Category Archives: Class

Class Warfare Illustrations From 1935 — History Being Repeated

This is from Ruling Clawss, which was a Daily Worker comic strip back in 1935. 

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GOP Policies Obliterating the Middle Class

I have been listening to GOP representatives and pundits proclaiming that taxing the wealthy who they refer to as so-called job creators would be bad for the economy.  These “job creators” have had the lowest tax rates in centuries, and over the last decade, we are still waiting for those millions of jobs they are supposed to create.  In fact, it has created such a gap in wealth between them and the middle class that it rivals the decade prior to the Great Depression. 

I came across a ThinkProgress article that articulates this point and brings into light how much income the middle and lower classes have lost and how the wealth in America is now concentrated into just 1% of our society. 

It may shock you exactly how wealthy this top 1 percent of Americans is. ThinkProgress has assembled five facts about this class of super-rich Americans: 

1. The Top 1 Percent Of Americans Owns 40 Percent Of The Nation’s Wealth: As Nobel Laureate Joseph Stiglitz points out, the richest 1 percent of Americans now own 40 percent of the nation’s wealth. Sociologist William Domhoff illustrates this wealth disparity using 2007 figures where the top 1 percent owned 42 percent of the country’s financial wealth (total net worth minus the value of one’s home). How much does the bottom 80 percent own? Only 7 percent:

As Stiglitz notes, this disparity is much worse than it was in the past, as just 25 years ago the top 1 percent owned 33 percent of national wealth. 

2. The Top 1 Percent Of Americans Take Home 24 Percent Of National Income: While the richest 1 percent of Americans take home almost a quarter of national income today, in 1976 they took home just 9 percent — meaning their share of the national income pool has nearly tripled in roughly three decades.

3. The Top 1 Percent Of Americans Own Half Of The Country’s Stocks, Bonds, And Mutual Funds: The Institute for Policy Studies illustrates this massive disparity in financial investment ownership, noting that the bottom 50 percent of Americans own only .5 percent of these investments:

4. The Top 1 Percent Of Americans Have Only 5 Percent Of The Nation’s Personal Debt:  Using 2007 figures, sociologist William Domhoff points out that the top 1 percent have 5 percent of the nation’s personal debt while the bottom 90 percent have 73 percent of total debt: 

5. The Top 1 Percent Are Taking In More Of The Nation’s Income Than At Any Other Time Since The 1920s: Not only are the wealthiest 1 percent of Americans taking home a tremendous portion of the national income, but their share of this income is greater than at any other time since the Great Depression, as the Center for Budget and Policy Priorities illustrates in this chart using 2007 data: 

As Professor Elizabeth Warren has explained, “there is nobody in this country who got rich on his own. Nobody…Part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.” More and more often, that is not occurring, giving the protesters ample reason to take to the streets.

Breaking Point: Obama and the Death of the Democratic Party

This is an article from FireDogLake.com written by Jane Hamsher that I want to share with you guys.  President Obama and the Democratic party need to realize there is a line, and if you cross it, there are consequences. The article begins here. 

According to both the Washington Post and the New York Times, Obama is proposing cuts to Social Security in exchange for GOP support for tax hikes. Lori Montgomery in the Post:

At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.  As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal.

And Jay Carney’s carefully chosen weasel-words today do not contradict this:

“There is no news here – the President has always said that while social security is not a major driver of the deficit, we do need to strengthen the program and the President said in the State of the Union Address that he wanted to work with both parties to do so in a balanced way that preserves the promise of the program and doesn’t slash benefits.” 

Nobody ever says they want to “cut” Social Security or Medicare. They want to “save” it.  Just ask Pete Peterson, he wants to “save” it. Likewise AARP.  They don’t want reduced benefits for senior citizens, they want to “preserve” it for future generations.  If they have an enormous customer base they can market private “add-on” accounts and other retirement products to when Social Security goes bye-bye, I guess that’s just a happy coincidence.

Now if you think that this is something the President is doing because it’s the only way to get Republican cooperation you can stop reading here, because we’re going to disagree.  From the moment he took the White House, the President has wanted to cut Social Security benefits.  David Brooks reported that three administration officials called him to say Obama “is extremely committed to entitlement reform and is plotting politically feasible ways to reduce Social Security as well as health spending” in March of 2009.  You can only live in denial for so long and still lay claim to being tethered to reality.

