Elizabeth Warren - Massachusetts Senate Candidate - On Class Warfare

Courtesy of Rumproast.com

I hear all this, you know, “Well, this is class warfare, this is whatever.”—No!

There is nobody in this country who got rich on his own. Nobody.

You built a factory out there—good for you! But I want to be clear.

You moved your goods to market on the roads the rest of us paid for.

You hired workers the rest of us paid to educate.

You were safe in your factory because of police forces and fire forces that the rest of us paid for.

You didn’t have to worry that maurauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did.

Now look, you built a factory and it turned into something terrific, or a great idea—God bless. Keep a big hunk of it.

But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

Class Warfare Index

46.2 million          Number of people living in poverty in the United States

15.1                      Per cent of Americans living in poverty

6.7                        Per cent of Americans living in “deep poverty” less than 50% of the poverty level

0                           Number of times poverty was mentioned by either candidate in the 2008 Presidential Debates.

24                         Per cent of total US wealth held by top 1%

$46,495                Median US income in 2009

7.1%                     Decline in median US income since 1999

9.9                        Per cent of Caucasian Americans living in poverty

25                         Per cent of African Americans living in poverty

50 milion              Number of people in US without health insurance

33                         Per cent of Hispanic Americans without health insurance

11.1                      Per cent of Americans living in poverty in 1973, after the “War on Poverty”

15.2                      Per cent of Americans living in poverty, in 1983, three years into Reaganomics

$22,050                Federal poverty level for a family of four

$44,100                Income needed to provide basic needs for a family of four

15 million             Number of US children living in poverty

21                        Per cent of children living in US in poverty

36                        Per cent of all people living in poverty who are children

64                        Per cent of total national wealth controlled by top 5%

87                        Per cent of national wealth controlled by top 20%

13                        Per cent of national wealth controlled by bottom 80% of population

38                        Per cent of Bush tax cuts that went to top 1%

1                          Percent of Bush tax cuts received by bottom 20% of population

$520,000             Average Bush-era tax cut for top .01% of households

$2.6 trillion          Total increase in federal deficit attributed to first ten years of Bush tax cuts

$5 trillion             Cost of extending Bush tax cuts for next decade

$400 Billion         Total amount spent on interest to finance first ten years of Bush tax cuts

-7.4%                   Decrease in real family income for bottom 20% of families between 1979 and 2009

+72.2%                Increase in real family income enjoyed by the top 5% of families between 1979 and 2009

+116%                 Increase in real family income enjoyed by bottom 20% of families between 1947 and1979

+86%                   Increase in real family income enjoyed by top 5% of families between 1947-1979

1980                    Year Reaganomics and trickle down economics began impacting federal tax codes

236                      Number of Congressional Republicans branding Obama’s efforts to fairly tax the wealthiest Americans as “class warfare”

The No (or not so many) Jobs Jobs Bill

In his speech to the joint session of Congress on September 8, President Obama proposed the American Jobs Act,  designed to be his answer to the stalled economy and high unemployment.  The $447 billion bill relies heavily on tax cuts as a way of stimulating the economy by putting more money in the hands of consumers and encouraging employers to create jobs.  This, in spite of the fact that there is no empirical, historical evidence that tax cuts create jobs.  In reality if you follow the arc of tax cuts starting with Reaganomics and the small government fervor of the 1980’s, through the Bush-error tax cuts, in reality it would appear that tax cuts have a negative impact on the economy.

The costliest cut proposed is a fifty per cent reduction in the payroll tax.  By calling this a payroll tax cut,  the President is obfuscating the fact that in realty it is a Social Security payroll tax cut.  The President is proposing that the 6.2% Social Security payroll tax paid by employers and employees be halved to 3.1% costing an estimated $240 billion.  The idea behind this cut is to put more money into the economy so that small businesses can hire new workers and current workers will have more cash to spend, thereby stimulating the economy.  The average worker will realize a payroll tax reduction of approximately $1,500.  While this is not an insignificant amount to put into someone’s pocket, it will do little to change an individual’s economic circumstances.  First, $1,500 translates to less than $30 per week or $120 per month.  Most people with an extra $120 per month will use it towards offsetting the high gasoline costs, paying down their credit card bills or helping to pay their mortgage or rent.  Not one of these options contributes to creating one single new job.  Instead it will increase the demand for gasoline thereby helping to maintain high gas prices or go directly to the banks and help fund even larger bonuses for executives.

