Thursday, October 13, 2011

999: A vicious assault on the working poor, and a lavish giveaway to the rich (VIDEO)

"The most vicious assault on the middle class and the working poor, and the most lavish giveaway to the rich, that has ever been proposed by a presidential campaign frontrunner."
-Lawrence O'Donnell
October 13, 2011

From Ezra Klein:

Herman Cain has not proposed three entirely separate taxes -- one a 9 percent corporate income tax, another a 9 percent consumption tax, and then a final 9 percent personal income tax. Rather, he has proposed an 18-9 plan: an 18 percent consumption tax and a 9 percent personal income tax. Or maybe he has proposed a 27 plan: a straight 27 percent payroll tax on wage income. Depends on which tax professor you ask and how deep into the details you want to go.

As Daniel Shaviro, a tax professor at New York University, notes, “a key part of 9-9-9’s intuitive appeal is the idea that, not only is 9 a low number, but the plan’s three 9’s appear to be spread out.” The only problem? The business tax and the sales tax are “effectively the same tax.”

The business tax is not a corporate income tax. It’s essentially a value-added tax. And a value-added tax is simply a form of a consumption tax. To tax wonks, this is comedy gold. Here they have spent years arguing whether a sales tax or a VAT tax is the better way to tax consumption, and Cain just went ahead and put both taxes in his plan. “So two of the 9’s in the Cain plan are simply redundant versions of almost the same thing,” writes Shaviro. That’s how you get to an 18 percent consumption tax.

From Glenn Kessler (whom I'm not quite as fond of, but always worth monitoring):

Bruce Bartlett, a former Reagan administration official who now calls himself an independent, also offered a critical examination this week on the New York Times Economix blog. He (as did Kleinbard) noted that the business tax allows for no deduction for wages, which he said “is likely to raise the cost of employing workers, even with abolition of the employers’ share of the payroll tax.”

Cain, in his television appearances, glosses over such details. “The fact that we are taking out embedded taxes that are built into all of the goods and services in this country, prices will not go up,” he asserted on MSNBC. “They will not go up.” He then gave an example of a family of four earning $50,000.

“Today, under the current system, they will pay over $10,000 in taxes assuming standard deductions and standard exemptions. I've gone through the math, $10,000. Now, with 9-9-9, they're going to pay that 9 percent personal — that 9 percent tax on their income. So that's only $4,500. They still have $5,500 left over to apply to this sales tax piece. …They are still going to have money left over.” 
We’re not sure how Cain calculates that this family now pays $10,000 in taxes, but the reliable Tax Foundation calculator comes up with a much more reasonable figure: a total tax bill of $3,515 — $690 in federal income taxes and $2,825 in payroll taxes. (The family gets a big income-tax savings from the child tax credit, which Cain would eliminate.)

So, in other words, under Cain’s plan, this family would instantly pay $1,000 more in income taxes. They would also pay additional sales taxes, probably more than $3,000, on their purchases. It’s unclear how the business tax would affect the family’s tax bill but it appears this theoretical family would get no tax cut but instead a 100 percent tax increase.

(The picture changes somewhat if you assume that all the employer-paid payroll taxes automatically would revert to the employee. We’re not sure that’s a good bet given the design of Cain’s business tax, but pro-Cain advocates make that assumption with their own tax calculator. But even under this scenario, the family appears stuck with at least a $2,000 tax increase.)

We take no position on whether it is good or bad to make the tax code less progressive. Perhaps in response to questions, Cain appears to still be tinkering with the plan. In Concord, N.H., he said on Wednesday that, among other changes, he would preserve the deduction for charitable donations and would exempt any used goods, including previously owned homes and cars, from the new 9 percent sales tax.

The Pinocchio Test 
We can excuse Cain inflating his adviser’s resume, but his campaign needs to do more to address the fuzzy math behind his tax plan. (We asked the campaign for a copy of Lowrie’s analysis but did not receive a response. UPDATE: The documents are posted below.)

Give Cain credit for thinking boldly, but he’s not talking clearly. As far as we can tell from the limited information Cain has provided, the plan he touts as a big tax cut would actually increase taxes on most Americans. Just like it would be wrong to claim pizza is a low-calorie meal, Cain’s description of the plan’s impact on working Americans is highly misleading.

