Taibbi on Hillary: Pork Queen

The Queen of Pork

By Matt Taibbi
May 1, 2008 | Rolling Stone

One Sunday about three months ago — on the day before Martin Luther King Jr. Day, in fact — I got out of bed very late and lazily switched on CNN. On the TV screen, Sen. Hillary Clinton was smiling broadly and wearing a black jacket over some strange Oriental get-up. She was standing next to influential black pastor Calvin Butts, in front of the latter's famous Abyssinian Baptist Church in Harlem. 

Camera bulbs were flashing. An important announcement was about to be made.

Butts, it turns out, was endorsing Hillary over Barack Obama in the upcoming New York primary. I raised an eyebrow. It's not that I expected Butts — perhaps the most prominent black minister in New York — to automatically endorse Obama simply because he is black. But I certainly didn't expect to see Butts go on national television and make swipe after thinly veiled swipe at Obama, sounding like he was reading a script prepared for him by Hillary's campaign team.

"This is no time for waiting or hoping for solutions," quipped Butts, making an obvious reference to The Audacity of Hope author Obama and echoing the hope-ain't-shit theme that had been pounded on the campaign trail by the Clinton camp over and over again.

The predominantly black crowd barely had time to scratch its collective head and ask what the hell was going on before the endorsement party abruptly ended, leaving the stunned audience to break out in scattered boos and dueling chants of "Harlem for Obama!" and "Hillary! Hillary!" The strange scene left some in the audience wondering what exactly they'd just seen. "What's frustrating about ministers endorsing candidates," an Obama supporter named Rafael Mason wondered to a reporter, "is it makes you question if their decision is representative of the church or if there's a backroom discussion going on."

Months later, while researching pork-barrel spending by the presidential candidates, I came across three federal budgetary awards requested by Hillary Clinton in this fiscal year:

•$446,500 Abyssinian Development Corporation, New York, to support and expand youth and young-adult after-school and summer programs (Discretionary Grants — Juvenile Justice Programs) COM 08 D Rangel Schumer Clinton

•$893,000 Abyssinian Development Corporation programs for at-risk youth, New York (Discretionary Grants — Juvenile Justice Programs) COM 08 D Rangel Clinton Schumer

•$146,000 Abyssinian Development Corporation, to support and expand youth- and family-displacement prevention programs (Social Services — Department of Health and Human Services) LABHHS 08 D Clinton Schumer

If you haven't already guessed, Calvin Butts is the chairman of the Abyssinian Development Corporation. The above-mentioned $1.5 million in federal funds that Hillary requested on behalf of Butts' organization had been approved by Congress a month before she received the minister's timely endorsement. Maybe the minister was following his conscience in endorsing Hillary — but then, it never hurts to have a little financial incentive when it comes to difficult decisions like these, does it?

All politicians buy and sell favors, and presidential candidates are worse than most. In this race, none of the three remaining candidates are exactly squeaky clean when it comes to the doling out of federal budgetary largess. Even John McCain, who boasts that he doesn't request "earmarks," as pork-barrel spending is known on the Hill, actually has at least one to his name. And Barack Obama has not been shy about steering taxpayer dollars to people who might be able to help his presidential bid.

But of the three candidates, no one can touch Hillary Clinton for her expertise in dispensing federal pork. She is fast becoming a sort of Heavyweight Earmark Champion of the Beltway — one think-tank analyst has even dubbed her the "Queen of Pork" — who excels as a favor trader not only in sheer quantity but in brazenness as well. A recent examination of this year's earmark requests shows her solidifying her champion status more and more with each passing year, even under the ostensibly bright lights of a presidential campaign.

Here's how earmarks work: Each year, Congress allocates trillions of dollars, with most of it doled out to federal agencies, which in turn spend their budgets according to their own established — and usually competitive and merit-based — criteria. But in a small percentage of cases, members of Congress can direct the agencies in question to award their monies to specific organizations or companies, which are almost always located in that member's home state. In an unsurprisingly high number of cases, the money is given to a company whose executives just happen to have donated heavily to the member of Congress in question. That's what an earmark is. Some are legit and go to worthy causes, but on the whole they are sleazy enough to have moved the Democrats to pass earmark-reform legislation after they took control of Congress in 2006. The reform forced members of Congress to attach their names to the earmarks in question, and Democrats pledged to cut the number and cost of earmarks in half.

They blew it. This past year, in fact, members of Congress jammed more than $17 billion of earmarks into the budget — a thirty percent increase from the previous year. In March, House Speaker Nancy Pelosi abandoned plans to impose a one-year moratorium on earmarks — a reform that was also rejected by the Democrat-controlled Senate.

