Taxes

The Left and conspiracy theories

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Cross posted on my own blog

Fifty years ago, a book was written about political conspiracy theories. It was called “The Paranoid Style in American Politics.” It was written in 1964 and has been a staple of the left ever since. Its theme was the paranoia of the political right that was looking for communists in the State Department and harassing Hollywood actors and writers. It was specifically directed at Senator Barry Goldwater who was the Republican nominee that year. It is still in print with new material contributed by Sean Wilentz, an Obama supporter and leftist professor of history.

It has been an article of faith on the left that conservatives are paranoid about such subjects as communists (Although defenders of Alger Hiss were disappointed to find him in Soviet archives as a spy) and foreign threats like the Soviet Union and militant Islam. The left now says that they knew all along that the USSR would collapse and Reagan had nothing to do with it. Fortunately for them, You Tube was not around in those days to record speeches to the contrary. The threat of militant Islam is the latest example of a threat dismissed by the left. President Obama has embodied this concept in his “reaching out” to Iran and Syria. Nancy Pelosi even conducted her own diplomacy while Bush was president by visiting Syria to convince them we were a friend. The left does not seem to be discouraged by failure to respond.

Recently, especially since Obama has been president, the conspiracy forces seem to be stronger on the left. The “9/11 truthers” are represented even in the administration. Jones, of course, was too nutty to represent a serious threat but it is suggestive.

Jones’s genius as an ideological entrepreneur was to mine white liberal anxiety — they are quite aware of their own NIMBY hypocrisy — by selling them the “green jobs” shtick to reconcile class/racial guilt with environmental enthusiasm, thus making them feel better about themselves.

That’s why Jones rose so far. That’s why he was such a “progressive” star. That’s why, as top Obama adviser Valerie Jarrett put it, “we’ve been watching him” and were so eager to recruit him to the White House.

In the White House no more. Why? He’s gone for one reason and one reason only. You can’t sign a petition demanding not one but four investigations of the charge that the Bush administration deliberately allowed Sept. 11, 2001 — i.e., collaborated in the worst massacre ever perpetrated on American soil — and be permitted in polite society, let alone have a high-level job in the White House.

He was “outed” and recently had a free lance reporter expelled from a “open to the public” meeting he was holding.

I read leftist blogs to find out what the other side is thinking. Here are some recent examples. In a post about the current struggle over the Bush tax rates, Steve Benen says:

There’s a reasonable case to be made that we’re looking at a cumulative effect. For much of the left, the concessions, many of which seemed wholly unnecessary, are just becoming intolerable. The party’s messaging, tactics, and inability to compromise effectively are just exasperating, and the apparent fact that Republicans will get an extension of a failed tax policy has led some to throw up their arms in disgust and proclaim, “I’ve had it.”

I get that. It’s a sentiment that obviously makes sense.

The Democrats are committed to static analysis of tax effects. A tax cut loses revenue while a tax increase adds revenue. Now why are the Democrats, who have large majorities in both houses of Congress, unable to block this Republican effort to keep tax rates the same? It can’t be good economic policy because Steve Benen said so. What could they do to convince Republicans the Democrat position is the better choice ? Here are some theories.

You’re sending the message the richest of the rich actually control this country, and in order to get a few crumbs for the common man, the rich need to be paid off with borrowed money – money that the common man (and woman), and their children, will be obligated to pay back, with interest. That does not bode well for the future of America.

Posted by: delNorte

So the rich and the corporations control the country. That is probably the most widely accepted conspiracy theory in the country. It is accepted by the left and many independents.

I think it’s a confluence of reasons: 1) It’s a simple issue with little to no nuance. There is no good reason to extend the cuts to the rich (outside of politics). 2) OTOH, the bank bailout and the fin reg are/were very complex issues which did not satisfy anyone’s sense of justice for holding responsible those to blame for the mess we’re in.

