Mitt Romney may have released his tax returns, but there’s more than one lesson he can learn from the legacy of George Romney

Just before his South Carolina shellacking by a thrice-resurrected Newt Gingrich, Mitt Romney fielded a question during a debate about whether he would release his tax returns. Romney hemmed and hawed around an actual answer:

“At the very beginning, I indicated that I didn’t have any plans to release my tax returns and then it became clear that that was of great interest to everyone… There was such an interest in tax returns, I said, ‘Okay, I’ll do it.’ Hadn’t planned on doing it, but there’s interest, so I said I will release the tax returns when they can all be released at one time.”

This is the sound of a candidacy in crisis – a campaign that cannot anticipate fairly obvious questions and a candidate who cannot think quickly and clearly on his feet.

The media, of course, was quick to invoke the name of George Romney, Mitt’s father as well as a contender for the 1968 Republican presidential nomination.

It was George Romney, actually, who set the precedent of presidential candidates releasing their tax returns to the public. Nor did he release the return for only a year or two, but a full twelve years worth:

“He ordered up all the Form 1040’s that he and Mrs. Romney had filed over the past 12 years – including those profitable ones when he saved the American Motors Corp. from bankruptcy and became a millionaire on the company’s stock options.

Romney’s disclosure was apparently unprecedented. While other candidates had released statements outlining their income, assets and other financial data, none had ever released his actual returns.”

Now, after relegation to the role of challenger, his son has finally followed suit, releasing returns from the last two years.

To no one’s surprise, Romney earned $21.7 million in 2010, paying $3 million in taxes, and in 2011 he earned $20.9 million, paying $3.2 million in taxes. Also to no one’s surprise, his tax rate was just below 14%, thanks to the fact that the vast majority of his income was generated by investments, which benefit from a lower rate.

It seems a wonder that this tempest in a teapot managed to reach the boil it has.

When Romney spoke with NBC’s Andrea Mitchell back in December, his tax returns were just becoming an issue. When he said he would “consider” releasing the returns, Mitchell asked, “Is there some secret? People know you’re wealthy.”

This is precisely the point. It’s common knowledge that Romney is worth something in the vicinity of $200 to $250 million. Romney had also previously admitted that his tax rate was around 15%. It’s doubtful putting an exact number on his wealth makes much difference to voters. After all, rich is rich and Romney’s rich.

What I suspect the Romney camp was trying to hide was the Romneys’ $7 million of charitable giving, amounting to 14% of their income.

Normally this would be something for a 1%-er to flaunt, especially with Newt’s charitable giving at a relatively paltry 3%. But Romney’s charity comes with an asterisk: $4.1 million went to the Church of Jesus Christ of Latter-day Saints in compliance with the stipulation that members tithe 10% of their income.

Such devotion may strike many voters, even deeply religious ones, as unusual, especially since many already regard the Mormon church with suspicion.

There is no disguising that Romney is on the wrong side of the economic zeitgeist. Nor is there any disguising his commitment to his religion. So why bother? Why give himself the opportunity to fumble an issue like the tax returns that doesn’t reveal anything we didn’t already know?

Gingrich’s most recent rise isn’t due solely to the fact that this Cheshire cat seems to have nine lives. Romney has seemed muddled, botching what should be a fairly straightforward political parry – which brings us back to George Romney.

Just as George W. Bush’s presidency was painted as an effort to take care of daddy’s unfinished business, so too are Mitt Romney’s presidential aspirations characterized as both an attempt to live up to his father’s high expectations and also avoid the mistakes that doomed his bid for the presidency.

If George Romney was direct and open about his tax returns, he was direct and open about very little else. He was prone to needless gaffes – such as when he claimed receiving a “brainwashing” at the hands of U.S. generals and diplomats in Vietnam.

But he also suffered from an inability to articulate clear responses to issues. A profile in Life magazine described his style of speech as “grandiloquent waffling that so often confounds what he utters.”

The reporter described Romney’s emotional response to an item in the paper dissipating into shapeless, shifting campaign platitudes:

“As I later watched the right-minded shock he had expressed that morning slowly erode into another badly gullied public position, it struck me that this is what makes George Romney so often seem his own worst backer. For all his energy, for all his idealism – for all his loquacity – he still manages to turn self-expression into a positive ordeal.”

The lesson here extends far beyond tax returns. The younger Romney tries his best not to stray from the general platitudes of campaign-speak, which are too often sound like they’ve been filtered through a focus group. Even worse, Romney sometimes sounds like he’s impersonating someone else, a cardinal sin in a political culture that prizes “authenticity,” however manufactured.

Following his father’s example in releasing his returns was a good move, but in all other respects he should leave the Romney family campaign legacy of befuddling behind him. We all know he’s rich, and we all know he’s a Mormon. Why hide it? Without compromising his reputation for steadiness and competence Romney should be frank, forceful, and unafraid to speak freely.

I still have faith that the Newt tornado will drop his grandiose presidential ambitions somewhere over the rainbow, but that’s no excuse for Romney to play it safe.

The rise of Rick Santorum forces Republicans to confront some uncomfortable truths

Put aside Rick Santorum’s opposition to contraception, which he has described as “a license to do things in a sexual realm that is counter to how things are supposed to be.”

Put aside the not-so-subtle racism of his declaration, “I don’t want to make black peoples’ lives better by giving them somebody else’s money.”

Put aside his assertion that the right to privacy “doesn’t exist in my opinion in the United States Constitution,” blaming it for the evils of the sexual revolution, contraception, abortion, and now gay marriage.

Put aside his opposition to the Supreme Court decision that overturned state sodomy laws, claiming it meant “you have the right to bigamy, you have the right to polygamy, you have the right to incest, you have the right to adultery.”

Put aside his characterization of homosexuality as only one step above “man on child” and “man on dog” and of the Massachusetts Supreme Court’s approval of same sex marriage as “an issue just like 9/11.”

Put aside the fact that, were Santorum victorious, the innocent schoolchildren of America would never be able to Google their President’s name.

Try your best to ignore these pronouncements of radical social theocracy, and try your best not to imagine his goblin eyes of inquisition, floating disembodied above an embroidered sweater-vest, peering into your bedroom as you exercise your fictitious right to privacy.

After all, this election is all about the economy, particularly that nasty four letter word: JOBS.

Maybe, just maybe, if Rick Santorum has a plan to turn the economy around, Americans will be willing to forgive his not infrequent lapses of tolerance.

As taxes are perhaps the largest influence the government exerts on the economy – and the primary focus of this blog – a candidate’s tax plan is a useful weather vane for how they would deal with the economy.

On the scale of GOP crazy, Santorum’s tax plan actually comes in on the sane end of the spectrum, though next to Herman Cain’s 9-9-9 plan (now complete with bus tour!), Rick Perry’s postcard flat tax, and Newt Gingrich’s kitchen sink kaleidoscope, that’s not exactly much of an accomplishment.

Santorum wants to reduce the number of income tax brackets from six to two, with rates set at 10% and 28%. He advocates lowering the capital gains rate to 12% and eliminating the Alternative Minimum Tax and estate tax.

