Blame the Stock Market for Economic Inequality

Sometimes when you sit in the cheap seats, up in nosebleed territory, the world below seems far away and small. Although the individual actors may lose definition, the view offers compensations in terms of seeing overall patterns, movements and strategies. Watching the economy from the cheap seats is very different because all the action is above where all the rich folks are, and the cheap seats are below, sometimes far below. When doom befalls those in the pricey seats, the fallout reaches to the cheap seats, and although the impact is less, it makes already difficult lives tougher. But in the pricey seats there can be mayhem – some win – some lose – some topple back to the cheap seats. When those in the expensive seats, the box seats, win, the people in the cheap seats can watch the celebration but they are not invited to the after-party.

What my analogy says is that you don’t have to be an economics major to know about the ebb and flow of money in the world. And you don’t have to be an expert to draw some interesting conclusions. Listen to the news. Pundits quite often point out that people at lower income levels do not own stocks, but most economic decision-making must consider how bills, laws, regulations, taxes, all things economic (even tariffs) will affect the stock market. That means that the economic needs of folks who do not own stocks don’t matter much in decisions that affect the economy. Even so, the whole economy, top-to-bottom is affected by whatever economic measures are taken. The poor can get poorer, or there may be times when a flourishing economy at the top temporarily lightens economic stresses at the base.

Progressives blame Capitalism for the economic inequality that has become increasingly apparent both in American and globally. But if you listen from your cheap seat you eventually understand that a lot of the blame belongs with the stock market. Capitalism can and did exist without stocks or stock markets, but once the stock market turned investment into a game that anyone with money could play, it was as if Capitalism went on steroids.

In order for the partnership to work, industry and business have to keep the investors happy with ever-bigger profits, rising stock values and higher dividends (if they are offered). This means that workers only get higher wages after owners and stock holders get paid. Since businesses get more investments when profits go to stock holders than when they go to workers guess who gets robbed?

When there were strong unions, workers could demand a share of the pie and then stop working (walkout, go on strike) if they were ignored. Conservatives have always opposed unions, but in the past decade they have managed to weaken unions by passing right-to-work laws which have stripped workers of much of the power they once had to act as a balance against the demands of stock holders. The market is doing well, worker incomes are not.

The profits that go to shareholders keep making those who have stocks and those who own businesses richer, and since money equals power, these particular citizens are able to exert a lot of pressure in Washington and can keep getting laws passed that favor those who are already wealthy. Lobbyists, PACS that fund elections, laws like the Supreme Court decision that gave free speech (and votes) to dollars (money equals speech, corporations are people) have expanded the power of wealthy Americans who own stock. And because those who cannot afford stocks know that everyone is hurt if the stock market tumbles they are afraid to oppose even the most outrageous legislation (like the Trump tax cuts) because they don’t know how their opposition will affect the overall economy and their own everyday lives.

The stock market becomes a rocket that delivers more and more money to those who already have it and turns workers into statistics in a global worker market where American salaries already seem too magnanimous.

If it is the stock market that is responsible for a lot of the economic inequality that exists then do we do away with the stock market? Well, good luck with that. And although this conclusion was reached in the cheap seats, when the question was put to the “Google” it was clear that there are already expert articles which show that economists were ahead on this. It can take longer to draw valid conclusions about money when you have always been in the cheap seats.

https://promarket.org/how-market-power-worsens-income-inequality/

“With income, the story is a familiar one of rising inequality. In 1989 and 2016, the poorest fifth had 3 percent of pre-tax family income. But the top fifth of families saw their share of income rise from 57 percent in 1989 to 64 percent in 2016. Put another way, the bottom group’s share remained miniscule, the top group’s share rose by 9 percentage points (or one-sixth), and middle America saw its share diminish.

For corporate equity, we find that the lowest-income fifth of families had 1.1 percent of corporate equity in 1989, and 2.0 percent in 2016 (over the same timespan, the second-bottom quintile share went from 3.5 percent to 1.6 percent, so the total share of corporate equity of the bottom 40 percent fell). By contrast, the highest-income quintile had 77 percent of corporate equity in 1989, and 89 percent of corporate equity in 2016. Hence, corporate equity is considerably more skewed than expenditure or income, and has become considerably more skewed over the past three decades.

Even if the shares had remained unchanged at their 1989 levels, excess market power would have exacerbated inequality, because stock holdings were considerably more skewed than consumption. But because consumption inequality remained little changed, while inequality in stock holdings worsened, the effect of market power on inequality was even more substantial in 2016 than a generation earlier.”

https://www.sciencedirect.com/science/article/pii/S0304387817300858

https://digitalcommons.iwu.edu/uer/vol15/iss1/7/

https://www.nytimes.com/2018/09/07/business/us-stock-market-income-inequality.html

A solution I like better than trying to close the stock market (which would be even harder than passing sensible gun laws) is for everyone to “inherit” some stocks when they turn 18, or 25, or, even better, at birth – and not risky stock, good solid stock, in accounts they cannot cash in until a real need arises (college, training, buying a house, starting a business) that also will serve as an investment. Medical emergencies would be handled in another way. Then everyone would have a reason to follow the market, to wish the economy well, to learn about investing and to experience an opportunity to have an economic goal and to reach that goal. This would also go far to lessen economic inequality, and reparations could be managed by giving those who have been held back by racial discrimination a larger share in the market.

You can start laughing now – but it could work and it would be so much more peaceful than a revolution.

