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Then the Rich Got Richer.

“Through midcentury, when times were good economically, most of the benefits trickled down to the bottom 90 percent of households. Then came the Reagan era and actual trickle-down economics. Suddenly, the benefits started sticking with the rich. Since 2001, the top 10 percent have enjoyed virtually all of the gains.”

As making the rounds of late, a devastating graph of rising income inequality in America, “post-trickle-down”. “This isn’t a totally new story. But it is a vivid and visceral illustration of what we’ve basically known to be true for a while.”

Along the same lines, Mother Jones is posting a new chart on income inequality every day this week. “In the past few years, we’ve heard a lot about overtaxed ‘job creators’ and freeloading ‘takers.’ But consider this: As the income rates for the wealthiest have plunged, their incomes have shot up.”

If it’s any consolation, presumptive 45th president Hillary Clinton has recently talked to friends and donors in business about how to tackle income inequality without alienating businesses or castigating the wealthy.” Er…sorry, that’s not going to get it done.

The Middle, Sinking.

“Nostalgia is just about the only thing the middle class can still afford. That’s because median wealth is about 20 percent lower today, in inflation-adjusted dollars, than it was in 1984. Yes, that’s three lost decades.”

Wonkblog’s Matt O’Brien briefly surveys the downward pressure on our sinking middle class. “[I]t’s still a heckuva lot better than households in the bottom 25 percent, whose wealth never grew during the good times, and then plunged 60 percent during the bad ones. That’s because, for both the middle and working classes, real wages have been stagnant the past 30 years, and housing equity has taken a nosedive.”

The New Gilded Age.

“[This] is, as I hope I’ve made clear, an awesome work. At a time when the concentration of wealth and income in the hands of a few has resurfaced as a central political issue, Piketty doesn’t just offer invaluable documentation of what is happening, with unmatched historical depth. He also offers what amounts to a unified field theory of inequality, one that integrates economic growth, the distribution of income between capital and labor, and the distribution of wealth and income among individuals into a single frame.”

In the NYRB, and in very related news, Paul Krugman sings the praises of Thomas Piketty’s new magnum opus, Capital in the 21st Century. “This is a book that will change both the way we think about society and the way we do economics…Piketty has transformed our economic discourse; we’ll never talk about wealth and inequality the same way we used to.”

As a counterpoint of sorts, CEPR’s Dean Baker — neither a Pollyanna nor a conservative — argues Piketty has picked up some of Marx’s bad habits, and finds the book too deterministic and despairing by far:

“[T]here are serious grounds for challenging Piketty’s vision of the future…the book [suffers from a] lack of attentiveness to institutional detail…In the past, progressive change advanced by getting some segment of capitalists to side with progressives against retrograde sectors. In the current context this likely means getting large segments of the business community to beat up on financial capital…[T]he point is that capitalism is far more dynamic and flexible than the way Piketty presents it in this book. Given that we will likely be stuck with it long into the future, that is good news.”

Update: Galbraith weighs in. “[This] is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world’s wealthiest countries…Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.”

“Too Fast to Fail.”

“The issue here is that people are earning large amounts of money by using sophisticated computers to beat the market. This is effectively a form of insider trading…[T]he front-running high speed trader, like the inside trader, is providing no information to the market. They are causing the price of stocks to adjust milliseconds more quickly than would otherwise be the case. It is implausible that this can provide any benefit to the economy. This is simply siphoning off money at the expense of other actors in the market.”

In the wake of Michael Lewis’ publicity blitz for Flash Boys, and per his “let’s focus on solutions” argument to Piketty above, CEPR’s Dean Baker explains how to easily fix the problem of high-frequency trading. “[O]ne simple method…would virtually destroy the practice. A modest tax on financial transactions would make this sort of rapid trading unprofitable since it depends on extremely small margins.”

Not Too Distant Mirror.

“The ritual, by now, is well-established. President Barack Obama will travel to the lower house of the national legislature from the executive mansion, and…give a long speech extolling the nation’s virtues and present circumstances — the state of the union is invariably described as ‘strong’ — and laying out the regime’s priorities.”

