Mainly its servants

by Henry on December 15, 2008

Robert J. Samuelson turns the stupid up to 11.

A second myth is that lobbying favors the wealthy, including corporations, because only they can afford the cost. As a result, government favors the rich and ignores the poor and middle class. Actually, the facts contradict that. Sure, the wealthy extract privileges from government, but mainly they’re its servants. The richest 1 percent of Americans pay 28 percent of federal taxes, says the Congressional Budget Office. About 60 percent of the $3 trillion federal budget goes for payments to individuals—mostly the poor and middle class. You can argue that those burdens and benefits should be greater, but if the rich were all powerful, their taxes would be much lower. Similarly, the poor and middle class do have powerful advocates. To name three: AARP for retirees; the AFL-CIO for unionized workers; the Center on Budget and Policy Priorities for the poor.

Should people pretend to take this sort of horseshit seriously? One, could, for example, point out to serious academic research that completely contradicts Samuelson’s claims, such as Larry Bartels’ finding that “[US] senators are consistently responsive to the views of affluent constituents but entirely unresponsive to those with low incomes.” (p.275, Bartels 2008; Bartels also finds that Republicans are roughly twice as responsive to the views of high income constituents as Democrats)? Or should people just point at the silly man, and laugh (Samuelson’s claims are so pig-ignorantly ridiculous that they’re not even competent hackery )? I’m genuinely of two minds.

Update: Bartels speaks further to this at Ezra Klein’s blog.

I know of two systematic attempts to measure the relative influence of affluent, middle-class, and poor people on government policy. One is in the next-to-last chapter of Unequal Democracy, where senators’ roll call votes are moderately strongly affected by the preferences of high-income constituents, less strongly affected by the preferences of middle-income constituents, and totally unaffected by the preferences of low-income constituents. That’s the more optimistic view. My Princeton colleague Marty Gilens (in a 2005 article in Public Opinion Quarterly and a book-in-progress) has a parallel analysis focusing on aggregate poilcy shifts over two decades. He also finds no discernible impact of low-income preferences, but argues that middle-class people also get ignored when they happen to disagree with rich people.

As Ezra says:

Bartels explains his research in further detail here. Marty Gilens’ work is here. I’d be interested to hear Samuelson respond to their findings, or describe which aspects of their analysis he finds insufficiently rigorous.

{ 40 comments }

1

John P 12.15.08 at 7:50 pm

As nobelist Paul Krugman is fond of pointing out, the highest tax rate was 91 % during the presidency of the “socialist” Dwight Eisenhower. The highest bracket now is 35 %. The rich never had it so good.

2

roger 12.15.08 at 8:01 pm

Don´t credit Samuelson with this hackery. He is pig ignorant, but only as a factotum in the system. The same nonsense can be found whenever you run into rightwing commentary on the economy. There has always been a particularly abject character typ- the Angestellte Kracauer wrote about, the white collar guys – who have so deeply swallowed the ethos of servitude that you could not find midieval retainers more loyal, more disgustingly without a backbone, than this kind of person. They combine servility and road rage in one ur-American package. The model for this is the Jim Crow south, with its legally defined hierarchy and its impoverished or lower middle class white sector clinging to the prestige of sharing the same skin color with their betters. While the racial element has diminished, the training in resentment and asskissing the wealthy seems to be handed down, generation after generation.

3

Delicious Pundit 12.15.08 at 8:01 pm

The boogeyman is The Center on Budget and Policy Priorities? Sheezus. I submit that he wrote “…and TK for the poor” and made his assistant google a group to drop into that sentence. And the AFL-CIO’s not doing so hot either. It’s like saying the Superfriends are Batman, Flash after hip replacements, and a kid in a Wal-Mart Hulk costume.

4

Ano 12.15.08 at 8:16 pm

Of course the “mainly its servants” thing is crap, buy when samuelson says:

The richest 1 percent of Americans pay 28 percent of federal taxes, says the Congressional Budget Office. About 60 percent of the $3 trillion federal budget goes for payments to individuals—mostly the poor and middle class.

is there a kernel of truth there? (i.e. that the U.S. federal government, in aggregate, redistributes income from the rich to the poor, so the rich must not control the government?)

Or perhaps Samuelson fails to take into account that some income redistribution may reflect the desires of the rich too. (Limousine liberals and all that.)

5

Barbar 12.15.08 at 8:20 pm

The richest 1 percent of Americans pay 28 percent of federal taxes

That this statistic is routinely trotted out without the obvious accompaniment (the % of income or wealth belonging to the top 1%) irks me greatly.

