Mike the Mad Biologist

Why, yes, I did. And Senator Evan “I’m dumber than a sack of hammers” Bayh illustrates exactly what I’m talking about:

Today, MSNBC’s Chuck Todd asked Bayh about the poverty data, and whether there is a disconnect between the real economic pain that people are feeling and lawmakers squabbling over tax rates for the wealthy. Bayh agreed that there is a disconnect, but then concluded that the poverty increase means lawmakers should forget about “fairness and things like that” and cut taxes for the rich:

TODD: Yesterday, the Census came out and said one in seven Americans are living below the poverty line. Do you look at that story today — you know, you open up your USA Today, right, and you see that story — and you see Washington is debating the tax rates for the wealthy, and you sit there and say, isn’t that a disconnect in America right now?

BAYH: It is a disconnect, Chuck. What we need to be focused on is growth, how do we create jobs, how do we expand businesses. That needs to be job one right now. And all these other issues involving, oh, fairness and things like that can wait.

So Bayh thinks that Congress should forget about:

- Income inequality, which is the worst its been since 1928. Currently, the top one percent of households make nearly 25 percent of the total income in the country. According to the latest data, “the gaps in after-tax income between the richest 1 percent of Americans and the middle and poorest fifths of the country more than tripled between 1979 and 2007.”

In order to:

- Borrow and spend $830 billion on the richest two percent of households. Extending the Bush tax cuts for the rich will give a millionaire an annual tax cut of $128,832, which is nearly two and a half times the median household income.

I can’t see what could go wrong with that. Oh, maybe this?

However, according to a new study from Moody’s Analytics, the rich are more likely to save the money if their taxes are cut than spend it.

It’s all about the retirement, baby….

Comments

  1. #1 fullerenedream
    September 19, 2010

    That’s not “not getting it”. That’s acting in the interests of the ultra-rich – i.e. deliberately acting against the interests of the majority of US citizens.

  2. #2 Pierce R. Butler
    September 19, 2010

    Another Democratic dynasty goes bad. Has anybody done a study on why this happens over and over?

    (Yes, there are minor exceptions, but the phenomenon still deserves some research. And as for the Repubs, how far back do we have to go to find one that didn’t start bad?)

    Not that Daddy Bayh’s Senate record shines like white armor in the sun, but when compared to junior’s… Maybe the relevant question is how each dynastic cohort manages to make their progenitors look better in retrospect?

  3. #3 william e emba
    September 20, 2010

    BAYH: It is a disconnect, Chuck. What we need to be focused on is growth, how do we create jobs, how do we expand businesses. That needs to be job one right now. And all these other issues involving, oh, fairness and things like that can wait.

    Bayh is simply, like most Democrats, buying into the supply-side hoax. Ever since Reagan, there has been pretty much universal agreement among both parties that we as a country have to decide between helping the economy by helping the rich, or between not helping the economy by helping the poor. This dichotomy is a rightwing nutcase fabrication, but it has become the accepted wisdom.

  4. #4 JasonTD
    September 20, 2010

    It is a disconnect, Chuck. What we need to be focused on is growth, how do we create jobs, how do we expand businesses. That needs to be job one right now. And all these other issues involving, oh, fairness and things like that can wait.

    I have little enthusiasm for using tax policy to correct for the inherent unfairness of life beyond what we already do. We already have a highly progressive tax code. That same 1% which takes home nearly 20% of all after tax income pays 40% of all federal income taxes (2007 data). That already seems ‘fair’ from a progressive taxation perspective. I couldn’t find a direct quote from the report itself, but others have referred to this OECD document saying that the U.S. has the 2nd most progressive income tax among OECD countries, with Ireland being first. (We just don’t spend as much on social programs like welfare and unemployment as most other OECD countries.)

    So, it very well could be that further increasing the progressive nature of income taxes will not in itself do much to change income inequality. We really need more information than what is given in this post to understand what to do about it.

    Bayh’s basic point is a good one. Whatever tax policies will help boost the growth of jobs and wages for the lower and middle classes are the tax policies we should be pursuing. Increasing taxes on the rich might seem ‘fair’, but it doesn’t actually do the lower and middle classes any good if their incomes don’t go up.

  5. #5 GrayGaffer
    September 20, 2010

    This seemed a bit trite when I first coined it, but things like this and the fallacy about cutting taxes for the rich resulting in them creating more jobs: nuts. Shit trickles down too, and there’s more of it.

    The really rich folks got that way by using other peoples’ money. Not their own. So giving them more of their own money does nothing for the economy. And if that OPM came from their corporation, they only get more of it from the corp if corp taxes are cut – again no more jobs. No, if you want to manipulate the economy via taxation tricks, cutting taxes is not the way to do it. Allowing re-investment and job creation expenditures to be taken off income before taxes is more likely to result in something actually useful – then there’s an incentive for that to be done with corporate profits so as to avoid paying taxes. And the super-rich won’t notice it either way.

  6. #6 scathew
    September 20, 2010

    As Krugman posts today:

    http://krugman.blogs.nytimes.com/2010/09/20/structural-impediments/

    The issue is not one of supply, but of demand. Giving tax breaks to the rich will if anything (beyond them saving it), have them invest in supply, whereas tax cuts for the other 90%+ help stimulate demand.

