ataxingmatter

Illinois's Tim Johnson (Rep.) Squirms under Norquist No-Tax-Increase Pledge

Back in 2002, Tim Johnson represented a safely red district in Illinois and the radical right was pressing on his back with its reaganomics-inspired program to cut-taxes-to-shrink-(nonmilitary)-government-and-eliminate-public-infrastructure-and-social-justice-programs; de-regulate-to-free-up-big-business; privatize-wherever-you-can-especially-schools-bridges-and-other-essential-services.  Not to be outdone, Tim Johnson signed the no-tax-increase pledge on the dotted line, with his right-hand aide as witness.

In spite of the decades of extraordinarily well-funded anti-tax/anti-government propaganda spewed by purported think tanks like the "Americans for Prosperity" arm of the Koch Bros, the anti-estate tax "American Family" coalition arm of the Walton heirs, the Big-Business oriented Chamber of Commerce and Club for Growth and similar groups, the American public seems to be finally beginning to learn to read between the lines and recognize self-serving propaganda for what it is.    Even with all the money being spent to misrepresent and distort the truth about taxes, it is worth noting that Rasmussen polls (run by a leaning-right head) are finding Americans more willing to support tax increases than they were a few years ago.  For example, back in December 2011, despite the anti-tax nonsense of the Tea Party and other radical right-wing groups, only 52% thought tax cuts would help the economy--in the low end of the 51% to 63% range answering that question affirmatively since July 2008.  Similarly, a recent poll showed that 47% favor a candidate who wants to raise taxes on the rich over a candidate who wants no tax increases.  Back in September 50% of Americans favored a mix of spending cuts and tax increases (but 64% weren't willing themselves to pay higher taxes, a product of the NIMBY syndrome).  And a March poll found a significant decrease in Americans responding who thought that America is an "over-taxed" nation. 

[N]ew Rasmussen Reports national telephone survey finds that 56% of Likely U.S. Voters believe America is overtaxed. But that’s down from 66% two years ago and 64% last year. One-out-of-three (33%) now believe the country is not overtaxed, while another 12% are not sure. (To see survey question wording, click here.)

[ASIDE:   The problem with the question about whether Americans are overtaxed--especially in this age of 527 groups spending buckets of money to convince them that they are--is that it depends on who you are asking and what facts they actually know about taxes, the economy, and what the difference is between effective tax rates and statutory rates.  Everybody hears the radical right prattle on about how high our (statutory) tax rates are.  Very few hear much about effective tax rates and fewer still understand the difference.  The wealthy are not over-taxed, though they have spent a good bit of their money to convince typical Americans that they are.  Those who escape federal income taxation because they earn amounts covered by the standard deduction and personal exemptions and earned income tax credits--amounts intended to keep lower income taxpayers from having to pay income tax--nonetheless have to pay signficant state and local property and sales (and often also income) taxes and have to pay significant federal payroll taxes.  Not surprisingly, they may well feel overtaxed when their wages are going down and their tax burden is staying the same and they hear the think tank spew of anti-tax stuff on the airwaves day and night.]

And now Tim Johnson's district has changed.  He represents a more Democratic electorate, that is less likely to swallow the Tea Party tax aversion hook, line and sinker.  So he is backtracking.  Which is good. It's a shame he backtracked bit by bit, at first claiming he'd never signed and then suggesting his aide signed for him before he finally admitted he had signed the pledge but just didn't consider it cast in granite.   See Are you Now and Have You Always Been?, New York Times editorial (March 11, 2012). 

But to give him credit, he finally did take a  stand against the idiocy of the tax pledge.   See Pat Garofalo, GOP Rep. Blasts Norquist's Anti-Tax Pledge as "Disingenuous and Irresponsible", Think Progress.org (Mar. 8, 2012).  He ought to do it more straightfowardly--by admitting that it is a mistake to assume that tax cuts are always good or that tax increases are always bad and by acknowledging that there is plenty of room to tax the rich more without harming anybody's economic recovery.  His statement (quoted on ThinkProgress) weasles by making clear that he is leery of tax increases other than fixing tax loopholes or raising the Social Security tax.....

 One hopes that these few quasi- brave Republicans who are beginning to speak out against the idiocy of a "pledge" to cut off a key tax policy tool of democratic institutions for supporting public infrastructure and public needs will cause Norquist's pledge to go to the same ignominious fate that awaited Joe McCarthy's anti-liberal binge (under the name of anti-communism) when a lone lawyer questioned his decency.  As a constitutent told GOP representative Rick Berg in a North Dakota town hall meeting (quoted on Think Progress), these guys are supposed to work for their constituents, not for Norquist.

Buffett Rule Legislation

In early February, Sheldon Whitehouse introduced the "Pay a Fair Share Act"--legislation embodying the so-called "Buffett Rule" to ensure that the highest income Americans who make more than a million  a year would pay at least a 30% rate on all of their income (including capital gains), rather than being able to pay less than 15% as in the case of Mitt Romney.  The bill is estimated to bring in about $50 billion a year.  (If the Bush tax cuts are allowed to expire, the additional amount would of course be less, around $25 billion a year.)

Whitehouse appeared on the Keith Olbermann show (Feb. 3, 2012) to help spread the word about the bill.  You can watch the episode/read the transcript here.   The Congressional Research Service has estimated that a quarter of all millionaires--more than 94,000 people--pay tax at a "rate lower than most middle class taxpayers."  Whitehouse explains that "[w]ith all the advantages that do come with enormous income, paying a lower tax rate than regular, working families should not be one of those advantages."

You can voice your support--and help give Congress the courage it needs to buck the Big Money that wants to rape the government by forcing the little people to pay taxes while the wealthy get off scott free--by going to www.Buffettrulebill.com.  Tax policy shouldn't be set as a quid pro quo to suit the reigning plutocracy.

 As usual, the anti-tax argument from the right is that if you raise taxes on the extraordinarily wealthy, you will drag down the economy and hurt small businesses.  That's bunk, of course, and the right knows it.  Whitehouse points out that studies have shown little relevance between rates for the wealthy and any negative impact on small business. Fact is, if someone makes more than a million a year out of their business, they can afford to pay 30% in taxes and still will be doing quite well, thank you.  The taxes aren't coming out of their businesses--they're coming out of their profits.

(There's a snippet of discussion about Romney's tax plan, which would save the average Middle Class American a whopping total of $167 a year in taxes, while cutting the bills of millionaires and billionaires by tens or hundreds of thousands of dollars.  Romney's response to a question about the fact that a typical middle class American would get only $167?  "It's not nothing.")

 

The right's phony debt and tax cuts logic

Every single GOP candidate complains that Democratic spending is a problem because it creates deficits that lead to borrowing that leads to high debt.  But they don't really care about the deficit or debt.  What they care about is having an argument for cutting spending on social safety net programs and reducing the role of government in preventing corporate malfeasance.

