Generally, opinion columns should not serve as a writer’s keyboard confessional. However, there are rare circumstances in which divulging personal information is relevant to subject matter. This week is one of those circumstances. I must come out in the open for what I truly am – a huge fan of the show “Glee.”
Occupy Wall Street (OWS) is one of the most widespread protest movements in recent memory. What began as a few dozen people leaning cardboard signs against makeshift tents in Zuccotti Park has exploded into a worldwide phenomenon. Tens of thousands of protestors in cities all over the world are occupying various financial districts and public parks, and curious journalists follow.
Yet these journalists seem to be confused, what exactly are these protests all about?
The signs at any given protest feature a mélange of political and social messages, but there are three consistently cited observations about the OWS protestors; (1) they lack cohesive policy demands, (2) they reject a traditional organizational hierarchy, and (3) they refuse to engage with our already-existing representative democracy.
In the mainstream media, these observations have largely been framed as criticisms, often coupled with pejorative characterizations of the protestors themselves.
However, criticizing the movement based on the aforementioned observations is misguided, and neglects the fundamental reasons behind OWS.
There are very serious systemic problems with America’s political machine. House Republicans held our economy hostage during the debt-ceiling negotiations, ultimately resulting in the downgrading of U.S. debt. The Supreme Court believes corporations and unions are people. The President’s naivety has alienated him from Democrats and Republicans alike. The Congressional approval rating is at an all-time low of 9%. In short, Washington is broken.
American citizens are sick of it, and so they have taken to the streets. Criticizing OWS for lacking cohesive policy or refusing to engage with politicians misses the point. OWS is not about ramming policy, which would ultimately be dismantled by Congress anyway, through a broken political system. Expecting prudence and pragmatism from our elected representatives, now more than ever, seems unrealistic. OWS is a response to this political disarray. The protestors in OWS are profoundly dissatisfied with the status quo, and they feel like representative democracy has let them down.
Rather than sink into a catatonic malaise and drowning themselves in cynicism, the protestors are actively voicing their frustrations. They may not share a unified picture of a political utopia, but they all agree that the current state of affairs is unacceptable.
John Mouracade, Chair of the UAA Philosophy Department, visited New York and observed the protests.
“When Congress can’t figure out what they’re doing, should we really be surprised that OWS hasn’t quite established a cohesive policy?” Mouracade said.
Our country’s political woes are directly linked to our dilapidated and dysfunctional economy. Growth is negligible, unemployment is rampant, and things don’t seem to be improving. Criticizing the OWS protestors for being unemployed completely misses the point. Of course a substantial number of them are unemployed. Unemployment is close to 10 percent for people under 25 with a college degree. When one in ten recent college graduates can’t find work, and Washington is rendered useless by petulant politicking and feckless gesturing, protesting seems like a reasonable response.
Despite the lack of actual policy proposals, OWS has actually been relatively consistent in promoting one message: our Nation’s policies ought to represent the views of average Americans just as much as corporations and the richest Americans.
The effective tax rate for General Electric in 2010 was 7 percent. Hedge fund managers report most of their earnings as long-term capital gains, and are taxed at around 17 percent. Meanwhile, recent college graduates are burdened with insurmountable debt incurred from the ballooning cost of education, and they face few, if any, job prospects. Clearly, our economic policies aren’t adequately representing the 99 percent of us who aren’t rich enough to pay for college out-of-pocket or report our earnings as capital gains. If our elected representatives, beholden to special interests and bombarded with lobbyists, won’t listen, then where can we turn?
Wall Street is symbolic of where powerful economic interests overlap. It was on Wall Street that investment banks completely forwent risk management and gambled with other people’s money. It was on Wall Street that those banks, despite their irresponsibility, were bailed out by the government. Wall Street represents the one percent of America that has most of the wealth, and most of the political bargaining power. I am the 99 percent, and I say occupy away.
Over the last month, I’ve tried to convince readers that increasing taxes on the wealthy will both satisfy the demands of justice and help our economy recover from the worst financial disaster since the Great Depression. In my final column on tax increases, I would like to leave readers of this column with a question; what kind of society do you want to live in – one characterized by an obsession with economic growth, or one that values equal opportunity and egalitarianism?
