9/26/2012 1:55 PM ET|
Why Romney's 47% matters so much
Presidential contender Mitt Romney's dismissal of 'dependent' Americans who don't pay income taxes actually highlights our most critical need: more jobs that pay enough to make ends meet.
Mitt Romney speaks to the delegation at the 2012 Republican National Convention
Mitt Romney's 47% problem just won't go away. A week after Mother Jones magazine released a spy-cam video of the GOP contender writing off the 47% of the population that doesn't pay federal income tax, the politicos are still buzzing about it.
Romney's comments were incendiary. He lamented that nearly half of Americans are "dependent upon government" and "believe that they are victims" and that "they are entitled to health care, to food, to housing, to you-name-it." He added that there was nothing he could do to "convince them they should take personal responsibility and care for their lives."
Coming from a guy who could moonlight as petrified wood and is routinely criticized for lack of conviction -- and for not releasing much of his own tax data -- it was a rare glimpse of honest opinion. But it also touched raw nerves among members of both ideological extremes.
On the left, it played into their fears that Romney wants to cut benefits and raise taxes on seniors, the poor and the middle class. On the right, it echoed worries that a tyranny of the majority wants to increase government largesse at the expense of a narrowing base of wealthy taxpayers.
Both sides' fears are valid, to some extent. And Romney's comment about the 47% ignores important details, such as the fact that the working families who make up a large portion of those not paying federal income taxes do pay payroll, state and local taxes.
Here's the thing: This election isn't about tax cheats and welfare queens, who are just a tiny part of the 47%.
In fact, Romney's poor choice of words, and the political fallout that followed, highlight the real problems that have so many Americans on aid. A lack of economic growth, increasing inequality, a narrowing tax base and the resulting growth in benefit spending have pitted American against American. Here's a look at what's at stake.
More are receiving aid
Both sides make some valid points.
Research from Sen. Jeff Sessions, R-Ala., ranking member of the Senate Budget Committee, shows that more than 107 million Americans are getting some form of government welfare. Add the seniors on Medicare and the 22 million government employees (at federal, state and local levels), and you suddenly get a very big number: More than 165 million Americans are at least partially dependent upon federal benefits, a clear majority of the 308 million Americans counted in the 2010 Census.
Consider the increase in people who have received federal disability support since the economy tanked in 2007. As of January, 8.5 million individuals (plus 2 million spouses and children) were receiving these payments. As a share of the population aged 25 to 64, the total has increased to 5.3%, from 4.5% when the recession started, at a total cost of around $200 billion a year -- more than the budgets of the departments of Commerce, Energy, Homeland Security, Interior, Justice and State combined.
This is puzzling. More-advanced health care and an increasingly service-based economy should result in fewer debilitating injuries. Moreover, a weaker economy means fewer people are working, which should mean fewer on-the-job injuries. Research by David Autor and Mark Duggan (.pdf file) suggests that disability benefits "appear in practice to function like a nonemployability insurance program . . . rather than (primarily) as an insurance program for medical impairment."
There are other problems on the spending side, too, especially out-of-control inflation of health care costs and underfunding of Medicare and Medicaid. In fact, an official from the People's Bank of China commented recently that if U.S. debt measures included entitlement liabilities -- or the promises that haven't been funded with payroll taxes -- our ratio of debt to gross domestic product would be roughly twice as large as it is now, at around $31 trillion.
Not enough to go around
On the other hand, it's also true that the benefits of our economy are increasingly accruing to the upper crust while the rest struggle with stagnant wages, lower home values and higher costs of living. Many middle-income Americans are also missing out on the rebounding stock market, a rare bright spot in the current economy, since many investors have been pulling money out of equities and putting it into bonds throughout the recovery. The market has recovered, but a lot of nest eggs have not.
You can see the growing wealth disparity in the income distribution numbers shown in the chart below. Since 1979, low- and middle-class incomes have basically stagnated in inflation-adjusted terms.
In 2009 dollars, the middle 20% of households has seen income rise from $53,100 in 1979 to $64,300 in 2009. For the top 20%, it has jumped from $136,200 to $223,500.
As a percentage of total income, the middle 20%'s share has fallen from 16% to 15%. For the top 20%, it has grown from 45% to 51%. Similar measures of wealth tell the same story.
This helps explain why the rich are bearing a greater and greater share of the federal tax burden, despite policy changes like the Bush tax cuts. According to the Congressional Budget Office, in 2009 the middle 20% paid 9.4% of all federal taxes. The top 20% paid nearly 68%. In 1979, these burdens were 14% and 55%, respectively.
