The Senate voted 81-19 yesterday to accept the $858 billion Obama/McConnell tax deal. California Senators Dianne Feinstein and Barbara Boxer voted with the majority but for varying reasons. Boxer attributes her support to provisions that will extend breaks for alternative energy sources. Feinstein says that while she doesn’t like the bill, she’s voting in the affirmative because it will create much needed jobs. Both of these positions hold an element of truth, but in the final analysis are, in tamed vernacular — equine feces!

A little simple arithmetic will help to appreciate the insanity of what these politicians would have us believe. Taking Feinstein’s rationale, she’s in favor of the “deal” because economists told her it would increase the GDP by .6 to 1.2 percent, which she claims will translate to 600 thousand to 1.2 million jobs. So in other words, it makes sense to the Senator to add $858 billion to the deficit in order to sustain jobs at a best-case rate of $715,000 per job. Does that make any sense at all?

Math for Senator Boxer’s justification is even worse, since she claims the energy provisions will only result in “tens of thousands of jobs.” Although to be fair, she does also identify help for the middle class as another motivator.

The problem with both of these positions isn’t really the math; it’s the fact that they’re really nothing more than an exercise in rhetorical gymnastics used to justify support for a bad piece of legislation. While this deal is being spun as “temporary,” the tax cuts are anything but. Set to expire in two years — during a presidential election — the politicians who lacked the will to terminate them now are not going to do so then. If they really were intended to be temporary, they would have been extended for a single year, where there was at least a chance of it happening. The sad truth is that this deal will seriously impact a federal deficit that’s already teetering at record highs, and it will do so for dubious benefit.

Center to the “deal” are the unemployment benefit extensions that the Republicans have held hostage pending the approval of tax cuts for the wealthy. Few disagree with the need for this action that will enable those who have not yet exceeded the 99-week maximum to continue receiving payment. Economists all agree that it is of the highest order of economic stimulus, returning as much as $1.90 for every dollar spent. But the 13-month extension accounts for only $56 billion of the package, and although it may be the right thing to do, it does nothing to address long term unemployment issues.

Other items included in the remaining $802 billion also have legitimate justifications.  For instance, the reasoning behind extending the Bush tax cuts for the middle class, which is the single largest piece of the tax deal pie, is sound. The situation is that 70% of the GDP is fueled by consumer spending, and because the middle class has been so severely squeezed by the recession, if their taxes were to increase, it would translate directly into a reduction in GDP. And when the GDP drops, jobs go with it.

The 2% reduction in payroll taxes follows the same logic as the extension of the middle class tax cuts. The money will mostly go to people who have already tightened their belts in order to make ends meet and will therefore be spent immediately and returned into the economy. Estimates actually place the return as high as $0.90 for every dollar spent, which is more than double the estimate for the general tax cuts. But at a cost of $120 billion, there are much more effective ways to use the money. And none of the other possibilities have the potential downside of tying Social Security to the general fund, which could lead to future arguments to dismantle the program.

Provisions included to extend certain tax credits follow the same reasoning, with each putting money in hands that will spend it. And the provision that will allow businesses that make investments in 2011 or 2012 to accelerate deductions by expensing 100% in the current year is really more of a shift than an outright loss of revenue.

But the sound reasoning and rationale component of the deal ends prior to evaluating the tax cuts for the top 2% and the estate tax reduction for the top one-tenth of 1%. Both of these upper crust tax cuts will reduce federal revenues, thereby adding to the deficit and requiring further indebtedness to foreign nations, like China. But they will do so, not for the purpose of stimulating the economy, as the money is much more likely to be saved. Neither will the savings be extended because the recipients have been hurt by the economic collapse and are in need. No, the tax cuts for the rich are included strictly because they are the ransom demanded by Republicans in order to do what’s right.

The sole justification for the tax cuts for millionaires and billionaires, beyond the fact that the Republicans demand it, is because the money belongs to these people. That’s it. Ask any Republican — it’s their money and the government doesn’t have the right to take it. Never mind that the wealth people accumulate is not created in a vacuum. That wealth is the fruit of both their individual efforts and the societal system that ALL Americans work to support and maintain. Never mind that taxation is the means by which the citizens of a free society fund the government in order to provide the services required to sustain that system and enable the accumulation of wealth.

This is the classic “redistribution of wealth” argument, and it’s as invalid now as it was the first million times it was spoken. Those who present the “redistribution” argument choose to give credit disproportionately to the individual, which is obviously nonsense. It takes an entire society to sustain a system of opportunity. The problem in America today is that too many of the wealthy and would-be wealthy want to extract the benefit of our democratic society but don’t want to pay back into its sustainment.

