Niello Sponsors a Whine-Fest for Business, As Usual.

Assemblyman Roger Niello

In his recent hearings, California Assemblyman Roger Niello (R-Fair Oaks) asked what government does “that makes it difficult for you [business] folks to be successful.” Predictably, those testifying complained about the egregious burdens California’s bureaucracy has imposed on them. One even threatened to move to Wyoming. Said another: “I fear the government, because they will bankrupt me”

The hearing also mentioned the Republicans’ Varshney report — a study that claims California’s attempt to regulate greenhouse gases with AB32 makes the state uncompetitive. No one mentioned, however, that the report was decidedly partisan, and has been thoroughly debunked. For example, “The report’s authors assess estimated costs of implementing AB 32 – $25 billion – but willfully ignore AB 32’s associated savings of more than $40 billion.” says one economist.

In fairness to “folks” decrying regulation and bureaucracy, finding fault with bureaucracy is like shooting fish in a barrel — not too difficult. But that’s to be expected; government can’t even guarantee that requiring motorists to drive on the right-hand side of the road is always going to produce perfect outcomes.

If such hearings were completely truthful, businessmen would also be thanking their lucky stars they had the infrastructure and human capital available in California now. After all, those are what really distinguish doing business in the sixth largest economy in the world (California) from Outer Mongolia, or Wyoming, for that matter.

The hearing was a particularly striking display of chutzpah since a large part of our current economic woes stems from too little regulation. Democrats were complicit, repealing Glass-Steagall at the Republicans’ request, but Republicans were the ones who controlled the Finance committee, not Barney Frank, when the Bush administration rejected mortgage market regulation. Former Republican congressman Mike Oxley said that the Bush White House gave the House’s regulatory proposal the “one finger salute.”

When they aren’t complaining about regulation, you can still hear Republicans like Niello and Tom McClintock yearn for a “tax cutter” like Ronald Reagan. Reagan did cut the top progressive income tax on rich “folks” roughly in half, but between him and his successor, the payroll tax quadrupled. To recap: rich “folks” got a big tax break, but poor folks got their taxes quadrupled, and the Reagan deficits were the biggest ever. Yet it’s supposedly liberals who want to “tax and spend”!

The current public policy debate is the end-game of a long-term Republican strategy called “Starve the Beast.” Essentially, they want to cut government revenues without cutting spending, making deficits so large that they appear sensible when cutting even the most popular social programs. That’s why, although he didn’t run on that platform, after exaggerating its financial predicament, Bush tried to privatize Social Security as his first order of business in his second term.

So Niello’s hearing is yet another bit of evidence that, no matter what the facts, the Republican narrative remains constant: We must reduce taxes and regulation, even if lack of effective regulation produced the current less-than-optimum outcome. And although “deficits don’t matter,” no matter how low they are, taxes are too high, especially on the wealthy.

Adam Eran

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Comments

  1. Adam Eran says

    A little further thought produces two observations:

    1. The income tax revenues — and only income tax revenues — from the top 10% of payers rose 9.2%, according to Mr. George’s cited figures. Note, BTW, that the cited link is a partisan, Republican piece, not something from the CBO, or some non-partisan source.

    But let’s say the cited study is true…Not only is it confined to income taxes, ignoring the quadrupling of the payroll tax (FICA / Social Security), it also ignores the fact that the bottom 90% of real incomes fell during the last few decades, while *only* the top 10% received a raise in real income. The biggest income increase came to the 99.99th percentile, whose incomes increased roughly five-fold. (See http://select.nytimes.com/2006/02/27/opinion/27krugman.html?_r=1 for the footnotes).

    One can only hope such people paid more than the tiny 9.2% more of tax receipts since they got a 497% (nearly five-fold) raise in real income.

    Notice that the study Mr. George cites carefully ignores all this. This kind of third-rate thinking and tunnel vision is terrific in service to the oligarchs who profited from the Reagan tax cuts, but it promotes a kind of divorce from reality that one can only call schizophrenic. In other words, in focusing on such half-truths, neo-cons really seek to promote a kind of delusional mental illness as the guiding force behind public policy.

    Tea-bagging anyone?

    2. I just happened to look at my wife’s paycheck. She makes about $50K per year. The deduction for Federal Income tax is roughly the same as the FICA deduction. In other words payroll tax is not some insignificant burden — at least for the bottom 90% of incomes — that can be ignored to get an accurate tax picture.

  2. Adam Eran says

    Note that Mr. George confines his comments to “income tax,” which doesn’t include the mentioned payroll (Social Security / FICA) tax.

    Pretty convenient, if you ask me.

  3. Bill George says

    Regarding the comment that the rich got tax breaks under Reagan while the taxes of the poor quadrupled: According to a 1996 report by the Congressional Joint Economic Committee: “The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988. .. Between 1981 and 1988, the income tax burden of the middle class declined from 57.5 percent in 1981 to 48.7 percent in 1988.” http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm

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