Tag Archives: Bush tax cuts

A Public Sellout That Can No Longer be Ignored

November 30, 2011

“How a party can so nakedly represent only the top 1 percent while at the same time try to stop anything that will help the economy, and survive while doing it, is just beyond me.” – Michael Tomasky

Look for the usual talking points from those who support the GOP and the anti-tax propositions they put forward as they allow efforts to re-instate the 6.2% payroll tax on workers’ wages. The President is not only trying to keep the lower rate in place but wants to reduce it further for workers and employers and pay for it by hitting millionaires with a 3.5% surtax. I’m sure we’ll hear a lot about trickle-down economics and how allowing the wealthiest to keep all of their income will create jobs. We know that’s bunk.

The 2% payroll tax deduction that was part of the deal that the Obama administration made with Republicans last December in exchange for continuing the tax cuts to the wealthiest 1% is due to expire at the end of this year and the GOP leadership is willing to allow that to occur. These are the same people that holler for tax cuts then scream if they are reinstated to cover the deficit, calling them tax increases. And you can bet your bottom dollar they will vigorously work to extend the Bush tax cuts for the rich due to expire at the end of 2012, unless the voters wise up and reduce them to an insignificant minority in this next election cycle.

As Michael Tomasky points out in his informative piece, “GOP is Set to Self-Destruct Over Payroll Tax”, the Republicans in the Senate will oppose this tax relief for most working Americans because it means the millionaires will have to ante up 3.5% of what they make over $1 million dollars to cover the revenue loss. In other words, if a person makes $1.1 million they will have to pay an extra $3500 in taxes on that $100, 000, reducing their income from $1,100,000 to $1,096,500. How will they ever keep up appearances over this tragic loss?

But of even greater hypocrisy on the part of GOP/TeaParty is that this extended tax break to the 99% will also apply to employers who net less than $5 million in revenue each year. This new deal will also give all employers a further tax break by not collecting any payroll taxes for any new hires they bring on board. The surtax on millionaires will take care of this shortfall. “So the new bill is specifically aimed at helping the job creators,” says Tomasky. “The total cost is $255 billion.” In other words, the Party that endorses the “Job Creators” in this country wants to hurt job creation.

Republicans … say (as they say of everything) that [the payroll tax cut] hasn’t done any good. But economists attest to its stimulative value. Two economists at the Economic Policy Institute say ending the holiday would reduce GDP by $128 billion and cost 972,000 jobs in 2012. The EPI is a liberal outfit, but Mark Zandi of Moody’s, who advised John McCain in 2008, agrees that raising the payroll tax back to where it was could cause another recession.

This convoluted stand by the GOP leadership isn’t so difficult to understand when you look at it from the eyes of Senate minority leader Mitch McConnell who informed the American public last year that “the single most important thing [Republicans] want to achieve is for President Obama to be a one-term president.” This apparently entails sabotaging anything that improves the economy during this period leading up to the 2012 elections. Right now the Republicans are focused on distorting the reality that put us in this economic mess in the first place by accusing Obama of failing to have fixed what almost single-handedly their Party screwed up.

The train wreck that turned into the worst economic recession since 1929 was the result of failed GOP policies to regulate non-banking financial markets that allowed wide-spread corruption with home mortgage loans even when they were warned by the FBI back in 2004. The nation’s top law agency informed Congress then that events within that industry were posing a threat that could exceed the devastation of the Savings & Loan scandal during Ronald Reagan’s presidency.

They have neatly side-stepped their complicity in this while fabricating scenarios that hold Obama and the Democrats fully accountable for everything that has gone wrong since late 2007. And since winning back the House in 2010 they have done everything they can to undo what Obama has achieved to slow the economic downward spiral while passing legislation that would pretty much reinstate conditions similar to what we had just prior to our economic collapse. Their biggest fear is that strong signs of economic recovery will develop from the Obama administration’s efforts. This would destroy the image they have created and ruin their chances to not only win re-election for themselves but to regain control of the Senate and the White House.

The payroll tax is essential to maintain funds needed for the entitlement programs, like Social Security. Reducing that tax would have removed needed funds to sustain this program but the greater need to provide financial relief for many working Americans had priority with the President and the Democrats. To compensate for the reduction in contributions, arrangements were made to resupply the Social Security trust fund out of the general fund. The Social Security trust fund you may recall has been routinely depleted by Congress to pay other federal expenditures then handing the trust fund IOUs in the form of government treasury bonds, giving this secure fund a bad image as a drain on the federal debt.

Naturally drawing money out of the general fund negatively impacted the federal deficit, that bugaboo that the chicken littles on the right ignored during the Bush years but now think is critical to our very survival. The Tea Party contingent that took over the GOP last year threatened to shut down the government if spending cuts weren’t initiated to prevent what they foolishly thought would increase the deficit by raising the debt ceiling. Obama has addressed the concern with raising the deficit however by requesting that the lost revenue that will occur if we extend the payroll tax cut be taken from those who live way beyond normal means now – the 3.5% surtax on income amounts in excess of $1 million.

To gall of Republicans who seek to eliminate hundreds of dollars from workers paychecks annually while killing a great opportunity to create more jobs is shocking. To them it is more important that millionaires not suffer the small hit on their taxes from income over $1 million. The vast number of American working families must continue to struggle so the wealthiest amongst us can continue their lavish life styles simply because one Party has signed over their good judgment to the threats of one man’s campaign to shrink government small enough to drown in a bath tub – Grover Norquist

Could it be any clearer where the hearts and minds of the GOP rest? When called to sacrifice for the improvement of our overall economy, Republicans are clearly on the side of that small segment who have vastly profited during this economic crisis as they were bailed out of their own failures on our dime.

Posted by lbwoodgate in 2012 Presidential Elections, Budget Crisis, Corporate Influence, Jobs, Society and Politics Tags: Barack Obama, Bush tax cuts, corporate-friendly GOP, Economic Policy Institute, Grover Norquist, Michael Tomasky, Mitch McConnell, party of the rich, payroll tax cuts, raising taxes on the middle class, Social Security Trust Fund

7 comments

Politics and Ideology, Not Country, Once Again Prevails in Congress

October 12, 2011

In its most current acting out as zombies, the Republicans in the U.S. Senate voted unanimously to kill President Obama’s Job Plan. They were joined by two conservative Democrats – Ben Nelson of Nebraska and John Tester of Montana. Both Democrats are up for re-election next year in states that are not politically favorable to the President. With nothing but the ideological view that government spending and tax increases for billionaires will hurt an economy, the failure to notice that the lack of spending by anyone and the top wealthiest 1% have seen massive increases in their income, begs the question, “How did these people get put into a position of leadership”?

On the heels of this Senate vote was an NBC/WSJ poll that showed a majority of people polled were in favor of Obama’s job plan.

Even though the United States Senate on Tuesday blocked President Obama’s jobs bill, the legislation’s specifics — as well as the idea of taxing the wealthy to pay for it — are popular with the American public, according to a new NBC News/Wall Street Journal poll.

When asked simply if Congress should pass the legislation or not, 30 percent of respondents answer yes, while 22 percent say no; 44 percent have no opinion.

But when the legislation’s details are included in a follow-up question — that it would cut payroll taxes, fund new road construction, extend unemployment benefits, and that it would be paid for by increasing taxes on the wealthy — 63 percent say they favor the bill and 32 percent oppose it.

What’s more, 64 percent of respondents agree with the statement that it is a “good idea” to raise taxes on the wealthy and corporations, because they should pay their fair share and can afford to pay more to help fund programs and government operations. SOURCE

We are in a fight here for our national way of life. The failure of leadership in the Congress and some lapses in the White House all too often come across as appeasing special corporate interests rather than what’s essentially needed to turn things around. In a detailed analysis that attempts to answer the questions “why have the policies attempted thus far fallen so far short … and what should we be doing instead?”, Daniel Alpert of Westwood Capital, Robert Hockett, Professor of Law, Cornell University and the ever renowned Nouriel Roubini, Professor of Economics, New York University, have stated the obvious in their report, The Way Forward

Our economic straits are rendered all the more dire, … by political dysfunction and attendant paralysis in both the United States and Europe. The political stalemate is in part structural, but also is attributable in significant large measure to the nature of the present economic crisis itself, which has stood much familiar economic orthodoxy of the past 30 years on its head. For despite the standoff over raising the U.S. debt ceiling this past August, the principal problem in the United States has not been government inaction. It has been inadequate action, proceeding on inadequate understanding of what ails us.

