Colbert Goes There

The Colbert Report last night featured one of the most subversive and brutally honest half-hours of television in recent memory. It's a sad commentary that it takes a comedy program to provide more news and information on one of the most critical subjects in American politics that anywhere else in our broken media and political landscape, but I'll take this argument wherever I can get it. Colbert spent two full segments of his show focusing on the Citizens United Supreme Court case, which could - and probably will - lead to deregulating the entire campaign finance process, allowing corporations to give unlimited money to any candidate of their choosing. This severe step backwards with enormous implications has been barely discussed in any traditional media setting, but Colbert went after it vigorously, discussing the consequences and even the flawed legal rationale, a true third rail of American politics, corporate personhood. Colbert explained that the 1886 case (Santa Clara v. Southern Pacific Railroad) that conferred 14th Amendment equal protection rights onto corporations wasn't even in the original ruling. But when the Chief Justice made an off-hand comment that the Court wouldn't hear an argument on whether the 14th Amendment applied to these corporations (saying, "We are all of the opinion that it does"), the court reporter wrote it into the ruling opinion, and the precedent has held ever since. And that reporter of the Supreme Court didn't only have ties to the railroad barons, he used to run one.

These are subjects you just never hear about in the American media, precisely because the American media is owned by giant multinational corporations, who benefit from the corporate personhood rule and would stand to benefit more from deregulating elections so they could use their "speech" to buy candidates and fund their own with unlimited resources. And despite being on a Viacom-owned network, Colbert says, skewering the immorality and psychopathology of the corporation, "Corporations are legally people... they do everything people do, except breathe, die, and go to jail for dumping 1.3 million pounds of PCBs into the Hudson River."

There's some backstory to that remark. Colbert actually worked with Robert Smigel on the "TV Funhouse" bits from Saturday Night Live (he's one-half of the Ambiguously Gay Duo), including the infamous episode from March 1998, Conspiracy Theory Rock. Here are some of the actual lyrics (remember this aired, albeit one time, on NBC, whose parent company is General Electric):

It's a media-opoly
A media-opoly.
The whole media is controlled by a few corporations
thanks to deregulation by the FCC.

You mean Disney, Fox, WestingHouse, and good ol GE?
They own networks from CBS to CNBC.
They can use them to say whatever they please,
and put down the opinions of any one who disagrees.
Or stuff about PCB's.

What are PCB's?
They come from power plants built by WestingHouse and GE.
They can give you lots of cancer that can hurt your body,
but on network TV, you rarely hear anything bad about the nuclear industry [...]

But the bigshots don't care.
They're all sitting pretty.
Thanks to corporate welfare.
What's that now?

They get billions in subsidies
from the government.
It's supposed to create jobs,
but that's not how it's spent.

They pulled this cartoon from the rerun broadcasts and it never aired again.

Colbert didn't just provide this lesson in corporate control of government in his "The Word" segment, but then had Jeffrey Toobin on to explain how the expected Supreme Court ruling would impact elections:

COLBERT: If this goes through, if they decide in favor of the corporations here, what's going to happen to elections?

TOOBIN: Well, they will be essentially deregulated. Corporations will be allowed to give money, corporations will be allowed to broadcast programs that are in favor of one side or another, it'll basically be no more rules about what corporations can do in political campaigns.

COLBERT: Now when I ran for President in 2008, as the Hail to the Cheese Doritos Stephen Colbert campaign for President, I was told that I actually couldn't do that, that I was breaking federal election law by being sponsored by that corporation. But if this goes through, if this court case, if they win, does that mean that I retroactively won the election?

TOOBIN: I don't think it means that.

COLBERT: But could you do that? Could I actually just wear a NASCAR suit and just have logos all over me and run for President as the sort of Gatorade Thirst for Justice campaign for President?

TOOBIN: You definitely could. No question.

COLBERT: What does it mean to individual donation? A corporation, as a person, gets to give any amount of money, but I as a person can give only $2,500.

TOOBIN: That's what's potentially the next legal challenge. Because if giving money is a form of speech, as the Court has held at various times, you can't prohibit a company from giving money. And then presumably the next step would be that you couldn't have limits on how much individuals could give either. That's the potential implication of this decision.

COLBERT: So right now, corporations would actually have more power as people than people, until people catch up with corporations.

Here's the point. Stephen Colbert, a comedian, devoted his show to arcane campaign finance law to show the power of corporations to engage in a hostile takeover of government and extract virtually any law they choose, with no consequences for any wrongdoing. Consequently, the self-described populists on the right - aided by a hapless political class - are working their minions into a frenzy over some unidentified alien "other" coming to take your hard-earned tax dollars, without the pernicious influence of rapacious corporations ever entering into it. Anonymous Liberal had a great post on this yesterday.

But even if you take these film-makers at face value and assume the worst, the reality is that ACORN has thousands of employees and the vast majority of them spend their days trying to help poor people through perfectly legal means (and receive very little compensation for doing so). Even before yesterday's Senate vote, the amount of federal money that went to ACORN was very small. This is a relatively insignificant organization in the grand scheme of things, but it's an organization that has unquestionably fought over the years to improve the lives of the less fortunate in this country.

That the GOP and its conservative supporters would single out this particular organization for such intense demonization is telling. In September of last year, the entire world came perilously close to complete financial catastrophe. We're still not out of the woods and we're deep within one of the worst recessions in U.S. history. This situation was brought about by the recklessness and greed of our banks and financial institutions, most of which had to be bailed out at enormous cost to the American taxpayer (exponentially more than all of the tax dollars given to ACORN over the years). The people who brought about this near catastrophe, for the most, profited immensely from it. These very same institutions, propped up by the American taxpayer, are once again raking in large profits.

But rather than focus their anger on these folks, conservatives choose to go after an organization composed almost entirely of low-paid community organizers, an organization that could never hope to have even a small fraction of the clout or the ability to affect the overall direction of the country that Wall Street bankers have. ACORN's relative lack of political influence was on full display yesterday, when the U.S. Senate (in which Democrats have a supermajority) not only entertained a vote to defund ACORN, but approved it by a huge margin (with only seven Democrats opposing).

Absolutely. Set aside the fact that the Glenn Becks of the world are smearing community organizations that help low-income folks, often at variance with the facts. It's the intensity of focus from the privileged on the poor, the disenfranchised, and yes, minorities, when measured against the influence and giant multinational corporations who are on the verge of buying American elections, that strikes such a discordant note. But not for the hucksters pushing the smears and the paranoids and racists who lap it up. They want to believe that black people have the power in America and they're coming for you and your children, so they can ignore the fact that they've been duped - that the ruling class has controlled the political machinery to keep them underfoot, and handed them welfare queens and illegal immigrants and all sorts of other members of the "lower orders" on which they can focus their attention. This boils down to a largely homogenous class of people not wanting their money, or anything, really, to go to people who don't look like them. "Illegals" or the undeserving poor need not apply. It's been a time-tested tactic going back to Richard Nixon's Southern strategy. And it allows a majority ruling class of whites, terrified that their stranglehold on the country is slipping away, to pretend that a race war is coming when it's the class war grinding them into the dust.

Matt Taibbi called it the peasant mentality. The powers that be get the lower classes to fight amongst themselves and split along ideological or tribal or other identifying lines, leaving room for them to prosper. For Republicans, that means painting their opponents, who are less homogenous and are made up of so-called "outsiders" of society - the poor, the disenfranchised, African-Americans, Hispanics, gays and lesbians, etc. - as undeserving of really anything; and painting the leaders of that party - whether it be a Governor from Arkansas or a war hero from Massachusetts or South Dakota or a multicultural community organizer from Illinois - as the head of a movement to destroy American culture. That's really basically it.

And all the while, both sides in DC studiously ignore the near-complete capture of the country by companies seeking only profit, and the corporate-owned media just follows the manufactured drama and goes mute on the critical stuff, such that it takes a comedian to shine a spotlight on this unexamined corner.

The Other

All of the health care bills offer their subsidies to those who need help affording coverage through tax credits. This is seen as completely normal and a cost-effective way to provide such subsidies, since it only requires a new line item on the tax form instead of some new structure for paying out credits. But it actually hurts people who have to lay out money for health insurance and then wait all year until April to get their money back. In addition, some groups, like nonprofits, don't pay taxes. But they also provide health care for their workers, which means they cannot benefit from any tax credits for small businesses to help with affordability in the plan.

The main bill in the House would award a tax credit to small businesses that provide their employees with health insurance — but nonprofits do not pay income taxes and thus would not benefit.

