Sunday, October 2, 2011

In the Name of Fairness

    President Obama has found a platform for his re-election campaign. He will the be the one that we are waiting for. He will be the guarantor of fairness, health insurance, and jobs in a time of economic anxiety. Republicans will be put in a position to defend a tax code that punishes the middle-class, to deprive people of health care, and to oppose Obama's jobs program. But behind the rhetoric of fairness, the positions of the Obama administration leave much to be desired.
    White House Senior Advisor David Plouffe tells us that President Obama believes “that the right way to get the fiscal house in order is to ask the wealthy to pay their fair share” and raise their taxes. The so-called Buffett rule (named in honor of billionaire investor Warren Buffett) and other tax proposals advocated by Obama would raise taxes on most individuals (small business are frequently taxed as individuals) with an annual income of $1 million or more. The Obama administration does not scruple to note that the wealthy already pay more in taxes as a percentage of their income than everybody else.
    In their fact-checking, the Associated Press (hardly a right-wing organization) found that households exceeding $1 million in annual income pay roughly 29.1 percent of their income in federal taxes. Households in the $50,000 to $75,000 range pay roughly 15 percent. Those in the $20,000 to $30,000 range pay 5.7 percent.
    Of course, a small number of the very wealthy do not pay their “fair” share. For example, Warren Buffett is one of the wealthiest people on the planet and he apparently pays less in federal taxes than his secretary – a feat he achieves by taking advantage of the tax loopholes and shelters that he derides. Dramatic tax reform similar to one achieved during the 1980's would be a remedy as would a simpler (and flatter) tax, but Obama's proposals fall well short of that goal and by advocating tax hikes during an economic downturn he appears to be ignoring his own advice from 2009: “The last thing you want to do is raise taxes in the middle of the recession because that would just suck up and take more demand out of the economy and put business in a further hole.”
    Yet some liberals are adamant in their support for (among other things) raising taxes in spite of the impact it could have on job growth (see Warren Buffett). Charlie Fink of the Agenda Project claims, “I have built and run businesses... through booms and busts... Taxes were never, ever, a factor in my decisions about hiring.” Never ever?
    Obama's latest job creation program (which would be called a stimulus package if the other one had worked) calls for a temporary reduction in payroll taxes and tax credits for businesses that hire new workers. The point of such reductions is to stimulate job growth. One wonders what economic rationale allows supporters of Obama's tax and job programs to claim that raising taxes on businesses does not impede job growth while simultaneously claiming that lowering taxes does encourage it.
    Perhaps it is the same sort of reasoning that motivates supporters of Obamacare like former House Speaker Nancy Pelosi to ban health insurance policies that charge females policyholders a higher premium than males and insurance policies where policyholders with a pre-existing condition are charged a higher premium than policyholders without one. We are told that “no longer would being a woman be a pre-existing condition.”
    Pelosi and others think it is unfair for insurance companies to charge women four or five dollars extra in monthly premiums. They don't seem to mind the idea of forcing a man to pay higher premiums for an individual health insurance policy that covers birth control pills, morning-after pills, maternity care, and well-baby visits. They think it is unfair to charge someone more if they have diabetes but find it acceptable to charge a healthy 60-year-old three times more than a sickly 30-year-old; apparently, fairness demands that pre-existing conditions must be ignored but age should not when one is trying to ban discrimination on the basis of medical history.
    Fairness is an almost universal human sentiment, but fairness as a political doctrine has serious limitations. For the Obama administration, it is a buzzword that barely disguises the weaknesses of its domestic policy.

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