Don Perata endorses Eric Swalwell for Congress

Former state Senate President Pro Tem Don Perata, D-Oakland, today announced he’s endorsing Dublin councilman and Alameda County prosecutor Eric Swalwell in his campaign to unseat Rep. Pete Stark, D-Fremont.

Don Perata“It is time for new energy and true leadership from the next Representative in Congress for the 15th District, and Eric Swalwell is the right person for the job,” Perata said in a news release.

Swalwell, in the same release, said Perata “is known for getting results and I admire that. I respect his willingness to work across the aisle to get things done for his constituents and the State, most notably when he worked with then-Governor Schwarzenegger to place and successfully campaign for five infrastructure bond measures on the ballot in 2006 to improve roads and mass transit, build more affordable housing, repair levees, and upgrade educational facilities.”

Perata is a longtime East Bay political figure who always has been tight with the organized labor community, and so his endorsement of Swalwell might mark a chink in the union armor Stark has tried to don (pun intended) since June’s primary election – most notably with his hiring of former Alameda Labor Council Executive Secretary-Treasurer Sharon Cornu to run his campaign.

Perata’s endorsement of Swalwell comes about a week after that of former Assembly Majority Leader Alberto Torrico, D-Newark, who reportedly got quite an earful from Stark about it. Maybe Perata should screen his calls for a while.

And he might not be the only one. Rumor has it another influential and labor-friendly politician from the East Bay – this one still in statewide office – is about to give a dual endorsement in this race. Stand by for more info on that…

UPDATE @ 6:16 P.M.: It’s State Superintendent of Public Instruction Tom Torlakson.

“We need a leader in Congress who understands the immediate need to support our education system and to invest in our public school students so they are ready for the jobs of the future. We need to empower educators to teach not to tests, but to individual needs,” Torlakson said in a statement emailed this evening. “I see Eric as a tireless advocate for our children in Congress. I look forward to having him as a partner at the federal level committed to delivering our children a high-quality 21st Century education.”

Torlakson already had endorsed Stark earlier; Stark still has way more endorsements from public officials and unions than Swalwell.

To me, getting a dual endorsement is a little like kissing your sister – a tie nobody wants, about as useful as staying out of it completely and giving no endorsement at all. That said, Torlakson is a longtime East Bay Democratic player who has worked closely with labor unions and won a statewide campaign, and the fact that he’s not standing solely by Stark in this race probably says something.

I managed to get Torlakson on the phone a few minutes ago to clarify why he added this endorsement. He said he’s seen Swalwell’s “depth of knowledge and energy to tackle the issues that will support our schools and children … emerge as the campaign has gone forward.”

Asked whether he would consider helping out with fundraising or campaign appearances for either campaign, he replied, “It remains to be seen, I haven’t been asked.” Pressed on whether he would do so for one campaign over the other, he replied, “We’ll see as it moves along.”

Josh Richman

Josh Richman covers state and national politics for the Bay Area News Group. A New York City native, he earned a bachelor’s degree in journalism from the University of Missouri and reported for the Express-Times of Easton, Pa. for five years before coming to the Oakland Tribune and ANG Newspapers in 1997. He is a frequent guest on KQED Channel 9’s “This Week in Northern California;” a proud father; an Eagle Scout; a somewhat skilled player of low-stakes poker; a rather good cook; a firm believer in the use of semicolons; and an unabashed political junkie who will never, EVER seek elected office.

  • DanvilleDemocrat

    Jerry Brown?

    Bill Lockyer — though the East Bay’s an “adopted” home?

    Time will tell. . . .

  • JohnW

    I can’t imagine two endorsements more coveted than Don Perata and Bill Lockyer. Has Mary Hayashi endorsed yet?

    Thanks to Stark-raving Pete, it looks like the half-councilman is going to waltz into Congress without ever having debated anybody on a single public policy issue.

