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 $223,500.
As a percentage of total income, the middle 20%'s share has fallen from 16% to 15%. For the top 20%, it has grown from 45% to 51%. Similar measures of wealth tell the same story.
This helps explain why the rich are bearing a greater and greater share of the federal tax burden, despite policy changes like the Bush tax cuts. According to the Congressional Budget Office, in 2009 the middle 20% paid 9.4% of all federal taxes. The top 20% paid nearly 68%. In 1979, these burdens were 14% and 55%, respectively.
Because of the progressivity of the income tax code, the upper-income household share of taxes exceeds its share of income. And in fact, because of growing inequality and the higher average tax rates paid by wealthy U.S. households, the Organisation for Economic Co-Operation and Development says the United States still has the most progressive tax system in the world.
VIDEO ON MSN MONEY
Do any of you remember NAFTA? If not, you should. And you should all search the Internet about it. Ross Perot was correct...all we would see if that "great sucking sound" of USA jobs going overseas.
End of comment.
So Anthony, stop the BULL$HIT and tell it like it is! At least your closer to the TRUTH than exlax ETCH-A-SKETCH and his "president", religious HYPOCRITE, LIAR, GUNSLINGER, MAMA'S BOY Ryan!!
Capitalism DOESN'T work, HAS NEVER worked and WILL NEVER WORK for the MAJORITY! Their UNCONTROLLED CAPITALISTIC GREED won't let it and there is NO END IN SIGHT!!
The majority of the people that Romney are talking about are the "freeloaders" that are sponging off the welfare/food stamp system. Not the low income people, those on social security and others. There are TOO many people that are just plain lazy and will take welfare and food stamps over working any day. Remember the saying "welfare breeds welfare". There are a lot of military that get food stamps, but they also pay taxes. That is because their salaries are so low they can't make ends meet without them. Yet obozzo criticizes the military for everything they do, yet he doesn't hesitate to "use" them and send them into harms way. There are a lot of people out there that are low income that need the extra assistance of food stamps, yet at the same token there are more illegals, blacks, hispanics, other foreign immigrants here that use our food stamp and welfare system - yet have enough money to buy expensive electronics like IPADS, IPODS, tablets, expensive phones. I know because my daughter works for a doctor and she sees immigrants from Russia, Poland, and other European and middle eastern countries that are here - drawing state aid but come in with all types of fancy electronics, where she is working hard trying to raise a family and can only afford the cheap Prepaid phones. So where is the justice.
My sister is needing food stamps to help until she can get another job after being layed off - but because she doesn't have a CERTIFIED copy of her birth certificate - she doesn't qualify - but these illegal "scumbags" come over here and get whatever they want with NO PAPERWORK in any way. So obozzo - why don't you leave and go to the middle east where your heart is and get the H*** out of our country. And take your brood with you.
For the entire x military who due to their injuries well hell they should be accountable for their lives whats wrong with them. The right is so hung up on not paying taxes they can’t see past their greedy little fingers. if mittens wants to succeed he needs to explain why the off sure accounts I am guessing so he does not have to pay tax on it, how many of them are doing that. Wake the hell people the rich have more money now under Obama than ever. But no jobs why because they want the right wing wacko's in place so they are guarantee to make a profit. As far as I know there was never a guarantee it worked or didn't better practice saying yes master.
Just saying that the people that replied to my previous post about we need a good godly leader that knows alittle about business reread it because i never went towards one or the other nor Mitt or Obama.I was clearly making a statement.
It is utterly rediculous to talk about raising taxes until you reduce your spending. Is that how you handle your budget? If you are spending your money on all kinds of extra things and you find at the end of every month that you can't pay for the things you really need to pay for, do you keep getting part-time jobs to bring your income up or do you cut your spending? I cannot believe the logic here. And how can you, with a straight face, even pretend that Obama wants to fix our economy? The highest deficit in any year for Bush was $400 billion (and that was with 2 wars going). The lowest yearly deficit Obama has run has been $1.1 trillion. He believes in redistribution and bringing our country down to a 2nd or 3rd world class status His ultimate goal is to redistribute America's weatlh to the rest of the world because of his attitude toward our nation that we have raped and pilleged the world's poor nations so that we could enjoy the excesses. You don't even know Obama.
What a ridiculous argument; you screw the US manufacturing sector by allowing all the jobs to be shipped overseas, you make the rich get richer by a lot, and then you complain that they have to pay a bigger percent of a much bigger total? Guess what? I'll let them pay less when the amount they make is only 13 times their average employee (like it used to be) instead of 700 times (like it is now). I actually make decent money...and when my taxes went up under Bill, I made way more on the stock market so I didn't care!
Is this Class Warfare? You're darn right - you can't take the whole apple and complain about having to give the core to the rest of the world. And Bill Clinton is just as complicit in this as any Republican is - he just was smart enough to know that he had to increase taxes a bit to balance the budget - a concept that has escaped ALL the Republicans in power, and isn't even possible for Obama to fix at this point.
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