Hurricane Sandy and the Myth of the Big Government-vs.-Small-Government Debate

Thursday, November 1, 2012 by Rolling Stone

by Matt Taibbi

 

Quite a shock the other day to look out my window in Jersey City, and see the Hudson River rushing over what used to be the street in front of my building. For nearly three days my dog and I played Robinson Crusoe and Friday, sleepily watching from our little apartment-island while we waited for hot water, cell service, the internet, even elevators to come back on line.

When I finally got back on the internet and was able to read the news again, I saw that Hurricane Sandy, in addition to being the rare storm to live up to its televised hype, had turned into the last-minute curveball plot twist that always seems to pop up in presidential races.

Some of those twists we hear about – like the sudden appearance of records from George W. Bush's 1976 drunk driving arrest in Maine – while others, like Dick Nixon's apparent secret negotiations with the Vietnamese in 1968, or the more-likely-mythical October Surprise deal involving Reagan and the Iran hostages in 1980, remain secrets until later on.

But this massive hurricane is apparently turning into a boon for Barack Obama on a number of fronts. One, it's allowed him to be seen all over television taking charge and acting presidential, and has even allowed him to brandish bipartisan credentials through the curiously intense bromance that he has developed this week with our own New Jersey Governor Chris Christie (a Romney supporter who, somewhat mysteriously, has gone out of his way to praise the president this week).

On a deeper level, though, the hurricane has seemingly made a powerful argument on Obama's behalf about the role of government in general. The media is casting this as a stark and simple dichotomy. Mitt Romney, the rhetoric goes, is on record as having favored cuts to disaster relief agencies like FEMA ("We cannot afford to do those things without jeopardizing the future for our kids," he said in a primary debate last year), while his running mate, Paul Ryan, has been even more hostile to FEMA ("When disaster-relief decisions are not made judiciously, limited resources are diverted away from communities that are truly in need," he said just last March).

Obama, meanwhile, has reportedly embraced FEMA in the past, and is certainly doing so now, with his comments this past week seeming to argue in favor even of an increase in FEMA spending, noting the frequency of "these kinds of storms."

The storm is also purportedly casting in a kinder light Obama's general attitude toward government, until now often described as an electoral weakness. Pre-Sandy, pundits usually raked the president over the coals for openly embracing the role of government in society during a time when anti-government sentiment is at an all-time high. In the first debate, for instance, his answer to a question about his view of the role of government was considered a dud:

I also believe that government has the capacity — the federal government has the capacity to help open up opportunity and create ladders of opportunity and to create frameworks where the American people can succeed.

It's this kind of language that's allowed opponents of Obama to cast him as the "redistributionist-in-Chief": a man who openly believes that government can help provide "ladders of opportunity." That language is particularly annoying to pure free-market ideologues, who have often claimed the "ladders of opportunity" phrase for themselves, but only in the context of their being provided by the private sector.

Anyway, enter Hurricane Sandy. Suddenly, it seems that most of the mainstream press – as if speaking through one voice – has finally decided that the storm has settled the big-government-versus-small-government argument, with Obama coming out the clear winner. There were a number of online columns like the one by USA Today's Amanda Marcotte, who wrote that "Sandy Shows Why Romney's Wrong on FEMA," or by Catherine Poe at the Washington Times, who pitched in with "FEMA to the Rescue: Why Obama is Right and Romney Was Wrong."

But more than a few outlets used the storm to make an even bigger case for government in general. Up north, for instance, the Globe and Mail decreed that "Superstorm Bolsters Obama's Big-Government Argument". But the more striking piece was the uncharacteristically brazen editorial in the New York Times, titled "A Big Storm Requires Big Government," in which the Times harshly criticized George Bush's cavalier attitude toward disaster relief in the years leading up to Katrina, and argued generally for the necessity of a broadly strong government.

The Times headline was instantly mocked by both the Heritage Foundation, who called it "a shameless attempt to politicize Hurricane Sandy," and the Wall Street Journal ("A Big Storm Requires Big Bird"), which used the editorial as an opportunity to wittily attack the Grey Lady:

Some people prepare for natural disasters by stocking up on food, water and batteries. At the New York Times, they stockpile tendentious ideological arguments.

The editorialists at the Wall Street Journal have a lot of balls themselves calling out anyone else for mass-producing tendentious ideology, but that's another argument for another day. The point is that the storm has become a flash-point for a new media meme: Obama is for big government (which is suddenly a good thing), Romney is for small government (and wants to take rafts and blankets away from flood victims), and goodness gracious, aren't we lucky that we got to see such a clear, real-world demonstration of the important philosophical differences between these two candidates in the week before the election.

All year, the press has been banging a similar drum, i.e. that Mitt Romney and his budget-slashing sidekick Paul Ryan are for small government, while the closet socialist Barack Obama and his old-school New Dealer VP Joe Biden are the obvious big-government candidates.

The only problem with this new line of rhetoric is that it isn't really true. The almost certain reality is that we'll end up with a big (and perhaps even a rapidly-expanding) government no matter who gets elected. People seem to forget that this time four years ago, George W. Bush was winding down one of the most activist, expensive, intrusive presidencies in history, an eight-year period that saw a massive expansion in the size of the federal government. Almost exactly four years ago, this is what the conservative Washington Times wrote about the outgoing president:

George W. Bush rode into Washington almost eight years ago astride the horse of smaller government. He will leave it this winter having overseen the biggest federal budget expansion since Franklin Delano Roosevelt seven decades ago.

Bush, it is true, consistently expanded the size of the federal bureaucracies almost across the board during his eight years in office, greatly increasing the size of government just in terms of sheer numbers and volume of spending, but that wasn't all he did.

People forget that he also took a major qualitative step forward in expanding the role of government, when in 2008 his Treasury Secretary, Hank Paulson, teamed up with then-Fed official and Paulson's future counterpart in the Obama administration, Tim Geithner, to design a series of financial bailouts and state-aided mergers. The bailout program that began under Bush cost trillions of dollars and left the state hopelessly and irrevocably involved in the insurance, banking and auto industries, among other things.

But within a few years, that was forgotten. Forget about the myth that the Republican Party is sincerely interested in reducing the size of government: the real myth is that the American people are in favor of reducing the size of government. And that myth was alive and well again by the summer of 2010, in the runup to midterm elections. Back then, Slate columnist Anne Applebaum described the national self-deception this way:

Americans on both the left and the right have, for the last decade, consistently voted for high-spending members of Congress and consistently supported ever-higher levels of government intervention and regulation at all levels of public life. As a result, the federal government expanded under George W. Bush's administration at a rate that was, at least until President Barack Obama came along, totally unprecedented in U.S. history.

In the abstract, most Americans want a smaller and less intrusive government. In reality, what Americans really want is a government that spends less money on other people.

Hurricane Sandy is a perfect, microcosmic example of America's attitude toward government. We have millions of people who, most of the year, are ready to bash anyone who accepts government aid as a parasitic welfare queen, but the instant the water level rises a few feet too high in their own neighborhoods, those same folks transform into little Roosevelts, full of plaudits for the benefits of a strong state.

The truth is, nobody, be he rich or poor, wants his government services cut. Drive up and down route 128 outside Boston, you'll see a lot of affluent white people waving Romney signs, complaining about entitlement spending. But about four thousand percent of those same people working along the high-tech ring there are totally dependent on the Pentagon contracts that keep doors open at companies like Raytheon and General Dynamics.

Here in the tri-state area, and especially in the lower Manhattan region I'm staring at out my window right now, you'll get much of the same – lots of whining now about deficit spending and the parasitical 47%, but also conspicuous silence a few years ago, when in one fell swoop, taxpayers had to spend about twice the amount of the annual federal budget just to save bonus seasons on Wall Street for the few thousand of our local assholes who nearly blew up the world economy.

And a lot of those same parasite-bashing, Randian pure-market ideologues were in full pucker mode for all of this past summer, while they waited in frank desperation for the Fed to announce a third Quantitative Easing program – in which the Fed will henceforth inject $85 billion of raw, uncut welfare into the financial services industry's bloodstream every month.

Programs like QE are always defended as being necessary to stimulate the economy in general, and who knows, maybe they are – but it's conspicuous that a crowd of people who normally hate "government spending" are suddenly overflowing with praise for the Fed's wisdom and logical explanations for why this massive pseudo-state intervention is necessary.