  • moderate voter

    Great to see Don Perata supporting Erik Swalwell for the 15th Congressional seat. I think a lot of political leaders in the East Bay – like Perata and Ellen Tauscher – can readily see it made virtually no sense for 81 year old Pete Stark to run for re-election in the newly configured 15th district.
    Stark has already said privately this will be his final term, yet this is an entirely new district, he’s not the incumbent. He’s basically asking voters to elect him to this new congressional seat, yet he’s already given “notice” on the job. If elected he will be a lame-duck, his telephone calls won’t even be answered. It’s just plain ridiculous for him to run for this new seat, while simultaneously announcing his retirement.
    I’m a blue collar work myself. At our plant when somebody “give notice ” they usually start goofing off on the job and calling in sick. Pete Stark, I should mention, doesn’t exactly have a rep for working very hard, he rarely visits the district he currently represents, he’s never in his office in Washington, I mean if Stark is elected 15th District constituents will be getting a lame-duck Congressman that work six hour work weeks!
    I like this Erik Swalwell guy, he’s a go getter, not afraid to take on the Washington big shots, he will put in 14 hour days for his constituents, I’m sure of it. Just look at this kid as a campaigner, he’s everywhere, I’ve run into the guy 14 times in the last 60 days at one event or another. The guy is a whirlwind, which is what you want for a Congressman.

  • GV Haste

    Torlakson is essentially saying “I no longer support Pete Stark”

    Like a guy who is officially married, but all over town with a new girlfriend. You know who he is really sleeping with.
    Pete’s ship is leaking water and the campaign captain (manager) doesn’t know how to run a campaign east of the hills.

    Stark can sustain perhaps one, and only one, more gaffe.
    Two embarassments over the next 12 weeks and he is through.
    No doubt he’ll only be appearing at well scripted friendly events. With guards between him and the press as well as a car waiting nearby to whisk him off to a “urgent appointment”.

  • moderate voter

    These gaffes being made by Stark aren’t the only reason not to vote for Stark. Stark just hasn’t been working very hard his last five terms. In the last session he missed 1/3 of Congressional votes, which means he isn’t showing up to his job 30% of the time. He also rarely visits his district, he claims he visits twice a month but I think he’s stretching the truth here. In fact, most Representatives – at least ones that are on the ball and hard working, are visiting their districts every weekend, you’ve got to, you’ve got 600 thousand constituents who are looking to you for leadership. But Stark visits his district rarely, and almost holds his nose the whole time he’s doing it.
    If a Congressman is missing 1/3 of his votes, and he’s not visiting his district very often, then he’s not doing his job. Period. In fact, it even gets worse. According to information put out by the Swalwell campaign Stark actually lives 1 hour away from the house office buildings, he lives in Maryland. I’m no expert on Washington, but common sense tells you when you’re a Congressman you’ve got to live right next to the Capitol. Why? Well, for starters, you’ve go to be close so you can vote on legislation, you also have lots of meetings to go to, including meetings with constituents.
    The fact that Stark lives an hour away from the House, the fact that he rarely visits his district, the fact that he’s missing 1/3 of his votes, these are all indicators – to me – that Stark is semi-retired, that he’s not doing his job. He’s an absentee Congressman – in Washington, and here in the East Bay as well.
    Stark is touting that he’s the dean of the NorCal delegation – he been in office longer than anybody, but it’s the more junior members that are bringing jobs to NorCal. George Miller got a division of Lawrence Livermore lab to come to Richmond, thousands of jobs for Richmond down the line, and this other women Representative in San Jose – her name escapes me – got a big federal patent office to come to south bay, thousands more federal jobs coming to job-starved Northern California.
    Senority is great, Pete Stark has got a lot of it, but he doesn’t appear to have much energy anymore, his junior members are getting jobs for NorCal, and he’s touting his skill at getting unemployment extensions for workers at closed plants.
    If Erik Swalwell is elected – he will have less senority – that true, but sometimes it’s energy that matters, not length of time in office. I invite anybody to read Robert Caro’s “Path to Power”, his book on Lyndon Johnson’s first term in Congress, a young guy – with energy, and initiative, can get it done.

  • Elwood

    @ “moderate voter” #5

    Granted Pete Stark is a senile fossilized turd and needs to go.

    But why don’t you just come out and admit that you are a paid flack of the Swalwell campaign?

