Nel's New Day

April 15, 2019

Tax Day: ‘Cuts,’ Returns

Today is the deadline for paying 2018 taxes, and the amount of taxes that people pay has consumed conversation for over a year, ever since DDT and other Republicans gave the wealthy and big business a huge tax break that cost the United States $1.5 trillion. When Dictator Donald Trump (DDT) delivered his rally speeches, he promised that people would get an additional $4,000, but over 80 percent of taxpayers didn’t get this generous bonus. Instead 10,260,263 paid more taxes last year after DDT’s 2017 Tax Cut and Jobs Act, and raises for most people were under $1,000. The law eliminated personal and dependent exemptions, caps on state and local deductions, employee business expenses deductions, etc. The cap of $10,000 on state and local tax deductions was onerous for many people, especially those who have lived in their home for a long time or have high state income tax, although DDT claimed that only the wealthy were hurt.

Researchers found that “half the tax cuts went to the richest five percent, with about a quarter going to the richest one percent. Those among the top five percent got bigger tax cuts not just in dollar terms but even when measured as a share of their total income.” Households making between $500,000 and $1 million had their after-tax income rise by an average of 5.2 percent. Households making less than $50,000 experience only a 0.6 percent increase. In even greater income inequality, W-2 wages fell 2.0 percent in 2018. Bonuses fell $0.22 for 2018, and the average bonus for 2018 was just $0.01 higher than in 2017. Most bonuses came from recruiting because of low unemployment instead of production from company tax cuts.

Big benefits went to Fortune 500 companies: at least 60 profitable corporations will pay nothing—some of them getting back extra money from the government. That number is double from previous years. Instead of paying $16.4 billion in taxes on their $79 billion of pretax income, the companies got rebates of $4.3 billion—a GOP gift of over $20 billion used to buy up stock and sock away in hidden offshore accounts. A few corporations with this advantage: Amazon, Chevron. Deere, Delta Air Lines, General Motors, Halliburton, Honeywell International, Molson Coors, and Prudential Financial. Another 51 companies with zero or minus taxes.

Jamie Dimon, J.P. Morgan’s CEO, bragged to shareholders that tax cuts for the bank add “$3.7 billion to net income.” But the increase “will be erased” so that shareholders won’t expect to get higher profits. The justification for the company’s spending $55 billion in stock buybacks? You have to buy back your own stock at “tangible book value.” And then at “two times tangible book value.” So buy back stock at any price, according to Dimonomics.

DDT surely gained millions—perhaps hundreds of millions of dollars—from DDT’s tax cuts for the wealth as did people he chose for his officials. Education Secretary Betsy DeVos testified in support of $6.7 billion in education cuts at a congressional hearing, but she saved at least $10 million in taxes for 2018. Amway, her family’s company structured as an S-corporation, dropped its taxes from 39.6 percent to 29.6 percent in what Republicans called a small business cut. The education cut comes from the tax cuts’ failure to continue revenue for the government; instead revenue is plummeting. DeVos’ $10 million in taxes would have supported work-study funding for 5,600 students, Nevada’s entire share of the 21st Century Community Learning Center after school program, or funding for Full Service Community Schools academic and social services at schools in 20 communities—programs that DeVos wants to eliminate because of no revenue. DDT wants to make his tax cuts for the wealthy permanent with a conservative addition to the deficit of $1 trillion over a decade.

In their effort to convince people that they are paying lower taxes, Republicans have decided to make the withholding form so complicated that they can just say that people aren’t being ripped off. Past forms asked for the number of allowances based on exemptions. The new form requires annual dollar amounts for nonwage income, such as interest and dividends; itemized and other deductions; income tax credits expected for the tax year; and total annual taxable wages for all lower-paying jobs in the household for people with multiple jobs. The new form references 12 IRS publications for its completion and looks like the 1040 for final taxes instead of a simple W-4. The former year’s 1099, pay stubs, or 1040 returns are necessary for making the withholding calculations.

People are required to tell the “primary” employee about all their other income as well as that of their family and will probably need training to fill it out. Productivity will shrink and privacy goes out the window. And states may also require a new withholding form instead of the current W-4. Remember when Republicans said that people could fill out their tax return information on a postcard? It’s not happening.

Polling indicates that only 17 percent of people think that they got any tax cut even if they did. This perception comes from most taxpayers getting only a small cut. Only one-third of people approve of the legislation that DDT saw as his signature legislative achievement. Economic growth, a talking point around tax cuts, is slightly worse than in 2015, and job growth has slowed. Senate Majority Leader Mitch McConnell (R-KY) said about the tax cut when it was passed:

“If we can’t sell this to the American people, we ought to go into another line of work.”

The 77-year-old man is up for re-election next year. He may have the chance for “another line of work.”

Presidential candidate Sen. Elizabeth Warren (D-MA)’s tax reform proposal, “Real Corporate Profits Tax,” might force a modicum of honesty on huge corporations. She recommends that companies reporting more than $100 million in worldwide profits pay seven percent on every dollar above the first $100 million claimed in profits to their investors. After CEO’s like Dimon brag about their tremendous profits, companies currently convince the IRS that they make no profits and thus pay no taxes. J.P. Morgan made over $131 billion in 2018 but paid less than $10 million in taxes. Warren maintains that raising the corporate tax rate does no good because the tax code is “so littered” with loopholes. She estimates that charging 1,200 companies subject to this tax would give “smaller” businesses “a fighting chance.” Companies paying no taxes would pay some taxes—Amazon would pay $698 million in taxes and Occidental Petroleum, $280 million. Last year, Amazon got a tax refund of $129 million plus paying no taxes.

For people who complain about costs of Social Security and healthcare, consider another destination for tax money. Of every dollar in taxes, 24 cents go to the military. Of those 24 cents, only 5 cents go to our troops while 12 cents go to corporate military contractors. The average taxpayer gave $1,704 to Pentagon contractors last year but only $683 for military pay, housing, and other benefits except $833 to military health care. The average U.S. taxpayer gave $225 to Lockheed’s executives and shareholders. Its CEO Marillyn Hewson got over $20 million for 2017, but the top pay for a four-star general or admiral is $189,600. The lowest-rank enlisted soldiers make just $20,172. Boeing got $100 from the average taxpayer, the same amount as all of education received.

And a shout out to DDT’s tax returns. Writing that concerns from Treasury Secretary Steve Mnuchin “lack merit,” House Ways and Means Committee Chair Richard E. Neal (D-MA) has given IRS Commissioner Charles Rettig a firm deadline of April 23 to turn over six years of DDT’s tax returns. Two days later, DDT’s personal lawyer wrote the Treasury Department to stop the tax returns from being handed over to House Democrats.

DDT’s tax preparer Mazars USA told House Oversight Committee Chair Elijah Cummings (D-MD) that it would turn over ten years of DDT’s tax returns if the company received a subpoena. In an attempt to hide the returns, DDT’s lawyers have threatened the firm with legal action if it follows the law. The letter accused Cummings of wanting the returns only for political reasons, basically accusing a member of Congress of being a liar.  calling it a politically motivated scheme to take down the president. Reps. Jim Jordan (R-OH) and Mark Meadows (R-NC), members of the Oversight Committee, also accused Democrats of requesting DDT tax returns “solely to embarrass President Trump.”

Press Secretary Sarah Huckabee Sanders passed along the DDT party line of smears and threats about Democrats requesting DDT’s his tax returns when she claimed that Democrats aren’t “smart enough” to look through his returns and that they are on a “dangerous, dangerous road.” DDT was tried twice for civil tax fraud, criticized by judges in both cases, and faced his own tax lawyer testifying against him.

Protesters brought an inflatable figure to the steps of the IRS when they asked for DDT to release his tax returns. The group uses the figure because DDT is “too chicken” to release his tax returns. The first “chicken bearing a resemblance to DDT was 23 feet tall and complete with golden hair pompadour and preening gestures. It arrived at a Chinese mall less than a month before DDT’s inauguration in preparation for the Year of the Rooster in the Chinese lunar calendar.

Questions: If there is nothing wrong with DDT’s tax returns, why would he be embarrassed? If there is something wrong, why isn’t a look at them not warranted?

 

September 5, 2016

Successful Labor Days Need the Middle Class

Filed under: Unions — trp2011 @ 10:30 PM
Tags: , , ,

Labor Day, the first Monday in September, became a “holiday” 122 years ago in 1894, a few days after government killed 30 striking workers in Chicago. Labor unions slowly developed in the decades before Labor Day but didn’t rapidly grow until the Great Depression and the New Deal of the 1930s. By the 1950s, unions had begun to achieve its goal of the 40-hour workweek, overtime pay, minimum wage, safer workplaces, Social Security, and the prevention of child labor. Medicare was added in the 1960s. Unions were responsible for the growth of a healthy middle class that provided a strong infrastructure, public services, and educational system.

