Nel's New Day

February 13, 2019

Tax Cuts Go to Wealthiest, Others Angry

Almost 14 months ago, Dictator Donald Trump (DDT) promised people would pay $4,000 less on their taxes this year and “have a nice, simple form.” Neither is true. An additional ten percent of tax filers will owe the IRS money since the “tax reform,” and average refunds were 8.4 percent smaller, down to $1,865 because of the same “tax reform.” And that’s from a week ago. In addition, filing taxes is as complicated as in the past. IRS refunds sent out are also down about 24 percent because of the shutdown.

People hoping to pay for their cars will be disappointed. Seven million people are at least 90 days behind on their car loans, a record and a red flag for the economy. Auto loans are the first payment that people make; delinquencies show serious economic problems for low-income and working-class people in the U.S. The nation suffers from more than a million more “troubled borrowers” now than in 2010 when unemployment hit ten percent and the car loan delinquency rate peaked. After George W. Bush’s recession, the government restricted mortgages so that people could make the monthly payments, but car financers could continue predatory practices because they have few restrictions . Subprime borrowers with low credit scores, increasing from 28 percent of the market in 2009 to 39 percent in 2015, may pay interest rates between 14.5 and 20 percent.

Howard Gleckman, a senior fellow at the Tax Policy Center, wrote about people plan buying big purchases or paying off large debts with their refunds. Some are so desperate that they pay extra to get advance lending on their refunds. Last year, 102 million taxpayers received an average of $2,778 in tax refunds, and most people spent this money, helping the U.S. economy. Lower refunds mean less spending and a shrinking economy. If people use their refunds for necessities, problems are worse than a slowing economy.

Fox & Friends told their watchers to stop whining about owing money to the government because they should have taken out more withholding—for a tax cut. The government’s guidelines did provide for less withdrawals from wages to get people to vote for Republicans in the midterm elections, a ploy that failed for many House members. But the reference to everyone’s “fatter paychecks” by Fox & Friends’ hosts applies primarily to higher income earners: most people didn’t see a significant increase in their paychecks.

Rep. Kevin Brady (R-TX), lead author of the tax bill, told taxpayers to be grateful for much smaller or no refunds because they have nothing to do with their overall tax bill. He falsely claimed that 90 percent of the middle class got a $2,100 average tax cut. Another tax cut backer, Rep. Warren Davidson (R-OH), tried to convince people that refunds are less because most people “owed less income tax.” The Tax Policy Center estimated that earners in the bottom 20 percent might each see a total of $60 less tax for the year, and the next 20 percent might expect a $380 total cut. The top 0.1 percent of people in the U.S. saved an average of more than $190,000—each.

Meanwhile, the government ran a $14 billion deficit in December—just one month—as we lost revenues because of the “tax reform” law. The U.S. has run into the red by $319 since the beginning of the fiscal year in October, up 41 percent from the $225 deficit of the same time period last fiscal year. Corporate taxes fell 17 percent, and those from individuals dropped by 4 percent. We’re not spending more: we just aren’t collecting money partly because of the tax cuts for the wealthy and big businesses, ending in a larger deficit for the previous fiscal year—almost $900 billion added to the debt. Budget Director Mick Mulvaney said that “nobody cares” about the debt.

DDT’s supporters are learning that the Democratic position on the failure of tax cuts was right and that Republicans lied. Most of the people aren’t getting any extra $4,000, businesses haven’t changed their capital investment and hiring, and tax breaks for the wealthy and big businesses aren’t paying for themselves. In addition, the economic growth is slowing instead of building. The GOP promised that corporate tax breaks wouldn’t go into stock buybacks; they did, which is the only reason that the stock market has not gone much below its level a year ago.

Instead of putting their tax breaks into higher wages for employees, companies in the S&P 500 spent almost $800 billion of their tax windfall on buybacks for the 2018 fiscal year that started nearly three months before the tax “reform” bill passed into law. The Dow Jones spiked until it went back to the same level as the beginning of 2018. The 2019 buyback projection is about $900 billion, almost all one third of all corporate cash spending and up 25 percent from 2017.

Senate Minority Leader Chuck Schumer (D-NY) co-authored an op-ed for the New York Times with former presidential candidate Sen. Bernie Sanders (I-VT) that criticized the tax law and suggested the prohibition of a public company from buy back shares “unless it invests in workers and communities first, including things like paying all workers at least $15 an hour, providing seven days of paid sick leave, and offering decent pensions and more reliable health benefits.” They also suggested other ways to require companies to invest in workers, including a change in tax rates on dividends.

A divided Congress with a Republican president can’t pass these laws, but the ideas have generated discussion. Lloyd Blankfein, former head of Goldman Sachs, tweeted that money doesn’t vanish with stock buybacks, that money “gets reinvested in higher growth businesses that boost the economy and jobs.” Sanders retorted that Blankfein was right in his claim that money “doesn’t vanish” but it Mr. Sanders quickly responded on Twitter that Mr. Blankfein was correct that the money buybacks “doesn’t vanish” but it “increases the wealth of billionaires” like Blankfein.

