Filed under: 2012 Presidential Campaign, Economy, Poverty
All the Republican presidential candidates advocate the same trickle-down policies that produced only 1.08 million jobs during George W. Bush’s presidency. They advocate lower taxes mainly for the wealthy, unregulated markets and less spending. Such policies have not and would not help the poor or the country.
Presidential candidate Mitt Romney has been receiving much criticism for his statement, “I’m not concerned about the very poor.” Romney went on to say, “We have a safety net there. If it needs repair, I’ll fix it. I’m not concerned about the very rich. They’re doing just fine. I’m concerned about the very heart of the America, the 90 percent, 95 percent of Americans who right now are struggling.”
One day later, Romney backtracked by saying, “It was a misstatement. I misspoke.” I agree he misspoke when he said that he cares about poor people. The Republican presidential candidates policies demonstrate they have no concern for the poor.
Romney himself has proposed spending cuts that would greatly reduce the safety net for the poor. He meant to say, if it ain’t broke, break it.
Like his other policies, Romney’s tax plan hurts the poor. An analysis by the Tax Policy Center showed that poor families would pay slightly more, around $140, while millionaires would gain more than $145,000 in reduced taxes.
Rick Santorum advocates policies that would “reform welfare to the point that it would offer no welfare at all.” Santorum’s would cut taxes for most Americans, but like Romney’s tax plan, most of the benefits go to the wealthy.
When Newt Gingrich is busy excoriating Romney for his lack of concern, he neglects to mention his own callousness. Gingrich has said that, “Really poor children … have no habits of working and have nobody around them who works.” He also says that child labor laws are “truly stupid” and poor children should work as janitors in the schools they attend.
Gingrich’s tax plan is even worse that Romney’s in some ways. The rich would gain more than $600,000. Since, Gingrich does not tax capital gains, dividends, or interest income, somebody like Romney could end up paying no income taxes
In addition, the Republican candidates have railed against the Affordable Care Act, or “Obamacare.” The ACA, despite it faults, does make health more affordable and available, which of course, helps poor people. (A single-payer system would save more lives, cost less, and make health care affordable for all, but that is another blog entry or editorial.)
Rick Tyler, with the pro Gingrich super PAC, Winning Our Future, illustrated the candidates’ indifference to the poor during an interview on MSNBC. Lawrence O’Donnell asked Tyler, “You say that Republican anti-poverty programs have worked. Please name me the Republican anti-poverty policy that has lifted people out of poverty and tell me how many people were lifted out of poverty by Republican policy?”
Eventually, Tyler’s responded by saying, “Lower taxes, more freedom, less government, and free enterprise. That’s the program.” He was unable to name even one specific program deliberately designed by Republicans to help the poor.
During a slow economy, austerity combined with tax cuts for the wealthy is the wrong approach. We need programs that help the poor instead of programs that hurt the poor and benefit the rich.
Imagine that you are the CEO of a company that has 50,000 employees with a 15 billion dollar budget. Your safety record has not been good, and you are looking to improve it. You have three options:
- Current: Keep the current option and spend 17.4 percent or $2.6 billion on safety. With this option, 50 employees will die in workplace accidents.
- Option ACA: Spend the same amount as the previous option, but improved procedures would reduce the number of workplace deaths to 23 people.
- Option SP: Improve procedures and spend only 12 percent or $1.8 billion on safety. There would be no deaths from workplace accidents.
|Options||Percent of budget for safety||Annual amount spent on safety||Workplace deaths|
|Option ACA||17.4%||$2.6 billion||23|
|Option SP||12.0%||$1.8 billion||0|
The obvious choice is Option SP, which is just good business.
When the numbers are adjusted, the above describes the current health care situation in the United States. The budget becomes the Gross Domestic Product of the United States, $15 trillion. Plug in the amount of GDP the U.S. spends on health care, 17.4 percent, which is the highest of any nation. The next highest amount is 12 percent. Then:
- Currently, 50 million people lack health insurance, which will cause about 50,000 deaths.
- The Congressional Budget Office estimates that the Affordable Care Act would leave 23 million people uninsured. This would cause about 23,000 deaths.
