A Redistribution Scheme Posing as Deficit Reduction

Commission Co-Chairs Erskine Bowles and Alan Simpson

The Deficit Commission has proposed a plan to rewrite the social contract, and make the poor and middle class pay

The Deficit Commission may have styled itself from day one as a "bipartisan team" bent on cutting the nation's debt, but upon close inspection some its core proposals seem less about reducing absolute debt, and more about shifting tax burdens to rewrite the social contract.  The central feature of the plan —which upon first read appears to be a smorgasbord of spending cuts that would hit every sector of society equally— is redistribution.


By its very definition redistribution never affects all sectors of society equally.  Wealth and income are  shifted among different classes, races, men and women, and sectors of capital under any redistribution scheme.  On balance the Deficit Commission's proposal calls for a restructuring of the US political economy to benefit corporate capital and the wealthy, and to force the poor and middle class to pay for an increasing share of everything.

The options presented with respect to comprehensive tax reform are an excellent case in point.  The Deficit Commission presents us with several alternatives, all of which would produce a general state of austerity, but also shift wealth and income in drastic ways.  For brevity we'll just look at one of the tax plans.

The "Zero Plan" takes its name from the fact that it would begin with a near total elimination of all tax expenditures.  Tax expenditures are deductions that taxpayers (persons and corporations) can make by tallying up special exemptions, credits, and rebates that the Congress uses to promote certain economic and social behaviors like home ownership or industrial investment.  In a nutshell the Zero Plan would reduce the tax code to three individual rates and a single corporate rate.  Within these four rates the plethora of tax expenditures would be drastically cut back, saving $1.1 trillion according to the commission.  The Congress would then use this cash to reduce the deficit and further reduce marginal tax rates across the board.  Last but not least, the Commission says that the Congress would "add back in any desired tax expenditures, and pay for them by increasing one or all of the rates from their zero- expenditure low."

From the Deficit Commission's Co-Chairs' Proposal.

The Commission's draft proposal includes a graph —"Who Benefits from Tax Expenditures?"— to illustrate the main beneficiaries of tax expenditures, implying that the plan is fair to the poor and middle class because under the current tax code, with its complex and vast array of itemized deductions, it is the wealthy who disproportionately benefit from expenditures.  The bottom half of taxpayers benefit mostly from a handful of major deductions which include refundable credits such at the Earned Income Tax Credit, Child Tax Credit, and deductions on mortgage interest.  The wealthy and corporations on the other hand, pay professional accountants to rack up numerous and byzantine deductions on their assets.

However if we read closely into the Zero Plan its redistributionary nature becomes apparent.  First there's the matter of the "simplification" of marginal tax rates to three personal brackets and one corporate bracket.  While this means of cutting taxes relies on eliminating tax expenditures, and therefore will not affect social welfare programs financed through legislation, at the zero baseline level it does eliminate very important tax reductions for the low-income working families.  These tax reductions are relied upon for for survival –to provide income to pay rent, tuition, for child care, and groceries— and therefore are fundamentally different from tax expenditures available to the wealthy and corporations.  Equally eliminating reductions that allow poor people to pay their rent or purchase food and clothing is not at all equal to the elimination of a deduction that allows a millionaire to pocket tens of thousands of dollars because of their second and third homes.  In treating every taxpayer equally, the Co-Chairs' Proposal does disproportional harm to those at the bottom.

While the reduction in marginal tax rates appears to be fair and even across the board, we have to remember that we're cutting rates across a drastically different set of absolute incomes.  This means that while millions of taxpayers in the lowest tax bracket would see a seven point drop, the money they keep will only be a tiny fraction of what a taxpayer in the uppermost brackets will save under the plan. 

For example, a single person with an income of $34,000 is schedule to pay at a rate of 15% in 2011, totaling about $5,130.  Under the Zero Plan their tax bracket would fall to 8%, reducing their tax burden to $2,740.  They save about $2,390, and while this is a serious chunk of change, it's also not a serious bit of assistance considering the levels of debt Americans are now dealing with, as well as the rising costs of everything from education to gas.

However if we look at a taxpayer in the upper brackets the saving are immense.  An individual with an income of 375,000 is scheduled to be taxed at a rate of 33% in 2011.  Under the Zero Plan their burden is reduced by 10 points to 23%.  Their savings under the Zero Plan increases by $37,570 —more than the pre-taxed income of the above mentioned hypothetical individual!  At the uppermost levels, the realm of millionaires and billionaires, tax rates reach 39%, but under the Zero Plan would all drop to 23%, allowing the nation's wealthiest individuals and families to keep an immense share of wealth that would otherwise fund important federal programs that benefit the majority of Americans.

