Romney and Ryan’s dangerous tax roadmap

By David Cay Johnston
September 7, 2012

Together Mitt Romney and Paul Ryan have put human faces on how the super-rich game the tax system to pay less, pay later and sometimes not pay at all. Both want to expand tax favors for the already rich, like themselves.

Their approach favors dynastic wealth with largely tax-free (Romney) or completely tax-free (Ryan) lifestyles, encouraging future generations of shiftless inheritors. What we need instead is a tax system that encourages strivers in competitive markets, not a perpetual oligarchy.

Romney and Ryan say that lowering tax rates and reducing or eliminating taxes on capital gains and dividends, while letting huge fortunes pass untaxed to heirs, will boost economic growth and mean prosperity for all.

We already tried parts of that, starting with Ronald Reagan in 1981 and doubling down with George W. Bush in 2001. Empirical result: Flat to falling incomes for the vast majority, weak job growth, but skyrocketing incomes for the top one percent of the top one percent, including Romney.

Romney, shifting the Republican focus away from red ink budgets, wants to slash income tax rates by 20 percent. Ryan has called for a 10 percent rate for married couples on the first $100,000, 25 percent above that. The details of both plans show they primarily benefit the highest paid and already rich, as multiple independent examinations have documented.

Romney also wants to greatly increase dynastic wealth by eliminating the estate tax, which I believe would have a devastating effect on future economic growth, entrepreneurship and social stability.

His plan would retain the gift tax, but it is already so porous that, as Reuters reported in January, the five Romney sons enjoy tax-free income from a $100 million trust fund on which no gift taxes were paid. Only about $2 million could have originally gone into the trust without triggering gift taxes.

SLASHING TAX RATES

Under Romney’s plan your economic future would be determined the same way it was in 18th Century France - primarily by who you picked as your parents, not by hard work, perseverance and that illusive element of luck.

Romney also wants to slash middle class spending programs, but despite issuing a 160-page plan he has not said just what he wants to cut or eliminate, asking voters to buy a pig in a poke.

Slashing tax rates, keeping the share of income taxes paid by the top unchanged and increasing military spending without any additional red ink may win votes from innumerates, but it is a mathematical impossibility. What is a mathematical certainty is that Romney would cut taxes on the rich and that everyone below the top would get a lot less back in services from the government.

The Romney tax plan is Bush II on steroids. The Paul Ryan plan is Romney supersized.

Ryan wants to lower Romney’s own remarkably low 13.9 percent 2010 federal income tax rate to almost nothing – and it would be nothing if Romney passed up lecture fees.

That is because Ryan’s 2010 “Roadmap for America’s Future,” would make capital gains, dividends and some other capital income tax-free. In April, 235 of 241 House Republicans voted for a new Ryan plan called “The Path to Prosperity” that obfuscated on taxes.

Nice deal for the already rich, not so much strivers and the vast majority who will never be able to live large on capital flows, taxed or not.

More than $21 million of Romney’s 2010 income of $21.6 million would be untaxed under Ryan’s 2010 plan.

Ryan now speaks for Romney’s version of reduced taxes on capital, but Ryan’s spokesman confirmed that Ryan’s goal remains making dividends, interest and capital gains tax-free for everyone. If Ryan’s plans become law then what little income Romney earns from speeches and other work could easily be wiped out through leveraged real estate investments and other tax favors Congress already bestows on investors.

Ryan poses as a tax-cutter, but his forthright 2010 plan would raise middle class tax burdens by half, as we shall see…

RICH GET RICHER

Hardly anyone in America knows more about how to avoid taxes than Edward Kleinbard, who spent decades as a tax lawyer finding creative ways for clients to defer or escape their obligations. He has been doing penance by exposing tax perfidies, from 2007 to 2009 as chief of staff for Congress’s Joint Committee on Taxation and since then as a tax law professor at the University of Southern California.

Kleinbard shows Ryan would turn individual and corporate income taxes into the equivalent of two large payroll taxes with the burden falling almost entirely on workers, not owners and executives.

The Roadmap “is a mechanism for redistributing tax burdens down the income scale,” Kleinbard wrote.

“Most ordinary Americans would see their tax burdens increase by around 50 percent,” he concluded, “while the most successful individuals would see reductions in their labor income tax rates, and elimination of all capital tax burdens – including the elimination of the gift and estate tax.”

