Wednesday, January 28, 2015

The American approach to helping middle class always seems to help the rich more

By Marc Jampole

When the Obama Administration announced plans to begin taxing future withdrawals from 529 college savings plans, those in favor played up the fact that 70% of all tax savings benefits from 529 plans go to families with more than $200,000 a year in income. The opponents of taking away this tax benefit to pay for other proposed educational reforms quickly pointed out that 70% of all 529 accounts belong to households with income under $150,000. Those opposed to reducing the tax benefit won the battle.
No one was asking why 529 plans are even necessary. The answer to that question is that the cost of going to college has risen precipitously over the past 25 years to the point that, without some assistance, large numbers of families can’t afford to send their children to college. The overwhelmingly most important reason for this rise in the cost of a college education is the withdrawal of federal and state support of higher education, starting in the Reagan years.
It’s a familiar pattern: A benefit meant to help the middle class address a financial challenge ends up helping the wealthy more. Most IRA money is in the accounts of people with the highest incomes. Remember that IRAs first came into existence under Reagan in 1981 as an alternative to traditional defined benefit pensions plans. In this case, it was the private sector retreating from its support of the middle class and poor—who primarily work for others—that led to the new need.
We see a similar pattern with the mortgage deduction. It used to be that all personal interest was deductible, but when Congress limited the interest deduction to home mortgages in 1986, again under Reagan, our leaders said it was to help keep home-owning more affordable. Again, even though affordability is not an issue to the wealthy, they are the ones to have benefited because they have larger mortgages. Politicians and pundits now associate the mortgage deduction with the middle class, but it’s the wealthy who benefit more.

It’s not just that the wealthy can deduct more from income because of these “middle class” deductions. It’s also the case that every dollar a wealthy person deducts is worth more in real money that isn’t taken away in taxes because the wealthy pay at a higher rate. These deductions may also drive other income below the threshold at which a higher taxation rate takes effect, thereby putting even more money in the pockets of the wealthy.

There are only three ways that government can address the lost revenue from a tax deduction:
  • Increase the deficit
  • Cut programs
  • Increase taxes on someone else
For most of the past 35 years, the federal government has preferred to increase the debt and cut programs. The net effect has been one more way of shifting income from the poor and middle class to the wealthy.

Thus we see time and time again over the past 35 years an institutional propensity to increase inequality of wealth in the United States, similar to the institutional racism that used to exist for decades throughout the country and still exists in the criminal justice system. Take something away from the middle class and poor, then give them a way to finance their new costs that ends up providing even greater benefits to the wealthy, who don’t really need the additional help. It’s a complicated shell game that has made a contribution to the dramatic increase in inequality of wealth and income in the United States over the past 35 years.

Friday, January 23, 2015

You can count on Wall Street Journal to deliver all the bogus facts rightwingers need to create an alternative reality

By Marc Jampole
Conservative think tanks and business associations know that they can always plant a bogus survey or an opinion piece by a bought-and-sold expert in the pages of The Wall Street Journal. That is, as long as the study supports unregulated growth based on fossil fuels and giving the biggest rewards to large corporate and banking interests.

The latest proof that the Journal prints all the news that fits with its rightwing ideology is “Many Millennials Yearn for Suburban Homes,” which touts a shoddy survey by the National Association of Home Builders (NAHB) claiming to prove that 66% of the Millennial generation wants to live in the suburbs. The study results go counter to the common belief, backed by a myriad of attitudinal studies, that a large number of Millennials prefer city life, in part because they are rejecting private ownership of cars as environmentally incorrect.
This preference for the urban experience is one of the major ways that experts say Millennials differ from their predecessors, Generation X and the Baby Boomers. The Journal article holds up the survey as proof that Millennials really want more room and therefore pine for the car-and-mall-focused suburban life.
But as it turns out, the NAHB survey does nothing more than exemplify that—as either Mark Twain or Samuel Butler once said—“figures never lie, but liars figure.”

The NAHB mendacious use of numbers comes in how it defines the Millennial generation. It takes responses from 1,506 people born since 1977. The main reason to be suspicious that NAHB cooked the books is that it is impossible to find anybody who says the Millennial generation started in 1977. Most citations I found on the Internet identify 1982 as the start year for Millennial births. A Newsweek article of a few years back used 1989 as the start date and Pew Research generally goes with 1981. But virtually everyone else says it’s 1982. My own analysis of a line chart of total births against the average growth rate concludes that we should start counting Millennials in 1984 or 1986. But no expert I could find uses 1977.