If they cared about debt and the deficit, they would let the gimmick they wrote into law in  2001 take effect as it is slated to do--they would let all of the Bush tax cuts expire and return us to that saner pre-Bush tax policy. From there we could eliminate loopholes and phase out giveaway tax breaks for the wealthy and big corporations, and we'd be well on our way to dealing with the deficit and debt without creating any new holes in the social safety net.

But that's not what they want.  The reason they support trillions of dollars of new tax cuts for the wealthy and big corporations is that they really don't want a viable federal government that works for the general public good rather than serving the militaristic objectives promoted since Reagan--and particularly not one that provides a social safety net.  Mark Thoma says it well.

Tax cuts create a deficit while rewarding key constituents at the same time (all the while arguing that the tax cuts create middle class jobs through trickle down effects that never seem to actually appear), and then the subsequent complaints and worries over the deficit lead to spending cuts. People say the Bush tax cuts didn't work -- I say it myself -- and that's true if you are talking about the impact of the cuts on economic growth and employment. It's hard to find evidence of strong effects on these variables. But it has created huge pressure to cut spending -- the government is being starved of the revenue it needs to support some programs -- and even if by some miracle the Bush tax cuts end Republicans will have accomplished the goal of shifting the conversation in a way that even has Democrats supporting changes to social insurance programs. 

 Mark Thoma, The Party of Higher Debts

or as a commenter (Charlier Baker) on Thoma's post noted:

 Reagan doubled the national debt while weakening social spending; Bush II added $3T, and his wars and tax cuts set up most of our deficits now. Yet the [right] will always blame old people, single moms, college kids, and any other powerless target group du jour that catches their eye.

Rick Santorum's tax policies and more--imposing his moralizing choices on all

Rick Santorum is a man who seems to hold sincerely held religious beliefs.  The problem is that he thinks everybody that matters holds (or should hold) the same beliefs that he does, or at least should be forced to live in a country that operates by the principles that follow from those beliefs.

Santorum has accused Obama of operating from a "phony theology" (one not based on the Bible).  That suggests that Santorum thinks a president is supposed to impose a biblical theology on all presidential work--and that Santorum intends to impose his own "correct" theology if he were to be elected president.  See Santorum Questions Education System and Criticizes Obama, New York Times (Feb. 18, 2012).   That approach fits with Santorum's idiosyncratic views on how religion is supposed to influence public life:  Santorum has made a point of claiming that he does not hold with the founding principle of separation of church and state--a principle enunciated by Thomas Jefferson, ascribed to by Abraham Lincoln, and articulated splendidly by John F. Kennedy.  See Joan Walsh, Santorum's JFK Story Makes Me Want to Throw Up, Salon.com (Feb. 26, 2012). 

This issue is worth pointing out clearly.  Here's what Santorum said

 I don’t believe in an America where the separation of church and state is absolute.  The idea that the church can have no influence or no involvement in the operation of the state is absolutely antithetical to the objectives and vision of our country. (emphasis added)

And here's what the statesman Kennedy said when confronting the concerns of the Southern Baptist Convention that a Catholic in office would implement the laws under the dictate of the Pontiff in Rome rather than the U.S. Constitution.

I believe in an America that is officially neither Catholic, Protestant nor Jewish; where no public official either requests or accepts instructions on public policy from the Pope, the National Council of Churches or any other ecclesiastical source; where no religious body seeks to impose its will directly or indirectly upon the general populace or the public acts of its officials; and where religious liberty is so indivisible that an act against one church is treated as an act against all.

What does Santorum's theology look like and how will it influence public policy under a Santorum presidency?  Santorum apparently thinks public schools are a bad idea (he's likened them to "factories") and that all children should be able to be home schooled (and indoctrinated in a parent's religious preferences) at taxpayer cost.  See Santorum Questions Education System and Criticizes Obama, New York Times (Feb. 18, 2012); Santorum Exposed: why is Santorum spending your tax dollars on his family (noting that Santorum took $100,000 from Pennsylvania for an online program for his home-schooled kids, even though he resided in Virginia at the time). He thinks kids get "weird socialization" in public schools.  Rick Santorum, Kids Get Weird Socialization in Schools, Huffington Post (Feb. 22, 2012).  We already have weakened public schools by permitting taxpayer funds to pay for "nonreligious" items at religious private schools, such as text books and transportation.  Since money is fungible, that payment merely subsidizes more religious expenditure on religious education and deprives children in public schools of much needed resources to deal with the huge lingering infrastructure problems of our public school systems.  We don't need to go even further in that direction by moving religion into public schools wholesale, or moving even more children into ideological indoctrination through taxpayer-funded schooling. 

Santorum's theology is backward on women as well, seeming to think more women should be anchored in the kitchen with numerous progeny pulling on apron strings that signify the most satisfying role for women (in his book).  One worries how that would play out in a Santorum presidency that could cut off funding for disfavored activities through executive orders, and his public statements bode ill for how it would pan out.  Santorum apparently thinks the feminist revolution is bad, because it has made it harder for women to choose to stay at home.  See Santorum faces questions on women in the work force, New York Times (Feb. 12, 2012).  In contradistinction to the importance of individuals' rights under the First Amendment, he seems to think that every religious institution should be able to impose its beliefs on its workers (no matter what their beliefs are):  under Santorum, a woman working in any capacity for the Catholic Church could not be covered in her health care plan provided by her employer for contraception.  See Social Issues Rule Day in Candidates Race, AP (Febl 12, 2012) (noting Santorum's comment that the contraception rule forces churches to do something against their basic (institutional) tenets).   He thinks voters should be aware of his religious faith and should consider that in determining whether to vote for him.  And his religious faith doesn't believe in birth control, so he wants to be sure that the tax code provides a huge tax exemption for each child in multi-child families--but not a refundable tax credit that would be of real use to a poor working mother with one child to care for.  See Santorum letter, Raise the exemption for children, not the child tax credit, Wall St. J (Feb. 25, 2012) (claiming that he wants an $11,100 personal exemption per child for working families but is against a child tax credit that would be refundable, so is "innocent" of "expanding welfare").  

Santorum's theology doesn't seem to find it problematic when a government system systematically redistributes resources upwards to the benefit of the wealthy.  His tax plan would result in zero taxation on unearned income, the primary type of income of the wealthy.  Welfare for the rich is apparently fine and dandy under Rick Santorum's version of morality. 

Romney's association with corporate tax shelter schemes

Bloomberg's Jesse Drucker has been doing some research into presidential candidate Mitt Romney and come up with some interesting information--at least for those of us who find corporate involvement in aggressive tax shelter phantom loss generating schemes a worrisome problem.  See Drucker, Romney as Audit Chair Saw Marriott Son of Boss Shelter Defy IRS, Bloomberg.com (Feb. 22, 2012).

Mitt Romney has been on the board of Marriott INternational Inc. on and off since 1993, and has served as chair of the audit committee for 6 years.  During that period, the company has used aggressive tax avoidance deals, including (i) the "Son of BOSS" tax shelter structure for generating artificial losses that could be used to offset gains from other sources, thus reducing taxable income and tax liabilities and (ii)  shifting profits to a Luxembourg shell company.  Marriott's effective tax rate has been as low as 6.8%, even though the federal statutory rate for corporations is 35%.