Republican presidents and leadership from 1968 through 1992 led to the decline of union and the stagnation of wages. A half century ago, almost one-third of U.S. workers belonged to a union; now it’s below ten percent and would be far less if it weren’t for the 35 percent of government workers who belong to unions. The refusal of the South, always the most impoverished region of the U.S., kept the percentage of union membership down. Even at the peak of unions during the 1960s, the South had only half the share of union workers as in the Northeast, Midwest, and West.

During the past few decades the economy in the nation has grown to double what it was in the late 1970s. In contrast to the late 1940s when income went up for everyone in the United States, 90 percent of workers earn about the same now as in the early 70s with the top ten percent seeing a sharp rise in real incomes. People in the top ten percent turned their wealth into power used to break labor unions, halve the taxes that they pay, eliminate safety nets, deregulate Wall Street, and increase costs. George W. Bush’s recession made the income inequality worse as shown by this graphic.

income inequality

As the U.S. comes close to the end of President Obama’s last term, there are glimmers of hope for the 90 percent. A Gallup Poll, usually very conservative, indicates that 50 percent of the people think that they are better off than eight years ago. The percentage of people—across all ethnic groups—who say they are “thriving,” 55.4 percent, is over double that of people in 2008. Donald Trump’s pitch to get votes from black voters is “what do you have to lose.” Many blacks respond with losses of civil rights, employment, income, and education under a Trump presidency.

Since 2010, businesses have added 15.1 million jobs, and that time period is the longest streak of total job growth on record. The unemployment rate has been cut in half since Bush’s recession. President Obama has finished the Fair Pay & Safe Workplaces Executive Order to hold accountable the federal contractors who repeatedly violate worker safety and labor laws. One in five U.S. workers are employed by these contractors. The Labor Department extended overtime protections to 12.5 million additional workers by increasing the overtime salary threshold $47,476. Graduate students at private universities may now unionize.

Unions are often defeated by business because employers have almost unrestricted union-busting. The Labor Department has closed a loophole, created in 1959, that allowed businesses to hire anti-union consultants, “persuaders,” without reporting this practice.

When union membership falls, wages fall for everyone. The 32.9 million full-time nonunion private-sector women and 40.2 million full-time private-sector men suffered a $133 billion loss in annual wages because of weakened unions. If unions were as strong in 2016 as they were in 1979, nonunion men with a high school diploma would earn an average of $3,016 more a year. Workers in unions earn, on average, 27 percent more than their nonunion counterparts. Unions close the pay gap for women, and black workers see outsized gains from union representation. At the same time while unions have declined, the pay gap between CEOs and workers has gone from 20:1 in 1965 to up to 331:1 today.

President Eisenhower bragged about unions in the 1950s, but every GOP president since then has been anti-union. Donald Trump pointed out that the economy is better with Democratic presidents in 2004 and said that Hillary Clinton would make a good president. He repeated the same thing in a recent interview, omitting the part about Clinton.

Now the GOP is pushing the myth of the “sharing economy.” People are forced to rent out rooms in their homes or drive their own cars for pay in the new “Uber” philosophy. Conservatives blame poor people on their moral failure.

On this Labor Day, plan ahead. Vote for people who support unions and a strong middle class.

Trump Watch: Donald Trump is definitely not in favor of unions. He blocks them in his businesses and refuses to pay overtime and some of his contractors although he signed contracts with them.

During the weekend, Trump had several “interesting” conversations with reporters. His surrogates and staff spent the weekend trying to figure out what his position actually is after his anti-immigrant speech last Wednesday, and they’re wrong again. Asked today about his immigration policy, he refused to rule out amnesty for undocumented immigrants in the U.S. Last week, he said they all had to leave the country; today he said, “I’m not ruling out anything. We’re going to make that decision into the future. OK?”

Approached the about the fine for his illegal foundation contribution to Florida AG Pam Bondi, Donald Trump repeated several times that he had never spoken to her. Marc Reichelderfer, Bondi’s reelection consultant, had said in June that Bondi personally asked for the donation. Later he indicated that he didn’t talk to Bondi about dropping the fraud investigation against Trump University. She dropped the case after she got $25,000 from the Trump Foundation.

In discussing debate strategy with reporters today, Trump said that he didn’t plan much preparation and definitely no mock debates:

“I’ve seen people do so much prep work when they get out there, they can’t speak. I’ve seen that.”

Asked if he would definitely debate, Trump said, “As of this moment, yeah.” He added that only “hurricanes and natural disasters” would stop him from debating Hillary Clinton. Trump commended that he had done the other debates, forgetting that he had skipped one of the GOP debates and backed out of one when he challenged Bernie Sanders.

Trump also declined to say whether he believes President Obama was born in the United States. “I don’t talk about it,” he said. Despite his desperate attempt to woo black voters, he has never apologized for his birther campaign or said he believes in the legitimacy of President Obama’s birth certificate.

Trump showed his inability to be diplomatic when he said that he’ll order Air Force One to leave if countries don’t roll out the red carpet. His statement came from an incident in China when there was no stairway prepared for President Obama to exit his airplane in China last Saturday. The president instead used an exit customarily used for high-security trips. He suggested his Chinese hosts might have found the size of the US delegation “a little overwhelming.” One difference of opinion between the two countries might be China’s concern about “America’s unwavering support for upholding human rights.”

Saudi Arabia was another issue on which Trump keeps changing his mind. He slammed Hillary Clinton for taking money from Saudi Arabia for the charitable Clinton Foundation, but it was recently discovered that he has made millions of dollars from that country which bought the 45th floor of Trump World Tower for $4.5 million. Since 2001 he has been paid $85,585 a year for building amenities. Osama Bin Laden’s half brother also lived in the Tower for four months in 1986. Trump recently told Sean Hannity that he would not take money from the Saudis, but last year he bragged that Saudi Arabia spends “$40 million, $50 million” for his apartments. “I like them very much,” Trump said.

After endorsing the GOP presidential candidate for the past 9 elections, Virginia’s Richmond Times-Dispatch has endorsed Libertarian candidate Gary Johnson Saturday. Sen. Jeff Flake (R-AZ) said that Donald Trump’s candidacy might turn Arizona blue in this election.

Hillary Clinton is ahead in the polls on Labor Day. History shows that the losing presidential candidate at that time is the losing candidate in November. We can only hope, but we’ll make that decision nine weeks from tomorrow.

September 7, 2015

Good News, Bad News from Labor Day, 2015

Republicans love to blame the Democrats for destroying the coal industry, but conservatives are the people who decimated the economy in the South through their eradication of the unions. For a century, union organizers were shot, beaten, and stabbed in their fight to get reasonable pay and safe conditions underground, but now the last union mine in Kentucky has been closed. Younger workers took their wages for granted, and now not one working miner belongs to a union, the only protection that mine workers have had.

Conservatives curse the unions but fail to realize that they are responsible for the rise of the middle class.

union_density_middleclass 2

union_density_inequality 1

High income inequality has correlated with low union membership for over 100 years in the U.S. As union membership shrinks, money and power shift upwards. Data from 2010 show that all workers make more money in a pro-union state.

workers do better

Today is Labor Day, established as a federal holiday 121 years ago to celebrate labor. Oregon declared it a holiday 17 years earlier. If you have today off, thank unions. If you are working today, thank unions for other benefits such as shorter work weeks, weekends off, expanded health care through employer-provided health insurance, and the end of child labor except within religious groups. Unions also brought paid vacation, breaks, sick leave, Social Security, overtime pay, worker’s compensation, and more. If you don’t have these benefits, thank the Republicans.

In some states, union attacks brought “right-to-work” laws, which block collective bargaining for higher wages, better benefits, and protections. The “freedom” created by these laws gives corporations and the wealthy the “right-to-underpay” and “right-to-cheat” employees. In Wisconsin, the latest state to adopt this law, “right-to-work” will cause workers and families to annually lose between $3.89 billion and $4.82 billion. Workers in “right-to-work” states make $1,560 less per year than in states without the law. Women in union jobs earn $212 per week—30.9 percent—more than women in non-union jobs. The gender wage gap is also smaller for women in unions, 88.7 cents for every dollar a man makes compared to 78 cents for all workers. Men in union jobs make $173 more per week than non-union workers.