"The Democrats studiously refuse to do anything serious about pork — for the simple reason that they are every bit as addicted to it as the Republicans and have no intention whatsoever of lessening a system of self-aggrandizement that they believe gives them political success, nay permanence," says Winslow Wheeler, a former Senate aide who worked on defense earmarks before being forced into retirement for complaining about it publicly. "They will find — hopefully sooner than they think — that the permanence they crave is undermined by their self-directed behavior."

Hillary's $1.5 million gift to Calvin Butts came from three of her earmarks in the fiscal year 2008. She had a lot of them. In fact, between 2002 and 2006, Clinton secured more than $2.2 billion in earmarks, many of them attached to defense-spending bills, where she has unusual influence as a member of the Senate Armed Services Committee. Hillary succeeded in securing twenty-six earmarks to the 2008 defense bill worth a total of $148 million — a number that dwarfed that of any Democrat except committee chairman Carl Levin. Barack Obama, by contrast, had only one request attached to the defense bill.

Hillary's defense earmarks benefited some of the world's largest weapons producers, many of which have factories in New York. Among the most prominent include Northrop Grumman, which Hillary singled out for $6 million to develop a new radar system; Plug Power, for whom Hillary secured $3 million for a backup power system for Pentagon operations; and Telephonics, which Hillary gave $5 million for an intercom system for Black Hawk helicopters.

Her biggest coup of all was a multi-billion-dollar contract she helped to secure for Lockheed Martin to build the Marine One presidential helicopter — a project derided by insiders as a typical example of Pentagon waste. "Oh, the presidential-helicopter thing is a classic boondoggle," says one congressional source. "They could have taken any old Black Hawk helicopter, put a nice interior in it and a decal on it, and it would've been OK. Instead, we got this thing that costs four times as much. It's nuts."

Indeed, the Pentagon confirmed in March that the helicopter Hillary made sure would be built at Lockheed's plant in Owego, New York, would, in fact, cost $400 million per unit — more than the modified Boeing 747 used as Air Force One. You heard right: $400 million for a single fucking helicopter.

With most of her earmarks, Clinton makes sure to get a return on her investment of taxpayer money. Lockheed donated $10,000 to Hillary's Senate campaign in 2006 and provided her with plenty of free rides on its planes. Plug Power officials have reportedly donated some $7,100 to her campaigns since 2003, and several Northrop executives gave the max to her presidential campaign. In that light it seems odd that Hillary was critical of a deal to award a refueling tanker project to Northrop — except that she has also received maximum contributions from executives at the rival bidder, Boeing. Meanwhile, employees from Corning, for whom Hillary secured a $1 million earmark, donated $133,000 to her presidential campaign. The list goes on and on.

But Hillary's most brazen earmark this presidential-election season had nothing to do with defense. It had to do, oddly enough, with rock music. Back in June 2007, Hillary attempted to write a $1 million earmark for a museum commemorating the Woodstock festival in Bethel, New York. Not that anyone should have anything against Woodstock, but it seems weird to ask taxpayers to pay for it — especially when the project is principally funded by one of America's richest men, a media mogul named Alan Gerry.

Listed as number 297 on the annual Forbes list of wealthy Americans, Gerry reportedly has a net worth of $1.6 billion. Beyond the fact that he hardly needs the money, there is this to consider: On June 30th of last year, exactly three days after the earmark was officially inserted into an appropriations bill, Gerry and his wife both made maximum donations to Hillary's presidential campaign, totaling $9,200.

The deal stank, even by congressional standards. When Republican opponents introduced an amendment to kill the earmark, the measure passed easily. "Most of our amendments fail by fifty or sixty votes," says John Hart, a spokesman for Sen. Tom Coburn, an anti-earmark crusader who introduced the amendment to kill the handout. "But this one passed with no problem. It was so over-the-top."

The thing that's really vile about earmarks is how cheaply we all get sold out. Two million of your taxpayer bucks in exchange for a $5,000 donation? Greenlighting a billion-dollar Pentagon boondoggle for a couple of free flights? Hey, if you're going to sell us out, at least fucking bargain. But it's not their money, and they never do.

