CalCentrist.com
Home Issues Book Reviews Blog Resources Contact Us
   

Common Cents

History of our political/economic system.

The United States was founded on the ideal of equality of opportunity - a meritocracy instead of the aristocracies of Europe. In the agrarian economy of the Founders, somewhat equal access to land provided the equality (except for blacks and women). Of course even then, some had advantages - such as those families with the original colonial land grants from Britain, and their descendents.

With the industrial revolution came the need to organize into large groups, and private corporations took hold. Private corporations were granted an enormous benefit - limited liability. No one could sue the investors; liability was limited to the assets of the corporation. This led to a huge advantage in raising capital. This was both a great benefit which was the engine of our economy, and also a great transfer of power without accountability. Companies also benefitted from government contracts, use of government land and mining rights. Many private fortunes were enabled by the government (our taxes). War profiteering has led to riches in every war (e.g., JP Morgan in the Civil War), and today we have a vaster military-industrial complex than Eisenhower could have imagined. Carnegie, Vanderbilt and Rockefeller used government railroad land grants to build their fortunes. More recently, public airwaves were sold cheaply to enable monopolistic media fortunes to be built. Timber, mining, oil and other fortunes have been made with cheap leases of public land.

The power given to private corporations led to abuses, such as by the robber barons of the late 1800s. They forced people to buy goods at company stores and work with dangerous machinery, used child labor, hired thugs to beat union organizers, etc. Government eventually reacted by establishing anti-trust laws and regulations of businesses.

There have been attempts to strengthen the middle class. The government has stepped in a few times to provide more equal opportunity, such as through the Homestead Act, giving land to settlers.
Industrialists like Henry Ford realized that paying higher wages ensured a stable workforce and enabled the workers to buy products. A strong middle class provided stability and was the engine of the economy, buying the products of business. The middle class was strengthened by job growth during World War II and a flood of qualified workers courtesy of the GI Bill providing free college education to veterans. Minimum wage laws, implemented since the end of the Great Depression, help lift people out of poverty and provide more consumers to drive our economy (1).

But in the past 30 years, the middle class has been in decline. The financial sector in particular has lobbied hard to obtain both deregulation and failure to regulate new financial gimmicks. It is no coincidence that most of the rise in inequality between rich and poor is due to the new super-rich in the financial industry. At the same time, various special interests have pushed independently for more regulation or subsidies in narrow areas, with no one looking out for the cumulative effect on small business and the middle class (which is supposed to be the job of Congress). Unions, which historically have looked out for workers, have overreached and how have declining membership and influence.

Political Stagflation.

In the last part of the 20th century, we’ve seen a combination of a weakening of limits on the power of corporations (due to business lobbies) and increasing red tape at the implementation level (due to advocacy group lobbying). This is causing a version of stagflation - increasing disparity between rich and poor, gutting the middle class (the consumer engine of the economy), while at the same time choking small business (the job creating, innovation engine of the economy) with regulations only large corporations can afford to comply with and subsidies for those large enough to lobby.

Capitalism is inherently tilted toward capital (money), not labor.

A capitalistic system inherently favors those with capital (money). Thus, the name capitalism. The driving mission of business is to increase profits for the owners or investors (who provide the capital) by increasing productivity – which means cutting costs (e.g., firing workers and making the remaining workers do more for less money). It is an inherently tilted playing field, which is only brought back to level by government regulation or unions.

Poor people suffer the most with under-regulated capitalism. We saw what happened in the industrial revolution with poor factory conditions. Today, the poor are still disadvantaged. They usually have no credit and pay higher interest rates on homes, car loans, etc. They live in poor neighborhoods where home and car insurance is more expensive. They often don’t have bank accounts and get fleeced by check-cashing, payday loans and rent-to-own furniture businesses. Those who do have bank accounts pay more fees because they have small balances. They often have to walk to high-priced corner stores, rather than pay in time and money to take a bus or drive to lower cost supermarkets. Some live in motel rooms because they don’t have the first and last month’s rent to rent a lower cost apartment.

