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Revolt of the Rich

Old 08-30-12, 05:02 PM
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Revolt of the Rich

This is a very long article, so I'm only going to publish excerpts. It's by former Republican House staffer Mike Lofgren and it's been published by The American Conservative. Follow the link -- it's worth reading in full.

Revolt of the Rich
Our financial elites are the new secessionists.

It was 1993, during congressional debate over the North American Free Trade Agreement. I was having lunch with a staffer for one of the rare Republican congressmen who opposed the policy of so-called free trade. To this day, I remember something my colleague said: “The rich elites of this country have far more in common with their counterparts in London, Paris, and Tokyo than with their fellow American citizens.

That was only the beginning of the period when the realities of outsourced manufacturing, financialization of the economy, and growing income disparity started to seep into the public consciousness, so at the time it seemed like a striking and novel statement.

At the end of the Cold War many writers predicted the decline of the traditional nation-state. Some looked at the demise of the Soviet Union and foresaw the territorial state breaking up into statelets of different ethnic, religious, or economic compositions. This happened in the Balkans, the former Czechoslovakia, and Sudan. Others predicted a weakening of the state due to the rise of Fourth Generation warfare and the inability of national armies to adapt to it. The quagmires of Iraq and Afghanistan lend credence to that theory. There have been numerous books about globalization and how it would eliminate borders. But I am unaware of a well-developed theory from that time about how the super-rich and the corporations they run would secede from the nation state.

I do not mean secession by physical withdrawal from the territory of the state, although that happens from time to time—for example, Erik Prince, who was born into a fortune, is related to the even bigger Amway fortune, and made yet another fortune as CEO of the mercenary-for-hire firm Blackwater, moved his company (renamed Xe) to the United Arab Emirates in 2011. What I mean by secession is a withdrawal into enclaves, an internal immigration, whereby the rich disconnect themselves from the civic life of the nation and from any concern about its well being except as a place to extract loot.

Our plutocracy now lives like the British in colonial India: in the place and ruling it, but not of it. If one can afford private security, public safety is of no concern; if one owns a Gulfstream jet, crumbling bridges cause less apprehension—and viable public transportation doesn’t even show up on the radar screen. With private doctors on call and a chartered plane to get to the Mayo Clinic, why worry about Medicare?

...

In both world wars, even a Harvard man or a New York socialite might know the weight of an army pack. Now the military is for suckers from the laboring classes whose subprime mortgages you just sliced into CDOs and sold to gullible investors in order to buy your second Bentley or rustle up the cash to get Rod Stewart to perform at your birthday party. The sentiment among the super-rich towards the rest of America is often one of contempt rather than noblesse.

Stephen Schwarzman, the hedge fund billionaire CEO of the Blackstone Group who hired Rod Stewart for his $5-million birthday party, believes it is the rabble who are socially irresponsible. Speaking about low-income citizens who pay no income tax, he says: “You have to have skin in the game. I’m not saying how much people should do. But we should all be part of the system.”

But millions of Americans who do not pay federal income taxes do pay federal payroll taxes. These taxes are regressive, and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues. By 2007, the last “normal” economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950. By 2007 they had fallen to 14.4 percent. So who has skin in the game?

While there is plenty to criticize the incumbent president for, notably his broadening and deepening of President George W. Bush’s extra-constitutional surveillance state, under President Obama the overall federal tax burden has not been raised, it has been lowered. Approximately half the deficit impact of the stimulus bill was the result of tax-cut provisions. The temporary payroll-tax cut and other miscellaneous tax-cut provisions make up the rest of the cuts we have seen in the last three and a half years. Yet for the president’s heresy of advocating that billionaires who receive the bulk of their income from capital gains should pay taxes at the same rate as the rest of us, Schwarzman said this about Obama: “It’s a war. It’s like when Hitler invaded Poland in 1939.” For a hedge-fund billionaire to defend his extraordinary tax privileges vis-à-vis the rest of the citizenry in such a manner shows an extraordinary capacity to be out-of-touch. He lives in a world apart, psychologically as well as in the flesh.

