Month: May 2016

In the history of every challenge to entrenched political power, a time arrives when the challenger is accused of threatening behavior, violating norms or violence. There is a natural dynamic driving such accusations.

The authorities, by definition, control rule-making and rule-implementation. They can deploy state security (or in certain cases private security forces) secure in the view that this will be seen as a legitimate use of power to “maintain order”. The very act of challenging the present order leads to accusations of fomenting disorder.

Most of us are accustomed to giving the benefit of doubt to a uniformed force and the agents of authority. We are predisposed to view disgruntled citizen-protesters as a rabble or mob.

The criticism of challengers/protesters comes in two forms:

• Attempts to conflate a broad non-violent movement with violent groups who may or may not espouse the same goals (or look the same, scruffy, poor, brown).
• Attempts to hold leaders responsible for controversial words/actions used by anyone associated with the movement.

For example, Abolitionists were accused of condoning violence when some refused to unequivocally condemn John Brown. Every day of slavery was an orgy of violence inflicted on slaves, but this was the current order, and therefore unremarkable.

There was concern the American suffrage movement would adopt the “window-breaking” tactics of the British suffragette movement. British suffragettes eventually moved on to more extreme violence (including bombing and arson). Flipping a chair sounds pretty tame compared to that.

Gandhi was accused of encouraging riots and imprisoned for six years on this charge by the Bombay High Court. In arguing his case, the prosecutor said:

“Of what value is it to insist upon non-violence, if at the same time, you preached disaffection to the Government, holding it up as sinful and treacherous, and openly and deliberately sought and instigated others to overthrow it”

The prosecutor, good Christian though he was, may have forgotten that Jesus simultaneously asked his followers to turn the other cheek and threw the money-changers out of the temple. In his sentencing statement, the judge said to Gandhi:

“But having regard to the nature of your political teaching and the nature of many of those to whom it was addressed, how you can have continued to believe that violence and anarchy would not be the inevitable consequence, it passes my capacity to understand.”

If this sounds familiar, it should. The criticism leveled against Sanders by some on this site is along the same lines. It seeks to delegitimize dissent by labeling it incitement.

The American Civil Rights movement is a case study of such tactics on both sides. MLK was accused of inciting violence, condemned for expressing empathy for rioters and subjected to surveillance. Isolated calls for violent protest, though condemned by many, were employed to discredit the entire movement.

The Trade Union movement in the US has seen violence directed at it, and elements within it have resorted to violence as well. In more recent years, concern has been expressed about confrontations associated with Black Lives Matter protests. Some observers seek to paint the entire movement as composed of rioters or claim it is a “war on cops”. One end result is to label it a “controversial group” (see right). BLM supporters have pointed out the civil rights movement also relied on creating violent confrontations with authority.

You can find similar threads running through criticism of the American Indian rights movement, the Palestinian civil disobedience movement and indigenous rightsmovements in various other parts of the world. Of course, the Democratic convention of 1968 is a similar case. Bill Clinton’s Sister Souljah moment was a variation on this theme, and used to undercut the Rainbow coalition. The last is quite an interesting case, since it reminds us that Bernie Sanders has seen this tactic used by another Clinton to undermine a movement he associated himself with.

The actual cause or movement may be small, or big. The dynamic of challenger and challenged is the same. In general, the goal of entrenched power in these cases is to create distaste for the challenger, by branding them or their methods as “unacceptable”:

• You may mean well, but the way you’re going about it is wrong (we will set the terms of debate)
• Now is not the time, we have more urgent matters (we will set the priorities)
• What you’re suggesting is not achievable (we will define the overton window)
• If you don’t accept our authority you’re giving cover to violence (give up now)
• You’ve had some success, we’ll take over now (know your place)
• etc. etc. etc.

To those who have followed the history of protest movements and political challenges, this is all quite predictable. To those who haven’t, you have just seen it in action.

It comes as no surprise to me that Bernie and his supporters are being accused of intemperance, lack of discipline and even violence. I am not upset by this, it is to be expected that “chair flipping” and “curse words” at a heated state convention would morph into wall to wall coverage of “chaos” and “melees”. As if there were people running around with broken bottles, brass knuckles and switchblades in Las Vegas.

