Category Archives: Taxes

The Politics Of Division And Deception.

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For many years, the GOP has used so-called “social” issues, such as proposed anti-abortion legislation and “sanctity of marriage” laws to divide the voting populace and fire up their base. The Democratic Party has focused on issues like social safety nets, minimum wages and availability of health care. And the debate has left our government largely paralyzed.

In some ways, arguing about the issues that divide the rank and file of the two political parties is akin to rearranging deck chairs on the Titanic. It’s not that the issues aren’t important. But compared to other issues, they are mere distractions…the political equivalent of a con artist bumping your shoulder while picking your pocket.

The con artists are working for large, multinational corporations and the very wealthy. In order to grow and thrive, these companies need two things: A plentiful supply of natural resources and cheap labor. Over the course of history, those needs have led the wealthy to finance exploration, nations to build wide-ranging empires, and corporations to destroy collective bargaining movements.

Following World War II, the desire for access to oil, rubber, timber, tin and other resources led the British, the US and the Soviet Union to attempt to divide much of the world culminating in the Cold War. The desire to acquire resources led us into conflicts in the Caribbean, Central America, South America, the Middle East and Southeast Asia. It was the cause of the Spanish-American War, the war with Japan, the war in Vietnam, and the war in Iraq. It led our CIA to orchestrate the overthrow of elected leaders in Brazil, Chile, El Salvador, Honduras, Indonesia, Iran, Iraq, Nicaragua and elsewhere.

Similarly, the need for cheap labor led mining companies to create company stores and to build entire towns designed to trap workers into becoming hopelessly obligated to the owners. It caused companies to hire thugs to brutally beat striking workers. It led to shooting wars between corporate interests and labor unions. More recently, it led corporations to move factories to Southern “right-to-work” states then on to Mexico to China to India, Pakistan and Sri Lanka.

The executives behind these actions aren’t evil. They’re just doing business. They claim that it’s not their responsibility to worry about social or environmental problems. They believe that their only responsibility is to increase the return on investment for shareholders by decreasing costs and increasing productivity. To them, picturesque mountains merely cover the precious minerals they covet. Pristine forests are merely the lumber needed for construction. Impoverished people in distant lands are simply motivated laborers.

And so it goes.

While we argue over the debt ceiling, corporations and billionaires quietly park their profits in off-shore tax havens then lobby for a tax “holiday” that will allow them to bring the money home at greatly reduced tax rates. While we argue over extending unemployment benefits, corporations lobby for more subsidies and government giveaways. While we argue over food stamps, corporate agribusinesses pocket billions in taxpayer funds. While we argue over Social Security retirement benefits, too-big-to-fail financial institutions steal trillions from 401ks, IRAs, pension funds and foreclosed homes. At the same time, all of these corporations continue to lobby for reduced government regulation and oversight.

It is because of our inattention that a mere 85 individuals now own as much wealth as half of the world’s population…the equivalent of the populations of China, India, the United States, Indonesia and Brazil combined. It’s why unemployment has grown and why most salaries have not. It’s why a few corporations now control most of our food supply. It’s why those same corporations are able to poison the food supply in search of ever larger profits. It’s why the incidence of chronic disease has skyrocketed despite government-funded technology and research that give us the ability to end it. It’s why our climate is rapidly changing while we continue to subsidize the companies responsible for changing it.

As long as we focus on the distractions instead of the actions, things will only get worse.

Congress Versus The American People.

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Politicians, especially Republicans, are fond of saying that they have faith that the American people will always do the right thing. Hmmm…that raises a number of questions.

If politicians believe the American people are so smart, why don’t they do what the people want them to? Why have they refused to vote for universal background checks on all gun purchases when more than 90 percent of Americans demand them? Why has the House refused to support bills that would create the jobs Americans want? Why has the House delayed action on immigration reform supported by more than 70 percent of Americans? Why has the House refused to vote for equal pay for women? Why has it refused to raise the minimum wage? Why do Republicans refuse to vote for gay marriage? Why do they refuse to decriminalize marijuana? Why have they failed to vote for tax reform and equal enforcement?

Why do more than 80 percent of Americans despise Congress?

At least we have an answer for one of those questions.

An Irresponsible Corporation’s Last Resort.

