Bush versus Buffett May 22, 2003February 23, 2017 As many of you noted in sending me the link, this is too good not to just reprint the whole thing. I hope Warren and the Washington Post will forgive me. Dividend Voodoo By Warren Buffett Tuesday, May 20, 2003; Page A19 The annual Forbes 400 lists prove that — with occasional blips — the rich do indeed get richer. Nonetheless, the Senate voted last week to supply major aid to the rich in their pursuit of even greater wealth. The Senate decided that the dividends an individual receives should be 50 percent free of tax in 2003, 100 percent tax-free in 2004 through 2006 and then again fully taxable in 2007. The mental flexibility the Senate demonstrated in crafting these zigzags is breathtaking. What it has put in motion, though, is clear: If enacted, these changes would further tilt the tax scales toward the rich. Let me, as a member of that non-endangered species, give you an example of how the scales are currently balanced. The taxes I pay to the federal government, including the payroll tax that is paid for me by my employer, Berkshire Hathaway, are roughly the same proportion of my income — about 30 percent — as that paid by the receptionist in our office. My case is not atypical — my earnings, like those of many rich people, are a mix of capital gains and ordinary income — nor is it affected by tax shelters (I’ve never used any). As it works out, I pay a somewhat higher rate for my combination of salary, investment and capital gain income than our receptionist does. But she pays a far higher portion of her income in payroll taxes than I do. She’s not complaining: Both of us know we were lucky to be born in America. But I was luckier in that I came wired at birth with a talent for capital allocation — a valuable ability to have had in this country during the past half-century. Credit America for most of this value, not me. If the receptionist and I had both been born in, say, Bangladesh, the story would have been far different. There, the market value of our respective talents would not have varied greatly. Now the Senate says that dividends should be tax-free to recipients. Suppose this measure goes through and the directors of Berkshire Hathaway (which does not now pay a dividend) therefore decide to pay $1 billion in dividends next year. Owning 31 percent of Berkshire, I would receive $310 million in additional income, owe not another dime in federal tax, and see my tax rate plunge to 3 percent. And our receptionist? She’d still be paying about 30 percent, which means she would be contributing about 10 times the proportion of her income that I would to such government pursuits as fighting terrorism, waging wars and supporting the elderly. Let me repeat the point: Her overall federal tax rate would be 10 times what my rate would be. When I was young, President Kennedy asked Americans to “pay any price, bear any burden” for our country. Against that challenge, the 3 percent overall federal tax rate I would pay — if a Berkshire dividend were to be tax-free — seems a bit light. Administration officials say that the $310 million suddenly added to my wallet would stimulate the economy because I would invest it and thereby create jobs. But they conveniently forget that if Berkshire kept the money, it would invest that same amount, creating jobs as well. The Senate’s plan invites corporations — indeed, virtually commands them — to contort their behavior in a major way. Were the plan to be enacted, shareholders would logically respond by asking the corporations they own to pay no more dividends in 2003, when they would be partially taxed, but instead to pay the skipped amounts in 2004, when they’d be tax-free. Similarly, in 2006, the last year of the plan, companies should pay double their normal dividend and then avoid dividends altogether in 2007. Overall, it’s hard to conceive of anything sillier than the schedule the Senate has laid out. Indeed, the first President Bush had a name for such activities: “voodoo economics.” The manipulation of enactment and sunset dates of tax changes is Enron-style accounting, and a Congress that has recently demanded honest corporate numbers should now look hard at its own practices. Proponents of cutting tax rates on dividends argue that the move will stimulate the economy. A large amount of stimulus, of course, should already be on the way from the huge and growing deficit the government is now running. I have no strong views on whether more action on this front is warranted. But if it is, don’t cut the taxes of people with huge portfolios of stocks held directly. (Small investors owning stock held through 401(k)s are already tax-favored.) Instead, give reductions to those who both need and will spend the money gained. Enact a Social Security tax “holiday” or give a flat-sum rebate to people with low incomes. Putting $1,000 in the pockets of 310,000 families with urgent needs is going to provide far more stimulus to the economy than putting the same $310 million in my pockets. When you listen to tax-cut rhetoric, remember that giving one class of taxpayer a “break” requires — now or down the line — that an equivalent burden be imposed on other parties. In other words, if I get a break, someone else pays. Government can’t deliver a free lunch to the country as a whole. It can, however, determine who pays for lunch. And last week the Senate handed the bill to the wrong party. Supporters of making dividends tax-free like to paint critics as promoters of class warfare. The fact is, however, that their proposal promotes class welfare. For my class. The writer is chief executive officer of Berkshire Hathaway Inc., a diversified holding company, and a director of The Washington Post Co., which has an investment in Berkshire Hathaway.
