Bernie Sanders’s Biggest Problem Isn’t Socialism

It’s his disdain for his country. That’s the lesson Democrats should draw from Corbyn’s catastrophe.

With America’s Democrats on the cusp of nominating Bernie Sanders, they have one last chance to look across the Atlantic for a glimpse of how this could end up.

The warning comes via the British Labour Party’s historic defeat in December’s general election. Under Jeremy Corbyn, a leader uncannily similar to Mr. Sanders in ideology, affect and career trajectory, Labour suffered its worst drubbing since 1935. This despite Mr. Corbyn’s adroitness at rallying a youthful and fervent-to-the-point-of-derangement base, the likes of which British politics has rarely if ever witnessed. Ahem.

The conventional interpretation is that it’s Mr. Corbyn’s socialism what done it. He promised a wholesale re-nationalization of the British economy—utilities, transportation, even the internet. He promised an outsize expansion of the state, and outsize tax hikes to pay for it. Those taxes, voters soon noticed, would fall heavily on the middle class, not only the rich.

All that played a role in Labour’s drubbing, but economics may not have been decisive. Polling by YouGov before the election found voters trusting Labour more than the Conservatives on health policy and education, less on taxation, and roughly the same on unemployment.

This angle needn’t worry Mr. Sanders much. Unlike Americans, British voters had labored under the yoke of democratic socialism within living memory. It wasn’t a positive experience for them, and it prompted their turn to Margaret Thatcher and free-market reform in 1979. Mr. Corbyn pledged to take the U.K. back to a past Britons would rather forget.

Mr. Sanders has the luxury of campaigning for socialism in a country that has never tried it. He can present his program as a door to a fabulous new future. U.S. voters still frustrated with the economy for various reasons might be tempted to knock on that door, not understanding what lurks on the other side.

The Corbyn warning for Democrats takes a different form. What British voters really, really didn’t like about Mr. Corbyn wasn’t his economics. It was his culture.

To a remarkable extent the December election wasn’t a vote on Brexit or socialism or Prime Minister Boris Johnson’s economic “leveling up” of poorer regions. It was a referendum on Mr. Corbyn’s Britishness: Does he have enough of it, yea or nay?

Nay, said voters in Labour’s traditional heartlands. Michael Ashcroft, a former Conservative deputy chairman and veteran pollster, this month released a postmortem on Labour’s campaign. His surveys and focus groups with former Labour voters who defected in 2019 are devastating. “He is not patriotic,” one participant said of Mr. Corbyn. “He meets all those terrorist parties. You want someone with good old values.” Quoth another: “He said he would never press the [nuclear] button. We need protection. He should have said he would, even if he didn’t mean it.”

Among those who voted Labour in 2017 but not in 2019, the most common reason for switching allegiance, cited by 53%, was that they didn’t want Mr. Corbyn to be prime minister. That sentiment outranked Brexit as a motivation even among voters who defected to Mr. Johnson’s get-Brexit-done Conservatives by 75% to 73% (respondents could choose more than one option). These voters decided the election.

Mr. Corbyn had given them ample reason for doubt: There was his tendency to pal around with terrorists who killed Britons or their allies. His indulgence of anti-Semitism in Labour’s ranks, which offended working-class Britons’ sense of decency. His disdain for alliances such as the North Atlantic Treaty Organization and military programs such as the Trident nuclear deterrent, which give the U.K. its esteemed place in the world.

Mr. Sanders faces the same problem. No one who shares Middle America’s core values of freedom, democracy and entrepreneurship would choose to honeymoon in the Soviet Union. No one who values American achievements in science, the arts or education would heap praise on Cuba’s schools.

Every other Democratic candidate on a debate stage with Mr. Sanders has been able to communicate even the most fantastical policy ideas with an undertone of patriotism. Mr. Sanders alone sounds as if he wants to replace America rather than transform it.

And if he wins the Democratic nomination he’ll be running against Donald Trump, whose only consistent mode is American greatness. Mr. Corbyn ran aground against a candidate in Boris Johnson and a policy in Brexit that spoke directly to British patriotism.

British voters concluded that the danger of a leader who didn’t share their values was greater than the risk even of Brexit. Labour now faces years in the political wilderness as it tries to rebuild the trust of those who came to doubt whether it’s truly a British party. Democrats still have a chance, barely, to spare themselves that misery.

Trumpworld torn over running against Bernie

Some advisers are salivating over running against a socialist. Others say they need to be careful what they wish for.

President Donald Trump and his top political advisers were huddling in the Oval Office earlier this month discussing the state of the Democratic primary when they arrived at an increasingly pressing topic: What to do about Bernie Sanders?

Sanders was surging, and some of the Trump advisers were salivating at the thought of a self-described democratic socialist as their general election opponent. As the president listened, they argued for taking steps to elevate him in the primary to boost his prospects.

