The Real Tax On America’s Middle-Class

July 4, October 31, December 25, January 1… All of these dates conjure up warm memories of great times with family and friends. The antithesis of these dates is April 15, when, for a majority of Americans, the biggest emotion being conjured up is dread. Nobody likes paying taxes. Period.

For most of his time in office, one of the biggest battles that President Obama has fought is his campaign (as part of a deficit reduction plan) to expire the Bush era tax cuts for America’s wealthiest 2% back to the rates that this group paid during the Clinton administration. Although 98% of the nation would not be paying the increased rate, the battle was fierce for one very simple reason: we all hate paying taxes and the idea of increasing rates for anyone is repugnant to us.

However, what if I told you that for a large number of America’s middle-class there is a huge tax being taken out of their weekly paychecks that most threatens our economic strength in the 21st Century? What is that large tax? It is the reduced size of the paycheck itself. America’s middle-class is increasingly being paid less at the expense of corporate profits. The value of corporate citizenship has been replaced by an almost fanatical obsession with the size of the Dow Jones industrial average.

Consider this from a November 2012 Time magazine article on Bill Gross: He states, “Over the last several decades, companies have taken profits at the expense of individuals. A lot of people aren’t being paid enough to spend. How can you have a sustainable recovery in an economy that’s 70% fueled by consumer spending when 90% of the income gains since the recovery began have accrued to the top 1%?”

I’m sure at this point in the column my fiscally conservative friends are rolling their eyes and making snarky comments about Jack touting the words of Western European socialists. Well, what if I told you that Gross is an Orange County Republican and is the world’s largest bond investor?

Let’s consider what Gross is saying. 70% of our economy is reliant on consumer spending, but 90% of the income generated is going to only 1% of the population, which begs the question, who will buy all the stuff that the 1% profits from when the bubble bursts and the middle-class can’t afford their products any longer? That’s a very real concern – as experts of all political stripes have come to realize. Slate magazine quoted former Federal Reserve chairman, Alan Greenspan as saying about income inequality, “This is not the type of thing which a capitalist democratic society can really accept without addressing.”

How do we address it? Let’s take a look at a local example: What would happen to many San Pedro restaurants, drycleaners, chiropractic offices, and other small businesses if many of their ILWU customers lost their jobs and they could no longer earn enough to afford their services? It would not be a pretty picture.

In 2014, the union will be renegotiating their contract with the PMA. One of the key bargaining issues will be automation. Just like in the 1960s when containerization emerged as an issue, in this decade, the goods movement industry is at a crossroads with the issue of automation. And just like containers replaced a line of workers unloading a ship with their bare hands, automation will again change the industry.

The jobs that were lost by the ILWU to containers were gained back in new technology and increased productivity, and today the ILWU is as strong as it ever was. This must be the model for the future. As man-hours are lost to automation, the new jobs in technology, maintenance, repair, and operations must be kept in our community as good paying ILWU jobs.

The alternative is another “wages tax” where yet another group of American middle-class workers get a huge chunk taken from their incomes in the never-ending quest for higher corporate profits. And who will ultimately pay for those profits? All of us (especially small businesses) as these private sector “taxes” continue to suck money out of our economy and erode the quality of American life. spt

Jack Baric can be reached at jackbaric@hotmail.com.

Hahn’s Bi-Partisan Congressional Caucus

A rollercoaster of emotions might be the best way to describe Janice Hahn’s entry into the United States Congress.

When she first announced her intention to run, many political pundits framed Janice as the underdog in the primary with California Secretary of State Debra Bowen expected to get a majority of the Democrats’ votes and Republican Craig Huey getting GOP ballots. However, Janice took home the most votes in the primary election and was well on her way to a run-off victory over Huey when life intervened.

On the day before the election, Janice’s mother Ramona Hahn passed away. The next day Janice was elected to Congress. On election night, I recall being in a long line of people who first offered Janice their condolences and then their congratulations. With tears in her eyes she accepted both sentiments graciously and began her work representing our district in Congress.

However, Janice had barely arrived in Washington D.C. when it was announced that her district had been re-drawn and she would be forced to run against an incumbent, Congresswoman Laura Richardson in the 2012 election.

With only one in ten Americans approving the work of Congress, one might wonder, why go through all the trouble to get elected?

Much of the disgust with Washington stems from the belief that the politicians have put party before country and the dysfunctional gridlock that has been created prevents our nation from moving forward out of two wars and the Great Recession into a better future. Janice would not disagree. “When I got to Congress I found myself in the middle of a very partisan, toxic environment that did not lend itself in any way to facilitate efforts by Congress members to work across the aisle. It was more of a team sport, us against them,” she says. “People want us to find a way to put aside our partisan bickering for the good of the nation.”

One of the criticisms that I occasionally would hear people whisper against Janice when she was our councilwoman was that she wanted to please everyone and was too concerned with building complete consensus before making decisions. Janice acknowledges that she always strived to build consensus, in fact she takes pride in it. “I think I was known for being able to work with environmentalists, labor, business, and neighborhood councils to figure out what we have in common to get things done,” she says.

I believe that it is precisely Janice’s great quality: to be able to listen to opposing points of view that might allow her to provide the type of leadership that the American people know we require.

She’s already begun that work in her very first year in Congress. Janice, a Democrat, and Ted Poe, a Republican from Houston, co-founded the bi-partisan PORTS Caucus to raise awareness among their Congressional colleagues about the importance of the nation’s seaports. “Surprisingly, in 112 congresses the subject of our nation’s seaports really had not been elevated to a level that I thought was appropriate considering the economics of our ports and the job creations of our ports,” says Janice. She adds, “I wanted to find something that I could do in a bi-partisan way when I reached across the aisle and asked Ted to consider forming the caucus. He said yes and we now have over 80 members of Congress that are part of the caucus.”

The PORTS Caucus has already given Janice a platform to promote the issues of our Harbor Area. Bi-partisan issues that the caucus advocates include strengthening port homeland security from terrorist attacks, pushing transportation bills that include necessary infrastructure improvements around the ports, creating grants to incubate small business start-ups that create green technology solutions for port pollution, and the creation of a national freight strategy.

The work has already begun to make its mark. President Obama recently created the first-ever White House task force on ports to create a future ports strategy and target infrastructure investments that increases the competitiveness of America’s ports. This task force can pay huge dividends for the continued economic strength of our community and is precisely the type of issue that our elected officials can work on in a bi-partisan manner to speed up our nation’s recovery from the worst economic disaster since the Great Depression.

Janice may have had a bumpy road into Congress, but it is my hope that she enjoys a long ride as our representative. On November 6, I urge you to vote for Janice Hahn as our Congresswoman. spt

Jack can be reached at jackbaric@hotmail.com