This is precisely the reason that our infrastructure is crumbling and the wellbeing of the average American is in serious decline. The problem that’s taken root in America over the past 30-plus years is unethical redistribution of wealth — from working Americans to the top 2%. It is that concentration that’s behind the recent collapse and the present stagnation. We are experiencing the result of over-extraction of wealth. It is therefore the responsibility of the system — the one that so many people have used to accumulate said wealth — to adjust and bring back employment and prosperity to those who have been exploited.

America needs jobs, and we need fair taxation. The Obama tax deal delivers neither. Working Americans will be glad to pay more taxes — if they are just allowed to work and share in the huge increases in productivity that have lined the pockets of the wealthy. Make no mistake about it: there is no justification, rational or moral, for the Republican-demanded tax cuts. They’re nothing but the looting of America by the new Robber Barons.

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Article first published as Why Don’t the Facts Seem to Matter Anymore? on Technorati.

How do Americans make up their minds on political issues? Some, I’m sure, simply echo the positions of trusted friends. There are people who are persuaded by specific arguments that just seem to personally resonate and still others who simply adhere to strict party lines. Such practices are understandable in the fast paced world of 21^st Century America. But understandable or not, one has to wonder if a more deliberate approach might be warranted.

Take for instance the current debate over the extension of the Bush tax cuts. Most polls previously showed that the majority of voters support extending the cuts for only the middle class. But the margins were remarkably thin and continue to shrink.

The most recent Gallup poll shows only 44% of participants in favor of extensions depending upon income level and tallied 40% in support of cuts regardless of income. An Associated Press poll of 1,000 people, taken just before Thanksgiving, showed a slightly larger margin, with 50% in favor of cuts for income up to $250,000 and only 34% favoring cuts for all income.

Division of this sort is typical on political issues, but what’s interesting about these results is that, while only 2% of Americans would benefit directly from cuts on income above $250,000, a third or more of those polled consistently support those very cuts. This is an atypical disparity that surely must have some explanation.

One possible motivation could be that people are concerned about jobs. According to that same AP poll, 82% of participants cited unemployment as an “extremely” or “very” important issue. Perhaps these people believe that extending tax cuts to the wealthy will result in job creation. After all, anyone who’s listened to the media has heard this argument. It’s a favorite of congressional Republicans, who regularly cast any tax increase as “job killing.”

But the fallacy of such a premise is immediately evident in even the briefest moment of serious contemplation. The fact is that employers simply don’t hire based on their personal income tax treatment. The formula for staffing is strictly limited to the number of employees required to produce the product or provide the services necessary to meet demand while maintaining a profit — period. Profits must be made before taxes even come into play. The fundamental rule is that, if demand goes up, businesses must hire more people, and if demand wanes, there will be layoffs.

I’m afraid that while the don’t-tax-the-job-creators line seems to have some legitimacy on the surface, nobody who’s actually studied the issue believes it. Economists are all forced to agree with Cornell University’s Robert Frank, who sums up the present situation with “Businesses aren’t investing because they can already produce more than people want to buy.” Indeed, the nonpartisan Congressional Budget Office (CBO) produced a report on the matter and concluded that, of the top 12 suggestions for spurring job creation, income tax cuts was the least effective option.

So, maybe jobs aren’t the primary concern. Could it be that people are moved to support tax cuts, even for millionaires and billionaires, out of a general concern over the economy? The economy was the highest priority issue amongst those voting in the AP poll. A full 90% of participants ranked it at one of the two highest levels of importance.

There has certainly been enough rhetoric flying around about the detrimental effects of raising taxes on anyone to give ample cause for alarm. Republicans are unified on the topic. The new Speaker of the House, John Boehner, voiced this conservative wisdom in an interview last August, “You cannot get the economy going again by raising taxes on those people who we expect to create jobs in America.” It sure sounds good, but once again there’s no evidence and only rare opinion to support the conclusion.

The fact of the matter is that the American economy is driven by consumer spending. To put that in perspective, around 70% of our GDP is generated thusly. So, it’s actually lack of demand that’s the key issue with the American economy today. Too many people are either without jobs and unable to spend or holding onto what money they have because they’re worried about the future. Businesses are flush with cash but aren’t investing for the same reason. They’re not refraining from hiring because they may have to pay more in taxes. They’re not hiring because there’s insufficient demand.