Pure capitalism is self-destructive

Pure capitalism, like a nuclear explosion, has tremendous power but is inherently self-destructive. It has a tendency to concentrate wealth, stifling smaller competitors and impoverishing most people, leading to the destruction of the middle class, the engine of the economy. This leads to economic decline, and thus isn’t in the best interests of the rich either. However, a properly regulated market, like a nuclear reactor, provides energy to everyone. Over regulate, and its power is diminished or extinguished. To optimally function, capitalism needs government infrastructure and Goldilocks regulation - not too much (see India), not too little. A true free market - pure capitalism where there is no regulation - is the Mafia, where you kill your competitors.

Overregulation and complexity favors the rich and large businesses.

In addition to the inherent advantages to capital (money) in Capitalism, the mind-numbingly complex way we have implemented it in the U.S. provides both (1) further advantages to capital and (2) further opportunity and advantage to capital for influencing regulations. There is an admirable quest for justice in the U.S., and a desire for the rule of law where you can look up the correct answer to everything and address every unfairness, no matter how small. But this, while admirable for preventing individual injustices, has the cumulative effect of strangling small businesses and the economy. Everyone has to comply with the complexity that exists for the one in a million exception. Adding a wheelchair accessible restroom is a minor cost for a Barnes & Noble location, but can put the Shop Around the Corner out of business. Large companies have the capital and can afford the lawyers and personnel to deal with all the regulations of opening and operating in a new location. It can be an insurmountable hurdle for a new, aspiring small business owner.

In order to clean the air and lower dependence on Mideast oil, we give loan guarantees for solar companies that fail, dictate mileage standards to the auto industry, and have a host of other regulations. It would be simpler to just raise the gas tax (and offset other taxes to avoid it being regressive), and let the market adjust. This type of regulation by goal is what we need - simple, high level taxes or regulations that allow the market to function.

The legal system is also complex, so again only the rich can both afford to hire lawyers and have enough at stake to make it worthwhile. The US ranks surprisingly low compared to other countries in access to justice (2). That is because our complicated laws and regulations, and expensive lawyers, mean the rich get the lions share of the benefits of our legal system.


Money and organization needed for the complexities of lobbying

This complexity of our government plays into the hands of those with money and organization. Although special interests influence elections, their real power is in lobbying Congress, regardless of who wins. Only groups that are well organized, with lots of money, can engage in the mundane, day-to-day lobbying of intricacies of complex bills over the course of years. Even if a bill adverse to special interests passes, they can lobby for favorable regulations under the law.

Government (thus us) enables capitalism, and enables people getting rich. Government regulations not only regulate capitalism, they enable it. The Capitalism nuclear reactor is enabled and regulated to operate optimally, and protections are built in so it doesn’t harm us. There are (1) rules to protect us from the excesses of capitalism, and (2) rules that enable Capitalism to function. Thus, the rest of us helped pay for the rich and corporations to get their money. They got rich because our taxes paid for government investments in infrastructure, education of workers, financial systems and a legal system. Our transportation infrastructure allows shipment of companies goods, the legal system enforces contracts, negotiated trade agreements lower tariffs for exports. The government provided another big advantage - limited liability for corporations, enabling the raising of large sums of money and accumulating vast power. Our complicated laws and regulations and expensive lawyers give further advantage to the rich. Many high return investment opportunities are only available to those with a high minimum investment amount. The list goes on.

The rich should be taxed at a higher rate because they get more benefit from the government.

Since the rich get disproportionate benefits from Capitalism, they should pay at higher tax rates. For the rest of us, it is like playing against the NY Yankees, who can afford to buy the best players. However, too high a tax on the rich will remove the incentives for people to work harder to get ahead. Capitalism works not because there is the incentive to do a little better than your neighbor if you get an education and work hard, it works because you can do a lot better.

