Political Horror So Bad It's Good (Eugene Robinson)

Finally! Tax and budget policy! That’s my wheelhouse! Ring the bell; I’m all laced up and ready to go.

Obama’s tax plan is common sense, not class warfare

Doesn’t this kind of seem like giving up on a headline? You gave away the whole farm, Eugene. Also, you’re about to contradict yourself, but we’ll get to that.

By Eugene Robinson, Monday, September 19, 2:22 PM

“Class warfare!” scream the Republicans, in a voice usually reserved for phrases such as “Run for your lives!”

Maybe in a Giant Shark vs. Crocosaurus. (Seriously, check it out. ) That’s because the unintentional hilarity of the President’s proposal is that he’s successfully parodied himself into the caricature of the insatiable left-wing leviathan with a lumbering, incomprehensible narrative of logical contortions. It has the rest of us rolling on the floors. Sure the proposal is dangerous and foolish, but it’s never going to pass, and it’s important to keep a sense of humor--as any giant shark/crocosaurus type of scenario teaches us.

Why yes, it does feature Steve Urkel running down the beach
with an assault rifle. Why would it not?

Spare us the histrionics.

It must be exhausting castigating so many imaginary foes.

The GOP and its upper-crust patrons have been waging an undeclared but devastating war against middle-class, working-class and poor Americans for decades.

Except all of the super wealthy are liberal! Hollywood actors, professional athletes, people who read the New Yorker, and billionaires begging to pay more taxes just doesn’t jibe with the conservative ethos. But, again, as long as you find fulfillment from crusading against false premises, don’t let me get in the way.

Now they scream bloody murder at the notion that long-suffering victims might finally hit back.

So…liberal tax policy is class warfare? Please allow me to interject that this seems, on the surface, to undercut the title of this precious little temper tantrum, as well as the shoddy argument that President Obama has hastily constructed for himself.

President Obama’s proposal to boost taxes for the wealthy by $1.5 trillion

Rejoinder: everyone should already know, federal receipts are mean-regressive at 18.2% of GDP, and show absolutely no empirical correlation with tax rates, particularly top marginal tax rates. If you’ve sifted through the fancy financial jargon, congratulations! Here are some fun words as a reward: Jousting Proust. Everlasting gobstopper. Newfangled gizmo. Boobs.

over the next decade is a good first step toward reforming a system in which billionaire hedge-fund executives are taxed at a lower rate than their chauffeurs and private chefs.

Keep in mind, the $1.5T tax is supposed to be part of the effort to create jobs. Hilariously, this guy has multiple economic advisors, each paid handsomely to ignore the rudimentary principles of macroeconomics that they pawned off on their grad students to teach.

Republicans whine that since they oppose raising taxes on the rich —

Technically, they oppose all tax increases, but continue.

and control the House of Representatives,

Thanks to Obama doing things like this from 2009-2010.

which can block such legislation — Obama’s proposal should be seen as political, not substantive.

That’s pretty much a carbon copy of what Democrats said about Cut, Cap, and Balance. Also, about 5 other proposals Republicans had to raise the debt ceiling. The motto of that fight was that we needed serious attempts at legislation that can pass a divided legislature. Now, all of a sudden, bucking the Republicans’ sole immutable governing principle with proposed legislation deserves serious consideration? Please.

This is just a campaign initiative, they say, not a “serious” plan to address the nation’s financial and economic woes.

Well, considering that it’s a tax increase under the guise of a jobs plan, it’s unintentionally hilarious.

But that’s pure solipsism:

Or, precisely the opposite: practical.

Whatever does not fit the GOP’s worldview is, by definition, illegitimate.

The bill is illegitimate because it lies to itself about its own purpose. It’s political chicanery because it was never intended to pass. The two are separate issues.

By this standard, Obama could propose only measures that are in the Republican Party’s platform —

And this was the guy who didn’t really get why Republicans were so resistant to adopting a debt ceiling bill that was squarely in the Democratic Party’s platform. I get being a partisan. What I don’t get is the glaring hypocrisy.

which obviously would defeat the purpose of being elected president as a progressive Democrat in the first place.

Of course, Obama wasn’t elected as a progressive Democrat; he was elected as a centrist Democrat. People are starting to regard the latter as a political unicorn.

Outside of the Republican echo chamber, polls consistently show

Polls—that is the ballot boxes on election days—consistently show the country fleeing the Democratic Party in droves, so it takes some chutzpah (See that, NY-9 voters? That’s my olive branch to the newly conservative Jewish community. Welcome!) to frame the Democrats as populists.

the American people consider unemployment to be the nation’s most urgent problem, not deficits and debt.

And yet, there is no conceivable tie between raising taxes on the rich and creating jobs. The two are antithetical. Obama himself acknowledged as much less than a year ago after the November “shellacking.” Remember? When he extended the dreaded Bush tax cuts? Now you remember.

Obama was on target with the American Jobs Act he proposed this month, the only question being what took him so long.

Vacations, incompetence, tone-deafness, general arrogance, misguided priorities, and a general dearth of economic know-how.

Americans do have long-term concerns about debt, however, and by large margins see an obvious solution: a balanced combination of spending cuts and tax increases.

Which is kind of like asking a kid whether he likes Transformers, Teenage Mutant Ninja Turtles, or both. Both, bitches! Michaelangelo fighting Optimus Prime to the death! (I may have dated myself a little there.) The point is that when you ask a childish question, you get a childish response.

In other words, they want precisely the kind of approach that House Speaker John Boehner rejected during the debt-ceiling fight — and that he vows to reject again. Why did Republicans begin squawking about class warfare even before Obama had a chance to announce his proposals?