6

Righteous Bubba 12.15.08 at 8:25 pm

Should people pretend to take this sort of horseshit seriously? [...] Or should people just point at the silly man, and laugh (Samuelson’s claims are so pig-ignorantly ridiculous that they’re not even competent hackery )? I’m genuinely of two minds.

Stay of two minds and continue to do both.

7

Barbar 12.15.08 at 8:53 pm

Also, it should be pointed out that the richest 1% pay 4% of Social Security and Medicare taxes. Social Security and Medicare mainly redistribute from the working and healthy to the retired and sick, less so from the rich to the poor. I guess our country is run by old sick people; everyone else lives to serve them.

8

James Joyner 12.15.08 at 8:55 pm

Henry,

It seems to me that Samuelson is just defining the problem differently. He says that, if the rich were really dominating government policymaking, then they should be paying a much smaller slice of the tax burden and getting more of the outlays. He is, in other words, measuring outcomes.

Bartels is measuring inputs: access to senators and their staffs. Presumably, though, senators have to counterbalance direct lobbying and contributions with the number of voters who will punish them at the polls.

9

theo 12.15.08 at 8:59 pm

The term is “lucky duckies.” Just google it. The cartoons are great.

Robert “not Paul” Samuelson’s biggest hackery here is that he only considers federal income tax. Federal taxes are only about half of the total tax burden, but they’re (sadly) the most progressive fraction. State and local taxes are mostly net regressive. I understand that he’s trying to describe federal lobbying, but you can’t break up the tax system like that without massively distorting its implications.

10

Stephen Kinsella 12.15.08 at 8:59 pm

Have to agree with Barbar, not reporting the stock of wealth inside the 1% bracket while trumpeting the flow of taxation revenue from that stock is both disingenuous and highly misleading, because it paints the rich as giving saints rather than a class out to satisfy its own interests, regulatory capture of Senators and Congressmen and women being one result of this.

Every time this statistic is trotted out, it should be referenced somewhere online and linked to, because it is a rhetorical rabbit punch: one can’t argue too much with the numbers, but the manner in which they are presented is incorrect and misleading. Some light needs to be shone on the types of people who use these statistics in this fashion in their arguments.

11

Righteous Bubba 12.15.08 at 9:02 pm

Should it be mentioned that the folks making the laws are generally doing pretty well?

12

James D. Miller 12.15.08 at 9:09 pm

“senators are consistently responsive to the views of affluent constituents but entirely unresponsive to those with low incomes.”

This can’t be true or there would be no welfare or food stamp programs.

Samuelson’s argument seems very reasonable to me since the rich do pay a higher percentage of their incomes in taxes than the non-rich do. The working poor actually get more money from the government than they pay in taxes.

13

Henry 12.15.08 at 9:10 pm

JJ – not so. Bartels doesn’t directly measure ‘levels of access’ or anything like it. Instead he uses W-NOMINATE scores to measure _voting outcomes,_ on the level of the individual senatorand their resemblance (or lack of same) to the expressed preferences of different interest groups as measured on the state level using NES data. So Bartels does directly contradict Samuelson’s account by showing how Senators’ votes track the preferences of rich voters and to some extent middle class voters, but don’t track those of poor voters at all. He has a longer and more detailed argument about how politicians can deviate from voters’ preferences on these issues without getting punished, for which I refer you to the book. (HF-comment has been edited for clarity)

14

James Joyner 12.15.08 at 9:14 pm

Henry: Interestingly. I tried to look at Bartels via Google but the relevant page isn’t “part of the review.” The next page, oddly, is and it talks about access.

15

Zamfir 12.15.08 at 9:27 pm

James Miller says: This can’t be true or there would be no welfare or food stamp programs.

Note that these kinds of programs are supported by many more than just the people that benefit from them

16

Phil 12.15.08 at 9:39 pm

The problem to me doesn’t seem to be how much tax the rich are paying it’s the view that what tax they do pay is redistribution to the poor. The rich receive benefits from paying taxes e.g infrastructure, an educated workforce, research and a legal and political system that they can influence.

17

MarkUp 12.15.08 at 10:16 pm

”The rich receive benefits from paying taxes e.g infrastructure, an educated workforce, research and a legal and political system that they can influence.”

And which still allows them to to accumulate wealth at an increasing rate. It’s like making the claim that giving el Presidente the line item veto, our budget woes will magically disappear.

