Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Thursday, March 19, 2020
Trump's Changing Tune on Covid-19
I know the memory of many Americans is short. This video should remind you that the President's tune on the novel coronavirus has changed pretty rapidly, and that a different initial response might have helped mitigate against our current circumstance ...
Monday, June 26, 2017
Wednesday, December 14, 2016
An American Disgrace IV: Trump Continues to Fortify the Corporate State
The Trump Presidency came further into focus in the past week with a rash of cabinet choices (at least they gave me the hives) that reinforce the notion that his promise of helping the working class, like his attacks on Clinton, were little more than campaign rhetoric along the path to his upset victory (Our Future) . Alongside the corporate lackeys that will now be at the epicenter of American power, we again saw the blustery and truth-impaired Trump many hoped would abate as he stood on the cusp of the highest office in the land. Instead, he showed the same petulance, the same penchant for lying and the same recklessness that has really defined his life from his early adult years.
1. The Post-Truth Era Accelerates: Presidents in the past have certainly had issues with the intelligence community, particularly when they release inconvenient facts like the foundation for the Iraq War being fake or that the Bush administration was warned of impending attack months before they occurred. Yet the extent of Trump’s attack on the CIA findings of Russian efforts to help get him elected might well be unprecedented. His penchant for lying and misinformation stands in clear repose here and is a clarion call to the mainstream media that they will have to hold all of his statements under a microscope, if they are to salvage their fading role as the fourth estate of government.
This call to arms will be made even more challenging as Trump appears to be intent on attacking the media on any instance that they don’t give him the positive PR he believes he deserves as a birthright (Salon; TNR). And, of course, the very press that might warn Americans of the fortifying Corporate State is a bigger and bigger part of that Corporate State. Six huge conglomerates now control over 90% of everything we see, read and listen to and their profit motives seem to override any concerns about the future of our democracy, playing right into the hands of our first fully corporate President.
2. Corporate State Bodes Poorly for Most Americans Interests: not unlike the Bush administration, but arguably substantially more so, the oil and gas industry will be well represented in the new administration, particularly with the Secretary of State and Head of the Energy Department. But beyond the ties to one of the biggest polluters on the planet, he has lined his administration with corporate interests while making no secret of his own growing conflicts of interest.
A meeting today with heads of the major tech companies (Daily Mail) exemplifies the many problems with his presidency to come. For one thing, the three children who are supposed to be running his business while he runs the country (presumably into the ground) were all present at the meeting, as many of them have been at previous meetings with heads of state and business leaders. In this case, representatives from Apple, Microsoft, Facebook (though not Zuckerberg), Amazon/Washington Post, and the like were all in attendance looking for tax reform, deregulation and more favorable trade agreements in the future. Trump attacked the industry throughout his campaign but now seems to be on the cusp of doing a 180, having promised to try to help them succeed in the future while praising himself for the recent stock market price rises for most in the room.
Beyond the meeting today, the conflicts of interest just keep piling up and one does begin to wonder if there will be repercussions once he takes office (The Guardian). The Office of Government Ethics, in fact, just today warned that his business arrangement with his children is so far afield of the normal blind trusts that all previous presidents have installed that they have serious reservations about the potential ramifications (The Guardian). The problem, of course, is that it appears Trump has little reason to heed these warnings and has openly admitted at times that he might be running his business and the country at the same time.
The potential for conflicts in either case are profound, and there are already worries about a changing relationship with Russia (that could have profound implications for, among others, Syria and Iran), business arrangements with Taiwan, Argentina, Turkey and others that could come with perks, the very presence of a Trump Towers in DC that business and organizations are lining up to utilize in return for favors or at least a meeting with the incoming President and broader concerns about Iran, South Korea, China and large swaths of Europe.
In a broader sense, it is becoming clear that the interests of Corporate America – whether it’s the health industry, gas and oil, fast food companies, for profit educational companies or the tech industry – will trump those of the average American on a whole host of matters from wages, job security and inequality to the environment, education, healthcare and globalization. The promises Trump made to middle America, particularly the Rust Belt, to rejuvenate the economy seem secondary to the business interests of his vast empire (TNY) and of the many corporations that increasingly define domestic and foreign policy in the U.S. Even on his welcome plan to rebuild the crumbling infrastructure of America appears to simply be a gift to contractors that may siphon billions of dollars of taxpayer money into the pockets of already bloated corporate profits.
