Lemkin

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Even more reason to do nothing. The joy of gridlock will hike capital gains taxes up to 25% in the absence of any actions on the part of Congress. Barring anything actually, you know, happening in the Congress, Mitt and other Masters of the Universe will finally see something approaching a reasonable tax rate. Very Serious People will tell you otherwise, but for the next few years gridlock is decidedly Our Friend.

Why They Fail

Mitt Romney:

“What’s the effective rate I’ve been paying? It’s probably closer to the 15 percent rate than anything,” Romney, a GOP presidential candidate, said. “My last 10 years, I’ve — my income comes overwhelmingly from investments made in the past rather than ordinary income or rather than earned annual income. I got a little bit of income from my book, but I gave that all away. And then I get speaker’s fees from time to time, but not very much.”

According to his most recent financial disclosure statement, he earned nearly $375,000 for nine speaking engagements in 2010 and early 2011.

Well, now, this would seem to be a rather rich potential political line of attack. In one simple, straightforward stroke you have a narrative that both weakens Romney and advances important information in the broader sense relative to what’s really been going wrong in America these past ~40 years. Not only does Mitt (unsurprisingly) pay the preposterously low 15% rate on his largely-investment-based income, a rate dramatically lower than most Americans pay on far less income and but also Mitt reveals that this is aside from the entirely trivial, “not very much” money he made doing speaking engagements, itself a value fully 10 times the median income in these United States.

Naturally, The Democrat thinks it’s high time to leave Mitt alone on such issues:

At least one top Obama surrogate is pushing for the party to shift the balance of its attacks on Mitt Romney away from his days in private equity and on to his time in the public sector. […] “Bain is a little complicated for people to follow.”

Of course, of course. Who among us can possibly understand that Mitt pays a fraction of the taxes you do on wealth so fucking inexhaustibly vast that he considers income in excess of 10 times what you probably make in a year to be “not very much.” There’s just no way to play that information such that people can follow it.

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A Vision of America

Matt Yglesias:

Loser liberalism, by implying that all fortunes are created equal, alternately goes too easy on scoundrels and comes down too hard on people who are merely prosperous. [Even “low” paid] folks working on Wall Street are making a living in an industry that’s systematically dependent on implicit and explicit government guarantees. Making a living as a patent troll is totally different from making a living as a genuine innovator. Dentists enriching themselves by blocking competition from independent dental hygenists and tooth whiteners aren’t the richest people around, but their income represents a healthy share of ill-gotten gains. A viable egalitarian politics needs to find a way to distinguish between “malefactors of great wealth” whose revenue streams need to be systematically reappropriated, and people who are just paying higher tax rates because of the declining marginal utility of income.

Reasonable people are going to disagree, of course, as to who exactly the malefactors are and what policy levers can and should be used against them. […] But there’s something deeply unimaginative, cramped, narrow, and — I think — fundamentally incorrect about this vision of America where everything is on the level, but people need to pay a top marginal income tax rate of 39.5% rather than 35%.

I’d say Yglesias has provided us with a rather trenchant distillation of just how warped our national political discourse has become.
Extending his example, the Republicans more or less universally call this potential 4.5% rise in top marginal rates on the richest of the rich “pure socialism,” or, at best, anti-American, anti-jobs, anti-whomever they’re talking to at that moment. That approach tends to be a conversation ender and the point at which the MSM says something along the lines of “we’ll leave it there.” And but also it’s unclear to me how you even address the broader issues in the economy that Yglesias rightly lays out without at least being able to have a semi-sane discussion about tax rates and revenues. If that 4.5% rise can be effectively dismissed using “socialism!” just how is a national candidate supposed to make the more nuanced and complex point?

I’d say it can’t be done in the current media environment. It is not possible. The slow motion implosion that is the GOP’s series of primary debates is a symptom, not a cause. The underlying rot is fundamental to the discourse itself; the growing and brazen willingness to use that rot for personal gain (e.g. by lying your ass off to score temporary political points even within your own party) is simply the work of our old friend the invisible hand. Fix the discourse and you’ll functionally eliminate the lying and its various outgrowths, such as but not limited to uniform one party partisan intransigence that the predominant national discourse inevitably blames on both political houses in Congress. A truly honest assessment could never reach such a illogical conclusion as that. Obviously one party is more to blame in any gridlock situation. Say so. You’ll put the Daily Show right out of business.

