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Morning in America or “Mourning” in America?

Morning in America or “Mourning” in America?

It depends on your point of view.

Production vs Comp graph

If you are one of those owners of capital at the top, well it’s been GREAT! But if you are a regular working Joe, not good at all.

From the graph you can see that everyone’s income went up along with productivity until around 1973. A divergence started and stayed fairly close until around 1980. Then in 1984, we heard this in and ad for President Reagan:

It’s morning again in America. Today more men and women will go to work than ever before in our country’s history. With interest rates at about half the record highs of 1980, nearly 2,000 families today will buy new homes, more than at any time in the past four years. This afternoon 6,500 young men and women will be married, and with inflation at less than half of what it was just four years ago, they can look forward with confidence to the future. It’s morning again in America, and under the leadership of President Reagan, our country is prouder and stronger and better. Why would we ever want to return to where we were less than four short years ago?

Well, maybe because even though the economy was in the doldrums for a few years preceding 1980, at least the wealth was kinda sorta still being shared. But after that, not at all.

And after Reagan we had George H. W. Bush, then Clinton, then W, and now Obama. And not one of them have been able to change the rules in our country that allow the richest of the rich to get richer and richer as the bottom 99% fall behind.

The rules of the game are rigged in favor of those who already have great wealth. If you read the article in The Atlantic where I found the graph, you’ll learn more about how and why the divergence started and continues to expand, and you’ll find out what might happen if we don’t do anything about it (it’s not good), and what we could do to start to close the gap. (Hint: spend money to improve the education of our population and improve our failing infrastructure).

If the rich want to avoid a revolution, they better start looking out for the health and welfare of the communities that supply them with workers; first by sharing the wealth that comes from increased productivity with their workers, and second by encouraging local governments to increase spending to repair our decaying infrastructure systems.

Corporate Citizen Dick Boeing vs. Arrogant Prick Cadillac ELR

Corporate Citizen Dick Boeing vs. Arrogant Prick Cadillac ELR

Speaking of total dicks like Mr. Boeing in the post below, last night I was reminded of another big dick in manufacturing – Cadillac.

This commercial first aired during the Super Bowl. I think it was won the “Ugly American Award” or maybe the “Arrogant Prick Award”. I can’t remember which one. Anyway, I hadn’t seen it since the big game until last night during The Academy Awards. In case you were lucky enough to miss it and don’t know what I’m talking about, here is the worst car commercial I’ve ever seen. It’s titled “Poolside”.

What kind of person would feel good about buying a Cadillac ELR after watching that nightmare of a commercial? Only some selfish prick that worships the likes of my tax-cheating neighbor, Corporate Citizen Boeing.

The American Dream is dead.

Go buy a Fiat. They make arrogance-free commercials.

Inequality, Redistribution, and the Problem with Capitalism by Blankfein, Binswanger, and Pope Francis

Inequality, Redistribution, and the Problem with Capitalism by Blankfein, Binswanger, and Pope Francis

About inequality:

[Goldman Sachs chief executive officer Lloyd] Blankfein also said that the financial crisis led to a “bit of a wake-up call” about income inequality. He said that was a good thing. “This country does a great job of creating wealth, but not a great of distributing it,” said Blankfein. “ But I don’t want to do something that stops our ability to build wealth.”

Here’s how Harry Binswanger thinks we should go about redistributing our nation’s wealth:

For their enormous contributions to our standard of living, the high-earners should be thanked and publicly honored. We are in their debt.

Here’s a modest proposal. Anyone who earns a million dollars or more should be exempt from all income taxes. Yes, it’s too little. And the real issue is not financial, but moral. So to augment the tax-exemption, in an annual public ceremony, the year’s top earner should be awarded the Congressional Medal of Honor.

While I read the Binswanger column, “Give Back? Yes, It’s Time For The 99% To Give Back To The 1%“, I thought that for sure he must be joking, especially when I got to “a modest proposal“, but I never got to a part where tongue was inserted in cheek. I reviewed his other stuff and Googled for more information and, as far as I can tell, he really is a selfish, prickish follower of Ayn Rand who actually believes what he writes.

Pope Francis had something to say about capitalisms failures in an exclusive interview for the La Stampa in which he responds to attacks on his criticism of “economies of exclusion” in his apostolic exhortation, Evangelii Gaudium:

Just as the commandment “Thou shalt not kill” sets a clear limit in order to safeguard the value of human life, today we also have to say “thou shalt not” to an economy of exclusion and inequality. Such an economy kills. How can it be that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?

