Thursday, May 25, 2006



As a kid, I used to play baseball in my backyard with some of my friends (and occasionally my brother). The house behind mine had a golden retriever named Cassandra who used to come out to the property line and watch wistfully, since her boy had already gone on to college. After a while, her resistance dropped, and sometimes she would join the game (usually standing on pitcher’s mound, such as it was).

Cassandra was a great dog, and she was my first encounter with the name. I remember liking the name, since it sounds nice on its own, but it can also shorten to any number of other things – Cassie, Cass, Sandy, Sandra, etc. Lots of flexibility. (I’ve also had a soft spot for golden retrievers ever since.)

Sometime in college I first encountered the myth of Cassandra. As I remember it (and it’s fuzzy), it boiled down to being cursed to speak the truth and not be believed. It struck me as an incredibly poignant fate. After all, the rational response to Cassandra’s curse would simply be to shut up. But somehow, that just wasn’t possible.

I was reminded of Cassandra by the Dixie Chicks, of all people. Their new single, “Not Ready to Make Nice,” is a response to their vilification by much of the country-music world when they came out against the Iraq war in 2003. I’ve never held much of an opinion either way on the Dixie Chicks, and the new song isn’t really anything special musically, but something about the proud defiance of a stupid and violent culture hit home with me.

For all of the hatred, slander, and self-righteous fury we progressives get thrown at us, there’s something redeeming in asserting our dignity unapologetically. After all, for all that we aren’t believed, we’re still right.

We were right about the Iraq war. Nobody seriously disputes that anymore. We were right about the Bush tax cuts being irresponsible. The deficit explosion under the Bush administration has pretty much settled that question. We were right (as far back as the seventies!) about the need for alternative energy sources; now even conservative Republicans working for think tanks drive Priuses. (Archival research indicates that it was a Democratic President, one “Jimmy Carter,” who first called attention to this.) We were right about the consequences of staffing the government with anti-government ideologues and cronies; after Katrina, this is no longer an arguable point. We were right about the growing wealth gap, about the state of our health care system, about the dangers to our civil liberties (Gitmo, tapping telephones of reporters, Abu Gharib), about the utter harmlessness of gay marriage (do you know what happened in Massachusetts? Nothing, really.), and the incredible harm to our standing in the world that results from an arrogant cowboy approach to diplomacy. All of these are beyond reasonable dispute.

Yet, for all that, we’re still on the outs. That’s why I think of Cassandra.

When we speak the truth, we’re called ‘strident.’ When we try not to be strident, we’re called flip-floppers. When we point out inconvenient facts, we’re called ‘out of the mainstream.’ By the time the mainstream finally catches up to where we’ve been patiently waiting, we’re called ‘tired.’ When we take offense to being slandered, we’re called ‘angry.’ When we turn the other cheek, we’re called ‘wimps.’

Honestly, I’m torn between a faith in the persistence of the truth over the long term, and a fear of the stupid shit than can happen in the meantime. The likeliest outcome looks like this: the government will pull all kinds of unbelievably offensive and ridiculous stuff, we’ll call ‘bullshit’ on it, we’ll lose public respect as people fall for God and Country, and the country will quickly decline along exactly the lines we said it would. By the time we’re widely perceived with having been right, the damage will be done.

Bravo to the Dixie Chicks for sticking to their guns. Cursed like Cassandra, they didn’t ‘shut up and sing.’ They’re pissed and they’re proud. It’s a heartening sight.

Cassandra, the myth, met a terrible fate. Cassandra, the golden retriever, got into the game. In this, as in so many things, the dogs have it. We have to get into the game. As Stephen Colbert would say, it's hard to play by the same old rules when there's fifty pounds of furry, smelly, drooling truth holding the ball.

Interesting perspective, DD.

The other thing about Cassandra was that this knowledge (of seeing on first sight how people would die, i.e. not the whole truth but the ultimate truth) drove her mad. Though she could see the inevitable doom, her madness only allowed her to speak it incomprehensibly, albeit rather poetically, which in turn exacerbated her madness.