Though he professes a desire to simplify the tax code, he explicitly retains deductions for charitable giving, home mortgage interest, health care, retirement savings, and children.

On the business side, Santorum wants to cut the corporate tax rate in half, from 35% to 17.5% and eliminate all tax on manufacturers, which he claims will “spur middle class income job creation.”

What really distinguishes Santorum, however, is his emphasis on “pro-family” measures like tripling the deduction for children and eliminating what he calls the “marriage tax penalties” spread throughout the federal tax code.

Santorum’s proposals are more radical than those of main rival Mitt Romney, but what’s most striking is their brevity. The twelve measly bullet points on Santorum’s website pale in comparison to Romney’s polished tome, which takes 160 pages to elucidate exactly how his experience and proposals would benefit the economy.

Santorum is unconcerned with the finer points of economic policy. Not once does he bother to explain the benefit of his proposals with any specificity, reverting instead back to the right-wing social engineering that he insists will rescue America.

The introduction to his tax plan sounds this recurring theme:

Rick Santorum believes that to have a strong economy, we must have strong families – because the family is the first economy. Our government must recognize this and create an environment for our families, our small businesses, and our communities to thrive.

His characterization of the family as the “first economy,” absurd as it may seem, does not fall on deaf ears. It is with completely straight-faced conviction that many of his supporters believe the key to fixing the economy lies in strengthening the family.

The Republican contest staggers towards its first showdown in Iowa

Imagine if you will a latter day Rip Van Winkle awaking from a three month slumber only to be coarsely thrust in the front row at the latest of these endlessly recurring Republican debates.

Having shaken the cobwebs from his befogged head and readied it for the battering, he would surely be astonished to find that during his absence the former speaker of House, the dishonorable Newt Gingrich, had, if only for a short spell, managed to float well above his competitors in polls nationwide.

True, our Rip would have been spared the far-fetched, frankly bizarre drama of the intervening months. He will have thankfully avoided the grim spectacle of the Governor of Texas Rick Perry, the famed, perhaps coyote killer, rapidly ascending only to have his commodious chest quickly deflated by a thousand self inflicted, not to mention poorly timed fumbles of memory.

He will also have missed the Hermanator experience, the now quaint saga of a Cain raised, like the Pillsbury dough boy he was, from the warm embrace of a pizza oven for his fifteen minutes of belly poking. Mr. Cain, a self-styled leader if not much of a reader, called it quit not because his ignorance of foreign policy was farcical, but because he had failed to guard his tongue, not to say the snake in his pants, from roaming about the workplace. That 9-9-9 was a triple six after all.

Still, poor Rip would surely struggle to explain the Newt’s own serpentine trajectory. Here was Gingrich in November, a Lazarus miraculously reborn when at midsummer he lay buried with his shambolic campaign in complete disarray. And there he was by early December, shockingly high above his foes in the public’s affections, like a hoary cupid lifted on the flimsiest of wings shooting from a quiver full of garrulous nonsense.

Then, less than a week to Christmas, it was obvious that the Gingrich balloon had been called back to the frozen earth of Iowa in winter, the hot air swiftly siphoned out of it by a volley of well-pointed arrows worthy of a martial arts movie, and its pilot rudely cast down the newly minted Newt Chute. It is reported that, since the Newt’s improbable rise, Iowans have been exposed to more than 1200 commercials trashing the architect of the Contract with America.

As of last week, the former speaker’s damaged vehicle has been overtaken by, of all wobbly wagons, that of Ron Paul. The gnomish doctor has improbably caught that same recalcitrant wave of anyone-but-Mitt sentiment that first the Commodore, next Herman Cain, and finally the Newt himself had surfed on their way to a short lived advantage. It has kept the former Massachusetts governor’s flag stuck at quarter-mast since the start of the campaign.

But while his political fate has grown murky, the unexpected rise of the Newt has clearly been a boon to commentators nationwide. Newt watchers have fallen over themselves to offer words adequate to encompass Gingrich’s capacious ego and match his peerless bombast. They have documented his colorful behavior with the alacrity of ornithologists first sighting the great-billed red-tailed Australian cockatoo.

This is fitting. The candidate’s bloated head makes for an exceedingly fine target, and the more bizarre aspects of his extensive biography positively invite copious verbiage, ripe with pithy neologisms and pungent adjectives meet for a man ever eager for big new ideas, not to say fundamental transformation. So what if they don’t presently make sense? Neither do most of the former speaker’s pronouncements.

The temptation when it comes to the Newt then is always to coin still more qualifiers and see what sticks. One that oozes from the muck and seems particularly apt is amphibious. It of course puns on the speaker’s moniker, not to mention his oily smarminess, by referencing the lizard-like amphibian common in many continents. But, it also suggests Gingrich’s uncanny capacity for regeneration and, more to the point, his astounding ability to navigate both the clear air of reason and the muddy waters of total mystification.

You can file his sensible take on immigration policy or his proposal to expand nuclear energy in the reasonable drawer. His giant mirrors in orbit to ease the spookiness of nighttime driving, or all over the earth to deal with climate change, you can throw in the crazy drawer or, if you wish, in the trash along with his idea to tap the moon for mineral extraction and as a destination for, well, honeymoons.

So we already have a futurist Newt, a lunatic Newt and, really, why stop there? Gingrich is a whole village of Smurfs wrapped in one corpulent package. A recent favorite, though, has to be Newt the accidental Swiftian.

Gingrich could once have fairly been called Dickensian when he advocated in the mid-90s that the children of welfare recipients be placed in orphanages. He successfully trumped that one last month with his own modest proposal that “truly stupid” child labor laws be scrapped to allow poor kids to take over janitorial duties in schools. That would teach the little scamps the value of work and, as he put it, “fundamentally change the culture of poverty in America”. Suffer little children; the kingdom of heaven is gained through the lavatories.

Those Newtisms that don’t make it to the bracingly pragmatic or grandiosely loony bins often have the feel of the just tossed in, like a few sad radishes in a salad, usually in response to an opponent’s foray into new territory.

So it is with Gingrich’s tax provisions. Crafted or, rather, cobbled up on the tail of Cain’s catchy but vacuous 9-9-9 plan, it includes a 15% flat tax option, a decrease in the corporate income tax to 12.5% and, shockingly, an end to all capital tax gains. As Michael Mandel has shown in his fine assessment of the plan for The Atlantic, it would ensure not so much a trickle down from the richer to the poorer than a veritable gush up to the wealthiest.

But enough about the Newt: the man is a clown and it is possible he knows it. Then again, so are most of his foes under the big Republican tent, starting with the good Doctor Paul, a sinister Whiteface to Mr. Gingrich’s jocular Auguste, and the apostle of a miserly liberty, the freedom not to give a damn.

That would of course make Herman Cain this farcical court’s prancing jester, a role he’s shown himself a master at. To the redoubtable Michele Bachmann would go the trapeze bar for her ability to vault over the facts and contort the truth. As for Rick Perry, his rugged good looks and booming voice would have made for a dandy ringmaster if only he could be counted on to remember his opening lines.