The point is, we will end up with a big government no matter who wins next week's election, because neither Mitt Romney nor Barack Obama is supported by a coalition that has any interest in tightening its own belt. The only reason we're having this phony big-versus-small argument is because of yet another longstanding media deception, i.e. that the only people who actually receive government aid are the poor and the elderly and other such traditional "welfare"-seekers. Thus a politician who is in favor of cutting services to that particular crowd, like Mitt Romney, is inevitably described as favoring "small government," no matter what his spending plans are for everybody else.

But everyone lives off the government teat to some degree – even (one might even say especially) the very rich who have been the core supporters of both the Bush presidency and Romney's campaign. Many are industrial leaders who would revolt tomorrow if their giant free R&D program known as the federal military budget were to be scaled back even a few percentage points. Mitt's buddies on Wall Street would cry without their bailouts and dozens of lucrative little-known subsidies (like the preposterous ability of certain banks to act as middlemen in transactions when the government lends money to itself).

And if it's not outright bailouts or guarantees keeping the rich rich, it's selective regulation and carefully-carved-out protections from competition – like the bans on drug re-importation or pharmaceutical price negotiation for Medicare that are keeping the drug companies far richer than they would be, in the pure free-market paradise their CEOs probably espouse at dinner parties.

The evolution of this whole antigovernment movement has been fascinating to watch.

People who grew up in public schools, run straight to the embassy the instant they get a runny nose overseas, stuff burgers down their throats without worrying about E. Coli and sleep happily in planes they know have been inspected by the FAA (I regularly risked my life in Aeroflot liners for a decade and know the difference), can with straight faces make the argument that having to pay any taxes at all is tyranny. 

It's almost as if people feel the need to announce that they don't need any help with anything, ever – not even keeping bridges safe or drinking water clean.

It's this weird national paranoia about being seen as needy, or labeled a parasite who needs government aid, that leads to lunacies like the idea that having a strong disaster-relief agency qualifies as a "big government" concept, when in fact it's just sensible.

If everyone could just admit that government is a fact of life, we could probably do a much better job of fixing it and managing its costs. Instead, we have to play this silly game where millions of us pretend we're above it all, that we don't walk on regularly-cleaned streets or fly in protected skies. It shouldn't take a once-in-a-generation hurricane for Americans to admit they need the government occasionally, but that's apparently where we are.

Profiles in Decadent Cowardliness

September 13, 2012
Two Conventions
by RALPH NADER

The Republican and Democratic Conventions are mercifully over but their corrosive impacts on our democracy persist.

First, did you know that taxpayers helped fund these conventions at a level of $100 million for logistics and police sequestrations of demonstrators in Tampa and Charlotte and an additional $18.2 million each for general convention expenses?

The two party duopoly obviously controls the honey pot in Congress. That corporate welfare is what they enacted in spite of the fact that the party’s convention committees are private corporations that should pay for their own big political party and their many smaller social parties with plentiful food and drink. No third party – Green, Libertarian or others – received any taxpayer money for their conventions this year.

Second, the Republican and Democratic Conventions have jettisoned their original purposes which were to resolve the contest for the presidential nomination and work up a platform. Both functions are now decided beforehand, setting the stage for a choreographed theatrical event of political pomposity and braggadocio. On the periphery are the omnipresent corporate lobbyists and their parties of free food and drink.

Did they ask you the taxpayers to foot so much of this bill? Silly question for an oligarchy greased by a plutocracy.

Taking these conventions at face value, one is shocked by how they are scripted right down to every line of every speech vetted by the politicos. Clint Eastwood’s spontaneity that so angered the GOP operatives was the exception.

The Republicans put three themes in just about every speech. Tell your personal story, recount your humble beginnings, and describe how you pulled yourself up by your own bootstraps. Show the people you’re human or at least humanoid, not corporatist. Keep heralding small business so you don’t have to talk about Big Business which has bad vibrations these days around the country. Also, praise, praise, praise Mitt Romney and Paul Ryan as family men with family values. Imagine Republicans telling the press that the convention was to “humanize” Romney and give the voters a warm, fuzzy feeling about their candidate so as to forget that his campaign is a clenched-teeth mouthpiece for Big Business.

The Democratic Convention evokes pity. They too had similar scripts at the podium – narrate your humble, hardworking family lines, talk incessantly about jobs so you won’t have to talk about wages. Especially muzzled was the willing Richard Trumka, head of the AFL-CIO, who, since 2009, has been given the back of Obama’s hand on “card check organizing rights” and on an inflation-adjusted minimum wage. His staged remarks even withheld any mention of a $10 minimum wage (See H.R. 5901 bill “Catching up with 1968”) and the raiding of worker pensions by corporate raptors.

The repetitive over-wrought praise of “el Presidente” in every speech became mawkish, reminding one of the “politics of personalism,” present in many countries with underdeveloped political institutions. Michelle Obama found no time for mentioning the Obama family and America’s mission to grow and consume nutritious food and keep fit to avoid the ravages of obesity. She was too occupied gushing over her aggressive drone commander’s touching nightly reading of letters from Americans about their problems.

The mass obeisance ended when the commander-in-chief himself sprung onto the stage to speak the language of hope, meanwhile avoiding addressing the number of undesirable conditions that need his attention at this singular opportunity.

Conservative New York Times columnist David Brooks, trying to be sympathetic, was looking for some significant specificity:

“What I was mostly looking for were big proposals, big as health care was four years ago. I had spent the three previous days watching more than 80 convention speeches without hearing a single major policy proposal in any of them. I asked governors, mayors and legislators to name a significant law that they’d like to see Obama pass in a second term. Not one could. At its base, this is a party with a protective agenda, not a change agenda…”

Fortifying Brooks’ observation was Obama’s recounting of the differences between the Democrats and Republicans. They are almost all defensive in nature. Defend social security, Medicare, and abortion from the Republican offensive. The Democrats are not on the offensive – getting tough on: corporate crime, consumer gouging, bank abuses, corporate tax avoidance and evasions. They are not on the offensive fighting for worker’s safety and labor rights or minimum wage increases or helping the poor earn more and pay less.

Even when Obama mentioned climate change – a recent no-no in the Democrat’s lexicon – his words were defensive, namely “climate change is not a hoax” he did not elaborate.

This defensive attitude against the cruelest, most ignorant corporate-indentured, anti-worker, war mongering Republican Party in history is also seen in the debates and programs of Democratic Congressional and state candidates.

Being on the offense with an agenda standing for and with the people who economically are being driven, along with their country, into the ground by unpatriotic global corporations and their political minions, should be easy. Unless, that is, the Democrats want to continue dialing for the same corporate campaign dollars.

Playing defense explains why veteran Democrat members of the House of Representatives tell me that the party is going to lose the House again to the likes of John Boehner and Eric Cantor. The Democrats cannot even defend the country from Republicans who think Ronald Reagan was too moderate and unelectable today.

Corporate Welfare By Job Blackmail

by Robert Oak on Tue, 05/01/2012 - The Economic Populist

You know how States are hurting? How budgets are in the red to the point some towns cannot even hold elections? Adding insult to injury comes the news States are allowing corporations to pocket taxes they take out of your paycheck and pocket the money for themselves. I kid you not.

Nearly $700 million a year in state income taxes withheld from worker paychecks in 16 states is being used to provide lavish subsidies to corporations rather than paying for vital public services. These diversions have gone to more than 2,700 companies, including major firms such as Sears, Goldman Sachs and General Electric. Few if any of the affected workers are aware, because no state requires they be informed on their pay stubs.

David Cay Johnston put together this nifty video overviewing how corporations manage to take state taxes out of your paycheck yet pocket the money.

The problem with these subsidies is the lie they are used to create jobs. Instead, corporations move from state to state, counting the jobs lost from one state as new jobs in another, all to get the tax subsidy. From the Taxes to the Boss report:

Many of the programs analyzed in this study are routinely used in deals that involve interstate job piracy. 

Revealingly, none of the 22 programs examined here has any form of interstate job piracy prohibition. And when counting “new jobs,” none requires a company to distinguish between truly new jobs versus existing jobs that have been merely relocated from another state.

On the Good Jobs First website is a spreadsheet listing the tax subsidy amount and the number of jobs created, or claimed to be created by businesses receiving these state tax subsidies.

General Electric actually had one of the largest job creations, 5,000. Yet their subsidy, from Ohio, was $115.34 million. That is $23,000 per job. In other words, Ohio could simply remove the subsidy and pay 5,000 state residents directly $23,000 and get the same result, particularly in this day and age of permanent employment being an oxymoron phrase and firings happen routinely. This is also assuming the G.E. jobs listed are actually new and not using foreign guest workers or moved from another state. Many of the subsidies list no jobs data at all in the spreadsheet, which one would think would be mandatory to be publicly reported and verified if a business is getting a tax credit to supposedly create jobs.

