The Bush Tax Cuts and the 99 Percent

By James Kwak

I forgot to alert you to my latest Atlantic column, which went up on Monday. To my mind, Occupy Wall Street is a protest movement, and a valuable one, and the often-stated criticism that they should have concrete demands is kind of silly. (See Frank Pasquale’s response, point 5.) I have spent a fair amount of time reading the 99 Percent tumblr, however, and I think the kind of policies that would help the people who describe themselves there are pretty obvious. This is Mike Konczal’s summary:

“Upon reflection, it is very obvious where the problems are.  There’s no universal health care to handle the randomness of poor health.  There’s no free higher education to allow people to develop their skills outside the logic and relations of indentured servitude. Our bankruptcy code has been rewritten by the top 1% when instead, it needs to be a defense against their need to shove inequality-driven debt at populations. And finally, there’s no basic income guaranteed to each citizen to keep poverty and poor circumstances at bay.”

But in my opinion, the preliminary step to getting rich (and reasonably comfortable) people to pay for a better social safety net is to let the Bush tax cuts expire, as I argue in the column. Most importantly, it’s the only inequality-reducing policy I can think of that has any chance of happening in the next year—simply because it only requires doing nothing. How much would it reduce inequality? That’s just the reverse of what the tax cuts did in the first place. (If you can’t read the table, click on it for a larger version.)

83 thoughts on “The Bush Tax Cuts and the 99 Percent

  1. I remember when the Bush tax cuts were enacted, a friend of mine was sent an invitation to attend a fund-raiser dinner with VP Cheney at $2500/plate. I thought to myself at the time, “I wonder how much I would have to be earning to have the entire dinner fee be paid for by the Bush Tax Cut?”

    The answer (if I recall correctly) was $250,000. Hmmm, can’t imagine who that tax cut was aimed at and how it was supposed to impact campaign fund-raising…

  2. The first step is to tax the rich on all their income. No caps.

    The second step is to pass a constitutional amendment clarifying that constitutional rights apply only to individual human beings, not to corporations, which should have no right to fund political campaigns—period.

  3. James Kwak,

    “Inequality” means different things to different people. Please give us your definition of “inequality” as you use it in the sentence, “How much would it reduce inequality?”

  4. @ JK – Inequality is 50% of Americans earning incomes pay no taxes. Let’s start with having everyone with skin in the game regardless of income level and repealing Obamacare, repealing Frank-Dodd, and re-implementing Glass-Steagall.

    I reject the entire premise that healthcare and education are entitlements that should be provided by the government.

  5. @ Bill Munny

    I am sure the 50% not paying taxes would love to pay them, for it would mean they would be above the poverty line. It’s easy to reject that healthcare/education should be universal rights when one was born into a life where these rights would exist with or without public assistance. I, for one, feel lucky to have been born into such privilege, but don’t feel that others who aren’t as lucky should be denied this basic support.

    Where have we gone as a country where there’s no sense of a social contract, where we as a society are all in this together? We are doomed if we cannot embrace the idea of joint sacrifice and joint propserity.

  6. @Anonymous

    The 50% that are not paying taxes are not below the poverty level.

    That is quite presumptuous that you think you know my background and circumstances. If you want to give away everything that you have worked for feel free. It’s just not the government’s place to decide that for you or me.

    WTH, is “joint sacrifice” and “joint prosperity”? No country, in the history of the world, has ever taxed itself to prosperity!

  7. @ Bill Munny. Well I guess Exon and other huge corporations would be included in your version of the 50% of people who don’t pay taxes the. Bill, you and your libertarian ilk fail to realize that your “me me me” attitudes give rise to these huge income disparities. It is to your benefit to pay a bit forward to the next generation. Oh, by the way, should the military, fire or police services also not be entitlements to keep you safe?

  8. @RMB

    Once again someone is being presumptuous about by background and cirumstances. I am a conservative that believes in the rugged-individualism and self-reliance that made this country great.

    I believe you will find that Exxon does pay taxes and provides 100’s of thousands jobs to people that also pay taxes. See how that works?

    Providing for the common defense is in the US constitiution so yes I believe in a strong military that will blow up things and kill bad people.

    As for fireman and policeman, I do believe this is a service that is provided at the local level not the federal government. So any expenditures by the federal government on these services should be cut.

    There will always be poor people and this is not the fault of the rich.

  9. RMB said, “Well I guess Exon [sic] and other huge corporations would be included in your version of the 50% of people who don’t pay taxes … ”

    Exxon recorded $7.7 billion in U.S. tax costs last year, and paid even more overseas.

    Its grand total in global taxes for the year? A whopping $78.6 billion. The company’s effective income tax rate was a hefty 47%, its highest in three years.
    CNN Money. April 16, 2010

  10. ah! the bush tax cuts!

    letting the bush tax cuts expire!

    so little is said about the bush tax cuts

    seems like everyone is washington has agreed to talk about anything other than the looming expiration of bush tax cuts

  11. @ Bill Munny: hiding behind anonymity is great to not prove any point. Bill we will have to agree to disagree as I cannot engage in purile arguements based in magical thinking. A final note to you Bill. Your illusion of rugged individualism is a myth… one in your country got rich by themselves. You have benefitted from generations past who paid for public services an infrastructure via tax dollars which helpd you to either get or not get where you are today. Sorry Bill but facts are facts.

  12. @ speed. I stand corrected. Exxon paid huge taxes In Nigeria! Silly me. I guess it’s not a problem for you that the article says not a single dollar went to the IRS (second sentace in case you missed) which was my point. On an aside, you should not pity Exon for he high taxes. It means they made a pile of cash on he backs of the Nigerians and Americans.

