Bad Deal

Washington treated us to a stunning piece of political theater in December. The confluence of a lame-duck session of Congress, expiring Bush-era tax cuts and the Obama administration’s fear of partisan gridlock produced some unusually hasty deal-cutting. Negotia-tions yielded a proposed tax package deemed a satisfying, prudent compromise by some. Others labeled the horse-trading between the president and the newly empowered Congres-sional Republicans an abomination. Allow me to explain the source of my own disappointment with the deal (still tentative as I write).

Liberals rightly accuse the president of capitulating to high-handed pressures by the Republicans for the preservation of huge tax cuts for the very wealthy. It is easy to agree that giving a $700 billion bonus to the privileged undermines the urgent task of deficit reduction. But consider two further items: the specific details of Obama’s concessions and a broader observation about our national discourse on wealth and taxes.


First, the president accomplished two major objectives in this complex deal. The first was securing a 13-month extension of jobless benefits for millions of the long-term unemployed, a measure that had stalled for lack of Republican support. The other was extending tax relief for middle-income American families. Any standoff allowing the Bush tax cuts to expire on Jan. 1 would have hit the middle class very hard in these difficult economic times, with unemployment still hovering near 10 percent.

From the perspective of Catholic social thought, with its special concerns for the poor and for fair sharing of social burdens and benefits, it is impossible to defend the way these two objectives became bargaining chips in a negotiation that ultimately redistributes wealth even further upward in the economic pyramid. To anyone with a taste for equity, insisting on budget-busting tax breaks for the affluent as a condition for relieving the distress of others is an indefensible course of action. It reveals warped priorities and political cynicism.

This is not a partisan point. Regardless of how particular parties or officeholders happen to line up, public policy measures that keep bread on the table of food-insecure households remain quite simply the right thing to do. How many reminders do we need that a record 42.9 million Americans are receiving food stamps, with millions more eligible? Holding financially strapped families hostage to self-serving, politically motivated demands is blatantly immoral, pure and simple.

My second point is not so much a matter of dollars and percentages as of philosophy, perhaps even ideology. Think of the unstated assumptions that surface all too often when Americans discuss income, wealth and taxes. We fall so easily into a mind-set that views the political and economic systems as mere mechanisms that operate without reference to values and morality. Markets and public policies churn out and distribute benefits in ways that respond to power, talent and perhaps luck, but need not serve any ultimate ends. There is no particular moral meaning to the taxes we pay or the wages our corporations offer. Ethical principles like progressive taxation and the living wage are nuisances at best, serious liabilities in international competition at worst. In a world governed by nothing more enlightened than the bottom line, there is scant room for social concern. The individuals imagined within this mythic and dystopian picture of reality are sovereign monads, unencumbered by social relations—not real people.

To evaluate such social and national institutions as the federal tax code according to this alluring but false ideology is to turn one’s back on the best of the Western philosophical tradition. Erasing the obligation to undertake sacrifices for the common good means parting company with Catholic social teaching and every other commendable approach to social responsibility. Good public policies require a moral compass, and the United States needs to dust off the compass it once employed.

The episode in our nation’s capital reveals how poorly the operations of our public life reflect and appreciate the central purpose of our economy, namely to meet the basic material needs of all members of society. Needs should take precedence over wants, necessities over luxuries. Insisting on a fairer sharing of social burdens and benefits may not always be popular, but it remains the right thing to do.

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C Walter Mattingly
8 years 2 months ago
The problem I have with this article is that it addresses an obvious Christian virtue, assisting the needy, but not the major question involving the differences between the conservative and liberal programs to address these issues. Indeed, it assumes that conservatives (read republicans) aren't concerned about solving the problems of the poor, and that liberals (democrats) are. This is far from obvious to most Americans.
Take for example the Bush tax cuts, which were larger as a percentage of taxes paid for lower income taxpayers than upper income ones. This was so pronounced that after the Bush cuts, 47% of Americans paid no income tax, and the percentage of taxes paid by the very wealthy, which had been 36% of the total compared to 43% for the 1-95% of all Americans, changed to 44% for the top 2% and 36 percent for 95 percent of the earners. A portion of this differentiation is explained by the larger percentage Bush tax cuts for the low income earners.
David Stockman, who does not believe in the efficiency of stimulative tax cuts, understandably criticized the republican party for defending continuation of the tax cuts, but further declared neither party was serious about taxes and the deficits we are facing. A main reason is that a circulated estimated cost of the Bush tax cuts over 10 years to the treasury is 4 trillion dollars. By extending the tax cuts for all but the two percent of the wealthiest, the savings is less than 20% of that amount, 700 billion, which Stockman and others hold won't make a significant impact. When President Obama eliminated ending the tax cuts from those families making 83K (1.5 times the average family) to 250K, he ended the possibility of eliminating 2.6 trillion, or 2/3, of the deficit estimate, a number which at almost 4 times larger would have a major impact. Or, instead of solving the problem, President Obama played the vote getting class warfare game. Just as his opposition to taking big corporate bucks to buy the election ended when he saw that beneficiary to be Barack Obama, he realized that too many federal employees, averaging $121 K annual income, and too many union members would rebel, translating to lost votes. The plausible reason is that the strategy was primarily about satisfying a constituency to gain votes by inflaming class envy, not substantial concern for the deficit.
Likewise some liberals are trying to redefine poverty, or to move away from the definition of  need that has existed, which relates to how much income is required to supply basic needs such as food, housing, etc, to one which relates to a percentage of those with larger incomes without reference to human need. This attempt to redefine poverty not as it relates to human need but to a percentage of median income is partly a response to recent statistics of a US family of four living at the poverty level and the fact that they are more likely to own their homes than the average European and live in housing typically twice as large than their European counterpart, typically have 2 TVs and cable, are more likely to own their own car, etc than the average European. It is also of course an attempt to transfer more control to the government by further extension of the welfare state we all saw portrayed in the movie Precious.
Other important differences, which America fails to address, are the concepts of a negative income tax to encourage and support workers who can't adequately provide for their families that would benefit them far more than unemployment insurance.
The differences most conservatives and the majority of the American public have with most liberals is not whether to provide for the needy, but rather with what will work and what won't.
Joseph Legan
8 years 2 months ago
Fr Massaro,