The spreadsheet list is quite amusing. Arkema Inc., for example, in 2008 received $8 million in subsidies. The number of jobs counted? 10. Thank Kentucky for this lovely use of taxes paid by existing workers as corporate welfare. Not to be outdone, Carbide Industries LLC, also in Kentucky, received $6.5 million in subsidies, to create a whopping 9 jobs. General Aluminum Manufacturing Co. managed to get over $1 million dollars by creating zero, count 'em, jobs.

The title of the tax credit which enabled a free, cool 1 mil to be handed to General Aluminum Manufacturing from Ohio workers is the Job Creation Tax Credit. You might ask yourself, is this a joke? Why, yes it is and the joke's on you, worker bee.

Organizations who clearly are questionable as job creating businesses are on this list. Take Benjamin Zolper, M.D. dba Northeast Pain Management. He received over $45 thousand for creating 9 jobs. Think about a individual MD getting a tax subsidy for 9 jobs and consider his clinic title, pain management. Now think about the pain Ohio goes through to provide basic services to state residents.


David Cay Johnston also went digging further and outlined his additional findings in the below interview.

This isn't by far the only corporate welfare scheme going. Apple just hit the news with an effective 9.8% tax rate, achieved by using the double dutch corporate tax loophole. The moving of assets around the globe in order to pay no taxes is the same trick Google and a host of other corporations use. The only businesses paying a high tax rate in the United States are the ones who cannot afford teams of corporate tax attorneys figuring out how to pay none. That's the little guy folks and squeezing regular people until the stone bleeds dry has become our new national mantra.


Naked Capitalism also covered this latest corporate tax gem. Good jobs first also has an online subsidy tracker so you too can see who the latest corporate welfare recipient is as your roads go unpaved, your water supply is undrinkable and your local police are laid off.

To Stop Corruption, Fight the Power, Not the People

Friday, August 26, 2011 by ColorLines

by Michelle Chen

 

Absolute power corrupts absolutely, and in a world where the gap between the powerful and powerless grows wider each day, corruption in political and economic institutions spreads much faster than shame.

Political power is abused wherever it exists—with scandals ranging from political graft in India to white collar crime on Wall Street to bribery of government regulators in China. Nonetheless, some communities seem especially vulnerable to the cycle of corruption, repression and impunity. And lately, we’ve seen many of them getting fed up with living under regimes that have lost legitimacy in the eyes of the people. Corruption has been one of the major issues driving the unrest across the Middle East and North Africa, and it has catalyzed a Gandhi-esque movement in the streets of New Delhi.

Indian activist Anna Hazare has inspired huge demonstrations in support of his hunger strike to promote a strict, controversial anti-corruption measure known as the Jan Lokpal bill. The government’s recent crackdown on Hazare only steeled protesters’ resolve under the slogan “India is Anna, Anna is India.”

Yet not all have been swept up in Hazare fever. Author and activist Arundhati Roy boldly challenged the public framing of the corruption issue, arguing it has been whitewashed by a bourgeois, nationalistic political class.In a commentary in The Hindu, she describes the obsession with the Lokpal bill, which would institute a “draconian” bureaucracy to monitor officials, as a well-managed charade, designed to absorb popular grievances into a more palatable but no less hierarchical concept of “accountability”:

Is corruption just a matter of legality, of financial irregularity and bribery, or is it the currency of a social transaction in an egregiously unequal society, in which power continues to be concentrated in the hands of a smaller and smaller minority? Imagine, for example, a city of shopping malls, on whose streets hawking has been banned. A hawker pays the local beat cop and the man from the municipality a small bribe to break the law and sell her wares to those who cannot afford the prices in the malls. Is that such a terrible thing? In future will she have to pay the Lokpal representative too? Does the solution to the problems faced by ordinary people lie in addressing the structural inequality, or in creating yet another power structure that people will have to defer to?

Rukshana Nanayakkara, senior programme coordinator for South Asia with the watchdog group Transparency International, told Colorlines that although the Indian and Arab uprisings may voice the outrage of citizens who feel “helpless and hopeless” about their rulers, their protests won’t necessarily articulate a solution:

While it is an important task to highlight corruption issues or to drive a grassroots movement based on this to overcome barriers to bring change, the real impact would lie within systemic changes and sustained ethical environments.

We can agree that corruption is bad, but can’t agree on what corruption really is. And when those who already have power are allowed to define and regulate corrupt practices, they’re empowered to permit the most dangerous form of impunity—the kind that is ingrained in the very edifice of the state.

Corruption Near and FarCorruption may be a universal scourge, but media portrayals and civil society surveys suggest that the problem is especially acute in the Global South, which in turn invites facile “cultural” explanations for greed and graft (pointing to, say, gift-giving traditions or inborn backwardness and tribalism of sub-Saharan Africa).

Yet North and South are both plagued by breakdowns of institutional integrity. The banking collapse and everyday machinations of government reveal that the malaise reaches up to the highest offices in Washington. Indeed, much of the dirty money that floods into the Global South trickles down from above, according to a Transparency International paper:

The North also carries part of the responsibility for the situation in the South due to its role as the bribe-payer. After all, it is largely Northern corporate interests that supply the bribe payments. Until recently, governments of the North not only tolerated these corrupt practices, but they even rewarded them with tax deductibility.

The public’s mental map of official immorality around the world reflects political blindspots: we tend to indict obvious crimes without interrogating structures and historical inequities.
“Corruption in the Global South is much talked about as it is part of day-to-day lives of people, as opposed to grand level corruption, which is normally opaque and harder to uncover,” Nanayakkara noted. At the same time, Transparency International says public perceptions of corruption are rising in affluent countries, in part due to the financial crisis.

But official transgressions do cut especially deep in impoverished communities, where rules are slackened to attract private investment or “development aid.” In the Haiti earthquake, for example, Transparency International observed that the extreme death toll could be traced in part to “alleged corruption in the construction of public buildings, including schools and hospitals.” And in the aftermath, suspicions of profiteering continue to swirl around the reconstruction process, now being directed by a shaky national government and the corporate-friendly coffers of the Haiti Interim Recovery Commission.

Environmental disasters can aggravate government malfeasance. Activists warn that policy responses to climate change may create unprecedented opportunities for exploitation and profiteering, particularly in much-hyped development projects for green energy and forest preservation.

The idea of corruption as culturally endemic offers convenient justification for outside intervention in poor countries. In an analysis of public myths about corruption, development scholars Ed Brown, Jon Cloke and Mohammad Sohail argued, “rather than seeing corruption as a complex socio-political phenomenon linked to global processes and specific national cultural and political economies, the issue is often reduced to a kind of political backwardness which needs ‘treatment.’ ”

The potential side effects of this medicine have manifested in neoliberal financial interventions like the IMF restructuring plans that pauperized Haiti and stoked chaos in Greece. The authors point out that so-called “anti-corruption programmes” imposed by free-market experts sometimes aggravate economic damage and ironically end up reaffirming stereotypes of poor countries as innately incompetent.

Symptoms and CausesSometimes the popular fixation on officials’ ethical transgressions distracts from the political malaise of which they are a symptom. And political elites are wise to this. In the U.S., the right evokes the canard of “waste, fraud and abuse” to militate against any form of income redistribution by blaming the economic hardship that “deserving” citizens face on imaginary “welfare queens,” patients who use too much Medicaid, civil servants collecting extra disability pay, and other social parasites.

Is corruption just the cost of doing business in a society that traffics in injustice? A recent public opinion study suggests people’s lack of trust in government institutions isn’t just tied to perceptions of official malfeasance, but the degree of social inequality they experience, along with the perceived failure of policymakers to address it.

The rebellions unfolding in North Africa, the Middle East and India reflect righteous resentment at rulers who have made careers out of betraying public trust. Of course, ultimately, Indian officials may fail again to police themselves, and the Arab Spring uprisings may be hijacked by new political orders that just rebrand old patterns of tyranny and kleptocracy. Whatever emerges from the unrest, fundamental inequalities will still reign, as long as entrenched hierarchies remain intact and governance hinges on tiers of privilege.

Our disgust with rotten politicians and Wall Street kingpins is in part anger at their impunity, but maybe there’s a streak of latent jealousy, a dog-eat-doggedness that pervades any competitive capitalist society. Still, even if humans are hard wired to exploit, we’re also hard wired to keep trying to harness power, however naïvely we deploy legislation and revolutionary rhetoric. In the debate over fixing crooked leaders, the definition of corruption often leaves out the root: not the people who misuse authority, but an excess of power itself.