A day before the big show, Joshua Keating’s consistently funny If It Happened There column at Slate looked at the State of the Union. “Members of the opposition typically do not applaud, though they occasionally join in with approval of paeans to the nation’s powerful military, the leaders of which typically sit stone-faced in front of the gallery.”

Which, of course, is exactly what happened. There are innumerable things Congress could be doing right now to create jobs, spur opportunity, expand the frontiers of knowledge, and generally make life better for families in America. Some of them — raising the minimum wage, ensuring equal pay for women, investing in infrastructure and early childhood education, admitting climate change is happening and proceeding accordingly — were even mentioned in Obama’s remarks, not that we can expect much in Year Six of this presidency (and an election year to boot.)

But with all due respect to Sgt. Remsburg’s sacrifice, when the only thing all of our nation’s legislators can get effusive about is venerating Americans wounded in battle, the republic is in a bad way indeed. As James Fallows put it: “[W]hile that moment reflected limitless credit on Sgt. Remsburg…I don’t think the sustained ovation reflected well on the America of 2014…the spectacle should make most Americans uneasy.” That it should – The last refuge of scoundrels and all that.

“This Sunday, the eyes of millions of Americans will turn to a fetid marsh in the industrial hinterlands of New York City for the country’s most important sporting event — and some would say the key to understanding its proud but violent culture.”

ICYMI, If It Happened There has aptly covered the Superbowl also. “The ethics of such an event can be hard for outsiders to understand. Fans, who regularly watch players being carted off the field with crippling injuries, are unbothered by reports of the game’s lasting medical impact on its players. Nevertheless, fans and the national media can become extremely indignant if players are excessively boastful at the game’s conclusion.”

Speaking of the handegg finals — as usual, also not lacking for tawdry paeans to militarismcongrats to the Seahawks on a convincing Superbowl XLVIII win. As I said on Twitter, I had no real dog in this fight – I was just happy to see the two states with sane marijuana laws karmically rewarded for their forward thinking.

Pope and Change.

“It is no longer simply about exploitation and oppression, but something new…In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting.”

In his recent major encyclical, Evangelii Gaudium, Pope Francis calls out the obvious shenanigans that is trickle-down economics, and has some choice words for the financial sector:

“How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?” “This imbalance is the result of ideologies which defend the absolute autonomy of the marketplace and financial speculation…To all this we can add widespread corruption and self-serving tax evasion, which have taken on worldwide dimensions. The thirst for power and possessions knows no limits. In this system, which tends to devour everything which stands in the way of increased profits, whatever is fragile, like the environment, is defenseless before the interests of a deified market, which become the only rule.”

I already sung the praises of this Pope a few months ago, but it can’t be said enough: this Holy Father is such a breath of fresh air. His recent courage in this regard even encouraged our President to make his own quite-good speech about income inequality last week: “So let me repeat: The combined trends of increased inequality and decreasing mobility pose a fundamental threat to the American Dream, our way of life, and what we stand for around the globe.”

Unfortunately — like Obama’s Osowatomie speech in 2011 and his election night speech in 2012 — this seems to be just another example of Obama’s rhetorical tourism on the progressive front. He’s talked a good game — on the occasions when he’s not hippie-punching or parroting Third Way — for close to five years now. But where’s the action to back this rhetoric up? After years of his touting grand bargains and deficit hysteria and allowing sequestration, and looking at the emerging budget deal, I’m not holding my breath. Whatever happens the next three years, it’s already past clear that the tremendous, once-in-a-generation opportunity granted to Obama in 2008 to effect real and positive change has, unfortunately, been wasted.

Update: Pope Francis is TIME’s Person of the Year. A worthy choice, though I would’ve probably have gone with Edward Snowden.

Nihilists, Dude.

“‘It’s imperative to act now, Cruz warns, before the full benefits of Obamacare kick in and Americans get “hooked on the sugar, hooked on the subsidies.’ His plan: Yoke the defunding of Obamacare to the must-pass budget bill the House will take up in September. The endgame? To force a government shutdown so painful and protracted that Barack Obama would have no choice but to surrender the crown jewel of his presidency. ‘As scary as a shutdown fight is,’ Cruz insists, ‘if we don’t stand and defund Obamacare now, we never will.'”