  13. RMB said, “you should not pity Exon [sic] for he [sic] high taxes. It means they made a pile of cash on he backs of the Nigerians and Americans.”

    Skip to the end. “The company’s effective income tax rate was a hefty 47%, its highest in three years.” Not much left for the IRS.

    “America’s oil and natural gas industry pays over $86 million every day in rents, royalties, bonuses and income tax payments to the federal government.”

    Click to access Total_Industry_Taxes_April_2011.pdf

    What do you think the number should be? Show your work.

    And at the end of 2010, Exxon had 83,600 employees, up from 80,700 the year before.

  14. @ speed…. No math necessary……make tons of cash pay lots of taxes. Simple. Even after they paid their bribes and funded wars and genocide, shareholders still got their share. How much more do you need while billions starve daily?

  15. The IRS is a straw, funneling what it collects to the US Treasury. It doesn’t keep any part of its’ collection.

    The agency works much like an automaton, but with human beings who are not bad people. Many work like the dickens, and most are highly professional in their official duties.

    Public information: many hugely profitable US multi-nationals wind up with a federal tax liability of ZERO.

    Some may wonder how this is possible, when the financial statements show mind-boggling profits……

    There are many working Americans living in what are called urban ghettoes, paying more income tax than these behemoths.

    I leave it for the enlightened readership of Baseline Scenario to ponder whether this is fair and equitable taxation.

  16. RMB

    It’s clear that you have given this matter deep and thorough study as evidenced by your well reasoned and insightful comments. Particularly shrewd was the clever, “No math necessary.” Perhaps you should run for president.

  17. When enough of a population realizes there are different rules [effectively laws] for different people this causes social unrest. The level of unrest grows even more dangerous when folks who believed, or were, part of the favored become nouveau underclass and realize they are screwed.

    What the 100% needs is social justice — all people accountable to the same laws. (Or at least the perception of such a thing.)

  18. @ speed
    The US already had a super genius at the helm. Perhaps you remember King George 2? Look where his genius got you. Once I realized you provided me stats from an ultra non-biased and respected American Petrolium Institute I knew that I had to make a simple, easy to understand response to your post. If you demonstrated any sort of intellectually curiosity, you wouldn’t be pulling info frOm the industry shrill and presenting it as fact.

  19. Well, long term policy reducing student debt by not having them take on so much would be good.

    But with those with crushing debt, and defaulted loans, at least letting them be discharged in bankruptcy would be a huge start. Nothing like getting ready to retire with $75,000+ in student loans/penalties/interest you can never pay off hanging over your head.

  20. I don’t know the percentage, but believe that a very good part of that 50% that doesn’t pay taxes is earning under-the-table income. Even the people that do pay taxes are not paying their fair share, both rich and poor. Cheating on taxes is big time. If people can get away with it, many are doing it. It’s a good way to get ahead. Same with many entitlements. How many people are getting entitlements that they don’t deserve because they are cheating on their taxes or just plain lying. Also, when you give entitlements freely, guess what, nobody wants to work as they are getting handouts for nothing. A good friend of mine was donating for many years to save those cute starving children that were shown on television and in magazines. She finally decided to quit donating when she realized that those poor starving children that she supported were growing up to raise their own cute poor starving children that needed to be fed as well. Kind of like an unneutered cat colony that is constantly fed. Where does it stop.

    America is the best place in the world to be poor. Free medical, free food, free shelter. There are many “poor” people that are on welfare that have 2 cars in the garage, televisions, all housing appliances, even nice housing for their families. Why would they want to give this up when they are getting it for free? Lazy people are made by enablers. I don’t think that this is good for society. Teach the people that if they don’t learn to take care of themselves, they aren’t going to be living quite so well. The decision is up to them. Yes, education is important and should be provided for all, as it is now. Other social services such as police and roads are necessary for all. Lets not coddle the lazy, cheating, and lying. Not everyone in society believes that being an enabler or a taker is best for society.

  21. Actually, James, my view is that the present tax code should be essentially ditched in toto, and be replaced by a modified flat tax. Once a new code is instituted, it should not be allowed to be amended without 2/3rds of each house agreeing. It is high time that we stopped using taxes for pork barrels and to foster public policy which has been done for ages, and which is just plain inappropriate. Of course, reinstating the Bush tax cuts would be okay until reform is done, except my feeling is that the same tax charts should be in place that were there immediately following WWII and up until the late 60’s. That would clean things up nicely.

  22. @Bayard:

    Wasn’t that the era of 90% top marginal rates? Agreed that it would sop up the excess income of the wealthy (but not the wealth), but I’m not clear as to how this would coordinate with a modified flat tax.

  23. I strongly agree with this post and Konczal’s thoughts on this. I think the OWS demonstrators needn’t necessarily have a “detailed and rigid list of demands”. There are some things which are just patently obvious and if those minimal demands are met the OWS leaders can work from there.

    1) I think it’s no coincidence the protests started almost immediately after the Bank of America debit card charges.
    2) Minimal account balance charges really hurt low income people, I think they shouldn’t be any higher than $400, and you can even make a strong moral argument there shouldn’t be any minimum acct. balance charge at all.
    3) Make usury rates/charges on pay day loans illegal. These even hurt white trash, but let’s get real for a few seconds, the payday loans are mainly aimed at uneducated blacks. This is exactly in the realm of what Konczal calls indentured servitude.
    4) How about some laws on how often used car salesman can “flip” the same car to low-income people. I think many car salesman “flip” cars just like the banks “flipped” mortgages by packaging them in CDOs.
    5) Stricter Usury laws
    6) Some laws related to mortgage “cramdowns”.
    Maybe where state judges could modify loans or do “workouts” based on economic conditions. We’re not talking about making loan contracts into a joke here. We’re talking about giving them a few months for job hunting, or adjusting the rate a few points so the home doesn’t sit empty for years for scavengers or looters to damage in a real estate downturn, when you already had a responsible homeowner going through a tough spot.
    7) A temporary freeze on university tuition rates. We’re cutting off an entire generation of young adults from getting a college degree only based upon the fact their parents can’t help. Better than average students from poor families getting cut off, while slobs from rich families get in. Think “W” Bush here. After “W” Bush passed out at frat drinking parties and many years later not being able to construct a sentence. “W” making up new words for Chinese ESL students to study. What good does churning rich idiots through college do our society???