Hillary isn't alone among the candidates in selling us down the river for a few campaign contributions. Unlike Clinton, who has only disclosed the pork she actually succeeded in doling out, Barack Obama has supplied reporters with a list of every earmark he requested. But the list only served to highlight Obama's own pork, including $8 million for a "High Explosive Air Burst Technology Program" that would have been overseen by General Dynamics. Obama's Illinois finance chairman, James Crown, not only sits on the board of General Dynamics, he and his wife are both Obama bundlers who have raised more than $200,000 for Obama's campaign. Obama was also alone among the remaining candidates last year in using his leadership PAC to hand out money to politicians whose support he sought in his presidential run.

McCain, meanwhile, has run a finger-wagging, holier-than-thou campaign. He insists he doesn't request any earmarks, even though he has: In 2003, he doled out $14.3 million to Luke Air Force Base in Arizona. He also insists that he is "the only one the special interests don't give any money to," even though he has lapped the field when it comes to surrounding himself with lobbyists. Public Citizen, the nonprofit watchdog group, has identified sixty-six current or former lobbyists who are either major fundraisers or bundlers for McCain, a number that far exceeds either Clinton or Obama.

Like Hillary, McCain has not been shy about doing favors for his lobbyist friends while milking their companies for campaign contributions. As chair of the Senate Commerce Committee, McCain obliged several firms, including Paxson Communications and Glencairn, by proposing an amendment that would have enabled them to own multiple TV stations in the same market. Though the measure was never adopted, Paxson rewarded McCain with a flight on its private jet, and a Glencairn executive made donations to McCain's campaign a month after he held the hearing.

But neither McCain nor Obama have been able to match Clinton when it comes to playing on their connections for campaign contributions. Last fall, while Obama was answering questions about using his leadership PAC to give $10,000 donations to politicians who supported him in key campaign-trail states, no one blinked when former senator Bob Kerrey showed up in Iowa to campaign for Hillary. Kerrey these days is president of the New School in Manhattan, which, like Butts' Abyssinian Development Corporation, scored more than $1.5 million in federal earmarks this year courtesy of Hillary. The school also boasts three trustees who are "Hillraisers" or Hillary bundlers — meaning they've raised $100,000 apiece for her presidential run. The notorious scam artist Norman Hsu, who raised $850,000 for Clinton before being indicted for fraud last December, was another New School trustee.

Nor is Hillary shy about funneling earmarks to big donors who don't even need the money. Real estate developer Robert Congel, another Hillary earmark recipient who has graced the Forbes list, scored $10 million in pork courtesy of Hillary for use in developing, of all things, a megamall. Why the hell we need to pay taxes to help billionaires build luxury shopping malls is a troubling enough question, without even considering the $26,700 that Congel and his wife have contributed to Hillary over the years. That's all it costs to get $10 million out of a U.S. senator? Where are the pitchforks?

Earmarking is only one small slice of the political cash game, but it has the advantage of being a slice we can actually see and quantify. And what we see of Hillary's record here suggests a couple of things. One: She has no qualms whatsoever about trading your tax money for personal political capital. And two: She likes to trade much of that money for favors in the defense sector, even if it hurts the people doing the defending.

As is often the case with defense earmarks, some of Hillary's pork spending is taken out of the Army's Operation and Maintenance budget, which is supposed to be used for troop-support initiatives like body armor. In simple terms, Hillary's rampant marauding of the defense budget takes money away from troops in the field. Soldiers wind up short on equipment, and Clinton winds up with hefty campaign contributions and free flights on private jets. Carrying charges, my boy, carrying charges!

If earmarks are just a little slice of the pie in the Washington cash game, imagine what would happen if Hillary got to serve up the whole meal. It's been so long since the Clintons were in office that we scarcely remember all those funny-sounding names of scandal-plagued campaign contributors — names like Roger Tamraz, "Charlie" Trie, Wang Jun and John Huang. When it comes to the Clintons and money, there was always somebody with a story buried beneath the line item, a hard-to-find dollar figure stuck to every Calvin Butts or Robert Congel. Are we really ready to go back to those days full time?

Stiglitz on true, hidden cost of war

Nobel laureat Joseph Stiglitz reveals true cost of war during Kellogg visit
By Matt Golosinski
April 21, 2008

The United States is bleeding money. That's the alarm sounded by Joseph Stiglitz in his new book The Three Trillion Dollar War, a narrative that details what he and co-author Linda Bilmes, a Harvard professor of public finance, say are the staggering hidden costs of America's current Iraq War. He brought his discussion to the Kellogg School on April 18, speaking to a capacity audience from Kellogg and the larger Northwestern University and Evanston communities.