Photo Credits: From Google Image Searches – Wall Street Journal, Giphy.gif

 

 

 

Examining Republican Myths

Republican economic myth 3 big

The Economy

Why are we still hearing the whine of Republicans like gnats buzzing our brains by way of our ears, saying things like they do not dare let Democrats get their hands on the economy and that they might be able to cast an extremely reluctant vote for Hillary if she moderates her agenda for the economy? I seem to recall that the Republicans were in office when this country went into the Great American Recession in 2008. I keep thinking (don’t you) that it was lack of regulation on banks and investment firms that created a housing bubble which was destined to burst and do real damage to millions of Americans. I have, with many other middle class Americans, waited for some of that “trickle down” to get into my bank account but that hasn’t happened. We have examined these Republicans myths many times.

So, my question is, why do Republicans still think that they should be put in charge of the American economy? Why do they think that the same policies that tanked the American economy are what we need to set it right? These are the same Republicans who obstructed the Obama administration so much that he was never really allowed to stimulate the economy as much as he would have liked and who then want to use the slow recovery meme against the Democrats in the 2016 election. I guess they think we have very short memories, or that they are so popular (or that their media brainwashing has been so effective) that the truth does not matter.

Thomas Friedman, who leans right, wrote about this in yesterday’s New York Times. He cites Hillary Clinton’s progressive agenda as being anti-business and he suggests that her policies will discourage, rather than encourage investment and innovation. Although Hillary may not have been addressing business interests lately, she knows that this country’s engine of growth is business, employment and a spirit of invention that keeps us striving to break new ground. He makes it sound as if she will replace industry with infrastructure, private with public, but she is not advocating any such dichotomy. She is saying that improvements in infrastructure will boost employment, but will also push economic growth and make it easier and less expensive to do business in America.

Republican myth 3 big

Foreign Affairs

I also keep hearing a chorus, sort of like the chorus in a Greek tragedy, softly chanting a refrain that tells us the heroic tale of the mighty Republicans who are much better at foreign affairs and winning battles than those dumb Democrats who seem to think that we can rely on diplomacy, alliances, and hit and run soldiering. In this version of the Republican myths they blame the Democrats, especially Hillary, for the chaos in Libya and they tell us that Obama and Hillary are to blame for the upheavals in the entire Middle East as if we have already forgotten who took the lid off the pot in Iraq (43). As if the internet played no part in the events of the turn of this century.

They are caught in a narrative that suggests that complex world events have simple causes. According to Republicans people can’t cause climate change, but one person, acting on his/her own can topple empires and create global political chaos with well-intentioned but clumsy advice. Yes Obama backed off from the “red line” in Syria, but where would we be right now if he didn’t? I suppose in GOP-world we would be shut of Assad, the Syrian people would not be flooding Europe (so that their children can have some quality to their lives), and there would be no ISIS. But this is all hypothetical and we might just be stuck sending our sons and daughters into a situation that is still in flux and cannot be solved with powerful rifles and dead soldiers.

They insist that ISIS would not exist if Obama had never brought the troops home from Iraq and the rest of us insist that ISIS would not exist if Bush had never sent our troops to Iraq. By artificially speeding up an awakening that probably was inevitable but perhaps not quite so imminent chaos was loosed on the world in the sense of the conflicting sects of a religion that we once saw as monolithic but which was not, in the sense of how the Islamic religion, which has been left in a peaceful-seeming equilibrium will eventually either temper its fundamentalism with modern secularism or will wall itself off in an ecstasy of purity and either turn its back on the rest of us or force our foreheads to the floor. I think Bush would have done better by all of us if he had gone directly to Afghanistan and left Iraq alone, although the taunting of Saddam Hussein was hard to ignore. Once the Middle East awakened to the 21st century, some Muslims with disgust, some with interest, the changes we are experiencing there were probably inevitable.

The GOP shows no more prescience or military brilliance when faced with our current dilemmas than the Democrats and, in fact, because they do not like to approach the problems we face with any delicacy, their desire to stomp around using the dusty boots of America’s children, and their bombast would actually be harmful. Many people believe that Hillary Clinton is too hawkish to conduct our foreign affairs in these combustible times, but I like to think that Hillary is unlikely to turn Obama’s foreign policy approach aside and become an avenging Amazon. She has too much compassion for women and children to leave the effects of her decisions on them out of the equation.

The GOP, if you really consider the past seven or eight years and the mistakes of G. W., has nothing to offer us on either the American economy or our foreign policy, but Hillary will still take their stand on these issues into account because she wants to unify, rather than divide, America. The Republicans cannot be trusted to do the same if they are in control.

What If?

