Tag: taxes

Paul Ryan’s Budget

Otherwise, Congress would not ignore the consensus of scientists and economists.

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Source: AlterNet

Author: Janet Allon

Paul Krugman was in feisty form in his Friday column for the New York Times. He opened by repeating a joke from  Ezra Klein, who now is editor in chief of Vox.com. Klein once described Dick Armey, the former House majority leader, as “a stupid person’s idea of what a thoughtful person sounds like.” The same could be said, Krugman says, of Paul Ryan, chair of the House Budget Committee.

You can’t blame Krugman for being a tad bitter. He explains:

I’ve been looking  at surveys from the Initiative on Global Markets, based at the University of Chicago. For two years, the initiative has been regularly polling a panel of leading economists, representing a wide spectrum of schools and political leanings, on questions that range from the economics of college athletes to the effectiveness of trade sanctions. It usually turns out that there is much less professional controversy about an issue than the cacophony in the news media might have led you to expect.

This was certainly true of the most recent

poll, which asked whether the American Recovery and Reinvestment Act — the Obama “stimulus” — reduced unemployment. All but one of those who responded said that it did, a vote of 36 to 1. A follow-up question on whether the stimulus was worth it produced a slightly weaker but still overwhelming 25 to 2 consensus.

Leave aside for a moment the question of whether the panel is right in this case (although it is). Let me ask, instead, whether you knew that the pro-stimulus consensus among experts was this strong, or whether you even knew that such a consensus existed.

The answer is most likely, no, unless you are someone who goes very far out of your way to get honest information like that. Krugman reports that on CNBC, the host was “so astonished to hear yours truly arguing for higher spending to boost the economy that  he described me as a ‘unicorn,’ someone he could hardly believe existed.”

Just as Republicans in Congress ignore climate scientists, they also ignore economics professionals when it comes to government spending. Economics may not be the hard science that climate science is, but still, it is reminiscent of the whole war on knowledge/war on intelligence/war on science trope.

No, the Republican ideologues prefer to put their faith (which is the right word, since they pursue their ideology with religious zeal) in discredited doctrines.

Krugman, ever fair-minded, does point out the exception to the rule:

The odd man out — literally — in that poll on stimulus was Professor Alberto Alesina of Harvard. He has claimed that cuts in government spending are actually expansionary, but relatively few economists agree, pointing to  work at the International Monetary Fund and elsewhere that seems to refute his claims. Nonetheless, back when European leaders were making their decisive and disastrous turn toward austerity, they brushed off warnings that slashing spending in depressed economies would deepen their depression. Instead, they listened to economists telling them what they wanted to hear. It was,  as Bloomberg Businessweek put it, “Alesina’s hour.”

The professional consensus not always right, Krugman allows. It’s just that politicians increasingly pick the wrong so-called experts to believe. “Bear in mind that the American right is still taking its economic advice mainly from people who have spent many years wrongly predicting runaway inflation and a collapsing dollar,” Krugman reminds. “All of which raises a troubling question: Are we as societies even capable of taking good policy advice?”
Sadly, the answer seems to be ‘no.’ Not in the realm of economics. And not, most glaringly, in the realm of climate change.

Emphasis Mine

See: http://www.alternet.org/economy/paul-krugman-reveals-devastating-reason-knowledge-not-power?akid=12082.123424.zhQa0i&rd=1&src=newsletter1013815&t=11

What Recovery? You Probably Became Poorer In the Last 10 Years

From 2003-2013, ordinary Americans lost a third of their wealth.

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Source: AlterNet

Author: Lynn Stuart Parramore

 You sense it when you look at your retirement account. You feel it when the bills come in. According to new research supported by the Russell Sage Foundation, your instinct is right: you are very likely getting poorer.

For the study, researchers gathered information on families in the middle of the wealth distribution continuum. What they found is that in 2003, the inflation-adjusted net worth for the typical household was $87,992. Fast-forward 10 years: that figure is down to a mere $56,335.

Ordinary Americans got 36 percent poorer in just a decade.

The Great Recession and the bursting of the housing bubble did their damage, but a long list of additional factors have helped funnel money out of the hands of regular Americans and into the pockets of the rich, including deregulation, high unemployment and job insecurity, the shareholder value trend in which corporations focus on manipulating stock prices while throwing workers under the bus, the reduced influence of unions, the shredding of the social safety net, privatization, and tax structures which favor the rich.

And once the inequality train leaves the station, it only gathers speed until something stops it. As Thomas Piketty has recently emphasized, the rich get richer faster than you and me because of the rate of return on their wealth.