These factoids demonstrate two things.

First, as the Bloomberg.com article points out, Romney claims that his business experience is the primary reason that Americans should want to see him in the White House.  Contrary to his claim, it seems to me that the more we hear about his business experience the less I think he is suited to the White House. 

At Bain Capital, as at most private equity firms, Romney was willing to reap millions from taking a stable, operating company and turning it into a bankrupt by leveraging it up, firing employees, and otherwise destroying the stable business.  Yeah, sometimes the "creative destruction" worked and the company exited making profits.  But often it didn't, and the company wasn't a loser until Bain Capital got hold of it.  Further, Romney doesn't appear to have developed much of a sense of corporate social responsibility through his "earning" of multi-millions taxed at low rate through Bain Capital.  So he didn't see anything amiss in the very aggressive tax planning  engaged in by Marriott when he served as a Marriott director with oversight responsibility--of which he certainly knew, as head of the audit committee.  Even John McCain was aghast at Marriott's wanton use of tax shelters, when he complained about the federal tax credits Marriott claimed in an accidental loophole in the law on synthetic fuels.  As the piece notes, McCain called Marriott's use of this loophole to claim the credits an "expensive hoax" or "scam." 

 Do we want as president a man who thinks it is okay for taxpayers to gin up artificial losses to reduce their tax liability or use provisions of the Code in ways that clearly go against their underlying purpose to get an unintended subsidy from the Federal government?  I don't think so.  Such a person would likely be quite willing to see further cuts to the corporate taxes and taxes on the wealthy, no matter what that does to the federal fisc.  And Romney has certainly demonstrated his willingness to cut taxes even in the face of deficit claims that are being used to demand privatization of Social Security and cuts to Medicare.  (See  his plan for a 25% corporate rate, a zero percent estate tax, a lower top rate on earned income for the wealthy, and other items.) 

I want a president who considers that every taxpayer has an obligation to the integrity of the system, and who would not look kindly on businesses that engage in aggressive tax minimization transactions that don't hold up to the laugh test.

Second, major corporations aren't paying enough--much less too much --in taxes these days.  We have a statutory rate of 35%, but most very profitable corporations end up paying very little in taxes, through a combination of excessive loopholes built into the Code by their accommodating buddies in Congress (quid pro quo for campaign contributions or, after Citizens United, "independent" super-PAC donations?) and outright tax sheltering through aggressive customized transactions intended to generate tax benefits. 

Why in the world would anybody in his/her right mind propose cutting the corporate tax rate in this context of minimal tax payments by corporations?  Makes no sense at all.  Get rid of the loopholes.  Bear down with enforcement clout on the phony tax-loss shelters.  But don't cut the corporate tax rate.  There's absolutely no substance to the constant whine we hear from corporate lobbyists that the corporate tax code is "too complex" (my JD students in corporate tax are quite capable of understanding it, so I am sure Corporate Tax Counsel are, too); or that the corporate tax code is "anticompetitive" (Marriott is making a fine rate of return); or that the corporate tax code is "preventing investments" (corporations have lots of cash floating around--if they want to make expansion investments, they can do so already).

Tax policy should be based on reasonable considerations of efficiency and simplicity, not exorbitant and unfounded claims of how the tax code is wrecking business.  But even more importantly, tax policy should be based on fairness considerations.  And Romney hasn't shown much understanding of what fairness is, or how to make the tax code fairer rather than even more of a government program for redistribution upwards.

Romney's Wall St. J. Interview with Gigot--Protecting the Rich

[edited to rephrase and correct typos 12/26/11 5 pm]

Joseph Rago and Paul Gigot interviewed Mitt Romney on his 'vision' for America--"On Taxes, 'Modeling', and the Vision Thing", Wall St. J. Dec. 23-24, 2011, at A13.  In it, Romney reveals the way patrician wealth has affected his values, casting President Obama as a "European social democrat" and suggesting that contrasts with his own belief in a "merit-based opportunity society--where people earn their rewards based upon their education, their work, their willingness to take risks and their dreams."  

Now everybody likes the idea of people being able to advance based on merit, rather than on crony capitalism, improper influence or whatever.   The problem with suggesting that America is a 'merit-based opportunity society' is that it isn't much of one anymore: America in this second Gilded Age is primarily a wealth-and-status-based opportunity society. 

• Education:  Even Romney admitted (obviously unintentionally) that wealth makes a real difference, since he noted that rewards depend in part on education.  People with wealth receive the finest educations from pre-K through post-graduate, getting preferences at the best children's academies in Manhattan and at the highest ranked universities like Harvard and Yale.  People without wealth lose out from the very beginning, with inferior schools that are no longer fully supported by the public, as charter and for-profit schools take over offering inferior educations that no patrician family would ever accept.  The poor and middle class take on enormous loans and work loads to finance even their public university educations, since state support has slipped down to a mere 20-30% of the cost of that education.  That makes study and grades and success much more difficult for them. 
• Working hard (with Contacts/Influence/lobbyists):  The wealthy are introduced early to the most important people of influence in society, like the Vanderbilts and the Astors of old, the private equity fund managers and the Wall Street bankers that can smooth their way through all the trials and tribulations of their 'work' careers--i.e., becoming owners of major league baseball team when you have no relevant experience (George W. Bush, with the aid of his papa and his papa's influential and rich partners) or setting up a venture capital fund (like Romney's Bain Capital). These connections ultimately permit the wealthy to mingle in a monied society that offers the right contact for every venture to succeed--including lobbyists to help a wealthy entrepreneur get his business going and ability to 'invest' in politicians who are willing to risk alienating the middle class to support preferential taxation of the rich. 
  • By the way, lots of the not-rich work quite hard, often at thankless jobs that provide no cushion to deal with life's difficult blows or at a job that, at minimum wage, still leaves their family below the poverty line.  Without the contacts and influence that smooth the way of the rich, there chances of moving up are much more limited.  If they persevere, have an entrepreneurial idea, and catch a break, they may be able to move beyond where they are, but they have to do a lot more than just 'work hard.'  
• Taking Risks (and Getting Subsidies and Preferential Tax Provisions):  The poor take a risk every time they get up in the morning--will their health hold out so they can keep working? will they be able to make it to their job in that car that needs a new starter? can they manage to arrange for someone to take care of their kids while they work or will they have to be "latch-key kids" yet another day?  But they don't usually have the kind of capital nest-egg to take a risk with in the way that Romney means it--the excitement of opening a new business demands from the poor and near-poor Herculean efforts to pull together family, friends, and workers to support their business ideas.  Those with money, on the other hand, have a head start on all of this.  Bill Gates' parents offered him an educated life of relative ease; he could 'play' in the garage on that dream of his rather than running heavy machinery or working behind a counter at a McDonalds.  And those with contacts and money are able (and willing) to hire the best lobbyists to ensure that they get all the tax-advantaged benefits and subsidies that they can finnangle (or buy) from local, state and federal legislators for their activities.  That includes favorable tax provisions that allow them to keep a significant percentage of their wealth (and to fight for even more favorable provisions), such as the carried interest provision that gave Romney a preferential rate on almost all of his compensation income, the preferential capital gains rate that gives all the wealthy a low tax rate on their income from trading stocks and bonds with each other, and the various ways that the tax code subsidizes the kinds of personal deductions that provide the most benefit to those with money--from the charitable contribution deduction (including the ability to give away stock and claim a deduction for its value rather than for your actual basis) and the mortgage interest deduction (for interest on home loans up to a million plus $100,000) to all of those provisions that allow the wealthy to retire well--pension plans, exclusion of life insurance benefits, etc.  Then there are the many subsidies they get various governments to provide for their businesses, presumably by using those long-term family/status connections to wine, dine and influence.  They include low-cost loans such as those enjoyed by Romney's Bain Capital for various businesses that Bain Capital was 'turning around'.  (Handily, they can make low-taxed profits for themselves even when their turnarounds fail, with all those subsidies, so that the taxpayer sometimes ends up paying  for their losses along with the fired workers.)  See the links provided in the posting yesterday on Romney's reluctance to release his tax returns, which discuss some of the subsidies and other benefits to Romney's business. 

