Monday, September 06, 2010

McCain Helping GOP Wage Class Warfare

John McCain, who previously bragged, endlessly, about being a "maverick," has continued his sharp right turn. On Sunday's Fox News Sunday, as related by Crooks and Liars, he pulled out from the his bag of myths one of the GOP's old faithful talking points, the "class warfare" myth.

Recently selected by Republican voters in Arizona for yet another term in the United States Senate, McCain told Chris Wallace

Well let's get into the old class warfare again. Let's get the rich....
The American people want us to stop spending and so let's just give 'em some certainty and let's extend the tax uh... existing tax cuts and then let's give some more tax breaks to small businesses and large and then maybe the American people will have some confidence.

The Arizona senator didn't mention that President Obama has been pushing tax cuts and hiring incentives for small businesses which, contrary to their rhetoric, GOP senators have been blocking. But.... "class warfare?" As Bloomberg News reported, in the midst of a severe depression in the nation

The millionaires’ club in the U.S. grew by 16 percent in 2009, following a 27 percent decline in 2008.

Families with a net worth of at least $1 million, excluding primary residences, rose to 7.8 million in 2009, an increase from 6.7 million a year earlier, according to a survey of high- net-worth U.S. households conducted by Spectrem Group.

“With the markets trending upwards, we expected an increase,” George H. Walper Jr., president of Spectrem Group, said in a telephone interview. The Standard & Poor’s 500 Index increased 24 percent in 2009 and has risen 68 percent over the past 12 months.

Affluent households, which the survey defined as those with net assets of $500,000 or more, increased 12 percent to 12.7 million, the Chicago-based consulting firm said in a statement today. The number of households with a net worth of more than $5 million rose 17 percent to 980,000, Spectrem said.

Even before millionaires and billionaires rebounded smartly from the recession the rest of us haven't recovered from yet, they were doing quite nicely. The Center for Budget and Policy Priorities analyzed data (report in pdf) compiled by the Congressional Budget Office for the period 1979-2007. These indicated "between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth."

That translates to a tripling of the gap between the richest 1 percent and the middle and bottom fifth. The figure below illustrates the share of after-tax income in 1979 and in 2007.

A common argument from those who want the wealthy more than the middle class to benefit from tax cuts is this: high taxes discourage businesses from hiring the unemployed. But the vast, vast majority of businesses would not face higher taxes under Obama's proposal and

Corporate America is hoarding a massive pile of cash. It just doesn't want to spend it hiring anyone.

Yet all the good news from big business hasn't translated into much promise for jobless Americans, leading many to wonder: If corporations are sitting on so much money, why aren't they hiring more workers?

The reluctance of corporations to hire is taking place in a low tax atmosphere; thus far, the Bush tax cuts for the wealthy prevail. Large businesses may not be hiring in part because they've found that they can get by with fewer workers- thus, less money spent on wages and on pensions (cutting Social Security- that would solve the problem!) And the vast majority of small businesses would be unaffected by whatever tax increase, if any, comes from the White House or Congress.

But individuals under $200,000 would get a tax break from the Democrats- and in each income bracket up to and including that of $100,000-$200,000, the individual gets a smaller cut from the GOP plan. Only in the brackets beyond $200,000 would the Republican plan be more generous than the Democratic one, as the figure below, from The Washington Post via, indicates.

So, ironically, John McCain is right. There is class warfare being waged- by the Republican Party on the middle class.

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