Underlying all of this is the spread of faulty economic thinking throughout academia, political circles and the mainstream press. Neoclassical economics, or so-called free-market ideology, essentially serves as the official justification for inequality, promoting mythologies about the rich as the great job creators (when they are actually job destroyers), the presumed benefits of inequality such as innovation (check the Scandinavian countries to debunk that one, where innovation thrives but inequality does not), and a host of similar nonsense.

The upshot is that regular people have endured one of the worst periods in recent memory. It will not surprise you to learn that during the same decade of 2003-2013, the rich were partying down. In the 95th percentile of wealth distribution, people got 14 percent richer.

To put all this in perspective, let’s take a look at another 10-year period, from 1937 to 1947. This decade witnessed something called the “Great Compression,” when income inequality in America plunged. The tax structure was addressed so that the rich paid their share, unions became a powerful force and regulation helped stabilize the financial sector and corporate America. Workers won protections and America’s middle-class blossomed and Americans enjoyed a period of low inequality for the next three decades.

By the 1970s, what’s known as the “Great Divergence” kicked off, with the rich gradually gobbling up more and more of the country’s wealth.

The authors of the Russell Sage study do not have much hope that America’s wealth disparity will get better any time soon: “The American economy has experienced rising income and wealth inequality for several decades, and there is little evidence that these trends are likely to reverse in the near term.”

As we can see from the Great Compression, it doesn’t have to be this way. Things won’t get better on their own, however: Inequality needs an intervention.

Lynn Parramore is an AlterNet senior editor. She is cofounder of Recessionwire, founding editor of New Deal 2.0, and author of “Reading the Sphinx: Ancient Egypt in Nineteenth-Century Literary Culture.” She received her Ph.D. in English and cultural theory from NYU. She is the director of AlterNet’s New Economic Dialogue Project. Follow her on Twitter @LynnParramore.

Emphasis Mine

See:http://www.alternet.org/economy/what-recovery-you-probably-became-poorer-last-10-years?akid=12061.123424.FdFn1w&rd=1&src=newsletter1013200&t=5Lynn Stuart Parramore

Paul Ryan’s New Clothes

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Source: National Memo

Author:E. J. Dionne

Paul Ryan is counting on this: Because he says he wants to preserve a safety net, speaks with concern about poor people and put out a 73-page report, many will slide over the details of the proposals he made last week in his major anti-poverty speech.

The Wisconsin Republican congressman is certainly aware that one of the biggest political difficulties he and his conservative colleagues face is that many voters suspect them of having far more compassion for a wealthy person paying taxes than for a poor or middle-income person looking for a job.

So Ryan gave a well-crafted address at the American Enterprise Institute in which the centerpiece sounded brand spanking new: the “Opportunity Grant.” The problem is that this “pilot program” amounts to little more than the stale conservative idea of wrapping federal programs into a block grant and shipping them off to the states. The good news is that Ryan only proposes “experiments” involving “a select number of states,” so he would not begin eliminating programs wholesale. Thank God for small favors.

Ryan surrounds his retread idea with the language of innovation. “The idea would be, let states try different ways of providing aid and then to test the results — in short, more flexibility in exchange for more accountability,” he declared. “My thinking basically is, get rid of these bureaucratic formulas.”

Who can possibly like those “bureaucratic formulas”? The phrase is another disguise. Among the programs Ryan would block grant are food stamps (now known as the Supplemental Nutrition Assistance Program or SNAP). Food stamps are one of our most valuable initiatives because people are automatically eligible for them when they lose a job or their income drops sharply. Studies have amply documented how important food stamps are to the well-being of children.

For the economy and for the disadvantaged, curtailing SNAP would be devastating. While providing nutrition help to families in desperate need, food stamps also offer an immediate economic stimulus at moments when the economy is losing purchasing power. Economists call such programs “automatic stabilizers.”

Ryan’s block grant would not be nearly as responsive to economic changes. If Congress would have to step in, its reaction would be slow. And the history of Ryan’s own budgets shows that increasing spending for poor people is not exactly a priority on his side of politics.

Food stamps aren’t the only programs that get wrapped into the grant. Housing vouchers go there, too, which could lead to more homelessness. So does money for child care. Ryan says there would be rules barring states from using funding from his Opportunity Grant for purposes other than helping the needy. But it’s not clear from his outline how he’d stop states from using their new flexibility to move spending away from the needy indirectly by substituting block grant money for existing expenditures.

Ryan might reply: You just don’t trust the states! And my answer would be: You’re absolutely right, there are some states I don’t trust to stand up for their poor people. I’d point specifically to the 24 states that are depriving roughly 5 million Americans of health insurance because they refuse to participate in the Medicaid expansion under the Affordable Care Act.