But instead of the rich paying more, it is going the other way. The share of federal taxes paid by corporations has fallen from 28 percent in the 1950s to 10 percent since the 1980s (3). Yet the corporate the tax rate remains high, due to the need to make up for all the loopholes and subsidies (oil industry subsidies, farming subsidies, etc.). Counting all payroll and income taxes, the poor pay a higher percentage than the rich (4). If you add in sales and other taxes, it gets worse. The effect shows up in how much money different groups make. The income of the 1% richest taxpayers doubled from 1977 to 1999. The top 10% went up 88.6%. The bottom 90% stagnated, slipping slightly (all inflation adjusted) (5).

How did this happen Death by 1000 cuts. Those with money and organization have lobbied Congress over the years to make the laws more favorable to them. Tax rates and subsidies aren’t inherent in a free market - they are set in the political process. The rich and corporations can both afford to hire accountants and lawyers to sift through the complexity, and have enough money at stake to make it worthwhile. Businesses negotiate lower tax rates like they negotiate the terms of a contract - it’s just business. Taxes currently favor capital over wages due to lobbying and deceptive PR campaigns. Special interests modified the tax code to favor those with wealth, in the form of what is taxed, tax rates, loopholes (that only the rich can exploit) and subsidies. The proportion of taxes paid by the middle class relative to the rich has increased as a result.

Capital gains are a good example - they account for 2/3 of the income of the 400 richest people. The capital gains tax fell from 29% in 1996 to 15% in 2003. This contributed to 51% of the benefit of the 2001 tax cuts going to the richest 1% (6). The lobby campaign spreads the myth [not true(7)] that low capital gains tax rates are needed to spur the economy. We are manipulated to buy in, although the result is that the middle class and poor thus bear a greater proportion of the tax burden. Common sense tells you the economy is spurred more by people having money to buy hot dogs, rather than tax breaks to someone to buy a cart to sell them. If people are able to buy, that vendor will find a way to buy the cart. If people don’t have money to buy, that tax-subsidized cart doesn’t do any good. And certainly less tax on selling stock in the hot dog cart company isn’t going to cause people to buy more hot dogs.

Gaming the system for the rich is more blatant than ever. After the 2008 economic collapse the financial industry has spent over a billion dollars lobbying to water down financial regulation. The chair of the House Financial Services Committee got 70% of his campaign contributions from the financial industry, and 7 of 10 freshman Republicans on the committee got at least 40% of their PAC campaign contributions from the financial industry (8). If the special interests and rich were benevolent dictators, that wouldn’t be so bad. But they are looting this country for short term gains, ruining our economy and putting us on the path to become a 3rd world country.

Money is the blood of our economy, it needs to keep pumping to keep the economy vibrant for all parts of the body. The concentration of wealth at the top has limited the ability of the poor and middle class to spend, and thus keeping the economy going. The amount of money hasn’t changed, it just isn’t in circulation. It is just all in the coffers of large companies and the rich, who aren’t willing to spend until consumers show up. Consumers have shown a willingness to show up when they have money, but it has been siphoned away from them, to the detriment of all of us.

Manipulation

In blatantly corrupt countries, votes are bought by sacks of money delivered to legislators. In the advanced US, corruption is more sophisticated. Industry, union or other special interest money pays for (1) campaign funding, (2) lobbyists to directly influence representatives, and (3) issue ads to indirectly influence them through the voters. Politicians become beholden to donors and if they cross a special interest, they risk losing their job. A jilted special interest will move money to an opponent and run ads against the representative who dares to step out of line. Is it any wonder our laws favor special interests and the rich?

Capitalism encourages businesses to manipulate us any way they can so we’ll buy their products. They use similar tactics to influence us. They have a field day with practically unlimited flexibility since they are not constrained by the same truth in advertising and trade libel laws that apply to commercial advertising. Attempts to regulate have been thwarted since even the US Supreme Court has been compromised.