Nations are more than economic units. They can be described in terms beyond GDP or Growth Trend Rate. Indeed, nations are defined by the attitudes and behavior of the people living within that society. The values expressed in the social contract we build with our fellow citizens are ultimately more important than the economic outcomes that result from such a contract. Unfortunately, our societal values have become drowned out in our obsession with growth.
Most people think of the economic boom of the early 2000’s as “good.” Sure, GDP was on the rise, unemployment was relatively low, credit was cheap, and American household consumption was driving growth. However, when we reflect on that time now, we see that most Americans did not in fact enjoy the benefits of a bustling economy. Most of that growth occurred in the financial sector.
Between 1997 and 2007, finance became the fastest-growing part of the U.S. economy. The gains reaped by financial executives, traders, and specialists represented almost two-thirds of growth in the gross national product. By 2007, financial and insurance companies accounted for more than 40 percent of American corporate profits and almost as great a percentage of pay.
So long as profits were soaring in the financial sector, the subsequent influx of capital meant free flowing credit for everyone. Most Americans thought they were benefitting, because it was easier to get a loan to keep with the rise of the rich, but in fact they were floating on the top of an economic bubble that was destined to burst.
In societies with gross economic inequality (read: The United States), soaring incomes at the top create conditions more conducive to “boom and bust” markets. In the last 100 years, economic inequality has been highest during times of boom and bust economics. This is because the wealthiest Americans use their soaring incomes to speculate on a limited range of assets (as I argued in my last article, millionaires are hardly “job creators). With so many dollars pursing the same assets, values exploded. This is what happened in the housing market. Mortgage backed securities and collateralized debt obligations are assets most Americans can’t afford to invest in. But to hedge fund managers competing for social status, these assets could mean the difference between the 260-foot yacht, and the 300-foot yacht with the helicopter pad.
Why are we okay with this kind of investing? Free flowing capital in the financial sector might mean cheaper credit for everyone, but is this how we want to live?
Do we want to live in a society wherein our access to student loans, mortgages, and car loans is dictated by the prudence (or lack thereof) of hedge fund managers? Are we satisfied with stagnating wages for most Americans, while the rich continue getting richer? As a country we can do better. Ultimately, we must come together as a united people that recognize our mutual desires for freedom and equality.
We need to empower the middle class, not with credit, but with real increases in wages. This means preserving collective bargaining power to establish fair wages. This means greater participation in our democracy. This means everyone pitching in to help put our country on track. Spending cuts are a necessary step. But if the poor and middle class are asked to sacrifice, then the rich should sacrifice too. For the sake of our country’s economy, our principle of justice, and our shared national spirit, we must increase taxes on the richest Americans.
Alex Rodriguez is a genuine baseball prodigy. In his junior year of High School, Rodriguez was selected as both the USA Baseball Junior Player of the Year and as Gatorade’s National Baseball Student Athlete of the Year. He was the first high school player in history to try out for team USA. Rodriguez was signed by the Seattle Mariners immediately after graduating high school, and has played major league baseball ever since.
Today, Rodriguez is the highest-paid baseball player in the world. He earns around $30 million a year, and is worth about half a billion dollars. To put this in perspective, Rodriguez earns about 750 times as much as the average high school teacher. At first glance, however, perhaps Rodriguez deserves this handsome compensation. In contrast to the article I wrote last week, Rodriguez did not come from a wealthy family. Though some of skills may be due to an arbitrary endowment of natural talent, he had the same opportunity as almost every other kid to refine his natural talents and practice playing baseball.
Moreover, millions of people consent to pay money to see Rodriguez play. There’s nothing coercive or opaque about Rodriguez’s earnings. People pay good money to see Rodriguez and the New York Yankees. In other words, the market distribution of Rodriguez’s talent was almost entirely the result of choices in a free market.
But even so, is Rodriguez’s success entirely his own? He benefitted from competent coaches, agents, and other players. He benefitted from personal trainers, health care professionals, and attorneys. On a broader level, Rodriguez benefitted from a society with infrastructure and public services that allowed him to succeed. Police officers and Firefighters helped to protect the neighborhoods and schools were Rodriguez grew up. Public roads helped to ensure that Rodriguez could make it to baseball practice and training. Simply living in the United States benefitted Rodriguez. The bottom line is that we all bought into Rodriguez’s success as a baseball player. While his personal talent is arguably the most important factor in determining in his success, it is by no means the only factor.