  • JohnW

    Eric stopped by my house over the weekend and left a “sorry I missed you” note. I would have listened politely and then patiently explained why he won’t get my vote. My vote is not FOR Stark, but rather FOR an open race in 2014. If the opponent were anybody but Stark, the newspapers and pols who have endorsed Swalwell would dismiss him as an energetic man with a promising future who should come back in a few years when he has some experience in lower office, has accomplished something and has said something meaningful about issues.

  • Elwood

    John, repeat after me:

    Congressman Swalwell, Congressman Swalwell etc.

    If this is too upsetting for you, lie down with a damp cloth over your forehead until you are feeling better.

  • JohnW

    Re #8

    Tried that, Elwood. Doesn’t work.

    The only thing that seems to work is repeating the words, “President Romney.” That gives me major chest pains, but at least it displaces the migraines from the thought of a half-term city councilman claiming a seat in Congress just for showing up.

    Can’t blame Swalwell, though. It’s the Bay Area Congressional delegation, who circled the wagons around Pete instead of telling him it’s time to leave and then backing somebody better than either Stark or Swalwell.

  • GV Haste


    Re #7 “My vote is not FOR Stark, but rather FOR an open race in 2014.”

    Uh, this IS a open race, except the others wimped out. That says loads about them and something else about Swalwell.

    The rest of the crew sits behind Pete while he labels Swalwell a “pipsqueak”..
    The real pipsqueaks are those who were frightened off from the race.
    Thank God, for once we have a real election.

  • JohnW

    Re: #10

    My definition of an “open race” in 2014 is one in which there is no incumbent. I believe that truly would be the best thing for the district.

    An open race this year, by my definition, would be one in which Stark decided not to run, so that no prospective candidate would hold back from throwing his or her hat into the ring. I don’t like being told I have to vote for somebody who, in my opinion, is not ready for the job just because the other guy is a jerk.

    I agree that the pols and some prospective candidates blew it. That doesn’t make me any happier about Swalwell. But I do give credit to Swalwell for being astute enough to understand that the open primary/top two system, combined with Stark’s baggage left the door wide open for him to stake a claim.

  • GV Haste

    JohnW, I see it as follows. If Swalwell is elected this year, he will have a fair chance in 2014, but by no means will his short incumbancy be able to keep the big money folks like Ro Khanna and Corbett from putting up a powerfull challenge.

    So, unless you are afraid of Swalwell doing such a great job over the next two years, then you will still have your wide open election in 2014.

    Ro already has over 1.1 million dollars and would easily have 2 million by 2014.
    Swalwell won’t have nearly that much, even as incumbent.

    NO, if Swalwell loses this time, you will probably have a only Ro as a huge monied favorite in 2014.
    With a meager-by-comparison effort by Corbett.

    Hence your election in 2014 will not be as open as you’d like to think. The money and promises are already in for Ro. He is the “prince” in waiting.
    More of the old-boy insider system seen so often in Alameda County.

  • moderate voter

    John W. is touting the Nancy Pelosi line here for the 15th district, which is “yes, it makes little sense to plop 81 year old left-winger Pete Stark in a district that ecompasses Dublin, Pleasaton and Livermore – and includes Lawrence Livermore Labatory a massive federal work installation Stark has long not supported – but we’ve got a terrific candidate coming in 2014.” That candidate is Rho Khanna, a former failed Congressional candidate from San Mateo who has driven across the bridge in search of greener pastures. The carpetbagger Khanna, I should mention, is being backed up by the elite of Nor-Cal CEO’s – the one’s moving all those jobs overseas – and has a multi-million dollar campaign fund – all special interest money – which he is going to use to buy the 15th Congressional seat in 2014.
    Meanwhile, for the next two years 15th district constituents have to put up with Pete Stark – a wacky left-winger who is a notorious bumbler, a Congressman who is routinely voted DC’s worst Congressman, a Congressman who is legendary for his laziness and flaky-ness, who – as many are noticing, appears to be half-batty.
    I think if Nancy Pelosi had run her “plan” for the 15 district by local voters and local leaders they would have told Pelosi her “plan” makes no sense – has never made any sense – which is why so many local political leaders, like Perata, Tauscher, and Torlakson are defying her and ignoring her ridiculous ‘plan” for the 15th district and supporting Eric Swalwell, who is the best candidate in the race, and possibly the best candidate to run for the house in NorCal in 20 years.