Every independent and credible tax expert whose reports I have read, as well as my own analysis, reaches the same basic conclusions about the Romney and Ryan vision: lower taxes for the already rich and highly paid; heavier burdens on the middle class along with cuts in government services.

The Romney campaign told me it pays no heed to analyses by the Tax Policy Center, even though Romney cited its work when it favored him in the primaries. The nonpartisan center is led by Donald Marron, a former economic official in the administration of Republican President George W. Bush.

The Romney campaign wrote me that the center’s latest analysis is unfair and incomplete and “it’s written by a former OBAMA staffer (Adam Looney).”

I checked. Turns out Looney, listed last among three authors, was a Federal Reserve economist detailed to the White House Council of Economic Advisers because of his technical expertise. Looney is a technocrat, not a political operative.

Looney told me he has never participated in any political campaign “and I am not sure I am even registered to vote.”

Attacking Looney’s, and the Tax Policy Center’s, integrity is a low blow. It is also a way to divert attention from the merits, or lack thereof, in the Romney and Ryan plans.

And while not intended this way, those plans make the case for fundamental tax reform that honors the time-tested – and therefore profoundly conservative – principle of making those who gain the most from society bear the heaviest burden. Romney and Ryan would shove that burden onto those with less, a radical plan by an oligarch and his partner in promoting tax-free living for the richest Americans.

26 comments

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Of course I would love not ever having to pay taxes on capital gains or dividends. However, the math just doesn’t make sense. Either services such as food stamps, education, roads, etc. would have to be cut drastically or taxes would have to rise on the 99%. This might be through the elminiation of middle class tax benefits (mortgages, employer contributions to retirement plans, etc.). Either way, the Romney/Ryan plan will not grow this economy. I only hope that enough people are capable of discerning that.

Posted by ProfMagyar | Report as abusive

Of course I would love not ever having to pay taxes on capital gains or dividends. However, the math just doesn’t make sense. Either services such as food stamps, education, roads, etc. would have to be cut drastically or taxes would have to rise on the 99%. This might be through the elminiation of middle class tax benefits (mortgages, employer contributions to retirement plans, etc.). Either way, the Romney/Ryan plan will not grow this economy. I only hope that enough people are capable of discerning that.

Posted by ProfMagyar | Report as abusive

Of course I would love not ever having to pay taxes on capital gains or dividends. However, the math just doesn’t make sense. Either services such as food stamps, education, roads, etc. would have to be cut drastically or taxes would have to rise on the 99%. This might be through the elminiation of middle class tax benefits (mortgages, employer contributions to retirement plans, etc.). Either way, the Romney/Ryan plan will not grow this economy. I only hope that enough people are capable of discerning that.

Posted by ProfMagyar | Report as abusive

Just what we need, untaxed and unbridled mega rich in the US. That will finish them for sure.

Posted by wyldbill | Report as abusive

The content of this article is so clear that a three year old could understand it. Half of American adults don’t.

Posted by foiegras | Report as abusive

Any three year old could understand this article. Half of adult Americans can’t.

Posted by foiegras | Report as abusive

Johnston subscribes to a zero-sum view of the economy in which big brother has to take from those who have to give to those who don’t.

The problem is that this tried and tested recipe does not work, has never worked and will never work, e.g. today’s European debt crisis in which higher and higher tax rates are levied to squeeze resources on those who still have them to finance government largesse for an increasingly larger proportion of the population which feels increasingly entitled, which gradually end up smothering entrepreneurship, individual initiative, job creation and economic oportunities, economic growth and wealth creation.

So, when taxes cannot be reasonably raised any more, then big brother, who needs to be reelected, invariably resorts to borrowing while the entitled members of society take a siesta and wait for their government checks.

In the end economic inequalities do tend to dissapear, but they do so simply because everyone is brought down to the level of the lowest common denominator.

The discussion should not be whether to raise taxes on the rich or not (they already pay 70% of tax revenues while more than half of increasingly entitlement-dependent Americans don’t pay any taxes at all). The US shouldn’t have to tax your income or the wealth you or your parents or your grandparents worked to create. The discussion should center on whether the path of higher taxes, higher borrowing, government omniprescence, and government dependency is what we want to leave as inheritance to our children and, more urgently, whether it is at all sustainable anyway.