“Why should employees of nonprofits be treated worse than employees of for-profit businesses?” said Jonathan A. Small, government affairs consultant at the Nonprofit Coordinating Committee of New York.

Nonprofit groups were hoping that the president would include them in his speech to Congress on Wednesday, but instead he mentioned only “families, businesses and government.”

“There was nothing in that much-repeated trilogy of those needing help that spoke to nonprofits,” said Lester M. Salamon, director of the Center for Civil Society Studies at Johns Hopkins University.

This sounds like a nitpicky point, except that nonprofits are collectively the fourth-largest employer in America.

And there are dozens of little inequities like this. We've heard about the canceling of all individual health insurance, essentially, for undocumented immigrants, even when they have the ability to pay with their own money. Then there's the issue of nurse home care for the children of the poor, a proven crime reduction strategy that has run aground amid shouts of "billions for babysitters" and the like.

It's part and parcel of a long-running strategy by the right to cry martyrdom for their tax dollars being given to the undefined "other." It doesn't matter if a government program reduces crime or saves money or just makes moral sense. This boils down to a largely homogenous Republican Party not wanting their money to go to people who don't look like them or don't act like them or don't work like them. "Illegals" or the undeserving poor or "do-gooders" in the nonprofit sector need not apply. It's been a time-tested tactic going back to Richard Nixon's Southern strategy.

This is the paradox of the tea-party movement and other right-wing protests fueled by genuine citizen anger and fear. It is true that the federal government embraces redistributive policies and that middle-class income is seized in order that "someone else benefits." But so obviously, that "someone else" who is benefiting is not the poor and lower classes -- who continue to get poorer as the numbers living below the poverty line expand and the rich-poor gap grows in the U.S. to unprecedented proportions. The "someone else" that is benefiting from Washington policies are -- as usual -- the super-rich, the tiny number of huge corporations which literally own and control the Government. The premise of these citizen protests is not wrong: Washington politicians are in thrall to special interests and are, in essence, corruptly stealing the country's economic security in order to provide increasing benefits to a small and undeserving minority. But the "minority" here isn't what Fox News means by that term, but is the tiny sliver of corporate power which literally writes our laws and, in every case, ends up benefiting [...]

What's really happening with these protests is that the genuine rage and not unreasonable economic insecurity of these citizens is being stoked, exploited, distorted and manipulated by movement leaders for entirely different ends. The people who are leading them -- Rush Limbaugh, the Murdoch-owned Fox News, Glenn Beck, business-dominated organizations of the type led by Dick Armey -- are cultural warriors above everything else. They're all in a far different socioeconomic position than the "middle-income Americans" whose anger they're ostensibly representing. Their principal preoccupation is their cultural contempt for various groups (illegal immigrants, the "undeserving" poor, liberals) and their desire to preserve the status quo whereby the prime beneficiaries of government policies remain themselves: the super rich and the interests that control Washington. It's certainly true that many of these protesters are driven by the standard right-wing cultural issues which have long shaped that movement -- social issues, religious fears, cultural and racial divisions, and hatred for "liberals" as Communist-Muslim-Terrorist-lovers. For many, all of that is intensified by the humiliation of being completely thrown out of power, at the hands of the first black President. But much of it is fueled by the pillaging of the corporations and Wall St. interests which own their government.

Matt Taibbi called it the peasant mentality. The powers that be get the lower classes to fight amongst themselves and split along ideological or tribal or other identifying lines, leaving room for them to prosper. For Republicans, that means painting their opponents, who are less homogenous and are made up of so-called "outsiders" of society - the poor, the disenfranchised, African-Americans, Hispanics, gays and lesbians, etc. - as undeserving of really anything; and painting the leaders of that party - whether it be a Governor from Arkansas or a war hero from Massachusetts or South Dakota or a multicultural community organizer from Illinois - as the head of a movement to destroy American culture. That's really basically it. And sadly, considering that Democrats have over the last several decades abandoned their role as protectors of the weak, the poor and the voiceless, you can almost sympathize with the misled in the teabagging protests, who finds nobody standing up for them.

Except, their susceptibility to what is essentially a racial argument leaves me little room to share sympathy for their concerns.

Parsky Commission To Introduce Their Shock Doctrine Document

We heard last week about outlines of the Parsky Commission report that would radically shift the tax burden in California. We even heard that offshore drilling may have been snuck into the draft at the last minute. Last week, the commission held a public meeting which featured more details, including the intimation that 3% of the population would see half of the tax break under the Parsky plan. They made the public wait for seven hours and then gave one individual a minute to make a comment. Yesterday, the final public meeting was held, and right before it, Jean Ross offered some facts and figures showing how the commission's recommendation would amount to the Latvia-ization of the state of California, with a massive transfer of wealth to the upper classes at the expense of working families.

The biggest winners would be the state’s millionaires, who would receive personal income tax breaks averaging $109,000 per year. The biggest losers would be middle-income families who would receive a tiny, if any, reduction in their personal income taxes and who would pay substantially more for goods and services due to the new “value-added” tax the Commission proposes to replace revenues lost due to the tax cuts for the wealthy and repeal of the corporate income tax.

The magnitude of the shift proposed by the Commission is nothing short of stunning. The changes to the personal income tax structure alone would reduce income taxes paid by the poorest 62 percent of California taxpayers by $4 per year, on average, while providing six-figure breaks to the millionaires. The bottom 81 percent of the income distribution – the vast majority of all Californians – would receive 10 percent of the personal income tax cut, while the top 0.2 percent would receive 27 percent of the benefits.

And that’s the “good news.” The Commission would repeal the corporate income tax and the state’s portion of the sales tax and replace it with a new tax on business net receipts – a tax that has never been tried anywhere in the US – that the Commission’s own consultant notes would raise prices of goods and services, while exerting downward pressure on wages and benefits [...]

Some might be willing to support these changes if they ended California’s persistent budget crises. But again, the Commission’s own estimates predict that revenues raised by the new tax system would grow more slowly over time than those raised by the state’s current tax system. Thus, the Commission’s recommendations would lead to larger, not smaller, budget shortfalls in the future.

At the committee hearing yesterday, commissioners requested an analysis of the impact of the recommendation for taxpayers, and it came out precisely as Ross stated - "The 10 million taxpayers making less than $50,000 would pay $100 million more in taxes while the 7 million taxpayers who make more than $50,000 would get $6.8 billion in tax cuts."

This will not be a consensus document, most of the liberals on the panel won't sign it. And even the news reports today acknowledge that the changes would "largely benefit the wealthy." Clearly the Governor will put his weight behind it, but that's meant nothing in Sacramento for several years. The question is whether the Democratic Legislature would dare to massively reward the rich so nakedly by accepting these recommendations. Because the business community is actually against it, worried about the effect of the net receipts tax, I'd still guess no, but people should be letting their Representatives know that they will not get away with a transparent shift in wealth from the middle class to the super-rich.

The Meaning Of Compromise

I think everyone expected Republicans to pre-emptively accuse Democrats of politicization in the wake of Ted Kennedy's death. (By the way, please politicize my death.) But that's just the far edge of the Overton window, the bluff so Democrats won't try to take comfort and inspiration to pass the cause of Kennedy's life. The far more insidious tactic, proffered by the right in a coalition with the bipartisan fetishists in the media, is to revise Kennedy's legacy as that of the ultimate centrist, in a fashion, the bipartisan dealmaker, the Great Compromiser. They've done a full-court press on this:

Senator Judd Gregg is already hinting at the idea. In an interview with the Boston Globe, Gregg hailed the bipartisan support for legislation he and Kennedy created together, adding that Kennedy knew how to “move the ball down the road with conservatives like myself.”

Meanwhile, Karl Rove hailed Kennedy on Fox this morning for being “willing to compromise.”

Other GOPers are floating the idea in The New York Times anonymously, in a discussion of how to navigate the politics of Kennedy’s death:

Republicans also noted that Mr. Kennedy, though an ideological liberal, was a legislative pragmatist who worked with Republicans to strike compromises on difficult subjects like health care, education and immigration. They said they saw little such reaching across the aisle in his absence.

Any member of the United States Senate with a long record will have many moments of compromise, whether between the parties or intra-party. But the idea that Kennedy should be remembered for "making the right concessions," solely in the context of bipartisanship, is a media projection helped along by a right wing who wants to blame Kennedy's absence for political polarization and the eventual death of a health care bill. We see this today with Steven Pearlstein's eleventy-billionth column arguing for the wise, high Broderist, split-the-baby approach:

And while there will be plenty of liberal Democrats who will be fuming about all the compromises forced upon them, somewhere from above will come a familiar voice with that distinctly Boston accent, whispering, "The dream will never die. Take the deal."