The “inadequate understanding” stems from a belief by the anti-government, Libertarian view in government these days that we can’t spend our way out of this recession and that raising taxes on richest 2% percent will deprive the economy of money needed for investments. These are age-old talking points of the right that have been debunked over and over by business leaders and numerous economists including Ronald Reagan’s former budget director David Stockman, who told ABC’s Christiane Amanpour last November and in a previous 60 Minutes segment that “the Bush tax cuts must be allowed to expire — not just the ones on the wealthiest earners, but on everyone”. Stockman argued that raising taxes is ordinarily a “bad thing to do,” but the US “is in such dire shape that we have no choice but to accept the negative trade-off of some harm to the economy to start paying our bills.”

This last point of Stockman’s about the legitimacy of raising taxes when the economy “is in such dire shape” was addressed in the aforementioned report, The Way Forward.

Regrettably, in our view, there seems to be a pronounced tendency on the part of most policymakers worldwide to view the current situation as, substantially, no more than an extreme business cyclical decline. From such declines, of course, robust cyclical recoveries can reasonably be anticipated to follow in relatively short order, as previous excesses are worked off and supply and demand find their way back into balance. And such expectations, in turn, tend to be viewed as justifying merely modest policy measures.

But despite the dearth of information available to those in Washington and many state legislatures along with the numerous polls that show Americans support government programs like Social Security, Medicare/Medicaid and Unemployment Benefits while raising taxes on at least the wealthiest amongst us, the GOP and blue dog Democrats continue to turn a deaf ear to most of their constituents. The only constituency that isn’t suffering under their efforts are the wealthiest 2%. Yet billionaires like Warren Buffett and Starbuck’s Howard Shultz have complained that the GOP has been coddling their class too long and concur with the polls that say some tax increases on the highest brackets make sense.

What will it take to get these intransigent politicians to break their tight bonds with Wall Street? Will it take an Arab Spring-style uprising that is beginning to evolve with the Occupy Wall Street movement?

NY Times columnist Joe Nocera, who has read Alpert, Hockett and Roubini’s report, The way Forward, thinks this lays out a cogent plan and can be a good start for the partisan divide in congress to find common ground with.

I don’t know that anything at this point could re-center the political debate, so unyielding are the two parties. But as Congress prepares to take steps, through the deliberations of the already deadlocked supercommittee, that will likely further wound our ailing economy, “The Way Forward” ought to at least give our politicians pause.

The report lays out a 3 pillar solution:

First, a substantial five-to-seven year public investment program that repairs the nation’s crumbling public infrastructure and, in so doing, (a) puts people back to work and (b) lays the foundation for a more efficient and cost-effective national economy.

Second, a debt restructuring program that is truly national in scope, addressing the (intimately related) banking and real estate sectors in particular – by far the most hard-hit by the recent bubble and bust and hence by far the heaviest drags on recovery now

And finally, global reforms that can begin the process of restoring balance to the world economy and can facilitate the process of debt de-levering in Europe and the United States.

But none of this can begin until reasonable are willing to look past their own political lives and ideological morass and work towards a solution that puts ALL Americans first, not just that vocal laissez-faire minority who are propped up financially by wealthy self-interests. If they don’t we can only hope that the American voter will correct what occurred in 2010 and pray that this action is not too late.

RIP, American Jobs Act (George Zornick, The nation)

Americans’ playing field tilts toward wealthy

I Support OccupyWallStreet

Posted by lbwoodgate in Budget Crisis, Economy, Jobs Tags: Barack Obama, Bush tax cuts, corporate special interests, David Stockman, economist Nouriel Roubini, gop blocks jobs bill, income gap, Libertarians, Nouriel Roubini, occupy wall street protests, Party of No, political dysfunction, right wing ideology, Ronald Reagan, senate republicans, The way forward, United States Senate, wealthiest 2%

7 comments

Need More Proof That Republicans Favor Corporate and Wealthy Citizens Over You and Me?

August 22, 2011

For all the faithful who have believed as the Tea Party-controlled GOP wanted, that our deficit issue was a spending issue and not a revenue issue, the latest news out of Washington reveals a truth that appears to debunk that myth.

The opening lines from an Associated Press article by Charles Babington says it all

News flash: Congressional Republicans want to raise your taxes.

Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, right?

Apparently not.

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

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

This means that the GOP wants to remove the tax break that working people are getting to reduce the deficit while trying to sustain a tax break that benefits mainly wealthy individuals whose income comes largely from non-labor sources like investments in the stock market and capital ventures using other people’s money.

Remember this comment from an Op-Ed piece by billionaire Warren Buffet

“If you make money with money, as some of my super-rich friends do, your [income tax rate] percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine” — most likely by a lot. SOURCE

In other words those who make an income for services rendered in the form of their labor are paying higher rates of taxes than those who “make money with money” such as bankers, investors and hedge fund managers, who among the top 25 in this country benefitted from special tax cuts that put about $4 billion more in their pocket last year. This means working people will be asked to continue making sacrifices for the sake of lowering the nation’s debt while the wealthiest 5% who own nearly 70% of the financial wealth in this country are spared.

I don’t know if there is something in the drinking water that Republicans drink but there has to be something to explain the sheer gall of making such a suggestion just a few short weeks after they threatened to shut down the government and derail any inkling of a recovery by refusing to raise the debt ceiling unless they got a budget that had NO tax increases in it. These are the same people who have signed Grover Norquist’s pledge that demands they not raise taxes in any way, shape or form.

To keep this payroll tax cut in place will cost the treasury another $120 million a year Babington tells us in his report, but this is if you combine all three types of payroll taxes which consist of income tax withholding, Social Security and Medicare taxes and Unemployment taxes. Based on payroll taxes I incurred my last full year of employment in 2008, the income tax withholding was roughly about two-thirds of my total payroll taxes.

It makes sense to reinstate the taxes for Social Security/Medicare and Unemployment benefits during these tough economic times. With high unemployment and the increasing numbers of baby boomers retiring, these two areas need not be cut at this critical point. That leaves the income tax withholding portion, an amount that can easily be covered by ending the Bush tax cuts for the wealthiest 5% in this country.

Is the haze clearing for you yet? The signal I am getting from this willingness by Republicans to reinstate the tax revenue lost by cutting payroll taxes is indicative of someone who sees the need to use tax revenue to pay down the deficit. This goes against the mantra of those on the right that say the deficit is a spending issue, not a revenue issue.

We have people in Congress who claim they want to keep taxes low so it can stimulate the economy but this is cover for those tax cuts that essentially benefit wealthy and corporate tax payers. It was the cutting of taxes twice during the Bush administration that aided in depleting the surplus he inherited from the Clinton administration (see chart above) as it failed to generate any kind of significant job growth over seven years. It did however succeed in handing Obama a $1 trillion budget deficit in 2009. The wealthiest people in this country not only benefit from an over all lower tax rate but see extra benefits from lower estate taxes, capital gains taxes and investment income taxes – all the tax cuts that the large majority of Americans will never find themselves in need of.

The GOP’s heart felt concern for the wealthy has always been transparent and now their lack of concern for the rest of us is equally clear. How else would you describe a need to reinstate the higher poll taxes, which by their own definition, as Babington points out, amounts to a tax increase.

Posted by lbwoodgate in Budget Crisis, Economy, Jobs Tags: Barack Obama, Bush tax cuts, cuts in social security and medicare, George W. Bush, Grover Norquist, income gap in U.S., investor class tax breaks, Norquist's tax pledge, Payroll tax, Republican, Republicans favor tax cuts for wealthy, tax breaks for corporations, Tax cut, tax cuts for wealthiest 2%, tax increases for low-income

11 comments

Eliminating our Deficit is Not Doable Without Tax Revenues and Job Creation

August 13, 2011

The super committee that was formed as a result of the debt ceiling deal to resolve the deficit issue is destined for failure with half of the members already set to deny the use of tax increases as a part of the solution. Will markets once again tank and the recovery remain a distant hope as a result?

