Fool Me Twice (21 page)

Although the study boasted “an impressive list of variables,” Furchtgott-Roth pointed to two major factors it neglected:

First, it omits the type of job … Second, it leaves out the field of education. It is meaningless to say that the earnings of a man or a woman with a B.A. in English should be the same as the earnings of a man or a woman with a B.A. in math. So the study compares workers without regard to education or type of work: secretaries are being compared with loggers, bookkeepers with oil drillers.

Ahead of the 2000 general election, Furchtgott-Roth announced in the
American Spectator
that “comparable work” was back on the table.
²⁹

It's five months before the November elections, and ultra-liberals Tom Harkin and Ted Kennedy are holding court in Dirksen Senate Office Building [in a hearing] … establishing comparable worth–federal wage and salary controls regulating how much employers must pay each male and female worker.

But in 2002 EPI's Heather Boushey was claiming that “comparable worth” would help to eliminate the failure of affirmative action to completely close the wage gap and wage penalty visited upon women for working in a predominantly female occupation like nursing, which requires high levels of education and certification. This was due, she wrote, to the “high degree of segregation of women and men into different types of jobs.”
³⁰

Occupations that have been historically dominated by women are often poorly paid compared to occupations that are dominated by men and that require comparable levels of skill and education.

The proposed comparable-worth legislation, Boushey claimed, “could reduce the wage gap and help low-wage workers without creating an excessive burden for employers.”

The above discussion shows the persistence of progressive attempts to socially engineer wages, well beyond the principle of paying women the same as men for doing the same jobs. In 1933, Franklin Roosevelt had called on all employers to sign a Code of Fair Competition agreement as “part of a nationwide plan to raise wages, create employment, and thus increase purchasing power and restore business.”
³¹
It was a detailed code regulating child labor, women's labor, hours of business operation, pay rates, a minimum wage, prices, and more.

Diana Furchtgott-Roth, in her
American Spectator
article, provided a detailed critique of this entire approach. She relies, in part, on former Congressional Budget Office director June O'Neill, in whose view

comparable worth demeaned women because “it conveys the message that women cannot compete in nontraditional jobs and can only be helped through the patronage of a job evaluator.”
³²

So now, Furchtgott-Roth pointed out, progressives have simply rebranded
comparable worth
as
pay equity
.

It's a warm, fuzzy concept, designed to lure working women with the promise of potential raises and to discourage political opposition. After all, who could be against equity?

Furchtgott-Roth also explains what passage of the convoluted Fair Pay Act would mean:

The Fair Pay Act would require employers to compensate workers according to an artificial calculation of a job's “value” rather than
on what anyone is willing to pay. It would extend the current “equal pay for equal work” doctrine of federal law to equal pay for very different jobs, with the goal of raising the pay of women in female-dominated occupations. In other words, federal bureaucrats would decide which jobs are underpaid and would require employers to raise those wages…. It defines discrimination as paying different wages for “equivalent” jobs that are dominated by employees of a particular sex or racial group. In the bill's own words, “The term ‘equivalent jobs' means jobs that may be dissimilar, but whose requirements are equivalent, when viewed as a composite of skills, effort, responsibility, and working conditions.”
³³

(In a modest progressive compromise—for now—the most recent rendition of the Pay Fairness Act, introduced in April 2011 by Representative DeLauro, does not as specifically stipulate wage controls as did FDR's.)

In 2000, proponents of the Pay Fairness Act were declaring: “The time to pass the bill is now.” We are hearing the same thing about much of today's legislation—“We can't wait.” While none of the bills were expected to pass in Congress in 2000, Furchtgott-Roth was warning then that “comparable worth and pay equity”—or some other version—could easily become law if then candidate Al Gore were elected president and the Democrats retook Congress. This is the same danger American voters should concern themselves with today. Should Barack Obama be reelected, and/or the Democrats retake control of Congress, find ourselves faced with Depression-era wage and price controls—or worse.

Bear in mind: in June 2000, President Clinton wanted regulations to make it easier to “punish firms for pay equity infractions through denial or withdrawal of federal contracts.”
³⁴
In 1997, Vice President Al Gore told the AFL-CIO, “We're going to send a message to companies that want to do business with the federal government: How you treat employees and how you treat unions counts with us.”
³⁵
In October 2010, President Obama put it more pithily to Latino voters: “We're gonna punish our enemies and we're gonna reward our friends.”

The progressive Troika—Economic Policy Institute, Demos and the Century Foundation—along with many other progressive groups, have published numerous articles about taxing the rich, all of which predict dire consequences if such taxation is not increased, or if—heaven forbid—it should stop. Case in point, an August 2010 commentary by John Irons, then EPI's research and policy director, and by Andrew Fieldhouse, EPI/Century Foundation federal budget policy analyst:

Economist Mark Zandi of Moody's Analytics estimates that every dollar spent making the Bush income tax cuts permanent generates only 32 cents of economic activity. Comparatively, every dollar spent on unemployment assistance generates $1.61 worth of economic activity, a dollar of spending on infrastructure yields $1.57 and a dollar in assistance to states to prevent layoffs of teachers or first responders yields $1.41. Tax cuts for the wealthy are simply not a good way to stimulate the economy….

Simply put, the cost of extending the upper-income Bush tax cuts, in both dollars and lost opportunities, is unacceptably high….

A one- or two-year extension of the cuts for the wealthy is a poorly designed stimulus and would set a fiscally irresponsible precedent for our nation's long-run budgetary planning. Congress should extend permanently reductions for the middle class and let the other provisions expire.

