How to Buy and Election

Here is a bit from an article in Salon.com on the source of campaign finance money in the US:

The hidden infrastructure of the 2012 campaign has already been built.

A handful of so-called Super PACs, enabled to collect unlimited donations by the continued erosion of campaign finance regulations, are expected to rival the official campaign organizations in importance this election. In many cases, these groups are acting essentially as outside arms of the campaigns.

These are America’s best-funded political factions, their war chests filled by some of the richest men (and almost all are men) in the country.

More than 80 percent of giving to Super PACs so far has come from just 58 donors, according to the Center for Responsive Politics analysis of the latest data, which covers the first half of 2011. The Republican groups have raised $17.6 million and the Democratic groups $7.6 million. Those numbers will balloon, with American Crossroads, the main Republican Super PAC, aiming to raise $240 million.)

If you want the names named, go read the whole article.

The US is sliding into "banana republic" status because the politics and the judicial branch have been bought off with the idea that "corporations are people" with "rights" to "speech". The joke is that corporations have no limit on their donations, but real breathing humans do have a limit. And of course, the Supreme Court has decided that the ultra-rich can set up Super-Pacs to allow them to use big dollar amounts to skew elections to favour the ultra-rich.

Ideal Tax Law from the Political Right

Here is a post by Paul Krugman on his NY Times blog that captures the intent of the political right to makes sure that the middle class carries the burden of taxation:

Gingrich-Helmsley 2012

From the Tax Policy Center, the Gingrich tax plan:

Click to Enlarge
Also, it would add $1.3 trillion to the annual deficit compared with current law.

For those too young to remember, Leona Helmsley famously declared that only the little people pay taxes.

So much for the theory of progressive taxation, i.e. those who are able, pay more while the poor are given a break.

Hoisting the Republicans on their Own Petard

Here is an excellent post by Robert Reich on his blog. I love the way he carefully lays out the logic so that when you arrive at the last sentence you realize that he has cornered the Republicans by their own screwy logic:

Every time I try to make sense of Republican tax doctrine I get lost.

For example, rank-and-file House Republicans are willing to increase taxes on the middle class starting in a few weeks in order to avoid a tax increase the very rich.

Here are the details: The payroll tax will increase 2 percent starting January 1 – costing most working Americans about $1,000 next year – unless the employee part of the tax cut is extended for another year.

Democrats want to pay for this with a temporary – not permanent – surtax on any earnings over $1 million, according to their most recent proposal. The surtax would be 3.25 percent.

This means someone who earns $1,000,001 would pay 3 and a quarter cents extra next year.

Relatively few Americans earn more than a million dollars, to begin with. An exquisitely tiny number earn so much that a 3.25 percent surtax on their earnings in excess of a million would amount to much. Most of these people are on Wall Street. It’s hard to find a small business “job creator” among them.

Nonetheless, Republicans say no to the surtax.

This puts Republicans in the awkward position of allowing taxes to increase on most Americans in order to avoid a small, temporary tax only on earnings in excess of a million dollars — mostly hitting a tiny group of financiers.

Not even a resolute, doctrinaire follower of GOP president Grover Norquist has any basis for preferring millionaires over the rest of us.

To say the least, this position is also difficult to explain to average Americans flattened by an economy that’s taken away their jobs, wages, and homes but continues to confer record profits to corporations and unprecedented pay to CEOs and Wall Street’s top executives.

So Republican leaders are trying to get rank-and-file Republicans to go along with an extended payroll tax holiday — but by paying for it without raising taxes on the very rich.

According to their latest proposal, they want to pay for it mainly by extending the pay freeze on federal workers for another four years — in effect, cutting federal employees’ pay even more deeply — and increasing Medicare premiums on wealthy beneficiaries over time.

But even this proposal seems odd, given what Republicans say they believe about taxes.

For years, Republicans have been telling us tax cuts pay for themselves by promoting growth. That was their argument in favor of the Bush tax cuts, remember?

So if they believe what they say, why should they worry about paying for a one-year extension of the payroll tax holiday? Surely it will pay for itself.

That last bit should make Republicans squirm. But it won't. They are shameless hypocrites and liars. Being caught in their big lie causes them no shame.

Selfishness is Alive and Well in America

Here is an excellent post by Paul Krugman in his NY Times blog looking at the poison the corrupts political discourse in American politics:

I Do Not Think That Word Means What You Think It Means, Hypocrisy Edition

OK, let me start by talking about Mel Gibson for a minute. Bear with me, this is actually relevant.

Back in 2000 Gibson made a movie, The Patriot, about the Revolutionary War. (I think I saw it on an airplane). And when the movie came out, Michael Lind wrote an essay that has stuck with me, pointing out that nobody involved in the picture seemed to know what patriotism means. The Gibson character was presented as a man who refused to get involved until his own family was hurt — then, he went to war for personal revenge. And this was supposed to show his patriotism.

As Lind said, the truth is that that’s more or less the opposite of patriotism, which is about making sacrifices for the national good, not serving your personal motives or interests.

Which brings me to the subject of this post, the apparently equally misunderstood concept of hypocrisy. I’ve been getting some personal attacks on this front, but it’s a bigger issue than that. Here’s the personal version: suppose that you’re a professor/columnist who advocates higher taxes on high incomes and a stronger social safety net — but you yourself earn enough from various sources that you will pay some of those higher taxes and are unlikely to rely on that stronger safety net. A remarkable number of people look at that combination of personal and political positions and cry “Hypocrisy!”