That's not a merit-based opportunity society:  it's an influence-based society, where the poor and even most of the middle class are working against long odds to make headway. 

And there's not much evidence that Romney recognizes this fundamental difference in existence of the well-off and the not-so-well-off here in America.  Take the Gigot story's discussion of tax policy and what kinds of "reforms" Romney supports.  The Journal apparently thinks Romney is too timid on 'risk-taking' because he didn't espouse the kind of tax agenda that the Journal supports--moving to a consumption tax--like the national sales tax-- that shifts most of the tax burden to ordinary folks (since they will pay tax on most or all of their  income since they spend most of it on food, shelter, clothing and other necessities) and leaves a zero percent tax rate on the capital gains, dividends, and other income from capital that makes up most of the income of the wealthy and little of the income of everybody else.  Why, the Journal notes, Romney's plan merely calls for extending the Bush tax cuts, cutting the statutory corporate tax rate from 35% to 25%, and eliminating capital gains and dividends taxes only for those who make $200,000 or less.  Romney won't even say he supports a consumption tax til he's studied it more, though he likes the purported "simplicity" of a flat tax.    Romney also says he likes "removing the distortion in our tax code for certain classes of investment".  This means that Romney does not understand the real economics of the consumption tax and the so-called 'flat tax', both of which result in taxation of 100% of the income of the poor and near poor and most of the middle class while leaving the rich with a minimal tax burden.  Any system for alleviating that burden (such as a low-level exemption at the bottom of the income scale) would thrust a truly burdensome recordkeeping requirement on those least able to cope with it.  Especially for versions that merely zero out the tax rate on income from capital, distortions would be magnified: the categorization of income into different types is one of the primary distortions in our system, and any plan to eliminate taxes on one type of income while retaining them on another increases distortions rather than removing them!

What about Romney's saying he won't propose cuts in individual tax rates for those making more than $200,000?  The Journal seems to think that is rather cowardly, since such a proposal accepts President Obama's linedrawing on where rate cuts might be reasonable.  Now, aside from the failure to consider dropping the entire bunch of Bush tax cuts and letting all the rates go back to the level that they were when Bush took office (which might well be the best tax reform the Congress could do at this point), Romney should be commended for at least recognizing that the wealthy have gotten a fistful of tax gifts from the Bush individual tax cuts (and, indirectly, from the various corporate tax provisions that have allowed companies to pay less and less into the federal fisc) and for not wanting to proffer even more. 

But here's the rub.  Romney doesn't recognize the damage from the wealthier among us continuing to get even wealthier while the vast majority suffers stagnation and decline:  as the concentration of income increases at the top and inequality becomes the defining characteristic of this society, opportunity for all is threatened as is democracy itself.  Tax policies that could serve as a deterrent to that wealth buildup at the top--e.g., a stiffer, progressive estate tax, a financial transactions tax to discourage trading and capture a tiny amount in connection with those secondary market trades amongst the wealthy, and bracket expansions that would create a more progressive set of tax rates for the highest income that would distinguish between those who have $400,000 a year and those who have $2 million a year--aren't even on Romney's radar screen.  He's content with the current system's distribution, one that is highly favorable to the wealthy.  As a recent FED Finance and Economics Discussion Series article made clear, inequality has made permanent inroads and tax policies haven't done much to dampen them.  See Jason DeBacker et al, Rising Inequality, Transitory or Permanent? New Evidence from a U.S. Panel of Household Income 1987-2006.

Romeny's made it clear that he isn't about to challenge the status quo of an easy tax life for the wealthy.  Here's what he said to the Journal on the question of making sure that the wealthy never see any kind of a tax increase.

"My intent is to simplify our tax code and create growth, and so I will also look to see whether the top one-half of 1% or one-thousandth of 1% or top 1% are still paying roughly the same share of the total tax burden that they have today.  I'm not looking to lower the share paid for by the top."  Wall St. J., Dec. 24-25, 2011, at A13 (quoting Romney).

So after a decade of cutting taxes on the wealthy and passing more and more provisions that benefit the wealthy in particular either directly or indirectly, Romney declares today's status quo as the perfect state for things to be in--the current low taxes on the wealthy, in perpetuity, are his goal.  And while we may applaud him for not intending to lower taxeds further on the wealthy, it is hard to see how continuing current tax policy towards the wealthy makes sense for the fisc or for democracy.   Carried interest--won't be taxed under Romney as the ordinary compensation that it is.  Mortgage interest deduction on million-dollar loans--won't be pulled back to a more reasonable amount such as the interest on a loan that is 80% of the value of the median-priced US home.  Charitable contribution deduction for value rather than basis in stocks contributed--won't get rid of that one.  Establishment of new brackets to recognize the drastic expansion of incomes at the top so that those with progressively more income are paying progressively more in taxes--won't happen under Romney.  Why?  Because he is going to make sure that the top 1%, the top 1/2%, the top 1/1000% don't pay less, but also don't pay a bit more in taxes than they are paying now, this perfect state where the GOP wants to cut people off Medicaid to save money, turn Medicare into a 'premium support' system that will shift more and more of the burden of health care in one's old age to the vulnerable elderly with a pension they can't count on and a Social Security system that the GOP is trying to ensure that they can't count on.

Most tax "simplification" promoted by lobbyists won't create growth--it is much more likely to result in tax loopholes that the wealthy can drive a truck through.  Refusing ever to increase taxes, even on the ultra-rich who can clearly afford to pay more (without really noticing the difference in spending power) won't create growth--it most likely will result in a stagnant economy where the burdened middle class gradually falls into the ranks of the New Poor. 