18

Tracy W 12.15.08 at 10:42 pm

Or should people just point at the silly man, and laugh

This is a form of behaviour frequently indulged in by people who don’t actually have an argument (see your average creationist). Consequently its information value, to anyone who doesn’t already agree with you, is very low. I advise mixing the two impulses.

19

James D. Miller 12.15.08 at 10:51 pm

Zamfir,

But if politicians care about the non-poor, and the non-poor care about the poor then politicians effectively do care about the poor.

20

PersonFromPorlock 12.15.08 at 11:19 pm

Still, I suspect the problem is less the Evil Rich (many of whom are progressives, anyway) than it is the politicians, who are shamelessly willing to sell their offices. Get rid of income inequalities entirely and I suspect the pols would still be up for bids.

21

b9n10t 12.16.08 at 1:31 am

# 20

“Attempting to explain ‘why Americans vote the way they do,’ Gelman and a group of fellow political scientists crunch numbers and draw graphs, arriving at a picture that refutes the influential one drawn by Thomas Frank, in What’s the Matter with Kansas?, of poor red-staters voting Republican against their economic interests. Instead, Gelman persuasively argues, the poor in both red states and blue still mostly vote Democratic, and the rich, nationally speaking, overwhelmingly vote Republican.”–Leo Carey, The New Yorker reviewing Andrew Gellman’s _Red State, Blue State, Rich State, Poor State_

http://press.princeton.edu/titles/8729.html

The Rich aren’t evil and the politician’s aren’t shameless. It is human nature to rationalize self-interest as the common good. A whole lot of money and power brings a whole lot of self-interest which engenders a whole lot of “common good” enterprising. That’s all that’s happening here.

22

Matthew Kuzma 12.16.08 at 1:40 am

The richest 1 percent of Americans pay 28 percent of federal taxes, says the Congressional Budget Office.

…and by all accounts they own way more than 28 percent of the nations wealth. That they are paying a large percent of the nation’s taxes on their large share of the nation’s income is not a case for anything at all.

23

steve 12.16.08 at 1:52 am

Samuelson’s approach to measuring the benefits of government (60% of federal spending goes to individuals mostly the middle class and poor!) is wildly misleading for several reasons. One of the main ways government helps the rich is by protecting their businesses from competition. Think Medicare Modernization Act of 2003. How much money did BigPharma make off of that deal? A load of money, none of which shows up in the income and expense accounts of the government.

24

Mark R 12.16.08 at 2:26 am

But if politicians care about the non-poor, and the non-poor care about the poor then politicians effectively do care about the poor.

Do you really believe that telling people what’s good for them is a fair substitute for, you know, actually involving them in decisions about their own fate? Has history ever shown the exclusion of entire classes of people from the political process to be a good thing?

Your point may be a pragmatic rather than moral one, but I still think you’re wrong. Food stamps and welfare are in place for a number of reasons both obvious and inscrutable; generally speaking, though, they are in place in spite of the enormous influence of the wealthy. Income inequality goes up, real wages stagnate, union memberships decline precipitously, conservative politics dominate, and social welfare programs are rendered more impotent by the year. These things are connected, no? I’m not the first to point this out and surely not the first to point it out to you, James.

People aren’t as narrowly self-interested as classic economics would have you think, but allowing the richest of the rich to dictate policy and then pretending you’ve taken the interests of all people into account is absurd on its face.

25

mb 12.16.08 at 2:43 am

…and by all accounts they own way more than 28 percent of the nations wealth. That they are paying a large percent of the nation’s taxes on their large share of the nation’s income is not a case for anything at all.

BINGO.
According to federal gov. statistics
( http://www.federalreserve.gov/pubs/feds/2006/200613/200613pap.pdf )
the richest 1 percent own around 33% of the nation’s wealth. And that percentage has grown over the past 4 decades. If you figure in the regressivity of other fed taxes (and then add in the greater regressivity of state and local taxes), these folks are not only not paying their way, but they’ve been increasing their share of the pie. I suppose you could argue that’s because of their great contributions to the economy, but I guess the bailouts speak concisely to that argument.
MB

26

A. Y. Mous 12.16.08 at 7:44 am

Can some academician in this forum actually provide numbers, or at least point to a source? These percentages aren’t that informative. A loaf of bread costs the same for everyone. So does a Cadillac stretch limo. If 28% tax for the super-duper-ultra-rich means food, shelter, clothing, healthcare for, a pulled-out -of-ass-number, ten million people, it is more a case of the govt. not utilising the money properly rather than a case for a more equitable tax rate.

