Wednesday, June 29, 2011

And The Other Inequality Fairy Tale: What Republicans Do And How It Works

This is the next-to-last post in my series about income and wealth inequality in the United States. To appreciate it fully, read the first fairy tale and the post on evidence before enjoying this one!

Remember those peasants, merchants and feudal lords from the first fairy tale? The peasants were made to believe that it is in their interest to get rid of any help from the feudal lord, that schools and physicians and fire prevention and policing are all things they should do themselves, out of their meager funds and with their scarce leisure time. The merchants were made to believe that getting rid of the fees they had to pay for town councils were money wasted, that having the scales tested at the markets was horrible bureaucracy and an unnecessary pain in the butt, that nobody needed a police force and so on. The feudal lords and ladies thought that they could squeeze the same amount of work out of the peasants, even if they were given less and less help each year.

What all this caused is told in the first fairy tale. That all this is happening in the United States was shown in the evidence post. This post shows how it is done, and mostly it is done by the Republican Party while the Democrats ride along as hand-wringing co-dependents, also pocketing a few feudal coins.

Let's begin with what the Republicans most want, based on what they advocate and work for. I have chosen only a few examples of the many possible ones, just to keep this post a manageable length.

1. Keep The Peasants Hungry

They work harder that way, right? You have to get work if you can't eat, and the work that is offered benefits the merchants and the nobility. Getting rid of subsidies for giving food for the poor is a twofer for the Republicans: The peasants will be leaner and more eager, and the taxes will go down for the rich.

An example:
In March 2011, a record 44.5 million Americans received food stamps, which was an 11.1% increase over the year before. Even more illustrative of the profound impact the economic recession has had on poor and working-class Americans is the fact that this represents a 64% increase over the number of recipients in March 2008.
Faced with this evidence of increased need, on 31 May, the House appropriations committee nevertheless approved the fiscal year 2012 agricultural appropriations bill, which includes $71bn for Snap – $2bn less than President Obama's recommendation. On 16 June, the bill was just barely approved with a 217-203 vote in the House.
Meanwhile, Wisconsin Republican and House budget committee
chairman Paul Ryan's "Path to Prosperity" budget proposes deep cuts to Snap, and even more fundamental changes to how it is administered:
"[P]rogrammes that subsidise food and housing for low-income Americans remain dysfunctional, and their explosive growth is threatening the overall strength of the safety net."

His plan would turn Snap into a block grant programme in 2015 (along with Medicare, starting 2013), meaning the funds would be delivered to the individual states with only loose stipulations about how they are to be used. The belief is that this improves flexibility and promotes innovation and creativity in the delivery of federal funds. But coupled with Republicans' intention to slash Snap by 20% over the next ten years – or $127bn, as the Centre on Budget and Policy Priorities calculates – Ryan's plan could leave millions in danger of going hungry.
How odd that the safety of the safety net is something Ryan worries about at the very moment when the safety net is needed! It's as if the net under the circus acrobats should be taken up to save it when the acrobats are actually performing.

But otherwise Ryan's arguments make perfect sense if you put them into the peasants/merchants/nobility framework. He wants to cut the spending on anything that benefits the peasants, especially the very poorest of them. Watch the 60 Minutes program on homeless children to see what it is the Republicans want to cut. They are also successfully demolishing the very successful nutritional program for poor pregnant women, infants and children, WIC. That this appears to be in direct contradiction to their supposed "pro-life" stance is only an illusion as well become clear later.

Republicans justify these moves by we-cannhNOT-afford (though we can afford wars and wars and wars) and by the incentive effects: Make being poor scarier and even those not yet poor will struggle harder not to fall into poverty! That this creates docile and hard-working and non-complaining serfs is just a side-effect.

And of course all this increases inequality in the United States.

