Category Archives: Politics

(not) Taxing the Rich; Losing Our Way.

Big Tex,

You posed an article by Robert Frank of the Wall St. Journal on my wall so I felt compelled to read it and respond thoroughly. Upon finishing my first read of the article, my mind was reeling attempting to harmonize its clever craftsmanship and highly disingenuous message; the WSJ is certainly getting its money’s worth with Mr. Frank.

Upon further contemplation, I was left with a lot of thoughts, which I’ll share below, after briefly recapping the author’s position.

Author’s Position

The article is motivated by the following correlation: those States most reliant on income tax revenue from their wealthiest citizens now face the largest deficits. Mr. Frank frames this subject by noting that this is emerging during a time of greatly increased public spending. He then notes that “as the incomes of the wealthy have grown, they have become less stable.” Mr. Frank acknowledges that there is a consensus that these top salaries are too tightly linked to the market. Nonetheless, this situation has left governments increasingly dependent upon their top earners for revenue.

This story is told through the personal story of Brad Williams, a former economic forecaster for the State of California. Mr. Williams retired from the State in 2007 and now runs his own consultancy. We learn that Mr. Williams had long been aware of this excess reliance on top earners. While working for the State, he advocated the following fixes: 1) flattening income tax rates, 2) allowing the wealthy to defer payments on windfall profits, and 3) establishing a “rainy day” fund. His proposals, however, were not adopted. Mr. Williams, however, felt vindicated by the recommendations of a bipartisan commission assembled by former Governor Schwarzenegger in 2009. The commission’s proposal to fix the State’s over reliance on income taxes from the wealthy was to decrease those taxes while increasing the general sales tax. As California remains beholden to its wealthiest, and by implication, to the market, Mr. Williams laments of having “no real pleasure in being right.”

My Thoughts

As I alluded earlier, the author of this article, Robert Frank, has spun this tale well. However, its unquestioned reliance on certain tacit assumptions, along with a gross disregard of other highly relevant factors, make it a staggeringly disingenuous work of art.

To his credit, Mr. Frank notes how the top tax bracket has fallen from 90% during WWII to 35% today. But instead of analyzing this massive decrease, he instead highlights how today, those earning over $379,000 are taxed twice that of those whose salaries are under $69,000. This “twice as high” tax rate is presented as a great injustice while the broader 55% decrease is included as mere background. Mr. Frank fails to examine how these massive tax reductions for the wealthy helped create the very conditions which underlie the current crisis.

Throughout the article, the increased accumulation of wealth is treated as inevitability. Furthermore, the article dismisses, as asides, other factors that have lead to the current crisis, namely decreased corporate taxes. As anyone following the saga of General Electric is aware, large corporations, while thriving, are paying far less in taxes than before. These profits are instead going into CEO and senior executive pay. Since these outsize compensation packages are directly tied to the stock market, they foment instability. Thus, public officials, instead of leading, are left studying Wall St. to “more accurately predict state revenues.”

In essence, this story is about how US public policy regarding taxation has empowered the super-wealthy to leverage their wealth so spectacularly as to ensnare all of us in their vagaries. The US economy has been split in two, leaving government constantly one step behind, trying to fix what has already transpired while the next movement is afoot.

The proposals that the author endorses, those espoused by Mr. Williams, are cruel and cynical. To escape the current volatility, it is suggested that income taxes be lowered and sales taxes increased. Such a proposal would further impoverish the state, enrich the already wealthy, and burden the poor and middle class.

Mr. Frank fails to examine other, more progressive policies, that could help address the current volatility in state revenues. Higher income taxes for the very wealthy might well temper current excesses in market-based speculation. And decreasing income polarization would itself engender more stable revenue collection models, thus allowing states to better plan for and wisely craft their spending priorities.

Instead, we’re one again pitched tired old proposals which do little more than privatize profit while socializing losses. We’re told that states will benefit if the super-rich are allowed to spread out their income tax payments on windfall profits over multiple years. In the same breath, we’re encouraged to create a “rainy day” fund, the type which could ostensibly be funded by such windfall tax revenues. Mr. Frank’s vision would leave us poorer now and surely impoverished later.

Conclusion?

