February 11, 2018: Rescumlican Fraud, Useful Bludgeon, Economic Sabotage

“Rest assured, whatever the Rescumlicans say they are, they aren't.”

----from “The Quotations of Chairman Joe”

Economist Paul Krugman, about whom Caesar Disgustus has nothing but contempt and is, therefore, worth reading, wrote an opinion published in Friday's New York Times about the fraudulence that now permeates the party of Lincoln. (1)

In 2011, as the country was reeling from the financial meltdown occurring under the last Rescumlican maladministration, Paul Ryan and his Rescumlicans “issued a report full of dire warnings about the dangers of budget deficits. 'The United States is facing a crushing burden of debt,' it declared, warning of a looming fiscal crisis that might soon 'capsize' the economy”.(2)

The Scums then went about refusing to raise the debt ceiling creating financial and political turmoil “effectively blackmailing President Barack Obama into cutting spending on domestic programs.” (3)

My daughter once told me that she wanted to study economics. I told her to ask the department at the university if they taught Keynesian economics pointing out that if they did not, then the department was staffed with a faculty that simply does not understand the subject. I had been introduced to Keynes in high school and the lessons were reinforced in my college instruction. Of late, the conservatives have been waging war upon John Maynard Keynes citing the fraudulence of Milton Friedman and, following corporate sponsorship at many of the business schools in this country, the error has spread into the media whereupon the idiot wrong have adopted the mantra.

Keynes famously taught that during recession the government should run deficits so that purchasing power would rise fueling production and recovery. With recovery comes increased government revenue which, as the economy improves over time, leads to reduced deficits and then surplus. Government should run deficits in time of recession, surplus in time of prosperity.

But the 'deficit hawks', about whom the Rescumlican Party claims a monopoly have, it has become apparent, never met a surplus they didn't hate and never met a deficit they didn't love—except, of course if the deficits occur under Democratic presidents. It is worth noting, as a side note, that the only budget surpluses ever achieved since World War II have been under Democratic presidents. Lyndon Johnson left Nixon a budget surplus in 1969, and Bill Clinton's budget surpluses during the last years of his presidency.

The budget deficit that caused Ryan and his 'hawks' such animated histrionics was 1.09 trillion in 2012 (4). “This week Republicans, having just enacted a huge tax cut, cheerfully agreed to a budget deal that, according to independent experts, will push next year's deficit up to 1.15 trillion—bigger than in 2012. True, this won't quite match 2012's red ink as a percentage of G.D.P., but this time none of the deficit will be a result of a depressed economy.” (5)

Indeed the economy, now at near full employment, is performing at such a level as to cause the Fed to increase interest rates in an attempt to dampen down economic activity lest that great bug-a-boo inflation once again emerges from under the collective bed.

Krugman points out that with unemployment at about 8 per cent there were sound reasons to run deficits in 2012, now with near full employment at about 4 per cent we should be nearly balancing the budget, if not creating a budget surplus and paying down the debt—as Clinton had done at the end of his business cycle. But as, in 2001, when the scums returned to power, the first casualty is fiscal responsibility. It is worth noting that the deficits under 'Ol Two-Cows' George W. Bush were created two months before the attacks on the World Trade Center. Indeed by June 2001, Bush had instituted—you guessed it—tax cuts, mostly on the wealthy, and made them retroactive to January 1 of 2001 so the scums could later claim that Clinton's last budget had left the scums with a deficit (the first fiscal budget of any incoming administration is the one passed in the last year of the outgoing administration. Hence, Disgustus' fiscal and economic policies do not take effect until his second year in office, laying false his claim that he is responsible for, for instance, low unemployment).

Indeed, Krugman points out that the Rescumlicans were never sincere concerning deficit spending. How do we know this? “It was obvious, even at the time, to anyone who looked at their fiscal proposals. These proposals always involved giant tax cuts for the wealthy—funny how that worked—offset by savage cuts in social benefits. Even so, assertions that deficits would go down depended entirely on assuming lots of revenue from closing unspecified loopholes and huge savings from cutting unspecified government programs. In other words, even at the peak of their deficit-hawk posturing, all Republican really had to offer was redistribution from the poor to the rich” (6).