President Obama celebrated this year’s Labor Day by mandating all 300,000 government contractor employees be granted seven paid sick days per year starting in 2017. That leaves another 44 million workers without paid sick leave because the United States is the only developed nation without a paid sick leave policy. The president’s executive order adds to other orders that move toward higher minimum wage and equal pay for men and women.

Other good news comes from the job market. Republicans swore to bring jobs back when they were elected in masses, but they’ve done nothing to help workers. GOP presidential candidate Mitt Romney said he would reduce the unemployment rate to 6 percent by 2016 if he were elected in 2012. Right now, it’s 5.1 percent after 66 consecutive months of private sector job growth—13 million jobs—during President Obama’s six and a half years in office. Many of these jobs came from the health care job growth after Republicans called the ACA the “job killing health care law.”

The bad news comes from the loss of wages for everyone except the top echelon. Oregon is an example of this: in the past 35 years, the bottom income bracket has lost 30 percent of income in the state while the top 1 percent gained 88 percent of the income. Republicans refuse to increase the federal minimum wage, one-third lower when adjusted for inflation than in the 1960s. They also consider the Keystone Pipeline bill a “jobs bill” although it employs only 4,200 people for one year while wiping out other permanent jobs by taking over and destroying land. The GOP’s “Hire More Heroes Act” to employ veterans doesn’t count veterans as employees so that companies with more than 50 employees can avoid the ACA mandate to provide health care. Up to one million workers would lose health insurance with the redefinition of “full-time employment” as 40 hours a week in the GOP’s “Save American Workers Act.”

Another piece of bad news is the growing divergence between salary and productivity. During the 25 years prior to 1973, wages and productivity grew together, but between 1973 and 2014, hourly wages went up 8.7, adjusted for inflation, and productivity increased by 72.2 percent. The change is a major reason for the rapidly growing income inequality during the past 40 years as payment for employees went to owners of capital. Workers generate the income but don’t get an increase in hourly pay. The last four years has been worse as worker productivity increased by 21 percent while wages rose only 2 percent.

wages by bracket

Republicans claim to support a “trickle-down” economy but instead push an economy that is “gush-up.” Unregulated free-market capitalism is a “winner-take-all” wealth over the common good, and billionaires buy politicians and design education and health systems to control the bottom 99 percent of people in the United States. The average CEO earns 204 times what average workers earn, and two-thirds of the poor in the United States—68 percent—have jobs.

Hedge fund billionaires are not required to pay their fair share of taxes receive awards yet are praised. For example, John Paulson, noted for “Outstanding Contributions to Society,” got $3.7 billion by conspiring with Goldman Sachs to create risky subprime mortgages. He used other people’s money to bet against his sure-to-fail financial instruments. As U.S. wealth grew from $52 trillion to over $83 trillion between 2007 and 2014, six million more children were forced onto food stamps. Forty percent of households are food-insecure while 40 percent of the food in the United States is wasted.

Despite the decreasing unemployment rate, taxpayers fund the movement of many jobs overseas while technology eliminates others. Kodak once employed 145,000 people to do the same photo processing that Instagram does with 15 workers. Three-fourths of faculty at colleges and universities are now “adjunct” instructors, paid a pittance for part-time work. One-fourth of these teachers, almost 20 percent of college and university faculty, are forced into food stamp or other public assistance programs to survive.

Republicans claim that they want to return to the 1950s, and economically this would benefit almost everyone. In 1956, the GOP platform supported an increase in the minimum wage, an expansion of Social security, adequate coverage for the unemployed, better housing, and health care for all. “Government must have a heart as well as a head” and “America does not prosper unless all Americans prosper” were included in the GOP belief system. According to the GOP platform, “President Eisenhower’s administration brought the highest employment, highest wages, and the highest standard of living ever experience in any country.”

Today’s GOP portrays people on unemployment as leeches, but the GOP of 1956 called for “providing assistance to improve the economic conditions of areas faced with persistent and substantial unemployment.” Republicans in the 1950s also wanted to strengthen “the rights of labor unions” and protect “the right of workers to organize into unions and to bargain collectively.”

In 1954, President Dwight Eisenhower looked forward to today’s GOP when he wrote:

“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history. There is a tiny splinter group, of course, that believes you can do these things. Among them are…a few…Texas oil millionaires, and an occasional politician or business man from other areas. Their number is negligible and they are stupid.”

He may have been right.

May 2, 2015

Sanders Enters Presidential Race

Some people celebrate May Day today with a pagan celebration of flowers and Maypoles; others recognize it as a day of protest and worker solidarity. That history goes back to 1886 when 200,000 U.S. workers struck for an eight-hour day. On the third day, a Chicago strike at the McCormick Reaper plant became violent as police killed and injured the strikers. The next day’s peaceful meeting at Haymarket Square protesting police action turned even more brutal. As the meeting started to break up, a bomb near the speaker’s wagon wounded 60 policemen and killed another seven. The police wounded 200 civilians and killed several more. Although no one was sure who had committed the crime, four people were executed. No one in the U.S. had an eight-hour day until the United Mine Workers in 1898; a federal law mandating the eight-hour day wasn’t passed until 1938.

The international holiday for labor, created in 1889 in honor of the Haymarket Tragedy, continued to be commemorated for over a century although conservatives tried to change the meaning in 1958 to “Loyalty Day” through a resolution signed by President Eisenhower. The declaration of May Day as “a special day for the reaffirmation of loyalty to the United States of America and for the recognition of the heritage of American freedom” remains in the 21st century. To this day, 27 years later, my town still celebrates the “Loyalty Day.”

Sen. Bernie Sanders (I-VT) declaration as a presidential candidate in the Democratic Party on April 30 was a great lead-in to this year’s May Day. For decades, Sanders has been advocating for the rights of workers, the middle class, and the poor. His platform lists the need for “new economic models to increase job creation and productivity instead of giving huge tax breaks to corporations which ship our jobs to China and other low-wage countries.” His proposal is worker-owned cooperatives, which studies show increase productivity and employee satisfaction while shrinking absenteeism.

An example is the Mondragon corporation in Spain that “has over 70,000 employees and brings in annual revenues of over $12 billion Euros.” In most of its operations, “the ratio of compensation between top executives and the lowest-paid members is between three to one and six to one.” In comparison, U.S. CEOs made 295.9 times the amount of worker salaries in 2013, up from 20 to one in 1965. No one in the U.S. even dreams of a six to one ratio: Massachusetts Nurses Association tried—and failed—for a ballot initiative fining hospitals paying CEO’s more than 100 times the earnings of the lowest-paid employee.

worker compensation chart

The salary of chief executives climbed 937 percent between 1978 and 2013 compared to the 10-percent increase for the average worker’s compensation. Bringing back workers’ rights to organize also helps ensure that workers share in the profits and productivity that they help to generate.

Another way to protect workers is Sanders’ push to stop  the Trans-Pacific Partnership (TPP). Since 2001, trade agreements have closed down almost 60,000 factories in the U.S. causing the loss of millions of jobs. In one TPP country, Vietnam, “the minimum wage is equivalent to 56 cents an hour, independent labor unions are banned and people are thrown in jail for expressing their political beliefs or trying to improve labor conditions. In Malaysia, migrant workers who manufacture electronics products are working as modern-day slave laborers who have had their passports and wages confiscated and are unable to return to their own countries,” Sanders wrote. As he pointed out, U.S. workers would compete with people in Vietnam and Malaysia in “a race to the bottom.” The increased profits for corporations and Wall Street come from “offshoring jobs, undercutting worker rights, and dismantling labor, environmental, health, food safety and financial laws.” The U.S. would also lose its sovereignty as foreign corporations can defeat domestic policies and laws in international tribunals.

Sanders has already released a 12-point Economic Agenda for America. As a leader in a growing consensus agenda for Democrats, Sanders 12-point Economic Agenda for America includes increase in the minimum wage, paid sick days, paid vacation, pay equity, and affordable child care. Equally important is his addressing the systematically rigging of rules producing extreme income inequality. He wants an end to corporate-defined trade and tax policies resulting in destructive trade deficits and calls for breaking up the banks “too big to fail.” His proposal for expanding security programs includes lifting the cap on Social Security payroll taxes, moving to a health care plan of Medicare for all, and providing two years of debt-free college or other advance training for all students who prove themselves willing to earn it.

Like Libertarians, Sanders opposes the idea that the U.S. has the responsibility to police the globe. As many people recognize, endless wars waste lives and take resources from the U.S. At this time, $0.27 of every tax dollar goes to the military.