Your Government at Work May 21, 2003January 22, 2017 My cousin Nan wrote this disheartening little guide to becoming a judge. If it rubs you wrong, hie yourself over to democrats.org and sign up. Everyone knows the President’s flying 30 miles out to sea – to an aircraft carrier they had had to slow down so it wouldn’t reach port before he got there – was a photo op designed for later campaign footage, courtesy of the taxpayer. But was the wonderful Jessica Lynch rescue a cynical photo op, too? If so, is this acceptable? Is there a pattern here? Should the news media scream bloody murder for having been manipulated this way? Should anyone be demoted for deceiving the taxpayers who pay their salaries? Click the BBC report and see what you think. (Or click here for the LA Times‘ take.) Verbatim from the Washington Post: “I don’t believe anyone that I know in the administration ever said that Iraq had nuclear weapons.” – Defense Secretary Donald Rumsfeld, May 14, 2003 “We believe he has, in fact, reconstituted nuclear weapons.” – Vice President Dick Cheney, March 16, 2003 Tomorrow: Warren Buffett (Always) Says It Best
My Stupid $20.91 Bill May 20, 2003January 22, 2017 But first this good news . . . A lot of you must have clicked May 6 to tell the Bush Administration how upset you were it would thumb its nose at 191 nations and obstruct the world treaty on tobacco. Your protests, combined with what were doubtless hundreds of thousands more – and just common sense and decency – got the Administration to reverse itself. Read all about it. And now . . . I have this stupid $20.91 monthly bill I get, and now that CheckFree has finally abandoned us Managing Your Money die-hards, I actually had to write a check. Gad, the indignity. Do they even still make paper checks? Talk about retro! But sure enough, I do still have a checkbook and a pen, and I wrote it for $209.10 instead of $20.91 to save my having to do that again for 10 months. Ah, you wonder – has he loosened his grip? Or lost it altogether? Why would anyone pay his bills a day earlier than necessary, let alone nine months early? But behold: Paying nine extra payments saved me 9 stamps at 37 cents each = $3.33. Assuming my time is worth nothing (which is, after all, what you pay me for it), $3.33 is the only advantage I get from writing one big check instead of 10 little ones. But what an advantage! I have tied up an extra $188.19 (on top of the $20.91 I would have had to pay anyway), and earned $3.33 by doing it. Yes, that is only 1.77% ‘interest’ on the money I tied up, but wait! It is tax-free (the government does not tax you on money you saved on stamps) and, more to the point, I didn’t have to wait a whole year to get it. With each passing month that I would have had to pay $20.91 anyway, that initial extra $188.19 that I tied up becomes $20.91 less. It works out to a compounded annual risk-free, tax-free 4.23% rate of return – which these days ain’t half bad. Not to mention the little bit of time and drudgery saved each month. Yes, if your automatic bill payment service charges you no fee, it’s smarter just to pay as you go – you save nothing by paying faster. But what if the checks themselves cost you a dime apiece? Now you’re really talking big bucks: you save an additional 90 cents, and the return jumps to 5.36%. Of course, if it’s a $70 cable bill you pay this way (let alone a $1,700 monthly mortgage), you might not be so cavalier. But on the cable bill, if not the mortgage, you might at least pay one extra month. If you paid $140 in a lump instead of $70 twice, you’d save 47 cents by tying up an extra $70 for a month – a dime on the check and 37 cents on the stamp. That’s an 8.06% tax-free, risk free rate of return on your money. Pay triple instead of double, so you need write a check only every third month and, using the same stamp and dime-a-check assumption, your annualized rate of return drops to 5.37%. Note: you needn’t restrict this practice to fixed monthly charges. If you’re phone bill runs you about $45 a month, you could pay $145, figuring that would likely carry you three months with a little left over. The phone company will just credit you with the difference. Note: If you run credit card balances, for heaven’s sake pay them off before doing this kind of thing. Note: This obviously isn’t really about the rate of return – no matter how high the rate, you’re still saving only pennies. Rather, it’s about helping you to save a little time, and feel smart doing it. Note: The best way to save time, in many instances, is by setting up recurring bills to be deducted automagically from your credit card (if you don’t pay credit card interest) or from your bank account (if you do). Many merchants offer this option. Final Note: No more check writing for me. Because I had been using CheckFree through Managing Your Money for a decade, I was able to sign on to Quicken Bill Pay in just a few minutes, and found all my payees and transaction history sitting neatly on line. The service no longer integrates with MYM, but I can live with that. And because Quicken charges 50 cents a transaction (if memory serves), much of the above math can still make sense.