4. Foreign Affairs Already in Tatters: one of the biggest concerns surrounding Trump in the run-up to the election is that his demeanor was poorly matched to the needs of international diplomacy (Washington Times). Some believed that his ability to “make a deal” and take a hardline stance might, in the end, override concerns about his lack of tact and experience. That seems like a stretch if early indicators are to be believed. He has already offended China, radically transformed our rocky relationship with Russia and spent a considerable amount of time attacking leaders across the globe. With the opportunity to send a positive message regarding his foreign diplomacy team, he instead picked a woman with no international experience to the UN and now a corporate titan to lead our foreign affairs team. As with the general tenor of his transition, it appears allies and payback have played a much larger role in administration picks than experience or ideological reasonableness. Trump ran as an alt-right hero, but many believed that he would temper those positions upon taking office. There is little to indicate that that is, in fact, the case, and much to support the exact opposite position. With a world in flux and danger around every corner, Trump has every opportunity to do irrevocable damage to the interests of not only Americans but billions around the world.
5. Environment Gasps Final Breaths of Fresh Air: across the board, there have been selections that seem to undermine the rather mediocre attempts of the Obama administration to address climate change. At the top of the list is the new head of the EPA, Pruitt (Salon), who is a global warming doubter and friend to the oil and gas industry. With the Energy secretary, Rick Perry, we have another friend to the biggest polluters in the world and someone who doesn’t even believe the department should exist. And, of course, a man at the helm of the one of the biggest companies in the world that has consistently attempted to stop any attempts to address climate change will now have a huge role in dictating our foreign policy. If his role at Exxon-Mobil is any indicator, dictators are considered preferable to democratic regimes, poverty abatement and education secondary to corporate interests and the bottom line to even the interests of the United States. The entire country will most likely suffer under Trump -- excluding the Top 1 percent -- but it is the environment that could take the biggest blow.
In fact, that pretty much sums up Trump to date ...
The lowlights since my last post include the selection of the Exxon-Mobil CEO as the next Secretary of State, Rick Perry as the head of an office he couldn’t even remember in his last run for president (and one he thinks should be eliminated - Guardian), confirmation of a head of HUD who questioned his own credentials for government service ( and Trump questioning the American intelligence agencies for pointing out the help Russian hackers gave him on the road to the White House (TNY). In fact, his selection of Rex Tillerson appears to be a further sign that not only did Russia get the man they wanted but that he is going to repay them in spades with one of the biggest allies to their economic interests in all of America.
So let’s look at the week in Trump in more detail:
So let’s look at the week in Trump in more detail:
1. The Post-Truth Era Accelerates: Presidents in the past have certainly had issues with the intelligence community, particularly when they release inconvenient facts like the foundation for the Iraq War being fake or that the Bush administration was warned of impending attack months before they occurred. Yet the extent of Trump’s attack on the CIA findings of Russian efforts to help get him elected might well be unprecedented. His penchant for lying and misinformation stands in clear repose here and is a clarion call to the mainstream media that they will have to hold all of his statements under a microscope, if they are to salvage their fading role as the fourth estate of government.
This call to arms will be made even more challenging as Trump appears to be intent on attacking the media on any instance that they don’t give him the positive PR he believes he deserves as a birthright (Salon; TNR). And, of course, the very press that might warn Americans of the fortifying Corporate State is a bigger and bigger part of that Corporate State. Six huge conglomerates now control over 90% of everything we see, read and listen to and their profit motives seem to override any concerns about the future of our democracy, playing right into the hands of our first fully corporate President.
2. Corporate State Bodes Poorly for Most Americans Interests: not unlike the Bush administration, but arguably substantially more so, the oil and gas industry will be well represented in the new administration, particularly with the Secretary of State and Head of the Energy Department. But beyond the ties to one of the biggest polluters on the planet, he has lined his administration with corporate interests while making no secret of his own growing conflicts of interest.
A meeting today with heads of the major tech companies (Daily Mail) exemplifies the many problems with his presidency to come. For one thing, the three children who are supposed to be running his business while he runs the country (presumably into the ground) were all present at the meeting, as many of them have been at previous meetings with heads of state and business leaders. In this case, representatives from Apple, Microsoft, Facebook (though not Zuckerberg), Amazon/Washington Post, and the like were all in attendance looking for tax reform, deregulation and more favorable trade agreements in the future. Trump attacked the industry throughout his campaign but now seems to be on the cusp of doing a 180, having promised to try to help them succeed in the future while praising himself for the recent stock market price rises for most in the room.
Beyond the meeting today, the conflicts of interest just keep piling up and one does begin to wonder if there will be repercussions once he takes office (The Guardian). The Office of Government Ethics, in fact, just today warned that his business arrangement with his children is so far afield of the normal blind trusts that all previous presidents have installed that they have serious reservations about the potential ramifications (The Guardian). The problem, of course, is that it appears Trump has little reason to heed these warnings and has openly admitted at times that he might be running his business and the country at the same time.