27

John Quiggin 12.16.08 at 7:44 am

What’s really striking about Samuelson’s piece is the assumption, natural to Beltway denizens, that lobbying is the only thing that matters, and that the fact that the rich pay some taxes proves they are not very good at it.

Given that it’s less then six weeks since a prominently publicised celebration of democracy was held throughout the country, he might perhaps have devoted a sentence or two to disabusing the handful of naive WP readers who might still imagine, on the basis of high school civics lessons, that voting made some difference to political outcomes.

28

Burghman 12.16.08 at 2:01 pm

Republican policy has been “supply side” – don’t tax the rich because its better for everyone.

The average “effective tax rate” for the top 1 percent is around 22 percent.

Also, many people pay more in payroll taxes than income taxes

29

samg 12.16.08 at 2:30 pm

according to a 2007 article in the new york times by david cay johnston, “‘The top 1 percent received 21.8 percent of all reported income in 2005, up significantly from 19.8 percent the year before and more than double their share of income in 1980. The peak was in 1928, when the top 1 percent reported 23.9 percent of all income.” given the quite proper progressivity of the tax system, their 28 per cent tax burden is certainly no more than their fair share.

30

roger 12.16.08 at 5:49 pm

As the crash is showing, the private sector can do many things, but effectively allocate capital to the benefit of society as a whole is not one of them. There, the private sector sucks. Its suckiness, however, can be mitigated by making the hunt for ever higher yields – which is the driver behind misallocating capital – pointless. Which is why a pre-Reagan marginal tax rate would be an excellent outcome to the current downturn. Tax the wealthy so much on any compensation whatsover over, say, the 800,000 dollar mark that they can´t enrich themselves by their usual disheartening schemes, or entrench their positions in the political and economic marketplace, thus freezing or reversing social mobility – something which has turned the U.S. from the land of opportunity to the land of neo-feudalism. The wealthy have succeeded at creating a constituency for themselves -witness the few rightwing comments on this thread – but that constituency is in serious retreat, and it is increasingly mixed with the true crazies, the anti-Darwinist, anti-science, christian nationalist crowd. That is not a crowd that trusts them. Otherwise, their constituency consist entirely of libertarian academics, working for the Koch foundation, aka the George Mason University economics department, or various of the many libertarian think tanks that have been set up by the wealthiest as their form of the strategy of tension – that is, the dissemination of lies and misleading memes.

31

Dan 12.16.08 at 6:55 pm

30: . Otherwise, their constituency consist entirely of libertarian academics, working for the Koch foundation, aka the George Mason University economics department, or various of the many libertarian think tanks that have been set up by the wealthiest as their form of the strategy of tension – that is, the dissemination of lies and misleading memes.

What amazes me about this line of criticism of the GMU economics (which seems to be trotted out fairly often) is that its proponents are never consistent in its application. If the GMU economists are biased towards the wealthy because their primary funding comes from wealthy people, what can we say about the bias of (the large numbers of) other economists whose primary funding comes from the state…?

32

Burghman 12.16.08 at 7:07 pm

average tax rate of the wealthiest 1% fell to its lowest level in at least 18 years,” allowing the wealthiest 1% of Americans to garner “the highest share of the nation’s adjusted gross income for two decades, and possibly the highest since 1929.”

The “average tax rate in 2006 for the top 1%, based on adjusted gross income, was 22.8%,” down from “28.9% in 1996, and…24% in 1988″:

http://online.wsj.com/article/SB121677287690575589.html?=special_page_campaign2008_leftbox

33

Barbar 12.16.08 at 7:17 pm

If the GMU economists are biased towards the wealthy because their primary funding comes from wealthy people, what can we say about the bias of (the large numbers of) other economists whose primary funding comes from the state…?

Isn’t George Mason primarily funded by the state?

34

Patricia Shannon 12.16.08 at 8:28 pm

“Barbar 12.15.08 at 8:53 pm
Also, it should be pointed out that the richest 1% pay 4% of Social Security and Medicare taxes.”

Since everybody pays social security/medicare taxes, but only on the first $102,000 ($106,800 in 2009), this means the richest pay a very low percentage of their income to these taxes. If your figures are true, it points to a really huge imbalance of wealth.