Monday Fun May 19, 2003February 23, 2017 Michael Axelrod: ‘My new Honda Accord has a navigator, and it’s amazing. I got the car in April and it knew about the recent closing of the Fell Street off-ramp in San Francisco and deftly directed me through city streets to my destination. It seems to know the position of your car to within about five feet. It has an amazing knowledge of the local streets in the Bay Area. It’s also comforting to know that if you day dream a little while driving (who doesn’t), it will remind you of when to turn. One time I made a mistake and turned when I should not have. In less than 20 seconds she said, ‘Make a U turn!” ☞ And speaking of Hondas, you don’t have to buy one to enjoy their latest ad. Click here. Rube Goldberg to a factor of 100.
My Woman May 16, 2003March 25, 2012 When I went to get into my new white Volvo, she was already in the car. This was a new experience for me. My first stop was a restaurant in suburban Boston to meet with a donor one of the kindest, most generous men in the world. (Winner, along with folks like Bob Hope, Jimmy Carter, and Ronald Reagan, of the United Ways Alexis de Tocqueville Award. Flies coach. Chose a nice Italian restaurant in a strip mall next to his dry cleaner.) I told her the address of the restaurant. "Right turn followed by slight left turn," she said in a pleasant voice. But Logan Airport is a mess of barricades, detours and temporary ramps, and I wasn’t sure which right turn she meant. "Continue on current road," she said, as I approached a choice. This took me back to the terminal. "Recalculating route," she said, leaving me to decide between Arrivals or Departures. "Left turn in point four miles, followed by slight left turn," she said. "Left turn." "No, not THERE," she said. "What are you DOING?" she said. I was just following signs for Airport Exit. This was making her completely crazy. "What are you DOING?!!" she moaned one more time before crashing. (She crashed, not me, although in my Volvo, I would surely have been safe.) Eventually I reached a known stretch of road where, after rebooting, she got her bearings and directed me safely to my strip mall. You have arrived, she said, with maybe I was imagining this, but I felt I detected a tone that implied, and good riddance. Wait in the car, I said, as I went in to dinner. I dont know whether it was the good company that warmed me up to her when I returned, or her determined professionalism that took the exasperation out of her voice, but somehow we began to get along. I played some classical music for her and she guided me from the strip mall to the Concord, New Hampshire, Courtyard By Marriott, where I would be addressing 200 JumpStart high school teachers the next morning. She got me there without a flaw. I left her in the car anyway you know how I am and didnt come back until lunch the next day, after my speech. On to a little town just past Dartmouth for another donor dinner, then back to the Hertz Car Return at Logan, again without a flaw. I am sold on this woman. The Volvo was too big and too white, but this woman? Despite our rocky start, Ill never again leave home without her. Thanks, babe !
24 Hours May 15, 2003March 25, 2012 It has come to my attention that there are only 24 hours in a day. This is wreaking havoc with my schedule. Yesterday’s column was too long by half anyway. Please use today to read that half. (Is anyone working on a remake of Fantasia? The Sorcerer’s Apprentice scene with e-mails instead of buckets of water?)
