Sudnay Times (London)
September 23, 2012
by Irwin Stelzer
Mitt Romney proved once again, if further proof is needed, that the tin ear that allowed him to be photographed at his vacation estate, or to claim that his support of the auto industry is demonstrated by the fact that his wife drives two Cadillacs, is still his auditory device of choice. Hence his claim to a group of supporters at a private meeting in affluent Boca Raton, Florida, that 47% of Americans pay no income taxes and 49% are "dependent on the government".
First, what the Obama-leaning media call the 47% gaffe. Romney is right that about half of Americans pay no income taxes (he put the figure at 47%, the precise figure is 46.4%), he was wrong to fail to mention that 28.3% are working and have highly regressive payroll taxes deducted from their wages, 10.3% pay no taxes because they are retired and living on social security benefits they paid for throughout their working lives, and 6.9% earn less than $20,000 (£12,300) a year. That's virtually all of Romney's 47%.
To say that these people refuse to "take personal responsibility" for their lives borders on calumny. Little wonder that leading conservative activist Bill Kristol called the remark "arrogant and stupid".
There is worse. Romney, who seeks the Ronald Reagan mantle, should have known — or at least been told — that it was past Republican presidents who lopped low earners off the income tax rolls so they would keep more of their wages and, therefore, have a greater incentive to find work. One device that accomplishes that objective, the earned-income tax credit, was called by President Reagan "one of the best anti-poverty programmes ever seen".
Now, to the 49% who are "dependent on government". This figure has some basis in fact, since 49% of Americans live in a household with at least one person receiving some government benefits, but it is a long jump from that to Romney's assertion that these people won't "take personal responsibility and care for their lives". The 49% includes recipients of social security (pensions), Medicaid and Medicare, veterans' benefits and unemployment insurance. To treat the entire group as "takers" rather than "makers", as some Republicans are doing, is nonsense at the very least.
It is not, as Mark Twain mistakenly believed Disraeli to have said, that there are lies, damned lies and statistics. It is not statistics that are false, but that politicians often attempt to torture them until they will say anything.
The media, overwhelmingly biased in Obama's favour, are convinced Romney's "gaffe" will have an enduring effect on his vote tally. But with three presidential debates coming up, and the race tight, that is far from certain.
What is certain is that Romney has distracted attention from a serious discussion that the country should be having between a Democratic candidate who believes in expanding the welfare state and the role of government, and a Republican candidate who believes that increased dependency on government is dangerous, sapping individual initiative, and that the nation cannot afford a continuation of the trend that has seen government transfer payments rise twice as fast as per capita incomes in the past 50 years, and government benefits rise from 7.8% of personal income in 1969 to 17.6% in 2009. These are facts with which voters should be asked to conjure.
The Obama team has produced a video called "The Life of Julia". At the age of 3, Julia begins a life of benefits, taking her from pre-kindergarten through college funding, free birth control, and, at age 67, a pension. Obama's largesse puts Lord Beveridge's in the shade: like Beveridge, he sees government benefits from the cradle to the grave — well almost to the grave, that being too grisly a prospect to mention in a campaign video — but without Beveridge's insistence that unemployment insurance be at subsistence level only, and end after six months.
It is Obama's vision of America's future as a government-centred provider of benefits that Romney finds antithetical to the dynamic self-confidence that has produced generations of entrepreneurs and brought America riches and, even more important, freedom. That is why Romney favours expanding individuals' control over such things as their health care and the way their children will be educated, while Obama prefers having health care decisions made by the boards he will appoint under Obamacare, and leaving the teachers' unions in control of the educational system.
In an attempt to calm the media storm, Romney admitted that he had "inelegantly" stated what he considers to be a correct distinction between himself and Obama. "I think a society based upon a government-centred nation where government plays a larger and larger role, redistributes money, that's the wrong course for America. The president's approach is attractive to people who are not paying taxes because, frankly, my discussion about lowering taxes isn't as attractive to them. And those that are dependent upon government and those that think government's job is to redistribute, I'm not going to get them."
Wrong: polls show that Romney is likely to get 35% of the half of Americans who don't pay income taxes. Perhaps his message that lower taxes stimulate the growth necessary to provide the government with tax revenues to fund benefit programmes has more supporters than he reckons. Or the failure of the Obama foreign policy is as worrying to the non-income-tax-paying group as to those who do pay those taxes. Or the Republicans' position on the so-called social issues (opposed to gay marriage and abortion) resonates with many of the voters he is writing off.
It might be a good idea for one of the candidate's advisers to remind him that man indeed does not live by bread alone, and that the half of the electorate that he has written off might well respond to a clear, positive, detailed, as yet undelivered message laying out how he plans to cut the deficit and grow the economy. Without that, it looks like four more years for the president.
Irwin Stelzer is a Senior Fellow and Director of Economic Policy Studies for the Hudson Institute. He is also the U.S. economist and political columnist for The Sunday Times (London) and The Courier Mail (Australia), a columnist for The New York Post, and an honorary fellow of the Centre for Socio-Legal Studies for Wolfson College at Oxford University. He is the founder and former president of National Economic Research Associates and a consultant to several U.S. and United Kingdom industries on a variety of commercial and policy issues. He has a doctorate in economics from Cornell University and has taught at institutions such as Cornell, the University of Connecticut, New York University, and Nuffield College, Oxford.
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