To Tax or Not To Tax, A Question Again

It’s interesting what issues home-town papers latch onto.  The headline of today’s Palm Beach Post chose to focus on Trump’s tax cut “plan. ” Write a blog such as this long enough and like a leitmotif in a novel the same issues seem to recycle.  Here we go again, trickle-down economics in the form of tax cuts that will benefit, mostly, the rich and the uber–rich. 

I’ve touched upon economic inequality some two dozen times, including the impact of removing the so called “death tax,” notwithstanding Trump’s disingenuous “not good for me, believe me.” Removing this tax entirely encourages family dynasties, which in this competitive world leaves those who have to begin their journey at the starting line way behind.  An argument that is made for removing the tax is it is a disincentive for working hard.  Warren Buffett doesn’t think so and neither do the entrepreneurs of the world, people whose creativity and ideas drive their lives.  Did Steve Jobs do what he did with the hope there would be no estate tax?  The other argument is that some farmers who have vast land holdings upon death owe taxes on the appraised value.  So, perhaps working farms should be exempt up to a certain amount.

I explained my position in two articles in particular, both written more than six years ago.  We are back to this prestidigitation again and as they are as valid as when they were written, I reprint them here. 

 

Wednesday, November 10, 2010

A Taxing Question

How rich is too rich? Actually, I published a book by that title almost twenty years ago and some of its ideas are as relevant today as it was then (How Rich Is Too Rich; Income and Wealth in America by Herbert Inhaber and Sidney Carroll: Praeger, 1992). Two points from that book stuck with me. First, there is the very descriptive opening chapter of looking at income distribution as an imaginary "sixty minute grand parade," tax payers being the marchers, grouped by their height which would be representative of their incomes, the first marchers having the lowest income and the last the highest, with "height" determined by the "average" taxable income being equal to the "average" height of an individual American. The "parade" in effect is an X/Y graph, the Y axis being the income (height), and the X axis being the minutes of the "parade." The first few minutes one sees no marchers even though we can hear some noise. These are people with negative height, those who report the loss of money in that taxable year. It isn't until about ten minutes into the parade that we see marchers between 10 and 24 inches in height and it isn't until 36 minutes we see the so called "average height" taxpayer march by. With about only 20 minutes left, heights begin to rise dramatically. With the last five minutes giants appear, people whose heads are so high we can hardly make out their faces without binoculars. The marchers in the very last minute of the parade are so tall we can only see their feet. These are people of accumulated, sometimes inherited, wealth and in the last few seconds the marchers are the size of sky scrapers. In effect, the parade shows a slowly rising gradient until the far right of the curve when it begins a parabolic rise and then shoots straight up off the graph.

While the numbers might have changed over the last twenty years, the concept has not. Probably, if anything, the "parade" has become even more dramatic, more parabolic, with a steeper rise at the end. And, those at the end of the parade pay now less as a percentage of their income to the government than at any time before.

To listen to the Tea Partiers, a roll back of taxes of the very wealthiest to pre-Bush rates, is an evil, evil thing. Just think of the trickle-down effect that would be lost to the little folk who stand in line for the crumbs falling from the tables of the fabulously wealthy. It is ironic that these dire warnings of the effects of a tax increase on the wealthy are carried into battle on banners hoisted by "Joe the Plumbers" -- it shows the power of the conservative media and the most virulent impact of the Internet. It just makes no sense that the people near the middle of the parade should become pawns for the people at the very end.

Actually, I think the converse is true: it is an evil thing for people who have benefitted from being able to accumulate wealth in the greatest of all capitalist democracies, not to give back more for that opportunity. The argument goes that asking these people to pay more will remove the incentive for them to work, and maybe if we're talking about 70 percent of one's income that might be true. But in 2000, people reporting AGIs of more than $1 million paid 28% of their income as taxes vs. 23% five years later. In 2005 there were 304,000 households reporting income of more than $1 million, more than a trillion dollars of income or $3.375 million per household. And mind you of those, there are a few at the very end of the "parade" with incomes that have so many zeros they would be hard to read. The latter are sports stars, entertainers, and, of course, very, very successful entrepreneurs. Are they going to work "less hard" by paying an additional five percent overall? That five percent would mean another $50 billion going to the US Treasury, at least a beginning to address the ongoing deficit. And, of course, if you look at the $250,000 level as the cut off as suggested by President Obama, there is much more to be gleaned, but given the midterm elections, that level is probably going to be raised if it is not eliminated altogether.