  24. @ JC: It gets better too, they can’t take that route because the financial industry (just like the current houseing situtation) has leveraged derivitives that would trigger a default, and this is just another straw waiting to break someones middle class back. Until those responcible for the 08 crash rise to face the consequences of their new laws, this future panic for another bailout is simply to tempting.

  25. @ Bill Munny

    The only reason you, or anyone else in this country, is able to prosper in this, or any other, society is because the government and society writ large encouraged it to happen. Without an organized state, you would live in a state of chaos. You, like everyone else who has succeeded in this country, owes something back. That is the social contract. Your failure to recognize this is nothing short of selfish greed. Your hard work and success is wonderful–good for you. But you owe something back. The only presumptuous displayed here is your belief that you owe nothing back.

    Read some basic political philosophy (Hobbes and Locke) before giving yourself all the credit for your success.

  26. @Anonymous

    Again, you do not know my background or circumstances. Not sure where you get the notion that I don’t give something back and that I haven’t read Hobbes and Locke. I just don’t think the federal government gets to decide where or how I give back. I do want everyone to have equal access to the same opportunities that I have had and hopefully more. That does not mean we will all have equal outcomes.

    Liberals measure compassion by how many people are given welfare. Conservatives measure compassion by how many people no longer need it.

  27. I love this blog – you never know what kind of unique combination of evolutionary survival skills you’ll meet up with in an economics class and meeting up with a troglodyte here today just fired up the imagination – I can’t stop cracking myself up – it’s just too rich of a vein for political sarcasm (cheaper than high tech war)

    Yup, it’s Friday and thinking is hard work.

    Unfortunately, those who do not believe in health care or education did manage to breed a brood of replicas with high tech access to *expressions of will*…

    Trog perspective, “I am a conservative that believes in the rugged-individualism and self-reliance that made this country great.”

    Okay, the first point he missed is that he could be wrong in his analysis of what made this country great. But that is such a long conversation, isn’t it? In the evolution of the human species from animal to human, the so-called rugged-individual didn’t live long enough to evolve a concept of *government* – he was pretty much just grizzly bear food in his environmental timeline on Earth.


    Can’t go on – lost in a mental skit that is making me giggle too much….

    Women participating in mate selection is a very good thing for the tribe that allows it – we don’t care if you have a *thing* about asking for directions, we just don’t mate with the one who does not ALLOW us, through brute force, to ask, either.

    Oh yeah, we know all about being loaded for bear :-))

  28. “Conservatives measure compassion by how many people no longer need it.”

    So by this “measure”, thirty years of Reaganomics have been a total disaster, as the amount of Americans needing compassion has grown on a constant basis.

  29. “Liberals measure compassion by how many people are given welfare.”

    Right, and that would be the banksters – privatize the PROFITS of the *rugged individual* and socialize the losses – the crippling loss, as I see it, is the ability to have fair competition when it comes to HONEST WORK. There is nothing HONEST going on with liberals, I’ll agree to that.

    “Conservatives measure compassion by how many people no longer need it.”

    No longer need what? Healthcare and education? – because, listen, buster, that IS hard work on top of being honest work! You boneheads kept those activities off the books for so long because you never *paid* women for their work – yea, it affects your bottom line calculation for how much you promised the mercenaries – and looky at what they did anyway, hit the *enter* button on their laptop. Paulson handed us a stick up note – not just a *tax cut* for themselves….

    FIAT $$$$ and fractional reserve banking – is it not WELFARE to suck up the savings and equity of everybody who picked themselves up by their bootstraps – HONESTLY – in spite of that diabolical schema of money-lending?

    Duly noted who the *other* side is in this Just War that is heating up – the *rugged individual* GANG of mercenaries – they took it with brute force…wiping out the HONEST LABOR *middle class* to replace it with Crime, Inc – the PERSON corp. who runs Psycho Heaven.

  30. It appears as though you endorse Konszal’s positions, and his definitions of the problems.. For example:

    “There’s no universal health care to handle the randomness of poor health.” Ah, excuse me. The randomness of poor health? While there are certainly health issues that occur at random, being 40 pounds overweight and all the self indulgent behavior that health researchers attribute up to 40% of health care cost are not a random events. Implied in this excuse makers interpretation is, “Eat like a pig to slaughter, drink to excess, use recreational drugs, smoke to your heart’s content, and we will handle the random nature of the consequences that you have inflicted upon yourself.” Again, this apologists mentality removes all responsibility from the individual.. How about this for a non-random solution to universal health care; “You must demonstrate that you are making a qualified effort to avoid the self inflicted disease that accompany life style influences on health. If you smoke, you are disqualified. If you are more than 18-22% body fat, you do not qualify. Test positive for narcotics, you are disqualified.” Having health care without responsibility will lead to a further declines in health, just as providing bail outs to banks leads to more bank misbehavior, and subsidizing the poor only leads to increased poverty.