But others warned that Sanders wouldn’t necessarily be the pushover he might seem. They told the president, who was joined in the meeting by top officials including campaign manager Brad Parscale and pollster Tony Fabrizio, that the Vermont senator’s authenticity and populist appeal could draw some of the blue-collar voters who propelled the president to the White House.

With the Iowa caucuses less than a week away, Trump advisers and supporters are split over whether to wage an effort to bolster Sanders. While proponents think Sanders would be an ideal opponent, others are wary that the liberal firebrand could make for a dynamic challenger — with the ability to make inroads in the Rust Belt states likely to decide the outcome of the election.

“It’s a big mistake for Trump supporters to assume that if Bernie Sanders gets the nomination there’s no chance somehow he can win,” said Matt Schlapp, a prominent Trump backer who heads the American Conservative Union.

Schlapp stressed that he thought Trump would win regardless but the party shouldn’t expect it to be guaranteed if his opponent is Sanders.

Among those pushing for a pro-Sanders offensive is the anti-tax Club for Growth. On Monday, the pro-Trump group launched a TV ad in Iowa that attacks Sanders but does so in ways that could help him with Democrats. The commercial calls Sanders

  • “too liberal” and says that he
  • supports “liberal health care policies” and
  • giving “government health insurance to everyone.” The spot also
  • compares Sanders to Democratic heroes Barack Obama and Franklin Delano Roosevelt, and says he would
  • spend trillions to combat climate change.

The Trump reelection effort, meanwhile, has spent much of the last several weeks focusing its attacks on Sanders — a gambit that two people close to the campaign described as a deliberate effort to draw attention to the Vermont senator. The campaign has used its Twitter account as an anti-Sanders messaging machine and urged prominent surrogates to train their fire on him. Their working assumption is that the presidential attention will only boost his standing among anti-Trump Democratic voters.

Trump himself took to Fox Business last week and declared that “Bernie is surging, there’s no question about it, and Bernie seems to be the one the party wants.”

Yet some of the president’s big-money backers say they aren’t interested in bankrolling an effort aimed at propping up Sanders. They worry his potential strength in a general election is being badly underestimated, much as Democrats wrongly discounted Trump four years ago.

The biggest fear about Sanders is that he could threaten the president’s monopoly on the outsider mantle in a way other Democrats in serious contention for the nomination cannot. Others express unease about Sanders’ energized following and worry that, as an unconventional, candidate he could inject an unpredictable dynamic into the contest. They, too, see potential parallels to Trump in 2016, when he attracted a wave of new voters.

Others say Sanders has struck a nerve with his focus on kitchen table issues both parties have long overlooked. Last week, Trump favorite Tucker Carlson used his Fox News show to warn that Sanders’ push to forgive student debt could win “many thousands” of past Trump voters.

“Bernie Sanders poses the greatest risk because we are still in an anti-establishment era for presidential elections,” said North Carolina Rep. Mark Meadows, who is widely regarded as a potential future Trump White House chief of staff.

Others in Trump’s orbit adamantly disagree. Unlike Joe Biden, they say, Sanders would be easy to brand as outside the mainstream — even providing an opening for Trump to make up ground with suburban voters who’ve deserted him. Senior Republicans say they have conducted focus groups and found that suburbanites are turned off by the senator’s politics.

“I’m of the school that says running against Bernie would be a gift,” said former Minnesota Sen. Norm Coleman, the national chairman of the Republican Jewish Coalition, a pro-Trump group that is expected to spend heavily in support of the president.

“In the end,” Coleman added, suburbanites aren’t “going to vote for a socialist.”

The Club isn’t the first conservative group to try to prop up Sanders in a Democratic primary. Ending Spending Action Fund, a conservative group tied to Republican mega-donor Joe Ricketts, aired commercials in the final days leading up to the 2016 Iowa caucuses labeling Sanders “too liberal” and outlining his positions on issues like health care.

Sanders went on to narrowly lose the caucus to Hillary Clinton. ESA Fund has yet to weigh in on the 2020 Democratic race.

Club for Growth President David McIntosh, a former Indiana congressman, said the Sanders-focused commercial was part of a broader effort to engage in the Democratic race. Last year, at a time when some Republicans were concerned about the candidacy of Beto O’Rourke, the conservative group ran TV spots that aimed to weaken the former Texas congressman among Democratic voters.

McIntosh said he was well aware of the prospect that the new ad would energize Sanders’ base and probably help him in Iowa.

“I think the person who suffers from that,” McIntosh added, ”is Biden.”

Jimmy Dore and Why Everyone Hates the Media | Useful Idiots

Comedian and podcaster Jimmy Dore joins Matt and Katie to discuss his show and media bias. Matt and Katie break down the fact-checking controversy involving The Washington Post and Bernie Sanders.

Joe Biden Used Tax-Code Loophole Obama Tried to Plug

Democratic presidential candidate Joe Biden used a tax loophole that the Obama administration tried and failed to close, substantially lowering his tax bill.