To hear the former World Bank chief economist and senior vice president detail the economic circumstances associated with the conflict, now in its fifth year and costing U.S. taxpayers $12 billion each month, is to enter a realm that rivals the bleak, madcap world conjured by Joseph Heller's classic satire Catch-22. For Stiglitz, a 2001 Nobel Prize winner, the tragedy of war is compounded by significant — and deliberate, he contends — flaws in how the Bush Administration has accounted for the war's expenses.

Citing the broader economic implications that extend beyond official budgetary figures that he said obscure the war's reality, Stiglitz believes the U.S. government is "vastly undervaluing" the war's impact on the economy, including its negative influence through lost opportunities that might otherwise shore up domestic infrastructure and education or enhance technological innovation. Stiglitz calculated that one-sixth of the Iraq War's cost would fund Social Security for the next 75 years, while "just a few days of fighting" would provide healthcare to all U.S. citizens currently lacking it.

By using a cash accounting system that minimizes up-front costs while obscuring or ignoring massive long-term expenditures, such as those associated with equipment repair and replacement or healthcare outlays for soldiers injured or killed in the war, the U.S. government has convinced some Americans that the Iraq conflict carries a far more modest price tag than Stiglitz and Bilmes say is accurate. In fact, Stiglitz, a professor at Columbia Business School, believes his own $3 trillion figure is "conservative." The real figure may be closer to $4 or even $5 trillion, he said, noting that the Bush Administration's current tally is only $600 billion — dramatically larger than its initial estimate of $50 to $60 billion, but well off the mark that Stiglitz has calculated using what he considers a more accurate system called accrual accounting. He said that this approach assesses many of the inevitable future costs associated with the war, including demobilization and restoring the military to its pre-war strength. But chief among these costs is long-term care for those killed or disabled by the conflict, expenses that Stiglitz said will continue for the next 50 years.

"Disability costs are a big chunk of change," he told the audience in the Kellogg School's James L. Allen Center, noting that the country is paying about $4.3 billion a year in healthcare for those soldiers injured in the first Iraq War, which lasted only 100 days in 1991. "Today, the costs of a years-long war will surely be much greater and will go on for decades," Stiglitz said, adding that improved battleground medical treatment has resulted in more soldiers surviving — his figures were 15 for every 1 fatality — a favorable development, but one that carries significant lifelong costs to care for those people. "We have created an unfunded entitlement as big as the hole in our healthcare system."

While the Bush Administration's cash accounting practice gives the appearance of fewer expenses, Stiglitz said it also drives short-term decisions that can have deadly consequences. He cited the examples of soldiers who were issued no body armor early in the war, or those whose vehicles were inadequately armored against improvised explosive devices. Equally troubling, he said, were instances of soldiers who, after being maimed and hospitalized, discovered that they were docked by the military for the remainder of their contracted service pay. (Congress is likely to change this policy soon, Stiglitz said.)

Deliberate accounting choices also play a part in the United States' official tally of its soldiers killed or injured in Iraq, Stiglitz said. Official injury numbers represent only half of the actual total, he said, citing data he and Bilmes obtained from veterans' organizations who themselves had to use the Freedom of Information Act to get the full statistics released. The government, Stiglitz indicated, only counts injuries it considers the result of direct hostile conflict, not those it reckons as accidents. As an example, he noted that any U.S. casualties from a helicopter shot down during daylight fighting would be numbered among the official tally. If that same helicopter, flying at night because day travel is too dangerous, crashes without coming under enemy fire, the injuries are not officially tabulated as battle casualties, Stiglitz said. Importantly, however, the U.S. taxpayer will be responsible for funding all such war injuries, whether or not these appear as "official" in government records.

In addition, the economics surrounding how the war is being fought — with significant privatization through contractors like Blackwater and Halliburton — creates "perverse incentives," according to Stiglitz. With salaries up to five times higher for private security forces, the U.S. military is faced with serious financial challenges when trying to recruit talent or retain those eligible for discharge at the end of their tours. "The administration wanted to convince citizens that we can do war on the cheap," Stiglitz said, but its policies actually have increased the military's costs since the armed services must now offer more money in salary and bonuses to compete with private contractors.

Stiglitz also pointed to what he considered broader economic mistakes made during the last eight years of the Bush Administration, which have contributed to the U.S. deficit ballooning from $6 trillion to $9 trillion, with about a third of that increase "directly due to the Iraq War," according to Stiglitz. What's more, that economic circumstance has resulted in some 40 percent of war costs actually being funded by foreign countries, through investments in instruments such as Treasury bonds, a situation Stiglitz said leaves the United States "more vulnerable to global volatility." He faulted "lax regulation" and a "reckless increase in liquidity" by the Federal Reserve under former Chairman Alan Greenspan and current Chairman Ben Bernanke as contributing to the recent real estate bubble and credit crunch, and considered this fiscal policy an attempt to prop up a fundamentally flawed economy whose collapse during the early years of the war could have eroded public support for the military intervention.