The alternatives that are occasionally pushed by the Tea crowd, such as a flat tax, is, in effect, a regressive tax, with the lower income people having to pay the same taxes on necessities as the wealthy, which just further splits the great economic divide in this country. A national sales tax does the same thing and as we are now so dependent on consumer spending, that could be the death knell for the economy. No, a progressive tax structure has been this country's basis for supporting it's national programs and we have been able to grow in spite of these supposed "disincentives" of higher taxes at a higher bracket.

No doubt the current tax structure is hopelessly and needlessly complicated and THAT is where the discussion should also be focused. There are so many loopholes, that a revised graduated tax structure would not have much teeth without addressing those as well. And then there is the issue of capital gains and dividends. We certainly want to encourage taxpayers to reinvest in our equity markets.

The other point I never forgot from that book was its commentary on the estate tax, arguing against the estate tax altogether, provided there was an alternative system of "estate dispersion." Rather than taxing one's estate at death, it suggested a tax-free dispersement up to a certain level per recipient (rather than per estate). For argument's sake, call that $1 million per recipient. Amounts exceeding that would begin to be taxed on some kind of graduated basis. Those would be life time totals, so if an individual receives money from different inheritances, they would be accumulated and taxed on that scale. "No longer would the estate tax system generate an American royalty -- those freed from the need ever to be economically productive. This alternative system would generate for all the incentive that most of us have in the outcome of our own economic lives. No longer would a large part of our national wealth be beyond responsive use."

Now, the incredibly wealthy could give a million dollars each to a thousand different people, all tax free (if those recipients also received no other inheritances in their lifetimes). The point is that those thousand people would put that capital to work, rather than vesting a billion dollars in one's immediate family who might decide to simply live off the income and pass it on to the next generation, and the next. Or he/she could still leave more to the immediate family, but it would be subject to taxation, perhaps substantial taxation on a graduated basis.

"Wealth great enough to entitle one to membership in the elite comes from two sources -- enormous earnings or inheritance. Prudent public policy should allow those, who, through individual ingenuity, talent, or luck, gain a fortune to use and enjoy it for life...but if these individuals have the power to transmit immense wealth to others after death...they can write the rules controlling this wealth, possibly many generations into the future. This breaks the chain of personal effort that is tightly bound, for most of us, to personal reward. Economic resources, controlled by rules set up by the dead, are denied to those who might well be more productive."

If the Republicans and Tea Partiers interpret their gains to mean they now have carte blanche to keep the Bush tax cuts for the highest wealth tier -- people who would not be hurt by some roll back to pre-Bush tax levels -- the result will only increase the deficit further. There would seem to be no upside to such an action; in effect it is a spending initiative something they claim to condemn. Failure to make tax reforms that lead to a more graduated income tax and closing loopholes, and not having a sensible inheritance tax also just further drives a stake between the haves and the have-nots.

 

Thursday, October 6, 2011

Do You Hear the People Sing?

About a year ago I likened the US income distribution to a "parade," the wealthiest appearing only at the very end, demonstrating the parabolic nature of great wealth at the very extreme of the income curve. I was wondering when, finally, the middle class would wake up to this growing disparity and do something about it. Finally, the "Occupation of Wall Street" movement takes up the cause, hopefully all by non violent means.

At the time I said "to listen to the Tea Partiers, a roll back of taxes of the very wealthiest to pre-Bush rates, is an evil, evil thing. Just think of the trickle-down effect that would be lost to the little folk who stand in line for the crumbs falling from the tables of the fabulously wealthy. It is ironic that these dire warnings of the effects of a tax increase on the wealthy are carried into battle on banners hoisted by 'Joe the Plumbers' -- it shows the power of the conservative media and the most virulent impact of the Internet. It just makes no sense that the people near the middle of the parade should become pawns for the people at the very end."

It is sad that Steve Jobs should pass away at this time. I think of him not only as a visionary technology and marketing genius, but as the greatest entrepreneur the world has ever known. The grass root movements of today, such as Occupation of Wall Street, would not be possible without the mobile devices he had a key part in developing and popularizing. I feel a personal loss of his passing at such an early age, and of the same terrible disease that took my father. And I wonder, if we did have a fairer graduated tax structure, one that would have rolled back the Bush tax cuts, would he have worked any less hard? The "don't-tax-the-job-creator" crowd might so argue.

