Here's a riddle: Todd Henderson's household makes north of $400,000 in a city where the median household income is $46,748. Yet Henderson says his family is "just getting by despite seeming to be rich." How can this be?
The Hendersons don't "seem" rich. They are rich. They are one of the richest families in the country. Their country is the richest country in the world. And the world is richer than it's ever been before. The Hendersons are thus one of the richest families in the richest country in the richest era the world has ever known.
Which doesn't mean that they don't worry about money. The implication of our rhetoric about taxes is that no one making more than $250,000 will feel a tax increase. That's not true. Our economy has adapted to having rich people, and now there's lots of stuff for them to buy. Private school, for instance. Fancy cars. Dinners at Alinea. Only a very select few make so much money that they cannot figure out how to buy enough stuff to make them feel financially stressed. This is Henderson's argument, and he's right: You can make $400,000 and still worry over the checkbook. You can make $400,000, in fact, and be terribly in debt.
Now, most of the things you're buying at $400,00 aren't the bare necessities. Your house is fancy, and in a desirable location. Your television is large, and flat. Your kid's school is only available to those with a lot of money, because you're paying for a wealthier peer group and higher-paid teachers. These purchases may seem like luxuries to people making $60,000, but a family making $60,000 a year will seem to be living in incredible luxury when faced with the median family in Mexico. It's all relative.
And it's relative to Henderson, too. "The super rich don’t pay taxes," he complains. "They hide in the Cayman Islands or use fancy investment vehicles to shelter their income."
And so there it is: Henderson may be rich. But he's not "super rich." That's where the president should be focusing. Not only do they have a lot of money, but they're cheats, too.
This is one of the problems with the debate over tax cuts. The effort to separate support for popular middle-class tax cuts from unpopular upper-class tax cuts has let a sort of moral language creep into the conversation. As if rich people "deserve" higher taxes because they're somehow bad, rather than because their share of the national income has gone up and their tax rates have gone down.
Which is all to say that this debate has gotten a bit confused. The argument for taxing people who make more than $250,000 isn't that they're bad people, and it isn't that they won't notice the tax increase. It's that we've got a very large budget imbalance, and we're going to need to do a lot of things to correct it. Taxes on the rich have dropped even as the incomes of the rich have skyrocketed. So one of the obvious things to do is update the tax code to correct for that drift. But eventually, we'll need to do much more than just increases taxes on the rich, and though politicians have tried to sell this one as a change that most Americans won't notice and needn't worry about, eventually, they're going to have to start talking about changes that people will notice, and should worry about.
As for the consequences of letting the tax cuts expire, just today, the Heritage Foundation released a comprehensive study showing that the tax hikes envisioned by President Obama would lead to slower economic growth, lower family income, higher interest rates and a loss of an average of 600,000 private sector jobs each year from 2011 through 2020, or 6 million fewer jobs total.
Liberals are already trying to frame the deficit debate as one of making sure government has the money it needs to pay for the vast expansion President Obama and congressional Democrats achieved over the past 19 months. A fair and balanced news media would put much of the onus on liberals to backtrack on their massive spending commitments before requiring the beleaguered private sector to kick in an even greater share.
Here’s the exchange during the 8am ET hour of CNN’s American Morning, September 20:
JOHN ROBERTS: Seventeen minutes now after the hour. We have 110 days until the Bush tax cuts are set to expire and the debate over whether to extend them has absolutely consumed Capitol Hill. The strongest impact will most certainly be felt in the bank accounts of millions of Americans.CANDY CROWLEY: Minding your business this morning, CNN/Money's Paul La Monica. President Obama is suggesting that the tax cuts should expire only for the richest 3 percent of taxpayers but there are economist who say that may not be the best idea. [turns to La Monica] So, is it?
PAUL LA MONICA: Yeah, we surveyed 31 leading economists and a majority, 18 of them, said that their top priority if they were a Washington policymaker would be to extend the tax cuts for everyone.
ROBERTS: So in terms of extending the tax cuts and what that does for the economy, run the numbers for us. You have got an example here.
LA MONICA: Yeah. You have a middle class family, $75,000, you know, two children, you would have about $2600 in higher taxes if the cuts are not extended.
ROBERTS: So — for the average family that's a lot of money, but particularly in these hard economic times, when you know you are worried about, ‘Am I going to keep my job,’ ‘Should I buy that,’ — to not to get hit with an extra bill of $2600, that’s substantial.
LA MONICA: Definitely, that's why I think there is such urgency in Washington to get something done. It does seems that the main issue is, obviously, just trying — whether or not to extend them for everyone or to exclude the wealthiest top percent of the country. I mean a lot of people both Democrats and Republicans think that extending it for the middle class is obviously the right thing that has to be done, particularly in these tough times.
CROWLEY: You know those tax cuts are already in place, so I'm going to assume that keeping them doesn't really change the job market, it simply — the argument is [if they expire] things will get worse for America.
LA MONICA: Exactly. It's similar to two years ago when the financial crisis was really first starting to take hold, a lot of things that Washington or you know, was hoping to do right now is preventing the economy from deteriorating any further. I mean we've had obviously hopes of a recovery earlier in the year that have started to fade this summer. And that's worrying a lot of people on obviously, you know, in Washington and on Wall Street.