The reactions of all parties concerned have been as expected. Senior Democrats who hold significant power are unaccustomed to being challenged Certainly not in public, and certainly not by the hoi-polloi who hold no power with the two-party system. Harry Reid runs a tight ship in Nevada, I doubt anyone in the Nevada Democratic party has even walked out of a meeting in a huff in recent years. So the sights and sounds of chants, curses and “chair flipping” engender the same response as the sight of a Visigoth horde on the Strip.

Curiously, Nevada had a similar “controversy” during the first round caucus. Sanders supporters were accused of “shouting down” a live Spanish translation. It later emerged they had been shouting for a neutral translator, and objected to high-profile Clinton surrogate Dolores Huerta serving as translator while wearing in a Clinton t-shirt. The initial version of events advanced was that civil rights icon Dolores Huerta had been shouted down by “BernieBros” and Spanish participants denied a translation. Who has time to understand what they were actually asking.

It’s tough for me to get worked up over heated words or curses by some person somewhere. Ours is a big country that has many passionate and stupid people in it. As was ably demonstrated in another diary, in 2008, some passionate supporters of Hillary Clinton also indulged in cursing and invective. In Nevada this year, Hillary supporters have gotten quite heated as well.

But hypocrisy never goes out of style in politics:

That was then, today, continuing the campaign means Bernie is “willing to do harm”.

Thankfully, Bernie is well prepared for all this. If you have spent any time on the left, as part of various struggles for equal rights, all of this is very familiar. Bernie came into this primary with an understanding of the history of protest and challenge, so there are no surprises for him here. His message discipline has been virtually flawless, his consistent advocacy of non-violence has been rock-solid, and he has avoided the trap of apologizing for things he has no control over.

This is a vigorous campaign to determine the nominee, and secondarily a platform. It should continue for now.

A couple of days ago, a DKos staffer linked to and quoted a National Review article:

“The Democratic socialist from Vermont, a man who rages against high earners paying a lower effective tax rate than blue-collar workers, saved himself thousands using many of the tricks that would be banned under his own tax plan.”

Now, it may bug some that the quote is from Buckley’s publication. That doesn’t bother me as much as the fact that NRO’s argument was gleefully parroted without examination. The “tricks” in question are deductions for state taxes, charitable contributions, mortgage interest and job-related expenses. If deducting state taxes on your federal return is considered a “trick” and is going to be used to bludgeon Bernie, then we are reaching the wrong conclusions from the returns candidates disclose.

I’ve seen snide comments about the Sanders’ effective tax rate popping up in discussions, along with repeated broadsides about “why won’t he release his returns”, followed by “he’s only released one year of returns” and “where are the rest”. Bernie has released his and Jane’s 2014 tax returns, and what I’m going to do here is review that alongside the Clinton’s 2014 return and discuss what they reveal about our political system, tax regime and this election cycle.

As an aside, I hope Bernie releases additional returns quickly. There was a lot of innuendo and fuss before he released 2014, and now that has switched over to why he’s only released one. The fact is that going by 2014, there’s nothing of particular interest in them. Here is the interesting fact:

If Bernie is out of the race, Clinton or Trump will be president. With near certainty, the White House will be occupied by a person with oligarchical levels of wealth and income.

Once you understand that, the attacks about Bernie’s returns, tax rate and deductions look very much like swift-boat style attempts to attack his strengths and distract attention from his opponent.

So what does an oligarch’s tax return look like?

The Clintons income of $28 million for 2014 is 136 times Sanders’ income for the same period.  And the Sanders are doing pretty well, they had income and Social Security benefits that totaled over 200k last year, putting them in the top 5% of Americans. However, the Clintons’ income of $28 million place them in a different league entirely. The numbers may seem abstract, so I’ve graphed them on the right. Sanders’ income is less than 1% of what the Clintons made in 2014. Where did that $28 million come from?

That adds up to over $32 million, but there are expenses (commissions, fees etc) associated with this income that reduces it on their tax returns. Another way to look at the disparity is that Hillary receives more for an hour of speaking than Bernie makes in a year. That should give pause to those who wish to believe both these statements are true:

• Bernie’s complete tax returns are of extraordinary significance (though his and Jane’s income derives almost exclusively from his Senate salary and Social Security)
• What Hillary tells captains of industry is none of our business, even if her administration would be responsible for regulating them and setting tax policy.

The second belief should be rejected out of hand. Bernie is right to ask why so many large enterprises (particularly in Finance) believe it makes sense to spend 250K on a speech by Hillary.