Libertarians, which mainly make up the Tea Party these days along with other uber-conservative groups, assure us that the government is like a family budget; to reduce our debt we must quit spending more than we bring in. This over-simplistic approach appeals to many but how well does this jell with the family who borrowed heavily from their bank to fix up their home and pay towards their kids college tuition while both parents were working good paying, full-time jobs and had no health problems? Will such a practice work if their employment and health condition takes a dramatic change for the worse?

Cutting back spending alone could suffice for this family if one partner loses their job and the other develops health issues that require lots of out-of-pocket expense beyond what insurance will cover, but only for a limited time. Unless these negative factors reverse themselves in short order, spending cuts alone will not undo the damage that will occur.

To think, as many Republicans do, that these problems can be adequately dealt with if they simply quit buying unnecessary things, forego that vacation this year and see the doctor only when absolutely necessary, is so naive in the long run.

What happens if the other partner loses their job or has to take a 20-50% cut in pay and one of their aging parents becomes terminally ill around the same time and Medicare costs won’t cover much of the expenses? The kids will obviously have to leave college and return home to find a job and help pay for the growing bills now due. But with such high unemployment there are few jobs available and those that the children could get are on the other side of town or in another one 30-40 miles away. The cost of gas today alone would eat most of the minimum wage earnings they would make.

There comes a point when cutting spending alone won’t do it. All the revenue that they had at one time might have been able to keep such costs under control but conditions have changed now with their job status and the increase with cost of goods and services. Some source of extra revenue will be necessary if they are to keep their heads above water. They might have been able to take out a loan but that avenue has obstacles in it with credit tightening restrictions that have been finally imposed after the failed practice of predatory lending by large banking institutions prior to the collapse in 2008. Their high credit debt that has developed makes them unlikely candidates for such lending.

They could sell off one of the cars and perhaps some other high dollar “toys” but there are outstanding loans on them so they wouldn’t get what they’re worth, thus increasing their debt that much more. The interest from their credit card debt and bank loans outstanding take a big chunk out of what income they do have and make it difficult to chip away at their debt.

Finally, out of desperation they apply for unemployment benefits because they have gone through their savings hoping to find work before they were forced to go on “welfare”. But it will be six weeks to 2 months minimum before they can receive that money and only after they have proven that they were steadily looking for work everyday; an act that requires time and money to print and submit resumes and travel to sites where jobs are being offered. Mental depression begins to set in only worsening physical health.

Meanwhile the doctors bills are stacking up and the mortgage has been late on more than one occasion. By the time they get the short-term unemployment benefits they need their credit rating has fallen dramatically or maybe even been totally ruined. The process to correct this credit issue cannot even begin until both get full-time work again with health benefits and a living wage. The prospects are grim for this to happen anytime soon and the fact that both parents are in their fifties makes it unlikely they will find any jobs comparable to what they had before that gave them a comfortable middle-income life.

From this perspective that over simplistic view of cutting spending alone to stabilize their economic condition seems to fall apart, at least for those willing to look at this issue from beyond the narrow parameters set by Tea Partiers and Libertarians. This kind of family condition is happening all over this country with millions of people. When you amplify this deteriorating situation and realize that they are not spending what they used to on consumer goods then you a get better picture of why the economy is going south.

The nonsense that tax increases will hurt economic growth is not borne out by the historical data and in fact shows that tax expenditures have cost the country nearly $1 trillion that could have been used to pay toward the debt George Bush left Barack Obama in January 2009.

Businesses, especially small businesses, are losing their customer base. As that happens they have to lay off employees or cut back their wages, thus adding yet another family to conditions where attempts to cut back on their spending will further worsen local economic markets as it fails to keep that family afloat until the jobs crisis eases. When the crisis deepens to the point that people have to give up their homes and their means of transportations, you have in fact added more people to a welfare system that is already stretched to the limit. More people become homeless and serious illnesses grow exponentially that our over-burdened health care system, public and private, cannot adequately handle.

There is the belief by many on the right that anybody who is unemployed is a dead beat. This only changes for some as this condition invades their own life or someone close to them. The 80-year old grandmother on a fixed income, the child in a low-income family too young to work and the disabled father who wants to but can’t are not dead beats, but they do need the things of life that require an income.

All this is going on while a handful of people are seeing some of their greatest income increases in years as most American wages remain stagnant at best.

The income gap in the United States has ballooned: It’s wider than any time since 1928, in the days before the stock market crash triggered the Great Depression.

The numbers are startling: Top CEO salaries were up 23 percent last year, according to the New York Times; the average worker’s pay was up only .5 percent. Meanwhile, the top 0.1 percent of American earners now take in more than 10 percent of the nation’s collective income. That puts the U.S. in the same inequality ballpark as developing countries like Cameroon and Ivory Coast.

“This inequality is destabilizing and undermines the ability of the economy to grow sustainably and efficiently,” says Fed governor Sarah Bloom Raskin . Income inequality, she continued, “is anathema to the social progress that is part and parcel of such growth.” SOURCE

Concurrent with this is the news that many businesses are seeing some of their largest profits in years but are reluctant to hire back those they have laid off or even hire new people. The trend has been to keep as few people as possible and work them longer at stagnant wages while increased production puts greater profits into their pockets for executive bonuses and investor dividends. Rather than reinvesting this increased wealth to create jobs it is going into personal savings accounts and investments of the wealthy, thus adding to the growing income gap.

We need to be spending money not cutting back, at least for the short-term until the economy begins to heal. Dealing with the debt is a long-term problem that can be put off for now says Nobel Prize economist Paul Krugman.

“For the fact is that right now the economy desperately needs a short-run fix. When you’re bleeding profusely from an open wound, you want a doctor who binds that wound up, not a doctor who lectures you on the importance of maintaining a healthy lifestyle as you get older. When millions of willing and able workers are unemployed, and economic potential is going to waste to the tune of almost $1 trillion a year, you want policy makers who work on a fast recovery, not people who lecture you on the need for long-run fiscal sustainability.

What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems.” – SOURCE

But the idiots in the Tea Party camp have shrilled long and loud that it is government waste and spending that has put us here and as if in a state of denial they say it has all occurred on Obama’s watch, even with evidence to the contrary. Why the main stream media and Republican politicians give these chicken-little voices the credibility they have is not only puzzling but portends that there may be some advantage they gain either monetarily or politically in doing so.

It may sell copy and air time to talk about the growing economic problems we face while all the time feeding the flames that fuel such conditions. It may give leverage to those in political office to blame all of our ills on one Party while pretending only the other has the solution. It may even seem an advantage by some big business to use such anti-government forces to increase their profits through lowered taxes and limit needed regulations that monitor abuses that come from corporate self-interests.

(AP Photo/Laurent Cipriani)

But such short-sighted, self-serving goals eventually implode and the problems that were lying just over the horizon and have now landed squarely in their own backyard. When the natives grow restless from spending cuts that impact low-income families and job creation is seen as non-existent, all that power and wealth will do little to offset the chaos that will ultimately result when hope seems apparently gone.

Why Grover Norquist’s “Taxes Are Evil” policy is Killing the Middle Class

July 30, 2011

How the illusion of one thing can can deceive us about a more important issue

There ‘s an enticing and yet deceptive ad going around many commercial internet websites that shows a very busty woman posing next to a claim that there is a secret sleep aid. The women in the photo above is not the one I’m referring to but I was pretty sure it would do what the ad intended – get your attention. In viewing this ad one is led to believe that there is a sexual connection between this product and one’s desire to find a non-drug remedy for a sound night’s sleep. After clicking on the ad with the busty woman it becomes clear immediately that her well-endowed breast had little to do with the sleep aid but only served as a come on for either horny men or small breasted women.

Believe it or not, this ad has something in common with Grover Norquist’s assertion that all tax hikes are bad and deficit reduction can only happen from spending cuts. They both seduce potential advocates or supporters with something they’ve alluded to but has no basis in reality. To my disappointment the busty lady in the sleep aid ad was not connected to the fantasies she stirred in my mind. Likewise, the promise that conservatives make when they sign Grover Norquist’s oath to never raise taxes in any way, shape or form and how this will rejuvenate our broken economy is a facade that appeals to capitalist purists and people who haven’t paid much attention to the real world of economics lately.

I suspect the sleep aid will promise to be the cure-all for my insomnia but will point out at the end of the ad – in small, legalese print – caveats that will protect them from libel suits down the road when many consumers find that it fell way short of the claims it made, BEFORE you laid your money down. I have been duped enough times to know that such miracle cures are hardly ever valid and yet … there is always this hidden belief that perhaps THIS TIME it will be different. Here’s the ad you get after clicking on the photo of the large breasted women. Notice the caveats in small print at the bottom of the page.

