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Wit and Wisdom

Deficit

Charity & Taxes

Suggesting voluntary contributions to the Treasury are a viable alternative to a more equitable tax system reveals an ignorance of the difference between charity and taxes, between individual and communal action. Charity and taxation, though both indispensable components of a civilized society, nonetheless represent very different principles and scales of action. A cynical conflation of the two does an injustice to them both.
 
Charity is good for the world and good for the soul.  It springs from personal conviction and can achieve great ends, especially from the power of example.  But charity by its very nature is capricious.  Certain favored causes gain, while others equally or more deserving languish.
 
In a democratic republic such as ours, taxation and the pubic investment it funds represent, however imperfectly, the collective decision of the populace.  As in a family, club or organization, once a course of action is agreed upon, every member is expected to contribute to its success according to individual ability, not individual choice.
 
Moreover, the capacity of the two processes—charity, and tax-supported public spending—are of entirely different magnitudes.  The assets of the world’s largest charity, the Bill and Melinda Gates Foundation—the entire assets, mind you, not the merely the annual income they produce—would fund the federal government for a grand total of three days.  Achieving big and important things requires public investment; the tax system that pays for it is only stable and reliable if it is fair.
 
Wealthy people who advocate for higher taxes on themselves and people like them, but abstain from making voluntary contributions to help retire the federal debt, are being perfectly consistent. Their aim is an improved system of taxation in which everyone takes an appropriate part, not haphazard, insufficient acts of charity that fall entirely to the most generous.  It is the critics who know better but pretend not to understand the difference between taxes and charity who are the hypocrites.  

Then Write An Extra Check

“Hey, Jimmy, would you lift the other end of this trunk so we can get it in the car?”
 
“No.”
 
“Why not?”
 
“Because if you keep asking me to lift pieces of luggage, I‘ll lose interest in this trip. And I’m central to us having a good time. Check the photo albums: I’m the happy-memory-creator.”
 
“Son, this is a family vacation we all agreed on. Now help me with this trunk.”
 
“Dad, don’t you see we can’t go on packing like this? We don’t have a lack-of-lifting problem, we have a too-many-Bermuda-shorts-and-deck-shoes problem.”
 
“You’re right: sometimes we pack too much. But this is a long vacation and we’ve already cut down our luggage by three suitcases. The stuff in this trunk is important.  So help me lift it.”
 
“Look, Dad, if the trunk is so important to you—if you’ll feel guilty if we leave it behind—fell free to lift both sides yourself.  Just leave me out of it.”
 
“I can’t lift both sides. We each have to do our part.  Now lift the trunk!”
 
“Do you realize that half our family lifts no luggage at all?”
 
“Your mother’s in a wheelchair, and your sister’s four years old.”
 
“Still, it means they’re not fully invested in this vacation.  And why do lifting duties always fall to me?”
 
“You’re on the high school weight-lifting team.  It seems like a good fit.”
 
“Aha! You’re punishing my success, undoubtedly through envy.”
 
“Jimmy, I’m your father—we’re your family—we’re all proud of you.  We want you to succeed. But given that you can bench press the rest of us combined, it seems reasonable to ask you to lift heavy objects.”
 
“Sounds like socialism to me.”
 
“Lift the trunk!”
 
“Now it sounds like fascism.”

Payback

“And we’ll need all your receipts from 1947 to 1961, including purchases at newspaper stands and vending machines. In addition--”

“This is ridiculous!”

“What’s ridiculous? That the United States Government wants to audit the finances of one of the nation’s three debt-rating agencies, private organizations responsible for determining the credit-worthiness of every large institution in the world?”

“No, that you’re conducting a witch-hunt against Standard and Poor’s simply because we revoked your AAA bond rating.”

“Did you do that?  Huh. We didn’t notice.  I guess it’s because we tend to pay a lot more attention to what Moody’s and Fitch are doing these days.  They’re kind of more relevant. You know--more accurate and responsible. Cooler.  Anyway: did you supply us with your pre-World-War-I lease agreements yet?”

“Don’t give us that.  You’re mad at S&P because we downgraded you to AA+.  And that’s precisely what we should have done.  You’re dysfunctional.  You’re just lucky we didn’t lump you in with Albanian turnip bonds.  At least we know someone’s going to dig up the turnips next year. Do you know if you’ll have a budget next year?”