Republican leaders who financially benefit from the buybacks lambasted the buyback proposals as “socialism.”  The GOP case against “socialism” ignores the difference between pure socialism and “Democratic socialism.” Republicans plan to use the term as a one-word meme slamming Democrats during the 2020 election campaign after they failed with “witch hunt.” Today, the White House blared the headline, “Not one more person should suffer under socialism.” Republicans’ definition for socialism may be anything that doesn’t benefit themselves. [In the chart to the left, you could add flood protection, sports coliseum, “freedom of religion,” a 40-hour work week, child labor laws, Social Security, Medicare–the list is quite long.]

Axios chief financial correspondent Felix Salmon asserts that the tax cuts will never pay for themselves and no one ever believed that they would. The increase in the national debt is faster than pessimists predicted at the time the GOP pushed through the cuts, and the CBO estimates that the annual deficit will top $1 trillion beginning in 2022. It’s almost there now. DDT campaigned with the promise that he would immediately eliminate the deficit, but in two years, he’s increased the national debt from under $20 trillion to $22 trillion. Salmon added that the nation is “awash in debt” with trillions in student loans, credit card debts, and car loans. Asked about the debt, DDT said that he’ll “get rid of” the entire debt “fairly quickly,” “over a period of eight years,” “paying off that debt like water.”

DDT plans to unleash predatory payday lenders on the majority of people receive less in tax refunds by gutting rules from President Obama’s era that shield people from “easy” loans with interests over 400 percent. If people borrow the money for the two weeks between paychecks, they pay $75 for a $500 loan. Over 60 percent of 12 million borrowers took out seven or more consecutive, digging themselves deeper and deeper into debt, and a majority of borrowers paid more in interest than the money borrowed.

In charge of making these changes is the Consumer Financial Protection Bureau (CFPB), which Budget Director Mick Mulvaney destroyed before he moved on to help DDT spike the national debt and works at failing as acting chief of staff. Vanita Gupta, president and CEO of the Leadership Conference on Civil and Human Rights, described the result of the change in rules for payday loans:

“This decision will put already struggling families in a cycle of debt and leave them in an even worse financial position. This administration has moved the CFPB away from protecting consumers to protecting the very companies abusing them.”

Almost 80 percent of people in the U.S. live from one paycheck to the next, and wages remain stagnant when inflation is taken into consideration, even dropping in the second quarter of 2018. Almost all the gains in the country go to the top—chief executives of big companies, financiers, and creators in the digital world. If the average wages go up at all this year, it will be due to the 18 states that raised the minimum wage although the increases in almost half these states were $.20 or lower—about 2 percent.  The GOP system makes the vast majority of people in the United States more and more desperate.

June 27, 2018

Democracy in the United States – Gone?

With Justice Anthony Kennedy’s resignation from the Supreme Court and the GOP stolen seat for Neil Gorsuch, no one will have to wonder about decisions from the Supreme Court: they will always favor Christian and business conservatism. Gone are any careful deliberations about the constitutionality of the cases. The five conservative justices will legislate from the bench according to their united radically right-wing ideology. An appointment from Dictator Donald Trump (DDT) can ban legalized abortions and contraception, reverse LGBTQ rights, promote discrimination against minorities and women, and increase capital punishment and solitary confinement.

Despite Kennedy’s conservative leanings and his decision to appoint George W. Bush as president in 2000, Kennedy was the swing vote to legalize marriage equality and preserve—to some extent—Roe v. Wade.  On the other hand, he overturned DC’s handgun ban, allowed unlimited finance restrictions, and set in place the destruction of equal voting right. Recently he supported discrimination against Muslims and Christian opposition to abortions and birth control. The week of his resignation after 30 years in the U.S. Supreme Court, Kennedy contributed to the taint of the “Robert Court.”

Despite Republicans ranting against legislating from the bench, the conservative justices made conservative law today in deciding against public-sector unions. The decision of Janus v. American Federation of State, County, and Municipal Employees permits workers to take union protection for free despite the fact that the small fees they paid has no political influence. The takers, including Mark Janus, won. Even conservative Antonin Scalia, who died before he could hear the case, wrote in 1991 that public sector unions could compel agency fees. Forcing unions to help nonmembers who do not pay them, “mandated by government decree,” would be constitutionally problematic. [Left: Janus was the name for a two-faced god of transition.]

For 41 years, public sector unions could levy fair-share fees to pay for workers interests.  The only intention of the five conservative justices is to break the union in their goal to protect large businesses and hurt working people. The loser in this case is the future for women and young people in the nation because union workers have greater wages—up to 20 percent more. The winner is the group of foundations funded by rightwing billionaires such as the Koch Brothers and the DeVos family who want to make money from privatizing the public sector. Their actions cost people more because privatization always costs taxpayers more money. Therefore people have lower wages while paying more money for everything.

The restrictions in Janus follows the courts’ history of blocking worker freedom. Nineteenth-century courts ruled that workers’ collective action infringed on employers’ freedom of commerce guaranteed by antitrust laws. The Supreme Court’s ruling in Lochner v. New York (1905) decided that labor protections such as maximum-hour laws violated workers’ freedom of contract. The Depression of the 1930s encouraged courts to give labor protections, but the GOP soon gained success in destroying these rights, actions that greatly expanded since their success in electing Ronald Reagan.

