Category Archives: Politics

What the 1% Want from Washington

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I don’t think I’ve ever heard of an opinion poll targeted at the rich. But two political science professors did a survey of people in the Chicago area with an average net worth of $14 million. Their research found that:

“The biggest concern of this top 1% of wealth-holders was curbing budget deficits and government spending. When surveyed, they ranked those things as priorities three times as often as they did unemployment — and far more often than any other issue…. They were also much less likely to favor raising taxes on high-income people, instead advocating that entitlement programs like Social Security and healthcare be cut to balance the budget.“

“The wealthy opposed — while most Americans favor — instituting a system of national health insurance, raising the minimum wage to above poverty levels, increasing the Earned Income Tax Credit and providing a ‘decent standard of living’ for the unemployed. They were also against the federal government helping with or providing jobs for those who cannot find private employment.”

Which explains why so many politicians talk about reducing the budget deficit instead of stimulating the economy and helping the unemployed and underemployed. And why so many politicians want to cut Social Security and never even think about expanding it.

http://www.latimes.com/news/opinion/commentary/la-oe-page-wealth-and-politics-20130322,0,3575694.story

$59 in 45 Years!

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In case there was any doubt about the growth of inequality in America, a new study based on IRS data shows that:

Corrected for inflation, the average annual income of the bottom 90% of workers in 2011 was $30,437. In 1966, the average was $30,378. That’s an increase of $59 in 45 years.

Meanwhile, the average income of the top 10% almost doubled, rising from $138,793 to $254,864, an increase of roughly $116,000, while the average income of the top 1% rose by $628,000. For the top 0.1%, the increase was $18 million!

More recently, since 2009, the top 1 percent received 81% of  the growth in income. The top 0.1% received more than 50% of the growth.

The wealthiest Americans are pulling away from the rest of us because income has shifted from labor to capital, and because of lower taxes on capital gains, dividends, estates, and other income that is especially important to people with a lot of money.

Policies that especially benefit people with high incomes could be changed (in theory). Yet, in the words of economist David Cay Johnston:

“It has become widely understood that we cannot balance our federal budget by raising taxes only on those at the top, because there is not enough income there, even if we taxed away everything the top makes. What is equally true is that we cannot increase tax revenue if the incomes of the vast majority keep falling [or remain stagnant]. That, however, has yet to become part of the debate on how to finance government.”

http://www.taxanalysts.com/www/features.nsf/Articles/C52956572546624F85257B1D004DE3FC?OpenDocument

Death and Taxes

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A recent article by Katherine Newman, a sociology professor at Johns Hopkins, highlights the effect of rising tax rates on the poor. She points out that for the past 30 years or so, many states in the South and the West have been raising sales taxes and fees for government services, both of which especially affect the poor. States in the Northeast and Midwest, on the other hand, have generally been more progressive in their tax policies, some even going so far as to create local versions of the federal Earned Income Tax Credit, which is specifically designed to assist people who don’t earn much money.

According to Professor Newman, the result of these policies, after correcting for other variables, like the local poverty rate, racial composition, diet and cost of living, is that there is a clear relationship between taxing the poor and “negative outcomes”, such as heart disease, infant mortality, dropping out of school, divorce, property crime and violent crime:

“The poor of the South — and increasingly the West — do worse because their states tax them more heavily. They have less money to buy medication, so their health problems get worse. High sales taxes make meals more expensive, so they shift to cheaper, unhealthy food. If people can’t make ends meet, they may turn to the underground economy or to crime.”

Partly for this reason, Southern and Western states receive more than their share of the federal budget (it’s not just because they have lots of military bases):

“Medicaid payments, food stamps, disability benefits — all of these federal programs swoop in to try to patch up a frayed safety net. Consequently, the Southern states reap more dollars in federal benefits than they pay in taxes (like Mississippi, which saw a net gain of $240 billion between 1990 and 2009), while the wealthier states — which do more to take care of their own — lose out for every dollar they pay (like New Jersey, which handed over a net of $706 billion over that same period)… We all pay for the damage done when states try to solve their fiscal problems, or score ideological points, on the backs of the poor.”