Four Things May 14, 2003February 23, 2017 I had hoped to tell you about the new woman in my life, but I am still writing that, so today I have four completely unrelated things to offer: BARTLETT’S VIA BART BARKER’S BARTLEBY Bartleby, you will recall, was a scrivener. What do you imagine he would have made of this handy link to Bartlett’s Familiar Quotations and so much more? (Thanks to Bart ‘Bartleby’ Barker for the link.) UNTROUBLED WATERS Did you know that Dartmouth, which is in New Hampshire, is virtually in Vermont? A short walk? And that Vermont and New Hampshire are kept apart by the Connecticut River? Like, they had to bring in Connecticut to keep the two from coming to blows? How cool is that! You go, little ol’ Nutmeg State! TROUBLED TEXANS So you’ve probably read that the Democrats in the Texas legislature have fled to a Holiday Inn in Oklahoma to deny their colleagues a quorum. This is more than a merry prank, because it goes to the Republican plan to retain and increase control over all three branches of the Federal government. The idea is to redraw the Texas Congressional districts – which were just redrawn two years ago after the 2000 Census – in order to give the Republicans 7 more seats in the United States House of Representatives. “The GOP plan could cement the Republican Party’s hold on power in Washington,” the Los Angeles Times reports in a truly fascinating story (even though you have to register to read it) that gives you some sense of what’s going on here. ‘In a ploy audacious even by the standards of Texas politics,’ the LA Times reports, ‘one of the GOP’s new congressional districts would be composed of two Republican-leaning areas, one north of Austin and one in the Rio Grande Valley – 300 miles away. The two areas would be connected by a mile-wide ribbon of land.’ Even this would be fun and games if there were not so much at stake in the different governing philosophies of the two Parties. One is mainly concerned with cutting government and avoiding taxes on the Best Off at almost any cost; the other takes (I would argue) a more balanced view. Take Texas again (home not long ago to George W. Bush and Dick Cheney), facing a $10 billion budget deficit, and not about to subject its most fortunate citizens to even a penny of sacrifice. Republican leaders in Texas ‘have proposed, among other things, reclassifying 56,000 elderly and disabled people so they are no longer ‘frail’ – making them ineligible for Medicaid,’ the Times reports. Just what the doctor ordered. And ‘an estimated 250,000 children from low-income families would be removed from the rolls of the Children’s Health Insurance Program. Money set aside to replace antiquated textbooks in public schools has been cut, and teachers’ health insurance benefits are expected to drop considerably.’ You go, Texas Republicans! If that’s not enlightened leadership, I don’t know what is. FINALLY, IF YOU WERE WONDERING WHERE THE LIBERAL PRESS IS . . . . . . read Paul Krugman. He thinks he knows why it’s largely gone AWOL.
Four Voices: Three Strong, One Weak May 12, 2003February 23, 2017 Michael Kinsley, as usual, says it best. Enjoy – Bill Bennett one more time. (Or, as Harry Mark put it to me in an e-mail: ‘Years ago, as DRUG CZAR, Bennett laughingly dismissed his three-pack-a-day nicotine addiction as no big deal. He also looks like he doesn’t miss too many meals. And he peddles moral hooey at $50K a pop to enable a gambling problem. Virtue? Self-control?’) Greg Palast says it most urgently. Be troubled – could the right wing be as bad as he says? It seems so ungentlemanly to suggest the things he does. We’d rather not think any of these things. But if you read Blinded By the Right – David Brock’s apology for the rightwing conspiracy he was a central player in – it’s no great stretch to credit the deeply troubling allegations in Palast’s book, too. John Snow, our Treasury Secretary, says it most spuriously – all over the Sunday morning talk shows yesterday. Be bearish. I have no transcript to link you to, but here’s what he says: What we need is the biggest possible tax cut, on top of the gigantic 2001 tax cut we already enacted. And no, we shouldn’t be worried about the giant budget deficit. That is something he used to decry. Not now. Now it’s imperative to give multi-millionaires a big tax cut – and average folks, little or nothing – because these multi-millionaires will go out and buy the refrigerators, SUV’s and gardening equipment they’ve been dreaming of but couldn’t afford … and that will spur demand and create jobs. (You know, you can blame our weak economy on business cycles, if that’s what you believe – but on whom do you blame our weak Treasury Secretaries?) Paul Krugman says it over and over again – and thank heavens he does. Even Tim Russert seems finally to be listening. Krugman gets the last word. # PS – Between Kinsley, Palast and Krugman, this is three columns in one, even if I didn’t write any of them. My contract calls for me to take tomorrow off.