Wait — it’s not just about me and the wingnuts. If you remember the 2004 election, which unfortunately I do, there were quite a few journalists who basically accused John Kerry of being “inauthentic” because he was a rich man advocating policies that would help the poor and the middle class. Apparently you can only be authentic if your politics reflect pure personal self-interest — Mitt Romney is Mr. Natural.

So to say what should be obvious but apparently isn’t: supporting policies that are to your personal financial disadvantage isn’t hypocrisy — it’s civic virtue!

But, say the wingnuts, you say that rich people are evil. Actually, no — that’s a right-wing fantasy about what liberals believe. I don’t want to punish the rich, I just want them to pay more taxes. You can favor redistribution without indulging in class hatred; it’s only the defenders of privilege who try to claim otherwise.

Lind’s essay about Mel Gibson ended with concerns that we may have lost the sense of what citizenship and its duties mean. Indeed. If people can’t comprehend what it means to work for larger goals than their own interest, if they actually consider any deviation from self-service somehow a sign of phoniness, we, as a nation, are lost.

The political right is poisonous. Right now they are blocking any attempt to heal the US after the 2008 economic collapse. They put politics above country... and of course consider themselves "patriots" because in their lexicon "patriotism" is doing what is in your own interest, not in the country's interest. This has made the US ungovernable and turned a big recession in the Great Recession and stretched it from a 2 or 3 year rut in the road into a decade long collapse of the economy. What I find incredible is that there appear to be roughly half the population in the US so bitterly "fundamentalist Christian" that they are willing to punch out their fellow man than go the extra mile, or turn the cheek, or give him the extra cloak. Pathetic!

Update 2011nov05: Here is a bit from from Krugman today on his NY Times blog:

But here’s an item that caught my eye, given what I wrote about hypocrisy yesterday:

Deadbeat Rep. Joe Walsh, Who Owes $100k In Child Support, Receives ‘Pro-Family’ Award From Family Research Council.

Now that’s real hypocrisy — and if the past is any indication, it won’t matter at all for Rep. Walsh’s career.

There’s a big difference between the left and the right in such matters, one that I don’t fully understand, although I’m trying. Here’s how it goes: if a liberal politician is caught behaving badly — enriching himself while preaching the need to help the poor, or just in general showing himself less than admirable by having an affair, visiting call girls, whatever — his career is over.

But if a conservative politician who preaches stern traditional morality is caught engaging in actions that are at odds with what he preaches — buying sex, taking wide stances in restrooms, or, in this case, stiffing his family even while preaching family values — he may well ride right through the scandal. Witness what’s going on now with Herman Cain.

How can this be? Here’s what I understand: on the right, “moral values” are considered to be, literally, God-given principles. And a politician is well-regarded for advocating those values, no matter what he does personally. Instead of his personal behavior devaluing his political position, his political position excuses his personal behavior; a philandering politician who preaches the sacred bond of marriage is considered a good man because of what he says, no matter what he does.

Unlike Krugman, I simply dismiss the right wing as insincere idiots who are completely self-serving in their manipulation of "morality". Paul Krugman, on the other hand, takes them at face value and tries hard to understand this hypocritical behaviour. I can't be bothered because I lived up close to a serial manipulator who used religion and self-serving "morality" to enable his crimes and cover his tracks. I have no patience with these people. But I do admire Krugman for trying to make sense of their behaviour.

A Voice from the 1%

This is refreshing. Here is a post on The Daily Kos from someone who says he is part of the 1% but understands why the Occupy Wall Street movement is growing:

The impetus behind the Occupy Wall Street movement - a vague sense that the rich are getting ever richer while everyone else suffers - was confirmed by a recent report from the Social Security Administration showing that while total employment and average wages remained stagnant, the number of people earning $1 million or more grew by 18% from 2009 to 2010. Those figures give real substance to the "We are the 99%" slogan, yet Republicans continue to insist, despite all evidence to the contrary, that if anything those "job creators" deserve an even greater share of our national income. The Tea Party, meanwhile, has launched its own "53%" movement, inexplicably rallying the working class to the defense of the wealthy. The one group rarely heard from in this rancorous debate is the 1%, whose incomes and taxes are its focus. I am one of them, and here is my perspective, which may surprise you.

First let me note that I am not part of the yacht and private jet set, which represents an even smaller subset of incomes than mine. The threshold for inclusion in the top 1% of income earners in 2008, the most recent year for which published data is available from the IRS, was $380,354, enough for an extraordinary life but nowhere near enough for a harbor berth in St. Moritz. Nevertheless, I am - for now - comfortably ensconced in that demographic. Herman Cain's 9-9-9 plan would save me roughly $400,000 a year in taxes, and President Obama's tax proposals would cost me more than $100,000, yet I support the latter and consider the former laughable.