We need to streamline and modernize the tax code, not perpetuate a failed system.
³⁶

In an August 2011 briefing paper, Fieldhouse and Isaac Shapiro, EPI director of regulatory policy research, claim the top 1 percent of households “benefited disproportionately” from the Bush-era tax cuts. The top 1 percent “received 38% of the total amount of these tax cuts, which is more than the combined amount of the total amount of the tax cuts received by the bottom 80% of tax filers.”
³⁷

The key phrase here is “bottom 80% of tax filers,” because now half of all Americans pay no federal income tax at all.

A Heritage Foundation analysis over nearly fifty years—from 1962 to 2009—based on data gleaned from individual income returns, calculated in February 2012 that the “percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009…. That means 151.7 million Americans paid nothing in 2009. By comparison, 34.8 million tax filers paid no taxes in 1984.”
³⁸

The U.S. Treasury's Office of Tax Analysis reports U.S. individual income tax is “highly progressive,” meaning “a small group of higher-income taxpayers [pay] most of the individual income taxes each year.”
³⁹
The top 1 percent of taxpayers, for example, “paid 33.7 percent of all individual income taxes in 2002. This group of taxpayers has paid more than 30 percent of individual income taxes since 1995. Moreover, since 1990 this group's tax share has grown faster than their income share.”

How about those 151.7 million Americans who pay no federal income taxes?

Annie Lowrey, now an economic policy reporter for the
New York Times
, wrote in
Slate
(October 2011) that “deductions and poverty” are responsible for the 47 percent who pay no federal income tax. They “qualify for enough breaks to cancel their tax obligations out.”

Of that group, 44 percent are claiming tax benefits for the elderly, like an exemption for Social Security payments. And 30.4 percent are claiming credits for “children and the working poor,” like the child-care tax credit. The remainder gets breaks for investment income, spending on education, itemized deductions, and a mish-mash of other things. When combined, it's all enough to cancel out their income tax requirements.

In short, it is not that they are not paying their taxes. It is that the country's tax structure lets them off the hook.
⁴⁰

Lowrey also credits the Bush tax cuts for some of those exemptions.

For instance, the 2001 cuts, extended under the Obama administration, doubled the child tax credit from $500 to $1,000 and expanded eligibility for the Earned Income Tax Credit among married taxpayers.
Additionally, the Bush tax cuts lowered income taxes in every bracket, making it easier for a household's liability to get fully offset by deductions and credits. And on top of all that, the stimulus bill introduced a host of further tax cuts.

Contrary to the barbed rhetoric coming from progressives, it's not “all Bush's fault.” And if tens of millions of Americans are now paying no income tax, the definition “rich Americans” being targeted for big tax increases is being pushed down onto the upper middle class.

In September 2011, Obama started pushing for his $447 billion jobs bill, promising to pay for it by raising taxes on the wealthy and businesses.
⁴¹
Jacob “Jack” Lew, then director of the Office of Management and Budget (now Obama's chief of staff), affirmed that proposed tax hikes on the wealthy and businesses would pay for Obama's entire half-trillion-dollar jobs scheme.
⁴²

Lew stated itemized deductions would be limited for individuals making more than $200,000 a year, and for families making more than $250,000. Lew purported this would raise about $400 billion.
⁴³
Suddenly, the definition of “wealthy” became $200,000.

Obama also proposed raising $18 billion by treating earnings of investment fund managers as “ordinary income” rather than taxing it at lower capital gains rates. Additionally, he would “eliminate many oil and gas industry tax breaks to raise $40 billion and change corporate jet depreciation rules to bring in another $3 billion.”
⁴⁴
All this is in line with Schakowsky's Fairness in Taxation Act, which called for taxation on capital gains and dividend income as “ordinary income” for those taxpayers making over $1 million. If enacted in 2011, Schakowsky wrote, her act would raise more than $78 billion.
⁴⁵
Although Obama's proposed tax rules would not take effect until January 2013, Obama was “not offering any spending cuts to pay for the jobs plan,” Lew said.
⁴⁶

“Obama is trying to raise income tax rates without having to admit it,” Timothy P. Carney commented in the
Washington Examiner
:

This is simply a rate hike by another name…. This matters because of the incentive effects. Eliminating tax deductions makes people
poorer, which is bad. Raising rates (explicitly or sneakily) makes people poorer and reduces their incentive to earn—doubly bad.
⁴⁷

The hundreds of billions of dollars to be spent under the EPI's Act for the 99% job-creation measures (see
chapter 5
on the WPA) could allegedly be offset by Rep. Jan Schakowsky's Fairness in Taxation Act. EPI projects ten-year savings “which would more than pay for all of the near-term job-creation policies.”
⁴⁸
Schakowsky's act creates new tax brackets for taxpayers earning an income starting at $1 million—taxed at a 45 percent tax rate. It ends with a $1 billion and higher bracket—taxed at a 49 percent tax rate.
⁴⁹
This revenue “would more than offset costs associated with the major job-creation proposals included in the Act for the 99%, while leaving ample room to apply some of the savings to long-term deficit reduction,” EPI claims. Schakowsky introduced her tax act March 16, 2011. Thus far, it has earned no Congressional action.
⁵⁰

The Congressional Progressive Caucus, for its part, would pay for its “fairness” agenda by cutting national defense and hiking taxes on U.S. energy producers. CPC defense cuts would include: “unnecessary” defense programs, which the CPC claims would save $280 billion, in addition to approximately $1.2 trillion saved by restricting spending in Afghanistan to planning and executing a “responsible troop withdrawal.” Congressional Progressives would raise revenue by targeting the oil and gas industry, from which they project raising over $60 billion by ending “tax giveaways” and requiring polluters “to clean up their mess.” They also want to level a 0.03 percent tax to disincentivize “dangerous speculation by slightly raising the cost to trade.”