Selling Us Our Own Economic Demise

One Wise ManIf you’re still among the employed, or are retired and still getting your pension payments, you may nevertheless be feeling financially squeezed.

Cheer up. It’s going to get much worse.

That Social Security will be turned into a cash cow for the corporate elite and an unreliable source of income for the rest of us is a given.

But you ain’t seen nothin’ yet. With the super rich now in control of the White House and Congress, they have begun an attack on a whole new set of goals, and those people are determined. Sherman’s march to the sea was a tea dance by comparison.

It has begun with attacks on middle class pay levels and a propaganda campaign. Participants in the latter include the U.S. Chamber of Commerce, right wing “think tanks,” the elite’s agents within government and the corporate “news” media — all the usual crowd.

So far the messages is fairly low key, but it is picking up intensity and volume at a remarkable rate.

In the past year, several highly profitable corporations have demanded that their employees accept substantially lower pay and fewer benefits. Mott’s and Harley-Davidson among others, have not claimed financial hardship. They simply declare that because the U.S. economy is lousy for working people, and likely to remain so, they can get other people to work for far less, so their employees better take less or have the can tied to their tails.

That take-back movement is growing rapidly. Several other companies are trying it on now.

The propaganda began about the same time. As seen in newspaper stories and op-ed pieces, it promotes the idea that the employers are in the right and that American workers must lower their expectations and give up their present lifestyles.

On September 6, 2010, for example, Kevin Hassett, writing for Bloomberg Opinion, bragged of his own courage in declaring that “the biggest problem with the labor market right now is that wages are too high.” Employment will improve, he said, if those who are still working accept substantially lower pay.

Oh, yes. And our hero said that minimum wage laws must go away because requirements for living wages create unemployment. Never mind that every study ever made on the subject has shown no such effect on employment.

His is one of three or four such essays, virtually identical in their positions and sometimes in language, that I’ve seen since early September. None of them suggested that tax breaks for corporations and the very rich should disappear, nor that executive pay and bonuses should be reduced, of course. It is axiomatic to the right that the poor and middle class must pay, while it is the god-given right of the rich to go on getting richer despite the fact that they created our present economic mess.

Hassett needn’t be too self-congratulatory about his courage, by the way. Someone obviously has his back –- the someone who also is creating the messages and doling out the think-tank “studies.”

Some of the recent pieces declare that the American economy is permanently changed and “we can no longer afford the excessive pay scales we grew accustomed to.”

You will see no mention in such articles of the rapid shift of wealth from the poor and middle class to the very rich in this country, nor will you see any suggestion that the very rich should in any way reduce their expectations. Quite the contrary. The articles will be signed by operatives of various right wing “think tanks” and their wholly-owned “pundits” — people such as George Will and Charles Krauthammer, who can be depended upon to tell whatever tale the economic elite wants told, no matter how dishonest or deceitful the message.

(It’s probably irrelevant, but what the heck, here’s a little aside: Two U.S. industries, of the few remaining, that have shown the the biggest recovery over the past year are yacht building and the production and sale of private jets. And the Associated Press reported in mid-November that the biggest gains in retail sales this fall have been reported by luxury retailers such as Saks Fifth Avenue, which are finding that their highest priced merchandise is fairly flying out the doors; expensive jewelry and women’s clothing are especially hot.)

My local rag, the Minneapolis Star Tribune, ran a column on the front page of its business section November 21 carrying another favorite message of right-wing tacticians and strategists. It was written by an in-house water boy for the corporate power structure, who declared that we need to get rid of tax deductions for mortgage payments.

It was quite an able piece of sophistry, actually, the general outlines of which have been oozing out of those “think tanks” for quite awhile now. It is complete crappola, but probably easy to swallow if you never learned to think critically.

The writer, Eric Wieffering, wrote with great scorn that supporters of mortgage deductions claim that “cutting, capping or dropping” the deductions will, “take your pick: depress home values; make it harder for minority families to buy a house; lower the overall ownership rate, and destabilize society at large.”

But, the dismissiveness of Wieffering and others who memorize the talking points of the American Enterprise Institute and the Heritage Foundation covers a shortage of factual evidence and some egregious diversionary tactics.

The Strib writer said that mortgage interest deductibility will cost the U.S. Treasury about $130 billion in 2012, and deductibility of property taxes will cost another $31 billion and the exclusion of capital gains on the sale of residential property will cut into federal income by another $50 billion.

Brrrrrraaaaaacccckkkk.

(That’s the sound of the bullshit alarm.)

First, there is no indication of a source for those numbers. If I had to guess, I’d guess they came from one or both of the aforementioned right wing “think tanks,” or a similar organization, none of which have any more reluctance to diddle numbers than does Glenn Beck.

Secondly, one could make a much more solid case for first going after other enormous tax breaks that are far more obviously harmful to the economy and the majority of its citizens. Huge tax giveaways to billionaires who run hedge funds? Special breaks for billionaires created under George Bush? How about the one third of large American-based corporations that pay no taxes despite enormous profits?

What about the tax breaks given to corporations – yes, this is true – for moving factories out of this country and outsourcing jobs?

The writer also gave no evidence to counter the belief of the great majority of independent economists, academicians and others who, having studied the questions extensively, are certain that home ownership does, indeed, create social stability, that loss of deductions would drive many present homeowners out of their homes and essentially collapse the market for owner-occupied dwellings.

He also stated as fact that “most” of the financial benefits of mortgage interest deductions accrue to people in the highest tax brackets.

Brrrrraaaacccckkk!

Weiffering said that 2008 study in “one economics journal” (Which? Whose? With what bias? Using what numbers?) concluded that households with incomes above $250,000 get “10 times the tax savings” from mortgage deductions than do households with incomes between $40,000 and $75,000. Does that mean that someone with a very high income and much larger mortgage gets a bigger tax break than someone who earns $40,000? If so, duh!