    “There’s no free higher education to allow people to develop their skills outside the logic and relations of indentured servitude.” We have had subsidized education for 40 years. Once again, subsidization leads to run away prices and the current tuition bubble. But, Konszal (and apparently you) believe we need to treat diabetes by giving the patient more sugar. How did the free higher education troll in California work out? Oops. If you want to see the path upon which your ‘Everything should be free’ ideas will take us, simply look at the Golden State. If you want an extreme example, look North to Detroit, the poster child for social engineering and welfare. These worn out socialistic ideas have failed (Europe anyone?). If these are the best ideas you can offer, we are in worse trouble than I thought. It is one thing to be wrong. its another to make the same mistakes over and over again. I understand Krugman missing the mark. His ideology is a corruption of Keynes and is an example of, “If the only tool in the world were a hammer, everything would be a nail.” But you guys are capable of original thoughts. Or am I wrong about your ability to recognize failure and avoid repeating the same mistakes that brought us here?

    Saving the best for last, Konszal stakes, ” And finally, there’s no basic income guaranteed to each citizen to keep poverty and poor circumstances at bay.” Provide basic guaranteed income, and we will have generations that live exclusively on basis guaranteed income. Don’t believe me. Look at the UK. They have generations of thugs with no life skills, no job skills, no motivation to improve their lot, but they can protest with great enthusiasm because the State has not provided them with enough subsidy. Why not throw companys into this guarantee plan? That’s what we did for the banks. Let’s guarantee that every corporations has a profit!

    Fellas, it’s time to grow up. Those trophies you received for being a bench warmer were meant to make you feel good about yourselves, and the mission failed. You were never equal to the best players and there is no shame in that fact. Sadly, the trophies convinced you that you were entitled to recognition for showing up. You misguidedly attack the 1%, lumping everyone everyone into the same category as the corrupt Wall Street bankers politicians. Believe it or not, some of us actually created stuff. You know, we started companies, we produced things, we provide services, we employ people, we mortgaged homes to raise collateral to support lines of credit when the company needed it. I know the are foreign ideas to you, but believe it or not, it goes on. Have you heard some of the dialog from the OWC crowd? Howard Stern has. Take a listen at Your suggestions of supporting the ward of the state mentality on display In OWC is frightening. What is most likely on display here is either the end of socialism and a return to capitalism, or the beginning of communism. I am afraid to ask where you stand.

  31. Everybody is getting this wrong. It is not “50% of Americans pay no taxes” or “50% of American households pay no taxes”. The correct statistic is “47% of US taxing units pay no federal income tax”. A taxing unit is any person / couple that is required to file a return. If you are married and have a teenager with a part time job and your elderly mother lives in your home, you are 1 household, 4 Americans and 3 taxing units. Junior didn’t make much at his minimum wage summer job and doesn’t owe federal taxes, but he did pay FICA and Medicare payroll taxes from his first dollar earned. Your mother has only her Social Security survivor’s benefit and also doesn’t owe federal taxes either.

    The majority of taxing units that don’t owe taxes (>50%) don’t owe them because they didn’t earn enough money to even match the standard deduction. Which basically means they didn’t earn enough for bare subsistence living. What exactly is the point of demanding that these people pay, and how much do you expect to get out of them? If we ask them for a token dollar will that make you happy?

    More than half of the remainder who pay no federal income taxes end up in that position because of a combination of low income and deductions/exemptions. Which means they are also pretty low on the income ladder, but are definitely better off than the people with next to nothing, but they still spend pretty much all their money just getting by. And remember that they are paying payroll taxes. How much do we demand from these people? How about a token $20?

    There. We’ve just taken a little money from people with next to nothing and reduced the deficit by a billion dollars. Everyone’s got skin in the game. NOW can restore tax rates to 1995 levels?

  32. BH in MA – your argument is entirely rational, therefore, you will make no headway with conservatives or troglodytes. But i repeat myself…

  33. Socialism, capitalism and communism all end up being Crime, Inc.- and they’re doing it “all together now” – Kleptocrats, Kings, and Psycho Dictators – step right up and get your advanced degree in diplomatic relations…it’ll cost you, though….

    All *isms* are designed to take away the right of the individual to make their lives less miserable through HONEST WORK.

    High crimes were committed in the USA and this HYSTERICAL push of all power levers to evade justice – a push that includes the SAVAGE use of taxation of labor to pay mercenaries

    will not be tolerated…

    pump and dump pump and dump pump and dump – global *math* skills…?

  34. @Kane, ““There’s no universal health care to handle the randomness of poor health.” Ah, excuse me. The randomness of poor health? While there are certainly health issues that occur at random, being 40 pounds overweight and all the self indulgent behavior that health researchers attribute up to 40% of health care cost are not a random events.”

    Also not *random poor health* are all the cancers KNOWN to be caused by *industrialization* – exposure to toxins, punishing labor who try to do the same HARD work in a *healthy* manner, polluting rivers with unprocessed waste – and on and on…

  35. @ Annie – “Socialism, capitalism and communism all end up being Crime, Inc”

    Capitalism doesn’t belong in this list, it is liberalism disguised as captialism that is to blame. For example, the housing bubble was caused by the liberal ideology that everyone should own a house. Not everyone can afford a home or they “qualify” for a loan they can’t afford.

    Bailing out the banks, investment brokerages, insurance companies on wall street was liberal ideals being forced upon the middle class taxpayer . Capitalist principles says let them fail.

    Both of these examples occured during a period of the liberal democrats control both houses of Congress.

  36. @Mummy

    “Bloomberg reports that Bank of America (BAC) has shifted about $22 trillion worth of derivative obligations from Merrill Lynch and the BAC holding company to the FDIC insured retail deposit division. Along with this information came the revelation that the FDIC insured unit was already stuffed with $53 trillion worth of these potentially toxic obligations, making a total of $75 trillion.”


    That’s a lot of houses – 75 trillion of *derivatives*!

    The tech bubble was caused by everyone knowing how easy the technology would make it to issue 75 trillion in *derivatives* – derived, I might add, from housing….