When those seeking the highest office in our country receive over $10 million a year for speeches to businesses, it is important to know what was said. It is our business because we live in an era where the Financial Times ran this front-page story today: Middle Class takes a hit in most US Cities:

More than four-fifths of US urban areas have seen declines in household income since the turn of the century, according to research that exposes the middle class decline at the heart of this year’s presidential election campaign.

The research on urban centres hosting three-quarters of the US population shows that median household incomes, adjusted for the cost of living in the area, grew in only 39 out of 229 metro areas between 1999 and 2014. […]

It reveals a steady erosion of the middle class across the US map, with 203 out of 229 metro areas experiencing a decline in the share of their populations that are middle income. At the same time, 172 metro areas saw increases in the share of their population that is upper income, and 160 saw a rising lower-income share.

This isn’t some commie-socialist rag raging on about the oligarchy. It’s on the front page of the Financial Times, the daily read of the global banking elite. My peers know the American middle class is being hollowed out. We know the US now has levels of inequality greater than those in India and much of the developing world. The question is whether the electorate will allow itself to be distracted from these very real issues by manufactured controversies.

What’s the story with tax rates?

The table that follows has data culled from the Clinton/Sanders tax returns for 2014. I want you to look at this data with this fact in mind:

For half a generation (15 years), 80% of urban areas in the US have seen nothing but declining incomes.

AGI is line 37, Itemized Deductions are line 40, Taxable Income is line 43 on the 1040s. I’ve halved the Clinton’s self-employment tax (line 57), since for Sanders employer pays half of his Social Security and Medicare (which I calculated based on reported wages/salary of $156,441). State/Local/Real-Estate taxes are from Schedule A.

The Clintons pay a higher tax rate than the Sanders in general. But that’s to be expected, their income is 136 times Sanders’. That’s what a progressive tax system is supposed to accomplish. Do note though that Sanders’ state/local and payroll tax rates are higher. That’s to be expected as well, since these tax schedules are often regressive. Looking at federal income tax rates alone doesn’t give you a good sense of the relative impact of taxes on the incomes of average Americans or the well-off versus the truly very rich.

The percentage tax rates are also a bit misleading because of the huge disparity in income. Small exclusions have huge impacts on Sanders’ tax rate, and almost none on the Clintons because their income is so insanely high (they are among the top 5,000 tax returns in the US, or 0.005% of taxpayers). The standard exemption for married couples is $7,900, that’s 4% of Sanders’ income. It is 0.028% for the Clintons. The Clintons deducted $41,883 in mortgage interest, that’s 0.15% of their income. Sanders deducted $22,946 in mortgage interest, that’s 11.17% of their income. Oh yeah, and charitable contributions. The Clintons gave $22,700 to unaffiliated charities. That is 0.08% of their income.* The Sanders gave $8,350 or over 4% to charity.

I do want to point out that all my calculations have somewhat understated the gulf between the Clintons’ income and Sanders’. There are 5 million tax-payers/households who have incomes higher than Bernie. Perhaps 4,000 tax returns showed more income than the Clintons.** That’s among 147 million joint and individual tax returns (I’m using 2013 stats on tax returns since the IRS hasn’t published 2014 yet).

If the US were a small city

If we compared the US to a city with 100,000 households, the Sanders are pretty well-off, only 3,700 people made as much or more than them in 2014. They’re comfortably in the top 5%. The Clintons on the other hand, are one of the three highest-earning households in our fictional city. They’re in the top 0.003%.  And as the Pew Research demonstrates, the middle class has been hollowing out over the past 15 years. The top three families though, have seen their incomes rise greatly.

It’s tough to visualize such disparities, but let’s try. In the graph at the right, all the blue boxes are tax returns with AGI under 50k. Orange is AGI between 50k and under 200k. Sanders squeaks into the green box by a hair, that’s 200k to 500k. The remaining little multi-colored boxes are AGI over 500k. That last little red box at the bottom right is tax returns over $10 million. That red box contains 12,839 returns out of the grand total of 147,351,299. Only 0.0087% of tax-payers make it into the red box. That is where the Clintons fit in, somewhere in the upper end of that box, with $28 million. Trump is a few notches above them with estimated income of $160 million.

Forget the population at large for a minute and let’s just compare their political peers. Sanders is among the poorest 20% of Senators. The Clintons are far and above the wealthiest ex-presidential couple alive. At $110 million in net worth, they are five times wealthier than the next, George HW Bush, who’s worth about $23 million. Or put in another way, the Clintons made as much from giving speeches in 2014 than George H. W. Bush is worth.