Schwarzman benefits from the so-called “carried interest rule” loophole: financial sharks typically take their compensation in the form of capital gains rather than salaries, thus knocking down their income-tax rate from 35 percent to 15 percent. But that’s not the only way Mr. Skin-in-the-Game benefits: the 6.2 percent Social Security tax and the 1.45 percent Medicare tax apply only to wages and salaries, not capital gains distributions. Accordingly, Schwarzman is stiffing the system in two ways: not only is his income-tax rate less than half the top marginal rate, he is shorting the Social Security system that others of his billionaire colleagues like Pete Peterson say is unsustainable and needs to be cut.

This lack of skin in the game may explain why Romney has been so coy about releasing his income-tax returns. It would make sense for someone with $264 million in net worth to joke that he is “unemployed”—as if he were some jobless sheet metal worker in Youngstown—if he were really saying in code that his income stream is not a salary subject to payroll deduction. His effective rate for federal taxes, at 14 percent, is lower than that of many a wage slave.

...

After the 2008 collapse, the worst since the Great Depression, the rich, rather than having the modesty to temper their demands, this time have made the calculated bet that they are politically invulnerable—Wall Street moguls angrily and successfully rejected executive-compensation limits even for banks that had been bailed out by taxpayer funds. And what I saw in Congress after the 2008 crash confirms what economist Simon Johnson has said: that Wall Street, and behind it the commanding heights of power that control Wall Street, has seized the policy-making apparatus in Washington. Both parties are in thrall to what our great-grandparents would have called the Money Power. One party is furtive and hypocritical in its money chase; the other enthusiastically embraces it as the embodiment of the American Way. The Citizens United Supreme Court decision of two years ago would certainly elicit a response from the 19th-century populists similar to their 1892 Omaha platform. It called out the highest court, along with the rest of the political apparatus, as rotted by money.

...

This raises disturbing questions for those who call themselves conservatives. Almost all conservatives who care to vote congregate in the Republican Party. But Republican ideology celebrates outsourcing, globalization, and takeovers as the glorious fruits of capitalism’s “creative destruction.” As a former Republican congressional staff member, I saw for myself how GOP proponents of globalized vulture capitalism, such as Grover Norquist, Dick Armey, Phil Gramm, and Lawrence Kudlow, extolled the offshoring and financialization process as an unalloyed benefit. They were quick to denounce as socialism any attempt to mitigate its impact on society. Yet their ideology is nothing more than an upside-down utopianism, an absolutist twin of Marxism. If millions of people’s interests get damaged in the process of implementing their ideology, it is a necessary outcome of scientific laws of economics that must never be tampered with, just as Lenin believed that his version of materialist laws were final and inexorable.

If a morally acceptable American conservatism is ever to extricate itself from a pseudo-scientific inverted Marxist economic theory, it must grasp that order, tradition, and stability are not coterminous with an uncritical worship of the Almighty Dollar, nor with obeisance to the demands of the wealthy. Conservatives need to think about the world they want: do they really desire a social Darwinist dystopia?

The objective of the predatory super-rich and their political handmaidens is to discredit and destroy the traditional nation state and auction its resources to themselves. Those super-rich, in turn, aim to create a “tollbooth” economy, whereby more and more of our highways, bridges, libraries, parks, and beaches are possessed by private oligarchs who will extract a toll from the rest of us. Was this the vision of the Founders? Was this why they believed governments were instituted among men—that the very sinews of the state should be possessed by the wealthy in the same manner that kingdoms of the Old World were the personal property of the monarch?

Mike Lofgren served 16 years on the Republican staff of the House and Senate Budget Committees. He has just published The Party Is Over: How Republicans Went Crazy, Democrats Became Useless, and the Middle Class Got Shafted.
http://www.theamericanconservative.c...t-of-the-rich/
Old 08-30-12, 05:53 PM
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Re: Revolt of the Rich

Good article. I do disagree with this being a political thing in terms of Democrats or Republicans. I don't see any difference in how they act, when they are super rich. Was Steve Jobs more noble in how he viewed the citizens of America than Steve Forbes? All I see is different lip service. I don't see that corporations were reigned in under Obama and the democratic congress, rather they simply got richer than any other time.