    You have NO CLUE what is coming, do you?

  37. The problem with equality of the Bush tax cut is that it is percentage based. If the cut was everyone gets 25k back from the government how would that equality be seen? I would think that 99% of the people would think it is more than fair. But this country is supposed to secure the rights of the minority, even when they are rich.

    Not being so lucky to be in the top quintile, I am fearful of what losing another $1500 to my budget will mean. Which in part is why the cuts are so hard to get rid of and why they are nearly fair.

  38. Hey Mummy, was George W Bush a “liberal”? No?

    Correct, he was a fascist “conservative”.

    Lunch and learn, here:

    I realize the NY TIMES is a rag best utilized as liner to a kitty litter box, nevertheless:

    Mummy, you’re a brainwashed dope, sorry….no finessing this one…..from a guy with good technique, usually.

  39. @ Bill Munny

    Are you repeating that old right wing canard that the CRA caused the financial crisis. Please say “yes”,so we can all know how full of crap that you are.

    Also do you think the poor deserve police protection, even if they unable to pay all that much taxes. Or do you think that it is perfectly ok for them to be killed without consequence in the name of “rugged individualism”?

  40. Bill Munny

    Bailing out the banks, investment brokerages, insurance companies on wall street was liberal ideals being forced upon the middle class taxpayer . Capitalist principles says let them fail.

    Both of these examples occured during a period of the liberal democrats control both houses of Congress.


    You REALLY do twist reality don’t you?

    The bailouts for AGI and all the rest were INITIATED by Henry Paulson – that well-know falming libearl REPUBLICAN from Wall St.

    The bailouts for Wall St and AGI and all the rest were pushed through a reluctant Congress by my applaing something-removed cousin George BUSH – that wacko socialist of the REPUBLICAN party.

    You must have flunked 8th grade civis if you do not understand that there are TWO governing bodies that control public policy and laws – COngress and the President. The one can refuse to pass the law and the other can refuse to sign it.

    Reality is that Pualson and Bsuh were begging and bullying COngress to pass the bailouts in 2008.

    Making up stupid lies and twisting reality only confirms the readers low opinion of your intelligence and reasoning ability.

  41. James Kwak,

    I asked above for your definition of “inequality” as used in your post and you have not responded. It was a reasonable question.

    Rather than engaging in productive dialog with rational people asking reasonable quesions it appears that you are interested only in preaching to the converted. An unproductive endeavor.

  42. James Kwak,

    A comment on inequality from Michael Shellenberger and Ted Nordhaus writing about NYU sociologist Dalton Conley at the Breakthrough Institute.

    … while the 1929 stock market crash reduced inequality by wiping out fortunes, the 2008 crash provoked measures that sustained it. “But greater equality after the crash came at a very high price: the Great Depression. So while the response to the 2008 crisis sustained the top-heavy structure of the American economy, it also averted the free fall that threw tens of millions of Americans into unemployment and breadlines throughout the 1930s.”

    … as the gap between the “99%” and the richest one percent has grown, “the interests of workers are increasingly yoked to those of their bosses,” Conley notes.


    more people who do not *deserve* to own a home….

    So the Treasurer of the United States, thanks to the Patriot Act, does not need permission from Justice to paw through any person’s financial records, and after BILLIONS of $$$ in gizmo *inwestment* in this spying apparatus of USA citizens, it’s still a “whack a mole” situation with scam artists?

    Logically, that can only mean that the *moles* are embedded in the spying apparatus…

    @Speed – you might want to cut back on the meth…or not, I could care less either way being as you are a *rugged individualist* and even in this *information age*, the gene pool will cull you out…

  44. @Speed – Unfortunately, today’s 1% are not the actual individuals who contributed research and discovery (brain power) or honest labor (brawn power) to the creation of ANY increase in a, peacefully-won, standard of living. What is abundantly clear is that you’re the hooligan gang of entitled *rich man’s idiot sons/daughters*. And utterly morally and ethically BANKRUPT – must be the *speed* that creates that level of social *autism*…

    We’re at war, Speed – a Just War. Wiki *Just War*…yup, time to cull the Teutonic Knight gene pool again….

    When you got to jail, and you will, they will torture you by playing the video of “The Sound of Music” – 24/7 – no relief….

    “…..edelweiss, edelweiss, every morning you greet me…”

  45. “There will always be poor people and this is not the fault of the rich.” (by this post’s leading troll)

    Of course, but how poor, and how rich? What is the sweet spot? When global inequality produced more excess wealth looking for parking spots than could be lent to solvent debtors, Wall Street “had to” market the debts of the insolvent in pretty ratings agency wrappers. Less excess wealth and more solvent debtors would have been nearer the sweet spot.

    “I am a conservative that believes in the rugged-individualism and self-reliance that made this country great.” (Bill Munny again)

    Seeking lucrative advancement on Wall Street, however creatively, energetically and single-mindedly, is “rugged-individualism and self-reliance”? The financial sector grew from about 10% of the US economy to about 40%. Thanks to lots of ruggedly self-reliant suits? Blue collar criminals may be the epitome of rugged self-reliance, but pasty white collar criminals in leather executive chairs? “This country” was “great” in the 1950s and 60s when wealth and income were way more evenly distributed than now. But then equality overshot in the 1970s when the problem was excess demand, the opposite of today’s problem of deficient demand. After 30 years of what was needed in 1980 but no longer by 1990 inequality has now overshot. No rampant inequality, no GFC.

  46. Annie — thanks for the link to the “rant” by Jonathan Capehart (preceded by an ad for Merck, a $46 billion company with 94,000 employees currently paying a 4.56% dividend).

