Saturday, November 01, 2008

In a Country Well Governed, Poverty Is Something to Be Ashamed Of. In a Country Badly Governed, Wealth Is Something to Be Ashamed Of.

Senator McCain's lead pollster, Bill McInturff, said "We're going to get a downscale, less well-eduacted, rural, older, white voter that, I believe, is going to vote and break towards John McCain and make the race closer." That may be the most honest thing ever said by a McCain aide, but it just highlights the division that the McCain campaign has been running on since Barack Obama proved to be an admirable challenger.

Since an overwhelming majority of people rank the econmy as the number one issue in this campaign, McInturff's assertion that these voters will break McCain's way can be seen in two different ways. One, these less well-educated, rural, older, white voters are racist and will vote for McCain by default. Two, these less well-educated, rural, older, white voters believe that the Republican platform of less regulation and benefits to the corporate class help the economy. Neither of these lines of thought are particularly flattering to these voters.

McCain's contention is that America has the second highest corporate tax rate among OECD (Organization for Economic Cooperation and Development) countries at 39.3% is true, but is only half the picture. The United States has so many tax benefits and special preferences for businesses that two-thirds of the corporations doing business here paid no taxes from 1998 to 2005, while collectively reporting $2.5 trillion dollars in sales according to the United States Government Accountability Office in a July 2008 report.

McCain wants to reduce the corporate tax from 35% to 25% and permananetly slash the capital gains tax from 15% to 7.5%. He says that both of these measures will help the U.S. economy by creating jobs. But two-thirds of corporations already don't pay taxes and two-thirds of people who pay capital gains taxes are millionaires. In addition, McCain's personal tax cuts are just a retread of the Bush tax cuts. The last eight years should demonstrate clearly that these did not create jobs, they only created wealth.

The middle class does not benefit from the generation of wealth. The OECD released a report on October 21, 2008 showing that the United States has the highest inequality and poverty in the OECD after Mexico and Turkey, and the gap has increased rapidly since 2000. The Internal Revenue Service data from tax returns filed between 2002 and 2006 show that household income grew by $863 billion during the period. The 15,000 families at the top of the income scale saw their annual incomes go from about $15 million a year to nearly $30 million. They alone accounted for more than 25 percent of all of the growth in income for the entire country. The remaining 1.7 million families in the top 1 percent of households accounted for nearly another 50 percent.

According to the Economic Mobility Project, only 7% of children born to parents in the bottom wealth quintile make it to the top quintile in adulthood and 36% of children born to parents in the bottom wealth quintile remain in the bottom as adults. If McCain believes in "spreading the opportunity around," then why doesn't he have a proposal that will?

As George W. Bush said, "This is an impressive crowd: the Have's and Have-more's. Some people call you the elites. I call you my base.” Isn't this McCain's base too?

8 comments:

Anonymous said...

So where is the wealth created in Obama's plan? To lower taxes of the poor and middle class? Bush sent everyone $600 and none of that went to create wealth - it went towards spending. Wealth isn't created by saving someone $1,000 on their taxes. It is created by encouraging people to save money and for taking risks (i.e. starting up a business).

Jim said...

Obama's plan is to create jobs through energy initiatives and rebuilding America's infrastructure. These jobs, coupled with his tax cuts, will stabilize the middle class while a new field is founded for export to other countries. In addition, he has spoken about the need for the auto industry and its need to develop a more efficient automobile. This would be another area for America to grow.

A majority of economists theorize that the wealthy save their money and the middle class and poor spend their money. Wealth is created from capital being added to the economy, so tax cuts are not in vain.

Unknown said...

Giving someone a job in a auto factory doesn't create wealth. While your response sounds nice, it really doesn't say anything more than "campaign speak".

As for the wealthy hording their wealth, they keep thier wealth in investments that they want to go up. They don't horde money, they horde shares of companies. These same companies are owned by most of america right now through their 401k. The wealthy benefit (as does the rest of the country) from seeing these investments grow. Warren Buffett "hordes" money, but he benefits by seeing the entire pie grow, and the rest of us benefit along with him.

Also, explain to me what you mean by saying capital being added to the economy creates wealth? Does this only work when capital is added from the bottom (spending) or could it work from the top as well (your dreaded trickle down)?

Jim said...

Wealth is the annual produce of the land and labour of the society, according to Adam Smith. That is the definition that I am using. Money that enters the economy produces overall wealth because it creates a demand for goods and services, which in turn, creates a demand for jobs. It doesn't matter where the money comes from.

Anonymous said...

I define wealth like the great economist Chris Rock. "Shaq is righ. The guy who writes his check has WEALTH." When I say wealth I am discussing people reaching financial freedom.

Oh, and that wasn't nicole posting.

Jim said...

Why don't you get a gmail account so I don't have to guess who I am talking to? I guess I shouldn't complain since you are the only one who talks to me.

I have financial freedom, but I am not wealthy. Are you?

Anonymous said...

I want not concur on it. I think precise post. Specially the title attracted me to be familiar with the sound story.

Anonymous said...

Hi all

The good vibe for everybody.
Problems of health blogging me at home (for the moment) I take of come here, participate a little good grow has all !

Keep smiling, Dennis from [url=http://www.myonlinepayday.com]Personal Loans[/url] website!