Wednesday, October 17, 2012

Romney lets a cat out of the bag

Special post on the presidential debate.

Personally, I thought the president was equally incisive and together in the first debate. But obviously the media has its own frame to fill, and shouting down others and bullying seem to be the "presidential" qualities du jour. It plays to Mitt Romney's strengths, but saddens and disturbs me. This after a period when we heard so much about the badness of bullying. How ironic.

Anyhow, Mr. Romney made a statement that was very important. Not new, but I hadn't heard it quite so clearly before:
"But your rate comes down and the burden also comes down on you for one more reason, and that is every middle-income taxpayer no longer will pay any tax on interest, dividends or capital gains. No tax on your savings. That makes life a lot easier.
And I will not -- I will not under any circumstances, reduce the share that's being paid by the highest income taxpayers."
 [Editor's note.. the comments below provide significant context to this quote, in that Romney added that his no-investment tax promise applies only up to middle-income taxpayers.]

If Obama were paying attention, he might have answered with something like:

"Mr Romney just said that in his plan, taxes on capital gains, investment income, and dividends would be eliminated. What would that do to his own taxes? Right now, under the Bush tax cuts, Mr Romney pays about 14% in taxes, which is lower than most middle class families and which I regard as disgraceful. Under his own plan, he would pay zero in taxes. Zero in taxes, because pretty much all his income is investment income.

Now there is no way to make up for this with deductions, credits, and loopholes, because he would already be paying zero taxes. Deductions and loopholes would have no effect. Extrapolating out to everyone in his position, again, there is no way to make up all his proposed tax gifts to the rich with deductions, credits, and loopholes.

Mr. Romney may be doing quantum mechanics or something. Frankly, I don't understand a lot of complicated math. But if you use arithmetic, there is no way to make all this add up. No way to make up for the enormous and explicit tax gifts Mr. Romney proposes for the rich with any amount of deductions, credits, and loopholes. 

And I believe it is insulting to you as listeners and citizens that Mr. Romney stands here and says otherwise, without having the detailed plan and math to back him up. His statements about making sure the rich pay their share are pure hot air, contrary to everything the modern Republican party stands for, and to everything he said during the campaign up until a few days ago.

Add in the elimination of the alternative minimum tax and the estate tax, and, when you are looking at Mr Romney, you are looking at a future of the rich in America getting richer and the poor getting poorer, in perpetuity. Of Mr. Romney and people like him, stomping on the face of the average American, forever."


  1. I thought that, right after that, Romney clarified that the "no tax on interest" only applied to people making "under $200,000 a year." I thought it was mainly silly because, as it is, I only make $4 a year on interest. Since it's under $10 it doesn't even need to be reported... meaning I already don't pay tax on it.

  2. Hi, Kelley-

    Yes, he said as you note:

    "If you're getting interest from a bank, if you're getting a statement from a mutual fund or any other kind of investment you have, you don't have to worry about filing taxes on that, because there'll be no taxes for anybody making $200,000.00 per year and less, on your interest, dividends and capital gains. Why am I lowering taxes on the middle- class? Because under the last four years, they've been buried. And I want to help people in the middle-class."

    The question is whether one takes this seriously. I admittedly take a highly adversarial position. He also said that the rich would pay the same share of the government taxes overall. And we was absolutely, positively, categorical about all of this.

    The Republican platform is in line, generally:

    "Reform the tax code by reducing marginal tax rates by 20 percent across-the-board in a revenue-neutral manner;
    Eliminate the taxes on interest, dividends, and capital gains altogether for lower and middle-income taxpayers;
    End the Death Tax; and
    Repeal the Alternative Minimum Tax."

    What is the record on all of this? Atrocious. The political fact of the matter is that right now, the Republicans are holding the low end Bush tax cuts hostage to the high end cuts. Congress is always happy to pass tax cuts, but never gets around to paying for them, or ending loopholes, or cutting deductions and loopholes. The chances of enacting the required deduction cuts are zero.

