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Post 04 Aug 2011, 11:00 am

Can we talk about how little the Democrats are serious about cutting anything? A perfect example is all the hoopla over the FAA. This is a bit complex, but basically, the Democrats are so devoted to increased unionization that they are willing to shut down the FAA over that and a relatively small number of cuts to rural airports:

But his House counterpart, Rep. John Mica, R-Fla., ruled out that possibility. The only way left to end the shutdown is for the Senate to agree to a previously passed House bill containing $16.5 million cuts in air service subsidies to 13 rural communities that some Democrats — particularly Rockefeller — find objectionable.

"The only one holding this up now is Mr. Rockefeller," Mica said. One of the 13 communities that would lose subsidies is Morgantown, W.Va.

The entire air service subsidy program costs about $200 million a year, roughly the amount the government lost in uncollected ticket taxes in the first week of the shutdown. The program was created after airlines were deregulated in 1978 to ensure continued service on less profitable routes to remote communities. But critics say some communities receiving subsidies are within a reasonable driving distance of a hub airport.

Subsidies per airline passenger range as high as $3,720 in Ely, Nev., to as low as $9.21 in Thief River Falls, Minn., according to the House Transportation and Infrastructure Committee.

Senate Majority Leader Harry Reid, D-Nev., said Republicans were trying to force Democrats to accept policy concessions they would be unable to enact through normal legislative procedures. Democrats tried repeatedly over the past two weeks to pass a bill extending the FAA's operating authority without the subsidy cuts, but were blocked by Republican senators each time.

"Republicans are playing reckless games with airline safety," Reid said in a statement. "We should not let ideology interfere with making sure that Americans' air travel runs as smoothly and safely as possible."

Underlying the subsidy dispute, was a broader, more politically-charged dispute over a labor provision inserted by House Republicans into a separate, long-term FAA funding bill. The FAA's last long-term funding bill expired in 2007. Since then, Congress has been unable to agree on a long-term plan. The agency has continued to operate under a series of 20 short-term extensions.

Democrats said the air services cuts were being used as leverage to force them to give in to the House on a labor provision, which the White House has said Obama would veto. They see the provision as part of a national effort by Republicans, both in Congress and in state capitals, to undermine organized labor.

The provision would overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting. Under the old rule, workers who didn't vote were treated as "no" votes.

Democrats and union officials say the change puts airline and railroad elections under the same democratic rules required for unionizing all other companies. But Republicans complain that the new rule reverses 75 years of precedent to favor labor unions.

"Democrats have to decide if they are going to be the handmaidens of the labor unions in every policy," Sen. Jon Kyl of Arizona, the No. 2 Senate GOP leader, told reporters. "Every now and then they should put the American people first instead of their constituency."


So, to change union formation rules from majority of those eligible to majority of those voting, and to save 13 highly-subsidized passenger airports (I think some of the subsidized flights average 0.6 passengers a day), Democrats are failing to pass a law that is costing jobs and tax collection.

If we can't make these kind of cuts, does anyone believe we will cut anything? I don't.
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Post 04 Aug 2011, 11:20 am

This is an interesting issue. I've seen both Repubs and Dems complain about the other in the press, but the numbers are small (relatively speaking) that the general public isn't really paying attention to this one. Each side is making their case that the other side is to blame, but there's not enough here to hold the Congress's attention. It seems that governments cannot tackle big problems because they are too big, or small problems because they aren't worth the effort.
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Post 04 Aug 2011, 11:32 am

Ray Jay wrote:This is an interesting issue. I've seen both Repubs and Dems complain about the other in the press, but the numbers are small (relatively speaking) that the general public isn't really paying attention to this one. Each side is making their case that the other side is to blame, but there's not enough here to hold the Congress's attention. It seems that governments cannot tackle big problems because they are too big, or small problems because they aren't worth the effort.


But, the Democrats (Reid, specifically) have said it's about "airline security." Wow. So, planes will be dropping out of the air? No, they just won't be subsidized to fly into Podunk and all the FAA may not be unionized.

That's a winning issue for Democrats? Apparently, they think so--they're allowing 40K employees to be furloughed to show their toughness.
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Post 04 Aug 2011, 1:15 pm

Wow, Harry is starting to listen to you. From the WSJ:

BY JOSH MITCHELL

WASHINGTON—Senate and House leaders reached a deal to fund the Federal Aviation Administration, ending a 12-day standoff that furloughed 4,000 FAA workers and idled thousands more construction workers, Senate Majority Leader Harry Reid said Thursday.
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Post 04 Aug 2011, 1:23 pm

Sorry, was it 40,000 or 4,000 employees being furloughed?

And how many deals do the two parties have to make before partisans from one stop making statements that the other is incapable of compromise?
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Post 04 Aug 2011, 1:25 pm

I think the answer to both questions is 4,000, but the answer to the 2nd one may be 40,000.
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Post 04 Aug 2011, 1:33 pm

Per NPR, It is 4,000 employees and the rest are contractors; I think about 70,000 of the latter.
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Post 04 Aug 2011, 1:42 pm

Ray Jay wrote:Per NPR, It is 4,000 employees and the rest are contractors; I think about 70,000 of the latter.

