Economy -- The Myth of 'Joe The Plumber'

October 17, 2008

by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers

ECONOMY

The Myth Of 'Joe The Plumber'

Last weekend, Sen. Barack Obama (D-IL) visited a quiet neighborhood outside Toledo, OH, and ran into a man named Samuel J. Wurzelbacher. Wurzelbacher, known as "Joe," asked Obama if he believed in the American Dream and expressed his concern about having to pay higher taxes should he fulfill his desire to own a small plumbing business. "I'm getting ready to buy a company that makes $250,000 to $280,000 a year," he told Obama. "Your new tax plan is going to tax me more, isn't it?" Obama explained that his tax plan is premised on the idea that "if the economy's good for folks from the bottom up, it's gonna be good for everybody. If you've got a plumbing business, you're going to be better off if you've got a whole bunch of customers who can afford to hire you." Obama then added, "I think when you spread the wealth around, it's good for everybody." Wurzelbacher became an instant conservative hero. Right-wing media immediately latched on to him -- who called Obama's economic plan "socialist" -- and Sen. John McCain (R-AZ) quickly jumped on the bandwagon, lionizing "Joe the Plumber" in the final presidential debate last Wednesday. "What you want to do to Joe the Plumber and millions more like him is have their taxes increased and not be able to realize the American Dream of owning their own business," McCain said to Obama. But the reality is far different. In fact, a progressive tax policy is exactly how "millions" like "Joe the Plumber" can realize the American Dream -- a concept that McCain once understood years ago.

PROGRESSIVE TAX POLICY: President Bill Clinton decided early in his term in office that expanding the middle class -- not tax cuts for the rich -- would be the engine of economic growth, while his successor, President George W. Bush, argued the opposite. But the as the results have shown, a progressive tax policy enacted by President Clinton achieved far superior results for the economy. By the end of Clinton's second term, unemployment stood at very low 3.9 percent while today it has risen over 6 percent. The poverty rate was lower in 2000 than it is today. The median household income (adjusted for inflation) was over $3,000 higher eight years ago. Bush inherited a $237 billion federal budget surplus, which he has turned into a $482 billion deficit (and growing fast). Building on this formula, the Center for American Progresss put forward a progressive, "comprehensive tax reform plan to restore fairness, simplicity, and opportunity to our tax system while generating the resources necessary to meet our nation's commitments," such as energy independence, education, and health care. In order to achieve these goals, the plan centers on increasing the take-home pay of those making under $200,000 a year, with those making more seeing an increase relative to the current tax policy.

THE REAL 'JOE THE PLUMBER': Earlier this week, Fox News's Neil Cavuto summarized the right wing's fascination with Wurzelbacher. "You're the type of guy who these tax increases of [Obama's] could affect, or where the cut-off is could effect, and you don't fit this gazillionaire model," Cavuto told him during an interview. But according to tax analysts, the problem for McCain and the right in focusing on Joe the Plumber is that "the underlying premise that Wurzelbacher would face higher taxes under Obama is neither true nor typical of how the vast majority of small businesses would fare." Moreover, even if Wurzelbacher buys the business, it is "unlikely" that his purchase "would give him a taxable income of more than $200,000 -- leaving him unaffected by Obama's proposal." Even if he did earn $280,000 per year as he projected he might, Wurzelbacher "would pay just $773 more in taxes under Obama's plan than McCain's," hardly a crippling blow to his business. The Toledo Blade reports that Joe the Plumber currently earns well under $100,000 per year. In that case, he would save more under Obama's plan than McCain's. "Rather than a game-changing blow for the McCain campaign, 'Joe the plumber' is turning into a bad case of blowback,'' said Rogan Kersh, a public service professor at New York University.

HELPING BUSINESSES THROUGH HEALTH CARE: Many critics have argued that letting Bush's tax cuts for the top two marginal income tax rates expire would have an adverse affect on small businesses such as Wurzelbacher's potential future plumbing company. But according to the Center on Budget and Policy Priorities, "only 1.9 percent of filers with any small-business income are projected to face either of the top two income tax rates in 2009." The rising cost of health care is making it harder for small businesses to grow and create jobs. In fact, Wurzelbacher himself has experienced the the high cost of health care. St. Charles Mercy Hospital filed a lien against him in March 2007 by for $1,261, records show, although it has since been paid off. Currently, many small businesses are overwhelmed by health care costs. They either "pay the overblown and disproportionate costs in purchasing and administering a health care plan or, worse, offer no health care plan at all and suffer the competitive disadvantage in attracting and retaining talented labor." But a progressive tax policy will allow the government to invest in health care reform, thus providing help to small businesses by expanding coverage for their employees and relieving employers of the burden.

SOCIAL JUSTICE -- WILL THE VOTE OF 'JOE THE PLUMBER' BE COUNTED?: Since Wednesday's debate, Joe 'The Plumber" Wurzelbacher has been warmly embraced by conservatives. However, he may soon fall victim to the right wing's crusade against so-called voter fraud. On Tuesday, a federal court ruled in favor of the Ohio Republican Party, allowing Ohio poll observers to force voters whose registrations don't match other state databases to fill out provisional ballots. These ballots are "used to record a vote if a voter's eligibility is in question." Provisional ballots, though, greatly increase the chance a voter's ballot will not be counted. In Ohio's March primary, the Cleveland Plain Dealer found that 20 percent of the provisional ballots were rejected, even though "many people shouldn't have lost their votes." Because Wurzelbacher is misregistered as "Worzelbacher," he may be one of the voters caught up in the misguided system. As Michael Waldman, the executive director of the Brennan Center for Justice, noted, Joe the Plumber is a "perfect example" of why these voter fraud laws are more harmful than helpful. "Purging voters or blocking their registration because of data errors is disenfranchisement by typo," he said.