The bigger issue that the President does not address, and which has been entirely ignored by the media, is that this $240 billion cut will further strangle the Social Security trust fund.  This is a Democratic president hammering another nail into the coffin of Social Security.  Even the Republicans have criticized their leading presidential contender for suggesting that Social Security would need to be done away with.  How can the President justify reducing the income of Social Security by $240 billion while it is agreed by all analysts that the trust fund needs to be shored up to provide for the long-term viability of the program and ensuring benefits for today’s workers?  The system requires additional inputs of cash, not less.  In 1955 there were 8.6 workers paying into the system for each retiree receiving benefits, while in 2010 there were less than three.  As the baby boom generation marches toward retirement, this ratio will continue to decrease.  Additionally, as older workers are laid off and are unable to find new jobs, they will file for Social Security earlier creating more of a drain on the system.

According to the President’s proposal a quarter of a trillion dollars will be taken from the system at a time when we should be looking at ways to increase the money going into the Social security trust fund, not reducing it.  While this cut will have little or no impact on job creation, it will move the crisis of Social Security up a number of years resulting in cuts to benefits and raising the retirement age.  While the President seeks to solve one crisis, he is exacerbating another.

The president has also proposed tax credits to companies that hire certain unemployed individuals.  Companies hiring a person who has been unemployed for six months or more can qualify for a $4,000 tax credit and companies hiring an unemployed veteran  can qualify for a $9,600 tax credit.  Just like tax cuts, tax credits do not create jobs.  All these credits will do is determine who gets hired when a  job is available.  The tax credits will flow to companies that would be offering jobs anyway.  These will not necessarily be new jobs.  In order for a company to create a job, there needs to be work .  If the economy remains stagnant, and consumer demand remains low, then regardless of tax credits, new jobs will not be created.  So these tax credits will not result in any net increase in employment.  And the President does not address what happens to those jobs once the tax credit expires.  Is he just creating a vicious cycle of short-term employment? 

By referring to his American Jobs Act as a bi-partisan bill that includes both Republican and Democratic initiatives, the president has proposed a bill designed to win Republican support through its heavy reliance on tax cuts.  These tax cuts make up approximately 59% of the cost of the bill, with only 41% targeting government spending that will actually impact unemployment.  There is a simple fact of life, government spending on big projects, such as those proposed only modestly in this bill – modernizing up to 35,000 schools and infrastructure investments – and not tax cuts put people back to work.  Employed people spend money and pay taxes, and that is what impacts a recession.  The only institution large enough and broad enough to help the country spend its way out of this economic slump is the United States Government.

It does not take Nostradamus to predict the outcome of this legislative process.  The Republican controlled House will support portions of the bill, those that focus on tax cuts, while defeating the spending portions of the bill including saving the jobs of teachers, cops and firefighters, extending unemployment and providing low cost mortgage refinancing.  Furthermore, the Republicans in the House will defeat any attempt by the President to offset the cost of this bill through closing tax loopholes for big business and raising taxes on the wealthiest Americans.  Once again the Republicans will show that they are the shills of the truly wealthy and of corporate America, and once again the Democrats will show that they have no backbone as a party.  The goal of the Republicans is to stop the President from a second term in office, and nothing guarantees that more than a sagging economy. 

Don’t Tax Me But Give Me My Government Services

It seems as though everybody resents paying taxes but yet we all still want the government to provide services when we need or want them. Without taxes our roads would be impassable, bridges would be unsafe, emergency services would be almost nonexistent, there would be no public education, police or fire. In short, we would be living in Somalia, a country without a functioning government. While the United States continues its slide downhill toward a third world economy, the only institution large enough to prevent that from happening is the government. That is before the vast majority of Republicans in the House and Senate signed a no new tax pledge, binding them to oppose any and all efforts to increase the marginal income tax rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

The author of this pledge is Grover Norquist, the head of Americans for Tax Reform. While tax reform itself is not a bad thing, that is not what Grover Norquist or this pledge is about. In his own words, Norquist has very clearly laid out his agenda when he stated: My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub. It is not about tax fairness or even about tax reform, but it is about reducing government and returning to a strict unregulated, untaxed free market economy that will leave millions of Americans behind.