Tax cuts for the top 2% will stimulate the economy, but the sad truth is that pretty much any other practical option would be more effective. Numerous studies have been completed, and virtually all agree that general tax cuts are the least effective form of stimulus, and those applied to the very rich are the worst of the worst. The CBO study mentioned above again rates tax cuts at the bottom of the heap with regard to impact on the GDP, with a best case of returning $0.40 for every dollar invested. Compare that to $1.90 for increasing unemployment aid, and you might glimpse the insanity of the conservative argument.

Although concern over the deficit is also high on everyone’s list, it’s difficult to see how anyone can argue that extending tax cuts that would trim $700 billion from federal revenue could help the deficit. So, if it’s not jobs, and it’s not the economy, what is the explanation for as much as 38% of Americans supporting tax policy from which they will not personally benefit?

There is one other possibility. It could just be that good old American sense of fair play. When asked how they felt the spending cuts and tax increases needed to address the deficit should be applied, the majority (54%) of participants in the AP poll thought they should “Be spread out so that all Americans share evenly in the costs.” A truly admirable position to take.

But then, just what is it that constitutes an even share? It’s hard to believe that there’s any such equity in extending tax cuts that already provided 52.5% of the benefit to the top 5% of taxpayers. The stark truth is that you cannot achieve an “even share” by extending that which is, by design, extremely uneven.

The facts about the Bush tax cuts are dramatic. They were touted to create jobs and stimulate the economy, yet they did neither. With regard to the economy, the Bush era netted the slowest average annual growth since World War II, averaging only 2.39% per year. And that doesn’t even take into account the economic crash of 2008. The next worst period was 1971 to 1980 at 3.21%. On the job front, the results were even worse, with the Bush era producing the slowest rate of average job growth of any cycle since 1945.

In the final analysis, the Bush tax cuts served but one purpose — to accelerate the concentration of wealth in America. Things have now become so lopsided that the top 1% of Americans now have more financial wealth than the bottom 95%. When the portion of wealth held in home equity is discounted, the top 1% holds 48.4 percent of the wealth compared to 20 percent retained by the bottom 95% — and that gap is growing at an alarming rate.

By 2001, the share of financial wealth had already grown to a 39.7% – 32.5% split, but ramped sharply upward under the policies of George W. Bush. The fact is that the wealth of the very rich is being extracted by squeezing the overwhelming majority of Americans to the point of collapse. The situation is so bad today that 23.5% of overall income belongs to that top 1%.

According to Bloomberg, during the period that followed the first of the Bush cuts, up until the financial meltdown, the average annual income of the top 1% grew from $1.08 million to $1.87 million, an increase of 73%. Meanwhile, according to the U.S. Census Bureau, the Bush economic cycle was the first since tracking of the data began in 1967 to produce a decline in median household income — focusing specifically on working-age household data, real incomes dropped by a whopping $2,176.

This is a sad and unethical story, and it’s not representative of the America that most Americans have grown up to love and respect. Our nation was founded on the principles of equality, of shared prosperity and shared burden — principles to which the policies of deregulation and tax cuts for the rich that have dominated the political landscape for the past 30 years are diametrically opposed.

There’s no guesswork here; we already know the outcome of the Bush policies. If the tax cuts are allowed to be extended intact, we will maintain the present trajectory. Poverty will continue to climb; the rich will get much richer, and any balance achieved will be on the backs of the middle class. Make no mistake about it; this is unfair, unethical, immoral, and completely un-American.

Welcome to the real-life tragedy of the commons in America, where the very wealthy have chosen to bleed the country dry, because regardless of the eventual outcome — they will already have their riches. It’s a game of squeeze-all-that-you-can while the squeezing is still possible; it is in essence the great national Ponzi scheme.

America’s economic elite have no interest in reforming the system to achieve sustainability. Our nation, its people and natural resources are nothing more than fodder for the mill of exploitation. And as with any Ponzi scheme, the sustainment of the system matters only to those who have not yet reaped their reward from the extraction.

The American people are the proverbial frogs in the kettle: they continue to support their own demise because they fail to recognize that the heat is still being turned up. If the American middle class is going survive, we will need a 21^st Century awakening. And that awakening must begin with people rejecting the self-serving sound bites of those with their hands on the thermostat.

In the end, the inescapable truth is that, whether the American people choose to recognize the facts or not — the facts do matter. We are presently in a race to the bottom for the vast majority of Americans — and that’s a fact. We can continue this march into oblivion or we can stop the hemorrhaging and restore some semblance of shared prosperity — and that too is a fact. The choice lies with the American people, and the future of our nation depends upon which way they choose — and that’s the most important fact of all.