The Budget Mess: A Crisis in Legitimacy

by Sheldon Richman, April 26, 2011 - The Future of Freedom Foundation

Reality has finally caught up with the ruling elite, and its members inside and outside government are in a panic. They have freely spent the taxpayers’ money for generations building a corporatist warfare-welfare state, and when that wasn’t enough to finance their projects, they borrowed just as freely. For a long while it paid off handsomely in power and wealth, but now even they realize things can’t go on as they have for so long.

This fiscal year the government will spend $3.8 trillion, more than 40 percent of which will be borrowed. In the last full year before the current administration came to power, outlays were just under $3 trillion. Earlier this year, the Office of Management and Budget estimated that under President Obama’s budget, spending in 2016 will rise to $4.5 trillion. The FY 2008 deficit stood at less than half a trillion dollars — an astounding amount in its day. It hit a record $1.88 trillion in 2009. According to administration estimates, the deficit won’t fall below a trillion dollars until 2013, then will begin rising again 2016.

Deficit projections of course depend on assumptions about economic growth. When the public is clamoring for action on the deficit, officials have an incentive be unrealistically optimistic.

Also, budget discussions overflow with opportunities for deceit. As we saw with the recent compromise over the 2011 continuing resolution, in Orwellian Washington a spending cut is really an increase.

Deficit spending has had a deep structural effect on America’s political economy. In mid April the national debt was $14.3 trillion, about 98 percent of GDP. Last year the administration’s Mid-Session Budget Review projected the debt would hit 100 percent of GDP by 2012, and would double by 2020, exceeding 100 percent of GDP for the rest of the decade.

To see the yearly budget impact of that, in 2010 the U.S. government paid more than $400 billion in interest, a little less than the Medicare budget — the fourth largest budget item. This year the government is on track to exceed that amount. It is estimated that in 2019 the government will pay $700 billion in interest.

Obama’s profligate spending should not lead us to think he succeeded a budget hawk in office. On the contrary, the eight years of George W. Bush saw outlays go from $1.9 trillion to nearly $3 trillion and the debt go from $5.7 trillion to $10.7 trillion.

Virtually everyone agrees that the current situation is unsustainable. It’s easy to see why the ruling elite think so. They are concerned that if some control is not achieved over spending, by 2025 all revenues collected by the national government will be swallowed up by Medicare, Medicaid, Social Security, and interest on the debt. But then how will the politicians do all the other things they do: subsidizing pet projects (many of which are carried on by well-connected businesses); policing the globe for political and economic reasons (fighting overt and covert wars and channeling billions to the military-industrial complex); and generally centralizing power in Washington, D.C.?


The regime faces a double crisis. The first is fiscal: Unless it does something, it won’t have the money to maintain the gravy train. The other is a crisis in legitimacy. People are catching on that the borrowing power hides the cost of government, imposing burdens on future generations. If politicians don’t appear to fix things their careers are in jeopardy.

Hence, Budget Chairman Paul Ryan’s House-backed meager “Path to Prosperity” and Obama’s expression of support for modest budget cuts (plus tax increases on the wealthy). But both approaches, whatever their differences in detail and style, have one overriding feature in common: Both aim to preserve the corporatist warfare-welfare state. Neither represents a serious rethinking of the role of government. In the end, there will be little change, no matter who prevails.

Let’s Admit the Truth About American Royals

Thursday, April 28, 2011 by GRITtv

by Laura Flanders

 

According to polls, only about 6 percent of Americans are following with any close attention the royal wedding of Prince William and Kate Middleton.  But that's not stopping the media fascination on both sides of the Atlantic with American's supposed fascination with Britain's royals.

“Royal wedding reminds us why we tossed Brits,” ran one letter to a local paper recently. That exorbitant $80 million spent on a medieval style ritual in time of 21st century austerity. It's shameful. It's old world. It's just what Americans fought a revolutionary war to throw off.

And then there are the folks like Rupert Cornwall at the UK Independent who argue hat people in the US love British royals precisely because they don't have their own real thing.  Gary Younge at the Nation noted that even his liberal friends wanted to know what he, a British citizen, thought of the prince marrying a "commoner." Oh please.

The only serious and in fact actually quite insidious part about this is that it re-inscribes the notion that the US has no  class.

Really? When the top one percent of wealthiest Americans own 34 percent of the country's wealth and enjoyed 80 percent of the total increase in wealth here between 1980 and 2005? No class?

As for ruling class? In the UK the commoners keep their royals on welfare. Here we do the same with our corporations. Billions in tax dollars keep them afloat and keep CEOs in mansions. Why not just give them palaces? At least we could keep them open for tours.
Since the Supreme Court has given corporations free speech rights and personhood -- how about marriage equality next?

Then, we could string up Bunting flags for the next monopolistic coupling... At the Comcast and NBC nuptials we'd all throw money while they stroll down the aisle. And -- with a nod to Jim Hightower -- instead of aristocrats with coats of arms, the paid off politicians would express their heritage -- in corporate logos on their lapels. At least then we'd know who owns whom.

The trinkets from a corporate marriage might be dreary. And the offspring, who can say? But at least we'd get a day off and one hell of a party. Plus we'd move out of denial.  The more I think about it the more I like it. Monarchies or Megacorps? Why not declare them royal?

Oil Prices: Gouge Us Baby One More Time

Wednesday, April 27, 2011 by GRITtv
by Laura Flanders

Gas prices have been edging up since February, reaching $4 a gallon this Easter, and Republicans are gearing up to make a stink about it. To blame Democrats, that is, for setting things up this way.

Blaming green energy initiatives for driving up prices, House Republicans are planning to hold hearings on a slurry of bills aimed at expanding domestic oil production in response to high gasoline prices. Even the President admits gas prices effect his standing in the polls.

But it should be easy enough to fight back. While the five biggest oil companies report historically high profit earnings, the same GOP that would slash juice programs for poor kids in school stands firm for federal subsidies for big oil.

It's enough to make your head spin. But then again, so is this country's entire relationship with big oil.

Like a marriage from hell. Americans keep getting beaten up environmentally, politically and at the pump. And even as we're beaten up, we shell out: in subsidies, tax breaks, and troops sent around the world to die and kill in defense of the interests of Big Oil.

While Americans keep paying, Big Oil keeps on profiting. The top five companies together made a greasy trillion dollars profit over the last decade. That's Trillion with a T. Yet Republican budgets would lay off the regulators even as they lay on the corporate welfare.

House Republicans marked the anniversary of the BP oil spill by voting unanimously FOR extending oil subsidies again this year.

It'll come as no surprise that for its first round of political contributions for the 2012 cycle, BP handed out a total $29,000 and it went almost entirely to House Republican leaders.

The President’s response so far has been to initiate a task force to investigate illegal commodities trading. But as Public Citizen reports, it's not the illegal but the legal speculation that's most to blame.

And progressive Democrats offer the President a far stronger way to go. Tax dirty energy companies, end corporate welfare, and impose a tax on commodities trading. Instead of getting on the defensive and easing up on drilling the White House should ask Senator Bernie Sanders about his end-to-subsidies bill.

The President needs to take a moral stand against Big Oil for all our sakes, before Drill Baby Drill becomes Gouge Us Baby One More Time.

Saving the Warfare-Welfare State

The difference is over means not ends.
Sheldon Richman
April 15, 2011

Why does everyone think Washington is plagued by excessive partisanship? The contest over how to address the fiscal debacle says otherwise: Both divisions of the uniparty (Democrat and Republican) agree that the warfare-welfare state must be saved. It’s the means not the end that divides them.

Rep. Paul Ryan, who leads the Republican side, declares that his goal in seeking a balanced budget (someday) is to save the three pillars of the welfare state—Social Security, Medicare, and Medicaid—for “our children’s generation.” “I support these missions,” he says. He would “voucherize” Medicare and give states discretionary Medicaid block grants because, he says, the alternative is insolvency. He would maintain Social Security, while permitting people under 55 to put one-third of their Social Security taxes into government-guaranteed accounts. (They would still have to pay current retirees’ Social Security benefits.) His substitute for Obamacare would give a cash subsidy—he uses the Washington gobbledygook “refundable tax credit”—to “[ensure] universal access to affordable health insurance.”

So, although couched in the rhetoric of liberty and self-reliance, Ryan’s plan aims at saving the welfare state from itself, while giving insurance and investment companies more of a role, not to mention a cut of the taxpayers’ money.

Growth Path

Likewise, Ryan’s plan would leave military spending—misleadingly called “defense” spending—on its growth path, even though it has doubled in the last decade. With the government spending hundreds of billions of dollars in three overt and several covert wars, Ryan shows no inclination to question the global military policy that milks the taxpayers, wreaks destruction abroad, and creates a desire for revenge.

