A modest proposal
Republicans apparently are at loggerheads with President Obama over provisions in the economic stimulus package that would provide a tax cut to workers who do not earn enough to pay income taxes. According to John Kyl of Arizona, this would not be tax relief but a government handout.
"Handouts," according to the Republican Bible of Economic Darwinism, are the cornerstone of the dreaded "welfare society," which is inherently evil because it provides, among other things, a disincentive to work. The optimal solution, of course, is to eliminate taxes, regulations and other burdens that prevent the glorious free market from solving the problem on its own.
So far, the glorious free market's contribution to economic freedom has been two million layoffs. And counting. I don't see it stepping forward anytime soon.
But what if it did?
In an earlier post, I mentioned that I had once done a back-of-the-cocktail-napkin calculation of the economic stimulus that would be provided if Wal*Mart increased its average hourly wage to $16 from the current poverty-level $9.68. Even holding its average workweek constant at 34 hours (which of course allows our economic titan to avoid providing hundreds of thousands of low-income workers with health care and other benefits), this would provide $15.6 billion of direct stimulus to the economy where it is needed most.
This wouldn't come cheap, of course. By my accounting Wal*Mart, which earns about $9 billion a year, would have to cough up about $548 million in profits. A portion of this money would come back to the retail titan as happy shoppers used their new economic prowess to buy its cheap Chinese-made clothing and toys.
But hey, maybe ceo Lee Scott could peel a few Benjamins from his $17 million in foldin' money to help cover the difference.
And maybe the govmint could carve off a nice tax credit for payroll expansion. You know, in recognition of the sacrifice America's Superstore made for the common good.
Oops, strike "common good." Them's code words for socialism.
Wal*Mart employs a million and a half people. These are the good, hardworking people our consumption economy needs to get spending again while we try to sort out a sustainable future that includes tens of millions more jobs that pay a living wage. It just might put enough pressure on the labor market to boost pay for convenience store clerks and frycooks. It would certainly return some of the luster to our glorious free market.
The stupidity, dishonesty and downright mean-spiritedness of an ideology that defines prosperity as the mass migration of wealth to the wealthy is a topic for another time.
But what say ye? Think shareholders and the suits in Bentonville are equal to the task?
This sounds like a communism. I am not saying that you are a communism. But this sounds like a communism.
All you have to do is push the corporate tax up to 90% if the corporation does not wish to comply with 16-17 dollars an hour for their employees.
That way the corporation is free to make a choice.
And aren't choices what America is all about?
January 24, 2009 9:29 AM | Reply | Permalink
By your coercive definition. It's been my understanding the tax code isn't supposed to have punitive aspects.
January 24, 2009 6:06 PM | Reply | Permalink
I prefer to look at it as taking the long view. "A nation cannot prosper long that favors only the prosperous."
Funny how hard it is to reconcile "strategy" with "doing the right thing."
Good Saturday morning, DD.
January 24, 2009 9:47 AM | Reply | Permalink
I say, "tax cuts for the wealthy," didn't work before, won't work, again. Wait a minute, "WE WON!" Word to John Kyl, "Live with it."
Good one, bluemeanie.
January 24, 2009 1:49 PM | Reply | Permalink
No, the suits at Wal Mart don't care and will never be up to the task.
The Republican's Dickensian view of the morality of economic deprivation is simply that if we "handout" aid to those who need it, they will no longer be fearful of starving to death and thus be more unlikely to work for subsistence wages. This is precisely what happened when the New Deal allowed vast expansion of unions, raised minimum wages, cut working hours, established time and a half for overtime and so on. this effort was so successful it contributed significantly to the greatest prospoerity our country or any other has known in the history of humanity.
This angered Republicans. They felt that the economic leveling the New Deal and progressive taxation caused was a theft that otherwise they could have kept all for themselves. And thus, the Republicans have spent their energy ever since 1932 trying to repeal all of that. They succeeded to an appalling degree and now it looks a whole lot like 1929 again. What a surprise eh?
January 24, 2009 3:46 PM | Reply | Permalink
It's amazing that we've turned the clock back to the same issues that had to be fought a century ago. It is hard to believe I'm in the same country. Sad. Very, very sad.
Good post!
January 24, 2009 3:55 PM | Reply | Permalink
Excellent insight, TheraP.
It is a shame. It's a shame that we feel we have to refight a battle for basic economic economic justice. Anyone care to place a bet on passage of the Employee Free Choice Act?
It's also a shame is that a real opportunity to create a path to sustainable growth is threatened by a conservative ideology that lost its relevance once the low- and semi-skilled jobs that built the middle class started heading overseas.
It was once at least nominally true that everyone with determination and the will to work could succeed, and some could grow rich. But today, success increasingly depends on access to education and the other tools necessary to succeed in a knowledge-based economy. That access is sorely lacking.