We will never get to see what the results of Obama and the
Democratic Party’s liberal agenda would have been if the obstructionists in the
Republican Party did not hold the Democrats back.  One area where this is true is in the health
of America’s economy. We will never see if loosening up on the budget a bit
would have allowed business to come back even better than it has since the
recession, because the Republicans insisted that the budget needed to be cut
and threatened to shut down government unless it was cut. So we see what
semi-austerity allowed, but we can’t go back and take that other pathway and
see what would have resulted from a little spending, not go-wild spending but
careful injections of cash. They might have acted like those cortisone shots
people get for their arthritis, but we will never know. Instead we got The
Sequester, which as far as I can see has had no positive effects on our
economy.
We could have experimented with raising taxes on the
wealthiest people and, since corporations are now people, on corporations, and
although we did get rid of the Bush tax cuts this and was not enough to cause a change in our economy. Would higher taxes
have been a shot in the arm our economy needed or would these taxes have made
the business climate in America worse as the GOP informed us they would. Since
these things are predictions and since the variables we might have examined
never included any appreciable tax increases we will never know if America
might have done even better in the Obama years than it did.
We could have experimented with some basic gun regulations
like registrations of all gun sales with records retained for use by law
enforcement. We could have done this for perhaps five years and we would already
know the results by now. Did shooters still continue to target people who are
either captive in public spaces as in the case of schools or are congregating
socially in public places as malls, movie theaters, and churches? But an
obdurate group of extremists has managed to convince Americans that President
Obama is just waiting to take away all their guns and turn himself into
President-for-Life Obama, crushing our 2nd Amendment rights forever.
We will be the new Cuba. This is nonsense. Are the perpetrators really
frightened (I doubt it) or are they just trying to have their way with the
American people regardless of who the President is. (Much more likely)
What about infrastructure? If Obama had been allowed to begin
a few infrastructure projects (not Keystone) would that have brought up the
employment numbers? Would it have helped move more people into a comfortable
financial condition? We have no idea. We did not get to find out.
So when you hear the Republicans blame Obama for America’s
slow economic recovery, unless you are totally hypnotized by FOX News and have
to get your right wing fix every day, then you must admit that there is some
truth to the things I have just talked about. Perhaps instead of saving America
by refusing to give Obama (and the American people) a decent allowance the
Republicans are actually responsible for some of the atrophy in the America
economy. Why would you trust people who want to get rid of the Federal
government to mess with the Federal Budget? How small do you want your
government to be? These folks still want to end all social programs including
Social Security, Medicare and Medicaid and they have already made a start on
this in their home states.  So why would
we elect a Republican President and hand them the whole kit and caboodle when
we have already been following their policies by default and they have not been
working. Think it through and you might agree with some of this.
By Nancy Brisson

The War of the Worlds

 
 
Everyone is so critical of Obama, but I find the things he
says very reasonable and I just don’t understand the animosity he arouses
(unless it is racist). He gave a speech today about America’s path to a solid
economic future which contained nothing in the least objectionable. He believes
that America will lose the character and philosophical underpinnings that make
America a unique nation if we allow all of the wealth of the nation to become
concentrated in the hands of a few Americans while the economic health of the
middle class continues to decline. He spoke about how we are a nation that
relies on consumerism to thrive and that in order to preserve our place among
the nations of the world and continue to be competitive we must have a
prosperous middle class. He tried to take the long view and think about what we
need to do to keep America at the top of the global economy. He reminds us that
the middle class is not necessarily feeling the recent recovery that is
happening in other areas of the economy. And he believes that if we don’t do
what we need to do to boost the middle class we will end up a backwater nation
in the global culture that is coming.

Obama did not tick off any agenda items for America that
are in any way bizarre or unusual. If the Republicans were not so determined to
hate him they would have to admit that these are the areas that need
improvement to guarantee the health of the middle class and of America. It is
possible that we could find some ways to make our nation’s success less dependent
on consumerism and that this might change the urgency to develop some of these
areas but Obama did not suggest any changes in our national values that would
turn us into a less consumer-oriented culture. He seems to believe that the
consumerism of the middle class is exactly what is needed to keep America
ticking along.

He recommended concentrating on education and training (once
again mentioning the importance of preschool). He recommended spending on
infrastructure. He listed the necessity of continuing to look for alternative
energy sources, and the need for businesses to offer higher wages and benefits,
especially given recent attacks on labor unions. Not once did Obama mention an
urgent need to cut the debt and the deficit or the need to do away with the
social safety net or to make government really, really small. He did mention
that if we worked together we could find ways to cut programs that are not
working and to streamline the social safety net programs so that we would not
have to plan to ignore the poor and the disabled. He feels that we will come to
value the Affordable Care Act because it ends the absolute control the
insurance companies had over health care that allowed them to refuse to cover
people with preexisting conditions, and because it offers insurance for young
people who often can’t afford it, and it covers people who have been too poor
to have insurance.  He reminded us that
we have never been an “it’s all about me” nation, but have always believed that
we have a duty to lift up those who are less fortunate than us. He did not
believe that we would ever want to become that totally “me” focused nation. I
just don’t understand how anyone can object to this agenda.

What I hear news commentators saying is that Obama cannot
deliver any of these things he is talking about but Obama admitted that he is
not running for any other office, and that he is taking a long view. At the end
of those 1276 days he will be 44 and he should be set for life. He will still
be an American though and as an America he will not want to watch America be
satisfied with a place at the edge of the global market place. He is not sure
what will be accomplished over the next 1276 days, but he believes that this
makes a great long term agenda for America and he hopes that future governments
will build on these areas and that the people will help offer creative
approaches that allow us to do this.

How will we fight our way out from under the strident
insistence of the Right that we need to have all private schools funded by vouchers,
we need vouchers for health care, and we need to cut all other social programs,
although they do express some distaste at cutting loose old folks (perhaps
thinking of their grandparents, you know). They do seem to think that old
people are retiring too soon and that they need to work longer, that they are
relying on the government to take care of them in their years and are therefore
not saving and planning ahead. They really want to cut loose the poor and those
who they feel are freeloaders and let them make a greater effort to make
something of themselves. They believe that the churches will pitch in and take
care of the poor and the disabled and the addicted and the aged as they did
(very ineffectively) before we had a social safety net. Many of our churches
are limping along as it is and are probably aghast at the prospect of being
called on to provide the millions of services we are talking about. It is not
realistic.