Our society establishes a reciprocal bargain between the government and citizenry. Citizens pay taxes, and in exchange the government provides services. Everyone benefits from these services. Education, transportation, and emergency services are just a few of the things that allow people to be wildly successful in the United States. People who are extremely wealthy owe something to the society that facilitated their rise to riches. When the idea of communal success is coupled with the concept of arbitrary advantage (discussed in my previous article), we see there is warrant to tax the wealthy more than other individuals. Innovation never occurs in a vacuum, and all people ought to benefit from innovation and success that they contributed to.
The United States is characterized by what economist Robert H. Frank calls “winner-take-all markets.” In these markets, a large number of people viciously compete for just a few high-paying positions. Professional sports, Wall Street, computer programming, and the financial sector are all examples of winner-take-all markets. Fierce competition fosters an increased propensity for success. However, competition necessarily incorporates different economic agents, who all contribute to the success of the winner. As such, the winner’s earning are not entirely his own. He owes something to the environment around him that allowed for the success he enjoys.
There are extremely wealthy people that realize this. During a recent interview on the Colbert Report, Melinda Gates (the wife of Bill Gates, and co-founder of the Bill and Melinda Gates Foundation discussed with Colbert why she and her husband donate so much money to public education in the United States.
She recognized that public education helped her husband become the successful software tycoon that he is. Without good schools, Bill Gates would have never acquired the skills necessary to program computes, negotiate trade agreements, or prudently invest his earnings. As such, Gates acknowledges that his success is not entirely his own. He owes something to the teachers that helped him learn, the police officers and soldiers that made him feel safe, and the firefighters that helped ensure his safety.
Almost all of the wealthy people in our country owe some measure of their success to their community. In fact, they owe more to their community than the people who are less well off. As such, it is justified to tax them more than poor individuals. Despite this, platitudes run amok in the political arena. Taxes are discussed as being “punishment” or “theft.” Such characterizations perpetuate animosity between the rich and rest, further exacerbating the idea of “class warfare.” Taxes need to be characterized for what they are: a bargain that benefits everyone, and a mechanism to equalize opportunity for everyone participating in the market.
Everyone seems to be obsessed with taxes. Warren Buffet and Barack Obama believe we ought to raise taxes on the wealthy. Michelle Bachmann seems to believe that Americans shouldn’t pay any income taxes at all. Ben Stein has read too much Ayn Rand, and believes taxes are a form of theft. Well Ben, The United States is not the Sherwood Forrest, and IRS agents are not Merry Men in tights.
Taxes are an integral component of our economy. Like it or not, tax dollars support vital government services that everyone benefits from. We have a problem in the United States. We like all the services we receive, but we really don’t like paying for them.
Everyone agrees that this trend cannot continue. The question is; how do we restore financial stability in the United States? A balanced approach – one involving both spending cuts and revenue increases – is needed. Because the middle class and poor rely more on social services, an approach that only cuts spending disproportionately harms those who can least afford it. Cutting spending is a necessary step in balancing the budget, but we also ought to increase taxes on the wealthiest Americans.
When we think about whether or not we ought to increase taxes on the wealthy, we often think in terms of economics consequences. Will increasing taxes create jobs, or hurt “job creators”? Will GDP be boosted, or stunted? Will real wages for the middle class go up or down? While these are important questions, before we address the economics of a highly progressive tax structure, we must address whether or not such taxes are just.
There are two related justifications for placing a higher tax burden on the wealthy. First, there are arbitrary factors that made them rich. Second, they owe something to the community that supported them in their rise to riches. I will address the first of these below, and discuss the second justification in my next article.
Generally speaking, when wealth is acquired by luck, rather than skill or merit, the government is justified in taxing some of that wealth with the intent of redistributing some of it to people who weren’t as lucky.
For example, we don’t have a problem with heavily taxing lottery winnings. Why? Because we recognize that wealth opens doors for people and gives them unique opportunities. Arbitrary factors that give some people greater opportunity than others violate the principle of equal opportunity. In a just society, luck is not a good reason for gross inequality of opportunity.