But perhaps the biggest shame is that conservatives have succeeded in demonizing government in the minds of so many of the people it is best suited to help.
Sorry for trying to cram a post into the comment box, but I'm just saying.
January 24, 2009 4:30 PM | Reply | Permalink
Excellent concise description of a tragedy in America.
I feel so sad. It amazes me that these folks are so short-sighted. To keep their money today, which of course they can't take with them when they die, they risk the country they live in. They risk its future.
January 24, 2009 4:37 PM | Reply | Permalink
I seem to have that effect on people. Yesterday DD said he felt like crawling into a hole. :{
It's certainly no my intent. I really believe that if we all get involved, we have a once-in-a-lifetime shot to make things just a little bit better.
January 24, 2009 5:45 PM | Reply | Permalink
Dear bluemeanie:
You are to be commended for your ability, using well reasoned comments, to move us to deep feelings - even if they are sad feelings. I'm not sorry to be sad. I'm grateful that your writing so well described what's going on, so evoked the desperate situation many are in, that I am moved to deep sadness about the whole situation.
Keep up the good work! I'm never sorry to have feelings.
January 24, 2009 5:56 PM | Reply | Permalink
More even, than education and opportunity now, heridity is what is most important. Chances are that in today's America, you will remain in whatever class you are born into be it rich, poor or otherwise. This is all a result of the relentless efforts of the right wing Republicans enabled by cowardly "centrist" Democrats over the past 30 years or so. It is shameful.
January 24, 2009 5:48 PM | Reply | Permalink
I believe people studying the issue have found that there still is economic mobility, both up and down. But you are right. Entrance into the highest caste is increasingly controlled by rank and privilege, not merit. Which by itself might not be a problem, except that small circle of friends controls about 90 percent of the wealth.
January 24, 2009 6:02 PM | Reply | Permalink
Yes,economic mobility exists but it is much, much less now than a generation ago and shrinking.
January 24, 2009 9:59 PM | Reply | Permalink
Man, you're so confused I don't know where to start.
When someone takes something from someone that doesn't belong to them, it's theft. When the government takes something which doesn't belong to it from someone, and gives it to someone else, it's the classical definition of welfare. Doesn't matter what you want to call it, tax credit, grant, whatever, it's still welfare. Got that one?
The 'markets' are in no way to blame for the current economic condition. The free house program initiated by democrats is solely to blame. Got this one?
Thirdly, unless you own Wal-Mart stock, or you work for Wal-Mart, it's none of your damn business what Wal-Mart does as long as it is lawful. Don't worry about Wal-Mart. If you think they're mean spirited, spend your welfare check somewhere else. Got that? Damn, it's hard to introduce some of you people to reality.
January 24, 2009 4:45 PM | Reply | Permalink
Your "free house program" is my "ownership society."
Realizing they were so piss poor at job creation (net 3 million in 8 years) and wages were in the toilet, your permanent republican majority figured the only way to keep consumers spending (70 percent of the economy, ludicrously out of balance and unsustainable) was to look the other way while mortgage brokers wrote stated income mortgages and passed the paper off to banks, who shoveled it over to investment bankers who made a fortune convincing people that if you cut a bad debt up small enough you could make it go away.
Who needs job and wage growth when your home is appreciating by 20 percent a year? And once you've run out of mortages, there's always credit cards -- issued by the millions of tons by banks who collected the debt and snip, snip, snip, made it disappear too.
Sure, there were plenty of people who bought more than they could afford. But that was never the purpose of the CRA, which worked until our "too big to fail" financial services industry saw the door was open and started gaming the system.
January 24, 2009 5:04 PM | Reply | Permalink
Buy your own house with your own money. Your 'ownership society' is on the verge of bankrupting the country through government coercion.
As far as credit cards are concerned, don't they come with contracts? Are the people in your ownership society adult enough to enter contracts responsibly?
January 24, 2009 5:59 PM | Reply | Permalink
Ain't my ownership society, my friend. It's your friend George Ws.
If all this is on the consumer, then what of the supersize banks who are going down the toilet and coming to us hat in hand? I find your notion that personal responsibility applies only to individuals not just morally vacant but appallingly quaint.
January 24, 2009 6:09 PM | Reply | Permalink
We're creating... an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property. - President George W. Bush, October 2004.
January 24, 2009 6:23 PM | Reply | Permalink
P.S. Proposing that Wal*Mart taking unilateral action to increase wages is a bit like proposing that impoverished Irish sell their children to the rich as food. It worked for Swift in the 18th century, so I figured why not?
After all, are our times really that much different?
January 24, 2009 5:38 PM | Reply | Permalink
That's the dumbest idea I've read on here in quite a while.