Considered relative to our long-term national health, the truly successful national candidate needs to disrupt the discourse itself. On the surface, this would seem a relatively straightforward thing for a President to do (despite the ineffective nature of Presidential speeches)…Obama did make some early feints in the direction of cutting off their air supply but ultimately (and predictably) chickened out. And, frankly, a frontal attack that simply refuses to speak to FOXnews (or similar organizations) will never work; journalists love nothing better than circling the wagons over perceived slights. You’ve got to destroy their memes by making them functionally irrelevant and you cannot do that by simply not talking to anyone but your chosen scribes.
If Obama really wants to be the modern TR, I’d say that’s where to start: with the discourse. Be smart. Explain, but not in novel form. Short, declarative sentences and concise paragraphs. Pick one thing; this cycle it’s going to be an outgrowth of what Yglesias is distilling above. Explain that. Repeatedly and in simple language. People already understand it in a deep sense, but they need you to give those feelings voice (Elizabeth Warren is proving the true power of such an approach; the application of the traditional GOP meme(s) actually increased her popularity). Explain. Say nothing else. If they want to show the President, some of this stuff will have to be included. Never leave that message behind, even for a second. Also provide it to your Congressional allies. Anyone who goes off script loses financial support, chairmanships, or whatever idiotic perks matters most to them. It’s our rotted discourse or the country. Choose one.

"President Obama is replacing our merit-based, opportunity-based society with an entitlement society. In an entitlement society, everyone is handed the same rewards, regardless of education, effort and willingness to take risk. That which is earned by some is redistributed to others. And the only people to enjoy truly disproportionate rewards are the people who do the redistributing — the government."

— Mitt Romney, accurately describing the inevitable and country-destroying results of going from a 35% top marginal rate to a 39.6% top marginal rate. Let’s not have anyone ask him about or call him on this issue specifically. Shrill.

"The surtax would impact around 345,000 taxpayers, roughly 0.2 percent of taxpayers, or one in 500 of them. Those people would pay on average an additional 2.1 percent of their overall income, or just over 1/50th of that overall income, in taxes.

In a majority of states, only one-tenth of one percent, or one in 1,000 taxpayers, would pay this surtax.

And how many people would benefit from the payroll tax cut? According to the group, around 113 million tax filing units — either single workers or families that include more than one worker — would see their payroll tax cut extended. That’s a lot of people — well over 113 million workers, in fact."

— Citizens For Tax Justice runs the numbers on the proposed funding mechanism that would extend the payroll tax “holiday” currently scheduled to end December 31, 2011. I don’t have to remind you that Republicans are categorically against this tax increase, because it harms the “job creators” out there in that 0.2 percent.
The vast majority of the GOP’s 1% constituency wouldn’t even see so much as a dime’s difference, whilst everyone earning a paycheck would stand to receive ~$1000 dollars more in an aggregate demand crisis. So, of course, we prevent the tiny increase for a tiny fraction of the richest people on Earth in exchange for a further insult to our tottering economy when the payroll tax extension is worth ~$250 billion to our economy. Great policy.

Upstairs/Downstairs

John Kyl (R, AZ), Saturday:  [tax increases are] the wrong medicine for our ailing economy, [...] [any possibility of a potential future increase only serves to] put a wet blanket over job creation and economic recovery.
John Kyl (R, AZ), Sunday:  The payroll tax holiday has not stimulated job creation. We don’t think that is a good way to do it. [Thus we want to raise taxes on every American that currently receives a paycheck]. The best way to hurt economic growth is to impose more taxes on the people who do the hiring. As a result, the Republicans have said, ‘Don’t raise the existing tax rates on those who do the hiring.’ [That is to say, the 1%. Who aren't, uh, actually hiring. But still. Don't raise THEIR taxes. Raise the 99%'s taxes. Only that will get the old economy going again!]
Lemkin:  Again, the MSM will see no dissonance whatsoever in these positions. Of course raising taxes on most everyone in the country to avoid a tiny tax increase on a tiny fraction of the country makes the best economic sense in an aggregate demand-based economic downturn. What other conclusion is even possible given this data? Surely both sides are at fault for low aggregate demand in the 99%; this is only fixable if both sides agree to lower taxes on the 1%. Again: what other conclusion is even possible?

The Rub

In all the rush to cast a pox on both houses, most Serious People seem to be missing the underlying point here.

The Republicans want tax rates to remain at current (i.e. Bush/Obama tax cut) levels or to be lowered. To do that without collapsing the Federal Government, they have to end Medicare. Period, the end, no other way to do it. Zero the non-military discretionary budget and you still aren’t getting particularly close. Thus, this:

…committee Republicans offered to negotiate a plan on the other two health-care entitlements—Medicare and Medicaid—based upon the reforms included in the budget the House passed earlier this year [this is what is commonly referred to as the “Ryan plan”; it ends Medicare but leaves in place a voucher system which seniors would use to try to buy coverage on the open market. Good luck with that, seniors. Anyone paying attention will recall that this is the issue Medicare was created to solve. At any rate, under Ryan’s plan everyone that fails to find coverage they can afford with regard to the differential between voucher and actual cost: go die in the streets.]

