Jim Cavan, HW Columnist
The now rapidly boiling midterm election cycle features anything but a one-dimensional storyline. There’s the economy and the war. There’s offshore drilling and health care. There’s climate change and education.
But more visible than perhaps any of these singular issues has been the seemingly omnipresent, and hardly singularly-minded, Tea Party. Signs, costumes, props, and latch-eager politicians abound, the Tea Part “movement” has in the last 24 months grown larger and louder seemingly by the news cycle, and despite the kind of organization and structure typically ascribed to “movements” writ large. Even assigning them a single moniker in some ways betrays the group’s categorically nebulous makeup: John Birchers, Ron Paul garden variety Libertarians, Reagan revivalists and anarchists can all claim inclusion under a tent so wide as to be its own skyscape.
And maybe that’s the point. To the extent that the common thread uniting the otherwise fractious Tea Party ethos has been a robust individualism uber alles, perhaps its disjointed and schizophrenic makeup is only to be expected. Still, look into any Tea Party crowd, and you’re likely to see one acronym emblazoned on more tee shirts and flags, more poster boards and bare chests, than perhaps any other: Taxed Enough Already.
Taxes. Behind perhaps national defense and Social Security, nothing polarizes the electorate more than the issue of budgets and deficits, and the items that line the ledgers. According to a recent Gallup poll, 81% of those polled claimed the federal deficit was either “extremely important” or “very important” in terms of how they planned to vote in the upcoming elections. Indeed, particularly in a recessionary economy, where individuals and families have been forced to confront a decade of unchecked consumption and ill-advised borrowing, such an attitude vis-à-vis the government can only be expected. Even now, nearly two and a half centuries after the actual Boston Tea Party set alight long-dormant but brink-destined resentments towards British oppression, the idea that the government maintains as its right the procurement of the wealth of its populace has never ceased to rile the political nerves.
What we make in private sector wages is our money, the argument went – and still very much goes. Shouldn’t we have a say in how, or even whether at all, it gets spent?
We eventually won that argument and the resultant bloodletting, and were awarded a Constitutional Republic in return. Federalists and anti-Federalists aside, we got essentially what we wanted. So there is more than a little irony in the idea of the 21st century Tea Party movement taking on that particular reference, given the fact that our “taxation” does in fact include – and in fact require – “representation”.
Beyond the grass-strewn demonstration, squarely back in the halls of power, the chief fiscal debate this election cycle – mired as it is in the worst financial crisis in 80 years – has been over whether or not to extend the 2000 Bush tax cuts. Republicans argue that not extending them would amount to a “tax hike” on those making over $250,000 – an awful idea in this or any other recession. Democrats, meanwhile, contend that those tax cuts don’t actually help create jobs. If anything, they argue, the stagnant economy would really only encourage beneficiaries to either: a) horde that money; or b) spend it on further automating their business operations – read: eliminating actual human jobs.
But what’s lost in the debate over the actual nature and scope of tax cuts, is the language of taxation per se; specifically how that language is manipulated. Republicans argue that not extending the tax cuts amounts to a tax hike, even though the tax code would really just be reverted back to where it was under Bill Clinton. This is important. Few realize that, under Dwight Eisenhower, tax rates on the wealthiest Americans were upwards of 92% . Under Ronald Reagan – the beacon of many seeking simpler times and softer tax codes – those same tax rates were still well above 40 percent for much of his two terms. Only in the last 13 months did the top marginal tax rate get dropped to 28%. But perhaps even more eye-opening is the fact that, since Eisenhower, the economic stratosphere has only become more rarefied, to the point where, as of 2007, the wealthiest 20% of Americans controlled close to 90% of the country’s wealth .
So Dwight Eisenhower ran and governed as a Republican, despite the fact that tax rates remained in the 90th percentile; despite the fact that there were more people in the highest tax bracket – as a percentage of the population – than there are now? And despite the fact that, back then, those top brackets weren’t even close to the millionaire-heavy tax stratosphere we have today? So why and how have we become so viscerally opposed to taxation, to that point that the word “taxes” invokes the kind of instantaneous rage capable of routinely dominating national debate?
Of course there’s the simple answer: government is, by its nature, wasteful. And in more than a few senses this argument is true; without having to worry about “competition”, at least with regards to certain sectors (i.e. the military) things like “efficiency” and “market share” don’t hold the same kind of value they would in the private sector. Remember when $9 billion funneled to the Iraqi reconstruction effort suddenly went missing? Sure, it was a news story. For about a week. Can you imagine if $9 billion in Medicaid money suddenly flew the coop? The program would have been viscerated in a week.