ROBERTS: So when you look at the calculation, Paul, you’ve got your rock and you’ve got your hard place. The rock being you want more money coming in to the economy itself so you want to put more money in the pockets of people, particularly when you look at unemployment over 9 percent. But then at the same time you have these deficits that are running at an absolutely frightening rate of a trillion-plus dollars a year. So, you’ve got to bump up your revenue stream but at the same time you want to keep your money coming into the economy. So how do you reconcile that calculation?
LA MONICA: Yeah, that's very difficult. It's the classic short-term versus long-term solution right now that people are trying to weigh. What is more important? A lot of people that we have spoken to at CNN/Money say that really Washington has to do everything in their power to help the middle class extending these tax cuts is likely something that can do that even though it could add to the deficit in the short-term. The hope, and admittedly it is something that could bear out over time but you know, you don't know for certain is that if the economy starts to finally pick up some steam and consumers spend more, primarily because maybe they aren't getting this bigger tax hit, the deficit could help take care of itself, because a stronger economy leads to higher tax revenue from not just individuals but businesses over the long haul.
CROWLEY: Paul, thanks so much for breaking it down. Appreciate it.
—Rich Noyes is Research Director at the Media Research Center. You can follow him on Twitter here.
Coming soon: A brand-new NewsBusters design. But we need your help!
ChampMan media scandals "would be fun" <b>News</b> - Page 1 | Eurogamer.net
Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...
Pentax K-5 announced and previewed: Digital Photography Review
Pentax K-5 announced and previewed: Pre-Photokina 2010: Pentax has announced the latest member of its DSLR line-up, the K-5. The new model is based on the Japanese manufacturer's current flagship DSLR, the K-7. Body design and control ...
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robert shumake
ChampMan media scandals "would be fun" <b>News</b> - Page 1 | Eurogamer.net
Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...
Pentax K-5 announced and previewed: Digital Photography Review
Pentax K-5 announced and previewed: Pre-Photokina 2010: Pentax has announced the latest member of its DSLR line-up, the K-5. The new model is based on the Japanese manufacturer's current flagship DSLR, the K-7. Body design and control ...
<b>News</b> Roundup: OWN Taps Hosts and Readies 'View' Competitor, Olivia <b>...</b>
Former 'Access Hollywood' anchor Nancy O'Dell will host 'Your OWN Show: Oprah's Search For The Next TV Star' along with Carson Kressley on Oprah Winfr.
Here's a riddle: Todd Henderson's household makes north of $400,000 in a city where the median household income is $46,748. Yet Henderson says his family is "just getting by despite seeming to be rich." How can this be?
The Hendersons don't "seem" rich. They are rich. They are one of the richest families in the country. Their country is the richest country in the world. And the world is richer than it's ever been before. The Hendersons are thus one of the richest families in the richest country in the richest era the world has ever known.
Which doesn't mean that they don't worry about money. The implication of our rhetoric about taxes is that no one making more than $250,000 will feel a tax increase. That's not true. Our economy has adapted to having rich people, and now there's lots of stuff for them to buy. Private school, for instance. Fancy cars. Dinners at Alinea. Only a very select few make so much money that they cannot figure out how to buy enough stuff to make them feel financially stressed. This is Henderson's argument, and he's right: You can make $400,000 and still worry over the checkbook. You can make $400,000, in fact, and be terribly in debt.
Now, most of the things you're buying at $400,00 aren't the bare necessities. Your house is fancy, and in a desirable location. Your television is large, and flat. Your kid's school is only available to those with a lot of money, because you're paying for a wealthier peer group and higher-paid teachers. These purchases may seem like luxuries to people making $60,000, but a family making $60,000 a year will seem to be living in incredible luxury when faced with the median family in Mexico. It's all relative.
And it's relative to Henderson, too. "The super rich don’t pay taxes," he complains. "They hide in the Cayman Islands or use fancy investment vehicles to shelter their income."
And so there it is: Henderson may be rich. But he's not "super rich." That's where the president should be focusing. Not only do they have a lot of money, but they're cheats, too.
This is one of the problems with the debate over tax cuts. The effort to separate support for popular middle-class tax cuts from unpopular upper-class tax cuts has let a sort of moral language creep into the conversation. As if rich people "deserve" higher taxes because they're somehow bad, rather than because their share of the national income has gone up and their tax rates have gone down.
Which is all to say that this debate has gotten a bit confused. The argument for taxing people who make more than $250,000 isn't that they're bad people, and it isn't that they won't notice the tax increase. It's that we've got a very large budget imbalance, and we're going to need to do a lot of things to correct it. Taxes on the rich have dropped even as the incomes of the rich have skyrocketed. So one of the obvious things to do is update the tax code to correct for that drift. But eventually, we'll need to do much more than just increases taxes on the rich, and though politicians have tried to sell this one as a change that most Americans won't notice and needn't worry about, eventually, they're going to have to start talking about changes that people will notice, and should worry about.