This returns us inevitably to Mitt Romney, now back on top of the polls in volatile Iowa. While still notable for his garish flip-flops, which are largely to blame for his failure to close the deal with the more intransigent conservative voters, the former Bain executive is the only Republican candidate to have articulated, more or less and quite recently, a vision of what a post-Obama America would entail, one furthermore that would not involve a return to an eighteenth century of powdered wigs and silk stockings, or a space travel to a distant galaxy.

In a recent USA Today op-ed, Mr. Romney spells out the difference between the merit-based or “Opportunity Society” his administration would presumably return us to and what he calls the “Entitlement Society”which President Obama has apparently led us to:

In an Entitlement Society, government provides every citizen the same or similar rewards, regardless of education, effort, and willingness to innovate or take risk. In an Opportunity Society, free people living under a limited government choose whether or not to pursue education, engage in hard work, and pursue the passion of their ideas and dreams. If they succeed, they merit the rewards they are able to enjoy.

We’ll leave to others the task of pointing out the enormous share of crude caricature in this statement, part of what Paul Krugman has aptly called Romney’s “post-truth” campaign, which suggests that Mr. Obama has been engaged all along in the blatant socialist goal of redistribution from the worthy to the undeserving.

As Thomas Edsall rightly pointed out, there is little here that diverges from what is by now well chewed rightwing fodder, and nor is Mitt Romney alone in shoveling it out. It does suggest however that, by making his pitch to that conservative element closely tied to the Tea Party that sees the world as divided between workers and parasitic spongers, even as they themselves often benefit from government largesse, Mr. Romney has tacked hard to the right, as many predicted he would need to given his plateaued approval ratings.

What is of pointed interest in Mr. Romney’s vision, though, is actually the question it begs about opportunity and choice. Opportunity, by definition, must be taken. It implies readiness. What then of those who are unwilling, unable, or not ready to do so?

The unwilling, presumably young and able, can be compelled to grab their chance by a further ratcheting of the Welfare rules set into place by President Clinton, even if it would be unseemly to do so without simultaneously providing them with the education that Mr. Romney believes they must choose to pursue, apparently irrespective of its prohibitive cost.

But what of those who are unable because they are disabled or injured, sick or aged? What should we as Americans do with those? Are they not deserving of our Christian kindness? Should not at least some of the money garnered from our taxes go to assist them, especially as simple charity has often failed at the task?

There is little, as Thomas Edsall writes, of compassionate conservatism in the new Romney strategy, one that he now hammers at every campaign stop. We know, certainly, that Mr. Romney’s sympathy does not extend to his pet which is reported to have ridden shackled to the family car’s roof on trips due north from Massachusetts. Nor does it of course tender to the many, we assume hard-working, employees laid off by Bain & Company in its restructuring labors. Perhaps those unable to purchase a ticket on the great American gravy train should just ride on its roof.

Mr. Romney is not yet out of the kitchen, this despite the endorsements of just about every establishment figure in the Grand Old Party. But the battle lines for the coming election are now sharply drawn and it is likely that we’re rushing headlong, to echo Edsall, into a brutal ideological conflict that has will put the very definition of what it is to be an American on the table.

One World-Historical Figure’s 2012 Campaign to Transform America, Fundamentally

Take up the White Man’s burden–
Send forth the best ye breed–
Go bind your sons to exile
To serve your captives’ need;
To wait in heavy harness,
On fluttered folk and wild–
Your new-caught, sullen peoples,
Half-devil and half-child.

Newt Gingrich, “advocate of civilization,” “arouser of those who form civilization,” and “leader (possibly) of the civilizing forces,” (his words, not mine) is on a mission to fundamentally and profoundly transform America.

Newt has never been shy about his grand ambitions. “I want to shift the entire planet,” he declared to the Washington Post way back in 1985, “And I’m doing it.” Newt sees himself as “a transformational figure,” one who is “systematically purposeful about changing our world.”

In 1997 Newt was censured by the House Ethics Committee for claiming tax-exempt status for a nominally academic class called, appropriately enough, “Renewing American Civilization” at Kennesaw State College.

In its final report, the committee released documents that included notes handwritten by Newt just before his 1994 rise to power.

Among them are childlike sketches of stick figure Newts affecting change on the world as well as long megalomaniacal task lists.

On one, goals as loftily ambitious as “articulate the vision of civilizing humanity and recivilizing all Americans” and “define, plan and begin to organize the movement for civilization and the effort to transform our welfare state into an opportunity society” share space with goals as common as “diet, exercise, recreational renewal with Marianne” (wife number two, for those keeping score).

But for the last thirteen years this would-be world-historical figure has languished in a political wasteland, with nothing to do but write novels and offer Freddie Mac his humble services as a historian, to the tune of $1.6 million.

Now, at long last, like a Churchillian phoenix rising from the ashes of political exile to save a country on the brink of disaster, Newt sees the chance to strike the parenthetical “possibly” from the self-proclaimed title Leader of the Civilizing Forces.

Finally given his moment (possibly), what does Newt do to rescue his country? Not one to skimp on transformational grandiosity with his political life on the line, Newt has proposed the most radical of all Republican economic plans.

Newt one-ups his Republican competitors on the most radical elements of their platforms and throws the results  together in a delicious anti-tax schmorgesborg of radical conservative platitudes.

Take a gander at Newt.org (like fellow world-historical figures Cher and Madonna, Newt has dispensed with the absurdity of second names), and you will bear witness to a sweeping plan of fundamental transformation.

First Newt proposes extending the Bush tax cuts in 2012, pretty much par for the course for a Republican candidate. Even Romney can get unwaveringly behind this one.

Then Newt moves on to the more radical elements of his plan. He wants to end the “death tax,” get rid of all capital gains taxes, and lower the corporate tax rate to 12.5%.

By comparison, Mitt Romney – the great corporatist – wants to keep capital gains taxes at their current levels and lower the corporate tax rate only to 25%, the level generally preferred by the rest of the developed world.

But why stop there with transformational change? Newt goes on to hawk a flat tax extreme enough to make Steve Forbes blush, proposing that America transition to a 15% optional flat tax. Even Rick Perry, never one to shirk from being absurd, suggested a flat tax of 20%.

But that’s not all! As the Washington Post reports, Newt goes much further than Perry:

What’s more, Gingrich preserves deductions for corporations and rich individuals that Perry eliminates: he preserves deductions for charitable giving and mortgage interest to all Americans, whereas Perry only keeps them for families earning less than $500,000. Perry vows to eliminate all corporate tax deductions, while Gingrich would preserve them. As such, corporations and the richest Americans could stand to benefit even more under Gingrich’s plan than Perry’s.

Phew! That’s enough to stop a bereft Cain conservatives from grieving over their beloved 9% sales tax.

