I'm writing this post about Robert Reich in the hopes that he'll read it here. Robert - if you're the one reading this, my sincere thanks for coming and reading this post. For the rest of you, I figured I'd let you listen in on what I have to say to Mr. Reich...
Dear Robert,
You probably don't know me, but I've followed your career from a distance for a long time now. I first became aware of you when you began showing up on a morning cable program aimed at providing an introductory course in Economics. I used to watch intently because I fancy myself something of a Renaissance man, and Economics was one of my passions. I was one of the few students in my high school to take an Economics course. My teacher was a socialist, and he taught us from the Marx school of economics, including what had become the discredited (though I didn't know it at the time) labor theory of value. I went on to minor in Economics, while I majored in Mechanical Engineering. I took Introduction to Macro Economics, and Introduction to Micro Economics, and then took International Economics at the 200 level. I then went on to get an MBA in Information Technology, and Finance and was able to take an excellent course called Econometric Modeling during that program. While my credentials don't really rival yours, I suspect that I have more economics training than the Tea Party folks that you quoted in your last editorial in my local newspaper.
Also, since we're talking about my past, I am, as you've probably guessed by now, a Conservative, but no longer a Republican - I'm registered as Unaffiliated, but clearly lean Republican. I've also served 9 years on my town's local Board of Education, serving as it's Secretary for a year, and in general, being a crucial member of the Board while it faced serious challenges from No Child Left Behind issues, to the upgrading of our failing school infrastructure. I have many Democratic colleagues that I'd be happy to name to you in private who will no doubt vouch for my fairly non-partisan approach to the job, and my good judgment in general.
Anyway, I watched intently, as I was interested in how you would portray Economics, and from what Economic schools you might use as your point of view. You thoroughly impressed me! As I recall, this was at a time when "trickle down" economics was being fiercely debated by politicians and economists, and Milton Friedman was the latest king of pop-Economics theory. You presented both sides of that particular argument in a dispassionate, ideologically-free point of view. I admired your ability to do that, and continue to keep that example in mind as I teach Citizenship in the Community and Citizenship in the Nation to Scouts in my Boy Scout Troop. As a teacher, there is no higher gift than an even handed presentation to controversial issues.
I was happy when I saw that you had joined the Clinton administration as his Secretary of Labor. While I felt that a position at the Fed or some other more economically centric position would have better played to your strengths, I was excited to see you get recognized.
I began to get disillusioned when you championed the increases in the minimum wage, and at some of your positions on organized labor, but decided that this must have been part of the job in a Democratic administration.
After leaving the Clinton administration, you popped back up on my radar when you began commenting on NPR and appearing in the editorial section of my newspaper. I must confess that at this point, I believe you've lost touch with your roots in Economics, and are simply using them to justify all kinds of big government interventions. I have come to find that you and I agree on very little. I'm saddened by this.
Having said all of that, I wanted to lay out for you why I sympathize with the Tea Party folks, and why you are a big part of the reason why they exist!
First of all, some background. I am NOT one of the rich that you and President Obama continue to talk about. My wife and I and two children make up a family of 4, and until very recently, have supported another family member for many years. We are both fairly charitable people, and spend most of our disposable income on your children. Without revealing our family income, I can tell you that our combined income last year was in the low 6 figure range. We are many tens of thousands of dollars away from being the "rich" that are so often spoken of.
So let's start with why I sympathize with the Tea Party by chronicling all the taxes that I paid last year:
Federal Income Tax: $31,000
Federal Social Security Tax: $6,600
State Teacher Pension Program: $4,000 (This is in place of Social Security taxes, as teachers cannot collect Social Security)
Federal Medicare Tax: $2,800
State Income Tax: $9,000
Real Estate Taxes: $5,100
Personal Property Taxes: $700
State Gasoline Taxes: $500
State Sales Taxes: $3,000 (estimated)
This excludes fees, surcharges, and other "funky" taxes like the 18% you pay when you rent a hotel room, etc.
The total is well over $60,000 in taxes which is somewhere between a third and a half of what we make in a given year.
This doesn't include the fact that my state income taxes will rise, along with all kinds of other fees due to our Democratic governor, Dan Malloy pushing through the biggest tax increase in the history of the state. (and during an economic downturn)
So you want to know why I sympathize with the Tea Partiers? It's because I'm already giving too much. Way too much.
You've lamented many times about how our tax system is becoming less progressive. Well, that may be true, but the problem with that logic is that the progressive nature of the system is already unfairly balanced. Look at the single biggest tax expenditure above. I fall into the top 5% of taxpayers. Again, recall that I'm not the "rich" that you so often quote. Anyway, this group of people pays almost 60% of the federal income tax revenue. The top 1%, which you call the rich, pays almost 40% of the federal income tax revenue. The top 10% of taxpayers, at a threshold of about $115,000 probably encompasses a good chunk of middle America. A married couple, both of whom are public school teachers would probably fall into that range. Those people, and the ones above, pay a whopping 70% of the federal income tax burden.