Notwithstanding the fact that Kennedy's staff wrote the HELP Committee version of the bill, and Kennedy himself labored over it, and that includes a public option, misses the point of Kennedy's legislative style, which continued to focus on broadening his goals and moving ever forward even when the odds weren't on his side. As Jonathan Cohn writes:

But this notion that Kennedy's liberal reputation somehow belied his pragmatism--a notion already gaining traction in the media, which has turned non-partisan accommodation into a fetish-- misses the point. Kennedy compromised on means, not ends. He would negotiate because it helped achieve his broader goals--signing on to NCLB, whatever its cookie-cutter standards, because it would send money to schools in poor, underfunded districts; embracing the Medicare drug benefit because, however poorly designed, it'd save senior citizens from having to choose between medicine and food.

It was precisely because Kennedy's devotion to his notion of social justice was so clear and dependable that he could make such deals stick. Liberals trusted him because we knew he wouldn't sell out the broader cause. If it was good enough for Kennedy, we figured, it was good enough for us. We knew he didn't see pragmatism as an alternative to ideology. It was just a necessary method of fulfilling it [...]

In the hours since Kennedy's passing, his speech to the 1980 Democratic convention--his most memorable oration, along with the RFK eulogy--has gotten a lot of play. Typically the networks show the final quote, in which he promises to continue his crusade even as he gives up his quest for the presidency. But the more important passage is where he invokes Franklin Roosevelt as an unabashed defender of the common man against the forces--and, yes, the people--who would disregard his well-being. Like FDR, Kennedy was not afraid to talk about values, to talk about right and wrong. Now that Kennedy is gone, who will pick up that torch?

Blue Dogs and ConservaDems have high praise for compromise these days, but their version of it basically preserves corporate goals and sells out their constituents in the exchange. Kennedy's version was precisely the opposite. His concern was "the least among us," the poor, the elderly, the disabled, the sick, the oppressed, the downtrodden, the less fortunate. He tried to get something for them, whenever possible. Pundits can call that "bipartisanship" but they ought to understand what that means.

The deviousness of the conservative project, to lament Kennedy's passing because now wild-eyed ideologues (like Max Baucus?) will go crazy, is clear. The true scoundrels, however, are those in the press trying to position the life of the man who did as much to advance the causes of the voiceless as anyone in the history of the Senate as someone who preferred half a loaf. Democrats should take a better lesson.

No, mere words cannot honor Ted Kennedy's memory. To pretend otherwise would be to cheapen his legacy, to lie about who Ted Kennedy really was. He was, for the vast majority of his life, a fiercely ideological public servant. It was his commitment to that New Deal social compact which defined him, which made him relevant to you and me. And his actions, not his words, were what marked him as the greatest Senator of his era. To attempt to honor Ted Kennedy without striving to further his life's work is simply impossible.

When Paul Wellstone died they told us that we couldn't celebrate him him as a political actor, that to do so would be crass and opportunistic. But the entire reason we knew Paul Wellstone, the reason we were crushed by his passing, was his political activism. It would have been a lie not to celebrate that legacy. It would have been crass to act as if Paul Wellstone hadn't been first and foremost a progressive hero, to feign nonchalance over political concerns as we eulogized the man, and in so doing stripping him of his essence. Likewise, it would be a lie today to pretend that the reason we loved Ted Kennedy had nothing to do with his leadership for working people. And it would be crass to attempt to celebrate him with mere words, rather than the action he demanded from us in life. How can we not "politicize" his legacy? The man was who he was because of his wholehearted commitment to his politics. The real obscenity -- the real opportunism -- would be for his political opponents to now try and depoliticize a quintessentially political life.

...George Steph agrees: Kennedy would have ditched the public option. Amazing how Kennedy's beliefs, after his death, line up perfectly with the beliefs of the blow-dried commentariat, n'est-ce pas? Lawrence O'Donnell, by the way, has a different perspective:

"Senator Kennedy...is not an easy compromiser on health care reform. In 1994, I was in the room when he told the president that he believed the strategy should be a Democrats-only strategy and that we should not be trying to reach out and get Republican votes."

Cracking Down On Tax Havens

A couple days old, but this is very interesting.

In the latest setback to Switzerland’s tradition of banking secrecy, UBS, one of the nation’s largest banks, agreed on Wednesday to turn over information on more than 4,400 American clients suspected by the Internal Revenue Service of using Swiss accounts for tax evasion.

The agreement is likely to unnerve American customers of UBS who do not know if their names will be divulged, and could deter others from opening Swiss accounts in the future.

Whether the deal will change the Swiss banking industry’s culture of secrecy remains to be seen. Smaller Swiss banks say they are confident that they can blunt its effects and continue to profit by finding new, more elaborate ways to protect the privacy of clients. But American authorities have made clear that their pursuit of tax evaders will not stop at UBS.

I would hope it does unnerve UBS customers from opening Swiss bank accounts, considering that those accounts violate US law. I would say that rich people ought to think twice before starting their own offshore tax havens.

By the way, if the President wants to recapture some of his liberal base, he could do worse than emphasizing this outcome. People are justifiably angry that the banks appear to have gotten away with almost destroying the global economy and taking hundreds of billions from the US Treasury. I know that class warfare is messy and all, but showing that a Democratic government does their job and ferrets out rich tax cheats would at least play against this hardening belief that all politicians funnel money to the wealthy. Foreign lobbyists are trying hard to get the DoJ to back off, but if the Administration remains vigilant in the face of that pressure, they can really announce this as a victory. I would like to see conservatives argue in favor of the uber-rich stashing away their cash in offshore tax havens. Really, go ahead.

...Apparently Switzerland knows when to get out of the tax cheat business: they're selling their stake in UBS.

The Plaintive Wail Of The Not-Quite-As-Obscenely-Rich

There's a new sub-genre in journalism, tracking the travails and hardships of the not-quite-as-obscenely-rich. Inequality is still at its highest level since the Gilded Age, mind you, and the top 1% still rakes in 35% of all compensation, but selected still-rich individuals lost a little of their fortunes. This is the stuff of front-page news.

Last year, the number of Americans with a net worth of at least $30 million dropped 24 percent, according to CapGemini and Merrill Lynch Wealth Management. Monthly income from stock dividends, which is concentrated among the affluent, has fallen more than 20 percent since last summer, the biggest such decline since the government began keeping records in 1959.

Bill Gates, Warren E. Buffett, the heirs to the Wal-Mart Stores fortune and the founders of Google each lost billions last year, according to Forbes magazine. In one stark example, John McAfee, an entrepreneur who founded the antivirus software company that bears his name, is now worth about $4 million, from a peak of more than $100 million. Mr. McAfee will soon auction off his last big property because he needs cash to pay his bills after having been caught off guard by the simultaneous crash in real estate and stocks.

“I had no clue,” he said, “that there would be this tandem collapse.”

You really have to be kidding me with this. The stock market dropped 40%, so we're talking about paper value, not real but imagined wealth. And none of it was real anyway. That same stock market is now at a 52-week high at today's close, so the first thing to come back in this so-called recovery has been the fortunes of these same lamented rich people. The jobs for everyday Americans, not so much.

The ostensible premise of the article, that lesser yields for the rich may lead to a flattening of income distribution and maybe some relief for the middle and lower classes, is proven wrong by the middle of the article.

Few economists expect the country to return to the relatively flat income distribution of the 1950s and 1960s. Indeed, they say that inequality is likely to remain significantly greater than it was for most of the 20th century. The Obama administration has not proposed completely rewriting the rules for Wall Street or raising the top income-tax rate to anywhere near 70 percent, its level as recently as 1980. Market forces that have increased inequality, like globalization, are also not going away.

No, the real reason for this article is so super-rich people can read about other super-rich people and not feel so bad about poor people dying in the streets because of their hoarded fortunes. For example, here's Mike Bloomberg, of all people, singing a dirge for the poor little rich people.

Billionaire Mayor Michael Bloomberg defended multibillion-dollar pharmaceutical companies and their chief executives on Friday, declaring that they "don't make a lot of money" and shouldn't be scapegoats in the health care debate.

The mayor – and wealthiest person in New York City with a fortune estimated at $16.5 billion – made the comments on his radio show Friday during a discussion about health care.

"You know, last time I checked, pharmaceutical companies don't make a lot of money, their executives don't make a lot of money – not that they couldn't be better," Bloomberg said.

Pharmaceutical CEOs are known to make millions, with generous salaries, stock options and other perks.