What we must acknowledge is that some people in our society have already won the birth lottery. I’ll use myself as an example. I am a white male born into an upper-middle-class family. My parents were loving and supportive, and did not fall victim to divorce. As a child, I enjoyed remarkable opportunities. I went to good schools in relatively wealthy neighborhoods, and my parents have helped me cover burdensome college expenses.
Now consider another individual in a vastly different situation. Jason was born to a single mother in inner city Detroit. His school was dilapidated and his friends are unenthusiastic about academic pursuits. He was exposed to drug abuse at a very young age, and did not have the community and family support that I enjoyed. Clearly, there is nothing “equal” about the opportunities afforded to Jason and me. Resorting to platitudes about how Jason can “pull himself up by his bootstraps” ignores the reality of his situation. Jason and I aren’t competing in a genuine meritocracy, because I was luckier in the birth lottery.
Anecdotal evidence may paint a picture, but it doesn’t substantiate a claim. In order to truly show how opportunity is arbitrarily distributed in society, we need to look at broader trends. If there truly exists a “cycle of poverty” that systematically prevents people from accessing economic opportunity, then measures designed to equalize opportunity are justified.
Moreover, if there exists a “cycle of wealth” that gives people born into rich families a demonstrable advantage in our economy, then redistributive efforts are further justified.
According to the Oxford Handbook on Economic Inequality, both cycles are somewhat paradoxical. While most impoverished people tend to experience relatively short bouts of poverty, they experienced repeated bouts of poverty throughout their life. In other words, if you took a snapshot of everyone in poverty today, you would be right to say that most of those people will only be in poverty for a short period of time. However, the majority of these people will move in and out of poverty throughout most of their lives, never reaching a level of economic stability sufficient to keep them out of poverty. The cycle of poverty does not keep people in poverty per se, but keeps them returning to poverty.
A similar story exists at the other end of the income spectrum. People born into wealthier families tend to become wealthier themselves. While there are certainly anecdotes of rags-to-riches success, most of America’s wealthy come from rich families. While most rich people experience wealth for relatively short periods of time, their social capital, superior education, and general experience means that they have a much better chance of returning to wealth. So the cycle of wealth does not perpetually keep money in the pockets of the rich, it tends to readily return money to their pockets. This means that when economic strife washes over the entire country, the wealthy are able to bounce back much more easily than the poor or the middle class.
The bottom line is that a person’s place in the birth lottery absolutely influences their success later in life. The birth lottery is arbitrary. No amount of hard work will change where you were born. The arbitrary nature of the birth lottery means it’s justifiable to place an increased tax burden on the rich.
I generally don’t take politics personally. Sure, I’ve been called an “America-hating” liberal, a “socialist,” a “Constitution-hater,” and a host of other nonsensical and platitudinous insults. Usually, I recognize these attacks for what they are – a logical fallacy known as “argumentum ad hominem.”
One in four college students will suffer from some form of diagnosable mental illness this year. More than half of these college students will suffer from some form of depression. Unfortunately, a great number of college students will not seek professional help to assist in treating their depression. Nobody is quite sure how many cases of depression go undiagnosed because nobody can be sure how many depressed people do not seek help. No matter the number, it’s too many
Many people do not seek help for their depression because of the stigma that’s associated with the illness. For some, the idea of a “mental illness” is a misnomer. Unlike physical illnesses, in which the symptoms of the disease are clearly observable, the symptoms for mental illnesses are often hard for others to see. An individual suffering from abject emotional torment may even be able to hide the symptoms of a mental illness from friends or family. People may find it easy to empathize with someone who is visibly ill, willingly giving the sufferer time off or work or an extension on papers. For someone whose illness doesn’t manifest itself as prevalently, that same empathy may be harder to find. If our society is to overcome the depression epidemic, we must begin to recognize depression for what it is; a serious health problem that can have lasting consequences.
Even for people who acknowledge the reality of mental illness, depression still carries a damaging stigma. For some, depression is not seen as a mental illness, but instead a weakness or inadequacy. This is especially true for young men. Our culture forbids men from showing emotional vulnerability. As such, men often do not seek help when they need it most. It is a tragedy that suicide is the third leading cause of death for men aged 18-26. Perhaps if young men understood that it’s perfectly okay, and healthy, to be emotionally vulnerable, this wouldn’t be the case.