    Capehart …

    o complained about … an overall lack of leadership from republicans and democrats here in Washington.
    o What we need is bold, fearless leadership from the president and the congress.

    Not sure what that has to do with home ownership.

  47. I suggest that Baseline Scenario commenters consider refraining from responding to “Bill Munny”

    Just let his rants sit there exuding their unique stupidity. To counter his nonsense only encourages him. But ignoring him might drive him crazy. ;-)

  48. In the latest edition of the Economist, the editors of this bastion of internationalist capitalism and small government side, or at least empathize, with OWS:

    “To the man-in-the-street, all this smacks of a system that has failed. Neither of the main Western models has much political credit at the moment. … Braver politicians would focus on two things. The first is tackling the causes of the rage speedily. Above all that means doing more to get their economies moving again. …The second is telling the truth—especially about what went wrong. ….To the extent that the protests are the first blast in a much longer, broader battle, this newspaper is firmly on the side of openness and freedom.”

    Now before you respond, take a moment to reflect as I complete the necessary disclosures. Of course there is in the ellipses restatements of the Economist’s traditional leanings; read the citation and decide for yourself if this disqualifies them from carrying OWS’ water. But I for one find it hopeful that this influential capitalist rag has begun talking change.

  49. @Speed

    Besides reading the blog, what else do you do? Do you lament the fact that the Confederacy lost the Civil War? Nobody here cares what Austrian School of Economics crowd has to say. Ludwig von Mises was a crank.

    I am economically well off, and I don’t attribute it all to the top 1%. I attribute much of it to the cop who protects my business, my property, and my life. I attribute it to the public school teachers who educated me. I attribute it to the infantry private who protects my security and who probably makes a paltry $300.00 per week.

    As a child of a union factory worker, I also attribute my economic well being to the fact that my father had a good union paying job, which means I got decent chance in life. Thank you Wagner Act. Thank you Franklin Delano Roosevelt.

    Ask yourself this? How would the top 1% be living if the 99% went “Galt”. What would they do if they had to fix their own plumbing, sweep the streets, and had to provide for their own defense. You can believe in the idea of Randian supermen if you want to. But, I and lot of other people are not buying it.

    Mr. Reismann seems to assume that somehow for the economy to function well, it is necessary for the top 1% to own 40% of the wealth. Sorry, I am not buying that.

    Now, you want to get on Professor Kwak’s case for not defining “inequality”. I have seen this little right wing tactic before. What is “rich”. What is “inequality”? The premise of such questions is that somehow the concepts of “rich” or “inequality” are impossible to define. I am sorry but being “rich” or there being “inequality” are not some abstract philosophical concepts. When there is real world data about the distribution of income and wealth, reasonable people can come to reasonable conclusions about what it means to be “rich”. They can also come to a reasonable conclusion that the top 1% owning 40% of the wealth is too much inequality.

    Accordingly, the points that Professor Kwak makes are not invalid because he does not define “inequality” with mathematical precision.

    Your crowd promised us that if we just gave the top 1% what they wanted, we would all benefit. Had that happened, then we probably would not being seeing the wall street protest today. But, as we all know, after thirty years of evidence, the trickle down theory did not work.

    In sum, nobody cares what the crowd at the Mises Institute has to say.

  50. William.

    What would the 99% do if they had to generate their own electricity (after building their own generators/solar panels/windmills), build their own cars (after mining their own ore etc.), grow their own wheat, produce their own polio vaccine, build their own microprocessors and can their own hams?

  51. @speedkills – sorry, wrong link –

    it was supposed to be this one….

    @woop – that’s the problem with the Teutonic Brain (the result of an alien race running from their *law* who mated here on earth with troglodytes and neanderthals) – repetition. It’s too easy to brainwash them. Especially with nice sounding, complex words like edelweiss :-)) The edelweiss might very well be worthy of a song, but *fascist* capitalism….? Not so much – try singing the same tune using the word *capitalism* or *fascism* or *communism* or *socialism* instead….

    re: the 1% story from speedkills – OMG – the absolute height of entitlement conceit from wannabe-slave-owners-again! (waaah-waaah go the cry babies)

    USA’s Gen X – as a politically savage mob – laying claim to brain and brawn power so superior it will show 99% of the world how to how to live by setting the standard! Puhleeze! First thing they’d do is steal the correct answer to any test that would be mandatory to prove their *knowledge*, real depth knowledge, of any SCIENCE topic on which they claim to know something superior about that they, themselves, discovered, built, or even IMAGINED. They lie so freely because it is all a game to them. C’mon, history is replete with gangs going criminal after setting the stage for themselves by making it *legal* through RELIGION and politics…

    Here’s the question – who could NOT see that the *derivatives* crap was crap?

    It was ALWAYS a plan among this group of du jour global psychos to eliminate 3 billion people. I kid you not. And it’s finally sinking in with all the endless *official* yaddayadda vs. the conditions on the ground, isn’t it? “Just the facts, Ma’am….”.

    Truth is stranger than fiction. There really is a *devil*, so to speak, who has been pushing all the wrong buttons. The buttons that favor his *ism* (which are not the buttons in favor of human beings, like duh). And he’s been at it for 500,000 years. The super-being sent here to nurture the SANE evolution of the human species HATES human beings. Sad but true. We can all *feel* that free-floating hate. He’s on tilt with the amount of hate he has for us after 500,000 years. Getting rid of 3 billion of us is just letting off some steam for him so that he can get back to a zen state or something – I really don’t know what people who are in love with only themselves go to the happy place in their head to feel *perfect*.