Look, this is a lot of detail, and your eyes may be glazing over. But I’m delving into it because I believe it’s blatant swift-boating to make a fuss about Bernie’s tax returns and tax rates while dismissing the fact that Hillary made 50 times as much from giving speeches to various industries. She won’t release the transcripts for those speeches, but some around here want us to believe that $25,000 in mortgage interest on Bernie’s tax returns is more problematic than $10 million in speaking fees? If that is not a calculated distraction, I don’t know what would be.

Let’s set aside the important concerns around time-deferred quid pro quo (speeches/consulting) for a moment. The new normal also means that, in a very narrow sense, both nominees (Trump/Clinton) would have oligarchic levels of wealth and be personally impacted by tax policy in significant ways. They have an enormous personal interest in how our government taxes the extremely wealthy. The highest federal income tax bracket is 39.6%, and it applies to income over $466,950. If a new tax bracket of 50% were created for income above $1 million, it would raise the Clintons’ tax bill by $2 million. Trump’s would go up by over $10 million.

That’s real money. In the Clintons’ case, it’s more money than the median American household earns in 40 years of working for 50K a year. In Trump’s case, it would take the median American household 200 years of working to earn as much as that increase in taxes.

Oh, and by the way, 2014 was not unique, the Clintons made over $27 million in 2013, as follows:

Who rules? A Blue or a Red Oligarch.

I do want to make sure I identify the forest and don’t get lost in the trees. Bernie will lose the Democratic nomination unless we see some unexpected news in a few days. He will likely end up about 200 pledged delegates behind Hillary. This is an amazing result for someone who was unknown to most Democrats when the campaign started last year. If he goes to the convention with 1920 pledged delegates, he will end up 3% behind Obama’s result when he ran against Hillary in 2008 (47.39% vs 50.35%). It is a remarkable run.

But Bernie’s loss would mean the two presidential candidates will be Hillary Clinton and Donald Trump. One has an annual income of $28 million and the other’s is well over $160 million (estimating 4% returns on a reported $4 billion fortune).

Take a look at the income comparison on the right, remembering Sanders income puts him in the top 5% of American incomes. When he’s gone, like it or not, our choice for president will be between two individuals who have oligarchical levels of wealth. Keep in mind that we’re discussing income, not wealth. This is money made in one year. Wealth levels are far higher. The Clintons have $110 million, and Trump is likely worth $4,000 million.

I won’t dwell on how Trump made his money, we live in a celebrity age and there’s no getting away from the remunerative “value” of personal brands. But I will note that looking at the recent nominees, John McCain ($100 million), Mitt Romney ($250 million), John Kerry ($200 million), we’ve been putting up candidates with oligarchical levels of wealth for some time. Compared to them, George W Bush was almost middle-class ($20 million). Al Gore’s net worth of $1.7 million in 2000 and Barack Obama’s of $1.3 million in 2008 make them relative paupers. Of course, Gore is now worth $200 million, so that ship has sailed. We’d have to go to Bob Dole ($5 million) and Jimmy Carter ($7 million) to get to levels of wealth for ex-presidential candidates that the average person can somewhat relate to. Since 2000, half our candidates have had oligarchic levels of wealth. This year, we may well have no non-oligarchic choice.

Look, this is not about demeaning monetary success. I don’t begrudge Trump or the Clintons what they have. This is about whether or not the pool of viable candidates for president  (i.e. nominated by one of our two major parties) has to draw solely from the oligarchic class of about 5,000 families. You may think that’s okay. After all, the president is in an even narrow bracket. No one else commands the armed forces of the US, has the nuclear codes, and comes close to wielding as much power. What’s a few tens of millions compared to that. But perhaps it should not be that way. Obama wasn’t in the oligarchic class when nominated. Lincoln certainly was not. Nor was George W. Bush for that matter, he had 896k in income in 2000 (Cheney definitely was, he made $36 million in 2000). FDR, for all his reputation of being fabulously wealthy, had half the fortune the Clintons do (in inflation adjusted dollars).

The fact that we see their faces on our TV screens makes it seem as if their lives and cares are familiar to many of us. Yet in reality, we’re talking about levels of wealth, economic security and comfort that are simply in another galaxy from the experience of the average or median American. Perhaps that is what the presidency is meant to be, an imperial office occupied by those who are very removed from the cares of ordinary Americans. Perhaps it isn’t meant to be that way.