Why We Should Care About Romney Refusing to Release His Tax Returns If Nominated

As most are probably aware, Romney announced a two days ago that he did not intend to release his tax returns even if he were selected as the Republican presidential nominee.  See, e.g., Mitt Romney Declines to Release Tax Returns, Cementing Posture of Secrecy, Huffington Post (Dec. 22, 2011) (quoting Romney as announcing "Never say never, but I don't intend to do so").

The reasons that such releases have traditionally been pushed for presidential candidates are myriad.  Voters can understand  more about a candidate's wealth  and potential conflicts from reviewing the returns.  They also have some idea of the candidate's understanding of finance from viewing the returns. 

What kinds of things likely prompt Romney not to want to release the returns?  Are they issues that voters might reasonably take into account in assessing his candidacy or are they irrelevant concerns? 

One can speculate that Romney may be worried that the stark revelation of his immense wealth compared to most voters will be damaging.  We are living through a second Gilded Age, when wealth is concentrated in enormous measure in the hands of very few Americans at the top, and the vast majority of us are just barely getting along and are worried about being tossed out of the middle class into the New Poor.  In that context, surely the wealth of a candidate is information that is relevant to voters.  Persons of immense wealth may have trouble understanding the daily trials and tribulations of 'average' Americans who have to save judiciously for unusual expenses and who may be thrust into bankruptcy by a car accident, storm-caused damage to a home, sudden change in job possibliites, or onset of a serious illness.  Further, Romney is trying to take advantage of his experience as a businessman and claims about his market abilities and savvy financial training:  that makes his tax returns directly relevant and it strikes this voter as contradictory that he both wants to claim it and hide it.

Given Romney's wealth, it is likely that most of his income is in the form of income from capital that is privileged under our tax code with especially low preferential capital gains rates--capital gains, almost all corporate dividends and income from pension funds (his private equity firm Bain Capital, still pays him a generous share of 'profits' through a deferred compensation plan--another tax -reduction scheme that most Americans can't benefit from).   Surely it is relevant to voters whether a presidential nominee is particularly benefited by the current tax laws that favor the wealthy or not.  And surely it is relevant just how extensive that benefit is.  For example, Romney may well pay a lower effective tax rate than many Americans who have many times less income than Romney does. Voters are entitled to know that fact, since it will undoubtedly influence Romney's views about tax reform.  As David Donnelly, the national campaigns director of the Public Campaign Action fund, notes in the Huffington Post piece, "the implications are that he is afraid of what this says about who he is and who he will represent if he is in the White House."

The decision not to release tax returns also provides more evidence of a person who does not believe in transparency.  Romney hasn't released information about campaign contribution "bundlers."  He destroyed records from his tenure as governor of Massachusetts.  This tendency towards secrecy runs against the importance of openness for the sustainability of democratic institutions.

Romney is "one of the wealthiest men ever to run for the presidency" and he made most of that money in the extremely tax-advantaged world of private equity fund managers (who have claimed preferential capital gains rates on their compensation income under the "carried interest" loophole in the partnership provisions that the wealthy members of Congress haven't yet been able to bring themselves to close).   Shear, Romney Says He Won't Release Tax REturns, New York Times, Dec. 22, 2011.  Release of returns would call attention to the privileged tax system applicable to private equity fund managers, and to the fact that Romney enjoyed that kind of special tax system while average Americans who toil for a living pay higher rates on their compensation.  Shouldn't we have that information in front of us in black and white? 

Tax policy is where a great many of the important decisions affecting every facet of the economic wellbeing of this country are now being made.  For a presidential candidate to refuse to release his/her tax returns and allow citizens to arrive at their own conclusions about how the candidate's wealth, tax advantages, and tax positions will influence his/her thinking on tax policy issues is worrisome.

Of course, the mere fact that there will be rampant speculation about the tax rate that Romney pays and the income that would be revealed on his tax returns if released is itself a reason to release the returns.  Americans will be interested, and they will want to understand how Romney's tax rates compare to their own.  The Democratic National Committee has already created a webstie that allows people to compare based on assumptions about Romney's rates, according to the New York Times story, at www.whatmittpays.com.  We already have too much misinformation and speculative information in our national campaigns, so it behooves Romney to release the forms so that people can see what the real information is.

And finally, the fact that Romney has challenged his own opponents to release their tax returns (Ted Kennedy in the 1994 Senate race) should be a "shame-on-you" reason for him to release his own returns now.  If he thought that Kennedy's tax returns would be relevant information for voters, then it is surely reasonable to assume that he thinks that his own tax returns would be relevant information for voters.

There doesn't seem to be any valid reason for Romney to withhold his tax returns if he is the nominee.  If he doesn't release them, then voters should attribute it to Romney's sense of patrician privilege.  And it wouldn't be unreasonable to assume along with that his acceptance of the corporatist agenda to shift more and more taxes onto working Americans and his inability to understand the daily lives of ordinary Americans. It should count against him in considering just how he will handle the key economic issues of our times--changes to the tax code that will finally require the wealthy and high income to pay more to redress the imbalance of the numerous changes made in the last 40 years that favor the wealthy.

House GOP Response to Obama Jobs Bill Speech

The House GOP responded to Obama's jobs act speech by writing a letter asking for the text of his proposed legislation. 

Two things are noteworthy here:  the insistence on offsets, and the presupposition that deregulation would do more for creating jobs than unemployment expansion, payroll tax cuts, and credits for hiring the long-term unemployed and the other Obama proposals.

The letter says that Republicans "look forward" to receiving information about the offsets proposed for the jobs proposals.  This  highlights one of Obama's mistakes in the jobs speech and in fact throughout his administration.  He has allowed the GOP to set the agenda.  Even when it is obvious that the economy is stalling, he still walked the "deficit reduction" walk --including calling for changes to workers' earned benefit programs (Medicare and Social Security) in line with the GOP's four-decade campaign to decimate them as unjustifiable 'entitlements'.   That permits the GOP to practice their obstructionism in two places--first, in the jobs-supporting proposals and second, in the pay-for proposals. 

The letter presages that battle by noting that the House GOP wants to look back to GOP-sponsored bills that would "remove government barriers to private-sector job creation". In other words, the GOP is repeating the same worn mantra that government regulation that protects ordinary Americans from the air, water, land pollution, bad labor practices, and other anti-consumer actions of a too-powerful corporate business sector is the thing hindering job creation. 

Everyone (except perhaps the low-information American voters who have been constantly misled on this issue by the corporate media) knows that isn't true.  What hinders job creation is the lack of a consumer base to buy the products that would be produced by new jobs.  It isn't regulation--regulation is at most a cost that limits the corporate managers' and owners' profits, since it forces business to internalize costs that it had foisted off on the public prior to the regulations.  It isn't taxes--taxes are similarly just a cost of doing business.  Remember that corporations have had an enormously profitable time, and they have huge warchests of cash, both abroad and at home.  They have plenty of money to hire if there were only people to buy the products and services to be provided by the new hires.  Until that vicious cycle is broken, stagnation will continue.   

