Buffet Rule: Bad Policy...Good Politics

If you are among those carrying the torch for reformation of our tax code then the next several days will feel like Christmas morning to a five year old.  The White House will kick off a week long push to sell the Buffet Rule today with a Presidential stump speech in Florida.  The Democratic Senate has scheduled a procedural vote on the rule for April 16.  That this flurry of activity comes as Americans face an April 15 deadline to file their taxes is no coincidence.  That the law has less than a snowballs chance in hell of passing does not lessen its political impact on the upcoming elections.

For those who may not be familiar; the “Buffet Rule” stems from a controversial comment made by billionaire Warren Buffet.  Buffet had the temerity to comment on how unfair it seemed that he, a billionaire, was paying a lesser percentage of his income in taxes than his middle class secretary.  Since most of Buffet’s earnings came from investments he was legally permitted  to pay his taxes at the 15% capital gains rate while his secretary paid hers as ordinary income; a rate of anywhere from 20-35%.  Democrats, led by the White House, seized on his comments, using them as key talking points in their effort to correct the income disparity between the richest 1% of Americans and the remainder of the country.  The result is a piece of legislation, the Buffet Rule that requires anyone making over $1 million in income to pay a minimum tax rate of 30%.

Conservatives who oppose the rule refer to it as “class warfare.”  They say that liberals are simply punishing the rich for their success.  They caution that most small businesses file their taxes as individuals and raising taxes on these job creators will hurt the economy and ultimately hurt the middle class. They say the proper way to generate increased revenue is to eliminate loopholes, reduce the tax rates and broaden the base.  But they offer no details on which loopholes they are willing to eliminate.

Liberals who support the rule say that the current system has been rigged to favor of the rich for decades.  The proof is in the huge disparity of income growth in the country.  They say that any talk of hurting job creators is nonsense; pointing out that the Bush tax cuts have been in place for a decade  without any corresponding increase in job creation.  They say the Buffet Rule is simply a matter of fairness.  They ignore that the Buffet Rule will only generate $47 billion in increased revenue; a mere blip on a $22 trillion dollar debt.

70% of Americans believe that the government should increase taxes on the rich.  This overwhelming sentiment will have no affect on a tone deaf Congress.  The fact is the Buffet Rule has no chance of passing through this deeply partisan legislature.  The Democrats know this.  But they will push for a vote simply to force Republicans to go on the record as being against tax increases for the rich.

We need to have a serious discussion about comprehensive tax reform.  This food fight over the Buffet Rule is not a serious debate.  The Buffet Rule is bad policy…but it makes for good politics.

               

Your Tax dollars At Work

The White House has released an interactive email: “Get Your Taxpayer Receipt” that is a real eye opener.  By using the information on their W-2s, taxpayers can enter their federal withholding tax information and learn exactly how the government is allocating their hard earned tax dollars.  The results are startling.

25% of every dollar is spent on defense…but we need to spend more.

24% is spent on health care…but there’s no reason for reform.

3.6% is spent on education…which explains why we spend 25% on defense and 24% on health care.

Stupid!

No other word seems appropriate.

Republicans Waging War Against Women...Fact Or Fiction

The Republican Party Chairman, Reince Priebus was recently asked how his party planned to overcome with the gender gap problem they face in the fall elections.  Mr. Priebus doesn’t believe that there is a problem.  He says that any inference that Republicans are waging a “war against women” is nothing more than a fictional controversy fueled by the main stream media. 

“If the Democrats said we had a war on caterpillars and every main stream media outlet talked about the fact that we had a war on caterpillars then we’d have a problem with caterpillars.  It’s fiction.”

In spite of the Chairman’s protestations to the contrary, there is a mountain of evidence that a war against women’s right is being waged by the Republican Party and their supporters.  Republican led state governments have presented over 90 pieces of legislation designed to limit women’s access various health care services.  Republicans have attempted to mandate trans-vaginal probes, defund Planned Parenthood and outlaw contraceptives.  They have politicized the Susan G. Komen Foundation and are presently engaged in efforts to block the renewal of the “Violence Against Women Act”.  They have called for a reduction in Pell Grants; over 50% of which go to women.  And when conservative mouthpiece Rush Limbaugh famously referred to Georgetown co-ed as a “slut” for speaking in favor of women’s access to contraceptives; not one Republican presidential candidate came to her defense.  In fact conservative pundits rose in defense of Limbaugh.