Sanders plans a social and economic justice candidacy at a time when people want change. The publicity and protests surrounding the police killing black males has brought to the forefront debates about racism, economic inequality, political campaign funding, and criminal legal system injustices. Sanders’ devastating 8.5-hour-long filibuster against President Obama’s budget agreement with the Republicans has been published as a book: The Speech: A Historic Filibuster on Corporate Greed and the Decline of Our Middle Class. The budget agreement extended the George W. Bush tax cuts for millionaires and billionaires, lowered estate tax rates for the wealthy, and established a “payroll tax holiday” diverting revenue away from the Social Security Trust Fund and threatening the fund’s future.

In addition, Sanders pointed out the U.S. middle class collapsed through corporate greed and public policy favoring the wealthy for several decades while childhood poverty in the U.S. rose to the highest rate in the industrialized world. He finished with a call to the middle class, a call to action that would take on the powerful special interests that elect legislators and guide their votes.

Sanders may encourage Hillary Clinton to take more questions from the press. In a bit over two weeks on the campaign trail, Clinton took seven questions, according to National Journal’s Zach Cohen, with half of the answers ignoring the questions. During just one five-minute exchange with MSNBC’s Andrea Mitchell the night before his brief campaign kick-off, he answered seven questions and took another six at the next day’s launch event. As Sanders said, “I believe that in a democracy, what elections are about are serious debates over serious issues … facing the American people.”

What makes Bernie stand out, more than his progressive platform and his great understanding of the problems currently facing the country, is his honesty. As Matt Tabbi wrote:

“Sanders is a politician whose power base is derived almost entirely from the people of the state of Vermont, where he is personally known to a surprisingly enormous percentage of voters. His chief opponents in the race to the White House, meanwhile, derive their power primarily from corporate and financial interests. That doesn’t make them bad people or even bad candidates necessarily, but it’s a fact that the Beltway-media cognoscenti who decide these things make access to money the primary factor in determining whether or not a presidential aspirant is ‘viable’ or ‘credible.’”

The opposition to Sanders uses the word “socialist” as a pejorative term against him. He describes himself as a democratic socialist, with the meaning that elected government sometimes needs to slow down the nation’s progress toward a complete oligarchy. That means not giving tax breaks to companies who decimate the middle class by moving factories overseas.

As Sanders starts his run for president, manufacturing jobs are returning to the United States in record numbers, and foreign companies are also bringing their factories here. In 2012, 60,000 of these jobs were added in the U.S. compared to only 12,000 in 2003 during George W. Bush’s first term. Only 50,000 jobs were sent offshore last year, declining from 150,000 in 2003. That leaves 3 million to 4 million manufacturing jobs still offshore.

The bad news is the reason for these returns. With Chinese workers demanding higher wages and better working conditions, U.S. companies are coming back to the nation that has been stripped of union rights and a federal minimum wage of $7.25. U.S. workers’ wages have remained stagnant for years while China’s wages are going up by 8.3 percent per year. Chinese private-sector wages went up 14 percent in just 2012, and a year ago, 30,000 Nike workers struck for higher wages. Among companies with annual sales above $1 billion, 37 percent plan to reshore manufacturing jobs from China to the U.S. due to higher labor costs in China. Of companies above $10 billion, 48 percent are planning to return. A return of these low-paying jobs means that U.S. taxpayers can lose more money through subsidies to manufacturing companies while the taxpayers continue to pay welfare benefits because of the same companies’ low wages.

Most of the U.S. taxpayers would live better and pay less taxes if the government incorporated the ideas in Sanders’ platform.

April 15, 2015

Tax Day: Bad, Good, Ugly

Filed under: Budget — trp2011 @ 9:11 PM
Tags: , , , , ,

On Tax Day 2015, far fewer people waiting in line because of electronic filing. Wealthy people increasingly pay less and less since the 90-percent tax rate for the richest filers in the 1950s. Every time that the GOP controls Congress, the wealthy benefit from additional tax breaks, and corporations get more subsidies. Every year, the United States has less and less investment funds for the infrastructure, education, climate change, job creation, etc. Corporations have dropped their share of federal revenues by almost three-fourths since the almost 40 percent in 1943 to only 11 percent now. The less that the wealthy and corporations pay, the more the bottom 80 to 90 percent of the people have to shell out.

The corporate tax rate may be 35 percent, but their actual payment is about 13 percent, less than a large percentage of people pay. Some companies pay no taxes. FedEx made profits of $5 billion between 2010 to 2012 and received $10 billion in federal contracts between 2006 and 2012, yet paid no income taxes. With billions of dollars in profit, Verizon and Pfizer paid no taxes while receiving billions of federal tax refunds. In 2013, corporate tax breaks cost U.S. taxpayers $176 billion in revenue, $1,328 per household. These corporate tax breaks have more than doubled since 1993. More is spent on corporate welfare than traditional welfare. Tax breaks, 17 percent of benefits going to the top 1 percent of households, are equal to more than the entire U.S. discretionary budget each year. The revenue loss of over $1 trillion each year is over 1.6 times the 2013 budget deficit.

estate tax

Instead of trying to close loopholes on Tax day, House Republicans are arranging a gift for the top 0.02 percent of U.S. households. Calling the estate tax the “death tax,” GOP members of the House announced a vote to repeal the tax on 4,700 estates out of 2.6 million deaths—one-fifth of one percent. The median household net worth was only $81,200 in 2014. Instead of paying the 40-percent rate, this 0.02 percent owe a rate of only 16.6 percent estate tax, because it applies to only an estate’s value of over $5.43 million. No taxes are required for the first $5.43 million.

If the law isn’t changed, the estate tax will bring in $246 billion in the next decade. Less than 1 percent of federal revenue, “it is significantly more than the federal government will spend on the Food and Drug Administration, the Centers for Disease Control and Prevention, and the Environmental Protection Agency combined,” according to the Center on Budget and Policy Priorities. A common complaint is that the estate tax hurts small and family businesses, including farms. In 2013, the 20 farms and businesses worth under $5 million paid a tax rate of 4.9 percent.

While House Republicans care for the wealthy, they have a budget to eliminate food stamps for 11 million people through a 34-percent reduction. That $125 billion cut from the Supplemental Nutritional Assistance Program (SNAP) will cost the economy 286,000 jobs. As families have less to spend on food, that reduced purchasing power ripples through the economy, translating into job losses not just in grocery and retail stores but also in trucking, warehousing, food manufacturing, farming, and other industries. Money for the wealthy does nothing for job creation, but a woman testifying about her past experience receiving food stamps said, “Without this program, I wouldn’t have been able to start my new career.” Just one week of the proposed estate tax cuts could feed more than 337,000 children for a year. The GOP answer to helping hungry people is charity. I suggest leaving both laws the way they are and create a GoFundMe collection for the top 0.02 percent who pay estate taxes.

This year’s Tax Day is memorable because Congress passed a sane law to end to the annual need for Medicare “doc fixes”–and in a grandly bipartisan manner. Only eight of 100 Senators voted against the bill, two of them the declared GOP presidential candidates Ted Cruz and Marco Rubio. The House passed the bill by 392-37. The bill got out of Congress just hours before Medicare providers would have had a 21-percent cut in payments.

The new law also funds the Children’s Health Insurance Program and community health centers for two more years. Republican Senators also failed to get a “repeal Obamacare” amendment attached to the bill. Senate Majority Leader Mitch McConnell said the bill’s passage is a sign that Congress is “back to work” under Republican leadership. And it took them only 105 days. (More details about the new law here.)

Sen. Bernie Sanders (I-VT) spent his time on Tax Day introducing a bill to recoup $590 billion from 83 companies using offshore tax havens to avoid paying taxes. Senator Elizabeth Warren called on lawmakers to break up big banks and change tax rules that benefit Wall Street.

Abraham Lincoln died 150 years ago today. He is the “Republican” who the GOP drags out into the media to show how wonderful today’s GOP members are. Here is the tweet from the GOP to commemorate his death:

abraham lincoln

And that’s Tax Day 2015.

April 13, 2015

Rubio Wants to be the Young President

Another GOP presidential candidate rollout, today Sen. Marco Rubio (R-FL). Writing for Nate Silver’s famous election analysis website, fivethirtyeight.com, Harry Enten puts him in the top tier following Jeb Bush and Scott Walker. Despite Rubio’s poor showing in polls, Enten calls him “electable and conservative.” A hawk on foreign policy, he may avoid Rand Paul’s pitfalls; less extreme than Sen. Ted Cruz (R-TX), he hasn’t alienated fellow senators; and more conservative than Bush, he could be an alternative, rather than a challenger.

resizeRubio’s entrance into the ring failed to make the splashes of the first two because Hillary Clinton announced her candidacy yesterday. His polling is even below Donald Trump with New Hampshire Republicans. Twitter responded with Rubio’s infamous video of reaching for a water bottle 11 minutes into his 14-minute speech responding to President Obama’s 2013 State of the Union speech. Constant references to the incident may seem cruel, but his votes against the people of the United States are also cruel.