Thus you can imagine my amazement this summer when I watched the Republicans in Congress push the United States to the brink of default - and the world to the brink of ruin - over whether to repeal a portion of the Bush tax cuts and raise my taxes by 3.5%. I know a lot of people with high incomes and even the conservatives among them were confused by that sequence of events. Here is a secret about rich people: we wouldn't have noticed a 3.5% tax increase. That is not only because there isn't a material difference between having $1 million and $965,000, which is obvious, but also because most of us don't actually know how much money we are going to make in a given year. Most income at that level is the result of profits rather than salary, whether it comes in the form of bonuses, stock options, partnership distributions, dividends or capital gains. Profits are unpredictable and they tend to vary wildly. At my own firm, the general rule of thumb is that if we are within 5% of our budget for the year, everyone is happy and no one complains. A variation of 3.5% is merely a random blip.

I was not amazed but disgusted when John Boehner and his crew tried to justify the extremity of their position by rebranding the wealthy as "job creators." While true in a very basic sense, it obscures the fact that jobs are a cost that is voluntarily incurred only as a result of demand. Hiring has no correlation at all to profits or to income - none. Let me keep more of my money without increasing customer demand and I will do just that - keep it. Perhaps I will spend a little more of it, though probably not, but even if I do it won't help the economy very much. Here is another secret of the well-to-do: we don't really buy much more stuff than everyone else. It may be more expensive stuff, sure, but I don't buy cars, or appliances, or furniture, or anything else more frequently than the average consumer. The things I do spend more money on are services such as travel, entertainment, restaurants and landscaping, none of which generate well-paying middle class jobs. There, in a nutshell, is the sad explanation of what has happened to the American economy over the last 25 years of "trickle down" economics.

That's why I was so pleased when the Occupy Wall Street protests began. I support them wholeheartedly, for several reasons. ...

Go read the whole post to find out what his reasons are! He has an interesting life story that is well worth reading and he makes many points worth pondering.

The Dilbert Version of "Occupy Wall Street"

Here is a nice bit by Scott Adams, creator of the Dilbert cartoon, to put the issues of Occupy Wall Street into simple terms people can understand:

If you and a friend go to lunch with each other on a regular basis, but you pay for lunch three times as often as your friend, is that fair?

Your mind immediately wonders if there are extenuating circumstances. Is the friend doing something for you in some other way? Are you wealthy whereas your friend is not? Is your friend also a client? Did your friend drive from out of town? Are these lunches always in the same place?

When evaluating fairness, we understand that you need to throw everything into the mix. You can't isolate one variable. For example, when comparing the tax burden on the rich versus the other 99%, you want to look beyond the federal income tax rate and include payroll taxes, sales taxes, and any other taxes. That's fair, right?

Wait...Are we leaving something out? Why don't we also tally up the benefits of the taxes? That's part of the equation too. Let's go back to our lunch example to see why.

Suppose you buy lunch three times more often than your friend, but in every case you eat at your favorite place in the world and your friend can barely tolerate the cuisine. Let's also assume it's a long drive for your friend, but very convenient for you. In fact, it's the only restaurant that's near enough to your workplace for you to have lunch in an hour. You both get the benefit of your friendly banter, but only one of you enjoys the food and convenience. With this new information, it seems a bit fairer that you pay for lunch more often than your friend because you get the most benefit.

Now back to taxes. Doesn't the fairness argument demand that we at least try to determine who gets the most benefits from taxes paid? I think it does. (This is a good time to remind you that fairness isn't a real thing. I'm just chasing shadows here to make a point.)

So who benefits most from taxes? Is it the wealthy person who benefits from protecting his fortune, or is it the people who consume the greatest percentage of the social services? Let's consider some specifics to tease out an answer.

Consider Social Security. The wealthy pay a much lower percentage of their total income towards social security because the tax only applies to the first $106,800 of income. And the wealthy also make a lot of money from investments that are not subject to the tax. But on the benefit side, Social Security has no real value to the wealthy. The retirement payout isn't enough to change their lifestyles. Social Security is an odd tax in the sense that you're really just letting the government hold your dollar with the promise that if you live long enough they might give you one or even two dollars later. In that sense, the tax is only unfair to the people who die young.

How about the military? All citizens get the same bodily protection. But the rich also get to protect vast fortunes whereas the poor and middle class have less to protect. But remember that half of the country pays zero federal income tax. Financially, they get a free ride from military protection, unless they are in the military. And a typical rich person might pay a hundred times more in federal taxes, on an absolute dollar basis, than a typical middle class taxpayer. That seems about right.

If you think of paying taxes for military protection as a sort of insurance policy, I would argue that it has great value for protecting your first $100 million of assets and a rapidly declining value for protecting anything above that arbitrary number. In other words, if a wealthy person loses all but his last $100 million, his lifestyle would be about the same as before. A wealthy person's practical benefit from the military is capped even if his fortune is not.

We can't ignore the physical and emotional cost to military people and their families, which is concentrated in the non-wealthy portion of the population. But as long as military service remains voluntary, I think we can view that noble calling as a separate issue from taxes.

How about sales taxes? There are no sales taxes on groceries, rent, education, medical care, garbage service, water, or any of the essential services provided by public agencies. That covers most of the budget for low income families. My guess is that most people pay about 1% of their income for sales taxes and get more than their money's worth in state services in return. The rich pay a much higher dollar amount, but arguably that's a good value for them too. They have more assets to protect from criminals, more cars on the road, and so on.