And yet the situation is getting worse, as states like Louisiana, Nebraska and North Carolina consider cutting income and corporate taxes, while raising sales taxes. 

http://opinionator.blogs.nytimes.com/2013/03/09/in-the-south-and-west-a-tax-on-being-poor/

Democracy by the Numbers

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For several years, I’ve occasionally driven back and forth between Vermont and upstate New York. The difference between the two states is always noticeable.

On the Vermont side of the border, everything seems neat and tidy and pleasant. There are billboards that say even the gas stations are nice in Vermont (I don’t remember seeing vases of plastic flowers in gas station restrooms in other states.)

The New York side of the border, however, which is equally rural, always looks shabby and rundown. The atmosphere in towns like Whitehall and Fort Ann is depressing. Every time I drive through there I wonder what the people do for a living.

So it was good to see confirmation of my assessment, and a possible explanation, in the New York Times: 

“In the four years after the financial crisis struck, a great wave of federal stimulus money washed over Rutland County (Vermont). It helped pay for bridges, roads, preschool programs, a community health center, buses and fire trucks, water mains and tanks… Just down Route 4, at the New York border, the landscape abruptly turns from spiffy to scruffy. Washington County, N.Y., which is home to about 60,000 people — just as Rutland is — saw only a quarter as much money.”

The Times suggests that the key difference between these adjoining regions is that Vermont, as a small state, has the same number of U.S. senators as New York, a very large state:

“Vermont’s 625,000 residents have two United States senators, and so do New York’s 19 million. That means that a Vermonter has 30 times the voting power in the Senate of a New Yorker just over the state line — the biggest inequality between two adjacent states.”

There are surely other reasons for the obvious discrepancy between Vermont and upstate New York, but it’s very likely that different levels of political representation are an important factor. States like Vermont and Wyoming (population 580,000) have the same number of senators as New York and California (population 38 million). That affects where the money goes.

Small states are even over-represented in the House. The representative from Wyoming has 580,000 constituents. The average representative from California has 720,000. Throw in the effect of gerrymandering in the House, which recently helped Republicans win 53% of the seats while receiving 48% of the popular vote, and it shouldn’t be surprising that Congress doesn’t reflect the will of the people.

http://www.nytimes.com/interactive/2013/03/11/us/politics/democracy-tested.html?pagewanted=all

That Amendment Again

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“A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.”

Fortunately, a well-regulated militia is no longer necessary to the security of a free state. It’s not 1789 anymore. We now have the largest “defense” establishment in the world, as well as the FBI, CIA, NSA, ATF, Border Patrol, National Guard, state police, local police, security guards and mercenaries keeping us secure. We devote more energy and resources to security than any other country in the world.

But we’re stuck with the Second Amendment for now. The question is: how should that amendment be interpreted?

In practice, some people interpret it this way: “the right of just about anyone to own and operate the latest in high-tech firearms shall not be infringed”. That’s an extremely liberal interpretation.

After all, none of the rights mentioned in the Declaration of Independence or the Constitution are absolute.  We certainly don’t have an absolute right to life (you can be executed for certain crimes, especially in Texas), liberty (you can be locked up for lots of reasons) and the pursuit of happiness (ditto). You can’t say whatever you want or assemble wherever you want or even practice your religion however you want.

Living with other people means having our rights restricted. In line with that fact of life, we should all start interpreting the Second Amendment in a reasonably restricted way:

“The right of the people to own and operate firearms shall not be infringed, but shall be subject to appropriate regulation, consistent with everyone’s more important rights to life, liberty and the pursuit of happiness”.

Even Justice Scalia agrees that the right to bear arms is restricted. The next problem, however, is that he and his like-minded colleagues won’t accept regulation that sufficiently protects other people’s rights to avoid death or injury at the hands of someone with a gun.