As former Reagan administration Pentagon official Lawrence Korb noted, “Apparently Ryan was taken in by Secretary of Defense Robert Gates’s claims that he has already proposed $178 billion in savings in defense spending. These were not real cuts. Gates plowed $100 billion of his ‘savings’ back into the budget for other programs while the remaining $78 billion merely reduced projected growth in the defense budget.”

Ryan’s package has other ingredients, such as cutting the top rate for the individual and corporate income tax to 25 percent, while broadening the tax base. He would also reportedly trim some corporate and agricultural welfare, but he leaves the principle in place.

Ryan thus reveals himself as not as one who has rethought the U.S. government’s current domestic and global missions and understands the need for a radical revision, but rather as one who seeks to fortify those missions by preventing insolvency and forced liquidation. The ruling establishment would have little reason to be concerned if Ryan prevailed.

Obama Response

In response, President Obama has now offered an outline — not much detail yet — of an alternative plan to cut the deficit, however, again the differences with Ryan are over means not ends. He too seeks to preserve the warfare-welfare state but would do so with fewer spending cuts than Ryan, higher taxes on the wealthy, an end to the business tax preferences he dislikes (while keeping those he approves of), and no operational changes to Social Security, Medicare, and Medicaid.

On defense, Obama calls for the elimination of Pentagon waste (edgy!), however, every president does that and it never amounts to much. (The Department of Defense is routinely unable to account for billions of dollars.) Obama says the government will “have to conduct a fundamental review of America’s missions,” but how serious can he be? He’s just led NATO forces into Libya on an undefined, open-ended military adventure, while overt and covert wars continue to rage throughout the Middle East and Central Asia. He shows no willingness to rethink the unipartisan global-policeman policy that accounts for so much of the fiscal burden (over a trillion a year) and creates the need for bloated and costly “homeland security” that undermines our liberty. As Korb says, “The Obama administration already plans to spend 20 percent more on defense than was spent on defense during the Bush administration.”

Satisfying the Base

Thus we see Obama’s basic agreement with Ryan’s wing of the uniparty, though the latter would rely on the tax-funded “private” sector more than the former would. Of course each side highlights the differences to make them appear to be matters of kind rather than degree or method. This way each can keep its base rhetorically satisfied (or try). Obama’s team talks about the need for the rich to sacrifice to the middle class and poor, while Ryan’s team counters that the private sector is where the action should be. Democrats accuse Republicans of wanting to end Social Security, Medicare, and Medicaid (they don’t), while Republicans accuse Democrats of being Marxian socialists (they’re not).

But here’s the thing: Both seek to retain the fundamental status quo in which the State parcels out favors to reigning interests while providing succor to the vulnerable in a combined spirit of charity and fear. Fear of what? In the case of the elderly, fear of their political clout at the ballot box; in the case of those shut out the economic system because of lousy government schools, occupational licensing, and cartelization via the subsidy and regulatory regime, fear of a frustration that could turn into unrest.

Globally the Obama side emphasizes the supposed humanitarian rationale for military intervention while his internecine rivals emphasize the security rationale. But they agree on the premise — that it is the proper job of the U.S. government to police the world, at least where there is oil and other things coveted by the ruling elite.

Thus The Charade continues.

Tax the Rich: Fair Taxation Requires More Brackets at the Top (2 articles)

Monday, April 4, 2011 by Robert Reich's Blog
Why We Must Raise Taxes on the Rich
by Robert Reich

It’s tax time. It’s also a time when right-wing Republicans are setting the agenda for massive spending cuts that will hurt most Americans.

Here’s the truth: The only way America can reduce the long-term budget deficit, maintain vital services, protect Social Security and Medicare, invest more in education and infrastructure, and not raise taxes on the working middle class is by raising taxes on the super rich.

Even if we got rid of corporate welfare subsidies for big oil, big agriculture, and big Pharma – even if we cut back on our bloated defense budget – it wouldn’t be nearly enough.

Tax the Rich!

The vast majority of Americans can’t afford to pay more. Despite an economy that’s twice as large as it was thirty years ago, the bottom 90 percent are still stuck in the mud. If they’re employed they’re earning on average only about $280 more a year than thirty years ago, adjusted for inflation. That’s less than a 1 percent gain over more than a third of a century. (Families are doing somewhat better but that’s only because so many families now have to rely on two incomes.)

Yet even as their share of the nation’s total income has withered, the tax burden on the middle has grown. Today’s working and middle-class taxpayers are shelling out a bigger chunk of income in payroll taxes, sales taxes, and property taxes than thirty years ago.

It’s just the opposite for super rich.

The top 1 percent’s share of national income has doubled over the past three decades (from 10 percent in 1981 to well over 20 percent now). The richest one-tenth of 1 percent’s share has tripled. And they’re doing better than ever. According to a new analysis by the Wall Street Journal, total compensation and benefits at publicly-traded Wall Street banks and securities firms hit a record in 2010 — $135 billion. That’s up 5.7 percent from 2009.

Yet, remarkably, taxes on the top have plummeted. From the 1940s until 1980, the top tax income tax rate on the highest earners in America was at least 70 percent. In the 1950s, it was 91 percent. Now it’s 35 percent. Even if you include deductions and credits, the rich are now paying a far lower share of their incomes in taxes than at any time since World War II.

The estate tax (which only hits the top 2 percent) has also been slashed. In 2000 it was 55 percent and kicked in after $1 million. Today it’s 35 percent and kicks in at $5 million. Capital gains – comprising most of the income of the super-rich – were taxed at 35 percent in the late 1980s. They’re now taxed at 15 percent.

If the rich were taxed at the same rates they were half a century ago, they’d be paying in over $350 billion more this year alone, which translates into trillions over the next decade. That’s enough to accomplish everything the nation needs while also reducing future deficits.

If we also cut what we don’t need (corporate welfare and bloated defense), taxes could be reduced for everyone earning under $80,000, too. And with a single payer health-care system – Medicare for all – instead of a gaggle of for-profit providers, the nation could save billions more.

Yes, the rich will find ways to avoid paying more taxes courtesy of clever accountants and tax attorneys. But this has always been the case regardless of where the tax rate is set. That’s why the government should aim high. (During the 1950s, when the top rate was 91 percent, the rich exploited loopholes and deductions that as a practical matter reduced the effective top rate 50 to 60 percent – still substantial by today’s standards.)

And yes, some of the super rich will move their money to the Cayman Islands and other tax shelters. But paying taxes is a central obligation of citizenship, and those who take their money abroad in an effort to avoid paying American taxes should lose their American citizenship.

But don’t the super-rich have enough political power to kill any attempt to get them to pay their fair share? Only if we let them. Here’s the issue around which Progressives, populists on the right and left, unionized workers, and all other working people who are just plain fed up ought to be able to unite.

Besides, the reason we have a Democrat in the White House – indeed, the reason we have a Democratic Party at all – is to try to rebalance the economy exactly this way.

All the President has to do is connect the dots – the explosion of income and wealth among America’s super-rich, the dramatic drop in their tax rates, the consequential devastating budget squeezes in Washington and in state capitals, and the slashing of vital public services for the middle class and the poor.

This shouldn’t be difficult. Most Americans are on the receiving end. By now they know trickle-down economics is a lie. And they sense the dice are loaded in favor of the multi-millionaires and billionaires, and their corporations, now paying a relative pittance in taxes.

Besides, the President has the bully pulpit. But will he use it?

+++++++++++++++++++

Tuesday, April 5, 2011 by OtherWords
Some of the most affluent Americans actually pay lower effective tax rates than many middle class Americans.
by Mazher Ali

So many governors are hammering their budgets with a “we’re broke” message these days that it’s amazing our country hasn’t shattered into a thousand separate islands. More and more, however, rational voices are correctly asserting that we’re not broke.

The problem isn’t that the United States is out of money. It’s that a tiny sliver of households are under-taxed. The richest 10 percent of Americans own almost three-fourths of the country’s total wealth. Astoundingly, the most affluent 1 percent of Americans own more than one-third of our total wealth.

Thankfully, the message that our country isn't broke is making its way closer to the center of the tax and deficit debates. It can’t get there soon enough.

Many Republican lawmakers, along with governors like Wisconsin's Scott Walker and Ohio's John Kasich, bizarrely think that they can erase deficits with tens of billions of dollars in budget cuts and tax breaks for corporations and wealthy people who don’t need them. They’re ignoring the greatest economic returns available, which are provided by public investments, federal aid to states, and even unemployment benefits. Instead of helping save the middle class, they're propelling us toward a busted, plutocratic disaster.

