Sunday, April 10, 2011

The New Belt

I'll let Cliff tell you about it.

[S]top saying we are in a crisis and just explain what’s really going on. The rich and corporations want to keep all of the money they can and have the power to make more with no restrictions. The middle class can’t be taxed anymore without starting a revolution and the poor have no lobbyists. When you don’t have enough money coming in to pay for what you have and you are not willing to do anything to change that something has to go.

Another friend summed it up thus:

America: Where the people with most of the money have convinced the people with some money that the people with no money are the greedy ones.



Dante said...

While I don't the right is full of Gordon Gekkos, greed isn't something conservatives particularly care about. Greed doesn't automatically associate with evil the way it does on the other side of the political fence.

Cousin Pat from Georgia said...

There is a big difference between honest ambition, the will to succeed, and the drive to get ahead - and greed.

The former all involve honest competition, hard work, and a level playing field. The latter involves screwing someone else over to get yours.

The right does a fantastic job of confusing the two: defending loopholes, subsidies, and no bid contracts that support the ultra-wealthy and corporate America; while demonizing folks who point out the inherent injustice of such things as if their purpose is to destroy initiative.

DADvocate said...

Of the ten richest Senators and Congresspersons, 7 are Democrats. Of course, the Democrats are good rich people. John Kerry only increased his wealth by $20 million from 2008 to 2009. But, he's not greedy, even though he tried to dodge paying taxes on his yacht.

"The evil rich" is just a meme Democrats use to get votes. I'm not sure I've ever met a person who didn't want to be rich. Yet, so many seem to hate what they want to be.

DADvocate said...

The right does a fantastic job of confusing the two: defending loopholes, subsidies, and no bid contracts that support the ultra-wealthy and corporate America;...

The left does a great job of ignoring the truth. Why don't you explore Obama's ties to Goldman Sachs and GE? Who's giving out no bid contracts?

You need better blinders.

Dante said...

And the left does a fantastic job of relabeling flatter tax rates as "subsidies" without anything other than "oversimplifications and assumptions" to back up their position. I defend loopholes and subsidies that get the tax code back to where it should be: flat. If you'd like to subsidize then create a subsidy. Stop pretending our tax code is an appropriate place for that subsidy.

Cousin Pat from Georgia said...

@ DADV: Calling it the "evil rich" pretty much proves my point, thanks.

I have nothing against rich people, or people who have done well for themselves. My problem, and overall point, is how our political culture will ignore when the wealthy get subsidies and taxpayer support even as they demonize the poor and public workers.

And while a lot of Democrats may allow that to happen (which is why so very many liberals and progressives are highly critical of the Democratic Party), the right absolutely owns this narrative and has for some time.

As if food stamps, teachers, and laws that force banks to treat minorities with justice are bankrupting our nation and our states even as we give away billions in tax breaks and subsidies to developers.

It creates an atmosphere where people focus on how much the "Cadillac Queens" are getting away with - not much because even if that figment of the imagination did exist, it wouldn't exist in high enough numbers to make a dent.

Meanwhile, every new Wal-Mart shopping center that opens up in the exurbs needs subsidized clear-cutting, grading, road paving, utility expansion, and tax breaks for a certain amount of time even if there are already commercially zoned areas available.

And yet, we have to hear about John Kerry's yacht. If he did something illegal, the authorities should do something about it. End of story.

And Obama gets incredible criticism from the left for his ties to big business. But those get drowned out over all the talk and narrative building of TEH SOCIALIZMS from the right.

Cousin Pat from Georgia said...

@ Dante: Even as I know that some are necessary, I find loopholes and subsidies unfortunate because they undercut the validity of the free market. They choose winners and losers, and they take market decisions out of the hands of the consumer.

But you and I will always disagree on flat tax vs. progressive incremental tax.

As another example of the wealthier/higher income folks get more from public funds than middle class folks is the National Flood Insurance Program. This is what the Federal government had to do because private insurance companies wouldn't insure folks at risk of flooding, and the government was eating the costs when it came to disaster aid. (I'm also shocked this wasn't spoken of much during the Public Option healthcare "debate," but I digress.)

