A real conversation starter: Taxing the rich

By Nicholas Wilbur

Talking about talking is a phenomenon in politics that has no equal.

We all smell smells and taste tastes. We sing songs and say sayings. And though thinking about thinking may be an exercise only the philosophically inclined among us entertain as a form of entertainment, we all think thoughts – when we're not busy dreaming dreams, puzzling over puzzles, believing in beliefs, supposing suppositions and fantasizing about fantasies.

Beyond our promises, however sincere, to call mom on Sunday, Americans don't generally talk about talking. If we want to talk, we talk – or "converse," if we're part of the "professional elite," or "conversate," if we're card-carrying members of the Tea Party.

When it comes to the big stuff, politicians don't want to have a conversation, they want to have a conversation about having a conversation. 

 

source: Kevin Kallaugher

When Rep. Paul Ryan proposed a plan to turn Medicare into a voucher program in April, he was spurned by the American public and shamed into silence by the leadership of his own party, but he nonetheless was commended by many on the Right for "starting a conversation" about the future of entitlements. Unfortunately for Ryan, polls showed that his plan to "end Medicare as we know it" wasn't the best way to start that conversation, which is why it was so short-lived. The only conversation Ryan actually started was a conversation about starting a conversation.

Similarly, Texas Gov. Rick Perry, the current co-frontrunner (with Mitt Romney) in the GOP's presidential primary race, said during a debate on Sept. 12, 2011 that "it's time to have a legitimate conversation in this country about how to fix [Social Security]."

He was correct: it is time. But describing an overwhelmingly popular anti-poverty program for seniors as a "Ponzi scheme" definitely isn't the best way to begin that conversation. As we've seen, there was no "legitimate conversation" that came out of his call to action. There was only nitpicking between pundits over whether Social Security does or doesn’t fit the definition of a Ponzi scheme.

President Obama's call on Congress to pass the American Jobs Act is another example of a politician trying to start a conversation. 

Let us not pretend that his American Jobs Act, or the tax increases on the rich he says should pay for it, has any chance of passing in the Republican-controlled House of Representatives. It doesn't.

"It could, however, be the catalyst for deal-making," according to The Economist ("No More Mr Nice Guy," Sept. 24, 2011). 

In "Hunting the Rich," also from the Sept. 24 edition, The Economist writes: 

In general, this newspaper's instincts lie with small government and against ever higher taxation to pay for an unsustainable welfare state. We reject the notion, implicit in much of today's debate, that higher tax rates on the wealthy are justified because of the finance industry's role in the crunch: retribution is a poor rationale for taxation. 

That said, The Economist gives "three good reasons why the wealthy should pay more tax": 

First, the West's deficits should not be closed by spending cuts alone. Public spending should certainly take the brunt: there is plenty of scope to slim inefficient Leviathan, and studies of past deficit-cutting programmes suggest they work best when cuts predominate. Britain’s four-to-one ratio is about right. But, as that ratio implies, experience also argues that higher taxes should be part of the mix. In America the tax take is historically low after years of rate reductions. There, and elsewhere, tax rises need to bear some of the burden. 

Second, there is a political argument for raising this new revenue from the rich. Spending cuts fall disproportionately on the less well-off; and, even before the crunch, median incomes were stagnating. Meanwhile, globalisation has been rewarding winners ever more generously. Voters' support for ongoing austerity depends on a disproportionate share of any new revenue coming from the wealthy.

*****

[T]he third argument for raising more money from the rich is that it can be done not by increasing marginal tax rates, but by making the tax code more efficient... Getting rid of the deductions would simplify the code and raise as much as $1 trillion a year. Since the main beneficiaries of the deductions are the wealthy, richer folk would pay most of that. And since marginal rates would be untouched (or reduced), such a reform would do less to discourage them from creating wealth. 

The result would be "[a] larger overall tax take from the rich, without hurting the dynamism of the economy."

Our elected leaders would be wise to take The Economist's advice, as reforming the entire tax code – "curbing exemptions, credits and deductions" – would save $1 trillion of the $1.5 trillion in spending Congress is tasked with cutting by November 23. It lowers the debt without slowing economic growth or punishing "job creators."

You can't take The Economist's words as the Gospel – especially in a literal context, as there's very little "good news" in the whole news magazine – but its (anonymous) editors are correct. Taxing the rich is fair. Budget cuts hit the less-well-off more disproportionally than the wealthy. And common sense says balancing the budget requires balanced sacrifice.

