A few days ago, October 19, there was a debate, unrelated to
a candidate campaign, between Senators
Ted Cruz and Bernie Sanders on CNN. [Transcript
here.]They had
one a while back on Obamacare. This one was specifically about taxes,
concurrent with a tax plan working through the legislative process right now.
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screen shot from here |
Ted Cruz started with this summary:
This debate is very, very simple. Bernie and the Democrats
want every one of you watching today to pay more taxes. And Republicans want to
lower the taxes for each and every person watching this debate.
Now, tonight I'm going to make a prediction. Bernie is going
to suggest in just a few seconds that this is not really about you, this is
about, "taxing the rich." That's what the Democrats always say. But
here's what you need to know. Every time Bernie says the rich, what he means is
taxpayers. And so if you pay taxes, he's talking about you.
And Bernie Sanders begins with, wouldn’t you know, coveting
the rich and hating on those evil Koch brothers:
Let me make a prediction:
In two minutes, Senator Cruz is going to tell you that if we
give tax breaks to the billionaires like George W. Bush did, like Ronald Reagan
did, we're going to create zillions of jobs and you're all going to become
very, very rich, that we have a trickle-down economic theory, tax breaks for
the wealthiest people, the largest corporations, and, whoa, everything is good.
That is a totally fraudulent theory. Here is the reality of
American society today. For 40 years, the middle class of this country, the
great middle class has been shrinking. And what we have seen is a massive
transfer of wealth from working families to the top 0.1 percent, trillions of
dollars because of cooperate greed and an unfair tax system.
Now, the Trump Republican tax proposal that's before us
today, this proposal is being pushed by Senator Cruz's campaign contributors,
some of the wealthiest people in this country, by the Koch brothers, who are
worth $90 billion. Why are they pushing this agenda? Because 80 percent of the
tax breaks in this proposal will go to the top 1 percent.
In fact, 30 percent of the middle class will end up paying
more in taxes. Forty percent of the tax benefits will go to the top 0.1
percent. This is massive tax breaks for the wealthy.
So it took one minute, just 163 words, to get to the Koch
brothers, who are virtually never mentioned at Republican meetings (I attend
many), or at tea party meetings (I attend even more of those), or on
conservative radio, or in conservative articles. In fact, the first time I ever
heard of them, it was in a left-wing pro-socialist article, claiming they had a
stranglehold over all conservative thought—so I, a conservative thinker, looked them up just to know who they were. I wrote about them in
May 2011.
There are, of course, exaggerations in Sanders’ prediction about what Cruz would claim: “zillions
of jobs,” everybody becomes “very, very rich,” etc. So that even saying “more
than zero jobs will be created” would sound like something to be flippantly
dismissed. But I thought I’d look at some of the data.
Sanders says the
middle class has been shrinking for 40 years. Not sure that’s essential
knowledge, but it seems measurable. So I looked it up. I think the data
probably comes from a
Pew Research Study.
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Screen shot from here |
Today the middle class is about 49.9%. That means that’s the
percentage earning a middle income.
Pew Research defines that as “two-thirds to
two times the national median income for your household size” or about $46,000
to $141,000 for a 4-person household. Roughly 29% make a lower-class
income, which includes entry-level workers, full-time students, retirees—not simply
full-time workers who can’t make ends meet, although they are among this level.
Another 21% make upper incomes.
The change has been happening over 40 years. But Bernie
would have you believe this is all bad news. There has been a slight growth in
lower-income households: from 25.2% in 1971 to 29% in 2015, so, over about 4 ½ decades—coinciding,
incidentally, with the “
War on Poverty.” Hmm.
But, most of the dwindling middle class has come at the
upper end: from 14% in 1971 to 21.1% in 2015. So the middle class lost 3.8% to
the lower class, and 7.1% to the upper class. In other words, more people are
moving up. That’s not a bad thing.
Here’s another detail: “Upper-class Americans have seen
their incomes rise 47 percent, while lower-class families have gained only 28
percent.” This is not a bad thing either, if you realize the good stuff is
happening to more people. Unless you’d rather see bad happen to everyone if
good isn’t happening to you.
And here’s another thing to note: while lower income
families aren’t gaining as fast as we’d like, it’s not mostly the same families
staying in poverty over those decades. Mostly those are newcomers—new young
adults, new students, new entry-level workers. Most of those people gain
experience and move up.
But Bernie’s view is that those poor families are specific
people losing out because specific rich people are getting their gains.
That’s what you call covetousness. And “Thou shalt not
covet.”
If we needed to summarize the difference between Sander’s
view and Cruz’s view, it would be that Sanders thinks it’s unfair for anyone to
rise; anyone who succeeds should have their rise taken away and given to
someone who didn’t rise. Regardless of difference in effort. Using the force of
government.
There was a significant portion of the debate talking about
Denmark. A man from Denmark posed a question:
And, you know, these are countries which—where the government
spends—taxes and spends approximately twice the level of the United States. And
while I am very sympathetic to many of your spending proposals, especially on
the things you mention on early childhood and single-payer and the like, I also
know that these are countries that heavily tax everybody, not just the rich
people, middle classes. They have consumption taxes on everything of 20
percent.
So while I'm very sympathetic to what you're saying, my sense
is still that you would like to spend as a Scandinavian but not tax as one, is
that right?