Sorry, but if that’s the best that “conservative” America has to offer, then maybe we should start dragging the term “conservative” through the mud, like “social welfare” (aka Socialism) has been. As Bob Herbert has opined in his swan song at the New York Times, America has lost its way. Our extreme economic inequality now holds the majority of us hostage, and our elected officials appear to be indifferent, impotent or in-cahoots. Our system no longer serves us. Rainy day funds are not the answer to an America, Inc., which has become “too big to fail.”

So, Jim, those are my thoughts. This article is well crafted but wrongheaded. I respectfully disagree.

Best,
-WD

About New Orleans

Hello readers. I want to take a minute and give you all my impressions of New Orleans, the city which I’ve called home for the past three years. First, you may be wondering why I came here; after all, I am a Yankee, born and raised in Massachusetts and educated in Connecticut. Well, there were two reasons. The first, which is what compelled me to apply to Tulane Law School, was Hurricane Katrina. When Katrina overtopped the levies and flooded New Orleans, I was a in the Peace Corps in Romania. It was from my vantage point behind the Carpathians that I viewed the utter destruction of an American city on my little 13″ TV. The images were shocking and sad. So I applied to Tulane. Fast forward and I find that not only does Tulane accept me but it offers a generous financial aid package. Deal done. When I returned from abroad, I spent a well-advised year re-adjusting in Lewiston, Maine. While I enjoyed my time in Maine, it simply could not prepare me for the reality that was New Orleans.

NOLA is a complicated city; once a gem of the South, it had been pretty much left to decay since the 1970s. Why? Plenty of reasons, the most important of which is race. While New Orleans was always an outlier in the Deep South, it too suffered from the pervasive racism that was so engrained south of the Mason-Dixon line. While the degree of the segregation here was mitigated by the Creoles and through the unifying culture of music, NOLA was a segregated city. In the parts of town that were, and still are, historically black, you’ll find, curiously enough, large Synagogues. NOLA was always a mercantile city, an important port for the slave trade, cotton trade, and sugar trade. Trade means business, which is what propelled New Orleans forward. Streetcar tracks were laid, swamps were cleared for homes, and the city grew, from the river (the French Quarter) to Carrolton to Lake Ponchatrain. Thanks to its strategic location near the foot of the Mississippi River, New Orleans was a bustling metropolis, with connections to South America and the American interior.

But as I mentioned, New Orleans was largely segregated. While no doubt our modern sensibilities recoil at this fact, it was not particularly scandalous at the time. After the abolition of slavery, strong black communities grew and thrived here. Treme, for those of you who enjoy the HBO show, has always been a historically black neighborhood. Ponchatrain Park and New Orleans East were also havens for an emergent black middle class. While the city remained segregated, it was strong. Good transportation networks linked communities and local businesses thrived in myriad commercial districts. The synagogues I mentioned earlier, in black neighborhoods, show the historic connections between the black and Jewish communities; both were somewhat unwelcome outsiders to the conventional power structure and both grew together.

But America was moving on, and the era of officially-sanctioned racial discrimination was coming to an end. Ruby Bridges, as a young girl, was the first to integrate the segregated New Orleans public schools. Pictures from her historic first day at school show a mob of angry whites protesting her entry into their school; in fact, after she was admitted to the school, almost all of the white families withdrew their children, lest they associate with their colored peers. And like that, the noble goal of integration led to the city’s great decline. White racists decided it best to move out of the city, to the communities outside of urban Orleans Parish to Metarie, Kenner, and across the lake to Mandeville. The white flight devastated the city, depriving it of tax revenue and depopulating its urban core. While New Orleans had been integrated, at least in theory, the effects led to another type of segregation, this one more invidious.

Moon Landrieu served as the mayor of New Orleans from 1970 – 1978. He was a progressive, and seeing the writing on the wall, was a pioneer in desegregating the city government. For the first time, under his administration, prominent blacks were elected and appointed to positions of power within the city government. Moon Landrieu encouraged the kind of desegregation that New Orleans badly needed. While Moon’s work was much appreciated by the majority of the black population of New Orleans, he set the stage for his succession by New Orleans’ first black mayor, Dutch Morial. Dutch served as mayor of New Orleans from the mid-1970s to the mid-1980s. Morial, unlike Landrieu, was a widely disliked figure. Though well aware of the racial injustices that had shaped the city, his self-aggrandising behavior caused great friction within the city and marked New Orleans’ slide away from the limelight. Morial’s commitment to affirmative action dramatically changed the racial composition of New Orleans’ civil service.

