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Have the democratic candidates <br />ever met a happy person?

The famous Democrat Will Rogers once remarked that he never met a man he didn't like. It is not clear whether the current Democratic presidential candidates feel the same way about the people they meet, but it appears that they have never met a man or woman who is happy or even one who is moderately contented.

In listening to their speeches and debates, they seem to encounter nothing but unhappy citizens. For example, there is:

  • worker who has lost his job to immigrants
  • another worker whose job was outsourced to India
  • laid off Asian-American steelworker who is feeling insecure
  • college student who is concerned about repaying college loans
  • prospective student who cannot afford to go to college
  • retiree who has lost his pension
  • couple who are losing their home
  • single mother who cannot find health insurance for her children
  • couple who have health insurance but find it too expensive
  • construction worker who is sure the country is already in recession

No doubt all the situations are real, and they represent people in genuine distress. However, these anecdotal references do not provide a full picture of the American people or a useful guide to public policy. It might surprise the candidates to learn that 95 percent of people have jobs and, in addition, that 86 percent of those employed are content with their jobs. Even more surprisingly, 76 percent of those surveyed are satisfied with their family income. An even larger proportion are satisfied with their lives.

This negativity appears to color the candidates' personal recollections as well. John Edwards, the past master (now that he has exited the campaign) of negativity, seems to view his father's career as a failure. Without a college education, his father rose to a position of industrial engineering manager and production manager in a mill, raised a successful family and appears to be happily retired. Most people would view this as an American success story, but not John Edwards, who believes that his father was treated unfairly by the system.

Barack Obama's mother seems to have led an interesting, albeit unconventional life. However, the candidate's current recollection of his mother is centered on her concerns over her medical expenses during the last stages of her terminal illness in 1995. It might be noted that at the time of Obama's mother's illness, both Obama and his wife were Harvard Law School graduates working in Chicago law firms.

The Democratic candidates may be using the litany of complaints as a cynical rhetorical device. For example, they never seem to hear from parents who are unhappy with the education their children are receiving in public schools and the lack of viable private alternatives. This may have something to do with the candidates' hope to win the support of teachers unions.

However, the process may also actually reflect the people they meet. Have they ever met a retired couple who are living relatively comfortably and are thankful for social security and Medicare? In social science research, there is a problem called selection bias. Samples are often not random. This may well be the case here. The Caterpillar worker employed in a thriving export firm is less likely to seek out a candidate to express his satisfaction compared to the workers who believe they have lost their jobs to foreign competition. The single mother who has gone back to school and now has a well-paying job with health benefits never seems to show up at political rallies. The student from a minority group who has gone on to a successful career has little reason to petition a politician running for office.

Should policy be based on anecdotal evidence? Most people would consider politicians deranged if they met one person who was having no trouble paying his mortgage and therefore concluded there was no problem in the housing sector or if they met a worker who had adequate health insurance and concluded there should be no concern about health care access. However, when they meet people in distress, candidates seem willing to generalize on these encounters.

Making policy directed at only those in distress can be ill-advised. For example, attempts to protect the jobs of the small fraction of workers damaged by foreign competition will likely result in even larger losses for those successfully employed in the more efficient sectors of the economy. Programs targeted at the 5 percent of the people unemployed will likely have even greater negative consequences on the 95 percent of those who are employed.

In a recent Wall Street Journal column, Daniel Henninger remarked about the unremittingly negative tone of the Democratic candidates. He was not referring to negative campaigning in the sense of one candidate disparaging the other candidates. This is another type of negativity--a pervasive negative view of America. Even Obama, with his polished and often inspiring delivery, has the same message as the other Democrats, which Henninger characterizes as a "downer."

This may be a problem in the general election. General election voters may not have the same view of the country as the voters in the Democratic primary. Kennedy and Reagan both had negative things to say about current policy, but their winning message was basically optimistic. Contrast this with John Kerry in 2004 who was running in an election the Democrats thought they couldn't lose. Kerry's negative message could not carry him to victory over an unpopular, uncharismatic George W. Bush.

In a year when there is little to cheer about for Republicans, this may give John McCain and his supporters some hope.