Tweets about Rubio’s positions were less funny than the water bottle. As one said, “Rubio used to believe in climate change. Now he’s running for president.” Another suggested that he would lose Latino votes through his denial of climate change. They also included his argument that employers should be able to fire people for being LGBT and recorded robocalls for the National Organization of Marriage, an anti-LGBT group. One tweet posted a video of his top-ten anti-LGBT statements. He has also called adoption as a “social experiment” on children and joined 29 other senators in voting against the Employment Non-Discrimination Act.

In 2013, the Russian parliament declared war on LGBT people with a law that promoted anti-LGBT atrocities, including beatings and causing LGBT Russians to try to flee the country. The same day, Rubio dropped his personal immigration reform legislation because of an amendment allowing U.S. LGBT citizens to sponsor foreign spouses for permanent residency, even if they had death sentences in other countries. Thirteen days later the Supreme Court struck down a major provision of the Defense of Marriage Act, making Rubio’s argument moot. Because conservatives were increasingly opposed to his reform, Rubio may have jettisoned the immigration reform by blaming LGBT people.

Rubio has made as many—if not more—flip-flops as Rand Paul. Originally a supporter of comprehensive immigration reform, he changed his position to look GOP presidential. He could separate himself from the GOP crowd by opposition to lower taxes for high earners and punishing the poor and working class, but he won’t. When he fails in persuading anyone toward his position, he caves to the popular GOP position on increasing income inequality. He makes promises such as improving the lives of poor people with no substance, even compromising in causing more harm to the poor.

To identify as the foreign policy specialist in the candidate field, he collected right-wing advisers who call themselves “reform conservatives” to address economic issues. Rubio’s tax reform pairs a few middle class benefits with massive cuts for the wealthy, similar to George W. Bush’s 2001 tax cuts that cost the country trillions of dollars. His tax plan would eliminate capital gains taxes and the estate tax, dropping taxes for the wealthy like Mitt Romney far below the 14 percent that Romney claimed he paid. Romney’s sons would also pay no taxes on the millions that they inherit from their wealthy dad.

Criticized by conservatives as too generous, Rubio added more regressional tax cuts for the wealthy into his earlier unworkable plan, greatly increasing his plan’s original $2.4 trillion deficits over a decade. He also followed the conservative approach that solves the increased deficit with massive reductions in social spending, just like Mitt Romney and Paul Ryan. In theory, that worked when he was just a senator. As a presidential candidate, he will be scrutinized for his tax and spending proposals. No one can successfully argue the success of simultaneous upper-income tax cuts, middle class credits, and anti-poverty spending.

Attempts to woo warring parties usually alienate both of them. Rubio wants both the conservative base and the left-leaning minorities. The Tea Party calls Rubio’s former immigration reform as his “amnesty” plan and refuses to believe that he has abandoned this position. His public scolding of undocumented protesters also alienated Latino voters. According to his own campaign staff, Rubio needs over 40 percent of the Latino vote but is trailing Hillary Clinton in polls with this population. Romney got only 27 percent of Latino vote.

Rubio brags that his foreign policy credentials as his signature, setting him above other GOP candidates, but he vows to block normal trade with Cuba, calling President Obama’s position a “victory for oppression.” Koch Brothers’ business megadonors think that Rubio’s philosophy is “out of step with the more noninterventionist” beliefs amongst Koch network donors.

In March, Rubio stumbled badly while questioning Secretary of State John Kerry on foreign affairs. Rhonda Swan, a Florida-based journalist, wrote that Rubio fails his own test that the next president have a “clear view of what’s happening in the world” and a “practical plan for how to engage America in global affairs.” The next week he complained that President Obama is nicer towards Iran than Israel, despite Netanyahu’s gratitude for the billions of dollars the Obama policy annually gives Israel and the help for attacks on Israel, for example the Hamas rocket assault. Rubio’s position is that he would immediately abandon U.S. allies and negotiating partners by “unilaterally” imposing “crushing” sanctions on Iran—which, as president, he couldn’t do.

Rubio wrote in his memoir that he has shifted among the Mormon, Catholic and Baptist churches. He grew up a Catholic before he became a Mormon, then switched back to Catholicism, then became a Southern Baptist and a Catholic, then left the Baptists and simply became a Catholic, then he became a Baptist again, then a Catholic again, all the while technically remaining a Mormon. Even right-wing websites are a bit snarky about this statement, responding that “many Americans might question how someone could attend both churches and fully share in both denominations.”

Last year he alienated both LGBT and conservative religious people by condemning discrimination against gays and lesbians and arguing they should be denied equal legal rights. He went farther this year with harsh statements against the pope for helping arrange talks between the US and Cuba, accusing him of not prioritizing “the cause of freedom and democracy.” Seventy percent of Latino voters identify as Catholic.

Enten may see Rubio as a viable “alternative” to Jeb Bush, but Bush has been working behind the scenes to collect the elite support to decide the nomination. Both are establishment-oriented candidates who aim for compromise within the party. The New York Times described Rubio’s competition:

“Scott Walker, who took on unions and won in Wisconsin, is a conservative hero. Ted Cruz is a favorite of the Tea Party. Mike Huckabee is a favorite of evangelical Christians. Then there is a long list of other conservative candidates—like Ben Carson, Rick Santorum, Rick Perry and Bobby Jindal—who might compete for votes.”

enten-datalab-rubio-21 chart conservativeRubio has lost credibility with almost everyone in the GOP. He failed to carved a niche in any majority faction of the party, and his message fails to resonate with any wing of the GOP. A winning candidate needs to be seen as exceptional—and Rubio does not have that designation.

Rubio’s speech slogan is that “it’s time for our generation.” The 43-year-old disses his old mentor, 62-year-old Jeb Bush, as well as many more in the over-50 crowd—Huckabee, Santorum, Carson, Fiorina, Graham,  Rick Perry—even Rand Paul and Chris Christie. On the other hand, he has “young” competition: 48-year-old Scott Walker, 44-year-old Ted Cruz, and 44-year-old Bobby Jindal. President Obama was only 47 when he was elected for his first term. Everyone took the hit from Rubio’s slam against 67-year-old Hillary Clinton.

Other conservatives are attacking Clinton, for example Meet the Press host Chuck Todd who asked, “How does Hillary Clinton deal with this freshness issue?”

Panelist and journalist Maria Hinojosa responded: 

“I have to be honest with you. The terms ‘expiration date’ and ‘stale’ and ‘too late for you’ as a woman, it’s like, I don’t know if men have that same reaction, that’s nuclear.”

Panelist Stephanie Rawlings-Blake, mayor of Baltimore, agreed, adding that the GOP is “stale.”

Rubio’s website uses the motto, “New American Century,” an organization that led the U.S. into war against Iraq. In 1997 founders called for regime change and much greater defense spending for the U.S. as the “world’s pre-eminent power” that led to George W. Bush’s “dominant” power. The focus was on military attacks rather than diplomatic strategy. By 2006, the organization had dissolved into a voice mail-box. Rubio may be bringing back the neo-con group to declare war on the world.

March 11, 2015

Walker Supports ‘Takers’ in Wisconsin

Gov. Scott Walker has created a new category of “takers” in his state of Wisconsin. Opposed to people getting something for free, he has signed the misnamed “right to work” law that allows people not to join the unions at their places of employment. To some people, this is “freedom,” but unions are not free to protect and negotiate for only their members. They must do this for all workers in places that unions cover. That means employees who don’t join unions but still benefit from the hard work of the organization are actually taking something free from the people who do pay for these services.

The law makes Wisconsin the 25th “right-to-work state” and the first state since Michigan and Indiana in 2012. The American Legislative Exchange Council (ALEC) provided wording, also used by Wisconsin, for this bill and those being pushed through legislatures in other states. The takers of Wisconsin are funded by ALEC backers such as the Koch brothers, the Coors family, and Exxon Mobile. This law follows Walker’s stripping collective-bargaining rights from many state workers in Wisconsin.

Although the ALEC-worded RTW bill may succeed in Missouri, it has run into problems in Montana, Colorado, West Virginia, New Mexico, Kentucky, and New Hampshire—at least for now. Michigan has introduced a RTW extension for police, fire, and public safety unions. Kentucky is passing RTW on the local level, and billionaire GOP Gov. Bruce Rauner has issued an executive order for RTW in Illinois public unions. On the federal level, Sens. Rand Paul (R-KY) and Mitch McConnell (R-KY) introduced a “National Right-to-Work Act,” and Rep. Steve King (R-IA) introduced its companion act in the House.