    Henry Ford was a freekin’ fascist and he got it – they can’t buy your crap if they can’t afford your crap…

  7. #7 scathew
    September 20, 2010

    But who cares because we have more pressing things – Lindsey Lohan is going to be arrested:

    http://www.guardian.co.uk/film/2010/sep/20/lindsay-lohan-arrest-warrant

    Man, now I feel like a fool worrying about taxes…

  8. #8 william e emba
    September 21, 2010

    I have little enthusiasm for using tax policy to correct for the inherent unfairness of life beyond what we already do. We already have a highly progressive tax code.

    Actually, we don’t. We have a fairly weak progressive tax, with just three brackets, and a very low top bracket cut-off.

    You are also assuming that the point of a progressive tax policy is to “correct” for “inherent unfairness”. It’s not. It’s usually sound economic policy. First off, progressive taxes act as a moderating influence, reducing overheating in good times and softening disasters in bad times. Second, wide income disparity leads to excessive debt, which as everybody (except all Republicans and seemingly half of all Democrats) have noticed, has led to our current economic problems.

    the U.S. has the 2nd most progressive income tax among OECD countries

    So what? The other countries have been aping Reagan and Thatcher too. Being #2 “most progressive” among current OECD countries doesn’t mean we’re all that progressive when the whole world is tilting regressively. Sheesh, this is a no-brainer.

    We’d rank #50 or #100 or #200 or whatever on the “most progressive” scale if you include historical OECD taxation policies. What’s the matter, you don’t want anyone to point out that a return to Clinton era taxation might lead to–gasp–Clinton era record economic growth or something?

    Bayh’s basic point is a good one.

    His basic point remains bloody stupid ignorant crackpot nonsense. There is no dichotomy between taxes and growth.

  9. #9 JasonTD
    September 21, 2010

    We have a fairly weak progressive tax, with just three brackets, and a very low top bracket cut-off.

    You’re wrong about that. There are 6 brackets: (I’ll use single for simplicity.)

    0-$8375 10%
    8376-34000 15%
    34001-82000 25%
    82001-171850 28%
    171851-373650 33%
    373651+ 35%

    There haven’t been just 3 brackets in almost 20 years. I’m hardly an economist, but at least I’m willing to look things up.

    What’s the matter, you don’t want anyone to point out that a return to Clinton era taxation might lead to–gasp–Clinton era record economic growth or something?

    I don’t see how raising taxes (on everyone, not just the wealthy, since that is what going back to Clinton era tax rates would do) would get us back to the mid and late ’90′s growth rates. So, no, I’m not worried that someone will try and make that argument without looking stupid.

    You are also assuming that the point of a progressive tax policy is to “correct” for “inherent unfairness”. It’s not. It’s usually sound economic policy.

    Virtually all of the rhetoric aimed at letting the top portion of the Bush tax cuts expire while preserving the ‘middle class’ part of the cuts is about how the original cuts were a tax break for the wealthy, so I can only assume that some kind of fairness is major goal. If there is anyone saying that raising taxes on the wealthy will make the economy grow, I’ve yet to hear it.

  10. #10 william e emba
    September 22, 2010
    We have a fairly weak progressive tax, with just three brackets, and a very low top bracket cut-off.

    You’re wrong about that. There are 6 brackets

    Half wrong. I guess you can tell the last time I figured out my taxes by hand. Half right: we still have a fairly low top tax bracket.

    I don’t see how raising taxes (on everyone, not just the wealthy, since that is what going back to Clinton era tax rates would do) would get us back to the mid and late ’90′s growth rates.

    So you don’t understand things, and wish to pontificate anyway? What an idiot.

    So, no, I’m not worried that someone will try and make that argument without looking stupid.

    Perhaps you should worry about not looking stupid.

    You are also assuming that the point of a progressive tax policy is to “correct” for “inherent unfairness”. It’s not. It’s usually sound economic policy.

    Virtually all of the rhetoric aimed at letting the top portion of the Bush tax cuts expire while preserving the ‘middle class’ part of the cuts is about how the original cuts were a tax break for the wealthy, so I can only assume that some kind of fairness is major goal.

    I could not care less about the rhetoric. I’m interested in the facts and the science and the truth.

    If there is anyone saying that raising taxes on the wealthy will make the economy grow, I’ve yet to hear it.

    So that only means you don’t know any economics and you apparently only listen to the right-wing echo chamber rhetoric. My point is that this sad state of self-made ignorance is very much believed by most Democrats too.

  11. #11 JasonTD
    September 23, 2010
    I don’t see how raising taxes (on everyone, not just the wealthy, since that is what going back to Clinton era tax rates would do) would get us back to the mid and late ’90′s growth rates.

    So you don’t understand things, and wish to pontificate anyway? What an idiot.

    Since you were the one ‘pontificating’ based on 20 year old recollections about our tax structure, I have to take that comment as a case of projection. By the way, the cut off for the top rate was $51,900 in 1992, the last year in which we had just 3 brackets. The following year, during Clinton’s first term, 2 brackets were added at the higher end, raising that cut off to $250,000. While you might still consider that to be low in your defense of being only “half wrong”, it still went up by about a factor of five.

    You didn’t make any defense of the assertion that Clinton-era tax rates had anything to do with Clinton-era economic growth. In truth, if you look at the tax brackets I linked, the only difference in taxes under Clinton vs. Bush is that taxes were a bit higher across the board. The basic structure and degree of progressiveness were about the same. So your assertion comes down to an argument that higher taxes = greater economic growth. That is so counter-intuitive that you need to back that up with the facts and science you were talking about instead of simply calling me an idiot for being skeptical.