The polls indicate that Republican candidates across the country are paying a heavy price for their “fictional” war against woman.  The most recent USA Today poll shows that among women voters in swing states the President leads Romney by 18 points; 54%-36%.

The Republicans ARE waging a war against women and it is absolutely killing them in the polls.  The facts make that quite clear.

The only “fiction” to be found here lies within Mr. Priebus’ assertions to the contrary.

             

Our Problems Lie Within The Politics

We hear a lot of talk about the difficulties we face as a country.  High unemployment, a stagnant economy, skyrocketing debt, burgeoning deficits, oppressive regulations, ineffective education, collapsing infrastructure; the list goes on and on.  The problems are so big it makes you wonder if we can ever find our way out.

The truth of the matter is that these problems, while serious and difficult to solve are not insurmountable.  We have demonstrated many times in the past that we as a society are capable of doing great things when the need arises.

So why haven’t we tackled these obvious difficulties with the same verve and vigor that we have in the past?  The answer is simple.

Politics!

The only thing standing between us and the robust economy and world leadership we once knew is politics.

Let’s take just one example to prove our point. 

Right know our economy is suffering from lack of growth.  One of the reasons for that is that investors are holding onto their money.  At present there are roughly $2 trillion dollars in capital sitting in off shore accounts that could be invested in this country; $2 trillion dollars that if repatriated into the US would spur economic growth and create jobs.  It is estimated that the unemployment rate would be cut in half if that money came back into the country.  So how do we get investors to invest in America? 

Both sides of the aisle agree that our 35% corporate tax rate, one of the highest in the world, is the primary reason that those funds are held off shore.  So one solution would be to reduce the corporate rate to less than the world average…say 10, 15 or 20%...to encourage investment in the US; but tie access to those tax credits to the hiring of American workers.  You want lower corporate taxes…create jobs here in America.  Quid pro quo!  Seems simple!

While we would like to take credit for this simple yet effective solution we cannot.  This idea was proffered by Starbucks CEO, Howard Schultz.  Mr. Schultz is a businessman who understands that to get something you have to give something.  He is also a clear headed individual whose thought process is  unencumbered by the yoke of politics and the desire to be re-elected.

And therein lies the problem.  Politics! 

Everyone knows what we need to do to solve our problems.  We need to increase the eligibility age for Social Security and Medicare.  We need to cut the cost of Medicare.  We need to reform our healthcare distribution system, reduce our military footprint, reduce our corporate tax rate and reform our tax code so that all Americans pay an equitable share.  We need to invest in innovation, infrastructure and education to position ourselves to compete on the world stage. Every poll shows that at least 70% of all Americans agree that these changes need to be made.  And the only thing standing between us and a resolution to these problems is politics.

If we could find a way to put smart, like minded people into a room…people without any political motive…people like Howard Schultz…we believe it would not take them very long to come up with equitable solutions to our seemingly insurmountable problems.  But until we find a way to set politics aside our problems will continue.

Our difficulties lie not within problems themselves; nor in finding equitable solutions. Our difficulties lie within the politics.

         

      

  

Play Ball!

If you paid any attention to Tuesday’s political events you came away with the very distinct feeling that the primary season is over and the general election has begun in earnest.

The President began the day excoriating the Ryan budget proposal and for the first time calling out Romney by name.  Addressing the annual Meeting of the Associated Press; a combative President referred to the House Republican budget as:  “a bleak backward and radical vision”; “a Trojan horse”, “thinly veiled social Darwinism”, “antithetical to our entire history as a land of opportunity and upward mobility for everyone who is willing to work for it.  It is a prescription for decline.”

He chided Romney by name for embracing the plan; and poked fun at the Republican frontrunner’s awkward use of the term “marvelous” in describing the budget.  “It (marvelous) is not a word you normally hear when describing a budget.  It’s not a word that you normally hear…period.”

Later in the day Romney gave a victory speech celebrating his primary wins in Maryland, Washington D.C. and Wisconsin. Assuming the mantle of the assumed nominee; Romney avoided any mention of his Republican opponents and focused his remarks on the President.  He criticized the President’s economic policies and what her referring to as Obama’s vision of a “government centered society.”

“There is a basic choice that we are going to face.   The President has pledged to transform America and he has spent the last four years laying the foundation for a new government centered society.  I will spend the next four years rebuilding the foundation of an opportunity society led by free people and free enterprises.”