Because of the progressivity of the income tax code, the upper-income household share of taxes exceeds its share of income. And in fact, because of growing inequality and the higher average tax rates paid by wealthy U.S. households, the Organisation for Economic Co-Operation and Development says the United States still has the most progressive tax system in the world.
VIDEO ON MSN MONEY
"Romney represents what America is all about."
Which is-- born rich, attended private schools, bullied other kids, skipped out on military service and attended college where he got a free ticket to politics and paper pushing roles. He spent his whole working age life milking the excess of the Boomer Era and getting around rules meant to stop abuse. He ran a cardboard company that chop-shopped businesses, terminated jobs, sold-off assets and put windfall profits in the hands of others just like him. He used offshore accounts to evade taxes and just last year- donated to charities 501(c)(4) shells owned by the Koches and Karl Rove that used those monies to pay for mudslinging ads. Neither Romney OR those so-called charities paid taxes for those self-serving benefits.
Romney IS NOT what America is all about-- he's what America needs OUT of America wearing a barrel and resigned to finishing life in a sweatshop since he likes giving our jobs away to them. If you are a senior and think Romney is our best, you are an ANTI-American. You got yours and we have to live with that? NOT.
I am very tired of all the give away programs we pay tax's all our lifes and deserve social security or a payout or get disabled and deserve subsistence but there is at least 50 percent of them on a giveaway program that never payed a dime, it has to stop or the rest of the tax payers need to rebel and do it on our own to fix the problem I have payed tax's for 43 years and have never taken a dime in give away programs get a life and a job. vote Romney
There is no doubt in my mind that 47% of the population are guaranteed votes for Obama whether they pay taxes or not. You can expect 90% of all African Americans and 90% of all Jews to vote for Obama,85% of all Latinos for Obama,70% of all Asians for Obama, 100% of all illegal aliens for Obama, 99% of all dead voters for Obama, and 100% of all welfare manipulators to vote for Obama. Romney spoke the truth he just misstated the tax bit.
Why does it insult anybody. LIving in Ca, this state is the welfare capital of the world. People here have made it a career to be on welfare all their life. Like Pelosi had said several times on TV, its cheaper to write checks than put them to work. Obama never campaigns in central LA when he's here on all his Hollywood Fund Raisers, because he knows they will all vote for him because of the free government lifestyle they all live. He himself does not waste his time going into the getto, because he does not care what happens to all these people. But they will still vote for him and continute to make Welfare a carreer. The Dems have destroyed this one time great state and they do not care.
So Romney wants to reform welfare and try to get these people to work again and have some selfrespect for themselfs and they get affended. The people who have lost jobs should be the ones we help, not keep giving Welfare mom more help because she's on baby #5 and gets more money, foodstamps and health care. This is a sad country when a candidate wants to reform welfare and get people back to work and gets attacted for it. If this government wants to keep giving giving to these people, than maybe they should give the hard working middle class a check everymonth for working and paying taxes, so we can feel like this government cares about middle class working people. The middle class does not get any help at all, but we are gonna pay for taxes for a government run Obama Care another Dem welfare health care program because the first one is so screwed up.
How can anyone with a rational mind vote for someone who did not honor his last election promises? Spent more money than any president with the congress & senate majority in his corner. Did Barak Obama become a chronic spender? Too many trips to Hawaii. A movie star instead of a president helping the working class who need decent paying jobs. Who is going to pay back the money on his fed charge account? Who is going to tell the 47% we
ran out of money? Take a good look at Greece & Spain today. The entitlement people broke them. It is scary. Now they will need to work like those who supported them for years. Time to riot? If they look in the mirror they will see the problem. Maybe Margret Thatcher and her" you eventually run out of others people money" will sink in on socialism. He needs to tell the 47% his credit is maxed out with tax payers and we both need a job.
They're not all rich and poor. The biggest violators are Middle Class.
A week after Mother Jones magazine released a spy-cam video of the GOP contender Romney writing off the 47% of the population that doesn't pay federal income tax, the politicos are still buzzing about it. Romney's comments were incendiary. "He lamented that nearly half of Americans are "dependent upon government" and "believe that they are victims" and that "they are entitled to health care, to food, to housing, to you-name-it." "He added that there was nothing he could do to "convince them they should take personal responsibility and care for their lives." Romney is doing everything he can to see that he doesn't get elected president. Alienating the working tax paying middle class is just plain stupid. Middle class working and working single mothers working hard to raise a family remember on election day.
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