In his speech and report, Ryan movingly described two hypothetical Americans, “Andrea” and “Steven,” and how much they could benefit from intense counseling by a case worker. There may well be something to this, but it’s expensive. How much would states have to cut basic assistance to the poor to hire additional case workers?

And by the way, one of the programs Ryan would eliminate to pay for an undoubtedly positive part of his plan — a roughly $500-a-year increase in the Earned Income Tax

Credit (EITC) for childless workers — is the Social Services Block Grant, which helps pay for the kinds of interventions he wants for Andrea and Steven.

There is such a hunger for something other than partisanship that the temptation is to praise the new Ryan for being better than the old Ryan and to leave it at that. It’s good that he moved on the EITC and also that he embraced sentencing reform. I also like his suggestion that we re-examine occupational licensing rules.

But forgive me if I see his overall proposal as a nicely presented abdication of federal responsibility for the poor. “Experimenting” with people’s food-stamp money is not something we should sign onto.

E.J. Dionne’s email address is ejdionne@washpost.com. Twitter: @EJDionne.

Emphasis Mine

See:

Krugman Divulges Real Reason Conservatives Freak Out About California Success Story

Right-wingers just hate when promised catastrophes don’t materialize.

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Source: AlterNet

Author: Janet Allon

 Paul Krugman feels terribly sorry for conservatives who predict doom whenever taxes slightly, and social programs are delivered, and then, lo and behold, the promised catastrophe does not materialize. You’d think they’d scurry away, tails between legs, issuing mea culpas and feeling horrible about themselves.

In Friday’s column, he discusses California, the “left coast,” where Governor Jerry Brown had the audacity to push through a modestly liberal agenda of higher taxes and spending, a higher minimum wage, and enthusiastic implementation of Obamacare.

The horror, conservatives said. As Krugman writes:

A representative reaction: Daniel J. Mitchell of the Cato Institute declared that by voting for Proposition 30, which authorized those tax increases, “the looters and moochers of the Golden State” (yes, they really do think they’re living in an Ayn Rand novel)  were committing “economic suicide.” Meanwhile, Avik Roy of the Manhattan Institute and Forbes claimed that California residents were about to face  a “rate shock” that would more than double health insurance premiums.

Well, darned if the catastrophe didn’t happen. Krugman offers numbers, as he usually does, to bolster his case:

If tax increases are causing a major flight of jobs from California, you can’t see it in the job numbers. Employment is up 3.6 percent in the past 18 months, compared with a national average of 2.8 percent; at this point, California’s share of national employment, which was hit hard by the bursting of the state’s enormous housingbubble, is back to pre-recession levels.

On health care, some people — basically healthy young men who were getting inexpensive insurance on the individual market and were too affluent to receive subsidies — did face premium increases, which we always knew would happen. Over all, however, the costs of health reform came in below expectations, while enrollment came in well above — more than triple initial predictions in the San Francisco area. A recent survey by the Commonwealth Fund suggests that  California has already cut the percentage of its residents without health insurance in half. What’s more, all indications are that further progress is in the pipeline, with  more insurance companies entering the marketplace for next year.

And, yes,  the budget is back in surplus.

But does the stubborn right flank ever examine the actual results, search their souls and reconsider their positions? Ha! Instead they just try to downplay the good news. California is not adding jobs as fast as Texas, they say. Gotta be the tax rates.

For the big difference between the two states, aside from the size of the oil and gas sector, isn’t tax rates. it’s  housing prices. Despite the bursting of the bubble, home values in California are still double the national average, while in Texas they’re 30 percent below that average. So a lot more people are moving to Texas even though wages and productivity are lower than they are in California.

And while some of this difference in housing prices reflects geography and population density — Houston is still spreading out, while Los Angeles, hemmed in by mountains, has reached its natural limits — it also reflects  California’s highly restrictive land-use policies, mostly imposed by local governments rather than the state.  As Harvard’s Edward Glaeser has pointed out, there is some truth to the claim that states like Texas are growing fast thanks to their anti-regulation attitude, “but the usual argument focuses on the wrong regulations.” And taxes aren’t important at all.

The lesson of the California comeback is a familiar, but it bears repeating. “You should take anti-government propaganda with large helpings of salt,” Krugman writes. “Tax increases aren’t economic suicide; sometimes they’re a useful way to pay for things we need. Government programs, like Obamacare, can work if the people running them want them to work, and if they aren’t sabotaged from the right. In other words, California’s success is a demonstration that the extremist ideology still dominating much of American politics is nonsense.”