I don't have an overall conclusion in terms of tax fairness because fairness isn't a real thing. People simply do whatever they think will maximize their benefit, give or take some irrationality. Fairness is just the marketing spin. All I'm saying today is that any discussion of tax rate fairness needs to include a discussion of who gets the most benefits. A more complete discussion of fairness, as I'm suggesting, will still be ridiculous, because fairness is an illusion. But for some reason I can't settle for half an illusion. I like my absurdities in full servings.

Looking at society is a lot like the three blind me inspecting the elephant. Each "sees" something different. The billionaires are convinced that it was their genius and hard work that got them their wealth. Others, like Warren Buffett, point out that you can't make a billion without a society with the infrastructure in place to support your entrepreneurial spirit.

For too long -- roughly 40 years -- the radical right has been selling the American people a pig in a poke. They have claimed that if you bow and scrape when the rich pass by they will toss dollar bills out the window to make your life better (the infamous Reagan "trickle down" economy). The latest incarnation is "don't tax the rich because they are the 'job creators' and if you tax them they will go on strike and there will be no more jobs". It is an utter lie, but it scares a lot of people. The OWS movement is finally breaking the mental shackles of 40 years of right wing propaganda.

The Bleak American Outlook

Here is an article that sums up the ugly state of US politics:

A decade ago Republican George W. Bush took our great nation into a $3 trillion war on lies. Today that party is mindlessly controlled by a cultish anti-tax pledge made to lobbyist Grover Norquist and his Americans for Tax Reform group, who once proclaimed: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.”

Yes, drown. Kill. Folks, this insane plot line has advanced into a no-compromise, scorched-earth vow to do everything necessary to drown the presidency and reinstall another conservative who will return America to the Wild West policies that sabotaged it in the Bush/Cheney years.

They’ve become a vengeful cult that will never back the president on anything, even their own job-growth policies. Will even destroy the economy to achieve their goals. They do not care about democracy. They want absolute control. And they’re succeeding.
America’s an addict, out-of-control, doesn’t care who gets hurts

Yes folks, I am mad as hell. The America I believed in when I volunteered for the Marine Corps, went to Korea, that America has been hijacked by an irrational, dark force that’s consuming our political system. We saw this coming a few years ago reviewing Jack Bogle’s warnings in “The Battle for the Soul of Capitalism.” Buffett called that one: “There’s class warfare, all right. But it’s my class, the rich class, that’s making war, and we’re winning.”

...

You know exactly what I’m saying: America is way off track. Our great nation is acting like a drunken self-destructive addict. Could use an intervention. But sadly we’ve drifted so far off our moral compass that only hitting bottom, a total collapse, near-death experience, only another meltdown bigger than 2008 and a depression will do the trick.

You know addictions turn even nice people into monsters. In the end they don’t care who they take down with them. Nothing matters, not families, not nations. Protect your assets folks.

The author is far more pessimistic than me. Also he is riding that old hobby horse of the 1960s: "overpopulation". But that is crazy. Almost all of the developed countries now have birth rates below replacement and the rest of the world, as it gets wealthier, is quickly sliding into the same situation. So "overpopulation" will cure itself.

The problem with the world isn't "overpopulation". It is out-of-control elites who are buying off politicians to let them grab all the money and leaving everybody else slowly sinking in debt. It is a fixable problem: re-establish progressive taxation to stop the rich from scooping up all the wealth and crashing the economy.

The Problem with "The Invisible Hand" of Right Wing Economics/Politics

Here is a bit from a post by Tim Harford in his blog:

[Robert] Frank has a particular Darwinian insight in mind: the idea that contra Smith’s “invisible hand”, individuals competing can produce results that are bad for society as a whole.

Consider the vast antlers of the north American bull elk: they’re the result of sexual selection balanced by other selective pressures. Elks with big antlers win fights with other elks, and mate with multiple females. However, they also get hunted down and killed by packs of wolves. Elks as a whole would be better off if they could all agree to shrink their antlers by a factor of four or five: the males with the biggest antlers would still get the girls, while only the wolves could object to faster, more agile bull elks. Sadly for the elks and happily for the wolves, that’s not how sexual selection works.

In a new book, The Darwin Economy, Robert Frank sees elk antlers everywhere he looks in modern society. For example, when parents bid up the price of houses near good schools, they’re engaging in a wasteful arms race: children as a whole will be no better educated as a result, but vast sums are devoted to the quest for the right school district. My flashy car makes you less satisfied with your own; if I take ladies out to the opera and Michelin-starred restaurants, other men will no longer succeed by offering scampi and chips at the Romford dog track. In short, says Frank, my spending harms you as surely as I would harm others by standing up at a concert and forcing everybody behind me to stand up in turn.

Sometimes this dynamic is the result of envy; at other times it is genuine competition for scarce resources, such as beautiful partners or elite university places.

Elks cannot reach an agreement to trim their antlers, but humans can, and Professor Frank advocates a steeply progressive consumption tax to serve this purpose. In effect, the tax would be an income tax with an exemption for savings, encouraging investment but discouraging spending sprees. Frank argues that it should be progressive because the wasteful economic arms races are at their most grotesque at high consumption levels.

Harford goes on the quibble with Frank, but this is a very easy-to-understand critique of the political right's "cut taxes, cut taxes, cut taxes" agenda in support of their billionaire overlords.

Thinking Seriously About Taxes

Here are some bits from a good article by David published by Reuters:

From the way Washington politicians in both parties tell it, you may well think that multinational companies favor low-tax jurisdictions when investing overseas. They don't.

