Out of Touch, Out of Mind

The deficit burble in the beltway appears to be happening without the consent or input of the governed. If polls are any indication, the congress and the White House are moving the exact opposite direction of public will. First, it’s been clear for some time that the majority of people think raising taxes on the rich and letting the Bush Tax Cuts for Billionaires go away is the correct prescription. They thought that when Obama joined the Tax Cuts for Billionaires club and their opinions still haven’t changed.

Alarmed by rising national debt, Americans are clear about how they want to attack the federal government’s runaway budget deficits: raise taxes on the wealthy and keep hands off Medicare and Medicaid.

At the same time, the new McClatchy-Marist poll of the nation found that voters don’t want the debt ceiling raised, despite warnings that failing to do so would force the government into default and the economy into a tailspin.

By a 2-1 ratio, voters support raising taxes on yearly incomes above $250,000.

It’s even more clear what voters think about the slashing and hacking of  Medicare, Social Security, and Medicaid.  It’s a big ol’ resounding Hell NO!!

The Post-ABC poll finds that 78 percent oppose cutting spending on Medicare as a way to chip away at the debt. On Medicaid — the government insurance program for the poor — 69 percent disapprove of cuts.

There is also broad opposition to cuts in military spending to reduce the debt, but at somewhat lower levels (56 percent).

In his speech last week, the president renewed his call to raise tax rates on family income over $250,000, and he appears to hold the high ground politically, according to the poll. At this point, 72 percent support raising taxes along those lines, with 54 percent strongly backing this approach. The proposal enjoys the support of majorities of Democrats (91 percent), independents (68 percent) and Republicans (54 percent). Only among people with annual incomes greater than $100,000 does less than a majority “strongly support” such tax increases.

Let me first suggest a few things.  First, remove deductions on second mortgages, boats, and overpriced McMansions.  If it’s not an average family home, it doesn’t need a tax subsidy.  Second, equally tax investment and labor income.  There should be no tax privileges given to rich people that inherit wealth and then spend their days sitting around reaping profits from speculation.   I agree with Katrina Vanden Heuvel of  The Nation that calls this policy “Tinkle Down” economics.  It’s really bad policy and it’s supremely unfair.

Then in December, the Obama-GOP deal extended the Bush tax cuts for the wealthy at a two-year cost of about $70 billion a year. Now Congress is making $40 billion in painful budget cuts this year. Meanwhile, President Obama, Representative Paul Ryan and others are battling over budgets and tax plans for the next decade and beyond. For the most part, what’s been missing from these suffocatingly narrow discussions is an easy source of income: taxing investments like ordinary income.

The folks over at Responsible Wealth believe not only that the Bush tax cuts on upper-income folks should be ended but also that money made from money (i.e., capital gains and dividends) should be taxed like money made from work, not at the preferential 15 percent rate. They have a simple calculator that calculates your tax savings using just three numbers from your tax form (or from your head), and an interactive graph with videos of people talking about their taxes. It’s worth checking out at responsiblewealth.org.

Taxing capital gains and dividends at regular income rates would save $84.2 billion in 2011 alone, twice the amount we’re cutting from this year’s budget.

I guess Congress thinks we’re all dumb Americans who can’t do math.  However, people must be getting tired of the media meme on how brave and courageous Paul Ryan is by suggesting we throw grandma from the train.   Even his own district isn’t buying it. About time.

During a town hall meeting in Milton, a constituent who described himself as a “lifelong conservative” asked Ryan about the effects of growing income inequality in our nation. The constituent noted that huge income disparities contributed to the Great Depression and the Great Recession, and thus wanted to know why the congressman was “fighting to not let the tax breaks for the wealthy expire.”

Ryan argued against “redistribut[ing]” in this manner. After the constituent noted that “there’s nothing wrong with taxing the top because it does not trickle down,” Ryan argued that “we do tax the top.” This response earned a chorus of boos from constituents:

CONSTITUENT: The middle class is disappearing right now. During this time of prosperity, the top 1 percent was taking about 10 percent of the total annual income, but yet today we are fighting to not let the tax breaks for the wealthy expire? And we’re fighting to not raise the Social Security cap from $87,000? I think we’re wrong.

RYAN: A couple things. I don’t disagree with the premise of what you’re saying. The question is what’s the best way to do this. Is it to redistribute… (Crosstalk)

CONSTITUENT: You have to lower spending. But it’s a matter of there’s nothing wrong with taxing the top because it does not trickle down.

RYAN: We do tax the top. (Audience boos). Let’s remember, most of our jobs come from successful small businesses. Two-thirds of our jobs do. You got to remember, businesses pay taxes individually. So when you raise their tax rates to 44.8 percent, which is what the president is proposing, I would just fundamentally disagree. That is going to hurt job creation.

This does not hurt job creation.  It didn’t hurt job creation in the Eisenhower years.  It didn’t hurt job creation in the Clinton Years.  Also, remember Reagan presided over the biggest tax increase in history, do they argue that job creation was rotten by the end of the Reagan years?  This is a ridiculous argument based in that old Laffer Curve and Supply Side, VooDoo economics that they just keep resurrecting.  Even two of Reagan’s advisers–Bruce Bartlett and David Stockman–are out decrying that fairy tale. It’s simply not backed by history, disproved by past economic performance, and insane.