All of this is fine and dandy as fodder for right-wing pipe dream machine, but the annoying thing about being a world-historical figure is that you actually have to accomplish things. And this ridiculous economic plan could never pass the Democratic Senate and probably wouldn’t even gain much traction in the Republican House, so detached from reality is it. As a former Speaker of the House Newt should know this.

Furthermore, barring some miraculous economic expansion, Newt’s plan would blow a transformational hole in the national budget ($1 trillion in a single year, to be precise). Maybe he wants to shut the government down for a second time, who knows.

And just look at the political stalemate the current budget problems have created. Could you imagine Washington, even one “recivilized” by the glory of Newt in the White House, operating under that sort of budgetary strain?

An article in the Atlantic gets at the core of Gingrich’s weakness as a leader: his solution to every problem is to “fundamentally” change the federal government. Rarely does he ever delve into the specific policies and annoying details that get Mitt Romney’s blood pumping but which must realistically be dealt with in order to solve our economic problems.

His predisposition to grandiosity,

Is a tick that often causes Gingrich to propose changes so absurdly unrealistic that no reform happens. And if he ever had the time, discipline or power to implement one of his schemes in full, the unintended consequences would be epic. He’d be a uniquely awful president, whether of a large corporation or the United States, accomplishing very little, and possibly mucking up a lot along the way.

The problem is that no policy prescription can exist merely as a solution to one of the country’s problems, but must also be in service to Newt’s vision of himself as a great world-historical figure. He favors sweeping change to specificity, amputation to surgery.

But I wouldn’t worry. Newt’s hot air bubble will surely burst. Never in his life has he demonstrated the patience, moderation, and knack for compromise that make a successful politician and a good President.

The last time he had power, as Speaker of the House, he so angered fellow Republicans that he was forced from his leadership position. Resigning from the House in a huff he declared, “I’m willing to lead but I’m not willing to preside over people who are cannibals.”

Luckily for us, it’s hard to civilize when you won’t go near the cannibals.

The quad married, thrice Sports Illustrated, ex-Mrs. Billy Joel owes half a mill to Uncle Sam

There’s nothing we here at Tax Rascal love more than a celebrity tax scandal to distract us from the Tolstoyean tax drama of Congress. The latest celebrity to get on the IRS’s bad side is Christie Brinkley, the supermodel and former Uptown Girl.

The three-time swimsuit edition cover girl reportedly owes the IRS $531,000 in back taxes. In response, the government agency placed a tax lien against her Long Island home on November 21.

The New York Daily News reports that “the lien is on her address at the towered mansion on Brick Kiln Road in Bridgehampton, where she resides.”

A representative said that Brinkley “was surprised to hear today that a tax lien had been filed and has instructed her team to resolve the matter immediately.”

Ms. Brinkley herself said the lien was the “result of an error” and pledges to pay the debt in full by Wednesday. She was distracted from her finances by her parents, who are facing “serious health issues.”

With this Brinkley joins the peerless caravan of celebrity talents such as Kirstie Alley and Wesley Snipes who have made the celebrity tax scandal honor roll.

Unfortunately for Brinkley, a tax lien is one of the IRS’s harshest measures. As the blog PriorTax writes,

One of the nastiest weapons in their arsenal is the tax lien. A tax lien gives the IRS claim to your property as security or payment towards taxes owed. Your property here can mean your paycheck from which the IRS can excise a percentage of your income. Or, in the worst possible case, it can involve seizure of your home to satisfy your debt.

But Brinkley, who made her debut on Broadway earlier this year as Roxie Hart in Chicago, is reportedly worth $80 million and should be able to scrape together a measly $500,000. Ordinary folks out there aren’t always that fortunate.

If you have a tax lien filed against you and you don’t pay up, the tax man can “seize your assets and sell them at public or private sale in order to satisfy your tax debt.” As such, “ It’s not uncommon these days to hear of homes sold for back taxes.”

he best thing to do, if you owe back taxes or haven’t filed a return in past years, is to get right with the IRS to make sure the same thing doesn’t happen to you.

Former Senator Judd Gregg articulates an evolving Republican position on debt and taxes

As Tax Rascal predicted, the super committee’s negotiations failed. After months of dramatic, closed-door democracy, the panel of twelve congressmen came up empty handed.

No one was surprised.

Still, it may not have been all in vain. Of notable significance, not to say a foreshadowing of a potential sea change in Republican fiscal policy, was republican senators Toomey and Hensarling’s willingness to “raise revenue” – aka raise taxes…

And alarm bells of change are now sounding from other corners too.

Judd Gregg, a former Republican governor and senator who served as chairman of the Senate Budget Committee from 2005 to 2007, has been articulating an evolving GOP position on debt and taxes in his column for The Hill.

One of the main thrusts is a focus on efficiency and a fatigue with the current state of politics in America. From his latest column:

It is reasonably clear that the American people are tired of a Congress that does not work and a president who does not lead. They expect more from the people they elect. Even in Italy, the governing class seems to have gotten the message that it is time to act and that the march toward large debt through expanded and unaffordable government is not politically acceptable. It is difficult to believe we might need to turn to the Italians for ideas on how to govern, but without presidential leadership we seem to have come to that point.

True, potshots at President Obama are prominent. But also implicit in Gregg’s critique of Congress is displeasure with the obstructionist tactics of Boehner and his conservative cohorts.

In an earlier piece a few weeks ago he took on the reigning Republican orthodoxy head on:

In the area of political fraud…we find groups like Americans for Tax Reform. This group needs to be given a scarlet “A” for disingenuous and deceptive practices in pursuit of contributions from unsuspecting but sincere Americans.

It takes the position that the fiscal problems of our country can be cured with no revenue increases of any type at any time. Its position is that a tax code that is dysfunctional, counterproductive, internationally uncompetitive and incomprehensible is sacrosanct.

This position is taken in the name of reducing taxes when in fact it is little more than a stalking horse for the protection of tax breaks and special interest deductions inserted into the code over the years through effective lobbying by the narrow groups who benefit from these tax benefits. The effect of this is to retard the economy and the government with a code that is a burden to economic growth and reasonable and efficient revenue production.

Harsh words, considering only a few months ago the GOP seemed to be marching in lockstep to the drumbeat of the Norquist agenda. Then again, it may have something to do with the fact that Gregg has no Tea Party constituents to appease.

Gregg is clearly not intent on articulating a new Republican platform, but he may be the harbinger of an important shift in party values, especially as a resident of the influential-in-an-election-year state of New Hampshire.

Mitt Romney is betting on a boring tax plan to keep him ahead of the pack in 2012

There was a time when tax policy actually had the starring role in the 2012 Republican Presidential race.

That was before Sharon Bialek dolled up for the hungry cameras, while her attention-grubbing attorney punned lamely about “stimulus packages”, and related the tale of citizen Cain slipping a hand up her skirt and pulling her head toward his crotch.

That was also before Rick Perry fumbled the presidential pigskin once again as he let the Department of Energy slip from his addled brain with an epically infantile “Oops”.