The deficit scare, as Krugman points out, prove a useful as a bludgeon with which the Rescumlicans would pummel Obama into cutting social and infrastructure rebuilding programs and hobble his presidency.

And, Krugman continued: “I don't think it's unfair to suggest that there was an element of deliberate economic sabotage. After all, Republicans weren't just vehemently opposed to fiscal stimulus; they were also opposed to monetary stimulus. Basically they were against anything that might help the economy on President Obama's watch” (7). Indeed, former Ohio Senator George Voinovich (Rescumlican) said, just before he died, that the Rescumlican senate caucus was ordered to oppose everything that Obama proposed, even if it hurt the country for Mitch McConnell was determined that Obama be a one-term president the country be damned.

“Now” Krugman rightly observes, “Obama is gone, and suddenly deficits don't matter.” (8)

“This is about Republican bad faith. Everything they said about budgets, every step of the way, was fraudulent. And nobody should believe what they say now.” (9)

Indeed, Disgustus pledged to eliminate the so-called “carried interest” loophole, where investors—especially real estate investors—get what amounts to a long term interest free loan, but the loophole is still there. Indeed, the last tax cut included nearly a half trillion dollars, over ten years, in tax benefits to real estate investors. This explains the enthusiasm overwhelmed Disgustus and why Senator Corker—who had vowed to oppose any tax measure that added a cent to the deficit—himself a real estate tycoon, was moved to support it. Not eliminated either were the loopholes in the tax code that rewards companies for outsourcing jobs overseas, indeed the latest Rescumlican creation created even more such loopholes. No they were never serious about this.

What this demonstrates is that once again Disgustus cannot be seen as an aberration. The animus of Disgustus toward all things Obama predates his arrival by 8 years. The same mendacity, the same resistance, motivated by an all-too-transparent racism as well as unlimited political expediency, was deeply entrenched well before the orange slime slithered up Pennsylvania Avenue.

“An' Br'er Putin, he jus' laugh and laugh'

Impeach and Imprison

______________________

1. Krugman, Paul. “Fraudulence Of the Fiscal Hawks” The New York Times. Friday, February 9, 2018. Page A25
2. ibid
3. ibid
4. ibid
5. ibid
6. ibid
7. ibid
8. ibid
9. ibid

September 29, 2015: Across the Alternate Universe, Hubris of the ‘Idiot-Wrong’, No-Nothing to Know-Nothing.

 

“Thoughts meander

Like a restless wind inside a letter-box
They tumble blindly
As they make their way
Across the universe”

                                    ----John Lennon “Across the Universe”

The vitriol of the idiot-wrong arcs across the alternate closed conservative universe, revealing the edifice to be nothing but a hollow echo-chamber amplifying as it does the cries of the damned.  As Michael Savage can declare with a straight face that the planet is cooling, or that the Pope is a Marxist, or Glenn Beck can lecture on what subjects the Pope is currently an authority and propose with equal earnestness that he [Beck] would be happy to get a group of people together and send them to the Vatican to ‘instruct’ the Pope on questions economic, the hubris of the ‘idiot-wrong’ is constantly demonstrating that it acknowledges no bounds. 

But there is a price to pay for this unseemly display of intolerant ignorance.  Increasingly the radical-wrong are seen drifting ever further off the political landscape to a place where fewer and fewer are willing to follow.  A place that is increasingly Caucasian, increasingly masculine, and increasingly older. 

The war waged by the conservatives upon the poor and the minorities is well documented, here and elsewhere and bears no repeating.  As we speak the Cons are about the business of attempting to once again shut down the Federal Government, this time over funding Planned Parenthood.  It’s another of those false crises designed to wring yet another series of spending cuts and further savage the safety net.  Once again the Cons are raising the bloody shirt of abortion and abortion funding, even though it has been illegal for the Federal Government to fund abortions (except in cases of rape, incest, or the health of the mother) since the passage of the Hyde Amendment way in the 70’s.  No matter, another false claim (like the planet is cooling) duly shouted from the rooftops of the giant media complexes sufficient to raise the blood pressure and testosterone levels of the vast throngs of ‘ditto-heads’.  This latest effort, combined with plans to cut spending on social services, opposing equal pay for equal work and concurrent efforts to keep ‘the woman in her place’, the misogyny of the modern Republican Party has become manifest.