    What is Romney's record on all this? He has a record of saying whatever will get him votes at the moment, changing positions diametrically, in what I would call pathological fashion. Thus I think we have a right to parse his words very adversely, measuring what he is saying against what other powers in the Republican party are saying and have done in the past. Romney is but a creature of this larger ideological ecosystem.

    Then there is the math, which doesn't add up, so one again has a right to fill in, not some gauzy feelings that the candidate would like to conjure, but some numbers to make up all these shortfalls- funding the military, funding the tax gifts, funding the deficit reduction. Either the entire discretionary government is going to disappear, or some of these categorical promises are not going to happen.

    ... cont ...

  3. Then there is the economic purpose of all this. Why exchange rate cuts evenly for deduction cuts, were that even possible on the scale proposed? The prospect of jobs being created by "job creators" only would come to pass if they had more money to invest to create those jobs. If they do not actually get more money, then it is a wash, and Romney may be making a different tax code for better or worse, but it will do nothing for his vaunted job creation, were one even to take his trickle-down theory seriously.

    Now, I am not against deficit spending, and wish that Obama defend the facts and beneficts of current policy more explicitly. What I am against is being sold a bill of goods with a smooth, sharp-suited delivery, which does not make any sense in terms of the whole campaign up to this point, or in mathematical terms were we to ignore where Romney is coming from. His choice of Ryan exemplifies this double-talk, since Ryan is the Republican Jihadist par excellance for all those things that Romney is desperately watering down in these last weeks of the campaign, with breathtaking cynicism.

    This obviously part of a much larger story where the Republican party has aligned itself with the interests of the rich. This makes eminent sense in a political system that runs on money. The advantages are abundant. Their whole convention was a celebration of success and riches. But it requires the Republican party to systematically dissemble and misrepresent itself when it comes time to do that part of the process where one actually gets votes, as though business experience in screwing competitors had anything to do with understanding and running a macro-economy, or as if they care about jobs, little people, the 47%, or indeed the 99%. Romney's presentations need to be viewed in that light, in my opinion, with the highest skepticism.

    What would my prediction be for a Romney administration? They would easily pass the desert course first- tax cuts for everyone. The economy would get a small boost, which everyone would celebrate. He would say, sorry.. the congress forced me to extend the cuts to the rich, even though I really didn't want to. Then they would start slashing the government- cutting research, parks, etc.. cutting business and evironmental regulation, making us even more corrupt than we already are. It would end there, because as we know, there is really no price at the moment for borrowing- indeed it is a good thing. So their policy priorities will be, in order: 1- tax cuts, 2- killing big bird and other provisions of the common good, 3- increasing corruption and business freedom (which is not the same at all as creating jobs), and a distant 4- lowering the deficit, if macroeconomic conditions warrant.

  4. Incidentally, it is interesting to note that in macroeconomic terms, taxes are very similar to borrowing. the government either demands money fairly and equitably from those who can pay by way of taxes, or gets their savings voluntarily in return for regular interest payments and iron-clad solvency.

    For the rich, bonds are a much better deal that taxes, so borrowing is a very attractive mode of government funding. The putative Republican aversion to deficits is, I would argue, for show and for beating on parts of the government they don't like (military spending never seems to lead to deficits!). None other than their patron saint Reagan got the ball rolling to vast deficit spending.

    For the rest of us, borrowing is a mixed blessing. It is a powerful tool for macroeconomic policy, when used rationally. But it also promises future redistribution of those interest payments from the taxpayers to the bond holders. If the rich have engineered the tax system to demand little from themselves, then it is quite a win-win situation!