The president has already agreed to trillions of dollars in budget cuts over the next decade. Politically, he has made his sacrifice, and by doing so he's given himself the credibility necessary to start that "real," "honest," and "legitimate" conversation with America, with Congress, and with the millionaires and billionaires who've been "generously rewarded" by globalization and years of "historically low" tax rate reductions. 

Obama isn't talking about talking about tax increases. He's actually starting a conversation. In contrast to Perry's attack on Social Security as being a fraudulent scam, or Ryan's call for destroying Medicare, the tax increases in Obama's American Jobs Act are popular, and therefore possible.

(Cross-posted at Muddy Politics.) 

Bush talked freedom, Egypt walked it

By Nicholas Wilbur

Corruption is out, liberty is in, and with the recent uprisings in Egypt and throughout the Arab world the media are hoisting up former President George W. Bush as the retrospective hero of democracy for what is turning out to be an effective "freedom agenda."

In a column published on February 3, 2011 -- titled "Was George Bush right?" -- The Economist gave a balanced overview of the conservative spin being applied to the people's backlash in Africa and throughout the Middle East:

With people-power bursting out all over the Arab world, the experts who scoffed at Mr Bush for thinking that Arabs wanted and were ready for democracy on the Western model are suddenly looking less clever – and Mr Bush's simply and rather wonderful notion that Arabs want, deserve and are capable of democracy is looking rather wise.

This is, simply put, a severely exaggerated, self-aggrandizing example of the political butterfly effect. Though we may believe that America is the beautiful epicenter from which all international reverberations of freedom and culture and wealth and greatness commence, it is also a rather shallow, ethnocentric interpretation of causality.

Can we honestly take even partial responsibility for the Egyptian people's uprising on the basis that our president invaded Afghanistan and dumped trillions of dollars into a 10-year mission of wandering the hillsides and peaking into caves in a fruitless search for the 9/11 mastermind? Are we the bricklayers of this new foundation of liberty because Bush took America to war in Iraq on the pretense of some imminent nuclear threat that eventually proved utterly false?

If that is true, then the opposite could be argued just as easily – that Bush's vacancy of the White House gave Arabs the go-ahead to fight for democracy without having to fear that the U.S. military would flatten their cities, control their borders, manage their natural resources, and play puppet master with their "democratically elected" officials.

Bush never called on the people to overthrow corrupt regimes. He did it for them or he did nothing, as The Economist noted when it contextualized the media's recent attempts to vindicate the former president:

The big thing Mr Bush did in the Arab world was not to argue for an election here or a loosening of controls there. It was to send an army to conquer Iraq. Nothing that has happened in Tunisia or Egypt makes the consequences of that decision any less calamitous... (Bush) wanted Arab democracy on the cheap. That is to say, he wanted Arab leaders to empower their people but at the same time to protect America's strategic interests. That put a limit on how far he dared to push the reliable old autocrats. And, knowing this, the reliable old autocrats thought all they needed to do to stay safely on their perches was to wait Mr Bush out.

Of course, no praise of Bush would be complete without a fair and balanced critique of President Barack Obama. Highlighting the criticism of Obama's failure to double-down on Bush's "freedom agenda" and his "lack of presumption" in foreign meddling, The Economist cited Obama's 2009 Cairo speech as proof of this administration's "diffidence" when it comes to international diplomacy. I provide a significantly larger chunk of Obama's speech than was quoted in The Economist: 

I know there has been controversy about the promotion of democracy in recent years, and much of this controversy is connected to the war in Iraq.  So let me be clear: No system of government can or should be imposed by one nation by any other. That does not lessen my commitment, however, to governments that reflect the will of the people. Each nation gives life to this principle in its own way, grounded in the traditions of its own people.

America does not presume to know what is best for everyone, just as we would not presume to pick the outcome of a peaceful election. But I do have an unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn't steal from the people; the freedom to live as you choose. These are not just American ideas; they are human rights. And that is why we will support them everywhere.

Okay, so Obama is a pacifist, perhaps even a neo-isolationist – on top of the usual criticisms spewed daily by the Republican sound machine (socialist, Communist, anti-colonialist, ististist...). But if we're competing for who can best swindle the masses into buying a series of baseless assertions about which president has done more to usher in a new era of international peace, one could brainstorm plenty of logical reasons why Obama, not Bush, is responsible for the recent removal of an Egyptian dictator.