His response in the interview to critics like Rush Limbaugh who called him a Marxist:

Andrea Tornielli (Vatican Insider): The most striking part of the Exhortation was where it refers to an economy that “kills”…

Pope Francis: There is nothing in the Exhortation that cannot be found in the social Doctrine of the Church. I wasn’t speaking from a technical point of view, what I was trying to do was to give a picture of what is going on. The only specific quote I used was the one regarding the “trickle-down theories” which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and social inclusiveness in the world. The promise was that when the glass was full, it would overflow, benefitting the poor. But what happens instead, is that when the glass is full, it magically gets bigger nothing ever comes out for the poor. This was the only reference to a specific theory. I was not, I repeat, speaking from a technical point of view but according to the Church’s social doctrine. This does not mean being a Marxist.

I came across that aphoristic quote while reading “This Fuckin’ Pope” at The Rude Pundit today. His post has much more to say about the importance of not only that papal quote but many others about politics and society. It’s a good read, so go there now.

So Blankfein seems to have some Catholic guilt in him, Binswanger has no guilt and no shame, and Pope Francis believes it’s best for people to direct an abundance of food and medicine to the people who don’t have it but need it very badly. You know, like Jesus did.

GOP’s strategy: Attack the poor, protect the rich and blame the grandchildren

GOP’s strategy: Attack the poor, protect the rich and blame the grandchildren

eat the rich

If the recent government shutdown and brinkmanship over raising the debt ceiling has shown us anything, it is to crystallize the willingness of the Republican Party to attack, with almost breathtaking fanaticism, programs that are designed primarily to help middle and lower income Americans by strengthening the nation’s tattered safety net.

The Affordable Care Act, whatever its flaws, will cover millions of low-income Americans by an expansion of Medicaid (Oregon has already lowered its uninsured rate by 10% through the Medicaid expansion contained in the ACA) and provide additional millions with the opportunity to buy affordable private health insurance, with government subsidies to help pay the premiums for those who qualify.

At most the ACA is a modest reform of the private health insurance system, with an expansion of Medicaid thrown in for good measure to help those folks whose income puts them beyond the reach of the private insurance system. Yet even this modest law to help our least fortunate citizens is fought with the sort of tenacity and fervor by the right and the GOP that any reasonable person would assume would be directed only at a Canadian-style single payer system. It’s even more perplexing and disgraceful when one considers that the GOP itself has provided no substantive plan of its own that would come anywhere close to the goal of the ACA to provide near universal coverage.

The reason, of course, is that the GOP does not see universal health care coverage as a worthy objective at all.

This blatant disregard for middle and low income Americans is displayed, too, in its budget aims. The GOP insists that any budget negotiations will take place in the context of no new taxes; even loophole closures, being off the table. Instead, the GOP will discuss only government spending cuts. And where do they want to cut? Well, we’ve already seen the GOP House voting to cut $70 billion over 10 years from food aid to the poor from the Farm Bill. And with Democrats desperate to get out from under sequestration cuts to vital domestic discretionary programs, the GOP’s sole offer is to shift the bite to entitlements such as Medicare, Medicaid and Social Security- more beating up on the poor and elderly (and poor elderly).

The GOP’s justification for slashing important programs that primarily assist the non-wealthy of our society is the magnitude of our national debt and the continuing deficits which we are passing on to our children and grandchildren. Setting aside the fact that deficits are already falling, it’s difficult to view this angst over the burden we are passing to future generations as anything but insincere and self-serving nonsense – merely crocodile tears.

First, if the deficit mattered that much to Republicans, they wouldn’t take revenues off the table. At a time when economic data shows that the wealthiest Americans have increased their share of income following the Great Recession whilst everyone else has seen their incomes stagnate and when Mitt Romney’s unearned income and that of hedge fund managers is no more than 15% while middle-income working Americans pay 15-33%, it is an absurdity bordering on obscene to argue that the rich are overtaxed. Yet for these few, these happy few, the GOP is willing to go to the mat.

Second, Republicans never talk about the other deficits that we will be passing on to our children and grandchildren if we don’t find more revenues; for example $3.6 trillion in infrastructure repairs by 2020. And if funding for scientific and other vital research continues to diminish in real terms, how will we maintain our economic primacy going forward?

Anti-government mindlessness bordering on fanaticism, combined with an almost total disregard for America’s least fortunate citizens and a singular concern only for the wellbeing of its richest – these are the hallmarks of today’s Republican Party. With its deeply misguided aims and despicable tactics, it is doing more damage to America than al-Qaida or any nation that wishes America ill could hope to accomplish. It is well past time America fought back.

