Right-wing billionaire Pete Peterson continues to use the Washington Post as an outlet for deceptive anti-tax and anti-government propaganda. His Fiscal Times is a factory for churning out James Frey-like mendacity, which the Post then deceptively packages and distributes as "journalism." For those of you who have forgotten, James Frey's deception, in his book A Million Little Pieces, was to pose as a former drug addict who got clean through the force of his own unaided will.
The Washington Post, on the other hand, poses as a newspaper.
The latest Peterson production, "Analysis examines what it's like to be a 'rich' family in America," is a grab-bag of misinformation and fiscal ignorance. This "analysis" was written by someone named Karen Hube, and it's based on two phony premises: First, that "President Obama and others have repeatedly used (that level of income) to define what it means to be 'rich' in America today," and second, that it's a hardship to get by on $250,000 a year.
There's so much deception, confusion, and ignorance in Hube's piece that it's hard to know where to begin. For starters, there's the assertion that the $250,000 figure is arbitrary -- and therefore presumably unjust. Hube quotes only one source, in order to paint this figure as a randomly and thoughtlessly selected "mantra." But it's not a random figure. It was chosen because approximately 2 percent of the nation's households make this much or more.
That's one person in fifty -- which, coincidentally, also happens to be the number of people who think the government's top priority should be taxes. And one of them is Pete Peterson.
Nor has anybody described a household with $250,000 in income as "rich." Instead, the president and others have suggested a tax on income earned above this level -- a fact Hube either doesn't understand or about which she deliberately prevaricates. When people talk about a tax on the "wealthy," the starting point for "wealth" is somewhere above the $250,000 figure. Here's why: If you tax earnings above that amount but continue to reduce them for earnings below it, which is the Democratic proposal, total income would have to be well above that amount before higher taxes began taking a significant bite.[1]
Hube depicts a fictional struggling family, which in a burst of creativity she dubs "the Joneses." The Joneses are living so close to the financial brink, Hube suggests, that they may have nothing left in the bank -- that is, after they're done paying for summer camp, music lessons, and of course the maid. Hube writes: "In reality, to make ends meet, this couple would have to cut back on discretionary expenses -- take a pass on a new suit, skip an annual vacation and drop some activities for the children."
But "to make ends meet" after what? The implication is that these terrible austerities -- fewer music lessons for the kids, one less Brooks Brothers suit for Dad -- would be forced on them by the draconian new taxes proposed by our Robespierre-like president and his party. And therein lies the most Frey-like deception in Hube's piece: The family in her example wouldn't pay a single penny more in income taxes under the Democratic proposal. Not one. The Democratic tax proposal would allow taxes to move toward pre-Bush levels, but only for income above that amount.
Since the Joneses "only" earn $250,000, the Democratic proposal would keep their present tax break completely intact. Undeterred by reality, Hube continues to hammer away at her deceptive scenario: "Unfortunately, the family would also probably save less, at the expense of retirement or college funds." What? No retirement funds? Then thank God for Social Security, which will provide some level of protection for them in their old age.
Oh, wait.
We almost forgot. Peterson's been trying to slash those benefits for decades -- and he's finally making some headway. The Post's disclaimer overlooks Peterson's lifelong aversion to having the rich (the truly rich, like himself) pay their fair share in taxes. While he poses as someone who's willing to increase taxes, Peterson has consistently made his position on taxes clear: He wants to cut spending much more than he would raise taxes in order to balance the budget. He wants to lower the highest tax rates for the wealthy, and he wants to replace the lost income with regressive taxes on consumption.
With only minor variations, that's the classic right-wing, anti-government, anti-tax position. How does the Post's disclaimer describe Peterson when it (belatedly, in the case of the online article) discloses his role in paying for the Hube piece? ""Hube contributes to the Fiscal Times, an independent news organization that specializes in fiscal and economic matters. It is funded by Peter G. Peterson, who separately supports groups that advocate for long-term debt reduction."
That's not right. Peterson actually "supports groups that advocate for long-term debt reduction" by cutting spending -- especially for vital programs like Social Security and Medicare -- while at the same time lowering the tax burden for the very wealthy. Peterson's mission to cut taxes for the wealthy is overlooked. That's a telling omission in an "analysis" of taxes for high-income earners!
Here's another deeply embarrassing Hube touch: She suffuses the Joneses with the nobility of sacrifice by pointing out that "they don't send their children to private school." And yet when she (or rather Peterson) hired accountants to estimate their total tax level -- a burden she characterizes as onerous -- she placed them in eight different cities with "top-notch public school districts."