ECONOMY -- ECONOMISTS CALL FOR INCREASED GOVERNMENT SPENDING: On Wednesday, Washington Post columnist Ruth Marcus joined the chorus of those calling for a "New Sobriety," counseling massive cuts in government spending to address the ballooning national debt and the economic downturn. Center For American Progress Action Fund Senior Editor Matthew Yglesias has called the instinct "Neo-Hooverism;" now "many economists and budget analysts argue that the next administration should --initially, at least -- open its wallet, not tighten its belt," the Washington Times reports. "Definitely in the short term, the policy should be to spend and not worry about the impact on the deficit," said Rob Shapiro, a former top economic adviser to President Clinton. Nobel-Prize-winning economist Paul Krugman agrees, writing in the New York Times today that despite the "politically fashionable" trend to rage against spending, "right now, increased government spending is just what the doctor ordered." Krugman calls on the federal government extending unemployment benefits, providing emergency aid to state and local governments, buying up distressed mortgages, and increasing infrastructure spending. Congressional Democrats have called for a second stimulus package that would include many of these provisions, but the White House has signaled it would oppose such an effort.

ETHICS -- FORMER GSA HEAD FURIOUS AT NEW HOUSE REPORT, DEMANDS CHANCE TO TESTIFY: On Wednesday, the House Oversight Committee released a report concluding that the White House "used the political affairs office to orchestrate an aggressive strategy to use taxpayer-funded trips to help elect Republican candidates for public office." One of the appointees aiding in this effort, according to the report, was former General Services Administration (GSA) chief Lurita Doan. Doan first gained notoriety for using a January 2007 government teleconference to "ask senior GSA officials to help 'our candidates' in the next elections." A White House Office of Special Counsel investigation found that Doan violated the Hatch Act and she was subsequently forced to resign. Now Doan is back. Furious at the Committee's most recent report, Doan sent an angry letter to Chairman Henry Waxman (D-CA) on Wednesday, accusing him of "vicious, partisan politics." "I know how your witch hunts and kangaroo courts work. So please, invite me to testify. I can't wait," she wrote. It's surprising that Doan remembers so much about Waxman's previous allegations and that she's so eager to return to Congress. After all, last time she testified before his committee in March 2007, she embarrassingly couldn't remember anything except that "there were cookies on the table" at one of her meetings.

The EPA and OSHA have some of "the most restrictive policies in the federal government on releasing scientific information to the press and public," according to a report card issued today by the Union of Concerned Scientists. The report card, which was based on surveys filled out by 739 researchers, gave the EPA a "D" and OSHA an "F." The CDC was the only agency to receive an "A."

"Autumn temperatures in the Arctic are at record levels, the Arctic Ocean is getting warmer and less salty as sea ice melts, and reindeer herds appear to be declining," a new report complied by 46 scientists in 10 countries finds.

Oil prices dropped below $70 a barrel for the first time in 14 months. "The decline in oil prices came after a government report showed domestic crude oil stockpiles rose more than expected as Americans use less oil, in part because they are driving less."

Maj. Gen. Jeffrey Schlosser, a top general in charge of U.S. ground troops in Afghanistan, tells CBS's 60 Minutes this week that “the enemy has increased by up to 30 percent in the last year and he is seeking re-enforcements." "I'll tell you that they are doing more complex activities which concerns me greatly," Schlosser told CBS News correspondent Lara Logan.

Sen. Ted Stevens (R-AK) took the stand yesterday and “immediately denied charges that he lied on financial disclosure forms to conceal gifts and extensive home renovations he received from a business executive.' Stevens's trial may conclude this afternoon, "with closing arguments scheduled for Monday."

And finally: On Monday, politics and Gossip Girl finally came together. During the show, rich Manhattan socialites Serena van der Woodsen and Blair Waldorf visited Yale and reminisced over the time that Blair tackled Sen. Chuck Schumer’s (D-NY) daughter at a football game because she was wearing a Harvard sweatshirt. Schumer wasn't watching the show but was reportedly impressed. "It took a couple tries to explain to him the significance, but then he thought it was, like, totally awesome," said the senator's spokesman.

The Environmental Protection Agency "is slashing the amount of lead allowed in the nation's air by 90%."

THINK PROGRESS: National Review's Frum incorrectly attributes quote to MSNBC's Keith Olbermann that was posted on a satire site.

WONK ROOM: How deregulation killed the Wild West.

YGLESIAS: The financial crisis and the lessons of macroeconomics textbooks.

MEDIA MATTERS: Media revive false pattern of reporting on alleged "voter fraud" concerns, despite lack of evidence.

CALIFORNIA: Teachers' union donates $1 million to oppose Proposition 8, a ballot initiative that seeks to ban gay marriage.

VIRGINIA: Study finds that the state is "among the least prepared states to handle Election Day problems such as long lines, broken machines and software malfunctions."

OHIO: Ohio's Secretary of State appealed to the U.S. Supreme Court to "decide whether the office should be required to reprogram the statewide voter registration database by today."

"[The economic crisis] could give the next president more maneuvering room to...build political consensus for painful but necessary budgetary choices."
-- Washington Post's Ruth Marcus, 10/15/08

VERSUS

"[R]ight now, increased government spending is just what the doctor ordered, and concerns about the budget deficit should be put on hold."
-- Nobel Prize-winning economist Paul Krugman, 10/17/08

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