Norquist, The Tea Party goofs and many otherwise serious conservatives continue to believe that deficits are the sole factor of too much spending and that only deep spending cuts will erase our national debt. Never mind the fact that during the nineties under Clinton there were taxes increases combined with some measured spending cuts and the economy saw one of its best decades in quite a while. Now follow that with the spending-only policy in the Bush administration along with deep tax cuts and we go from a federal surplus to a record deficit in less than three years.

For the eight years under Bush/Cheney we continued to borrow money from China, Germany and other foreign nationals to pay for these tax cuts and two wars on the other side of the world. The result was the slowest economic growth in half a century. The economy eventually crashed under the weight of non-regulated financial industries who went crazy with predatory lending to people who had no collateral, sometimes not even a job and then sold these insecure mortgages off to other banking and financial interests, who had inadequate capital to cover their losses if the borrower defaulted. It might even surprise some of these angry anti-government types to discover that these pre-Obama practices set the stage for the $1 trillion deficit we faced shortly after Barack Obama was inaugurated in January, 2009.

So what do outraged but ill-informed conservatives voters do? They turn out in record numbers in 2010 to vote for those pie-in-the-sky promises from an extremist group of people who have no depth of historical knowledge about economics. The Tea Partiers assert that our problems stem from spending that needs to be curbed and ignore the borrowing that’s been going on for the last eight years necessary to pay for what tax revenues were lost with the Bush tax cuts in 2001.

As a result people were put in office who are poorly qualified to address our core economic issue today – high unemployment. Capitalist ideologues who believe fully in the premises made by philosopher Adam Smith over two centuries ago and perpetuated to further extremes by the like of “free market” devotees Ayn Rand and Milton Friedman in the mid 20th century, have convinced enough cult followers that an unrestrained free market will make life comfortable for most, if not all people within such an economic system.

The fact that it never truly has and that even under the most unrestrained periods in our economic history poverty affected about 1 in 7 Americans, seems to be ignored by such narrow-minded people. According to recent census data, the actual number of people who are classified as poor, 43.6 million, is “the largest number in the 51 years for which poverty estimates have been published.”

Not surprisingly though capitalism has had its rich rewards for many but most specifically those that fall within the wealthiest 2% category. In fact this wealthiest group continues to make gains while many of the remaining 95% are actually growing poorer than many of their parents before them. In big part this is due to the tax cuts that Grover Norquist and many foolish Tea Partiers continue to promote. Most of the tax revenue from the time WWII ended helped fund projects that enabled a strong middle class in this country as it also addressed the social needs of those who fell outside the grasp of the free markets’ “invisible hand”.

The argument made by this fringe element can rightfully say that less taxes do increase personal wealth but when your wages are at or even slightly above the poverty level, such savings have no real bearing on your ability to pay market prices for essential good and services. Most may be able to keep up but are hard pressed to save, while those who can’t continue their downward spiral into poverty.

Only the very wealthy benefit from tax cuts because their cut will often amount to sums that exceed a middle-income wage earner’s annual salary. Most if not all of this will be put into further income earning measures like stocks and products that cater to the very wealthy. What jobs result from this activity are hardly significant to most people looking for good paying jobs.

The GOP, Tea Party and Grover Norquist worshippers are not concerned about the plight of the economy because their wrong-headed notions honestly believe that the free-market will correct what ails us. This of course is an ideological belief and presumes that government intervention in the form of higher taxes is sure to prevent “real’ recovery.

Never mind that human greed has and does continue to intervene for the sake of profits and personal wealth as previously good paying American jobs find their way over to the cheaper labor markets abroad. Never mind that as these neo-conservatives and neo-liberals continue to reduce the deficit by eliminating government positions, the U.S. labor market isn’t able to pick up these surplus workers and thus the unemployment rates continue to climb. The middle class is slowly eroding because ideology is overriding what has worked well for us for nearly a century.

Is Grover Norquist smiling as he reflects on how a sucker is born every minute?

We’re all suckers to some degree by the fantastical and enticing claims that promises wealth, health, beauty and social acclaim. But at what point do we learn when we’ve been duped and that those who claim to have our best interests at heart are really working behind the scenes to promote only their own self-interests?

RELATED ARTICLES:

The Tax Burden of the Very Rich

The Question Conservatives Can’t Answer

Posted by lbwoodgate in 2012 Presidential Elections, Budget Crisis, Economy, Jobs Tags: Adam Smith, Americans for Tax Reform, Ayn Rand, Barack Obama, Bush tax cuts, causes of unemployment, deficit reduction, Grover Norquist, have and have-nots, income gap, job loss, Milton Friedman, Tea Party

6 comments

Both Sides of the Fiscal Equation

July 25, 2011

When Republicans, right-wing radio talk show pundits and FOX news commentators tell you that our deficit is a “spending” problem, they’re not being totally honest and they’re doing it on purpose.

The current deficit exists because we’ve eliminated huge amounts of revenue through tax cuts and corporate subsidies while continuing to spend on programs that are both necessary and needed. Other financial obligations in the form of two foreign wars have also run us short of cash to the point that we now have to borrow nearly one-third of everything we owe.

The Republicans want to ignore the fact that our current deficit mess is the result of the Bush tax cuts they approved back in 2001 and the two wars they implemented as they were reducing federal funds to pay for them. To further enhance our deficit issues, the failure of Congress to properly regulate greedy financial markets has led to defaults that have costs millions of jobs; jobs that served as sources of revenue to pay for wars, tax cuts and needed entitlement programs. Thus the deficit is only a problem in the sense that Republicans need a smoke screen to conceal their negligence over the last few decades, starting with Ronald Reagan’s pro-corporate policies and extending to Dick Cheney’s assertions that “deficits don’t matter” as they went on a spending spree that has created the largest income gap in history between the haves and have-nots.

It would be true to declare that federal spending is higher now than it has been since the end of WWII. Left at that, this would infer that our deficit problem IS a spending issue. But the other half of the equation is that revenue to pay for what we spend is also lower than it’s been since 1950. Spending by the government may be a part of our debt problems but when conservatives pass legislation that reduces revenue, especially from the wealthiest amongst us, it is also a failure to maintain the necessary capital to pay for what we need to do.

Historical data has shown that when you cut federal spending too much you create conditions for recession. Combined with tax cuts, recessions become deeper and longer.

FactCkeck.org has recently posted data on the broader fiscal picture showing that when only half of the valid information is discussed by partisan hacks, many voters are poorly informed and thus seem confused about what action they want their representatives to take. The information from FactCheck, displayed here, clearly shows that spending alone is not the cause of high deficits and any action to address it without increasing taxes or stimulating job growth will continue to make the problem worse.

Some bullet points on their research are as follows:

Federal spending (“outlays” in budget jargon) is expected to equal 24.1 percent of the nation’s gross domestic product in the current fiscal year, which ends Sept. 30. The figure was 25 percent in fiscal year 2009, highest since 1945.

On the other hand, federal revenues are expected to drop to 14.8 percent of GDP this year, lower even than the 14.9 percent attained in both 2009 and 2010. There has been only one year since World War II when revenues have been as low as in any of these years: 1950, when the figure was 14.4 percent.

These historically high rates of spending and low rates of taxation have combined to produce a chain of deficits that are also the highest since WWII. The deficit was 10.0 percent of GDP in fiscal 2009. It declined to 8.9 percent last year as the economy started to recover, but is projected to go up to over 9 percent this year. Each of these deficits is larger than in any year since 1945, measured as a percentage of GDP.

The U.S. is borrowing about 36 cents of every dollar spent so far this year. It borrowed 37 cents on the dollar last year, and 40 cents in fiscal 2009.

The largest components of federal spending are Social Security and Medicare programs for the elderly (33.5 percent of total outlays in 2010) and national defense (20.1 percent). Interest payments on the federal debt alone accounted for 5.7 percent of all federal spending, and that percentage is rising.

The federal income tax accounted for 41.5 percent of federal receipts in 2010 (down from 49.6 percent prior to the Bush tax cuts of 2001 – 2003). Corporate taxes brought in only 8.9 percent, also down sharply since the recent recession. Payroll taxes and other “social insurance” payments accounted for 40 percent of total receipts in 2010.