    1. Whew! Don't get me wrong (and I thought about this as soon as I first hit "post"), I disagree with the basic economics of the GOP platform (and most of the GOP's platform in general). I just wanted to point out that Romney should be represented fairly - even if he refuses to represent himself as such - and so thought it was an important omission.
      I have never understood the idea that allowing the richest of the population to keep more of their money is somehow the key to a prosperous economy. Surely an economy can't function at all if all of the money is locked up in the hands of the rich? I may not be a financial analyst or even a professional economist, but I can see when I'm being sold snake oil. So to speak.
      It's interesting to me, having so many European friends, to see the difference in the average. What I mean is, I don't expect that living elsewhere will mean living in a place where people don't argue. People always argue. But if I move to Europe, for example, the average about which people argue is shifted from the average here in the US. So the basic premise, those things which everyone agrees upon before the discussion begins, is different. In Europe, everyone agrees on the basic premise that the government pays for welfare and education. Here, that isn't even close to the truth.

  5. Hi, Kelly-

    I appreciate your question and attitude. It is disturbing for me that I may be so far in the tank that I can not listen, read, or think clearly. The lying that is usual in politics has been augmented over the last decade or two by the bilge on FOX, talk radio, etc. to the point that it seems rational to significantly discount anything that someone from the right wing echo chamber says. An example is the many eminent economists who have sold their scholarly integrity for right wing ideology (John Taylor, Greg Mankiw).

    So, disturbing as it is, and as much as it paints me one of the group-thinking polarized partisan hordes, my analysis of the situation is that one side deserves a great deal less trust in what is actually coming out of their mouths at this critical time of the campaign. The Etch-a-sketch is at work, and it is our task to divine what portion of its artistry reflects true intent and true capability once in office.

    The election isn't just about Romney and what he says at the moment to get elected. It is about the tens of thousands of Republicans he will appoint, many from the Bush administration, ready to roll back every progressive policy of the last administration and beyond. How well are they tied to Romney's exquisitely constructed promises? What is their track record of policies and intentions, not to mention competence?

    I was heartened by the Occupy meme- that finally, someone identified and fought against the central political issue of our time: the corruption of the political system by money and the corruption of our whole way of life by growing inequality, corporate, and plutocratic power, at the cost of any semblance of public good. A win by Romney would, on that front, be an enormous step in the wrong direction, towards a new feudalism. Forgive me for being hyperbolic, but the stakes do seem enormous.

  6. The election isn't just about Romney and what he says at the moment to get elected. It is about the tens of thousands of Republicans he will appoint, many from the Bush administration, ready to roll back every progressive policy of the last administration and beyond. How well are they tied to Romney's exquisitely constructed promises? What is their track record of policies and intentions, not to mention competence?

    Burk, I totally agree, and I also agree that the stakes are high. When it comes to election season, though, I suppose that I take this same skepticism toward all participants - nobody ever answers questions honestly or straightforwardly during any event that bears the mark of public relations. So it's not that I feel you have some "group-thinking polarized partisan" stance, it's that I want to make sure I'm having (at least) an honest half of a conversation.

    On a related note, I just recently finished Jarecki's "The American Way of War," have you read it?


  7. I have not read it. I read a bit of Glenn Greenwald on Salon,who writes in a similar vein. It is certainly an important story and topic. My library has it, so I may check it out next week.

    I think we can agree that Iraq was a horrible, incompetent, immoral catastrophe. But how about Afghanistan? How about Japan and Europe? How about Libya? I set a great deal of store by the world peace we have been able to provide in the post-WW2 era by way of our strength and (occasional) sponsorship of decency, democracy, and open economic activity. Where would China be if they were not drawn into the modern capitalist system that we largely sponsored around asia and elsewhere (Japan, South Korea)?

    On this modern theme of drones in particular, it is certainly a difficult issue. The precision we now have replaces a lot of very blunt instruments that we would have employed in earlier times, like direct invasion, blanket bombing like in WW2 and Vietnam, and perhaps civilian terrorization, like our burning of whole villages in Vietnam. To me the question is simply whether we have institutional controls in place so that they are used on a true war footing against legitimate adversaries.