Emphasis Mine

See:http://www.alternet.org/economy/krugman-divulges-real-reason-conservatives-freak-out-about-california-success-story?akid=12054.123424.eyAYQu&rd=1&src=newsletter1012840&t=7

 

Paul Krugman on the Real Reason Behind the Deficit Panic and the Terrible Damage It Has Wrought

The debt apocalypse has been called off.’

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Source: AlterNet

Author: Paul Krugman

Paul Krugman attacks the recent, years-long panic over the national debt and deficits in today’s column reminding readers that this once relentless topic in the news has pretty much disappeared from view. And for good reason, Krugman says, “The whole thing turns out to have been a false alarm.”

There was a time not so long ago when it was all you could read or hear about. The media and politicians of both stripes kept sounding the alarm over budget deficits and rising debts. Very serious people said the U.S. would soon turn into Greece unless something was done. Obama tried to strike a “Grand Bargain” with Congress for a balanced budget. But, of course, this Congress does not bargain—refuses to raise taxes—and no deal was struck.

Writes Krugman:

I’m not sure whether most readers realize just how thoroughly the great fiscal panic has fizzled — and the deficit scolds are, of course, still scolding. They’re even trying to spin the latest long-term projections from the Congressional Budget Office — which are distinctly non-alarming — as somehow a confirmation of their earlier scare tactics. So this seems like a good time to offer an update on the debt disaster that wasn’t.

About those projections: The budget office predicts that this year’s federal deficit will be just 2.8 percent of G.D.P., down from 9.8 percent in 2009. It’s true that the fact that we’re still running a deficit means federal debt in dollar terms continues to grow — but the economy is growing too, so the budget office expects the crucial ratio of debt to G.D.P. to remain more or less flat for the next decade.

Krugman goes on to responsibly inform readers that things will get more complicated after about a decade as an aging population makes increasing demands on Medicare and Social Security. But, on the plus side, healthcare costs have dramatically slowed down, which none of the doomsday prognosticators saw coming. Krugman writes:

As a result, despite aging, debt in 2039 — a quarter-century from now! — is projected to be no higher, as a percentage of G.D.P., than the debt America had at the end of World War II, or that Britain had for much of the 20th century. Oh, and the budget office now expects interest rates to remain fairly low, not much higher than the economy’s rate of growth. This in turn weakens, indeed almost eliminates, the risk of a debt spiral, in which the cost of servicing debt drives debt even higher.

OK, but still, Krugman allows, rising debt is not good. He also points out that it would take “surprisingly little” to avoid it.

The budget office estimates that stabilizing the ratio of debt to G.D.P. at its current level would require spending cuts and/or tax hikes of 1.2 percent of G.D.P. if we started now, or 1.5 percent of G.D.P. if we waited until 2020. Politically, that would be hard given total Republican opposition to anything a Democratic president might propose, but in economic terms it would be no big deal, and wouldn’t require any fundamental change in our major social programs.

In short, the debt apocalypse has been called off.

So, having cleared up the economics, Krugman turns to the real reasons behind the fiscal panic. It is, as you might have imagined, politically and ideologically motivated. So much so that conservative thinkers like Alan Greenspan have expressed disappointment that the Greece-style crisis never arrived. Even in Europe, the crisis was dealt with rather quickly, in fact, “once the European Central Bank began doing its job, making it clear it would do ‘whatever it takes’ to avoid cash crises in nations that have given up their own currencies and adopted the euro,” Krugman illuminates. “Did you know that Italy, which remains deep in debt and suffers much more from the burden of an aging population than we do, can now borrow long term at an interest rate of only 2.78 percent? Did you know that France, which is the subject of constant negative reporting, pays only 1.57 percent?”
No, that story is not told here. Nor is the simple fact that we do not have a debt crisis. Why is that? Krugman suspects that it has served a political purpose, namely  it suited those powerful conservative interests that want to dismantle Social Security and Medicare. That desire in itself is cruel and irresponsible enough, but these deficit hawks also did a lot of collateral damage along the way, distracting all of us from real problems like unemployment and decaying infractructure and climate change for far too many years.
And who is going to pay for that?

Emphasis Mine

See:http://www.alternet.org/economy/paul-krugman-real-reason-behind-deficit-panic-and-terrible-damage-it-has-wrought?akid=12038.123424.JK4ohx&rd=1&src=newsletter1012195&t=5&paging=off&current_page=1#bookmark

The Rise of the Non-Working Rich

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Source: RSN

Author Robert Reich

In a new Pew poll, more than three quarters of self-described conservatives believe “poor people have it easy because they can get government benefits without doing anything.”

In reality, most of America’s poor work hard, often in two or more jobs.