All anyone could talk about then were Cain’s 9-9-9 tax plan and Perry’s optional flat tax, two true-blue conservative proposals that advocated uprooting the existing tax code and replacing it with some version of a flat tax.

But what of their chief rival Mitt Romney? Why no brouhaha about his tax plan?

Part of the reason may be that, compared to Cain and Perry’s catchier tax refrains, Romney’s tax plan is, well, kind of boring. Like the candidate himself, some would unkindly add.

Romney is rightly known as a details guy and his proposals certainly don’t disappoint in that respect. His economic plan, whose very title is itself a mouthful, is called Believe in America: Mitt Romney’s Plan for Jobs and Economic Growth and it is literally a book length tome. Rick Perry has even mocked it as a Tolstoy novel.

The first stand out is that Mitt Romney has not hopped aboard the flat tax bandwagon, even as he’s jumped every rightward cart heading his way. This is hardly surprising, as Cain and Perry embraced a flat tax less for the effective solutions it presented for our economic woes than as an opportunity to get to the right of Romney on tax policy.

In fact, even before the current campaign started Mitt Romney was already on record  criticizing the idea of a flat tax. Here he was hard at it as recently as 2007:

There was one aspect I thought would be troublesome, and that was the very, very wealthy, the people who sit back and clip coupons, who have very substantial investments, would pay no taxes at all. People like Bill Gates and Steve Forbes for that matter, under his plan, would pay no taxes and I don’t think that is acceptable to the American people.

War and Peace

So what is Romney’s tax plan? He is much too great a pragmatist to suggest something as extreme as completely scrapping the current tax code. Rather, he advocates maintaining the tax policies of the Bush administration, with a few minor alterations.

With respect to individual tax rates, Romney proposes making permanent the current, low marginal rates. Established by the Bush tax cuts of 2001, they are set to expire next year.

Depending on your political persuasion, this is either equivalent to maintaining the status quo or proposing a tax cut. But the fact of the matter is that Americans have lived with these rates for a decade, however temporary their real nature. If rates returned to 1990s levels, it would certainly have an effect on taxpayers comparable to an increase. In short, it would feel like a tax increase.

More controversially, Romney also wants to make permanent the low capital gains rate of 15%.

This is the rate that makes it possible for the billionaire Warren Buffett to fall under a lower tax rate than his middle-income secretary. The “tax the rich” fervor sweeping the country advocates increasing this rate the same as the marginal income tax rate. As is, the current 15% rate is seen as a major culprit in the widening economic inequality. If Romney wins the nomination, look for this to be a major point of difference with President Obama.

Helping Romney’s position somewhat is the fact that he also proposes eliminating capital gains tax on those making less than $200,000.

Romney argues that low capital gains taxes are essential to encourage “Americans to save and to invest for the long-term, which would in turn free up capital for investment flowing back into the economy and helping to facilitate economic growth.”

Romney also advocates permanently dissolving the estate tax, also known as the “death tax.”

When it comes to the corporate tax system, Romney’s proposals are a little more dramatic. He wants the top rate immediately lowered from 35% to 25%.

In his view, the current top rate is so high that it impedes America’s competitiveness on the global playing field. Indeed, the trend among OECD nations has been to lower corporate taxes. As he puts it “excluding the United States, combined statutory rates among OECD nations fell from an average of about 48 percent in the early 1980s to 25.5 percent on 2010.”

As for what some would characterize as the unfairness of lowering taxes on corporations, the Romney camp has this to say:

Worries that a lower corporate tax rate is unfair or unaffordable are fundamentally misplaced. The truth is, as Mitt Romney likes to say, “corporations are people.” They represent human beings acting cooperatively to be economically productive. Each dollar earned by a corporation is a dollar that ultimately flows in one form or another, to employees and shareholders. And those shareholders include the millions of Americans who own shares in mutual funds or who have pensions that invest in the American economy.

The question, though, is who exactly these dollars flow to. I can already see Occupy Wall Street foaming at the mouth with something like this.

Rounding up, Romney says we must “broaden the base and simplify the rules.” But whether that includes closing corporate tax loopholes is  unclear.

Romney does, however, support the transition to a territorial tax system, which would solve the problem of many companies tending to keep their profits offshore which, incidentally, is the primary means by which corporations like GE and Google have been able to avoid taxes.

The U.S. now operates under a worldwide tax system, in which corporations pay taxes in the host country. When they move that money back to the States, they have to pay to the IRS the difference between the host country’s taxes and what they would have owed here. As such, the current system amounts to a huge disincentive for companies to repatriate profits.

Under a territorial system profits are only taxed in the country in which they are earned. 26 of 34 OECD countries operate under this system. Romney hopes that removing the incentive to keep profits offshore will encourage American companies to bring as much as $1 trillion back to the U.S. and reinvest it in the national economy.

The Teflon Candidate?

This is not a tax policy proposal that’s going to get many conservatives excited. Among the current Republican field, Romney is one of the only serious candidates not advocating some sort of radical overhaul of the tax system, as this Tax Policy Center matrix makes clear.

In the recent CNBC Republican debate, moderator John Harwood tried to pin Romney down on what many see as his weak conservative tax credentials.

“You don’t have a flat tax,” Harwood said. “You’re proposing to preserve the Bush-era tax rates. What is wrong with the idea that we should go to one rate? Why do you believe in a progressive tax system?”

Romney replied, “Well, I would like to see our taxes flatter. I’d like to see our code simpler. I’d like to see the special breaks that we have in the code taken out. That’s one of the reasons why I’d take the corporate rate from 35 down to 25, is to take out some of the special deals that are there.”

This response, in a nutshell, encapsulates Romney’s approach in the primary battle, which could be summed up as one eye at the base and the other cast further off at the general electorate. He throws a few vague bones to the right and then immediately pivots to an issue more popular with independents. Later in his answer he attacks President Obama and woos the middle class but  without ever really weighing into a flat tax debate that could potentially inflame conservatives against him.

Romney is clearly banking on winning the Republican primary without ever once making a fuss, not least over his tax plan – which is why you probably haven’t heard about it. And as soon as he’s clinched the nomination, without making any major concessions to the right, he’s going to start selling his middle of the road tax plan to moderate and independent voters in the 2012 election.

By way of a startling contrast, take a look at the other Republican contenders: Herman Cain has the drastic 9-9-9 plan, Newt Gingrich touts a Perry-esque optional flat tax, and Ron Paul wants to abolish the IRS entirely. Surely if one of them did manage to surge past Romney and win the nomination, key independents would balk at their radical, conservative, hot button reform proposals.

There is every indication that tax policy will feature just as prominently in the general election, and Romney is betting his candidacy on the hope that Republicans at large will recognize his moderate strain of conservatism as the most electable.

President Obama has already voiced his opinion that the rich ought to be taxed more. Doubtless this will be the Democratic rallying cry in 2012.

The challenge for Romney is that he’s going to have to deflect criticism that he’s a candidate for the wealthy, and the GOP is effectively the party of the rich. His tax plan arguably favors wealthy individuals and corporations. Still, Romney has done a good job linking a thriving, profit-driven private sector with increased job opportunities for average Americans.

