I've been thinking a fair bit about entitlements.
Today on C-SPAN in a replay of Thursday's House debate, I heard Rep. Dave Camp (R-MI) say to Rep. Bill Pascrell (D-NJ):
“... I would just say in comment to my friend's remarks:
This is not about giving anybody a tax cut.
This is about preventing a tax increase...”
—Rep. Dave Camp (R-MI)
Only it isn't. Taxation levels might change, but only in the sense that a cut that was only ever temporary will resume its normal level.
Since I've recently discussed the spin aspect of this, I won't belabor it here. But today I have a new point which is well illustrated in Rep. Camp's remark above.
We have an entitlement class in America. The Republicans make this point all the time, they're just wrong about who it is. It's the rich, not the poor.
If you look at Rep. Camp's remark, implicit in his words are the notion that the “temporary” status of the Bush tax cuts is just irrelevant. Bush and his Congress didn't pass tax cuts forever. They couldn't. It would have been impossible to do without subjecting it to the full scrutiny of the opposing party, and its deficit impact would have had to have been considered. He did an end run, an end run that existed only for temporary programs. It is intrinsic in the presence of these cuts in law at all today that they weren't really there for the long run, since that's the only condition under which the “reconciliation” process was available to put them in place at all.
But now the Republicans would like to forget that. They don't really care what the law is, and you can see it in their rhetoric. What I mean is: They know the rule of law is there. They do care in that sense. But they don't see that law as defining the current state even when they put those laws in place because they know what they want and only what they want matters. They're willing to assert as a matter of truth that what is true is not true. They think there is a higher law—the law of their gut, if you will, or the law of truthiness, if you prefer. They are incensed at the idea that someone would disagree with what they just expect to be even when the truth is other than they are saying.
They feel entitled, in other words. That's what it means for them to have this “my way or the highway” attitude.
en•ti•tle•ment -noun
...
1. the act of entitling.
2. the state of being entitled.
3. the right to guaranteed benefits under a government program, as Social Security or unemployment compensation.
They refer to themselves relentlessly as the champions of the “Job Creators” even when the legacy of their policies was the rampant loss of jobs. Is it that the companies losing these jobs have no money? No. Many have record profits. They have the money to hire, but are not hiring. The Republicans tell us now that if we would please just sustain this glut of money, the hiring will resume. Ex-President George H. W. Bush called it “voodoo economics.” That's a good name, as it implies much handwaving with no documentable relation to observable causality. Still, through all of it, we are reminded that they are entitled to speak about their actions as “Job Creation.”
If a single person spilled oil on their front lawn, they would sue the Hell out of that person. But when BP poured oil on the front lawn of the entire United States, its gulf coast, Rep. Joe Barton (R-TX) thought BP deserved an apology for the idea that they might bear substantial economic responsibility. Big companies are entitled to do this kind of thing. It's just white collar crime, nothing serious.
In 2005, a Republican congress passed legislation to clamp down on individuals who go bankrupt, but when the entire banking system goes bankrupt, there have been almost no negative consequences for any of the powerful people involved. They are entitled to do this kind of thing to us.
And then there's the estate tax. It's framed in terms of ownership because that sounds politically popular. But when someone dies, there is no owner. What this issue is really about is the entitlement not only of oneself but of one's family to be treated well. In some cases, a person may have earned that right, but the next generation has not earned it. It's just a gift. And it's the kind of gift that perpetuates inequities in our society. It makes it easy for someone from that family to stay on top of a corrupt system, while making it hard for someone from across the tracks to ever climb out. At its core is a gut-level assertion that these children of the rich are entitled not just to live well, but to every last penny, even when what has enabled that wealth is an ever-more-corrupt system that favors people who already have money.
Yes, there is an entitlement class. And it's the one asking us to believe that it's already got the tax cuts, and that what's being voted on is the taking away of those cuts. That's not what's being voted on, no matter how much they want to believe they're entitled to better treatment. What we're voting on is whether to give them a new bonus.
Enough with the bonuses. They are not entitled. When they start actually creating good high-quality jobs—when they start investing in the United States—we can talk again.
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Footnote
I don't mean here to suggest that every rich person is in this category. I know personally some people with a lot of money who haven't forgotten about investing in the United States and who are working hard to help the poor and the middle class. And there are the Patriotic Millionaires for Fiscal Strength who have stepped forward. I'm happy to see them doing these things and to acknowledge their efforts. As with all social struggles, one has to acknowledge if one expects to gain any ground at all, that the motion is person by person. But I'm also sure these well-meaning folks would agree with me that there is still much to be done, or they wouldn't be speaking out.


Salon.com
Comments
Lefty, while I agree the Democrats are not free of problems, I think there is a truly substantive difference between the parties and I think it's counterproductive to refer to the parties in a way that suggests parity.
Scanner, they scramble to point to the occasional farm that is caught in the death tax, yet there's an obvious answer: a farm exemption. Somehow, that doesn't occur to them. Couldn't be because it doesn't serve them to admit it...
