According to the constant refrain from Republicans in Congress, the reason that tax rates can’t be raised on anyone, even the already super-wealthy, is because doing so will hurt economic growth. However, two prominent economists — Nobel Prize winner Peter Diamond and John Bates Clark award winner Emmanuel Saez — write in today’s Wall Street Journal that the conservative theory is basically bunk:
In the postwar U.S., higher top tax rates tend to go with higher economic growth — not lower. Indeed, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, GDP annual growth per capita (to adjust for population growth) averaged 1.68% between 1980 and 2010 when top tax rates were relatively low, while growth averaged 2.23% between 1950 and 1980 when top tax rates were at or above 70%.
Neither does international evidence support a case for lower growth from higher top taxes. There is no clear correlation between economic growth since the 1970s and top tax-rate cuts across Organization for Economic Cooperation and Development countries.
Saez and Diamond also note that growth can be boosted if the revenue raised from higher taxes gets spend on infrastructure or other public investments. “The neglect of public investment over the last few decades suggests that the returns could be quite high,” they wrote.
As this chart shows, job growth has been weakest when the top tax rate was at its lowest:
In fact, job growth has been stronger when taxes are higher overall:
Of course, none of this should be construed as proving that higher taxes cause better job growth. But the Republican claim that higher taxes will blunt job growth is most certainly not true, as the data shows.
Rev. Kurt Nagel, a pastor of Holy Family Parish in Washington state, is responding to the growing number parishes who have opted out of a campaign to repeal marriage equality by doubling down on the Church’s opposition to gay people. ?The Catholic Church does not believe that people with same sex attraction are inferior,? he argued. ?It is sometimes said to support the charge of bigotry that the Catholic Church teaches that homosexual persons are ?disordered?. That is not true”:
It is true that the sexual DESIRES for persons of the same sex are disordered. That is, such desires are not ORDERED, or aimed, at the right end or goal. But we all have disordered desires ? in terms of sex, food, power, money, etc. That is because, although made in the image and likeness of God, we are also fallen creatures.? [...]
Nagel argued that ?homosexual persons? already have ?the legal benefits of marriage? ? thanks to the Domestic Partnership law enacted when Washington voters approved Referendum 71 in 2009.
?So our opposition to redefining marriage is not now a matter of denying anyone legal rights,? Nagel told parishoners. He acknowledged that the Washington State Catholic Conference opposed the 2009 Domestic Partnership law, as ?obviously? a step toward legalizing marriage and ?in part because we don?t believe such sexual relationships encourage the best lives and greatest happiness for homosexual persons.?
?The Catholic Church believes that creating this new legal and social institution of domestic partnerships is, on balance, not wise,? Nagel said. ?But it is doable. The Catholic Church, on the other hand, believes that Gay MARRIAGE is simply not possible.?
It’s unclear how Nagel would respond to the very real and possible marriages of the thousands of same-sex couples across the country, but while his comments echo the sentiment of the Washington Archbishop — who has called on churches to take part in an effort to undo Washington’s recently-enacted marriage equality law — they don’t represent the thinking of all Catholic leaders or congregations in the state.
At least six Catholic parishes are avoiding the recall, partly because it is ?hurtful and seriously divisive in our community.? Last week, Seattle?s Our Lady of the Lake Catholic Church gave the Rev. Tim Clark a standing ovation when he announced that the parish would not be participating in the anti-equality campaign.
Opinion polls have consistently shown that Catholics reject the Church?s opposition to marriage equality, with nearly three-quarter of Catholics favoring ?either allowing gay and lesbian people to marry (43%) or allowing them to form civil unions (31%). Only 22% of Catholics say there should be no legal recognition of a gay couple?s relationship.?
In an emotional speech about the difficulty of motherhood and life on the campaign trail, Ann Romney used an odd choice of words to discuss mothers who are forced to work while raising their children.
Ann Romney was at the center of a national discussion recently after a Democratic consultant charged that the would-be future first lady couldn’t possibly understand the plight of working mothers because she had the luxury to stay home and devote herself full time to raising her kids. The Romney campaign fired back, accusing Democrats of lacking respect for stay at home moms.
The issue was largely dismissed after a few days as a ginned-up “silly season” controversy, but Ann Romney’s comments last night at the Connecticut Republican Party?s Prescott Bush Awards Dinner could potentially reignite the issue. After discussing how she understands the challenges mothers face, Romney said, according to BuzzFeed:
Romney alluded to the fact that not all women can stay at home saying, ?I love the fact that there are women out there who don?t have a choice and they must go to work and they still have to raise the kids. Thank goodness that we value those people too. And sometimes life isn?t easy for any of us.?
It seems Romney was trying to express empathy for women who don’t have the option to stay at home, as she did. But the comment that she “love[s]” that some women “don’t have a choice” and must work is unusual, to say the least, and could lead to a new round of charges that the Romneys don’t understand average Americans, given their enormous wealth.
