Article of the Day: Tax the Rich -- Create Jobs

Who Will Stand Up to the Superrich?

By FRANK RICH

IN the aftermath of the Great Democratic Shellacking of 2010, one election night subplot quickly receded into the footnotes: the drubbing received by very wealthy Americans, most of them Republican, who tried to buy Senate seats and governor’s mansions.

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The top 1 percent of American earners took in 23.5 percent of the nation’s pretax income in 2007 — up from less than 9 percent in 1976. During the boom years of 2002 to 2007, that top 1 percent’s pretax income increased an extraordinary 10 percent every year. But the boom proved an exclusive affair: in that same period, the median income for non-elderly American households went down and the poverty rate rose.

It’s the very top earners, not your garden variety, entrepreneurial multimillionaires, who will be by far the biggest beneficiaries if there’s an extension of the expiring Bush-era tax cuts for income over $200,000 a year (for individuals) and $250,000 (for couples). The resurgent G.O.P. has vowed to fight to the end to award this bonanza, but that may hardly be necessary given the timid opposition of President Obama and the lame-duck Democratic Congress.

On last Sunday’s “60 Minutes,” Obama was already wobbling toward another “compromise” in which he does most of the compromising. It’s a measure of how far he’s off his game now that a leader who once had the audacity to speak at length on the red-hot subject of race doesn’t even make the most forceful case for his own long-held position on an issue where most Americans still agree with him. (Only 40 percent of those in the Nov. 2 exit poll approved of an extension of all Bush tax cuts.)

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Incredibly, the top 1 percent of Americans now have tax rates a third lower than the same top percentile had in 1970.

“How can hedge-fund managers who are pulling down billions sometimes pay a lower tax rate than do their secretaries?” ask the political scientists Jacob S. Hacker (of Yale) and Paul Pierson (University of California, Berkeley) in their deservedly lauded new book, “Winner-Take-All Politics.” If you want to cry real tears about the American dream — as opposed to the self-canonizing tears of John Boehner — read this book and weep. The authors’ answer to that question and others amounts to a devastating indictment of both parties.

Their ample empirical evidence, some of which I’m citing here, proves that America’s ever-widening income inequality was not an inevitable by-product of the modern megacorporation, or of globalization, or of the advent of the new tech-driven economy, or of a growing education gap. (Yes, the very rich often have fancy degrees, but so do those in many income levels below them.) Inequality is instead the result of specific policies, including tax policies, championed by Washington Democrats and Republicans alike as they conducted a bidding war for high-rolling donors in election after election.

The book deflates much of the conventional wisdom. Hacker and Pierson date the dawn of the collusion between the political system and the superrich not to the Reagan revolution, but to the preceding Carter presidency and its Democratic Congress. They also write that contrary to the popular perception, America’s superhigh earners are not mostly “superstars and celebrities in the arts, entertainment and sports” or the stars of law, medicine and real estate. They are instead corporate executives and managers — increasingly (and less surprisingly) financial company executives and managers, including those who escaped with outrageous fortunes as their companies imploded during the housing bubble.

The G.O.P.’s arguments for extending the Bush tax cuts to this crowd, usually wrapped in laughably hypocritical whining about “class warfare,” are easily batted down. The most constant refrain is that small-business owners who file in this bracket would be hit so hard they could no longer hire new employees. But the Tax Policy Center found in 2008, when checking out similar campaign claims by “Joe the Plumber,” that only 2 percent of all Americans reporting small-business income, regardless of tax bracket, would see tax increases if Obama fulfilled his pledge to let the Bush tax cuts lapse for the top earners. The economist Dean Baker calculated that the yearly tax increase at the lower end of that bracket, for those with earnings between $200,000 and $500,000, would amount to $700 — which “isn’t enough to hire anyone.”

Those in the higher reaches aren’t investing in creating new jobs even now, when the full Bush tax cuts remain in effect, so why would extending them change that equation? American companies seem intent on sitting on trillions in cash until the economy reboots. Meanwhile, the nonpartisan Congressional Budget Office ranks the extension of any Bush tax cuts, let alone those to the wealthiest Americans, as the least effective of 11 possible policy options for increasing employment.