I do not see the American people gathering together to help
restore health to the middle class or to talk about whether they really think
voting to repeal health care 38 times and overturning Roe v. Wade and not
paying America’s debts and getting rid of labor unions (especially for
teachers) and closing the IRS but still collecting taxes are things that will
improve the health of America. Even if some people want to repeal health care,
end abortions and refuse to pay debts, I assume they are not the highest
priority items on their list, and yet they are priorities for Conservatives.
Perhaps wealthy Americans plan to take their money out of America and no longer
pay any taxes to the nation and they are just preparing us for the inevitable.
Can we afford the social safety net without them? We certainly can’t right now
given the economic loses the middle class has suffered.  Someone needs to draw a word picture of what
America will be like if we follow the agenda of those on the Right. I don’t
think that country will in any way resemble the America we know and love.

After watching Rachel Maddow last night I guess we will get
a preview, a peek of this Conservative nirvana if we keep an eye on North
Carolina, a state with a Republican majority in all branches of its government,
a state which is passing some unusual laws such as, all seventh graders will
have to be taught that if they have an abortion they will not be able to have
any more babies, and all millionaires will receive a $10,000 check. Now just take a moment to
roll your eyes and say “what?”

An Endless Republican Loop

.

 

I feel like we are caught in a time warp or an endless loop.
The Republicans have been giving us the same message over and over for the past
four years and even though the American people voted against their plan they
insist that Obama come to meet them when they should be offering to go to meet
him. Their only message, offered to every commentator every time they are
interviewed is about the need to cut spending, balance the budget, and get rid
of the deficit. They always act as if Obama is a spendthrift who passes out
money to everyone and pays no attention to the nation’s debt or its deficit.
They are changing their message slightly because instead of expressing a desire
to privatize everything, and to cut entitlements, they are focusing, for now,
on Medicare. Health care costs are rising at an alarming rate and I am sure we
all worry about whether Medicare will continue to be available. But it is very
interesting that the party that wants small government is always talking about
cutting our benefits. That is all they seem willing to cut. They never suggest
cuts in any other programs or departments of government. They offer to revise
the 70,000 page tax code, but again they rarely give us any specifics.

There are several economists who admit that avoiding
austerity has actually helped the American economy. And although all of us are
unhappy with huge national debts and deficits, some economists suggest that
they are not that enormous given the recession we just came through. Paul
Krugman, an economist who writes in the New
York Times
calls the Republicans “deficit scolds” with good reason because
that seems to be their sole argument, repeated ad nauseum.

 I also do believe
that Obama fully intends to make some cuts in spending, but I know he would
also like to do some spending because he thinks it would help create jobs. Paul
Ryan who appeared on Meet the Press this
Sunday repeated the same alarmist message that we have heard from him before.
He intimates through his arguments that Obama is ruining the American economy
and that Obama is a stubborn idiot who needs to be saved by the Republican
agenda. He still worries that we have created an “institutionalized” group of
inner city minorities who lack initiative because they have been supported by
the government for too long. I don’t think the financial support they get or
the rigmarole they must go through to get that support really produces a living
income or a satisfying lifestyle. I would think that a focus on educational
models that help people succeed in school would be more useful than some “throw
them in the deep end and see if they swim” strategy.

The Republicans do have some plans for how to become a more
popular political party. They have decided to go after the minority vote by
working with Democrats on immigration. They have decided that the only reason
Obama won was by pandering to minorities so they want to get in on some of that
pandering action. However, just in case Spanish and African Americans see
through this courtship and decide they will not be wooed, Republicans want to
change the way electoral votes are counted. Because big cities tend to skew
Democratic and more rural areas tend to skew Republican.  Presidential candidates often win all the
electoral votes in a state if they win the major cities. The GOP has come up
with a plan to go district by district to count the vote and then to apportion
the electoral votes in the state by the numbers of districts won, instead of
the number of votes won. If a candidate won the popular vote s/he would not
necessarily get all of that state’s electoral votes.  Electoral votes would be split among the
candidates. If we had run the 2012 election Mitt Romney would have won the
Presidency even though Obama won the popular vote, experts say. Why isn’t this
the perfect time to get rid of the elitist Electoral College and decide the
election by the popular vote alone?

Last week John Boehner accused Obama of trying to get rid of
the Republican Party. Why would Obama bother when the Republicans are doing
such a great job of sabotaging themselves? They are committing political seppuku.We are not a single party nation and
I don’t believe we really want to be, but if the Republicans can’t moderate
their agenda I, for one, would be just as happy to see them sidelined until
they stop trying to dictate a path that Americans did not choose and do not
want, for some very obvious reasons.

This is the view from the cheap seats.

This photo is from an article on yahoo.com. Thank you Yahoo.

Should We Go Off the Cliff: The Rationale

Many economists and others believe that we should do only
the things we must to avoid sequestration and that we should raise taxes on the
wealthy and we should deal with some of the tax loopholes and raise the debt
ceiling, but we really need to do more right away in stimulating growth in the
economy through doing what is necessary to make more jobs available, more jobs
that pay a living wage and have a path to advancement, and we need to tackle
infrastructure and education.