But what people don’t realize – or care to realize – is that the same qualities that make certain government functions unfit for market competition can also make other industries work better when brought under the government yoke, which could actual help bolster the overall economy. Health care is the perfect example. Without rehashing the entirety of the 2009 mega-debate, one of the seldom-heard arguments on behalf of government run (or guided) systems such as those employed in Canada and Western Europe was that it is precisely because a government insurer wouldn’t be driven by market principles that the most people can potentially be served. That is, the person underwriting your government insurance policy in Sweden isn’t driven strictly by a bottom line mentality; rather, they’re driven by the mandate of “cover as many people as possible”. Not exactly what an executive at Aetna would want to here.
Say what you will about the benefits of government involvement in specific programs or sectors, one thing is certain: the people of the United States cannot and will not ask its government to do absolutely everything. In fact, beyond roads and basic infrastructure, there isn’t much we really ask it to do, at least directly. We’re not the Soviet Union. We may be content to spend upwards of 60% of our budget on defense, even if we accept without much of a qualm that much of it will be lost in the bureaucratic shuffle. But that’s mainly a factor of a long-held belief that the chief function of government is to protect us – to “provide for the common defense”. Unlike other “welfare programs”, shelling out a tremendous chunk of our wealth for defense is a sacrifice we’re willing to make for security and security alone; we can deal with the risk of waste, as long as it’s keeping us safe.
Beyond defense, however, the argument tends to be: keep your hands off my money. Or, in the case of some, off of my Medicare. But lost in the shuffle of numbers and rates and returns, and how those monies are used to fund government departments and programs, is the issue of individualized wages and earnings themselves – where those tax dollars are coming from. Specifically, there seems to be a gross misunderstanding of how, exactly, wages are in many ways influenced by government money to begin with. Certainly, in most cases, and with respect to an overwhelming majority of small businesses and median income income earners, wages are no more or less a matter of simple math: how much the business takes in versus inventory versus the number of employees, etc.
Still, most “small businesses”, which make up a majority of the workforce and which have arguably been the hardest hit by the economy, still fall under President Obama’s $250,000 threshold of those who will actually receive tax cuts. It’s where “the other half” works that paints a different picture. Indeed, in the past fifty years, while our ever-changing tax structure and the attitudes towards its functioning have only rendered reality the very “military industrial complex” prophesied by Eisenhower, a large segment of our economy has only become more conglomerized. Fewer and fewer mega-companies are employing a larger percentage of the working population (at least those who haven’t been laid off already). In the process, we’ve gone from a manufacturing-based economy to one of paper-pushers and financiers on the one hand, and “service industry” employees on the other, with very little – and the military, of course – in between.
One argument of free market purists – espoused by everyone from Smith to Rand to Friedman and countless others in between – states that, with less government intervention, everyone becomes more prosperous. But this has hardly been borne out by the facts. Since Clinton brought taxes to their lowest rates since the 1920s, wages have stagnated, while growth in the real, physical economy has sputtered. Meanwhile, as in the late 20s, more and more of that money originally intended to increase and bolster capital and labor expenses ended up instead in increasingly shady and complex financial instruments that…. you know the rest.
In this context we can see the effects of tax policy on our attitudes as actual tax payers taking shape. The beef that minimum wage – and near minimum wage – earners have vis-à-vis what comes out of their weekly paycheck is more than legitimate: When you’re making $400 a week, the $40 or $50 that gets sent to Washington feels like a lot. Indeed it is a lot. Eliminating the tax burden on anyone making less than, say, $50,000 would seem to be a legitimate and feasible policy. The problem is, assuming current spending is a constant, you’d have to make up that revenue ground elsewhere. However, assuming cuts in military spending will remain anathema to a majority of voters, the only thing left is other forms of spending — “welfare”, “entitlement programs” such as Social Security and Medicare, etc. While they don’t enjoy the blind backing that the armed forces enjoys, many of these programs still have deeply entrenched support that would be difficult to uproot, to say the least.
So let’s take a more rarefied hypothetical. Let’s say you make $100,000 a year working for any number of Fortune 500s. Think midlevel management. Sure, the fact that you pay the same percentage as the grocery bagger means you pay a comparatively larger chunk of your check to Uncle Sam. But lost in this calculus is how much of your salary can be attributed – directly, sure, but more so in ways that have yet to be reliably tracked – to tax breaks shelled out to your company in one form or another. “Welfare”, in Tea Party-speak. Just the corporate variety. What role do investments in your company by shareholders play in deciding your wages? And how much of that investment is tied to the kind of toxic products and assets that brought us to the brink of financial ruin in the fall of 2008?