Walker said, “This [law] sends a powerful message across the country and across the world.” His message is his move to the right as he prepares for a presidential campaign. His email message immediately after he signed the bill is that he wanted money for his campaign when he asked for donations of $10, $100 and $1,000.

Walker consistently reneges on his statements. Until a few weeks ago, he denied that he would make Wisconsin a RTW state and claimed throughout his reelection campaign, “Private-sector unions are my partner in economic development.” Before his 2010 election, he told newspapers that he would negotiate with public sector unions; his anti-collective bargaining bill was introduced immediately after he took office in 2011. Two years ago, he was in favor of giving undocumented workers a chance at citizenship if they obeyed the law. Now he reversed that opinion to join another possible presidential candidate, Sen. Ted Cruz (R-TX).

The governor’s position on abortion has also reversed. Before last fall’s election, he told voters, “I support legislation to increase safety and to provide more information for a woman considering her options.” He claimed he supported a bill that “leaves the final decision to a woman and her doctor.” Now he plans to sign a bill banning abortions after 20 weeks in constitutional violation of Roe v.Wade and removing the decision from a woman and her doctor.

Wooing Iowa, he switched his opposition to mandating ethanol and other renewable fuels. Now he wants to continue the Renewable Fuel Standard. Iowans might want to use caution in believing him. Walker will no doubt flip his promises for any personal gain.

ALEC has been helped by the 60-year-old National Right to Work Committee (NRTWC), led by fundamentalist Christian Greg Mourad, that also receives huge donations from the Koch brothers. The organization was co-founded by right-winger Fred A. Hartley, who co-sponsored the 1947 Taft-Hartley Act restricting unions and also co-founded the John Birch Society. The NRTWC has been behind the skyrocketing income inequality in the United States. CEOs who earned 20 times a worker’s pay 50 years ago, now receive at least 300 times the worker’s pay. Between 1973 and 2014, public-sector union membership dropped by 78 percent. Unionization and minimum wages helped equalize the distribution of wages. That’s why the Koch brothers are determined to get rid of both.

In a comparison of the share of income going to the middle 60 percent of population, the workers in the ten states with the lowest rates of union membership brought home 46.8 percent of total income, and the ten states with the highest rates of union membership brought home 47.4 percent of total income. It may sound like a small percentage, but the difference is equivalent to billions of dollars.

Abdur Chowdhury, professor of economics at Marquette University in Milwaukee, explained why Walker’s legislation could annually cost Wisconsin $4.5 billion in lost income and revenue: “If our income goes down, we spend less money on groceries.” Walker also loses money for his state: less income means less tax revenue, at least $234 million. The state won’t get this back from the wealthy and corporations because of the massive tax cuts that Walker gave them.

Despite claims from ALEC “economists” that RTW laws boost per capita personal income, average wages for all occupations in RTW states were about $4 an hour lower compared to non-RTW states in 2013. In RTW states, workers have $5,971 lower wages and fewer employers offering pension benefits or health care. Employers looking for skilled workers or a well-developed infrastructure will most likely not go to RTW states because these are less likely to have these advantages. That’s a reason that 400 businesses formed a coalition to oppose the law.

Oklahoma, the first state to pass a RTW law in 2001 for 25 years, was also the first state to do so in the post-NAFTA era of globalization. There has been no positive impact on employment in Oklahoma in the last 14 years. In addition, the number of companies relocating to the state and the number of manufacturing jobs both fell by a third in the first decade after the law was enacted.

Walker is not finished with trying to lower wages for workers. He’s trying to restrict the role of administrative law judges in workers comp disputes and take authority for the system away from the state Department of Workforce Development, a move that has been found unconstitutional in Florida. Also, Wisconsin is one of 32 states with a wage law to “prevent lowball bids from depressing wages,” something that Walker wants to repeal. The third reduction of wages would come from prohibiting “project labor agreements” that bars non-union contractors from working on publicly-funded projects.

Unions in Wisconsin are fighting Walker in creating his new category of takers. The Wisconsin state AFL-CIO with chapters from the International Association of Machinists, and United Steelworkers unions have filed a suit on the basis that the law “deprives the unions of their property without just compensation by prohibiting the unions from charging non-members who refuse to pay for representative services which unions continue to be obligated to provide.” In other words, Walker’s permission for employees to free-load off the unions is unconstitutional.

When Walker was elected, he promised a massive increase in jobs in his state. He failed. Since Walker became governor, job growth, GDP, and decline of unemployment have all lagged behind neighboring states and the nation as a whole. He may fail again with his new RTW law. Seven of the 10 states with the highest unemployment rates are RTW. After stopping RTW laws in 2012, Minnesota’s average weekly wage is $877.81, almost ten percent higher than its RTW neighbor Michigan that has a 6.3 percent unemployment rate compared to Minnesota’s 3.6 percent. Indiana, another RTW state, has an average weekly wage of $788.70 and a 5.8 percent unemployment state. Minnesota is one of the five fastest-growing states in the nation since 2012.

RTW Michigan also has a huge budget deficit and no industry coming into the state. Gov. Rick Snyder has had to lower the number of jobs that businesses need to create in order to receive massive tax credits. The worst is yet to come because workers are still operating on contracts made before the 2012 law, something that won’t happen in Wisconsin because the law goes into effect immediately.

Quality of life in RTW states is measurably worse with eight of the worst states in the nation having RTW laws, and eight of the best being non-RTW. RTW states have poorer life expectancy and infant mortality, higher homicide rates, worse pollution, lower voter turnout, less broadband access, lower educational levels, and poorer housing. The 24 RTW states have 34 percent higher rate of deaths on the job in the construction industry. During the 20th century, the middle class grew as unions grew; it began to shrink when unions were weakened through the so-called “right-to-work” laws.

Walker’s legacy will be the bodies that he leaves strewn along his path toward the White House.

September 10, 2014

Congress Returns to Take More Money from Poor

The peace of Congress’s long summer vacation of Congress is over, and legislators have straggled back into Washington, D.C. (“don’t care,” according to Sen. Mitch McConnell’s (R-KY) opponent, Alison Grimes). Sen. Ted Cruz (R-TX) is highly incensed that his party supported a debate on overturning Citizens United. The vote was 79-18 to explore an amendment that would return the regulation of campaign funding to Congress. That’s 25 GOP senators who voted for debate. In his opposition, Cruz said that the measure would ban Saturday Night Live and throw Lorne Michaels into prison because of the program’s political satire. The bill, which has no connection to Cruz’s “reality,” is here.

Fights over government funding scheduled to begin tomorrow have been delayed because of President Obama’s speech and the rising issue about ISIL. It will have to be dealt with before the end of September, however, or the United States will face another government shutdown. As voters ponder on the wisdom of the GOP approach toward starving the United States, let us consider their history of profligate spending during the past few years:

  • $350,000: initial cost of suing the president for nothing with Baker Hostetler charging $500 per hour.
  • $1.3 million: 2011 delay in raising the debt ceiling causing the Conference Board’s Consumer Confidence index to plunge from 59.2 in July to 45.2 in August.
  • $3 million: cost for House to defend ban on marriage equality that the Supreme Court overturned last summer.
  • $24 billion: loss in the U.S. economy because of the GOP 2013 government shutdown which doesn’t include shaving 0.6 percent off fourth-quarter GDP growth. During the shutdown, approximately 800,000 federal employees were indefinitely furloughed and another 1.3 million were required to report to work without known payment dates.
  • $1.5 billion per day for 15 days of shutdown: furlough of approximately 800,000 federal employees and another 1.3 million required to report to work without known payment dates; loss in government services, travel spending, National Parks, federal and contractor wages, small businesses suffering from frozen government contracts and stalled business loans, tourism suffering from closed national parks, and military families coping without childcare and other services.
  • $2 million: almost non-stop investigations on the Benghazi attack since September 2012 requiring approximately 50 congressional hearings, briefings, and interviews with the State Department. 
  • $5.65 million: newest “special committee” to reinvestigate Benghazi—larger than budgets for the committees on Veteran’s affairs, Intelligence and the budget itself.
  • $14 million: investigation into the IRS that required over 600,000 pages of documents, “none of which substantiate the GOP’s wild attempt from the get-go to tar the administration,” according to Rep. Sander Levin (D-MI).