I don't see the Democrats as having become useless, only that they want the same thing as the Republicans, but don't want to say that because they have done a great job of convincing the poor that they are looking out for them, while effectively doing nothing.
Old 08-30-12, 05:57 PM
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Re: Revolt of the Rich

In keeping with the preferred forum wording, this thread should be renamed "The rich are revolting"
Old 08-30-12, 06:19 PM
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Re: Revolt of the Rich

So the gist of the article is that Miley Cyrus is overpaid?
Old 08-30-12, 09:19 PM
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Re: Revolt of the Rich

Originally Posted by kvrdave View Post
Good article. I do disagree with this being a political thing in terms of Democrats or Republicans. I don't see any difference in how they act, when they are super rich. Was Steve Jobs more noble in how he viewed the citizens of America than Steve Forbes? All I see is different lip service. I don't see that corporations were reigned in under Obama and the democratic congress, rather they simply got richer than any other time.

I don't see the Democrats as having become useless, only that they want the same thing as the Republicans, but don't want to say that because they have done a great job of convincing the poor that they are looking out for them, while effectively doing nothing.
this is pretty accurate.
Old 08-30-12, 10:27 PM
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Re: Revolt of the Rich

Originally Posted by creekdipper View Post
So the gist of the article is that Miley Cyrus is overpaid?
Well, that goes without saying.
Old 08-30-12, 11:50 PM
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Re: Revolt of the Rich

But millions of Americans who do not pay federal income taxes do pay federal payroll taxes. These taxes are regressive, and the dirty little secret is that over the last several decades they have made up a greater and greater share of federal revenues. In 1950, payroll and other federal retirement contributions constituted 10.9 percent of all federal revenues. By 2007, the last “normal” economic year before federal revenues began falling, they made up 33.9 percent. By contrast, corporate income taxes were 26.4 percent of federal revenues in 1950. By 2007 they had fallen to 14.4 percent. So who has skin in the game?
Got to agree with this. I hate it when conservatives defend low taxes for the rich by claiming that the poor don't pay any federal taxes. They certainly do pay SS and medicare taxes even from part-time minimum wage work. The lower -middle class - might as well call them poor now, certainly do pay federal income taxes.
Old 08-31-12, 12:27 AM
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Re: Revolt of the Rich

Originally Posted by Ranger View Post
Got to agree with this. I hate it when conservatives defend low taxes for the rich by claiming that the poor don't pay any federal taxes. They certainly do pay SS and medicare taxes even from part-time minimum wage work. The lower -middle class - might as well call them poor now, certainly do pay federal income taxes.
Is there no distinction between taxes that fund forced retirement programs and those that are never to be seen again?
Old 08-31-12, 01:30 AM
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Re: Revolt of the Rich

Originally Posted by X View Post
Is there no distinction between taxes that fund forced retirement programs and those that are never to be seen again?
Are the taxes that fund retirement programs the only taxes that provide any benefit to the American public?
Old 08-31-12, 01:58 AM
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Re: Revolt of the Rich

Originally Posted by kvrdave View Post
I don't see the Democrats as having become useless, only that they want the same thing as the Republicans, but don't want to say that because they have done a great job of convincing the poor that they are looking out for them, while effectively doing nothing.
Old 08-31-12, 08:12 AM
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Re: Revolt of the Rich

Originally Posted by Ranger View Post
Got to agree with this. I hate it when conservatives defend low taxes for the rich by claiming that the poor don't pay any federal taxes. They certainly do pay SS and medicare taxes even from part-time minimum wage work. The lower -middle class - might as well call them poor now, certainly do pay federal income taxes.
On top of that the poor don't have any money to pay taxes. A 1% tax on someone making $30K is far more punitive than a 50% tax on the wealthy. The poor and middle class are not out only the amount of the tax, but have to sacrifice what they could have done with the money. The wealthy are out the amount of tax but do not have to sacrifice what they could have done with the money.
Old 08-31-12, 08:30 AM
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Re: Revolt of the Rich