Posted by CAL59 | Report as abusive

Larry Flint is offering $1 Million for Mitt Romney’s Tax returns? Maybe this article makes sense after all:

Posted by RyanTK | Report as abusive

The biggest problem with both candidates is that they both share the assumptions of the late dynasty French Bourbons and the late Romanoffs that nothing they do can threaten their own survival. Neither can perceive the real threat, which is the end of America as anyone has ever known it.

They all think the USA is “too big to fail” and so they really have no need to deal with national problems. Just with perceived problems of their own class. That class is the Oligarchs.

Immigration has profoundly changed this country and the way American citizens treat one another. While there has been an undoubted increase in “hard work” especially at the lower, independent business level, there has also been a gigantic increase in legal discrimination originally intended to deal with the problems of an America over half a century gone. The Federal Government has built, for most Americans, a new Ottoman Empire. Rulers are dynastic and arrogant and isolated from the ruled. Political procedures are more like unvarying religious rituals. Ethnic sub-groups are left alone unless disobedient, with the exception of lower class whites. Emphasis is on accreting ever more wealth and power to the Oligarchs.

Such a system can be reasonably stable but economically and intellectually unsuccessful. But it is clearly not “America” as anyone has ever meant it other than geologically. Unfortunately, it is already in place. And it seems unlikely to be significantly dislodged short of catastrophic failure.

Neither candidate has a clue. They are oligarchs.

Posted by usagadfly | Report as abusive

Another attack the rich article.

Few if any facts, no analysis, and just hate for a conclusion.

But the same is true about u-bam-a and the romney/ryan as to facts and analysis.

The United States needs to overhaul its economic structure and tax code. But raising taxes on the rich to carry everybody else is not the answer; it will NOT work and will never happen.

The facts no one wants to read.

Learn to think for yourself.

Banned from huffpost.

Censorship is evil.

Posted by ALLSOLUTIONS | Report as abusive

Another attack the rich article.

Few if any facts, no analysis, and just hate for a conclusion.

But the same is true about u-bam-a and the romney/ryan as to facts and analysis.

The United States needs to overhaul its economic structure and tax code. But raising taxes on the rich to carry everybody else is not the answer; it will NOT work and will never happen.

The facts no one wants to read.

Learn to think for yourself.

Banned from huffpost.

Censorship is evil.

Posted by ALLSOLUTIONS | Report as abusive

Another attack the rich article.

Few if any facts, no analysis, and just hate for a conclusion.

But the same is true about u-bam-a and the romney/ryan as to facts and analysis.

The United States needs to overhaul its economic structure and tax code. But raising taxes on the rich to carry everybody else is not the answer; it will NOT work and will never happen.

The facts no one wants to read.

Learn to think for yourself.

Banned from huffpost.

Censorship is evil.

Posted by ALLSOLUTIONS | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy really means to anyone who is not wealthy.

It is also true this country is an oligarchy, not a democracy, exactly as it was meant to be. Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are much nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the substantial growth in the power of the wealthy class who have seized control of the federal government once again, after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today, a transformation which will take this country into yet another third-world nation of “haves and have nots”.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is completely worthy of that degree of trust. It is human nature that ALL power will be misused in relation to the amount it has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities. But then oligarchs rarely see the issues in national terms.

We need a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading quickly as the wealthy move to fight over what little is left of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy really means to anyone who is not wealthy.

It is also true this country is an oligarchy, not a democracy, exactly as it was meant to be. Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are much nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the substantial growth in the power of the wealthy class who have seized control of the federal government once again, after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today, a transformation which will take this country into yet another third-world nation of “haves and have nots”.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is completely worthy of that degree of trust. It is human nature that ALL power will be misused in relation to the amount it has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities. But then oligarchs rarely see the issues in national terms.

We need a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading quickly as the wealthy move to fight over what little is left of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy really means to anyone who is not wealthy.

It is also true this country is an oligarchy, not a democracy, exactly as it was meant to be. Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are much nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the substantial growth in the power of the wealthy class who have seized control of the federal government once again, after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today, a transformation which will take this country into yet another third-world nation of “haves and have nots”.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is completely worthy of that degree of trust. It is human nature that ALL power will be misused in relation to the amount it has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities. But then oligarchs rarely see the issues in national terms.

We need a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading more quickly as the wealthy prepare once again to fight over the remains of what little is left of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy really means to anyone who is not wealthy.