The impression of equality that the across-the-board cut of tax rates gives under the Deficit Commission's proposal is therefore illusory.  Low-income and middle class families will end up saving relatively small amounts of their income that will hardly make a difference in paying for housing, health care, transportation and other major expenses, while at the same time losing key tax credits and deductions they already rely upon.  The wealthy, on the other hand, lose the myriad of deductions they already use to save immense amounts of money from the tax man, but they save these funds anyhow with the huge proportional drop in their tax rates relative to the poor and middle class.

The Zero Plan includes three baseline options that do not initially ax the Child Tax Credit, EITC, and Current Mortgage, Health and Retirement Benefits.  This is where the Commission's redistributionary measures become a little more subtle, and it takes a little unpacking.  Here's how the Zero Plan, even when it keeps these important tax expenditures, harms the poor and middle class by redistributing the tax burden on them.

The first thing to note is how the corporate tax rate drops from 35% to 26%.  Then, under each scenario which considers keeping some or all of these important tax reductions for working and middle class families, the corporate rate does not rise if (under scenario B) the Child Tax Credit and EITC are kept, and then only rises one point at a time under the next two scenarios (C and D) including further tax expenditures.  Table 1. illustrates this virtual corporate exemption from incremental rate increases.  This two point absolute rise contrasts starkly with the 5 to 7 point rises for individual taxpayers, with the middle class taking on the burden of rate increases to pay for retained expenditures.

Table 1. Tax rate increases under the Zero Plan's scenarios, A, B, C, D (data adapted from the Deficit Commission's draft proposal).

Guess Who's Not Coming to Tea?

The morning after the midterm elections news outlets across the nation ran with headlines like, "Minorities ride GOP wave to groundbreaking wins."  According to an Associated Press article, "Latina, African-Americans lead a notable list of Republicans to win last night."  In the Atlanta Journal Constitution one columnist declared, "Inspired by Obama, Republicans of color win more seats."  An editorial in the New York Daily Post put it to its readers: "guess who's coming to tea," claiming that "the Tea Party-inspired wave that produced historic Republican wins also revealed a substantial diversity in the movement."

However, a closer look at this supposed "diversity in the movement" reveals a less than convincing picture of racial progress within the GOP and its voter base.  The high profile of a few Republicans of color instead points to a relatively new and circumscribed phenomenon in white political ideology: white conservative voters in select districts and states are now willing to vote for Republican candidates of color, but only under certain conditions.  White conservatives seem willing to elect Republicans of color who embrace a post-racial colorblindness, who promote the Party's far-right cultural and economic values, and still only in races without a centrist white option.  Furthermore, in most high profile races the GOP's new candidates or color have only prevailed when running against a woman or another person of color, and again only in races with a majority white electorate.

One of the first things that jumps out about the new supposed "wave" of Republicans of color within the conservative movement is that a simple accounting doesn't add up to proclamations that they've made groundbreaking wins or added anything other than token diversity to the GOP.  While there might be a few black faces in high places such as Michael Steel, statistically the Republican Party remains about as white as it has been since the mid-1980s, having gained no meaningful political ground within communities of color.  The Republican Party's voting base remains overwhelmingly white, as do its successful candidates for national offices. 

This year's elections did result in two black Republican representatives who will take their seats in the 112th Congress, but these two men do not even account for one percent of the GOP's caucus in the House.  In contrast there are 42 black Democrats in the House, comprising 21% of the Party's ranks, a level of representation that exceeds the general population in fact.  There are of course no black senators.

In this year's primaries thirty-two black Republican candidates ran for nomination, the largest in a single year since Reconstruction, spurring commentaries about the new post-racial era.  Commentators claimed, among other things, that even the modern day Republican Party —founded as it was after segregationist Dixiecrats joined the pro-corporate GOP establishment— is embracing blacks, Latinos, immigrants, and homosexuals.  The results of Tuesday's elections don't support the claim that the Republican Party's white voter base is openly embracing communities of color or acting in a post-racial way.  Only fourteen black Republicans progressed into Tuesday's elections.  And after the ballots were counted, a mere two prevailed - Allen West in Florida's 22nd Congressional District, and Tim Scott in the 1st District of South Carolina.  The remaining twelve were mostly trounced by their Democratic Party rivals.

Interestingly black Republicans West and Scott prevailed in districts that are overwhelmingly white, making them politicians of color with mostly white constituencies.  Such is an anomaly in the Democratic Party where except for the commander in chief, black congresspersons nearly all represent districts in which either blacks or Latinos are the solid majority.  It would seem then that black Republicans succeed in their campaigns in direct proportion to the extent that they succeed in representing a mythical post-racial America for white conservative voters who do not feel threatened by a candidate's ethnic or racial identification, candidates who in fact go out of their way to deny the significance of their own race, and deny the salience of racial difference in the American political system.