Three Pinocchios

Oh, and in case you missed it, Glenn's definition of what Three Pinocchios means?

Significant factual error[s] and/or obvious contradictions.

Bruce Bartlett took a moment to note its effect on business...well, certain businesses:

Little detail has been released by the Cain campaign, so it’s impossible to do a thorough analysis. But using what is available on Mr. Cain’s Web site, I’m taking a stab at estimating its effects.

First, the 9-9-9 plan is actually an intermediate step in Mr. Cain’s plan to overhaul the tax system and jump-start growth. Phase 1 would reduce individual and business taxes to a maximum of 25 percent, which I assume means reducing the top statutory tax rate to 25 percent from 35 percent.

No mention is made on the site of a tax cut for those now in the 10 percent, 15 percent or 25 percent brackets. This means that the only people who would get a tax rate cut are those now in the 28 percent, 33 percent or 35 percent brackets. According to the Joint Committee on Taxation, only 4 percent of taxpayers pay any taxes at those rates.

As for corporations, Mr. Cain’s proposal is primarily going to benefit those with revenues of more than $1 million a year, because they account for 98.7 percent of all receipts by C corporations. (A C corporation is a legal entity separate and distinct from its owners that is taxed as a corporation; its shareholders pay taxes individually on their gains.) Those companies with receipts over $50 million account for 88.8 percent of total receipts.

Other business entities — sole proprietorships, S corporations (which have between 1 and 100 shareholders and pass through net income or losses to shareholders) and partnerships — would not benefit because they are not taxed on the corporate schedule. But they represent 92 percent of all businesses.

Elizabeth Warren’s story (VIDEO)

First saw this over at the Political Carnival. Enjoy!

Wednesday, October 12, 2011

Lawrence O'Donnell: When Obama starts out! (VIDEO)

Visit for breaking news, world news, and news about the economy

At the heart of #OWS is a Civil War between Main St. and Wall St. with both sides shooting at Obama...

Ezra Klein recently went to he Cleveland Clinic’s annual innovation summit where Jeffrey Immelt, CEO of General Electric and chairman of President Obama’s Council on Jobs and Competitiveness, delivered the keynote and sat for a Q&A.

It was a Q & A that if you were inclined to dislike or distrust Immelt, what he said there was hardly going to change your mind about him. (My own view got dramatically worse):

Business types really hate Barack Obama. Everybody sort of knows that, but it’s hard to get a sense of it if you’re not in the room listening to them laugh bitterly at questions like, “Does Obama understand the damage regulations are doing to business?”

In fact, this audience is so down on Obama that Immelt, who you have to assume is one of the more pro-Obama CEOs out there, is not willing to defend him or his policies before this audience. At all. Even a little. His only comment is that people need to roll up their sleeves and help rather than complain. And his answers to Maria Bartiromo’s questioning slyly suggest sympathy with the audience. Asked by Bartiromo how he’ll make the White House listen to him and the business community, his answer, with a smile, is “repetition.” Everyone laughs. “Our job is to make our ideas his ideas,” Immelt says.

This is the sort of audience that makes you think the White House is going to have a lot of trouble meeting its fundraising goals next year.

“When you criticize Wall Street, they don’t care. You’re hurting the guy in Illinois who wants to build a factory.”

I should say that this is more a comment on the conference and some of the other panels than on Immelt himself, but these folks really, really feel persecuted and unappreciated. The common response to this, of course, is that corporate profits have hit record levels in recent years and the top 1 percent has never been richer. But if you need more evidence that money doesn’t buy happiness, you should sit with some CEOs for an hour.

The President has reached out to these people, and this is the thanks he gets from them.

My own first reaction is say "@#$^ you" to Wall Street.  (You can now see what side I'm on).

The President steps up, defends the Wall Street Protesters, telling the world he understands why they're pissed, and a lot of reaction from the Professional Left, as well as from some of the Wall Street Protesters has been to say "@#$% you, Mr. President.  You've sold us out to the Banks."

I'm left wondering why the hell President Obama wants to bother.  Why not just let the Professional Left run their dream candidate; let the Wall Streeters run Mitt Romney, and watch America pay the price.