This is a guy who bought the Mayoralty in New York for $100 million dollars over two terms, talking about people who routinely make tens of millions of dollars and hold hundreds of millions more in stock options, telling the public that the plebes shouldn't revolt because things are tough all over and those pharmaceutical CEOs are barely scraping by.

Well, tell you what then. As long as CEOs from the insurance and drug industries are basically pikers, they should have no problem adhering to Henry Waxman's request and providing readouts of their salaries and perks, so they can prove to the world once and for all that they're in this for the saving of lives and not the filthy lucre. Surely they'll agree to that.

Maybe they'll even tell the New York Times what a bad year they're having.

The War On Mitch Albom's Bank Account

Yesterday, I screwed up a pretty basic tax question when I misread that drug companies were getting a tax deduction for their ads instead of using ads as a business expense, like other companies, to offset profits. In times like these, I'm happy to not be Mitch Albom.

In explaining why it was OK to sock a new 5.4% tax on the highest earners in this country — to pay for health care reform — President Obama’s press secretary, Robert Gibbs, said this:

“The president believes that the richest 1% of this country has had a pretty good run of it for many, many, many years.”

Ah. So that’s it. The old “You’ve had it good enough for long enough” policy. That’s why a family earning a million dollars a year should now cough up $54,000 of that — in addition to all the other taxes it pays...

It is not that the rich should not pay fair taxes. They should.

But to justify a grossly overweighted tax by saying “You people have had it good long enough” is to engage in the worst and most destructive form of politics: class warfare.

Albom is engaging in math warfare. A family earning $1M a year would, under the surtax plan which is probably DOA, owe an extra $9,000. There's a thing called marginal tax rates, and so all your income isn't taxed at the same rate. Jonathan Schwarz has the full details.

But I actually want to hone in on Albom's "class warfare" comment. Obviously he gets the math completely wrong, but he thinks that we should not institute the kind of tax fairness that led to runaway growth in the 1950s and 1960s because we would be "engaging in class warfare." Well, we're already engaged in it, and the rich won. They captured government and shouted down the voices of the less fortunate. The truth of the matter is that higher marginal tax rates do not harm growth whatsoever. The rich have constructed a fantasy world where taxes on their income force them to cut jobs and end all business output. The facts show otherwise.

The effect of a range of variables other than the tax rates is tested by “progressive inclusion” to ensure robustness. When the average tax rate and the marginal tax rate are included separately in regressions the average tax rate is insignificant but the marginal tax is significant. A sample of the results is shown in Table 8 (t statistics in parentheses). Models II and III enter the tax variables separately. The lack of significance of the average tax rate is clear. Including both the average tax and the marginal tax is claimed to represent the effect of progressivity: holding the average tax rate constant while the marginal tax rate is increased represents an increase in progressivity. The results for Model VI show that when both tax variables are included the coefficient on marginal tax remains negative and significant but average tax is not significant. The results of Model III show that a 10 percentage point increase in the marginal tax rate reduces growth by 0.23 percentage points.

In addition, common sense dictates that rich people are far more concerned with their take-home pay than how many jobs they create for the poor and middle classes. A friend has a joke about his Republican brother insisting to him about the unfairness of the estate tax, and he replies, "I don't think rich people spend a lot of time thinking about the tax rates of my truck driver brother in downstate Illinois."

And needless to say, the author of two best-sellers and well-regarded columnist Mitch Albom falls into the category of the rich, not the Illinois truck driver. I'm sure he does find class warfare the "most destructive form of politics." At least to him.

America Is Worth Paying For

The Wall Street Journal today takes a look at inequality and produces a startling statistic.

The nation's wealth gap is widening amid an uproar about lofty pay packages in the financial world.

Executives and other highly compensated employees now receive more than one-third of all pay in the U.S., according to a Wall Street Journal analysis of Social Security Administration data -- without counting billions of dollars more in pay that remains off federal radar screens that measure wages and salaries.

Highly paid employees received nearly $2.1 trillion of the $6.4 trillion in total U.S. pay in 2007, the latest figures available.

So much for trickle-down economics. Incidentally, the same people who tell you that the top 1% pay 30% of the taxes won't tell you that they also make 30% of the money, or that the after-tax income, adjusted for inflation, of the top 1% grew 256% over the past 25 years, compared to just 21% for those in the middle. So the rich are doing pretty well, and they can probably pony up so that nobody goes without health care in this country.

This brings us to a larger point about the success of the conservative movement in this country. Despite this extreme inequality, which causes asset bubbles, threatens programs like Social Security that cap payroll deductions at $100,000 a year and invariably destroys national economies, talk about progressive taxation - indeed, any taxation - is considered heresy.

One of the bigger, but more under-reported, sea changes in American politics is how any kind of tax increase -- whether in war or peace, good economic times or bad ones -- has become absolutely unacceptable. After all, Ronald Reagan raised taxes. So did every modern American president involved in war, until George W. Bush. But not anymore. Indeed, as one of us pointed out on Nightly News last night, only 29% (or 157) of the 535 and House members and senators serving in Congress were around the last time -- 1993! -- the federal government raised taxes, and that was on gasoline. Think about that for a moment: Congress hasn't really had a TOUGH vote in 16 years, if one defines a "TOUGH" vote as the government asking for a financial sacrifice from the American people. This is the political climate that President Obama faces in trying to pay for health reform. Republicans and some Democrats are opposed to a tax on the wealthy, and unions and Obama's political strategists are against taxing health benefits.

Congress raised the tobacco tax this year to pay for expansion of children's health care, but the point is basically true.

Barack Obama has not been a profile in courage on this front, stressing a tax cut for "95% of all Americans" and failing to act definitively to roll back the Bush tax cuts on the wealthy. Joe Biden made one statement during the campaign about how it's patriotic to pay taxes and he got rapped on the skull for it, and we never heard it again.

But look. If Democrats cannot stand up and say that America is worth paying for, that we have an overclass in this country that's had it very good for a long, long time, that rampant inequality threatens economic stability, and that the way to a sustainable future includes paying for the commons that we all share, we'll really never get anywhere. Republicans have made taxes more of a four-letter word than liberals, to the extent that they threw an entire round of tax "tea parties" despite Obama having cut taxes in the stimulus for practically everyone. Conservatives since the Reagan era have determined that America has an innate selfishness that they can exploit, to claim "the other guy" is getting your tax money, and everyone should resist it. As government has provided little of perceived tangible value since the invention of Medicare in the 1960s, they've been able to get away with this. But it's not a path that can hold.

It starts by making the argument that while nobody likes taxes, nobody builds their own roads, or schools, or police and fire departments, or health care infrastructure, and government needs to act as a provider of services. This is basic stuff that has been pushed aside in our national debate for far too long. In the final analysis, we have a selfish and cruel segment of society that has been allowed to rule the roost for decades, promising their constituents endless services and endlessly low taxes forever. Democrats have the choice of accepting that and permanently nibbling around the edges the few times they get into power, or making the argument that we can have a better society.

Your Eight Weeks Waiting Tables Don't Matter

This New York Magazine article about the whines of the Wall Street rich officially marks a trend in journalism, wherein a writer finds a bunch of Wall Street guys and turns on the tape recorder while they speak a bunch of cringe-inducing quotes into it. It's not very revelatory after the 5th or 6th article, since by now we know pretty well that these are a collection of Randian jerks with a massive entitlement complex who think they rule the world by selling worthless pieces of paper to one another. Sure, it's good to know that they never gave charity out of a sense of, you know, charity, but for the tax cut and the hope of accumulating more power, and it's telling to recognize that the same people so concerned with being personally denigrated by the White House and the public decided not to publish their names. But all in all, this story has been told, and while I guess I understand why establishment media would want to run the same "poor, poor rich people" story over and over, it's certainly telling that you couldn't find a story quoting all members of the middle class that live in Manhattan (the median salary in NYC is about $65,000, so you have 4 million or so making less) if you sat in front of Lexis Nexis every day for a week.

But this part, as DougJ notes, was crucial to understanding the mindset of these people, and also reveals the nexus between the financial establishment and the DC Village establishment:

Jake DeSantis, a 40-year-old commodities trader at AIG, was an unlikely face of Wall Street greed. Stocky and clean cut, with an abiding moral streak, he’d worked summers for a bricklayer in the shadow of shuttered steel mills outside Pittsburgh; he was valedictorian of his high-school class and attended college at MIT.

He laid bricks one summer as a teenager, and so he simply deserves million-dollar bonuses for a company effectively owned by the federal government. I'll turn it over to DougJ at this point.