Up 63% on a Filibuster May 9, 2003January 22, 2017 Listen. I know a lot of you are annoyed or lose interest when I stray from personal finance. I mean, it’s one thing to stray to write about interesting vegetables, quite another for me to mount my political soap box and decry the Bush economic policies that, I think – but some of you don’t – are just tragically misguided. That’s one reason I do try my best to suggest what I think could be a helpful investment idea from time to time – not that there’s ANY assurance of success. But the little batch of stocks I suggested last July is up 38% or so, and the even littler batch of bio-techs from last September is up 63%, and I can’t find other batches I’ve suggested that have gone down dramatically (please do not be shy about refreshing my selective memory, which I promise to share with the group) . . . and, truthfully, this makes me quite nervous because, as I’ve mentioned in the past, it’s just when one begins to think one is given to occasional spasms of reasonably good judgment, that the market – which is smarter than any of us, believe me – whips around and bites one in the butt. The point is, I’m not insensitive to the views of people like Donald, who wrote me earlier this week, ‘Your columns are beginning to suck.’ But how can I write about vegetables (I still owe you a column on radishes), when I think this country we all love so dearly is taking wrong turn after wrong turn. (We really want to favor the tobacco industry over the desires of 191 nations for world health? We really want to borrow trillions of dollars from future generations to finance tax cuts for people who least need them? We really want to erode the separation of church and state?) It is in that spirit, and for those of you with a little time this weekend and an interest in such things, that I offer you Ralph Naes’s latest memo with regard to the fight for the Judiciary. (Ralph heads People for the American Way.) A lot of people don’t even know this fight is going on (which is fine with the Bushies, believe me), let alone know the details. But the details are compelling, and the outcome will significantly impact the kind of country we become. And judges are appointed for life, so this can’t get fixed for a long, long time once it goes wrong. So here’s Ralph. I have taken the liberty of highlighting in red a few phrases I thought might help to catch your eye. Have a great weekend. May 6, 2003 To: Journalists Fr: Ralph G. Neas Re: GOP Leaders Try to Create Constitutional Cover for Illegitimate Power Play The Senate Judiciary Committee’s Constitution, Civil Rights and Property Rights Subcommittee is holding a hearing today “to examine judicial nominations, filibusters, and the Constitution, focusing on when a majority is denied its right to consent.” It appears that the hearing is an effort to create the illusion of legitimacy for an outrageous scheme to eliminate an important check and balance on the administration’s court-packing efforts in advance of future vacancies on the Supreme Court. Republican threats to “go nuclear” and put an end to long-established Senate practice, rules, and precedents are extraordinary in light of the success that President Bush has already had in making his mark on the federal judiciary. In the two years since President Bush named his first nominees to the federal bench, the U.S. Senate has confirmed 120 Bush judges, including 100 who were confirmed with the Senate and the Judiciary Committee under Democratic control. Since Republicans regained control of the Senate this year, Democrats have used the filibuster – a longstanding Senate procedure requiring a supermajority to cut off debate on important topics – to block only two controversial appeals court nominees, while a number of other nominees have been permitted a full floor vote in spite of intense opposition. Amidst the talk of crisis and a broken system, one important fact is being overlooked: there are currently only 49 vacancies in the federal judiciary, less than half of the 111 vacancies that existed when the Democrats took control of the Senate in July 2001. In spite of the rapid approval rate for Bush’s judicial nominees, Republican leaders’ fury that even two nominees have been stopped by Democratic filibusters has led to a series of remarkable efforts to unilaterally change longstanding rules and to abrogate bipartisan agreements in order to undermine the ability of the minority party to provide any real check on the administration’s efforts to create a federal judiciary dominated by committed right-wing ideologues. Perhaps the most potentially far-reaching is the effort to declare the use of the filibuster to be unconstitutional when applied to judicial nominees. The astonishing claim that the use of the filibuster is unconstitutional – although it has been used by Republicans and Democrats alike for decades – is a short-sighted strategy for undermining the Senate’s traditional role as the more deliberative House of Congress and for removing one of the only checks on the abuse of power by the majority Party, with respect to the issue of judicial nominations. The Curious Champions of a Constitutional Right to a Senate Floor Vote It is a remarkable display of hypocrisy for Republican leaders, including senators like Orrin Hatch, to suggest that use of the filibuster to prevent final votes on judicial nominees is unconstitutional. The historical record is clear that the