From Huffington Post:

So, the big takeaway is that we should never do this
again?
Should we trust Congress when they say they will meet in a committee
to draw up substantial spending cuts? Going forward, it’s going to be hard to
do so. The good news, however, is that if we can avoid the nonsensical level of
fiscal austerity that the sequestration is threatening, Congress can start work
on a more critical, near-term project that I like to call “ameliorating
the negative effects of that gigantic financial collapse that happened four
years ago.” Getting the long-term budget trajectory in line is something
that can be safely put off until after we’ve solved the unemployment and
foreclosure crisis, and we’ll have already gotten a good head-start on that
once the Clinton-era tax rate levels on upper-income earners are restored. This
is what the American people want Congress to do anyway — as usual, they
do not give a tinned turd about the deficit.

Jason Linkins, author

From The Examiner:

“In August 2011,
bipartisan majorities in both the House and Senate voted for the threat
of sequestration as a mechanism to force Congress to act on further deficit
reduction. The specter of harmful across-the-board cuts to defense and
nondefense programs was intended to drive both sides to compromise. The
sequestration itself was never intended to be implemented. The Administration
strongly believes that sequestration is bad policy, and that Congress can and
should take action to avoid it by passing a comprehensive and balanced deficit
reduction package.

As the Administration has made clear, no
amount of planning can mitigate the effect of these cuts. Sequestration is a
blunt and indiscriminate instrument. It is not the responsible way for our
Nation to achieve deficit reduction. The President has already presented two
proposals for balanced and comprehensive deficit reduction. It is time for
Congress to act. Members of Congress should work together to produce a balanced
plan that achieves at least the level of deficit reduction agreed to in the BCA
that the President can sign to avoid sequestration.”

When it comes to
non-defense spending cuts, they will be wide-spread as the law requires.
Medicare will be cut 2% which is the maximum the law allows Medicare to be cut.
Other mandatory qualification-based domestic programs like Medicaid, Food
Stamps, etc will be cut 7.6%.

Domestic discretionary programs such as
scientific grants and Education Department programs will be subject to 8.2%
cuts across the board. Congress and the White House also get their budgets cut.
Pell grants, food safety, the FAA, FEMA, farm programs also get cut 8.2%. These
cuts will hit nearly every agency of government.

Most people when asked
are for spending cuts at least until the cuts affect a program they like or
use. Then, the attitude changes. Cut everything else, leave my program alone.”
When everyone says that, nothing gets cut. That is why we have the debt.

The problem with this
plan, however, is two-fold. First, the cuts are not strategic. They are not
based on the cost-effectiveness of a program. They are across the board.

Secondly, economists
warn that austerity at this point in the recovery would cut GDP, slow the
recovery, or perhaps send us back into recession. An average cut of 8.2% in
federal salaries alone will mean tremendous layoffs. So will cuts by defense
contractors. That will raise the unemployment rate, hurt consumer spending, stifle
small business, and throw ice on the recovery.

Despite the severity
of the problem, nothing will happen until after the election—if then.

Meanwhile, taxpayers are paying the salaries,
expenses, and medical plans for Congress to do-nothing.

From The New York Times for November 26th, 2012
here is what Paul Krugman has to say:

But the
deficit scolds aren’t giving up. Now yet another organization, Fix the Debt, is
campaigning for cuts to Social Security and Medicare, even while making lower
tax rates a “core principle.” That last part makes no sense in terms of the
group’s ostensible mission, but makes perfect sense if you look at the array of
big corporations, from Goldman Sachs to the
UnitedHealth Group
, that are involved in the effort and would benefit from tax cuts.
Hey, sacrifice is for the little people.

So should
we take this latest push seriously? No — and not just because these people,
aside from exhibiting a lot of hypocrisy, have been wrong about everything so
far. The truth is that at a fundamental level the crisis story they’re trying
to sell doesn’t make sense.

You’ve
heard the story many times: Supposedly, any day now investors will lose faith
in America’s ability to come to grips with its budget failures. When they do,
there will be a run on Treasury bonds, interest rates will spike, and the U.S.
economy will plunge back into recession.

This sounds plausible to
many people, because it’s roughly speaking what happened to Greece. But we’re
not Greece, and it’s almost impossible to see how this could actually happen to
a country in our situation.

He has
more to say. You can find his article at this link:

I think many of us are perplexed by the complexity of the issues involved in dealing with all of these things at one time:  decide what to do about taxes, decide what to do about budget cuts, decide what to do about the debt, decide what to do about the deficit, decide what to do about tax loopholes, decide whether or not to simplify the tax code, decide how best to stimulate job growth, decide what to do about “entitlements”, and make sure we keep inflation low while we tackle and solve all these issues. Solve them? That could take several lifetimes. Pick a direction and see how it works while keeping in mind that we may have to try something else? That’s probably more like it. Why are we trying to accomplish all of these things at once. 
Let’s deal with one or two things at a time. Raise the debt ceiling and raise top tax rates. Just do it! Make some careful cuts but leave “entitlements” alone for now. Tackle education and infrastructure to help grow jobs, but make sure to chose projects that really will help. In terms of education spend money to train people for those jobs that are going unfilled. In terms of infrastructure look at how to get the most bang for our buck. What parts of our infrastructure will help jobs or trade or business. If we have solved the problem of the water resources in Nebraska build that Keystone Pipeline the Republicans want so much. Then make some more cuts and begin work on “entitlements” only if necessary.
Doing this all of the things we need to do at one time is huge and it is like trying to straighten out a giant pretzel. Oh, but I forgot, the whole idea is just to obfuscate the process by focusing everywhere but the taking care of budget business. We may have to take to the streets on this one. Get your signs ready!   (My view represents the view from the cheap seats.) 