     I agree with your premise that basic social justice should not be used as a barganing chip.  However, I suspect the deal struck was more complicated than it appears in your column.  I certainly hope so. 

Joe Legan
David Smith
8 years 2 months ago
"Holding financially strapped families hostage to self-serving, politically motivated demands is blatantly immoral, pure and simple."

Perhaps, but politicians are pragmatists, not moralists.  And Obama is a professional politician - that's what he chose to do with his life.  When politicians sacrifice something they said was a principle, they justify the sacrifice by moving up one rung:  I have to do this thing so that that more important thing up there isn't lost.  Listen with one ear, but watch with both eyes.  What they say is cover; what they do is who they are.

Morality plays no part in political life, unless morality has a good lobby.
8 years 2 months ago

As an old man whose aging has increased his grumpyness, I recognize this and the next three articles as having been created by compatriots.  To them I say, keep up the good work.

Linda Pfeifer
8 years 2 months ago
I am sorry to say, I have not seen any evidence of Republicans wanting to help the poor. They held out for tax cuts for the wealthy because that is the only constituency they truly care about. These are the people who bought their elections.

Now, they will try to dismantle any programs that may have helped the poor and middle class, such as health care reform, and strip away legislation protecting the environment and consumers. Hopefully, they will not succeed. There is no indication that Republicans plan to do anything positive in the next two years.
8 years 2 months ago
People who rail against "tax cuts for the rich" usually refuse to admit how desperately they need the rich.  They need the rich to finance what the middle class could never afford.  They want to have great entitlement programs, great national security, great everything.  But such things would not be affordable without the disproportionate share of federal income paid by the small portion of Americans who are rich.  What kind of federal budget would we have without the rich?  And why should anyone expect to enjoy a lifestyle they can't afford?  Such critics also overlook the basic understanding that the very rich don't earn the bulk of their income from W-2 taxable salary and wages.  They earn it from investments, which can just as easily be moved into tax-exempt forms of investment when the tax rates are set too high.  Every time I hear politicians and others bandying about "tax cuts for the rich" as some kind of immoral "gift," I recognize it for what it is: simple demagoguery and holier-than-thou class warfare.  Either that or they just need an education in basic economics.
C Walter Mattingly
8 years 2 months ago
Linda, let's look at some of that evidence. Take for example the current and immediate past VP's of the US, Joe Biden and Dick Cheney.
In the year 2005, according to the information on his tax return, VP Biden, a liberal democratic champion, a wealthy man with about 6 times the income of the average American family, reported charitable deductions of $367 on his tax return, or just over .1% of his reported income. The previous two years were similar. This is about 25 times less as a percentage of income that average American reported on his same form, less than the typical assistant manager at McDonald's, for example.
The same year, again according to his tax return, then VP Dick Cheney, the greedy, malevolent enemy of the disenfranchised, a very wealth man who earned over 150 times the average family in the US, reported charitable deductions of over 2/3 of his $9 million income, over $6 million, on his tax return.
Put another way, Cheney earned 29 times as much as Biden, and gave 17,160 times more of his own treasure to charities than the current VP.
Perhaps part of this discrepancy can be accounted for by philosophy: Mr Biden may not believe it to be his responsibility to contribute to the poor personally, but rather the government's, whereas Mr Cheney believes it is his personal responsibility. But it is hardly true, from this measurement where the rubber hits the road and you put your money where your mouth is, that Mr Biden wishes to help the needy from his own personal treasure, whereas Mr Cheney does not.
You mention the Republican opposition to Obamacare. Look back. On at least 8 different occasions in his campaign, we have on videotape candidate Obama assuring us all that he would put the healthcare issue open to public debate, on CSPAN, for all to see and have input. At Google he even said that Hillary's mistake on healthcare was that instead of making it an open and public debate, she went behind closed doors and presented her own secretly produced done deal. I'm guessing that President Obama did not anticipate at the time he would win supermajorities in both houses and could renege on this committment and take it behind closed doors to get his own program done, which is what he had Pelosi and Reid do. The result, as everyone from extreme left wing Mike Moore (a bad joke) to Glenn Beck and most in between agreed, is a bad plan. Now we see the problem this pig in a poke rammed down the throat of the American public has caused: over 200 "exceptions" granted to McDonald's and many others, the constitutionality called into serious question, etc. In other words, we got more of the same rather than change we could believe in.