The complexities of our system allow us to be easily manipulated by those with the money. We are too busy scratching out a living to have time to see through sound-bite mischaracterizations of complex laws that actually favor special interests, but are made to sound as if they favor us all. Much of the media, instead of informing us, panders to our biases.

We’re mammals - we react to quick movements and love to watch train wrecks. We’re drawn to TV and videos because of their seductive powers of excitement, which studies show we receive passively, without thinking, in contrast to reading (which many of us are too lazy or busy to do). It is the perfect medium for showing the fight and pulling heart strings, it is a lousy medium for balanced, in depth analysis. Special interests and politicians know this, and use it. We are polarized into watching biased sources, and we have trouble spotting the bias because they use tricks to manipulate us.

The move to more direct democracy (initiatives, recalls, etc.) was intended to give us more power. But it has resulted in the opposite since we don’t educate ourselves as voters and are so susceptible to manipulation. Special interests pay signature gatherers for initiatives, then pay for misleading ad campaigns. It takes about $2 million to get an initiative on the ballot in California, so only special interests with money can afford them. Where politicians spend the time to study the issues and know what to do, we the voters stop them because we are easily deceived by sound-bite opposition. For example, politicians have to be tough on crime to get and stay elected. We end up footing the bill for far more people in prison than any other country, many of them non-violent drug offenders.

There are a host of manipulation techniques available to those who want to use them. One is doublespeak - the proponents adopt a name that sounds like a public service group, hiding their true identity (e.g., the “Californians for Affordable Prescriptions" was really drug companies opposing a discount for prescriptions). Another is deceptively framing issues, such as framing the elimination of a subsidy as a tax increase.

The technique of confusing coincidence with causation is effective, such as showing crime rates declining with increasing prison sentences, but leaving out the fact that the decline started before 3 strikes and other increases in sentences (which is another manipulation technique, leaving out key parts of the story). The media is complicit, and especially loves focusing on the trees instead of the forest (more easily done with video), such as showing the gory crime in repetitive detail, while neglecting to show crime rates are dropping and it is the exception (guess which provides higher ratings and thus profits?).

The Trojan Horse is a favorite for tax issues - the issue is framed as benefiting the public at large, when it actually benefits a special interest. This was true of the capital gains tax as described above, the Bush tax cuts (there was a 1st year $300 rebate for most taxpayers, but eventually 51% of the lost revenue went to the richest 1%), and the estate tax (which affected only the richest 2% of estates). Most of the Proposition 13 property tax cut benefit in California went to the richest, while devastating funding for schools. To add insult to injury, the Bush tax cuts caused the deficit, yet a prescription being hawked is more tax cuts. The manipulators know people have short memories and take advantage - people forget that the economy was booming during the Clinton years, when tax rates were higher.

The estate tax attack is a good example of manipulation techniques that need organization and money. The lobbying campaign lasted over a decade, and was started by an estate planner with wealthy clients, Patricia Soldano. She formed a lobbying group, giving it a public-interest sounding name, the “Policy and Taxation Group”(9). They did polls and realized the public was ripe for duping - most already thought it affected half of all estates, when it only affected the top 2%. They framed the estate tax as a “death tax,” implying it affected everyone, and making up practically non-existent heart-wrenching examples of families losing the family farm to pay the estate tax (trees instead of the forest). Estates less than $675,000 were exempt in 2001, and the exemption has increased to $5 million in 2011. Clearly, most people are not affected.

One technique used when the public is too strongly behind reform is sabotage. Like the other techniques, this is a bipartisan, Democratic and Republican approach. Teachers’ unions water down school reforms to the point of ineffectiveness, then gloat that the reform didn’t work. The same was done with economic stimulus (with an added twist that it, like small school reforms, did work, but the effect wasn’t full recovery, just avoiding another Great Depression).

