Monthly Archives: May 2012

Tea For Too (sic)

I keep thinking that I should be able to put the Tea Party to bed.  For some reason, I get it in my head, from time to time, that the fever pitch of tea bagging is over and that history has already recorded it as a temporary, reactionary, populist wannabe movement from a frightened fringe.  But, then I read of new Tea Party conventions, I see a “Tea Party representative” on the news and hear that so and so is “a Tea Party favorite and is favored to win.”

So, I guess I’m not being passé or irrelevant if I voice my opinion again about the Tea Party.  Here’s my essential problem with the Tea Party movement:  I don’t want people in government who despise government and who are more interested in their rhetoric than they are in pursuing the truth.

Polls don’t reveal everything but they can give us a general overview of what people are thinking and a recent CNN poll revealed that a very small percentage of Tea Party attendees knew that taxes have not increased under Obama.  Admittedly, most people, myself included, did not feel a substantial break, but there were some like the Make Work Pay act.

Tea Partiers polled didn’t realize that the tax raises that may occur are to taxable earnings over $250,000 a year (which comprises, perhaps, 2% of those protesting).

I understand protesting taxes and I understand where value added tax talk and sales taxes levied on various items have people concerned; it is every bit as relevant to their pocketbooks, but the arguments from the Tea Party are broad strokes with buzz words like “socialism” that evoke an irrational frenzy that obscures the truth.

I heard a newsman on CNN say that “no one at the Tea Party realized that discretionary spending was down.”  On this note, I sympathized with my tea bagging friends because I didn’t even know that non-mandatory spending was actually down. So I yelled back at the tv (I do that a lot): “Because the news doesn’t do its job of keeping the public informed!”

I have a theory that traditional news sources (by that I mean non-Fox News) are so afraid of being labeled “liberal” that they fail to be responsible in providing a full array of information.

I can’t get the sight of a placard at a Tea Party that read “Thank you Fox News for keeping us INFROMED (sic)” out of my head.

Very few TP’ers (are they still called “Tea Baggers”?) seem to realize that it was President Bush who put into motion the Emergency Economic Stabilization Act (2008) to the tune of 700 billion dollars.

The initial bailout of Detroit and TARP and the “Too Big to Fail” bailouts of the banks took place before Obama became president, but the partisan yapping continues.

Earlier this year, “Tea Party favorite,” Michelle Bachman got up at the rally in Washington and called the Obama Administration “Gangster Government.”  Fine.  She’s entitled to protest, but its disingenous since she never criticized a previous Executive Branch for trumping up evidence to justify a war and who then literally used gangster politics (cronyism) to allow massive no bid contracts that fed off our tax dollars.  Or is it now off limits to give any responsibility to the Bush Administration?  That’s now just whining, right?

We need to get past double standards, inaccurate information, lies, ignorance, bias, history bending, false analysis and realize that solutions to economic crisis and social justice are not about “winning” or “defeating” the opposition with different ideas.  Rather our mutual goal must be look deeper, gather as much information as we can, so as to find common ground and work together within the framework of our brilliant Constitution.  The Tea Party is throwing people out of office for using the very concept our Founding Fathers created.

Their culture is to revile bi-partisanship and while they use the disguise of our revolutionary heritage to make their point, they are not living up to the principles the Colonial protest embodied- to be inFROMED.

Good resource with links: http://www.perrspectives.com/blog/archives/002487.htm

Bruce Braley for Congress!

We have a very important race for Congress here in eastern Iowa.  Congressman Bruce Braley will be challenged in District 1 by the Republican nominee Ben Lange, who barely lost to Braley in 2010.  Lange benefitted from 1 million dollars from the American Future Fund to invest in negative advertising.

Let me be perfectly clear:  Bruce Braley has been a shining light in Washington as a representative demonstrating the highest degrees of integrity, intelligence and resolve in a time of crisis at home and abroad.  If we want to “improve” government, we need to keep the representatives of Bruce Braley’s caliber in office and push back the irrational, untruthful voices that challenge them.

Braley eloquently stated, “The disabled single mom in Waterloo who receives modest Social Security benefits did not cause this recession.  Grandparents in Davenport who need to see their doctor didn’t crash the stock market; yet that’s what today’s Republican budget says to Iowans and other middle class families.”  Lange supports the Republican budget and agenda.