What pays for those "top-notch" schools, the ones that save the Joneses from the expense of private educations? Taxes. Good private schools in the cities she's listed can cost anywhere from $20,000 to $50,000 a year. $10,000 in property taxes vs. $20-$50,000 in private school tuition? That sounds like a good bargain to me.
Here's Hube's soliloquy on her hardy little family's painful burden of taxation:
"Taxes take a hefty toll. Everything from property taxes and the alternative minimum tax to the taxes tacked on to cellphone bills and the cost of gas, when combined, takes a large bite out of earnings -- in some cases even more than the federal income tax toll."
Regarding that Alternative Minimum Tax -- yes, there's been bracket creep since it was imposed in 1969, and it has become an unfair burden on the middle class. But what was the marginal tax rate for income above $200,000 back in 1969?
77 percent.
Today it's 35 percent -- and Peterson's minions want to cut it down to 28 percent. Even adjusting for bracket creep, the Joneses would have paid a higher percentage of their income (in its 1969 equivalent) than they pay today. And Pete Peterson would have paid lots more. And about those property taxes: Why didn't the Joneses rent, instead of buying? That's not an unthinkable alternative, here in the real world. Neither is apartment living, as opposed to the split-level American dream. And how much is the federal taxpayer giving the Joneses in a tax break for their mortgage interest? Lower-income renters don't get that kind of public subsidy. What's more, Peterson's dead set on ending the mortgage interest deduction, at a time when that's all keeping millions of underwater homeowners from going under permanently.
Then there's this:
... [C]osts assumed by the Joneses could be significantly higher if their circumstances changed. If they worked for themselves, for example, they would have to foot the bill for all of their medical insurance premium, which averages $14,043. As it is, they pay 30 percent of the premium and their employers pay the rest.
But if the Joneses worked for themselves, they would presumably incorporate. That would allow them to deduct the corporate contribution for health insurance and give themselves a tax break. They might even be able to deduct 100 percent of the premium, which would pretty much leave them at break-even. More importantly, Hube, despite the prowess she must undoubtedly possess as an "analyst," never asks why their premiums are more than $14,000 -- or what might be done to control them.
The answer to that question is this: We live in the only developed nation with a privatized health insurance system, so we pay far more in premiums for far less in medical care than any of the others. We could fix that, with more government involvement in the health sector. But that would mean Peterson's fellow billionaires might have to pay more in taxes.
What's more, Peterson wants to end the deduction for health insurance benefits. That would decimate the Jones family budget by forcing them to compete on an open market, where they'd pay ever-increasing premiums for ever-dwindling coverage.
Others will no doubt comment at greater length about the bubble in which Hube and her editors live -- a bubble that seems to provide near-perfect isolation from real world concerns. To the Joneses, and to Hube, the everyday sacrifices that most people make unthinkingly are inconceivable. And prosperity isn't a privilege, but a burden. Oh, my dear, you just can't imagine...
I don't know what Peterson's paying to fund the Fiscal Times, but here's what I do know -- followed by what I suspect. I know that, thanks to the Washington Post, he's getting his money's worth. And I suspect he's taking a tax deduction for it, too.
"$250,000 goes quicker than you think," concludes Hube. The median household income in the United States is about $52,000. If you want to know how fast that goes, you'll probably have to look elsewhere. The Fiscal James Freys -- those inventors of financial fictions manufactured in Pete Peterson's workshop and distributed to the world by the Washington Post -- don't deal in figures less than a quarter of a million.
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[1]According to the nonpartisan Tax Foundation, a family of four with $300,000 in income -- $50,000 more than Hube's supposed "rich" figure of $250,000 -- would see their taxes go up only 1.1 percent more under the Democratic plan that it would under the Republicans.
But a couple earning $1,000,000 would see their taxes go up by nearly 3 percent more -- not an astronomical figure, but one that's starting to make a difference. And at Pete Peterson levels the difference would be significant.
Richard (RJ) Eskow, a consultant and writer (and former insurance/finance executive), is a Senior Fellow with the Campaign for America's Future. This post was produced as part of the Strengthen Social Security campaign. Richard also blogs at A Night Light.
He can be reached at "rjeskow@ourfuture.org."
Website: Eskow and Associates
(Figures do not incorporate the proposed Obama/McConnell tax compromise.)