The time between 1977 and 1982 is five years, or one quarter of the approximately 20 years that sociologists and demographers tend to view as defining Boomers, Gen X-ers and Millennials. We have no idea how many of the 1,506 surveyed were born before 1982 and therefore should probably not be counted as Millennials.

The other problem with the study is that the NAHB only asked about city versus suburbs to people who had first answered that they had either purchased a home in the last three years or intend to within the next three years. Eliminating everyone else almost by definition front-loads the age of the respondents, which in this case means that most of them were born too early to really be called Millennials. According to U.S. Census figures, for each of the past 25 years many more people aged 35-39 own homes than those aged 30-34; those aged 25-29—the heart of the Millennial generation—are almost half as likely to own a home than the 35-39-year-olds. In others words, adding five years worth of Gen X-ers to the study universe has a dramatic effect on the results, overestimating the desire of Millennials to live in the suburbs. Moreover, rejecting anyone who doesn’t own or plan to own a home in all likelihood skews the universe of respondents even further.

The Journal never addresses the issue of what years constitute Millennial births, but it does finally admit that selecting only those who own or will soon buy a home makes the survey unreliable. But the writer waits until the tenth paragraph to do so, in effect burying the information.

We know why NAHB would construct and distribute such a transparently invalid survey. It’s less expensive to build homes in the suburbs, and that’s where most new homes are built.

But why would the Journal publish such dreck?

The answer is that the survey fits into it’s the Journal ideology in several ways: The Wall Street Journal believes that local economic policy should benefit developers, banks and corporations, and the study certainly shores up those interests.

But just as important, the Journal hates cities and what cities stand for. The Journal is a proponent of private property, private space and private solutions to social problems. The essence of the urban environment is the public space. Major cities need viable public transportation, whereas the Journal worships car culture and hates anything public. Cities thrive on cultural diversity, and the Journal loves the white bread, the middle brow and the middle of the road when it comes to cultural experiences. City voters are much more liberal than suburban voters. In short, cities such as New York, Philadelphia, San Francisco, Pittsburgh, Milwaukee and Chicago represent everything that The Wall Street Journal and its owner Rupert Murdoch despise.

Tuesday, January 20, 2015

Paterno case raises a broader issue of praise and blame

By Marc Jampole

“The Rehabilitation of Paterno, Back at No. 1” read the New York Times front page headline when the news hit of the settlement of the lawsuit brought against the NCAA for its sanctions of the Penn State football program because it turned its back while an assistant coach was sexually abusing children. This rehabilitation or vindication of Paterno in the eyes of those who never thought he did anything wrong brings up a broader issue of the praise and rewards we heap on some people.

In Praise and Blame, moral philosopher Daniel Robinson asserts that people get too much praise—and by implication too many rewards—for their accomplishments, which are too often the result of factors beyond the control of the individual. Some of those factors include the innate ability one has at birth and does nothing to get, wealth and social position of family, match of skills to what’s in demand, chance meetings with mentors and patrons and timing.

Applying the principles of Praise and Blame, it’s clear that Paterno always received too much credit for those victories, which resulted from a group effort of his football players, coaches, recruiters, alumni and university staff.

His first luck was to be born with high ability in the types of intelligence that leads to success in football—organization, strategy, communications skills, ability to predict change in complex patterns of motion. Like the basketball player Spencer Haywood, who was born with an extra set of knuckles on his enormous hands, or the physics whiz whose math IQ is so high that it’s virtually immeasurable, Paterno did nothing except be born to have his natural genius.

Paterno was also lucky that a rich guy agreed to pay his tuition to an Ivy League college, a place where he could get connected to a powerful network of contacts.

He was lucky to have a mentor who hired him to be an assistant coach at Penn State, lucky to have an alumni support system that helped to identify players and raise funds for state-of-the-art facilities, lucky that Penn State football is the big sports team for miles around, which it wouldn’t be if the university were located in Philadelphia, Pittsburgh or New York.

That Paterno stayed in the same place that offered him his first real job may have stemmed from a personality trait, not the fact that he kept getting promoted. Lots of successful people flit around. Think of Larry Brown or Urban Meyer. If Paterno’s nature was to stay in one place, how lucky he was that place was Penn State. If his mentor took a job at Bowdoin or Grinnell, would Paterno have remained loyal to his first university job and had a long, but mediocre career?

