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Did Someone Say “Class Warfare”?


Rep. Paul Ryan

If you would like to know what shaped Paul Ryan’s economic philosophy, Google Ryan Incorporated Central. The company was founded by his great-grandfather and is responsible for the fact that when Ryan’s father died at the age of 55, Ryan was able to bank his entire Social Security survivor benefits for college instead of living on them the way my siblings did when our father died at the same age. Thirty-eight years ago, our mother’s income as a nurse was not enough to support the family without the supplement provided by Social Security. Twenty-five ago, Betty Ryan didn’t need to supplement her income as an attorney, well, not with Social Security, to raise four children in the manner they were accustomed to. Ryan’s big “real business” experience was working for one branch of the family conglomerate as a “marketing consultant.”

He actually has a B.A. in economics and political science from Miami University, but some people are never capable of letting book learning override personal experience. Ryan is apparently one of them. He ended up in politics at his mother’s urging because she was afraid he was going to end up “a ski bum.” We had a rash of these ski bums in my home town once, the sons of doctors and lawyers with no worries about where the next meal was coming from. At least Betty Ryan’s intervention kept Paul from ending up like some of our little elitist ski bums – with long rap sheets for what their parents kept excusing as “youthful highjinks.”

Ryan’s charmed life might explain his inability to understand the basic flaw in his supply-side economics philosophy. In the supply side economic model, companies manufacture goods in the belief that they can create demand. You know how it works – they hype the iPhone4 until they have people lined up around the block to buy it. There’s a retail company’s ad that makes fun of this, how something is “obsolete” five minutes after it’s released. The flaw in supply side economics is in overestimating the ability of people to buy those products. When Carly Fiorina was CEO of Hewlett-Packard, she believed they could sell everything they made, so they made a lot of stuff. H-P ended up with warehouses full of unsold product and she was paid off to leave the company.

The opposite of supply side economics is demand side economics – where a there are people to buy products and companies must work overtime to meet the demand. Demand side economics is dependent upon potential consumer who have money to spend. So, where are our consumers at right now? In the economic toilet.

The median income (the numerical half of all Americans earn more, half earn less) has fallen an additional 2.3% in 2010 to the lowest level since 1996. The number of families living in poverty rose to 46.2 million, the largest increase in the 52 years that the Census bureau has tracked income. Poverty would be even higher if the unemployed weren’t living with relatives, which 21.8 million of us are doing.. Average household income has dropped for the third straight year to $49,445, a 6.4% drop since December 2007. The recession technically ended in June 2009.

Minorities are even worse off. Median income for black households is $32,206, while for white households it’s $54,620. The top 5% only saw their incomes drop 1.2% to $180,810. The bottom 20% are making less than $20,000 and saw that decline 3.8%. The poverty rate for women rose to 14.5% in 2010 from 13.9% in 2009, the highest rate in 17 years. The extreme poverty rate for women hit 6.3%, an all-time high. Poverty is defined as an income of $22,314 before taxes for a family of four. While they would not pay income taxes, they would pay payroll taxes currently equal to 4.2% – dropping their income to $21,376 a year, $411 a week.

So, under those circumstances, how many of us are capable of rushing out to buy the latest DVD release or a new car? If we don’t have the money to buy things, who is going to buy them? Therein lies the simple reason so many of our “American” companies are ignoring America and concentrating on the “emerging economies,” nations like China and Brazil where there is a rapidly growing middle class.

A middle class is essential to the economic health of any nation and ours is shrinking fast. In its place we are getting a small group of extremely wealthy people who don’t need to concern themselves with us because they have a couple billion consumers waiting for them overseas and workers who don’t demand living wages to meet those consumers’ demands.

Back to Paul “silver spoon” Ryan, who pleads frugality as the reason he has been squatting in his office at our expense for 13 years…..

Ryan, appearing on Fox News Sunday, made it clear that the Republicans are absolutely adamant about never raising taxes on the rich, or eliminating tax credits, breaks and loopholes that benefit the rich in order to raise our government’s revenues. He is also, in conjunction with Speaker John Boehner, talking about blocking any attempt to lower taxes on the poor and middle class by retaining reductions in payroll tax rates.

Ryan says that retaining the reduced payroll tax rates is useless because it has failed to create jobs. But, he wants to extend the Bush tax cuts for the rich because…..well, that didn’t create jobs either, but Ryan can’t see that. He also opposes the President’s plan to make millionaires pay the same tax rate as the middle class. Okay, this one is just plain twisted. Technically, the richest Americans should be paying around 36% for personal income taxes, but they average far less than that because of tax credits etc. Warren Buffett pays 17%. The middle class pays around 29%. What the President wants is to get rid of the breaks and perks and lower the tax rate. The Republicans are crying “Hell, No!” calling it “class warfare” and mocking Buffett for suggesting that he could easily afford the $5.5 million in additional taxes that he would have paid if he paid the same rate as his secretary.

So, the Republican position is we in the bottom 98% of the country should pay 100% more in payroll taxes so that the top 2% won’t pay an additional 12% in income taxes.

And they have the brass cajones to call the President’s plan “class warfare.”

Chris Wallace asked Ryan about the upcoming negotiations for both the deficit reduction plan and President Obama’s jobs program, “You’re basically saying there’s going to be no bargain, no compromise.” Ryan replied, “Clearly, Democrats could work with us. That shouldn’t be tough.” No, it should be impossible. Surrender is not an option at this point. Compromise is not an option. We need the President and the Democratic Party to dig in and refuse to give in. We need help, not more concessions to the “job creators” who aren’t creating jobs or more tax cuts to the wealthy who aren’t even paying the statutory tax rate. They are right, this is class warfare, and so far, we are losing to the Kochs, the Waltons and the rest of that Forbes 400 list of billionaires.

We only have 412 days to make the majority of Americans realize that unless the Republicans are stopped, we are going to be a third world country and jobs will return to us when we are earning less per hour than the Bangladeshis.



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