Stiglitz, chairman of the Council of Economic Advisers from 1995-1997, also criticized the Bush Administration for cutting taxes during wartime, thereby passing the costs on to future generations.

For the first time in U.S. history, "We have put this war entirely on our credit card," he said.

The tax simplification dodge

The Simplification Dodge
By Robert Kuttner
March 24, 2008 | Prospect.org

There are two broad views of what we mean by tax reform. One school decries the complexity -- a byzantine tax code, impenetrable forms, public and private tax bureaucrats, and self-defeating or inefficient incentives that add up to sheer economic waste. The other school objects to who pays, reminding us that the rich have used their political influence to kill the system's progressivity, leaving ordinary taxpayers with too much of the bill. Both schools can agree that the system ought to be streamlined and that the complexity is often the consequence of special-interest provisions that harm economic efficiency as well as efficient tax collection.

In practice, however, the tax- simplification theme is often a political stalking horse for an even less equitable (though perhaps simpler) tax system. Proposals such as the Forbes flat tax, or the postcard-size tax return, or Gov. Mike Huckabee's proposal to abolish the IRS in favor of (what would be astronomical and regressive) national sales taxes invariably tout how simple they would be, but their deeper purpose is to reduce the share of taxes that the rich pay.

Michael Graetz's book, 100 Million Unnecessary Returns, is an intellectually serious and moderately conservative version of this first genre. At the heart of his plan is a 10 percent to 14 percent value-added tax (VAT) that would underwrite a general exemption of $50,000 for an individual and $100,000 for a couple or family. As a consequence, the 100 million households of his title would no longer file income-tax returns. His book is mostly about the purported benefits of the plan to simplification and to competitiveness, not the worsening regressivity.

By contrast, David Cay Johnston's Free Lunch is a shining example of the second school. In an era of over-caffeinated armchair pundits, Johnston is the rare old-fashioned reporter -- he covers taxes for The New York Times -- with a capacity for both investigative legwork and indignation on behalf of regular people. His previous book, Perfectly Legal, explores the Internal Revenue Service's losing war with ever more convoluted tax schemes, virtually all for the benefit of the wealthy. These schemes have shifted taxes onto moderate-income people while conveniently adding to the popular backlash against the IRS. Johnston shows why low-income people using the earned income tax credit are far more likely to be audited than rich people using baroque tax shelters. With audit resources restricted by a conservative Congress, the IRS can fathom the former but not the latter.

In Free Lunch, Johnston offers an appalling sampler of the other strategies used by the affluent to win tax breaks and other hidden subsidies at the expense of both the Treasury and the broad public interest. In one chapter, he explains how the tax code rewards America's large corporations for moving production abroad. As if it were not enough that the Chinese government offers huge subsidies and repressed workers,

A company with operations in the United States and another country can borrow money at home, deducting the interest and thus lowering American taxes. At the same time, it can earn interest on the untaxed cash it keeps overseas. So when an American company closes a factory here and moves it to China, provided it meets some technical rules, it can deduct the interest charges on its United States tax return while building up profits overseas that may never be taxed.

The tax treatment of U.S. foreign corporate profits is complex -- but who cares? Though the complexity serves incidentally as a full-employment act for a costly private bureaucracy of tax attorneys and accountants, the real function is reducing corporate taxes (and also subsidizing outsourcing). That's why corporations lobby for tax simplification about as often as cops get parking tickets. In a nice grace note, Johnston recalls the system's lineage. The treatment of foreign taxes was originally worked out by Herbert Hoover's Treasury secretary, Andrew Mellon, to reduce the big oil companies' American taxes while offering the Saudis stable royalties. As Johnston comments, "Adam Smith would not have approved."

In his well-researched and narrated stories covering more than a dozen facets of the subsidy-for-the-rich game, Johnston makes clear that the "complexity" of our tax system is not the result of tax bureaucrats, or wonky legislators, or big-spending liberals. Rather, it reflects elaborate schemes invented by wealthy people seeking to evade taxes or find other ways to underwrite private riches at public taxpayer expense. Johnston reminds us that complexity per se is a second-order problem. The primary problem is who pays and who benefits.