Other than its repetition of the Reaganomics anti-regulation mantra, the letter says nothing in substance.  It claims to approach the Obama jobs proposals with bipartisanship and cooperation.  But the years of the Obama administration have demonstrated that there is no such thing as cooperation among the current Republicans in Congress.

Lofgren's Exodus from GOP Politics--a worthy farewell

Mike Lofren, long-time GOP operative, decided it was time to leave the cult.  His farewell, published on Truth Out, is well worth reading:  Goodbye to all that: reflections of a GOP operative who left the cult, Sept. 3, 2011.

First, he acknowledges that both political parties fall short of what they should be ("are rotten"), but that the GOP is so bad because the "Party is full of lunactics."

Both parties are rotten--how could they not be, given the complete infestation of the political system by corporate money on a scale that now requires a presidential candidate to raise upwards of a billion dollars to be competitive in the general election?  Both parties are captives to corporate loot.  The main reason the Democrats' health care bill will be a budget buster once it fully phases in is the Democrats' rank capitulation to corporate interests--no single-payer system, in order to mollify insurers; and no negotiation of drug prices, a craven surrender to Big Pharma.  But both parties are not rotten in quite the same way.....

[I]t may have come as a shock that the Republican Party is so full of lunatics.  ..[T]he crackpot outliersw of two decades ago have become the vital center today:  Steve King, Michele Bachman (now a leading presidential contender as well), Paul Broun, Patrick McHenry, Virginia Foxx, Louie Gohmert, Allen West.   The Congressional directory now reads like a casebook of lunancy. ...

I could see as early as last November that the Republican Party would use the debt limit vote...in order to concoct an entirely artificial fiscal crisis.   They, they would use that fiscal crisis to get what they wanted, by literally holding the US and global economies hostage....It should have been evident to clear-eyed observers that the Republican Party is becoming less and less like a traditional political party in a representative democracy and ... more like an apocalyptic cult, or one of the intensely ideological authoritarian parties of 20th century Europe.  ...

Second, he notes that this new ideological purity means that the democratic institutions cannot function properly, and the GOP is undermining democracy itself by its extremist approach to governance.

During periods of political consensus...the Senate was a 'high functioning' institution: filibusters were rare and the body was legislatively productive.... [Now] virtually every bill, every nominee for Senate confirmation and every routine procedural motion is ... subject to a Republican filibuster. ...As Hannah Arendt observed, a disciplined minority of totalitarians can use the instruments of democratic government to undermine democracy itself. ...[Quoting John P. Judis, the author notes] "If there is an earlier American precedent for today's Republican Party, it is the antebellum Southern Democrats of John Calhoun who threatened to nullify, or disregard, federal legislation they objected to and who later led the fight to secede from the union over slavery."  ....[A] Republican committee staff director told me candidly ...what the method was to all this obstruction...By sabotaging the reputation of an institution of government, the party that is programmatically against government would come out the relative winner.

Third, the reason this sabotage of government by a radical right GOP is working is the ignorance of most US voters.

There are "tens of millions of low-information voters"  whose "confusion over who did what allows them to form the conclusion that 'they are all crooks' and that 'government is no good'.... This ill-informed public cynicism ... further intensifies the long-term decline in public trust in government that has been taking place since the early 1960s--a distrust that has been stoked by Republican rhetoric at every turn. ...

Fourth, the corporatist media "are also complicit in this phenomenon" because they dare not tell the truth or distinguish facts from fiction or even point out when a side is completely in the wrong, for fear of not appearing 'evenhanded.'

Ever since the bifurcation of electronic media into a more or less respectable 'hard news' segment and a rabidly ideological talk radio and cable TV political propaganda arm, the 'respectable' media have been terrified of any criticism for perceived bias.  Hence, they hew to the practice of false evenhandedness.  ...[Discussing Chris Cillizza, the author notes that ] the pundit's ironic depreciation falls like the rain on the just and unjust alike, on those who preciptated the needless [debt ceiling] crisis and those who despaired of it.  He seems oblivious that one side--or a sizable faction of one side--has deliberately attempted to damage the reputation of Congress to achieve its political objectives....

Fifth, as more voters become disillusioned by the GOP's anti-government propaganda and the media's misleading depiction of the parties' actions, it allows the radical fringe to acquire even more power.

And if the uninvolved middle declines to vote, it increases the electoral clout of a minority that is constantly being whipped into a lather by three hours daily of Rush Limbaugh or Fox News.  ...

[T]he deindustrialization and financialization of America since about 1970 has spawned an increasingly downscale white middle class--without job security (or even without jobs), with pensions and health benefits evaporating, and with their principal asset deflating in the collapse of the housing bubble.  Their fears are not imaginary; their standard of living is shrinking.

Sixth, the Republican method is "schizophrenic", in that it claims to be based on reverence of the Constitution yet denigrates  key constitutional principles, including the very federal government that the Constitution was written to create after the failure of the loosely joined states under the Articles of Confederation.

[The party] embodies a "caustic" denigration of the "very federal government that is the material expression of the principles embodied in that document....  [M]ost Republican officeholders seem strangely uninterested in the effective repeal of Fourth Amendment protections by the Patriot Act, the weakening of habeas corpus and self-incrimination protections in the public hysteria following 9/11 or the unpalatable fact that the United States has the largest incarcerated population of any country on earth.  If anything, they would probably opt for more incarcerated persons, as imprisonment is a profit center for the prison privatization industry, which is itself a growth center for political contributions to these same politicians.  Instead, they prefer to rail against those government programs trhat actually help people.  And when a program is too popular to attack directly, like Medicare or Social Security, they prefer to undermine it by feigning an agonized concern about the deficit.  That concern ... is largely fictitious.

Seventh, the Democrats cede the ground and fail to combat the Republican madness, and the Republicans succeed with faux populism that hides their destructive agenda.

Democratic Leadership Council-style 'centrist' Democrats were among the biggest promoters of disastrous trade deals in the 1990s that outsourced jobs abroad: NAFTA, World Trade Organization, permanent most-favored-nation status for China.  ...While Democrats temporized, or even dismissed the fears of the white working class as racist or nativist, Republicans went to work.  To be sure, the business wing of the Republican Party consists of the most energetic outsources, wage cutters and hirers of sub-minimum wage immigrant labor to be found anywhere on the globe.  But the faux-populist wing of the party, knowing the mental compartmentalization that occurs in most low-information voters, played on the fears of that same white working class to focus their anger on scapegoats that do no damage to corproations' bottom lines: instead of raising the minimum wage, let's build a wall on the Southern border (then hire a defense contractor to incompetently manage it).  Instead of predatory bankers, it's evil Muslims.  Or evil gays.  Or evil abortionists.