The potential for conflicts in either case are profound, and there are already worries about a changing relationship with Russia (that could have profound implications for, among others, Syria and Iran), business arrangements with Taiwan, Argentina, Turkey and others that could come with perks, the very presence of a Trump Towers in DC that business and organizations are lining up to utilize in return for favors or at least a meeting with the incoming President and broader concerns about Iran, South Korea, China and large swaths of Europe.
In a broader sense, it is becoming clear that the interests of Corporate America – whether it’s the health industry, gas and oil, fast food companies, for profit educational companies or the tech industry – will trump those of the average American on a whole host of matters from wages, job security and inequality to the environment, education, healthcare and globalization. The promises Trump made to middle America, particularly the Rust Belt, to rejuvenate the economy seem secondary to the business interests of his vast empire (TNY) and of the many corporations that increasingly define domestic and foreign policy in the U.S. Even on his welcome plan to rebuild the crumbling infrastructure of America appears to simply be a gift to contractors that may siphon billions of dollars of taxpayer money into the pockets of already bloated corporate profits.
3. Russia Quietly Celebrates the Victory they Helped Secure: Russia could benefit greatly from the election of Donald Trump and he increasingly showing a proclivity to serve those interest (AGM). The most obvious case is his pick for Secretary of State, a man who once brokered one of the biggest deals in history between Russian and American economic interests, though the Crimean attacks scuppered that deal. That same deal could be back on the table in the future, with the CEO of Exxon Mobil actually benefitting his own company through his foreign policy actions. Trump’s stance on Syria and the Middle East could also benefit Russia as could a softer touch on their human rights abuses and potential plans to reengage in the Ukraine.
The fact that the mainstream media has largely taken a pass on the deeper implications of this story is rather startling, as the ramifications of the hacking scandal could indicate a pay to play scandal never seen in the history of major political and economic competitors in history. That Trump has so blithely rejected the issue at hand seems like a good predictor of how future scandals will be treated and there is every reason to believe, at least for the next two years, that a Republican Congress with the unique power to push through radical policy initiatives like killing Obamacare, undermining Medicare, privatizing Social Security, deregulating industry, ignoring climate change and radical tax cuts, might simply ignore any of his many offenses against the national interest.
The fact that the mainstream media has largely taken a pass on the deeper implications of this story is rather startling, as the ramifications of the hacking scandal could indicate a pay to play scandal never seen in the history of major political and economic competitors in history. That Trump has so blithely rejected the issue at hand seems like a good predictor of how future scandals will be treated and there is every reason to believe, at least for the next two years, that a Republican Congress with the unique power to push through radical policy initiatives like killing Obamacare, undermining Medicare, privatizing Social Security, deregulating industry, ignoring climate change and radical tax cuts, might simply ignore any of his many offenses against the national interest.
4. Foreign Affairs Already in Tatters: one of the biggest concerns surrounding Trump in the run-up to the election is that his demeanor was poorly matched to the needs of international diplomacy (Washington Times). Some believed that his ability to “make a deal” and take a hardline stance might, in the end, override concerns about his lack of tact and experience. That seems like a stretch if early indicators are to be believed. He has already offended China, radically transformed our rocky relationship with Russia and spent a considerable amount of time attacking leaders across the globe. With the opportunity to send a positive message regarding his foreign diplomacy team, he instead picked a woman with no international experience to the UN and now a corporate titan to lead our foreign affairs team. As with the general tenor of his transition, it appears allies and payback have played a much larger role in administration picks than experience or ideological reasonableness. Trump ran as an alt-right hero, but many believed that he would temper those positions upon taking office. There is little to indicate that that is, in fact, the case, and much to support the exact opposite position. With a world in flux and danger around every corner, Trump has every opportunity to do irrevocable damage to the interests of not only Americans but billions around the world.
5. Environment Gasps Final Breaths of Fresh Air: across the board, there have been selections that seem to undermine the rather mediocre attempts of the Obama administration to address climate change. At the top of the list is the new head of the EPA, Pruitt (Salon), who is a global warming doubter and friend to the oil and gas industry. With the Energy secretary, Rick Perry, we have another friend to the biggest polluters in the world and someone who doesn’t even believe the department should exist. And, of course, a man at the helm of the one of the biggest companies in the world that has consistently attempted to stop any attempts to address climate change will now have a huge role in dictating our foreign policy. If his role at Exxon-Mobil is any indicator, dictators are considered preferable to democratic regimes, poverty abatement and education secondary to corporate interests and the bottom line to even the interests of the United States. The entire country will most likely suffer under Trump -- excluding the Top 1 percent -- but it is the environment that could take the biggest blow.
In fact, that pretty much sums up Trump to date ...