Mr. Biden and his wife, Dr. Jill Biden, routed their book and speech income through S corporations, according to tax returns the couple released this week. They paid income taxes on those profits, but the strategy let the couple avoid the 3.8% self-employment tax they would have paid had they been compensated directly instead of through the S corporations.

The tax savings were as much as $500,000, compared to what the Bidens would have owed if paid directly or if the Obama proposal had become law.

There’s no reason for these to be in an S corp—none, other than to save on self-employment tax,” said Tony Nitti, an accountant at RubinBrown LLP who reviewed the returns.

“As demonstrated by their effective federal tax rate in 2017 and 2018—which exceeded 33%—the Bidens are committed to ensuring that all Americans pay their fair share,” the Biden campaign said in a statement Wednesday.

The technique is known in tax circles as the Gingrich-Edwards loophole—for former presidential candidates Newt Gingrich, a Republican, and John Edwards, a Democrat—whose tax strategies were scrutinized and drew calls for policy changes years ago. Other prominent politicians, including former President Barack Obama and fellow Democrat Hillary Clinton, as well as current contenders for the 2020 Democratic nomination Sens. Elizabeth Warren and Bernie Sanders, received their book or speech income differently and paid self-employment taxes.

Some tax experts have pointed to pieces of President Trump’s financial disclosures and leaked tax returns to suggest that he has used a similar tax-avoidance strategy.

Unlike his Democratic rivals and predecessors in both parties, Mr. Trump has refused to release his tax returns, and his administration is fighting House Democrats’ attempt to use their statutory authority to obtain them. Democratic presidential candidates have released their tax returns and welcomed criticism to draw a contrast with Mr. Trump.

Mr. Biden, who was vice president from 2009 to 2017, has led the Democratic field in polls since entering the race. He is campaigning on making high-income Americans pay more in taxes and on closing tax loopholes that benefit the wealthy.

Mr. Biden has decried the proliferation of such loopholes since Ronald Reagan’s presidency and said the tax revenue could be used, in part, to help pay for initiatives to provide free community-college tuition or to fight climate change.

We don’t have to punish anybody, including the rich. But everybody should start paying their fair share a little bit. When I’m president, we’re going to have a fairer tax code,” Mr. Biden said last month during a speech in Davenport, Iowa.

The U.S. imposes a 3.8% tax on high-income households—defined as individuals making above $200,000 and married couples making above $250,000. Wage earners have part of the tax taken out of their paychecks and pay part of it on their returns. Self-employed business owners have to pay it, too. People with investment earnings pay a 3.8% tax as well.

But people with profits from their active involvement in businesses can declare those earnings to be neither compensation nor investment income. The Obama administration proposed closing that gap by requiring all such income to be subject to a 3.8% tax, and it was the largest item on a list of “loophole closers” in a plan Mr. Obama released during his last year in office. The administration estimated that proposal, which didn’t advance in Congress, would have raised $272 billion from 2017 through 2026.

Under current law, S-corporation owners can legally avoid paying the 3.8% tax on their profits as long as they pay themselves “reasonable compensation” that is subject to regular payroll taxes. S corporations are a commonly used form for closely held businesses in which the profits flow through to the owners’ individual tax returns and are taxed there instead of at the business level.

The difficulty is in defining reasonable compensation, and the IRS has had mixed success in challenging business owners on the issue. The Bidens’ S corporations—CelticCapri Corp. and Giacoppa Corp.—reported more than $13 million in combined profits in 2017 and 2018 that weren’t subject to the self-employment tax, while those companies paid them less than $800,000 in salary.

If the entire amount were considered compensation, the Bidens could owe about $500,000. An IRS inquiry might reach a conclusion somewhat short of that.

“The salaries earned by the Bidens are reasonable and were determined in good faith, considering the nature of the entities and the services they performed,” the Biden campaign statement said.

For businesses that generate money from capital investments or from a large workforce, less of the profits stem from the owner’s work, and thus reasonable compensation can be lower. For businesses whose profits are largely attributable to the owner’s work, the case for reasonable compensation that is far below profits is harder to make.

To the extent that the Bidens’ profits came directly from the couple’s consulting and public speaking, “to treat those as other than compensation is pretty aggressive,” said Steve Rosenthal, a senior fellow at the Tax Policy Center, a research group run by a former Obama administration official.

Mr. Nitti said he uses a “call in sick” rule for his clients trying to navigate the reasonable-compensation question: If the owner called in sick, how much money could the company still make?

“The reasonable comp standard is a nebulous one,” Mr. Nitti said. “This is pretty cut and dried. If you’re speaking or writing a book, it’s all attributable to your efforts.”

The IRS puts more energy into cases where the business owners pay so little reasonable compensation that they owe the full Social Security and Medicare payroll taxes of 15.3%, Mr. Nitti said.

In a statement released Tuesday along with the candidate’s tax returns, the Biden campaign noted that the couple employs others through its S corporation and calls the companies a “common method for taxpayers who have outside sources of income to consolidate their earnings and expenses.”