It isn’t simply that the party is sexist, by declaring war upon science it has become the party of ignorance; by confusing Corporate America with the genuine article, it has become the vehicle for the most rapacious environmental policies, and most vociferous anti-labor policies; by embracing America’s racists it has become the staunch advocate of the most xenophobic anti-immigration policies, seeking wherever possible to limit the franchise and erect obstacles to voting.  Whatever face one tries to put on it, the facts are that it has become the party of rich, old, white, conservative men.  With the latest diatribes and screeds directed at the Pontiff, we can now add anti-Catholicism to the ever growing list of abuses.

The modern American Conservative movement has long been about rolling back progress.  It has long been about the business of not only obstructing progress (minimum wage, social security, child labor, environmental protection, education…etc.) but, when possible, of actually reversing the progress the larger society has labored to achieve by way of gaining a more equitable distribution of the fruits of our labors and a more just society.  To that end it has steadfastly endeavored to drag this country, kicking and screaming, back into the 19^th and 18^th centuries.

Accordingly the Republican Party is transforming itself from the “No-Nothing” party of obstruction and nullification to a modern reincarnation of the “Know-Nothing” Party of the 19^th century.  All we need is a little more anti-Semitism and anti-Masonry for the metamorphosis to be complete.  What does it say about a group of increasingly rich, fat, old, white men that they would readily create a modern “Know-Nothing” movement?  Ask Michael Savage, Glenn Beck, George Will, and Patrick Buchanan about the clown-car presently in the Presidential race and who they represent. 

 

 

February 20, 2011: Eating The Seed Corn, No Mandate, On the Altar of Greed

Paul Krugman writing an op-ed piece in the New York Times entitled “Eat the Future” correctly pointed out that the Republicans in congress have no mandate to cut spending or reduce the deficit. Citing a survey by the Pew Research Center he pointed out that when Americans were asked they favored “more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and–surprise–defense”. (1) In fact, says Klugman, the only thing they really want to cut is foreign aid.

When asked how the states should go about dealing with growing deficits, Americans favored neither cutting “education or health care” nor “do they favor tax increases”. “The moral is clear”, said Krugman, “Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic”. Fitting, it seems to me, for a party that has declared war on science and reason.

When they aren’t engaging in political theatre, as in the recent vote by the house to repeal the Health Care Reform Act, or in trying to strip state employees of the right to bargain collectively, they are voting to deny the Environmental Protection Agency the power to issue regulations on global warming gasses. Is it any wonder, given this record of hopelessly whoring after a political base, that is itself lost in a parallel universe that answers to an entirely different and opposite set of physical laws, that we should find them when in opposition proposing budgets with no numbers; and, when in the majority, crying against deficits whilst voting to give the rich yet another free ride.

This business has been going on for a long time. Ever since Reagan proposed what George the Elder called “Voodoo Economics” in which it was held we could slash taxes, raise defense spending and balance the budget. Later George the Lesser, following the same well-tread path did much the same thing calling Al Gore’s criticisms of this approach “fuzzy math”. It wasn’t “fuzzy math”. It wasn’t the Democrats who can’t cipher, it’s the party of the political pachyderm, the holy warriors who, in the cause of greed, wage a constant war with empiracle reality.

For decades, now, the Cons have been telling the electorate that all we have to do is cut waste, fraud and abuse from the budget and we can bring it into balance; that we can, in effect, have our cake and eat it too. This, coupled with the canard that we can enact massive tax cuts for the rich and that the largesse so bestowed upon our benefactors will “trickle down” to the rest of us, has combined to put us into a fiscal bind that portends very ill for the future.