Nor are the superrich helping to further the traditional American business culture that inspires and encourages those with big ideas and drive to believe they can climb to the top. Robert Frank, the writer who chronicled the superrich in the book “Richistan,” recently analyzed the new Forbes list of the 400 richest Americans for The Wall Street Journal and found a “hardening of the plutocracy” and scant mobility. Only 16 of the 400 were newcomers — as opposed to an average of 40 to 50 in recent years — and they tended to be in industries like coal, natural gas, chemicals and casinos rather than forward-looking businesses involving the Green Economy, tech or biotechnology. This is “not exactly the formula for America’s vaunted entrepreneurial wealth machine,” Frank wrote.

As “Winner-Take-All Politics” documents, America has been busy “building a bridge to the 19th century” — that is, to a new Gilded Age. To dislodge the country from this stagnant rut will require all kinds of effort from Americans in and out of politics. That includes some patriotic selflessness from those at the very top who still might emulate Warren Buffett and the few others in the Forbes 400 who dare say publicly that it’s not in America’s best interests to stack the tax and regulatory decks in their favor.

Many of the countless tasks that need to be addressed to start rebuilding an equitable America are formidable, but surely few, if any, are easier than eliminating a tax break that was destined to expire anyway and that most Americans want to see expire. Two years ago, Obama campaigned on this issue far more strenuously than he did on, say, reforming health care. Now he and what remains of his Congressional caucus are poised to retreat from even this clear-cut battle. You know things are grim when you start wishing that the president might summon his inner Linda McMahon.

Read more: http://www.nytimes.com/2010/11/14/opinion/14rich.html?hp

Articles of the Day:

The Perverse Priorities and Fatal Flaws of the Deficit Commission

By DEAN BAKER

The country in which most people live is experiencing an economic disaster. More than 25 million people are unemployed, underemployed, or have given up looking for work altogether. Tens of millions are now underwater on their mortgages, with millions facing the imminent loss of their homes. Furthermore, there is little prospect that the situation will improve anytime soon.

Many fewer live in the other America, the world of Wall Street and Washington lobbyists. This is where you’ll find former Wyoming Republican Senator Alan Simpson and investment banker-turned-Clinton Chief of Staff Erskine Bowles, the co-chairs of President Obama’s deficit commission, which on Wednesday outlined its plans for what it calls “fiscal responsibility.” In their world the key fact is that, today, corporate profits are back to their pre-recession peaks. As long as the bonuses on Wall Street are again hitting record highs, the economy must be just fine, so what else is there to do but worry about deficits?

It would be hard to understand how ostensibly serious people could be concerned about the deficit right now, unless we realize that they stand apart from the economic calamity that has engulfed most of the country. The suffering caused by this recession simply does not register on their radar screens.

This is not just a moral complaint, although it is troubling that the people most responsible for the economic wreckage are doing just fine. More important is that there is no evidence that Simpson, Bowles, and the rest of the deficit cutters have the slightest understanding of the economy. If they did they would be looking at the deficit in a completely different way.

First, the current deficit should not even be viewed as a problem. Yes, a deficit of $1.4 trillion is big, but this is a direct result of the loss of demand stemming from the collapse of an $8 trillion housing bubble. This bubble was driving the economy until its collapse. There were two channels through which the bubble generated demand in the economy: bubble-inflated house prices led to a boom in construction, bubble-inflated wealth led consumers to increase their spending, pushing saving rates to almost zero.

This demand has disappeared now that the bubble has deflated. The economy has lost more than $600 billion in annual construction demand as builders cut back in response to an enormous over-supply of both residential and non-residential property. Similarly, consumption has plummeted. This left an enormous gap in demand that, at least in the near-term, can only be filled by the government. If the government were to spend less—say it instantly balanced its budget—the primary result would be a further decline in demand and more job loss.