Men often see depression as an inability to cope with stress. Rather than associating debilitating depression with mental health, men associate depression with weakness. This often exacerbates the problems associated with depression. People who are depressed see the world entirely differently from people who don’t suffer from the illness. They often put inordinate amounts of pressure on themselves to overcome their perceived inadequacies; setting unrealistic goals and becoming more depressed when those goals aren’t met. For a young man who is taught his whole life to be a rock of emotional stability, this can be devastating. If this young man happens to be starting college, facing a whole array of new challenges in a whole new environment, coping with depression can seem insurmountable.
The beginning of the school year can be exhilarating. There are new classes, new friends, new acquaintances, and new challenges. Some people might be moving away from home for the first time. Others might be juggling work, school, a girlfriend, and extracurricular activities. The stress that is sometimes associated with transitioning into a new semester is often loss in the excitement of going to college. It’s important that people coming to college for the first time, or even those returning, take a moment to acknowledge the state of their mental health.
Colleges place a great emphasis on physical health. People must be immunized for various diseases before going to school, the flu shot is highly recommended, and pamphlets discussing healthy sleep habits and nutrition are often given to students. The topic of mental health, however, is somewhat overlooked. Students are certainly made aware of mental health services, but the topic can be awkward to talk about. Pamphlets for mental health services are briskly shoved in some drawer, and eyes gaze away when people start talking about how to cope with stress, depression, anxiety, or other mental health problems. Why?
It’s because of the stigma. We’re uncomfortable talking about mental health, because talking about our feelings makes us vulnerable. Nobody wants to feel vulnerable, especially in a new environment where first impressions can be so important. But mental health is serious. Depression can mean the difference between graduating or dropping out, having a large circle of friends or isolating oneself, and having a positive college experience or despising college.
This doesn’t mean we all need to sit in a circle, sing acoustic covers of Morrissey and take turns talking about our feelings. But it does mean we need to be away of our mental health, and take care of our minds in the same way we take care of our bodies. I encourage all students returning to UAA to take just a moment to think about their mental health, and how they can maintain it. Acknowledge that you are in a new environment, and stress is a perfectly normal reaction to the world around you. Think about healthy ways you will cope with the stress that you will inevitably encounter this semester. Think about people in your life you trust, and can talk to if things become overwhelming. This doesn’t need to be an hour-long introspective meditation. Take fifteen minutes out of your day, and think about it.
This is especially true for young men. Not because men need it more, but because they find it harder to acknowledge their mental health. If you are a male, and you are reading this, hear me now. Think about five people you know. Two of those people will suffer from depressive symptoms this semester. One of those five people will suffer from major depression, a very serious condition, before college is over. It’s important that these individuals know they can get help, and most importantly: there’s nothing wrong with being depressed.
When your body catches a cold, you deal with it. You take it easy, perhaps take some cold medication, and you give yourself the tools you need to recover quickly. Do not hesitate to give your mind the same consideration.
Students at UAA are all too familiar with the rising cost of college education. Protests on campus last year demonstrated that many students were not pleased with the Board of Regent’s proposed tuition hikes. I suspect that proposed tuition hikes in the future will be met with a similar response. Well, if you’re a UAA student who was planning on attending graduate school, you might want to think again.
As part of the recent debt ceiling compromise, Congress has eliminated subsidized federal loans for graduate students (they have also doubled the interest rate on subsidized loans for undergraduates, but that’s another story). A subsidized loan, or “interest-deferred loan,” allows students to attend school without accruing interest. Interest on a subsidized loan kicks in the day of graduation. However, Beginning in July of next year, students using the Federal Direct Student Loan Program (FDSLP) to help pay for graduate or professional school will begin accruing interest immediately after taking out the loan. Most students who take out loans for graduate school are unable to pay back anything during their education, meaning the interest on their loan will compound year after year. This will result in unprecedented levels of student loan debt. As an example, the average law student today graduates $75,000 in debt. After subsidized loans are done away with, this number will be closer to $90,000.