“Which brings me back to the Republican Dilemma”, writes Krugman. Having promised to cut 100 billion from the federal budget and leaving defense and, for the time being, Medicare out of the mix, the House GOP now faces cutting appropriations for “pregnant mothers, infants and young children, ...578 million from IRS enforcement" (there’s a boon for the rich if I ever saw one, sure to lower future revenues creating larger deficits)..."648 million from nuclear nonproliferation enforcement", cuts in Pell Grants, Home Heating Assistance, High Speed Internet and Rail, Public Transportation and...yes, Big Bird over at PBS.

“In a better world”, says Krugman, “politicians would talk to voters as if they were adults. They would explain that discretionary spending has little to do with the long-run imbalance between spending and revenues. They would have to explain that solving that long term problem requires two main things: reigning in health-care costs and, realistically, increasing taxes to pay for the programs Americans really want”.

That’s not going to happen of course. By whoring after the political fringe–even to the extent of welcoming the John Bircher’s back into the fold–they have boxed themselves into a corner whereby they are now held hostage by the very forces they thought they could manipulate. To suggest serious Health Care Reform would incite a revolt within the ranks–just ask Mitt Romney who has been running as fast as he can from his record in Massachusetts. To suggest raising taxes–any taxes–would invite endless primary challenges. Already the idiot fringe has targeted such persons of reason as Richard Lugar of Indiana and Senator Olympia Snowe of Main. Even such a water-carrier and hopeless apologist like Orrin Hatch of Utah–one of the great supporters of Clarence Thomas–is on their hit list.

The fact is this is the very box the Rescumlicans would have us in, and by agreeing to extend the Bush Tax Cuts the administration bought into the strategem. Because we have created a political environment where we cannot reason with the unreasonable we can now have no compromise. Taxes are off the table, that means that the tax breaks given to those who need it least are going to be paid for by taking milk from babies, making our work force more illiterate and less competitive, and allowing our infrastructure to further deteriorate.

In order to make it possible for old moneybags to give little lord Fauntleroy even greater advantages in life we are now, it appears, willing to eat the seed corn of next year’s crops. We are sacrificing the future on the altar of greed and we cannot now appeal to the electorate as grown adults for the “Generation of Swine”, long since lost in a parallel universe of eternal adolescence, has never grown up.


Footnotes

1. Krugman, Paul. “Eat The Future”. New York Times, Monday February 14, 2011.
Pg. A23

October 4, 2008: Social Darwinism, Selfishness as the Highest Charity, The Right to Starve

A Polish rose by any other name is still a dandelion” ---Quotations of Chairman Joe

In the American political tradition, both modern American liberalism and modern American conservatism trace their roots back to the nineteenth century European liberalism rooted in the economic philosophies of Smith, Malthus, Ricardo, Stuart and Mill. Indeed so great was the influence of Smith that Darwin “confessed that his model for natural selection had been Smith's concept of Market competition; so men were just retracing Darwin's steps when they brought biological 'laws' back into the world of economics to create 'Social Darwinism'”. (1)(2)

Social Darwinism had become the rage by the late nineteenth century. Writers like William Graham Sumner took lessons from Smith but more importantly Malthus and Darwin to lay the basis for economic theory that John Kenneth Galbraith would later refer to as the “grim science”. If evolution was the law of nature then, they reasoned, “automatic progress was to be expected in man's economic activity” as well. (1) Garry Wills' summarized it this way: “If one progresses by survival of the fittest, then, as a consequence, the less fit do not survive. If the race is never finally won, at least some competitors are forever eliminated. Malthus made this clear when he said that, since the Invisible Hand (3) provides the maximum food intended by Nature and Nature's God (Malthus was a clergyman), it was the will of nature that population in excess of this divine provender should starve (if it were allowed to come into the world)”. (4) “This cruel consistency” led by degrees to the belief that the worst thing you could do was help your fellow man. Charity becomes, to these 'enlightened' souls, an abject form of evil. To feed the huddled masses would lead to further overpopulation and suffering, better—more humane—in the mind of Malthus was to let them starve. It isn't simply that the race goes to the strongest but that the survival of the 'less fit' threatens progress itself. The very concept of Charity as it had been passed through the ages by our religious institutions was stood on its head. Grown men of property and standing were known to publicly proclaim that selfishness was the highest form of charity.