 

 

 

 

The 53% vs the 47%

When Mitt Romney tells his country club friends that 47% of Americans don’t pay taxes and that they are victims because of their dependence on government is he really talking campaign strategy? Yes and no. Or that new word, nyes, nyes, nyes. It makes a certain nasty sense. Why try to sell yourself as a candidate to people if they will not vote for you? Romney says that those who pay no taxes and collect all the “entitlements” are on the gravy train and they know Republicans intend to derail the gravy train and send all their “taker” asses out on the mean streets of America to make their own way. He actually is saying that all these people have been taking a free ride from the other 53% of tax payers and that the 53% can no longer afford to pay for these “entitlements” and that they will no longer pay for them.

In a sense he is correct, although Republicans insist on counting people on Medicare and Social Security as “takers” even though we were told that these were benefits we paid for, because there is not enough money to make the programs work for much longer. Republicans are selling a much grimmer America. The people Congress once tried to subsidize and protect were the poor, the disabled, the children (especially the children). Seniors were not being cared for, they were taking care of themselves with the help of their government. Now, when money is scarce the GOP says that in order for America to remain a financially viable superpower all the “deadbeats” must be turned loose and the few people who are genuinely needy will be taken care of by not-for-profits or churches. Now we will be inundated with children who don’t have enough and America will enter some Dickensian future.
It is probably true that there are Americans who take advantage of the programs our government offers and who have no intention of going to work unless they actually have to. Do we have any idea how many people are gaming the system? The number is probably higher than the number of examples of voter fraud in this country for which we are being subjected to an elaborate system of voter ID laws. Do we have any idea of how many people have languished so long in the system that they don’t know any other way to live and who will turn into productive citizens only if the system turns them loose? I don’t think we do.
However, I also don’t think any of these things matters. I think the GOP believes that the top earners in this country are done paying for the poor, the disabled, their grandparents and any other people who want to take assistance from the government even though they pay no taxes. The billionaires feel we are hanging onto their coattails and bringing them down. They want to fix the laws in America so that the 53% do not pay for the 47%. And they do not care that seniors thought they were paying their own way because it didn’t work, the program is going broke. Gramma and Grampa better go get a job so they can pay for their health care all over again.
Most of us have some pride and do not want the 53% to take care of us. Some Americans cannot afford to let pride stand in the way of their survival. The reason this is an issue right now is our depressed economy. We need jobs and we need them soon or our government could go broke. When we had jobs that paid better than a living wage we could afford to take care of less fortunate Americans. Without jobs we can’t. But doesn’t the GOP reasoning essentially disenfranchise 47% of Americans because they say they are not paying their way. Apparently we buy the right to be a citizen by paying taxes. America never placed salary requirements on citizenship, at least not since 1776. If you can only be a citizen if you pay into the American government then what will happen to all the people who no longer qualify to be US citizens? What if jobs don’t miraculously appear when you tip everyone off the gravy train?
No matter how true the financial arguments are that are coming out of the Republican camp I cannot embrace their view of an America that is just a profitable corporation. I cannot embrace their view of an America that has no social functions. Instead of settling for an America we won’t recognize let’s have a serious discussion about a combination of cuts and tax increases that will improve the tax balance in America. But it is a sad thing when wealthy people used our government to create laws that favored wealthy Americans and then, when they cornered most of the wealth in the nation, they started to scream like little girls that people were touching their money. It is not just the people at the bottom who will bring America down, the greed at the top plays a big role also.

A Bipartisan Concern – The Tax Code

It sounds like there is one area that both Democrats and Republicans talk about as important and that area is revising the tax code. Everyone seems to agree that the tax code is too complex. What is not clear is if revising the tax code in the ways it really needs to be revised constitutes an increase in taxes. Since Republicans are in thrall to Grover Norquist, they are not allowed to change taxes in any way that Mr Norquist defines as a tax increase. They signed a pledge, which should be unconstitutional, but which apparently is not.
I know very little about the tax code; it is not my area of expertise. But I do know how to read so I asked the internet to tell me what parts of the tax code should be changed. Hardly anyone is very specific in their recommendations. But the internet did lead me to Robert Pozen, a senior lecturer at Harvard Business School and a senior fellow at the Brookings Institution. He wrote an op-ed in The Washington Post on the subject last year on July 19, 2011 entitled A debt plan Republicans can support.
He says, “On the corporate side, Congress could raise $150 billion over 10 years by adopting four measures:
First, Congress should eliminate the $60 billion tax subsidy for producing ethanol.
Second, changing corporate accounting standards from LIFO (last in, first out) to FIFO (first in, first out) would raise $70 billion over 10 years.
Third, Congress could raise $17 billion by taxing ‘carried interest’ earned by investment professionals at ordinary income rates (35%) rather than capital gains rates (15%).
Fourth, Congress should eliminate the allowance for accelerated depreciation of certain capital expenses such as corporate jets. Although this is a rhetorical favorite of Democrats, it would raise only $3 billion over 10 years.
On the individual side, Congress could raise substantial revenue by imposing several limits on the mortgage interest deduction (2nd and additional houses, vacation property, home equity loans, restricting such deductions to mortgages of as much as $500,000 per couple instead of $1million). This could raise $150 billion in revenue over the next decade.
To raise the final $100 billion of revenue, Congress could modify the approach to insurance premiums in the recently passed health care legislation. That legislation imposed a ‘Cadillac’ tax effective 2018 on any insurance company offering health care plans with premiums of more than $27,000 per year. Instead of the ‘Cadillac’ tax Congress could cap the currently unlimited exclusion for employer based health care premiums at $23,000 for families (and $8,500 for singles), effective 2013. For example, a family with health care premiums of $24,000 per year would pay income tax only on the last $1,000.
This cap would have a narrow impact; approximately 80 percent of workers would not be affected. Yet the cap would help constrain health care expenditures by limiting the tax subsidies for the most expensive plans.
I will continue to explore the internet for other suggestion re tax code reforms, but in my preliminary search I didn’t see too many people offering specifics.
Of course when you have one party (the GOP) whose stated goal is to stop the other party (Democrats) from accomplishing anything for as long as our current President is in the White House, then there is no longer any room to discuss tax code revisions or any other economic strategies for that matter. This stance alone should convince every voter that it would not be wise to elect any Republicans in the 2012 election. The reforms to the tax code are something that could be tackled right now to help us avoid that “fiscal cliff” we will hear about almost daily at least until the election and maybe beyond. Will it happen? I doubt it.