    But now he is SO CLOSE to using the entire planet for his PASSION, his hobby – genetic cut and paste. *Intelligent* slave labor – people who can be with numbers in their brain all the time and nothing else to interfere – pesky consciences or imaginations or music or feelings – just numbers…

    That’s all edelweiss brain cares about – manipulating genes. But before you all think I’ve gone off my rocket, riddle me this – if I seem to be the only one who could have told you in under 60 seconds flat that *derivatives* are a bunch of crap – then is there anybody who could figure out that we do have this *caretaker* super-being planted here who is alternately BORED with us or hates us…?

    Let me guess, people with those kind of objectives (cut and paste genes) and charming well rounded personalities (bi-polar between hate and bored) – they’re working in Big Pharma for abigabucks….

    More misery for others = More $$$$ for ME ME ME!!!

    I’m just getting started on the blistering criticism – reality based – on the article “In Praise of the Capitalist 1 Percent”….if even 0.00000000000001 % of one penny of my tax dollars somehow ended up at that *think tank* – well, I’m sure that it’s going to be something like that article that will light the fuse…

  52. Couldn’t agree more with JK’s opinion of OWS. We are in deep deep doo doo.

    “Fast forward 80 years and we have protestors setting up camp in a public square, not far from where the same exact banks that caused the Great Depression have created the Greater Depression. The biggest Wall Street banks have gotten bigger. The Federal Reserve, in collusion with the Wall Street banks, has engineered a two year stock market rally, while the average American has seen their wages decline, food and energy prices soar, home prices fall, and banks paying them .1% on their savings. Anger and disillusionment continue to build in this country like a volcano preparing to blow. Some people are angry at Washington politicians. Some are angry at Wall Street. Others aren’t sure who to be angry at. The evil oligarchy of bankers, corporate titans, and bought off Washington politicians that control the agenda and mainstream media, continue to scorn, ridicule and denigrate the middle class of America. Their financial engineering is failing. They’ve gone too far. The debt accumulation is unsustainable. The mood of the country has darkened and talk of revolution and the shadow of impending violence is growing.”

    “The Great Depression was not an event, it was an era. It was an era of discontent, pain, suffering, and ultimately war and death. The people who lived through this era have mostly died off. We have entered a new similar era. The average citizen sees the American Dream of a better life slipping away due to the corruption, greed, and immorality of our political and financial systems. The Federal Reserve’s current chosen mandate is to make the stock market go up, while impoverishing the middle class. The 1% better hope the police and military continue to obey their orders, because the 99% are angry and heavily armed. This Fourth Turning has ten to fifteen years to go. Every previous Fourth Turning has included violence, war and death on an epic scale.”

  53. The delicious irony is that James Kwak is a founder of Guidewire Software who filed for a $ 100 million IPO just last month. All the while, he’s fooled all of you into thinking he’s a lumpenproletariat unwashed just like the rest of you slobs.

    How does Guidewire make its money? Well, by serving the insurance companies; I’m sure a favorite among many of you.

    Who is taking Guidewire public? Well, little deceived darlings, it’s the banks, i.e. JPMorgan, Deutsche Bank and a real favorite, Citibank.

    How much will James make? Well at least in the millions of dollars, nitwits.

    Don’t believe me? Well here’s the IPO prospectus:

    Watch the stock when it goes public. I’m sure all of you will be pleased.

  54. American capitalism, Title 25, you should get with the program….for one who forever is extolling the virtues of free enterprise, you sure are sounding very much the “socialist”…..bawahahahaha.

  55. @Title52

    I know you think you’re slick, but you’re not. Despite all the red baiting from jerkos like you, most of us here are not opposed to somebody making a buck. What were opposed to is people like you who are trying to take us back to the nineteenth century.

    If Mr. Kwak is going to make a bunch of money, then fine. There is nothing contradictory in him saying the wealthy should pay more in taxes and at the same time becoming wealthy.

    I know you can’t distinquish between liberalism and actual Marxism. But hey, that is because you must have attended “Glenn Beck” University.

    Nice Try. But try again.

  56. This comment directed @ Title52

    Title52= EPIC FAIL.
    Warren Buffett also heads a huge insurance conglomerate and at one time (I’m not sure now) owned a huge chunk of a credit rating agency. Buffett is for a progressive tax system and for those making high income to pay higher tax rates.

    The vast majority of regulars on this site are pro-capitalism. We just don’t support crony-capitalism, the type of capitalism that creates securities which damage their own customers, crony-capitalism that causes large banks to sell CDO’s packed with garbage loans to school districts. The crony-capitalism that causes NYPD police to beat the citizens who pay their base salary because they got some new computers from JPMorgan.

    Just like many community banks haven’t shafted people like the Systemically Threatening large banks have, not all insurance companies are evil or try to shaft people out of their damage claims after they paid hefty premiums.

    Kwak makes his money the honest way—with effort.

    Asking small depositors at a commercial bank to pay for investment bank irresponsibility, or passively watching a Derivatives trading manager run off to London with huge bonuses (privatized gains) while sticking taxpayers with the defaults (socialized losses) ISN’T CAPITALISM. But then, expecting a Glen Beck listening wacko, or Rush Limbaugh hypnotized zombie to understand that, we know, is like expecting a zoo monkey to solve a Sudoku puzzle.

  57. True enough working market capitalism isn’t crony capitalism. It isn’t concentration of economic power to destroy market efficiency.

    But it also isn’t Kwak’s version of using government to socialize the mistakes of the private sector either. Big banks, even TBTF, should in fact be allowed to fail. And this can be done by actually chopping up and merging parts of say, JPMorgan or Citibank, into the smaller regional banks.

    Instead, Kwak’s friends in the administration, i.e. Geithner and Summers, have instead concentrated more monopoly power by essentially carrying on what Henry Paulson started. And plus his icons like Barney Frank who is the height of corruption in his protection and cronyism at Fannie Mae.