The multinationals prefer investing in high-tax jurisdictions because it so happens that is where they can earn the highest returns.

Multinational companies then reduce or eliminate those seemingly high taxes by using simple, widely used devices to take profits in low-tax and no-tax jurisdictions.

Such practices create "stateless income," in the words of Edward Kleinbard, whose new scholarship on corporate taxation deserves our attention.

As defined by Kleinbard, stateless income means profits earned in a country other than where the firm is headquartered and subject to tax only in a third country which imposes little or no tax.

Kleinbard shows why stateless income is the most serious threat to the corporate tax base even as Washington politicians blather on about less important corporate tax issues that their remarks show they do not understand.

...

Ignoring the reality of tax erodes the tax base, distorts economic decisions and through shortsighted policy enriches the few at the expense of the many.

That corporations prefer investing overseas in high tax countries may seem to defy common sense. But much of tax is counterintuitive and requires careful study of a kind that was once much more common on Capitol Hill. Sadly, as partisanship has grown along with reliance on campaign donors, serious thinking about taxes has been supplanted by ideological marketing that has more in common with advertising than serious policy debates.

Since tax is the largest economic activity in the world, it is crucial that we base our policies on facts, not fantasies, if civilization is to endure. Get tax wrong and the damage diminishes markets, distorts investments, destroys private wealth and endangers social stability.

The idiocy of American political partisanship has not only crushed that country with a Lesser Depression, it has wrecked the world economy. Somehow common sense, pragmatism, collegiality, and reasoned discourse needs to be knocked into the heads of the politicians in Washingon. (I don't want to create the idea of a false equivalence. About 90% of the idiocy is in the ranks of Republican ideologues and 10% in the ranks of Democratic ideologues.)

A Sensible Viewpoint from the Political Right

Two things...

First, Bruce Bartlett is an old Reaganite Republican who has woken up to the dysfunction in American politics and understands the current economic mess. Here is gives sensible answers despite media types trying to create sound bites and phony "issues":



Notice that he distinguishes on entitlements: Medicare spending is out of control, but Social Security is not a problem despite what the right wing fanatics who want to kill the program are saying.

Bartlett does an excellent job of fending off the idiocies that the "journalists" throw at him. I'm quite happy with what Bartlett is saying. I especially love the bit at 10:35 when he says Bush was "buying votes" with Medicare Part D and that "they are all damn liars" because people like Ryan voted for Medicare Part D but now is on a high horse about deficits and debt.

Second, Here is a list of things that George W. Bush speech-writer David Frum identifies as errors in Republican thinking (from here):

On the most urgent economic issue of the day – recovery from the Great Recession – the Republican consensus is seriously wrong.

It is wrong in its call for monetary tightening.

It is wrong to demand immediate debt reduction rather than wait until after the economy recovers.

It is wrong to deny that “we have a revenue problem.”

It is wrong in worrying too much about (non-existent) inflation and disregarding the (very real) threat of a second slump into recession and deflation.

It is wrong to blame government regulation and (as yet unimposed) tax increases for the severity of the recession.

It is wrong to oppose job-creating infrastructure programs.

It is wrong to hesitate to provide unemployment insurance, food stamps, and other forms of income maintenance to the unemployed.

It is wrong to fetishize the exchange value of the dollar against other currencies.

It is wrong to believe that cuts in marginal tax rates will suffice to generate job growth in today’s circumstance.

It is wrong to blame minor and marginal government policies like the Community Reinvestment Act for the financial crisis while ignoring the much more important role of government inaction to police overall levels of leverage within the financial system.

It is wrong to dismiss the Euro crisis as something remote from American concerns.

It is wrong to resist US cooperation with European authorities in organizing a work-out of the debt problems of the Eurozone countries.

It is wrong above all in its dangerous combination of apocalyptic pessimism about the long-term future of the country with aloof indifference to unemployment.

Conclusion... more people on the right need to rebel. They need to say "enough!" Stop the obstructionist politics and get down to business to solve America's problems.

Lawrence O'Donnelll Crusading for the Bottom 90%

Here is yet another excellent piece by Lawrence O'Donnell in his The Last Word program at MSNBC. He interviews Michael Moore who is present at the Occupy Wall Street protest:



Best line of the interview: The future has been stolen.

Linda McQuaing Calls for Another Canadian "Me Too!"

Funny how Canada toddles after America. Nothing succeeds in Canada until it "proves" itself in the US. Ideas aren't serious until advocated south of the border. And "leadership" in Canada is pointing out that something is done in the US so it surely must be tried out in Canada as well.

Here's a bit from Linda McQuaig offering a "me too!" on taxes and social policy in her column in the Toronto Sun:

Canada’s ultra-rich — those in the top 0.01 per cent — now have a bigger share of national income than at any point in Canadian history, according to data compiled by McMaster University economist Michael Veall. But the median Canadian family income hasn’t grown in 30 years; in fact, it’s declined from $48,800 (in today’s dollars) to $46,700.

This means ordinary Canadians have little buying power, reducing the incentive for business and the wealthy to invest their substantial cash reserves in ways that create jobs.

As growing inequality becomes a global issue, the subject is strangely absent from Canadian politics, including the current Ontario election.