The toxic mix of nineteenth century economics, biology and sociology served to give a 'scientific' veneer to greed translating itself into what Mark Twain labeled the “Guilded Age” dominated by what Ida Tarbell called the “Robber Barons”. It took over a half century of reform to right the ship.

The modern ear has no tolerance for the din of such nonsense. What is left of Social Darwinism still reverberates down through the twentieth century in the writings of Ayn Rand and in the bedrock assumptions of Milton Friedman and Bill Buckley but rarely do they give it open expression. Instead new forms must be assumed, a more progressive pose must be struck in order to appeal to modern man. To that end modern conservatives use 'liberation' terminology in order to mask the true nature of their creed. To 'liberate' the markets from harmful regulation that is, to these lights, both inefficient because it restricts the free movement of the market but also immoral because it empowers the 'less fit'. Empowering the 'less fit' means threatening progress itself. To threaten progress is to threaten the 'social good' or, in the words of the founders, the 'general welfare'. In the pretzel logic of moder conservatism the welfare state thereby threatens the general welfare. This logic extends beyond the commodities markets to embrace the labor markets, investment markets as well as the markets of political and social ideas and beliefs. It is through such mental gymnastics that conservatives can draw distinctions between the deserving and undeserving poor but cannot bring the same standards to the rich. The rich, you see, are by definition deserving. It is a modern mutation of “Social Darwinism” that drives the conservative to reduce all human interaction to market functions and to resist any subsequent regulation on any such market. To introduce fetters on intercourse is said to deny freedom. What they mean of course is that to impose restraints—civility if you will—is to deny the victor his presumed right to rape not only his fellow man but mother nature in the bargain. It is also to deny the vanquished his right to starve.

ootnotes:

1.Wills, Garry. “Nixon Agonistes, The Crisis of the Self-Made Man”
Houghton Mifflin Company. Boston 1970. page 548.

2.For an enlightening discussion of the origins of modern conservative and
liberal thought as it pertains to nineteenth century liberalism see Garry Wills'
“Nixon Agonistes” a deeply penetrating analysis of Richard Nixon and his time

3.The operation of the market at which a purchase price is reached through the
impersonal forces of supply and demand is held by Smith and others to be
the most rational and efficient means to allocate resources in a given society.
Smith held that these forces acted as like an “invisible hand” in the marketplace.
Later wits confused the Invisible Hand with Providence forever transforming classical Liberalism, that is modern conservatism, into a theology.

March 2, 2008: Fair Tax/Fraud Tax, The Duct Tape Standard, Won't Get Fooled Again

Why is it that every time one sees a fundamentalist preacher turned politician campaigning for the Presidency he has the Bible in his left hand, his right index finger in your face and a tax cut for the rich in his back pocket? It is difficult to say, perhaps overweening ambition, perhaps the reluctance or the inability to understand something as complex as economics, perhaps intellectual laziness, perhaps a simple willingness to be a shill for wealth. But in any case we are now presented with another such spectacle this time in the form of Mike Huckabee, our very own Elmer Gantry.

He arrived late to the Presidential sweepstakes and took up the twin causes of God and good government in an effort to gin up the support of the fundamentalist wrong that heretofore were seen to have controlled the proceedings. Initially his message was a welcome variant from the old standard in which Christ was seen not as the apostle of greed but became, briefly in the hands of the Reverend Mike, once again the God of compassion. Accordingly Mike spoke eloquently, if only briefly, of our collective need to tend to the least among us. But his campaign, after Iowa, gained little traction with victories limited by religious and sectional boundaries. In order to breathe new life into his flagging effort, the Huckster has now transformed himself into a full-throated champion of the so called “Fair Tax”, not so much to win the nomination but to pick up the broken petard of Pat Robertson and become the new Champion of the idiot right.

