I promised myself that I wouldn’t write anything else about politics for my next post, but then today’s newspaper landed on the front porch. The headline proclaimed “Romney won’t pay city.” Turns out that when both candidates for the top of the Republican ticket, Mitt Romney and Congressman Ryan, visited our little city right before the election significant costs were incurred to provide for their safety. An invoice was prepared and sent out to the campaign for reimbursement. It was returned with the message that the U.S. Secret Service had requested these services. They should be billed for the cost. Of course the campaign already knew that USSS never reimburses cities for these expenses. They don’t have enough money in their budget to cover such things. Our little city has struggled economically because the Hoover Company had provided a large portion of city tax revenues. It was the city’s major employer and operated the factory in the center of town until they closed up and moved all of its jobs to Mexico and China. Now the city is stuck with this bill.
This situation points out a few major issues that should be discussed as our nation is herded by our elected officials like lemmings toward the “fiscal cliff.” The first thing we need to deal with is campaign financing reform. Billions of dollars were spent for advertising here in Ohio and across the nation. Television ads played non-stop. Several flyers arrived in our mailbox from both candidates on a daily basis. If campaigns have enough money to fund these things, they should also be required to fund extra security measures deemed necessary for personal appearances. This goes for incumbents as well as challengers. These guys raise enough money to cover it, and if it means that one less ad won’t air on TV, well that’s really a good thing as far as I’m concerned.
Our mayor tried to put a positive spin on this mini-fiscal crisis. The guy was so happy that his party’s top dog was going to bless this little burg with a personal appearance that he couldn’t wait to show off our fair city’s resources. He answered the critics of his reckless spending by saying that the visit provided an economic boost to the city. People came to town and ate in our restaurants. They saw what a fine little city we had, and maybe stored that away for future development potential. I believe the proper term for this is “bullshit.”
I posted about this visit in detail (see “High School Football and Political Rallies” from 10/27/12) and witnessed the marvelous “economic boost” firsthand. The folks who came to town were mostly from wealthy little enclaves to the north, like Hudson and Medina, where the well off have been hiding from urban problems for decades. Do you think they were impressed by North Canton, and considered investment potential while here? Probably not. They rolled into town in their Cadillacs, Mercedes-Benzes, and Lexus cars or SUVs and parked wherever they could find a spot. Many chose to take a free parking space in the parking lot of the store where I work. We sold a few disposable rain ponchos and provided free restroom facilities to folks still clutching their huge Starbucks coffee containers (by the way, we don’t have a Starbucks in North Canton, so they didn’t buy it here) before strolling off to the rally down the street. Our regular customers couldn’t come in to shop. We experienced no financial boost. North Main Street was so choked by traffic that I would bet that none of the local merchants had a positive economic boost that evening. But it’s nice to pretend it happened, isn’t it Mr. Mayor? Nice spin control, which’s what politics are all about these days. Hope your party noticed, because you’ll be facing re-election soon and you might just need a new job. But perhaps he has no need to worry, because no group has demonstrated a penchant for clinging to unworkable policies or unqualified leaders more than the Republican party.
The second thing that this brings to mind is the reason that rich people (Mitt Romney is certainly worthy of this distinction) stay wealthy: they like to make money for themselves, and spend other people’s money whenever possible. Romney canceled his campaign workers’ credit cards on the night of the election. If workers were far away from home, they had to pay their own way back, because the campaign was no longer going to pay for anything. He might have kept the cards active if he had won, but he didn’t, so in the typical reaction of every “self-made” rich dude it was every man for himself.
Perhaps the reason that he lost his bid for President is that enough people have finally figured out that the nonsense that his party spews about the need to maintain low tax rates for rich people so that they can create jobs is bullshit. The Congressional Research Service reported this fact to Congress, but had to pull the report due to Republican bitching about wording in the report (see “Never Stop Learning” posted 11/2/12). This tax policy simply doesn’t work, yet remains a cornerstone of the party’s platform.
Warren Buffett, a well-respected billionaire and perennial member of Forbes Magazine’s list of the 400 wealthiest Americans (currently #2) appeared on a TV show the other night. He expressed his opinion that wealthy Americans should actually pay more taxes than they are now required to pay. His idea is that if you make over $1 million per year, you should pay a flat 30% tax on that amount over $1 million. If you are blessed enough to make more than $10 million per year, you should pay 35% in taxes, no matter what the source of your income (salary, dividends, capital gains, etc.). He pointed out that the aggregate income of the Forbes 400 twenty years ago was $300 billion which has now increased to more than five times that amount, or more than $1.5 trillion. For the most recent period, one forth of those people paid less than 15% in taxes, and six of them paid no taxes at all. During the same period, the productivity of the American worker has doubled, while their incomes have remained static. It’s pretty easy to see where all the money went, and it wasn’t to the struggling American middle class.
Yet the House Majority Leader announced that his party is completely unwilling to raise taxes on the wealthiest Americans in order to prevent the “fiscal cliff” at the start of next year. His reason is that we must protect the “job creators” by which he means our richest citizens. On his TV appearance the other night, Buffett asked the host what how he would respond if Buffett were to call the host and say he had a great idea to make money. Buffett was going to invest all of his money in the idea, certain that the reward would mean lots of return on the investment. He then asked the host if he would hesitate to join him based on the amount of taxes that he would have to pay. They chuckled about it, obvious that the answer would be no. Buffett also pointed out that he had been selling stocks since he was twenty years old (he is now 82) and that over that time period he had witnessed significant increases in our nation’s Gross Domestic Product. This even included times when the marginal tax rate was in excess of 90%. So even when rich people got to keep only a dime out of every dollar they earned, they had been willing to invest in America.
Isn’t it time to refute this idiotic argument once and for all, and stand up for rationality and reality? Certainly we could stand a bit more fiscal responsibility in our government spending. We also need to face some hard realities when it comes to taxation. Chief among these is that those who can best afford to pay more taxes should do so. How about a compromise on who should pay more taxes? The suggested limit of an income of $250,000 per year may be outmoded. A quarter of a million per year isn’t what it used to be, and despite how attractive it may look to you or me, those at that level of income may actually feel a pinch. So let us compromise. Raise the top rate to those who make more than a million per year, and do as Mr. Buffett suggested. Tax all income at the higher rate. It really does make sense. The rich have been getting richer for years, while the middle class struggles. All we need is some rationality in the thought process.
Warren Buffett
No comments:
Post a Comment