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Last Friday, it was announced that the company responsible for the chemical spill in West Virginia, Freedom Industries Inc., had filed for bankruptcy protection and is in the process of selling its assets to a newly created corporation headed by (you guessed it) the former CEO of Freedom Industries. What better way for a group of uncaring, money-grubbing individuals to maintain their incomes while avoiding the consequences of their actions? Or should it be inactions? After all, the chemical tank that leaked hadn’t been inspected in decades.

Not surprisingly, the company claims that the leak is not its fault. It claims that “an unidentified object pierced the affected tank” allowing the toxic, but largely unregulated chemical to flow into the river just upstream from the City of Charlotte’s water supply; a chemical that, if ingested, causes severe diahhrea and vomiting; a chemical that, in the words of West Virginia officials, is only good for “flushing.”

By filing for bankruptcy, the company owners are hoping to protect their assets while avoiding any lawsuits from those affected by the spill and fines from the Environmental Protection Agency. To be held accountable, courts will have to find that the former owners of Freedom Industries were guilty of negligence or malfeasance (difficult charges to prove). If not, the company owners will be able to go right back to doing what they were doing…soaking up large sums of money and sticking the public with any clean-up costs.

And that’s not all.

In its bankruptcy filing, Freedom Industries admits that it owes the IRS $2.4 million in back taxes. One assumes that sum is in jeopardy if the bankruptcy court allows the owners to abscond with the company assets while avoiding any and all liabilities. If nothing else, the corporation will likely be able to diminish its tax liabilities through a variety of tax write-offs. And don’t think for a moment that this situation is unique. This has become a common strategy for corporations facing lawsuits for irresponsible activities. Indeed, the advantage of incorporating a business is to create a “corporate veil” that the owners can hide behind if and when things go bad. The belief is that, without the corporate veil, no one would take the risk of starting a business…a belief that I don’t share.

It’s this very protection that belies the conservative fantasy that corporations are people. Yes, they are owned by people and they are run by people. But articles of incorporation give owners an opportunity to simply walk away from problems when they outweigh profits. Individuals and sole proprietorships have no such protections. And, as the result of the Citizens United Supreme Court decision, owners and managers of corporations now have more influence than ever before. They can contribute to political campaigns both as individuals and as corporate officers. Given this disproportionate influence, we are likely to see many more corporations like Freedom Industries.

That’s unlikely to generate any complaints from conservatives.

Conservative idealogues may insist on personal responsibility for individuals…especially those who ar impoverished. But they have no such demands for corporations. After all, they view corporations as “job creators” and they despise government agencies responsible for regulating corporations. Moreover, most corporate political contributions will benefit conservative candidates. Conservatives wouldn’t want to give up those.

Stop Blaming Bush?

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On today’s edition of The Diane Rehm Show on NPR, a conservative asked the question, “Can we all admit that this is no longer George W. Bush’s economy?” It’s a fair question. We are, after all, about to begin the sixth year of the Obama administration. So I, for one, am more than willing to concede the point. Even though Bush’s policies crashed the economy, slashing federal revenue through tax cuts for the wealthy and leaving us mired in two unfunded wars with annual deficits in excess of $1 trillion along with massive unemployment, this is no longer Bush’s economy.

It is now quite clearly President Obama’s.

So let’s review what has happened over the past five years. To begin, President Obama signed a stimulus plan that helped stem the bleeding. He gave loans to GM and Chrysler to save the US auto industry and tens of thousands of jobs. He withdrew troops from Iraq and has promised to withdraw our troops from Afghanistan this year. He lifted American spirits by giving the order to kill or capture Osama bin Laden. He expanded health care access to millions more Americans and stemmed out-of-control inflation of health care costs.

Under President Obama, we have seen a consistent rise in GDP (Gross Domestic Product) and the stock markets. At the same time, we have seen a substantial drop in umemployment despite substantial cuts to the number of employees at all levels of government. Finally, under President Obama, we have seen the most rapid drop in the federal deficit in modern history!

And most of this has been accomplished despite a recalcitrant GOP-led House that would have us believe that the way to deal with a struggling economy is to cut federal spending and revenues. Counter to the advice of most every economist, the Teapublicans in Congress have voted against bills that would create jobs, bills that would rebuild infrastructure while interest rates are at historic lows, and programs that stimulate the economy while helping those who most need it.