How do they manage to do this?  Because Democrats ceded the field.  Above all, they do not understand language. ...You know that Social Security and Medicare are in jeopardy when even Democrats refer to them as entitlements.  'Entitlement' has a negative sound in colloquial English: somebody who is 'entitled' selfishly claims something he doesn't really deserve.  Why not call them 'earned benefits.' which is what they are because we all contribute payroll taxes to fund them.  ...

It was not always thus.  It would have been hard to find an uneducated farmer during the depression of the 1890s who did not have a very accrurate idea about exactly which economic interests were shafting him. ...  But that is not the case in the present economic crisis. After a riot of unbridled greed such as the world has not seen since the conquistadors' looting expeditions and after an unprecedented broad and rapid transfer of wealth upward by Wall Streeet and its corporate satellites, where is the popular anger directed, at least as depicted in the media?  At 'Washington spending'--which has increased primarily to provide unemployment compensation, food stamps and Medicaid to those economically damaged by the previous decade's corporate saturnalia.  Or the popular rage is harmlessly diverted against pseudo-issues: death panels, birtherism, gay marriage, abortion, and so on, none of which stands to dent the corporate bottom line in the slightest.

Eighth, the GOP has three basic tenents that the party carries out with ideological purity.

A. The GOP cares only about the corporate elite and the rich owners and managers thereof.  That class warfare and corporatism is the reason for their opposition to tax increases, their groundless claims that capital gains preferences are necessary to create jobs, their repetition of myths about small businesses as job creators or American tax rates as so onerous that it chases the jobs away.

"Their caterwauling about deficit and debt is so much eyewash to con the public. ...The GOP refused [Obama's proposed $4 trillion defict reduction package] becdause it could not abide so much as a one-tenth of one percent increase on the tax rates of the Walton family or the Koch brothers, much less a repeal of the carried interest rule that permits billionaire hedge fund managers to pay income tax at a lower effective rate than cops or nurses.  ...

Republicans have attempted to camouflage their amorous solicitude for billionaires with a fog of misleading rhetoric. John Boehner is fond of saying 'we won't raise anyone's taxes' as if the take-home pay of an Olive Garden waitress were inextricably bound up with whether Warren Buffett pays his capital gains as ordinary income or at a lower rate.  Another chestnut is that millionaires and billionaires are 'job creators'.  US corproations have just had their most profitable quarters in history; Apple, for one, is sitting on $76 billion in cash, more than the GDP of most countries.  So, where are the jobs?

Another smokescreen is the 'small business' meme, since standing up for Mom's and Pop's corner store is politically more attractive than to be seen shilling for a megacorporation.  Raising taxes on the wealthy will kill small business' ability to hire: that is the GOP dirge. ...But the number of small businesses that have a net annual income over a million dollars is de minimis. ...And ...small businesses account for only 7.2 percent of total U.S. employment. ...

Likewise, Republicans have assiduously spread the myth that Americans are conspicuously overtaxed.  But compared to other OECD countries, the effective rates of US taxation are among the lowest.  In particular, they point to the top corporate income rate of 35 percent as being confiscatory Bolshevism.  But again, the effective rate is much lower.  Did GE pay 355 percent on 2010 profits of $14 billion?  No, it paid zero.

When pressed, Republicans make up misleading statistics to 'prove' that America's fiscal burden is being borne by the rich and the rest of us are just freeloaders. ...All of these half-truths and outright lies have seeped into popular culture via the corporate-owned business press. ...And when misinformation isn't enough to sustain popular support for the GOP's agenda, concealment is needed. ...

B. The GOP "worship[s] at the altar of Mars" with a "sheer, libidinous enthusiasm for invading other people's countries."

About a month before Republicans began holding a gun to the head of the credit markets to get trillions of dollars of [spending] cuts, these same Republicans passed a defense appropriations bill that increased spending by $17 billion over the prior year's defense appropriation.  ...A cynic might conclude that this militaristic enthusiasm is no more complicated than the fact that Pentagon contractors spread a lot of bribery money around Capitol Hill.  That is true, but there is more to it than that.  It is no neceesarily even the fact that members of Congress feel they are protecting constituents' jobs.  ...Some areas ... are heavily dependent on Department of Defense (DOD) spending.  But there are many more areas of the country whose net balance is negative: the citizenry pays more in taxes to support the Pentagon than it receives back in local contracts.  And the economic justification for Pentagon spending is even more fallacious when one considers that the $700 billion annual DOD budget creates comparatively few jobs. ... [A] disproportionate share is siphoned off into high-cost research and development (from which the civilian economy benefits little); exorbitant management expenditures, overhead and out-and-out padding; and, of course, the money that flows back into the coffers of political campaigns.  A million jobs appropriated for highway construction would create two to three times as many jobs as a million dollars appropriated for Pentagon weapons procurement. ...

The results of the last decade of unbridled militarism and the Democrats' cowardly refusal to reverse it have been disastrous both strategically and fiscally.  It has made the United States less prosperous, less secure and less free. ...

C.  The GOP has merged politics and religious fundamentalism to replace Eisenhower Republicanism with a "system of economic royalism, militarism and fundamentalism"

[The GOP embracing of fundamentalism has had the] "consequent normalizing of formerly reactionary or quaint beliefs", including backward positions on evolution versus creationism, scriptural inerrancy, and the existence of angels and demons, resulting in a "prevailing anti-intellectualism and hostility to science." ...

The Constitution to the contrary notwithstanding, there is now a de facto religious test for the presidency. ... Politicized religion is also the sheet anchor of the culture wars.

[This] rise of politicized religious fundamentalism (which is a subset of the decline of rational problem solving in America) may have been the key ingredient of the takeover of the Republican Party. ...

In summary, the GOP is out to make sure that ordinary Americans suffer and that the elite have everything that they want.

Having gutted private-sector pensions and health benefits as a result of their embrace of outsourcing, union busting, and 'shareholder value', the GOP now thinks it is only fair that public-sector workers give up their pensions and benefits, too.  Hence the intensification of the GOP's decades-long campaign of scorn against government workers. ...They will move heaven and earth to force through tax cuts that will so starve the government of revenue that they will be 'forced' to make 'hard choices'--and that doesn't mean repealing those very same tax cuts, it means cutting the benefits for which you worked.

The attack on public workers and their pensions is particularly galling in light of the way the super-elite have accumulated wealth while paying very low taxes.  See, e.g., this article on Alter.Net regarding Paulson and the carried interest advantage he enjoyes.  Les Leopold, hedge fund gamblers earn the same in one hour as a middle class household makes in over 47 years, AlterNet, April 2011.  As some point, ordinary Americans must claim back their lives and livelihoods from the corporatist/elitist agenda.

More on Obama's Jobs Plan

There's lots of commentary out there on Obama's jobs plan. 

One worth noting (published before the speech to Congress) is Dan Shaviro, What Would Nixon Do?, Start Making Sense (Sept. 7, 2011).   Shaviro makes the point that most progressives have been trying to make to Obama for months--that ceding to Republican talking points at the outset does nothing to advance good policy and in fact merely ensures that Obama takes the blame when the same old Republican policies fail once again!  Shaviro suggests that Obama pick up some of 'Tricky Dick' Nixon's political savvy about these things.  Go bold!  he says, so that when Republicans don't pass it, they can bear the blame for the failed economy.  