While I have the option to buy in as a renter or a homeowner, business owners can also participate. As a lower class renter, if I take a 100% loss to a flood, that will not cost the government as much as a 100% loss as a more wealthy property owner, a business, or an industry.

While I might benefit from this in the low thousands of dollars; businesses and industry potentially benefit in the millions of dollars, depending on the assets they have at risk.

I have no problem with that program, because it keeps business and industry working on valuable land, and allows them to not lose everything in the face of disaster (bad for the overall economy). But that subsidy allows them to benefit much more than I do because it allows them the access to markets and land that they would take a tremendous risk using without the subsidy.

That's why I have no problem with them paying a slightly larger percentage of their income in taxes.

Dante said...

NFIP is supposed to pay for itself. It falls short to the tune of about $200 million per year. The idea was that they play their odds like an insurer normally would and if they get caught short a year because of something like Katrina, NFIP would borrow against government funds and then raise rates to cover that debt. The solution to that issue isn't a progressive tax rate. It's making the NFIP operate as designed and then offering subsidies to those too poor to afford the premiums.

As far as not mentioning it during health care reform, I don't think that would've been a smart move. If it were me personally trying to push a government option for health care reform, I'd steer clear of a nearly identical government-run insurance program on the casualty side that constantly runs over projected costs. Pricing casualty policies is a walk in the park compared to pricing health policies.

Cousin Pat from Georgia said...

Yeah, because a national flood insurance program - that also recommends flood mitigation development and drawing maps of possible flooding threat - after the past 10 years, is only running a $200M a year average deficit? (Where did you get that number, btw?) And that's considered a failure.

There are problems with NFIP, but a $200M yearly loss can really only be examined based on how much property they actually insure.

It keeps a tremendous amount of economically valuable land participating in commerce. I can only imagine the increased costs to the country if people couldn't live and businesses couldn't operate around rivers, lakes, or near oceans because insurance costs were prohibitive.

So I wonder about the numbers - is it a $200M average yearly loss after considering total economic impact, or is that number figured when added to the disaster relief payments? And based on a loss of that much, how does it compare to how much property the program insures? And, of course, how much property loss is incurred by who?

Dante said...

I pulled that figure from the Wiki. It has a footnote but that footnote was referring to the second half of the sentence. So I pulled up the Actuarial Rate Review conducted by FEMA. I couldn't find the exact amount of subsidy being spent but I did find two things of interest:

1. There are two types of properties: those built before the Flood Insurance Rate Map (pre-FIRM) for an area was built and those built after (post-FIRM).

2. Despite a very unusual method for determining loss (a historical model that more or less ignores catastrophic years), the post-FIRM portion is entirely self-sufficient as of 1994. (FEMA claims 1988 as their first year of self-sufficiency but that ignores that NFIP employees were being paid out of the general fund.) Pre-FIRM policies are where NFIP is subsidizing using federal dollars.

I still wasn't happy without a figure so I looked around and found a CBO testimony. According to the CBO testimony, $1.3 billion is subsidized annually on pre-FIRM policies.

To answer your question the best I can using the materials I've linked, we're subsidizing roughly $1.3 billion annually to insure $192 billion in property while spending no tax money to insure $608 billion in property. That's exclusive of any other types of federal relief.

I still think the best answer here is to use the actuarial method currently working for post-FIRM policies and then subsidize based on need instead of putting a blanket subsidy on property just because of its age.

Cousin Pat from Georgia said...

Good link. I'll have to keep going through that tomorrow.

But just from the quick overview, and your numbers (which appear, at my glance, correct), this means all taxpayers are paying (yearly) $1.3 billion to support a program that, combined with the premiums that don't lose money, insures roughly $800 Billion worth of total property.

I did not see (in my cursory overview) an economic impact study of how much that $800B worth of property affects the overall economy, but I'd take a guess that it is a significant impact.