    All the while, Kwak’s sanctimonious message is I’m just a little ole citizen just like Herzog. And PS, Herzog, you dimwit, your hero Buffett is one of the most egregious examples of crony capitalism. He wants to come off like another little ole citizen, but this stinks to high heaven.

    Buffett is one of the biggest investors in Wells Fargo, which routinely engages in predatory lending and fraud. Buffett was also an investor in Moodys, the credit rating agency of infamy. Or did you forget that or never knew it?

    As far as his progressive tax stance, Buffett could easily write a big check to Treasury if he feels so bad about it. So we’re waiting, Warren, where’s the check? Or maybe, Herzog, you can write a big one to Treasury, once you get off the unemployment line.

  58. Don’t kid yourself, Moses, we have zoo monkeys who CAN solve Sudoku puzzles as the pets of the banksters – they were even throwing their *mass’er* weight around on Wall Street to the point where they were asking some Asian men to dress in drag because they looked really good as women….

    Between being a monkey in the wild and inventing Sudoku puzzles there was a long evolution of a lot of other skill sets for those who were evolving into human beings….you should not be surprised by the holders of those other skill sets to be on the move….

  59. I think the most important thing they could do would be to remove the tax cap on social security taxable wages and not pay benefits to retirees making more than $250,000 annually in gross (non adjusted) income.

    That would fill a tremendous hole in the social security program, and be ethically sensible (how else did the retired person making $250K/yr earn that much? On the backs of others more than likely – that being the case, is it not right that the wealthy earners fund the retirement on whose backs their nest egg is being created?)

  60. @speed,

    Please keep in mind James Kwak isn’t a trained economist (has his Ph.D. in French intellectual history – whatever that means). So, when asking for his definition of “Inequality” – you will likely get some ultra naive and purely idealogical answer. Nothing seriously thought through or worth taking into account.

    I find it a bit sad that someone like Professor Johnson can’t find someone better to partner with for a serious blog. I mean, MIT and Cambridge are crawling with smart people who have real degrees. Oh well!

  61. “Only when it is far too late will the status quo finally deem it worthwhile to engage with the “99%” on an equal and equitable footing. By then, however, not even the Dow at 36,000 will give anyone any more illusions that things are even remotely “normal.”

    “But then again, a violent end, and subsequent reset, is nothing new in history: every declining civilization has gone through the same terminal death rattle, only to result in a systematic rebirth. This time around it won’t be any different.”

    P.S. @ cmk011

    Your comment speaks volumes about what you are: espèce d’imbécile.

  62. @Anonymous

    Gee, I’m sorry for not wanting to take Economic advice or give weight to the economic viewpoint of someone who doesn’t have a substantive background in economics or economic theory.

    Silly me, I have the same silly rule for medicine. Usually like MDs who came from top schools and are experts in their field.

    Same for those darn rocket scientists – usually like them to have advanced degrees from top institutions. Heck, same for just about anything that is somewhat science-oriented.

    I know, dumb rule!

    Screw all those folks and their nobel prizes! Screw all those people who got PhDs in economics from MIT, Chicago, etc. Screw em all, eh! We should all look to the somewhat uninformed for insight and anaysis.

    Your an idiot just looking for a comfortable and familiar echo chamber that reinforces what you already think – fool.


  64. The most important step would be to tax the rich without any caps. Even Warren Buffet voiced this opinion in one of
    his recent interviews. Unless this is done, the fed is foregoing a huge potential revenue base, which will be
    difficult to make up for even with the most stringent policy measures. But again, to be fair to them, tax benefit
    is the most important incentive they can provide for the rich and corporation which create employment, thereby
    helping the fed in their objectives.

  65. Re: Inequality.

    James Kwak has failed once again to join the conversation and give us his definition of inequality. I give you this from Bill Niskanen via Cato@Liberty.

    [John] Rawls recognizes that individual well-being is dependent on more than income and wealth, but he does not acknowledge the implications of the fact that the other dimensions of well-being are not fungible. Consider the following example.

    One young man is healthy and handsome, spends his days on the beach, has his pick of young women companions, and makes $10,000 a year by busing tables in the evening. Another young man is confined to a wheelchair, has congenital body odor, has never had an intimate relationship, and, with no other life, makes $100,000 a year as an expert computer programmer. In this case, who is worse off? Who should redistribute what to whom and how?

  66. Constitutional Amendment to overturn Citizens United introduced in US Senate
    Submitted by oskebuckley on Tue, 11/01/2011 – 13:42

    U.S. Senators Tom Udall and Michael Bennet introduced a constitutional amendment to overturn the Citizens United decision. The amendment calls on Congress to correct the Citizens United v. FEC Supreme Court ruling on campaign finance allowing virtually unlimited corporate and special interest spending in elections. Joining Udall and Bennet as original cosponsors of the legislation are Sens. Tom Harkin, Dick Durbin, Chuck Schumer, Sheldon Whitehouse and Jeff Merkley.

    The constitutional amendment would authorize Congress to regulate the raising and spending of money for federal political campaigns, including independent expenditures, and allow states to regulate such spending at their level. It would also provide for implementation and enforcement of the amendment through legislation.

    For the text of the proposed amendment visit,

  67. “It’s clear that this is civil war. It’s clear that the government has voluntarily abrogated all legitimacy. America is at war with economic terrorism in the form of the banks and corporations, and the government is their thug. Nothing could be more clear than this. And yet the people remain complacent, meek, even smug. Even as they’re being liquidated in real time, they think only of how to continue to party. It’s clear that the mass consciousness is not organically reaching the brink (though as with the bubble, that could change quickly). So my question is, does it follow that the growing few who understand all this should, for the time being, forget about trying to figure out how to “reach the masses” and instead focus on slowly growing and protecting a movement of self-selected activists?”

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