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Tag: 2015 budget
‘Envy’ vs. ‘Greed’

‘Envy’ vs. ‘Greed’

WASHINGTON — Rep. Paul Ryan values his reputation as a serious policy analyst and a genial soul. But he’s not above name-calling, and he insists that President Obama’s budget is the product of “envy economics.”

Ryan’s label invites a comparable description of his own approach, which would slash taxes on the rich while cutting programs for the poor and many middle-income Americans. If Ryan wants to play the branding game, is it unfair to ask him why “greed economics” isn’t an appropriate tag for his own approach?

Ryan’s opening rhetorical bid is unfortunate because there are signs that at least some conservatives (including, sometimes, Ryan himself) seem open to policies that would redistribute income to Americans who have too little of it.

Yes, conservatives and just about everybody else — except, perhaps, for truly austere libertarians — are for redistribution. But almost everyone on the right and many of the more timid Democrats want to deny it. This form of intellectual dishonesty hampers a candid debate about solving the interlocking problems of stagnating wages, rising inequality and declining social mobility.

Let’s first examine Ryan’s envy claim. “Look,” he said on Meet the Press last Sunday, “the president has done two big rounds of tax increases. It’s one of the reasons why we have this stagnant economy we do. He’s practicing yet again envy economics and it doesn’t work. We are an aspirational people. We are an optimistic people and our policies should reflect that in our country, and that is not the kind of economic policy or politics the president practices.”

Well. Regiments of Republicans claimed that Obama’s policies, and especially Obamacare, would be “job killers.” In the face of 58 straight months of private-sector job growth, will they ever admit their claims were absolutely wrong? Will anyone even ask them? And like them or not, aren’t Obama’s proposals on higher education, child care and pre-kindergarten programs all about aspiration and optimism?

At least some conservatives, such as Michael Strain at the American Enterprise Institute, are coming around to the perfectly sensible view that a few percentage points up or down in the top income tax rate for the rich don’t make much difference after all. As Bob Davis reported in The Wall Street Journal, many conservatives, including Strain, are supporting various policies (along the lines of the Earned Income Tax Credit) to lift the incomes of the working poor. Does anyone notice that this is redistribution?

In fact, we need to pay far more attention to “pre-distribution,” the wages and benefits people get before government taxes or transfers money. It’s why we should increase the minimum wage, strengthen unions and find other ways of enhancing workers’ bargaining power. Funnily enough, progressives are more insistent than conservatives on increasing the market rewards for work so government doesn’t have to redistribute so much. In the meantime, the tax code and the various credits ought to be tilted toward those who have been lagging behind.

As it is, we engage in all sorts of redistribution in favor of those already doing well. Consider: In 2014, the Department of Housing and Urban Development, which focuses on lower-income Americans, spent $42 billion. The numerous tax benefits for homeowners totaled $154 billion, a lot of which went to the affluent. I’ll be the first to admit that these tax breaks help me. But who is redistributing to whom?

And then there’s a little item in Obama’s budget reported by Politico that would take away tax subsidies for the owners of pro-sports teams that help them build new stadiums. Oddly enough, Wisconsin Gov. Scott Walker, who is busily trying to cut the budget of the University of Wisconsin, has endorsed $220 million in state-backed debt to build a new arena for the Milwaukee Bucks. Bucks over Badgers? Really? Who benefits from this particular redistribution?

We should just admit it: Government inevitably redistributes all the time. Won’t bigger defense budgets help large defense companies? At a time of rising inequality, we need to pay closer attention to whether this ongoing government redistribution aggravates the problem or instead tries to make life better for those at the wrong end of economic change.

In a moment memorialized across the Web, Elizabeth Warren once suggested there was nothing wrong with asking entrepreneurs doing very well to “pay forward” for the government that protects their property, educates their workforce and builds the infrastructure to transport their goods.

That’s not about “envy.” The words that come to mind are social justice.

E.J. Dionne’s email address is ejdionne@washpost.com. Twitter: @EJDionne.

Photo: Gage Skidmore via Flickr

President Obama Proposes Extending Earned Income Tax Credit Program For The Poor

President Obama Proposes Extending Earned Income Tax Credit Program For The Poor

On Tuesday, President Barack Obama announced his 2015 budget, and much attention was immediately given to his proposed expansion of the Earned Income Tax Credit (EITC).

“At a time when our deficits are falling at the fastest rate in 60 years, we’ve got to decide if we’re going to keep squeezing the middle class or if we’re going to continue to reduce the deficits responsibly while taking steps to grow and strengthen the middle class,” Obama said.

Part of the president’s strategy for doing so includes a proposal to expand the EITC, an anti-poverty program that subsidizes low-income workers who meet the minimum income requirement.

Though first enacted under President Gerald Ford, in recent years the EITC has disproportionately benefited only some of the many Americans it was meant to help and protect. The biggest critique is that it benefits low-income workers with children, but not those without.

Under Obama’s proposed budget, however, 7.7 million workers would qualify for a larger credit and an additional 5.8 million would be newly eligible for the program. According to USA Today, among these are approximately 3.3 million young workers – aged 21 to 24 – and 300,000 senior workers – aged 65 and 66.

The expansion could also lift 500 million people out of poverty.

In order to fund the $60 billion expansion, the president proposes closing two major tax loopholes that benefit only particular corporations and high-income, self-employed workers.

How the measure is received by the far right is perhaps the most interesting part of the ambitious proposal.

With midterm elections approaching, Republicans have expressed support for the EITC program, in a move that may aim to distract from one of Democrats’ most popular positions: a minimum-wage increase.

As Mother Jones points out, Republicans and the idea of an EITC extension “have been sworn foes for the past two decades.” Still, that did not stop House Budget Committee Chairman Paul Ryan (R-WI) from describing the EITC as “an effective tool for encouraging and rewarding work among lower-income individuals” in his most recent report that actually calls for cuts to anti-poverty programs. Other Republicans advocate “reforming” the EITC, to avoid completely speaking out against it.

Yet, even with Republicans not directly voicing opposition to the EITC, President Obama’s proposal will probably not gain much traction in Congress — especially not if it relies on closing two major tax loopholes: one that allows managers of private equity funds to receive a share of future investment returns as capital gains so that the income is then exempt from payroll and self-employment tax, and one that allows self-employed workers to avoid payroll taxes by establishing S-corporations that then account for a only a portion of the total earnings subject to taxes.

If the proposed budget had any chance, the notion that funding for low-income workers would come from some of the nation’s wealthiest and largest corporations may have ruined that.

AFP Photo/Brendan Smialowski