Paterno was the commanding general and not the field general in the 111 victories returned to Penn State by the NCAA. The field generals were a succession of quarterbacks. Paterno not only taught, selected and advised the players, but he managed the other coaches, the medical staff, the weight trainers, the tutors, the recruiters, the statisticians, the caterers and the liaisons to the alumni and public. All these people—an ever changing cast of characters over decades—contributed to his success. Without them, he would have been nothing.

Let’s still admit that Joe Paterno was a genius football coach of mostly legitimate students. Probably most other people given the same set of breaks would not have done as well as JoePa.

But the luck part of it mitigates the position that every one of us holds in life, be it high, low or somewhere in the middle: what you accomplish should not really be used to judge the essence of any of us because so much of it results from circumstances beyond our control. Joe Paterno is a perfect example of the preponderance of factors beyond our own efforts that determine our lot in life.

What we’re left with then is not money, championships, fame or respect by which to judge a person, but those things which he or she can control. And in 1999, Joe Paterno had absolute control over how he was going to act after hearing from an assistant that Jerry Sandusky molested a young boy in the shower. He was in control when he passed on a cursory report to the administration, and he was in control when he didn’t follow up to see what the administration was doing. He was in control when he didn’t make it an important issue, didn’t insist on getting the results of a real investigation. He was in control when he didn’t ponder the implication of the accusation against Sandusky, what it meant to the children in the programs the monster controlled. He was in control when he swept it under the rug like yesterday’s dust bunnies.

Thus while we can readily hold back the praise of Paterno’s successes, shaped as they were by luck, there is no way we can mitigate the blame he holds for the repeated rapes of young boys for more than 10 years because he failed to speak up aggressively to follow-through on a horrifying accusation.

What took Obama so long to address our unfair tax system? And why is his plan so complicated?

By Marc Jampole

Barack Obama started with majorities in both the House and Senate. Six years later the opposition holds both.

Why did the president wait until he was in the overwhelming minority to push for higher taxes for the wealthy and lower taxes on the middle class?

True, a few years back Democrats and Republicans kind of negotiated an agreement that raised taxes slightly on the top 1%, but it was accompanied with Draconian cuts to federal programs. And it is true that the richer you are, the more you have to pay in taxes related to the Affordable Care Act. But neither of those moves had attached to them the grandiose notion of taking from the wealthy to give to the middle class.

The big picture of Obama’s current proposal sounds great. But the details are not exciting, as Obama prefers to tinker with the tax code instead of just raising marginal tax rates. The New York Times said that Obama proposes eliminating a federal tax provision regarding inherited assets that shields hundreds of billions of dollars from taxation each year. The plan also raises the top capital gains tax rate to 28% for couples with incomes above $500,000 annually and places a new fee on banks with assets over $50 billion.

What the middle class gets is equally as complicated as what the rich pay: tax breaks for middle-income earners; a $500 credit for families in which both spouses work; increased child care and education credits; and incentives to save for retirement.

It’s interesting how many of the tax breaks Obama is proposing for the middle class facilitate and perpetuate the new world economy wrought by Reaganism. It used to be that a family could afford to have only one spouse work, but now two incomes are absolutely necessary to maintain middle class status for tens of millions of families. $500 isn’t much, but it does help to some degree to keep the second spouse in the workforce, thereby keeping a lid on wages that would surely increase if fewer people wanted to work. Incentives for retirement are only necessary because defined benefit pensions are gone and people are on their own, sink or swim, except for Social Security, a program that many Republicans would love to dismantle. The increased education credit also responds to the new world reality of college costs made prohibitive to the middle class and poor because of the steady decline in federal and state support of higher education.

Obama’s noble gesture—calling for some fine-tuning of the system that has led to the greatest inequality of wealth in the United States since the Gilded Age—comes only after his only hope for controlling the direction of the government has become the veto and executive order. It’s so much sound and fury, so much rhetoric meant to paint the Republicans into a corner, meant to draw a contrast between the Republican and Democrats for the 2016 election cycle.

Politics seems to enter into the decisions of all contemporary politicians. But politics aside, Obama’s decision to resume friendly relations with Cuba, his decision to grant papers to about 5 million illegal immigrants and his climate change accord with China all moved the country in the direction it needs to head, even if in the case of the environmental accord, it was only a nudge. The decision to seek support for community colleges takes a realistic approach to giving more poor kids access to higher education.

