Tag: redistribution
‘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

How States Are Redistributing The Wealth

How States Are Redistributing The Wealth

In 2008, then-candidate Barack Obama was lambasted for supposedly endorsing policies of wealth redistribution. The right feared that under an Obama presidency, Washington would use federal power to take money from some Americans and give it to others. Yet, only a few years later, the most explicit examples of such redistribution are happening in the states, and often at the urging of Republicans.

The most illustrative example began in 2012, when Kansas’ Republican Gov. Sam Brownback signed a landmark bill that delivered big tax cuts to high-income earners and businesses. Less than two years after that tax cut, the state’s income tax revenues plummeted by a quarter-billion dollars — and now Brownback is pushing to use money for public employees’ pensions to instead cover the state’s ensuing budget shortfalls.

Brownback’s proposal: Slash the state’s required pension contribution by $40 million to balance the state budget, even though Kansas already has one of the worst-funded pension systems in the nation.

Brownback defended his proposal to take money from middle-class state workers and use it to effectively finance his tax cuts for the wealthy. He told the Wichita Eagle: “It’s kind of, uh, well where are you going to go for the funds? And I don’t like it, but it’s kind of what’s your other option if you don’t hit K-12 and higher ed with allotments?”

Brownback is not alone. He joins fellow Republican Gov. Chris Christie in coupling large tax breaks with cuts to actuarially required pension payments. In New Jersey, Christie slashed required pension payments while signing legislation expanding tax credits to corporations, and doling out a record amount of taxpayer subsidies to businesses. Many of those subsidies have flowed to firms whose executives have made campaign contributions to Republican political organizations. Earlier this month, New Jersey pension trustees filed a lawsuit against Christie for not making legally required contributions to the state’s pension system.

Both Brownback and Christie promoted their tax cuts as instruments to boost economic growth. Yet, a recent review of federal data by the Kansas City Star found Kansas “trails most other states when it comes to job growth.” Likewise, an investigative series by Gannett newspapers recently found “New Jersey’s job growth rate [is] the second worst in the nation. … New Jersey’s middle class has lost billions in income through layoffs, salary cuts and wage freezes [and] more than 100,000 job seekers have been unemployed for months on end.”

Illinois followed a somewhat similar path. For years, lawmakers did not make the full actuarially required pension payments, causing severe funding shortages in the state’s pension system. While lawmakers said there was little money to meet pension obligations, Democratic Gov. Pat Quinn signed a corporate tax cut in 2011 that is projected to cost the state more than $370 million a year in lost revenue. Two years after signing that bill, as pension funding gaps swelled, Quinn signed legislation slashing public employees’ retirement benefits. An Illinois judge last month ruled that the legislation violated the state’s constitution, though the ruling is being appealed.

The obvious question raised by these episodes is: Where is the outrage? To date, these attempts to use workers’ money to finance massive giveaways to the rich have generated little media coverage or political opposition — and certainly less than the full-fledged frenzy that took place when Obama made his “spread the wealth” comment a few years ago.

The tepid response to this kind of wealth transfer suggests that for all the angry rhetoric about redistribution you might hear on talk radio, cable TV and in the halls of Congress, the political and media class is perfectly fine with redistribution — as long as the cash flows from the 99 percent to the 1 percent, and not the other way around.

David Sirota is a senior writer at the International Business Times and the bestselling author of the books Hostile Takeover, The Uprising, and Back to Our Future. Email him at ds@davidsirota.com, follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

Photo: Gage Skidmore via Flickr