Republicans make a show of shrinking government, while decrying big government, but have no qualms about funneling its largesse to the wealthiest among us with lavish tax cuts. In fact, those that rail the loudest against big government and taxes are the greatest beneficiaries. One example is in the imbalance of federal taxes paid by the citizens of the states. Currently thirty states are represented by Republican governors. Twenty-two of these receive more in federal tax expenditures than they pay in. On the contrary only nine states represented by a Democratic governor receive more than they pay in federal taxes.

One of those states living off the fat of the federal government is Virginia, currently represented in Congress by Eric Cantor, the majority leader of the House. Not only is Cong. Cantor a signer of the no tax pledge but he has taken the anti-tax mania to newer and more absurd heights. In the wake of Hurricane Irene, Cantor has called for all new spending in federal disaster assistance to be offset by cuts elsewhere in the federal budget. This at the same time that FEMA is being starved by budget cuts forcing it to reduce assistance to tornado ravaged parts of Missouri, in order to provide disaster assistance to areas ravaged by Irene. (it is worth noting here that Missouri is represented by a Democratic Governor)

Back in Virginia however, Mr. Cantor and the entire Virginia Congressional delegation has signed a letter asking for federal emergency assistance. So Mr. Cantor, like so many of his Republican colleagues has no trouble trying to have it both ways. Fight new taxes, force cutbacks in services that he does not believe in, while enjoying a greater return on federal taxes paid by his state; and, at the same time requesting additional federal funds in the form of disaster relief. It seems that Cong. Cantor’s plan is to force shrinkage of the federal government in all states but his own. But he is not the only one, in addition to Virginia, Republican governors in New Jersey, Pennsylvania and Georgia are also seeking federal disaster assistance. Two of these states, Pennsylvania and Georgia, are on the list of states receiving more in federal funds than they pay. If these Republicans were true to their so-called ideals then they should use the excess funds that they receive from the federal government to pay for their disaster relief.

Eric Cantor Wants 'Matching Spending Cuts' on Hurricane Irene Victim Assistance Funds

However, if you are going to be hypocritical, then why not go all out and do it Texas size. Rick Perry, Governor of Texas and leading Republican presidential candidate, said this about taxes in an interview with James Robinson for Life TV: I think we are going through these difficult economic times for a purpose, to bring us back to the biblical principals of you know, you don’t spend all the money. You work hard for those six years and you put up that seventh year in the warehouse to take you through the hard times and not spending all of our money. Not asking Pharoah to give everything to everybody and to take care of folks because at the end of the day it’s slavery and we become slaves to government. Watch it here.

Perhaps Mr. Perry believes it is only appropriate for others to go back to those “biblical principles” but not for him. In his advocating for the federal government to provide federal disaster aid to his state to cope with the forest fires he stated: I think we have had 9,000 separate fires in the state of Texas. The federal government has only helped us with twenty-five of then, that’s inappropriate.

It would seem that what is really inappropriate here is that Governor Perry does not follow his own biblical interpretations. If Mr. Perry had saved in the seventh year to take his state through the hard times, as he preaches, then there would be no need to request federal disaster aid. It would appear that following his preaching on the bible and government is his way of telling others how to live. Another take on “do as I say, but not as I do.”

While I’m talking about Rick Perry and biblical interpretations I just can’t sign off without mentioning Michele Bachman and her evangelical preaching’s. Instead of seeing the recent natural disasters as one result of global climate change, Ms Bachman sees it as a message from above not to take better care of Mother Earth but as an economic message to the people of the United States when she says I don’t know how much God has to do get the attention of the politicians. We’ve had an earthquake, we’ve had a hurricane. He said “Are you listening to me here?” Curiously, she left out the runaway forest fires and the drought in Texas. It seems that God only gives messages when he disagrees with Democratic politicians.