Congress has made the wrong decision for three reasons. First, they’re being hypocritical. Second, they’re hurting students who need subsidized loans the most. And third, they’re making it more difficult for American citizens to compete in a globalized, information-based economy.
On the first point; Harry Reid (D), Mitch McConnell (R), and John Boehner (R) all agreed that increased revenues (read: more taxes) would not be part of the initial spending cuts associated with raising the debt ceiling. Well, by doing away with subsidized loans, Congress is effectively imposing an additional tax on graduate students.
Let’s be clear – a subsidized loan is still a loan. It still must be paid back. Students still pay interest. The only thing that’s “subsidized” on a subsidized loan is the interest accrued during the time spent in school. Unless a student defaults on their loan, the lender (the U.S. Department of Education for almost all subsidized loans) will make money through earned interest. The government isn’t “losing” any money by subsidizing a loan.
The money earned through interest goes back to the United States. By definition, any money collected by the government in exchange for services is a “tax.” A subsidized loan can be thought of as a “tax break” for graduate students. The government provides a service – a low interest loan backed by the full faith and credit of the United States – and in return the government asks for a “tax” by charging students interest once they graduate. Congress has effectively eliminated this tax break, raising the tax imposed on graduate students.
In other words, Congress has decided to raise revenue, albeit through a roundabout mechanism. Congress refused to raise revenue by ending the Bush Tax Cuts, closing tax loopholes for the wealthiest corporations, or raising the Capital Gains Tax. Instead, they have imposed a tax on students seeking graduate degrees. Why is it that graduate students should be asked to pitch in and close the deficit, while the wealthiest Americans should not?
Now, let’s consider the impact this policy has on education. Students who are on the fence about going to graduate school, because of the cost, may now be deterred from attending graduate school. Students that considered medical school, law school, pharmacy school, or business school may now decide it is not in their interest to pay more for their loans, and choose less lucrative careers. This is turn results in less taxable income, and ultimately, less revenue for the government.
Congress could not have picked a worse time to implement a policy like this. The rising cost of graduate-level education and dwindling resources available for grants and fellowships means that an increasing number of students are relying on loans to pay for graduate school.
Let’s look at pharmacy school as an example. The pharmaceutical market is one the most profitable in the world. Despite the recent economic turmoil, individuals with graduate-level pharmacy degrees are in extremely high demand. As such, the cost of attending pharmacy school has risen by more than 50% in the last eight years. It now costs as much as $100,000 to receive a graduate degree in the pharmaceutical sciences. The same is true for almost all other graduate programs and professional schools.
According to U.S New and World Report, “the University of California system recently warned it will raise professional school tuition by as much as 31% in 2011.” Law Schools and Medical Schools across the country are raising tuition at an alarming rate. The research fellowships and TA positions that students once relied on to pay for graduate school cannot keep up with the inflating cost of education. Graduate students taking out loans has been a growing trend, and now those loans are more expensive.
In terms of the globalized economy, doing away with subsidized loans will make America less competitive. NPR reports that our nation’s top tier graduate schools (MIT, Columbia, and Berkley) are enrolling an increasingly large number of foreign students. In 2010, MIT granted more engineering PhDs to resident aliens than to American citizens. This is because foreign governments understand the value of highly specialized degrees in a globalized, information-based economy. To the best of their ability, they subsidize the education of their students, sending them to the best graduate programs in the world. The students then return to their home countries, doing wonders for their domestic economies, and fostering competition in the global economy.
The United States cannot rely on cheap labor to power its economy. Nor can it rely on low-skilled workers. The United States must make new investments in education, but it seems Congress is moving in the opposite direction.
On July 19, The House passed the “Cut, Cap, and Balance Act” (CCBA). The bill proposes to make “substantial cuts in spending… [create] enforceable spending limits,” and amend the Constitution so that the government must have a “Balanced Budget.” Granted, there’s no way that CCBA would pass through the Senate, and the President has stated…
In 1948, President Harry S Truman nicknamed the 80th United States Congress the “Do-Nothing Congress.” After controlling both houses of Congress for almost the entirety of the early 20th century, Democrats lost both the House and the Senate midway through Truman’s first term. Republicans who came to control Congress adopted a new strategy to halt American Progressivism — they became the party of “no.” They opposed much of FDR’s legislation. They opposed Truman’s Fair Deal legislation (which included universal health care). Joseph McCarthy, a Republican Senator from Wisconsin, helped launch a frantic wave of anti-Communist sentiment across the United States. McCarthyism, as it came to be known, was not only designed to stir up Americans against the Soviet Union, it was a platform Republicans used to castigate Democrats, who they thought were “soft on Communism,” or even Communists themselves.