It’s striking how much we now see the idea that a working-class childhood justifies an adulthood of careerist whoring. Somerby’s been all over this for years, but I think the most blatant example I’ve ever seen is this bit from a chat with Howard Kurtz recently:

Reader: Much of the scalding tone many of your writers on these chats are subjected to from readers is based on this premise. We know that the Post, the Times, the networks are working to support the establishment at all cost. (In Broder’s famous and haughty dismissal of Bill Clinton “this is not his town”). But the problem is that you guys don’t like to portray yourselves as defenders of the establishment. You are the “little guy.” No you are not. Be honest with your audience.

Howard Kurtz: Talk about sweeping generalizations! Evan Thomas declares himself part of the establishment and suddenly every member of the major newspapers and networks are pillars of that establishment as well?

That would be news to Brian Williams, who was a volunteer fireman as a young man and washed out in his first job at a tiny Kansas station. And news to me, a guy who went to a state university. And news to Katie Couric, who started out on the University of Virginia’s student paper and washed out in her first national job, at CNN. And news to longtime Post editor Len Downie, who went to Ohio State University and started here as an intern. And also news to me, a kid from Brooklyn who never met a professional journalist until my junior year at a state university.

If you want to say these are big corporations, if you want to criticize what they do, be my guest. But let’s not assume that everyone in the business grew up in the bosom of the establishment.

An even more amazing example is George Bush’s claim (from a 2000 Nick Lemann piece that’s subscription only) that the biggest difference between him and Al Gore is that Bush went to San Jacinto Junior High.

How did this idea of humble, or humbler, beginnings become so important? It’s worth noting that it’s Randian as well—her heroes usually come from the working class, even if they spend their adult lives spitting on it.

It's mixed up with the idea of virtuous selfishness, that if you "picked yourself up by your bootstraps" that it's necessary and good to cut the bootstraps of everybody else. After all, if they can't make it they lack character. And this imagined "rough childhood" gets used by the establishment to delude themselves into thinking they are jus' folks, in touch with the needs and concerns of the people and just like everyone else. There was a study a while back (can't find it now) showing that something like 80% of the public considers themselves middle class, which is functionally impossible. But these biographical data points have nothing to do with present circumstance. As far as I know, robbery remains robbery whether or not you preceded that robbery with a stint landscaping in the heat.

In fact, we have a grossly unequal society, with little upward mobility, and dangerous implications from such inequality, creating the bubble-based economy which is now bursting. In the past 25 years, top salaries have increased by 256% while low-income salaries increased by 11%. In real dollars that's an obscene difference in income. It's also a major difference in access to media and raw power, which is why we have to endure multiple waves of articles about the persecuted overclass.

Somebody spare us.

No Money, No College

This sounds like a good way to entrench a permanent overclass:

In the bid for a fat envelope this year, it may help, more than usual, to have a fat wallet.

Facing fallen endowments and needier students, many colleges are looking more favorably on wealthier applicants as they make their admissions decisions this year.

Institutions that have pledged to admit students regardless of need are finding ways to increase the number of those who pay the full cost in ways that allow the colleges to maintain the claim of being need-blind — taking more students from the transfer or waiting lists, for instance, or admitting more foreign students who pay full tuition.

Private colleges that acknowledge taking financial status into account say they are even more aware of that factor this year.

“If you are a student of means or ability, or both, there has never been a better year,” said Robert A. Sevier, an enrollment consultant to colleges.

Let's face it - this has ALWAYS been a criteria. We've always seen a preference for legacies at the major universities and Ivy League colleges, with special treatment for those scions whose parents have, say, donated a building. But this is far more overt and applies to the entire college population. At a time when the federal government tries to increase Pell grants and smooth delivery of financial aid, your best chance of getting into colleges which have inflated their prices in recent years is to be very rich.

Nice. No wonder the US is one of the least class-mobile societies in the world.

Embedded Class Warriors

In Gary Kamiya's article on the death of newspapers that I cited the other day, he lamented that the "ideal of journalistic objectivity and fairness" would be a casualty of the decline of print journalism and news reporting.

I don't know if I agree with that. First of all, the "ideal of objectivity" is a relatively recent phenomenon - newspapers were house organs for party politics, and then perhaps more ideologically rigid and powerful, right up through the Hearst era. And to this day, I'm not sure if this ideal is anything more than a facile hope than an actual practice. Human beings have feelings and beliefs and those show up in the context of what they write. They are shaped by their perspectives. And on the subject of economics, their perspective is from the perch of the upper class, particularly those media celebrities who pretend they are men and women of the people, but who aren't good enough actors to hide that they don't want to see their taxes go up under the Obama budget.

Barack Obama has proposed a budget that, among other things, would reduce taxes on over 90 percent of the population and increase taxes on around 2 percent of the population. Flipping through the Sunday talk shows, it’s striking to see how uniformly wealthy media celebrities think it makes sense to characterize this is a “tax increase” or “raising taxes” and to leap immediately to a discussion of what the impact of these “higher taxes” will be. I think that the majority of people whose taxes are set to go down might be more interested in learning about the impact of lower taxes.

We've seen this all weekend, both on the air and in print. The phrase "class warfare" is thrown around liberally. The perspective of the 2 percent who would see their taxes rise is given far more exposure than the perspective of the 90 percent who would see those taxes fall. Even while the LA Times article strives for balance and does give room to the economic argument that reducing inequality often leads to prosperity, the tone of the article is that class warfare is being waged and the burden of proof is on Obama to explain why the wealthy have to get gouged.

This is why I don't really believe the argument that Rick Santelli's rant was a pre-planned scam (though there's certainly a lot of evidence and I wouldn't be surprised) - or rather, the argument that it HAD to be, that there is no other explanation. Santelli and his ilk have a particular perspective - they are media stars with a stake in the outcome. I don't see anyone saying that Chip Reid and his pals' questioning of Robert Gibbs the other day was pre-planned. It's just the way they think. They want to keep their money.

Reid: On jobs, which is the big complaint up on Capitol Hill right now from Republicans, that this plan is a job-killer. I mean, the $787 billion plan was all about jobs, more than anything else. And now you have a plan in place that -- how can you possibly tax people making people over $250,000 something like $667 billion over the next ten years and not have a downward effect on jobs?

Gibbs: Well, Chip, how did it work in 1994 and 1995 and 1996 and 1997?

Reid: Well, I guess the argument would be, imagine if they didn't have those taxes... how much better it would have been.

Gibbs: Well, isn't it interesting that there's always some little slip? ... There isn't a member of Congress, if they were to file a single-taxpayer form, who makes above $200,000 a year.

Jake Tapper: There are a lot of millionaires up there.

Gibbs: Well, that's true, but not on their income. I mean, I think it's interesting as people listen to those complaining about some aspects of the budget, I think it's just interesting to note. I think the President was pretty clear on Tuesday. We are talking about people who earn in excess of a quarter of a million dollars a year.

Reid: And a huge percentage of those people are small business owners.

Gibbs: Some of them are, sure. Some of them are big business owners. Some of them are home run hitters in Major League Baseball. Some of them run kickoffs back for a living. Some of them are the President of the United States.

Q (off mike): -- create jobs?

Gibbs: Certainly some of them, that's what their job is. But I would reject this overall premise that when we're asking for tax fairness from the American people, that this is going to kill jobs. I guess if I follow the logic of the Republicans on Capitol Hill, how do you explain last month's unemployment figures? (Pause.) Under current tax rates? 550,000 jobs.

Reid: (Long pause) It's a unique moment.

Gibbs: (Laughs heartily) Apparently, it always is.... The president ran specifically on the promises that are contained in what he believes is a blueprint and a vision for our future. And that's what the the American people, that's the result they rendered in November [...]

Question: Critics of the budget blueprint that has been put out today charge that this is a form of wealth redistribution. Even the New York Times in its front page story, fourth paragraph, talks about the idea of wealth redistribution. How do you respond to that?

Gibbs: The same way I did to the other questions: that the president campaigned on explicitly promising that he would cut taxes for 95% of working Americans if he was elected president. We did that in the reinvestment and recovery plan, and those tax cuts are also contained within this budget. The president also said that for families that make more than a quarter of a million dollars, $250,000, are likely to see their tax rates revert back to the way they were for most of the 90s. That's also in this budget. The President believes we have a plan that will lead to long term economic growth, sustained long term economic growth, while making those important investments. That's what this budget blueprint does, that's what he campaigned on, instituting fairness -- more fairness in our system, and that's what he's done.

As Sean Quinn noted one reporter saying after the briefing, "Did you notice all the questions about taxes came from reporters making over $250,000 a year, especially the TV guys?"