And if you think it’s only the President, and the progressives in Congress will oppose him, we’ll have to disagree about that too.  Nancy Pelosi can always come up with the votes she needs to pass whatever the White House wants, and she’ll do it again this time.  It’s her only chance to ever be Speaker again.  If the Democrats somehow manage to retake control of the House, she needs Obama’s support.  She’ll shake her fist and say things like any health care bill “without a strong public option will not pass the House” — and then turn around and force her caucus to walk the plank.

Progressive Democratic “leaders” like Raul Grijalva will fold once again like a house of cards if need be — and they know it.  Today, the Huffington Post reports:

Progressives Won’t Criticize Obama For Proposed Social Security Cuts

Grijalva and Rep. Sheila Jackson Lee (D-Texas), a vice chair of the caucus, defended the president for signaling he would be willing to take a look at changes to the programs, arguing there are ways to restructure entitlement spending to save money without hurting beneficiaries.

Translation: They’ll wait for the whip count to see if their votes are needed, and if not, they can let somebody else be the “rotating villain” this time. But just in case, they’re leaving the back door open for themselves.

What we’re watching is the death of the Democratic Party.  Or, at least the Democratic Party as most of us have known it.  The one that has taken its identity in the modern era from FDR and the New Deal, from Keynesianism and the social safety net.  Despite any of its other shortcomings (and they are myriad), the Democratic Party has stood as a symbol for commitment to these principles.   As recently as 2006, Democrats retook the House in a surprise wave election because the public feared that George Bush would destroy Social Security, and they trusted the Democrats over Republicans to secure it.  Just like George Bush, Obama now wants to “save” Social Security….by giving those who want to burn it to the ground the the very thing they’ve wanted for decades. 

Any member of any party who participates in this effort does not deserve, and should not get, the support of anyone who values Social Security and cares about its preservation.  The amount of damage that the Democrats under Obama have been able to do has been immeasurable, by virtue of the fact that they are less awful that George Bush.  But where George Bush failed, Obama will probably succeed. 

Which means we’re watching another casualty here:  Democracy.  Or at least, the illusion that we live in a democratic society.  The public, regardless of party,  overwhelmingly opposes cuts to Social Security and Medicare. But elected officials of both parties are hell-bent on conspiring to bring the programs to an end.  They seem to have come to grips with a fact that the public has not: their tenure in office depends on carrying out the wishes of oligarchical elites. 

There is only one thing you can reasonably conclude as you watch the political theater that is transpiring:  what the voting public thinks really isn’t all that important.  And to the extent that it does matter, it can easily be channeled by those with sufficient money to pay the tab.  Samuel Johnson said that patriotism was the last refuge of scoundrels, but in our modern era, that honor goes to tribalism.  The list of horrors that people found intolerable when George Bush was in office, but are now blithely accepting because  “Sarah Palin would be worse,” grows longer every day. 

We’ll fight this, because it’s the right thing to do.  We will probably lose. But we will make it as painful as possible for any politician from any party to participate in this wholesale looting of the public sphere, this “shock doctrine” for America.  And maybe along the way we’ll get a vision of what comes next.  Because what we believe in as Americans, and what we stand for, is not something the Democratic party represents any more.

© 2011 FireDogLake.com 

The Precipice Of Economic Failure

Do Republicans really care if the economy takes a tumble? Do they care if families are unable to send their kids to college, if public schools are unable to adequately teach our children, if the shrinking middle class have wages that are stagnant on top of the fact that healthcare costs are increasing, college tuitions and food prices are sky rocketing and having an effect of lowering wages even more? 

No. Their stance on this debt ceiling debate is proof positive (not to mention Eric Cantor’s portfolio is increasing on the fact that the debt ceiling hasn’t passed). Washington Post columnist Eugene Robinson put it best.

There’s no dispute about where we need to go. The question is what path to take.

Clearly, the federal government cannot continue spending at a rate of 25 percent of GDP while taking in revenues that equal less than 15 percent of GDP, as is the case this year. We would reach the point where debt service crowds out health care, education and other priorities dear to progressives’ hearts. Major investments the nation desperately needs to make — for infrastructure and energy research, for example — would be impossible. Decline would be inevitable. 

The way to avoid this dystopian future is to bring spending and revenues more into balance. Yes, there will be some pain and sacrifice. But it is not necessary — nor is it wise — to heap a disproportionate share of the burden onto the backs of the poor, the elderly and the battered middle class.

Economists around the United States of both parties are all in agreement that the GOP’s stance of only cutting entitlements without raising revenue does nothing but hurt this economy. In order to turn this economy around, we need to employee people who are then able to spend money, which in turn will help businesses and help create more jobs.