Friday, October 14, 2016
By the way ... On the Economy
During the most recent debate, Trump claimed that economic growth is at its lowest level since the Great Depression. While it does stand under two percent at the moment, that is obviously a radically incorrect statement - given that we have had negative growth in a number of years since 1942. Here is a chart of GDP growth by year since 1930: The Balance. On top of this, jobless claims just hit a 42-year low (see chart below). So, as with so much that Trump says, it is important to check those "facts," as they are just as often convenient "lies" he is using to spread fear and try to save his fledgling campaign.
Friday, June 24, 2016
Cheers, Europe … it was nice knowing you!
Auf wiedersehen,
adios, arrivederci, au revoir, vaarwel. That is what the British
people, by a small margin, have decided to say to the European Union this
evening (NYT).
Following in the footsteps of nativist movements across the world, England will
now stand alone, leaving the rest of Europe to find a way to live in harmony
under one currency and free trade zone. It was a stunning victory for the right-wing group that sponsored the vote,
not only sending shock waves across Europe and the globe, but causing the Pound
to tumble like Road Runner over the cliff after another failed plan to snatch
his nemesis.
Like the nomination of Donald Trump as the GOP presidential candidate, it appears to show a new fascist tide rising across parts of the Western world, where anger over economic disparity has been planted firmly at the footstep of growing transnational migration and the immigrants looking for a better life at the core of the neoliberal economic juggernaut. Nigel Farage, the leader of the Independent Party largely responsible for the victory, proclaimed, “Dare to dream that the dawn is breaking on an independent United Kingdom.”
As the first of the 28-member bloc to leave, it is still unclear what effect it will have on the EU, though it is worth noting that England never accepted the Euro as their currency, and were thus not as closely aligned with the economic policies of Germany and France as the rest of the member countries. On the other hand, as a key player in the financial and banking industries of Europe, one imagines it will cause even further consternation as the European Union attempts to confront its failures over the past decade and a half to live up to its early promise.
More troubling is the anti-immigrant “populism” that is spreading like a Ziska plague across Europe and America and what it means for our collective future. The real culprits at the heart of the declining economic prosperity of all but the richest Westerners have dodged the proverbial bullet of the 2007-08 Financial Crisis so far and seem to have effectively used their political surrogates to create an alternative narrative that resonates with the people. The first rule of colonialism was divide and conquer and that still seems to be among the most effective strategies to keep an increasingly squeezed middle and working class at bay as their quality of life continues to decline.
Whether it can last in the long term is an interesting question, particularly with the model of economic prosperity, equality and opportunity the countries of Finland, Norway, Sweden and Denmark continue to provide to the rest of the Western nations, who conveniently ignore the data in lieu of tired old tales of neoliberal hegemony and its many beneficiaries. The election of Francois Hollande and the run of Bernie Sanders certainly provide some hope of a progressive “spring” that can restore some semblance of reason to the debate about our collective future, but it appears the reactionary policies of ressentiment are winning out with substantially more frequency at the present.
Like the nomination of Donald Trump as the GOP presidential candidate, it appears to show a new fascist tide rising across parts of the Western world, where anger over economic disparity has been planted firmly at the footstep of growing transnational migration and the immigrants looking for a better life at the core of the neoliberal economic juggernaut. Nigel Farage, the leader of the Independent Party largely responsible for the victory, proclaimed, “Dare to dream that the dawn is breaking on an independent United Kingdom.”
As the first of the 28-member bloc to leave, it is still unclear what effect it will have on the EU, though it is worth noting that England never accepted the Euro as their currency, and were thus not as closely aligned with the economic policies of Germany and France as the rest of the member countries. On the other hand, as a key player in the financial and banking industries of Europe, one imagines it will cause even further consternation as the European Union attempts to confront its failures over the past decade and a half to live up to its early promise.
More troubling is the anti-immigrant “populism” that is spreading like a Ziska plague across Europe and America and what it means for our collective future. The real culprits at the heart of the declining economic prosperity of all but the richest Westerners have dodged the proverbial bullet of the 2007-08 Financial Crisis so far and seem to have effectively used their political surrogates to create an alternative narrative that resonates with the people. The first rule of colonialism was divide and conquer and that still seems to be among the most effective strategies to keep an increasingly squeezed middle and working class at bay as their quality of life continues to decline.
Whether it can last in the long term is an interesting question, particularly with the model of economic prosperity, equality and opportunity the countries of Finland, Norway, Sweden and Denmark continue to provide to the rest of the Western nations, who conveniently ignore the data in lieu of tired old tales of neoliberal hegemony and its many beneficiaries. The election of Francois Hollande and the run of Bernie Sanders certainly provide some hope of a progressive “spring” that can restore some semblance of reason to the debate about our collective future, but it appears the reactionary policies of ressentiment are winning out with substantially more frequency at the present.
