 by Chris HayesStory of the Week, Up w/ Chris Hayes |
The contemporary Republican party faces a fundamental political problem and it is this: the policy position to which the party is most committed is very unpopular. Over the last decade the single most urgent, durable domestic priority of the Republican Party is reducing taxes on wealthy Americans. If there is one thing you can bank on when the Republicans are in power, it's that.
It happened twice during George W. Bush's terms, in which he pushed through tax cuts that totaled a combined $2.74 trillion. When those tax cuts were set to expire in 2010, Republicans announced they would happily let taxes rise for everyone, and let unemployment benefits expire—an unprecedented move under such dire conditions—rather than raise taxes for the top 1%.
They won that standoff and got their way, leading to at least $225 billion in tax cuts for the top 1% over the last two years. Once Republicans took the House, they moved quickly to vote for the Ryan budget, which passed the House the first time on a vote of 235-193. All but four Republicans voted for it, and it would have cut taxes for those at the top even further. The Ryan budget died in the Senate, but undeterred, earlier this year Ryan unveiled a second version of his budget, this one would have cut more than $1.76 trillion from the taxes of the top one half of the top 1% over ten years.
Which brings us to the current campaign. During the Republican primary every candidate in the field offered tax cuts that, it turned out, would most benefit the wealthy. A number of the plans proposed - Cain's, Gingrich's - came right out and said explicitly that they lowered taxes for the wealthiest. I suppose it's to Mitt Romney's credit that he did not have the most cruelly regressive tax plan in the primary. But it's under-appreciated that he is currently proposing at least three major separate tax cuts, all of which would disproportionately benefit the rich.
First, he's proposing that all of the Bush tax cuts be made permanent, which would mean a tax cut of $3 trillion for the wealthiest over just the next ten years. Second, he's proposing to cut the corporate tax rate from 35% to 25%. The Tax Policy Center estimates that just over half of the corporate tax burden ultimately falls on the top 1%, so Romney's plan amounts to a cut of $43-thousand for each household in the top 1%. And then there's the now famous $5 trillion tax cut Mitt Romney is, or at least was proposing, which he says isn't a tax cut because he'll close unspecified loopholes and deductions.
We all know inequality has grown, that the 1% have pulled away from everyone else, and perversely, the recovery has only made that trend worse. So it violates voters' basic and appropriate sense of fairness to further skew the tax code towards those who are doing the best, in fact some doing much better year after year than anyone else. Why, they ask, should Mitt Romney, who makes more than $20 million a year and sits on a fortune of $230 million only pay 14% in taxes? The polling on this is remarkably robust and incredibly consistent. Heck, even a majority of Republican support higher taxes for the wealthy, as several polls have found.
So if you're a Republican seeking the highest office in the land, you've got a real problem. On the one hand you absolutely have to advocate for and push through tax cuts for the wealthy, knowing full well the electorate as a whole does not like or want them. So what do you do? Well, up until this point, Mitt Romney has floundered a bit, but Wednesday at the debate, he fully embraced the very effective strategy used by the last man to successfully pull off this particular bait and switch: George W. Bush. The centerpiece of Bush's campaign was a large tax cut, skewed heavily to the wealthy. But rather than defend this principle of tax cuts for the wealthy, he simply obfuscated and hand waved and misled about his tax cuts' effects.
Bush: Everybody who pays taxes ought to get tax relief. After my plan is in place, the wealthiest Americans will pay a higher percentage of taxes then they do today, and the poorest of Americans, six million families, seven million people won't pay any tax at all.
Notice the sleight of hand. The wealthiest Americans will pay a higher percentage of taxes than they do today. Not a higher percentage of their income in taxes, since that would be an outright lie. This is a very common bit of conservative misdirection used to hide the distributional unfairness of their tax cuts.
Even in Herman Cain's regressive world of a 9-9-9 flat tax, you can imagine that with enough concetration of income at the top, the wealthiest households would still pay the majority of total income-tax revenue. That doesn't reflect how progressive or fair the taxation system is, it reflects just how unequal incomes are. Bush did it again in the next debate, too.
Under my plan, if you make -- the top -- the wealthy people pay 62% of the taxes today. Afterwards they pay 64%. This is a fair plan. You know why? Because the tax code is unfair for people at the bottom end of the economic ladder. If you're a single mother making $22,000 a year today and you're trying to raise two children, for every additional dollar you earn you pay a higher marginal rate on that dollar than someone making $200,000, and that's not right.