It is also true this country is an oligarchy, not a democracy, exactly as it was meant to be. Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are much nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the substantial growth in the power of the wealthy class who have seized control of the federal government once again, after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today, a transformation which will take this country into yet another third-world nation of “haves and have nots”.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is completely worthy of that degree of trust. It is human nature that ALL power will be misused in relation to the amount it has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities. But then oligarchs rarely see the issues in national terms.

We need a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading more quickly as the wealthy prepare once again to fight over the remains of what little is left of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy in absolute power really means to anyone who is not wealthy.

It is also true this country is an oligarchy, exactly as it was meant to be, NOT a democracy.

Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are MUCH nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the vast amount of structural damage already done to the US economy recently.

Indeed, ALL of what you see today is due entirely to the tax and free trade legislation that benefit ONLY the wealthy class at the expense of the 99%.

Since the collapse of the US economy in 2008, ALL efforts to revive it have been aimed at restoring the wealth of the 1%, which is why the stock markets have now regained ALL that they have “lost”.

But in fact the economic chasm between the 1% and the 99% has opened wider than it has in many decades, so the “bottom line” is the wealthy have not lost money at all, but gained enormous amounts of wealth at the expense of the 99%.

This is due entirely to the efforts of the Fed bank bailout insanity that in effect is no different than simply printing money, and a course of action that is absolutely guaranteed to cause stagflation and the economic collapse of this country.

To add insult to injury, the wealthy class are now demanding that they stop paying taxes at all, thus shifting their relatively small tax burden onto the 99%. But this can only happen if what little social programs this country has are destroyed, just so they can become wealthier.

The ugly truth is that this country will NEVER recover because the 99% are being forced to pay for the “gambling debts” of the wealthy class.

Unfortunately, it is about to get a whole lot worse.

This massive damage has been due entirely to the substantial growth in the power of the wealthy class, who have seized control of the federal government once again after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today will mean to them personally. It is a transformation which will take this country into yet another third-world nation of “haves and have nots”, with no future for anyone but the oligarchy.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the huge negative political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is worthy of that degree of trust.

Indeed, it is a fact of human nature that ALL power WILL be misused in relation to the amount the ruling class has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities.

But then, by their nature, oligarchs rarely see the issues in national terms, because to do so would automatically diminish their wealth and power.

The 99% need to demand a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading ever more quickly as the wealthy prepare once again to fight over what precious little remains of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy in absolute power really means to anyone who is not wealthy.

It is also true this country is an oligarchy, exactly as it was meant to be, NOT a democracy.

Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are MUCH nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the vast amount of structural damage already done to the US economy recently.

Indeed, ALL of what you see today is due entirely to the tax and free trade legislation that benefit ONLY the wealthy class at the expense of the 99%.

Since the collapse of the US economy in 2008, ALL efforts to revive it have been aimed at restoring the wealth of the 1%, which is why the stock markets have now regained ALL that they have “lost”.

But in fact the economic chasm between the 1% and the 99% has opened wider than it has in many decades, so the “bottom line” is the wealthy have not lost money at all, but gained enormous amounts of wealth at the expense of the 99%.

This is due entirely to the efforts of the Fed bank bailout insanity that in effect is no different than simply printing money, and a course of action that is absolutely guaranteed to cause stagflation and the economic collapse of this country.

To add insult to injury, the wealthy class are now demanding that they stop paying taxes at all, thus shifting their relatively small tax burden onto the 99%. But this can only happen if what little social programs this country has are destroyed, just so they can become wealthier.

The ugly truth is that this country will NEVER recover because the 99% are being forced to pay for the “gambling debts” of the wealthy class.

Unfortunately, it is about to get a whole lot worse.

This massive damage has been due entirely to the substantial growth in the power of the wealthy class, who have seized control of the federal government once again after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today will mean to them personally. It is a transformation which will take this country into yet another third-world nation of “haves and have nots”, with no future for anyone but the oligarchy.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the huge negative political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is worthy of that degree of trust.

Indeed, it is a fact of human nature that ALL power WILL be misused in relation to the amount the ruling class has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities.

But then, by their nature, oligarchs rarely see the issues in national terms, because to do so would automatically diminish their wealth and power.

The 99% need to demand a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading ever more quickly as the wealthy prepare once again to fight over what precious little remains of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

Mr. Johnston,

Your article is an excellent synopsis of the real problems facing this country today.

The comments by foiegras, and especially that of usagadfly above, further illustrate the problem underlying what you are saying.