Clearly the battle lines have been drawn.  The President has made clear his intention to turn the conversation away from his record and focus voters’ attention on the radical aspects of the Ryan plan.  The video of Romney and Ryan attached at the hip in Wisconsin only plays into the narrative.  Thus far he has been wildly successful.

Romney will counter by emphasizing his successful career as a “fixer”.  He will demonstrate that the lagging economy, high unemployment and skyrocketing deficits produced by the Obama administration require his “fixer” talents.

Spring training is over for the professional political athletes; the regular season has begun.  The teams have set their rosters.  Both sides are well funded, loaded with talent and eager for the challenge.  A long season lies ahead. 

The President threw the first pitch…and Romney smacked it right back up the middle.    

                  

President Takes Political Risk...Challenges Supreme Court

The President went off the rails Monday and issued a direct challenge to the Supreme Court to uphold his health care reform act.  When asked about the Court’s deliberations at a Rose Garden press conference the President took the opportunity to remind the Court that they are an “unelected group of people” who should refrain from overturning a law passed by a “democratically elected Congress.”

“Ultimately, I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress.” 

While challenging the Court, the President sought to pull his opponents into the fray by using the current case to remind conservatives about their long standing concerns about activist judges and judicial over reach.

“For years what we’ve heard (from conservatives) is that the biggest problem on the bench was judicial activism or lack of judicial restraint…that an unelected group of people would somehow overturn a duly constituted and passed law.”

This is not the first time that this President has chosen to publically confront the Roberts' Court.  You may recall that during his 2010 State of the Union address the President blatantly criticized the Court’s decision on Citizens United; a ruling that allowed corporations to donate unlimited sums of money into political campaigns.  The President warned of the magnitude of this decision on our election process.  His words have proven to be prophetic.

As a general rule Presidents do not publically challenge the Supreme Court.  If they do, they do so at their peril.  The division of powers is sacrosanct. Thomas Jefferson challenged the Court…as did Jackson…and FDR.  All lost. 

The American people like to believe that the Court rises above partisan politics.  They do not like their politicians to infer otherwise.  The fact that this President would challenge the Court so publically on this issue shows how important he believes it is to the country…and his legacy.  Make no mistake; “legacy” plays an important role in every major Presidential decision.

Was the President’s directness an attempt to influence the Court?  Was he making a case for the division of powers?  Or was it pure politics…paving the way to dismiss a negative ruling as just another example of partisan judicial over reach?  Regardless, he has opened himself up for scrutiny and placed a large political bet in the middle of a divisive election season.

The President went out on a limb with this one.  From our view the limb is cracking.                   

A "Handout" Is A "Handout"...Right?

One more comment on the Republican budget proposal…

Fiscal conservatives have an ideological aversion to the social safety net.  Simply put; they do not believe in “handouts.”  They believe that each of us has an opportunity to be successful in life.  They believe if you work hard you should be able to reap the fruits of your hard labor; and under no circumstances should you be forced by the government to hand over those benefits to others.  They see programs like welfare, unemployment insurance, food stamps and the like as “handouts” to those who are unwilling to do what it takes to become successful and self sustained.  “I’ve got mine…now leave me alone and go take care of yourself.”

These basic beliefs are borne out in their politics and policies.  The recent Republican budget proposal is centered on the reducing the deficit by cutting or eliminating social safety net programs that they view as “handouts” to those who have been unable, for one reason or another, to get by on their own.

We get it!  And our purpose here is not to question those beliefs but to ask a simple question:

If fiscal conservatives are so averse to giving “handouts” to those less fortunate; then how do they explain their willingness to continue providing government subsidies to wealthy corporations; and tax loopholes that clearly favor the richest among us?  Are these not handouts as well? 

The government currently provides trillions in subsidies to major oil companies and defense contractors that are generating billions in profits.  Agriculture, transportation, small businesses; these industries are all receiving “handouts” from the government. Wealthy individuals benefit as well; permitted to pay their taxes at a 15% capital gains rate half of the standard rate required of most Americans.

Fiscal conservatives say these “handouts” are justified because they encourage the more fortunate to invest in the economy and create jobs for those less advantaged.  The current state of the economy and rate of unemployment suggests that their argument lacks credibility.  In fact every economic study shows that the economy gets more bang for every dollar of unemployment insurance paid than it does from any subsidy or tax break.

So we ask; if conservatives are so averse to giving handouts to the less advantaged how do they square providing handouts to the most advantaged?

Just asking…