At times it seems that groups on both sides of this divide really just haven't understood each other, and many have stopped trying to listen. It seems like there's a Cassandra on each side.

The next general election campaign promises to be a good one.

I think many people find it difficult to believe the truth when not believing it just feels better; you can keep driving that big car, getting those tax return, think your country is doing good in the world, you can be slim without eating less, you will win in Vegas, etc.
The facts are uncomfortable.
A parallel could be drawn to a friend making a bad dating choice.

Your friend and roommate, let's call him Amerigo, starts going out with a girl. We'll call her Georgina.

You immediately peg Georgina as bad news. She spends his money like crazy, tells what you see as obvious lies, and mouths off about "us versus them."

You tell Amerigo that his new girlfriend is bad news. Does he want to hear it? No. So he tells you off, and Georgina declares you to be "against their happiness." She encourages him to think you don't want him to be happy.

Then the apartment burns down due to neighborhood kids lighting fires. Everybody's scared. Amerigo clings to Georgina even harder and gets married. You pull for your friend, hoping it might work out okay.

But still you get the cold shoulder, which now flares up into open mockery and hostility pretty much every time you speak. She also presses her advantage over a freaked-out Amerigo and forces all three of you to sign up for a crappy apartment you can't afford.

Over the years, Georgina's bad habits become so ridiculous that even Amerigo realizes he's hitched to a bitchy, empty-headed dud who's sinking him in debt, driving away his friends, and endangering his safety. He gets that sinking feeling, and quietly thinks about divorce.

This doesn't mean he forgives his friend who tried to warn him, since nobody likes it when you speak ill of their intended. That you were right all along adds a little salt to his self-inflicted wound.

What do you do? Amerigo acted like a complete jerkass for years, and his injuries are self-inflicted. Moreover, he's not apologzing for any of his earlier misbehaviors.

Repeating "I told you so" and revelling in his regrets is not only satisfying, but justified.

He'll hate you for it, but screw him. He knows the truth, and he knows what he did.

The moral of the story: don't act like a jerkass, because someday the worm will turn. Georgina and Amerigo didn't have to mock you and push you away when the apartment burned down. They did it because they wanted to.

To translate it back to the real world, I feel bad for a lot of Republicans, since they didn't quite know what they were getting themselves into. But then again, they knew more than enough. So my feeling bad doesn't extend very far.
I agree with app crit, there are plenty on the right who have that Cassandra feeling.

Also, everything that you know to be true may not actually be true, or may at least have an alternative explanation. For example . . .

"We were right about the Bush tax cuts being irresponsible. The deficit explosion under the Bush administration has pretty much settled that question."

The tax cuts were not themselves irresponsible, they pulled us quickly out of a real recession. Unemployment is now at remarkably low levels. The revenue shortfall from the cuts was far less than projected, largely because economic growth has been far higher than expected (5.3% in the first quarter of this year, for example). I would argue that the tax cuts stimulated the economic growth, you might disagree, and I'll readily admit that we can't definitively settle the causation issue.

Yes, the deficit is now larger, but that's due to massive increases in federal spending, not seen since when LBJ was President. The Republican spending increases dwarf the tax cuts, and a lot of it is pure pork. You might like some of these increases, I might like others. The bottom line is that the existence of the deficits don't say that much about the appropriateness of the tax cuts per se. Tax increases to close deficits have a nasty way of slowing economic growth, making deficits worse--it is a dynamic system. Remember the luxury tax on yachts?

Also, according to some nonpartisan Congressional study the tax code has become significantly more progressive during the Bush presidency, that is, the top 5% of taxpayers are paying a significantly larger share of total federal income taxes than before, while more and more taxpayers at the low end pay no income taxes at all. (FICA is omitted from this analysis.) Is the wealth gap growing anyway? Yes it is, but it's not because taxes are too low on the rich, the gap is much larger than any theoretical tax cuts the rich have received. Changes in the wealth gap are attributable to economic growth and changes in the value of capital assets, not failures of taxation. At least that's how I see it, but your mileage may vary.