Because specialized news outlets have audiences that self-select to mirror the biases of the news outlet, they can get away with reporting just one side of the story, quoting out of context, etc. The audience isn’t going to complain and leave, so there is no check or balance. In fact, they are encouraged to distort the news, because this reinforces the audience biases and makes a more loyal audience, with higher ratings and more ad revenue.

Polarization.

Politics in a democracy has always been about manipulating the masses, but the advent of television, then cable TV and finally the Internet has herded us like cattle into  polarized groups that make us easier to manipulate. We are further polarization by Gerrymandering, radicalized primaries, the media and the simple desire to associate with like-minded people (socially and in choosing where to live). An unchallenged, biased view becomes our perception of the world.

Gerrymandering is used by the party in power to increase the number of representatives from their party and make the districts “safe,” with a super majority of party voters in their districts. This is done by cramming all the other party voters in a few districts, wasting their votes where they already have a majority. Sophisticated software factors in actual voting, not just registration, and shows the homes of representatives to enable redrawing boundaries to move an incumbent’s home into another district. This can force the incumbent to run against the entrenched incumbent from that district, who may even be from the same party.

Radicalized Primaries. The US has lower voter turnout than many other countries, and many think their vote doesn’t count. Perhaps it is because, due to Gerrymandering, well over 90% of seats are solidly Democratic or Republican, safe for the incumbent (10). Even fewer people vote in primaries, so that hard-core radicals, a minority of the electorate, are deciding who we get to vote for. The results are evident in Congress.

Specialized media outlets now pander to the left or the right, instead of everyone watching the same network news as in the past. To stay profitable, these specialized stations present news that conforms to the prejudices of their viewers, keeping ratings, and thus revenue, high. This is a sinister feedback loop, reinforcing prejudices and making them more engrained. This exacerbates the effect of gerrymandered districts, forcing candidates to appeal to more and more radicalized constituents.

Restore balance to government.

In addition to the need to regulate capitalism to maintain a strong economy, we need to regulate or balance the accumulation of power that capitalism inherently provides under our system of government.

Education

In an ideal world, all of us voters would take periodic refresher courses on how to judge and compare media sources, watch for bias and misleading articles, understand the US budget, etc. But even a well-educated public won’t solve our problems, because people are too busy and can still be manipulated. So we must fix the politics first. We need to accept that we won’t have time, and that, as mammals, we’re subject to manipulation. So we need structural checks and balances that take this into account.

Our republican form of government has shifted to direct democracy, requiring new checks & balances

We don’t have a pure democracy, where everyone votes on every law. The Founders purposefully designed our system to avoid direct democracy (aka mob rule). Instead, we elect representatives, who can study the issues in detail, because that is their job, and make the right decision. Because we voters don’t know the details, they then need to sell it to us.

The Founders did not contemplate a system where Congress and the President were elected by the masses, and did not foresee the use of money to buy TV ads to manipulate the masses. The Founders wrote the US Constitution rejecting direct election of the president, and instead having states provide for election of “electors” who would then use their independent judgment to elect a president. Senators were originally elected by state legislatures, popular vote wasn’t used until the 20th century with the adoption of the 17th amendment. The founders wanted senators insulated from pressure from the populace. The house was elected directly by voters in each state, but the states set the rules for who could vote, with most of the states requiring that voters pay taxes and/or own a specified amount of property. Now we have not only direct elections, but voters can directly pass laws through initiatives. We have achieved mob rule.

Four year term for House of Representatives - Constitutional amendment

Two years for House terms used to be a long time, but with legislation now much more complex, and campaigns starting more than a year ahead of time, it’s a wonder they can do their job at all. The term should be made four years to allow time for them to do their jobs rather than constantly running for office. However, this requires a Constitutional amendment, so other reforms would be easier to enact.