Originally Posted by feenst View Post
Are the taxes that fund retirement programs the only taxes that provide any benefit to the American public?
There is certainly an "insurance" element as the payroll tax monies are pooled, but they are the only elements with a "defined benefit" that is individual. Your Social Security benefit will be figured on what you paid in (hopefully, there is a risk it will go broke). At a certain age you will receive Medicare Part A free, and Part B at a substantial discount (unless you are rich, then you will be overcharged, and that threshold is substantially lower than Obama's magic $250K definition of rich). The money does not fund the general operation of the government, and is not generally thrown down a rathole like taxes.

It is certainly debatable whether the payroll taxes represent a "good deal" but you get something back. Can you define the benefit of throwing money at Solyndra while it sank or several other questionable uses of tax dollars? There is a difference.

That is not to say all uses of tax dollars are a waste. Defending the country, building roads (except to nowhere), educating kids generally seem like good things, even if some individual steps are not well thought out. So you have some where the idea is good but execution may be good or bad, and you have others where the idea is just bad.
Old 08-31-12, 08:46 AM
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Re: Revolt of the Rich

There are some good points there, but mixed with some stupid ones. Mentioning rates of military participation by class presently vs. during World War II is silly. Arguing that many tax loopholes for the rich need to be closed is obvious, though the capital gains issue is a bit more complex than he makes it out to be. And the fact that both parties kowtow to the rich is nothing new, though I guess it bears repeating frequently, as even posters here, who tend to be more intelligent and informed than the general masses, often get caught up in partisan-induced myopia when considering the behavior of their party of choice. What the article doesn't have is any plan, or even a starting point for one, on how to fix things.
Old 08-31-12, 01:45 PM
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Re: Revolt of the Rich

Originally Posted by rw2516 View Post
On top of that the poor don't have any money to pay taxes. A 1% tax on someone making $30K is far more punitive than a 50% tax on the wealthy. The poor and middle class are not out only the amount of the tax, but have to sacrifice what they could have done with the money. The wealthy are out the amount of tax but do not have to sacrifice what they could have done with the money.
Who says? Who are you to tell Jay Leno that he can't buy Car #102 when you have an extra car you could do without?

It's all relative. To a person making $5,000 a year, $20,000 would seem 'rich'. To the person making $20K, $50,000 would be 'wealthy'. And so forth and so on.

Most middle class families have luxury items in their budgets...they're not living from paycheck to paycheck and wondering how they will keep the lights on. I see plenty of four-family households who have extra money to buy fishing equipment, tickets to college football games, beer, designer sneakers, etc. It's a pittance compared to what a billionaire can buy, but they are still luxury items they could do without. I just get tired of people who say that "you can't legislate morality" turning around and telling other people what they can/cannot own.

Do I think wealthy people SHOULD contribute their "fair share"? Sure...but I'm not going to demonize them for taking advantage of legal tax shelters. How may posters here DON'T take every deduction possible at tax time, even if they could spare the money?

I'd wager that most of the posters here (unless they need it for business purposes) could do without the internet, and that money could be used to feed homeless people. Yet I doubt that many of us lose sleep at night worrying about our selfishness.
Old 08-31-12, 03:01 PM
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Re: Revolt of the Rich

Not me. Fuck the homeless. They don't even pay rent. PAY YOUR FUCKING RENT!!!
Old 08-31-12, 03:06 PM
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Re: Revolt of the Rich

Yeah... we're in a 'recovery' after all.

Damn whiners complaining about losing everything and upward mobility in the society ceasing to exist and whatnot.

Old 08-31-12, 04:27 PM
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Re: Revolt of the Rich

Originally Posted by creekdipper View Post
Who says? Who are you to tell Jay Leno that he can't buy Car #102 when you have an extra car you could do without?

It's all relative. To a person making $5,000 a year, $20,000 would seem 'rich'. To the person making $20K, $50,000 would be 'wealthy'. And so forth and so on.

