who pay the most in taxes should get more votes. Yep, you read that right.

The sentiment is especially offensive when you consider the demographics associated with the statement (read: white and male), but it isn’t the most absurd thing he’s said. That would be a letter Perkins wrote to The Wall Street Journal on Jan. 24, in which he compared “the progressive war on the American 1 percent, namely the ‘rich’  ” to the persecution of Jews in Nazi Germany, particularly that the 1 percent face a “rising tide of hatred” akin to Kristallnacht, a series of coordinated attacks against Jews in 1938.

The strangest thing about the letter isn’t that he thought that or even admitted it in a paper of record. What boggles the mind is the outpouring of support he received from like-minded ultrarich Americans and conservatives.

Billionaire investor Sam Zell, appearing on Bloomberg TV recently, denounced what he termed “the politics of envy,” arguing the 1 percent have earned their position in society. “I guess my feeling is that [Perkins] is right: The 1 percent are being pummeled because it’s politically convenient to do so,” he said in an exchange with anchor Betty Liu. “The problem is that the world and this country should not talk about envy of the 1 percent. It should talk about emulating the 1 percent. The 1 percent work harder. The 1 percent are much bigger factors in all forms of our society.”

And The Wall Street Journal, a publication most beloved by the rich, similarly came to his defense. Anyone wondering whether the paper’s editors had printed Perkins’s letter to embarrass or expose him had their answer: They published it because they were sympathetic to the argument. Under the curious headline “Perkinsnacht,” the editorial board published an indictment of “liberals in power,” waxing dramatic about how “liberal vituperation makes our letter writer’s point.” The editors concluded: “The liberals aren’t encouraging violence, but they are promoting personal vilification and the abuse of government power to punish political opponents.”

Support for Perkins’s argument was so widespread that The Washington Post‘s Eugene Robinson wrote a piece questioning what exactly was making “some conservatives take a leave of their senses” in coming to Perkins’s defense. The best response to that question came (as usual) from New York Magazine‘s Jonathan Chait. “Perkins’s letter provided a peek into the fantasy world of the right-wing one percent, in which fantasies of an incipient Hitler-esque terror are just slightly beyond the norm.”

It wasn’t just the wealthy who came to Perkins’s side. One of the most cogent conservative arguments I read came from Michelle Malkin, who argued that it’s dangerous to marginalize a group, any group, even millionaires and billionaires. It was a good point, but it was something else in her piece that caught my attention. She called Perkins a “truth-teller” whose “message in defense of our nation’s achievers will transcend, inspire, embolden and prevail.” No matter, she lamented, “the mob is shooting the messenger anyway.”

That’s just it: Perkins isn’t an aberration, and his message is offensive precisely because it speaks to something a lot of rich people and conservatives actually believe. Perkins hadn’t gaffed. He hadn’t misspoken. Although he would later qualify his remarks, he was making a point that many of the uber-rich believe instinctively. They’re just too prudent to say so.

Perkins’s most recent statement—that people who pay more in taxes should get more votes—hasn’t had time to attract the kind of support his first one garnered, but it has parallels in Erick Erickson’s 53 percent movement. The RedState.org founder’s counterpunch to Occupy Wall Street’s “We are the 99 percent” slogan was meant to represent the 53 percent of Americans who pay federal income taxes. The assumption is that Occupy protesters are among the now famous (thanks, Mitt Romney!) 47 percent of the country who don’t.

The sentiment would resurface again on the presidential campaign trail when Romney said the thing that doomed his candicacy. A refresher: “There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe they are victims, who believe the government has a responsibility to take care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it.”

Another thing Romney left off but might as well have said? Those who believe they are entitled to vote. Romney and Perkins have good reason to want to keep the 47 percent from voting. Namely, the 47 percent won’t make it a priority to protect the interests of the long-suffering 1 percent. They have more pressing concerns, like, say, groceries.

And that gets to another of Perkins’s fears: that the 1 percent is somehow endangered and at risk of “economic extinction.” To wit: “The fear is wealth tax, higher taxes, higher death taxes—just more taxes until there is no more 1 percent. And that will creep down to the 5 percent and then the 10 percent,” he said. It’s the irrationality of this fear that has garnered the bulk of media attention. But it’s also worth reflecting for a moment on just how poor Perkins’s conception of percentages is. (Pauses for dramatic effect. Moves on.)

