How Romney Could Win the Presidency And Save the Republic (And Why He Won’t)
by Thomas Magstadt
At this perilous moment in the nation’s history, nobody is better positioned to restore public trust - or take the White House back for the Republicans – than Mitt Romney. My prediction is that he won’t do either because he believes he can do one (win the presidency) without the other (restoring public trust).
Oddly enough, while poll after poll shows that most Americans no longer trust our basic institutions, they continue to believe the people who run them got where they are on basis of superior merit and talent. This belief flies in the face of mounting evidence of corruption and incompetence at the top.
Despite a steady stream of news about scandals in business (WorldCom, Enron), banking and finance (Countrywide, Merrill Lynch, Lehman Brothers, JP Morgan Chase), journalism (Iraq War, WMD, and Judith Miller), sports (Mark McGwire, Barry Bonds, Roger Clemens, and doping), and, of course, politics (Watergate, Iran-Contra, the Keating Five, NSA warrantless surveillance), the public is still being gulled into believing what corporate media shills say about everything from global warming to health care.
Few public policy issues are more confusing and convoluted that our bizarre federal income tax code. The system, like the political and business elites who created it and now shamelessly perpetuate it, is designed to deceive most of the people most of the time.
Most middle-class taxpayers know the system is rigged in favor of corporate interests and wealthy individuals, but few understand when or how it happened – or the real reasons why. Indeed, the winners like it that way and reward politicians and journalists who play along.
Here are six facts that provide a glimpse into the origins and scale of the problem:
- In the past 10 years the income of the top 1% has risen by 18%, while that of blue-collar male workers has fallen by 12%; meanwhile,
- In the early 1950s, the federal-state-local revenue structure changed from one in which high income tax returns on average paid over 4 times the percentage of the average for the bottom fifty percent; today, the lowest fifty percent pays one-fourth more as a percentage of adjusted gross income (AGI) than the top one percent.
- Based on estimated gross income the lowest fifty percent of tax returns, on average, now pay nearly two thirds more as a percent of total income than the top one percent of tax returns.
- The top federal tax rate of 35% is a farce: most wealthy individuals pay nowhere near that level thanks to countless loopholes, the 15% tax on long-term capital gains, and the maximum taxable income for Social Security and Medicare capped at just $106,800 – a nice tax break for the 7.8 million households (a 2009 estimate) with over a million dollars in annual income.
- Half the nation’s wealth is excluded from the tax rolls; meanwhile the net worth of the 400 Americans at the top of the wealth pyramid is now greater than that of 150 million on the bottom.
- According to the OECD, the US ranks with Mexico and Chile as having the highest level of inequality among the world’s advanced economies, an imbalance that has grown steadily worse since 1985.
Ironically, the rest of the world sees the hypocrisy at the core of our public life even as we continue to tolerat
e (and thus enable) it. Some months back, the British Guardian ran an article on the debt-ceiling debacle in the US Congress that highlighted the unfair US federal income tax. The result of “such regressive policies” it noted (correctly) “is a level of inequality unknown in other developed nations.”
On the spending side of our budget woes, few lawmakers (whether Democrat or Republican) want to talk seriously about deep defense cuts. Pentagon spending is a sacred cow in Congress, and in the 50 states where military bases and defense industries dot the landscape it’s the goose that perennially lays the golden egg.
In 2000-2001, the last year of President Bill Clinton’s two-term presidency, the federal government ran a small surplus (not counting money “borrowed” from Social Security); between 2001 and 2007, the costly war on terror and the notorious across-the-board tax cuts gave rise to huge annual budget deficits totaling some $3.686 trillion in just six years (2001-2007).
The “tax and spend” chief executive with the compliant Congress during those years was George W. Bush. The other "conservative" president who ran up the biggest deficits in the nation’s history was, of course,Ronald Reagan.
Romney could acknowledge that his party has not been honest with the voters and taxpayers about its commitment to fiscal responsibility and a balanced budget. He could promise to the party to its lost principles. He could – and it might get him elected – but he won’t.
According to G. Ross Stephens, a recognized expert in the field of intergovernmental relations and public finance: “Massive increases in [defense-related] procurement contracts have altered the effects of federal expenditures…. Over three decades, step by step, tax loophole by tax loophole, like a parasitic worm, fiscal policy on the three levels of government has redistributed wealth upward to large corporations and the very wealthy.”
Not accidentally, the historic downward shift in the tax burden is associated with a steady erosion of middle class savings, a steep rise in middle class indebtedness, and loss of consumer confidence. All the talk of “class warfare” emanating from the talking heads on Fox News, among others, is a thinly disguised cover for what has really been happening in this country over the past few decades. It is a form of class warfare but it is certain members of the super-rich elite and big corporations with massive lobbies in nation’s capital that are waging war on the middle class.
In sum, the tax burden has fallen increasingly on the middle class at the same time that government on all levels has sunken deeper and deeper into debt. We have a tax system riddled with loopholes and based on a shell game. Mitt Romney is "Exhibit A". Deceiving voters and taxpayers is something our dysfunctional Congress has elevated to an art from.
No republic has ever prospered or endured without a stable currency, sound public finances, a vibrant labor force, fair taxes, and a thriving middle class. The US for all its supposed “exceptionalism” is no exception.
The trend toward ever-greater inequality in this country is past the tipping point. The “winners” are now so few and so powerful that they alone can save the system from the dire consequences of popular distrust and the prospect of a continuing slide into indentured servitude for millions of debt-burdened Americans.
As the new face and voice of the super rich, Mitt Romney could lead the way. He could begin by disclosing his tax returns. If the real number is 13%, that’s a bit too low for a guy whose annual income over the past two decades reportedly averages a cool $20 million.
Romney could turn this roaring negative into a positive. He could point out that he has broken no laws but has benefited from a tax code that unfairly favors the wealthy and taxes “earned income” at a much higher rate than “capital gains”. He could promise if elected to use the full powers of the presidency to push real tax reform through Congress, to fight for fairness and progressive policies across the board, and to balance the federal budget not by cutting Medicare or privatizing Social Security but rather by slashing bloated and wasteful defense outlays.
Of course, many of his super rich backers would cry “foul”. Many would feel betrayed and threaten to...to do what? Cut off the money flow? Back Obama? Hardly. Billionaires like the Koch Brothers and the casino baron Sheldon Adelson have nowhere else to go. Not to mention the fact that there are fair-minded members of the über rich class – Warren Buffet comes to mind – who would probably support a well-designed plan to move toward tax fairness and fiscal sanity.
While he’s at it, Romney could truthfully say Obama had his chance and blew it. And he could pledge, “No more federal bailouts for banks and corporations too big to fail and zero tolerance for financial fraud, insider trading, and all manner of crime in the suites.”
He could say these things, but he won’t. Even if he did, who would believe him now? Romney’s choice of Paul Ryan as his running mate is a harbinger. What it foretells is the outcome of this election and the fate of the country.