It is also, quite literally, a continuation of the Bush administration policies which, after four years of the Obama administration, is a much less damning charge than it once was.

The Promise of Stability

Perhaps the greatest strength of Romney’s tax policy proposals, and incidentally his whole candidacy, is stability. Romney aims to “keep the tax structure stable so that investors and entrepreneurs are not confronted with a constantly shifting set of rules that make it impossible for them to plan ahead.”

His conventional and comparatively boring tax proposals may end up working in his favor. I think he’s made the correct calculation that Americans are tired of economic upheaval and are going to think twice before upending the tax code.

This time around, Obama can’t just run on hope-filled rhetoric; he’s going to have to run on his record. And what most people remember, at least on taxes, are the President’s battles with Congress and the last-minute tax deal that resulted last December – a tax deal that’s only going to last for two years.

Combine this with the crisis over the debt ceiling, the stimulus package before it, and then the bailouts before that and there is an argument to be made for stability, a return to economic normalcy, if you will.

Romney might just be boring enough to pull this message off.

The super committee deadline draws near. Congress looks no closer to a compromise

The drama on Capital Hill ratchets up this week as the super committee nears the November 23 deadline by which time it must come up with $1.2 trillion in savings.

The latest development comes as Pennsylvania Senator Pat Toomey, a Republican on the super committee, offers up a GOP plan to raise $290 billion in taxes over the next ten years. That’s not a typo: a Republican senator proposes to raise taxes.

His plan cuts deductions for mortgage interest, charitable donations, and state and local taxes, targeting those who itemize deductions for a tax hike. Hardest hit will be taxpayers in the top two income brackets, those making more than $174,400.

At the same time the plan proposes reducing tax rates at every level of income, lowering the rate on the top bracket from 35% to 28% and the rate for the bottom bracket from 10% to 8%, and all the rates in between.

Unsurprisingly, Toomey’s offer has set off a round of vicious infighting within the GOP between the moderates willing to compromise on the issue of raising taxes and those staunchly opposed to any tax increase.

Already, 72 rank-and-file Congressional Republicans have sent a letter to their six colleagues on the super committee urging them not to compromise on tax increases.

Senator Toomey’s proposal is only the latest volley in a long round of back and forth between the super committee’s two partisan blocs.

Initially Democrats wanted $1.3 trillion in new revenue while Republicans insisted on absolutely no new revenue. Then Toomey agreed to accept a $300 billion increase in revenue, but only if Dems agreed to extend $3.8 trillion of the Bush tax cuts. Democrats made a counter offer of $400 billion in revenue, but only if the Bush tax cuts were shifted to the back burner.

The super committee’s Republicans are caught between a rock and a hard place, with liberals accusing them of only caring about the extension of the Bush tax cuts while fiscal conservatives condemn them for being weak on taxes.

Will there a compromise plan be reached? One, not to mention, that makes it past a Congressional vote and President Obama’s desk? Most observers of the political scene are skeptical.

Most likely the super committee, like the gridlocked and highly partisan Congress from which it issued, will punt, sending a round of default spending cuts into effect.

Does the committee have Congress’s knack for finding last minute deals on thorny budget issues? If they do come up with a compromise package, will it even matter? With the country about to enter in full-on election mode, we may not get a definitive answer on our new fiscal direction until next November.

GE’s accounting and lobbying prowess exemplifies the influence of corporations over government

Jack Donaghy, the irrepressible network executive of 30 Rock played by Alec Baldwin, may have moved to Kabletown last season, but it doesn’t sound like the real General Electric is doing too bad without him, especially in light of the news last March that GE paid zero taxes in 2010.

The top corporate marginal tax rate in the United States is 35%, nominally one of the highest in the world. And yet, thanks to corporate tax loopholes, GE paid absolutely nothing in taxes for 2010, making their effective tax rate the equivalent of zero. Not only did the company not pay taxes, they earned a $3.2 billion tax credit despite earning a whopping $14.2 billion in profits.

Why didn’t the giant corporation owe anything? Well, part of the reason GE paid no taxes is because so much of its profits are concentrated overseas. Of the $14.2 billion the company reported, $9 billion of them were parked offshore and were thus not subject to US taxes.

GE candidly revealed that the tax rate on its American profits was 7.4% – which itself is about ⅓ of what the average US multinational reports. But those taxes will only be paid if the company repatriates those profits, and since they remain offshore GE essentially gets money back.

GE also claimed that its low tax burden was due to the fact that its financial arm, GE Capital, suffered losses during the Wall Street meltdown.

While It’s true that the company posted a loss in 2009, over the last five years they have also accrued $26 billion in American profits. Yet, despite these gargantuan profits, the company’s tax burden was a net tax benefit from the IRS of $4.1 billion.

While all of this may sound felonious, it’s in fact perfectly legal. That’s because GE is a master at manipulating the political system for its own gain.

As a New York Times piece on the company noted,

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. GE’s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world’s best tax law firm. Indeed, the company’s slogan ‘Imagination at Work’ fits this department well. The team includes former officials not just from the Treasury, but also from the IRS and virtually all the tax-writing committees in Congress.

Clearly this band of experts are adept at exploiting the corporate tax code to GE’s advantage. But the secret to GE’s success also lies in the tenacity of its lobbying. Over the last ten years the company has spent $200 million in lobbying fees and has been quite successful at persuading Congress to enact new tax breaks that benefit GE first and foremost.

For instance, GE has successfully lobbied for a more generous depreciation schedule for jet engines, for green energy credits for its wind turbines, and to ensure its lucrative ability to operate a leasing and lending business abroad that is subject to few foreign taxes and and no American taxes as long as the money stays offshore, among many other tax breaks.

The tax breaks allowed by Congress are so valuable to GE that when one of the most beneficial was set to expire in 2008, the company hired a bevy of outside lobbyists, organized a letter writing campaign with other companies, and sent some of the highest figures in the company to successfully lobby Congress for the extension of the tax break.

The 99% takes on General Electric

All of this might very well  just be relegated to business as usual if not for Occupy Wall Street, which has recently shone a harsh light on the practices of America’s major corporations.

Over the last two months protesters camped out in downtown Manhattan, and in several other locations across the country, have protested the tyranny of the 1% of top income earners and the behavior of large American companies which has contributed to this percentile’s staggering earnings.

A majority of Americans support the goals of the Wall Street occupiers, but it seems to me that all their anger is misdirected. Can we really blame a business for doing everything it can to maximize profits? And should we? This after all is exactly what a free enterprise is supposed to do. The promise of increased wealth is one of the major drivers of capitalism and progress.

GE and all of the other companies and banks and financial services firms currently under siege by Occupy Wall Street are only behaving rationally, not to mention legally. They cannot reasonably be expected to forgo opportunities to increase their profits.

As such the failure to behave morally and responsibly lies not so much with the 1%, but with the politicians who enable them. Just as it is the capitalist’s duty to maximize profits so too is it the public servant’s duty to work for the good of their constituents and the good of the country, and in this they are failing miserably.