 Nixon was a big fan of proposing legislation that he knew couldn't be passed, specifically because if it wasn't passed he would get a campaign issue. E.g., supposedly in 1970 he was disappointed by his success in getting the Democratic Congress to pass a tough crime bill that contained provisions that, under the quaint standards of the time, were considered odious by civil libertarians. Nixon had deliberately put these things in the proposed legislation, although they were largely symbolic and expected to have little actual impact on crime, because he wanted the Democrats to refuse to pass the legislation, whereupon he would make it a campaign issue and blame rising crime levels on them. They took the issue away by acceding.

How would such a scenario play out today? If Nixon faced Obama's current political circumstances, he would not be trying actually to enact stimulus legislation. He would know that he had zero chance of getting anything that would make a significant difference. He would want to propose something that the opposition WOULDN'T pass, and that he could then campaign on. (And it is clear this time around, unlike with the 1970 crime legislation, that the Congress won't accede in order to take away the issue.)

We could use a bit of that thinking today. Why not propose something that is actually big, dramatic, and well-designed? And why not make reasonable, economically supportable arguments about why and how much it might actually help? Then Obama could rightly criticize the Republicans and blame the labor market on them when they fail to pass it.

This would not just be Nixon-style maneuvering. It would also help make the correct point that, since at least mid-2009, we have actually been following Republican budget policies and they haven't worked. As things stand, by repeatedly acceding to them, even in what he proposes, he accepts a state of affairs in which they actually set the policy yet he takes the blame.

Obama went a little bit closer to that strategy in his speech, since he claimed to be laying out a workable plan to create jobs and essentially dared the Republicans in Congress to bare the blame for blocking it.  The problem was that too many of the ideas were washed over Republican tax incentives like lower corporate rates and further extension of the useless and wasteful expensing provisions that the Republicans began pushing as part of the Bush tax breaks for business, rather than direct funding of programs that we know work.

While you are reading, pick up Ken Houghton's post over at Angry Bear: Private Sector Employment in Jobless Recoveries, Sept. 8, 2011, which notes that the place where people are hurting is in the loss of public-sector jobs at the state and local level.  Towards the end of the post, he tells us what Obama should have said in the Thursday night speech, reminding us that the US government can borrow at amazingly low rates right now, and could use that cheaply borrowed money to put Americans back to work in the states simply by increasing the grants to the states to make up for the hard hits they have taken. 

The latest few years have been difficult for you.  Almost every state in the Union has to balance their budgets, and with record levels of unemployment and job losses, that’s not easy to do.  So they made decisions that affected you, your children, and your friends.  ...  Your classrooms are more crowded, your property taxes are higher, and you’re getting less for your money while you have to put in more effort.

The Federal Government doesn’t have to balance its budget, and the bond market has given us a rare opportunity to borrow money for less than it will cost us.  I plan to take full advantage of that now, so that your children will have food, your streets will be safer, your opportunities for education will be greater, and the services for which you pay will be more available.

The private sector  ... cannot rebuild if there is no demand, and you cannot demand things if you cannot pay for them. So, along with $1T in infrastructure improvements to be made over the next 15 years, I will tomorrow send a bill to Congress to triple the total of the two previous grants-in-aid to the States that were made as part of the ARRA.

Now you have heard many people—and to my shame, I am one of them—who live in fear of deficits. They pretend that the government “has to be like a family”—a family that never takes out a mortgage, never borrows to buy a car, never needs a loan to pay for schooling or training, and never uses a credit card.  I’ve seen families like that. ...  They’re impoverished.

The United States is not impoverished,.... We will rebuild opportunity now and build our superhighways—information and otherwise—for life in the 21st and 22nd Centuries.  The bankers—grateful for the bailouts that have been heaped upon them by my predecessor and myself—are willing to loan us money for less than the cost of inflation. We would be foolish not to borrow.  ....

We have a unique opportunity. We have massive unemployment because the states do not have the money to employ and hire workers—workers who help keep our streets and homes safe, who keep our roads in good condition, who educate our children, who find us opportunities for work and ways to keep us healthy so that we can do that work.  And the bankers are telling us, “We will give you that money for free!”  And some people are telling you that we should not take that money.

We have given the bankers enough.  Now, they are willing to Pay It Forward, to give some small portion of that money back to us for less than it will cost them to do it. I intend to take that money and use it to make a better present—and the chance for a better future—for the American family.

Not surprisingly, 'centrists' like Len Burman (now a professor at Syracuse University and still affiliated with the Urban Institute/Brookings Institution's Tax Policy Center) think it was a good idea for Obama to say that workers' benefit programs need to be cut.  Len Burman, Very Quick Thoughts on President Obama's Jobs Speech, Forbes, Sept. 8, 2011.   Burman is probably correct that the employer-side payroll cut is a waste of money. 

But the idea that worker benefits have to be cut in order to balance a sovereign nation's budget in what is still the richest country in the world is, quite simply, hogwash. 

• First, remember that George W. Bush painted his attempt to privatize Social Security and reduce benefits as "saving" Social Security.  Back then, here's what I wrote in 2005 on this blog, More on Bush's Social Security Doublespeak, about that (beginning with a quote from Bush White House materials):

"President Bush has discussed the importance of Social Security and the need to fix the Social Security system for future generations of Americans. The President has assured Americans that he will not change the Social Security system in any way for those born before 1950.

• Social Security was one of the great moral successes of the 20th century by providing a critical foundation of income for retired and disabled workers.
• For one-third of Americans over 65, Social Security benefits constitute 90% of their total income."

Now isn't it interesting that the [Bush] White House acknowledges that Social Security ends up providing 90% of the income of one-third of our seniors, yet Republicans are proposing to "fix" Social Security by cutting those very benefits for seniors.   Funny, but it doesn't seem logical that anyone should claim to be saving Social Security, a benefit program, by cutting benefits.

• Second, we still have in place the unnecessary Bush tax cuts.  Allow them all to expire--including the many wasteful ones benefiting multinational corporations that are outsourcing jobs faster than we can say scat. 
• Third,  move to single payer and 'available to all' Medicare and Social Security, with full taxation on all working income (including 'carried interest' and any other 'profits interest' payment out of a partnership) for Social Security and on all economic income for Medicare.  (And that includes eliminating Congress's  exclusive system into which they pay zilch and for which they get cushier benefits than ordinary Americans.)  Moving to Medicare for all will put in place a national healthcare system like the rest of the civilized world that will permit the government to bargain on behalf of ordinary people who are taxpayers/citizens/patients/beneficiaries of that system so that hospitals, doctors and private insurance companies no longer get away with price-mugging:  they would have to accept more reasonable prices  than the insanely high salaries/charges and other perks that they now enjoy. 

[edited to expand]