The GOP's deficit obsession isn't just misguided. It turns a blind eye on the struggles of low- and middle-income Americans. In contrast, Rep. Jan Schakowsky’s sensible Fairness in Taxation Act would raise taxes on millionaires and billionaires, which better serves the American majority.

Currently, families earning $374,000 pay the exact same federal income tax rates as families with multi-million-dollar incomes, or even the handful who earn a billion bucks every year, such as the heirs of Walmart's founder. The lifestyles of the ultra-wealthy wouldn’t change in the least if they had to pay moderately higher income taxes. And it would boost our national economy.

The Fairness in Taxation Act calls for establishing five new tax brackets for incomes between $1 million and $1 billion, with rates ranging from 45 percent to 49 percent.

The Illinois Democrat's bill would also address an absurd aspect of our tax system, which wrongly favors wealth over work. Today, money earned through working nine-to-five or the graveyard shift is taxed at a higher rate than money obtained through windfalls. Capital gains, dividends, and other investment income derived from pre-existing wealth shouldn't be taxed at rates lower than income earned through work.

Three-quarters of all stocks and mutual funds owned by U.S. taxpayers belong to the richest 10 percent of American households. Therefore, some of the most affluent Americans actually pay lower effective tax rates than many middle-class Americans.

Take, for example, a weasel like Lloyd Blankfein, CEO of Goldman Sachs. He raked in just over $13 million in 2010 (excluding his bonus of some $12 million worth of shares in his company). Of that $13 million, only his base salary of $600,000 will be taxed according to the federal income tax rates. The remaining $12.4 million will be taxed at a top rate of 15 percent. Unfortunately, Blankfein is just one example of the kind of gross inequity that exists in the current tax system.

A century ago, tax policies adopted during President Teddy Roosevelt's administration were guided by sound principles that stand in direct contrast to those of today’s Republicans.

“No man should receive a dollar unless that dollar has been fairly earned,” explained Roosevelt in a 1910 speech. “Every dollar received should represent a dollar's worth of service rendered--not gambling in stocks…I believe in a graduated income tax on big fortunes."

The Fairness in Taxation Act takes aim at the same inequities Teddy Roosevelt--a Republican--identified long ago. If it were enacted this year, it would generate $78 billion that could fund jobs and social programs that Americans need now more than ever.

Repeat after me: we're not broke. It’s time to mandate that the wealthiest members of our communities share in the sacrifice of the economic recovery and pay their fair share. The Fairness in Taxation Act offers a clear path in that direction.

USDA Funds Secret $12 Million Bailout of Domino’s Pizza

(So the govt bailed out a fast food chain? That's it! I want my own bailout! Get the MN off my back and gimme my bailout!--jef)

 USDA Bails out Domino's Pizza
Kerry Trueman
Huffington Post
January 14, 2011

Chalk up another victory for Stephen Colbert’s gut. Back in January, the touter of all things truthy declared Domino’s Pizza his “Alpha Dog of The Week” for a “game-changing ad campaign” to promote its new pizza recipe. Consumers had complained that the old formula tasted like ketchup-covered cardboard, a factor that presumably contributed to the company’s sagging sales.

So, Domino’s did two things: it reformulated its pizzas to contain nearly twice as much cheese; and launched an ad campaign which took the bold step of acknowledging just how awful its old pizzas were, while gushing about the “cheese, cheese, CHEESE!!!” that distinguishes the new recipe from the old one.

With the logos of Goldman Sachs, Citibank, Fannie Mae, Bank of America, and AIG on display behind him, Colbert applauded Domino’s “for joining the great American corporate tradition of screwing your customers and then having the balls to ask them to come back for more.”

Turns out that Domino’s had something else in common with these ethically challenged entities, aside from the dubious products they dumped on unwitting dupes.

As Sunday’s New York Times revealed, Domino’s effort to rebrand itself and thereby revive its flagging fortunes was partly financed by a government handout, or, if you prefer, corporate welfare. According to the Times’ Michael Moss, Domino’s $12 million marketing campaign was created and financed by a USDA-funded organization called Dairy Management.

The free market had spoken, and its collective voice said “Yuck!” But instead of standing by and letting Domino’s slide deeper into an apparently well-deserved decline, the government chose to intervene with an infusion of cash and a profusion of cheese.

And Dairy Management’s efforts to get more milk fat on the menus at Domino’s, Wendy’s, Burger King, and Pizza Hut have been a huge success, boosting cheese sales by “nearly 30 million pounds,” as Moss reports.

This is a great thing, if you are a dairy farmer saddled with surplus whole milk. For the rest of us, though, it raises some disturbing questions:

(1) Do we really need to eat more cheese, given that cheese consumption in the U.S. has already nearly tripled since 1970? Cheese is now the single greatest source of saturated fat in our diet. Is there no other use for all this excess milk fat? Given its artery-clogging capabilities, could it be used to fill the fractures in our ancient, decaying water mains, or the cracks in our highways?

Seriously. There’s a guy in Vermont named Andrew Meyer who’s figured out how to make an awesome, super durable, non-toxic floor and furniture varnish from another by-product of the cheese industry, whey. Why not use the USDA’s resources to encourage this kind of innovation, instead of ladling more cheese onto every one-handed fast food item so that we can shovel even more saturated fat down our gullets like geese at a foie gras farm?

(2) Doesn’t this totally conflict with the USDA’s anti-obesity campaign? A spokesperson for the USDA gave Moss the department’s boilerplate spiel: “When eaten in moderation and with attention to portion size, cheese can fit into a low-fat, healthy diet.”

Yes, but how do the gooey, greasy, lactose-laden monstrosities that Dairy Management has helped to create fit into that mythical moderate diet? As Marion Nestle notes in my Q & A with her on this topic, “Who eats one-quarter of a pizza?”

And, about those portion sizes? Jonathan Bloom points out in his timely, terrific new book,American Wasteland (citing research from Nestle herself and her colleague Lisa Young) that portion sizes climbed steadily in the 1970′s, increased sharply in the ’80s and continued to rise in the ’90s:

In recent years, seemingly everything in the food industry, from portions to plates, has swelled, except for our common sense.

Bloom writes that “we grow about twice as much food as we need,” thanks to agricultural policies that encourage overproduction. And all that waste has to go someplace, whether it’s to the landfill, the compost heap (all too rarely), or our stomachs.

In his salute to Domino’s, Colbert didn’t fault the company for its unapologetic admission that it had been serving its customers a sub-standard product:

After all, we’re the human garbage cans who bought these trash discs by the millions. Domino’s is simply advertising that they weren’t fit to wipe your ass with.

The new formula is both a dietary disaster and a marketing triumph. But the Domino’s campaign is only a small part of the story; Moss’s piece also delves into the troubling history of Dairy Management’s attempts to manipulate consumers with unsubstantiated claims touting the alleged weight-loss benefits of increased dairy consumption.

Oddly enough, the USDA’s top officials declined to speak with Moss, passing up the chance to trumpet Dairy Management’s evident success.

Don’t they want to disprove the naysayers who claim the government can’t create–or preserve–jobs? Aside from aiding the dairy industry, this partly tax payer-funded pro-lacto largesse has a few other winners. Think of all the pizza deliverers, the cardboard box manufacturers, and the producers of bovine growth hormone who might have been laid off had Domino’s been left to its own devices and lousy slices. It’s great for cholesterol-lowering drug sales, too.

Who loses? The ‘little people’. Although, apparently, we’re growing bigger everyday, with the help of a heap o’ cheese.

Corporate Welfare: Obama Unveils Pro-Business “Jobs” Plan

By Tom Eley - Global Research - 09-12-2010

President Barack Obama’s Wednesday speech on the economy in Cleveland, Ohio was an exercise in deceit and demagogy. Presenting himself as a defender of the middle class against the wealthy, Obama outlined a “jobs plan” based on a series of corporate tax give-aways that have long been championed by the Republican Party. The president made no proposals for direct job creation.

The Cleveland speech is part of a campaign to stave off what are widely predicted to be major losses for the Democrats in the upcoming November elections. It comes on the heels of Obama’s Labor Day speech in Milwaukee and in advance of a Friday press conference on the economy.

Obama’s new plan hinges almost exclusively on tax breaks for corporations, justified with the threadbare claim that the windfalls will convince firms to hire more workers. This ignores, for one thing, the fact that US banks and corporations are already sitting on a cash hoard of over $1 trillion.