  • JohnW

    Re #13

    “John W. is touting the Nancy Pelosi line here.” You mean the part where I say the pols blew it?

    “…in a district that includes Dublin, Pleasanton and Livermore…” The overlooked voters of Hayward, Union City and San Ramon (where I live) thank you for your comprehensive description of the district.

    I’m just trying to help out the good citizens of Dublin. Would hate to see them lose their star city councilman. Having the title of city councilman would rarely be taken seriously by voters and the press as qualification for election to Congress. Without that title, Swalwell would have no resume (political or other) to run for national office. Yet, Swalwell became a candidate only 10 months into his first 48-month term on the council.

    But, not to worry. Thanks to Stark, Swalwell would be caught in a wide stance in an airport men’s room to lose.

  • moderate voter

    #14, John, I wouldn’t describe Dublin, Pleasanton, Livermore OR San Ramon and Union City hot-beds of left-wing politics, which is why fire-breathing leftist Pete Stark doesn’t work as a Congressional candidate. In this district you’ve got lot’s of high tech workers, many that are worried about thier jobs being moved overseas by these high tech CEO’s – the ones backing Rho Khanna in 2014 – who are flying around on private jets and buying 100 million dollar homes. They are also worried about this massive federal debt that has been run up. Left wing Pete Stark – whose has spent his entire career scheming to quadruple the federal debt – he’s got it up to about 2 trillion now – doesn’t work as a candidate in this district. Nor does Rho Khanna, who is in bed with all these CEO’s in the Silicon Valley. Josh Richmond has reported Khanna has 1.5 milion dollars banked for 2014, ALL of it special interest money.
    In fact, the voters in the 15th are very sophisticated, they don’t like all this special interest money dominating elections – the stench of corruption in politics has never been this bad – so I think Khana doesn’t work as a candidate for the 15th, not in 2014, or ever.
    The best candidate for the 15th is Erik Swalwell. He’s running a real grassroots campaign – minus all this corrosive special interest money, he’s politically “in tune” with voters in this district, liberal on social issues, a strong supporter of core democratic programs like Medicare, Pell grants and so on, but I think he’s sensible too, he will be on guard agaisn’t goofball federal spending, he will look out for the taxpayers, something the left wing Stark is functionally incapable of doing.

  • JohnW

    Moderate Voter,

    If you’re going to be head cheerleader for Swalwell on this blog, I’m sure he would appreciate it if you would correctly spell his first name. It’s Eric with a “c.”

    Stark is irrelevant, especially in a House controlled by Republicans. What’s relevant is who claims the CD 15 seat and the advantages of incumbency for future years. If this were a judicial appointment instead of an election, the American Bar Association would not rate Stark or Swalwell in terms of which is best or worst. They would independently rate each nominee as Well Qualified, Qualified, or Not Qualified. Generally, anything less than Well Qualified is the kiss of death for a nominee.

    One could make a case for “Not Qualified” for Stark and either “Qualified” or “Not Qualified” for Swalwell. To me, that doesn’t mean I choose between the two. I vote to keep looking for somebody who is Well Qualified. The only way to do that and have an open seat race in 2014 is to send Stark back to D.C. and put a leash and muzzle on him, which I’m sure Nancy can do.

  • Elwood
  • JohnW

    Just like Mitt and his taxes. Just does what the law requires or allows. I think Warren Buffet collects SS benefits too.

  • GV Haste

    I know people out of work, eligible for food stamps, but they don’t take them, because of something that tells them, if they can get by, they don’t want someone paying for their food.

    Guess Pete Stark doesn’t think that way. Worth over $20 million, living in a large waterfront home, he and his wife holding down two well paid jobs, with full benefits, and yet Pete grabs thousands of more dollars for his 3 young children..
    Why? Because he says he is entitled to it.

    What a sign of our times. Millionaire politicians grabbing more, ever more. Remines me of Mary Hayashi, with her and her judge husband pulling in $300,000 per year, but she wants more, so she goes to Nieman Marcus and steals high end merchandise.

    How sick it has gotten in Alameda County politics.