Although the Janus ruling may feel like doom, Shaun Richman, a veteran union organizer, warned that the ruling might require public employers to allow multiple unions competing for workers instead of negotiating with just one. If unions go to great lengths to show that they are the best worker advocates, the results could be more union militancy and power.

“The American people should have a voice in the selection of their next Supreme Court Justice,”  Senate Majority Leader Mitch McConnell (R-KY) said two years ago when President Obama nominated a Supreme Court justice eleven months before the next president would be inaugurated. His position was that no nominee should be considered in an election year, and he refused a hearing for the nominee. For over a year, the Supreme Court was sometimes tied because of only eight justices voting on rulings. The next Congress is only six months away, but McConnell has abandoned his former belief. “We will vote to confirm Justice Kennedy’s successor this fall,” he said on the Senate floor with no idea of who that nominee will be.

Much has been said about the standard of whether a nominee will overturn Roe v. Wade, but McConnell’s standard is an approval by the NRA. In an interview with Fox, he said that he “can’t imagine that a Republican majority in the United States Senate would want to confirm, in a lame duck session, a nominee opposed by the National Rifle Association [and] the National Federation of Independent Businesses.” McConnell also told a crowd at a campaign rally:

“One of my proudest moments was when I looked at Barack Obama in the eye and I said, ‘Mr. President, you will not fill this Supreme Court vacancy.’”

The United States, which claims to be a democracy, now has a bogus president, a bogus Supreme Court justice, and a senate leader who decides which nominees can be confirmed.

Two days ago, the Supreme Court sent a gerrymandering case from North Carolina back to a trial court for further examination. Emboldened by other recent Supreme Court non-decisions on gerrymandering, North Carolina Republicans are asking SCOTUS to use the 2017 map plan that would inordinately favor the GOP.

DDT is fortunate that the media is not concentrating on some of the worst news for the United States because of DDT’s horrific policy separating children and families, his Russian scandals, and the recent disasters of the Supreme Court. During the time of President Obama, conservatives railed against the growing national debt after the president saved the U.S. economy that tanked from George W. Bush’s decreased taxes, $5 trillion wars, and the corruption of subprime mortgages. The last budget from President Obama, the one for 2017, increased the national debt by only $672 billion, a lot of money but much less than the projected deficit from DDT’s first budget in 2018. DDT’s first deficit is $1.233 trillion—almost twice that from President Obama—and his next year is about the same. DDT blamed President Obama for doubling the national debt after he took over Bush’s excesses, but now DDT is doubling President Obama’s debt.

Continuing deficits from tax cuts for the rich and big companies will come with increased dependence on foreign investors that weakens the world power of the U.S. Usually drastic debt increases result because of war and poor economy; the U.S. has neither at this time. After President Obama made progress in decreasing the deficit, however, Republicans’s huge tax cuts moved the nation to higher debt levels and erased its ability to respond to emergencies. Instead of addressing the problem, the GOP wants to make permanent the temporary taxes for individuals after 2026 to create even greater debt. Also contributing to greater debt and decline in the economy is DDT’s trade war with China, Mexico, Canada and Europe.

The GOP solution for the debt in the coming year will be to shred the safety net and established programs that people have paid into for decades. DDT ran on a campaign of preserving Medicare and Social Security, but the 2019 budget proposed by the GOP House now have drastically cuts many programs, including Medicare and Social Security, in order to pay for its tax cuts. Presenting these priorities that hurt the GOP voting block of older U.S. citizens is a brave move less than five months before Republicans try to keep the House majority in the midterm general elections. Republicans knew that the tax cuts could drive up the deficit, but they are now crying that the biggest domestic problem are debts and deficits. The GOP budget, called “A Brighter American Future,” goes back to House Speaker Paul Ryan’s (R-WI) desire of privatizing Medicare which supposedly reduces Medicare by $537 billion over the next decade. Considering that privatization always costs more than government programs, that’s a big slice out of health care for its recipients.

A new law that permits additional Medicare benefits for people with multiple chronic illnesses is a move toward privatization. These benefits may include home improvements such as wheelchair ramps, transportation to doctor’s offices, home delivery of hot meals, and other social and medical services. The catch is that only people with MedAdvantage programs, contracted with private companies, will have this “advantage.” Those who subscribe to traditional Medicare won’t have them available because Congress waived the requirement that all plans offer the same benefits for those with chronic illnesses.

Ryan is blaming God for taking benefits for people:

“Catholic social teaching … cautions us against allowing the state too great a reach into civil society. This is about saving souls, not dollars.”

Ryan’s college education was provided by his survivor’s benefits from the “state” after his father died. At the same time Ryan began “dreaming” about destroying Medicaid when he was “drinking out of kegs.” He plans to spend his last six months taking more money from people like him and ordered his team to provide reconciliation instructions to fast-track the budget without Democratic votes in the Senate—probably in the lame-duck session after the elections.

This June, the Supreme Court ended with a bang.

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