What is even more telling is that basically, anyone earning more than $33,000 a year is part of a group that essentially pays THE ENTIRE FEDERAL INCOME TAX burden, and that group comprises 50% of all "taxpayers."
I put the word "taxpayers" in quotes, as the other 50%, while technically taxpayers, pay no taxes. In fact, many of them get an Earned Income Tax Credit, which is essentially welfare with anyone that earns money in the US.
As a trained economist, you'll point to the other half of taxes paid, and call that regressive. The Social Security cap, sales taxes, gas taxes, etc. are levied regardless of income level. But I would posit that this is a specious argument. The sales taxes they pay are far lower, for most of what they buy will be exempt from sales taxes. Food, clothing under $50, etc. are all non taxable. Gas taxes are paid only when you own a car, which is a decision, not a right. Many take mass transit, which is subsidized by government. If they choose to eat a meal out, why shouldn't they pay a sales tax? If they choose to own and operate a vehicle, why shouldn't they pay taxes on that like anyone else?
At the same time, the growth in State and Federal spending seems to be spiraling upward. I simply cannot afford to do the things I need to do (like putting my children through college) if taxes continue to rise. Spending must be curtailed.
The biggest problem is our National Debt. It was out of control before Obama took office. After taking office, he went spending crazy. Deficit spending is at an unsustainable rate. On this, everyone can agree.
Where you and I disagree is in the method of stopping this out of control spiral. Your solution, along with most other Democrats is to raise taxes. As illustrated above, I can't afford that anymore.
Republicans want to cut services. It's clear to me that this is what needs to happen. Unfortunately, the power base of the Democratic party makes that very hard to accomplish.
Finally, I want to come to the main issue - why you, and the folks who advocate the same kinds of "solutions" that you do, are the direct cause of the Tea Party in America.
The Tea Party didn't exist as a political force until quite recently. There were mumblings and grumblings by people who felt that government had gotten too big. But they were easily ignored when our economy was growing briskly. This fed the ability of the government to expand into areas that it had not previously been involved in.
However, the 2008 political campaign triggered the Tea Party revolt. People who had mostly gone along with government expansion suddenly saw the Federal government step up it's efforts to reach into new areas. Suddenly, we were seriously considering "Universal Health Care" - a huge expansion of the Federal government. On top of that, the financial crisis of 2008 saw the Federal government begin to pump trillions of dollars into the economy to try and control unemployment. Remember that the trigger for this meltdown was the mortgage crisis - with housing values beginning to fall, the government's relentless push to increase home ownership through Fannie and Freddy came undone. The CDO's that they created rippled through the financial markets. I was keenly aware of this, as the company that I work for was highly exposed to the mortgage backed security crisis, as we had entered the business of insuring these CDO contracts. We ran a substantial risk of going bankrupt, and our stock, which had recently been at $80 a share was suddenly trading at $3 a share. We were lucky in that a new CEO came on board and quickly floated more equity in the company, thus allowing us to exit that market at a huge loss, but with the promise of remaining a going concern.
As Wall Street subsequently began to melt down, and the government began providing public bailouts, the debt began to mount. This was bad enough, but the Obama administration then embarked on reckless spending sprees, in an attempt to control unemployment. Subsequent "quantitative easing" led to a devaluation of the dollar, which would have been worse had the EU problems with Greece and Portugal not provided a lifeboat for the dollar. Even so, precious metal prices soared, and after a correction, continue to climb.
The real costs of ObamaCare won't be realized until after the 2012 election, and then we will begin to see just how much bigger the federal government has become.
For people like me, the real risk of a currency meltdown continues to loom. I have begun investing in gold and silver as a result. It may not make a sound investment in the long term, but certainly provides me some "sleep at night" insurance knowing that not all of my money is tied to the dollar.
These are the frustrations of the Tea Party crowd. The government spending needs to be cut, so that we can put our government on a more sustainable path of growth - one that respects the free market and that we can afford to pay for.
Unfortunately, the message you continue to send is one of hopelessness to someone in my position. By focusing on tax increases and more wealth redistribution, you discourage me from continuing to try and increase my income. At some point, if pushed, I'll leave this party that you are throwing. As I approach retirement age, I'll be looking to become one of the receivers of government largess rather than one of the suppliers. There's only 50% of the country in the supplier category today. How will your tax increases work if fewer people choose to earn the money to pay your exorbitant taxes?
All of the things you want; increased minimum wages, universal healthcare, more wealth redistribution, higher taxes, and continued expansion of government are all the things that Tea Partiers stand against. They are not the ignorant straw men that you stand up in your articles only to knock down. They are not, by and large, mean spirited people. They are people tired of paying the freight for ever increasing government, and being forced to do so at gunpoint. They want a government that serves the people - Not one where the people serve the government. They want more people to work, and take care of themselves, rather than relying on government to solve all their problems for them. They have taken their name from the patriots who threw tea into Boston harbor to protest what they see as unfair taxation. They are trying to make the US a better place.
They deserve better than to be derided and dismissed by you.
Respectfully,
Steve Edwards
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