Steve Jobs worked as he did because it was his passion. Entrepreneurs work with a creative obsession that is not going to be railroaded by a higher incremental tax rate. They are the job creators, not the legions of corporate and banking types, raking it in, paying a lesser portion of their income in taxes than a dozen years ago when the US actually had a balanced budget, CEOs now being paid unspeakable multiples of the average income of workers in the same company. Are higher incremental tax rates and the closing of loopholes the only solutions to the deficit? No, but it's a beginning. And that, as well holding these people accountable for any fiscal malfeasance, is what the growing Occupation movement is all about, the middle class finally awakening to the issue of their being used as puppets by political ideologists.

Do you hear the people sing?

Singing a song of angry men?

It is the music of a people

Who will not be slaves again!

...............Les Misérables, the musical

Infrastructure and Politics Redux

Inevitably, this headline  -- Probe begins after Conn. commuter trains crash -- will lead to the conclusion what any rider of the New Haven Railroad could tell you:  the tracks are in need of serious upgrade.  Yet, investment in the railroad's infrastructure is one of those things that is constantly postponed -- until a tragedy occurs, and this could have been a much more serious accident with loss of life in addition to the injuries.  But making this expenditure is a political hot potato, no one wants to take on.  Again, until.....

 

Fact of the matter, not only do the tracks need upgrading, the entire system -- which to a degree is still mired in its late 19th century beginnings -- needs to be addressed, bringing public transportation for the heavily populated northeast corridor into the 21st century.  We are a third world country when it comes to such transportation -- ask anyone from China or Japan who visits and rides those rails.  And, with easy credit and the need for jobs, it would seem to be a no brainer to make this investment, but do we have the vision and determination?

Meanwhile, on the Florida political front, an apparent self-serving decision by Governor Rick Scott: to deny Amazon.com the ability to build a warehouse in the State as it would appear that he (the Governor) is supporting an Internet sales tax and he wants to be perceived as being against tax increases. Consequently, the Governor has given tacit approval of the commonplace practice of avoiding the payment of "use tax" on such purchases, a law already on the books.  In rejecting Amazon's application for a warehouse in the State, he is also foregoing more than a thousand new jobs, an initiative that was the centerpiece of his election campaign.  No surprise, he is up for reelection next year, and being perceived as a champion of tax avoidance now seems preferable to job creation.

And speaking of things that never seem to change, the Mourning Doves (or their descendants) that have made their nest year in and year out underneath our roof eaves have two new chicks and here mommy is feeding one of them. They are messy nest makers and it is amazing they don't all fall out.

The People Have Spoken: Compromise!

It is amazing how close the anecdotal survey mentioned at the end of my last post came to predicting the 2.2% popular vote plurality for Obama (only a tenth of a percent off).  I wonder how many professional polling pontificators were as accurate!  Assume Florida is finally called for Obama, and that seems most likely at this point, the final Electoral College tabulation will be 332 for Obama vs. Romney's 206.  Here the survey of 289 vs. 249 was too pessimistic, although calling the winner.

This was no mandate for Obama, nor should it be. His political campaign of 2008 underestimated the depths of the economic crisis and the ability of a mere President to affect meaningful economic change.  Too many promises were made, indeed. Perhaps he has a more sober view of reality with the onset of his second term. 

Looking at the results vs. 2008 clearly shows that the American public is dissatisfied with the status quo.  Obama's popular plurality in 2008 was 52.93% or 2.63% more than 2012.  That doesn't sound like much except when you look at the absolute vote itself, with Obama getting 9.6 million less votes than in 2008.  Less people voted, showing the disenfranchisement of the country as a whole.  We are all sick of the shenanigans of both parties.

But if Obama is listening, hopefully they are across the aisle as well.  Senate's Minority Leader Mitch McConnell's gave an ominous post election speech saying, "They [the American public] gave President Obama a second chance to fix the problems that even he admits he failed to solve during his first four years in office, and they preserved Republican control of the House of Representatives...Now it's time for the president to propose solutions that actually have a chance of passing the Republican-controlled House of Representatives and a closely divided Senate, step up to the plate on the challenges of the moment, and deliver in a way that he did not in his first four years in office...To the extent he wants to move to the political center, which is where the work gets done in a divided government, we'll be there to meet him half way."

