Tuesday, November 16, 2010

who will stand up to the superrich?

NYTimes | “How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, “Winner-Take-All Politics.” If you want to cry real tears about the American dream — as opposed to the self-canonizing tears of John Boehner — read this book and weep. The authors’ answer to that question and others amounts to a devastating indictment of both parties.

Their ample empirical evidence, some of which I’m citing here, proves that America’s ever-widening income inequality was not an inevitable by-product of the modern megacorporation, or of globalization, or of the advent of the new tech-driven economy, or of a growing education gap. (Yes, the very rich often have fancy degrees, but so do those in many income levels below them.) Inequality is instead the result of specific policies, including tax policies, championed by Washington Democrats and Republicans alike as they conducted a bidding war for high-rolling donors in election after election.

The book deflates much of the conventional wisdom. Hacker and Pierson date the dawn of the collusion between the political system and the superrich not to the Reagan revolution, but to the preceding Carter presidency and its Democratic Congress. They also write that contrary to the popular perception, America’s superhigh earners are not mostly “superstars and celebrities in the arts, entertainment and sports” or the stars of law, medicine and real estate. They are instead corporate executives and managers — increasingly (and less surprisingly) financial company executives and managers, including those who escaped with outrageous fortunes as their companies imploded during the housing bubble.

The G.O.P.’s arguments for extending the Bush tax cuts to this crowd, usually wrapped in laughably hypocritical whining about “class warfare,” are easily batted down. The most constant refrain is that small-business owners who file in this bracket would be hit so hard they could no longer hire new employees. But the Tax Policy Center found in 2008, when checking out similar campaign claims by “Joe the Plumber,” that only 2 percent of all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners. The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”

Those in the higher reaches aren’t investing in creating new jobs even now, when the full Bush tax cuts remain in effect, so why would extending them change that equation?

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