Though Occupy Wall Street is a groundswell of anger on the left, liberal politicians in Washington have done little to combat the special favors corporations like GE receive from the government.

Charlie Rangel, for example, the Democratic Congressman who represents Harlem, may stand on the floor of the House and talk sympathetically of Occupy Wall Street and make appearances at Zuccotti Park in a show of solidarity with the protests, but he himself is a guilty as anyone of giving special favors to these corporations.

When that important tax break was set to expire in 2008, John Samuels, the vice president and senior counsel of GE’s tax policy and planning department, himself was seen literally begging on his knees – in jest, a spokeswoman claimed – before Rangel, then chairman of the House Ways and Means Committee. Later the very same day, Rangel dropped his opposition to the tax break.

One month later GE donated $30 million to New York City schools, $11 million of which went to schools in Rangel’s district. He and GE’s CEO Jeffrey Immelt stood together in St. Nicholas Park while Immelt made the announcement of what Mayor Bloomberg described as the largest gift to New York City schools ever made.

In pretending to sympathize with the sentiments of Occupy Wall Street, Rangel has exposed himself as nothing but a political opportunist and rank hypocrite. This is such a shame given his reputation as one of the most honest and ethical members of Congress.

President Obama looks on approvingly as Jeffrey Immelt speaks

But it’s not just Congress. President Obama is chummy with GE as well. CEO Jeffrey Immelt advises Obama on economic matters and serves as chairman of the President’s Council on Jobs and Competitiveness.

Mr. Obama has consulted Immelt on jobs despite the fact that from 2007 to 2009 the company laid off 21,000 workers and closed 20 factories, the President’s repeated demonization of wealthy individuals and corporations who take advantage of tax loopholes to avoid paying their fair share notwithstanding.

Recently Ben LaBolt, a spokesman for the Obama re-election campaign, castigated the Republican candidates, accusing them of favoring “policies that led to our challenges, letting Wall Street write its own rules and more tax cuts for large corporations.” But this is precisely what a Democratic Congress has itself been guilty of.

For their part, Republicans are too busy kowtowing to Grover Norquist and debating about whether the semantics of “closing tax loopholes” constitutes raising taxes, which they have sworn never to do.

Even if you believe that America’s corporate tax rate should be lower, ostensibly to make American businesses more competitive with the rest of the world, I don’t think it’s possible to disagree that loopholes should be closed. The richest corporations who expend the most money on lobbying should not be allowed to carve out exemptions that benefit them. Republicans, for all their recent obsession with flat taxes, should be able to support this.

Allowing certain companies to bend the law to their advantage at the expense of others is not consistent with the philosophy of market competition and thus not consistent with capitalism itself. This too is something Republicans should approve.

Nor is it unprecedented for conservative politicians to take action to close corporate tax loopholes. In his day, the patron saint of conservatism President Ronald Reagan was opposed to GE’s extreme efforts to avoid paying its taxes. In fact one of the focuses of his 1986 Tax Reform Act was on combating loopholes that benefit financial giants like GE. According to the same New York Times article

In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that GE – a company for which he had once worked as a commercial pitchman – was among dozens of corporations that had used accounting gamesmanship to avoid paying taxes.

“I didn’t realize things had gotten that far out of line,” Mr. Reagan told the Treasury secretary Donald T. Regan, according to Mr. Regan’s 1988 memoir. The President supported a change that closed loopholes and required GE to pay a far higher effective rate, up to 32.5 percent.

Despite this achievement, in the 1990s GE had managed to lobby its tax rate back well below this line.

There is even a history among the current crop of Republican candidates of similar action being taken. Though in his rhetoric Mitt Romney has since enthusiastically jumped on the Grover Norquist bandwagon, he was himself something of a corporate tax loophole crusader during his time as Governor of Massachusetts.

Mr. Romney, despite his business background and connections, aggressively closed corporate tax loopholes, increasing state revenue by several hundred million dollars, according to a New York Times article. An examination of the period

Shows a governor who sometimes put the need to find revenues ahead of the conservative argument that tax increases almost by definition kill jobs; a shrewd financial manager who aides said was guided by a strong sense of rectitude, not just pragmatism; and a political aspirant willing to buck the orthodoxies of his own party.

For the primaries, at least, Romney has to pretend he’s a fiscal conservative and thus rarely mentions his efforts to close corporate tax loopholes. Many in Massachusetts, however, consider his actions a rare of demonstration of political courage.

I have a feeling that if Romney wins the nomination, we’ll begin to hear a lot more about this in the general election, especially if the current Occupy Wall Street discontent rises among the middle class.

In the meantime, Occupy Wall Street should try to spread some of their bright anger to Washington,  to the steps of the Capital and the White House. That’s where the real problem is.

The right wing Tea Party protests may ultimately pack more of a punch than Occupy Wall Street

Now that Occupy Wall Street is approaching the two month benchmark (and has even survived its first snowstorm), it has become common for pundits to draw comparisons between it and the Tea Party movement. Both were born of populist anger over the recession and government bailouts of U.S. banks and both have expressed that anger through showy protests that garnered considerable media attention.

Even our esteemed Vice President, never one to leave anything to subtlety, has made the connection between the two movements. Speaking of Occupy Wall Street he said, “Look, there’s a lot in common with the Tea Party. The Tea Party started, why? TARP. They thought it was unfair.”

The question now at hand is whether Occupy Wall Street will have an influence on politics in the year ahead comparable to the Tea Party’s in 2010.

The first challenge Occupy Wall Street has to overcome is one of message.

When they’re not busy dancing barefoot in drum circles, getting pepper sprayed by the NYPD, or displaying their genitalia to local residents, the protesters are busy painting signs and clacking away at their MacBooks, denouncing our political economy with lots of catchy, Don Draper-worthy slogans. The problem is that Occupy Wall Street’s multifarious demands refuse to resolve themselves into anything coherent.

Adbusters, the rabble-rousing Canadian magazine largely responsible for sparking the Occupy Wall Street movement, proposed back in July that the primary focus would be to “demand that Barack Obama ordain a Presidential Commission tasked with ending the influence money has over our representatives in Washington.” (Though in light of the super committee’s experience, a commission might not be the most effective way to end big money’s influence on politics).

Since the movement has gotten going, a great variety of complaints and demands have been made by each of its individuals. They express an opposition to capitalism, an insistent belief that 1% of the country is mysteriously controlling the other 99%, and a condemnation of inequality.

A banner on their main website even strikes a more radical, dare I say Marxist, tone: “The only solution is World Revolution.” The movement’s General Assembly proudly states its preference for democratic expression over unity.

One girl, epitomizing critiques of Occupy Wall Street’s demands, carried a sign that read, “Close corporate tax loopholes, tax religious groups, end the wars, legalize weed, and bring back Arrested Development” (well, at least she got her last wish).