  • JohnW

    Bad, bad Pete.

  • Elwood

    @John W. #18

    “Just like Mitt and his taxes.”

    So what are you suggesting? Romney should voluntarily pay more taxes? I’m sure he will right after you and Buffet do so.

  • JohnW

    No, I was simply noting that Stark is taking what he is entitled to under the law; and Mitt is paying no more than required under the law. So, if somebody thinks it is okay that the law allows Mitt to pay a very low tax rate, then they should not be upset that the law allows Pete and his minor kids to collect Social Security, or that Stark does what the law permits.

    Whether we have a flat tax, progressive tax or whatever, my belief is that the law should be that people with comparable incomes should pay comparable taxes. Give everybody a standard deduction that reflects basic living expenses (2-3 times the poverty rate) and then apply whatever the tax rates are to the net amount.

    I checked my effective tax rates for 10 years (2002-2011), a period during which I had a lot of income fluctuation due to various circumstances. In 2006, my effective rate was higher than Mitt’s, even though my adjusted gross income was roughly the amount that Mitt deducted for his wife’s horse. I had two years in which my effective rate was more than double what Mitt paid in 2010 and nearly double in another year. For the record, even my very best year income-wise was a very small fraction of what Mitt reported in 2010.

  • Elwood

    “So, if somebody thinks it is okay that the law allows Mitt to pay a very low tax rate, then they should not be upset that the law allows Pete and his minor kids to collect Social Security”

    Non sequitur.

  • JohnW

    Non sequitur? How so? The standard defense of Mitt’s taxes is that he is just aggressively taking advantage of every legal means to keep his tax rate low. Why, it would be almost unpatriotic not to do that, right? Pete apparently is collecting advantage of the Social Security benefits for which he and his minor children are eligible, even though they obviously don’t need the money.

    What’s the diff?

  • Elwood

    @ #24 John W.

    If you don’t see the difference between not paying money to the government you don’t owe and taking money from the government you don’t need, I don’t think I can explain it to you.

    Leave it to a worm like Stark to do something like this. You seem to be quite proud of him for taking that money and condemning Romney for not paying more taxes. Illogical.

  • JohnW

    Elwood, I’ve never suggested that Romney should pay more taxes than required by the tax code. I have said that a tax code that gives him a 15% preferential tax rate on what is really ordinary income while somebody who gets paid an excellent but not gargantuan salary has an effective rate of 25% or more and a marginal rate of 35% is totally messed up. Surely, Romney knows that. As a presidential candidate, he could score big political points and do the right thing by acknowledging how messed up that is and pledge that it will get fixed as part of tax simplification. He could have turned the tax issue to his advantage. But he’s too tone deaf to do that.

    There is very little about Pete Stark about which I am proud. He paid into Social Security just like the rest of us. He is past 70, so he can receive full benefits and still work. In fact, because he is still receiving a salary as a member of Congress, he has continued to pay into Social Security for 15 years beyond when he became eligible for full benefits. That means that, during the past 15 years, he has paid roughly $75k into the system (excluding the employer share); but his benefit doesn’t increase because of it. I’m not clear why his minor children are eligible, but I assume it is according to law.

  • moderate voter

    I think there is a general perception in the US that our “elites”, Congress, Wall Street, Big Corporations, and CEO’s have let the average US worker down, that’s the read I get from talking to people all the time, there is this stench of corruption that seems to permeate our institutions in the last decade. Greed is the order of the day, all of the time.
    This latest revelation that Pete Stark – who is worth 27 million dollars – talked his teenage kids into signing up for social security – which they apparently “qualify” for – but obviously don’t need, is just another example of this stench of greed. This is the kind of thing you would expect of a political leader in a bananna republic. Geez, no wonder the popularity of the US Congress is at 8%.
    When I read stuff like this the word “corruption” and “rot” comes to mind, which is why I am such an enthusiastic supporter of the give Pete-Stark-a-Pink Slip movement, which is catching fire in the 15th district. We need ethical leadership in the Congress, Stark has got to go, this year, in 2012.

  • JohnW

    Moderate Voter,

    Warren Buffet takes Social Security, and I’ll bet most wealthy seniors do as well. So, whatever Pete Stark’s shortcomings, it is a bit snarky to single him out on this.