We are in a peculiar situation where the main problem for the economy is a lack of demand. More demand will mean more growth and more jobs. Government must supply demand because there is no other entity that can step forward to do it—unless someone gets very good at counterfeiting hundred dollar bills.....

Read more: http://www.counterpunch.com/baker11122010.html

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Fix the Economy or Else: Why It Could Get Even Worse for the Democrats

 By MARK WEISBROT

By now it is clear to most analysts of the United States’ midterm election that the economy played a huge role in the Democrats’ losses. It is also pretty clear that the vote was a protest vote by people reacting to economic troubles, rather than an attitudinal change in the electorate towards a conservative political agenda.

This can be seen from both pre-election polling data and exit polling. For example, 58 percent of voters said that they were “trying to send a message about how dissatisfied they are with things in Washington.” But voters were more likely to agree with Democratic positions on Social Security, trade policy and other issues. This is despite the fact that an “enthusiasm gap” lowered Democratic turnout.

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Since the two major parties each have a base that will mostly vote for their candidates, most elections are being determined by “swing voters” – about 35 percent in this latest election. Most of these voters are choosing a representative with very little information – most of them know little or nothing about the candidates or how they stand on the issues. The performance of the economy is one of the few politically relevant realities that they do know something about: they can see what is happening in the labor market and other indicators. For this reason they will tend to punish the incumbent party and congressional representatives if the economy is perceived as doing badly.

In reality, the Democrats could have done a lot more to fix the economy – or at least tried. After subtracting off the state and local government budget tightening, the stimulus provided by the American Recovery and Reinvestment Act only made up for a small fraction – about one-eighth – of the private spending that was lost from the bursting of the real estate bubble. This was the Democrats’ fatal mistake.

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The latest conventional wisdom is that another, more adequate stimulus package is off the table now that the Republicans control the House. But the President and his party had better find a way around that. At the very least they would have to fight very hard for what is needed – as they did not do in the last two years – and make it extremely clear that Republican obstruction is the obstacle to economic recovery. Otherwise, the most likely result in 2012 will be a repeat of what we just saw – only with more losses for the Democrats, possibly including the presidency.

Mark Weisbrot is an economist and co-director of the Center for Economic and Policy Research. He is co-author, with Dean Baker, of Social Security: the Phony Crisis.

Read the entire article: http://www.counterpunch.com/weisbrot11122010.html

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The Hijacked Commission

By PAUL KRUGMAN

Count me among those who always believed that President Obama made a big mistake when he created the National Commission on Fiscal Responsibility and Reform — a supposedly bipartisan panel charged with coming up with solutions to the nation’s long-run fiscal problems. It seemed obvious, as soon as the commission’s membership was announced, that “bipartisanship” would mean what it so often does in Washington: a compromise between the center-right and the hard-right.

My misgivings increased as we got a better feel for the views of the commission’s co-chairmen. It soon became clear that Erskine Bowles, the Democratic co-chairman, had a very Republican-sounding small-government agenda. Meanwhile, Alan Simpson, the Republican co-chairman, revealed the kind of honest broker he is by sending an abusive e-mail to the executive director of the National Older Women’s League in which he described Social Security as being “like a milk cow with 310 million tits.”

We’ve known for a long time, then, that nothing good would come from the commission. But on Wednesday, when the co-chairmen released a PowerPoint outlining their proposal, it was even worse than the cynics expected.

. . . .

It’s no mystery what has happened on the deficit commission: as so often happens in modern Washington, a process meant to deal with real problems has been hijacked on behalf of an ideological agenda. Under the guise of facing our fiscal problems, Mr. Bowles and Mr. Simpson are trying to smuggle in the same old, same old — tax cuts for the rich and erosion of the social safety net.

Can anything be salvaged from this wreck? I doubt it. The deficit commission should be told to fold its tents and go away.

read more: http://www.nytimes.com/2010/11/12/opinion/12krugman.html

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Why We Should Beware of the Budget-Deficit Mania

by: Robert Reich 

We’re in for another round of budget-deficit mania.