Lots of Americans DON'T work at Wal-Mart. Why are we giving just them a raise?
Another option would be to temporarily suspend EVERYONE'S social security tax witholdings from their paychecks.
January 24, 2009 5:59 PM | Reply | Permalink
Their British overloards impoverished the Irish, in much the same way implementation of your wishes would result in our own government impoverishing us.
January 24, 2009 6:01 PM | Reply | Permalink
Wow, if you'd spelled overlords right I'd almost say you agreed with me! British government was (and is once again becoming) controlled by the peers -- in other words, the superich. Kind of like it is here in the good old US of A, wouldn't you say?
BTW, I have a traditional fixed rate mortgage and very little other debt. If you paid cash for your abode, hats off to you. When did your lottery number come in?
January 24, 2009 6:22 PM | Reply | Permalink
Bluemeanie: An aside -- are you from Charleston? No mistaking that "govmint." I thought your use of it "impoewtndt."
January 24, 2009 7:07 PM | Reply | Permalink
Well, shoot, failed to read your blog description. Govmint, from Greenville?
January 24, 2009 7:08 PM | Reply | Permalink
To confuse matters even further, I came here from NYC by way of Toledo, Ohio. I don't know what got into me. I guess our guv'nor, who fills me with a rage that surpasseth understanding, has been too much on my mind of late.
January 24, 2009 7:14 PM | Reply | Permalink
What's he done lately? I'm now in the north, and could use a laugh -- although a relatively gentle one, as the guv'nor is a relatively good person, as a person, although he is admittedly afflicted by being intellectually ever so "slooww."
January 24, 2009 7:48 PM | Reply | Permalink
I too have heard that Governor Sanford is a good soul, and I have no doubt he is. I met him only once, at a reception in Columbia, and he struck me as a bit of a cold fish.
But no matter. It is his politics that enrage me, a brand of libertarianism sauced with with a flavorless blend of Southern-fried conservatism and world-weary boredom. His relationship with the legislature is dysfunctional. His dominant policy prescriptions -- lower taxes and school choice -- seem calibrated to attract votes (they do) rather than offer any real solutions to the corrosive problems facing our state. His latest gambit is to eliminate the corporate income tax and replace it with a 30 cent increase in the cigarette tax. This is lame on so many levels I don't know where to begin.
South Carolina is 43rd in the nation in total tax burden but 46th in per capita GDP and 42nd in per capita income. Our problem isn't high taxes, and won't be solved by using public dollars to underwrite religious education in private schools. We suffer from a lack of leadership and a dearth of imagination in our State House. That may not be Sanford's fault, but it's his burden to bear.
Mentioning the governor's name to my friends up North does provoke laughter, but not always gentle. Hope I didn't ruin your evening.
January 24, 2009 8:48 PM | Reply | Permalink
Oh, Blue, what you say about the guv'nor's agenda -- tax cuts for corporations and vouchers for fundamentalist private schools -- makes me so sad. How can the state, in general, and the Lowcountry, in particular, that I love continue to support the insupportable?
Why do I even ask this question? That damn flag is STILL flying over the state house, isn't it?
Never mind. Change is coming, even to SC, and you and I, and countless others can help make it happen, sooner rather than later. I believe this because I was back in Charleston last January for three weeks before the state primary, working on the Obama campaign. I was so heartened to see people I actually knew ( and knew to be ostensibly conservative) volunteering -- even though, at the time, they were doing it sotto voce, as if participating were a secret addiction that must be concealed.
Blue,I know we can make a difference in South Carolina. You know the upstate; I know the Lowcountry; and, because SC is, in essence, a small place, we both presumably know people who are heavy hitters in its small pond. Not to mention that BlueSplashy, here at TPM, is like-minded and living in Charleston.
What's next?
January 26, 2009 6:47 PM | Reply | Permalink
If the guvmint demanded Wal-Fart pay decent wages, I have serious doubts it would work. It has not worked in the past. You can find all kinds of wage issues on the web, such as their locking people in the stores so they worked longer hours, and having them punch out and return to work off the cloock, etc.
Here in the PacNW, Walm-Fart had the audacity to refuse people their right to file a workers compensation claim. It was so pervasive that the state of Washington had their self-insured status severerly curtailed. In the decades long history of workers compensation, a program designed to protect EMPLOYERS, no company has had their status diminished. Fines were levied and fingers wagged, but none ever had their status impeded.
Wal-Fart stands alone as the single most favored company when it comes to supporting China. One could easily say they have better relations with the Chinese then their own American workers. I have not shopped there in 15 years, and I do not understand why anyone would. Nothing could be more shortsighted then giving their hard earned wages to the corporation who has the least respect for laws in America.
PS - If their workers were organized, they could get higher wages for themselves.
January 25, 2009 1:17 AM | Reply | Permalink