So, yes indeed. This is President Obama’s economy. And it would be even better if the GOP would get out of the way!

Paying It Forward.

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Renewing the Emergency Unemployment Compensation bill would add $25.2 billion to the current federal budget. Right wing politicians and media outlets tell us that we can’t afford such “giveaways” unless they are offset by other spending cuts. Oddly, they have no such requirements for subsidies to defense contractors, the oil industry, the financial industry, big Pharma, corporate agriculture and other large interests.

But for a program that will prevent 1.3 million people from falling into the abyss? Teapublicans believe that cost needs to be offset!

Certainly saving $25.2 billion sounds good. But, in government, saving money always comes at a cost. In this case, it’s not difficult to imagine the human cost of taking away the only source of income for 1.3 million people…people who have been unemployed for six months or longer. People who are discriminated against by employers who think there must be something wrong with someone who has been unemployed for so long.

And there are other costs.

As journalist Bill Moyers reports, “Harvard economist Lawrence Katz estimates that the expiration of benefits for the long-term unemployed is costing the economy $1 billion per week.” Others estimate the cost to our economy at $400 million a week. Whichever figure is correct, that means the cost of extended unemployment benefits is already offset by what the program contributes to the economy.

Economists confirm that money spent on such programs goes directly into the economy. After all, what else are the long-term unemployed going to do with the money? Save it? Obviously, they spend it. They use it to pay for food, gasoline, utilities and other necessities. It’s not enough to allow them to live comfortably. But it helps. And that money stimulates other portions of the economy. It contributes to sales taxes. It contributes to the profits of local businesses which, in turn, pay income taxes on the money. As a result, the money finds its way back into federal, state and local governments as revenues.

It’s a win-win. It’s taxpayers paying it forward to help their struggling neighbors. Anyone who would say otherwise is cruel and heartless.

Oh wait! I just described today’s GOP.

The Conservative War Against Labor.

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In the years following the Great Depression, labor unions were popular and thriving. The Wagner Act of 1935, also known as the National Labor Relations Act, guaranteed workers the right to collective bargaining and the right to strike. As a result, union workers, particularly those in mining and manufacturing, experienced dramatic gains in salaries and benefits, along with safer working conditions.

Corporations didn’t give up these things without a fight. But public sentiment was temporarily on the side of workers and World War II demanded unity between corporations and unions.

The end of World War II and the beginning of the Cold War gave corporations a new opportunity to undermine unions with the rise of Sen. Joseph McCarthy (R-WI) and his House Un-American Affairs Committee (HUAC). Likely emboldened by President Truman’s loyalty program intended to discredit Democratic rival Henry Wallace (former V.P. to FDR, nuclear disarmament advocate and pro-labor candidate) prior to the 1948 presidential election, McCarthy launched a witch hunt in search of communist sympathizers. News of the Soviet Union’s growing nuclear capability spawned a national paranoia that allowed McCarthy to portray labor unions as a communist front .

By the time McCarthy’s lies and un-Constitutional tactics were exposed, hundreds of Americans had been imprisoned, thousands more had lost their jobs and tens of thousands had been investigated. The victims included those who had supported Wallace, civil rights leaders, union leaders…even the unions’ rank and file.

The unraveling of the HUAC may have posed another setback for corporations and the wealthy, but McCarthy’s accusations left many suspicious of organized labor, even as labor unions continued to help build the middle class. Finally, in the 1980’s, anti-union forces suceeded in electing a president sympathetic to their cause – Ronald Reagan. When the Professional Air Traffic Controllers Organization (PATCO) went on strike, violating a law banning strikes by government workers, Reagan fired all 11,345 members who failed to return to work.

Reflecting on the event, former Federal Reserve Chairman Alan Greenspan commented, “His [Reagan’s] action gave weight to the legal right of private employers, previously not fully exercised, to use their own discretion to both hire and discharge workers.”

The war against unions resumed in earnest.