Posted by: You Don’t Say

Now, there is another theory. There is no reason to keep the tax rates the same for those with incomes over $250,000 except politics. Here is a person who does not believe that small business creates jobs. I doubt he would be impressed by this video. That business owner makes $300,000 and employes about ten people. Raise his taxes and what happens ? Who cares ?

There is absolutely NO convincing case that extending tax breaks for the super-wealthy is good for the nation; quite the reverse — it signals that the unabated looting of America is now in full swing;

Here’s more the same from another commenter.

What strikes me is there is no discussion of economics and how the economy works. OK. “Trickle Down” doesn’t work. “Tax cuts for the rich” doesn’t work. What does work ? Silence.

This morning, the This Week program on ABC, in its new incarnation with Christiane Amanpour, spent the entire show on DADT. They said not a word about the economy. DADT will not be repealed so why spend an hour on it two days after the unemployment rate went up again to 9/8% ? The political left is bored by economics and the national economy. They are far more interested in social issues like DADT or gay marriage. I can understand this because so many of them are government employees, or academic institution employees or low level employees of private organizations who have nothing to do with managing the business. They don’t know how private business is managed, they have never signed the front of a paycheck, and have no idea how people make decisions about investing because, aside from 401ks, they have no contact with it.

There was an amusing exchange about passports yesterday. It began with this:

Mayor Mike Bloomberg, leader of the Bloomberg faction of the Bloomberg party, was interviewed en route to China, where he was seeking to open diplomatic ties between Cathay and the colorful principality he governs. A quote: “If you look at the U.S., you look at who we’re electing to Congress, to the Senate — they can’t read. I’ll bet you a bunch of these people don’t have passports.”

Imagine that ! People who don’t have passports ! Anyway, the funniest part was a comment that the writer was being interviewed about tea parties by a German journalist. She asked him if he had a passport and he told her that he had lived in Germany as a child. I can’t find the link now and I wish he had asked her if she had ever owned a share of stock. Economic ignorance seems to be requirement for leftist credentials. Not only ignorance but disinterest.

The Left and its delusions

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Cross posted at my own blog.

I skim the Washington Monthly blog as a window on the thinking of the far left. They are more civil (except in comments) than the DailyKos but the mentality is the same. Today is a reasonable example. The topic is taxes.

Roll Call noted this morning that the Senate is moving towards “an epic election-year battle over Bush-era tax cuts.” That sounds about right.

The dispute helps capture exactly what the two parties prioritize right now — Dems want to keep lower rates for the middle class, while reducing the deficit by letting the rich go back to the rates they paid when the economy was healthy. Republicans want to hold the Dem proposal hostage, fighting tooth and nail for breaks for millionaires and billionaires, and adding $680 billion to the deficit the GOP pretended to care about for a while.

The “middle class” is a very elastic concept for them with the top income range going all the way down to $150,000 per year. Secondly, the group with incomes of $250,000 or more, the target class, consists of mainly small business people who are not incorporated and who file all income with a personal return.

There is also no concept here of who pays the taxes. Shouldn’t “tax cuts” be distributed to those who pay taxes ? Otherwise, it is just one more government handout to those who are nonproductive. Here is a look. The top 1% of income pays 40% of the income taxes. Hmmm That’s also about $410,000 per year, not $2 million.

The top 5% pays 60.63% of the income taxes. The threshold for the top 5% is $160,000. Well, what do you know ?

Billionaires need little help from Republicans but they do invest and are the source of most new jobs. The concern for “the deficit” on the part of Democrats may be translated as the left side of the entire argument about spending versus taxing. Republicans want to talk about cutting spending, especially tea party Republicans. I even have a compromise: Let the tax rates go back to the Clinton administration rates but let’s also go back to the number of government employees of the Clinton period.