Monday, February 08, 2016
Critique of Critiques of Bernie (Robert Reich)
Bernie skeptics
How to respond to Bernie skeptics? Watch our latest video to find out.
Posted by Robert Reich on Tuesday, January 26, 2016
Tuesday, January 26, 2016
The 1% Have Now Surpassed the 99% in Wealth
Yes, that’s right. A report from Oxfam found that the top 1% of the world’s earners now has the combined wealth of the bottom 99%. Even worse, the richest 62 individuals in the world have as much wealth as half of the people on the globe combined. This trend has been ongoing since the 80s, but has accelerated dramatically in recent years.
Free market advocates would argue that these individuals deserve the money they’ve earned and invest it in the economy to make us all better off. But that is inaccurate, as the accumulation of wealth in the hands of the few tends to lead to riskier investment behavior, dramatic waste and conspicuous consumption in cars, housing, fashion and the like, which have high profit margins but where there are fewer employees.
Ben Southland of the Adam Smith Institute is among the critics of the report, claiming: “"More meaningful measures show greater equality. Those in the middle and bottom of the world income distribution have all got pay rises of around 40% between 1988-2008. Global inequality of life expectancy and height are narrowing too—showing better nutrition and better healthcare where it matters most. What we should care about is the welfare of the poor, not the wealth of the rich.” While I agree we should care about the welfare of the poor, this is highly correlated with the share of global wealth in the hands of the few.
It’s not a complicated argument, either. The more money amassed by the few, the less there is for the rest of us. Other economic booms have involved wealth creation, but more equally distributed across the population. That is no longer the case and many in the West actually have net-negative wealth, given their outstanding debt obligations. This is the result of relatively flat wages for the average worker, higher unemployment rates, inflation that is higher than reported by the official measures and increasing debt (particularly student loan balances).
So is there a solution to this problem? Of course there is! It involves returning to more progressive tax policy, expanding the earned income tax credit, putting limits on executive compensation, breaking up the big banks and expanding the “living wage” movement across the country and then globe. Workers have been increasing productivity over the past 30 years and profits have steadily risen (except during economic downturns), but the fruits of those increases have increasingly gone into the hands of the few. At the global level, we could take inspiration from the Nordic countries that not only have a higher average standard of living with high taxes and “big government” but higher life expectancy, higher happiness rates and, surprisingly to Americans, more income mobility. Addressing global poverty in the developing and underdeveloped worlds should begin with forgiveness of foreign debt and an end to the demands of “liberating” markets for foreign capital and competition.
If you are wondering whether you are among the lucky few, it takes $68,800 in savings to hit the top 10 percent and $760,000 to make that top 1 percent.
Free market advocates would argue that these individuals deserve the money they’ve earned and invest it in the economy to make us all better off. But that is inaccurate, as the accumulation of wealth in the hands of the few tends to lead to riskier investment behavior, dramatic waste and conspicuous consumption in cars, housing, fashion and the like, which have high profit margins but where there are fewer employees.
Ben Southland of the Adam Smith Institute is among the critics of the report, claiming: “"More meaningful measures show greater equality. Those in the middle and bottom of the world income distribution have all got pay rises of around 40% between 1988-2008. Global inequality of life expectancy and height are narrowing too—showing better nutrition and better healthcare where it matters most. What we should care about is the welfare of the poor, not the wealth of the rich.” While I agree we should care about the welfare of the poor, this is highly correlated with the share of global wealth in the hands of the few.
It’s not a complicated argument, either. The more money amassed by the few, the less there is for the rest of us. Other economic booms have involved wealth creation, but more equally distributed across the population. That is no longer the case and many in the West actually have net-negative wealth, given their outstanding debt obligations. This is the result of relatively flat wages for the average worker, higher unemployment rates, inflation that is higher than reported by the official measures and increasing debt (particularly student loan balances).
So is there a solution to this problem? Of course there is! It involves returning to more progressive tax policy, expanding the earned income tax credit, putting limits on executive compensation, breaking up the big banks and expanding the “living wage” movement across the country and then globe. Workers have been increasing productivity over the past 30 years and profits have steadily risen (except during economic downturns), but the fruits of those increases have increasingly gone into the hands of the few. At the global level, we could take inspiration from the Nordic countries that not only have a higher average standard of living with high taxes and “big government” but higher life expectancy, higher happiness rates and, surprisingly to Americans, more income mobility. Addressing global poverty in the developing and underdeveloped worlds should begin with forgiveness of foreign debt and an end to the demands of “liberating” markets for foreign capital and competition.
If you are wondering whether you are among the lucky few, it takes $68,800 in savings to hit the top 10 percent and $760,000 to make that top 1 percent.