“Oh, we’ll have a budget.  In fact, the budget for credit-rating investigations will be practically unlimited.  So, do you know the marital status of all your employees great grandparents?  We’re going to need copies of their blood tests.”

“Instead of having this temper tantrum, you should be figuring out how to get Democrats and Republicans to see eye-to-eye.”

“We agree on one thing: S&P sucks tailpipes.”

“Nice.  Now try balancing your budget.  Shouldn’t be hard: you’re only off by about a trillion dollars a year.”

“Are you sure you don’t mean a buck ninety-seven?  Math hasn’t been your strong point lately.”

“It’s hard to do math when the federal government is using all the zeroes.”

“Not quite: check your boardroom.”

“Banana republic!”

“Bubble enablers!”

“Washington slackers!”

“Wall Street swindlers!”

“Bureaucrat!”

“Plutocrat!”

“Wait a minute.  This is getting us nowhere.  Maybe it’s different in government, but in business, you can always come to a mutually-agreeable understanding.  Just as a for instance: what would it take to make this whole fed probe go away?”

“Oh, you mean, what would cause the Justice Department to conclude its investigation without significant findings of misconduct and no referral to the Criminal Division?  Hard to say: ever since the credit downgrade, we’ve had to push really hard on possible financial malfeasance, just in case there’s any uncollected taxes involved. And changing the subject entirely: what would it take to get our triple A rating back?”

“Oh, you mean, what’s the procedure for a reappraisal of endemic credit risk in the light of new circumstances?  Well, first of all it takes a lot of man-hours, and unfortunately right now a big chunk of our staff is tied up in responding to this federal investigation.”

“Hmm.”

“Hmm.”

“Think we have a deal.  Who says Americans can't work together anymore?”

Sanity Liberation

Whatever shape the final budget deal takes, it will have been crafted along strictly Republican lines.  Important government services—those serving the needs of the most needy—will have been cut, while taxes—on the wealth of the most wealthy—will not have been raised. Why such an uncompromising “compromise”?

The determining role played by the GOP’s Tea Party wing brings to mind several analogies.  An old psychological dictum is that every family is controlled by its most neurotic member.  A madman with dynamite and hostages has a lot of leverage.  And if you can’t fight, act crazy, and people will tend to leave you alone.

But what are the limits of the right-wing extremists’ ability to set the terms of debate by their intransigence, messianic belief system and apparent unconcern for the consequences of their actions?  How can the more sane among us exercise our rights?

One way is simply to show up.  Many of the Tea Partiers who now control our government were elected last fall because large segments of the Obama coalition failed to vote in the midterm elections.

Another is to organize and focus.  Minority opinions—not only on the federal budget, but on gun control, relations with Cuba, and more—can effectively control public policy because of disproportionate interest: though fewer in number, zealots care more about their cause and prosecute their position with greater vigor than the larger but more diffuse opposition.   Of course, the majority—because it is bigger—need not replicate the fervor of the few in order to make their case: just a slight rise in all our voices can drown out the noisy minority.

Families can learn to control their neurotic members, rather than be controlled by them.   It simply takes cool, calm and concerted effort—and a determination not to let madness reign.

Wall Street Calling

Police investigating the News Corp. phone hacking scandal today released a transcript of a call between an unlisted Manhattan number and the private line of Senate Minority Leader Mitch McConnell.