Nearly two-thirds of women are the breadwinner or co-bread winner in their households. Nonetheless, the gender pay gap remains. And while Mitt Romney has broken with most Republicans to support the Lilly Ledbetter Fair Pay Act, he has still not yet taken a position on the Paycheck Fairness Act.
The Social Security Trustees have just projected that the date by which the system will no longer be able to meet all of its payouts has been moved up three years from 2036 to 2033. This has prompted the usual clucking about the need for drastic benefit cuts of partial privatization right now.
What nobody seems to have noticed is that the primary reason for the pessimistic forecast is the lousy economy, particularly the high unemployment and depressed wages. Social Security is of course financed by payroll taxes. There?s no better way to put the system into the red than to have a recession and to have 93 percent of the gains to go to the top one percent (whose payroll taxes are capped.)
In the late 1990s, when we had full employment, in one three-year period Social Security?s Year of Reckoning was set back by eight years, from 2029 to 2037. Full employment would solve all the system?s problems. And if wages rose with productivity growth, as they did until the late 1970s, Social Security would enjoy a perpetual surplus and we could raise benefits. Conversely, an austerity program will help kill the system.
More Joy: The New York Times reports that Mexican immigration to the U.S. has fallen sharply since 2007, according to a new report by the Pew Hispanic Center.
Though repressive policies such as that of Arizona may have played a modest role, the real reason has to be the persistent recession. People don?t come north looking for work when there?s no work.
So for the right-wing, there are lots of things to celebrate about the recession?more grist for attacks on Social Security, fewer pesky immigrants.
This could be a whole new theme: in prolonged recessions, fewer families can afford kids?less fiscal pressure on public schools! Fewer people commute to work, so we can cut public transit. Workers have less bargaining power, so corporations enjoy lower wage costs. Suicides go up, which spares the health system the cost of treating prolonged illnesses.
You think I?m kidding? Just listen to the austerity lobby.
After the cut: a transcript of President Obama's remarks.
You'd think that something like this wouldn't be all that controversial:
President Obama today begins a two-day tour of college campuses in three battleground states ? North Carolina, Colorado, and Iowa ? in which he will press Congress to extend the 2007 law that keeps interest rates on student loans at a lower rate of 3.4 percent. If Congress doesn?t extend this lower rate, rates will double on July 1 to 6.8 percent.Hard to argue with that, right? Even Mitt Romney endorsed President Obama's position. Yet Republicans just can't help themselves:
Republicans on Capitol Hill noted that then-Senator Obama seemed to make the lower interest rates for student loans a lower priority.On the face of it, that's a stupid attack: the bill passed overwhelmingly, by a 79-12 margin; his vote was irrelevant. And it's not like he was goofing off: Obama was running for president. If his vote would have made a difference, he would have returned to D.C. to cast it?but it didn't.
When the bill came up for final passage on September 7, 2007, then-Senator Obama did not vote; he was campaigning for president in California and Oregon.
Moreoever, every single one of the 12 no votes in the Senate were cast by Republicans. The same thing was true in the House, where a majority of Republicans voted against the measure. Even if you fault Obama for missing the vote, at least he didn't try to kill the bill.
Yet John Boehner's press shop keeps piling on:
?It seems not much has changed,? said Brendan Buck, spokesman for House Speaker John Boehner, R-Ohio. ?Five years ago, just like today, the President put campaigning before governing. As a result, 50 percent of new graduates can?t find full-time employment in this economy.?Sure enough, Boehner was among those who voted no on the bill. And he's not supporting it now.
Our news roundup continues with selected stories and links from April 23, 2012, about, swaps regulation, CalPERS, Argentina oil seizure, Brazil, labor strikes, Supreme Court.rent control, Tim Geithner, Jim Crow, People's Park, nuclear power and more.[...]
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Did Timothy Noah catch a wave or anticipate one? In 2010, Noah, a longtime public-policy reporter now at The New Republic, wrote a ten-part series in Slate about American economic inequality. This was at a time when the most discussed issue in U.S. politics was how much government Tea Partiers aimed to slash and how quickly we must balance the budget?even in the face of the worst downturn in eight decades. Then, about a year after the Slate series, Occupy Wall Street and its proxies around the country seemingly awakened the nation to the vast disparity of wealth between the top 1 percent and the rest of us. This was just in time for The Great Divergence, Noah?s expanded book on the subject, to refer to the movement in an introduction.