Currently the Republican-controlled House is threatening further economic disaster by refusing to raise the debt ceiling if they do not get more spending cuts than they have already received from a generous White House and Democratic Senate. They refuse to budge on the issue of raising taxes as a means of curbing the deficit and focus entirely on spending, and not just any spending cuts. They are determined, with the aid of wealthy interests and narrow fiscal ideologues to cut that spending that impacts the most vulnerable of our citizens; the elderly, children and low-income wage earners

Besides deluding you about how we are already over-taxed (see graph above), Republicans would have voters believe that the rich are unduly burdened with taxes. This negative image is skewered by the fact that “the rich” are also seeing income levels higher than they have ever before and at a growth rate that far exceeds more than 95% of other wage earners.

The most recent complete data cover 2007. CBO figured in that year more than half of all federal taxes was paid by the top 10 percent of income earners. They paid 55 percent of all federal taxes in 2007, CBO said.

That’s a comprehensive figure, counting the income tax, payroll taxes, excise taxes and even the corporate income tax (borne by stockholders in the form of reduced dividends and appreciation). And perhaps surprisingly, the top 10 percent of earners pay a greater share of federal taxes now than they did before the Bush tax cuts, which Democrats constantly criticize as a giveaway to “the rich.” The top 10 percent paid 50 percent of all federal taxes in 2001.

However, that comes in spite of lower tax rates at the top, not because of it. The reason the most affluent 10 percent pay a greater share of taxes is that they are getting a greater share of all income. Their share of all pre-tax income went from 37.5 percent in 2001 to 42 percent in 2007.

The GOP and their conservative counterparts in the media would argue lamely that by overtaxing the rich you dry up the financial resources that would go into job creation. This sounds good in theory but is simply not the case as the first part of the 21st century has indicated. Under Bush and the GOP, job growth was the weakest it had been from previous administrations with only a 4.8 percent increase in jobs during the entire period the Bush tax cuts were in play.

That’s not nothing, but it’s pretty anemic compared to job growth under President Bill Clinton. President Clinton, after raising taxes in 1993, oversaw an economy that went from 111 million jobs in August of that year (the month Clinton’s budget plan passed, including the increase in taxes) to 129 million jobs six years later—an increase of 16.2 percent, and more than three times better than under the Bush tax cuts.

And the Bush tax cuts didn’t just fail to stack up on jobs. Overall economic growth was much slower under the Bush administration’s tax policies than under the Clinton administration’s tax policies. Real gross domestic product grew by 26 percent in the six years after Clinton’s tax increases. But real GDP grew by just 16 percent in the six years after the Bush tax cuts began. In fact, that six-year growth rate was low even by general historical standards. The average real GDP growth in any given six year period (from any quarter to the same quarter six years later) since World War II was 22 percent. SOURCE

The Center on Budget and Policy priorities agrees that our deficit issues are more a result from discretionary spending and tax cuts than mandatory spending which entitlement programs like Social Security and Medicare/Medicaid come under. According to the CBPP “the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The stimulus law and financial rescues will account for less than 10 percent of the debt at that time.” (See diagram below)

Though nearly a third of all federal spending goes toward Social Security and Medicare/Medicaid programs – paid for in large part by deductions from income earners – one-fifth goes to National Defense, which includes Homeland Security. The GOP has focused on the two major entitlement programs and have given nothing but lip service to cuts in national defense.

Social Security and Medicare/Medicaid are facing fiscal problems because of retiring baby boomers and lost revenue from high unemployment rates but there are ways to reduce entitlement costs without reducing needed benefits for most of the recipients.

One such measure that would address Social Security’ financial ills, that the GOP and their wealthy, corporate friends object to, would “eliminate over 100 percent of the currently projected 75-year long-range actuarial deficit … and would provide enough funding to pay scheduled benefits every year through 2080.” This could be done by simply raising the current income level of $106,800 that are taxed for Social Security purposes. SOURCE

The largest cost over runs in Medicare and Medicaid are fraud committed by care givers and medical supply vendors. Making stronger efforts to reduce this criminal activity could save the system billions in lost revenue. Eliminating many unnecessary medical procedures and drug prescriptions would also help lower Medicare/Medicaid costs considerably. Both of these steps are part of the new health care reform bill that was passed last year when Democrats were still in control of the House and that the new GOP-controlled House has attempted to negate by passing HR 1217 – the Repealing the Prevention and Public Health Fund bill.

One showcase item that illustrates how poorly Republicans address the needs of one segment of low-income citizens while contributing to a bloated deficit is the Prescription Drug Bill that passed in 2003 by the GOP-held Congress and signed off on by George Bush. Rather than allowing Medicare to negotiate lower prescription prices or allowing Americans to purchase cheaper medications in Canada and Europe, the $400 billion program ensures that Big Pharma continues its practice of over charging Medicare and Medicaid beneficiaries as well as their benefactor, the U.S. tax payer.

With all of this information at our disposal why do Republicans insist on making this an issue that can only be resolved by spending cuts, especially those cuts that impact the most vulnerable amongst us? It’s been contended that they are more interested in exploiting a bad economy (that they helped foster) with the hope that voters will oust the current president and the Democrat majority in the Senate so they can regain control of these two seats of power.

Would they really be so insensitive to inflict the damage their efforts could have on millions already struggling to make ends meet just to hold political sway in seats of government? A bigger question is why would voters re-seat a Party that essentially has made no attempt to correct the problems that have brought our working families to their knees and who did everything they could when they last held that power to meet the special interests needs of less than 2% of their constituency?

With just a few days left before this nation defaults on its financial obligations from GOP obstructionism, the American public needs to become better informed about those who represent them in Washington. FactCheck.org resources have helped lay this out but will those who have thus far been partially misled continue to rely on their own subjective sources and allow ideology to prevail over sanity? I encourage all who read this to go to this page on FactCheck.org and decide for themselves if the GOP has their best interests at heart.

How the Deficit Got This Big

Debt Ceiling Poll: Voters With Obama

Dumbing Deficits Down

The Emergency in Front of Us is Jobs

Posted by lbwoodgate in 2012 Presidential Elections, Budget Crisis, Economy, Jobs Tags: Bush tax cuts, creating jobs, debt ceiling, Dick Cheney, FactCheck, GOP-controlled House, Gross domestic product, Republicans, Ronald Reagan

6 comments

The Big Lie the TEA Party Was Founded On

June 12, 2011

Taxes are lower than they have been for decades. So why do those on the right claim they have been “Taxed Enough Already?”

Remember back in 2009 when the Tea Party first made itself known to the public. It created an acronym from the words, “Taxed Enough Already” – TEA - and they took that acronym to represent a time in history when American colonists protested high taxes by the British Royal government without representation by dumping crates of tea in the Boston harbor. The problem with this notion for the Tea Party, that they’re being taxed too much, is that it’s not true, then or now.

The researchers at the Center for American Progress think tank have documented, with the use of 10 graphs, that taxes are not only not oppressive but haven’t been this low for nearly 60 years.

Somebody hasn’t been paying attention to these facts or perhaps has deliberately exploited right-wing anger following the passage of the $800 billion stimulus package Obama and the Democrats passed to prevent the economy from devolving into another Great Depression era. The fractious elements with ultra-conservative groups that began to connect with each other through social networking in early 2009 were ultimately funneled and more cohesively formed by astroturf groups like FreedomWorks and Americans for Prosperity (AFP)

Both groups are tainted. In an article by Ed Pilkington with The Guardian, we discover that “FreedomWorks and AFP are sister groups who came from the same parent body — a campaign called Citizens for Sound Economy, which split in two in 2004. It was set up by one of America’s richest men, David Koch, an oil tycoon who has funded right-wing causes for decades.

FreedomWorks receives funding from the tobacco conglomerate Philip Morris, as well as from Richard Scaife, another business tycoon, who for years helped fund dirt-digging investigations into Bill Clinton. Local branches of Americans for Prosperity have also received tobacco money; the group has opposed smoke-free workplace laws and cigarette taxes.”

FreedomWorks and AFP took the honest outrage of people who mistakenly thought they were being taxed for wasteful spending at a time when many Americans were losing their jobs and homes and used it to promote the hysteria that would benefit them in undermining the Democrats in 2010. The “anti-tax movement” that resulted, not from real over-taxing, but from fear generated by people whose self-interest to regain the seats of power were preeminent, is now exposed as a fraud.