Their plan for resolution to our financial crisis, cut as many government jobs as possible, cut our social safety net (Medicare, Medicaid, and Social Security) is not the right plan.  

The fact is, corporate tax rates that are being protected by GOP, and the loop holes used by the wealthiest in this country to skirt around the IRS and pay virtually no taxes is where we need to look. 

The nominal corporate tax rate of 35 percent is a joke, since big corporations don’t actually pay that much; those loopholes, too, could be eliminated. Then we could look at measures that would have broader impact — say, hiking or eliminating the income cap for Social Security payroll contributions. 

The point is that it doesn’t take much imagination to get within shouting distance of $2 trillion in deficit reduction over 10 years — looking at the revenue side alone. That’s half of the $4 trillion that both Republicans and Obama have set as a target. 

There would have to be an equal amount of spending cuts. But what sense does it make to begin with the small slice of the pie — less than 20 percent — that is being called “discretionary” spending? It’s just not possible to find enough savings there. 

Also, Eric Cantor’s plan for all cuts without revenue increase is counterintuitive. In Steven Benen of Washington Monthly’s latest op-ed he writes how this plan is wrong for our economy.

The more pressing problem with Cantor’s contention is that it’s largely Keynesian — and Cantor hates Keynesian economics. Jon Chait had a good item on this. 

[I]f you think the state of the business cycle should influence your fiscal policy, then you should oppose any spending cuts at all, and the tax cuts you support should be as progressive as possible. Alternatively, if you’re worried about the incentive effects of tax cuts on business and the rich, then you don’t care about whether unemployment is high or low at any particular moment. Cantor’s position, which is the universal Republican position, is pure nonsense by absolutely any standard, including the most conservative standard. 

That’s even aside from the fact that nobody is proposing an immediate tax hike. Democrats are perfectly happy to phase in any tax increase slowly. Cantor’s argument is nonsense economics piled on top of a factual misrepresentation.

Most of Cantor’s arguments are.

Regardless, Chait’s point is an important one. Why does Eric Cantor oppose any and all tax increases? Because, as he sees it, the economy is weak, and if there are tax increases, it would take money out of the economy and put into the Treasury. That would be wrong, Cantor believes, because we want that money in consumers’ hands, generating economic activity. 

In the next breath, Cantor then argues that he also wants spending cuts, taking money out of the economy and putting it into the Treasury.

Do you see the disconnect? Well, you probably do, but the Majority Leader doesn’t.

Let’s put this another way: the policy reasoning that tells Eric Cantor that tax increases are a bad idea is the same policy reasoning that makes sweeping budget cuts a bad idea, too.

The fact is Republicans are sending us down a path of economic despariety. The median income of middle and lower classes have stagnated and with their proposed cuts will further reduce incomes and make things like college for our children an impossibility.

Only a select few are feeling the effects right now, but I hope it will not come for the majority of Americans to feel these repercussions before we realize the disastrous path our choices have taken us down.

Would an Economic Collapse Benefit the GOP?

My answer is yes and I will tell you why. Over the last two years leading up to the 2010 election, their main complaint (meaning GOP and the Tea Party) has been government is too big. The only way to grow the economy is to get rid of government waste, i.e., Medicare, Medicaid, Social Security, and funding for things like education. 

In my previous posts I have written about their plan on how to do this, which is called Starve the Beast. They want to create such an economic disaster through cutting of taxes personal and corporate so low that the economy can’t continue on its present course.

They have been very successful in their goal. Through the last decade, which began with a surplus, they cut taxes on the wealthy, slashed corporate tax rates to the point some are paying net negative (actually receiving refunds from the IRS), instituted Medicare Part D that was unfunded and was a huge give away to big PhRMA, on top of fighting 2 wars that were not paid for. 

Judging by Republicans actions in the last few weeks over the debt ceiling debate, it is my belief that they feel they would benefit by pushing talks to the last minute and creating turmoil in our financial system, which would result in rising interest rates on America’s debt.

This would put our economy in such a bind that it would create a scenario where our government could no longer continue Social Security payments, Medicare and Medicaid benefits, and cause already financially burden local municipalities who are already dependent on government subsidies to collapse and default on pension payments for retired government workers (which has already occurred in some areas that were already struggling). 

I wonder if this scenario does come to pass, would the Tea Party followers and social conservatives finally get it. When their parents are no longer able to reside in their own homes because of lack of government benefits or no longer have access to vital healthcare or be eligible to go to residential facilities or nursing homes, will it finally sink in who Republicans really work for?