Astute Tea Partiers often target, legitimately, the nefarious doings of the Federal Reserve, which has been placating our addiction to credit for decades. But to what extent can we thank these same nefarious doings for massaging wages in certain sectors to levels that were themselves inflated? Indeed, when your income is inextricably linked to government functions – either via tax breaks or rebates from the government, out-and-out subsidies, or investment form a Wall Street machine that itself uses the Treasury, via the Federal Reserve, as essentially an on-demand money printer – how can you possibly complain about “government intrusion”? Eliminating this kind of under-the-radar government spending would actually render the piggy banks of many “fiscal conservatives” slightly depleted, no?
Thus, out of an increasingly stratified and complex economy arises a disproportionately confusing and confounding income system: we take home our weekly paychecks, but how that amount came to be deposited into your checking account isn’t as simple as it might seem.
Lost in all hand wringing over “Big Government” – its shortcoming and even never-comings – is perhaps one of the singular and central tenants of American democracy, one that has been espoused in everything from The Declaration to the Constitution to the Gettysburg address and in countless republican relics between and since. It is simply this: We are the Government. Not in the creepy, totalizing Soviet sense of an ego wholly subsumed by the collective; but as an assumed and welcome agency of having a definitive, direct, and – albeit via C-SPAN – view-and-reviewable stake in the decision-making process. When it comes to government, we both enjoy its benefits and lament its shortcomings, and lament the benefits while enjoying the shortcomings.
Clearly the Founders never anticipated a country of under four million assuming the size and scope we have, or the skewing of representation in our state and federal houses and senates that would result. Nor did they anticipate a monetary system that would come to be pegged to little more than how much of its currency was in circulation at any one time – not gold, not silver; just itself. And nor did they expect a corporate welfare state that routinely and continually redistribute our already fault-straddled wealth, cycling it over and over again in increasing degrees of complexity and ethereal vagueness.
At the end of the day, it’s not about “pulling our weight” or “government waste”. It’s not about “welfare sponges” or “economic growth”. It’s not even about “fairness”. It’s about a gross misunderstanding of how much of the American economy already is intimately entwined with the State, its monetary and fiscal policies, as well as its most basic, taken-for-granted functions. There are few wages or incomes — if any — that are the result of an absolutely pristine market calculus. In this sense, Tea Partiers and fiscal conservatives are flirting with the limits of irony in saying “hands off my money”. The truth is, it never really was totally their money to begin with: as with so many things, the nature of our unbelievably complex and uniquely American economy, how wealth is spent and shared and taxed and inflated, proves that such a notion is far too simplistic.
Tea Partiers, imagined Revolutionaries and so-called “fiscal conservatives” can hem and haw to their hearts content about being “Taxed Enough Already”. But the fact is that a good number of them — and all of us, to a certain degree — have for decades been both blessed and cursed and lifestyle that is so inextricably linked to and bolstered by “the government” that irony no longer succeeds in capturing the movement’s collective, vitriolic phenomenon. To demand and dream an end to taxes is like asking for God to stop floods: in both cases you’re asking for the liquidation of an element that sustains us all in some way, shape or form. And in this case, it seems like those looking for a flood ban are the ones already stationed on the high ground.
We are neither purely capitalistic nor careening towards Stalinism. We are neither a nation of free market purists nor one of government-dependent sponges. What we are, as in so many other respects, is uniquely American: a hybrid of people and persuasions and politics and policies absolutely outside of duplication or definitive capture. And the same goes for our economy, which, far from being absolutely socialistic in either nature or inclination, and even further from being the pristine Randian utopia so often cited as ideal, is only becoming more diffuse. If anything, the American economic system has become too complex to function properly or efficiently, or at least in a way we all agree is the best possible. In the end it’s easy to point out how the complexity of our American economic system has hurt or failed you. What’s harder to see – and what so many Tea Partiers neglect to even look for – are the government roads, metaphorical and literal, which support that dissent.
This is not to say there isn’t any room for criticism of government dysfunction – far from it. But to “throw the baby out with the bathwater” – to actively seek a fabled return to some centuries-gone idea of anti-federal utopia, where your income is directly related to your labor power – is simply unrealistic. Instead, we should all be more concerned with how that money is spent and where. Paying more attention to how our elected representatives throw the gears of government is not only more important to recapturing some sense of fairness — the collective notion that, by and large, the government is doing right by us; that we are doing right by ourselves — it’s also a hell of a lot easier to accomplish than simply eliminating taxes altogether.
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