Only Taxing the Rich is Bad, Says O'Driscoll

The Yahoo! Finance web series the Daily Ticker today consisted of an interview with Gerald O’Driscoll, former Vice President and economic advisor at the Dallas Federal Reserve, and a senior fellow at Cato Institute. He was asked whether there was anything that either the Fed or Washington could do to spur job creation, and naturally O’Driscoll quickly turned to criticizing President Obama’s tax policies, describing the raising of marginal tax rates on millionaires and billionaires as economically destructive.

The interviewer reminded O’Driscoll of the counter-arguments that would come from the presidential administration and its supporters, then asked: “Do you make a distinction between taxes whether they’re aimed at individuals or corporations, or is it – bottom line – raising taxes on anybody is bad for the economy?”

I think that question presented O’Driscoll with a pretty clear choice: is the problem simply taxation in general within a weak economy, or is it taxation of businesses? Yet O’Driscoll appears to have avoided that simple choice and opted to advance an entirely different perspective.

He began, “Well I would say that raising taxes on the…” and then paused at length, searching for the right synonym for “wealthiest Americans.” I found that pause very telling. He knew about whom he was talking, but he needed to phrase it in a way that served his ends. Using the phrase “the rich” is perfectly clear to every viewer, but using the phrase “the source of savings and investment” obfuscates what we’re talking about and makes it harder to attach an image to the subject, but easier to affix it to a concept. So that was the phrase that O’Driscoll settled on, saying that raising taxes on the source of savings and investment is bad for the economy.

Now, did you notice how that avoids the simple one-or-the-other choice that he was given with the question? For simplicity, let’s drop the more pleasant synonym and just acknowledge that he’s talking about the rich. So when he’s asked whether it’s bad, in a weak economy, to raise taxes full-stop, O’Driscoll’s answer is really no, it’s bad to raise taxes on the rich in particular. Theoretically, his point of view leaves open the possibility of raising taxes on the poorest American’s without expectation of consequence. Of course, this is something that several Republicans have actually advocated, but it’s quite amazing to see that such callous initiatives have a theoretical underpinning.

O’Driscoll continues by rebuking the president for ostensibly failing to understand that most business are not C Corporations and thus are not taxed separately from their owners, “So when you raise taxes on individuals, you’re raising taxes on the business, and hence… you’re inhibiting job creation.”

I almost admire how the language of this quotation allows O’Driscoll to exclusively designate millionaire business owners as “individuals.” Raising taxes on lower or middle class workers doesn’t raise taxes on business. Even raising taxes on millionaires who primarily earn their income from things like investments in businesses they don’t own is not equivalent to raising taxes on businesses. Do neither of these groups count towards the discussion? That seems suspiciously convenient for O’Driscoll’s argument.

Essentially, that argument seems to be that it’s destructive to raise taxes on extremely wealthy individuals, because they might use some of their own wealth to invest in the businesses they own or from which they profit. Meanwhile, by this line of thinking, there is no particular problem with raising taxes on people who will definitely use a portion of their slight income to purchase things like food, clothing, and gas.

I admit that my understanding of economics is rather rudimentary, but it seems to me that a sure-fire way to create jobs is by raising demands for goods and services, thus increasing the size of the workforce required to supply that demand. Unless I’m wrong about that, it’s pretty asinine to suggest that allowing the wealthy to hoard their money while thinking nothing of depriving the poor of theirs is the best way to stimulate the economy. Sure, business owners need personal wealth to invest in their industries. But why on Earth would they do so if demand for what they’re offering remains flat.

By contrast, if a wealthy American is legitimately interested in earning the highest margins from his business, he would be a fool not to make investments to match growing demand, unless of course his wealth has been taxed out of existence. But I hardly think anybody’s proposing that, and I certainly don’t think that paying a thirty-five percent marginal rate would cripple a billionaire’s investment capabilities.

The Class Warfare Brand

One of the things that bother me most about American politics and the news media is that conservative forces always seem to be controlling the narrative. As bad as Republicans tend to be at policy, compassion, moderation, and common sense, you’ve got to admit that they’re great at branding. Terminology and concepts that should have equal weight on either side of an issue have a tendency to become tethered to purely conservative ideologies. The phrase “class warfare” is a terrific example of this, and it tends to come up every time policy debates turn toward exploration of the possibility of raising the marginal tax rate on the top one percent of income earners, or of eliminating tax breaks on things like corporate jets. Somehow, that same term doesn’t gain as much popular traction when certain politicians stonewall efforts to extend unemployment benefits, or when unions are stripped of their collective bargaining powers. “Class warfare,” we are evidently meant to conclude, can only be conducted by the poor against the rich, never the other way around.

Thus we have Rush Limbaugh responding to the president’s mention of those tax breaks on corporate jet owners by calling it “dangerous!” and “full-fledged demagoguery!” and claiming that Obama’s “aim is for one group of Americans to hate and despise another!”

How can the effort at narrowing the gap between rich and poor be class warfare if decades of efforts at widening that gap weren’t? What could the president possibly be doing here to make one group of Americans despise another? He’s not changing the landscape of class distinctions in America; he’s just bringing attention to some of its features. If Limbaugh’s concern is that hatred will arise from nothing other than more information, there’s probably something wrong with the reality that is being described. If anything is going to breed hatred and despisal by one group against another, it’s not going to be successful efforts to make the rich take up a fair share of the tax burden. Rather, what will breed hatred is being witness to rich people repelling those efforts and holding fast to the most inequitable elements of American society.