The real non-workers are the wealthy who inherit their fortunes. And their ranks are growing.

In fact, we’re on the cusp of the largest inter-generational wealth transfer in history.

The wealth is coming from those who over the last three decades earned huge amounts on Wall Street, in corporate boardrooms, or as high-tech entrepreneurs.

It’s going to their children, who did nothing except be born into the right family.

The “self-made” man or woman, the symbol of American meritocracy, is disappearing. Six of today’s ten wealthiest Americans are heirs to prominent fortunes. Just six Walmart heirs have more wealth than the bottom 42 percent of Americans combined (up from 30 percent in 2007).

The U.S. Trust bank just released a poll of Americans with more than $3 million of investable assets.

Nearly three-quarters of those over age 69, and 61 per cent of boomers (between the ages of 50 and 68), were the first in their generation to accumulate significant wealth.

But the bank found inherited wealth far more common among rich millennials under age 35.

This is the dynastic form of wealth French economist Thomas Piketty warns about. It’s been the major source of wealth in Europe for centuries. It’s about to become the major source in America – unless, that is, we do something about it.

As income from work has become more concentrated in America, the super rich have invested in businesses, real estate, art, and other assets. The income from these assets is now concentrating even faster than income from work.

In 1979, the richest 1 percent of households accounted for 17 percent of business income. By 2007 they were getting 43 percent. They were also taking in 75 percent of capital gains. Today, with the stock market significantly higher than where it was before the crash, the top is raking even more from their investments.

Both political parties have encouraged this great wealth transfer, as beneficiaries provide a growing share of campaign contributions.

But Republicans have been even more ardent than Democrats.

For example, family trusts used to be limited to about 90 years. Legal changes implemented under Ronald Reagan extended them in perpetuity. So-called “dynasty trusts” now allow super-rich families to pass on to their heirs money and property largely free from taxes, and to do so for generations.

George W. Bush’s biggest tax breaks helped high earners but they provided even more help to people living off accumulated wealth. While the top tax rate on income from work dropped from 39.6% to 35 percent, the top rate on dividends went from 39.6% (taxed as ordinary income) to 15 percent, and the estate tax was completely eliminated. (Conservatives called it the “death tax” even though it only applied to the richest two-tenths of one percent.)

Barack Obama rolled back some of these cuts, but many remain.

Before George W. Bush, the estate tax kicked in at $2 million of assets per couple, and then applied a 55 percent rate. Now it kicks in at $10 million per couple, with a 40 percent rate.

House Republicans want to go even further than Bush did.

Rep. Paul Ryan’s “road map,” which continues to be the bible of Republican economic policy, eliminates all taxes on interest, dividends, capital gains, and estates.

Yet the specter of an entire generation who do nothing for their money other than speed-dial their wealth management advisors isn’t particularly attractive.

It’s also dangerous to our democracy, as dynastic wealth inevitably accumulates political influence.

What to do?  First,restore the estate tax in full.

Second, eliminate the “stepped-up-basis on death” rule. This obscure tax provision allows heirs to avoid paying capital gains taxes on the increased value of assets accumulated during the life of the deceased. Such untaxed gains account for more than half of the value of estates worth more than $100 million, according to the Center on Budget and Policy Priorities.

Third, institute a wealth tax. We already have an annual wealth tax on homes, the major asset of the middle class. It’s called the property tax. Why not a small annual tax on the value of stocks and bonds, the major assets of the wealthy?

We don’t have to sit by and watch our meritocracy be replaced by a permanent aristocracy, and our democracy be undermined by dynastic wealth. We can and must take action — before it’s too late.

 

Emphasis Mine

See:http://readersupportednews.org/opinion2/274-41/24802-the-rise-of-the-non-working-rich

Walmart On Welfare

chasdarwin2 Comments

Source: National Memo

Author: David Cay Johnston

Emphasis Mine

Next time you drive past a Walmart, think about how much in taxes you pay to subsidize the nation’s largest private employer, owned by the nation’s richest family.

Your cost this year:  $247 if you are single, $494 if you are a couple, and $987 if you are a couple with two kids.

And you pay whether or not you shop at Walmart or its Sam’s Clubs.

Put another way, if you are single and a minimum-wage earner, the first 39 minutes you are on the job each week just goes to provide welfare for Walmart and the Waltons.

For a family of four, the cost of welfare for Walmart and the Waltons probably comes to more than your weekly take-home pay, based on government data on incomes.

American taxpayer money explains almost a third of Walmart’s worldwide pretax profits last year. But that understates the scale of taxpayer assistance to the retailer, which made 29 percent of its sales overseas last year.