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Education Nation, NBC’s weeklong look at education in America, kicked off Sunday with a Teachers Town Hall. Involving a live audience of a few hundred and another 6,000 logged in online, the meeting provided a forum for teachers and others to voice their opinions on the issues affecting education. Many shared their private experiences and perspectives in an open dialog looking at everything from teacher recruitment and retention to tenure, charter schools, global competition and parental involvement.

The Town Hall event comes on the heels of the release of the documentary, “Waiting for Superman,” which many argued places teachers in an undeserved bad light. Several people voiced the opinion that teachers are being unfairly attacked, that they were being made the scapegoats for the growing shortcomings of our education system. Most topics enjoyed shared support from the crowd and guests on stage, but tenure stood out as a single point of contention. Even amongst teachers, the debate over tenure revealed some who argued that it protected “bad” teachers and others who strongly disagreed.

If the NBC/Wall Street Journal poll is any indication, most Americans seem to agree that, regardless of tenure, teachers aren’t the major problem with education. While 58% of those polled believe that education needs either a “major change” or “complete overhaul,” only 30% cited teachers as part of the problem. And the only group that a majority of people, 53%, identified as part of the problem was elected officials, with parents next highest on the list at 50%.

Regardless of who’s to blame, there are few who believe that the system doesn’t need reform. Asked to assign letter grades to the system, only 19% of those surveyed would give either an A or B. This is good news in that the American public seems to have a fairly good handle on the topic. Of course, it’s also bad news, since they’re correct. The U.S. now ranks 24^th amongst the 37 Organization for Economic Coordination and Development (OECD) nations in mathematics, 21^st in science and 15^th in literacy. As many in the education community are inclined to state, “the system is failing our children.”

But is it accurate to label a system that only graduates 68.8% of its students as merely “failing our children?” Not to downplay the significance of such a statement, but holding the problem in such a perspective is more than a little limiting, and may actually provide a window into certain important aspects of the problem. To suggest that the impact of the failure is isolated to students is to misrepresent the true customer of education and to minimize its destructive effects upon the nation.

In the United States, between the federal, state and local governments, over $1 trillion will be spent on education this year. That’s around 7% of our GDP, which is enough to rank #2 amongst the OECD nations, second only to Iceland.  For a moment, forget the question of whether or not Americans are getting their money’s worth, the point is that education accounts for more public spending than any other category, except healthcare — even more than defense. The customer of the American education system is not the students; it’s the American taxpayers.

The attitude that public education is intended to serve the students fails to recognize the importance of an educated populace. Countries don’t invest in education because of some moral imperative directed toward student wellbeing; they do so because it’s an absolutely essential part of building and maintaining a strong and prosperous nation. To the extent that an education system is effective at producing capable and knowledgeable graduates, it’s also effective at providing the labor resource for a high-performing economy and the intellectual engine for technological progress, while simultaneously minimizing the cost of social programs, law enforcement and corrections.

The American education system has failed the children, but more importantly, it has failed America. Never mind our international rankings. They provide a decent relative measure, but the impact is felt right here at home. The impact is fewer graduates capable of designing tomorrow’s technology; it means fewer science papers and patents originating in the U.S.; the result is a labor force increasingly incapable of competing on a global basis, and the tragic side effects are more unproductive Americans, higher crime rates, more drag on available social programs and an increased sense of futility.

Explanations for the failures of the system are many and varied, and the suggestions for remedy are limited only by the number of experts chiming in. But the core issue is that the system is in need of structural change, and as is the case with our nation’s energy infrastructure, the vested interests will fight against any reform that may dilute their voice or adversely impact their pocketbooks.

The truth of the matter is that the American education system was designed during the Industrial Revolution with the specific goal of producing factory workers. The primary objective of the system was not to promote the creativity necessary in the 21^st Century, but to produce a crop of docile workers who would accept the dominance of the factory system. The schools were designed like factories, the students treated like raw materials, and the finished product was a labor force where few graduates went on to college.

Our system is providing exactly what it was designed to produce. In order to effect real change, the entire system must be rethought, and learning must be the central focus. Alternative forms of education need to be evaluated and systems implemented where the incremental costs of additional students are minimized. Teaching resources need to be expanded to include peers and professionals. Systems that effectively deal with teacher evaluation and development, disadvantaged students, operating efficiencies, measuring student performance, and fully leveraging technology must all be established.

In short, the American education system needs to be redesigned from the ground up with the needs of the nation in the new millennium driving the process. The power of any nation is derived from its people, and the power of the people is derived from their education. There is no more important endeavor for the future of our nation than to optimize our educational system and invest in the citizens of tomorrow.

Next: American Education — the Path Forward.

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