Tax revenue as share of GDP is lower now at 14.8% than it was in 1946 at 20.4% and lower than it ever was during George Bush’s or Ronald Reagan’s administrations.

The U.S. has much lower taxes as a share of GDP – 26.9%, than other developed countries like Canada, 33.1%, Great Britain, 35.8% and Denmark with 49.3%.

We have lower tax rates than our parents or some grandparents did. In 1945 top marginal tax rates on ordinary income was 94%. Today it is currently at 35%.

Top capital gains tax rates are also lower now at 15%, a rate we haven’t seen since 1933.

The tax on large estates has virtually disappeared. Total percent of all estates subject to federal tax has dropped from 2.14% in 2001 to 0% in 2010 but which has recently rose to 0.14% this year.

Tax rates for the wealthy and super wealthy have plunged. Millionaires who were paying 26.8% of their total income towards taxes in 1992 are now paying around 22.8%. Billionaires have received an even better deal. The richest 400 households went from a tax rate of 26.4% in the same time period to one of 16.6%

Corporate tax revenue has also declined over the years following WWII. Corporate tax revenue as a share of GDP has dropped from 7.2 percent in 1945 to 1.3% this year.

The U.S. raises less tax revenue from corporations than most other Organisation for Economic Co-operation and Development countries (OCED). Out of 26 OCED countries 18 others have a higher corporate tax revenues as a share of GDP than the U.S., with Norway having nearly 4 times the rate than the U.S.

And the one that anti-tax, pro-corporate Republicans like to tell constituents about how the U.S. are taxed more than their foreign rivals is also bunk. Technically on paper that business tax rate is 35% which is higher than in most OCED countries but thanks to tax breaks and loopholes for corporations that have proliferated since 1982 from $526.1 billion in 1982 to over $1 trillion in 2010, U.S. companies have an effective corporate tax rate of 13.4%, a rate that is lower than 19 other OCED countries.

Voters are being misled by powerful interests to vote out those we sent to Washington to correct years of spending by Republicans who had no serious plan in place to pay for this spending. Under George Bush we borrowed furiously from foreign treasuries to replace the revenue lost through these tax cuts as well as paying for two foreign wars and a Medicare Prescription bill.

When George Bush and the Republican-led Congress signed off on tax cuts for the wealthiest 2% in 2001, we lost the revenue we needed to sustain the surplus we had then. Had this bill not been pushed through by corporate-friendly Republicans of that time we would have averted a deficit now that seems out of reach.

Clearly we’re are not going to get out of this mess with spending cuts alone. The Bush tax cuts need to end in 2012 as promised by the Obama administration. They should not have been renewed for two more years by Democrats last December to appease the new GOP majority in the House.

The record shows, contrary to GOP and Tea Party views, that raising taxes, especially on the wealthy, in such economic hard times will not only aid the recovery but will grow the GDP, as it did during the Depression Years of the 1930’s

There are no free rides and if we are to provide quality education for our children and sustain elderly retired workers that rely on Social Security and Medicare/Medicaid we need to end the tax Bush tax cuts across the board for all Americans. At this rough economic period for middle and low in come families we could perhaps postpone it for a couple of more years but the wealthiest 2% need to see tax rates reset to levels they survived handsomely under before Bush cut them in 2001. Tax rates that were still lower than they were under Ronald Reagan.

Posted by lbwoodgate in 2012 Presidential Elections, Budget Crisis, Economy, Jobs Tags: budget surplus, Bush tax cuts, Corporate tax, FreedomWorks, George W. Bush, Gross domestic product, Ronald Reagan, tax cuts, Tax rate, tax revenue, Taxed Enough Already, Tea Party protests

3 comments

Drawing a Line in the Sand on Tax Cuts for the Wealthy

April 15, 2011

As jobs are being cut for lack of revenue in states, millionaires and billionaires are increasing their revenue due to gaping loopholes in state tax structures.

I wrote a piece earlier this month here about how everybody should pay their fair share of taxes. This came on the heels of G.E.’s revelation that after making $5 billion in profits last year they paid zero taxes. G.E. argued that they filed their taxes as the law prescribed but that can only be speculated on because the defunded and under-manned IRS doesn’t always have enough people to check 25,000-page income reports similar to what G.E. provided the tax agency. Besides, so what if they did? The fact that the tax laws accommodate the wealthy is the problem, not that someone follows them.

Here are a few examples of how very wealthy people in this country and abroad abuse tax laws written initially to help farmers, allowing them to pay almost no taxes.

Michael Dell of Dell Computers – By periodically hunting and maintaining a “well-managed deer herd” on the suburban Austin ranch he uses as a second home, Dell reduced the property’s 2005 market value from $71.4 million to an agricultural value of $290,000, which saves him—and costs Texas—$1.2 million a year.

After putting a couple of cows out to pasture, billionaire publisher Steve Forbes, got more than a 90 percent property tax reduction on hundreds of acres on his multimillion dollar estate in upscale Bedminister, New Jersey.

Korea’s Samsung Electronics – Under a broadly defined Texas agricultural tax law this foreign-owned company was able to qualify for a “wildlife management” agricultural tax exemption on 54 acres of land outside its semiconductor plant in the Northeast Austin. Did chickens and pigs roam the views outside the lab windows at this facility to create a soothing pastoral mood for workers?

In an article “PROPERTY TAXES ARE FOR PARASITES: BILLIONAIRES USE THE “FAKE FARM LOOPHOLE” TO NOT PAY ANY…” by Yasha Levine, found on the eXiled Blog site, we’re informed that “agricultural tax breaks got their start in the 50s and 60s, as a response to the explosive growth of suburban development, which was encroaching on farmland and raising agricultural property values to the point where farmers were having [a hard time] paying their tax bills.”

“Fearing that this would pressure farmers into selling out to developers, states began granting exemptions that allowed agricultural land to be assessed at rates well below market value. The practice, called use-value assessment, is today used by all but one of the fifty states to artificially deflate the value of farmland, frequently by 90 percent or more. The plan looked good on paper, but in the real world it was quickly manipulated to steer money to the rich.” (emphasis mine)

In these economically tough times, where states are cutting school budgets and social safety net programs for children and the elderly retirees, billionaires are lining their pockets with tax revenue that would help eliminate these cuts. These laws may have been set up to help not-so-rich farmers but leave it to conservative state legislators that turn a blind eye to the wealthy as they exploit these laws to the detriment of working class families.

Yasha Levine’s report is an eye-opener on how the politically powerful and wealthy in this country avoid paying their fair share of taxes by masking as farmers. George Bush has done so on his Crawford ranch reducing its taxable value from $2.1 million to $950,000. Back in 1970 Ronald Reagan was able to reduce his tax bill by nearly $12,000 on land that was viewed as “too rugged for serious ranching and almost impossible to farm.”

Image via Wikipedia

Walt Disney World planted a few trees and flowers and put some cows to pasture on its 1,600 acres of undeveloped land adjacent to their Florida theme park and reduced their tax liability as they were able to lower the land’s value from $194 million to only $12.3 million under that state’s poorly worded agricultural tax law. Now there’s a “dream come true” for this wealthy interest. In New Jersey “ fake farmers” have sprung up in the likes on Jon BonJovi, Stephen Forbes and the billionaire heirs to Johnson and Johnson by simply making a few cosmetic alterations or additions to land that will never see a traditional farm worker work the soil.

What makes this doubly infuriating is the tact that Congressional Republicans and a few conservative Democrats have taken to balance the budget on spending cuts to vital social programs like Social Security, Medicare and Medicaid. When revenue is available by simply closing these tax loopholes for the very wealthy, the GOP is totally focused on how best to bleed them that have the least in this country.

In his recent fiscal speech at George Washington University President Obama drew a line in the sand on wasteful tax cuts for the rich as he noted: “In the last decade, the average income of the bottom 90% of all working Americans actually declined. The top 1% saw their income rise by an average of more than a quarter of a million dollars each. And that’s who needs to pay less taxes? They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty-three seniors to each pay six thousand dollars more in health costs? That’s not right, and it’s not going to happen as long as I’m President.”