Figure about 44 percent of Walmart’s domestic pretax profits were contributed by local, state and federal taxpayers directly and indirectly, based on company disclosure statements.

These figures on welfare for Walmart and the Waltons were calculated from a report released today by Americans for Tax Fairness, part of a broad coalition of union, civil rights and other organizations trying to shame the Walton family into paying wages that if not good, are at least enough to make sure Walmart employees do not qualify for food stamps.

So far the Waltons have shown themselves to be shameless and utterly unapologetic for foisting any of their costs onto taxpayers instead of earning their way in the marketplace.

This is in a way not surprising. The best-known heir of the retailing innovator Sam Walton, his daughter Alice, 64, has a long history of drunk-driving accidents, including killing a woman hit by her vehicle.

While repeat drunk drivers are routinely prosecuted in most jurisdictions, often as a matter of policy, and upon conviction get the time behind bars their conduct deserves, to date no law enforcement agency has seen fit to prosecute Alice Walton. Instead she basks in the glow of encomiums for the philanthropy enabled by the fortune her father built and boosted by the steady flow of money taxpayers are forced to give her, her relatives and other Walmart investors.

Compared to this taxpayer largesse, Walton philanthropy is small change.

The Walton Family Foundation ranks 22nd in America with $2.2 billion in assets, which may seem large. But Walmart and the Waltons have already extracted that much from the taxpayers this year. In fact they hit about $2.2 billion of taxpayer subsidies on Saturday, April 12, based on the Americans for Tax Fairness report.

The $7.8 billion a year annual cost estimate in the new report is based on a study last year by the House Education and the Workforce Committee Democratic staff. It showed that each Walmart in Wisconsin costs taxpayers between $905,000 and $1.75 million in welfare costs.

Americans for Tax Fairness extrapolated to all the Walmarts in America based on that study and then took into account other costs taxpayers are forced to bear to subsidize the company and, thus, its controlling owners, the Waltons.

The study estimates that if the subsidy costs were divided equally among the company’s 1.4 million American workers, the cost would be $4,415 per Walmart employee.

Welfare for Walmart workers, the Americans for Tax Fairness report says, costs $6.2 billion, making it by far the bulk of the costs taxpayers must bear.

The study estimates that only $70 million is for the use of tax dollars to build Walmart stores, distribution centers and other property provided by the largesse of the taxpayers. That number is small because Walmart has pretty much built out across America.

To date Walmart has probably received $1.5 billion from taxpayers to build and equip stores, distribution centers and other buildings, according to Phil Mattera, research director at Good Jobs First, which on a budget of about $1 million annually has for years dragged out of local, state and federal officials details of how much welfare Walmart gets.

The discounted rates at which dividends are taxed, a policy first put forth by then-President George W. Bush in 2003, save the Walton heirs $607 million in taxes annually, the Americans for Tax Fairness report calculated from company disclosure reports.

One aspect of the report should be regarded with caution.

Americans for Tax Fairness says Walmart saves $1 billion each year by taking advantage of an almost universally used method to deduct the value of new equipment quickly rather than slowly. It is called accelerated depreciation.

That lowers taxes in the early years after an investment is made, but it means higher taxes in later years.  The proper way to measure this is how much less the future taxes are worth because they are delayed between one and 20-plus years. A more realistic figure is probably $100 million, a tenth of what the report says.

Despite this, I used the report’s estimate of accelerated depreciation costing $1 billion annually in calculating how much it costs you to subsidize Walmart and the Waltons.

That caveat presented, the core issue here is why does Walmart need welfare? Indeed, why has welfare become almost universal among large American companies, some of which derive all of their profits from stealth subsidies?

Walmart is far from alone among big corporations that do not depend on what they can earn in the marketplace, but instead extract your tax dollars to juice their profits.

Every big company I know of (except one) not only takes from the taxpayers, but has its hands out for all the welfare it can collect in the form of tax dollars paying for new buildings, exemptions from taxes, discounted electricity, free job training and all sorts of regulatory rules that thwart competition and artificially inflate prices. From Alcoa and Boeing on through the alphabet, America’s big companies – and a lot of foreign-owned companies – are on the dole.

The one exception is Gander Mountain, a chain of retail stores that sells sporting goods, especially for hunting and fishing. It refuses all welfare and once sent a check for $1 million to a municipal agency after being alerted to a hidden subsidy.

Imagine how much more money you would have in your pocket if the Waltons stood on their own proverbial two feet, pulled themselves up by their own bootstraps, and gave back all the welfare they have taken year after year after year.

Then ask yourself why you voted for any politician in either party who has not introduced legislation and regulations to stop this and recover that money – with interest.