Wednesday, May 20, 2015
Monday, May 04, 2015
Saturday, May 02, 2015
Kansas as a Microcosm of Regressive Taxation in America
One of the less reported trends in America over the past 20 years or so is the indirect establishment of a flat tax, when one aggregates federal, state and local taxes. This has been accomplished by reducing the marginal tax rates on capital (capital gains taxes) and income (progressive taxation) and replacing the lost income with increased regressive taxation (sales and excise taxes). Income tax, of course, is a progressive tax system in the U.S. where those who make more pay a higher percentage of their income in taxes. Capital gains taxes relate to investments, and generally thus influence the middle class and wealthy, who have more money invested, than the working class and poor. Sales taxes, however, are equal for everyone, and thus regressive – in the sense that the taxes are a lower percentage of total income for those who make more. This is amplified by the fact that the poor tend to spend more of their money on products that are taxed, thus placing the sales tax onus more on their shoulders.
Overall, it is a clever backhand approach to imposing the flat tax that some advocates, like Steve Forbes, pushed hard for back in 1996. The idea was that it was unfair for those who made more money to have to pay a higher percentage of their income in taxes. Of course, this idea has been attacked since progressive taxation was first established, and accelerated under the presidency of Reagan, who cut the highest tax bracket from 70 to 28 percent within six years (along with lowering capital gains taxes). Under Bush we also saw the elimination of the federal inheritance tax (coined the “death tax” by clever conservative rhetoricians) and further reduction in federal taxes. At the state and local levels, tax rate reductions have been a staple for conservative legislatures for over three decades.
The real trick is a bit more nefarious. Given the reduction in state and federal revenue, state and local government tend to run deficits whenever the economy slows even a little. This creates a “crisis,” which means reduction in spending and, rather than adjusting the tax rates back to their previous levels, increasing what are generally called “consumption taxes” (sales tax, toll rates, etc.). Given that this is a shift from progressive to regressive taxation, it disproportionately hurts the poor and working class (as they necessarily spend a larger proportion of their income on consumption). Thus the shift is a key part of the “war on the poor” many progressive journalists discuss in two ways: 1. Reductions in marginal income tax rates lead to lower revenue, which is used as the key excuse for reduced funding for social services that the poor and working class tend to count on, and 2. Rather than increase income taxes, they tend to increase sales taxes to make up these deficits, again hurting those at the bottom of the income ladder more than the middle and the middle more than the top.
Kansas is a hyperbolic exemplar of this trend, with the rich actually paying a lower percentage of their income than the poor by a relatively wide margin. A major overhaul of the Kansas tax code was completed by Republican Governor Sam Brownback a few years ago, cutting the tax rate for the wealthy to stimulate the economy, bring more revenue into the state’s coffers and close the budget deficit. This is, of course, the supply side (“trickle down”) economic approach that has proven itself to be both “funnel up” and “deficit generating” (facilitating the largest transfer of wealth from the poor and middle class to the rich in the history of the world). So it is not terribly surprising that the tax cuts did not stimulate the economy to the extent promised and that instead Kansas is sputtering along at the national economic growth rate and poised for a $143 million budget shortfall next year. Rather than reforming the failed policy and asking the wealthy to chip in their fair share, the legislature instead passed a bill that banned welfare recipients from using their benefits to swim or watch movies and are close to increasing sales and excise taxes yet again.
The progressive Kansas Center for Economic Growth argues that the state's deficit can't be eliminated without reversing some of the income tax cuts Brownback made in 2012, but instead the legislature seems ready to further punish the poor for their own profligacy. Kansas is already among the worst places to be poor in the country, as they actually tax all food (some can get a rebate of this tax, but not those who make no money or too little to earn a return, i.e., the poorest citizens of the state). To put it in numbers, among the fifth of the Kansas population with the lowest income, the average person pays 11.1 percent of what they make in state and local taxes, including sales taxes. Among the wealthiest one in every 100 Kansans, the average tax bill is just 3.6 percent of annual income. The proposal is to increase the sales tax from 6.15 to 6.3 percent. While that doesn’t sound like much, most of the pain will be felt by the poor and working class already food insecure in far too many cases.
The plan for increasing these taxes is defended by economists that argue people should be taxed on what they spend, not what they make, so as not to penalize them for earning more but instead encourage them to save and invest their money. The problem, of course, is that the average American has little to no savings, increasing debt, and thus is punished by these policies without the ability to take advantage of the increased incentive to save and invest. On top of that, given the low interest rates people get at the bank, it makes little sense to save money rather than pay off debts with substantially higher interest rates accruing on outstanding balances. In the end, it is a gift for the rich sold as an economically-sound alternative to progressive taxation and yet another example of the radical GOP agenda to transfer income and democratic power from the majority of the country to its rich minority and corporate sponsors.
