Sunday, January 22, 2012

The Politics of Entitlement

Mitt Romney calls it the "politics of envy." "The rich are different than you and me" to quote F. Scott Fitzgerald, but, let me assure you, contrary to Hemingway's rejoinder, it isn't just because they have more money. There is a sense of entitlement, something one (they) can "talk about in quiet rooms" but never in public because the rabble might grumble. The full quote from Fitzgerald's, The Rich Boy, beautifully tells about this kind of wealth: Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft, where we are hard, cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand.

Oh, to be a fly on the wall of Romney's campaign headquarters, advisors pouring over his tax returns trying to determine if they should be released, and, if so, when, how many, in what detail, and what explanations (spin) should accompany them. Bring on the Madison Avenue types to brand and package his wealth as a sort of "Romney Success Cereal." I am "successful" (i.e. "rich"). Vote for me, and you can be like me with a nice looking Father-Knows-Best family thrown in for good measure!

His tax returns are probably hundreds of pages and there may be multiple returns depending on how he has set up Family Limited Partnerships, etc. They probably reflect some form of tithing as by "Commandment of God" Mormons are expected to pay 10% of their gross income to the church -- including income from trust funds and food stamps (no chance of the latter) to be a member of the church "in good standing" and therefore receive its "blessings."

While religion should not be an issue in this or any election, and I will vote for any candidate I think best suited for the job, no matter what the religion, even (gasp!) an atheist, undoubtedly this is an issue for the American electorate (which would never elect an atheist), and therefore what is revealed in Romney's tax return may have a bearing.

But, mostly, it will be about how his tax handlers may have manipulated the issue of earned vs. unearned income. And this cannot be determined by one year's return. When asked about his intentions to release multiple years' tax returns at a recent Republican "debate" he chortled with his patented disingenuous laugh, "maybe." In fact, every time his wealth comes up as an issue he looks like a deer in the headlights, trying to portray himself as having lived "real streets of America" and having come from modest means (father, president of American Motors, and later Governor of Michigan).

The greater the wealth the greater the opportunity to shift income between "earned" (taxed up to the maximum 35%) to "unearned" (income from investments and in private equity, "the carry" which is taxed at 15%) It was not long ago when those figures were approximately in equilibrium, but the Bush era changed all of that and Wall Street would like to keep it that way. Masters of the Universe, unite! A reasonable measure of economic equality has become a corpse of the American Dream.

This election year is conjuring up the most virulent politics in history, Super PACs having contributed to this, something that should be abolished. Here, in Florida, we are now being besieged by them on the airways, Romney having a presence in political advertising even weeks before. The Republicans would like us to believe that calling to roll back the Bush "temporary" tax cuts is the "politics of envy" and that "class warfare" is actually a tactic in an overarching strategy by Obama to make a "welfare class" dependent on the Federal government and therefore more likely to vote Democrat. Talk about conspiracy theories. Might as bring up the issue of his birth certificate again.

Ironically, if I had to hold my nose and vote for just one of the remaining Republicans, my default candidate would be Romney. But as much as I find wanting in President Obama, he has the right idea when he said "don't compare me to the Almighty; compare me to the alternative."

Jan. 24 Follow-Up: "The" Return was released -- as expected, hundreds of pages but everything legal and above board, an effective tax rate of 13.9 percent. Romney also contributed what would be expected to the Mormon Church, so, on both counts he is absolved of any wrong doing. But if there was ever a clarion call for a more sensible tax code, this is it. I've written repeatedly over the years about the issue of economic inequality and just clicking that label at the bottom of this entry will bring most of them up, so no sense going into great detail.

However, I will say the following fearing this point gets lost in all the rhetoric about what motivates people to work: the Republicans argue that lowering the tax rate for everyone (Gingrich proposes a zero tax rate for capital gains) will magically create jobs, economic growth, and therefore the necessary revenue for the Federal Government to do its job, albeit at a reduced level (with cuts in just about every area of social welfare as everyone would "then" be working). But if their theory is wrong, we will be right back onto the same economic precipice at the end of the Bush Presidency.

Romney says his success was due to "working hard." Did he do so because of an effective tax rate of 13.9 percent? At the end of the Reagan Presidency my effective rate was 33 percent. Did I work "less hard" as president of a publishing company than Romney did in private equity? My mistake was to work for a W-2 rather than for carried interest. This kind of tax code games the system so, indeed, the rich can only get richer while everyone else is mired in economic limbo at best.

Jobs do not "happen" because of the tax code alone. They come from education, a passion for working, jobs being valued by society no matter what they are, entrepreneurial vision, a host of other, more relevant, factors.