The True Price of Mittenomics
by Bruce Fisher
Strain in the suburbs should Democrats falter
Consuming more and more, incrementally upgrading our cars, furniture, clothing, electronics, and of course our food, is, yea verily, the way of our people, and very possibly the way of all people, except those who currently look to the Taliban for fashion advice.
In the current American dialogue about how to resolve the choice between the supple and resilient Obama versus the alternately strident and benign-visaged Romney, there is a certain infantilism on display. To adults with any development at all of the superego, it is a grim experience to witness Romney pet the Pander Bear as he promises a restoration of Boomers’ pre-2008 crash dreams of all those effortless riches that came from our houses going up and up and up in value—the value that made our purchases of BMWs and vacations and private college tuitions possible, but that’s mainly gone now, and which we never wanted to admit to the local tax assessor ever existed. Boomers are whiny enough: Younger folks might be worse in their magical thinking, tepid on Obama because he didn’t unilaterally fix absolutely everything, but Romney and his market-research staff know that, too. He invites us all to Trimalchio’s feast.
And what a sly invitation he sends! Every American who came to consciousness after November 1989 may wonder what in the heck Romney is talking about when he talks about Russia being America’s number one foe, but everybody who lived through the Hungarian Revolution, the Cuban missile crisis, the Prague Spring, Vietnam, and the Sandinista-Contra fight perks up when Mitt kicks that other bear, the Russian one that starred in Ronald Reagan’s ads, because folks who came to consciousness in the 1950s and 1960s prefer the old world of Us and Them. It was simpler then. Mitt is the sonorous-voiced man with Stewart Granger’s grizzled temples, the white papa who tells the oldsters that the world is as they recall it: a far more straightforward place, not this complex kaleidoscope that this nuanced, cautious, non-dramatic, professorial stranger from Chicago tries to explain.
In this rich land of ours, where our Christmas advertising season will soon overlap our election advertising season (the World Series has shrunk to two media markets and some old white guys who already know who they’re voting for), there is no patience for arithmetic, or geography, or history. We want the world we were promised when Bobby McFerrin covered poor dead Bob Marley’s “Don’t Worry, Be Happy.”
White males of low educational attainment consistently poll for Romney. These are the crushed manhoods to whom the Right promises rescue. They do not want to be reminded that the free money of home equity is no more, and that Christmas will have to come out of cash. White females of low educational attainment drift toward Romney, too: Their stress is even greater, and the Obama speeches, enactments, and suits addressing equal pay for equal work have not been translated into better conditions in all the hundreds of towns in this country where the boss leaves Limbaugh on in the restaurant, the store, the warehouse, or the garage from noon to three o’clock every single damned benefit-free workday. In their experience, equal pay gets to college women in cities, not to them. In many of their minds, jobs with benefits go to men who look like Obama, not for men who look like their husbands.
This grim experience of low-wage work crowds out the grim-visaged scholars who speak the plain truth, which is that the United States is 40 years down the road of increasing and now, evidently, structural income polarization that is going to keep economic growth very slow, and, in the aftermath of the housing-equity collapse of 2008, keep consumer spending low, too.
A brand-new report from the International Monetary Fund says it again: When the one percent takes too much of overall income, economic growth slows down. The 99 percent just don’t have the purchasing power that they used to have to make the wheels of commerce turn like they used to. The tax system contributes to the problem: A falloff in the progressivity of the income-tax systems in the US and around the industrialized world has meant that public goods like education and infrastructure have been underfunded compared to previous years, because the tax dollars to buy that sort of stuff just aren’t coming in, and when they do come in, they’re used to pay debt service. Here, that means paying off the money Bush borrowed to wage two wars and rent the love of elderly Medicare recipients.
