Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.

One of Mitt Romney top fundraisers and fellow 1-percenter Stephen Schwarzman was recently on television questioning the civic involvement of nearly half of Americans. Asked on Bloomberg TV whether he would be willing to pay higher taxes to help solve the country’s fiscal challenges, the billionaire Schwarzman responded by pointing at the approximately 45 percent of households who will not owe income taxes this year (an abnormally high number due to the recession) and said:

You have to have skin in the game….The issue is the concept that we’re all in this together, solving problems together…. The concept that half of the public isn’t involved with the income tax system is somewhat odd, and I’m not saying how much people should do, but we should all be part of the system.

This “skin in the game” myth, which implies that people who don’t owe federal income tax in a given year don’t contribute to the public good, is both factually misleading and fundamentally insulting. And it’s particularly offensive coming from a guy who’s been the most zealous defender of a loophole that allows billionaires like him to pay a lower federal tax rate than many middle-class workers.

First, all Americans pay taxes. The “tax system” Schwarzman refers to includes federal payroll taxes and state and local sales taxes, which claim a bigger share of income from those in the middle and bottom than from those at the top. All told, even the very poorest quintile pays about a sixth of their modest incomes in taxes. These other, more regressive taxes may not be noticeable to billionaires like Schwarzman, but the fact that everyone pays them shows that we are all already “part of the system.”

Moreover, it’s likely that many families won’t owe federal income tax this year precisely because they have too much skin in the game. Among the major reasons a household might not owe income taxes:

– They worked (paying both income and payroll taxes) for years or even decades but lost their jobs in the Great Recession and saw their incomes fall under the low thresholds where the income tax kicks in.

– They worked their whole lives (again, paying taxes on their wages) but are now retired and rely principally on Social Security benefits, which are mostly untaxed.

– They are students and their income-earning years are mostly ahead of them.

– They work at low-paying jobs while raising children, and qualify for the Earned Income Tax Credit. (Tax data shows that most EITC recipients only claim the credit for short periods; on net, recipients pay hundreds of billions in federal income tax over time.)

What’s particularly galling is to hear Schwarzman, of all people, sermonize about how low-income people need to pay higher income taxes to prove that they have skin in the game. Schwarzman, co-founder of the Blackstone Group private equity firm, is the most zealous defender — and probably one of the biggest beneficiaries — of the “carried interest” tax loophole. Read more

Last month, 2012 GOP presidential hopeful Newt Gingrich called for drug-testing recipients of federal aid. “Unemployment compensation, food stamps, you name it,” he said.

And Gingrich now has a kindred spirit in the GOP race when it comes to drug-testing those who need to access federal programs and the social safety net — Texas Gov. Rick Perry:

“I don’t have a problem with before you get any dollars from the federal government that you’re drug tested,” Perry said in response to a man who suggested the idea in a question to him at a meet-and-greet in Mt. Pleasant, Iowa, that drew over 80 people. Perry pointed out that as a pilot in the Air Force, he himself had been drug tested. “I don’t have a problem in the world with that,” he said.

As ThinkProgress’ Justice Ian Millhiser has noted, this sort of policy “would likely run headlong into the Constitution,” as it constitutes a “suspicion-less search,” nevermind the fact that drug testing requirements cost more money than they save and welfare recipients actually use drugs less than other groups. Even 2012 GOP candidate Rick Santorum, a big fan of rabid right-wing causes, wouldn’t endorse federal drug-testing for benefits.

Republicans in several states, however, have embraced testing those who need benefits, as have House Republicans at the federal level. In Georgia, one Democratic lawmaker responded to his Republican colleagues’ desire to test beneficiaries by introducing a bill to drug-test lawmakers.

Minutes after House Speaker John Boehner (R-OH) delivered a press conference vowing to stand firm on the payroll tax holiday, Senate Republican Leader Mitch McConnell (KY) delivered a major blow to Boehner’s position, calling on the lower chamber to pass the Senate’s two-month extension, something which Boehner has refused to do. “The House should pass an extension that locks in the thousands of Keystone XL pipeline jobs, prevents any disruption in the payroll tax holiday or other expiring provisions, and allows Congress to work on a solution for the longer extensions,” McConnell said in a statement.

McConnell’s statement further isolates Boehner, who has found little support from fellow Republicans in his position, and gives President Obama new ammunition with which to attack Boehner in an upcoming speech today.

Boehner initially appeared to support the Senate’s bill, but quickly backtracked in an “apparent breakdown between Boehner and McConnell.” McConnell had remained silent on the payroll tax dispute since the Senate passed its version with overwhelming bipartisan support last week, likely could have avoided delivering a rare intra-party rebuke longer.

But Boehner’s intransigence, which risks raising taxes on 160 million Americans next year, is increasingly hurting the GOP, according to many leaders in the party, and perhaps McConnell felt he had to speak up before more damage was done. As The Hill reports today:

Senate Republicans are worried the standoff over extending the payroll tax holiday could hurt their chances of winning the upper chamber next year.

Senior Republican aides have made clear in private conversations that their bosses are not happy with how House Republicans have handled a bipartisan Senate compromise to extend tax relief for two months.

“It’s not helping,” a veteran Senate Republican strategist said of the House GOP fight against the Senate package. “Senate Republicans are tired of paying the price for the lack of legislative thoughtfulness in the House.”

Indeed, House Republicans have drawn the public ire of Karl Rove, the Wall Street Journal, conservative pundits, and five Senate Republicans, while they’ve found little support among the GOP 2012 presidential candidates. It’s still unclear what the endgame for the payroll tax issue will be, but it’s looking increasingly like it won’t be one in which Boehner comes out winning.

Though the economy has struggled throughout 2011, one sector that saw some significant improvement was the American auto industry. In fact, about one million more cars are expected to be sold this year than last year, and American automakers are once again claiming a larger share of the American auto market than their foreign competitors:

After selling roughly 11.8 million cars and trucks last year, U.S. vehicle sales to businesses and consumers are expected to hit nearly 12.8 million in 2011…That’s up from 10.6 million at the height of the Great Recession in 2009. Through November, new-vehicle sales had logged six straight months of year-over-year gains. That should continue in December, when 1.2 million vehicles are likely to be sold.

In addition, U.S. and foreign automakers “are poised to add nearly 167,000 U.S. jobs by the end of 2015.” “The industry has pretty much hired back just about everybody from the automotive side that had been laid off. And now they’re hiring fresh, so they’re actually adding to their rosters. And it’s not just the Detroit automakers. It’s everybody,” said Aaron Bragman, a senior analyst at IHS Automotive.

Of course, this wouldn’t be possible if the Obama administration hadn’t stepped in to rescue the American auto industry, protecting it from an uncontrolled bankruptcy. Remember, at the time, Republicans were convinced that the rescue would set the country on the “road to socialism,” raging about the “war on capitalism.” However, it seems that the rescue is going to turn out to be one of the most important steps the administration took in 2009.