filibuster has been used by both Republicans and Democrats with respect to controversial judicial nominations. In defending a Republican-led filibuster on a judicial nomination in 1994, Hatch himself explained that the filibuster is “one of the few tools the minority has to protect itself and those the minority represents.” Moreover, during the Clinton administration, Senate Republicans blocked dozens of Clinton nominees with much less open and accountable procedures like secret holds. Fully one-third of Clinton’s appeals court nominees from 1995 through 2000 were kept off the bench – many without even a hearing or committee vote – while others were delayed for as long as four years. How can it be constitutional for a committee chair to stop a nominee by refusing to hold a hearing, or for a secret hold by a single Republican senator to prevent a nominee from moving forward, but unconstitutional for 41 Democratic senators to prevent a final vote using a public Senate procedure specifically designed to protect the rights of the minority? It is clear that the answer has nothing to do with the Constitution and everything to do with the politics of power at all costs. It is simply amazing for Sen. Hatch and his colleagues to make this argument with a straight face. Senate Majority Leader Bill Frist was among those voting against cloture on the nomination of Richard Paez in 2000. Yet now Frist says, “If filibusters are going to be made part of the judicial nominee process, I think you will see increasing discussion over whether the rules should be changed.” Frist and others have even suggested taking the constitutional question to the Supreme Court, a separation of powers nightmare that seems implausible at best. Former Senate Majority Leader Trent Lott has told reporters that he has devised a strategy that could bypass the filibuster and force approval of nominees with only 51 votes, describing his idea as “nuclear.” Although Sen. Rick Santorum has suggested that the Democratic filibuster against Estrada “set a dangerous precedent” and that Democrats have “changed the rules,” it is clear that it is Republicans who are seeking to change the rules and make a dramatic break with history and Senate tradition. Republican Sen. Richard Lugar explained in 1993 that it is “a function of our Constitution that minorities are protected in many, many ways,” and that this is part of the rationale for the continued existence of the filibuster. Some Republicans have wrongly asserted that there has been only one filibuster against a federal judicial nomination, the successful Republican filibuster of Supreme Court nominee Abe Fortas in 1968. In fact, cloture votes have been required to end debate on a number of judicial nominations. According to the Congressional Research Service, cloture motions have been filed and cloture votes held on 14 Court of Appeals nominations since 1980; as recently as 2000, cloture votes were necessary to obtain votes on the nominations of both Richard Paez and Marsha Berzon to the Ninth Circuit. Sen. Bob Smith openly declared he was leading a filibuster, and he described Sen. Sessions as a member of his filibuster coalition. Democrats have also demanded 60 votes for controversial nominees, such as Edward Carnes, who was nominated to the Court of Appeals for the 11th Circuit in 1992. Over the years, there were many other attempted filibusters that did not result in a cloture vote. The current situation – with one party dominating the White House and Congress in spite of a narrowly divided national electorate – demonstrates why our constitutional framework was designed as a system of checks and balances. The filibuster is now virtually the only tool that Senate Democrats have at their disposal to try to force the administration and the Republican Senate majority to engage in bipartisan consultation, compromise, and cooperation on judicial nominations. If a demand for 60 votes is legitimate with respect to legislation that future Congresses can revisit, it is even more appropriate when considering lifetime appointments to powerful positions on the federal judiciary. Historical Revisionism and Bogus Constitutional Theory The primary legal theory being put forward by right-wing legal scholars and activists to support their claims rests on bad logic, bad law, and bad history. Conservative legal pundit Bruce Fein, scheduled to appear at Tuesday’s hearing, is among those arguing that requiring a supermajority to cut off debate on judicial nominations is impermissible. Such an interpretation defies the language of the Constitution and the history of the Senate. In fact, Article I, Section 5 of the Constitution clearly states that each House of Congress would make its own rules. In some areas, the framers of the Constitution did take some matters out of the hands of Congress by requiring, for example, two-thirds of the Senate to approve international treaties. Requiring a majority vote to approve matters is in essence a parliamentary floor, not a ceiling. Nowhere in the Constitution is there a requirement for a simple majority for votes on nominations. In fact, it wasn’t until 1917 that there was any way other than unanimous consent to cut off debate on issues, including judicial nominations, and bring them to a vote. In that year the very first cloture rule was adopted — two thirds of the Senate present and voting required to invoke cloture and force a vote on a measure. For the past 