Public Financing of Campaigns

In the early days of baseball, players could be bribed to throw a game by gamblers because the payoff was much higher than their salary. Higher baseball salaries today make them much less susceptible to bribery. For Congress, we taxpayers only cover a portion of their expenses with the salaries we pay. The cost of running for re-election dwarfs their salaries, leaving them susceptible to the same influence - money to throw the game. In 1974, the average spent to run for re-election in Congress was $56,000. By 2008 it had increased to $1.3 million (11). Also, it has been estimated that representatives spend 30% of their time raising money (12). This system for Congress is like paying police officers only a fraction of what they need, and telling them to make it up by shaking down businesses for protection money.

The solution to special interests buying our representatives is obvious - let’s outbid them. Instead of having our representatives on the payroll of corporations and unions, let’s put them on our payroll for all of their expenses, so they really work for us. Make them beholden to us for the financing they need for their attack ads.

Many other countries and some US states provide for public funding of political campaigns (currently, the US only provides matching funds, and only for the presidential candidates). Public financing won’t fix everything. Representatives would still try to direct pork to their states to get votes. But the cost of public funding should be more than covered by reducing special interest subsidies and special breaks. If Congress hadn’t needed campaign contributions from the financial industry, would they have allowed unregulated derivative trading and other practices that ended up tanking the economy and requiring the taxpayers to bail out Wall Street

Candidates who qualify for public funding (enough signatures and seed donations) should get free or low cost TV time to limit the cost to taxpayers. Most of the money spent by politicians is for TV advertising. A condition of the government grants to media companies of public airwave frequencies should be low cost ads during election campaigns (13).

To learn more, and see how you can help, visit http://fairelectionsnow.org/

All lobbying should be public

Secret lobbying should be prohibited. All lobbying should be videotaped and placed on the Internet. Any group opposing the views lobbied for should be able to monitor this and be entitled to a meeting of the same duration with the same representative. The average person won’t watch these, but watchdog groups and the media will summarize them.

Fact Checker Independent Agency

We should establish an independent agency, like the Fed or legislative analyst, whose job is to monitor misleading ad campaigns and to launch a fact-checker counter campaign to expose the half-truths and present a balanced picture. We can’t force people to go to a website, or watch something other than Fox News or MSNBC. But we can put ads on those shows, and the reality shows and other popular shows. The agency could act like an expanded version of factchecker.org - with an advertising budget (like the anti-smoking campaigns and FDA campaigns to counter misleading commercial ads). We’d thus have experts on our payroll to let us know when we are being misled. Media companies would be required to carry the ads on the same programs to insure the audiences of the misleading issue campaigns see them. Since our system allows those with money to pull our puppet strings, we can at least build a mirror so we can see how our strings are being pulled.

This independent agency should be funded with tax dollars, with the amount of funding adjusted to match the amount spent on political media campaigns. It would match not just candidates’ direct campaign ads (yes, the ads we are also paying for thru public funding), but PAC and independent ads - in other words, special interest ads as well.

Complexity limits on new laws

Years of special interest lobbying and plain old trying to right every wrong have left us with tons of complex, verbose laws and regulations on the books whose cumulative effect makes life difficult for small businesses. Why don’t we require a “Business Impact Report,” like an Environmental Impact Report, for any new law or regulation to be enacted Passage of each new law or regulation should require the removal or simplification of some other law or regulation to keep from increasing the total burden on businesses. This would both provide an inherent incentive for brevity and insure old laws that should be revoked are thrown out.

Change Congressional Procedures that block votes on bills.

Special interests now spend money and lobby to block legislation, since they already have laws giving them special favors and subsidies. It is certainly inherently easier to block legislation than to enact it. The US senate in particular has adopted rules that make this even easier to do, and in effect has given us minority rule. The most egregious are the filibuster and the unrelated rider.