Most Americans, for various reasons, don’t really understand the paradigm shift taking place in this country. Nor, as a result, do they seem to care.

The changes occurring today WILL take this country back to the “good old days” of France around the time of the French Revolution.

Unfortunately, I believe it is only when we have conditions comparable to the French economy at that point that we will awake to the issue of what a landed aristocracy in absolute power really means to anyone who is not wealthy.

It is also true this country is an oligarchy, exactly as it was meant to be, NOT a democracy.

Most Americans do not understand this because the federal government has been relatively benign during their lifetimes.

But the decades since WWII have been the exception, not the rule. As a result, they do not understand what this political and economic drift backwards in time will mean to them until it is far too late.

I agree with usagadfy that “it seems unlikely to be significantly dislodged short of catastrophic failure”, but he implies that is unlikely to happen in the near future.

However, I think we are MUCH nearer to that “catastrophic failure” than the vast majority of Americans understand, mainly because of the vast amount of structural damage already done to the US economy recently.

Indeed, ALL of what you see today is due entirely to the tax and free trade legislation that benefit ONLY the wealthy class at the expense of the 99%.

Since the collapse of the US economy in 2008, ALL efforts to revive it have been aimed at restoring the wealth of the 1%, which is why the stock markets have now regained ALL that they have “lost”.

But in fact the economic chasm between the 1% and the 99% has opened wider than it has in many decades, so the “bottom line” is the wealthy have not lost money at all, but gained enormous amounts of wealth at the expense of the 99%.

This is due entirely to the efforts of the Fed bank bailout insanity that in effect is no different than simply printing money, and a course of action that is absolutely guaranteed to cause stagflation and the economic collapse of this country.

To add insult to injury, the wealthy class are now demanding that they stop paying taxes at all, thus shifting their relatively small tax burden onto the 99%. But this can only happen if what little social programs this country has are destroyed, just so they can become wealthier.

The ugly truth is that this country will NEVER recover because the 99% are being forced to pay for the “gambling debts” of the wealthy class.

Unfortunately, it is about to get a whole lot worse.

This massive damage has been due entirely to the substantial growth in the power of the wealthy class, who have seized control of the federal government once again after having their power seriously eroded during the Great Depression.

I applaud your efforts, but I fear there is nothing that can be said to the 99% to make them aware of the swing back towards an oligarchy that is occurring today will mean to them personally. It is a transformation which will take this country into yet another third-world nation of “haves and have nots”, with no future for anyone but the oligarchy.

What the American 99% need to understand, but do not, is that history is replete with examples of wealthy class oppression of their “fellow countrymen” (i.e. those who are not born wealthy), along with the huge negative political and economic results of that oppression, which will ultimately destroy any nation so afflicted.

The American people have an unreasonable trust in this government that is almost unique in the West, but NO government is worthy of that degree of trust.

Indeed, it is a fact of human nature that ALL power WILL be misused in relation to the amount the ruling class has available, and this wealthy-controlled government is clearly out of touch with reality in terms of national priorities.

But then, by their nature, oligarchs rarely see the issues in national terms, because to do so would automatically diminish their wealth and power.

The 99% need to demand a massive movement of political and economic power back to the national level, and away from the global focus of the oligarchs, in order to survive as a nation.

The problem is that the 99% are fragmented and unable to even understand the problem, much less do anything about it. Thus, they are unable to effectively use the political machinery available to return the country to them where it rightly belongs.

Soon what little political process available to the 99% will disappear forever. In truth, it has nearly vanished at this point, and is fading ever more quickly as the wealthy prepare once again to fight over what precious little remains of our country in yet another meaningless election.

It is an unfortunate truism that those who don’t understand history will be forced to repeat it.