[W]here would this $680 billion go? Nearly all of it would go to the richest 1 percent of Americans, people with incomes of more than $500,000 a year. But that’s the least of it: the policy center’s estimates say that the majority of the tax cuts would go to the richest one-tenth of 1 percent. Take a group of 1,000 randomly selected Americans, and pick the one with the highest income; he’s going to get the majority of that group’s tax break. And the average tax break for those lucky few — the poorest members of the group have annual incomes of more than $2 million, and the average member makes more than $7 million a year — would be $3 million over the course of the next decade. […]

Notice how the “richest” become those with incomes over $2 million when we are talking about one aspect of the issue but, when it is time to actually impose the taxes, the incomes shrink back down to $250,000 or, in some cases, it shriveles all the way down to $150,000 per year.

Midwestern centrists such as Sens. Kent Conrad (D-N.D.) and Evan Bayh (D-Ind.) have called for an extension of all of Bush’s tax cuts, including those benefiting individuals earning more than $200,000 and families earning over $250,000 annually.

Other Democrats say they would consider raising taxes on individuals and families earning below those thresholds, despite President Obama’s promise that middle-class families would not see their taxes increase.

Some liberals balk at the notion that families earning $250,000 or more belong in the middle class.

“Two hundred and fifty thousand dollars? Is that the top 1 percent of Americans, or half a percent? Come on!” said Sen. Tom Harkin (D-Iowa).

Harkin said he would be willing to extend the tax cuts for families earning $150,000 or less annually.

See how elastic that number is ? Families with a combined income of $150,000 are “rich.” We went from $2 million per year to $150,000 per year just like that!

Or we’re told that it’s about helping the economy recover. But it’s hard to think of a less cost-effective way to help the economy than giving money to people who already have plenty, and aren’t likely to spend a windfall.

Did you notice that one ? Tax cuts “give” money to people who have “plenty.” Just keep repeating to yourself; it’s not your money. It’s the government’s money and they are “giving you some of it.” They used to call that “To each according to his needs.”

No, this has nothing to do with sound economic policy. Instead, as I said, it’s about a dysfunctional and corrupt political culture, in which Congress won’t take action to revive the economy, pleads poverty when it comes to protecting the jobs of schoolteachers and firefighters, but declares cost no object when it comes to sparing the already wealthy even the slightest financial inconvenience.

Once again, a translation. Schoolteachers “need” the money. Firefighters is just a cover. The “wealthy” (Those with over $150,000 per year income) don’t “need” the money.

Note, there is no concept of a private economy here. Nobody invests; nobody starts a business. The story of the 2001 tax cuts that Democrats want to repeal is here in more detail.

This is what socialism looks like in practice.

Obama’s 95% Illusion

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One of the things that has bothered me, since at least the first presidential debate of this campaign, is Obama’s outright Orwellian use of the term “tax cut”. The Wall Street Journal now debunks the illusion:

It’s a clever pitch, because it lets him pose as a middle-class tax cutter while disguising that he’s also proposing one of the largest tax increases ever on the other 5%. But how does he conjure this miracle, especially since more than a third of all Americans already pay no income taxes at all? There are several sleights of hand, but the most creative is to redefine the meaning of “tax cut.”

For the Obama Democrats, a tax cut is no longer letting you keep more of what you earn. In their lexicon, a tax cut includes tens of billions of dollars in government handouts that are disguised by the phrase “tax credit.” Mr. Obama is proposing to create or expand no fewer than seven such credits for individuals:

  • A $500 tax credit ($1,000 a couple) to “make work pay” that phases out at income of $75,000 for individuals and $150,000 per couple.
  • A $4,000 tax credit for college tuition.
  • A 10% mortgage interest tax credit (on top of the existing mortgage interest deduction and other housing subsidies).
  • A “savings” tax credit of 50% up to $1,000.
  • An expansion of the earned-income tax credit that would allow single workers to receive as much as $555 a year, up from $175 now, and give these workers up to $1,110 if they are paying child support.
  • A child care credit of 50% up to $6,000 of expenses a year.
  • A “clean car” tax credit of up to $7,000 on the purchase of certain vehicles.