- There would be zero deaths due to lack of insurance.
|Options||Percent of GDP spent on health care||Annual amount spent on health care (actual or estimated)||Uninsured deaths caused by lack of health insurance|
|ACA||17.4%||$2.6 trillion||23,000 (when ACA fully implemented)|
A single-payer system would cover everybody at less cost. The savings would be $800 million more than the other options, and no lives would be loss.
Single-payer is just good business.
This was the editorial cartoon by Ed Stein that appeared in the Missourian newspaper with my editorial, “Source of income should not matter for taxes,” on Tuesday, Jan 31. It was the perfect compliment.
Mitt Romney may not have intended it, but he is providing another good reason to be rich: the low tax rate. First, there was the $10,000 bet in the Republican debate on Dec. 10. It must be great to be able to wager that much money as nonchalantly as most people bet a six-pack of beer.
Then on Jan. 17, Romney said that his $374,327 in speaking fees over one year is “not that much.” Earth to Romney, these fees alone put you in the top 1 percent of income, and more than likely 98 percent of the population would be thrilled to make that much money.
Romney might be able to afford $10,000 bets because of his low tax rate. Romney reluctantly released his tax returns on Tuesday. He paid about $3 million in taxes on income of about $21.7 million, for an effective rate of 13.9 percent in 2010. The difference between that rate and the top rate of 35 percent would allow Romney to lose 456 wagers.
Unlike Romney, investment guru Warren Buffett willingly revealed his income and tax rate back in August. Buffet wrote in “Stop Coddling the Super-Rich,” he made about $40 million and paid 17.4 percent in taxes. His employees paid taxes at rates from 33 percent to 41 percent on salaries around $60,000. Romney’s and Buffett’s compensation was more than 360 times what these employees made, yet their tax rate was about half.
Buffett has been advocating many years for a fairer tax system. In October 2007, he offered the following challenge:
I’ll bet a million dollars against any member of the Forbes 400 who challenges me that the average [tax rate] for the Forbes 400 will be less than the average [tax rate] of their receptionists. So, … I’ll give ‘em an 800 number. They can call me. And the million will go to whichever charity the winner designates.
He remains unchallenged.
A few months ago, President Barack Obama advocated getting rid of this unfair tax quirk law and applying the Buffett Rule — “that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”
The current regressive tax system, Buffett’s proposal and Obama’s advocacy generate a more fundamental question. Why does source of income matter when determining tax rates?
The Federal Insurance Contributions Act (Social Security and Medicare) taxes are examples of a higher tax burden imposed on one source of income: wages. Can anybody explain why it is fair to charge most wage earners an extra 5.65 percent on their incomes? Why not put the extra burden on capital gains or dividend income? Just to be totally arbitrary, why not put the burden on people whose surnames begin with the letters A through F?
It’s not even a matter of coddling the super-rich, although that is happening. It is a simple matter of fairness. Someone who makes $60,000 should not be paying a larger percentage of their income in taxes than someone who makes $20 million or $40 million.
It is time to change the tax code and set rates strictly on amount of income. Income source should be irrelevant. Otherwise, exceptions could always be added that force lower paid wage earners to pay higher rates.
A system based on amount of income would have several advantages. Such a system would simplify the tax code. Different tax rates for different sources of income would not be required. A proposal to add a tax exception to correct an inequity caused by a previous tax exception would be unnecessary.
Social Security and Medicare funding could be maintained by allocating a percentage of tax revenue to these programs, thus ending the highly regressive FICA taxes on individuals and making payroll processing easier. This same method could be used to eliminate FICA taxes on businesses.
In addition, the government would need to remove business tax loopholes and tax breaks so that all profitable companies actually pay income taxes. Perhaps the most egregious example is General Electric Co. In 2010, GE made $14.2 billion in profit, yet paid no federal income taxes.
For too long, wage earners have been subjected to unfair, regressive taxes on their wages while some millionaires and billionaires have been favored with much lower tax rates than their wage-earning counterparts. It is time to level the tax paying playing field by having tax rates determined only by the amount of income. Such a system would establish a tax system that is more equitable and progressive.
Employees who made $60,000 could buy about 1,800 six-packs if their tax rate was 13.9 percent instead of 35 percent. Unfortunately, at their current high tax rate, they can’t afford to drown their sorrows.
