Friday, March 22, 2013

A Republican Split? Don't Hold Your Breath

By Manifesto Joe

There's been much ado in the MSM lately about change in the Republican Party. Last month, Sen. Rob Portman, R-Ohio, became the first major Republican politician to come out in favor of gay marriage, and said his son is gay. On immigration overhauls, former Florida Gov. Jeb Bush has endorsed a path to citizenship for legal immigrants, and his son, the very Latino-looking George P. Bush, is launching a statewide political career in Texas and appears to be making some inroads with Hispanic voters in this state. U.S. Sen. Marco Rubio, R-Florida, touted as another GOP rising star, has specific ideas for immigration overhauls that sound strikingly like what the Obama administration proposes.

These developments are anathema to the GOP's hard-core Tea Party types, who generally projectile-vomit at the mention of gay marriage and are often hard-line opponents of even legal immigration. Their reaction to these changes has primarily been bilious disgust.

This has some unsympathetic observers speculating that the Republican Party is about to break into two factions: (1) the economic royalists it has always represented, but those whose "social" views are moderate, and (2) the die-hard right wing.

Don't hold your breath. The Republicans have fought all these battles before. Phyllis Schlafly's 1964 screed A Choice Not an Echo illustrates how old this battle is. In those days, it was mainly being fought over economic issues (Barry Goldwater referred to the Eisenhower administration as "the dimestore New Deal") and general sanity about avoiding nuclear war with the Soviet Union. Gay marriage and immigration have merely taken the place of those Cold War and New Deal issues.

The Kool-Aid that both factions have drunk, and with gusto, is supply-side economics. That's different from the GOP infighting that was going on 50 years ago. They are very, very united on that crucial point, and that's the glue that will hold them together no matter what.

Dwight Eisenhower, a conservative in the more pragmatic sense of the word, realized the value of New Deal economic reforms such as Social Security and unemployment insurance. He at least privately regarded these changes as more or less permanent. Now, even the alleged "reform" faction of the Republican Party seems united on gutting Social Security and perhaps even considers benefits for the jobless to be wasteful welfare that just makes the unemployed into paunchy bums.

The Democrats have even more rifts under their tent than the Republicans have, especially now with a quasi-pragmatic centrist like Barack Obama as president. This faction, the pragmatic center, has pretty much controlled the Democratic Party since the McGovern debacle of 1972, but many on the far left remain idealists. Despite the failures of the past, they sincerely believe that "real Democrats," i.e. hard-core lefties, are what the party needs.

I'd be among the first to concede that Obama has been all-too-accommodating. He still doesn't seem to realize that the Republican concept of bipartisanship is to do everything entirely and absolutely THEIR way. But neither do the Democrats need their own version of Tea Party extremists.

The Democrats need to stay as united as possible, because they can't expect any less from the Republicans. The GOP is just doing what its rank-and-file thinks it needs to do to be electable, in reaction to losing the last two presidential races rather badly. They did the same thing starting with Alf Landon in 1936, when the moderate Republican governor of Kansas didn't flatly oppose some parts of the New Deal, he just said it was being poorly administered.

Landon lost badly, but the Republicans kept inching toward the perceived political center, until they finally came up with a winner with Eisenhower in 1952. They'll do that again, this time with gay marriage, immigration and similar "social" issues. The thing that will hold them together this time is that they all remain social Darwinists. They all agree that the poor should be punished for being that way.

Don't expect the GOP to deviate from the formula of the past. When they experience national defeats (the 1930s and '40s, and to a lesser extent now), they will move toward the center. When they start winning again, they'll move back to the far right (the 1980s and '90s, and briefly in 2010-11). They'll stay together -- and if the Democrats are to continue to win, the Democrats must, too.

Manifesto Joe Is An Underground Writer Living In Texas.

Thursday, March 14, 2013

'The Poor Rich': More Tiresome Mainstream Media Obfuscation

By Manifesto Joe

Several days ago, newspapers all over the U.S. had wire editors stupid enough to drink another round of strong Kool-Aid. A "story" by Stephen Ohlemacher of The Associated Press went viral in the MSM. The crux of it: The share of federal income taxes that the rich pay is close to a peak since 1979.

What this "story" amounted to was cherry-picking of the worst possible kind. It was misleading and generally beside the point. But, let's start by examining the thesis:

For 2013, families with incomes in the top 20 percent of the nation will pay an average of 27.2 percent of their income in federal taxes, according to projections by the Tax Policy Center, a research organization based in Washington. The top 1 percent of households, those with incomes averaging $1.4 million, will pay an average of 35.5 percent.

Those tax rates, which include income, payroll, corporate and estate taxes, are among the highest since 1979.

The average family in the bottom 20 percent of households won't pay any federal taxes. Instead, many families in this group will get payments from the federal government by claiming more in credits than they owe in taxes, including payroll taxes. That will give them a negative tax rate.

Please note that what this "story" by Ohlemacher (who obviously has figured out who ultimately pays his salary) focuses on is federal income taxes, exclusively. Conveniently omitted are:

(1) State and local taxes, which are notoriously regressive.