Emphasis Mine

See: http://www.nationalmemo.com/walmart-welfare/

Cui Bono?

The key is messaging; messaging is the key. Listening to conservatives yesterday, their message was that this is a large tax burden. Our first message? That is a Lie: the only people who would pay the fee are those who can afford health care insurance, and choose not to get it. (The best example of a tax on Pure, Utter, Stupidity yet offered!)

chasdarwinLeave a comment

The Patient Protection and Affordable Care Act has been protected by the SCOTUS, who judicated that to those for whom health insurance is affordable, they must either purchase same, or pay a fine.

Hooray for Us!

The question is: who benefits?

There are three dimensions to the answer: human, business, and political.
The first two are straight forward.  For the first: those under 27, those over 65, those who cannot afford adequate health care, and those who can. The second: private health insurance companies (at least for a decade), and health care providers will benefit from an increase in customers.
Political?  “Aye, there’s the rub…”
This decision may well have motivated the conservative base – something their candidate has been incapable of achieving.  (To those who find joy in others not being able to obtain adequate health care, there is no hope.)
It also provides a unifying issue for progressives, and defines a clear difference between the parties: The GOP, who want to go back to the past; and the Democrats, who want to move forward.
How do we progressives protect our gains and move forward?  By re-electing President Obama, and by electing solid progressive majorities in the House and Senate.   How do we achieve that?  By organizing, motivating, messaging, and getting out the vote.
The key is messaging; messaging is the key.  Listening to conservatives yesterday, their message was that this is a large tax burden.  Our first message? That is a Lie: the only people who would pay the fee are those who can afford health care insurance, and choose not to get it.  (The best example of a tax on Pure, Utter, Stupidity yet offered!)
We must frame messages to the middle of the political spectrum on why the ACA is good for all, bad for none, and that includes them.
N.B.: cui bono is Latin for Who Benefits: the basis of any homicide case.

The Tea Party History of the United States.

Until one understands what is wrong with the above, they have no hope of understanding the USA of today.

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Things were almost perfect during the seventh and eighth years of the Presidency of GW Bush: The Axes of Evil had been subdued (Really?); income tax rates for the highest earners were at a historic low(TRUE); the terrorists had been vanquished(FALSE); income tax rates for the highest earners were at a historic low; the estate (death) tax – (inheriting an estate enables hard working Americans to be successful because of their birth situation) was on life support (TRUE);income tax rates for the highest earners were at a historic low; there was almost no deficit adding to the minuscule national debt (FALSE); income tax rates for the highest earners were at a historic low; access to contraception and abortion for people without means was low (TRUE); and fewer Americans than ever understood Natural Selection in specific or science in general (TRUE). The only dark cloud on the horizon (besides the fact that Social Security was on sound footing) was in housing: some very wealthy people – of the class know as job creators – had been growing our economy by speculating on increasing housing values, which had created a bubble getting ready to burst; and many home mortgages – of a type labeled  subprime – had been written because the government forced financial institutions to make loans to people who had no chance of ever paying them back(FALSE). (The job creators dealt with the latter issue by hiding these bad loans in a package of securities, which they – using the best of free market principles – sold to unsuspecting clients) (ALL TRUE).  When the housing bubble burst, the shady, worthless securities were exposed, markets collapsed, millions of job were lost (TRUE),  many homes became worth less than what was owed on them (TRUE), and then, even worse, a Democrat – and  a Black person – was elected President.

The President and his Democratic Party friends came into office and instantly the national debt and the deficit became huge (FALSE),unemployment reached levels almost as high as during the Reagan Administration(TRUE), gas prices skyrocketed, our national defense was compromised, and – horror of horrors – legislation to help people gain access to affordable health care was signed into law (TRUE).  Even worse, the policy – begun in the previous presidency – of helping the financial and auto industries by providing low interest loans was continued(TRUE). What could have been worse? Higher taxes? Food stamps and unemployment insurance for those who were living the American Dream until their jobs were destroyed? Higher taxes? Spending tax money on successful military missions?  Higher taxes?  Strengthening public schools in poor neighborhoods so that some could gain the skills to survive, and even prosper? Higher taxes?  Improved access to contraception and woman’s health needs?  Marriage equality?

N.B.: taxes on moderate incomes are lower than they were on Jan 19, 2012; the marginal (highest) are unchanged.

Until one understands what is wrong with this tea party perception of history, they have no hope of understanding the USA of today.

Give Karl Marx a Chance to Save the World Economy: George Magnus

s he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.”

