The Grand Republican Strategy: We Win, You Pay!

On a recent trip to London, I got into a conversation with a wealthy oil and gas investor about climate change. He didn’t disagree we need to shift from fossil fuels to renewable energy, he said. His job is to make sure the lights in our homes still turn on while we make the transition.

Fair enough, I said. Would you support a carbon tax or a cap-and-trade program to speed up the transition?

“Sure,” he said, to my surprise, without hesitation. “As long as the revenue is spent on new technologies, and not given away to poor people.”

Ah. There’s always a catch.

At first, I thought it was a strange caveat, especially since we’d just got done talking about income inequality, an issue that he seemed quite concerned about. It wasn’t until I saw the Republican presidential hopefuls unveil their new economic plans that it all made sense:

I really want to do the right thing, he’s saying, as long as I don’t have to pay for it.

Carbon Tax BurdenThe reason for his concern, by the way, is that poor people have to spend a higher percentage of their income on oil and gas than rich people, so the burden of a carbon tax or a cap-and-trade program would fall the hardest on them. Many people think that’s unfair since (a) they’re already strapped for cash and (b) they’re not the ones profiting from all the carbon emissions. So progressive proposals usually include a rebate of some sort to ease their cost.

Our friend the oil-and-gas investor would rather give that money to — surprise, surprise — corporate America.

This, I realized, is the grand strategy of the new “reformocon” movement in the Republican party. No longer can a Republican run for president without admitting that the government must do something about our nation’s most pressing problems — but neither can he ask his friends in the One Percent to pay for it. Thus is born a new slogan: We win, you pay!

Mike Lee and Marco Rubio, two of the leading reformocons in the Senate, put this strategy to the test earlier this month when they released an ambitious tax plan centered around an expansion of the Child Tax Credit for middle-income households. Sounds great, right? Rather than cutting government spending for the middle class, these Republicans want to spend more. Heaven knows they could use it, after decades of dismal income growth. But who will pay for it?

Certainly not the rich. The Lee-Rubio plan eliminates taxes on investments, where they get most of their income, and it lowers the corporate tax rate and the income tax rate for the top bracket. Add it all up, and it turns out to be an enormous tax cut for the wealthiest Americans and barely any relief for everyone else.

Republican Budget CutsAnd what happens when all these tax cuts increase the budget deficit by $400 billion a year? Well, if recent history is any indicator, these same Republicans will scream “Crisis!” and demand spending cuts. If you’re wondering where those cuts will come from, look no further than the latest Republican budget, which gets two-thirds of its cuts from programs that help low- and moderate-income households. It scorches their budgets by 40 percent!

So, who will pay for the reformocons’ new plans? You know who.

No sooner had the ink dried on Marco Rubio’s deceptive debut than his presidential competitor Jeb Bush announced, in a speech about income inequality, that he would abolish the federal minimum wage.

Among the reformocon movement, Jeb Bush is not alone in this desire. You may wonder how they can expand the Child Tax Credit in one breath and abolish the minimum wage in the next, since the two policies are basically intended to help the same people?

It’s very simple really, once you understand the “we win, you pay” principle. Wages are paid by corporations. Tax credits are paid by…well, you just saw who, and it ain’t the corporations.

So, for the reformocons: Tax credits, good. Wages, bad.

The most egregious example of this strategy is our first official presidential candidate, Ted Cruz, who’s advocating a “flat tax,” charging the same rate to everyone, regardless of their income. For that to work, he’d have to raise taxes significantly on most Americans in order to cut them significantly for the richest Americans because the only way to raise the same amount of revenue is to find a rate somewhere in the middle of what the two groups pay now. It’s basic arithmetic.

But you never hear the reformocons talk about arithmetic in their speeches. They talk about inequality and upward mobility and the American middle class. They talk about all sorts of expensive new plans, and they never mention that there’s a catch.

They can’t mention the catch because it undermines the entire point of their reforms. If they win, you pay. And if you pay, they’re not helping you after all.

So, who are they helping? You know who.

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This op-ed was originally published in the Huffington Post.

The Poor Don’t Lie and Cheat Any More Than the Rest of Us

Those no-good, dirty, rotten poor people. They lie, and they steal, and they spend our money.

Or so I’ve been told by readers since my last op-ed column, where I did the math proving that government benefits aren’t generous enough to make people want to be poor.

But you’re just doing the legal math, said one reader. What about what goes on under the table? Surely all that welfare fraud is proof that poverty can be the good life, if only you have the gumption to bilk the taxpayer.

Food Stamp Error RateFirst of all, the government has conducted investigations of fraud in programs like welfare and food stamps, and they’ve found it to be shockingly low. Less than 2 percent of the programs’ budgets get ripped off. That’s lower than the private sector, where the average business loses 5 percent of its annual revenue to fraud.

Second, and perhaps more surprising, investigators have found that the majority of government fraud is committed by the middle class and the rich, not the poor!

After Hurricane Katrina, for example, the investigative reporter Eric Schnurer discovered that most of the $500 million lost to fraud did not go into the pockets of the poor people who lost their homes but rather to the “shifty contractors” who were supposed to be rebuilding the homes.

Similarly, reports Schnurer, “Medicare and Medicaid fraud is largely committed not by patients — very few people are trying to rip off taxpayers to obtain unneeded spinal taps or root canals — but by providers: unscrupulous (or sometimes just incompetent) doctors and hospitals billing for procedures the patient didn’t need or didn’t receive.”

Throw in another $100 billion a year in defense contractor fraud, and you quickly find that fraud is more likely to make the rich richer than it is to make the poor want to be poor. It’s redistribution alright, but the wealth is moving up, not down, the ladder.

Once upon a time, I might have been surprised by these findings, but in writing my new book Letter to the One Percent, I found a consistent pattern in the research literature. Psychologists have conducted many experiments on the rich and the poor, and they’ve found that the rich are less likely to have empathy for other human beings. They’re more likely to break the rules and feel that they’ve earned the right to do so. They’re less likely to think of the moral consequences of their actions, especially when money is involved, and they’re more likely to put their own needs ahead of others’.

The notion that the poor are uniquely morally deficient, it turns out, is completely backward. They’re actually more virtuous, on average, than the rich.

And yet, we have politicians who assume that the poor are less trustworthy and therefore less deserving of our help. On the 50th anniversary of the War on Poverty, they took to the floor of Congress and criticized “single mothers” and “deadbeat dads” for dropping out of school and having babies and cheating the system. Then they proposed a budget that would cut government benefits for tens of millions of Americans.

Meanwhile, in Florida, they’re fighting a recent court decision that struck down a law requiring drug testing of all welfare applicants. But they don’t seem concerned about corporate executives who apply for billion-dollar subsidies. They’re not clamoring for drug testing doctors who receive Medicare payments or retirees who receive Social Security checks or Congress members who receive six-figure salaries.

Why? Because they assume that the poor are more likely to waste taxpayers’ money on drugs. Well, I’ve got news for them: The rate of illicit drug use is no higher among the poor than it is among the rest of us, and the rate of alcohol addiction is actually lower.

Human nature is human nature. There are liars and cheaters in every walk of life. But the facts are irrefutable: The poor are not poor because they lie and cheat, nor are they responsible for high taxes and mounting debt. If anything, they have contributed less to fraud and waste than the rest of us. The next time you hear Senator Marco Rubio and his Republican colleagues say otherwise, remember: That’s a stereotype, and it’s wrong.

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This op-ed was published in today’s South Florida Sun-Sentinel and Huffington Post.