On Tuesday (Jan. 24), The Daily Show skewered Mitt Romney on his low tax rate of about 14 percent. Romney made $42.6 million over two years.
Romney says about his low tax rate, “I pay all the taxes that are legally required and not a dollar more. I don’t think you want someone as the candidate for president who pays more taxes than he owes.”
As Jon Stewart says, “No, but you might want one who think that’s wrong,” which captures the essence of the problem.
In a future posting, I will comment on how to modify the tax code so that millionaires would never have a tax rate less than somebody who makes around $50,000.
Sen. Roy Blunt (R-Mo.) underwent outpatient surgery on Thursday. He had a stent placed in a coronary artery.
As a conservative Republican, Blunt has railed against the Affordable Care Act, or “Obamacare,” as the conservative critics like to call it. These same critics have yet to propose any other viable solutions that will make health care more affordable or prevent the 45,000 deaths per year due to lack of health care.
Blunt said he is “a strong believer in the life-saving importance of early detection, and I encourage everyone to be proactive about their preventive screenings.”
How likely is it that people will get a preventive screening if they do not have heath insurance? Even if they can scrape up the money for a screening, they almost assuredly would not be able to afford any necessary medical treatment, such as having a stent inserted.
Senator Blunt, if you are truly “a strong believer in the life-saving importance of early detection,” either stop complaining about Obamacare or propose a health care system that provides affordable health care for everybody.
In the meantime, as you recover, just be thankful that you have great health insurance largely financed by taxpayers, a benefit that you refuse to extend to other citizens of this country.
People are not the only ones who can make resolutions to make themselves better. Nations can do the same. The following resolutions would make our nation better and improve the economy.
Resolution 1: Adopt a single-payer system for health care.
A single-payer system would cover everybody, reduce the nation’s health care costs by more than 40 percent, and prevent medical bankruptcies. Currently, more than 45 million people are uninsured in this country, and 45,000 people die due to lack of health care. By 2019, the Affordable Care Act would reduce the uninsured to 23 million allowing about 23 million deaths from lack of health care, a better, but still imperfect solution. It is time to end the lethal effects of a health care system that relies on private insurance.
Resolution 2: Modify the tax code so that all millionaires pay a higher tax rate than thousandaires, and close loopholes so that profitable companies actually pay taxes.
As Warren Buffet has stated, last year he paid 17.4 percent in taxes on about $40 million while his employees paid anywhere from paid an average of 36 percent on incomes around $60,000. In 2010, General Electric made $14.2 billion in profits, but paid no federal income taxes.
Resolution 3: Our infrastructure will be rebuilt, and taxes will be raised to pay for it.
Our infrastructure’s overall grade of “D” by American Society of Civil Engineers’ 2009 Report Card is unacceptable. The ASCE estimates it will take about $2.2 trillion over five years for the improvements.
Resolution 4: Enact policies that will maintain and create jobs.
We can start with the resolution to rebuild our infrastructure, and provide local and state governments with the necessary funding to keep the number of public employees, especially teachers, fire fighters, and police at pre-2008 levels.
Resolution 5: Make our educational system the best in the world.
According to 2009 study, the United States ranked 14th in reading, 25th in math and 17th in science out of 34 countries. Between budget cuts and the No Child Left Behind Act, the focus has been on making sure that every student meets a basic level of achievement. Our education system will not become superior if we just concentrate on the underachievers. Making education fun and exciting should be a priority so students can naturally excel. We can and must do better, and a good place to start would be by hiring back teachers laid off due to budget cuts.
Resolution 6: Any candidate who does not accept science will be disqualified.
I cannot take any candidate seriously who does not recognize evolution as a valid scientific theory. I find it troubling and discouraging that half of the current Republican presidential candidates do not recognize evolution as a valid scientific theory. Ron Paul, Rick Perry, and Rich Santorum have this view. At least Newt Gingrich and Mitt Romney have expressed limited support for evolution. Jon Huntsman to his credit has expressed strong support for evolution.
When it comes to climate change, all the previously mention candidates disagree with the scientific evidence supporting climate change despite the fact that about 97 percent of climate change specialists think that human activity significantly contributes to climate change.
