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
If you've got a business, you didn't build that. Somebody else made that happen."
Another quote revealing how obama views the successful amoung us.
You mean like-- financial corruption and collusion, blockade of able workers from gainful employment at family-sustaining wages, offshoring of jobs, importing of goods we used to make here and political control and manipulation through Super PACs and quasi-charities 501(c)(4) funded by the Koches and Karl Rove?
I'll keep whining, thank you. By the way... check those JOB RECOVERY stats lately? No one has a pulse. The President doesn't lord over businesses but Congress does. They worked just 12 days during the second half of 2012. Record numbers have given up looking. Do you think they are lazy or exhausted. GET YOUR HEAD OUT OF THE SAND.
Romney is basically correct, it's just that people don't like the insult. I know of people who own their own business, make more money than me, but play the system and pay no taxes. I also know of other people that buy low lifes' food stamps for half their value. The buyer goes out and buys (cheap) groceries and the low life goes out with the cash he got for food stamps and buys things other than food with the cash he got for the food stamps.
People are just playing the government and therefore are playing ME - The Tax Payer!!!
I never asked for hand outs, I drained my own savings to keep a float. I was not "dependent upon government", i did feel like I was a victim of a bad economy, but so was a lot of other businesses. I never thought that I was "entitled to health care, to food, to housing, to you-name-it.".
Romney cannot understand the working man. He has never had to live from paycheck to paycheck. He owns 6 houses, all of them worth more than the average American makes in a year, some of them worth more than the average American makes in a lifetime. He is spending $55,000 to get an elevator to park his cars!
$2000 is like $20 to him, he cannot comprehend how much money that is to the average joe. For me, that is almost 3 months of house payments.
I have always voted republican, but I cannot support him. He is to out of touch, he says what ever the current crowd wants to hear, and most important, how can I support somebody that thinks I am a deadbeat.
when did republicans begin sharing the notes from their Clan rally's. I mean fundraisers.
"And it's not surprising then they get bitter, they cling to guns or religion or antipathy toward people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."
one of obama's quotes about his views on the 53%
hell'ofalot more inflamatory than Mitt
This article and others like it somehow imply that state, FICA and other local taxes are good enough. The top wage earners also pay all these taxes PLUS the big Fed tax Bill. Social security and medicare payroll taxes are already spent on those programs.
My question is this.... why does the top tier tax bracket start at $250k? Why aren't there additional tax brackets for people earning $2.5 million or $25 million? A married couple with two wage earners at $125k each are doing well, but not the same as the CEO's of GE, Target etc who are making tens of millions of dollars.
And, unfortunately, Mitt's 47% is probably close.... the truth hurts.
There's only one group of HATERS here......The same bunch that hates Bush also hates Romney.
He was not my first choice during the primaries but right now if he was caught in pink tights and black leather underwear wearing a batman mask holding a whip standing over a trussed up LasVegas hooker I'd still pick him over this muslim S0B we got right now.
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