Another dispatch from the madhouse: In a fine piece of reporting, Rolling Stone‘s Tim Dickinson delves inside the Republican suicide machine. “Having backed the GOP into a shutdown fight that congressional leaders never wanted, the insurgents are winning, and establishment leaders are running scared. America is now careening toward a catastrophic voluntary default on our debt because no one in the Republican Party with the authority to put on the brakes has the guts to apply them, for fear of being toppled from power.”

An important point Dickinson makes here that cannot be emphasized enough: We didn’t just stumble into this crisis: Taking the government and the debt ceiling hostage was the strategy all long, and the right-wing insurgents have been planning for this for months. “They’d drawn a dangerous lesson from the previous battle: Brinksmanship works…In February, the House temporarily suspended the debt ceiling — intending to give the president’s poll numbers three months to come back to earth.”

Hey, speaking of polling numbers coming back to Earth

In any case, see also the NYT on this: “To many Americans, the shutdown came out of nowhere. But interviews with a wide array of conservatives show that the confrontation that precipitated the crisis was the outgrowth of a long-running effort to undo the law, the Affordable Care Act, since its passage in 2010 — waged by a galaxy of conservative groups with more money, organized tactics and interconnections than is commonly known.”

So we’re not in this hostage crisis by accident. The GOP even changed the House rules so they could maximize this confrontation. Republicans saw Obama fold in December 2010 on the Bush tax cuts and in August 2011 on the last debt ceiling hike. They think they can make him fold again here, and on every subsequent debt ceiling hike, and sadly, history is on their side on this. As Ted Cruz put it a few months ago: “If you have an impasse, you know — one side or the other has to blink. How do we win this fight? Don’t blink.”

Another small digression: If, like Ralph Nader this morning, you’re wondering why the right-wing of the GOP always seems to pull these sorts of stunts off while the left-wing of the Dems are usually completely marginalized, two quick answers: 1) The lefties don’t have billionaires backing their plays, and 2) we’re the People’s Front of Judea. They’re the right, they’re inherently better at the goose-stepping.

That being said, this whole episode also illustrates why it’s useless for Democrats to try to meet these fools halfway on policy: Republicans have now spent almost three years voting constantly to end the Affordable Care Act. To break a health care law originally penned by the Heritage Foundation and enacted by Mitt Romney, they have shut down the government and sent us to the brink of an economic default. So, how, exactly, would things be different if we had just passed Medicare for all, and/or a public option? They were going to lose their shit regardless, just like they did on Social Security, on Medicare, and any other progressive issue you can think of. There’s no point in trying to placate people who aren’t bargaining in good faith.

Anyway, as it happens, and as Andrew Sullivan recently pointed out, we’ve seen a minority party in America rejected at the polls try to take the entire nation hostage before. Here’s Abe Lincoln in 1861:

“What is our present condition? We have just carried an election on principles fairly stated to the people. Now we are told in advance, the government shall be broken up, unless we surrender to those we have beaten, before we take the offices. In this they are either attempting to play upon us, or they are in dead earnest. Either way, if we surrender, it is the end of us, and of the government. They will repeat the experiment upon us ad libitum. A year will not pass, till we shall have to take Cuba as a condition upon which they will stay in the Union.”

So too here: This time the scalp the GOP wants is the Affordable Care Act, or the Ryan budget, or social insurance cuts, or Malia Obama. “‘The girl. Bring us the girl,’ said Congressman Steve King (R-IA)..’The bill may pass, but the firstborn shall be ours.'” It’ll be something else the next time and the time after that.

That’s why John Judis is calling this “one of the worst crises in American history“, and why Jon Chait wrote that “Allowing Republicans to default on the debt now is better than trading something that allows them to threaten it later.” Because if Obama buckles this time — and, let’s remember, we already gave the GOP their sequester-funding-levels — the Republicans will just keep taking the American government and economy hostage to get whatever they want. And quicker than you can say he-said, she-said, the rest of the lazy Beltway media will come to treat this sort of hostage-taking as politics as usual. It has to end here, or it never will.

Yes, the Game is Rigged.