That claim is utterly meaningless without considerably more explanation. And even if we know what the real comparative benefits are at different income levels, the information is likely to be much less significant than the writer would have you believe. This fact still remains: Millions of people who have moderate incomes and who own homes in this country –- people who are making their payments, and are not in danger of defaulting -– could not have bought their homes and could not keep up with ownership costs now if they didn’t have mortgage interest tax deductions.

The writer says that’s not true, but don’t believe him. As proof that the tax deductions don’t affect home ownership rates, he cites Canada, which doesn’t have such a deduction as we know it and Great Britain, which, he says, eliminated mortgage interest deductibility in 2000, and both of which have ownership rates comparable to ours.

But, again, that is meaningless without a great deal more information. What other breaks do home owners in Canada and Britain get? What’s their loan structure like? What interest rates do they pay? What income subsidies might they get?

And please note that the residents of Canada and Britain have some very big economic advantages over U.S. citizens. They don’t have our enormous health care costs, and they don’t have to buy health insurance. They pay far less to educate their offspring, and other services that cost us dearly are covered by their governments. Their utilities cost them less. Even such things as high speed internet connections are free or much less costly than they are here. They can afford to pay more for housing.

My experience when looking at costs of various pieces of the economic puzzles in other countries is that the American political right, in going after whatever is its current target, rarely compares apples to apples, and, as with health care, it frequently hands out outrageous lies in the (realistic) belief that few people here will bother to check the facts.

There’s considerably more to set off that alarm, but this is getting far too long.

But I have to say I’d go along with some of the suggestions the Strib writer allowed might be desirable, though they are way down on his list of preferences.

One I’d buy is to eliminate the interest tax deduction on loans for second and third and fourth and fifth homes. (Take that, John McCain!) I also would go along with putting an upper limit on the amount of mortgage payments that qualify for a deduction. If you have a $250,000 mortgage –yes, it’s a bit high – you get to deduct all of your mortgage interest. If you have a $2 million mortgage, only the interest on the first $250,000 would be deductible.

I can hear the screams from John Boehner now. Picking on the rich.

But eliminating the deduction for home equity loans? Not entirely. If someone takes out such a loan to finance a couple of months of touring the world, no deduction. But if a homeowner uses a home equity loan to do necessary maintenance on his house, or to, say, rebuild a badly outdated kitchen, let that deduction stand.

Here’s what’s really going on with the building push to eliminate home mortgage interest deductions:

It is part of the bigger attack on the economic stability and independence of the American middle class. If we buy our homes, and eventually pay them off, that gives us a degree of freedom and independence that does not sit well with the one percent of the population that now pulls in 50 percent of the country’s annual income – the oligarchy, we might say.

Inability to buy a home means we lose an extremely important method of building our own modest wealth. Perpetually paying rent means the wealth of the ownership class grows even more.

It is a sure bet that the call to do away with mortgage deductions will be repeated and repeated, with the volume growing ever greater, until large segments of the American public accept the message as reasonable. Then we’ll lose our mortgage tax deductions and millions of Americans will be shut out of home ownership. That is a goal high on the wish list of the political right.

A public that will buy into a “grass roots” Tea Party agenda controlled, financed and promoted by oil barons such as David and Charles Koch, and manipulated by their do-anything fixers such as Dick Armey and Karl Rove, will swallow an awful lot of dung and think it’s food.

But that’s just part of the din that will bang against our ears in the months and years to come.

Public transit? We can’t afford it, you’ll be told with increasing frequency.

Health care? We already have the best in the world, they’ll say — a monstrous lie that much of the American public already believes. But, the noise will continue anyway, because “we simply can’t afford so much health care, especially for the undeserving poor.” (See Arizona’s new Republican-created “death panel,” which says poor people can’t have organ transplants.)

Schools? All the inadequacies of our public school system are the fault of teachers unions and lazy, bumbling teachers. We’re already told that almost daily by those right wing pundits and “think tank” operatives and corporate executives and their hired politicians. Spend on education: No way. That would require tax increases, which are unacceptable.

Higher education: If you can pay the ever-increasing costs, you can go. The propaganda machine is well on the way on this one, but still building: Of course “we can’t afford” to subsidize college costs for lower and middle income people. A university education is properly a privilege of the moneyed is the message. It is being peddled softly now, but the drum beat will quicken.

jim fullerIn fact, you’ll find that the cry of “can’t afford it” is going to get louder and louder, and far more frequent, and it will apply to everything that the rich don’t need or want. It will apply more and more to services we now take for granted.

This is, indeed, class warfare, in case you are among the suckers who think that’s a new thing.

We –- everybody but the super rich -– are losing.

Jim Fuller

Republished with permission.

Published by the LA Progressive on December 4, 2010
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About Jim Fuller

James Clay Fuller is a sort-of retired journalist who has worked in newspapers and magazines for more than 45 years. His day job for 30 years was at the Minneapolis StarTribune, where he was a business and economics reporter, features writer, and sometime music critic, as well as an editor in charge of several specialized sections of the newspaper and a number of investigative projects. He was nominated for Pulitzer Prizes in 1977 and 1992, and was the instigator and senior editor on a project that was nominated for a Pultizer in 1997. He has written for many national publications.

Professionally, Fuller has been known throughout his career as Jim Fuller. However, when applying for the URL of that name, he learned it has been hijacked by a Web squatter who is using it in an extremely offensive way. In addition, Web searches for "Jim Fuller" turn up thousands of others with the same name, so he is now using his full name - James Clay Fuller - to make it easier to find him online.