While the NDP has called for increased corporate taxes, it’s retreated in recent years from urging higher taxes on the rich — as even Bob Rae did when he was Ontario NDP leader. In the 1990 provincial election, Rae ran on a platform that included a provincial estate tax — and won a majority government.

Is it too much to hope that our most progressive party would take a stand as progressive as the president of the United States and America’s second richest man?

Don't get me wrong. I'm behind McQuaig's advocacy. My problem is that it is packaged up with a pretty ribbon and bow of "me too!".

Elizabeth Warren on the Campaign Trail

Here she goes with a wonderful message of social justice...



I sure hope she is the first sprig of green in a new springtime of democracy in America. I hope many more follow her example and take to the hustings to bring the bottom 90% some hope of a better tomorrow, a more just tomorrow, a tomorrow where future generations have a chance at a decent life.

Paul Krugman Examines "Class Warfare"

From Krugman's latest op-ed in the NY Tims:

This week President Obama said the obvious: that wealthy Americans, many of whom pay remarkably little in taxes, should bear part of the cost of reducing the long-run budget deficit. And Republicans like Representative Paul Ryan responded with shrieks of “class warfare.”

...

Detailed estimates from the Congressional Budget Office — which only go up to 2005, but the basic picture surely hasn’t changed — show that between 1979 and 2005 the inflation-adjusted income of families in the middle of the income distribution rose 21 percent. That’s growth, but it’s slow, especially compared with the 100 percent rise in median income over a generation after World War II.

Meanwhile, over the same period, the income of the very rich, the top 100th of 1 percent of the income distribution, rose by 480 percent. No, that isn’t a misprint. In 2005 dollars, the average annual income of that group rose from $4.2 million to $24.3 million.

So do the wealthy look to you like the victims of class warfare?

...

On one side, we have the claim that the rising share of taxes paid by the rich shows that their burden is rising, not falling. To point out the obvious, the rich are paying more taxes because they’re much richer than they used to be. When middle-class incomes barely grow while the incomes of the wealthiest rise by a factor of six, how could the tax share of the rich not go up, even if their tax rate is falling?

On the other side, we have the claim that the rich have the right to keep their money — which misses the point that all of us live in and benefit from being part of a larger society.

...

Republicans claim to be deeply worried by budget deficits. Indeed, Mr. Ryan has called the deficit an “existential threat” to America. Yet they are insisting that the wealthy — who presumably have as much of a stake as everyone else in the nation’s future — should not be called upon to play any role in warding off that existential threat.

Well, that amounts to a demand that a small number of very lucky people be exempted from the social contract that applies to everyone else. And that, in case you’re wondering, is what real class warfare looks like.

I believe Americans should give the rich what they want: no taxes. Simply take away their citizenship and put them on a boat and tell them "bon voyage". They can then paddle to some place that is willing to coddle them as they demand.

Luckily, the sensible rich, people like Warren Buffet will stay behind, accept higher taxes, and help to build a stronger US society: one where everybody gets enough food, clothing, housing, medical care, education to have a fair chance to rise to a better position in society than their parents.

US Tax Cuts

Here is a bit from a post by Paul Krugman on his NY Times blog walking through the logic of "tax cuts" to show that the real effect is quite different from how it is presented by the spin doctors:

Suppose that it’s 1979, and individual A is a member of the working poor, paying 12 percent of his income in taxes — basically payroll tax and not much else. Meanwhile, individual B is very wealthy, and pays 40 percent of his income in taxes — as the very wealthy did on average 30 years ago.

Now suppose that 30 years of conservative governance lead to a fall of a quarter in both individuals’ average tax rates; A’s rate falls from 12 to 9, B’s from 40 to 30. Would it make sense to say that they have gained equally from tax cuts?

Clearly not. A’s after-tax income has risen from 88 to 91 percent of pretax income, a gain of 3.4 percent. B’s after-tax income has risen from 60 to 70 percent of pretax income, a gain of 16.7 percent. The distribution of after-tax income has become substantially less equal. And that’s the calculation I was doing here.

Now, right-wingers come back and say that this is what has to happen when you cut taxes. No, it doesn’t. And anyway, cutting taxes is itself a choice — and they’re a choice that then leads to demands that we cut programs for the poor and middle class to close the deficit those tax cuts created.

The point is that yes, tax policy these past 30 years has been very much tilted toward benefiting the rich.

The poor American taxpayer is caught in a double whammy. On the one hand the rich are dumping the cost of government on the bottom 90% by using their wealth to buy politicians and the Republican party to push for ever more "tax cuts" for the rich. On the other hand, you have government taking that hard earned money and wasting it. Here's a bit from an article on The Atlantice:

$16 for a Muffin?! A Justice Department Boondoggle

Yes, hotel food is overpriced. But $16 muffins, $5 sodas, and $8 cups of coffee are still pretty pricey for a government agency -- or anyone.

...

Internal inspectors -- from the same office which once upon a time investigated the Justice Department's role in the 2006 U.S. Attorney scandal -- have concluded that mid-level DOJ officials consistently failed in 2008 and 2009 to follow federal guidelines designed to keep food and beverage costs at reasonable rates for government-sponsored conferences. They were taken advantage of, in other words, by private contractors (See? It doesn't just happen with military contracts).

...

conference attendees received Cracker Jacks, popcorn, and candy bars at a single break that cost $32 per person

...