How can we improve our dismal science education ranking when major political figures deny scientific evidence?
Adopting these resolutions would make our nation stronger and provide a solid foundation for future growth.
The end of the Iraq War brings a welcome close to a domestic and foreign policy disaster. Some politicians have criticized the president saying that we should not withdraw, and that our interests in the Middle East could be harmed. Sen. John McCain (R-Ariz.) and Sen. Sen. Lindsey Graham (R-S.C.) along with presidential candidates Mitt Romney and Newt Gingrich have advanced some variation of this argument. McCain and Graham voted for the war without voting to fund it.
These politicians display their blatant hypocrisy when they argue to continue the war without explaining how they will pay for it. After months of complaining about the national debt and excessive government spending, McCain, Graham, Romney and Gingrich owe us that much.
The cost of the Iraq war is staggering, more than 4,470 American soldiers dead and more than 30,180 wounded. More than 100,000 documented civilian deaths and 2.8 million displaced Iraqis. The direct cost of the war is $806 billion, and the total economic cost will be between $3 trillion and $5 trillion. (Just think how many jobs would have been created and how great are roads, bridges and schools would be if that money had been spent on infrastructure.)
In addition, the damage to moral authority of the United States is staggering. The Bush Administration created a false association between Saddam Hussein and the 9/11 terrorists attacks. We lied about the weapons of mass destruction. We allowed the use of torture, which has been outlawed in this country since the Revolutionary War. We have ignored international treaties that demand the investigation and prosecution of suspected war criminals. Since former President George W. Bush admitted personally approving waterboarding, an investigation is not only warranted, but also necessary to help regain our international reputation.
The Iraq War did meet the foreign policy goals of one country. Unfortunately, the country is Iran. Our wasteful foray into Iraq accomplished many of Iran’s foreign policy goals at virtually no cost for that country.
From almost any view, the Iraq War has been a disaster for this country. The danger is not ending the war—it is continuing it.
McCain, Graham, Romney and Gingrich, are you listening?
Filed under: 2012 Presidential Campaign, Economy, Jobs, Taxes
All the Republican presidential candidates claim that excessive regulation and high taxes are stifling economic growth. Cut taxes and regulations, and the economy will expand. “It’s a compelling picture, but the data simply do not support it,’ said CNN’s Global Public Square host Fareed Zakaria this past Sunday.
If the Republican presidential candidates were presenting rational plans about how to grow the economy, the country could have an honest debate about policy prescriptions. Unfortunately, the evidence overwhelmingly contradicts their prescriptions.
In two rankings on economic competiveness – one by the World Bank, and the other by the World Economic Forum – the United States ranked fourth and fifth respectively said Zakaria, “And these rankings have not slipped much over the last decade.”
Zakaria expands and explains where the economy has problems [emphasis added]:
The organization of economic cooperation and development, the OECD, released a study last week measuring tax revenues as a percentage of GDP. Of the 30 countries studied, the United States came in 28th. Taxes are low in historical terms, as well, the lowest since the early 1950s.
So where has there been change? Where have we slipped?
The answer is pretty clear. Only five years ago, American infrastructure used to be ranked in the top 10 by the World Economic Forum. Now, we’re 24th. U.S. air infrastructure has gone from 12th in the world to 31st, roads from eighth to 20th.
The drop in human capital is even greater than the drop in physical capital. The United States used to have the world’s largest percentage of college graduates. Now, we’re number 14, according to the most recent OECD data. And American students routinely rank toward the bottom of the developed world in international tests.
The situation in science education is even more drastic. The number of engineering degrees conferred annually decreased more than 11 percent between 1989 and 2000.
In other words, the big shift in the United States over the past two decades has not been a rise in regulations and taxation but rather a decline in investment, in physical and human capital. … [And] investment is the crucial locomotive of long-term growth.
On this program, Michael Spence, the Nobel Prize-winning economist, pointed out that the United States got out of the Great Depression because of the spending associated with World War II, but also because during the war it dramatically reduced its consumption and expanded investments. People spent less, they saved more, and they bought war bonds.
That surge in investment by people and government produced a generation of growth after the war. If we want the next generation of growth, we need a similarly serious strategy of investment.