- J. Fred Giertz is a professor of economics within the University of Illinois' Institute of Government and Public Affairs. He can be reached at (217) 244-4822 or jgiertz@ad.uiuc.edu.

America's corporate taxes are
2nd only to Japan's

Morris Beschloss

Morris Beschloss
CIBM Contributor

As the winds of populism sweep across the nation in this pivotal election year, little support can be expected for a cut in the corporate income tax.

As President George W. Bush and his advisers mull over a tax cut package to stimulate the lagging U.S. economy, it's doubtful that a reduction in taxes paid by American corporations will engender much sympathy.

The U.S. rate of 35 percent (it's 40 percent if the average impact of state corporate income taxes is included), is the second-highest in the world--after Japan's.

With exports at the heart of America's industrial revival, U.S. corporate competition will play a critical role in keeping this momentum going. The average corporate tax bite in the 17 most developed countries was 31 percent in 2006, down from 38 percent in 1954, and 51 percent in 1982, according to the Organization of Economic Cooperation and Development.

The last reduction in the U.S. federal corporate tax rate was the cut from 50 percent to 34 percent as part of the 1986 tax reform act.

Even China, which still claims an authoritarian Communist regime, has a corporate tax of 25 percent. Communist Vietnam and France's new conservative government have announced their intent to lower corporate taxes to the 25 percent level.

Western Europe, not known for its sympathies to the business community, has seen its major nations lowering their corporate taxes to make them more competitive in world markets.

Germany, which is heavily dependent on exports, has dropped its corporate taxes from 62 to 39 percent in the past 25 years. Britain has gone from 52 to 30 percent, Sweden, from 63 to 28 percent, and Austria, from 62 percent to 27 percent.

But Ireland gets the golden crown by having the lowest corporate tax rate anywhere at 12 percent, which has made that little country the best economic performer in Western Europe.

Unfriendly toward business

Although each country defines its rates somewhat differently and provides loopholes for its favorite sectors, all those who have shown themselves to be export friendly have gained substantially in the past few years.

The U.S. is way overdue in creating a more export-friendly climate for the corporations that ship heavily abroad, as well as supplying opportunities to expand their business horizons in the world's largest, by far, the U.S. home market. The U.S. ranks only fifth among the world's top 17 nations recognized as particularly tax friendly and regulation savvy.

In the American Treasury's quest for more dollars, the U.S. government has been stuck with policies that have caused many foreign companies to withhold setting up facilities in the U.S.

The U.S. is the only major industrial nation to disallow the return of value-added taxes from finished goods as components fabricated by foreign manufacturers to be shipped abroad, even though such a stratagem is allowed by the World Trade Organization.

This also applies to America's soaring exports. American corporations are not allowed to secure better tax treatment for their exports by substituting a value-added tax for the corporate income tax. Despite years of Congressional hearings on this matter, little progress has been made to make our corporations more competitive, both here and abroad.

Since most members of Congress are gun-shy because of the continued bad press the corporate world has received from the media, they are loathe to support such initiatives.

Part of the problem is lack of interest in America's dynamic export growth in the past few years. Unlike almost all other major world powers, which depend heavily on their industrial sectors for exports and home consumption, the U.S. has never considered outward-bound shipments as a major function of the growth economy.

Harboring more than 20 percent of world consumption, American business has historically concentrated on its huge home markets, with exports a supplement to overall revenues.

Pleading the case

Unlike China, Japan, Germany and Southeast Asia, which depend on overseas revenues for maintaining their industrial infrastructure, there is no export lobby to plead America's case.

With House, Ways and Means Committee chairman Charles Rangel, D-N.Y., now the kingpin of taxation initiatives, it's doubtful the corporations will fare better than they did when the Republicans controlled both houses.

Rangel has offered a bone by calling for a corporate decrease from 35 to 30.5 percent. But in exchange, he demands a new top bracket of 44 percent, up from the present top rung of 35 percent. This will affect most corporate executives and small business owners.

Editor's note: This article was previously published in the Desert Sun in Palm Springs, Calif.

- Morris R. Beschloss graduated from the University of Illinois' College of Communications in 1952.

He is a columnist for the Desert Sun and publishes two newsletters for the pipe, valve and fittings industry. He can be reached at flem6609@bellsouth.net or (760) 324-8166.

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