54 years, the Senate has required a super majority of the entire Senate (ranging from 3/5 to 2/3) to bring judicial nominations or legislation to a vote. Never in our history as a nation have we authorized a simple majority to force a vote in the Senate on a judicial nomination or any other matter. There is certainly no justification for doing so now. The Senate was in fact designed to be the more deliberative body, where extended debate would be a check on potential abuses by the party in power. That characteristic of the Senate has often been lauded by conservatives in the past. Contrary to what George Will is suggesting now, in 1993 he wrote, “[T]he Senate is not obligated to jettison one of its defining characteristics, permissiveness regarding extended debate, in order to pander to the perception that the presidency is the sun around which all else in American government – even American life – orbits.” Back then Will also wrote that “Democracy is trivialized when reduced to simple majoritarianism – government by adding machine. A mature, nuanced democracy makes provision for respecting not mere numbers, but also intensity of feeling.” (Washington Post, April 25, 1993). Although most observers consider it unlikely that the Supreme Court would accept a case about internal Senate rules, the Court did uphold the principle of supermajorities in a case involving local voting rules requiring a majority of 60 percent to pass a measure. The Court’s ruling stated: “Certainly any departure from strict majority rule gives disproportionate power to the minority. But there is nothing in the language of the Constitution, our history, or our cases that requires that a majority always prevail on every issue.” Gordon v. Lance, 403 U.S. 1 at 6 (1971) As has been noted earlier, filibusters have been used by both Republicans and Democrats against judicial nominations and many types of legislation. During the Clinton administration, Republican senators filibustered a number of legislative initiatives, including an economic stimulus package, campaign finance reform, lobbying reform, health care reform, striker replacement legislation, and racial justice provisions in a crime bill. Would Republicans now argue that these efforts were unconstitutional because they are not explicitly permitted in the language of the Constitution? The framers of the Constitution showed wisdom in specifying certain matters in which particular super majorities would be required and in all other areas allowing Congress to set its own rules. When Congress moved to create a rule that would create a mechanism to cut off debate – for the first time in 150 years – it did so in a manner that would maintain the Senate’s deliberative role and make it difficult for a narrow majority to abuse its power. Other Examples of GOP Rule Changes and Power Plays Senate Judiciary Committee Chairman Orrin Hatch is increasingly abusing the power of his chairmanship to flagrantly violate or unilaterally change longstanding committee rules and bipartisan agreements that govern the Judiciary Committee’s deliberative process. It is these actions by Sen. Hatch, not the Democrats’ legitimate use of the Senate’s filibuster procedure, that mark a dramatic break with precedent and an abandonment of a commitment to act fairly and according to mutually agreed-upon procedures. Several of Hatch’s actions also stand in direct contradiction to his own stated principles about how the Judiciary Committee should function. Committee Rule IV One of the most egregious abuses of power occurred on Thursday, February 27, when Hatch violated clear and explicit Judiciary Committee rules that prevent the Committee from moving to a final vote on any matter before the committee without the support of at least one member of the minority party. Over the strenuous objections of several Democratic Senators, Hatch insisted that the rule did not apply to nominations – a specious claim that had never been made before – and that he would call for a final vote on appeals court nominees Deborah Cook and John Roberts, even though no Democrats supported the motion to bring them to a vote. (In a compromise since then, another hearing was held for Roberts; Cook received a vote on the Senate floor without an additional hearing to review her record.) Since then, Hatch has changed his explanation, claiming that Committee Rule IV does not apply to the Committee Chairman. He now claims in essence that the Chairman’s power to call for a vote on a matter is absolute regardless of agreed upon rules of procedure, and that Rule IV is actually a rule that gives members the right to push for a vote that is being delayed by the Chair. Hatch’s claims are demonstrably false. As recently as 1997, in connection with the consideration of the nomination of Bill Lann Lee to be assistant attorney general, Hatch explicitly acknowledged that “[a]bsent the consent of a minority member of the Committee, a matter may not be brought to a vote.” (Transcript of Judiciary Committee meeting of November 13, 1997 at 6) (emphasis added) As Senate Minority Leader Tom Daschle wrote to Hatch on March 4, Rule IV “clearly establishes a Committee filibuster right.” Blue Slip Policy Hatch has also changed another fundamental Senate rule regarding judicial nominations. In the past, Hatch has been a fervent supporter of the Senate’s “blue slip” policy, which has allowed home-state senators who object to a judicial nominee to delay