And while Kansas is the most obvious and egregious example of regressive taxation policy, one can see the results across the country, including in Los Angeles County where recent estimates claim 1.5 million people are food insecure today. Not that the unofficial state flat taxation trend has stopped calls for an official flat tax at the federal level; two candidates for the 2016 Republican presidential nomination, Ted Cruz and Rand Paul, are leading the charge to give this misguided proposal a comeback from its 20-year nap.
Friday, April 17, 2015
Sunday, April 05, 2015
The World Gone Wild 2015
As neoliberalism moved toward unfettered dominance in the wake of the collapse of communism, the promise was the raising of all ships and a more peaceful future. Has that happened in the past 25 years? Of course not! From the Iraq War to the global financial crisis of 2007-08 to continuing troubles in Ukraine, Africa, Iraq, Israel and the like, we have seen a world of increased financial instability, increased inequality, increased poverty, global climate calamity and general insecurity and decline in the average standard of living. Just looking at the news over the past few days shows us how far we are from the utopian promise once offered by liberal democracy and a liberated global market. In Kenya, Islamic militants slaughtered 148 people on a college campus while screaming “God is great,” but one of the increasing terrorist incidents on the continent. Across Europe, racial discord continues to boil over along with anti-Semitism, anti-Islamic rhetoric and ethnic battles. Back in the U.S., newly released racist emails between officers and city officials in Ferguson, MO only amplify the ongoing discord. Over in Indiana, a family-run pizzeria, Memories Pizza, has received $840,000 in donations after claiming they would refuse to provide food to a gay marriage, continuing the ongoing partisan divide on equal rights for the LGBT community. In Alabama, yet another death row inmate was released, after having 28 years of his life robbed by a racist legal system. Meanwhile, Fox News is calling for Missouri officials to demand that food stamp recipients be banned from buying steak or seafood. Looking at the economic climate, Europe and Asia continues to suffer through instability, Russia’s economic growth is in serious jeopardy, Africa remains mired in poverty and the U.S. middle class continues to be strained by seemingly boundless one percent greed (Guardian). The one piece of good news, of Iran agreeing to curb its nuclear program if economic sanctions are lifted, might be undermined by the insanity of the GOP. It’s a mad mad world, indeed!
Monday, February 16, 2015
Some Questions for the Climate Change Deniers
The tired debate on climate change continues on unabated by the ever growing body of evidence debunking it. The latest example? A recent study highlighted by Fox News and then Joanne Nova that climate change deniers are more likely to know the answer to a nine-question quiz on climatology, created by a Yale professor and answered by a sample of 2,000 respondents. But here are the questions global warming conspiracy theorists never seem to answer:
1. Why would all these Nobel Prize winning scientists lie?
2. Who benefits from this “conspiracy?”
3. How do you explain the rather obvious changes in the climate, including the fact the temperatures are rising dramatically in the Arctic?
4. Who benefits from continuing to argue about this “conspiracy?”
5. Who benefits if we continue to do nothing about climate change?
6. Who funds most of the research on this “conspiracy?”
7. Why hasn’t the mainstream media found any evidence of this conspiracy after all these years?
The only question I’ve seen answered with any level of scrutiny is #2, with the absurd claims about Wall Street organizing this whole thing for future carbon trading profits. While they did orchestrate one of the biggest scams in history, almost eliciting the collapse of the global economy in the process, while garnering record profits and bonuses, it was really their incompetence that was rewarded. How are they supposed to have convinced so many climatologists to go along with this epic scam, backed by pretty compelling scientific evidence. Last and maybe most importantly:
1. Why would all these Nobel Prize winning scientists lie?
2. Who benefits from this “conspiracy?”
3. How do you explain the rather obvious changes in the climate, including the fact the temperatures are rising dramatically in the Arctic?
4. Who benefits from continuing to argue about this “conspiracy?”
5. Who benefits if we continue to do nothing about climate change?
6. Who funds most of the research on this “conspiracy?”
7. Why hasn’t the mainstream media found any evidence of this conspiracy after all these years?
The only question I’ve seen answered with any level of scrutiny is #2, with the absurd claims about Wall Street organizing this whole thing for future carbon trading profits. While they did orchestrate one of the biggest scams in history, almost eliciting the collapse of the global economy in the process, while garnering record profits and bonuses, it was really their incompetence that was rewarded. How are they supposed to have convinced so many climatologists to go along with this epic scam, backed by pretty compelling scientific evidence. Last and maybe most importantly:
8. Even if this is all a scam, aren’t there other benefits to lowering our addiction to carbon-based fuels, that clearly pollute the air and cause all sorts of problem for human health (that are beyond question) and global geopolitics?