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Here is what the Republican in my backyard had to say:

“Ok. I read this and it isn’t horrible but you are missing the point. The point isn’t a lack of funding, a need for increased taxes. The problem is the out of control, and increasing spending. Obama’s spending nearly as much as spent for WWII. Further, recent legislation is going to increase the deficit. If all the tax increases proposed here passed, it still won’t touch the deficit. What is coming, is a huge increase in middle class taxes. There is no free ride and the majority of the wealth regardless of what Democrats think, is in the hands of the middle class.”
(He knows I don’t agree with the way Republicans do the math relative to Obama’s spending, but he insists the Republicans did the math correctly.)

No Ordinary Downturn

Whenever anyone mentions jobs lately they always seem to neglect to mention the Great Jobs Migration as if it is long over and no longer significant. Well it is significant in my community and I bet it is in many others. So many people lost great salaries which they can not duplicate because all of our manufacturing jobs are gone.
My city is littered with empty factories. One employer tore down their factory and replaced it with green space – nice – but do you think we can pass by the space without picturing what used to be there. It looms still in the traffic circle; in that green space we still see the ghost of that factory.
Fortunately my city does not have the neighborhoods full of empty homes that can be found in many cities. Of course we have more empty houses in the central city, but that is true of almost every city in America. Our neighborhoods are not empty only because our banker’s did not jump on the wacky mortgage bandwagon. We didn’t have the housing bubble; so no bubble to burst.
We are replacing our factories with other businesses at a fairly glacial pace and the jobs we are opening cannot usually be filled by the workers who lost their positions because there is a skill mismatch. Training programs have just not offered new skill sets appropriate to new tech jobs and these courses are only free while you are actually on unemployment. Once your unemployment income runs out these programs are prohibitively costly. We have not been able to look to state or local governments or even the federal government for assistance with funds for training or even grants for new businesses because of our current financial and political climate.
I just don’t hear people talking about this unique set of circumstances which are unlike previous periods of low employment. They were true recessions resulting from market factors. As the markets recovered the businesses came back. This time we don’t have businesses that are lying low and waiting to come back. This time we have to create new businesses from scratch. However, those holding the investment dollars have no taste for investment right now because these are not low-risk, proven businesses; they are businesses of innovation, testing new technologies and products which may succeed, but may also fail.
If we think we can just wait for jobs to recover as we have in the past we are fooling ourselves. We are floundering because we are not situated to boom yet. We don’t have a clear vision of what businesses will flourish in the future. This picture could snap into focus at any moment. We have hope and we have expectations and we can fall back on our optimism and our spirit of adventure. Some new opportunities will turn up if we keep pushing and trying.
We just need to stop acting like this is your average everyday downturn. Election reporting is especially guilty of acting like these are ordinary times. They keep marveling at the slow pace of the jobs recovery as if they live in cities without empty factories and empty houses. Perhaps they do since they cluster in places like NYC and Washington which don’t resemble mouths full of places where teeth used to be. Let’s be realistic and talk about jobs we could invent instead to acting like we are just waiting around for jobs to appear through some kind of magical thinking.

