Filed under: Capitalism, Economy, Progressivism, Statism, Taxes | Tags: "Not Much Further We Can Cut", Misunderstanding Equality, Slashing Spending
The reaction of the White House to the downgrading of America’s credit rating from AAA, a rating it has held since Standard and Poor’s began, to AA+ was twofold. The financial team, Treasury Secretary Geithner and White House Economic Adviser Gene Sperling attacked the credibility of Standard and Poor’s while the political team blamed Republicans. This was a “tea party downgrade” said David Axlerod on “Face the Nation.”And Obama notably consulted Warren Buffett who said the U.S rating should be AAAA. Nobody seemed to consider it a wake-up call to slash spending.
Obama has mentioned several times that there’s “not much further we can cut.” His “balanced approach” envisions cuts in Medicare (not raising the eligibility age) and raising taxes on the rich. The suggestion that there’s not much further we can cut doesn’t pass the laugh test. The Daily Caller expanded on that a little more”
“Not much further we can cut” seems like a hanging curve ball, an open invitation for ongoing ridicule–the sort of naive assertion that might come easily to someone who had never worked in the federal government, who only realized after promoting his half-trillion-dollar public works-based stimulus plan that there was “no such thing as shovel-ready projects.” Or someone who doesn’t want to know. Or who wants to act as if he doesn’t know.Here is the official list of federal job openings. They are still hiring. Sure, big enterprises keep hiring essential employees even in tough times. But these aren’t essential jobs. Many of them seem like the sort of job a private firm, in a financial crisis like the feds are in, would consolidate with another job or leave unfilled. (The first one that jumps out is the “Associate Administrator for Administration” at the Department of Transportation, which pays $119,554 to $179,700. It seems that this person will do administrative work to maintain the layer of bureaucracy that “coordinates” the DOTs research programs. The new hire will also give “advice and assistance in directing, coordinating, controlling” etc. this little fiefdom. You don’t have to be Peter Drucker to realize that this position does not have to exist.)
Part of the problem, of course, is that since it is virtually impossible to fire an actual underperforming federal employee, conscientious administrators have to hire new people (or consultants) to actually do the work the unfireable employees aren’t doing.
Liberals have long been obsessed with equality. A poll from Zogby International back in 1998, commissioned by the leftist New World Foundation that asked 1,800 rank-and-file progressives what a progressive agenda should look like. The country’s single most important social problem was racism, followed by poverty, corporate power, jobs/economy, environment, moral decline and education. Over a decade later, it doesn’t seem to have changed much, in spite of all the changes in the country.
We have done about all we can, legally, to eliminate racism, and the fact that we have a black president, we have had two black, much admired, Secretaries of State, Supreme Court Justices, CEOs of some of our largest corporations, would seem to indicate that there aren’t many barriers for qualified people.
It is a basic liberal belief that there is a finite amount of money in the world, and that if some —the rich — get more, the poor will get less. This is incorrect. The world economy expands as more wealth is created, and the poor get richer too. Liberals counter that inequality — the difference between rich and poor — has increased dramatically in recent decades. The poor can’t get any poorer unless government transfer payments are removed, so that end of the distribution tables doesn’t change. But the rich can certainly get richer. Call it the Bill Gates Syndrome, although it applies to a lot of people who have become fabulously wealthy in very recent years because computers went from being a curiosity for geeks to being a necessity for everyone. So you have the top end of the distribution tables expanding — a lot.
Liberals hate the rich. not just anyone who is rich, for most of their support comes from the rich (that “small donations from millions of ordinary people” is bunk). They don’t mind George Soros’s Democracy Alliance (billionaires for big government), they mind the Koch Brothers, libertarian businessmen who support some Republican causes among all their charitable contribution, and just now, hedge-fund people. Selective hate.
The statistics compare households, and earnings largely reflect how many members of a household are working. Single mothers, largely black and Hispanic, are at the bottom of the earnings distribution. You cannot take enough money away from the rich to make the poor not poor.
If you could make the poor equal, some people are lazy, some are ill-educated, afflicted with drug addiction, some are highly educated entrepreneurs, some are aggressive in their desire to make money, some are savvy investors, some have outstanding ability at a popular sport. If you could make everyone equal, they wouldn’t stay that way.
Revenue to the government is not down because of the Bush tax-cuts — the CBO has shown this to be demonstrably false. The budget arm of Congress looked at the changes in their baseline projections back on May 12. They predicted, for 2011, a surplus of $889 billion, instead it expects a deficit of $1.4 trillion. The combined 2001 and 2003 Bush tax cuts contributed roughly $216 billion — only 9.5 percent of the $2.29 trillion budget reversal. Obama’s payroll tax cut was sold to stimulate growth and hiring, yet the economy has grown more slowly this year than last.
The tax cuts that work are permanent, take effect immediately, and hit at the next dollar of marginal income.
Studies show that higher income people respond to changes in the tax code. This is common sense. They are less dependent on salary, and have more options to avoid taxes. Tax-free municipal bonds, IRAs and 401Ks, or not taking capital gains are just a few of the options. The income tax brought in less revenue when the highest rate was 70% to 91% than it did when the highest rate was 28%. Pundits cling to the myth that lower tax rates mean lower revenues.
Income tax rates have become far more progressive. U.S. rates are the most progressive in the OECD. And the tax rate on our very richest is the highest individual tax rate. When you cut the capital gains tax, you get more revenue, because people are more willing to move from one investment to another, to sell their home with an appreciated value and buy a new one. It really is common sense, but you have to take of the partisan blinders.