The class warfare card is kind of like the two of clubs in Obama’s game of hearts—it always gets played first. The race card is the queen of spades. If you don’t play hearts, these metaphors are kind of lost to you. Sorry.

Because by calling on the rich to pay “their fair share” of taxes,

Which is both vague and undefined.

the president has hit upon a clear and simple way to illustrate how unequal and unfair our society has become.

By refusing to speak in specifics and playing to the basest instincts of an increasingly sophisticated electorate?

Since the beginning of the Reagan years, the share of total income captured by the top 1 percent of earners has doubled while the share taken by the bottom 80 percent has fallen.

And yet, it was irrelevant when the pie was growing. The idea that the rich are taking from the poor is the type of redistributionist nonsense that has led Obama to believe that by reapportioning money through the vehicle of government, that he can create wealth. It can not; it can only destroy.

The rich are getting richer

And the poor are also getting richer! That’s how a growing economy works!

at the expense not only of the poor but of the middle class as well.

Sigh.

Studies demonstrating this trend tend to be dry and, let’s face it, sleep-inducing.

Eugene Robinson just called you dumb. Which, I suppose, is no worse than linking you to Giant Shark vs. Crocosaurus, (seriously, check it out)

But the perverse disparity in tax rates between the super-rich and the rest of us is enough to grab anyone’s attention.

Beautiful. Yes, the wealthy do pay more in income taxes.

The very wealthy earn much of their income through dividends and capital gains, which are taxed at 15 percent.

So, already you’re talking about framing national economic policy based on a perceived slight by .0001% of the population. Brilliant.

This low rate would apply specifically to a wildly successful hedge-fund manager who made, say, $50 million last year. By contrast, an insurance company executive who made $500,000 — just 1 percent of what the hedge-fund manager took home — would pay a top marginal income tax rate of 35 percent. Even a teacher who made just $50,000 — 0.1 percent of the hedge-fund haul — would pay a top marginal rate of 25 percent.

Here’s the difference: the school teacher and the insurance company executive are both also saving, whether through a 401k, IRA, personal savings account, or pension program. When they pull that money out of the hedge fund, they are also taxed at 15%. The fact that this impacts their livelihood less is a testament to which industry they chose to work in, not a function of some unfair conspiracy. Plus, let’s also give a little love to the hedge fund managers: these guys are extremely good at what they do. Successfully managing a hedge fund is kind of like playing center field for the Yankees against 10,000 other Mickey Mantles. And still winning.

By increasing the capital gains tax rate, though, Obama is not only increasing the taxes on teachers and insurance executives alike, he is also putting a thumb on the scales of the capital budgeting equation. All companies have to make a decision how much of their operation to finance by debt and how much to finance through equity (and preferred stock, and other more complicated financing vehicles, but let’s keep this Robinson-accessible). By increasing the capital gains tax, the government has essentially disincentivized stockholders from putting their wealth in equity (or encouraged short-term stockholders that increase price volatility). This disincentivization sucks money out of the equity markets. The replacement funds must come from debt financing. And the primary lesson of the 2008 recession, if you recall, was that debt financing and overleveraging are dangerous tools. Yes, tinkering with this tax rate has the potential to cause economic ruination.

Either that or the entire financial industry will move to Switzerland, the Seychelles, or Malta.

Obama proposes tax legislation that would erase this disparity.

And create all sorts of exciting new ones, rife with government inefficiency and smothering bureaucracy!

He also vows that unless Congress enacts comprehensive — and fair — tax reform, he will allow the Bush tax cuts for households earning more than $250,000 a year to expire at the end of 2012.

That’s fine. He’ll be out by then. Also, how is this brinksmanship any less dastardly or nefarious than what the Republicans did with the debt ceiling debate? Oh right. The difference is that Eugene Robinson approves of this one.

The overall plan that Obama announced Monday would cut deficits by about $4 trillion over the next 10 years — without gutting programs that bolster the middle class and aid the poor.

Instead, he would simply gut the middle class. It’s much simpler that way. More direct.

New tax revenue and money saved from ending the wars in Iraq and Afghanistan make up most of the total.

The end of the wars in Iraq and Afghanistan will be realized, but only because they’re actually spending cuts. Forgive, for a moment, that they were never supposed to be permanent budgetary additions, and appreciate the value of simply taking something off the books.

Obama’s proposed savings in Medicare and Medicaid are modest and tailored so that their impact is progressive.

The bone requisite has been thrown to the apoplectic left.

The president correctly decided that ensuring Social Security’s long-term solvency should proceed on a separate track.

In other words, he pussed out.

All this should be heartening to those who really want to preserve these vital programs.

Not I, but we’ll address that some other time.

The headline from Obama’s plan, though, is the call for wealthy Americans to pay taxes like everybody else.

Thereby upending the economic homeostasis with the delicacy and purposeful foresight of a 5-year-old shaking a snow globe.

If Republicans believe the current system is fine, Obama said, “they should be called out. They should have to defend that unfairness. . . . They ought to have to answer for it.”

We’ve already heard their answer.

And we’ve heard Obama’s retort: “This is not class warfare. It’s math.”

Except that Robinson explicitly acknowledged it was class war. Remember? It was the first thing he said after poorly imitating Republicans, (and giving me an opportunity to rattle off a Giant Shark vs. Crocosaurus reference for the first of three glorious times this article.) So, either Obama’s wrong and this actually is class warfare (true) or Eugene Robinson is a blithering idiot who can’t stay on topic for four sentences (also true.)

In the end, what does it matter? Eugene Robinson has screeched about hating the rich for a few paragraphs, so he’s probably all tuckered out by now. Obama has pulled off the last vestiges of the moderate’s façade, and I got an opportunity to talk about capital budgeting. Wins all around.