Filibuster. A filibuster is endless debate to prevent a vote. To end the debate, “cloture” is required, which requires 60 votes. The filibuster did not exist when the US was founded. It was first used in 1837, made possible because no one thought the Senate needed a rule to end debate. It was defended as a rarely-used tool to allow the minority to block things they felt strongly about (e.g., abolishing slavery), but recently it has been used on everything the majority disagrees with. Before 1970, there were less than 10 cloture votes a year, by 2008 it passed the 100 mark (14). The Founders wouldn’t have allowed a filibuster if they had known of it; and the House doesn’t have anything like this. The Senate can get rid of it by a simple rule change.

Tell the senate to act now, visit http://fixthesenatenow.org

Riders (unrelated amendments). The house requires amendments to bills be germane (same subject matter), but the senate does not. The Senate should quit playing political games with our system of laws, act like statesmen, and end this practice. Our meritocracy should apply to proposed laws as well - each should be judged on its own merits.

End Gerrymandered Districts

A few states, including recently California, have ended Gerrymandering by putting redistricting in the hands of an independent commission. But we need to get the other states on board.

To learn more, and see how you can help, visit http://www.americansforredistrictingreform.org

Open Primaries.

Open primaries is another technique to counter the polarization of our parties. An open primary allows Republicans to vote in Democratic primaries and vice-versa. Currently, few people vote in primaries, and those that do are the extremists. Thus, they decided the candidate, and in a gerrymandered, safe district, they decide the winner of the general election. Open primaries force candidates to appeal to a broad range of voters, and thus be less partisan (15).

To learn more, and see how you can help, visit http://www.openprimaries.org

Conclusion

Our political system has broken down. The tide moving to direct democracy has had the unintended consequence of making things worse - decisions are made by the uninformed, polarized and manipulated masses - us. We need to do what the Founders would have done: level the playing field with new checks and balances to protect us. But it won’t happen unless we the people demand it.

 

 

(1) Claims that the minimum wage adversely affects job growth have been shown to be wrong: Unequal Democracy, Larry M. Bartels, 2008, Kindle location 4925 .

(2) The US is last in the high income group and region (North America and Western Europe) in The Rule of Law Index (World Justice Project) with respect to access to justice].

(3) See Tax Foundation.

(4) http://www.politifact.com/truth-o-meter/statements/2011/apr/19/chris-hayes/journalist-chris-hayes-says-average-american-pays-/

(5) Perfectly Legal (2003) David Cay Johnson.

(6) Winner-Take-All Politics: How Washington Made the Rich Richer--and Turned Its Back on the Middle Class, Paul Pierson and Jacob S. Hacker (Simon & Schuster, 2010)

(7)“The most common argument for taxing capital gains at a lower rate is that it promotes economic growth by encouraging savings and investment. But the evidence to support this claim is lacking and it is difficult to find any correlation between low capital-gain rates and economic performance over time.[4] The capital-gain rate was 28 percent throughout much of the 1990s - a time of strong business investment, rising productivity, and spectacular economic growth. By contrast, the capital gains and dividend tax cuts of 2003 were followed by a period of weak investment and growth - even before the recession began in 2007." Tax Expenditure of the Week - Capital Gains,” Seth Hanlon, americanprogress.org, 2-23-2011.

(8)“The Billion-Dollar Bank Heist,” Gary Rivlin, Newsweek, July 18, 2011

(9) Death by a Thousand Cuts: The Fight over Taxing Inherited Wealth (2005), Michael J. Graetz & Ian Shapiro.

(10) http://en.wikipedia.org/wiki/Congressional_stagnation_in_the_United_States

(11) Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream, Arianna Huffington (2010)

(12) http://www.newsdesk.umd.edu/archive/release.cfm?year=2000&ArticleID=266

(13) Note that HR 137 has been introduced in the 112th Congress to require radio and television broadcasters to provide free broadcasting time for political advertising.

(14) http://en.wikipedia.org/wiki/Filibuster_%28United_States%29#Recent_U.S._Senate_history

(15) See www.openprimaries.org.