As for the consequences of letting the tax cuts expire, just today, the Heritage Foundation released a comprehensive study showing that the tax hikes envisioned by President Obama would lead to slower economic growth, lower family income, higher interest rates and a loss of an average of 600,000 private sector jobs each year from 2011 through 2020, or 6 million fewer jobs total.
Liberals are already trying to frame the deficit debate as one of making sure government has the money it needs to pay for the vast expansion President Obama and congressional Democrats achieved over the past 19 months. A fair and balanced news media would put much of the onus on liberals to backtrack on their massive spending commitments before requiring the beleaguered private sector to kick in an even greater share.
Here’s the exchange during the 8am ET hour of CNN’s American Morning, September 20:
JOHN ROBERTS: Seventeen minutes now after the hour. We have 110 days until the Bush tax cuts are set to expire and the debate over whether to extend them has absolutely consumed Capitol Hill. The strongest impact will most certainly be felt in the bank accounts of millions of Americans.CANDY CROWLEY: Minding your business this morning, CNN/Money's Paul La Monica. President Obama is suggesting that the tax cuts should expire only for the richest 3 percent of taxpayers but there are economist who say that may not be the best idea. [turns to La Monica] So, is it?
PAUL LA MONICA: Yeah, we surveyed 31 leading economists and a majority, 18 of them, said that their top priority if they were a Washington policymaker would be to extend the tax cuts for everyone.
ROBERTS: So in terms of extending the tax cuts and what that does for the economy, run the numbers for us. You have got an example here.
LA MONICA: Yeah. You have a middle class family, $75,000, you know, two children, you would have about $2600 in higher taxes if the cuts are not extended.
ROBERTS: So — for the average family that's a lot of money, but particularly in these hard economic times, when you know you are worried about, ‘Am I going to keep my job,’ ‘Should I buy that,’ — to not to get hit with an extra bill of $2600, that’s substantial.
LA MONICA: Definitely, that's why I think there is such urgency in Washington to get something done. It does seems that the main issue is, obviously, just trying — whether or not to extend them for everyone or to exclude the wealthiest top percent of the country. I mean a lot of people both Democrats and Republicans think that extending it for the middle class is obviously the right thing that has to be done, particularly in these tough times.
CROWLEY: You know those tax cuts are already in place, so I'm going to assume that keeping them doesn't really change the job market, it simply — the argument is [if they expire] things will get worse for America.
LA MONICA: Exactly. It's similar to two years ago when the financial crisis was really first starting to take hold, a lot of things that Washington or you know, was hoping to do right now is preventing the economy from deteriorating any further. I mean we've had obviously hopes of a recovery earlier in the year that have started to fade this summer. And that's worrying a lot of people on obviously, you know, in Washington and on Wall Street.
ROBERTS: So when you look at the calculation, Paul, you’ve got your rock and you’ve got your hard place. The rock being you want more money coming in to the economy itself so you want to put more money in the pockets of people, particularly when you look at unemployment over 9 percent. But then at the same time you have these deficits that are running at an absolutely frightening rate of a trillion-plus dollars a year. So, you’ve got to bump up your revenue stream but at the same time you want to keep your money coming into the economy. So how do you reconcile that calculation?
LA MONICA: Yeah, that's very difficult. It's the classic short-term versus long-term solution right now that people are trying to weigh. What is more important? A lot of people that we have spoken to at CNN/Money say that really Washington has to do everything in their power to help the middle class extending these tax cuts is likely something that can do that even though it could add to the deficit in the short-term. The hope, and admittedly it is something that could bear out over time but you know, you don't know for certain is that if the economy starts to finally pick up some steam and consumers spend more, primarily because maybe they aren't getting this bigger tax hit, the deficit could help take care of itself, because a stronger economy leads to higher tax revenue from not just individuals but businesses over the long haul.
CROWLEY: Paul, thanks so much for breaking it down. Appreciate it.
—Rich Noyes is Research Director at the Media Research Center. You can follow him on Twitter here.
Coming soon: A brand-new NewsBusters design. But we need your help!
robert shumake
ChampMan media scandals "would be fun" <b>News</b> - Page 1 | Eurogamer.net
Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...
Pentax K-5 announced and previewed: Digital Photography Review
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robert shumake
ChampMan media scandals "would be fun" <b>News</b> - Page 1 | Eurogamer.net
Read our news of ChampMan media scandals. ... Latest News. "Rebuilt" iPhone ChampMan soon . Developer Beautiful Game Studios; Publisher Square Enix; Release Date Autumn 2010; More on Championship Manager 11 → ...
Pentax K-5 announced and previewed: Digital Photography Review
Pentax K-5 announced and previewed: Pre-Photokina 2010: Pentax has announced the latest member of its DSLR line-up, the K-5. The new model is based on the Japanese manufacturer's current flagship DSLR, the K-7. Body design and control ...
<b>News</b> Roundup: OWN Taps Hosts and Readies 'View' Competitor, Olivia <b>...</b>
Former 'Access Hollywood' anchor Nancy O'Dell will host 'Your OWN Show: Oprah's Search For The Next TV Star' along with Carson Kressley on Oprah Winfr.
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