Republican’s Corporate and Individual Tax Cuts, Job Creation and Wages

In order to raise the debt ceiling which will prevent America from defaulting on our debt, Republicans are insisting on cutting spending by slashing entitlement programs like Medicare and Medicaid while at the same time refusing any revenue increases like ending subsidies on gas and oil or tax increases on the wealthy and corporations. The blanket reason for this they say is raising taxes on the “job creators” will have a negative effect on our economy and will not create new jobs. 

Well, I am here to tell you that is simply wrong. If keeping the tax rate on the above mentioned people at the lowest levels in decades created jobs, the previous decade should have had a plethora of job creation. That would mean our jobless rate should be well below 5% (now it is maintaining at around 9%, however, in minority communities it is much higher). The fact is, under the Bush tax cuts, job creation has been at its lowest.  (click to enlarge graph below)

Also, the wages for the middle and lower classes have stagnated. Pat Garofalo reported:  Over the 2000 to 2009 period, workers experienced a “lost decade,” with incomes falling by nearly five percent and wages hardly growing at all. And according to Jed Graham, the last decade in terms of real wages was actually worse than the Great Depression: 

The increase in total private-sector wages, adjusted for inflation, from the start of 2001 has fallen far short of any 10-year period since World War II, according to Commerce Department data. In fact, if the data are to be believed, economy wide wage gains have even lagged those in the decade of the Great Depression (adjusted for deflation). Over the past decade, real private-sector wage growth has scraped bottom at 4%, just below the 5% increase from 1929 to 1939, government data show. 

Myths About Tax Rate: Who Pays and Who Does Not

I have been in an ongoing debate with family and friends about our tax code and the inequalities that exist. To push the idea that the wealthy carry most of the tax burden, people love to say that half of Americans do not pay anything in taxes, and technically they are correct. I have been researching this issue looking at non-partisan groups that evaluate our tax code by using official data provided by the IRS and other federal agencies. Here is what I found. 

Tax Policy Center reports that 47% of American households owed no income tax for 2009. The number is up from 38 percent in 2007, and it has become a popular talking point on cable television and talk radio. But that 47% is decieving and the conservative cable/radio shows fail to go into. Here is a breakdown by economics columnist David Leonhardt

Focusing on the statistical middle class — the middle 20 percent of households, as ranked by income — underlines this point. Households in this group made $35,400 to $52,100 in 2006, the last year for which the Congressional Budget Office has released data. That would describe a household with one full-time worker earning about $17 to $25 an hour. 

Taking into account both taxes and tax credits, the average household in this group paid a total income tax rate of just 3 percent. A good number of people, in fact, paid no net income taxes. They are among the alleged free riders.

But the picture starts to change when you look not just at income taxes but at all taxes. This average household would have paid 0.8 percent of its income in corporate taxes (through the stocks it owned), 0.9 percent in gas and other federal excise taxes, and 9.5 percent in payroll taxes. Add these up, and the family’s total federal tax rate was 14.2 percent.

I realize that it’s possible to argue that payroll taxes should be excluded from the discussion because they pay for benefits — Social Security and Medicare — that people receive on the back end. But that argument doesn’t seem very persuasive. 

Why? People do not receive benefits equal to the payroll taxes they paid. Those who die at age 70 will receive much less in Social Security and Medicare than they paid in taxes. Those who die at 95 will probably get much more. 

The different kinds of federal taxes are really just accounting categories. At the end of the day, the government has to cover the cost of all its operations with revenue from all its taxes. We can’t wish our deficit away by saying that it’s mostly a Medicare and Social Security deficit. 

If anything, the government numbers I’m using here exaggerate how much of the tax burden falls on the wealthy. These numbers fail to account for the income that is hidden from tax collectors — a practice, research shows that is more common among affluent families. “Because higher-income people are understating their income,” Joel Slemrod, a tax scholar at the University of Michigan says, “We’ve been overstating their average tax rates.” 

State and local taxes, meanwhile, may actually be regressive. That is, middle-class and poor families may face higher tax rates than the wealthy. As Kim Rueben of the Tax Policy Center notes, state and local income taxes and property taxes are less progressive than federal taxes, while sales taxes end up being regressive. The typical family pays a lot of state and local taxes, too — almost half as much as in federal taxes. 

There is no question that the wealthy pay a higher overall tax rate than any other group. That is an American tradition. But there is also no question that their tax rates have fallen more than any other group’s over the last three decades. The only reason they are paying more taxes than in the past is that their pretax incomes have risen so rapidly — which hardly seems a great rationale for a further tax cut.