The Justice Department will say this is old news and that it has done much more since 2009 to reduce these costs. And Congressional Republicans and the GOP presidential candidates will likely use the report to take pot shots at Eric Holder and President Barack Obama for wasteful government spending. Perhaps the only appetizing "component" of this meal is that copies of Michael Kinsley's under-appreciated book "Curse of the Giant Muffins and Other Washington Maladies" now likely will soar. In fact, I hear the Justice Department just bought a few copies at $125 each.

I understand the political right doing these boondoggles for their rich friends. What I don't understand is that Obama -- who promised transparency in government -- has allowed this to go on under his administration. Why? Did he really think that nobody cares how tax dollars are wasted? Why did his people allow this to go on. Didn't they know it would be used by the political right to undermine him?

Paul Krugman on Class Warfare

It looks like Paul Krugman is preparing to write an op-ed in the NY Times on the topic of "class warfare" and the yelping that the ultra-rich are doing as Obama attempts to move tax rates back to what they were in the 1990s.

Here's a bit from a post on his NY Times blog:

Notes on Class Warfare

I’ll be saying much more on this. But for now, partly as a note to myself, some notes on the actual class war that has taken place over the past 30 years — namely class warfare for the rich against the middle class.

1. Major tax cuts for high-income Americans, much larger as a percentage of income than for the middle class; CBO data here.

2. Decline in real minimum wage.

3. Union-busting, aided and abetted by federal policy.

4. Financial deregulation, which has fed inequality because very high incomes come disproportionately from that sector.

And now shrieks of outrage over the prospect of even a slight reversal of these trends.

The Republicans strike me as similar to bullies. They love to dish it out, but they can't take it when tables are turned. They've made life miserable to tens of millions of Americans, but the first hint that their glory days are over and they run screaming about how "unfair" the Democrats are to attack then and how vicious the "class warfare" the Democrats are directing at them. What a joke.

Calling on Americans to Sacrifice for their Country

Here is a post by Dean Baker in his Beat the Press blog which points up the hypocrisy of a writer like Thomas Friedman writing for the NY Times. He wants "the little people" to sacrifice but can't think of a thing which the ultra-rich need to do. This is what Friedman called "shared" sacrifice:

That's right, he said it in his column today. He approvingly quoted Kishore Mahbubani, a retired diplomat who is now the dean of the Lee Kuan Yew School of Public Policy at the National University of Singapore:

“No U.S. leaders dare to tell the truth to the people. All their pronouncements rest on a mythical assumption that ‘recovery’ is around the corner. Implicitly, they say this is a normal recession. But this is no normal recession. There will be no painless solution. ‘Sacrifice’ will be needed, and the American people know this. But no American politician dares utter the word ‘sacrifice.’ Painful truths cannot be told.”

Sacrifice is wonderful if it serves a purpose, but there are two big unanswered questions. First how would sacrifice help the recovery right now and second, exactly who do Mr. Friedman and Mahbubani think should be doing the sacrificing?

On the first question, I suppose that Friedman and Mahbubani want to see taxes increased or benefits like Social Security and Medicare cut. Both of these steps would mean real sacrifices for low and middle class people, but how exactly do they help the recovery?

Remember our problem is too little demand. So we make people sacrifice by paying higher taxes. How does this increase demand? Or we cut their Social Security benefits or make them pay more for their Medicare. Again, this would imply real sacrifice, but how does this spur the economy?

Are there businesses out there who are saying that they will not hire or invest today because Social Security and Medicare are too generous? Will these businesses decide to hire more workers and expand their business if the government cut these benefits?

In more normal times, there was at least a plausible argument that this could be the case. The story would go that reducing the deficit would lower interest rates, thereby encouraging businesses to invest. (Actually most research shows that investment is not very responsive to interest rates.) However, with interest rates already at post-Depression lows, it is difficult to envision them going much lower, nor that there would be much additional investment even if they did. In other words, Friedman and Mahbubani seem to be calling for pointless sacrifice.

The second part of the story is who they want to sacrifice. The top 10 percent of income distribution received the vast majority of the gains from economic growth over the last three decades. A grossly disproportionate share went to the top 1.0 pecent and the top 0.1 percent. It might be reasonable to expect that the big gainers over this period would be the ones who should be doing the sacrificing.

But not in Thomas Friedman's world. In his world, sacrifice must be shared equally. Those who are incredibly rich and those who are barely getting are both called upon to make sacrifices for the greater good. That's Thomas Friedman justice.

Friedman reminds me of the old men who exhort the young to "do their duty" and go to war. The old are safe in knowing they won't be called up. So it is awfully easy for them to rant about the need to "go to war" with this or that.

Class in France, Class Warfare in the US

This news report by Thom Hartmann makes it very clear that while in France the billionaires feel a need to take on bigger taxes to help the nation, in the US the billionaries want to pay less taxes and remove Social Security, Medicare, education, policing, and fire fighting from the bottom 90%:



Funny how this kind of "news" doesn't make it onto the major "news" organizations in the US. No wonder the US is up to its eyeballs in radical right wingers. Propaganda from the right is about all the "news" that most Americans ever get.

James Fallows Loses Patience with the Republican Cynicism over Taxes

Republicans lie. They lie all the time. They lie because they are ideologues and it is in their interest to obscure the truth.