Diversity and a lack of a central organization are not necessarily weaknesses. Many people forget that the Tea Party was, and in many ways still is, a highly diverse political movement. In February 2010, the New York Times noted:

It is an amorphous, factionalized uprising with no clear leadership and no centralized structure. Not everyone flocking to the Tea Party movement is worried about dictatorship. Some have a basic aversion to big government, or Mr. Obama, or progressives in general. What’s more, some Tea Party groups are essentially appendages of the local Republican Party. But most are not. They are frequently led by political neophytes who prize independence and tell strikingly similar stories of having been awakened by the recession.

The similarities between the two young movements are striking, even if there are demographic differences. The Tea Party is more male, older, and a little better off. As Newsweek put it, the Tea Party “is a revolt of middle-class ‘haves,’ but ‘haves’ who fear that their hold is slipping.” Almost half of Occupy Wall Street, by contrast, makes less than $25,000 and another quarter between $25,000 and $50,000.

There is one area, however, in which the Tea Party movement was never particularly conflicted: the end goal of a smaller government. Whatever disparate concerns drew people to the Tea Party, they were united in their belief that the government was the problem. Individual liberty and free enterprise would solve the nation’s problems.

It’s incredibly easy for conservatives to rally behind a banner of Don’t Tread on Me as a cure all for a vast range of ills. For liberals who believe that greater government intervention is necessary to counteract capitalist excess, it’s much harder to decide where, or on whom, to tread.

No taxation without representation

Tax Rascal was correct in predicting that taxation would be the defining issue of this political cycle and these two political movements are no exception. Their positions on taxation highlight the larger differences in the nature of their demands.

Tea Party politics is clear in its opposition to taxation, of any sort, for anyone. The Occupy Wall Street movement is generally unified as well behind the slogan “Tax the Rich.” According to recent polling, ¾ of the protesters support higher taxes on the rich. In the general American public that number is ⅔, suggesting that Occupy Wall Street could have some resonance.

The difficulty, of course, becomes who to tax exactly. Warren Buffet and President Obama beat the Occupy Wall Street movement to the generally popular idea of taxing the rich, but stumbled when it came to the question of who was rich.

When you stick to generalities, such as the vague idea of a taxing the rich, the proposed measures find much support. But as soon as you begin to define the cutoff for rich at a million dollars, or at $250,000, or $200,000 you are walking into a minefield.

No one is going to deny that Warren Buffet is rich, but what about a small business owner making $200,000 a year? What about a Manhattan family making $250,000. Are these people millionaires? Are they even rich?

These are questions that have been raised before and they are questions that will have to be answered if there is ever to be any practical policy outcome from all of these protests. I’m willing to bet that Occupy Wall Street has a harder time defining rich than the Tea Party did in rallying behind the banner of a lower tax burden.

Nor is Occupy Wall Street’s vilification of the financial sector as simple as it seems. It’s easy to target Lloyd Blankfein, Goldman Sachs’s chairman and chief executive officer, for earning $19 million last year, a raise of 50% from the year before. And it’s easy to vilify JPMorgan’s Jamie Dimon for making $23 million.

But Wall Street is not the land of financial milk and honey that many of these protesters seem to think it is. Wall Street is hurting too, maybe not as much as other sectors of the economy, but hurting nonetheless. A recent article in Slate pointed out the weakened state of the financial industry:

Consider the data provided in an analysis of New York’s financial industry by Thomas Di Napoli, the state comptroller. This week, he wrote that profits “declined 10.8 percent in the first half of 2011 to $12.6 billion. [This office] forecasts that profits are unlikely to reach $18 billion for the entire year.” Eighteen billion sounds like a lot! But, he notes, it is just one third of the profits the banks were making back in 2010.

Financial firms are, not surprisingly, throwing employees overboard, DiNapoli reports. “The securities industry could lose an additional 10,000 jobs” in the next year, he writes. Add that to job losses in the banking sector, and the overall industry will have eliminated one in five of its New York-based jobs since 2008. Looking beyond New York, the numbers get even worse. Bank of America is shedding a whopping 30,000 positions. Even Goldman Sachs – the same Goldman Sachs boasting about its all-time record profits 18 months ago – is shedding 1,000 workers.

I’m not saying these overpaid executives aren’t culpable. I’m sure the 1000 people now out of work wished Lloyd Blankfein were making a lot less than $19 million. Some of these laid off workers are probably now in a more precarious position than the protesters (or the parents I would guess support a great deal of them).

My point is that any attempt to vilify a broad group of people, or hold them accountable through increased taxation, is going to run into pitfalls when you have to make decisions about who exactly should pony up. It’s a lot easier to demand to be left alone than it is to demand to be taken care of.

This is precisely the problem that positive rights have had in achieving the same status as negative rights. Negative rights, which emphasize freedom from interference from others, are relatively easy to demand, but positive rights, which assert that people are entitled to certain goods and services which must then be appropriated from others, are notoriously difficult to establish and enforce.

All politics is local

Ultimately, though, even a refinement of Occupy Wall Street’s message won’t matter so long as its tactics remain estranged from the electoral process.  A recent poll of the protesters revealed that a plurality (35%) of them hope for the Occupy Wall Street movement to “influence the Democratic Party the way the Tea Party has influenced the GOP.”

Tip O’Neill’s old adage “All politics is local” suggests that unless Occupy Wall Street shifts focus, its influence on electoral politics will be limited. New York is already one of the most liberal states in the country and New York City is one of its most liberal locales. Occupy Wall Street could conceivably push the city’s politics to the left, but this would have little effect on Congressional math.

The Tea Party movement was so effective because it got its start at the local level. In 2009 loose Tea Party organizations popped up in cities across the country, forming coalitions with other conservative groups.

The same New York Times article noted that “At the grass-roots level, it [the Tea Party movement] consists of hundreds of autonomous Tea Party groups, widely varying in size and priorities, each influenced by the peculiarities of local history.” Tea Partiers convened on major cities such as Washington for marches, but, in accordance with their federalist views, they were fundamentally local organizations, willing to play local politics.

Tea Party activists showed up in force at local Republican primaries, demonstrating absolutely no remorse at cannibalizing more moderate conservatives. Part of its effectiveness was its willingness to target Republicans, such as long-time Senator Robert Bennett of Utah who lost out in the primary in no small part because Tea Party activists would physically show up at his events taunting him with jeers of “TARP, TARP, TARP.”

Such enthusiasm carried over into general elections and was one of the reasons Republicans were able to recapture the House.

Part of the problem with Occupy Wall Street is that it is protesting non-political entities. The banks are not going to implement any of the changes the protesters demand. Since executives answer to their investors and not to the public, a protest is easily ignored.

Occupying Washington, or better yet the ballot box, makes much more sense. The Occupy movement has spread to other cities, though Occupy Oakland is hardly the heartland. There is a move, though to take the Occupy movement to the Iowa caucuses. It’s action like this that give it a chance of rivaling the Tea Party.

If Occupy Wall Street moves into the battleground states that really make a difference, it might yet be able to exert electoral influence. If it wants to be successful, it needs to stop occupying Wall Street and start occupying Main Street.