There are a few other statistics Romney didn’t mention, such as that two-thirds of households that don’t pay federal income tax do pay payroll taxes. Or that 18 percent of all tax filers paid neither payroll nor income taxes. Of those who paid neither, nearly all of them were elderly or had incomes under $20,000.

Romney thought he was speaking in confidence, but Perkins isn’t worried about that. Perkins, as Malkin so deftly observed, is a truth-teller. He’s saying what the right-wing 1 percent truly believe but are too scared to admit publicly.

 

By: Lucia Graves, The National Journal, February 14, 2014

February 15, 2014 Posted by | Economic Inequality, Wealthy | , , , , , , , , | 4 Comments

“A Renegade Chop Shop”: Five Reasons Ronald Reagan Couldn’t Make It In Today’s GOP

Former Senate Majority Leader and Republican presidential candidate Bob Dole slammed the state of the Republican Party over the weekend, telling Fox News Sunday host Chris Wallace that the GOP should be “closed for repairs” and lamenting that some of the most famous Republicans would have no chance at becoming party leaders in the Tea Party era.

“I doubt [I could fit in with the modern party],” Dole said. “Reagan wouldn’t have made it, certainly Nixon wouldn’t have made it, because he had ideas. We might have made it, but I doubt it.”

While Dole’s criticism of his party’s current platform could be debated, his assertion that Ronald Reagan wouldn’t have prospered in the current political climate is pretty much unassailable. Here are five reasons that Republicans’ favorite Republican could never fit in with today’s party:

Taxes

Although modern Republicans have posthumously deified Reagan as the patron saint of tax cuts, he actually signed at least 10 tax increases totaling $132.7 billion during his eight years as president, and had raised taxes several times before that as governor of California.

Ideologically “pure” Republicans like Eric Cantor may deny it, but if Reagan ran today, he would completely flunk Grover Norquist’s anti-tax test, and be eaten alive by the Tea Party.

The Deficit

Modern Republicans tend to portray the federal budget deficit as an economic and moral issue of the highest importance — an attitude that Reagan echoed when he declared the deficit to be “out of control” shortly after taking office in January, 1981. Once he was in the Oval Office, however, Reagan began enacting policies that would infamously lead Vice President Dick Cheney to scoff that “Reagan proved that deficits don’t matter.” Within two years the deficit had nearly tripled, reaching $208 billion, and by the time Reagan left office it was at $155 billion; during Reagan’s two terms America went from being the world’s largest international creditor to the largest debtor nation.

In fairness, this is the one position on this list that the right may have been able to forgive. After all, as former George W. Bush speechwriter David Frum once said, “We’re all Keynesians during Republican administrations.”

Immigration

Long before Rick Perry’s “oops” heard ’round the world, the Texas governor’s presidential ambitions were already on life support due to his refusal to disavow a law providing in-state college tuition for the children of illegal immigrants — a position that got him vociferously booed at a Tea Party-sponsored debate.

If the crowd couldn’t handle that benign position from Perry, they certainly wouldn’t have liked the fact that Reagan granted legal status to about three million undocumented immigrants when he signed the Immigration Reform and Control Act of 1986. If you’d like to know what the right’s criticism might have sounded like, look no further than Tea Party representative Steve King (R-IA), who recently blamed the ’86 reform for President Obama’s election.

Israel

Reagan’s complicated relationship with Israel is yet another issue on which he and the Republican Party’s right wing could never have agreed — not after the Reagan administration called on Israel to adopt a total settlement freeze and place its nuclear facilities under international supervision, and sold highly advanced military jets to Saudi Arabia. Not to mention Reagan’s 1985 trip to Germany, where he initially declined to visit the site of a concentration camp but agreed to lay a wreath at a cemetery containing the remains of 49 members of the Waffen-SS. As Haaretz‘s Chemi Salev put it, “If Obama treated Israel like Reagan did, he’d be impeached.”

Gun Reform

Even if Reagan had somehow managed to survive all of the other issues on this list, his support for expanded gun sale background checks and an assault weapon ban would certainly have killed his chances of winning over the GOP base. Although Reagan — who was shot in an assassination attempt in 1981 — makes for a sympathetic gun reform advocate, if Republicans can attack Sandy Hook parents, they could certainly have gone after the Gipper.

Plus, the “he only supported gun control because he was senile” excuse wouldn’t work quite as well for an active candidate.

 

By: Henry Decker, The National Memo, May 27, 2013

May 28, 2013 Posted by | GOP | , , , , , , , , | Leave a comment

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