(2) Corporate income taxes. About two-thirds of U.S. corporations, among them the largest, pay ZERO federal income tax, and some even got credits.

(3) Social Security and Medicare payroll taxes, which stop entirely after a certain income level, so they are by definition as regressive as a tax can be.

(4) The assorted breaks that go only to the very, very rich -- we're talking here 0.1%, not just the top 1%. Some of them are mind-blowers.

(5) The U.S. economy doubled in size in 30 years, and yet real wages for ordinary people remained about the same. Obviously somebody has been profiting handsomely from this increase in productivity, and it hasn't been the ordinary run of Americans. Given this trend, wouldn't one expect the top 20%, and even the top 1%, to pay a lot more?

What happened? When newspapers across the U.S. took a great big swig of this Kool-Aid it was, in essence, an acceptance of about one-sixth of relevant data when one honestly and thoroughly examines the effect of taxation on the growing gap between rich and poor. In other words, this "journalist" wrote a "story" based on one of six factors in the overall picture.

Mr. Ohlemacher did one-sixth of the job as well as one could expect. Here's a link to his original "story," courtesy of USA Today.

But now, let's examine the other five sets of data.

(1) A New York Times series on the growing American gap between rich and poor points out:

While the federal government has largely stuck by the principle of progressive taxation, the states have gone their own ways: tax policy is particularly regressive in the South and West, and more progressive in the Northeast and Midwest. When it comes to state and local taxation, we are not one nation under God. In 2008, the difference between a working mother in Mississippi and one in Vermont — each with two dependent children, poverty-level wages and identical spending patterns — was $2,300.

I live in a state (Texas) where there is no income tax. In contast, sales taxes and user fees are very high. These obviously hit consumers at the lower income level, at which more money is spent on basic goods and services, much harder than they affect consumers who spend relatively less on such things. In essence, such taxes are an effective way of punishing the poor for being that way. Texas ranks 5th on the list of 10 most regressive tax states, according to one study. Here's a link to that one.

I'll give my home state credit for one big thing -- grocery items are mostly exempt from the sales tax (although not all convenience store operators have heard that news yet, and related enforcement is very lax). Oklahoma, where I once lived for something under a year and a half, has a state income tax. But they levy a sales tax on everything, including ALL groceries. That wipes out most of the progressive effect that the state income tax has.

(2) The corporate income tax rate in the U.S. is alleged to be relatively high. The problem is, not very many corporations pay it, and that's especially true of the largest and most powerful ones. Even economic conservatives, when pushed into a corner, will admit this. I found a New York Times piece in which Bruce Bartlett, a former Reagan administration official, came clean on this issue. (Sorry, the link no longer works.)

What has the effect been on the federal budget -- which is of so much concern to both major political parties now? Here's a hint: Barlett and Steele, the reporting team that wrote America: What Went Wrong?, reported that in 1959, corporate income taxes comprised 39% of IRS revenue. By 1989, that had declined to 17% And, by the way, those are IRS figures.

It's one thing for Worthington Farthington, CEO of Corporation X, to pay higher personal income taxes than Jack Shitt of Biloxi, Miss. But what if Corporation X, which employs Jack part time with no benefits, pays, effectively, no income tax? And that is increasingly the case.

(3) Yes, I know that corporations pay into the Social Security system, and that they support Medicare as well. But look at the bigger picture. The employee pays 6.2% for Social Security, and the employer matches that, for an effective federal rate of 12.4% But the payroll tax is capped at $106,800, which I would place as the upper threshold of middle-class earnings. No taxes are paid on anything above that. For an illustration of the effect this has, here's a link to the Center for Economic and Policy Research.

This is called regressive taxation. Any questions, class?

Although Social Security's general effect on U.S. society since its inception in 1935 has been a reduction in poverty, the tax that supports it is clearly regressive. But this was largely by design. One of the reasons it has always been this way is to give fatcats some sort of incentive to reluctantly participate in the system.

Now, the swine don't even want to do that. They have all manner of schemes to "privatize" Social Security, to phase it out, give it over to the tender mercies of Wall Street. The arrogance of these people is such that even asking them to do their "part" in a regressive tax structure is just too damned much.

(4) There are tax breaks that go only to the VERY, VERY wealthy that are astonishing. For the sake of brevity, I will cite only one example. The corporate jet tax loophole, it is estimated, will be worth at least $3.2 billion over the span of 10 years. Some estimates, such as the one on this link, put the break's 10-year worth at more like $4 billion.

(5) So, who's been getting rich since 1980, with the U.S. economy doubling in size? Here's a link on the subject. Here's a hint: It hasn't been me, and it's unlikely, if you've read this far, that it's been you, either.

It's mind-boggling to still be hearing allegations that American mainstream news media have a liberal bias, when it's so obvious to whom they are kowtowing. Mr. Ohlemacher certainly seems to know that it's the U.S. Ownership Class that ultimately pays his salary.

Manifesto Joe Is An Underground Writer Living In Texas.