The more interesting question, given that you are always right, that you've always been right, is why won't anyone believe you? I think that Brother of Dean Dad provides a clue with:

"Repeating "I told you so" and revelling in his regrets is not only satisfying, but justified.

He'll hate you for it, but screw him. "

Although I've seen that attitude a lot, I don't find that approach persuasive, and I'm trying to listen. It's really not going to work well with those who aren't listening to you, and those are the ones you need to reach to effect the change you want.

It's not enough today to be right, if it ever has been. Ideas have to be sold. When they aren't being bought, it's poor practice to blame the buyers.

As to the Dixie Chicks, I never heard of them before the controversy. I expect entertainers to critcize politicians, I do it myself. But I don't do it before a foreign audience, as a way to suck up to the crowd. They are entitled to their opinions, and to the reactions they get.
Equality, my surliness was directly inspired by four years of being considered a traitor and a friend of al-Qaida because I didn't toe the party line on Saddam Hussein. Why didn't I toe the party line? Because I know a little bit about the Middle East and Iraq in particular. And, like most everybody who actually knew anything about the region, the whole war looked like a massive boondoggle from the start, an ill-advised "democratic domino theory" adventure based in fantasy.

What surprised me and angers me, and to what I was referring, was not conservatism. Every single one of my conservative friends now wants Bush's head on a pike. Which I can appreciate.

What shocked me was the denial of reality, the replacement of factual analysis by wishful thinking as the war approached. This wasn't a liberal thing, either; the Pentagon said the same things, made the same warnings. The White House didn't listen. In that, the most important of all things, the White House, the Right Wing Noise Machine, and a depressing segment of the population, didn't want to hear facts.

"Hussein has nuclear weapon programs!" Dude, that's impossible. Between the massive no-fly zones and the sanctions, seriously, Iraq couldn't possibly build a nuclear program without our seeing it. "They'll celebrate our arrival! It'll be just like the end of the Cold War!" -sigh- Yeah, you keep thinking that. Because the Fertile Crescent is just like Eastern Europe. Sure.

As I'm sure you've seen, when people argue from fear and wishful thinking, they get nasty. Acting as a voice of reason and being shouted down for it for years on end has left me with a wee bitter taste in my mouth. With the war transforming into the sectarian civl war that anybody who paid attention knew was coming, I would now indulge in the luxury of schadenfreude, but too many people have died over this crap and, as I write this, my best friend from high school is busy getting shot at in Ramadi.

So yeah, I'm pissed at the folks who, out of fear, stuck their fingers in their ears, yelled "la la la," and were happy to see the U.S. of A. start a war, any war. And I'm pissed that they called me and mine cowards and traitors for pointing out pesky things like "facts" and "history."

Now that reality is finally smacking people in the face, I'm pissed off that their reaction at no point contains that vital, key phrase, "Holy crap, you were right." Which, okay, is a lot to ask. How about "Maybe you weren't all Bin Laden-loving, terrorist-appeasing hippies...maybe you had a point."

Not that I expect anything of the sort. No, no. All I can do is wait for history to vindicate my side. Which, tragically, it will.
Dean Dad, Can I get an Amen.

'Nuff Said.
This comment has been removed by a blog administrator.
I think the speech last night was a futile, albeit interesting attempt at humility and political redemption by Bush and Blair. Truly amazing what low poll numbers will do to people's perspective.

Great post.
My brother pretty much nailed the case shut on the war, so I'll go to the taxes.

The reason that the rich pay more tax than they used to is that the gap between the top 1 percent and everybody else is wider than it has ever been. EQ has the causal arrows wrong. The tax code is far less progressive than it was under, say, Clinton. Remember him? He raised taxes early in his first term, setting off a string of years of peace, prosperity, and budget surpluses. The horror!