Graetz, a Yale law professor and former assistant secretary of the Treasury, downplays this key issue in 100 Million Unnecessary Returns. I admired his previous book, Death by a Thousand Cuts, co-authored with his Yale colleague Ian Shapiro. From this earlier volume, a superb case study of how the right had successfully demonized progressive taxation, I had mistakenly pegged Graetz as a process reformer and moderate liberal. I was curious to learn what kind of liberal case he might make for a VAT.

But 100 Million Unnecessary Returns, though ingenious, relies heavily on familiar conservative premises and rhetorical ploys. He begins by expressing alarm at the projected deficit. If the Bush tax cuts are allowed to expire in 2010, he writes, "federal revenues will exceed 20 percent of GDP, a level reached only once since World War II." But maybe we need federal revenues to exceed 20 percent of gross domestic product. Restoring a progressive income tax system to finance an adequate level of public outlay after decades of public neglect is an option not on Graetz's radar.

Worse, though the current deficit is clearly the result of deliberate policy choices by George W. Bush to reduce taxes on the rich and finance his war through borrowing, Graetz blames the deficit on generic irresponsibility of unnamed "politicians." Because future generations do not vote, Graetz contends, "deficit finance is catnip to politicians." But oddly, neither Bill Clinton nor the Democratic congressional majorities of the mid-1990s were susceptible to that catnip when they took political risks to balance the budget. The most elementary intellectual honesty by a Yale law professor would lay the blame for the deficit where it belongs.

Having begun with a misleading jeremiad against deficits, Graetz then offers a thoughtful discussion of the excessive use of tax deductions as instruments of public policy. But unlike Johnston (or parts of his own previous book with Ian Shapiro), Graetz once again does not cite the paramount source of the estimated $700 billion in revenues lost to tax expenditures -- the outsized political influence of financial elites.

Graetz also proposes to cut the already reduced corporate income tax rate even further, to the range of 15 percent to 20 percent, purportedly as a boost to competitiveness. As justification, he cites other advanced economies' lower corporate rates -- the unfortunate result of tax competition and the influence of Graetz's counterparts overseas. He also offers standard conservative alarms on Social Security and Medicare, which he says will have to be "trimmed," and he likes individual savings accounts as a substitute for part of Social Security.

Graetz makes four arguments for his value-added tax scheme. First, the federal tax code is too complex; second, government inefficiently pursues many social and economic objectives via tax subsidies instead of directly; third, our failure to have a VAT leaves U.S. industry at a competitive disadvantage; and finally, a VAT would increase savings rates. This is all true as far as it goes. He is also usefully and somewhat scornfully critical of the two competing conservative proposals, a national sales tax and a flat tax. However, his own preferred remedy, which he terms a "Competitive TAX," leaves much to be desired.

Graetz thinks he sees the elements of a grand bargain in a VAT. He quotes a marvelous line from Larry Summers that a VAT will be enacted as soon as Democrats recognize its potential as a money machine and Republicans realize it is regressive. Indeed, one can defend the regressivity of Europe's value-added taxes because the services they pay for are highly redistributive. By analogy, it might make great sense to have, say, a 10 percent to 14 percent value-added tax if it paid for national health insurance. Graetz's value-added tax, however, would neither add net revenues nor finance additional public services. It would replace a more progressive income tax with a far less progressive tax on consumption.

To make his VAT less regressive, Graetz would offer credits for people making under $30,000 a year (and require them to file a new tax form to receive the credits!). But the working middle class earning $30,000 to $100,000 would likely be socked with higher net taxes. And despite his erudition, Graetz doesn't bother to compute just how much more regressive the resulting system would be.

Would his proposal simplify the tax system, the premise for his entire scheme? Most tax complexity is the problem -- and the opportunity -- of those in the upper brackets. They are the taxpayers who make extensive use of shelters -- and under Graetz's plan they would still file income tax returns. For the rest of us, filing a tax return is just not that big a deal. The vast majority of people with earnings under $100,000 use the standard deduction. Even for those moderate- income people who itemize, it's a matter of keeping decent financial records and perhaps paying a few hundred dollars to a tax-preparer. As Graetz admits, getting rid of the tax expenditures that cause the worst complexity (and regressivity) is a political problem. If Congress can muster the political will to render the income tax simpler and fairer with the addition of a VAT, it can do so without one.

The next president will need to make the tax system simpler and fairer for three big reasons: to restore fiscal balance, to raise adequate funds for public needs, and to restore trust in the tax system itself. The best way to achieve those goals is not to add a VAT but to restore progressive rates and repeal tax preferences that cause most of the system's complexity, regressivity, and failure to collect adequate revenues.

