Sunday, November 4, 2012

GOP censors truth on trickle-down failures, and hate civil service

If ever you need proof as to why we need independent, unionized civil service along with Democrats in charge, I can think of no better example than this story from recent days.

The Senate Republicans objected to a report made by the Congressional Research Service in September analyzing the Bush tax cuts and the effect tax cuts have on economic growth, and got the CRS to withdraw the report after complaining about some of its language, and its findings. If you read the actual report, you can see why the GOP hated it- because it shows trickle-down economics to be a fraud that does nothing to help our overall economy.

First of all, the paper gives a clear connection between the lowering of the top tax rates for the rich, and the funneling of income away from workers and up to the wealthy. It specifically mentions the trends starting with the lowering of capital gains rates in 1997, and continuing through the Bush tax cuts of the 2000s.
Research has shown that changes in capital gains and dividends were the largest contributor to the increase in income inequality since the mid-1990s. Capital gains and dividends have become a larger share of total income over the past decade and a half while earnings have become a smaller share. This suggests that labor’s share of income could also be related to the top tax rates.... The fitted values show that the labor share of income is higher with higher top marginal tax rates and higher top capital gains tax rates. This relationship is statistically significant.
I've touched on this in the past as well, and I'll bring back a couple of charts that discuss this trend over the last 45 years. First, note the drop in wages as a percentage of GDP, and then notice the increase in profits, and it shows how workers' production has been stolen and taken into the pockets of stockholders and CEOs as tax rates have been cut for the rich.

Wages as % of GDP

Corporate profits as % of GDP

And the final summary of the CRS paper makes this connection clear, and illustrates the failure (or perverse success) of supply-side theory.
The results of the analysis suggest that changes over the past 65 years in the top marginal tax rate and the top capital gains tax rate do not appear correlated with economic growth. The reduction in the top tax rates appears to be uncorrelated with saving, investment, and productivity growth. The top tax rates appear to have little or no relation to the size of the economic pie.

However, the top tax rate reductions appear to be associated with the increasing concentration of income at the top of the income distribution. As measured by IRS data, the share of income accruing to the top 0.1% of U.S. families increased from 4.2% in 1945 to 12.3% by 2007 before falling to 9.2% due to the 2007-2009 recession. At the same time, the average tax rate paid by the top 0.1% fell from over 50% in 1945 to about 25% in 2009. Tax policy could have a relation to how the economic pie is sliced—lower top tax rates may be associated with greater income disparities.
That's the bottom line of this report- trickle-down does nothing about increasing growth (especially important because economic growth is how Romney/Ryan claim they'll fill the deficit from their $5 trillion in tax cuts), but it does do Robin Hood in reverse- giving the rich a huge amount of the benefits.

But it's not surprising that the GOP would try to censor a report like this. This party tries to keep themselves and the people they govern in a bubble, and still attempt to operate like they did in 2004. Remember this quote on the eve of Bush's re-election?
The aide said that guys like me were ''in what we call the reality-based community,'' which he defined as people who ''believe that solutions emerge from your judicious study of discernible reality.'' I nodded and murmured something about enlightenment principles and empiricism. He cut me off. ''That's not the way the world really works anymore,'' he continued. ''We're an empire now, and when we act, we create our own reality. And while you're studying that reality -- judiciously, as you will -- we'll act again, creating other new realities, which you can study too, and that's how things will sort out.
- Ron Suskind, NY Times Magazine, October 17, 2004
This is why Republicans hate indepednent civil servants like those in the Congression Research Service, or in unionized public employees, because it gets in the way of creating their alternate reality.

We've seen it plenty of times in Wisconsin. Remember August 2011, when DHS Secretary Dennis Smith cherry-picked and lied about a report finding that showed Obamacare was a net positive for Wisconsin? Remember Scott Walker's false ads about job creation before the recall elections, which not only had the wrong numbers, but failed to show that Wisconsin's job growth was the worst in the Midwest? And how about the independent report this Summer which showed the Wisconsin Retirement System was fully funded and had no business being modified to a 401 (k) program? That report probably went a long way toward preventing the Walker Administration from trying to steal public worker pensions as their next tactic to "balancing" the state budget.

Republicans would love nothing more than to get these do-gooders in civil service out of the way, and hire their own hacks to fudge facts and make things up in official-looking reports to try to get their failed ideas through (a good exmaple is the sexed-up documents about Iraq's "weapons of mass destruction" that generally turned out to be bullshit). I have no doubt a President Mitt Romney (shudder) would hire a bunch of lackeys and ass-kissers in government service, and heavily pressure any dissenting opinions from ever seeing the light of day. And that would be to the detriment of everyone in this country, except for the well-connected few (again, much like what we've seen in Wisconsin these last 2 years).

So take the Senate GOP's censoring of the report on trickle-down's failure as yet another reason to go to the polls and pull the lever for the Dems on Tuesday. And not just because of 65 years of evidence that lower tax rates don't do a thing for productivity or growth, but do increase inequality and wage stagnation for the vast majority of Americans. But also because the Dems are more likely to support reality-based civil service, and therefore, are much more likely to come up with solutions that work, and work for more than just the elite, well-connected few.

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