The first draft of the President’s deficit commission, written by its co-chairmen Erskine Bowles and Alan Simpson, is a pastiche of ideas – some good, some dumb, some intriguing, some wacky. The only unifying principle behind their effort seems to be to throw enough at the wall that something’s bound to stick.

At their best, presidential commissions focus the public’s attention — not only on the right solution to some important problem but also on the right problem. Sadly, this preliminary report does neither.

As to solution, the report mentions but doesn’t emphasize the biggest driver of future deficits – the relentless rise in health-care costs coupled with the pending corrosion of 77 million boomer bodies. This is 70 percent of the problem, but it gets about 3 percent of the space in the draft.

The report suffers a more fundamental error — the unquestioned assumption that America’s biggest economic challenge is to reduce the federal budget deficit.

The size of the budget deficit (and cumulative debt) is meaningless without reference to the size of the economy. What looks like a big debt 10 or 20 years from now may turn out to be small if growth has been rapid in the intervening years. By the same token, a seemingly small future debt can become unmanageable if the economy tanks, or barely grows at all.

In 1945, the nation’s debt was 120 percent of GDP. That proved to be no problem in later years, not because the debt shrank but because the U.S. economy soared.

Our biggest problem isn’t the size of pending federal budget deficits or debt but an anemic recovery that may drag on for years. And unless we’re careful, budget-deficit mania may further slow economic growth – thereby making future debts even less manageable.

read more:http://www.truth-out.org/why-we-should-beware-budget-deficit-mania65069



Article of the Day: Collapsed Economy, Hateful Conservatives and Ineffectual Liberals Are a Recipe for Fascism

Hedges: A Collapsed Economy, Hateful Conservatives and Ineffectual Liberals Are a Recipe for Fascism

By Chris Hedges

American politics, as the midterm elections demonstrated, have descended into the irrational. On one side stands a corrupt liberal class, bereft of ideas and unable to respond coherently to the collapse of the global economy, the dismantling of our manufacturing sector and the deadly assault on the ecosystem. On the other side stands a mass of increasingly bitter people whose alienation, desperation and rage fuel emotionally driven and incoherent political agendas. It is a recipe for fascism.

More than half of those identified in a poll by the Republican-leaning Rasmussen Reports as “mainstream Americans” now view the tea party favorably. The other half, still grounded in a reality-based world, is passive and apathetic. The liberal class wastes its energy imploring Barack Obama and the Democrats to promote sane measures including job creation programs, regulation as well as criminal proceedings against the financial industry, and an end to our permanent war economy. Those who view the tea party favorably want to tear the governmental edifice down, with the odd exception of the military and the security state, accelerating our plunge into a nation of masters and serfs. The corporate state, unchallenged, continues to turn everything, including human beings and the natural world, into commodities to exploit until exhaustion or collapse.

All sides of the political equation are lackeys for Wall Street. They sanction, through continued deregulation, massive corporate profits and the obscene compensation and bonuses for corporate managers. Most of that money—hundreds of billions of dollars—is funneled upward from the U.S. Treasury. The Sarah Palins and the Glenn Becks use hatred as a mobilizing passion to get the masses, fearful and angry, to call for their own enslavement as well as to deny uncomfortable truths, including global warming. Our dispossessed working class and beleaguered middle class are vulnerable to this manipulation because they can no longer bear the chaos and uncertainty that come with impoverishment, hopelessness and loss of control. They have retreated into a world of illusion, one peddled by right-wing demagogues, which offers a reassuring emotional consistency. This consistency appears to protect them from the turmoil in which they have been forced to live. The propaganda of a Palin or a Beck may insult common sense, but, for a growing number of Americans, common sense has lost its validity.

The liberal class, which remains rooted in a world of fact, rationalizes placating corporate power as the only practical response. It understands the systems of corporate power. It knows the limitations and parameters. And it works within them. The result, however, is the same. The entire spectrum of the political landscape collaborates in the strangulation of our disenfranchised working class, the eroding of state power, the criminal activity of the financial class and the paralysis of our political process.

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Read more: View this story online at: http://www.alternet.org/story/148778/



Article of the Day: How to Create a new WPA Jobs Program NOW!