Grand Total:  $25,025,300,000

Debates over government funding will result in the GOP’s self-righteous objections to these so-called entitlements for the bottom 90 percent:

  • $220 billion: just over 4 million teachers–an average of $54,750 per teacher.
  • $246 billion: about $100 billion coming from state and local governments with the remainder provided by employee contributions and investment earnings—an average of $27,333 per pensioner.
  • $398 billion: non-medical safety net including SNAP (aka food stamps), WIC (Women, Infants, Children), Child Nutrition, Earned Income Tax Credit, Supplemental Security Income, Temporary Assistance for Needy Families, Education & Training, and Housing—an average of $8,600 per recipient because huge corporations refuse to pay a higher minimum wage.
  • $863 billion: Social Security. (The GOP fails to recognize that the average two-earner couple making average wages–$14,600–receives less throughout their lifetimes than they pay in.)

Then there are the entitlements for the wealthy that the GOP supports:

  • $2.2 trillion: tax expenditures, tax underpayments, tax havens, and corporate nonpayment with two thirds of the breaks going to the top 20 percent of taxpayers—an average of $200,000 per individual in the top 1 percent.
  • $5 trillion since 2009: investment income, with 95 percent—an average of $500,000—taking 95 percent of this amount.

Congressional members have an excellent reason to retain the entitlements for the wealthy: they are some of the entitled ones, helped greatly by the stock market boom. More than half the members of Congress (268) had an average net worth of $1 million or more in 2012, up from 257 members the year before. The actual number could be much greater, however, because lawmakers report their assets in sizable ranges. That’s compared to median household net worth in the United States of $56,300. The median net worth for all House members was $896,000 and, for Senators, $2.5 million. You can check out your Congressional members here.

Even without any additional income, members of Congress make over $83 per hour—if they actually worked a standard 40-hour week. That’s something to think about when they object to raising the minimum wage from $7.25 to $10.10.

Former Rep. Eric Cantor (R-VA), who lost his primary after out-spending his opponent 10-1 with $5 million, is no longer jobless. As vice chairman, managing director, and member of the board of directors at “boutique investment bank” Moelis & Co., he gets a base salary of $400,000 each year for two years plus $1.4 million in bonuses for this year and $1.6 million in incentive compensation next year, about ten times the $174,000 salary for being in the House. As Elizabeth Warren said, corporate sell-out politicians like Cantor “head straight out into the industry, not because they bring great expertise and insight, but because they’re selling access back in to their former colleagues who are still writing policy, who are still making laws.” As Jon Stewart quipped on The Daily Show, Cantor is being paid for services previously rendered.

Between 2009 and 2011—the so-called recovery—the mean net worth of households in the top 7 percent grew by 28 percent while the remaining 93 percent of households lost 4 percent. This trend continues the one for the last three decades. The following chart shows how much has been lost by the majority of people since Ronald Reagan and his conservatives shifted the economy of the United States.chart 2Workers at almost all percentiles down from the 95th saw wage declines since 2010. The only wages that went up was at the 10th percentile—an increase from $8.36 an hour to $8.38. Two pennies. That’s $.80 a week and $4.04 for the year. The extra two cents came from minimum wage increases in 13 states last year. When workers can’t afford to spend money for goods and services, businesses don’t make enough money to hire which increases unemployment. The middle class continues to shrink.

In just one state, North Carolina, CEOs in the biggest companies got a 14-percent pay increase last year, to $4.1 million. The raise means that the median CEO pay is 129 times higher than that for the workers, up from 113 times the year before. The media wage for all North Carolina workers increased 1 percent last year to$31,850. The highest CEO pay in North Carolina last year came at Lowe’s; Robert Niblock got $18.7 million, up 54 percent from the year before. Of the 50 largest publicly traded companies in North Carolina last year, two CEOs were women, two were nonwhite, and none were blacks. Nationwide, median pay for CEOs at S&P 500 companies increased 9 percent to $10.5 million.

“Why when American corporation profits have skyrocketed to over $1,800,000,000,000, why are they only investing 9% of all those profits in expansion, in wages, in research and development? Ninety-one percent goes to CEO salaries and to stockholders. What’s wrong with this picture, folks?”—Joe Biden

Free-loading corporations have joined the wealthy in obtaining government entitlements. Technically, the tax rate for corporations is 35 percent; in reality it’s much, much less. They now pay about ten percent of all taxes, compared to the 33 percent in the early 1950s. Their contribution is 1.6 percent of the GDP, drastically down from 5.9 percent in 1952.

Of the 288 companies in the Fortune 500 that registered consistent profit every year from 2008 to 2012, 26 of these companies paid no federal income tax from 2008 to 2012. Another 93 paid less than ten percent in taxes. The overall average was 19.4 percent over these five years. Tax subsidies for just these 288 companies were $364 billion during that time with $174 billion going to just 25 of the companies.  Overall, each family in the nation annually pays an average $6,000 subsidy to corporations that have doubled their profits and cut their taxes in half in ten years.

The country is divided into the “makers” and the “takers,” as Rep. Paul Ryan (R-WI) claims, but the takers are the wealthy and the corporations. And the GOP is headed back into session to take more from the workers, the “makers,” at the bottom who lose money every year.

July 26, 2014

The American Dream Is Almost Dead

Back in the 1950s, people believed in the American Dream. Tax rates for the wealthy were at 90 percent, veterans had good benefits, and strong unions had created a healthy middle class. By the 1960s, even the Republicans voted for civil rights, and the country moved forward. Fifty years later, the American Dream is most likely dead. Two-thirds of the people in the United States think that the next generation will not be better off that their own.

An article in USA Today has directed attention toward the disappearance of the dream in the wealthiest nation in the world. According to an analysis of living expenses in the nation, the price tag for the American Dream is $130,357 a year for a family of four. Only 16 million U.S. households earned that much in 2013, according to the U.S. Census Bureau. That means that only one out of 8 people in the U.S.—12 percent—achieve this goal.

The American Dream has always included owning a home. For a home that costs $275,000 (the median price) with 10 percent down and a 4-percent, 30-year mortgage, the family pays $17,062 a year. Groceries would run $12,659, and one car would cost $11,039. Those with other essentials take $58,491. The extras did include restaurant expenses, but only $70 per week—for four people. Taxes—federal, state, local, sales, and property—would run about 30 percent of the $130,000. The article also factored in $22,500 savings each year, $5,000 of that for the children’s college expenses.

Obviously, people could not save, spend less on entertainment and restaurants, and live in a cheaper house. But that’s not the American Dream, and that’s not the way that people lived in the 1950s. Also people live cheaper in places like Oklahoma City and Cleveland than in San Francisco and New York. To make an annual salary of $130,000, a person would require a $65 hourly wage, considered ridiculous. Yet the prices have gone up far faster than workers’ salaries.

With the median household income is $51,000, people are far below a living wage. Almost 50 million people in the country are below the poverty level, an almost 50 percent increase since George W. Bush became president.

Conservatives still promote the belief that people can achieve the American Dream if they just work hard enough. Studies show that they are wrong. A Johns Hopkins University study, documented in The Longest Shadow, followed almost 800 Baltimore schoolchildren for 25 years starting in the early 1980s. The poor stayed poor, and only four percent of urban disadvantaged youth graduated from a four-year college.

Karl Alexander, research professor of sociology at Johns Hopkins University, said that upward mobility is much more limited in the U.S. than in other industrialized countries. In the United States, where people live is as much an indicator of success as how much they work. For example, people are better off in California than in South Carolina. Kids born into the bottom 20 percent of households, for example, have a 12.9 percent chance of reaching the top 20 percent if they live in San Jose (CA) but only a 4.4 percent chance if they live in Charlotte (NC).

SocialMobility

Factors influencing the differences in upward mobility:

  • Race: The larger the black population, the lower the upward mobility. That holds true for all races living in areas that are predominantly black.
  • Segregation: The greater the isolation, the less chance people have to get to good jobs and good schools. The more sprawl, the less willingness on the part of higher-income people to invest in solutions such as public transit.
  • Social Capital: Living near the middle class also brings better institutions with a better safety net and services. For example, Utah’s vast Mormon culture creates better upward mobility.
  • Inequality: The bigger the gap between the poor and rich (as compared to the super rich) the less of a chance that upward mobility can occur.  It’s easier to jump up from the bottom if the top isn’t as far away.
  • Family Structure: Top on the reasons for upward mobility is families. Children have the best chance in stable, two-parent homes.  Notice the word “stable.” That contradicts the conservative theory that women should marry just anyone in order to improve their personal finances.