Accordingly he is now out canvassing the country saying that “in Arkansas if it can’t be fixed with duct tape it cannot be fixed, and the tax code and the IRS cannot be fixed with duct tape”. There you have it in a ‘nut’ shell. If it cannot be fixed with duct tape it must go. Well Mike, I hate to break the news but you cannot fix the schools with duct tape, you cannot fix the military with duct tape, you cannot fix the roads with duct tape…..shall we get rid of those too? Talk to any heating and cooling contractor and you will learn that in fact one cannot fix anything with duct tape, not even ductwork. But it is by these standards that the Huckster wages his war to rid us of the onerous Internal Revenue Service.

No one, especially a progressive, is about to defend the present system of how we tax ourselves in these United States. The present tax code is as close to a ‘flat’ tax as we have seen in generations, with nearly all the progressivity having been taken out of it. But the problem of taxation in America is not that we are being taxed too much, for we rank near the bottom in overall taxation among industrial countries. It is that the near elimination of the graduated income tax of our forefathers has produced a society that has increasingly become more bifurcated between great wealth and the struggling rest of us. This tax proposal, coming as it does on the abject failure of a straight out ‘flat’ tax proposed by the likes of Pierre DuPont in his Presidential campaigns, is even more regressive. It would move the tax burden increasingly from the wealthy unto the backs of the working middle and lower classes; increasing the taxation on work while nearly eliminating the taxation of wealth.

When our forefathers introduced the graduated income tax they understood, as the ‘boomers’ apparently do not, that it is better to tax wealth than tax work. Reasoning from the tenets of Adam Smith, the founder of modern free-market capitalism, that work produces wealth, our forefathers rightly concluded that it would be counterproductive to tax work since it was through work that all wealth originates. Better, they said, to tax wealth at a higher rate. By taxing wealth at higher rates it leaves work with a relatively lighter share of the overall burden, freeing it to generate more wealth. This reasoning took the form of the distinction, in the terminology of our ancestors, between what was called “earned” and “unearned” income. Better they said to tax at higher rates unearned income (income from rents, interest and profits), than earned income (income from wages). Accordingly heavier taxes were laid upon the upper income tax bracket (in the 90% range), capital gains and estate taxes. The result was a more egalitarian society, one in which the fruits of our collective labor were generally shared, a society in which we witnessed the explosive growth of a large industrial middle class.

But the ‘Boomers’, the grand recipients of our forefathers collective wisdom, saw nothing in the lessons taught that we felt obliged to learn. Accordingly we have followed the siren song of greed introducing one tax ‘reform’ after another from the tax limitation craze set off by Howard Jarvis in California in the late ‘70s, to Ronald Reagan and the Republican assault on the graduated income tax, to the several flat tax proposals, and efforts to eliminate outright the capital gains and estate taxes. Let us take a brief look at the latest entry in the tax ‘reform’ craze put forward by the conservative stink tanks. The effort, such as it is, requires more from us than it deserves.

John Kenneth Galbraith once termed economics the ‘dismal science’, and although he was referring to the writings of Smith, Malthus and Ricardo, he can also be read to understand that approaching a study of economic theory or practice is like going to the dentist. Accordingly one approaches the study of the “Fair Tax” with all the enthusiasm of facing root canal work.

The idea came out of the bowels of Americans for Fair Taxation as a simple shell game in which the tax burden would be shifted from income taxes on profits and wages to what is, in effect, a national sales tax. Now even a flat rate tax of say 10 or 12%, as our friend Pierre DuPont proposed, has at least the appearance of ‘progressivity’ inasmuch as that the more one makes the more taxes one pays. But the so called “Fair Tax” proposes a 23% sales tax on all goods and services. It would eliminate taxes on savings and investments, all estate taxes, and virtually every other form of taxation. The result is that the tax burden would be shifted entirely onto consumption. What this means is that there becomes an inverse relation between income and the effective level of taxation. That is the lower your income the higher the percentage of your income to taxation. Those at the lowest levels, required as they are to spend virtually every cent on necessities, would pay the going rate. The higher one’s income the more can be put aside for saving and investment which, under this scheme, is shielded from taxation. Yes say the proponents but when it is withdrawn it is spent and taxes are paid on it. No say we critics because the interest on this money is earned and compounded while in the bank and is not subject to taxation. “Unearned” income, which is income nonetheless, is not subject to taxation unless and until it is spent. Suppose it is not spent, suppose it is left to constantly multiply itself over a period of time. Yes when it finally is withdrawn from the bank to make some purchases it is taxed but in the meantime it is tax free. Wages are not so lucky. One is presented then with the spectacle of the worker being taxed at every turn while the investor merely clips his coupons and watches his money grow.