Posted by Gordon2352 | Report as abusive

@Reuters: Can we please remove the duplicated comments from this thread?
~~~
This is truly frightening, in the context of how much strain the US economy is already under (strain that has been partially hidden by several rounds of cosmetic “stimulus”, or negative static+cyclical default momentum that has been temporarily frozen).
The USA is basically painted into a corner at the moment. With the Euro zone finally starting to get a clue and rally together (thereby removing the main distraction from US economic weakness, or, the main backstop that has until now made the USA look COMPARATIVELY safe); the cynicism of short-selling investors will soon be directed back toward the USA, with its weak structural deficit and accumulated debt position.
If foreign oil suppliers start demanding payment in SDRs or gold (and the Chinese start selling their reserves anticipating a rout); then the USD could be in real trouble very quickly…
~~~
So, here’s one more band-aid “solution” for Mitt.R + Paul.R to shoe-horn into their 160-page bold “new” plan: Let’s return to the GOLD STANDARD (so that anyone with money can basically cash out of the US economy into gold, before it’s too late). This way, the über-rich will be able to escape almost completely unscathed when the US economy “unexpectedly” tanks as a result of their other policies…
~~~
Obama has not been good enough for the US economy. The USA badly needs a stronger president who knows that it’s a terrible idea to apply “stimulus” spending during a debt+confidence crisis according to priorities determined by political patronage. Obama might have put a temporary floor under the housing equity crisis; but unfortunately he’s no Clinton when it comes to spending policy or budgetary discipline. The US economy is STILL standing on a precipice…
~~~
So which (partly bad, partly good) option will the American people choose this November?

Posted by matthewslyman | Report as abusive

Columnist here,

@ALLSOLUTIONS, try reading again, as facts permeate my column including the excellent work by Ed Kleinbard. And nothing in it attacks the rich. My column describes the likely effects of the Romney-Ryan tax policy as best we can discern it from the candidate’s amorphous descriptions and his running mate’s most detailed past proposal.

It may surprise you to know that in 1961 the average federal income tax rate paid by the top 398 taxpayers (the only people who made more than $1 million in 1961 dollars) was more than 40 percent of their adjusted gross income.

That effective rate has been as low as under 17 percent in recent years even as top incomes have skyrocketed.

By one measure over the last half century the top 400 had their income tax rate cut 60 percent, while the bottom 90 percent had theirs cut just 20 percent and then all of that and more was taken back through higher payroll taxes since the Reagan administration, For the vast majority it meant that their total federal tax burden increased even as those at the top had their burdens lowered by more than half.

And for each additional dollar of after-tax income going to the bottom 90 percent at the end of this nearly half century the top 400 received more than more than $36.

In 2009 those making $500,000 to $77 million paid a much higher tax rate than the 400 who reported incomes of more than $77 million (average more than $200 million). Six of the top 400 paid a tax rate of zero or got money from the government, giving them a negative income tax rate.

My column detailing the facts on some of this is at http://blogs.reuters.com/david-cay-johns ton/2012/06/06/the-fortunate-400/

So the facts do not lend any support to your statements.

@ Gordon2352, I think Americans as a whole understand the reality of their economic situation. The question is whether they actively participate in shaping our nation’s destiny or outsource the work to others. We got rid of slavery, women got the right to vote, we got child labor laws and we can solve our economic problems, but only if choose to act rather than wish.

Posted by DavidCayJ | Report as abusive

For the record, I’m actually a lot more optimistic about the economic & political future of the West than (say) Gordon2352 (post above)… Only, as he suggests, our politicians had better not get complacent, thinking that what happened to the British Empire can’t happen to U.S. domination of world trade, diplomacy & military affairs. We only deserve this position, and will only retain it; if we are wise and diligent custodians of the power we possess – and humane, free, thinking societies. Discussions like this (evidence that there are more than a few people who recognise these dangers) actually give me hope…

Our political systems are uniquely well calibrated with checks and balances to ensure that polar extremes of political thought cannot occupy the halls of power for long. Before long, the pendulum must swing in the opposite direction (thankfully in our case, without requiring a bloody revolution to complete its movement).