Lowry: The underside of (Obama's) elitism

If I had to critique Obama's controversial San Francisco speech, I'd say he was mostly wrong, but he was certainly sniffing around the edges of a big, uncomfortable truth that most politicians have turned their noses away from for the past 30 years.

Lowry is right that many Americans simply like owning guns and/or hunting. And many Americans are simply religious, since that is how they were raised, and how their parents and parents' parents were raised. America has been a gun-toting, God-fearing country from the start.

But America has not always been a paranoid, angry, and deluded gun-toting, God-fearing country. That is what's different today.

Unfortunately, the Rust Belt's gun-loving Christians for whom Obama's heart bleeds don't want to hear his message. They distrust populists. For them "liberal" is a dirty, four-letter word. Worst of all, they've been socialized to believe that if you're rich, it must be because you were smarter or worked harder than everybody else; and if you're too poor to pay the bills and put your kids through school, it's because you were dumb or lazy. And that is their downfall. They've swallowed the "land of opportunity" Kool-Aid.

So all that's left is to blame their economic plight on welfare-collecting blacks and Mexicans, and damned liberals in Washington giving welfare (and affirmative action) to said blacks and Mexicans.

That is why they will vote for a guy like McCain who cuts taxes for the rich and corporations even as he admits that "those manufacturing jobs are not coming back" to America, who said it would be "fine by me" to keep their enlisted children in Iraq for "100 years," who will side with Wall Street and K Street every time to the detriment of working class interests, rather than vote for a "liberal" like Obama who wants to give them affordable health care and better education and pay for it by raising taxes on the rich and U.S.-based corporations who boost their stock price by exporting American jobs.

Call me an elitist, call me a pessimist who "hates America," but I think things will have to get even worse and stay that way before the God & Guns crowd finally wises up.
Conservatives like Bush & Cheney may hunt on occasion, they may like their BBQ, they may speak in simple, declarative sentences -- but they still wipe their asses with $100 bills, and they have enough money to never work another day in their lives, and to ensure the same for their children and grandchildren. Yet most God-fearing Americans trust an "average" guy like GW Bush over some damned lib'rul "elitist." Go figure.

(BTW, on the "elitist" scale, does it make any difference that out of the 3 presidential candidates Obama is the poorest? Guess not. Elitism must be defined by your state of mind, not your income.)


The Underside of Hope
By Rich Lowry
April 15, 2008 | National Review

Barrack Obama was caught saying something he believes.

At a San Francisco fundraiser, away from the prying eyes of the press, Obama reflected on why small-town voters in Pennsylvania and the Midwest seem resistant to his appeal. He said those areas had lost jobs for 25 years. Therefore, people "get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."

Obama has apologized for his phrasing while defending the substance of his statement. And why not? He was retailing an article of left-wing orthodoxy going back centuries: that the working class is distracted by religion and other peripheral concerns from focusing on its economic interests and embracing socialism.

Versions of Obama's insight have been expounded by a world-famous 19th-century economist (Karl Marx), by a 1960s New Left philosopher (Herbert Marcuse) and by a best-selling contemporary liberal writer (Thomas Frank, author of What's the Matter With Kansas?), among many others. It's such a commonplace that Bubba-friendly Bill Clinton wrote in his memoir that Republicans wanted to undermine confidence in government so voters would be more receptive to "their strategy of waging campaigns on divisive social and cultural issues like abortion, gay rights, and guns."

At bottom, this is a profoundly insulting point of view. Consider Obama's formulation. He makes it sound like no one would be a hunter or a Christian absent economic distress, that economic circumstances drive people into such atavistic habits. Has he considered that some people simply enjoy hunting? And view the right to bear arms as a guarantor of American liberty? As they used to say, "God made men, but Sam Colt made them equal."

The assumption is that only liberal attitudes are normal and well-adjusted: If only these small-town people could earn more income, get an advanced degree, and move to a major metropolitan area, then they could shed their chrysalis of social conservatism.

Obama prides himself on his civility, but it has to go much deeper than dulcet rhetoric. A fundamental courtesy of political debate is to meet the other side on its own terms. If someone says he cares about gun rights, it's rude to insist: "No, you don't. It's the minimum wage that you really care about, and you'd know it if you were more self-aware." But Democrats have an uncontrollable reflex to do just that. Since the McGovernite takeover of their party, they have struggled to work up enthusiasm for Middle American mores. (Since 1980, only Bill Clinton managed it, which is why he was the only Democrat elected president in three decades.)