 

For the past half century, far-right conservatives have worked to destroy unions so that the top 1 percent can get richer. Membership has gone from 25 percent in the private workforce of the 1940s to the current 6.7 percent—and the rate is still moving down.

In two months, United Airlines, the continent’s third largest airline, will outsource 630 of its gate agent jobs at 12 airports to private companies. The union workers who are making up to $50,000, the median wage, will be replaced by non-union workers who will make between $9 and $12.50 per hour. These people will become part of the working poor, needing government aid such as food stamps and Medicaid to survive. The airline makes the money, and the taxpayers fill in the gaps.

 

The fast-food industry already takes in $243 billion every year from taxpayers because the companies refuse to pay living wages. Wal-Mart costs taxpayers between $900,000 and $1.75 million per store so that it can make $35,000 profit every minute.

 

Even without unions, there are ways to stop companies from ripping off taxpayers, increase the economy, and move people upward toward the American Dream.

 

Raise the minimum wage: Of the 13 states (Arizona, Connecticut, Colorado, Florida, Missouri, Montana, New Jersey, New York, Ohio, Oregon, Rhode Island, Vermont, and Washington) that raised their minimum wage in January, only one, New Jersey, saw a decrease in employment during the first half of this year. The other 12 saw speedier job growth in the first half of 2014 compared to 2013 than states that didn’t raise their wages.

 

Take away corporate tax benefits and breaks from all corporations that have even one full-time employee qualifying for food stamps or Medicaid: Instead of punishing people who get paid a poverty wage, shame the companies that keep their workers in poverty.

 

As for unions, repealing the Taft-Hartley Act would allow workers to unionize and keep taxpayers from having to pay part of workers’ wages through food stamps and Medicaid.

 

 

A new type of union, micro-unions, is growing in popularity, and the National Labor Relations Board (NLRB) is recognizing their formations. The first one was created in 2011 at the rehabilitation center Specialty Healthcare where nursing assistants wanted to organize. This week, the NLRB recognized a small group of Macy’s employees, much to the dismay of industry groups. They claim that chaos will result if companies are forced to bargain with multiple unions at the same work site, but the reason is that employees are finding a way to unionize. Their objection is to what they call “gerrymandering,” a practice satisfactory to conservatives in private education and political voting units.

 

We’ll hear more about micro-unions. In April and June, bills have been introduced in Congress to block micro-unions. Sen. Lindsey Graham (R-SC) plans to introduce an amendment to the appropriations bill to stop them on the premise that they hurt the American worker. Graham represents the state with extremely low economic mobility. The 6th Circuit Court of Appeals has already upheld NLRB’s earlier ruling for micro-unions. It’s the next fight against re-creating the middle class in the United States.

June 16, 2014

Decline of the U.S.: Brandeis, Warren, Reich

Louis Brandeis’ book, Other People’s Money and How the Bankers Use It, was published 100 years ago, but it has a strong parallel to Elizabeth Warren’s latest book, A Fighting Chance, according to reviewer Jill Lepore. Brandeis contends “that the country was being run by plutocrats and, especially, by investment bankers, who, by combining, consolidating, and aggregating the functions of banks, trusts, and corporations, controlled both the nation’s credit and the majority of its resources—including the railroads—and yet had not the least accountability to the public or any sense that the functions they had adopted were essentially those of a public utility.” He wrote:

“The power and the growth of power of our financial oligarchs comes from wielding the savings and quick capital of others. The fetters which bind the people are forged from the people’s own gold.”

One hundred years ago, the Gilded Age plutocrats used savings in banks to build giant, monopolistic conglomerates controlled by the shareholders instead of the people who had deposited their money into bank accounts. Brandeis’ book originally appeared in Harper’s as essays. Its compilation of facts and figures shows the massive control that banks wielded:

J. P. Morgan and the First National and the National City Bank together held “341 directorships in 112 corporations having aggregate resources or capitalization of $22,245,000,000,” a sum that is “nearly three times the assessed value of all the real estate in the City of New York” and “more than the assessed value of all the property in the twenty-two states, north and south, lying west of the Mississippi River.”

When Brandeis republished Other People’s Money in 1933 at a cost of $.15, the book was designed to influence President Roosevelt’s administration. The result was a number of anti-trust reforms and financial-industry regulations that grew the middle class during the middle decades of the last century.

While Brandeis’ book deals with the banks’ use of savings, Warren’s A Fighting Chance shows how banks today use the massive debt of the middle class to make money and wield control. With the repeal of financial reforms starting in the 1980s and the loss of the wall between commercial and savings banks from investment banks came the fetters on people from excessively-high interest rates on credit cards and mortgages. People were lured into a sense of false security with “teaser” rates before they faced the shock of skyrocketing interest rates.

Warren first published about bankruptcy in a monograph with Teresa A. Sullivan and Jay Lawrence Westbrook, As We Forgive Our Debtors: Bankruptcy and Consumer Credit in America (1989). Studying 2,400 bankruptcy petitions filed in 1981, they discovered that many of them belonged to the middle class. Over half were homeowners, and many were women rearing children. In The Fragile Middle Class: Americans in Debt, published six years later, Warren reported on personal-bankruptcy filings a decade after her first study. She found that between 1979 and 1997, the number of these filings had increased by 400 percent.

Part of Brandeis’ work led to abolishing child labor and establishing maximum-hour and minimum-wage laws. These laws lost the power to help the middle class, starting with insufficient increase in minimum-wage during the late 1900s. Warren’s work concluded that women holding jobs and raising children become more economically vulnerable, not less. “For middle-class families, the most important part of the safety net for generations has been the stay-at-home mother,” Warren and her daughter, Amelia Warren Tyagi, wrote in The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke (2003). As wages grew stagnant for the middle class in the early 1980s, married women, like Warren’s mother decades earlier, were forced to get a job to help the financial crisis. Once the family grew dependent on the second income, there was no cushion for wages that continued to be stagnant.

stagnant wages

The only answer for struggling families was to spend savings. Once those were gone, they took on huge debts. The final step was filing for bankruptcy. Financial crisis for a two-income family is the loss of one of these jobs. Warren and Tyagi reported, “Having a child is now the single best predictor that a woman will end up in financial collapse.” Between 1981 and 2001, the number of women filing for bankruptcy rose more than six hundred per cent.

During the battle for Massachusetts senator in 2012, Scott Brown tried to paint Warren as an Ivy League elitist. A Fighting Chance shows a far different picture. The divorced Warren was a single mother when she worked to get her college degrees and a registered Republican until the mid-1990s. It was her study of bankruptcy that destroyed her faith in unfettered market systems and “crony capitalism.”

A parallel to Elizabeth Warren’s work is Robert Reich’s research that has been recently promoted in the documentary, Inequality for All based on his book Aftershock: The Next Economy and America’s Future.

Income-Inequality-Graph-from-Robert-Reichs-New-Film

A recurring visual during the film is a suspension bridge superimposed over a graph of wealth concentration of wealth during the 20th century. The two high points are 1928 and 2008 when equality peaked in the United States. Immediately following both these peaks were crashes—the Great Depression and the Great Recession. At both these high points, the top 1 percent took home over 23 percent of the national income. Currently, 400 people in the United States have more wealth than the bottom half of people in the U.S. That’s 400 people with over $2 trillion who have the same wealth as over 150 million people in the United States.

share in income 1

The Golden Age from 1945 to about 1975 disappeared with the anti-union legislation and rapid increase in college tuition. Taxes were also high during this period of time, as much as a 70-percent marginal rate, but they shrank rapidly starting with 1980. At the same time, taxes on the middle class such as sales taxes and payroll taxes (including Social Security) rose.

During the time shown by the suspension bridge, other trends parallel the suspension bridge concept in reverse. Wages grew during the middle of the 20th century as did union memberships. By the 1980s, wages stayed stagnant and union membership shrank.

In his work, Reich goes farther than Warren to show how the rigged system destroys not only the people but the corporations. When workers lose an adequate share of the nation’s income, they can’t buy anything. Lower consumption equals lower corporate earnings. In a vicious cycle, resulting layoffs causes even lower corporate earnings and more layoffs. In short, it is the majority of people who are the job creators, not the wealthy.

share in total income

A common perception among conservatives is that people are poor because they won’t work. As more and more people struggle, that perception is gradually changing. The following chart shows that during the past two decades, more and more people understand that people who work hard cannot climb out of poverty. By 2012, less than one-fourth of the people blame “not working” instead of “not earning enough.”

chart poor people in us

Reading A Fighting Chance and watching Inequality for All (http://inequalityforall.com/) provide a great background for the problems we face and the ways that we can move forward.

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