Here is James Fallows with a post on his blog at The Atlantic magazine:

The GOP Position on Taxes Gets Worse

Please focus on the boundless cynicism here.

Through the artificial debt-ceiling "crisis," through the Moonie-like spectacle in Iowa of candidates (including Mr. Sanity, Jon Huntsman) raising hands to promise never to accept any tax increase, the Republican field has been absolutist and inflexible about not letting any revenue increase, in any form, be part of dealing with debts and deficits.

Except, it now turns out, when the taxes are those that (a) weigh most heavily on the people who are already struggling, and (b) would have the most obvious "job-killing" effect if they went up.

When it comes to those taxes -- hell, we're easy! According to the AP and Business Insider, Rep. Jeb Hensarling of Texas (at right), the Republican co-chair of the all-powerful budget Super Committee, is dead set against letting the Bush-era tax cuts expire for anyone, including millionaires. But he sees no problem in letting the current cut in payroll-tax rates -- you know, the main tax burden for most Americans -- run out. As the AP story puts it:

>>Many of the same Republicans who fought hammer-and-tong to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned. By their own definition, that amounts to a tax increase.

The tax break extension they oppose is sought by President Barack Obama. Unlike proposed changes in the income tax, this policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a "payroll tax" on practically every dime they earn...

"It's always a net positive to let taxpayers keep more of what they earn," says Rep. Jeb Hensarling, "but not all tax relief is created equal for the purposes of helping to get the economy moving again."<<

"Not created equal" is exactly right. In fact, payroll-tax cuts are the sort of tax break most likely to "get the economy moving again" during a recession. (Because they put money in the hands of people most likely to spend it and therefore boost other businesses. And on balance they lower the cost of adding new workers.) Income-tax breaks at the top end are least likely to create new demand or jobs. (Because they go to people who have a lower "marginal propensity to spend" and are more likely to park the money in the bank.)

I had thought that Republican absolutism about taxes, while harmful to the country and out of sync with even the party's own Reaganesque past, at least had the zealot's virtue of consistency. Now we see that it can be set aside when it applies to poorer people, and when setting it aside would put maximum drag on the economy as a whole. So this means that its real guiding principle is... ??? You tell me.

That pretty well nails it. The Republicans have no principles. They are cynical opportunists who scream "deficit!" and hold the country hostage over raising the debt ceiling just 8 months after they forced an extension of the Bush Tax Cuts that will pull $4 trillion out of the budget and add to the deficit.

On no issue are they "principled". They simply use and abuse words and people in order to get power.

Reality versus Ideology

Here is a bit from an article in Yahoo! Finance by David Cay Johnston that highlights fact over fiction especially the lies spread by fanatical Republicans:

In China it is among the best of times, in America it is among the worst of times, the age of wisdom in one country, the age of foolishness in the other when it comes to taxes and economic growth.

Here is some news about the idea that the path to prosperity is paved with lower taxes and reduced government spending.

In China, tax revenues since 2003 have grown a fifth faster than the booming economy.

In America, tax revenues are growing a quarter slower than the sputtering economy.

The result is that tax revenues are up 22 percent as a share of the Chinese economy, but down 7 percent as a share of the American economy.

In China, jobs are everywhere. In America, joblessness is everywhere.

There is a lesson here and it goes to the heart of why America, stuck for a decade in the economic doldrums, risks foundering on the shoals of economic ruin not because it taxes too much, but because it has adopted unsound and profoundly anti-market economic rules while Communist-led China sails into the future ever more prosperous even though its tax burdens are rising.

How do you get these truths through the thick skulls of unreasoning right wing radicals in the US? Will it require the complete destruction of America before these fanatics are forced to release their death grip on American politics?

Here is the bottom line:

What the Chinese grasp is that it matters where tax money is spent. So they spend it on education, infrastructure and pensions to get older workers out and younger ones in.

In urban China -- where half the people live -- wide, smooth roads mark the land, the stretch marks of a growing economy. Storm sewers are being built to deal with chronic flooding along the low-lying coast and electric generating plants are coming on line as fast as the now ubiquitous air conditioners that make life in this humid region pleasant.

In America, a drive is on to cut teacher pay while potholes ensure brisk business for alignment, shock absorber and tire shops and people whose guaranteed pensions were replaced with 401(k) plans learn the meaning of a 201(k).

What the Chinese know, and Americans have forgotten, is this: all private wealth is built on a foundation of commonwealth. And that commonwealth is financed with taxes.

...

Since 2003, China's tax revenue has grown a fifth faster than its gross domestic product. The Chinese economy grew at a 16.6 percent compound annual rate over those seven years while tax revenues grew at a hair under 20 percent.

During those same years in America the economy grew at a compound annual growth rate of just under 4 percent while taxes grew at just 2.8 percent.

How do you get the anti-tax fanatics in the US to understand how badly misdirected their ideology is? How wildly wrong they are?

Here is they key failure of empathy and economic understanding:

Unlike the Tea Partiers, the Chinese get the ancient, time-tested and therefore (in the classic meaning of the word) profoundly conservative idea that the greater your economic gain the greater your tax burden. They also grasp the teachings of Adam Smith that taxing the incomes of the poor just raises the general labor price level and of John Locke that there is no tax to be had from the poor.

Go read the whole article.