It sounds like more of the same.  Will Senator McConnell and Representative Boehner get the message as well?  Boehner said "The American people also made clear there's no mandate for raising tax rates." Doesn't sound encouraging that Boehner is still drawing a line in the sand that there can be no tax increases in any compromise. Another game of chicken with the fiscal cliff and the debt ceiling?  Any sane person knows this cannot be merely addressed with spending cuts.  There will have to be some tax increases, a more progressive tax scale such as in the Clinton era.  Our economy did fine then, why not now?  Ok, guys, time to compromise.  The election results seem to be shouting that message. 

Antidote du jour...

Romney and Ryan and a Hope and a Prayer

Although I had promised myself that I would not write much about the upcoming presidential election (or at least as much as I did some four years ago), I have to say something about Mitt Romney’s VP choice of Paul Ryan. When Sarah Palin was picked by McCain to be his running mate, I thought it was one of the most unconscionable, politically motivated choices he could have made.   Palin simply did not have the knowledge or experience to be a heart beat from the presidency.  

Now, another GOP choice four years later seems to be as politically motivated to appeal to the conservative base.  While Ryan is no Palin, his economic “plan” is the typical hope and a prayer of supply-siders:  lower taxes for the “job creators” and that will inexorably lead to spectacular economic growth.  Didn’t we try that last when Bush’s tax cuts went into effect after budget surpluses under Clinton? What was the outcome of that along with the deregulation of the banking system? I guess Romney thought his own lack of specifics would be easily clarified by adopting Ryan’s plan, at least in spirit.  

Ironic, isn’t it, the GOP accuses Obama of engaging in social engineering, but the essence of Ryan’s plan is social engineering in reverse?  The Obama camp has called it a form of social Darwinism. Indeed, the survival of the fittest, all others be damned!  (“At this festive season of the year, Mr. Scrooge, ... it is more than usually desirable that we should make some slight provision for the Poor and destitute, who suffer greatly at the present time." / "Are there no prisons?" / "Plenty of prisons..." / "And the Union workhouses…..Are they still in operation?" /  "Both very busy, sir..." / "Those who are badly off must go there." / "Many can't go there; and many would rather die." / "If they would rather die, they had better do it, and decrease the surplus population.")

The personal irony is I would be better off with Romney and Ryan’s economic plan.  Imagine, not having to pay any taxes on dividends, interest income, and capital gains!  Bring it on, but how many jobs is this retired ex-publisher going to create? And, then, the double irony of the hard-working middle class getting conned by all the staged patriotic hoopla the handsome R&R team projects, and then voting against their own best interests!   

I’m as much against a big government welfare state as I am a government based on Atlas Shrugged, but I’m afraid that is how this presidential campaign is going to be framed.   The PACs will have a field day with hyperbole.   Blather into matter.  

 

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.

Corporate Governance Gone Wild

Here is something for the Occupy Wall Street crowd to get specific about: CEO salaries have become obscene. Even new shareholder "say on pay" rules have not reversed the tide, shareholders being led by management's "recommendations" like lambs to the slaughter.

By 2009 the average CEO pay at S&P 500 companies was $9,246,697, including salary, stock and option awards, bonuses, pension and deferred compensation and other compensation (like the use of the corporate jet, when reported).

Compensation for these so called "job creators" has risen to 262 times that of an average worker by 2005, up from 24 times in 1965, about the time I entered the work force with my first job in publishing at $100 a week. If I had learned my ultimate boss earned 24 more times than myself, I think I would have understood, but 262 times? Today it takes the average S&P 500 CEO one working day to earn what his/her average employee earns in an entire year.

There are two issues that get wrapped around these facts for the Occupy Wall Street crowd. First how did salaries get so far out of balance? Then, why would a flat tax or any kind of reduced income tax at these lofty levels help the economy and create jobs?

Here is but one anecdotal example which helps address this issue, Eugene M. Isenberg's (the CEO and Chairman of Nabors Industries Ltd., a Bermuda registered drilling rig contractor) severance package of $100 million. (See the Wall Street Journal's A Very Rich Adieu for Nabors CEO)

This nifty package comes after compensation of "almost $750 million since 1992, including the value of his exercised stock options, according to Standard & Poor's ExecuComp," So that's about $850 million paid to one person over about twenty years, or about $43 million year after year after year. Meanwhile, "the Nabors stock has underperformed the S&P 500-stock index for the prior one-year, five-year and 10-year periods".