Jamison Foser tackled this today, especially the way in which the media acted like this was a brand new idea and not a central part of the President's campaign platform:

What sparked this sudden concern about "class warfare"? President Obama indicated that in order to fund things like health care, the very wealthiest Americans (individuals who make more than $200,000 and families making more than $250,000) might have to pay slightly more in taxes, via the expiration of President Bush's tax cuts for those earners. Under this plan, the wealthiest Americans (again, those making more than $200,000) would be subject to the same income tax rate they paid in the 1990s -- when, it should be remembered, the rich got richer and the economy did quite well.

If this plan -- raising taxes slightly on people who make more than $200,000 a year in order to pay for things like health care for people who don't -- sounds familiar, it's because Obama campaigned on it for roughly two years. Conservatives, amplified by the news media, ridiculed it with labels like "socialism" and "class warfare" and used all kinds of scary rhetoric. And the American people voted for it anyway.

So it's a bit odd to see all this media angst over the idea that Barack Obama's plans to do something he said he would do -- and something the American public supported.

The class war has always been one-sided - there are those with enough money and power to have a voice in the debate, and those who don't. And the media's position in this debate is squarely on the side of the rich, because it's not only the sole perspective they hear, it's the sole perspective they have.

A Seriously Progressive Budget

This is it. The budget details are being leaked, and the most important number so far is $634 billion for health care reform:

Ceci Connolly of the Washington Post and Laura Meckler of the Wall Street Journal have the dollar figure on the "downpayment" for health reform you've been hearing about: $634 billion.

The money will be drawn from new revenues and changes in the way federal insurance programs pays drugmakers, medical providers, and insurers offering coverage through Medicare.* It will underwrite the cost of expanding insurance coverage--through public programs like Medicaid and subsidies for the purchase of insurance--at least for the next ten years. (Ideally, efficiency savings will help offset more of that cost in the more distant future.)

How big an investment is that? It's pretty big--more, I believe, than any president has proposed setting aside for coverage expansions to the non-elderly since Clinton tried for universal health insurance in the 1990s. And it confirms that Obama is serious about pursuing health care reform, beyond small incremental steps.

Even so, the amount will not enough to finance full universal coverage, as discussed previously here and elsewhere. The budget will call for finding that money, although that obviously raises another question: Just how much more would it cost to get everybody (or nearly everybody) covered by decent insurance?

The working number during the campaign was $1 trillion over 10 years. So this comes up about $40 billion/year short. And Congress will have to find that money (I know, the Pentagon budget!). As for where the money in the budget would come from, that would be from phasing out the wasteful Medicare Advantage, possibly capping the amount of tax-excludable health benefits, and through a change to how the rich can itemize:

Under the Obama budget blueprint, about half of the new "health care reserve fund" would come by limiting the tax break on itemized deductions for families with incomes above $250,000. The proposal would reduce the value of tax deductions by about 20 percent, a change which would generate about $318 billion over the next 10 years, according to administration documents provided to The Washington Post.

If you read the New York Times piece, you see that the full budget will really re-imagine the tax code for fairness and progressivity.

Mr. Obama will also propose in the budget outline he releases on Thursday to use revenues from the centerpiece of his environmental policy — a plan under which companies will have to purchase permits to exceed pollution emission caps — to pay for an extension of a two-year tax credit that benefits low and middle-income people.

The combined effect of the two proposals, on top of Mr. Obama’s existing plan to roll back the Bush-era income tax reductions on upper-income households, would be a pronounced move to redistribute wealth and reimpose a substantially larger share of the tax burden on the most affluent taxpayers.

Get ready for the screams of "class warfare!"

Paul Krugman is on board, saying that this is a significant commitment and a signal that the Administration is very serious about achieving serious health care reform. I'd go a step further and say that they're serious about a progressive domestic agenda.

Let Them Eat Crawfish Cake

Kicking off his 2012 Presidential campaign, Louisiana Gov. Bobby Jindal has decided to screw over poor people.

When President Obama signed the Economic Recovery and Reinvestment Act last week, it included three different provisions to benefit unemployed workers. The first provided funding to states that allowed for a $25 per week increase in benefits. The second extended the Emergency Unemployment Compensation (EUC) program which gives 20 weeks of federally-funded unemployment benefits to individuals “who had already collected all regular state benefits,” while the third provision widened the pool of people eligible to receive unemployment benefits.

Today, however, Louisiana Governor Bobby Jindal announced his intention to oppose changing state law to allow his Lousiana citizens to qualify for the second two unemployment provisions. Jindal said the state would only be accepting money to increase the unemployment insurance payments for those who currently qualify for unemployment insurance.

In all, Jindal turned away nearly $100 million in federal aid for his state’s unemployed residents.

I know a big state on the West Coast that can use it.

For the most part, these "principled" Southern governors have been talking the talk about rejecting stimulus funds but not walking the walk. Jindal is sufficiently crazy enough to go all the way. And of course, he didn't reject the new homebuyers' benefit or anything that would hit someone of less modest means, he rejected aid for the desperate. Unemployment benefits are among the fastest forms of stimulus there are, with really big multipliers, because people in that situation spend the money. But it's considered good strategy now in the Republican Party to try and sink the economy, and it's always been good strategy to harm the poor at the expense of the rich. Jim Clyburn is right here, though I think it's a function of class and not quite race.

The highest-ranking African-American member of Congress on Friday accused Southern governors who oppose economic stimulus spending of indifference to the plight of poor blacks who might benefit from the federal money.

House Majority Whip James Clyburn, a South Carolina Democrat, amplified earlier statements that the governors' hesitation in accepting stimulus money had insulted him because "these four states are in the heart of the black belt."

Clyburn singled out Republican Govs. Mark Sanford of South Carolina, Rick Perry of Texas, Bobby Jindal of Louisiana and Haley Barbour of Mississippi for criticism.

This isn't about traditionally poor communities anymore. Due to the length and breadth of this recession, middle class professionals are now showing up at food banks. And Bobby Jindal wants to make sure that they get no help from the state that they could use to get themselves back on their feet and ready to contribute to the economy again.

Good Presidential material.

...if Jindal wants to really make a name for himself, he could reject federal support to rebuild New Orleans. Now THAT would make him look like a tiger!

Daschle Post-Mortem

There's a pretty amusing old Tom Daschle ad going around, with him driving to work at the Capitol in his old Pontiac instead of "BMWs and limos," with the final line:

"It's too bad that the rest of Washington doesn't understand that a penny saved is a penny earned."

What's that old adage about power corrupting and absolute power corrupting absolutely?

Eventually, no matter the rhetoric to win votes in South Dakota, Tom Daschle became a DC insider. And because President Obama relied on DC insiders to implement an agenda of change, he got burned. The case is a textbook example of how Beltway privilege - which is also class privilege - is inevitably corrupting and ethically corrosive.

A classic rule of Washington's political culture -- that public service can lead to personal riches -- seemed to collide yesterday with the presidential promise that the time has come for a break with the past.

Former senator Thomas A. Daschle, whom President Obama once called "the original no-drama guy," suddenly was forced to step aside as the president's nominee for secretary of health and human services because of problematic ties to wealthy private interests.

It was a jarring twist to Daschle's 30-year career in Washington, one built on a reputation of integrity and decency. After losing his Senate seat while serving as that body's most powerful Democrat in 2004, he swiftly signed on as a special policy adviser to a 900-member law firm and pulled in a multimillion-dollar salary. It is a well-worn path, trod by dozens of ex-lawmakers in the past decade.

But some observing the debacle wondered if the capital's ways were changing. The story of how he fell in with the monied elite and out with the popular mood involves a longtime Democratic financier, Leo Hindery Jr., and his keen interest in currying influence with powerful politicians. The outcome caught many in Washington off guard.

"I think it's possible this is some sort of bridge between an old Washington and the new Washington," David Arkush of Congress Watch said of the initial backing of Daschle and the sudden reversal.

Somehow this is being spun as a consequence of Obama holding Daschle to too high of a standard with all this talk of ethics during the campaign, and not the fact that Daschle really is ethically compromised, as is his business partner Bob Dole. Not that Daschle's the worst offender, but he's just a symbol of a failed status quo that has pushed this country to the point of ruin:

Dole said the Democrat would be a valuable asset to the firm even though Congress is run by the GOP these days. "He's got a lot of friends in the Senate, and I've got a lot of friends in the Senate, and, combined, who knows -- we might have 51," Dole joked. "It's going to work fine. You need some flexibility and diversity. I don't think any successful firm is all Democrat or all Republican."