In light of all this it will be interesting to see how the various parties that influence people and tax policy in politics and the media will skim over this critical information; ignoring that while more people are being laid off from their jobs to accommodate the wealthy tax cuts, billionaires and millionaires are the only ones now living that “American Dream” many so fondly allude to.

Posted by lbwoodgate in Budget Crisis, Economy, Jobs, Poverty/Homelessness, seniors/aging, Society and Politics Tags: Bush tax cuts, job losses, Michael Dell, Property tax, Ronald Reagan, state budget cuts, Stephen Forbes, tax loopholes for the wealthy, tax revenue

7 comments

Are Spending Cuts Really THE Saving Grace to Reduce Budget Deficits?

March 16, 2011

“Ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub. But there has always been a political problem with this agenda. Voters may say that they oppose big government, but the programs that actually dominate federal spending — Medicare, Medicaid and Social Security — are very popular. So how can the public be persuaded to accept large spending cuts?

Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government’s fiscal position. Spending cuts could then be sold as a necessity rather than a choice, the only way to eliminate an unsustainable budget deficit.” – Paul Krugman, The Bankruptcy Boys

In these tough economic times, when personal incomes are shrinking for many and future prospects of that changing are dim, people are being led to believe the conservative narrative that suggests tax relief, along with spending cuts, are the only real answer to their dilemma.

Regarding tax cuts however, they do little if anything to significantly reduce low and most middle-income family sources of revenue. Spread out over a year’s annual intake for a family of four with a $50,000 income the tax cuts we have seen from the federal government often amount to less than one hour a day of our labor time. Though this can amount to a nice tidy sum when accumulated over a years time, it is still less than what it would take if we were left to our own devices to pay for the education and health services those taxes help pay for.

For example, it was estimated that a family of four making $50,000 a year would pay an additional $2678 a year if the Bush tax cuts had ended for them at the beginning of this year. That amounts to less than $8 dollars a day. How far would $8 go to help you pay for your kids education if there were no public schools or for security and fire protection if there were no police and fire departments.

Are taxes and anything that resembles a tax increase becoming the scapegoat for our damaged economy? Taxes and the government services they provide are essential to a democracy. When fairly applied and equitably distributed they benefit us much more than they hurt. It behooves us as citizens to make sure abuses and incompetence don’t corrupt the legal application of taxation laid out in the Constitution. Sadly though, we are beyond such well-intended efforts.

Corporate welfare, not public welfare, is where most of our taxes go in the form of bailouts, grants, incentives and subsidies to private enterprises. Huge tax cuts for the wealthiest 2% is also lost revenue that many say would not only eliminate the deficit but easily pay for essential social services that are needed to protect children, the elderly and those who have been racked by economic hard times. For example:

The cost to the taxpayer to pay for Halliburton’s war profiteering during the Iraq war alone cost somewhere around $90 million in the form of overcharges and kickbacks. SOURCE
$4 billion annually in subsidies to profitable oil companies
$32 billion each year since 1989 to pay for the Savings & Loan scandal. Taxpayer will fund this amount for at least 8 more years to fully clear the original $157 billion default. SOURCE
Nearly $10 billion to Defense contractors over 10 years in a Foreign Aid scam to Egypt alone. SOURCE

This is only the tip of the ice berg. In one chart here we see other areas where money goes to benefit wealthy individuals and corporate interests that often violate the capitalist credo that rejects government intervention; money that would benefit those segments of society that are often victims of a consumer driven economy seeking even to price some out of affordable health care and a college education.

The legitimate concern about where our tax money ends up and how it impacts our income plays into the fears of many Americans who have lost their jobs recently or whose income has shriveled down to amounts that barely keep them afloat in today’s economic environment. It’s a contemptible shame that there are those who would exploit this concern to serve their own self-interests. There are a powerful handful of corporate-friendly astroturf groups like Freedom Works and Americans for Prosperity that spend vast sums to conceal the fact that the taxes which serve the public’s best interest for better schools, parks and income assistance during hard times, are really not the threat we need to fear.

When the Tea Party evolved in early 2009 they took the acronym T-E-A to express their rejection of being “Taxed Enough Already”; a sentiment that rapidly associated itself with the government bailouts of large financial institutions that had failed, giving us what we now refer to as the Great Recession. The fact of the matter was, there was no increase in taxes to pay for these bailouts.

The Bush tax cuts were still in effect when Barak Obama took office and as a part of his stimulus package that many railed against, further cuts in taxes gave Americans their lowest tax rates in decades. So what was all this hoopla about being “taxed enough already”? The point of contention it appears was not that taxes were going up but in order to pay for them the deficit was going up and had been going shortly after the Bush tax cuts of 2001 were implemented and we engaged in two wars in the mideast, which currently have a price tag somewhere around $1.2 trillion dollars.

Essentially we are taking current tax revenue that should be going towards paying down the debt, along with driving it up further through foreign loans to pay for the wars. Instead there are those who support giving it back to taxpayers with the belief that they will turn around and spend it to generate economic growth that will in itself create greater revenue in the future thus allowing us to start paying down the debt then. Get it?

However, tax cuts to the 95% who make less than $100,000 annually really never wound up stimulating the economy enough to generate revenue to pay down the debt. The biggest reason for this is that most of this income bracket are in debt themselves and usually take what tax cuts they get to pay down their debt. On the other hand, tax cuts for the top 5% are pretty significant, especially the top 2%, yet are not entirely used to stimulate significant economic growth in the form of job creation. Most of this money wounds up getting socked away in their private investments that generates wealth more for them than it does creating jobs for the rest of us.

But the TEA Party advocates and their corporate-funded cronies have created the illusion that our debt is due solely to what we are spending tax revenue on, with their narrow focus centered on the social programs that encompass health, education and Social Security. This perception serves the need to conceal how tax cuts for the wealthiest are really at the heart of budget deficits.

The tax revenue from these federally funded social programs have been eyed by wealthy interests for decades. The efforts of anti-tax groups spearheaded by the likes of Grover Norquist appear to have structured a plan of action that channels their energy and financial resources towards convincing a naive and poorly educated public that once we eliminate these programs they will see great gains in their personal wealth.

But here’e the deceptive part. The costs to middle-income America for these programs really don’t totally disappear. They are re-established as vouchers or subsidies to help the poorest of the poor purchase the essentials of a basic education and health care. Sure we are given the impression that now we can select the schools and health care servers of our choice but the fact remains that costs of services will be determined by the private sector; costs that will not always be in sync with the allotments doled out by the new federal structure in the form of vouchers and subsidies.

These grants will be means tested too meaning that the more you make the less federal assistance you receive. This makes practical sense unless you are at the middle-income level where you are ineligible for any assistance while the privatized price structure makes it tough for you to buy into those health care and essential educational tools. Thus this group tends to have to dig deeper into their pocket and as a result have great difficulty saving for their kids college tuition or for their own retirement

The marginally small amounts that we all now pay in taxes for these services is spread across a wide spectrum. But once this is taken away from you and people have to vie for what the Tea Partiers-types will reduce in grant money, costs that will no longer be controlled through government measures to adjust for inflation are more apt to reflect corporate profit needs rather than a consumer’s ability to pay.

This is the slippery slope that we are headed towards as the pro-corporate, anti-tax advocates convince themselves and other gullible types that all taxation is bad and that all government services are unnecessary. The belief that you will have greater individual choices with health care and educational needs through the private sector is a canard by those who simply want their higher share of taxes to go away so they can invest it in wealth-generating tools for themselves. Lowering corporate taxes may reduce consumer costs on commodities but when some or all of it goes back into share holder dividends and CEO bonuses, the costs of education and adequate health care can remain outside the means of many to pay, and this is morally unacceptable.

The private sector feeds our consumer wants and needs; drives that are often conditioned by capitalist interest of the so-called “free-market”. We are an over-consuming nation and much of what we purchase is junk that has no intrinsic value. It clutters our homes and eventually our landfills and creates low paying jobs that often go to other labor markets other than our own.

But when it comes to the value of a good education and health care many are at risk of doing without if they have to rely on the private sector. If your revenue source is inadequate you can be priced out of accessing these markets. Instead of finding relief through the shared efforts of every citizen ( a progressive tax structure) in the form of government assistance and programs, we become instead dependent on market analyzers and consumer profilers who influence not only our purchasing habits through ads and other marketing schemes but project through risk analysis criteria whether or not it is profitable to offer some people these human essentials.