So here’s a tribute to a free-thinking, innovative, politically balanced West…

Posted by matthewslyman | Report as abusive

@Reuters, @DavidCayJ:
~~~
There’s been a long-standing technical problem in Reuters’ WordPress blogging platform (in addition to the security problems I hear you’ve been having). I’ve mentioned it previously but nothing has been done about it.
~~~
Whenever a blog article title includes an apostrophe, this creates issues in the display/ input processing of comments for certain browsers (such as Google Chrome). When I submit a comment under these circumstances, the comment is accepted by the server, but the next page appears to take forever to load (so, combined with your moderation policy, it appears to the end-user that the comment has not successfully been transmitted – that there has been an HTTP error or something like that).
~~~
As a temporary work-around until the Reuters technical people wake up, you might consider avoiding titles with apostrophes in them…

Posted by matthewslyman | Report as abusive

Problem is, “deserving” a position of world domination. No one — and no country, oligarch, corporation — is or can be/become deserving of such a role. (Referencing mattewslyman’s comment of 9/12.) Problem is, most of us have survival-interests which enmesh us with one or another of these bodies — be we line-workers for GE, a university don or policy-maker — so as to make it basically unthinkable to consider scrapping the world economic structure wholesale. But that sort of thorough-going renovation is what is needed — and has been needed — since, (pick a date!) shall we say, the close of the 100 year war between England & France. That was a time when it became clear to the peerage of Britian that they no longer needed “standing armies” of serfs, since the threat of war had abated, plus there was more profit in sheep, with the opening of wool trade with the Dutch merchantiles. Thus, the “enclosures” of commons for this purpose and the wholesale displacement of, say, 60% of the tenants who’d lived & worked the estates began in deadly earnest. All sorts of machinations & guile at the level of common law ensured. In the end, the nature of life in Great Britain changed a great deal for the “working folk.” Dispossessed of landholds that had been in existance for 1000+ years, deprived of recourse through the courts, these people became what was termed “the sturdy beggars” of the 16th & 17th century. (“Sturdy beggars” because they weren’t blind, crippled or otherwise infirm, thus, not the ordinary sorts people were, at that time, used to.)
Note, if you will, how similar this economic/political dynamic was to the present day, in it’s impact on classes of people: The were no longer “necessary” to the goals of the ruling classes and, thus, were simply discarded. Whether they lived, died or did something else was of little concern to the landowners; the money had moved on to sheep. If they migrated to the larger industrial towns, they became mill-hands or labor. They lived in fetid conditions and employers had no responsibility to care for the sick or to provide food in times of want — as they almost alway had been, traditionally, expected to do when these populations were working the estates and on call for defense! Those who became drunken, disorderly or given to crime were, in fact, seen as a problem, of course. These were the very folk shipped to populate the Southern U.S., Alabama, Geogia, the Carolinas.
Oddly enough — aren’t these the very stock of today’s U.S. right wing, moved ahead 2 or 3 centuries? Wasn’t it these folk, among the whites from Europe, who visited a similar genocide upon the Native Americans & acted out their self-contempt upon the identifiable “other,” the African blacks?
In today’s world, according to Wolfowitz-neocon thinkers, 90-95% of the world population is no longer needed to produce goods. Advanced robotics have replace almost all hands-on assembly, etc. Industrial farms could be down-scaled and practices made sustainable if the population to be fed were reduced, say, to 20% of those living on earth. That’s the real game plan, for this century & beyond. The move is on to squeeze down to a fine-combed elite those who are allowed to stay on, at all levels & walks of life. If what I’m saying seems impossible, go strike up this conversation with a British peer; you’ll find, I believe, that these are the sorts of consideration that commonly figure in social & educational policy at national levels.
The very idea that an elite can “deserve” to be dominant over the very existance of whole masses of people — isn’t that more that just a little insane? Utterly outrageous? Beside being monsterous, isn’t it, finally, becoming vividly obvious the sort of impact this outlook has on its own perpetrators, over time? William Bourroughs called the oligarch leadership “giant, fur-armed insects,” no longer capable of trust, tenderness, art or, in all likelihood, even regeneration. Most people are pretty fundamentally unwilling to look squarely at these implication, not because the arguements are difficult or the examples obscure, but, rather because they feel themselves entirely enmeshed in this, our aggressive economic/political ghestalt. The fear is, if one were to admit what a real mess we’ve engendered among ourselves on this planet, that we’d simply be excised, cut short. That’s been the fate of a great many, surely, since this great debate started in earnest in the 17th century “age of enlightment.”
“Duck the issue & get by to retirement; work around the edges & don’t rock the boat!” These have been the political/economic dodges we’ve used to stay safe & stay present in many long centuries. Trouble is, as we notice now, graphically, that whole generations of discarded homosapiens are, in fact, actually living in garbage & dung heaps, it is progressively harder to imagine ourselves & our off-spring as somehow exempt from a similar fate!