Most middle class families have luxury items in their budgets...they're not living from paycheck to paycheck and wondering how they will keep the lights on. I see plenty of four-family households who have extra money to buy fishing equipment, tickets to college football games, beer, designer sneakers, etc. It's a pittance compared to what a billionaire can buy, but they are still luxury items they could do without. I just get tired of people who say that "you can't legislate morality" turning around and telling other people what they can/cannot own.

Do I think wealthy people SHOULD contribute their "fair share"? Sure...but I'm not going to demonize them for taking advantage of legal tax shelters. How may posters here DON'T take every deduction possible at tax time, even if they could spare the money?

I'd wager that most of the posters here (unless they need it for business purposes) could do without the internet, and that money could be used to feed homeless people. Yet I doubt that many of us lose sleep at night worrying about our selfishness.
If Jay Leno has to give up car #102 then he is being punished by a tax rate that is too high. I doubt he's in that situation though.
I don't consider work income as wealth anyway. I consider assets wealth. My definition of wealthy is someone with assets that earn enough income they can sit on the couch all day and earn the same amount per year as if they were working without ever touching the principal.
Old 08-31-12, 04:30 PM
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Re: Revolt of the Rich

Agreed. Which is why the Democrats have always tried to push a wealth tax so that they can finally get the rich to pay their fair share.
Old 08-31-12, 04:42 PM
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Re: Revolt of the Rich

Originally Posted by rw2516 View Post
My definition of wealthy is someone with assets that earn enough income they can sit on the couch all day and earn the same amount per year as if they were working without ever touching the principal.
Times have changed. When I was in grade school, all touching the principal got you was a dime and a comic book. Hardly a living wage!
Old 08-31-12, 04:55 PM
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Re: Revolt of the Rich

Touching the principal? Oh, you better believe

Old 08-31-12, 04:55 PM
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Re: Revolt of the Rich

The sad truth of the matter is raising their taxes to 90% won't change the lives of those screaming for it. It's like the old saying..."misery loves company"
Old 08-31-12, 11:10 PM
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Re: Revolt of the Rich

Originally Posted by OldDude View Post
It is certainly debatable whether the payroll taxes represent a "good deal" but you get something back. Can you define the benefit of throwing money at Solyndra while it sank or several other questionable uses of tax dollars? There is a difference.

That is not to say all uses of tax dollars are a waste. Defending the country, building roads (except to nowhere), educating kids generally seem like good things, even if some individual steps are not well thought out. So you have some where the idea is good but execution may be good or bad, and you have others where the idea is just bad.
I agree with this.

I thought it was hyperbole to say that taxes not funding retirement programs are "never to be seen again."
Old 08-31-12, 11:43 PM
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Re: Revolt of the Rich

Originally Posted by Ranger View Post
Got to agree with this. I hate it when conservatives defend low taxes for the rich by claiming that the poor don't pay any federal taxes. They certainly do pay SS and medicare taxes even from part-time minimum wage work. The lower -middle class - might as well call them poor now, certainly do pay federal income taxes.
What does the number come to when you count income tax credits? many people get money back from income taxes. Is that enough to cover fica?
Old 09-01-12, 10:46 AM
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Re: Revolt of the Rich

I think we should all have the same percentage.

But I think that we should close up all of the tax writeoffs that the rich can "use". When I do my taxes, there's "real" stuff. And then there's the stuff that's not really "real". I have never abused those rules (largely because I don't have enough money yet to do so). But they're there, and they are used to manipulate wealthy people's income tax.

If they just made it so that we paid xxx state and xxx federal, minus the "real" business expenses - then we'd be making progress. Everything else is just going to cause debate and will never make it into law.
Old 09-01-12, 12:24 PM
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Re: Revolt of the Rich

Originally Posted by K&AJones View Post
The sad truth of the matter is raising their taxes to 90% won't change the lives of those screaming for it. It's like the old saying..."misery loves company"
You mean like the hell on Earth that was the Eisenhower era?


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