By way of defending his opposition to public works programs or other forms of government job creation, Obama offered a bald statement of his subordination to big business. “I’ve never believed that government’s role is to create jobs or prosperity,” he said. “I believe it’s the private sector that must be the main engine of our recovery.”

New give-aways for corporations in his plan include allowing them to deduct from their taxes the full value of new equipment purchases. He also proposed to increase and make permanent a tax credit for corporate research and development.

As for Obama’s proposed $50 billion in funding for transportation development—a tiny fraction of the financial outlay required to repair the nation’s crumbling infrastructure—it would merely extend existing funding that is currently set to expire, while establishing an “infrastructure bank” that would attempt to secure profits for private investors in public projects.

All told, the new economic measures would cost about $180 billion. According to economist Mark Zandi, the program might “a year from now… create tens of thousands of jobs.” As the Washington Post noted, “This would be a drop in the bucket compared with the 7.6 million jobs lost during the recession that began in December 2007.”

Meager as it is, the proposal has virtually no chance of passing, a fact underscored by its cool reception among many congressional Democrats. “Republicans noted that top Democratic leaders and embattled candidates were virtually silent on the proposals,” the Wall Street Journal observed. “House Democratic leadership aides said they did not want to move forward without assurance that the Senate could pass the measures. And Senate aides gave no such promises.”

As always, the Democrats, who hold historically large margins in both houses, claim their hands are tied by Republican opposition. “The only way we can get anything done is with cooperation of Republicans, and that’s been in short supply in recent months,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid.

What Obama presented as the main difference between the White House and congressional Republicans—whether or not to extend Bush administration tax cuts for the wealthy set to expire in January—is also more pretense than reality.

Obama claims to favor continuing the tax breaks only for households that earn less than $200,000 a year for an individual or $250,000 for a couple, about 98 percent of all households. But prominent Democrats, including Reid and former Office of Management and Budget head Peter Orszag, have already signaled their support for an extension of the cuts for the 2 percent with incomes above the cut-off levels as well.

In his speech, Obama sought to obscure the Democrats’ share of responsibility for the economic disaster, pinning blame on the “governing philosophy” of the Bush years: “Cut taxes, especially for millionaires and billionaires. Cut regulations for special interests. The idea was that if we had blind faith in the market; if we let corporations play by their own rules; if we left everyone else to fend for themselves, America would grow and prosper.”

“For a time, this idea gave us the illusion of prosperity,” Obama continued. “We saw financial firms and CEOs take in record profits and record bonuses… But while all this was happening, the broader economy was becoming weaker... The wages and incomes of middle-class families kept falling while the cost of everything from tuition to health care kept rising. Folks were forced to put more debt on their credit cards and borrow against homes that many couldn’t afford in the first place. Meanwhile, a failure to pay for two wars and two tax cuts for the wealthy helped turn a record surplus into a record deficit.”

These remarks reveal the Obama administration’s contempt for the intelligence of the public. The White House seems to assume that the American people are suffering from collective amnesia.

The policies of tax cuts for the rich and deregulation have long been bipartisan. They were expanded during the Clinton years.

And they have continued under Obama. One wonders whether Obama and his handlers think the public has forgotten that Obama supported the multi-trillion-dollar bailout of Wall Street under Bush and extended it once he came to power. And that Obama intervened to block legislation that would have imposed modest restrictions on the pay of bank executives, while insisting that government loans to General Motors and Chrysler be made contingent on a 50 percent wage cut for newly hired auto workers.

In its staggering dishonesty, the administration’s public relations campaign on the economy is strikingly similar to its effort during the BP Gulf catastrophe to appear “tough,” even as every step it took had as its overriding concern the protection of oil giant’s profits. Last spring Obama staged a visit to the Gulf, followed by a White House meeting with BP executives and a prime-time press conference to present the $20 billion cleanup fund—set up according to BP’s requirements—as a great boon to workers and small businesses victimized by the company’s negligence and criminality.

Similarly, the White House has stage-managed a series of events this week to package another bonanza for the corporate-financial elite as a lifeline to the “middle class.”

Yet even as Obama attempts to pose as an advocate of jobs and the middle class, the White House has been at pains to refute any notion that the latest proposals constitute a “stimulus,” or that they will significantly add to the deficit.

“I am absolutely committed to fiscal responsibility, which is why I’ve already proposed freezing all discretionary spending unrelated to national security for the next three years,” Obama declared, referring to his long-term budget plan dubbed “A New Era of Responsibility.”

The speech was two-faced throughout. Appealing to elderly voters, he promised to fight “the efforts of some in the other party to privatize Social Security, because as long as I’m president, no one is going to take the retirement savings of a generation of Americans and hand it over to Wall Street.”

But minutes later, Obama signaled to the ruling class that he was preparing, after the elections, to impose harsh cuts in basic entitlement programs such as Medicare and Social Security. “[O]nce the bipartisan fiscal commission finishes its work,” Obama said, “I will spend the next year making the tough choices necessary to further reduce our deficit and lower our debt.”

Obama was referring to his National Commission on Fiscal Responsibility and Reform, which in December—one month after the elections—is expected to propose a series of “reforms” of Social Security, including reductions in benefits, an increase in the retirement age, and the introduction of private “add-on retirement accounts.” (See “US ruling class prepares attack on Social Security”)

Obama is playing his role in a carefully orchestrated political act. The media incessantly claim that the primary concern animating voters is their fear of “deficit spending,” and that businesses have frozen hiring due to excessive government intervention from the Obama administration. This is counterposed to the Republicans’ central policy goal—the extension of tax breaks for the extremely wealthy and the rejection of any form of assistance to the vast majority of the population.

In reality, both the Democrats and Republicans are committed to making the population foot the full bill for the economic crisis, the bailout of Wall Street, and the cost of the wars in Afghanistan and Iraq.

The Predicament of ShoreBank

Hopes Dimming
By RALPH NADER

The Obama Administration’s treatment of its current majority ownership of bailed out General Motors and its standoffishness toward the pioneering but troubled ShoreBank, a community bank based in Chicago, are lessons in how the Big/Bad fare in Washington, D.C., as compared with the Good/Small.

Having shed its bad assets and abandoned its common shareholders, the new GM emerged from bankruptcy in 2009 with a clean balance sheet and lots of taxpayer cash. For the first two quarters of 2010, it has signaled a comeback by reporting over $2 billion in profits.

In return for a federal infusion of well over $50 billion, the government took a 61 percent ownership stake. The Canadian government received 10 percent ownership for its financial assistance, and the United Auto Workers received 17.5 percent ownership in return for major concessions and a two-tier salary scale starting at $14 an hour.

The Obama administration exercises its trust duties on behalf of the taxpayers by repeatedly saying it would not use any powers of majority ownership at all. The Obama administration is urging GM is issue stock sooner than later so that the government can sell its stock and get out of the company completely.

GM’s CEO Edward E. Whitacre Jr., former CEO of AT&T, agrees. In recent weeks, he has been telling the press that GM is losing sales because of its moniker “Government Motors.” Not known for his graciousness, he did not add that without the government a bankrupt General Motors would not have any sales at all.

There are serious consequences for Obama’s absentee management style. First, he did not prohibit GM from lobbying, as was required for the bailouts of Fannie Mae and Freddie Mac. As a major member of the Alliance of Automobile Manufacturers, GM has been part of a lobbying force that seeks to weaken auto safety legislation now moving through the House and the Senate. Historically, GM has been the most strident in its opposition to mandatory pollution control, fuel efficiency and safety standards. The company’s strategy for decades has been to defeat, delay or weaken efforts to clean your air, safeguard your motor vehicle and get you more miles per gallon of gasoline.

Now, when the government, as a majority owner, can at last tell GM to support long established national policies in these three areas, Obama is hands off. The new GM is free to return to its old obstructive ways.

Moreover, GM’s recovery is just beginning. It has cut its costs very significantly so that its breakeven mark is at a low production volume by historical standards. Starting from nearly rock bottom sales volume, GM is making money in the U.S. and booming in China. So why would Obama want to sell the government’s share so early when waiting a couple of years will make a nice profit for the taxpayers and, in the meantime, restrain GM’s opposition to innovation-driven regulations for the health, safety and economic well-being of consumers?

Now, consider ShoreBank’s predicament. This bank broke ground since its founding in 1973 by providing loans for lower-income homebuyers, apartment building owners and small businesses. Year after year, this community bank proved it could make money by opening up markets that the big banks chose to red-line in Chicago and later in Detroit and Cleveland. Hundreds of articles and news reports heralded its success.