    By the way, one of the few issues where Swalwell has taken a specific position is how to beef up Social Security. He advocates lifting the cap on wages subject to Social Security taxes, which is currently about $110,000. A person earning that amount is probably in the 25% marginal tax bracket. Tacking on another 6.2% (employee share only) would effectively be a 24.8% increase in their marginal tax rate.

  • Elwood

    “Warren Buffet takes Social Security, and I’ll bet most wealthy seniors do as well.”

    Warren Buffet and most wealthy seniors are not members of the United States Congress.

    One would hope (probably in vain) that they would set a higher standard.

  • JohnW

    I have to agree to an extent. I still don’t see anything ethically wrong with receiving benefits as the law provides. SS eligibility is not means-based. However, If I were in Congress, I don’t think I would claim SS benefits while still serving. “Bad optics” as they say in the political image-making trade. With so many 65+ people in the Congress, I wonder how many others currently in office, if any, do claim SS.

  • moderate voter

    Congressman Pete Stark, in my mind, is a ludicrous figure at every level, he’s worth 27 million dollars – and he get’s a $200,000 Congressional salary – yet he has the feds paying for his kid’s I-Pods, cell phones, cheeseburgers, and prom tickets.
    These are all things he could easily pay for himself, but he shrewdly saw he could stick the federal treasury with the bill, saving Pete a pile. I don’t know how anybody could conclude Stark isn’t ethically challenged by pursuing such a course of action, regardless of whether or not this “legal” in the technical sense.
    Stark, as I understand it, is also himself receiving social security, while drawing a magnificent Congressional salary, thus he is a “double dipper” on the federal treasury, so he has actually one-upped his kids who are just “single dipping”. Given how wealthy Stark is – he’s worth 27 million dollars – there does appear to be a LOT of federal money flowing into his family. Too much, I think so, especially in light of this 2 trillion dollar deficit we have in US.
    One way to cut the flow of federal dollars to the Stark family, is – of course – to throw him out of Congress, which voters will likely do because the other candidate in the race – Eric Swalwell – is just terrific.
    John, as I was saying – there is this perception that our elites have let the US worker down, I think there is a lot of evidence of that. But we can change that by giving Congressman Pete Stark – and other like them, their “pink slips” in November.

  • GV Haste

    Romney pays only 13% on his huge income.

    Pete Stark, a fully employeed multi-millionaire, age 80, gets thousands and thousands of dollars for his 10 year old and up kids. Oh and did we forget, their mother is fully employed.

    Neither pass the stink-test.

  • JohnW

    Moderate Voter,

    I don’t endorse Stark’s recent record in Congress or on the campaign trail. I just reject the notion that Swalwell is a good choice to replace him.

    Congressional salary is $174k, not $200k. Deficit is $1.3 Trillion, not $2 Trillion.

    “Whether or not it’s legal in the technical sense.” You make it sound like an oversight or loophole. Anybody who is age 70 or older who has paid into SS is eligible for full SS benefits while still working, whether they make their living as a member of Congress, or as a truck driver. Maybe Stark shouldn’t take his Congressional salary. He’s rich and doesn’t need that money either, right?

    Whatever imagined good things may come of Stark’s defeat, cutting “the flow of federal dollars to the Stark family” won’t be one of them. He’ll still be eligible for the SS benefits. But he will no longer pay into the system. So, the net flow of SS dollars will actually increase. Plus, he’ll start collecting a full pension. Plus, we will be paying full salary and benefits to his replacement. As a financial proposition, we are better off keeping Stark in office until he goes to that great Congress in the Sky, presided over by the Speaker of the Universe, Sam Rayburn!

  • Elwood

    The 13% of Romney’s income, which undoubtedly runs into the millions of dollars, is quite a lot more than nothing which is what approximately half of the US population pays.

  • Elwood

    “We are becoming the 50–50 nation—half of us paying the taxes, the other half receiving the benefits.”


  • JohnW

    I read on CNN Money that, if all the Bush tax cuts were allowed to expire, the share of tax filers paying nothing would drop to 36%. In other words, many of the breaks that result in people paying nothing (including some millionaires), were established during the Bush administration.