On the other hand, important ideas may lie dormant for ages, unacknowledged beyond a few specialists?and then, suddenly, they pervade ?the air around us,? as an old professor of mine used to say. So it is with the issue of inequality, whose current salience is also a victory for a liberal intellectual/media infrastructure that has developed over the past 20 years. Even as it became the conventional wisdom of Washington centrist elites like David Brooks, The Washington Post editorial board, and the Sunday network pundits to fret about debt and deficits, this alternative establishment of intellectuals, academics, writers, and engaged professionals?notably the economists? duo of Thomas Piketty and Emmanuel Saez, the political--science team of Jacob Hacker and Paul Pierson, and the journalist Thomas Edsall?had been preparing the case that inequality is the defining issue of our time. One distilled result of these efforts, to which Noah gives full and generous credit, is his superb new book.
The story told here is, as Noah himself puts it, ?not principally a story about the poor.? It was bad to be poor in 1979; it?s bad now, too, but not so dramatically worse. The major difference is the chasm that has opened between today?s middle class and the rich. It would be impossible to list all the changes in American life since 1928, the country?s previous inequality high point. But in at least one important way, it might as well be 1928 again. In that year, the richest 1 percent held 24 percent of the nation?s income. Holdings at the very top declined to as low as 9 percent by the 1970s. But by 2007, the top 1 percent again held ? 24 percent (yes, the 1 percent?s share is just slightly lower after the recession?the rich have more to lose?but it will rebound with the economy).
While other advanced democracies have experienced similar trends, the U.S. situation is more profound, and worsening faster. Noah also discredits the reassuring hokum that American social mobility?the enabling national fairy tale that any one of us can go from ?rags to riches??acts as a counterbalance. Perhaps a century ago but no longer. As Noah puts it, italics his: ?Almost (arguably every) comparably developed nation for which we have data offers greater income mobility than the United States.?
What caused this disparity? Noah is our unpretentious Detective Columbo, walking us through theories of the case. There are many suspects to interrogate, and there turn out to be not one but two crimes to solve. First, how did the ?stinking rich? (Noah?s glib phrase for the top one-hundredth of 1 percent of the population making more than $9 million annually) get to be so, well, stinking rich? The answer has a lot to do with pre-tax earnings. Restraining social norms once enforced by a strong labor movement have waned, and corporate executives now take turns bidding up one another?s salaries via enormous stock options untied to company performance. (All this happened while banks were being deregulated, Wall Street partners won massive windfalls as old firms went public, and bankers started to take high-risk, high-reward gambles with clients? money.) What Noah lambastes as ?unequal government,? always sympathetic to the plight of the rich, helped too. For the top one-tenth of 1 percent?those making at least $1.7 million per year?the effective tax rate has declined by 25 percent since 1979.
Second, how did the middle class stagnate? Unlike in the Slate series, and perhaps wisely, Noah?s book offers no unscientific guesstimate as to which factor caused what percentage of the problem. But his reading of the data dismisses some theories and holds others for further questioning. Continued racial and gender discrimination are not the villains. African Americans today are doing almost exactly as well (or not well) as they were in 1979; women have cut nearly in half their income deficit relative to men, in part because men?s incomes failed to rise equivalently. Similarly, the rage against immigration found among Tea Party adherents has almost no basis in economic data. Unskilled immigrants may reduce somewhat the income of the 13 percent of the native-born workforce lacking a high-school degree, but even here, the costs borne are far too small to account for the big-picture shift. As for oft-blamed computers, they have indeed upped the demand for higher-skilled workers and helped to eviscerate occupations like bank teller. But Noah?s divergence started before the computer boom, and it actually ?slackened? for a spell, he says, as ?businesses stampeded to the Internet? during the 1990s.
Finally, Noah arrives at his prime suspects. Relying on Harvard economists Claudia Goldin and Lawrence Katz, Noah argues that for the first time since the spread of public schools, the education system has been unable to ?increase the supply of better-educated workers sufficiently to meet demand.? As schools fell behind, the American labor movement?particularly in the private sector?all but died. This deprived workers, union and non-union alike, of the negotiating leverage necessary to maintain the link between their steadily increasing productivity and their wages.
Throughout, Noah reminds us?in a good way?that he?s not a social scientist or academic but a journalist who can synthesize reams of complex material (and even write wittily about it). A lot of the pleasure here comes from his mini-biographies of figures in what might be called the history of American struggles over money and power. In the volatile period from the mid-19th century until the Great Depression?a time of the rise of monopoly corporations and the great industrial and banking fortunes of Rockefeller, Carnegie, and Morgan?America experienced enormous income inequality. But the country did also permit some of the social mobility that we?re taught is our birthright. Noah tracks the power of mobility as animating creed in the careers of two writers: Horatio Alger, the idea?s famous 19th-century bard, and James Truslow Adams, born into money himself and a freelance historian of New England, who coined the iconic phrase ?the American dream? in 1931, even as the Depression took its terrible toll.