The three mayors following Dutch Morial were all black, and all of them continued the affirmative action policies espoused by the first Morial. Here it is crucial to note that all these black mayors received the overwhelming support of New Orleans’ elite, the Uptown crowd. These white Republicans were more than ready to support any “pro-business” mayor and were shrewd enough to realize that the city’s demographics now weighed heavily in favor of its black population. While the white power structure remained a potent force in the city, they were outnumbered by the city’s black citizens. Therefore, the succession of black mayors, culminating in C. Ray Nagin, were all supported not only by the majority of the city’s black population, but also by the city’s white Republican power structure.

Unfortunately, New Orleans went the way of most American cities in the 1970s and 1980s. Declining revenue led to cutbacks on city services and deferred maintenance on some of the city’s jewels, such as public parks and schools. While this was occurring, a new segregation was taking root; whites either left the city, or, if they remained, sent their children to a parallel universe comprised of private schools. That which had been integrated was abandoned, from neighborhood schools to public pools. This wholesale “opt-out” of public/civic life rendered the black administrations unable to maintain the quality of life for its citizens. Schools began to go downhill, playgrounds were not maintained, the roads fell apart, streetlights were not replaced, and the city became very violent.

While much of the blame for this sad situation rightfully rested on the backs of the racist whites who refused to integrate, much of the resulting decay was accelerated by corruption within the black community. Because blacks had been wronged for so long, the black administrations sought to rectify this by turning the tables and creating a majority-black city workforce. While this policy no doubt allowed many qualified individuals to obtain positions that would have once been foreclosed to them, it also encouraged race-based hiring decisions that did not necessarily seek to recruit the most qualified candidates. The result of this dysfunction is epitomized by the creation of certain institutions, such as the Progressive Democrats, a group of black politicians that played on the majority black population’s legitimate fears of racism. Bill Jefferson, known as “Dollar Bill” for his notorious corruption that ended with Federal agents finding wads of money secreted away in his freezer, is perhaps the most egregious offender. Race was used as a factor to award all sorts of city contracts. The result was widespread corruption. Those who suffered the most were, as usual, the most vulnerable; the youth. Corruption within the New Orleans Public Schools was rampant. Corrupt black politicians and contractors managed to rip off fellow blacks while harping on the perils of control by outsiders. This unfortunate situation led the city to be driven not by best practices, but by fear-based race mongering.

During this time, an attitude developed within New Orleans’ black community which sought to protect its own over all, even common sense. Victimization became the norm, and hatred of the white oppressor rose to the forefront. These emotions were not without basis. As mentioned previously, many whites were openly hostile of the black community. Nonetheless, certain black political operators, including the city’s mayors, used this situation for their own advantage. Instead of seeking to unite a city fractured by racial and political turmoil, they counted on their demographic advantage by pandering to their constituents’ worst fears. The result was a city decimated, depopulated and ever more segregated. Nowhere was this more evident than in the New Orleans Public Schools; even today, most of the city’s majority white elite shun the public schools in favor of expensive private schools.

Even more invidious than the physical segregation was the mental segregation. Blacks and whites increasingly saw their needs as divergent. The white minority loyal to NOLA hunkered down in certain neighborhoods while the black population increasingly defined themselves by their solidarity with one another. The result of this cognitive divergence led to a cycle of close-mindedness and self-perptuating stereotypes. The corrupt from both communities exacerbated these tensions, and to this day, New Orleans remains a highly segregated city.

Then came Hurricane Katrina. The results, as we all know too well, were disastrous. Not only was the city vulnerable due to shortcomings in the Army Corps of Engineers’ flood protection, but also its response was hamstrung by the serious structural defects outlined above. Public busses abandoned at the depot sat there and flooded instead of being utilized to evacuate needy citizens. Ray Nagin got on TV and cried, and while we all cried with him at the time, we’d later learn that he himself was largely responsible for the utter ineptitude shown in the wake of the crisis.