For one, Egypt made no progress through eight years of Bush's "war on terror," and yet only a year and a half after Obama told the Egyptians to stand up for themselves, they did.

Second, while Bush half-assed lobbied the leaders of Arab nations to maybe, if they had some free time, perhaps start thinking about thinking about representing the people, it was Obama who spoke not to the comfortable dictators but to the oppressed people themselves. He threw the ball in their court, essentially saying, "We're not your liberators. You must decide how your government represents you. The United States will not jump into another international quagmire only to be abandoned by allies, rebuked by the world and bankrupted by war, again. America fought for her freedom and independence. So must you, if that is your wish."

The truth, I believe, is somewhere in between. Neither Bush nor Obama is to blame or thank for having any more than a peripheral influence on the uprising in Egypt. America is but an example of how it is possible to establish a government that is of, by, and for the people. The Egyptian people are now fighting, and dying, for that dream. If it is achieved, it will be because the Egyptian people acted.

Credit is due them, not us.

(Cross-posted at Muddy Politics.)

Another country heard from

By Mustang Bobby

One of the most respected publications in this or any country is The Economist of Great Britain. It is the closest you can get to a peer-reviewed scholarly journal on financial matters that is sold at the neighborhood newsstand. And being a journal of big business and finance, you would think it would be conservative in its bearing and its outlook. And by and large you would be right. So it comes as both amazing and comforting that they have chosen to voice their support for the election of Barack Obama:

IT IS impossible to forecast how important any presidency will be. Back in 2000 America stood tall as the undisputed superpower, at peace with a generally admiring world. The main argument was over what to do with the federal government’s huge budget surplus. Nobody foresaw the seismic events of the next eight years. When Americans go to the polls next week the mood will be very different. The United States is unhappy, divided and foundering both at home and abroad. Its self-belief and values are under attack.

For all the shortcomings of the campaign, both John McCain and Barack Obama offer hope of national redemption. Now America has to choose between them. The Economist does not have a vote, but if it did, it would cast it for Mr Obama. We do so wholeheartedly: the Democratic candidate has clearly shown that he offers the better chance of restoring America’s self-confidence. But we acknowledge it is a gamble. Given Mr Obama’s inexperience, the lack of clarity about some of his beliefs and the prospect of a stridently Democratic Congress, voting for him is a risk. Yet it is one America should take, given the steep road ahead.

Read the whole article, including their almost sorrowful review of what has happened to the John McCain they once admired. And when it comes to the Palin Factor, their revulsion for this is almost palpable.

Granted, they have their blind spots (referring to the hapless "BlackBerry" Douglas Hotlz-Eakins as "impressive") and they have their doubts about Mr. Obama's lack of experience, but in the end, they believe he's up to the challenges:

There is no getting around the fact that Mr Obama’s résumé is thin for the world’s biggest job. But the exceptionally assured way in which he has run his campaign is a considerable comfort. It is not just that he has more than held his own against Mr McCain in the debates. A man who started with no money and few supporters has out-thought, out-organised and outfought the two mightiest machines in American politics—the Clintons and the conservative right.

Political fire, far from rattling Mr Obama, seems to bring out the best in him: the furore about his (admittedly ghastly) preacher prompted one of the most thoughtful speeches of the campaign. On the financial crisis his performance has been as assured as Mr McCain’s has been febrile. He seems a quick learner and has built up an impressive team of advisers, drawing in seasoned hands like Paul Volcker, Robert Rubin and Larry Summers. Of course, Mr Obama will make mistakes; but this is a man who listens, learns and manages well.

[...]

So Mr Obama in that respect is a gamble. But the same goes for Mr McCain on at least as many counts, not least the possibility of President Palin. And this cannot be another election where the choice is based merely on fear. In terms of painting a brighter future for America and the world, Mr Obama has produced the more compelling and detailed portrait. He has campaigned with more style, intelligence and discipline than his opponent. Whether he can fulfil his immense potential remains to be seen. But Mr Obama deserves the presidency.

The conventional wisdom is that when a left-leaning publication endorses a Democrat or a conservative one endorses a Republican, the endorsement itself carries little weight; it's what people have expected from them. But when a publication like The Economist comes out for Barack Obama, that is news, and it will reach readers who would never consider voting for a Democrat. And it is no small point that the editors of The Economist speak not just for themselves but also for the rest the financial world, both here and overseas. They are the people the next president will have to deal with when the election is over and the world wonders.

(Cross-posted from Bark Bark Woof Woof.)