I went to Ben Lange’s website to see where he stood on the issues, and they are, essentially, as they were two years ago; casting blame for the economic crisis in the wrong direction and offering solutions that are manifest of that misunderstanding.  He believes that going back to the policies that strangled the middle class and put more people under the poverty line are in the best interests of Americans and his party cloaks a platform to line the pockets of a rich minority with rhetorical platitudes like, “opening the free market” and calling it constitutional integrity.

Bruce Braley believes in giving tax breaks to small businesses and middle class families.  He supports fiscally responsible legislation such as “Pay As You Go” spending and the “Reduce Unnecessary Spending Act” to reduce the federal deficit.  And decreasing the growing burden placed on students by stopping increases on interest rates for student loans.

Braley’s support of the Recovery Act was to improve an economy in free fall by investing in infrastructure, education, and health care, to offset the previous economic neoliberalism that opened America’s pocketbook to a rich ruling class.

Can anyone disagree with Braley’s work to honor Iowa’s veterans by making sure they receive the benefits they deserve?

We need real integrity in Washington, not bloviated rhetoric based in erroneous claims of historical patriotism.  We need more people like the one we have representing us in District 1 in Iowa; we need people like Bruce Braley.
  Learn more, or donate to this important campaign, at http://www.brucebraley.com/?no_splash=1

Fixing a Flat

Taxes.  What a concept.  Is there any way to satisfy those who believe progressive taxation is a more fair distribution of burden, those who believe the only fair formula is that everyone should pay the same percentage, and those who think that we should abolish federal taxes altogether and pay as we play?

Personally, I believe progressive taxation is the best way to keep capitalism running in perpetuity, but I’m listening…

It occurs to me that we are looking at the current tax structure incorrectly.  It seems that the general perception of our current tax rate is that its around 23%, but that the high earners pay more at 36%.  I’d like to flip our perspective in order to make a case.

Try thinking of our current tax rate as being 36% and that middle and lower class earners pay less, averaging 23%.

That may seem pedestrian, but it makes a point; it alters the perception that many have that wealth accumulation is punished and I’m suggesting that we, instead, look at it as if lower incomes are being incentivized to invest and spend.

The question now becomes, “Is 36% too high?”

Well, if you consider that 50 years ago the highest marginal tax rate was 91% and people still accumulated vast amounts of wealth an argument could certainly be made that a rate that is 55% less is astonishingly low.

If you consider that the transfer of wealth toward the upper class has amassed three times higher in 30 years than for middle class Americans, a case can clearly be made that tax rates are working in favor of the higher earners, but I’m going to go out on a thlimb here and say, “Yeah, I think 36% is high” (don’t get too excited, conservative friends- there’s more…)

It’s also pretty close to irrelevant.

If progressive tax tables unfairly tax the rich, why has income inequality between the top 1% and middle incomes tripled over the past 30 years?  How have the wealthiest Americans managed to increase their holdings in that span by 250% if taxes are unfairly repressive for them?

In 1979, the middle 20% of Americans averaged $54,000 annual income (higher than the “average” household income).  The top 1% averaged $550,000.  Today, the middle 20% have increased their average earnings by 8% while the top 1% have increased their average by nearly 29% to 1.9 million dollars a year.

If progressive taxation is unfair, then it has been unfair in favor of the rich.

The tax code has been modified over the past 99 years to work toward incentivising investment and sheltering wealth by lowering capital gains tax, creating S Corp status and all sorts of investment protections and deductions.  What has clearly happened, now that we know that one of the richest men in history pays an average personal tax around 15% and a wealthy, former presidential candidate has revealed the same, is that the tax codes have been their friends.

The conversation we should be having should not be about the higher bracket (which no one with even a decent accountant pays) and it should be about reforming breaks, loopholes and deductions so that the investment class remains incentivised, while the middle and lower classes are given better opportunity to spend and invest.

Many people argue that a Flat Tax is the cure to end all inequities and I’ve found that the more information I offer to counter it, the less those who think a flat tax makes sense, will listen.  But, here I go….

A Progressive tax is based on a simple idea that it is more fair for those who have the ability to pay the most, to be the ones who pay the most.  The argument against a Progressive system is equally logical; it is the idea that success is being punished when rates become higher for higher incomes.

In a flat tax system, however, the lower the income, the greater the tax burden and the difference between tax percentage and tax burden needs to be understood.