35

Peter Whiteford 12.16.08 at 10:25 pm

Tangential to this topic, people may want to look at a recent OECD report on income distribution –

http://www.oecd.org/document/53/0,3343,en_2649_33933_41460917_1_1_1_1,00.html

Chapter 4 of this report – which I wrote while working at the OECD – finds that the USA has the most progressive system of direct taxes (federal and state income taxes and employee social security taxes, but not employer social security taxes or indirect taxes) in the OECD, and the richest 10% of US households (in terms of disposable income adjusted for household size) pay 45% of direct taxes, also the highest share in the OECD. Even after adjusting for the fact that the richest 10% of US households have one of the highest shares of income, the system of direct taxes remains the most progressive in the OECD.

There are a number of other countries where the richest 10% pay a higher share of their incomes in taxes, but in these countries the poor and the middle class also pay a significantly higher share of their incomes in taxes, so that in these countries the tax systems are not as progressive as in the USA.

BUT — One point to note is that progressivity describes the structure of taxes and benefits, but redistribution is determined both by the progressivity of taxes and benefits and the level of taxes and benefits. For example, a more progressive tax system may redistribute less than a less progressive system if the level of taxes is substantially lower.

In fact, the US even has the most redistributive system of direct taxes – that is, the direct tax system in the US reduces income inequality (not wealth) by more than any other country.

The report also points out that the USA is the only OECD country which redistributes more through the tax system than through the system of cash benefits.

What this mean of course is that other countries reduce inequality more through paying social security and other benefits than through taxes.

The other half of the equation is that the USA redistributes less through social security and unemployment payments etc. than most other countries. Also most but not all other countries support families with children through cash benefits, whereas the USA mainly does this through the tax system.

What is happening is that the US provides more social welfare through the tax system than most other countries, but relatively little social welfare through the social welfare system. (In passing, Germany and France also provide a lot of welfare support through the tax system.)

Even though the US social security system overall is about average in progressivity, the overall redistributive effect is lower mainly because most other countries spend a lot more through their social security systems than the US.

So when you look at the combined effect of taxes and benefits overall the USA redistributes significantly less than most other OECD countries, despite the fact that it has the most progressive system of direct taxes.

The USA also starts off with one the highest levels of earnings inequality among OECD countries, so that when you look at household incomes “after” taxes and benefits, the USA is the fourth most unequal country in the OECD – after Mexico, Turkey and Portugal.

36

roger 12.17.08 at 4:04 am

Peter, nice links! And a very interesting study.

37

engels 12.17.08 at 4:38 pm

Oxlib is apparently Oxford’s equivalent of the Cambridge Footlights. Dan, I’m sure you have a promising career ahead of you in comedy. Have you thought of doing a sketch based around the idea of a Nozickian response to the current disaster? I’m not really sure if that would be funny, though, or tragic.

38

engels 12.17.08 at 5:31 pm

(Further information on Charles Koch and his hired prizefighters at George Mason University and elsewhere is available here.)

39

grendelkhan 12.17.08 at 8:43 pm

Barbar: That this statistic is routinely trotted out without the obvious accompaniment (the % of income or wealth belonging to the top 1%) irks me greatly.

It’s a delicious cycle, as follows. The wealthy pay a high proportion of total tax receipts. Therefore their tax rate is too high. Reduce the taxes on the wealthy. Observe as they accrete more and more wealth. Then note that they pay a high proportion of total tax receipts. Delicious!

Y’know, I remember reading about Bartels’s research, and seeing some reactions along the lines of “In Other News: Water May Be Wet”. Because, of course, it’s blindingly obvious that legislators serve their wealthiest constituents first, the middle class maybe, and the poor ones not at all, and you’d have to be dumb as a sack of rocks to think otherwise. But, as we’ve seen here, Bartels’s study is instrumental in responding to rock-sacks like Samuelson.

40

Joe 12.17.08 at 10:11 pm

About 60 percent of the $3 trillion federal budget goes for payments to individuals—mostly the poor and middle class.

How much is almost immediately channeled back into other hands. I’d argue almost all the aid to poor people comes with strings that indirectly, but strongly benefit wealthy people.

Food stamps for example amount to a subsidy for grocery stores. Section 8 a subsidy for rapacious landlords etc.

The poor clearly benefit from this in some fashion, but so do the wealthy, and in a far more direct fashion then “social order” (though that too is extremely important).

From another tack, what does a low tax rate get you. The super rich have more income then anyone could ever need. Past a certain threshold the “worth” of money changes. It becomes a “way to keep score”, “a stepping stone to immortality”, “a tool for social power” or some other such use. Taxation often has little impact on these non monetary goals. When you already have more then you will ever need, what good does accumulating even more do you?

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