I didn’t really intend to write a whole essay here, but I’ve just come to grips with the fact that my own life is, in fact, tailing down and I’m in a good position to assert that I have found it entirely possible to live & live richly and well on this planet while remaining both reasonably conscious and entirely harmless, in terms of my “footprint.”

Posted by shastakath | Report as abusive

Referencing @mattewslyman’s comment of 9/12: Problem is, “deserving” a position of world domination. No one — and no country, oligarch, corporation — is or can be/become deserving of such a role! Arguing as to who or what is qualified to “run things” & impose their decisions on others misses the point & needs reframing. Problem is, most of us have survival-interests which enmesh us with one or another oligarchy — be we line-workers for GE, a university don or an elected policy-maker. Isn’t it basically unthinkable to consider scrapping the world economic structure wholesale, let alone to debate it? But that sort of thorough-going renovation is what is needed — and has been needed — since, (pick a date!) shall we say, the close of the 100 year war between England & France? That was a time when it became clear to the peerage of Britain that they no longer needed “standing armies” of serfs, since the threat of war had abated. Plus, with the opening of wool trade with the Dutch merchantiles, there was more profit in sheep! The “enclosures” of commons for this purpose and displacement of, say, 60% of the tenants who’d lived & worked the estates began in deadly earnest. All sorts of machinations & guile at the level of common law ensured. In the end, the nature of life in Great Britain changed a great deal for the “working folk,” who were dispossessed of landholds that had been in existence for 1000+ years. Deprived of recourse through the peerage-owned courts, these people became what was termed “the sturdy beggars” of the 16th & 17th century. (“Sturdy beggars” because they weren’t blind, crippled or otherwise infirm, thus, not the ordinary sort.)
Note, if you will how similar this economic/political dynamic then was to the present day, in its impact on people: Those no longer “necessary” to the goals of the ruling classes were discarded. Whether they lived, died or did something else was of little concern to the landowners; the money had moved on to sheep. If they migrated to the larger industrial towns, they might be used as mill-hands or labor, living in fetid conditions. Employers had no responsibility to care for the sick or to provide food in times of want — as they had been, traditionally, expected to do when these populations were working the estates and on call for defense! Those who became drunken, disorderly or given to crime were seen as a problem. These were the very folk shipped to populate the Southern U.S., Alabama, Georgia, the Carolinas.
Oddly enough — aren’t these the very stock of today’s U.S. right wing, moved ahead 2 or 3 centuries? Wasn’t it largely these folk who subsequently visited expulsion/genocide upon the Native Americans & acted out their own self-contempt upon an identifiable “other,” the African blacks?
In today’s world, according to Wolfowitz-neocon thinkers, 90-95% of the world population is no longer needed to produce goods. Advanced robotics has replaced almost all hands-on assembly, etc. Industrial farms could be down-scaled and practices made sustainable if the population to be fed were reduced, say, to 20% of those living on earth. That’s the real game plan, for this century & beyond. The move is on to squeeze down to a fine-combed elite those who are allowed to stay on, at all levels & walks of life. If what I’m saying seems impossible, go strike up this conversation with a British peer; you’ll find, I believe, that these are the sorts of consideration that commonly figure in social & educational policy at national levels.
The very idea that an elite can “deserve” to be dominant over the very existence of whole masses of people — isn’t that more than just a little insane? Utterly outrageous? Besides being monstrous, isn’t it, finally, becoming vividly obvious the sort of impact this outlook has on its own perpetrators, over time? William Burroughs called the oligarch leadership “giant, fur-armed insects,” no longer capable of trust, tenderness, art or, in all likelihood, even regeneration. Most people are pretty fundamentally unwilling to look squarely at these implications, not because the arguments are difficult or the examples obscure, but, rather because they feel themselves entirely enmeshed in this, our aggressive economic/political gestalt. The fear is, if one were to admit what a real mess we’ve engendered among ourselves on this planet, that we’d simply be excised, cut short. That’s been the fate of a great many, surely, since this great debate started in earnest in the 17th century “age of enlightment.”
“Duck the issue & get by to retirement; work around the edges & don’t rock the boat!” These have been the political/economic dodges we’ve used to stay safe & stay present in many long centuries. Trouble is, as we notice now, graphically, that whole generations of discarded homosapiens are, in fact, actually living in garbage & dung heaps; it is progressively harder to imagine ourselves & our off-spring as somehow exempt from a similar fate!
I didn’t really intend to write a whole essay here, but I’ve just come to grips with the fact that my own life is, in fact, tailing down and I’m in a good position to assert that I have found it entirely possible to live & live richly and well on this planet while remaining both reasonably conscious and entirely harmless, in terms of my “footprint.”

Posted by shastakath | Report as abusive

Glad we dodged this bullet (Romney/Ryan tax plan). Is the president’s tax plan better? If so, how?

Posted by mamaier262 | Report as abusive