Since Bernie talked about how we need “free” health care and
“free” child care—that these are “rights” we are born with and therefore the
government is obligated to provide—let’s look at the cost of “free.” I wrote
about Denmark a while ago. [ 2-11-2016 ] Using data that a young Danish writer
offered, an ordinary working class Dane who makes $25,000 DKK a month (about
$4,000, which would be $48,000/year) ends up with 9,848.71 DKK before he can
start making choices about how to spend it. Here’s what I said:
That is 39.39% of your original. You have paid 60.61% of your
income. If you were wealthier, you would add 15% [in taxes] earlier in the
process. Not far off from what Bernie Sanders thinks those terrible rich people
ought to be paying here. But note that in Denmark everybody pays, no matter how
little they make.
Socialism isn’t about getting free stuff; it’s about spending
60% or more of your income on those “free” things, without market choice.
Everyone pays it. There’s no getting away from it. If you’re healthy and would
rather pay for minimal health care, so you can save up for a down payment on a
house, you don’t get that choice. If you want faster internet or more media
options than the single media company offers, you don’t get that choice.
But for all the lack of choice, you work until mid-July or
later for the government and can only use what you make the rest of the year to
support your food, shelter, clothing, transportation, and entertainment
choices.
Meanwhile, the government is telling you how happy you must
be, because of the good way the government takes care of you.
To translate the numbers in our US experience, a single
person makes $48,000 a year, which feels pretty good just out of college. But
the government takes $29,092.80, leaving you $18,907.20.
But your healthcare is minimal; isn’t that worth it? If you’re
a young, healthy person, do you think $2,424.40 is a good deal for you? Let’s
throw in child care—not quite free; the Dane says it’s about $300 a month,
depending on region. So, let’s take away $3,600 from your $18,907.20, which
leaves you $15,307.20 for your discretionary spending like food, housing,
transportation, or travel.
Do you feel better, earning $44,000, but getting to spend
only $15,307.20 the way you choose, in exchange for “free” stuff?
Bernie made the false claim that the average Dane has a
better standard of living than the average American. But 70% of Americans,
according to the data he used, are middle class or above, so they can buy a
home, one or two cars, high-speed internet, a big screen TV, and save up for
vacations, open their own businesses, prepare for their retirement, and in
every other way “pursue happiness.”
Meanwhile, their Danish counterpart is less likely to own a
home, more likely to live in an urban setting (in an apartment, without land),
and more likely to work for the government (
1 in 4).
Ted Cruz brought in statistics about socialized medicine in
Denmark:
If you look at socialized medicine, there are waiting
periods. There's rationing. The government says, if you're an elderly person
and you need a hip replacement, it says, well, you may not get a hip
replacement. We were talking about Denmark. The average wait time in 2014 for
cataract surgery was 83 days...
And the average time in Denmark, which he brought up, for hip
replacement was 55 days, 59 days for knee replacement.
The man asking the question believed these statistics were
more negative than the reality. Anecdotally, he reported that his mother was
treated for cancer within a couple of days of her diagnosis. However, I don’t
know exactly where Cruz got his statistics, but he’s not haphazard about
gathering and memorizing that kind of thing. My own familiarity with socialized
medicine, Canada’s, involves a former neighbor’s father. He was told they
couldn’t do anything to treat his cancer, and he should plan to die soon. He studied,
changed his diet, and came to the US for some necessary care. No thanks to
Canada’s socialized health care system, he lived six more important years while his
grandchildren were growing.
The health care discussion was a side issue for this debate.
But what it did was clarify the two vastly different philosophies on taxation.
Despite some early dissembling, Bernie Sanders was really in favor of raising
everyone’s taxes, significantly—up to Denmark’s levels, which are the highest
in the world.
Bernie finally admitted that, but he believed promising all
the free stuff would persuade voters:
If we can explain to people, yeah, you're going to be paying
more in taxes, it's going to be a progressive tax system. The wealthy are going
to pay their fair share, not the middle class, not the working class, but
everybody will pay some more.
Cruz pointed out that admission moments later, and Bernie
interrupted to tell him not to put words in his mouth. He forgot (or maybe didn’t
pay enough attention to know) that Cruz remembers what he’s heard verbatim; it’s
his superpower. And he’s better at math:
Bernie's tax plan cost over $13 trillion. That's what he's
proposed raising in new taxes. And who pays for it? Well, the Democrats always
talk about the millionaires and billionaires, but here's a simple fact. We
could take every single person making $1 million a year or more and confiscate
100 percent of their income, everything they make, every penny, and it would
raise about $1 trillion, about 8 percent of the cost of Bernie's tax plan.
That means if you want tax revenue, you don't get it from the
millionaires and billionaires. You get it from the middle class. You get it
from the working men and women in this country.
One of Cruz’s better points was that higher taxes slow
growth, and lower taxes lead to more growth. Cruz had charts. Growth is
important, because we’ll never get Congress to cut enough spending to cut the
deficit. Here’s Cruz’s summary:
Obama versus Reagan, under Obama, median income increased 6
percent. Under Reagan, 17 percent. How about African-Americans? Under Obama,
median income increased 8 percent. Under Reagan, 12 percent. How about women?
Under Obama, median income increased 6 percent. Under Reagan, 25 percent. Young
people, under Obama, 9 percent, under Reagan, 55 percent. Young women, under
Obama, 8 percent, under Reagan, 73 percent. And, finally, the bottom 20
percent, those struggling, under Obama, 12 percent, under Reagan, 40 percent.
What I don’t know is whether the current tax plan is as good
as we need it. But what I do know is that we Americans make better decisions
about how to spend the money we earn than the government does.