Obama: Create Jobs by Executive Order

by Jeanne Mirer and Marjorie Cohn

On May 6, 1935, with the country in the midst of the Great Depression, and with indirect efforts to create jobs having not moved the needle of unemployment rates, President Franklin D. Roosevelt signed Executive Order 7034 and appropriated $4.8 billion for the Works Progress Administration (WPA). The WPA put millions of Americans to work constructing buildings, painting murals to decorate them, and performing plays for audiences that had never before seen a dramatic production. In the process, many were saved from poverty and starvation and the economy began to revive.

Although Congress, as part of the New Deal, had appropriated money specifically for relief, FDR decided to use the money for a direct jobs program by issuing a Presidential executive order. This Executive Order described the agencies to be involved in the program, its structure and procedure for application and allocation of jobs.

The WPA was quickly implemented. By March 1936, 3.4 million people were employed and an average of 2.3 million people worked monthly until the program ended in June 1943. During its existence the WPA employed more than 8,500,000 different persons on 1,410,000 individual projects, and spent about $11 billion. The average yearly salary was $1,100, a living wage at the time. During its 8-year history, the WPA built 651,087 miles of highways, roads, and streets. It constructed, repaired, or improved 124,031 bridges, 125,110 public buildings, 8,192 parks, and 853 airport landing fields.

Today our infrastructure is crumbling, and loss of revenue is forcing many cities and states to cut basic services. About 15 million people have become unemployed since the crisis hit in late 2008; a million and a half of them are construction workers. The need for a direct jobs program is either as great, or even greater than during the Depression.

But, in light of the election results, is such a program possible? Can the President directly create jobs by executive order? The answer is a resounding yes. Remember when the Emergency Economic Stabilization Act of 2008, which created the $700 billion Troubled Assets Relief Program (TARP) was passed, one of the purposes was to preserve homeownership, and promote jobs and economic growth.

Much of the TARP money has been repaid and the administration refers to the profit on the payments. If one assumes an average cost of one job is $50,000, 6 million jobs could be immediately created for $300 billion. 12 million jobs could be created for $600 billion. Because this is already appropriated money, Congressional Republicans could not block it.

This direct job creation would be bold. It would also be highly stimulative. It would not add to the deficit because it is already appropriated money. Furthermore, one third of it would come back immediately in taxes, and more importantly, the growth in demand from this number of added jobs would expand private sector job growth and grow the overall economy.

This bold program would contrast markedly with prior stimulus bills, which were indirect and whose effects have been too slow to manifest themselves. The posture of the Republicans during the last two years has been to prevent the President and Congress from taking bold steps to intervene in the economy to directly create jobs. Then they used the Administration’s failure to take bold steps to create jobs to say the “stimulus did not work.” They turned the very TARP bailouts they supported into a rallying cry against government intervention in the economy to help people and they characterized as “socialism” any government initiatives such as health care. They decried deficits and opposed any sane tax policies to get the deficit going in the other direction.

By keeping progress in job creation slow and blaming the administration for lack of jobs, the high expectations for the Obama administration became deflated. The loss of jobs exacerbated the mortgage crisis, and banks have been encouraged to foreclose rather than restructure mortgages despite the opposite being explicitly called for the Emergency Stabilization Act.

The people who voted for Obama in 2008 voted for the promised hope and change. Many developed buyer’s remorse when what they got was a set of policies which protected Wall Street at the expense of Main Street, big business at the expense of workers, and made unnecessary compromises with the right. The so called “enthusiasm gap” created by Republican obstruction and Administration timidity, produced such a deflation in people’s morale that it acted as an effective form of voter suppression. The election results can be explained in this fashion.

Some have said that it makes no sense that the voters would go in a more rightward direction because the Obama administration was not “left” enough. But the fact is the Obama administration failed to deliver change and also failed to make the case for progressive policies. The election of Democratic incumbents meant only more of the same. And only 9 million of the 23 million young people who voted in 2008, came out in 2010. This undervote made the difference.