    We need to get rid of all the itemized deductions, exemptions, refundable tax credits etc. that result in people with identical gross incomes paying significantly different taxes. The biggest welfare program in the country is the mortgage interest subsidy.

    Everybody should pay something, even if it’s just 3% of gross income at the low income level. That wouldn’t change the fact that high income people pay a very high share of taxes, because most of the income growth during the past 30-40 years has been at the higher income levels.

  • Publius

    Re: #36

    “We need to get rid of all the itemized deductions, exemptions, refundable tax credits etc. that result in people with identical gross incomes paying significantly different taxes. The biggest welfare program in the country is the mortgage interest subsidy.”

    We need to stop spending. We need to stop throwing money down a rat hole.

    Your statement reveals a common thread in liberal thought. You labeled the mortgage deduction as a welfare program; this idea that the money people are allowed to keep is a cost to the government implies
    that the Government owns all wealth and that its yearly expenditures are fixed and cannot be reduced.
    Somehow somewhere the progressives have defined that
    not taking is spending?????

    The real cost of government has nothing to do with how much revenue (taxes that are taken from the people) the government has. The war, real welfare, food
    stamps, research, education, pensions, payroll,
    infrastructure etc……, these are costs.

    The obvious problem is government over spending and waste. The progressive income tax and the mammoth tax code that has taken form over the last 100 years make the problem of inefficient government worse. When you
    tax (punish) production and achievement you will
    always have those that will fight to keep what they have earned and in the end you will get less
    production and more evasion. Our current income tax
    law is bad and needs to be reformed. A tax based on
    income invariably makes liars out of most men. A Fair
    Tax based on consumption will be more acceptable to the human heart and be in line with our intrinsic American values.

    “Bad laws, make socially advantageous acts illegal and therefore lead to an undermining of morality in general. “

    Milton Friedman

  • JohnW

    Whoa there, Publius! “Liberal thought?” The idea that tax preferences such as the mortgage interest deduction and the exemption for employer-paid health insurance distort markets and behavior is not “liberal thought.” So-called free market economists have been singing that tune for years. If we eliminated them all, it would nearly wipe out the deficit. In fact, in a normal economy, it would produce a significant surplus to rapidly pay down the national debt, at which point we could lower tax rates and sustain whatever level of government we chose.

    We can have a separate debate about income tax vs “fair tax,” or what rates should be, or how big the government sector should be. But, so long as the national government gets more than 70% of its revenue from the income tax, my position has always been that people with equal incomes should pay equal taxes. All the deductions and exemptions make that impossible.

    Economists of all persuasions refer to the preferences as “tax expenditures.” The taxpayer who chooses to take on a million dollar mortgage with deductible interest of, say $50,000 ends up with a tax reduction of about $15,000 that another taxpayer who chooses to rent or to buy without taking on a mortgage doesn’t get. It’s no different than if the government mailed a housing subsidy check to the taxpayer with the mortgage — hence the term, “tax expenditure.”

    In the case of the mortgage deduction, we actually encourage people to take on debt; which, of course, was a big factor in why the Great Recession started and why it continues while individuals and companies de-leverage rather than spend. Canada doesn’t have a mortgage deduction. Yet, they have a higher rate of home ownership than the U.S. Plus, they didn’t have a housing and debt crisis.

    Almost exactly one year ago, it was reported that 75% of the tax benefit from the mortgage interest deduction goes to homeowners in just three markets: NY, SF and LA. Essentially, tax payers in all other locations are subsidizing homes in those three places. Most people think the deduction is a wonderful thing, even though most homeowners, including those with mortgages, benefit very little from it.

    As for the “fair tax,” its advocates say it would need to be about 23% to be revenue neutral. That’s extremely misleading. It’s really 30% of the amount paid for good or service being purchased, because they include the tax amount in the denominator.

    Under the “fair tax” as proposed, you wouldn’t pay that 30% when buying a previously owned home but would if you purchased a newly built home. I’m sure people will really go for the idea of paying a $150 thousand tax on a $500 thousand new home. And if you excluded homes from the “fair tax,” then the tax rate would have to be even higher than 30%.