Meanwhile, this second part from Ezra highlights what's really going on here, a Civil War between Wall Street and Main Street, with both sides feeling they're the most important thing in America, and both sides pissed off that the other side doesn't get it.

The Council on Jobs and Competitiveness is the Obama administration’s answer to the charge that it doesn’t listen to the business community. It includes not just Immelt but executives from Xerox, DuPont, American Express, Kleiner Perkins Caufield &; Byers, TIAA-CREF, Southwest Airlines, Procter & Gamble, Boeing, Intel, Citigroup, Eastman Kodak, Facebook, Comcast, BNSF Railway and UBS Investment Bank. And today it released its interim report (PDF).

This is, in other words, the big moment: This is the business community trying to make its ideas President Obama’s ideas. But here’s the thing: Its ideas don’t seem to differ much from Obama’s ideas.

The report proposes “five common-sense initiatives to boost jobs and competitiveness.” Initiative No. 1 is more infrastructure and energy investment. The White House would happily check that box. Initiative No. 2 is a grab bag of proposals to help “high-growth enterprises,” ranging from more visas for skilled immigrants to patent reform, to amending Sarbanes-Oxley to make it easier to go public, to tax changes to make it more appealing to invest in start-ups. Then there’s the “National Investment Initiative,” which might as well be called “winning the future.” Fourth on the list is streamlining regulations. And then there’s worker retraining, educating more engineers and a second high-five for high-skills immigration.

I’m sure if you dug into the details of the policies on this list, you would find items the administration doesn’t support. Perhaps the business community would deregulate beyond White House regulatory chief Cass Sunstein’s comfort level, for instance. But all in all, you could lift most of these items out of Obama’s speeches. Judging from this report, business leaders’ thinking is substantially his thinking already. Which makes sense: Like many of them, Obama is an Ivy-educated datahead who likes reading boring reports. But sitting with a group of CEOs, you would never know that. In those gatherings, he’s often presented as a naive Marxist who is one bad day away from trying to throw everyone with a corner office into jail.

Perhaps the distance is greater than this report suggests. Perhaps the CEOs have a much more dramatic agenda than they were willing to put on paper. But I haven’t seen much evidence for that view. Most business leaders I talk to would love to see something along the lines of the Simpson-Bowles deficit plan pass, and at this point, so too would the White House.

Another possibility is that the gulf between the business community and the White House is more cultural and personal than it is substantive. Matt Yglesias had an interesting take on this last week. “A lot of what you have is . . . a kind of bitter feud between businessmen and the kids they went to college with who didn’t go on to become businessmen. What did they do instead? They became teachers or doctors or nurses or professors or lawyers or scientists or nonprofit workers. . . . The business coalition sees the service coalition as composed of useless moochers, and the service coalition sees the business coalition as greedy bastards.”

“If it were merely a clash of objective interests, it really wouldn’t be much of a clash,” Yglesias wrote. “A healthy business environment needs schools and hospitals and public infrastructure to backstop it, and nobody is made happy by a business cycle downturn. There’s tension at the margin, but it’s not a zero-sum world. Layered on top is, I think, a raw level of gut-level dislike — both kinds of people think the other kind of people are clueless about what really matters in life.”

Increasingly, I’m coming to agree with that analysis.

The American Jobs Act...this ain't over yet! (VIDEO)

Monday, October 10, 2011

Why I don't need Andrew Sullivan's or anyone else's permission to come down hard on Herman Cain (VIDEO)

Following up on Lawrence's interview with Herman Cain:

Part 1:

Part 2:

Andrew Sullivan was just a little insulting this morning with his Moore Award Nominee:

"Mr. Cain, you were in fact in college from 1963 to 1967, at the height of the Civil Rights Movement, exactly when the most important demonstrations and protests were going on. You could easily as a student at Morehouse between 1963 and 1967 actively participated in the kinds of protests that got African Americans the rights they enjoy today. You watched from that perspective at Morehouse when you were not participating in those processes. You watched black college students from around the country and white college students from around the country come south AND BE MURDERED, fighting for the rights of African Americans. Do you regret sitting on those sidelines at that time?" - Lawrence O'Donnell, in a pretty horrifying interview.


Yeah, he said horrifiying.