Corporations began sending jobs offshore in search of labor willing to work for low wages and without benefits such as health insurance, disability insurance and unemployment insurance. The export of jobs also eliminated the need for worker pensions. (In the years since Reagan’s election, more than 85,000 defined benefit pension funds have been eliminated.) Many of the jobs that can’t be exported, like those at Walmart and McDonald’s, now pay so little that their employees require public assistance. And with fewer workers eligible to pay dues, many labor unions have been weakened.

Meanwhile, management compensation has soared. The savings on labor costs has resulted in million dollar annual salaries and bonuses for executives.

With money comes influence allowing corporations and industries to successfully lobby Congress for subsidies, tax write-offs and lower tax rates. In addition, many corporations have been allowed to avoid taxes by creating Post Office box “headquarters” in off-shore tax havens. The resulting drop in tax revenue led to increased deficits and greater debt. But, rather than rewrite the corporate tax code and raise taxes on those who could afford it, conservatives have seized the opportunity to cut social programs. They not only cut food stamps. They have targeted Medicaid, Medicare and Social Security, as well.

Not surprisingly, conservatives have also taken aim at the labor unions which represent government workers, such as teachers, firefighters and police. In particular, they want to eliminate government pensions. The argument is that, if private workers don’t have pensions and benefits, why should government workers? If successful, conservatives will have turned the clock back to the gilded age; the days prior to labor unions; the days of extreme wealth and extreme poverty.

Some say that we already have two Americas. I would argue three.

One is the America of the one percent; those who make lots of money and pay little to no income tax; those who can buy influence by donating to political campaigns and build new businesses with government subsidies financed with the taxes paid by others.

The second is the America of hard work, limited upward mobility and shrinking investments. In this America, you work ever longer hours in order to meet the corporate demands of increased productivity. Each year, you are forced to do more with less. For you, retirement may be little more than a dream. And for your children, college will become a financial burden they may never be able to repay.

The third America is one in which people work for so little money they can’t afford many of the necessities of life. According to the Working Poor Families Project, one in three American families are now among the working poor. One in six Americans and one in four children don’t know where the next meal is coming from, or even if there will be a next meal. In this America, more than 630,000 are chronically homeless and 3.5 million will experience homelessness in a given year. For many of these people, there is little hope that their circumstances will change. They not only lack political influence, many face new laws and obstacles intended to discourage them from voting.

Both President Obama and Pope Francis have recently called economic inequality the biggest problem we face. But President Obama can’t reduce inequality in America by himself. We will need a Congress that represents all Americans. We will need a sympathetic and unified citizenry. And we will need organized labor.

(As a footnote, I should make it clear that, having become part of middle management almost immediately following college graduation, I was ineligible for union membership. But, like most Americans, I was able to take advantage of the improved working conditions, salaries and benefits negotiated by labor unions.)

Why We Can Never Return To The Nostalgic Post-War US Of The Baby Boomers.

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The Baby Boomers who comprise the majority of the Tea Party movement fondly recall the world of their youth; a world of cheap gasoline, muscle cars, rock ‘n roll, full employment and US world dominance. They want that world back. And they are convinced that the only thing standing between them and the world of their youth is a liberal, out-of-control government that wastes their money on freeloaders.

I have bad news for them. That world no longer exists. And it’s never coming back.

You see, following World War II, we were one of the few countries that had not suffered significant destruction. While much of Germany, Japan, Italy, France, Belgium, Poland, Great Britain and the Soviet Union had been flattened, the US was essentially unscathed. That led to unprecedented industrial production and wealth for the US. We produced an astounding 50 percent of the world’s goods and services…goods needed to rebuild much of the world. We held two-thirds of the world’s gold. And Americans were looking to the future by investing in education and infrastructure through increased tax rates.

For those in the US, life was good. Really good!

Now contrast that situation with today’s economy. Instead of making the materials to rebuild other nations, we must now compete with them. Instead of exporting manufactured goods, we have been exporting middle class jobs. Taxes are near 60-year lows, reducing revenues and forcing our government to borrow money in order to maintain our crumbling infrastructure. We are recovering from the worst economic conditions since the Great Depression and two unfunded wars. And, according to Teapublicans, it’s all the fault of President Obama and the Democratic-controlled Senate.

Say what?