That about covers how Washington works: driven by sleazy, bipartisan influence-peddling. And it is, in particular, how the Senate works: members do nice favors for their "friends," who are lavishly paid for asking for those favors (and who ensure that their "friends" still in the Senate are rewarded for granting those favors), and the outcome is our set of laws.

In a way, Obama picked Daschle not in spite of this sleaze, but BECAUSE of it. The thinking was that health care reform could only be accomplished with someone of stature coordinating White House maneuvering, someone who can go get the votes. He wanted someone from the Washington favor factory that would do whatever necessary to get health care reform passed. It would be a turd of a bill, filled with giveaways, but Daschle could do it, and Obama could put a pretty bow on it, and everyone would shout "huzzah."

The buzzsaw that Daschle ran into was a public increasingly given to agree with the populism expressed on the campaign trail, something Washington never saw coming.

So what happened? My guess is that official Washington underestimated the public's pique at what appeared to be the old ways of Washington. Hill staffers tell me that many offices have been inundated with telephone calls, emails, letters and faxes expressing concern (to put it mildly) about Daschle -- not only his failure to pay back taxes but his relationships with major players in the health care industry and rich consulting contracts with the private sector since leaving the Senate, and even the fact that he was given a car and driver by one of them [...]

Typical Americans are hurting very badly right now. They resent people who appear to be living high off a system dominated by insiders with the right connections. They've become increasingly suspicious of the conflicts of interest, cozy relationships, and payoffs that seem to pervade not only official Washington but our biggest banks and corporations. In short, many Americans who have worked hard, saved as much as they can, bought a home, obeyed the law, and paid every cent of taxes that were due are beginning to feel like chumps. Their jobs are disappearing, their savings are disappearing, their homes are worth far less than they thought they were, their tax bills are as high as ever if not higher.

Meanwhile, people at the top seem to be living far different lives in a different universe. They're the executives and traders on Wall Street who have lived like kings for years off a bubble of their own making while ripping off small investors, the financial louts who are now taking hundreds of billions of taxpayer bailout money while awarding themselves huge bonuses and throwing lavish parties, the corporate CEOs who are earning seven figures while laying off thousands of workers, the billionaire hedge-fund and private-equity managers who are paying a marginal tax rate of 15 percent on what they say are capital gains while people who earn a fraction of that are paying a higher rate, and, not the least, the Washington insiders who have served on the Hill or in an administration and then gone on to pocket millions as lobbyists for the same companies they once regulated or subsidized. To the American who's outside the power centers -- the places of entitlement and I'll-scratch-your-back-while-you-scratch-mine deal making -- the entire system seems rotten.

I'm sorry Tom Daschle won't be in the Obama administration. He would have served the public well and with distinction. But the public wants change, real change, big change. There's no tolerance any longer for the way things used to be done.

There is a hope in all of this, in the fact that Obama acknowledged the mistake, and more important the disconnect between one set of rules for public officials and another for the man on the street. That's a big step early in an Administration, to take blame and admit it. Now the action has to follow the words.

Ezra Klein has more.

Beltway Ethics and Tom Daschle

Tom Daschle is awfully sorry about overlooking his tax burden and wants to get his high-level cabinet post, please.

Fighting to salvage his Cabinet nomination, Tom Daschle pleaded his case Monday evening in a closed meeting with former Senate colleagues after publicly apologizing for failing to pay more than $120,000 in taxes. President Barack Obama said he was "absolutely" sticking with his nominee for health secretary, and a key senator added an important endorsement [...]

Nobody was predicting defeat for Daschle's nomination as secretary of health and human services, but it was proving an unsavory pill to swallow for senators who only last week confirmed Timothy Geithner as treasury secretary despite his separate tax-payment problems. It's an issue that strikes a nerve among lawmakers' constituents who are struggling with their own serious money problems.

Daschle's tax problem is nothing more than an example of the Washington favor factory used by every out-of-work lawmaker. Trent Lott and Bob Dole and J.D. Hayworth and John Breaux and Richard Pombo and about 20 kajillion other lawmaker-turned-lobbyists aren't up for a cabinet position, but if they were you'd hear the same thing.

Beyond the ramifications for Mr. Daschle’s ascent to the cabinet, the disclosures about Mr. Hindery and the many clients Mr. Daschle advised on public policy offers a new window into how Washington works. It shows how in just four years an influential former senator was able to make $5 million and live a lavish lifestyle by dint of his name, connections and knowledge of the town’s inner workings.

There is no evidence that Mr. Daschle pulled strings for Mr. Hindery. Indeed, Mr. Hindery’s firm appears to have had few interests before the government. But interviews and a review of public documents show that in his work for a Washington law firm, Mr. Daschle did take on an array of clients seeking influence with the government, including concerns involved in Indian gambling, ethanol, health care, telecommunications and federal contracting.

Worse, he accepted multiple speaking fees from health care industry groups, the same ones who he would presumably be trying to derail in reforming the system:

Over the past two years, Daschle has made more than $220,000 giving speeches to health care stakeholders. This includes $40,000 for two speeches to America's Health Insurance Plans, $30,000 for a speech to CSL Behring, $16,000 to the National Association of Boards of Pharmacy, $15,000 from a talk at the Principal Life Insurance Co. given policy advice to United Health, and much more. These are payments from the parties with a direct interest in the eventual shape of health reform.

I trust that the guy who spends his weekends reading Health Affairs isn't in this for speaking fees. But Daschle can't rely on every American reading his book and picking through his testimony. He needs prima facie credibility. And Daschle is less credible today than he was a week ago.

It will be harder for him to tell single payer advocates that he neutrally considered their views on the worth of the private insurance industry given that AHIP put $40,000 in his pocket. So too with those concerned by the medical device industry. Indeed, the Washington Post reports that "the Health Industry Distributors Association, a trade association representing medical product distributors, wrote to Daschle last week to express concerns about proposed Medicare changes and reminded him of the $14,000 speech he delivered at its conference last year." It may not be the case that these groups actually succeeded in buying sympathy when they paid Daschle to speak. But it was certainly their intent.

This isn't about Daschle conniving to defraud the government of $100K, it's about a culture of Beltway backscratching that treats life the same way as the horse-trading inside the Capitol. It's why he'll be swiftly confirmed, because his former colleagues in the Senate want the SAME kind of treatment when they are cast out into the "real world". Tom Daschle and his wife epitomize Beltway ethics, which thinks nothing of perks and speaking fees and other corrupting activities. Simply put, there is a premium paid to former lawmakers by those who want to influence the system, to buy their knowledge and expertise. Matt Taibbi has much more on all of this.

In Washington there are whores and there are whores, and then there is Tom Daschle. Tom Daschle would suck off a corpse for a cheeseburger. True, he is probably only the second-biggest whore for the health care industry in American politics — the biggest being doctor/cat-torturer Bill Frist, whose visit to South Dakota on behalf of John Thune in 2004 was one of the factors in ending Daschle's tenure in the Senate [...]

Regarding Daschle, remember, we're talking about a guy who not only was a consultant for one of the top health-care law firms in the country, but a board member of the Mayo Clinic (a major recipient of NIH grants) and the husband of one of America's biggest defense lobbyists — wife Linda Hall lobbies for Lockheed-Martin and Boeing. Does anyone really think that this person is going to come up with a health care proposal that in any way cuts into the profits of the major health care companies?

Daschle is just a symptom of an accountability-free system in Washington and throughout the country among the upper echelons of the elite. They evade taxes like it's their job. They pass favors back and forth to any fellow member of the club. And the working class pays for it. This story is from the UK, but it could just as easily be from the US.

British taxpayers are being left to plug a multibillion-pound hole in the public finances as hundreds of the country's biggest companies increasingly employ complex and secretive tax arrangements to limit the amount they hand over to the exchequer.

An extensive Guardian investigation has examined the accounts of the UK's biggest companies - many of them household names - and discovered a series of sophisticated tax strategies which, critics say, amount to an almost unstoppable tide of perfectly legal corporate tax avoidance.

The veil of confidentiality that covers these tax avoidance schemes is so difficult to penetrate that nobody knows exactly how much tax goes missing each year. But HM Revenue & Customs estimated that the size of the tax gap could be anything between £3.7bn and £13bn. The Commons public accounts committee put it at a possible £8.5bn and the TUC said £12bn.

This is all legally accomplished, through corporate tax laws written by corporate lobbyists, through handshake agreements between those former lawmakers on one side of the revolving door and the others on the insude, and through a general sense of permissiveness and leniency. Practically everyone in Congress is a future recipient of such beneficence, so there's not a lot of effort put into caring. There are hundreds of billions of dollars in unpaid taxes floating around out there, maybe enough to put aside this "grand bargain" of fiscal reform and pay for virtually the entire current deficit. This is the poison that keeps the country from progress on significant issues.