Warfare, you see, is something that happens between two different nations or groups of people. If anyone wants to breed hatred and promote class warfare, it’s people like Rush Limbaugh who seem hell-bent on making the differences between the two groups of people in the United States as stark as possible – one group owning everything, the other nothing. So it is outrageous that he is able to throw those pejorative terms entirely onto the other side of the issue and paint multi-millionaires as the sole victims of unprovoked class warfare.

How are Republicans able to get away with this at every mention of labor policy or class inequality when the claim is so patently absurd? Skillful branding and manipulation of language can go a long way towards making simple acts of conscience appear to be villainous and persecutory. Does the Democratic Party have no public relations people whatsoever, no one who can introduce vivid and effective language on the right side of a topic before it is co-opted by the political right? How awful they must be at PR by comparison when they can’t even use it to promote the truth or the action that better advances the public good, while their opponents can paint lead to look like gold and then sell it to a desperately impoverished metallurgist.

All right, so once again the conservative wing has established the narrative and decided the course of the conversation. This is where it’s time to become proactive and change what it is they’re saying, so they look like the manipulative misers they are, rather than noble martyrs. Glenn Beck has described the corporate jet tax conversation as “unprecedented class warfare!” I would like to see someone respond, “You’re goddamn right it is!” It’s a war we’re engaged in, and you know what? That has great potential to be a good thing in the mind of the public. My dictionary shows that “war” can be defined as “a sustained effort to deal with or end a particular unpleasant or undesirable situation or condition.” How about we put the bitter, self-serving complaints of the right in that context? That would be good branding, and then Beck and Limbaugh would be decrying an unprecedented effort to deal with the unpleasant condition of a broadening gulf between rich and poor, the undesirable situation whereby the rich are given every effort to deepen and extend their wealth, while the poor struggle fruitlessly to find work and keep in their homes.

Being more of the latter class myself, I am afraid I can’t bring myself to be so nuanced, though, in response to the rest of Glenn Beck’s comments about the president’s discussion of corporate jet tax breaks, so don’t read on if you’re offended by strong language. Beck has said that it shows Obama’s “sheer, unadulterated disgust for the wealthy, the successful and anyone who’s ever tried to do anything with their life here in America”

Fuck you, Glenn Beck! How dare you indict anyone else for not inhabiting the same deluded fantasy-land that you’ve built with your $65 million personal wealth? As someone who’s trying desperately to do something with my life here in America and finding that my constant, crushing poverty adds more than a few layers of difficulty to my struggle, I powerfully resent the implication that an effort to get the most obscenely rich members of our society to give back something substantial constitutes a punishment of the ambitious. Your greed and that of those like you is what punishes my ambition, and what’s more, it makes my own personal promotion of class warfare seem ever so justified. Fuck you, Glenn Beck, if you think your success is a testament purely to your hard work and that the poverty of 36 million Americans is underpinned by laziness, and if they all just stepped up their efforts, they could have an eventually-disgraced television show and earnings of up to $11 million a year. Fuck you and your brand of class warfare.

Fact-Free Ideology

There was some highly recommended reading from Steve Kornacki at Salon today:
When Rush bet $2 million that Clinton would ruin the economy.

Put very simply, it refers to recent conservative remarks that taxing the wealthy in times of economic difficultly makes recover virtually impossible, and sets those claims against identical commentary from the early nineties, when the Clinton administration was making just such a tax increase. Kornacki quotes Rush Limbaugh in 1993 as saying: “Tax rate increases slow down economic activity. It is not a theory. It's not an opinion. It is fact. It is true.” Limbaugh went on to predict that if any tax increase went forward, the economy would worsen, with a higher deficit, lower employment, and higher inflation. Well, the Clinton plan did go forward, and none of Limbaugh’s predictions came true, as anyone who lived through the Clinton administration should remember.

Yet, amazingly, Limbaugh and the entire conservative establishment continues to repeat the same talking point to this day: that tax increases of any kind hurt the economy. Taxing the wealthiest two percent is now “the Obama way,” and according to Limbaugh, “The Obama way has been tried… But it doesn’t work.”

This is the nature of entrenched ideology. It does not bend to reality. I find it hard to believe that these kinds of people actually believe the things that they identify as indisputable facts. If they do, it is an heroic kind of personal delusion, to be able to say something, watch your claims be conclusively proved false, and then say those things again, over and over for years.

No matter what the issue, and no matter what the ideology, this kind of rhetoric should never appear in serious public discourse. If you don’t want to give up your personal wealth, fine, stand up and say that that’s your position. But can’t we all have enough self-respect to not invent facts to support false claims that help us get our way?

Then again, it’s pretty hard to get your way if you have to say to ninety-eight percent of the population: “Yes, my money could help you to get through these difficult times, but I just don’t wanna part with any of it.” Acknowledging that taxing the wealthy actually is effective, but arguing against it anyway would probably prove rather self-defeating, so those who stand to lose a measure of what they can afford to lose must instead resort to lies and willful ignorance of the clear lessons of history. The truth just doesn’t support their interests, and that’s all there is to it.

So I’m looking for either of two breaking points: for conservatives to stand up for their greed and actively resist giving up their fair share, or for the rest of us to stand up for truth and make it plainly and commonly known when they are lying.