This sounds awfully familiar. A relatively progressive liberal is in the White House. Halfway through his first term, both houses of Congress are controlled by Republicans. They oppose almost everything the President proposes (including universal health care). A right-wing populist movement, the Tea Party, is sailing through the country, accusing our President of adopting socialist policies. And once again, the Republicans have become the party of “no.” They are even saying “no” to their own ideas. In March of this year, Republicans on the Joint Economic Committee released a report called “Spend Less, Owe Less, Grow the Economy.” The report stated, “successful fiscal consolidations averaged 85% spending cuts and 15% revenue increases.” Yet, when the Obama administration proposed to an 83:17 ratio of spending cuts and revenue increases, Republicans demanded that increasing tax revenues be excluded altogether. Indeed, The party of “no” isn’t simply trying to be prudent; they’re trying to make Obama look bad. This political posturing comes at the cost of American taxpayers, who are currently waiting for Washington to come to find common ground in the debt ceiling debate.
While the Obama administration struggles to negotiate the terms of raising the debt ceiling, Republicans in Washington are as obstinate as obstinate as ever. 236 Republican members of Congress have pledged “ONE, oppose any and all efforts to increase the marginal tax income rate for individuals and business; and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.” This is an odd statement, given that 13 weeks ago, Republicans called for increasing tax revenues. This political war of attrition could have disastrous consequences.
As the Center for American Progress points out; failure to raise the debt ceiling leads to economic uncertainty. “Most businesses don’t make big investments or ramp up hiring when they see a substantial risk of the economy tanking…. We’ve shows that a two-month failure to raise the debt limit could result in the largest quarterly decline since 1947, when relevant data were first reported.” The uncertainty that currently plagues US markets is driven by the fear of a technical default on federal spending. This default will occur as soon as August 2nd unless a compromise in Washington is reached soon.
In the meantime, markets are already showing weaker confidence in the US economy. A common indicator of economic health is the Credit Default Swap Spread, or CDS Spread. The wider the spread, the more expensive it is to purchase a CDS (which is basically an insurance policy) on US Treasury Bonds. The Economist observes, “one-year protection is now almost as expensive as five-year protection. This is more often seen in distressed markets where investors are pricing in an imminent default than with otherwise healthy borrowers with long-term problems.” In other words, some investors no longer see the United States as having problems down the road, they see a real risk of default. If the Treasury actually misses a payment (which hasn’t happened since 1979), US Treasury bonds could lose their AAA bond rating. Losing this rating would cause interest on future bonds to be higher, meaning the United States would owe more money on further borrowing. This cannot be allowed to happen.
Hopefully, Republicans will learn from their mistakes. After the “Do Nothing Congress” attempted to shoot down Truman, Democrats won back both houses of Congress in the following election. President Truman went on to defeat his Republican opponent Thomas Dewey (who was heavily favored to win) by successfully demonstrating that stubborn and ideological Republican congressmen had stifled progress in Washington. America’s distaste for the “Party of No” paved the way for an era marked by liberal dominance. I don’t think either party should dominate Washington. I do think, however, that it would be in the best interest of Republicans to stop their political grandstanding, and actually help the economy.
In 1992, George H. W. Bush proclaimed, “there is a religious war going on in our country for the soul of America.” Indeed, beginning in the early 90’s, “public morality” – the ethical code that would define America – became the leitmotif of American political discourse. Abortion, LGBT rights, publically funded art, and religious schools became hot issues. Battle lines were drawn, allegiances were pledged, and the culture war had begun.
Conservatives declared their party to be the party of the founding fathers, a party that spoke to Bush’s “nation that we still call God’s country.” Liberals declared their party to be one of meeting new challenges and looking forward. They labeled themselves as progressive, moving into an American Enlightenment equipped with a fresh and superior understanding of poverty, sexuality, race relations, and public morality. The two parties became two competing value systems, warring voters in a race that would produce one winner and one loser. The parties decided that there was no compromise.