Somehow, however, Ray Nagin managed to be a hero. He was re-elected in 2006 and tasked with the mandate of rebuilding the city. However, he was not up to the task. As a recent report issued by a disinterested consultant concluded; New Orleans under the tenure of Ray Nagin was the most corrupt and mismanaged city in the United States. When I arrived in New Orleans in the summer of 2008, three years after Katrina, the city looked like it had been hit just a month or a year ago. Neighborhoods were destroyed; homes lay wrecked; the streets were a mess. Yet everywhere there were signs promising recovery. At shuttered libraries and damaged schools, signs from the private contractor MWH declared “Recovery In Progress.” But there was no progress. For those first two years, the signs declaring progress was all the progress one could see. As has now been revealed by the consultants’ report, this progress was stymied by the blatant corruption and sheer ineptitude of not only the Nagin administration but also a vindictive contra-power structure that emphasized the color of one’s skin over the quality of one’s character.

So a great opportunity to rebuild a once-great city was squandered. Most of New Orleans’ poorer neighborhoods remain devastated to this day. Blighted properties abound and sub-standard schools limp forward, with the hope that charter school management will salvage generations of ignorance, illiteracy and race-hatred. Public services are non-existant, the police force is out of control, and the urban decay continues.

Yet I’d like to conclude this post on a positive note. In 2010, Mitch Landrieu was elected mayor of New Orleans. His election was both shocking and familiar. It was shocking because Mitch is the first white mayor of New Orleans since his father held that position in the 1970s. It is also familiar because his election, like that of Marc Morial in 1994, showcases how loyal NOLA is to its native sons. Mitch, however, won fair and square, amidst a sea of well qualified black opponents. Since his election, those big signs trumpeting “Recovery in Progress” have been taken down. In their place you will see work crews out working, on the city’s public libraries, schools and streets. Mitch has also embraced the nascent people-power movement that is finally finding its way down here by organizing community meetings and “fight the blight” campaigns. Mayor Landrieu has endorsed the findings of both the consultant hired to evaluate City Hall and the the Department of Justice’s report on the New Orleans Police Department. Both of these reports are stark; utter incompetence at City Hall, which culminated under the administration of C. Ray Nagin, and blatant violations of the US Constitution by the NOPD. Now that these reports have been released, Mayor Landrieu can begin to take the drastic action that must be taken to re-orient this city.

This re-orientation will not be easy. As I’ve mentioned, the racial tensions here are like none I’ve ever before seen. Attitudes, on both sides of the divide, will need to be changed. Ineffective managers and workers will need to be let go. Respect for the rule of law, both by the police and citizens, must be inculcated. In short, inertia must be overcome.

This task will not be easy, but for the first time in a long time, New Orleans has been forced to look at itself for what it really is. A fun, artistic place graced by musical fancy; yes. But now too a lawless and segregated place with major attitude problems. And no, the two are not co-dependent. Indeed, NOLA may yet shine with a police force committed to the rule of law, an education system committed to excellence, and a city government committed to innovation. New Orleanians have been given one last chance; having overcome Mother Nature, it is now themselves that they must confront.

Madison, WI

Hey there, just wanted to put out a quick update about the protests going on in Madison, WI. First, I support the right of public workers to unionize. Period. Second, I wonder whether comments like this will come back to burn Republicans:

“The people who are not around the Capitol square are with us,” said Rep. Robin Vos, a Republican from Rochester and co-chair of the Legislature’s budget committee. “They may have a bunch around the square, but we’ve got the rest on our side.”

Isn’t that what Mubarak’s people said in the earlier days of the uprising in Egypt?

Comments such as these should put all progressives in Wisconsin who are not out there protesting on notice. Don’t let them get away with this. Go protest if you can, or write these Republican politicians to let them know that while you may not be there, you are not “on their side.”

Which side are you on?

Dear Mr. President

You have recently indicated your willingness to extend tax breaks for the richest Americans in this time of great financial distress. In the spirit of bi-partisanship, as you so often trumpet, I’d like to remind you of some words from Theodore Roosevelt:

It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself for a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.

Are you a cold and timid soul, Mr. President?

For shame.