Here’s the political catch. All but the clean car credit would be “refundable,” which is Washington-speak for the fact that you can receive these checks even if you have no income-tax liability. In other words, they are an income transfer — a federal check — from taxpayers to nontaxpayers. Once upon a time we called this “welfare,” or in George McGovern’s 1972 campaign a “Demogrant.” Mr. Obama’s genius is to call it a tax cut.

The word “socialist” has, since the fall of Union of Soviet Socialist Republics, lost its force as a political charge. People don’t feel threatened by “socialism” the way they did by “fascism”. That is simply too sanguine.

I don’t doubt that most voters will read through that list of what counts as “tax credits” and say to themselves, “I fit in there, I’m a good person, and by golly, in this economy, I can use all the help I can get.” But ask yourselves, “Where is this money coming from?”

I myself have been the recipient of unemployment benefits, and though I enjoyed not having to work for a while and getting money nonetheless, I always felt guilty about it. Not enough to get a job until the money flow ran dry; and that is the point. When there is “free” money, people become lazy. Further, the money Obama is promising to “95% of tax payers” is not “free”; it is gotten by increasing taxes on “the wealthy”.

Put in other words, this is nothing more than a blatant attempt to use government forcefully to redistribute wealth. It might not seem forceful right now because it does not happen at the tip of a gun, but rest assured that that is exactly what it is: coerced charity.

One reason why “socialism” has never gotten the same bad rap that “fascism” had is that people feel warm when they think about the purported intentions of socialists, which is to better the lives of the everyman. How callous must one seem who argues against providing for the everyman!

But that assumes that government is the only instrument by which we can take care of the less fortunate. To be sure, government often has incomparable scale, such that it can theoretically purchase for less due to greater bulk (but those who have supplied government contracts know that this is more the exception than the norm), and provide the logistical support to boot (although that didn’t seem to work real well during Katrina). Nevertheless, government, particularly a distant federal government of a nation that covers a third of a continent and a third of a billion people, has a tendency to lose touch. Further, to inure itself against lawsuits and charges of unfairness (in essence, to cover its own ass), it requires much more bureaucracy and red tape that eventually begins to undermine the gains from its scale. With such remove, is it any wonder that government often ends up helping opportunists and rejecting those in real need of help?

Contrast this with private charities. A private charity may not have the same scale as government (except perhaps for the Roman Catholic Church). However, private charities tend to be more involved in the lives of those getting their help; this is particularly true of religious charities, because of the motivation to win converts, whether through direct proselytization or through serving as values models. Further, private charities must always work to raise money, and a primary form of persuasive argument is demonstrating the good work that they have done.

Government, on the other hand, need never raise money, as it can levy taxes directly (with the implied support of “lawful use of force”), or indirectly by siphoning funds from a general account. In addition, all that is necessary in order for government to commit itself to such action is enough votes in the legislature, or the action of the executive, all of which requires, essentially, a simple majority of votes of the voting public–and yet, once 50%+1 of votes are cast in favor of action, government suddenly has access to the funds raised from 100% of the taxpaying public, not all of whom are eligible voters.

Charity is best which comes from the heart, and worthless which is imposed by government with the implied threat of violent force. In modern America, a compromise has been found by providing loopholes in the tax code that provide incentive to the rich to give. Although resultant giving may be less altruistic, nevertheless it gives “the rich” a choice, so that in some sense that charity still can be said to come from heart.

When Obama promises to pay for these “refundable tax credits”, he increases the number of those who end up paying no taxes, he rewards others who have no income, he stratifies income bands (thus reducing income and social mobility), and he does it all by punishing those who best have means to leave this country and its tax burdens. Look beyond the stated intentions, and you will see that such socialist economics will do nothing but impoverish this country. Can we really afford that in this economy? Is it any answer to claim that because Obama did not cause this state of the economy, he is therefore the antidote?

I think not.

(Cross-posted from Between Worlds)