In The 22nd District of Florida, where West prevailed with 54% of the vote, whites make up 82% of the population.  Famous as an epicenter of 2000's disputed presidential election, Florida's 22nd was created in the 1990s census and was, congressionally speaking, Republican property for the fourteen years during which Eugene Clay Shaw, Jr. won multiple re-elections on the strength of white conservative voters who routinely out-mobilized white progressives and the district's small Hispanic and black swing votes.  Representative Shaw spent the better part of the 1990s bashing immigrants and welfare recipients, making claims such as, "many aliens immigrate to America with the express intent of accessing welfare as soon as they are eligible."  Shaw voted for every conceivable bill that would withdraw support for the nation's poor and scapegoat them for everything from crime to budget deficits.

The racial subtext to Shaw's positions were clear to the elderly white population that made up his conservative base.  Allen West represents a return of the district to Shaw's white conservative voters after four years of centrist Democrat, and white male, Ron Klein.  Klein's ability to win in the 22nd seemed to hinge on the nationwide repudiation of the Bush administration and Republicans in 2006 which mobilized more of the poor, youth, people of color, and other likely Democrats to the polls, and then again in 2008 when Obama's candidacy aligned with the district's congressional election, again boosting turnout of progressives.

Hailed as a new face of diversity within the Republican Party, black Republican Tim Scott again represents a district that is three quarters white and which has a long history of electing segregationists and racists politicians who in words and deeds have opposed legislation to advance racial justice.  South Carolina's 1st Congressional District has been a Republican stronghold since 1981 when Ronald Reagan's election signaled the final consolidation of the Republican shift among white southern conservatives away from the Democratic Party which had become, in their eyes, irredeemably colored. 

In 1986 the 1st District's voters elected Arthur Ravenel, Jr., a member of the Sons of Confederate Veterans who once called the NAACP the "National Association for Retarded People."  Even the District's previous Democratic Congressmen, like L. Mendel Rivers who held the post from 1941 to 1970, have been ardent segregationists.  To appease his own white voter base Scott supported a compromise to move the Confederate battle flag from statehouse to a monument nearby.  His platform is popular among conservative white South Carolinians; he is anti-abortion, supports further militarization of the US-Mexico border, and has called for legislation to enforce English as the official language.  On the whole he does not support legislation that in polls has been shown to be popular with the majority of African Americans.

Bergmann and her "colorblind" supporters during the campaign.

Outcomes for the Republican Party's new black "wave" have been poor in congressional districts with black and Latino majorities and a history of supporting the civil rights, labor, women's rights.  The race in Tennessee's 9th District, roughly encompassing Memphis, is an excellent example.  In a race pitting Charlotte Bergmann, a black woman endorsed by the Tea Party movement, against Democrat Steve Cohen, the district's black majority overwhelmingly voted against Bergmann.  Cohen won handily with 75% of the vote.  Black voters had no problem seeing beyond race and voting for the candidate who they felt best represented their interests, even though he was a white man. 

In a radio interview during the campaign, Cohen described the Tea Party as a bigoted reaction against blacks, gays and lesbians, and surmised that its the rank and file's motivation seemed to be "hostility to anybody who wasn’t just, you know, a clone of George Wallace’s fan club."  Bergmann's local Tea Party supporters responded by calling Cohen racist and demanding a retraction of his statement which he refused to do.  Tea Party bloggers pointed to Bergmann's race to refute Cohen's observations about the movement's overall tenor and the impacts that Tea Party policies would have on blacks, gays and lesbians, and others he considered key members of his constituency.  Sticking to his words, Cohen had no problem garnering votes from a majority of black constituents who would seem to agree that the Tea Party's agenda will result in systematically racist harms to people of color, whether implemented by white or black politicians.

In the few remaining races that featured black Republican contenders they mostly faced black Democratic Party opponents.  The Democrats easily won election in districts with non-white majorities, producing some of the largest spreads in the nation.  Black Democrats had few problems dispatching their Republican rivals by running on platforms that the vast majority of black and many Latino voters identify with: repealing the Bush administration's tax cuts for the wealthy, ending the wars in Iraq and Afghanistan, providing universal health care coverage, protecting Social Security and Medicaid, raising the minimum wage, increasing unemployment insurance, and just about anything else that runs opposite the Tea Party and Republican Party establishment.

The conditions under which Republicans of color can win office appear to be very circumscribed and particular.  In many cases where non-white Republicans have won office, they have done so against opponents who are women.  Where Republicans of color have beaten Democrats of color, they tend to do so only in districts or states with large white majorities which are given the choice between a black candidate who represents the mainstream of black political thought, and a right-wing black candidate whose platform more resembles white conservative thought.