The Democratic Party and the White House should be reading these poll numbers and discussing the facts RIGHT now. They should–at the very least–end the Bush/Obama preferential tax treatment for the rich.  Paul Ryan and his ilk need to be outed for the charlatans they are on every talk show.  I have no idea why this isn’t being done unless there’s a huge beltway conspiracy between the media, the Republicans, and the Democrats to carry on with no regard to voter’s wishes or interests.

Historical Tax Rates on the Richest via Washington Monthly

18 Comments on “Out of Touch, Out of Mind”

  1. Peggy Sue says:

    I hate to say this but I “do” think there’s conspiracy going on, a major propaganda campaign to convince the public that our financial woes are all about social spending and union greed rather than addressing the widespread looting that’s been going on by corporations/financial institutions/the mega rich [while the Government winks and nods]. This is been going on for the last 30 years, but then was pushed into overdrive in the last decade.

    Pitting workers against workers [the public vs private sector] has been effective when you hear Tea Party types screaming about the “socialist” in the WH. Barack Obama is a lot of things but he’s no socialist. He’s been nothing but an enabler for Republican myth-making.

    I watched a really disturbing video last night about the economic conditions in Ireland, the Celtic Tiger brought down by staggering debt. Ireland still has ‘Poor House” laws on the books. And people, so far around 300+, have been jailed for unpaid mortgage and credit card fees. Ireland has a population of approx 4 mil. Their underwater rate is pushing 30%. The middle class is being squeezed, social services and safety nets shredded.

    Sound familiar?

    This is going on all over. The international banks and financial institutions have been bailed out for ridiculous Ponzi scheme investments. The developers have been bailed out, leaving ghost estates in their wake. And the Irish middleclass is being saddled with impossible debt in the form of lifetime tax increases, while public assets are being sold off left and right.

    Perhaps the saddest detail of the vid was the information on ‘immigration wakes’ coming back into style because as was the case during the Great Famine, people are leaving the country. Only this time it’s to escape imprisonment for unpaid debts.

    It’s unspeakable what’s going on, and Ireland could very well be our own future if the public doesn’t wake up.

    • There definitely is a deeply concerted propaganda effort going on. The oligarchy isn’t even trying to hide it.

    • bostonboomer says:

      Ireland never should have agreed to the bailout. They got royally screwed by the EU.

    • paper doll says:

      a major propaganda campaign to convince the public that our financial woes are all about social spending and union greed rather than addressing the widespread looting that’s been going on by corporations/financial institutions/the mega rich

      Well put. As far as I can tell this ” narrative ” is really the only topic in the media…it informs dancing with the stars even

      • bostonboomer says:

        And everyone in the media is pushing the meme that Social Security and Medicare are “entitlements” (i.e., welfare) and that these programs have caused the deficits–not low taxes on corporations and billionaires or ten long years of wars and overspending on defense.

      • paper doll says:

        Indeed. The media is the billionaire’s play thing and organ. They will keep it on message.

      • Sophie says:

        I was just gonna say… I’ve been watching one of the cable news stations and they’re showing the polls of how many Americans are against cutting Medicare and Medicaid (like almost all of us, both sides of the aisle, even the TP). Yet the talking heads go on to say that we have to cut these programs! Obviously, that’s the message they’re being told to spread. Advertising dollars don’t come from us. (You can also tell they’re already counting the billion OFA says they’re going to raise.)

  2. bostonboomer says:

    I’m glad that constitutent spoke up to Ryan, but his district is overwhelmingly Democratic. What I don’t get is why they voted him in in the first place.

  3. bostonboomer says:

    In liberal Massachusetts, the legislature is trying to remove the right of public employees to collectively bargain over health care benefits. Huge fight coming.

  4. mjames says:

    It can be so disheartening, although every once in a while there’s a flicker of understanding. A few days ago a gym buddy of mine (a 66-year-old conservative Republican evangelical or fundamentalist) forwarded an email going around among his friends, which promoted, among other things:
    1. Term limits for members of Congress.
    2. No health care for members of Congress. They’d have to sign up for private insurance just like us peons. Immediate cancellation of any programs currently in effect.
    3. No pensions for members of Congress. They’d have to contribute to and use Social Security just like us peons. Any money currently in their pension plans to be turned over to Social Security immediately.
    I think perhaps the Tea Party has less power than the media and TPTB want to want to present as truth. It’s a diversion in the main. Most people know what’s happened and they’re fuming. Ryan should be out shortly, followed shortly thereafter by the ouster of whoever follows him, if that person doesn’t represent the constituency.

    Still, what Obama has wrought by throwing away Democratic first principles is truly horrific. That someone like Ryan could ever gain any support is a sad commentary on the Democratic Party and the state of the country.

  5. Jadzia says:

    Is there any real reason (that an economist would know better than I would) NOT to tax investment (i.e., sitting-on-your-butt) income at the 28-33% rate, and taxing WORK at 15%?

  6. fiscalliberal says:

    We are all fighting each other with no balanced approach being proposed. Obama seems to be incapable of guiding discussion.

    Dak – do you (or some articles) have some insight into what happens if the US Debt is defaulted. If we are going to play brinksmanship, we should know the consequences

    • dakinikat says:

      I actually don’t know because it’s always seem far fetched that we would purposefully tank the country. It would seriously tank the dollar which is why gold is setting record highs. It would drive the interest rate up on everything. It is hard to think that US elected officials would do this. It is treason imho.

  7. Deborah says:

    people of Ryan’s ilk have no problem redistributing money the other way…from the poor and middle class to the pockets of the rich, do they?