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Karl Marx and the World Economy

By George Magnus

“Policy makers struggling to understand the barrage of financial panics, protests and other ills afflicting the world would do well to study the works of a long-dead economist: Karl Marx. The sooner they recognize we’re facing a once-in-a-lifetime crisis of capitalism, the better equipped they will be to manage a way out of it.

The spirit of Marx, who is buried in a cemetery close to where I live in north London, has risen from the grave amid the financial crisis and subsequent economic slump. The wily philosopher’s analysis of capitalism had a lot of flaws, but today’s global economy bears some uncanny resemblances to the conditions he foresaw.

Consider, for example, Marx’s prediction of how the inherent conflict between capital and labor would manifest itself. As he wrote in “Das Kapital,” companies’ pursuit of profits and productivity would naturally lead them to need fewer and fewer workers, creating an “industrial reserve army” of the poor and unemployed: “Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery.”

The process he describes is visible throughout the developed world, particularly in the U.S. Companies’ efforts to cut costs and avoid hiring have boosted U.S. corporate profits as a share of total economic output to the highest level in more than six decades, while the unemployment rate stands at 9.1 percent and real wages are stagnant.

U.S. income inequality, meanwhile, is by some measures close to its highest level since the 1920s. Before 2008, the income disparity was obscured by factors such as easy credit, which allowed poor households to enjoy a more affluent lifestyle. Now the problem is coming home to roost.

Over-Production Paradox

Marx also pointed out the paradox of over-production and under-consumption: The more people are relegated to poverty, the less they will be able to consume all the goods and services companies produce. When one company cuts costs to boost earnings, it’s smart, but when they all do, they undermine the income formation and effective demand on which they rely for revenues and profits.

This problem, too, is evident in today’s developed world. We have a substantial capacity to produce, but in the middle- and lower-income cohorts, we find widespread financial insecurity and low consumption rates. The result is visible in the U.S., where new housing construction and automobile sales remain about 75% and 30% below their 2006 peaks, respectively.

As Marx put it in Kapital: “The ultimate reason for all real crises always remains the poverty and restricted consumption of the masses.”

Addressing the Crisis

So how do we address this crisis? To put Marx’s spirit back in the box, policy makers have to place jobs at the top of the economic agenda, and consider other unorthodox measures. The crisis isn’t temporary, and it certainly won’t be cured by the ideological passion for government austerity.

Here are five major planks of a strategy whose time, sadly, has not yet come.

First, we have to sustain aggregate demand and income growth, or else we could fall into a debt trap along with serious social consequences. Governments that don’t face an imminent debt crisis — including the U.S., Germany and the U.K. — must make employment creation the litmus test of policy. In the U.S., the employment-to-population ratio is now as low as in the 1980s. Measures of underemployment almost everywhere are at record highs. Cutting employer payroll taxes and creating fiscal incentives to encourage companies to hire people and invest would do for a start.

Lighten the Burden

Second, to lighten the household debt burden, new steps should allow eligible households to restructure mortgage debt, or swap some debt forgiveness for future payments to lenders out of any home price appreciation.

Third, to improve the functionality of the credit system, well-capitalized and well-structured banks should be allowed some temporary capital adequacy relief to try to get new credit flowing to small companies, especially. Governments and central banks could engage in direct spending on or indirect financing of national investment or infrastructure programs.

Fourth, to ease the sovereign debt burden in the euro zone, European creditors have to extend the lower interest rates and longer payment terms recently proposed for Greece. If jointly guaranteed euro bonds are a bridge too far, Germany has to champion an urgent recapitalization of banks to help absorb inevitable losses through a vastly enlarged European Financial Stability Facility — a sine qua non to solve the bond market crisis at least.

Build Defenses

Fifth, to build defenses against the risk of falling into deflation and stagnation, central banks should look beyond bond- buying programs, and instead target a growth rate of nominal economic output. This would allow a temporary period of moderately higher inflation that could push inflation-adjusted interest rates well below zero and facilitate a lowering of debt burdens.

We can’t know how these proposals might work out, or what their unintended consequences might be. But the policy status quo isn’t acceptable, either. It could turn the U.S. into a more unstable version of Japan, and fracture the euro zone with unknowable political consequences. By 2013, the crisis of Western capitalism could easily spill over to China, but that’s another subject.”

(George Magnus is senior economic adviser at UBS and author of “Uprising: Will Emerging Markets Shape or Shake the World Economy?” The opinions expressed are his own.)

To contact the Bloomberg View editorial board: view@bloomberg.net.

emphasis mine

see:http://www.bloomberg.com/news/2011-08-29/give-marx-a-chance-to-save-the-world-economy-commentary-by-george-magnus.html