“Well, the plutocrat class — that’s the top 16,000 households in this country — are where all the gains have been going since the end of the recession. Thirty-seven cents out of every dollar of increased income between 2009 and 2012 went to these 16,000 households — in a country of 314 million people…[Meanwhile] The average income of the bottom 90 percent of us has fallen 20 percent below where it was in the year 2000 — it fell from about $36,000 to $30,000. It has fallen back to the level of 1966, when Mustangs were new, Lyndon Johnson was president and we were prosecuting a war in Vietnam. 1966.”

In an interview with Joshua Holland, journalist and tax expert David Cay Johnston discusses how our current tax code, among other things, is fueling inequality. For example:

1) “Very, very wealthy people…are not required to report most of their economic gains and legally they can literally live tax-free or nearly tax-free by borrowing against their assets. You can borrow these days, if you’re very wealthy, against your assets for less than 2 percent interest and the lowest tax rate you could pay is 15 percent…[I]f you’re a billionaire and you borrow, let’s say, $10 million dollars a year to live on, you pay $200,000 interest, but your fortune through investing grows by $50 million. At the end of the year you pay no taxes, your wealth is up almost $40 million dollars and your cost was just the interest of $200,000.”

2) “Well, one of the reasons some Americans feel they’re being taxed to death is that if you add up our taxes, which are low compared to other modern countries, and then you add in private expenditures for things the tax system pays for in other countries — a lot of our health care costs, higher education costs, admissions and fees and tickets and licenses for a lot of things — lo and behold, we end up being a relatively high-tax country.”

Don’t Blame Me, I Voted for Kodos. | Deficits Now!

“Barack Obama proposes a painful hit to middle-class and working-class seniors, in return for an increase on taxes on the rich so small that they will hardly notice. Bargain? Yes. Grand? Not so much. By legitimating changes that could lead over time to the conversion of Social Security into a means-tested program for the elderly poor only, Barack Obama has proven himself to be a true and worthy successor of his predecessor, George W. Bush.”

As Obama — to no one’s surprise who was watching the last two years closely — definitively reveals he wants to go all Nixon-in-China on Social Security, Michael Lind notes the many similarities between Bush and Obama on social insurance. “Both Bush and Obama crafted their Social Security plans solely with an eye to the approval of the bipartisan economic elite, most of whom prefer cutting Social Security benefits, which they don’t need, to raising taxes on members of their class.”

One key difference: When Dubya tried to slash Social Security benefits in 2005, Democrats stood up as one against him. Now that an ostensible Dem is in the White House and wants to enact social insurance benefit cuts for ridiculous reasons, not so much. But this time, we can’t countenance the usual Third Way spinelessness. As PCCC’s Stephanie Taylor said: “‘You can’t call yourself a Democrat and support Social Security benefit cuts…The President has no mandate to cut these benefits, and progressives will do everything possible to stop him.'”

***

“People really don’t like deficits…But hold on a second. Why do we hate deficits? ‘Balancing the budget’ sounds really nice, but what reason do we have to believe it’s actually valuable?” In the WP and in very related news, Dylan Matthews punctures the various talking points driving deficit hysteria:

We’re broke! America is going to be bankrupt! We’re really not. The U.S. Treasury never has to default on any of its debts. That’s because we control our own currency. If we owe debts and don’t have the tax revenue to pay them, we can always just print the money and hand it over. That may not be the best approach, and in the very worst-case scenario this leads to hyperinflation so bad that defaulting is the less-bad option. But we’re so far from that situation today that worrying about it doesn’t seem worthwhile.”

***

Update: “The president’s major purpose is not to address mass unemployment, not to build a new foundation for the economy, not to revive the middle class or redress Gilded Age inequality. The president’s overriding priority is to cut a deal – and a deal that continues to impose austerity on an already faltering recovery.”

As Obama’s budget is officially released — $2 of spending cuts for every dollar in revenue is NOT a good thing. See also: Austerity in EuropeRobert Borosage reads the administration the riot act. See also Bob Kuttner: “You can understand Republicans wanting to crush government and hoping to slow the recovery in a way that harms the Democrat in the 2014 midterm elections. But what is the president thinking?…Now voters can conclude that they can’t trust either party.”

Oh yeah, and all that happy talk about addressing climate change and raising the minimum wage in the State of the Union? You won’t see it in this budget. Meanwhile, the GOP are loading up the cannons.

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