Stop Nitpicking – Ignore the Triumverate

Obama spoke yesterday, Friday, June 8, 2012 asking Congress to pass a section of the jobs bill related to infrastructure so we were treated to the usual suspects from the GOP pontificating on CNN. We had the entire triumvirate of John Boehner, Mitch McConnell and Eric Cantor (or Paul Ryan – I have a hard time telling them apart), with a distinctly Southern flair, bemoaning everything Obama has ever done since he entered office and everything he has ever wanted to do. They besmirched the stimulus again, predicted that the Affordable Health Care Act will soon go down in flames (which it may indeed do), and renewed, at the risk of fatal tedium, their vows to make sure taxes don’t get raised.
While it is true that Obama can perhaps be faulted for suggesting that the private business sector is healthy, it is certainly healthier than the public business sector which is suffering from difficulties with state and local budgets. At least private business seems to be percolating at a slow boil. Actually the Republicans like to constantly drive home their desire to see business regulations go away, so this also is part of their endless litany.
Then, bizarrely, after their many attacks on the safety net and the “deadbeats” who use it, they promised to save Social Security, Medicare, and Medicaid, to create beaucoup jobs and to pass the “Perfect” Health Care Plan for all Americans.
They must believe we are all deaf, dumb, blind, memory deficient, and nuts. The GOP by itself does not have any answers for America. They are reactionary and they are haters. Don’t believe them and don’t elect them.
None of the petty nitpicking that is going on so far in this election matters. What matters is that we are choosing the future of America on almost every front.
Business – We need jobs, we need business and it would be reassuring to retrofit America so we could live the 50’s again (a more enlightened 50’s, I hope), but I don’t think we can do that. I don’t think Americans can shrink the economy and their wage requirements enough to make doing business in America profitable even if we trash every union in sight. American workers did not chase business away by being greedy and they probably cannot bring it back by working for peanuts. We will have to build new businesses.
Energy – Business is tied to energy. The Republicans feel that if we find and use every drop of oil and coal and gas under the earth’s surface, if we, in a sense, erase the dinosaurs, we will become the factory haven we once were and America will thrive once again. They earnestly believe that ending our dependence on foreign oil is the key to America’s future. Guess what? Democrats believe this too, but they see that if we work around fossil fuels as much as we possibly can, and innovate and invent, we can  end our dependence on foreign oil, but we can do it in a way that will usher in a future that will include energy sources that are not disappearing and that do not pollute (although every positive arrives with some kind of negative in tow). This is why we need to compromise with some drilling, some innovating, and a common picture of the future. We should not want to retrofit America; we should want to reinvent it.
Regulation – Regulation is not helping the American business climate. Both Republicans and Democrats believe that we may have too many regulations on business. What we don’t agree about is how much regulation and which regulations to cut back on. And instead of doing the detailed work of sorting through our current regulations we are grandstanding. Republicans want to get rid of all regulation on business. They know this is unwise, they know the lessons of history as well as the Democrats do, but they still insist that we follow this extreme path. They are desperate to go back to what they see as the only way America will ever be affluent, go back to the 50’s. Why can’t they believe that America can find a way to an affluent future that differs from the past? Is it because it will take too much time and America might fail in the meantime? This is why we need to work together to lessen the stranglehold of regulations on business, if there is one, without just turning the American business scene into the Wild West.
Benefits – Yes when business was thriving we could afford all the benefits we wanted and people paid their workers with benefits instead of salaries. People depended on their benefits and now, in less affluent times, they have become too expensive and businesses have yanked them away, or cut them back. Now the government, without a healthy business sector to back up its prosperity, is finding its benefit promises onerous. This time the entire nation is depending on these benefits. If you yank them away you send Americans into homelessness, illness and perhaps death. If we don’t yank them away you are afraid the American government will go bankrupt and America will never be prosperous again. We either rise together or sink together. We can’t afford an America that only takes care of business and does not take care of people. People are the government. Cut benefits back until times improve, but they are pretty bare bones already so they can’t be cut by much. Getting rid of all our safety net will not bring back business; it will not bring back widespread prosperity. It is short-sighted and mean-spirited.
Environmental concerns – The GOP is in denial about environmental concerns largely because they also see these concerns as chasing away business (do we see a theme here). No American can afford to be anti-business. Business fuels America more than oil, or gas or any other substance we call fuel. But if we destroy our soil, our air and our water it won’t matter if we have businesses. Life will become a deadly grind with no beauty to relieve it. The only businesses we will need then will be ones that create bio-domes we can live under or space ships we can escape in. If we dial back our environmental rules for businesses will they return to do business in America? I doubt it. Are there possibly too many environmental penalties and rules? We could explore that in great detail if we could actually talk to each other.
Immigration – Immigration issues are more complicated to solve because many Americans feel that these issues are affecting American business, but also the very nature of America. Americans don’t want illegal immigrants to compete for jobs right now because these jobs are needed by legal citizens. But there is also the sense that we are at a tipping point when America will no longer be a Caucasian nation. Perhaps we are afraid of retribution from people who have been oppressed and held back. Perhaps we are afraid that only Caucasians understand the America our forefathers created and will strive to maintain it. People worry about immigrants who use America to prosper but do not see it as home. They worry that “home” is somewhere else to these immigrants and that they, if brought into the fold will undermine America. But the real America was always a haven for people from around the world who wanted an opportunity to do better, or who needed to escape oppression. It is too late to “whiten” America without ruining everything America stands for. We do need to sit down and reach an agreement, even if we eventually have to revise it, over what to do about illegal immigrants who are new to America and what to do about illegal immigrants who have been here for decades.
Reproduction – Oddly enough the GOP has chosen this very moment, with so many other issues on the table, to try to win the anti-abortion argument that it so important to so many in their base. There are 7 billion souls on this earth. By 2050 there will be 9 million. Trying to impose 15th century morality from an unpopulated age on a planet that is bursting at the seams is bizarre and atavistic, although we all, I think, admire the Christianity of it. Will we rot in hell if we use birth control? Will we rot in hell if we abort fertilized eggs? We don’t know, but we still all think we might. Do we want to bring unwanted children into an already overpopulated world? Perhaps there is no hell? Perhaps the earth with 9 billion people will be hell. America was founded so that each person in it could answer these questions for themselves. Besides, when we have so much else to do perhaps this issue can be left on the back burner for the moment.
Evolution – Back, back burner, please.
One Political Party – I have a horrible sinking feeling that if we elect a Republican government right now we will become a country with only one political party and that would be devastating. I do not understand the stubborn refusal of the GOP to let any business be taken care of by our government. They have put American in jeopardy with their insistence on a “my way or the highway” approach. We cannot afford to elect any Republicans at this juncture in America history. There are already enough Republicans who are not up for reelection at this time to insure that we will still have two parties. How will we tempt Republicans back from their extreme positions to help do the work of America? I am not sure. Time and failure at the polls might help.