And leaving payroll taxes out of the analysis is highly distorting, to say the least. Interest income, dividend income, rentier income generally is exempt from payroll taxes; they only hit income earned from actual work. Which is to say, they're regressive in the extreme.

To me, the defining failure of the Bushies on taxes is the AMT. Everybody recognizes it as bizarre and silly, but Bush can't bring himself to address it, since that would involve acknowledging reality. So we patch it for a year, then patch it for a year, then patch it for a year, all with borrowed money. I guess if the Rapture is imminent anyway, debt will become irrelevant.
I am a bit disappointed, "dean dad" in your analysis.

You wrote: "Interest income, dividend income, rentier income generally is exempt from payroll taxes"

Yup... isn't the answer in your sentence? They are, by definition, not on the "payroll" thus are not "payroll taxes."

And if by regressive, you mean that payroll taxes, which are designed to put the money into the social net programs, from those who ultimately will need it, then perhaps it is regressive.

How then, would you explain Capital Gains taxes? I am fairly certain that the vast majority of those earning less than 50K are not paying any significant amount in capital gains taxes (but I don't have the time to actually do that leg-work. Perhaps we have an economist amongst us with the number?) I would think that capital gains taxes are *progressive* to the extreme.
Capital gains are taxed at a lower rate than wages. Both are income. Essentially all capital gains are earned by those with very high income whose tax rates on ordinary income are much higher than the capital gains tax rate. The claim from the Professor is bogus and so wrong that one wonders the reason for his making it
elirabett wrote: "The claim from the Professor is bogus"

Which ones? That most people earning below 50K have no capital gains, and thus are not taxed for that? Or that I refused to accept that "payroll" taxes are a synonym for "income taxes"? One can have "income" (as you correctly point out) without being on a "payroll."

My two-fold points were these:
1. Payroll taxes by definition will not include income earned through other means, and;
2. Capital gains taxes, whatever the tax rate, is a progressive rather than regressive tax, since only those with significant capital will most likely pay them.

If you still feel my claim is bogus, could ya at least tell me which claim?
Dean Dad:

I am curious, in your 4th para, you wrote: "Their new single, “Not Ready to Make Nice,” is a response to their vilification by much of the country-music world..." and then "...proud defiance of a stupid and violent culture..."

Are you intending to say that "much of the country-music world" is a "stupid and violent culture?"
The stupid and violent culture to which I referred is the deliberate ratcheting-up of jingoistic militarism by the Right. The echo chamber of cable news, the (national) Republican Party, and politically-conservative churches routinely rains holy hell on anybody who dares question them. They've tried to coopt country music, and succeeded to some degree, but any art form worthy of the name transcends easy political categories.

As to the capital gains point, I object strenuously to any tax system that taxes income earned through work at a higher rate than income earned ANY OTHER WAY. Rentier income, such as capital gains, is taxed at a lower rate than earned income. This is objectively true, and morally galling. Compare it to FICA, which isn't charged on income over about $90k, but which finances the general operations of the government.

I anticipate the usual 'taxed twice' objection, but that's ridiculous. If you really want to prevent income from being taxed twice, allow people to subtract FICA from their taxable income. Until then, the 'taxes twice' objection to capital gains taxation is pure plutocratic crap.
DD writes:

"Rentier income, such as capital gains, is taxed at a lower rate than earned income. This is objectively true, and morally galling."

I agree. But only in that part that it is taxed at a lower rate compared to those already paying at the higher income rates. Those in the lower brackets, even when adding in the payroll taxes, are still paying at a significantly lower rate than the capital gains rate. That too is "objectively true." (Of course, this is because of the inherently difficult nature of making a blanket " this is objectively higher than that" statement when discussing a progressive tax structure.)

Would a satisfactory solution to this dilemma be to reduce the upper tax brackets to bring them "no higher" than the capital gains taxes?

Or perhaps, set a single "flat tax" with no exceptions?
Basically the Professor is trying to bull his way through.