Adams wasn?t just talking about money, though. He imagined a ?dream of a social order in which each man and each woman shall be able to attain the fullest stature of which they are innately capable.? Following World War II and pretty much through the 1970s, Adams?s dream could almost be said to have come true. But a battle for the future was under way. Noah gives us a couple of its gladiators. The first is Walter Reuther, the creative and militant president of the United Auto Workers (UAW) who stands at the high-water mark of American unionism and its power to support millions of middle-income Americans during the postwar era. In Noah?s telling, Reuther is the embodiment not just of postwar labor?s strength but also its fragility. He wanted to win more for the unions than just boxing them into the narrow context of collective bargaining; he wanted them at the forefront of public policymaking and decisions about the economy. But Reuther?s innovative vision?of a UAW dedicated, almost in full partnership with auto companies, to building a worker- and consumer-friendly business model?fell on deaf ears in Detroit. Thus even at its peak, organized labor and its most brilliant leader could not persuade American companies to enter into industry--labor managerial collaboration similar to arrangements in Western Europe.
The time of Reuther, who died in a plane crash in 1970, was almost precisely followed by the prime of the less well-known, but perhaps equally influential, Bryce Harlow. Sage aide to Dwight Eisenhower and Richard Nixon and a lobbyist for Proctor and Gamble, Harlow effectively founded modern corporate political lobbying in the 1970s. As early as 1962, Noah quotes him warning a trade-group audience: ?Our principal occasion for alarm ? is the role of our Federal Government in accelerating the drive for equality.? Harlow himself had the skills of a great organizer and marketer and used them in defense of a beleaguered but still powerful corporate America. Thanks in large measure to his efforts, business defeated a Ralph Nader?supported federal agency for consumer advocacy, a reform bill that would have made labor organizing easier by penalizing corporations in violation of the National Labor Relations Act, and several other major pieces of business and environmental regulation. Harlow?s other lasting legacy is his creation of the Business Roundtable, which brought the principals of large corporations into direct strategic discussion.
Noah tells his stories in pithy prose. I worked in the labor movement for more than 20 years and often described its ongoing deterioration, but I hadn?t thought to characterize the virtual disappearance of private-sector unionism and its influence the way Noah does. In noting that private-sector union density today is no higher?under 7 percent of employees?than it was in the year Franklin Roosevelt became president, he vividly writes, ?It?s as if the New Deal never happened.? Reading this, I had an epiphany about the world we had lost: the world of Reuther standing behind Martin Luther King Jr. on that stage in August 1963 or whispering in the ear of Lyndon Johnson, so alarming the titans of the nation?s most important industry that then?auto executive George Romney called him ?the most dangerous man in Detroit.? Liberals often comfort themselves that modern conservatives, despite their best efforts, haven?t yet ?rolled back? the New Deal. But in the important case of savaging labor unions, the strongest counterweight to big business?s drive to redistribute wealth upward, modern conservatism has indeed, as Noah shows, rolled back the New Deal.
What of the larger problem Noah surveys? How will it be solved? Rules of the genre demand that he suggest solutions in his final chapter. He?s got smart ones, ranging from somewhat plausible under Democratic governance (universal preschool, a more progressive tax code, a publicly funded infrastructure program) to what seem, barring a transformed political culture, impossible (imposing price controls on college tuition, breaking up the big banks, repealing the 1947 Taft-Hartley Act that so sharply curtailed labor). As often happens in policy advocacy books, this is the point where the visceral power of the author?s description of a great wrong dissipates into something more abstract?a scholarly brief rather than a bracing polemic.
Noah concludes The Great Divergence by saying, ?We can do better.? The ?we? in that sentence is the book?s putative audience: well-educated members of the professional cultural elite. But how? As it stands now, Occupy Wall Street is but a pebble in the ocean compared to the great strikes and mass movements like the populism of the 1890s and the birth of industrial unionism in the 1930s that paved the way, once upon a time, for a more economically just America. Sympathetic intellectuals articulated back then the determination and anger of these ordinary Americans, too, but they were not the ?we? who changed the country. No, millions of outraged citizens compelled the few-though-powerful?business chieftains, policymakers, and politicians?to ratify a series of political and economic reforms that staved off greater social conflict.
Today?s army of liberal intellectuals, writers, bloggers, and academics (led by the indefatigable Paul Krugman?and it is no surprise that Krugman is frequently alluded to here) is necessary but insufficient. In a telling aside, when speaking of the lack of bargaining power most workers have today, Noah admits that ?a couple of years ago I worked out with my cleaning lady what I would pay her. Here?s how the negotiation went. I told her what I would pay her. She said, ?OK.?? As the abolitionist and social reformer Frederick Douglass said, ?Power concedes nothing without a demand.? At times in the past, such demands were thunderously made, and those who held power finally conceded some of it. Noah has done what he can, but the great divergence won?t end until a lot more people like his cleaning lady start loudly saying, ?No, it?s not OK at all.?