First off, to be clear, let me give you the definition of the Moore Award. This is from Andrew's own site, now. It is named after film-maker, Michael Moore - is for divisive, bitter and intemperate left-wing rhetoric.


I'm personally horrified at how horrified people are at Lawrence's interview with Herman Cain. He treated Mr. Cain far more politely than I or virtually any other African-American I know would have given the circumstances.

And the circumstances are these. My Father attended the University of Texas roughly during the same time period. UT was desegregated at the time, but he has no fond memories of the school. The atmosphere was such that a Professor at Texas publicly vowed that any Black Student who enrolled in his class would start at a "C" and head downward.

My Father never suffered the physical jeopardy that other African Americans suffered in trying to get their due rights. He had a beer dumped on him during a Texas-Oklahoma game while sitting in the burnt orange section, but that was it. Mostly everything he experienced was delay, resistance and frustration.

Maybe that's why he thought it was important to find the time to test Restaurants during his stays at both Texas Schools. In the end, he knew it was his about him and his children, when he had them. So even though I wasn't even in glimmer in his eye, he was doing it for me.

He also met another student at the time who was also testing restaurants while attending Texas Southern University. Her name was Claudette Smith. I know her today as Mom.

One may argue that Herman Cain had a right not to participate in the Civil Rights Movement, and that may be true. But here's the problem, he's holding himself up as an example of, if not the very pinnacle of, the black community. (Just ask him, he'll be glad to tell you). He has gone so far as to suggest that Black People who do not support him (not give him a fair hearing, mind you, but out and out support him) have been brainwashed by the Democratic Party.

May I suggest that my Father and Mother were not brainwashed? May I suggest that they saw with their own eyes who was supporting Civil Rights and who wasn't; and their allegiance forevermore was aligned with the Democratic party.

And for the record, yes, there were Southern Democrats who voted against the 1964 Civil Rights Act. They long ago switched parties and joined Herman Cain's party, the Republicans. I'm sure even Mr. Cain remembers Lyndon Johnson signing the Civil Rights Act, and saying he was delivering the South to the Republicans for the next 40 years. He was wrong. Try 60-70.

The horrific part of the interview which apparently did not catch Andrew's eye, was Lawrence's first asking Mr. Cain if he wanted to back off that "brainwashing" statement. Mr. Cain did not. With him questioning my intelligence as a African-American, I had a a right to know where he stood in relation to the community he was questioning. I had a right to know what kind of African-American he was, and yes that is something I can judge given the questions Lawrence O'Donnell asked rather haltingly. I had a right to know what he had given to the cause. Because if he had stood with my parents, if he had marched with my parents, then African-Americans as a whole would have shrugged when he called us "brainwashed". At least, he earned the right.

But he didn't. He didn't march. He didn't sit-in. He didn't test. He didn't want to get involved, because frankly, it was probably more important to him to ingratiate himself to the white community, and if you look, it certainly paid off for him. I'm sorry to come off sounding like a member of the Black Panther Party, but African-Americans see people like Mr. Cain all the time. They're the ones who think they're better than the rest of us, smarter, and the only ones fit to lead, the only ones fit to be heard from. You know this because they spend a lot of time shouting down the opposition. These people ars not a symptom of ideology, it happens in both left-wing and right-wing circles. It comes from a life spent in front of, or behind the pulpit, where the Preacher was the most powerful man in our community.

In the end, Herman Cain is not powerful, he is a parasite. He is a man who will twist himself into any shape required to make his money, to ingratiate himself to the white community, and more importantly to show himself superior to the African-Americans that frankly he despises. Yet, with equal lack of character, he will do the same to ingratiate himself back with his fellow African-Americans because he suddenly needs their votes. Remember, though Mr. Cain wants those votes, he still feels those voters inferior to the greatness that his "him" and will let that attitude slip out on occasion; like he did when he called a great many of us "brainwashed".

Andrew is wrong, and just a little bit insulting. The African-American community will call Herman Cain out on his past. It may be regrettable that Lawrence O'Donnell a white Irish-American face was the one asking him the questions, but make no mistake, African-Americans wanted those questions asked, and we don't need Andrew Sullivan's permission or anyone else's approval to have it so.