For adjusted gross income between $14.6K and $59.4K the rate is 15% for a married couple filing jointly. For a single person the band is between %7.9K and $29.7K Payroll taxes are an additional 7.65% to the employer (if you believe that employers would give you the other half, I suggest you take economics from the Professor) That is 22.65% on wages for a people with rather low income.

The capital gains tax for anyone with an agi above $50K is 15% (it's 5% if you are below). There are no payroll taxes on capital gains. 22.65% is greater than 15%. The capital gains tax is regressive.

The interesting question about "payroll taxes" is not that these taxes are levied only on wages but why. Do rentiers not get Medicare? Not only are the so called "payroll taxes" regressive, they are giveaways to the idle rich.

As to a Flat Tax, this is especially popular among those who file alphabet schedules (C, D, E). Under the so called Flat Tax, they get to deduct their business expenses from gross income (Malcolm Forbes thought buying Fabrege eggs was a business expense that he got to enjoy 360/365). They are quite happy to wipe out everyone else's Sched A deductions.
Might I suggest a few things (and thanks for pulling out the numbers!)

First, remember the "pay roll tax" is actually one of the few deductions with a specific purpose, and carries with it a promise for those who contribute towards it--if you put in, you can get back out. So, while we can bellyache all we want about those taxes, I think we can all agree that they are "different" than the "general fund" taxes. Besides, if we wanted to include all the taxes (and all monies that end up with the Federal government) and include those as taxes paid, should we not also then include the fuel taxes paid (not just individually, but the burden paid through increased prices for goods delivered to stores, as well as increased costs of providing public transportation, etc?)

The comparison of income tax to capital gains tax is an apples to apples one. It is taxation based on some form of income that goes into the "general fund."

Moving on to the math, and the general argument...

I will capitulate on the point about lower tax rates being "significantly lower" than the capital gains. I stand (well, sit right now) corrected on that point.

Remember, the income taxed for the couple earning $59,400 starts at 14,600, so if one were to compute that amount as the amount of taxation on total income the effective tax rate is 11.3%. I would not add the "Payroll taxes" in, as mentioned above, but if you do, then the tax burden does shift ever so slightly over 15%, making it 18.95%.

Certainly if these folks have a capital gain, you wouldn't recommend taxing them on that gain at a rate HIGHER than that already being paid. Or are you arguing that, if lower income families actually have an opportunity to earn a capital gain, that they should pay a penalty for that?

That being said, I do not think you can call a Capital Gains tax "regressive" if, as was so well pointed out, those earning less than 50K pay only 5% (or more specifically, quoting from the IRS tax topics link "or 5%, if it would otherwise be taxed at 15% or less") while those earning over 50K pay the 15%. Actually, there are three exceptions to these rates also listed on the tax topics site, and each of those result in a taxation of 28%.

Remember, a regressive tax has those earning less income paying a higher tax rate than those earning more. moving from 5% to 15% as one earns more is progressive.

So to sum up.

a) I was wrong--people in lower tax brackets do have an opportunity to pay less for a capital gain than for regular income.
b) It seems to me that for the lowest of income levels, having them pay less for a capital gain than they do for other taxes is perhaps a good idea, and
c) Our tax system, despite protestations to the contrary remains progressive.
"Compare it to FICA, which isn't charged on income over about $90k, but which finances the general operations of the government."

This is not true, Dean Dad. FICA is dedicated to providing Social Security payments, and to the administrative costs thereof. That's it, the FICA taxes do not fund the military or anything else.

At the moment we collect more in FICA taxes than we pay out in benefits. The excess is held by the Social Security trust fund, which invests the money solely in the debt instruments of the U.S. government. So it is accurate to say that the feds are borrowing money from the Social Security trust fund, as well as in the financial markets, to meet their ordinary obligations.

BTW, if you don't like the preferential tax rate for long term capital gains, how do you feel about tax free municipal bonds? I hate 'em, myself, because they distort the financial markets. 100% of the benefits of tax free municipal bonds go to the very highest income taxpayers. Should we end that practice?
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