action in the Judiciary Committee by not returning a nominee’s “blue slip” to the committee. As American Prospect has noted, “it was Hatch, in 1995, who hardened the blue-slip policy to allow a single senator to block a nomination indefinitely.” Indeed, Sen. Hatch made his blue slip policy explicit in 1998 by stating on the blue slips themselves that “[n]o further proceedings on this nominee will be scheduled until both blue slips have been returned by the nominee’s home state senators.” Now, however, Hatch has apparently declared a new policy saying that even though a senator’s decision not to return a blue slip would be given great weight, it would not be allowed to prevent Hatch from moving nominees he wants to move. “In other words,” says Hatch, “we can go ahead with certain nominees where you might have a withheld blue slip.” Sen. Barbara Boxer has objected to proceeding on controversial nominee Carolyn Kuhl, but Hatch has scheduled a committee vote on the nomination on Thursday, May 8. Stacked Confirmation Hearings Sen. Hatch held a single confirmation hearing featuring three controversial appeals court nominees simultaneously – Jeffrey Sutton, Deborah Cook, and John Roberts – on January 29. Scheduling multiple controversial appeals court nominees on a single day violated a longstanding bipartisan agreement. In the mid-1980s, Senators Strom Thurmond, Joseph Biden, Bob Dole, and Robert Byrd agreed in writing that there would be no more than one controversial nominee scheduled at any one time, an agreement that had been followed under both Republican and Democratic control until Hatch’s packed January 29th hearing. Hatch’s move virtually assured that it would be impossible for senators to prepare thoroughly and for all three nominees to receive sufficient scrutiny. In fact, senators focused their questions on Sutton, meaning that nominees Roberts and Cook were asked very few questions. Hatch did provide another hearing for Roberts, but on May 5, Cook was confirmed by the full Senate, never having been subjected to serious public scrutiny, even though Democratic senators objected to the way she was railroaded through committee with the stacked hearing and Hatch’s violation of Rule IV. Conclusion The effort to create a constitutional objection to the selective use of the filibuster against extremist judicial nominees has no grounding in history or constitutional law. It is a power play that would subvert the Senate’s historical role, undermine its ability to conduct its advise and consent responsibilities, and open the door to further abuses of power by a narrow majority of the Senate. The way to limit the time and energy expended in divisive confirmation battles is not a nakedly partisan power play that would alter the nature of the Senate in order to cement ideological domination of the judiciary for decades to come. The way forward is for the White House to engage in genuine consultation and cooperation on judicial nominations that would result in more mainstream nominees who could win bipartisan support.
But What If You Make $30,000 and Have Two Kids? May 8, 2003February 23, 2017 David Maymudes: ‘I think people are letting W. off too easily by letting him talk so much about the tax reduction you get if you have two kids and exactly the right income level. If you make $30,000 instead of $40,000, with two kids you already basically pay no income taxes, so you get nothing. More importantly, why let him ignore the 7.65% Social Security and Medicare tax? That $40,000 couple is paying $3060 in Social Security taxes. So, yes, they’re getting a tax cut from $4000 to $3000, but it doesn’t sound as impressive that way. (And the $30,000 couple is still paying $2300 with no cut.) Dick Cheney’s $327,000 annual tax savings still sounds pretty impressive, though.’ Jeremy Bronson: ‘I agree with your position on the tax cut, but I wonder whether you’re guilty of the same type of misleading rhetoric as the President when you say the $500B deficit this year will result in $5,000 of additional debt per household. In all candor, don’t the same people who enjoy the benefits of the tax cuts – and who (including their progeny via the estate tax cuts) are gaining an even greater share of the nation’s wealth through the GOP’s policies – end up with the vast majority of the associated long-term tax burden?’ ☞ Yes and no. Say I’m childless (well, I am) and that I save $327,000 each of the next three years (well, I wish), and then I die and leave my money to charity (well, I might). OK. Neither I nor my kids bear any of the burden of the extra $500 billion a year in debt – everyone else’s kids and grandkids do. Yes, rich people will pay more to service it . . . but the poor will pay by virtue of its squeezing out the investment we could otherwise have made in health care and education. No? And if the huge deficits weaken the dollar, as they will, driving up the price of imports, who is worst hurt by that? And if it raises interest rates on car loans and mortgage loans, who is worst hurt by that? Rich people don’t borrow, if they don’t want to – they lend. So I think borrowing hundreds of billions of dollars to lower the tax burden on the wealthy is pretty much what it appears: saddling all of us with debt, while showering most of the rewards on just a very privileged few who least need the largesse. It is a HUGE economic and social mistake, but the President either doesn’t realize that or doesn’t care.