At the time, this drove observers to distraction. Bush was running on a huge tax cut for the wealthy and refusing to admit he was running on a huge tax cut for the wealthy. Paul Krugman nearly broke his keyboard writing column after column pointing this simple fact out. "The big lesson of this year's campaign," he wrote, "a lesson that we can be sure politicians will take to heart -- is that a candidate can get away with saying things that are demonstrably untrue, as long as the untruths involve big numbers."
Romney has already embraced much of the substance of Bush's domestic policy, and now he's come around to fully embracing Bush's style to sell it. Confronted with his 5-trillion dollar tax cut, which would skew towards the wealthy, Romney simply refused to own the consequences of his own proposal. And he used exactly the same "share of taxes" sleight-of-hand Bush got away with: "I'm not going to reduce the share of taxes paid by high- income people."
But Romney has an even more sophisticated game of three card monte than Bush had, with three principles that are impossible to satisfy together--lower tax rates for everyone, revenue neutral, and taxes won't be lowered for high-income people. But if you point towards one of those cards, he waves at the other two. We've seen this before and a lot of folks got fooled the first time. So it's all the more true that those reporting on this campaign have a duty to make sure voters are not fooled again. We can start by listening to Romney himself:
We're going to cut taxes on everyone across the country by 20%, including the top 1%.
That was Romney before he found his inner Bush. But hear me now: if Mitt Romney is elected president, taxes for the top 1% will be reduced. If I had Romney's money, I'd even bet $10,000 on it.
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As an old manufacturing manager, consultant, and consumer, I am extremely disappointed in the discussion overall about economic strategies. All the discussion revolves around supply side. Cut taxes and the 1% will do more hiring - baloney!
If I am a business owner, surviving or prospering with my current staff, I will not hire, I will pocket the tax break. So would you.
It is really all about the demand side. How to stimulate demand (throughput). Encourage R&D, new product/process development, technology implementation, etc. The 1% are not the job creators, I AM(and you are)!
Chris Hayes: I think that Axelrod and Pflouffe are exhausted or never had the policy chops to begin with. If only you could pierce through the bubble and get your arguments and analyses directly to the President.
What had seemed like an inevitable victory is now looking like a tossup. They're fresh out of ideas and are repeating the same talking points. Whatever hologram of Obama was on that debate stage didn't seem to have the presence of mind to make these rebuttals and the clean up brigade who did the spinning afterwards had nothing new to say.
Who made that bubble? the one Chris Hayes can't penetrate. Answer....Barack Obama. He is surrounded entirely by center-right figures. Exclusively. Is this an accident. He took a lot of people from the Clinton era, but not Stiglitz or Reich.
He kept the entire Bush military team, he has continued to press on not only in the Middle East, but with the insane drug war, over which he has a lot of control.
He is not a progressive, he is not a populist, he is a right center, conciliatory weasel.
(sorry that just slipped out....name calling doesn't help, and the right has already poisoned that well.)
The point is...it is not the advisors...not the bubble...it is the man.
Chris, conventional wisdom says that Mitt Romney won the first debate and that Obama and Lehrer did not rein him in as they should have. Here's the scoop: it was the plan to let Romney rule the first debate. If the timelines had been enforced and if Obama had asked the questions that you and other debate critics wanted, we would not have seen Romney's performance as a "rules don't mean anything if I have something to say" debater. Notice that Lehrer never told Romney that his time was up but he did tell the President he had five seconds and the President said, "I had 5 seconds before you interrupted" and proceeded to give a more than 5 seconds response. If Romney hadn't been allowed to take charge, we wouldn't have heard all the blatant changes in position Romney took and we wouldn't have heard his comment about Big Bird, that instantaneously lost Romney the votes of millions of moms with young children. Obama and Lehrer showed that Romney, given the chance, will be what Romney has always been --- a flip-flopper with no moral compass. I think the Obama campaign knows Romney so well that they knew that, given the chance, Romney would do what he did in the first debate -- and he did.
