Monday, November 14, 2011

Welfare for the Rich

Cheers to Oklahoma Republican Senator Tom Coburn for releasing a report entitled "Subsidies of the Rich and Famous," detailing the many billions in government aid that goes to the most well-off among us. While some Republicans seem to prefer to talk about how poor and lower middle class people need to pay more taxes, while refusing even to consider closing loopholes and eliminating subsidies that benefit the rich, Coburn does not shy away from pointing out how much the government subsidizes those who seem to need subsidies the least.

We are never going to do anything about reducing deficits and making our tax system more fair until we start acknowledging that all of us benefit from government social programs and tax breaks, and that the rich might benefit from them most of all. A few Republican politicians like Coburn are also smart enough to understand that their party is going to suffer if it continues to be perceived as the party of the rich and against the poor. If we're going to talk about cutting spending and reducing deficits, we have to put some of the subsidies for the rich and famous on the table, or we are not going to make any progress.


  1. Seems like a no brainer. I would vote for Coburn in an instant if he would run for Prez.

  2. I applaud Coburn for raising the issue of welfare for the rich, but I can't go so far as to support him for president.

    Two problems with his proposals: One is that politically it would be almost impossible to end mortgage interest deductibility or to means test Social Security. And those are the big money items in his list of subsidies for the rich. A lot of the other stuff is pretty small potatoes. Two is that making changes like that endangers popular support for those programs. One reason that programs like Medicare and Social Security are popular is that they are not seen as welfare programs for the poor and middle class. They are for everyone. So Coburn may actually be more cagey than most Republicans in suggesting that these programs be turned into means-tested programs. Because he knows, or should know, that doing that would endanger popular support for those programs, and make it easier to cut back on benefits.

    And Coburn will not support simply raising the highest marginal rate for income tax, which is the easiest and most time-honored way of making everyone pay their fair share. And also the easiest way to reduce the deficit. That is what should be a no brainer. Considering that our highest marginal tax rate used to be 90% back when Eisenhower was president (and he wasn't exactly a socialist), it is hard to understand why we can't afford to inch the rate up a bit from the current 35%.

  3. Of the things you don't want to see happen when it comes to cutting spending, what would you be willing to go along with if it meant raising the highest marginal tax rates to 39%?

  4. Why do I have to go along with anything to get tax rates back to where they were in the Clinton years? They never should have been lowered from that level in the first place. It was Bush's irresponsible tax cuts that caused most of the deficit that people are complaining about now. And who said I wanted to raise the highest rate to 39%? If it were up to me, the highest marginal rate would probably be more like 50 or 60%, which is what it was under Ronald Reagan.

    The more interesting question is where those rates would kick in. Would it be for incomes over $250,000, or $1 million, or what? The answer to that should be, it depends on how big a deficit we want to run.

  5. Thanks, I didn't want to assume anything. My question: how would you solve this if you were in congress and were tasked to mediate? What agreement (realistically) can the super committee get done?

  6. It is tough to mediate when one side--maybe both sides--does not want to make a deal, and can live with the alternative. In this case, the Republicans absolutely refuse to consider any revenue increases to reduce the deficit, and they think they have a fallback plan to avoid the automatic spending cuts in the defense budget. And the Democrats cannot will not agree to a deal that includes cuts only and no revenue increases.

    As with a lot of mediations that I am involved in, the outlines of a reasonable deal are not hard to find. There are any number of reasonable deals to be made that would satisfy many of the objectives of both sides. But so far the price of failure still does not seem to be high enough to force the parties to an agreement, despite the strong incentives to make a deal that were supposedly built into the system.

    I don't think a mediator can force the parties to make a deal if they do not perceive the risks of failure to be worse than the things they have to give up to make a deal.

  7. Joe, that is the best description of the situation I have heard, anywhere. Bravo!