In the end, when we are swayed to believe that taxes are innately bad, taxes that ensure we all get a good education and financial assistance to access the “greatest health care system in the world”, we are ensuring a return to that life that many in the Tea Party thinks is the America we have lost. One where there were no government regulations to prevent unsafe, sweatshop working conditions, a minimum wage, diseased food products or a safety net for the elderly and orphaned children.

Once again we would be dependent on the ethical and moral standards of a wealthy class who too often push their own needs for consumption. The labor by which we helped establish their wealth is weighed in terms of how best they can get their hands on most of it leaving enough for the rest of us to just get by.

RESOURCES:

EXTENDING THE BUSH TAX CUTS IS THE WRONG WAY TO STIMULATE THE ECONOMY

Posted by lbwoodgate in Business/Jobs, Economy, Education, Health Care Reform, Jobs Tags: budget deficits, Bush tax cuts, FreedomWorks, Grover Norquist, income disparity, Paul Krugman, Republicans, Social Security, spending cuts, tax burden, Tax cut, United States

6 comments

Money Well Spent

February 26, 2011

Who really has your best interest at heart in the battle to balance state and federal budgets?

In the battle of the state budgets the bottom line on all sides comes down to money. Gee, what a shocker in our consumer oriented culture. For conservatives it’s all about cutting costs in the public sector where the people they represent who have the least power will be denied that assistance that keeps them in the game of life. For Progressives it’s about preventing the private sector from hijacking social programs that enable those who have the least power and would otherwise not benefit on a level playing field without them.

But this divide really isn’t along ideological splits as much as it is along societal and self-interest concerns. Both sides have those who will be negatively impacted by cuts that either see their salary lowered, the workload increased or a combination of both. For many others it will be the worst scene scenario of job losses. But for well-healed conservatives this tact really doesn’t improve the quality of life for those future generations they claim they are fighting this fight for.

In the situation playing out in Wisconsin and soon to be carrying over into other states is the attempt by the conservatives who are backed by private monied interests to bust up unions; one of the largest groups in the country that tend to support social-conscience Democrats. With unions weakened the campaign contributions that many Democrats rely on could dry up. This counter-measure to the wealthy conservative PACs that support Republicans has helped maintain a balance in political battles but once it’s gone the GOP and other conservative groups will have an upper hand in funding their candidates and causes. The Robert’s Supreme Court decision in the Citizens United case guaranteed that. Long-term rule by one Party will be the outcome.

But this is only an aspect of what corporate private interests are really after. By killing unions and the right of public workers to unite for the purpose of protecting their positions, the CEO’s and their lucrative paid board members gain more control over a factor that affects their profits – workers’ wages. If there is any doubt that GOP interests are not aligned with wealthy corporate interests one merely needs to look back at the battle they waged last December where they threatened that the Bush tax cuts would not be sustained for anyone unless the wealthiest 2% were included. Unwilling to battle for the wealthy at a later date when the economy had revived some was not even a consideration by the GOP.

No one bemoans the fact that companies exist to make profits in order to survive and grow. Our economy relies on it. But profits that don’t promote growth for all who have invested themselves in a company’s goal is money that only makes a handful of people wealthier and the larger, working class population poorer. And the bogus notion that tax cuts for the wealthy improve the economy can now be easily dismissed in face of the it’s abysmal failure during the Bush/Cheney years.

When conservative legislators cut wages to balance the state budgets on the backs of educators, public health workers, fire fighters, police and community infrastructure workers like waste disposal and water supply maintenance, they are sending a signal to corporate investors that says we won’t tax you to assist in providing essentials to our citizens. That’s money they can put back in their overstuffed pockets.

By eliminating public jobs to correct mismanaged budgeting practices of the state, corporations are given a larger base of people to pick and choose from who are often forced to take jobs where the pay scale is lower than in times past and with fewer, more costly benefits like health insurance coverage for workers. Once unions around the country have been brought to their knees there no longer exists a force to keep employers honest concerning wages and work safety. All that private sector employees enjoy today in terms of job income, health care benefits, two-day weekends, work safety conditions and minimum wages are the results of unions fighting for them through collective bargaining.

The ultimate goal of many corporations is to fulfill the scheme of people like Grover Norquist who literally wants to eliminate the public sector to allow private interests to cash in on the vast wealth citizens lay out in taxes for services and programs. This of course has a certain appeal to it from the business model that supposedly works efficiently to serve their customer base lest they lose that loyalty to a competitor. But unlike the public sector the private interests of a few people are dedicated to their self-interests and those of big investors and stock holders, not primarily to the people they are supposed to serve.

The belief that if a business isn’t serving their clientage satisfactorily at reasonable prices will force the customer to go elsewhere and serve as a corrective force for providing quality products (the so-called “invisible hand” of the market) is true , but mainly when you are talking about small businesses; businesses who do not have slush funds or a Political Action Committee (PAC) to influence legislators to favor them with no-bid contracts and to look the other way when laws are broken. Large corporate, multi-national businesses have vast amounts of wealth they spend solely for fighting law suits from citizens who have been harmed by their goods or services while spreading that wealth into diverse branches of the business to reduce their risk of losses that might be impacted by such lawsuits. Small businesses do not have this luxury.

Illustration by Victor Juhasz

Thus the citizen actually loses real control, theoretically anyway by allowing private interests, not state agencies overseen by elected officials to provide our children basic education, health care facilities for the elderly and the means to ensure air and water safety for public consumption. Private sectors will look at their bottom line first before they make a needed adjustment that insures a safe and cost-effective outcome for the goods and services they provide. Public funded entities rely on established standards set by concerned citizens as their guide, not profits that could determine a high bonus for one of their executives.

And for anyone who would suggest that we can have the best of both worlds where the private sector performs the service or supplies the goods with some governmental watch dog agencies making sure they don’t cut corners that undermine the general welfare, need I remind you of the slush funds and the corporate PACs already in place that attack such watch dogs today as interferences and obstacles to “free markets mechanisms” – that hallowed claim that invokes the fear of “socialism” by the very people who have already robbed the nation of billions with their toxic mortgage assets, high credit interest rates, predatory lending practices and polluting waste disposal into our drinking water systems.

The imagery that corporate billionaires have established with their phony funded Astroturf organizations of an over-reaching government, like the Koch Funded Americans for Prosperity group, were never intended to protect the public from government excesses. They were established to allow those excesses to continue WITHOUT regulatory oversight so the federal largesse would continue to flow into their personal and corporate accounts and out of the paltry savings, purses and pockets of working families.

The conversation that Governor Walker of Wisconsin thought he was having with corporate billionaire David Koch is not unlike all the other conversations that go on between political figures in local, state and national offices and private corporate lobbyists. Their’s is a partnership to divest the public of funds that were intended to improve the general welfare of their citizens through elected officials. As they succeed in this they slowly eliminate competitive markets of the public sector that block the self-serving, profit-motivated private interest.

The assurance by free-market capitalists that some “invisible hand” will keep well-funded, diverse, multi-national corporations honest in today’s global market is a whitewash of a principle that no-longer has the merit it did when it was formulated 250 years ago. Why do people keep taking the bait about how deregulation is good and the business model serves all of our social needs? If the failure of capitalism and cronyism between government and corporate lobbyists in 2008 didn’t expose this fraudulent notion to voters, then we are doomed as a democracy and headed for a plutocracy

Large, unregulated or so-called self-policed businesses are an invitation for greedy people to do what they have done since man first walked the earth – take from others everything they can for their own well-being.

Posted by lbwoodgate in Social Discourse Tags: Bush tax cuts, corporate friendly Republicans, corporate lobbyists, income gap, invisible hand of free markets, public vs. private interests, social programs, unions, working families

3 comments

Tag Archives: Bush tax cuts

Politics and Ideology, Not Country, Once Again Prevails in Congress

Eliminating our Deficit is Not Doable Without Tax Revenues and Job Creation

Why Grover Norquist’s “Taxes Are Evil” policy is Killing the Middle Class

Both Sides of the Fiscal Equation

The Big Lie the TEA Party Was Founded On

Drawing a Line in the Sand on Tax Cuts for the Wealthy

Search Blog Content

America Honors Leaders, Not Politicians

Bet on solar power

What I have written recently

Blogroll

Archives

Follow “Woodgate's View”