The claim that tax cuts will create jobs is especially egregious. Taxes were higher under President Bill Clinton than under President George W. Bush. During the Clinton years, 22.7 million jobs were created, while under Bush, only 1.1 million jobs were created. What the Bush years prove is that tax cuts by themselves do not produce jobs.
So what will produce economic growth? As previously stated, investment in physical and human capital produces growth. Policies should concentrate on infrastructure and education to rebuild capital. The debt and deficit are not a concern in the short term.
We can start by rebuilding our infrastructure. The American Society of Civil Engineers gave our infrastructure a grade of D, and estimates it will take $2.2 trillion dollars over five years to rebuild infrastructure. This would create needed jobs.
Next we can improve our educational system. Some good first steps would be to lower class sizes by rehiring laid off teachers and hiring more teachers. Target class size should be 15 – 20 for most classes.
In addition, a college education should be free, provided a student is qualified and accepted by an accredited school. This would prevent students from being saddled with expensive student loans, and would be a great way to improve human capital.
The extra cost could be covered by a one percent financial transaction tax, which could raise up to $700 billion. Half could be used for infrastructure, and the other half could be used for education.
For the economy to grow, we must implement economic policies that are based on reality. Until the Republican presidential candidates propose policies that might actually work, they deserve neither support nor the presidency.
Obama sounded reinvigorated in his speech on Tuesday. He clearly specified the issues facing the country and what needs to be done. Now he needs to tell us how to accomplish these goals.
Obama outlined the problems facing most people in the country. He said what made our country great, “If you gave it your all, you’d take enough home to raise your family, send your kids to school, have your health care covered, and put a little away for retirement,” and this is what made our country great.
However, “Fewer and fewer of the folks who contributed to the success of our economy actually benefitted from that success. Those at the very top grew wealthier from their incomes and investments than ever before. But everyone else struggled with costs that were growing and paychecks that weren’t – and too many families found themselves racking up more and more debt just to keep up.”
Obama then explains why Republican policies won’t work, and what needs to be done to fix the economy.
Trickle-down economics, the Republican policy of “cut more regulation” and “cut more taxes – especially for the wealthy,” doesn’t work and has never worked, Obama said. It didn’t work the decade before the Great Depression. It did not lead to the “incredible post-war boom of the 50s and 60s. And it didn’t work when we tried it during the last decade.”
Obama says that the “most expensive tax cuts for the wealthy in history” in 2001 and 2003 had the “slowest job growth in half a century.”
The data backs Obama. During President Bill Clinton’s time in office, almost 22.7 million jobs were created, while the under President George W. Bush about 1.08 millions jobs were created. (Note that the figure often quoted for jobs created during the Bush presidency is 3 million. Updated statistics revised that figure downward.)
Obama then says that years of weak regulation and lax oversight led to: “Insurance companies that jacked up people’s premiums with impunity, and denied care to the patients who were sick. Mortgage lenders that tricked families into buying homes they couldn’t afford. A financial sector where irresponsibility and lack of basic oversight nearly destroyed our entire economy.”
He then cites statistics that “the average income of the top one percent has gone up by more than 250 percent, to $1.2 million per year,” and that the “typical CEO who used to earn about 30 times more than his or her workers now earns 110 times more.” This inequality “distorts our democracy” and gives an “outsized voice” to lobbyists who can afford unlimited campaign contributions.
Obama then talks about how the inequality makes it harder to advance to the middle class, how we should be rebuilding our infrastructure, hiring teachers instead laying off teachers to improve education, and fix our tax code so that millionaires do not have a lower tax rate than somebody who makes $50,000.
He then commends how the Big Three Auto companies agreed to give bonuses not just to executives, but to all employees, and how the owner one company said that during tough times when workers give up benefits and pay, so should the owners.
Obama gave a passionate speech that clearly and eloquently stated the problems facing our country, especially the problems cause by inequality. Implicit in the speech is that we need to resolve the problems caused by inequality. He needs to explain how he would solve these problems.
As Obama said: “This isn’t about class warfare. This is about the nation’s welfare. It’s about making choices that benefit not just the people who’ve done fantastically well over the last few decades, but that benefits the middle class, and those fighting to get to the middle class, and the economy as a whole.”
I passionately agree.