Monday, February 09, 2015
Clinton Conundrum at Heart of New Consensus
A New York Times article Saturday highlights the conundrum facing Hillary Clinton as she runs for president, essentially serving as a perfect exemplar of where we find ourselves in American politics today. As argued in the lede, “With advice from more than 200 policy experts, Hillary Rodham Clinton is trying to answer what has emerged as a central question of her early presidential campaign strategy: how to address the anger about income inequality without overly vilifying the wealthy.” The problem starts with who some of those purported experts are, including the longtime champion of neoliberalism Lawrence Summers.
Clinton has never been a progressive populist in the way some hoped and has instead tended to adhere to the policies of her neoliberal husband and the more “centrist” voices of the party. The New Democratic model seemed to die with the election of Bush and fading popularity of sellout Blair, but we might be in for another round of cultural progressivism and conservative economics, even as the country yearns for an economic overhaul that more equitably shares the benefits of our rise in productivity and profits. Can Clinton shepherd such a change? The early signs are ominous, even as there does seem to be a more progressive bent to some of her early platform ruminations.
In the article it claims, “Although people close to Mrs. Clinton say she has not yet settled on a specific platform, she is expected to embrace several principles. They include standard Democratic initiatives like raising the minimum wage, investing in infrastructure, closing corporate tax loopholes and cutting taxes for the middle class. Other ideas are newer, such as providing incentives to corporations to increase profit-sharing with employees and changing labor laws to give workers more collective bargaining power.” This would be as close to a populist message as we could hope for, but can Clinton push through even a subset of these proposals with a Republican dominated Congress? Can her victory sweep in enough Dems to take back the Senate and soften the GOP majority in the House? At the moment, given the recent history and last election, that seems unlikely.
Early signs instead point to more of the same bipartisan bickering with little substantive work getting done. Obama has finally stood up to the Republicans in the past couple of months and passed some more progressive executive orders, but the battle over the budget and key economic policy loom in the near future, with a sense that the GOP will look to rebound from these post-wave reversals and assert their questionable “mandate.” The country looks on, hoping for a change that seems less likely than ever with four to eight more years of a Clinton administration, and an even dimmer outlook if she happens to lose. Another Clinton/Bush race, which is starting to look likely, really is déjà vu all over again, only worse …
Clinton has never been a progressive populist in the way some hoped and has instead tended to adhere to the policies of her neoliberal husband and the more “centrist” voices of the party. The New Democratic model seemed to die with the election of Bush and fading popularity of sellout Blair, but we might be in for another round of cultural progressivism and conservative economics, even as the country yearns for an economic overhaul that more equitably shares the benefits of our rise in productivity and profits. Can Clinton shepherd such a change? The early signs are ominous, even as there does seem to be a more progressive bent to some of her early platform ruminations.
In the article it claims, “Although people close to Mrs. Clinton say she has not yet settled on a specific platform, she is expected to embrace several principles. They include standard Democratic initiatives like raising the minimum wage, investing in infrastructure, closing corporate tax loopholes and cutting taxes for the middle class. Other ideas are newer, such as providing incentives to corporations to increase profit-sharing with employees and changing labor laws to give workers more collective bargaining power.” This would be as close to a populist message as we could hope for, but can Clinton push through even a subset of these proposals with a Republican dominated Congress? Can her victory sweep in enough Dems to take back the Senate and soften the GOP majority in the House? At the moment, given the recent history and last election, that seems unlikely.
Early signs instead point to more of the same bipartisan bickering with little substantive work getting done. Obama has finally stood up to the Republicans in the past couple of months and passed some more progressive executive orders, but the battle over the budget and key economic policy loom in the near future, with a sense that the GOP will look to rebound from these post-wave reversals and assert their questionable “mandate.” The country looks on, hoping for a change that seems less likely than ever with four to eight more years of a Clinton administration, and an even dimmer outlook if she happens to lose. Another Clinton/Bush race, which is starting to look likely, really is déjà vu all over again, only worse …
Monday, February 02, 2015
Thursday, January 29, 2015
More Good News for the One Percent!
In the wake of the recent disclosure that the Koch brothers will be spending close to a billion dollars to elect GOPers across the country in 2016, the New York Times shared some additional positive news for the one percent. Namely, that they are still garnering the vast majority of the benefits of a growing economy. According to data from Berkeley economist Emmanuel Saez, their share of total income (excluding capital gains) for 2013 is 17.1 percent. That is a level of inequality not seen since the Gilded Age a hundred years ago. Digging a little deeper into the numbers, we find that average income for the richest one percent has risen from $871,100 in 2009 to $968,000 in 2013. By contrast, the average for the remaining 99 percent has fallen from $44,000 to $43,900. This has been a consistent trend since the 1970s, though it has accelerated dramatically since the Bush tax cuts of 2001 (see the chart below).
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