When the liberal reflex is coupled with a Ivy League–educated candidate who seems personally remote and uncomfortable with everyday American activities, it's electoral poison. After the likes of Al Gore and John Kerry, Republicans had to be wondering, "Could Democrats possibly nominate yet another candidate easily portrayed as an out-of-touch elitist?" With Obama, Democrats appear to be responding with a resounding "Yes, we can!"

Obama brings a special measure of arrogance to the standard liberal critique of Middle America. His candidacy has always been characterized by two paradoxes. How can he be so hopeful at the same time he and his wife, Michelle, portray America as a sink-pit of despair? And how can he claim to be a uniter when he's an orthodox liberal who has risked little or nothing for bipartisan outreach?

Now, we know. Obama defines hopefulness as liberalism, specifically liberalism as embodied by himself. Only with Obama's election will America be redeemed from its harrowing false consciousness. We will be unified, not by Obama reaching out to conservatives to hammer out compromises, but by conservatives shedding their bitterness and becoming Obama liberals.

This is the underside of hope: arrogance fading into a secular messianism based on the fallenness of everyone who disagrees with Barack Obama. And it's small-town voters who are deluded?

Obama was right: We SHOULD feel bitter

Bitter? You Should Be! Why Obama Is Right
By Nicholas von Hoffman
April 15, 2008 | TheNation.com

Last week Barack Obama, destiny's tot, suggested blue-collar Americans are feeling bitter about their financial condition, which has been on a bit of a decline during the last five, ten, fifteen, twenty years or so. Rival politicians immediately pounced and they've been whaling on him ever since.

How dare Obama suggest people are bitter? Americans are not bitter! Americans are happy, proud, peppy, content and optimistic!

Maybe. But if millions of them are not bitter and/or angry at this point, there is probably something wrong with them.

In his new book, The Big Squeeze: Tough Times for the American Worker, Steven Greenhouse of the New York Times writes, "Since 1979, hourly earnings for 80 percent of American workers (those in private-sector, non-supervisory jobs) have risen by just 1 percent, after inflation. For male workers, the average hourly wage actually slid by 5 percent since 1979.... the nation's economic pie is growing, but corporations by and large have not given their workers a bigger piece." A 1 percent raise in almost thirty years? Still not bitter?

And who is getting ever larger chunks of pie? The Wall Street Journal has isolated some of the most energetic pie pigs: "the wealthiest 1 percent of Americans earned 21.2 percent of all income in 2005, according to new data from the Internal Revenue Service. That is up sharply from 19 percent in 2004, and surpasses the previous high of 20.8 percent set in 2000, at the peak of the previous bull market in stocks. The bottom 50 percent earned 12.8 percent of all income, down from 13.4 percent in 2004 and a bit less than their 13 percent share in 2000." You can be sure that a substantial portion of the bottom half of the population is living in small towns similar to the ones in which Obama sniffed out a degree of bitterness.

Even the 1 percent increase in hourly wages over the past generation or so is illusory. During the same period, unavoidable expenses--such as medical insurance, child care and transportation--have expanded explosively. Whatever progress that's been made in living a little better has been achieved by working a lot harder and a lot longer.

"In a survey by the Families and Work Institute," Greenhouse writes, "two-thirds of employed parents responded that they didn't have enough time with their kids and just under two-thirds said they didn't have enough time with their spouses. The typical American worker toils 1,804 hours a year, 135 hours more per year than the typical British worker, 240 hours more than the average French worker, and 370 hours (or nine full-time weeks) more than the average German worker. No one in the world's advanced economies works more."

Compared to workers in other countries, where the standard of living is as high or higher than it is in the United States, Americans, with fewer and shorter vacations, are worked like donkeys. Politicians repeatedly insist on telling the voters that America is the richest country in the world, which is a true enough statement but also provides little comfort to the massive population of under-appreciated workers, in small towns and big cities, who don't get their share.

Every election season, candidates pretend to tear up as they assure millions of Americans who are working for less--or not at all--with the phrase the Clintons made famous:"I feel your pain." That empty empathy will get you a bag of groceries in the basement of that church across town.

This year, the politicians are back with their speeches about how they are going to arrange for vocational classes so the voters will be able to compete in the twenty-first century. The first decade of the twenty-first century is already almost over. Time to drop that line, lest the small-town people turn bitter.

Obama is getting drubbed for saying that people, in their bitterness, are looking to God and their guns. If you had to choose who to go to for economic assistance, Hillary or God, who would you be clinging to? As for the guns, American politicians, with their frequently broken promises, are just lucky they aren't picking birdshot out of their derrières.