Phony allegations of class warfare

By: - August 28, 2010 9:41 am

The right wing's latest courageous defense of the super-rich

Self-deception is a universal human phenomenon. Everyone is capable of convincing him or herself that the world's problems are all someone else's handiwork and that he or she has been doing everything and more to make the world a better place. Whether it's a discussion of which household member is responsible for the most bathroom clutter or one regarding which country is doing its fair share to underwrite the costs of the United Nations, just about everyone has a natural tendency to magnify one's own contributions to the common good and feel underappreciated or abused.

If you doubt this proposition, listen carefully the next time some multi-millionaire hedge fund manager, pop star or professional athlete starts whining about his or her taxes and America's costly "welfare state."  This is not to say that taxes are always fun to pay or that there haven't been low income people who have abused public systems down through the years, but come on – let's get real!

For all of its many and important good points, neither the "market" nor the astonishing wealth it bestows upon some lucky members of our society is divinely ordained. Even the most ardent of "conservatives" must concede that Aubrey McClendon, who made more than $100 million in 2008 as the head of Chesapeake Energy Corporation, was not 3,122 times more deserving than his average employee or 6,000 times more deserving than the average office janitor. LeBron James and Alex Rodriguez are great athletes, but their contributions to society are not a couple of thousand times more important than those who change the oil on their fleets of sports cars. Such comparisons grow even more offensive and egregious when the subject is Paris Hilton or some other silver spooned socialite.

Fortunately, for most Americans of great wealth, they are seldom reduced to complaining publicly about their taxes or bragging about their innumerable contributions to the general welfare. As with most other things in their lives, they can pay someone else to do it for them. In the finest tradition of American "free markets," not only can the wealthy deceive themselves, they can also pay someone with an income hundreds or thousands of times less than theirs to try and deceive everyone else.

Like the John Locke Foundation.   

To see an example of such embarrassingly obsequious propagandizing, check out yesterday morning's "Daily Journal" effort from the Locke group. Its premise: Americans should start making use of Labor Day – our one tepid national effort to honor the working men and women of the country – to honor…wait for it… rich people and business owners! 

We're not making this up.

Here are some of the "highlights" of this essay along with a brief response to each that attempts to set the record straight:

Claim #1: "…from the political class to mainstream America, it is politically correct to lash out with words and policies at those who will make or break our economic future…. they deserve our appreciation, not our scorn."   

Setting the record straight: Let's get this straight: it's "lashing out…at those who will make or break our economic future" to ask the richest 2% of all Americans to return to the still historically low tax rates they paid during the boom period of the 1990's? This is "lashing out"?

Perhaps even more to the point, who says these are (or ought to be) the people who will "make or break" our future? Aren't the nation's mom and pop businesses and entrepreneurs the real economic engine? For that matter, wouldn't it be more accurate to ascribe that role to the teachers and kids who populate are embarrassingly underfunded public schools? 

Claim # 2: "You and I are the beneficiaries of the jobs they create to carry out their investment. If the idea catches on, they hire more people, sell more products, and reap rewards for their willingness to risk. We all win. But if the business goes bust, you and I take only a temporary hit. The entrepreneur's investment is gone forever." (Emphasis supplied).

Setting the record straight: Oh really? Perhaps the Locke Foundation got this interesting spin on economics by talking to all of the laid off textile and furniture workers in North Carolina who have taken "only a temporary hit." Or maybe it was the various industry magnates and heirs who have all, no doubt, headed straight for the Food Stamp line when their businesses closed.

Claim #3: "In 2007, nearly $3 of every $10 of all federal taxes paid – 28.1 percent – were paid by the highest-earning 1 percent of U.S. households – those with income of more than $352,900, according to Congressional Budget Office reports. That same group of earners accounted for 39.5 percent of federal income tax liability. Remember this the next time someone tells you the 'rich' don't pay their 'fair share.'"

Setting the record straight: Actually, 28% of federal taxes is not a "fair share." Even with our modestly progressive federal income tax, the income and wealth of the top 1% still far exceeded (and continue to exceed) that percentage. Moreover, their share of national wealth has been growing at a rapid clip for decades. When it comes to state and local taxes, the rich actually pay much less of their incomes than do people in the middle and at the bottom. In North Carolina, they pay roughly 33% less of their incomes than do the middle class and poor.  

Claim #4: "The top 5 percent of U.S. households drive the economy. They're the people who, in good times and bad, buy products and services from the stores and businesses that employ millions of Americans."

Setting the record straight: This is from a recent study published by the experts at the Center on Budget and Policy Priorities:

"The [Congressional Budget Office] recently examined 11 options to stimulate growth and job creation and found that extending the 2001 and 2003 tax cuts in general came in last in effectiveness…. Furthermore, CBO indicated that extending the tax cuts for high-income households in particular would rate even lower in effectiveness than extending all of the tax cuts. This is because, as CBO explained, ‘higher-income households … would probably save [rather than spend] a larger fraction of their increase in after-tax income.' An economy in a recession or the early stages of a recovery needs more spending, not more saving." (Emphasis supplied).

As for the Locke Foundation's final two contentions (that we should honor rich people because a) they give away a lot of money and, b) they buy a lot of nifty new products and services that eventually trickledown to the masses, pardon us if we don't get too dewy-eyed. As study after study confirms, poor and middle class Americans give more of their income to charity than the wealthy. This may even partially explain why they buy fewer $5,000 massage chairs at the Sharper Image each Christmas.

Getting real about Labor Day

Of course, setting aside all debates regarding the worthiness of the American over-class, the bottom line fact about Labor Day is this: its existence and purpose are both based on the intuitively obvious fact that the rich and powerful don't really need their own special day of recognition because virtually every other day in the calendar year already fits that bill. Honoring the owners of Wal-Mart and Morgan Stanley on Labor Day makes about as much sense as paying tribute to children on Mother's Day.

Even the apologists and deceivers for hire over in the right-wing think tanks ought to be able to figure that out. 

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Rob Schofield
Rob Schofield

Editor Rob Schofield oversees day-to-day newsroom operations, authors regular commentaries, and hosts a weekly radio show/podcast.