Take sales tax, for example, that is a regressive (or flat) tax where everyone pays the same percentage of a purchase.  For the sake of an illustration I’ll use low numbers, but you can add all the zeros you’d like.  If a person who makes $10,000 a year makes a purchase on a $100 item and pay a fixed sales tax of 9%, that’s .0009% of their income.  A $100,000 earner making that same purchase pays .00009% of their income; the reality of that tax as a percentage of income is, therefore, 10 times greater for the lower income; that’s tax burden.

“But, a Flat Tax means that those making less are paying less!”

Actually, no.  The Americans who could barely (or not at all) afford a minimal standard of living would be paying taxes they didn’t previously pay and middle income families, while some will pay less in federal taxes, are still shouldering a greater burden from regressive taxes and rising costs of living.

Take an average American household income of about $50,000 a year and compare that to a very comfortable annual income of $250,000.  Presume that a Flat Tax is adopted and everyone will pay 20%.

The 50k family is bringing home $40,000. They live within their means and have a modest house payment (property taxes included) of $1200 a month.  With 2 kids, groceries are $400 a month, utilities $200, car payments with insurance is $500.  Miscellaneous (gasoline, parking, etc) is $500.  Health insurance is $5500 annually.  At the end of the year, after modestly calculated hard costs, they might have a thousand dollars in discretionary money.

Christmas is on a credit card, and there’s nothing put into savings or for a college fund.  If a water heater breaks or there’s a serious health issue, they borrow.

This, by the way, is exactly what is happening to the Middle Class.

Now, at $250,000, they pay taxes at 20% too and bring home $200,000.  They can afford to live in a $600,000 house and the mortgage is $4500 a month.  They have an SUV and a nice car with payments that total $1500.  The kids are in private school adding $10,000 more a year, plus they can put 10,000 a year into funds (college or trust) for two kids.  They buy groceries and often entertain and that costs $2000 a month.  Basic utilities are $1000 a month.  They have a stellar health plan and pay $10,000 a year.

After expenses for a very comfortable lifestyle, they have $62,000.  They can take a family vacation for $7,000 and still save $55,000. They put half into retirement accounts and have $27,500 still for discretionary spending and so over two thousand dollars a month goes into the stocks and investments.

They are entitled to live this way and that is the reward of their income – no one is arguing thatbut, now here’s the tough part –  every dollar is more valuable to the first family and their meager $1000 is more precious than the $62,000 is to the second family.  And collectively it is more valuable to our economy – because the first family is 90% of America.

It is the aggregate of that disposable income that drives consumerism and feeds our economic system—allowing for success.

There is nothing wrong with having the lifestyle your earnings provide to you, but when tax rates are the same, the tax burden is not and if participation in consumerism is predicated on having a high income, the system will fail.  The reason we have economic deterioration isn’t because the progressive system is failing, it’s because we have allowed for massive loopholes, shelters and minimal capital gains tax, to where, in fact, it isn’t really progressive anymore- it favors the top.

Sprinters and distance runners are measured in terms of their speed to the finish line, but we don’t race sprinters against distance runners in the Mile and then judge them as “slow” because they didn’t have the stamina to finish the race; we change the criteria to match the event.

In golf, a handicap is given based on an amateur’s ability on a given course so players of different proficiencies can play competitively against each other.  You could call that a “Progressive” golf system- and the reason for it is to increase membership at the club and keep the course open (you can replace “course” with “economy” if you’d like).

A Flat Tax will only exacerbate inequities, strangle the Middle Class and put more people into debt; it is not the solution to an ailing economy and will, in fact, make things worse…which brings us back to “Dough.”

The Buffet Rule, rejected by House Republicans, was designed to solve the conflict this essay started with.  Adjusting the code to close loopholes that allow high earners to pay a lower percentage than the rest of us and to bring marginal rates down.  I believe it put the high bracket at 30%.

Heavy sigh.

At what point might the wealthy say, “Thank you, America!  You’ve really been a friend!”

Welfare Queens and NyQuil

I had a dream where America settled down for a day.  We all took a collective breath and did some research about social spending along with doing a little math.  My dream was inspired by a news report that I saw, as I was nodding off, about how a big part of the budget controversy, that separates the right from the left, is based on social programs.  So as I drifted off, having taken some NyQuil for my chest cold, I imagined a nation working on this problem together

We looked at federal spending on welfare programs and subtracted social security, veteran’s pensions, children’s healthcare, and Medicare (because those are different arguments) and we looked for welfare numbers in terms of what people receive and for how many people get off welfare and go back into the tax base.