What the inventors of this scheme have done is take the entire cost of government and raise the money by levying a consumption or sales tax. The proposal, with the requisite misleading moniker of ‘Fair Tax’ has the appearance, like the flat tax, of fairness. Everyone pays the same tax, right? Wrong. Everyone pays the same tax, as now, at the checkout counter, but not everyone pays the same effective tax. Whole parts of the economy, principally the investment community, earn money but are exempt from taxation. So for instance, the poor slob earning $15,000. a year pays an effective tax at the going rate of 23% while the billionaire, because so much of his money is off earning income at compounded rates tax free, pays an effective rate of less than 2%.

What makes this shell game so appealing is the deceptively simple complexity of it. It reminds me, in a perverse way, of the objections modern Republicans raise to the idea of returning to a graduated income tax. “The rich already pay the lion’s share of income taxes”, they point out parroting the talking points of the Republican National Committee. The Rich do pay nearly two thirds of all income tax in this country. But that is precisely the problem. The fact that the upper ten percent carry such a burden is not due to the unfairness of the present system or to the horrors of reinstituting the tax code of John Kennedy or even Jimmy Carter. It is due, quite simply, to the fact that the wealthy now own such a large share of the economic pie. No the answer is not to lower taxes on the all too heavily burdened upper classes, it is instead to raise those taxes and return a greater share of the wealth to those who labored to produce it in the first place. What is needed is a candidate for President to look the American people in the eye and tell them that what we want to see is the middle class paying 80% of the income taxes, because under this administration the middle class will control 80% of the wealth.

There are other problems with this so-called "fair tax" proposal:

There is the question of the effective tax rate. Proponents say that it is 23% but for the scheme to be income neutral—that is for it to generate as much money into the federal treasury as the current system—the effective tax on goods and services would be at least 30% and, according to the President’s Advisory Panel on Tax Reform, as much as a 34% in order to fund government at present levels. In fact according to economist William Gale of the Brookings Institution taxation at the 23% rate would blow a 7 trillion dollar hole in the budget over 10 years and he projects a more realistic rate of 31% or higher in order to reach present levels of funding.(seehttp://money.cnn.com/2005/09/06/pf/taxes/consumptiontax_0510/index.htm) This new tax would be levied at time of purchase on new homes, rent, interest on credit cards, mortgages and car loans, doctor bills, utilities, gasoline (current taxes would not be repealed) legal fees, ad nauseum.

Conservative radio talk-show host Neil Boortz contends that there will be a 22% reduction in prices as companies will be able to produce and sell goods and services cheaper because they would no longer be required to withhold taxes. This is a blanket admission, by one of the scheme’s principal proponents, that by passing the savings on to the consumer wages will in effect be cut by at least 22%. In other words the money now being withheld would not be returned to the worker but would instead be passed on to the consumer who would then realize the savings when the product is purchased. For the worker, on the other hand, the tax burden remains but must now be paid at the check out counter. The tax must be paid, albeit at the reduced price, not with one’s old ‘gross’ income but with one’s old ‘net income’ that is what was previously left after the old IRS got done with it. Assuming that all of the savings are passed on to the consumer this is at best a simple economic wash. No real savings emerges.

Now either prices increase or wages must fall. Either the employer pockets the monies formerly withheld and passes the savings on to the consumer in which case it is a dead wash—if, and it’s a big if, all of said savings are recycled back to the worker as consumer. The worker is then confronted with a giant leap in retail prices. If the schemers allow us to keep all our earnings and we have all of our former paycheck in hand then prices we will face will be as high as 34% greater. In any case the system, as presented, is a wash. The proponents contend that it will raise as much money as the present system. The question is why make the change?