The nostalgic world of the fifties and sixties was not the norm and never could be. Moreover, Americans got fat (literally) and lazy. We also got greedy. Instead of investing in our future, we cut taxes. Instead of maintaining our manufacturing base, our corporations became engaged in a race to the bottom looking for impoverished populations they could exploit in order to lower their labor costs. Instead of forcing multinational corporations to pay the true cost of energy and transportation, politicians enabled the export of jobs through government subsidies. And instead of promoting hard work and the American Dream, we eliminated estate taxes allowing the wealthy to create dynasties leading to unprecedented income disparity.

Truth is, today’s situation is the result of decades of bad political decisions…most originating during the Reagan administration. Doubling down on those policies, as the Tea Party demands, will not help. Instead of taking us back to the days of Leave It To Beaver, they’re more likely to take us back to the days of Oliver Twist and Scrooge.

Public Versus Private. Corporations Versus People.

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Ever since President Ronald Reagan said, “The nine most terrifying words in the English language are I’m from the government and I’m here to help,” conservatives have attributed virtually all of our problems to the federal government. They believe that the government cannot do anything well. As a result, they have continually cut taxes in order to starve the government of revenue, making it less effective and less efficient so it better lives up to their expectations.

At the same time, conservatives have pushed to privatize many government functions. Private, for-profit contractors now handle many of the functions that our military once did, including food service, transportation, supply and security. Both state and federal governments have awarded contracts to private prison corporations. Public education now competes for funding with private charter schools. Even our most sensitive spying and surveillance programs have been outsourced to private companies as evidenced by the revelations surrounding Edward Snowden.

But are these private entities really better than the government? Is the government really the problem? Much of the evidence says no.

The jury is still out on whether or not privatizing our military is a good idea, but there have been numerous embarrassing incidents in which private contractors were accused of committing war crimes. As for private prisons, studies have shown that they cost far more per inmate than public prisons, even though private prisons refuse to accept high security prisoners and those with chronic illnesses. And a study by Stanford University has shown that private charter schools perform no better than public schools.

Moreover, the 2013 Customer Rage Survey by Customer Care Measurement and Consulting and the Arizona State University W. P. Carey School of Business found that the percentage of people with customer service problems grew from 32 percent in 1976 to 50 percent in 2013. And 56 percent of those who complained in 2013 remain unsatisfied. Most telling is the fact that 98 percent of the most serious customer service problems involved private companies. Only 2 percent were associated with the government!

How can that be? Is it possible Reagan was wrong?

The truth is, our government is ultimately accountable to us. It may seem big and uncaring, but one election can change everything. On the other hand, today’s giant financial institutions and multinational corporations have little accountability to customers. Certainly, you can move your account from a large bank to a smaller one, but the likelihood is that it, too, is controlled by a large holding company. You can switch insurance companies and find that the new company is just as difficult to deal with as the previous one. Likewise, you can get rid of your cable company, but your satellite provider may not be any more responsive. Indeed, it may be worse.

The problem is not a matter of public versus private. Most customer service problems stem from bureaucracy – both public and private.

But our most serious problem involves both public and private institutions. It centers on the alliance between government and large corporations based on disproportionate access and influence. Consider, for example, the alliance between the George W. Bush White House and Richard “The Dick” Cheney’s former company, Halliburton, which was awarded billions in no-compete military contracts for Iraq and Afghanistan; or the alliance between Ohio congressional representatives (both Republican and Democrat) and the Ohio contractor for Abrams tanks which was awarded a contract for additional tanks that the Army neither wants or needs; or the alliance between Arizona Governor Jan Brewer’s staff and a private prison company which led to the company receiving multi-million dollar contracts for private prisons. There are many, many more examples.

Not surprisingly, many of the government’s most outspoken critics are conservatives who will gladly spend money to enrich their districts, their states, their corporate friends and themselves.

Conservatives Take Aim At Government Labor Unions.

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This year, conservatives are gathering lumps of coal for most Americans’ Christmas stockings. We can soon expect to see multi-million dollar assaults on many of the nation’s remaining social institutions and programs. At the federal level, conservatives in Congress are seeking to cut another $4 billion to 40 billion from the Supplemental Nutritional Assistance Program (SNAP), better known as food stamps. They are also targeting Social Security, Medicare, Medicaid, and unemployment insurance. And they are fighting attempts to increase the minimum wage despite the fact that large corporations have raked in record profits since the beginning of the Great Recession, and that wage growth is our main impediment to economic growth.