But calling on Congress to end some tax breaks for the wealthy and give others to the middle class is nothing but grandstanding, given it will never pass. I call it grandstanding because it creates a minimal distance between where he and other Democrats stand and where Republicans stand. This small distance is supposed to make the 99% want to vote Democratic, because the Democrats are going to reverse the 35-year flow of wealth and income up the ladder to the wealthy and ultra-wealthy. But what Obama is calling for isn’t even a start. It’s a quarter turn of a screw.

I would feel differently if Obama were calling for a large increase in the capital gains tax or lifting the cap on income assessed the Social Security tax. Congress wouldn’t go for it, but at least Obama would be making a point.

Instead, he’s trying to further redefine the definition of what it means to be left in this country, moving it further to the right.

NCAA doesn’t exonerate Joe Paterno, it cuts a business deal to end a lawsuit

By Marc Jampole
Some Penn State football fans are acting as if they won the national championship.
That’s the reaction I read in the quotes I’ve culled from news articles about the National Collegiate Athletic Association’s (NCAA) settlement of the lawsuit filed by Pennsylvania State Senator Jake Corman to overturn the heavy fines the NCAA placed on Penn State University for looking the other way while assistant coach and pervert Jerry Sandusky sexually abused a large number of boys.
Here is a sprinkling of what is being said (names omitted):
  • “Today is a victory for the people of Pennsylvania….The NCAA has surrendered.”
  • “This is significant.…This was a beat down on the NCAA, it really was.”
  • [Mr. Paterno’s reputation has been restored] “to a large degree.”
  • “I’m happy this wrong has been righted.”
  • “Vindication is Penn State’s. Vindication is Joe Paterno’s.  And the bullying NCAA walks away from its worst hour in utter disgrace.”
Except that’s not what happened. No matter what the extreme Penn State fans and sports pundits may want to think, the NCAA did not capitulate. It has not been disgraced It did not suffer a beat down.
What the NCAA did was settle an expensive lawsuit that could have dragged on for years. By settling, the NCAA makes sure that the $60 million it collected as a fine for Penn State’s role in facilitating Sandusky’s crimes goes to fight child abuse victims in the Commonwealth of Pennsylvania.  Otherwise, a lot of the money would have been spent on lawyers. In the news release the NCAA issued about the deal, Harris Pastides, University of South Carolina president and member of the NCAA Board of Governors put it well, “While others will focus on the return of wins, our top priority is on protecting, educating and nurturing young people.” As well it should be.
The NCAA made a business deal that was in the best interest of the organization and society. It did not admit that it made a mistake to vacate victories, nor that it overreached in its punishment.  “Today’s agreement with Penn State reaffirms our authority to act,” said Kirk Schulz, Kansas State University president and member of the NCAA Board of Governors, who also spoke for the organization.  The NCAA news release about the settlement went out of its way to mention that Penn State had cleaned up its act and thus deserved reconsideration. The implication is that the NCAA is still in charge.
The news reporting has focused on the fact that the NCAA gave Joe Paterno back the 111 Penn State victories the NCAA had vacated because they came after Paterno first learned that a key assistant was sexually assaulting young boys.
Also untrue.
The victories were not given back to Joe Paterno, but to Penn State. While the punishment was appropriate at the time, it also took something of real value away from hundreds of Penn State football players, who were innocent victims of the fallout from the mess. The NCAA does not even mention the former coach in its news release, although it does state firmly that it intends to continue its defense of the lawsuit from the Paterno family.
As a negotiating point, to give back those Penn State wins in return for keeping the $60 million looks like a complete victory to me.  If anyone put the beat down on the other side it was the NCAA and its executive committee who can walk tall today (for a change, as its record in administering sports for college students is execrable).
As for those grotesquely strutting peacocks spiking an imaginary football and declaring victory for Penn State and Joe Paterno, I would like to suggest that they conduct a thought experiment. Imagine what it’s like to be a 10-year-old in the process of being sexually violated. Think about the touching, the being touched, the insertion of various body parts, the uneasy feeling, the guilt that young children typically feel because they tend to blame themselves, the nightmares, the fear that it won’t be the last time.
Imagine yourself not as one boy, but as every single one of the many children Sandusky was able to violate over the more than 10 years that went by after Paterno first learned that Sandusky was taking boys in the shower.
No, Joe Paterno’s reputation has not been rehabilitated.  And yes, Penn State still has a lot of dues to pay.