Then the Wall Street-produced recession struck the country. Through little fault of its own, many of its hard-pressed lower-income debtors began to miss or default on their loans. ShoreBank started to register losses--$119 million in 2009. Unlike the big banks, ShoreBank did not deal in risky speculative derivatives—like credit default swaps, collaterized debt obligations or subprime mortgage lending.

Washington is drawn irresistibly to bail out the big banks’ wildly speculative, toxic paper investments with no redeeming social value. George W. Bush took the taxpayers to levels of corporate welfare beyond the dreams of corporate avarice.

Neil M. Barofsky, the valiant special inspector general for the Treasury Department’s Troubled Asset Relief Program (TARP) reported that the giant AIG bailout ($182 billion) gave its trading partners—bonus-rich Goldman Sachs, Merrill Lynch, Societe Generale and other banks—100 cents on the dollar for their notorious credit default swaps. Had AIG defaulted, it would have been a fraction of that sum.

Barofsky’s report denounced the Federal Reserve for not negotiating strongly with the banks. Incredibly, the Fed gave the banks $27 billion in taxpayer cash and let them keep $35 billion more in collateral already posted by AIG. Barofsky declared that these vastly overpaid sums were way “above [these contracts’] market value at the time.”

Compare these amounts to what ShoreBank needs in additional investment to provide liquidity and adequate capital reserves to ride out the recession. It projects losses of about $200 million before returning to black ink and another $300 million or so to support future operations.

The community bank has raised $150 million in pledges from several Wall Street firms—a little p.r. redemption here—and it needs $75 million in TARP funds from the Obama administration.

At this writing, Washington is balking and the Bank, willing to shink down further, finds its hopes dimming.

The Chicago Tribune editorial “Still Worth Saving” put it well: “ShoreBank, for many years, showed that operating honorably in low-income neighborhoods could pay off for everybody. One way or another, we can’t let its shining example disappear.”

Why Are We Afraid to Tax the Super-Rich?

Why Are We Afraid to Tax the Super-Rich?
We are told that we’re already living well beyond our means we’ve got to cut back on government programs at all levels. Meanwhile, the super-rich are still having a ball.
By Les Leopold, AlterNet
March 13, 2010

Our nation is already deeply in debt. How can we possibly afford to invest in our infrastructure, renewable energy, health care, our schools — and create the millions of jobs that our unemployed desperately need?

Meanwhile, the super-rich are still having a ball. In his annual shareholder letter, mega-investor Warren Buffett wrote, “We’ve put a lot of money to work during the chaos of the last two years. When it’s raining gold, reach for a bucket, not a thimble.” And Forbes Magazine adds, “Many plutocrats did just that. Indeed, last year’s wealth wasteland has become a billionaire bonanza. Most of the richest people on the planet have seen their fortunes soar in the past year.”

Which brings us back to the federal budget. There are two sides to every ledger: the expenses…and the income. We need to start looking at the income side. With a fairer tax system, we could retrieve some of that money downpour that the elite has been siphoning away from us for decades.

In the 1950s the marginal tax rate on those earning more than $3 million a year (in today’s dollars) was 91 percent. By 1990 it was 28 percent. The IRS says that the top 400 richest tax filers actually paid a rate of just 16 percent in 2007 (the latest numbers we have). Yep, the richest earners — people who took in an average of $343 million each — probably paid a lower rate than you did. Something to consider as you sign your 2009 return.

By the way, those 400 people who do so well on tax day have a combined net worth of nearly $1.37 trillion. (According to Forbes Magazine their wealth has gone up on average by more than 16 percent over the past year — the worst economic year since the Great Depression during which 29 million Americans are without work or forced into part-time jobs. )

How do we even wrap our minds around a number so large? Here’s the example that brings it down to earth for me. If we had progressive taxes that reduced their wealth to a trifling $100 million each, we’d have enough money to set up a trust fund whose interest could provide tuition-free higher education for students at every public college and university in perpetuity. Imagine that. Our kids could actually leave college without carrying tens of thousands of dollars of debt on their backs.

Could those 400 special people be able to get by on just $100 million a year? I think they might.

So why are we so fearful of taxing the super-rich? Here are the arguments I’ve heard.

1. They’ve earned it.
Really? The concept of “earning” is murky when you consider the array of corporate welfare programs we provide. Oil companies have their depletion allowances. Big sugar farmers have their sweet subsidies. The health insurance industry is exempt from anti-trust laws.

One way corporations spend their welfare checks is by providing top management with mind-boggling compensation packages. For instance, in 2009, our financial wizards netted about $150 billion in bonuses – as if in reward for crashing the economy. Were it not for our $10 trillion (not billion) in bailout funds, they would have earned nothing at all. In fact, the financial sector’s reckless gambling has lost us over $6 trillion in wealth. But the execs did quite well, thanks to taxpayer largesse.

You’d think we’d be crying out for a windfall profits tax to reclaim our money. But no.

2. Redistribution of Income is Un-American.
During the 2008 campaign, Joe the Plumber got his 15 minutes of fame when he slammed Obama for daring to utter the phrase “redistribution of income.” Of course, we redistribute income primarily through progressive taxation – having the rich pay a higher rate.

Joe didn’t mention that we already live in a world of massive redistribution. Only it’s from the bottom to the top. We still hear about how poor folks game the system and mooch off our hard earned tax dollars. They go to emergency rooms and don’t pay. They get Medicaid for free. And many don’t pay any taxes at all (mostly because their incomes are so impossibly low). But all of that is chump change compared to the gaming going on at the other end of the economic scale.

Just think of all the scams corporations and the rich are running: ever-rising credit card fees, predatory mortgages, usurious interest rates, check cashing ripoffs, monopoly pricing. They turn income into lower taxed capital gains, find offshore tax shelters, collect subsidies for their runaway shops. And then they netted the big one: Wall Street bailouts. Post-baillout, these too-big-to fail companies are getting even bigger. It all adds up to a major redistribution plan — from the many to the few.

During the post-WWII boom we had one of the fairest income distributions in the world. Not anymore. Today the gap between rich and poor is wider than at any time in U.S. history. Here’s a telling statistic: In 1970 the compensation ratio of the top 100 CEOs compared to the average worker was 45 to one. By 2008 it was 1,071 to one. You think they got that much smarter?

3. If we tax the wealthy, we’ll hinder investment and kill jobs.
This was the justification politicians and pundits used when they started cutting taxes and eliminating regulations in the late 1970s. Tax cuts were supposed to create a robust investment class whose dollars would fuel the new service economy. Since only the wealthy can make such investments, the argument went, we have to make sure they have the money they need to invest. Otherwise, where will all the new jobs come from?

In theory this sounds good. But we tried this experiment, and it didn’t work. When we cut taxes on the super-rich, we got a different kind of investment boom than the politicians and economists had promised. The wealthy literally ran out of investments in factories, equipment and even services. So they flocked to financial investments — which were supposedly safer and more profitable anyway. The super-rich laid their money down in the Wall Street casino, and helped puff up bubble after bubble. Profits in the financial sector soared. In 1960, the sector accounted for about 15 per cent of all corporate profits. By 2008 (before the crash, that is), it was almost 40 percent. The financial sector crased as the direct result of tax cuts for the super-rich and Wall Street deregulation.

4. Government’s too big already. We should be cutting the public sector, not raising taxes to expand it.
Many people (like those in and around the Tea Party) dislike tax scams by the wealthy, but dislike government even more. They’re outraged that public sector workers often have better wages and pensions than people in the private sector. They’ve made attacking public employees the new national blood sport.

With unemployment so high, public sector workers are an easy target. Why should taxpayers, many of whom have no pensions, finance the pensions of public sector workers? Why should we protect public sector jobs when we ourselves are unemployed?

Here’s one reason: Because cutting state and local payrolls would actually add to our economic woes. If we fire public sector workers, they’ll stop paying taxes — which will only add to the tax burden on those people who still have jobs.

Laid off public sector workers — and even those whose wages and benefits have been cut — don’t buy as many goods and services. This drop in demand triggers layoffs in the private sector — and a further slide in tax revenues. In short, public sector cutbacks contribute to an economic death spiral: plummeting tax revenues and ever more cutbacks.

By failing to tax the super-rich, we’re burrowing even deeper into a billionaire bailout society in which the rich keep on gambling away our money, knowing that we will bail them out if they lose. Yes, we need to regulate Wall Street. But we also need to recognize that these gambling addicts have too much money in their pockets. And society needs that money for constructive investments, not for more gambling.

In the end the real fiscal crisis is in our minds. We don’t have to keep fighting over the scraps the wealthy have left us. We can build a new kind of economy, but only if can summon up some courage. Do we have the nerve to tax the super-rich?