Apologies. Yes, the total I've heard is 74K and that includes construction contract workers.
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Post 26 Aug 2011, 9:03 am

http://www.nwcn.com/news/washington/Steves-donation-arts-center-tax-cut-128462128.html

Here is what some people are doing with their tax cuts! Great idea! Let people decide what they will support, rather than have the government choose for us. Full marks to Rick Steves.
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Post 06 Sep 2011, 6:59 pm

Archduke Russell John wrote:Geo,

I just read this article that seems to contradict everything you say about the rich paying less then middle class. Specifically, he says that Warren Buffet is lying. From the article.
According to the Congressional Budget Office (CBO), middle-class families in 2007 (earning between $34,000 and $50,000) paid an effective 14.3% of their income in all federal taxes. The top 5% of income earners paid 27.9% and the top 1% paid 29.5%. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32% of their income in federal taxes in 2005 (the most recent year for which data are available).


I am curious as to your take on it.


I apologize for the delay in getting back to you on this. I just don't have to the time to troll these boards that I used to.

Duke, the key point in this article is how the author calculates effective tax rates. He uses income after deductions. The only way to do this kind of analysis, I believe, is on income before deductions. You probably don't recall, but I tried to get people to do volunteer this info back in this post:

http://redscape.com/forums/viewtopic.php?f=4&t=257

Take total tax and divide it by adjusted gross income, and that's what should be your effective tax rate.

The analysis in the article ignores deductions, and since the rich have so many of them, and they don't pay any taxes on that money, it skews all the numbers.

For example consider a taxpayer with $1,000,000 adjusted gross income. Let's say the tax he pays is $200,000. But he has $400,000 in deductions. I (and Warren Buffet, I believe) would say his effective tax rate is 20%. The person writing this article would say his effective tax rate is 33%. If deductions were evenly distributed among all incomes, then fine, you could do this sort of analysis, but for most folks, they just take the standard deduction. If they're poor, this could be a substantial amount of their total income, but if they're upper middle income, they're only sheltering a small amount of their income from taxes.

The bit on corporations is a completely different story. It's an old argument: taxes on dividends should be low because they are taxed at the corporate level and then at the personal level amounting to double taxation. There is a pretty compelling logic to this argument except for that many corporations don't pay the amount of taxes you think they pay (see GE, which paid no corporate income taxes last year, yet still mustered a dividend to shareholders.)

But the untold story of corporations is how the rich can hide all kinds of income in their closely held corporations. For instance, imagine I own a corporation. That corporation could consider it necessary that I have a personal accountant, a car with a driver, a nanny for my kids so that I'm available all the time, all the technology I could ever want (computers, cell phones, high speed internet, to make sure I'm always connected) and so on, and I get all of those things tax free. The cost for these things show up as an expense of my company, which is just a cost of doing business, subtracted from the profit of the company, and is, therefore, never taxed.

If you want a car and driver, you have to pay for it out of your after tax dollars, but if you control a corporation that says its a necessary part of the business, you get that service tax free.

So, in sum, I'm not doubting the numbers the article uses, but in a world where the rich can shelter a lot of income in deductions, to ignore that sheltered money in the analysis renders it effectively meaningless. Additionally, there are lots of other opportunities for zero percent benefits that are the nearly exclusive domain of the rich that aren't discussed at all. Hugely flawed article.
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Post 06 Sep 2011, 7:10 pm

BTW, did you see Stewart's take on this? Fantastic. Don't read what I wrote, watch these:

Part 1
http://www.thedailyshow.com/watch/thu-august-18-2011/world-of-class-warfare---warren-buffett-vs--wealthy-conservatives

Part 2
http://www.thedailyshow.com/watch/thu-august-18-2011/world-of-class-warfare---the-poor-s-free-ride-is-over

Warren Buffet a socialist? Hilarious.
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Post 01 Nov 2011, 1:47 pm

Good article by David Brooks about different types of income inequality. He reminds us that the debate is more complex than the focus of this thread:

http://www.nytimes.com/2011/11/01/opinion/brooks-the-wrong-inequality.html?src=ISMR_AP_LO_MST_FB

Then there is what you might call Red Inequality. This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 percent and the bottom 99 percent. It’s between those with a college degree and those without.
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Post 01 Nov 2011, 1:59 pm

Coincidentally, I was listening to a programme on the radio this morning which was an interview of Malcom Marmot who is a Professor of Public Health and Epidemiology. He set up the Whitehall II study.

The implications are fascinating, and it was pretty revolutionary to suggest that stress was more common among people at lower levels of a heirarchy than at the top, leading to an effect on health outcomes (and life expectancy).

Basically, the people at the top are healthier and live longer. The people at the bottom are less healthy and die earlier. And in between, it tends to be a gradual trend. He also pointed out that in our current society, equality of opportunity is limited, which is why the UK (and US) seem to have sharper gradients than do our social-democratic cousins.
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Post 01 Nov 2011, 2:22 pm

The above posts and their links indicate the real-world impacts of having much of the wealth go towards the top. The morbidity differences are astonishing in the Whitehall II study and the social impact on high-school graduates is eye-opening in the column linked by George as well. This winner take all society is bearing ugly fruit.
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Post 30 Nov 2011, 5:24 pm

If you missed it, worthwhile article about Ronald Lauder and his billions.

http://www.nytimes.com/2011/11/27/business/estee-lauder-heirs-tax-strategies-typify-advantages-for-wealthy.html?_r=1&scp=2&sq=lauder&st=cse