Republicans on the committee also offered to negotiate a plan based on the bipartisan “Protect Medicare Act” authored by Alice Rivlin, [which would allow seniors to] choose from a list of Medicare-guaranteed coverage options, similar to the House budget’s approach—except that Rivlin-Domenici would continue to include a traditional Medicare fee-for-service plan among the options.

So, the GOP “choices” here are: completely voucherize and functionally end Medicare under the Ryan plan, or vastly extend Medicare Advantage and get to Ryan’s plan stepwise. After all, Medicare Advantage has bee such a smashing success; it’s the plan that delivered a ~14% more costly version of Medicare, the program it sought to “revolutionize.”

Democrats, on the other hand, believe that a return to Clinton era tax rates fundamentally solves the near- to mid-term budget issues. This is widely known to be true; it is also known to be true by Republicans, who are simply using the current “crisis” (which, not coincidentally was invented by them during the run-up and denouement of the debt ceiling “crisis”) as an excuse to attempt various long-held policy goals, most notably: ending Medicare.

Long term issues in our budget do indeed exist, these can only be handled by bringing health care costs under control; Democrats wish to work towards that goal, Republicans choose to address the issue by simply ending that program entirely. This is the point at which it’s worth noting that, if we paid for medical care the per-capita rates that our next-nearest “competitor” pays, we’d be facing surpluses as far as the eye can see. Right now.
But, a massive step in that “solvency” direction would, in fact, be Medicare for all. Instead, the GOP demands Medicare for none or they blow up the country. Those are your two GOP-approved choices. They simply don’t want to talk about it in public, because eliminating Medicare is a wildly unpopular position to hold. You’d think someone in the media would mention something as explosive as this from time to time. Doesn’t ever seem to come up.

Clearly, though, both parties are equally at fault here. Truly a triumph of 21st Century Journamalism.

"the current hand wringing about the administration’s pledge [not to raise sub-$250k tax rates] feels like a distraction…especially given that we could achieve medium term sustainability without going there."

— Jared Bernstein agrees that we can achieve neutral debt/GDP ratios without savaging middle class rates. Serious People sure love to wring hands. It’s as though they have a vested interest in the tax rates of the trans-$250k class. Oh, right.

Again with the Middle Class →

It’s almost as if our media aristocracy of inbred Serious People have a vested interest in seeing to it that the middle class, and only the middle class, gets soaked in any economic “compromise.” Amidst reacting to a particularly poor NYT Magazine piece, Dean Baker nails it:

…the piece too quickly dismisses the possibility of getting substantial additional tax revenue from the wealthy. It presents the income share for those earning more than $1 million as $700 billion, saying that if we increase the tax rate on this group by 10 percentage points (from roughly 30 percent to 40 percent), then this yields just $70 billion a year.

However, if we lower our bar slightly and look to the top 1 percent of households, with adjusted gross incomes of more than $400,000, and update the data to 2012 (from 2009), then we get adjusted gross income for this group of more than $1.4 trillion. Increasing the tax take on this group by 10 percentage points nets us $140 billion a year. If the income of the top 1 percent keeps pace with the projected growth of the economy over the decade, this scenario would get us more than $1.7 trillion over the course of the decade, before counting interest savings. Of course there would be some supply response, so we would collect less revenue than these straight line calculations imply, but it is possible to get a very long way towards whatever budget target we have by increasing taxes on the wealthy.

Shocking. And but also, Baker smartly includes the most important issue in any truly serious discussion of American economics and the proper balance of same: the cost of health care:

We pay twice as much per person as people do in other wealthy countries. Since more than half of the tab for our health care is paid by the government, our broken health care system becomes a budget problem. If we paid the same amount per person for our health care as people in other wealthy countries, we would be looking at long-term budget surpluses rather than deficits. The reason that we pay so much more is not that we get better outcomes – we don’t generally. Rather it is that we pay too much to drug companies, hospitals, medical specialists, and others in the health care industry.

Baker’s being generous. We spend as much as five times more per capita than the best performing countries do, all of which achieve uniformly better outcomes than we do. Obviously, the only possible answer here is just get Big Guvmint out of the way so the poor can kindly go die in the streets. It’s the only serious answer to the problem. Well, that and lowering taxes on the wealthiest 1% of the country.

Read the whole thing.