    My view is that the northwest areas of Pakistan have plenty of legitimate targets. This area has been cynically cordoned off by official Pakistan (since their founding) as their private stash of nuts, to be deployed, Jihad-wise, against any adversary, which has over the years included India, Russia, Afghanistan, and the US.

    Additionally, I think it is clear that we have a well-functioning chain of command in the military. Our republic is not in danger of rogue generals being declared emperor in distant provinces and marching back over the Rubicon to take over our government.

    But as you point out and as this book is surely about, our civilian control does not sufficiently extend to other branches than the executive branch. That is a serious problem, though there have always been security issues from sharing operational information with a larger circle of legislators. And it should be said that the executive branch was created precisely with this purpose- to run our affairs on a day-to-day basis, including especially those topics where security and secrecy are paramount.

    So we need to update our congressional oversight to take into account a variety of new miltary technologies and ethical dilemmas. Congress should be providing boundaries and guidelines, but not participating in operational affairs. They should also investigate past practices and events more carefully- I think this is where they have fallen down especially, though much of this will always be so sensitive that it can not not always be done publicly.

    And lastly, the war-declaration power needs to be reformed so that it is not an all-or-none affair. Dramatic Pearl Harbors followed by all-out war are very rare, and our current environment and frankly imperial responsibilities mean that congress needs to have an ongoing approval role for minor actions that stops short of declaring war. Much of this is already implicit in their funding powers- congress people constantly travel to war zones and consider what to fund and what not to fund, and investigate, etc. But congress needs to stand up occasionally and defund some aspects of our activities, like excessive surveilance, etc., and stand up for its war powers requirements, which I believe force the president to report on a timely basis what is going on in our various wars and police actions.

    So on the whole, tweeking seems more appropriate than wholesale change. Nor do I believe the republic is at risk. It is far more in peril from rampant corruption, corporations-are-people, etc. (which is part of the military-industrial story as well, of course).

  8. After all that, let me ask- what do you view as the constitutional issue at hand here? That the president starts wars without congressional approval? I think the story is that congress is regularly brow-beaten into approving what the quasi-imperial president wants, whether Bush or Obama. But that is a test of wills, and congress still has the power to say no, if sentiment was really against it. So perhaps the real question is the extent of the president's propaganda powers- why we let ourselves get snookered into Iraq, for instance. How can congress's standing be beefed up if its practices are mired in the most abject corruption?

    1. Burk, good point. Congress does still have the power to stand up to the executive branch (though infrequent corruption in that branch... cough cough Cheney... can lead to Congress being circumvented). I think that there is some kind of PR nightmare going on in this country (for someone in PR, it's probably more like a wet dream). Why do we allow such ungodly amounts of money to be spent on these auctions (I mean "elections," sorry)? Why do we not demand accountability or integrity, but instead desire flashy graphics and lies (which surely can't be lies if they're delivered so convincingly...)? And why have we allowed ourselves to fall into this two-party system where the very nature of it forces us into an "us vs them" kind of mentality? Surely we know that there is a spectrum between the two extremes?
      So to answer your question, I guess perhaps I don't know. It does bother me that the executive branch seems to have amassed far more influence than its legislative or judicial counterparts, and that is a constitutional balance-of-power issue. But the greater issue is that we allow ourselves to be fleeced by that influence, instead of questioning it in the first place.

  9. You'll recall that the most striking case of circumvention in modern times was the Iran-contra scandal, where congress expressly forbade/defunded Reagan's war on the Contras. Which Reagan shockingly circumvented by selling high-tech weapons to, of all the countries of the world, Iran to get the money to funnel back to the Contras. That deserved impeachment.

    1. I almost feel like that particular incident, because we (Congress, the judicial branch, and ultimately the American people) did not call him out, set an unfortunate precedent. A president is generally unwilling to give back any powers he (or she, eventually) has been given, even if only implicitly by way of mimicry of the previous administration.