--Senator McConnell, there’s someone on the line for you--at least I think it’s for you--he asked for the “bozo in charge” and said you’d know who it is.
--Thanks, Pam, I’ll take it.
--Is this the bozo in charge?
--Yes, sir.
--You know who this is?
--Yes, sir.
--Let me ask you something: do you like your job?
--Very much, yes, sir.
--And your cushy office, with the Monument view?
--I’m viewing it right now, sir.
--And your family?
--Sir!
--Just making sure you’re paying attention. Now here’s another set of questions:  do you know you can mess with my radio stations? In my car?
--I didn’t know that, no, sir.
--You can. You can climb right into the passenger seat and start pushing buttons like a kid on an elevator. I don’t care.
--Very flexible of you, sir.
--And do you know you can mess with my hair?  Just step right up and helicopter the heck out of it.
--Of course, I never would...
--But you could.  Go to town. Seconds before I’m supposed to address the board.  Don’t mind.
--Very free-spirited of you, sir.
--But do you know what you can’t mess with?
--I’m almost certain I know.
--My money.
--Your money.
--Don’t mess with my money.
--Right.
--All this flirting with default is messing with my money, Mitch. Messing with my bonds.  Messing with my stocks. Messing with my money.
--Yes, sir.  I can see how frustrating that might be.  But you have to understand we have certain elements within the caucus who are quite adamant--
--Adamant?  Who’s adamant?  Some puffy-faced insurance salesman from East Jesus, Florida, who got sent to Congress on the Tea Bagger Ticket--
--They object to that name, sir.
--on the Tea Bagger Ticket by a bunch of home-schooling machine-gun collectors who think the world is flat, John Wayne was the 34th President and Katie Couric is the devil?  What do they know about my money?
--Not much, I wouldn’t think, sir.
--But you know about my money, don’t you, Mitch?
--Yes, sir.
--You like my money, don’t you, Mitch?
--Very much, sir.
--Well, I’ll tell you what. Why don’t you trot out in front of the TV cameras and tell everybody how you guys are going to stop acting like the cast of “Jackass”--rolling down a stone staircase in a shopping cart full of my money--and instead make my money feel safe and secure again with a clean debt-ceiling vote?  Can you do that for me, Mitch?
--You mean right now?  The negotiations with the White House are at a critical juncture, and I really think we have the upper hand--
--You’re not listening, Mitch. If you don’t do this, my money goes away. And if my money goes away, you go away.
--You don’t mean..?
--That’s right: you’ll wind up in East Jesus, Florida, with the insurance salesman and all those machine guns, drinking Gatorade with the home-schoolers and watching Glenn Beck morning, noon and night.
--I’ll call the press conference now.
--That’s a good boy.

The Last Taboo

Even purportedly friendly observers are cautioning President Obama not to be too hard on the rich in his policies and rhetoric. Those not offended by the unseemly nature of acknowledging differing obligations based on wealth are, on a practical level, worried that he’s risking the support of potentially big campaign donors.  He shouldn’t back down for either reason.

It’s often said that money is the last taboo in personal relations, and the same seems to be true in public debate.  The ability to silence any discussion of the programmatic and moral implications of America’s huge wealth disparity by declaring it “class warfare” is quite convenient for the well-to-do.  But that shouldn’t cow the President or anyone else from addressing this central issue of economic and political policy.  

Demanding more from those who have more is simple physics, like asking the strongest camper to carry the heaviest canoe.  Taxing wealthier people at higher rates is not “punishing success,” as the scolds peevishly describe it, but based on a recognition of the role of society and luck in the accumulation of riches. Lionizers of the wealthy as exclusively a class of rugged self-made entrepreneurs ignore the fact that a lot of fortunes are simply inherited.

Besides, there has always been a logical disconnect between the portrayal of rich people as, on the one hand, indefatigable world-beaters undeterred by obstacles and setbacks in their accumulation of wealth; and, on the other, fragile hothouse flowers who will get hurt feelings and stop investing (and politically donating) at the mere whisper of a tax hike.  

The correct assumption is that wealthy Americans know they are treated more gently here than in any other industrialized country and will continue to live and invest here even if called upon to do a little more to help the national finances.  And many of them—who care about social causes like choice and marriage equality, the environment, and, yes, even a better balanced economy—will continue to support President Obama, even if he calls on them for minor monetary sacrifices and from time to time calls them that filthy word: rich.

Walkover

If President Obama and the Democrats can’t win this budget debate, they can’t win any debate. Losing a pushover public policy battle like this one would prove that the decades-long conservative tactic of poisoning the well-- of so misinforming and discouraging the electorate, so lowering their expectations, so worrying them with vitriol and bombast that they can no longer recognize common sense when presented to them-- has worked.  The game will be up; all that will be left to do is watch while the nation dissolves further into a mass of angry twitching.