Vzn, I'm not sure what you mean by distortions arising at the top. Can you explain? I think the thing that doesn't apply is that some things don't scale: hunger, for example. You don't get twice as hungry if you lose half your money, as the Republicans would have us believe. You are simply hungry if you fall below a certain line and not otherwise. You don't get half-as-housed if you lose half your money, though you might have to move to a smaller mansion if you're rich and you lose money. The problems of survival simply do not exist above a certain line unless such people are needlessly overleveraged. Is this what you meant or something else? I agree with you about tracking and reporting wealth disparity. We should get reports on that as often as we get unemployment numbers. It should appear side-by-side. Jobs are down, the wealthy are wealthier, the income disparity grew, the middle class shrank, etc.
Bonnie, would we all be bilingual if we learned to be fluent in doublespeak? :)
If one more of them calls my veteran's compensation and pension and "entitlement", I'm going to rant like there's no tomorrow.
R.
"The aristocracy of France before the French Revolution, for example, gave itself virtually total tax exemption. The burden of supporting a profligate royal court with its thousands of royal pensioners was therefore laid upon commoners, thus supplying not a little fuel for the onrushing tidal wave of royal blood."
(The Rich and the Super Rich: A Study in the Power of Money Today, Ferdinand Lundberg. 1968. Lyle Stuart, Inc. New York. Chapter 9: The Great Tax Swindle, page321)
xenon, you're drifting into another gripe I have about the use of the word entitlements. It was more than I wanted to cram into this post, but I agree with you there's more to say on this topic. Thanks for visiting, please keep checking in as I might get to that other bit.
Another example is the way the current "tax cut" talk has been framed. I heard an NPR, or perhaps its was a PBS reporter talking to a Republican, and he said something to the effect -"Let me get this right, Republicans want to give everyone a tax cut and Democrats only want to give some a tax cut?" Even out supposedly liberally biased public media doesn't think it through. Tell me how, if the Democrats got their way and ALL INCOME up to $250k continued the current tax rate and income above that the rate expires - tell me how that doesn't give everyone a tax cut! It just doesn't give all income above $250k a cut (of 3%).
Insidious.
As usual, excellent post Kent. Rated and bumped to FB for wider reading.
Imagine the sell job that's been done to refer to the guy who started Microsoft as a "lefty"
It's all about being in the entitlement class. (Or not) You are spot on correct.
In Search of Excess -- a book in which former executive compensation consultant Graef Crystal ripped the scab off what was then a suppurating wound but now appears to have become a terminal cancer.
The Reckoning -- David Halberstam's dual biography of Ford and Nissan, which showed what happens when bean-counters run companies instead of people who actually make things.
Network -- Paddy Chayefsky wrote the screenplay for a movie which not only predicted the rise and oppression of corporatism, but predicted the devolution of news into gross entertainment.
Jane, yes, they've gotten a big haughty and it might bring them down. But it's We The People's game to lose at this point and while there have been some recent gains, I think we're far from being declared a snowballing phenomenon.
I get very irritated when I hear that reinstating the Bush tax cuts for the wealthiest Americans will result in job creation. This is arrogant nonsense.
It's arrogant because they don't think that people can put two and two together.
Here's a fact the Republicans don't want anyone to look at:
Reinstating the tax cut for the richest Americans does nothing to promote job growth because the tax rate we're talking about is the individual tax rate, not the corporate tax rate.
The Bush Tax Cuts did not affect corporate tax rates, but only affected individual tax rates.
In order for those so-called wealthy Americans to re-invest their tax cut proceeds in their businesses, they would have to go through some convoluted bookkeeping in order to legally inject the funds into their businesses. They would have to issue additional shares of stock, or write loans to their businesses, but they simple can't co-mingle personal and business income, which is quite illegal under the tax code.
Taking personal funds and comingling them corporate funds can be construed as money laundering. Selling shares of stock to raise additional revenues dilutes the value of the outstanding shares, thus reducing the value of investor’s holdings. Issuing shares privately has serious consequences for publicly-traded companies.
The bottom line is that decreasing the personal income tax rates has no effect on job creation. The suggestion that failing to renew the tax reductions would have an adverse effect on the economy would only hold true if you believe that people with annual incomes of more than $373,650 (not $250,000 as the news media continues to reiterate) are living so close to their maximum means that adding three percent to their net income would somehow stimulate the economy, when only 10% of the population lives at that level.
For all of the Republican ballyhoo about how failing to reinstate these tax cuts would adversely affect job creation, the fact remains that the tax cuts have no effect upon corporate taxes but only on personal taxes….but that doesn’t matter because corporate taxes are charged on net profits after expenses.
ALL expenses incurred during business development activities, which includes all job creation activity costs, are deducted BEFORE the taxes are charged against net proceeds as a cost of doing business.
Therefore, it’s ridiculous to maintain that not reinstating these tax cuts would have any effect on job creation since all that any company has to do to pay ZERO taxes on funds expended for job creation is to do it…and charge off the cost on the annual tax returns.
Now, I understand how the majority of Americans - who lack even the most basic training in economics and finance - might make this mistake....but I do NOT understand how even the most sophisticated democratic legislators either don't get this essential fact or choose to ignore it during their debates....or is it simply that the media doesn't report it?
