This morning a wonderful appraisal of Obama's State of the Union Speech can be found in Thomas Edsall's "Can Capitalists Save Capitalism?" The SOTU is a campaign document. As Edsall puts it in the last paragraph of his piece:
While the new agenda has no chance of passage in the Republican-controlled Congress, Democrats plan to use the tenets of inclusive capitalism in the 2016 elections. One Democratic goal in putting specific policies forward is to use them as wedge issues to force Republicans to choose between their affluent backers and their supporters in the white working class. This will be no easy task because a decisive majority of whites without college degrees has been voting against Democratic candidates for two decades, making it very difficult for the party to break what has been a Republican hammerlock since 1994."Inclusive capitalism" is the new marketing pitch crafted by former Treasury secretary Lawrence Summers and Ed Balls, a top British Labor Party politician, in a report published by the Center for American Progress, a think tank run by Clintonista John Podesta. Podesta will be one of the helmsmen of the "Hillary for President" effort:
The Summers-Balls report – “The Report of the Commission on Inclusive Prosperity” – is the most comprehensive summary. This report, which uses the phrase “inclusive capitalism” more than a dozen times, was published by the Center for American Progress, a Democratic think tank founded by John Podesta – Bill Clinton’s former chief of staff who in February will join Hillary Clinton’s exploratory presidential campaign.
Those pressing the Democratic Party to take more populist stands contend that the lack of a persuasive Democratic economic program contributed to, or drove, devastating losses in the 2014 elections in states as diverse as North Carolina, Maryland, Iowa and Colorado. According to an Oct. 13, 2014, Gallup pre-election survey, voters believed Republicans were better equipped to handle the economy than Democrats by 50 percent to 39 percent.Obama in his SOTU fleshed out "inclusive capitalism" to include more taxes on the 1%:
In his State of the Union address, Obama put it this way: “Let’s close loopholes so we stop rewarding companies that keep profits abroad, and reward those that invest in America.”
His plan calls for the imposition of new taxes on the wealthy and on major financial institutions, totaling $320 billion over 10 years. The money would be used to finance tax cuts and credits for low-to-moderate-income men and women, and to make attendance at community colleges tuition-free.
Not only would Obama raise capital gains tax rates from 23.8 to 28 percent for couples making more than $500,000 in taxable income, but he would eliminate a provision in tax law that allows the very rich to avoid taxation on much of the wealth passed on to their children and he would end a current exemption from taxation on the increase in the value of stocks, bonds and other assets when passed on through inheritance.
This exemption, technically called the “stepped up basis,” is crucial to the unrestricted intergenerational transfer of wealth, a practice that many liberals, and even some conservatives, contend conflicts with equality of opportunity. The Obama plan additionally calls for a .07 percent fee on financial institutions with more than $50 billion in assets that would produce $110 billion in revenue over 10 years.These are good ideas and should be implemented. Edsall quotes progressives Josh Bivens of the Economic Policy Institute and Dean Baker of the Center for Economic and Policy Research voicing their approval. The problem is they won't be implemented, not just because the GOP is in control of Congress, but because the Democrats are aligned with Wall Street.
Once again, what is driving this Democratic repackaging of a "kinder, gentler" capitalism is the 2016 presidential election and the massive erosion in support for the party among working-class whites (gay marriage is not enough to get Democratic constituents to the polls):
While none of the proposals, or their advocates, acknowledge this explicitly, one of the objectives of the evolving Democratic economic agenda is to get back support among whites without college degrees – the polling shorthand version of what is sometimes still called the white working class.
In 2014, these voters, who made up 36 percent of the electorate, cast their ballots for Republican House candidates by a 30-point margin (64-34 percent). This was nearly double the 16-point Republican margin among white college graduates, 57-41.
Inclusive capitalism has its critics on the left, nicely summed up by the Guardian columnist Nafeez Ahmed. He argued last May that the inclusive capitalism movement represented “less a meaningful shift of direction than a barely transparent effort to rehabilitate a parasitical economic system on the brink of facing a global uprising.”By now, after six years of Obama, I believe the voters are deaf to Democrat promises, promises which sound sweet with their tough talk that the rich should pay their fair share in taxes; but the promises are never kept. Eventually you are going to stop listening. And that is where we are at today.
That leaves Republicans in control of the field. All we need do is look to Kansas to see what that means: Taxes pared back so radically that basic governmental functions are at risk. John Eligon had an informative piece this past weekend, "Pressed by Budget Squeeze, Gov. Sam Brownback of Kansas Pulls Back on Tax Cuts," about the disastrous results of GOP legislative experiments in tax cutting. Brownback is having to walk some of them back:
TOPEKA, Kan. — Gov. Sam Brownback, who made cutting taxes and shrinking government the centerpieces of his government, proposed on Friday to close a huge projected shortfall in the state budget by increasing some sales taxes and sharply slowing his plan to gradually reduce the state income tax.
The move marks a significant turn for Mr. Brownback, a Republican who has tried to make his state a national model for conservative governance and who criticized calls from his Democratic opponent in last year’s campaign to scale back his income tax cut.
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Under Mr. Brownback’s income tax cut, rates dropped this year to 4.6 percent on the top end and 2.7 percent on the low end. The lower rate was set to drop to 2.4 percent next year, but under the new budget proposal, it would fall only to 2.66 percent, while the higher rate would remain at 4.6 percent as scheduled. By 2018, the higher rate was supposed to dip to 3.9 percent, and the lower to 2.3 percent. But under the governor’s new proposal, the rates would remain at 2.66 percent and 4.6 percent.
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The big expenses in the state’s budget of more than $6 billion are pensions, Medicaid and K-12 education. With the deficit estimated at $650 million for the fiscal year beginning in July, Mr. Brownback proposed overhauling how each of those areas was funded. He also has called for cutting state agency budgets and making operations more efficient to save money. Most notably, he called on lawmakers to rewrite the school funding formula, which has been the subject of a hotly debated lawsuit that has bounced around the state’s court system.
While lawmakers contemplate how to rewrite the formula, the governor has suggested funding the schools over the next two fiscal years with block grants rather than through the traditional method. This has raised concern among some school advocates about whether districts would be shortchanged.The GOP wants to repeal the 20th century; the Dems want to keep it around as a mirage to attract voters to the polls. The system is collapsing. That is apparent.
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