It is unclear whether the corporate jet is included in the compensation figures. "Records of Nabors-operated jets have shown frequent stops in Palm Beach, Martha's Vineyard, Mass., and New York, places where Mr. Isenberg has homes. A Nabors spokesman said previously that the company had offices in Palm Beach and Martha's Vineyard and that Mr. Isenberg is frequently in New York on business." Guess there is a need for off shore drilling offices at some of the most upscale neighborhoods in America.

This is but one example of corporate governance gone crazy, Boards rubber stamping their approval of insanely generous compensation packages for CEOs, justifying their actions based on the (wink, wink) peer review system. Hey, look at these other overpaid executives at competitors, we have to keep up with them! Meanwhile (wink, wink), Board of Director positions are in theory subject to shareholder approval, but in practice management has played a major role in selecting and retaining board members. Board compensation of S&P 500 companies is now $234k per year for a few hours work each month and frequently they serve on the Board of more than one company. This compensation package is up 10% from the prior year (how many average employees received 10% increases last year?). So reciprocal scratches of the proverbial back have to be commonplace. Shareholders and Occupy Wall Streeters, unite!

Then, is it reasonable to tax someone who "makes" $43 million a year at a higher rate than his/her average employee making (in this case) probably less than 1/500th of that salary? You bet it is. And is this executive, competent though he may be, creating more jobs because he is taxed less than he ought to be? No way. Innovators and entrepreneurs create jobs, foremost example of course being Steve Jobs, and they are not primarily motivated by compensation and are they are not deterred from their calling by taxes.

Show Us The Figures, Rick

By now Rick Perry's opinion piece in today's Wall Street Journal is making some waves. In many ways I agree with you, Rick, particularly about simplifying the tax code. But that does not mean a simple graduated tax structure has to be thrown out (in favor of the regressive flat tax) and it does not mean one has to entirely do away with capital gains taxation (usually the realm of the wealthy, so that, too, is another regressive move) or does it mean that a carefully thought out, and fair, inheritance tax shouldn't be retained (concentration of wealth doesn't enhance the American dream, it erodes it). And I'm all for responsibly addressing the twin Swords of Damocles that loom in our future, Medicare and Social Security. I'm even for a balanced budget, but not via Constitutional Amendment (imagine having to raise $$ in a crisis with congressional bickering stalling the process, not to mention transitional issues).

So while I agree with many of the feel-good measures, Rick, how does your op-ed piece constitute a "plan?" Show us the figures, Rick -- how many jobs evolve from massive tax cuts and would those jobs materialize anyhow with the next business cycle? Where is the evidence? Or, is this merely an ideological belief?

And that is my problem in accepting your "plan" as a serious one. Furthermore, Rick, you were not the first Republican candidate with a flat tax agenda. Cain beat you to the Texas punch and Gingrich now says he's for an optional flat tax rate of 15%, which beats yours by five percent. By your own logic, that ought to create even more jobs! And Romney now says he's always been for a flat tax. Sounds like a game of Texas Hold 'em. Are all you Republican candidates in? -- place your bets.

There is a pioneering book of social psychology you should read, Rick: Gustave Le Bon's The Crowd; A Study of the Popular Mind. Hard to believe it was written in 1895 as your true-believer words "tax cut" could have been used by Le Bon as an example. Think of them in the context of a passage I underlined as a student: "The power of words is bound up with the images they evoke, and is quite independent of their real significance. Words whose sense is the most ill-defined are sometimes those that possess the most influence...Yet it is certain that a truly magical power is attached to those short syllables" [e.g. tax cut] "as they contained the solution to all problems. They synthesize the most diverse unconscious aspirations and the hope of their realization. Reason and arguments are incapable of combating certain words and formulas. They are uttered with solemnity...and as soon as they have been pronounced an expression of respect is visible on every countenance, and all heads bowed. By many they are considered as natural forces, as supernatural powers. They evoke grandiose and vague images in men's minds, but this very vagueness that wraps them in obscurity augments their mysterious power."

"Tax cut" is the holy grail for supply-siders -- a "mysterious power" indeed when it comes to resulting in more jobs. As Le Bon further says, those unexamined words "become vain sounds, whose principal utility is to relieve the person who employs them of the obligation of thinking." And, that seems to be the new "democracy" of the so-called "debates." As the late preeminent science fiction writer Isaac Asimov said in Newsweek (21 January 1980): “There is a cult of ignorance in the United States, and there always has been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that 'my ignorance is just as good as your knowledge.'” (Hat tip, The Big Picture)