2. Keep The Merchants and Feudal Lords Rich and the Peasants Poor

Keeping the peasants hungry helps with this, too, but the Republican Party is much more open about its desire to make the income and wealth distributions even more skewed. Here Michelle Bachmann tells us what she thinks should be done:
Representative Michele Bachmann, a Minnesota Republican planning to seek the party's presidential nomination, said she would stoke U.S. economic growth by cutting taxes on corporate income and capital gains and considering elimination of the minimum wage.
Corporate tax rates should be significantly reduced from a maximum 35 percent and capital gains taxes should be eliminated, Bachmann said in an interview on CBS's "Face the Nation" today. Congress should also reevaluate the federal minimum wage of $7.25 per hour, she said.
Get it? This is spoken about quite openly. We should tax the merchants and feudal lords and ladies less and we should be allowed to pay the peasants even less than they currently earn. Capital gains taxes should be abolished! Capital gains are something the peasants seldom gain.

The current Republican goal to Kill All Unions is part and parcel of their push towards greater inequality. Unionized workers have higher earnings and more rights, and therefore unions Must Die. That way every tiny worker will negotiate with -- oh, say -- Wal-Mart to get a fair labor contract! It's fair-and-balanced! Two parties at the table and all. Hence unions must go. That they also fund the shadow Republicans (Democratic Party) is another reason for the Republicans to kill them.

All this increases inequality in the United States. Which, quite honestly, is its intended effect, because the Republican Party is the party of the feudal lords and the rich merchants.

But what the Republicans argue that cutting taxes provides jobs. If you give the one percent an even bigger and bigger slice of the overall wealth and income cakes, they will somehow magically bake all of us a bigger cake. That this doesn't seem to happen much in reality is a never-mind.

3. Shred The Nets Of Civil Society

This is the most important point of my post series. The Republican Party indeed desires to get rid of old-age insurance, health care for the elderly, public schooling for children and pretty much all shared concerns except the legal system and the military. Those two are excused and allowed to survive because they are needed to protect the rich and their wealth. The rich don't need public schools and don't use them, the rich don't need old-age pensions or subsidized health care. They need none of that, and they don't want to fund it.

But given the inequality in this country, the overall levels of all public services will decline to Third World levels if the rich are allowed to bail out. But then, of course, the United States already has Third World levels of wealth and income inequality.

The device for shredding the civil society is to focus on government deficit reduction, combined with all these other moves. It's the WE-can't-afford argument, shouted over and over and over again, even though the "rainy day" for which we are to save and scrimp is, in fact, today!

An example of the arguments the Republicans use:
Congressional Republicans are standing firm on their principle that for every dollar of increase in the national debt limit, President Obama and the Democrats must agree to a dollar of spending cuts. That means if President Obama wants to increase the debt limit by $2 trillion to $3 trillion, then he will have to agree to $2 to $3 trillion in future spending cuts. But President Obama and the Democrats are insisting they won’t agree to any spending cuts unless the Republicans agree to tax increases.

Most people don’t know that sweeping tax increases have already been enacted in current law for 2013. In that year, all of the tax increases of ObamaCare go into effect, and the Bush tax cuts expire, which President Obama has refused to renew for singles making over $200,000 per year, and couples making over $250,000. Together, these job killing tax policies would sharply raise tax rates on the nation’s small businesses, job creators and investors for virtually every major federal tax.

The top two income tax rates would rise by nearly 20%, the capital gains tax rate would rise by nearly 60%, the tax on corporate dividends would nearly triple, the death tax would rise from the grave with a 55% top rate, and the Medicare payroll tax rate would increase by 62% for these taxpayers. This is on top of the current corporate tax rate of nearly 40% nationwide on average. Even Communist China has a 25% corporate tax rate, with the average in the socialist European Union below that.

Can you hear the bards hired by the feudal lords and ladies singing? "Obamacare", "small businesses", "job creators", "death tax rising from the grave", "socialist European Union." Yes, the bards sing to the peasants and tell them to identify with the nobility and the merchants. Otherwise the darkness of socialism will overtake them.

I have written earlier that the actual income taxes corporations in this country pay are quite low because of the large number of allowed deductions. The initial tax rate isn't a meaningful basis for comparisons but the actual taxes firms pay.

And listen to this bard about those high tax rates. He doesn't sing about the high wealth differences there or about the fact that doubling one's taxes when one makes a million a year doesn't hurt anywhere as much as children going to sleep hungry because we decided not to double those taxes. He doesn't mention that the "death taxes" only affect a miniscule number of very rich families every year, and that it is not death that is taxed but inheritance.

Your views might differ, but do remember that the bards are paid by the rich merchants and feudal lords.