But the Democrats shouldn’t lose. How do you lose when you’re suggesting that we might want to ask billionaires to kick in a few more dollars before we start dumping our grandparents out nursing home windows? How do you lose when your idea is that the sprawling behemoth of a defense department might be harboring some savings worth investigating before kicking our children out of Head Start classes?  How do you lose when your argument is, “Let’s not eliminate Medicare”? How do you lose when poll after poll shows the public is already on your side: wanting the hyper rich to pay more in taxes, wanting cuts at the Pentagon, wanting to preserve services for the poor and middle class?

Of course, the Democrats-- the poor, bewildered, cringing Democrats-- can always find a way.  They’ve proved time and again they can not only snatch defeat from the jaws of victory, but actually scramble down victory’s throat and extract defeat from its gullet.  President Obama began the process, in the worst part of a good speech that set the budget battle lines, when he said the final product would not look like his proposal.  Republicans never do that. Garage sale browsers trying to lowball the purchase of a commemorative plate never do that. That’s not how you negotiate.

But never mind.  This could be the tipping point. This could be the moment when the conservatives’ dark and chilly image of the future becomes sufficiently clear to the public that the Democrats can win just by showing up.  Let’s just make sure they show up.

Ignoring Half the Solution

In addressing national debt without considering taxes, American politicians are willfully and irrationally ignoring one of two levers that bring budgets back to balance.  They are not only making the problem twice as hard by rejecting half the solution, they are shifting all the pain of debt reduction onto those least able to bear it (recipients of government service) while holding harmless those best able to contribute: the super wealthy.

Reactionary conservatives try to have it both ways by scaring voters into believing that any proposed federal income tax increase would apply to a broad swathe of the middle class, while at the same time complaining that the majority of federal taxes are paid by a minority of citizens at the top of the income scale.  The reality is that federal income taxes (though not payroll taxes, state and local sales taxes, and other regressive levies) are predominately a burden of the relatively well-off...as they should be.  

Poorer people have a hard enough time just getting by (including paying all those regressive taxes); federal income taxes should be borne principally by those who have benefitted most from our national polity and culture.  The simple theory behind progressive taxation--that is, taxing richer people at higher rates--is that taxes come from surpluses: what’s left over after you’ve fed, clothed and housed yourself and your family.  Poorer people have very little or nothing left after meeting the bare necessities; richer people have a lot, so they should contribute more of it to the common good in the form of taxation.

And yet in the past 30 years, taxes on the wealthy and the kinds of income on which they chiefly rely (dividends and capital gains) have plummeted: the top tax rate is half what it was when Ronald Reagan took office, and unearned income--money that money makes--is now taxed at lower rates than working people’s paychecks.  

The inability of most voters to conceptualize the dizzying wealth of some of their fellow citizens aids the anti-tax zealots in making taxes politically toxic.  Hearing that taxes may go up on the wealthy, average Americans might picture the intended targets as people like their Uncle Harry, who owns a hardware store, two cars and a boat.  They don’t think about the hyper-rich: those with hundreds of millions or billions of dollars in assets, enjoying the annual income of small countries, who could easily pay much more without impinging in any way on their way of life or desire to invest in the economy.

Before we wrest one more dollar from Head Start and winter fuel subsidies, let’s cast our eyes to the other side of the ledger, bringing this whole budget-balancing exercise into rational balance by making higher taxes on the rich part of the equation. 

The Wrong Target

Deficit-reduction talk is full of the need to “make tough choices.”  But are the people on the rough end of these tough choices really the ones who should be asked to make the sacrifices?

Anyone old enough to remember the early Reagan Administration will find a sickly echo in today’s proposals to cut child nutrition programs and education grants to low-income students.  Once again the budget cutters are focusing on the easiest targets:  services for people without high-powered lobbyists to protect their interests.  These are lifeline  programs-- like weatherization assistance for poor people in cold climates-- that operate on a shoestring now, often have waiting lists, and should be expanded, not cut.

As pointed out in a recent report from the Center on Budget and Policy Priorities, it was the Bush tax cuts, the Great Recession and two wars that got us into this deficit mess.  Discretionary programs ensuring baseline services to the poor and middle class played no part. (Entitlement programs Medicare and Medicaid are in a separate category, but these too can be fixed without punishing the poor.)

Sacrifice should be asked of those (like Wall Street bankers, military contractors and those who live off unearned income from stocks and bonds) who’ve benefited from the tax and spending policies of the past 30 years.  They’re the ones who’ve been having the party-- they should get the bill. 

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