Eyes glaze over when one explains that our tax system has encouraged tax-avoidance ever since the grand compromise of 1986 was undermined. The essence of Reagan’s deal with Tip O’Neill and Bob Packwood, between the AFL-CIO and the Chamber of Commerce, was to cut the top income tax rate to 28 percent but to tax capital gains and the income from work as if it were all just money. That deal has been in tatters for years. Mitt promises to rip it further, and he has elderly whites, undereducated and arithmetic-averse suburbanites, wistful Boomers, and magic-loving Millennials, too, believing him. The high-income professional, the pro athlete, the executive who actually works for a living—they’re all livid that they paid a top rate of 39 percent under Bill Clinton, 35 percent under George W. Bush and Barack Obama, while a Mitt Romney or a Donald Trump or a Warren Buffett paid and today still pays a top rate of only 15 percent (if that), because income from speculating and from dodges like “carried interest” for Bain Capital partners gets smooched while work earnings get smacked. But now, Romney has something for them, too. The promise of a drop in tax rates to 28 percent has real salience among some moderate- and higher-income salarymen who concede that the hedge-fund managers and money-manipulators will make out even better than now, but these are aspirational consumers, aspirational voters, cravers of the world before their home equity collapsed.
There is a map of Romney’s victory archipelago. Go to Zillow.com and see what the suburbs of Buffalo, Rochester, Syracuse, Cleveland, Detroit, Pittsburgh, and other Rust Belt cities look like from the point of view of the Boomer empty-nesters who were planning to cash out and get themselves a Sun Belt casa, or at least buy the BMW, the tuition, and the vacation before downsizing to downtown. Here’s what the maps say: There’s a huge inventory of 40-year-old houses for which there are few if any Millennial buyers, and the prices that the shoulda-coulda-woulda sellers of 2008 thought they could get are no more. Mitt Romney and Paul Ryan have a lot of takers in that land.
But here’s what those folks don’t yet know. They’re being told to do the Right dance, the tax-cut dance, the Reagan Ghost Dance, and that if they do, their asset values will rise up again—the bison will return. But President Ryan (the chameleon Romney will become him) and the Tea Party Congress mean what they say: They will reduce or eliminate capital gains taxes, and a supine Senate will go along with them. They will turn Medicaid into a block grant, which will leave intact the Red states, which today get an average of 70 percent of their Medicaid paid for by the federal government, but which will hammer the Blue states like New York, which gets only about half its Medicaid bill paid for by Washington. The other half comes out of state and county taxes. Doctors, nurses, healthcare aides, pharmaceutical firms, and other providers of actual services will get crushed. Frail, ill, broke grandma, or your nephew whose head got cracked in a car crash, will live upstairs in your 1974 split-level on Deer Run Lane, not in anything like the places Medicaid pays for now. And the rest of the public apparatus that suburbanites expect their taxes to buy them will be eviscerated by that cost-shift to states and tax-capped counties. Go to Zillow.com land now and see how school budgets are doing today, before the cuts of President Ryan’s tomorrow of Medicare vouchers, uninsured college graduates, ramped-up speculation, and his own three-hour marathons all get enacted.
Quite bizarrely, while Emmanuel Saez of Berkeley and the University of Michigan’s Joel Slemrod pump out truly strong evidence that lower tax rates don’t and won’t produce economic growth, and while the New York Labor Department says that all the growth in jobs in this state has been in low-wage jobs, we are not hearing much about these realities in the 2012 campaigns. From Washington, the latest echo of unreality comes from the Brookings Institution, where two of its senior fellows are publishing essays and podcasts about how income polarization doesn’t really hurt anybody, and about how much the national debt has gone up in the last four years—as if it were Obama, not Bush, who borrowed for Afghanistan, Iraq, Medicare Part D, and the Wall Street bailout.
When the dour economists get ignored and the biggest, most-quoted think tank in the land starts to hedge its bets, it’s time to do as Samuel L. Jackson says and wake the flip up: The plutocracy that Albie Michaels, Paul Krugman, Stephanie Miller, and Tom Tomorrow have been warning us about smells a victory. Its win will come thanks to, but at the expense of, the scared white folks in the suburbia who can’t unload their real estate, can’t cope with $4 gas, can’t differentiate Russia from Mali, and won’t do the arithmetic about taxes, Medicare, or debt.
Bruce Fisher is director of the the Center for Economic and Policy Studies at Buffalo State College. His new book is Borderland: Essays from the US-Canada Divide, available at bookstores or at www.sunypress.edu.blog comments powered by Disqus
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