A “with us or against us” mentality infected Washington. America entered an unprecedented era of partisanship, as each of the two parties sought to label the other as not just imprudent, but morally wrong. Smear campaigns, character assassination, and candidate litmus tests became commonplace in American politics. As the culture wars spilled into the various branches of government, political appointments became centered around candidates opinion on hotly contested issues of public morality, and less about their abilities as leaders, judges, or diplomats. In selecting judges for our courts, a candidate’s personal opinion on abortion, for example, might be more valued than his or her ability to objectively adjudicate the law.
The rise of political pundits; Glenn Beck, Sean Hannity, Alan Colmes, Bill O’Reilly, and Ed Schulz have exacerbated the problem. All of these pundits, liberal and conservative alike, invent history, tell partial truths, gloss over complicated policies., and care more about lambasting their opponents than about truly examining prudent policies to help our country. Jon Stewart was onto something when he referred to this kind of “reporting” as “partisan hackery.”
I have asked staunch supporters of both parties how they feel about partisanship in Washington. When asked why they would support a clearly incompetent candidate who represented their party, they tell me: “because I know how they will vote.” Voting someone into office because they will vote “republican” or “democrat” drives our country further into partisanship. In order to guarantee a “republican” vote, conservatives support far right-wing candidates. One might throw their vote away if they dared to vote for a more moderate republican, who might “flip” on an issue. Consequently, party voting tends to produce candidates who are least willing to compromise on their values. When both parties do this, it produces a stalemate. Washington is becoming filled with obstinate fools who thrive off platitudes and vapid political rhetoric.
The culture war is problematic for effective governance, and now more than ever, we must declare a cease-fire. Today, the culture war has spread into the realms of economics, care for the poor and the elderly, education, health care, and foreign policy. Republican tacticians accused democrats of implementing “death panels” in the new Health Care Legislation. During the recent budget battles, conservatives claiming to be fiscal hawks spent tremendous amounts of political capital trying to cut funding for Planned Parenthood. It wasn’t all about the budget. Had their effort been placed elsewhere, perhaps they could have bargained for more than $38 billion in spending cuts.
The rhetoric employed in debating the current economic crisis reeks of the culture war. When income taxes for the super wealthy were close to 90% in the 50’s and 60’s, nobody described Truman, Eisenhower, or Johnson as “socialist tyrants”. Anymore, talk of raising taxes for the rich (read: ending the Bush Tax Cuts) results in accusations of tyranny and socialism. It isn’t tyranny, and it isn’t socialism. It’s prudent, and it probably needs to happen. Federal tax expenditures cost the government trillions.
Politicians on both sides of the aisle must realize that addressing our fiscal woes demands compromise. Revenues must be increased and spending must be curbed. Ending the Bush tax cuts and increasing the capital gains tax is a good place to start. Raising the retirement age, trimming entitlement spending, and addressing ballooning pension funds are also necessary. These kinds of policies require bi-partisan support. No party will save the economy alone.
Despite the gloomy outlook, there are signs of hope. Bi-partisan groups are beginning to gain support. One such group, No Labels, has already amassed hundreds of thousands of supporters. The front page of their website states “we are Democrats, Republicans, and Independents who are united in the belief that we do not have to give up our labels, merely put them aside and do what’s best for America.” This kind of bipartisanship and civility is exactly what Washington needs right now.
As our economy flounders and our international prowess evaporates, Democrats and Republicans alike are further entrenching themselves in ideology. This is not the time for idealism or populism. As our political spectrum spreads apart, moderates and independents are essentially ostracized from the political community. Because moderate politicians aren’t winning primaries, moderate voters are forced to choose between two extremes – the lesser of two evils. Politics should not be about choosing sides in a war for soul of America. There are issues we can all agree on, and perhaps we should start focusing more on the similarities, and less on the differences.
Cutting the national debt of the United States pervades almost every facet of today’s political discourse. Former U.S. Deputy Treasury Secretary Rodger C. Altman has called the post-2020 fiscal outlook “downright apocalyptic.” The aging population of our nation, coupled with exponential federal interest expense, is sending our country into a dangerous cavern of economic uncertainty.