But even this "20% across the board" cut is skewed towards the wealthy, as no one seems to point out, because its a cut in tax RATES. So the highest tax bracket, say families making over $388,350, is 35% (slated to go up to 39.6% when the Bush cuts expire, but let's ignore that for the moment). Romney takes the 20% of the Bush number and voila, they pay 28%, giving them a 7% tax cut. For the lowest bracket, families making less than $17,400, the Bush rate is 10%, so a 20% rate cut means a cut of only 2%. So the rich get a 7% cut while the poorest taxpayers get only a 2% cut--camouflaged by the "20% across the board" language. Why should the rich get a cut that is 5 points higher? This is a clear, easily understood example of Romney's perfidity, and I cannot understand why no one is using it!
I've been trying to emphasize this in my comments elsewhere. Romney wants people to hear he'd be cutting their TAXES 20% but no, it's their tax rate. Thanks for going through all the important devil-in-the-details facts.
Don't forget that he plans on getting rid of deductions and exceptions. That will hurt 98% of Americans and the wealthy will have other ways of getting their deductions and exceptions to help them. We need to stop listening to Republican driven numbers and remember how most of us were duped and how he changes his mind so he can fit the people listening.
So, Chris, I watched your show this morning, even if it is ridiculously early. Always love your commentary. My take on your exchange with Mayor Nine-Eleven was that he was insulting YOU. Funny that you felt the need to clarify, when basically you were right.
I think you can force the banks to make their own qualifications for better mortgage loans by passing a simple law requiring the bank issuing the original loan to hold the loan longer than the second after the buyer signs the contract.
I believe that it should be at least 1/3 of the term of the loan. 30 year loan bank has to hold that loan for 10 years - 15 year loan bank holds on to it for 5 years. By being responsible for the loan they will instantly improve their qualifications. The government could then continue to guarantee loans for people that only need a little help to meet those qualifications.
This law should have a solid deadline to begin and the banks qualifications should have to be presented to a committee of economist to okay before going in to effect.
So, Chris --- watched your show this morning, even if it is ridiculously early. Always agree with your commentary. Thought it was unfortunate, however, you felt the need to apologize to Mayor Nine-Eleven when you were basically right, and it was he who insulted YOU! Did not make any sense to me.
I'm disgusted with the way Avik Roy thinks people do make it on their own and scoffed at the notion that the roads,bridges,post offices, etc... somehow contribute to people's "success".
Why doesn't he return to India and see how much success he has with that country's corrupt government and business regulatory institutions that require a great deal of bribes, their crap ass and unsanitary infrastructure that makes it extremely difficult to transport goods and services, their CRUSHING level of poverity that limits buying power, etc..
If you've been anywhere outside of the US then you understand it as FACT that everything that the US has to offer, that came at the expense of "we the people", is the MOST IMPORTANT aspect of becoming a success.
People don't have to pay bribes, pay private security and aren't limited by a LACK of adequate roads, bridges, potable water, electricity, etc...or an educated workforce with disposable income here thanks to US taxpayer funded infrastructure & public education for even the poorest. That's why people should pay an estate tax because they most definitely did NOT built it on their own.
Unless you want to go to a European nation where you will pay even more in taxes,but not have to worry about sky-rocketing health care costs.
Your piece on the Return of the Fuzzy Math should be seen by everyone. Can you put this on Youtube? This would make a good peice for and ad! You always explain things so we can understand. Love your show, keep up the GREAT work.
Just to put your guest Avik Roy's comments into perspective:
Maintaining the unfairly low tax rates on carried interest which benefits only wealthy hedge fund managers and the wealthy who "earn" a living through their investments not working for their wages: Cost: ~$2 billion a year - fiddleing small change not worth worrying about
The national funding for PBS, a highly valued cultural institution beloved and beneficial to a vast portion of the citizens in the United States: Cost: ~$440 million a year - Sorry Big Bird, I like ya, but you're fired!
Romney's faith allows him to lie, cheat, defraud, & break campaign promises to all of us non-mormons. The fact that lying to us is not a sin cannot be overstated. He is so awkward and uncomfortable with people because we are barbaric "gentiles" in his eyes.
During the Warren Jeffs trial, the news reported on investigations into mormons defrauding banks, etc. It was reported that as long as mormon lies and criminal activity do not harm other moromons then it is not a sin! This explains why Romney says whatever his audience wants to hear. He has no guilt about lying and flip flopping. We who won't be joining Mitt on his god's planet of Karnak, or whatever, are mere perdition bound heathens...sub-human in he & Ann's eyes.