One idea that Republicans introduced to the discussion, Health Savings Accounts, would put the initial monies for healthcare in the hands of the citizen, who many believe are better suited to controlling health care expenditures than a remote bureaucrat. It would maximize the input of the citizen and minimize that of the government. That idea would have come about and been given consideration in such a public debate, but that removes control from the government to the individual, something republicans generally desire and democrats, wanting to consolidate control in governmental (their) hands, oppose.
There is one clear, longstanding example of what happens when the government and their union allies almost totally control the field: public primary and secondary education. There we have seen an immense increase in dollars spent per student, to the very top of the world, an almost tripling of such dollars spent between 1997 and 2005, and increase to the most expensive per student in the world, and a drop to the bottom of the third quartile in performance among the major industrial nations of the world. Here, conservatives believe that this system has been an abject failure going on almost 2 generations and wish to replace school choice from the bureaucracy to the parent in the form of vouchers. Liberals, whose campaign contributions come greatly from teachers' unions and others, want to prevent this freedom of choice, or limit choice to only schools where government controls the dollars. The problem I and other conservatives have with that process is it increases the dependency of the citizen upon government, which has heretofore failed them in the inner cities, and denies them access to resources they determine would better serve their needs.
If you have not seen the movie Precious, which has been widely praised by Oprah and many others and is in itself an unusually well constructed artwork, I recommend it to you highly, as it is a dramatic reenactment of what the democratic senator Patrick Moynihan was vilified for identifying as the effect of the Great Society trillions: the disintegration of the family among welfare recipients and building a culture of dependency.
There are many other examples of differences between conservatives and liberals on what will work and what won't. Take unemployment compensation with and without a negative income tax. Today there are workers who will be going 3 years into their unemployment benefits. It is not uncommon that such a worker, who made say $600 a week or so before and now receives $425 a week in benefits, to refuse the best replacement job offer he can obtain, say $375 a week. Why? He is unemployed, not stupid, and knows he can enjoy his current government check for another year. If, however, his level of compensation were gradually reduced, and he was offered say $150 a week for 3 months if he took the job as supplementary income (negative income tax), he likely would take it. He would be better off, we would be better off, and the nation better off.
So it is not a question of not wanting to help those in need between conservatives and liberals, but rather what really will help those in need and how to go about it.

8 years 2 months ago

One thing that seems to be missing in all of this is reference to the pastoral letter issued by the American Bishops in 1986, "Economic Justice for All." The massive and growing income disparity in the American population coupled with the plunging revenue stream at all levels of government is a catastrophe that must be stopped.
Ana Blasucci
8 years 2 months ago
The nexus of fallacy in the Massaro piece is the combination of an obvious undertone of class warfare going well beyond the "preferential option for the poor," and a misunderstanding of U.S. history, tradition, and what makes us 'tick' (this seems to be an oft-displayed misunderstanding for a magazine named "America").
The class warfare tone is self evident.  As to the misunderstanding of the U.S. system, the country was set up to LIMIT the reach of the Federal government.  States and localities can do more, with smaller populations consenting (hopefully) as a community.
Historically, an over-reaching Federal government has been seen as the supreme earthly moral evil by the US.  We have preferred to act freely, and have accepted greater risk for greater possibilty. 
Those on the liberal side of things, like Fr. Massaro, often if not always run to the Federal government for solutions.  
Focusing on taxes, as Fr. Massaro does; when taxes can be raised past the point of the consent of the governed, in any society, they become legalized robbery.  Every penny demanded in tax is telling one he is not the master of the fruits of his labor.  Past the point of true necesity as judged by the population (to which representatives should bow), this seems an unchristian principle.
Insisting on burden-sharing might be the right thing to do, as Fr Massaro asserts, but to do it by empowering the Federal (or any level) of government to take more and more of the value created by citizens away from those citizens, with disconnect that is endemic and sickening, is absolutely the wrong thing to do.  


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