Because it was a dream, people kept changing but one of my Facebook “foes” was there, along with President Obama, who oddly turned into George Bush. Then for some reason my ex-wife showed up and turned into my mother and for reasons I can’t possibly explain, she became Charles Kuralt.

I remember thinking, “I’ve got to make an appointment with my therapist in the morning.”

We were going to compare those numbers to those who are freeloading the system to find out how much of our tax money is being thrown into the abyss. But as fate would have it, a car alarm went off around 2 am and I woke up before finding the answer.

But along with my coffee this morning I was inspired to finish what my dream started and I began to do some investigation.  I investigated real numbers from the Congressional Budget Office and Child Welfare Information Gateway along with my pay stubs to discover what percentage of my income that I spend on non-medical welfare.  I washed it against a current census analysis to determine what I personallyWASTE on those welfare recipients who take unfair advantage of the system and I came up with a number.

I was surprised.  Without a doubt, it isn’t right, it isn’t fair and I should get this money back!  I throw to the wind every year—- $36.

Why, I could be taking my sons to Chuck E Cheese one more time every year! (Well, not if we want drinks) and I am incensed that I have lost the freedom to decide HOW my $36 are spent!!!

For me, with a good salary, I spend less than 50 bucks a year, or about 10 cents a day on those Welfare Queens we keep hearing about.

I admit, this was not a truly scientific analysis but I encourage anyone to look at their own taxes, look at social spending figures, research the number of people who are on and who get off of welfare (the numbers are out there) and determine your actual burden for yourself.  And, to be fair, if we take that number based on average salaries/wages, multiplied by the taxed work force, we are looking at over 2 billion dollars compiled a year- and that is a fair chunk of change that could be used in better ways.  But, then when you consider that’s what we spend in a week in Afghanistan, perhaps there is a more useful discussion about our taxes that we should be having.

We also need to ask a couple of questions regarding the basis of our arguments:  What is the role of government?  What do we expect from government?  We need to know what it is we are for and what it is we are really against.

There are a lot of broad strokes in today’s protests. “Stop big government!” “Take America back!” “Lower taxes!”  That’s all very well and good, but what, specifically are we talking about?  We’d all love to keep more money in our paycheck, but which programs do we want to get rid of?  I met a person who admitted that an unemployment extension and food stamps made the difference in his life to bridge hardship–and today he is successful- but now he opposes those very entitlements!

I also saw on the news, as I was drifting away, some people in the South protesting “big government” who were also upset that the local high school wasn’t meeting mandated health standards; it seems there aren’t enough government inspectors to ensure safe food for their children.

I had a discussion with someone recently who used the oft quoted proverb “Give a man a fish and he eats for a day. Teach him to fish and he eats for a lifetime.”  I like the Chinese proverb, too, but here’s the ironic twist when used by modern conservatives who find social spending repugnant- it’s a “socialist” concept.  It is the philosophy of sharing and teaching as a community.

“Socialism” is, of course, that dirty word that many believe was spawned from the lap of Satan, but I wonder how many people with signs at Tea Parties claiming that “Obama is a Socialist” can define what the word actually means. Our Constitution was written with strands woven into a Republic by and for the People?

So…let’s all take a breath…define a few terms…do a little math…and maybe start a new conversation.  Many of us will still disagree profoundly. Some people will come up with different numbers regarding social spending and draw different conclusions. And there will always be fundamental, philosophical differences between people, but if we could collectively determine that solutions exist in our cooperative efforts and that much of our argument (on either side) is based on hand-me-down rhetoric without a genuine analysis of what it is we’re screaming about…maybe we can inch toward better politics….or maybe I’m just dreaming again.

Suggested reading (from all sides of the issue of welfare):

“The Welfare State Nobody Knows,” by Christopher Howard

“Why American’s Hate Welfare,” by Martin Gilens

“Regulating the Poor,” by Piven and Cloward

“Welfare Happiness and Ethics,” by L.W. Sumner

“American Social Welfare Policy,” by Karger and Stoesz

“Flat Broke with Children,” by Sharon Hays

“The Myth of the Welfare Queen,” by David Zucchino