Chris, when talking about the estate tax, the romney advisor (on health care?? wha?) was talking about the immigrant who comes here and builds a business and wants to pass it along to his family. I'm surprised no one mentioned the $10M exemption (if married), was not mentioned. Few small businesses are worth more than that. As a matter of fact, the largest group of people with estates,farms businesses, etc. is about .03%. Fits in well with the 1%ers. But that extra exemption means an average of $116B in lost revenue over ten years. Yep, Romney wants to pass along the plutocracy (he has five sons getting rich on their own). He is a skilled liar.
They, both, behave as if we are here for their pleasure and are not to ask or question their actions in any way, shape or form. The idea that Ann thinks she knows how it feels to be a working woman with an illness who has to come home and take care of the children is preposterous. Not very many women have maids, housekeepers or nannies to help. Nor do they have the luxury of having the economic means to get the best health care available. Oh, I forgot there is the ER. Obama 2012
I don't think this is simply "fuzzy math." At this point it is math from an incomprehensible other dimension where addition equals subtraction and as Romney said at his fundraiser where simply by electing Republicans our problems will be solved no matter what policies they put in place.
Please remember the end of 2008 and the beginning of 2009 if any voter thinks Republicans are "magical" problem solvers in the dimensions we live in and understand.
Axelrod and Pflouffe are feeding Obama the same old talking points. Young guns like Bill Burton are effective operatives, not visionaries. The administration needs boy geniuses like you with brains that whirl 30 miles a minute.
Is there a way for a whippersnapper, say named Chris Hayes, to burst through the bubble and provide our president with some fresh arguments?
Do you MSNBC guys have a tweeter back channel or something? Their performance this week has been pitiful and the president didn't have much to say on 60 minutes or his convention speech either.
Here is a clip from The Daily Show with Jon Stewart that brings this issue to light in using Subway sandwich shops as an example.
Here is a clip I found on YouTube where Paul Krugman and Bill O'Reilly are debating each other on the Bush Tax Cuts.
Mr. Hayes, your tax policy segment was brilliant today. It was the most intelligent discussion of Mitt Romney's new tax positions on TV (even though grinning liar Avik Roy was in the room).
There is one issue though that I think you overlooked. Your discussion focused only on vertical inequality, but it didn't have anything to say about horizontal inequality.
Here were Mitt Romney's premises: (1) we can lower tax rates; (2) we can limit deductions and other minuses in a way that raise enough revenue that this tax cut will not add to the deficit; (3) doing so will not lower taxes on high-income people; (4) doing so will not increase taxes on middle-income people;
BUT, here is the BIG ONE that no one is talking about (which is odd because Romney used it as the entire justification for implementing his plan at all), (5) doing so will reduce taxes paid by businesses.
Even if we take Mitt Romney at his word here, what he is in effect saying that he is going to shift the tax burden from businesses to individuals. Mathematically, there is no way to lower the tax burden on businesses, while raising the same amount of revenue, without also raising taxes on individuals. His entire justification for his plan was to lower taxes on businesses. This is really about the age-old struggle between capital and labor. The unavoidable effect here would be that individuals who earn money by DOING things will be forced to pay more so that individuals who earn their money by OWNING things will pay less.
None so blind as those who will not see.
You sound so foolish I don't know where to begin. But you are just the victims of a government that is so screwed up you could not have ever seen an example of how a government should tax, borrow, spend and regulate. A payroll tax on businesses comes the closest to meeting all of the fiscal rationality criteria. The less government spends the lower this tax rate can be. Only individual citizens should be allowed to buy government debt. And this debt should be inflation protected zero interest bonds. This is to ensure that any wealth saved over a lifetime will not be eroded by inflation. Finally the real evil to be addressed is the maldistribution of income due to government grants of economic power. Excess income without government protection provides more than sufficient competitive incentives to assure a fair distribution of income. The reward for moral and rational laws and regulations is a high standard of living for everybody.
During the debate Ryan, when pushed, offered Kennedy as a President that lowered taxes and grew the economy. Since Ryan had to go back to Kennedy, but could not think of Bush, and his assistance as a member of the house. This is an admission that the Bush tax cuts did not create jobs otherwise he would have named the Bush presidency.
Chris, here's an idea, if all the fuzzy math adds up to such a great plan for the middle class and the rich, then should we suggest that they put it in a bill and the president would sign it! Does anyone ever call a bluff in politics?