Gov. Elect Nikki Haley's triumph over Vincent Sheehan in South Carolina appears to be the exception to this rule.  However, in Louisiana where the Republican Party elected its first non-white governor in modern history in 2007, Bobby Jindal prevailed over Gov. Kathleen Blanco, a centrist female Democrat, with 54% of the vote.  Barack Obama's victory over Hillary Clinton in the 2008 primaries may indicate a similar tendency among among Democratic Party voters for high office?

Susana Martinez's historic election in New Mexico this year pitted a Latina Republican against Democrat Diane Denish, a white woman who lost by a spread of 10 points.  While Martinez has been offered up by some as evidence that the Republican Party is inclusive of Latinos and immigrants, a closer look at Martinez reveals quite the opposite.

New Mexico has elected one of the most anti-immigrant politicians in the nation, largely on a wave of white xenophobia.  Gov. elect Martinez has promised that one of her first initiatives will be to ban "illegal immigrants" from obtaining driver's licenses.  Further playing to popular myths of immigrants who "leech" the welfare state (and sounding like a clone of Florida's Eugene Clay Shaw, Jr. no less), Martinez has promised she will oppose "providing illegal immigrants with free tuition through taxpayer-funded lottery scholarships." 



In her campaign ads and appearances she bragged about carrying her own pistol and portrayed herself as a tough on crime leader, especially against "illegals."  As the District Attorney of Dona Ana county, borderline to Mexico, she aligned herself with Albuquerque's conservative white Mayor and City Council to the north.  In the last year Albuquerque's officials have implemented Arizona-like procedures within the Sheriff and Police Departments and county jails.  In June of 2010 a mini-scandal threatened to break when an e-mail leaked from her office.  In the note a staff members of the chief law enforcement officer for Dona Ana County joked about killing muslim and mexican immigrants, but the episode blew over with Martinez claiming to have "reprimanded" the underling.



Weighing the actual numbers of Republicans of color in office, the constituencies they represent, the policy programs they intend to implement, and the circumstance by which they won office, claims of a diversifying GOP are much overblown.  Rather than representing a shift of voters within communities of color into he Republican Party, or a GOP policy agenda that includes initiatives which resonate with people of color, the new (and small) cohort of black and Latino Republicans in office is mostly a phenomenon resulting from the specific dynamics of particular races, and the willingness of white conservatives to occasionally break racial ranks and vote for non-whites who will represent their interests.


Tuesday's full elections results for black Republicans:

Allen West, Florida-22 (winner with 54% of vote against Ron Klein, white male, in district that is 82.3% white, 10.7% Hispanic, 3.8% black)

Tim Scott, South Carolina-1 (winner with 65% of vote against Ben Frasier in district 74/21% white black split)

Charlotte Bergmann, Tenn.-9 (loser to Steve Cohen, a white man who wins with 75% of vote in district with 59.7% black majority)

Robert Broadus, Md.-4 (loser to Donna Edwards, black woman who wins with 83.5% of vote in district with 56.8% black majority,)

Stephen Broden, Texas-30 (loser to Eddie Bernice Johnson, black woman who wins with 76% of vote in district with 41.2% Hispanic and 39.1% black majorities)

Michel Faulkner, N.Y.-15 (loser to Charles Rangle, black man, who wins with 80% of vote in district with 47.6% Hispanic and 34.6% black majorities)

Ryan Frazier, Colo.-7 (loser to Ed Perlmutter, white man, who wins with 53% of vote in district with 68.9% white majority)

Isaac Hayes, Ill.-2 (loser to Jesse Jackson, Jr., black man, who wins with 80% of the vote in a district with 62.4% black majority)

Charles Lollar, Md.-5 (loser to Steny Hoyer, white man, who wins with 64% of vote in a district with a 60% white majority, 30% black minority)

Bill Marcy, Miss.-2 (loser to Benny Thompson, black man, who wins with 62% of vote in a district with a 63.5% black majority)

Star Parker, Calif-37 (loser to Laura Richardson, black woman, who wins with 69% of vote in a district with a 43.2% Hispanic and 24.8% black majority)

Bill Randall, N.C.-13 (loser to Brad Miller, white man, who wins 55% of vote in district with a 65% white majority, 27% black minority)

Marvin Scott, Ind.-7 (loser to Andre Carson, black man, who wins with 59% of vote in district with 63% white majority, 29% black minority)

Chuck Smith, Virginia-3 (loser to Bobby Scott, black man, who wins with 70% of vote in a district that is 56.4% black)