Abraham Lincoln once said: “You can fool some of the people all of the time, and all of the people some of the time but you cannot fool all of the people all of the time.” What happened in this election was the right wing was able to fool enough of the people enough of the time to make independents join with rabid right wingers, while at the same time suppressing the progressive electorate.

This country has a lot to do to get its economic house in order. It is heavily dependent on the financial services industry which only promotes speculation and unregulated bubbles. It is largely controlled by the defense industries which have promoted two and possibly more wars. It is beholden to the extractive energy industries, whose owners are funding the “tea party,” thus putting environmental amelioration on indefinite hold. And it is more and more influenced by the prison industrial complex which promotes hostility to immigrants, and takes resources from education and other vital areas. For the last 30 years it has relied on anti-union and anti-worker policies, which has forced the hemorrhaging of high paid manufacturing jobs to low cost countries and driven down wages for U.S. workers which can no longer be papered over with unsustainable debt.

The President cannot solve all these problems overnight, but with a stroke of a pen he can use already appropriated money to create millions of good green jobs, and move down the road to recovery much faster. Any opposition to this from the Republicans will expose their hostility to anyone but the richest members of society, and give the progressive movement ammunition to take the offensive.

Jeanne Mirer, who practices labor and employment law in New York, is president of the International Association of Democratic Lawyers. Marjorie Cohn is a professor at Thomas Jefferson School of Law and past president of the National Lawyers Guild.

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Article printed from www.CommonDreams.org

URL to article: http://www.commondreams.org/view/2010/11/08



Article of the Day: Death of the Liberal Class

‘Death of the Liberal Class’

By Chris Hedges

From the book “Death of the Liberal Class,” by Chris Hedges.  Excerpted by arrangement with Nation Books, a member of the Perseus Books Group.  Copyright © 2010.

 The following selection is taken from the first chapter of the book, published this month by Nation Books.

In a traditional democracy, the liberal class functions as a safety valve. It makes piecemeal and incremental reform possible. It offers hope for change and proposes gradual steps toward greater equality. It endows the state and the mechanisms of power with virtue. It also serves as an attack dog that discredits radical social movements, making the liberal class a useful component within the power elite.

But the assault by the corporate state on the democratic state has claimed the liberal class as one of its victims. Corporate power forgot that the liberal class, when it functions, gives legitimacy to the power elite. And reducing the liberal class to courtiers or mandarins, who have nothing to offer but empty rhetoric, shuts off this safety valve and forces discontent to find other outlets that often end in violence. The inability of the liberal class to acknowledge that corporations have wrested power from the hands of citizens, that the Constitution and its guarantees of personal liberty have become irrelevant, and that the phrase consent of the governed is meaningless, has left it speaking and acting in ways that no longer correspond to reality. It has lent its voice to hollow acts of political theater, and the pretense that democratic debate and choice continue to exist.

The liberal class refuses to recognize the obvious because it does not want to lose its comfortable and often well-paid perch. Churches and universities—in elite schools such as Princeton, professors can earn $180,000 a year—enjoy tax-exempt status as long as they refrain from overt political critiques. Labor leaders make lavish salaries and are considered junior partners within corporate capitalism as long as they do not speak in the language of class struggle. Politicians, like generals, are loyal to the demands of the corporate state in power and retire to become millionaires as lobbyists or corporate managers. Artists who use their talents to foster the myths and illusions that bombard our society live comfortably in the Hollywood Hills. 

The media, the church, the university, the Democratic Party, the arts, and labor unions—the pillars of the liberal class—have been bought off with corporate money and promises of scraps tossed to them by the narrow circles of power. Journalists, who prize access to the powerful more than they prize truth, report lies and propaganda to propel us into a war in Iraq. Many of these same journalists assured us it was prudent to entrust our life savings to a financial system run by speculators and thieves. Those life savings were gutted. The media, catering to corporate advertisers and sponsors, at the same time renders invisible whole sections of the population whose misery, poverty, and grievances should be the principal focus of journalism.

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Read more: http://www.truthdig.com/arts_culture/item/the_death_of_the_liberal_class_20101029/