Conservatives are facing a severe time crunch in order to accomplish these goals. You see, the economy is finally showing signs of real growth. That means more Americans are working and paying taxes, thereby reducing the drain on social programs and lowering the deficit. As the deficit disappears so, too, does the conservatives’ primary argument for slashing social programs and cutting spending.

If conservatives are going to force more austerity and “personal responsibility” on poor Americans, squash labor unions, slash corporate taxes and head off a growing environmental movement, they have to do it now while the deficit is still inflated due to the effects of the Great Recession.

That’s why, as The Guardian reported, the State Policy Network funded by the Koch brothers is coordinating an all-out assault on government and social institutions in 34 states beginning early next year. The focus is on cutting pensions and wages for government workers, cutting budgets for public schools through voucher programs, and combatting attempts to reduce greenhouse gases. But, undoubtedly, the primary goal of the campaign is to rid the country of labor unions, particularly those in the public sector.

Of course, virtually none of their goals are actually good for our country. They are, however, great for large corporations, their executives and their investors.

None of this should come as a surprise to anyone. Conservatives have been fighting organized labor since the 1800’s. Labor unions grew in the 1930’s following the Great Depression when workers realized that the economic collapse was caused by the rich and their insatiable appetites for more wealth. But labor unions have been under attack ever since. The attacks accelerated during the Reagan administration leading to a decline in union membership, the elimination of more than 85,000 pension plans since 1980, and the export of hundreds of thousands of American jobs. As more high-paying labor jobs were sent offshore, union membership further declined. At the same time, large corporations like Walmart fought to block the unionization of their workers. As a result, union membership declined 11.3 percent in 2012 alone. Simultaneously, corporate profits have soared. But that largess has not been shared with workers.

There is, however, one sector of our economy in which labor unions are alive and well. The percentage of union membership among government workers is now 5 times higher than for workers in private companies. Given their contempt for unions and government, that figure makes public sector unions a tantalizing target for people like the Koch brothers. Their control of workers and the disassembling of government won’t be complete until labor unions no longer exist, corporate taxes are eliminated and the federal government is reduced to the Department of Defense. (After all, somebody has to defend them from those who would like to claim part of their wealth.)

Want to learn more about the attacks on American workers? I highly recommend The Betrayal of the American Dream by Barlett and Steele.

Exactly What Are Teapublicans Trying To Protect Us From?

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In shutting down the federal government, GOP congressional leaders said they wanted to save us from the Patient Protection and Affordable Care Act, (aka “Obamacare”). In other words, they want to save Americans from an idea that they, themselves, proposed in 1996 and successfully implemented in Massachusetts as an alternative to universal health care.

So what great evils are they trying to keep at bay on our behalf?

They are trying to block our access to online marketplaces that will allow hundreds of thousands of Americans to choose more affordable options for health insurance. (Yes, HealthCare.gov will soon be fixed and, if the experience of Massachusetts is any indication, customers will wait until the last few weeks to sign up.) They are trying to overturn a new government rule that prevents insurance companies from denying coverage for pre-existing conditions. They are trying to overturn a new rule that prevents insurance companies from terminating policies rather than pay the costs of medical treatments. They are trying to save us from the tax credits we’ll receive for purchasing health insurance.

The GOP and their wealthy contributors are trying to save up to 50 million Americans from being able to afford private health insurance for the first time. They are trying to keep parents from adding adult children up to age 26 to their own insurance policies. They are trying to save us from subsidized preventative care that will help identify medical conditions before they become more serious (and expensive) diseases.

They are trying to make sure that those who already have health insurance will continue to bear the costs of the uninsured who use the Emergency Room for routine health care visits. They are trying to preserve Washington’s largest group of lobbyists. Teapublicans are trying to ensure that the cost of health care benefits continue to encourage large corporations to ship middle class jobs overseas. Finally, they are trying to ensure that increases in health care costs continue to outpace inflation and that the cost of prescriptions will continue to skyrocket.

It’s obvious we need someone to rescue us for these self-proclaimed rescuers!