The answer lies in the hidden agendas. Remember these are the same folks that have been toying with the tax code now for nearly a generation, killing with a thousand cuts the golden goose given us by our ancestors. It began at the 1976 Democratic National Convention when Jimmy Carter, as he accepted his party’s nomination for the Presidency, called the American tax code a “disgrace to the human race.” The problem facing the nation at the time was that the tax code as it had evolved in the postwar era had not been adjusted for inflation. Greater numbers of working Americans were now lifted, by the hyperinflation of the era, into higher tax brackets fuelling a nation-wide tax revolt. Carter in calling for reform gave voice and legitimacy to this growing concern. Instead of simply adjusting the tax code for inflation the Democrats stalled and it was left to Ronald Reagan to do the reforming.

Posturing as a progressive Reagan, much as ‘Ol Two-Cows would do two decades later, put conservative stink tanks in overdrive spinning ‘tax reform’ that had the veneer of being progressive but in effect shifted the tax burden increasingly from wealth to work. Accordingly they cut the highest tax brackets from 72% to 35%; they cut the capital gains tax in half, made similar reductions in the estate tax. They increased Social Security withholding taxes and cut federal revenue sharing meaning that state and local governments, funded on flat rate income or sales taxes, were left to make up the difference. This had the effect of further shifting taxation over the entire spectrum from the graduated income to more regressive forms of taxation. To add insult to injury they eliminated the exemptions for consumer loans, most medical bills, and other previous exemptions that the middle class had enjoyed so as to raise the needed revenues. The result, as has been noted by Republican turned independent Kevin Phillips, is that there has been a growing gap between rich and poor and the middle class, now owning a smaller share of the national economy than at any time since before 1929, is shrinking relative to the rest of the economy. The economic high tides of the 80’s and 90’s did not, as Reagan had promised, raise all boats; and under the maladministration of ‘Ol Two-Cows, over 5 million have slipped through the now tattered safety net into poverty. It is from advocates such as these that the latest incarnation of ‘tax reform’ in the shape of the so called ‘fair tax’ comes. The question poses itself: why trust them?

The shell game gets complicated. The proposal calls for a “Prebate” program in which those at the lowest levels will be reimbursed for taxes paid giving the act a ‘populist’ veneer but this would ensure, under a revenue neutral standard, that the middle class will bear a greater share of the burden. And, to be fair, the proposal does for the first time shift social security funding in such a way as to make the rich belly up to the bar and pay more. But the fact remains that this is perhaps the most regressive tax proposal to ever have reached the national political debate since early in the nineteenth century. It is a shell game in which wealth walks away from the table nearly scot-free.

Nor does the ‘Fair Tax’ eliminate the IRS as the Huckster would have us believe. Some agency, however named, will have to collect the taxes. Taxes, in the new form would simply be collected not by the employer but by the merchant. How the retail industry will react to this burden is unclear. This proposal, by their own admission, will not cut the overall tax burden it will simply shift who will pay it. To suggest otherwise is to hint at a hidden agenda in which the real purposes are to simultaneously cut taxes on wealth and cut government revenue so as to further savage governance. It gets harder to fund the OSHA or the Consumer Protection Agency, when funding has gone dry. Whatever the real intent, one smells a rat under the kitchen sink.

It is doubtful that neither the Huckster nor Neil Boortz has studied Econ 101. If they had they would be able to recognize so obvious an economic shell game. Let us give them the benefit of the doubt and put this present misunderstanding down to a lack of proper schooling. To assume otherwise is to understand that they have become mere shills for great wealth, mere apologists for their corporate paymasters, and mere pimps for the GOP-- the Grand Old Prostitute.

In the immortal words of ‘Ol Two-Cows’, fool me once shame on you, fool me twice, shame on me, fool me three times, ‘won’t get fooled again’. No! No!

For another assessment of the impact of the “Fair Tax “proposal see:
http://www.factcheck.org/taxes/unspinning_the_fairtax.html