Scenes From The Class Struggle In Capitol Hill

If you're on Twitter, I strongly recommend you find a right-wing mouth-breather Congressman to follow on the site and read them carefully. You'll get the talking points hours or even days before they show up on the teevee. For example, my favorite right-wing Twitterbug, Rep. Pete Hoekstra (R-MI), has offered his sage thoughts on this Tom Daschle tax story.

Daescle(sp?)/Geitner/Rangel all avoided/cheated on taxes!Daescle latest!They don't mind raising taxes because they don't pay them.

He got two of the three names wrong, including Daschle, who was Senate Majority Leader when Hoekstra chaired the Intelligence Committee (!) and therefore was in all the Gang of Eight meetings with him.

But let's get off spelling for a second. The soundbite is that Democrats don't mind raising taxes because they don't pay them. Har giggle snort glorf!! So let's pre-but this statement in case it's used by George Will or David Brooks tomorrow morning.

Because, sigh, if only failure to pay taxes or disclose income had anything to do with party and not class. And this happens through both illegal and legal means.

The average tax rate paid by the richest 400 Americans fell by a third to 17.2 percent through the first six years of the Bush administration and their average income doubled to $263.3 million, new IRS data show.

The 17.2 percent tax rate in 2006 was the lowest since the IRS began tracking the 400 largest taxpayers in 1992, although the richest 400 Americans paid more tax on an inflation-adjusted basis than any year since 2000.

The drop from 2001’s tax rate of 22.9 percent was due largely to ex-President George W. Bush’s push to cut tax rates on most capital gains to 15 percent in 2003.

And as long as we're talking about tax dodgers, let's bring in the biggest group of them bar none, corporations.

The news that more than 60 percent of U.S. corporations failed to pay any federal taxes from 1996 through 2000 when corporate profits were soaring and that corporate tax receipts had fallen to just 7.4 percent of overall federal tax revenue in 2003 – the lowest since 1983 and the second-lowest rate since 1934 – is an outrage. But it should come as no surprise to anyone who has been paying attention to national tax policy over the past few years. The General Accounting Office (GAO) report also found that an astonishing 94 percent of corporations reported tax liability of less than 5 percent of their total income during the same time period. Corporate tax dodging has gone on for far too long. But the policies of the Bush administration have exacerbated the problem by furthering the culture of tax avoidance by big corporations and creating a pervasive unfairness in our tax code.

We have a problem in this country with people not paying their taxes. And irrespective of anything else, those people are by and large rich and connected. They influence politicians in Washington to write breaks and favors into the tax code. They pass special gifts back and forth to one another. They claim that their corporate headquarters can fit into a mailbox in the Cayman Islands.

The tax code is multi-layered and complex. These tax problems happen at confirmation hearings every four years as a result. Because it's easy to evade taxes, by either legitimate oversight or outright theft, and for the wealthy that likelihood is multiplied. Don't take my word for it - take the leader of the Republican Party from 2000 to 2008:

WALLACE: How does [McCain] overcome all of that and...

BUSH: Because there's two big issues. One is, who's going to keep your taxes low? Most Americans feel overtaxed and I promise you the Democrat [sic] party is going to field a candidate who says I'm going to raise your tax.

If they're going to say, oh, we're only going to tax the rich people, but most people in America understand that the rich people hire good accountants and figure out how not to necessarily pay all the taxes and the middle class gets stuck.

We've had -- we've been through this drill before. We're only going to tax the rich and all you have to do is look at the history of that kind of language and see who gets stuck with the bill.

He said this over and over during the 2004 campaign. His team must have thought it was a mighty clever talking point. It was so much fun to see the President of the United States, with control over the IRS, helpfully explain that the rich evade taxes and there's nothing anyone can do about it.

7/14/2004 THE PRESIDENT: ...People need to be aware of this talk out of Washington, D.C. that says, oh, don't worry, we're just going to tax the rich. That's not the way it works in the tax code. The big rich dodge taxes, anyway. It's companies like this who end up paying more taxes.
8/3/2004 THE PRESIDENT: ...He said, tax the rich. You've heard that before haven't you? You know what that means. The rich dodge and you pay.
8/13/2004 THE PRESIDENT:...I'll give you one other thought. Let me just leave you with one other thought about taxing the rich. You know how that works. A lot of the rich are able to get accountants, so they don't -- they're able to dodge. You've seen it before. We're going to tax the rich, and then they figure out how not to get taxed.
8/28/2004 THE PRESIDENT: ...Every time they say, tax the rich, the rich dodge and you pay.
9/1/2004 THE PRESIDENT: ...You know what it means, tax the rich. It means the rich dodge and you get stuck with the bill.
9/3/2004 THE PRESIDENT: Yeah, we've heard that before, haven't we? First of all, you can't raise enough money by taxing the rich to support all his programs. Secondly, the rich figure out a way to dodge it, and you get stuck with the bill.
9/7/2004 THE PRESIDENT:Yes. Oh, don't worry, we'll tax the rich. Well, that's why the rich hire accountants and lawyers. They dodge, you pay...
10/11/2004 THE PRESIDENT: ...Something else about taxing the rich -- the rich hire lawyers and accountants for a reason, to dodge the tax bill and stick you with it.

This is the same guy who eliminated half of the IRS lawyers who audit the rich, and went after the middle class more often with audits and scrutiny.

Since 2000, authorities at the Internal Revenue Service have nearly tripled audits of tax returns filed by people making $25,000 to $100,000 as part of a broad change in audit strategy.

Audits of these middle-class taxpayers rose to nearly 436,000 last year, up from about 147,000 returns in 2000. For these 61 million individuals and married couples, who make up nearly half of all taxpayers, the odds of being audited rose from 1 in 377 to 1 in 140.

I'd be willing to bet that practically everyone of means in Capitol Hill has cheated on their taxes in one way or another. They're the Masters of the Universe and they see it as their due. If Republicans have gotten religion and suddenly want to end the practice, sounds good to me. We'll just put those auditors back to work and start poring over the returns of every corporation and every man and woman of wealth. We can even get rid of those loopholes and complexities that cause a lot of these problems. But don't tell me that this is an issue of party in any way. This is a class issue.

McCain's Fabulous Life, Day 2

McCain's house gaffe made probably every major paper this morning, and was featured on every nightly newscast. A good example is this USA Today piece, featuring one of the best paragraphs ever:

McCain, who has portrayed Obama as an elitist, is the son and grandson of admirals. The Associated Press estimates his wife, a beer heiress, is worth $100 million. Obama was raised by a single mother who relied at times on food stamps, and went to top schools on scholarships and loans. His income has increased from book sales since he spoke at the 2004 Democratic convention.

Hilarious. Among the other developments: the DNC put out a funny video asking random folks if they remember how many houses they own:



Josh Marshall notices that the McCain household staff budget went up 50% last year to $273,000 a year. Inflation's tough for everybody.

And even a fount of conventional wisdom like Chris Cillizza gets why this matters:

In politics, there is nothing worse than appearing out of touch.

From time immemorial, a candidate who is effectively portrayed as forgetting about the "little" people, of having "gone Washington," of living higher on the hog than voters, loses.

Class remains a powerful motivator for many voters in the country. Politicians are forever trying to cast their candidacies as closely rooted in the communities from which they sprung -- a purposeful attempt to ensure that voters know that the candidate "understands the problems of people like you." Put simply: The worst thing you can call a politician is an elitist.

And so, seen through that lens, it makes perfect sense why Democrats have picked up on John McCain's comment that he wasn't sure about how many houses he and his wife own -- comments made to Politico's Mike Allen and J-Mart -- and why Republicans have fought back so quickly and so hard.

By the way, the progressive movement needs to take a little credit for this one. We harped on McCain's comment at the Saddleback Forum that $5 million dollars connoted being rich, which Obama connected to the current controversy yesterday. Brave New Films and the AFL-CIO have teamed up to drive the "McCain is the real elitist" angle hard, and they put a video out on Wednesday about his many houses. That clearly prompted the Politico writers to ask the question to McCain, leading to that priceless moment.

And I have to say the Obama new media team has been very solid on this in providing information. This is what can happen when everyone works together.

...I forgot to mention the 9-car entourage to Starbucks for a latte yesterday. McCain is not doing himself any favors. And of course this is ticky-tack, but as I've constantly said, this is how the media works in the modern age, and anyway McCain started this whole "elitist" thing, and being out of touch with what's happening in the world and the economy actually does matter.