Am I wrong here? I've read the relevant laws and the The Economic Growth and Tax Relief Reconciliation Act of 2001 (Pub.L. 107-16, 115 Stat. 38, June 7, 2001) and nowhere do they stipulate any changes to the corporate tax rates.
By the same token, I have spent 40 years in the business world and I've had my hands slapped several times for trying to inject personal money into failing businesses. Correct me if I am wrong here.
By the way, on that, I was so glad to see someone do something unusually competent in the Democratic quarter this week and start to refer to the bill continuing tax cuts only for income of $250K and below as being “a tax cut for everyone.” In fact, it is just that, and I had overlooked that opportunity. But the tax system being tiered, even billionaires are taxed in the lower brackets on the first “few” dollars and so will see a tax cut as well. Meager? Sure. But such delicious turnabout given that the Republicans are constantly talking about how these things affect “everyone” when really the degree to which most of their things affect everyone is miniscule even compared against small incomes. Would that every day were such a linguistic victory.
Tom, some interesting cross-references. I'll have to go back and rewatch Network. I guess I got the message stronger about the news than about corporatism. I would maybe have cited Rollerball (the original) also as seeing corporatism coming a mile away. Oh, and Snow Crash has some really brilliant imagery of a world run by corporations.
Even people who lose money in business are expected to pay debt. My understanding is that when businesses loan money (perhaps not through the SBA, but smaller things like credit cards or other personal loans to help business) they want both the company and its owners on the line to secure the card. That seems to be routine.
The IRS has an interest in having a business not be a hobby that has no chance at making money, but it wants there to be businesses and it knows they will sometimes fail and it knows that when businesses do not operate at breakeven, someone has to pay the bills.
Nonetheless, I think your major point is right that the taxes on corporations are on profits after expenses, which expenses certainly include employing people. So the notion that someone fears they cannot hire because they can't afford the tax seems nonsense. Thanks for raising that point.
Jensen speech from Network
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Tom, thanks for the cross-reference.
'The wealth of a few depend on the backs of many laboring poor.
That is not word for word but it makes my point.
There are three ways to make real money: manufacturing, mining, and farming. Shuffling paper does not count. Neither does service jobs.
As more and more people get shuffled into the class of lower earnings or none, the downward spiral continues. Money flows up the feeding chain straight into the coffers of the few at the top.
They hold this position tight and could care less about the masses at the bottom. We are supposed to think we can move to the top of the heap with the American Dream. If we do not, it is our personal fault since the so called dream is available to all.
Does not work but the dream still lives, and so does the wealth disparity.
They worked the hardest, right, and deserve it.
But is does not work so well in real life.....
Republicans definitely defend a particular brand of entitlement, a point well made in your post. What’s baffling is that they’ve never made a secret of that.
My problem in all of this is that even though Republicans had a majority in Congress when these tax cuts passed, the Dems had enough representatives to stop them, but they did not. So, once again, I’m presenting the question: “Why?” Why did the Dems in Congress go along with these cuts?
Let me post another question: who among us EVER thought the Republicans would not be doing exactly what they are doing with the issue NOW? Not I. And I know there was much discussion of this very point at the time those tax cuts were being debated.
So, once again, I find myself asking: Why? Are the Dems just this totally stupid? Or are they just complicit?
Oh, and one more question which you frequently pose: Will the Dems capitalize on this hypocrisy, or will they soft-pedal it and acquiesce yet again? You, Kent, know exactly what my prediction is, I’m sure. ;-)
RATED
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The Bush tax cuts of 2001 and 2003 were supposed to encourage spending and boost the economy after 9/11 (which happened on GWB's watch, by the way). So if it didn't stimulate the economy then, why would extending the tax cuts for the wealthiest 2% stimulate the economy now? It won't! They'll just continue to put it in their pockets like they always have.
Scanner hit the nail on the head when he wrote in his comments: "Democrats stand back and let them re-name it and don't even have a campaign to explain it to average Americans."
Rated
Jay, yes, the tax cuts are paying to defend the gilded apple carts at the high end, whereas they're going to more basic services at the low end, so no wonder the dialog is skewed.
Mission, some excellent points there. Thanks! I'm glad some of that comes through in the aggregate of my writing. You also gave me an idea for another post in there...
Rick, your questions often are tricky to answer because if I try to cite a reason you call me an apologist. I worked out a reply but I saved it to do as a post so we can discuss it in full in its own forum without me trying to limit discussion as off-topic after a point. And regarding your comment to Sage about corporate size, there's no necessary reason corporation has to mean large. Corporations can be as small as a single person. You probably know that. But see my article Rethinking Mega-Corporations for more of my thoughts on that. I mention in there the “many minds” hypothesis, that we need to have a certain number of actual brains in the market, and that mega-corporations are working against that. I think that's in keeping with what you're saying.
For example, had McCain won and now proposed to let the cuts lapse, I doubt that many elected Repubs would oppose him. In that sense it doesn't completely sound like entitlement to me.