The Super Rich 1% are Taking More Money than Ever

The Super Rich 1% are Taking More Money than Ever

Followers of this blog already know that income inequality is high on my list of injustices in this world. Why should a tiny privileged sliver of our economy take so much?

Their slice of the pie has been increasing for the past forty years, but in 2012 they broke a record. From NBC News:

The pay gap between the richest 1 percent and the rest of America widened last year, making a record.

The top 1 percent of U.S. earners collected 19.3 percent of household income in 2012, their largest share in Internal Revenue Service figures going back a century.

U.S. income inequality has been growing for almost three decades. But until last year, the top 1 percent’s share of pre-tax income had not yet surpassed the 18.7 percent it reached in 1927, according to an analysis of IRS figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

If you are like me, that makes you angry. I could go off on this like I have several times in the past, or I could just say DUH! What did you think was going to happen? Did you think that things would change under the administration of a Democratic “Progressive” president? I did when I voted for Obama in 2004, but not so much anymore. No progress on this front. Inequality has gotten worse. Worse than it was prior to the Great Depression.

So what should we do? Good question. I don’t know the answer, but I do know that the next time some ignorant Republican refers to Obama as a Socialist, I will show a silly grin and wait for them to ask about what I think is so funny.

Until then, I will listen to The Clash who, as Gorby says, have a song for every occasion.

Lyrics:

I don’t want to hear about what the rich are doing
I don’t want to go to where the rich are going
They think they’re so clever, they think they’re so right
But the truth is only known by guttersnipes

Wealth Inequality in America explained with animated charts and graphs

Wealth Inequality in America explained with animated charts and graphs

I’ve written about income inequality and wealth disparity many times on this blog, and I hope I’ve successfully communicated the extent of inequality in America. However, I know I’ve never written anything that comes close to describing the magnitude of the problem as well as this video.

Does anyone doubt that there’s enough wealth and income in this country to pay for our government? Our country is not any less wealthy than it was when we were running surpluses, it’s just that our wealth is much more concentrated in the hands of a tiny sliver of our population. They should be asked to pay their fair share. And by that I mean much more than they are currently paying on investment income, and much more on income of any kind over $5M and even more on income over $10M.

Bowles-Simpson and the Gang of Six both thought we should have fewer tax tiers, a broader base, and lower rates. I think they are horribly wrong. We need more tiers to capture more tax revenue from the top 1%, the top 0.1%, and especially the top 0.01%. And I have no doubt they can all afford to pay more and continue to live lavishly.

After viewing the wealth inequality video, you shouldn’t have any doubts either.

Stagnant Middle Class Income and Escalating Income Inequality are Not Myths

Stagnant Middle Class Income and Escalating Income Inequality are Not Myths

You may have recently read a column titled “The Myth of a Stagnant Middle Class” by Donald Boudreaux and Mark Perry published in The Wall Street Journal that starts out with:

A favorite “progressive” trope is that America’s middle class has stagnated economically since the 1970s. One version of this claim, made by Robert Reich, President Clinton’s labor secretary, is typical: “After three decades of flat wages during which almost all the gains of growth have gone to the very top,” he wrote in 2010, “the middle class no longer has the buying power to keep the economy going.”

This trope is spectacularly wrong.

To support their thesis they go on to cite some very, very misleading statistics about how the middle class is actually far better off than it was 20 to 30 years ago even though middle-class income has been stagnant during that time. They say the middle class is better off because of life-expectancy gains and because today’s modern “basics” are far superior to older, less technologically advanced versions and are relatively cheaper than they were decades ago.

First off, there is no mention of how many middle-class families require two income earners just to get by these days. Second, there is a significant difference in life expectancy gains between the top half and the bottom half of earners.

Life Expectancy Earnings Graph

And third, when they say consumer spending on basics “fell from 53% of disposable income in 1950 to 44% in 1970 to 32% today” they are counting spending by everyone, not just members of the middle class.

You’ve probably heard the metaphor of how when Bill Gates walks into a local bar the average wealth of the patrons goes up by a factor of, I don’t know, 1,000,000 or so. Point being that the same is true for spending on basic necessities. When some way overpaid corporate CEO like Ted Kelly walks into a local bar, the average percent of spending on basics drops from about 50% to around 1% or less.

And how much wealth do people like Ted Kelly, let’s say for example the Walton family, accumulate during their lives compared to regular middle-class people? Josh Bivens reports:

…it is now the case that the Walton family wealth is as large as the bottom 48.8 million families in the wealth distribution (constituting 41.5 percent of all American families) combined.

So no matter what you might read in conservative publications like The Wall Street Journal about the “myth” of stagnant growth of the middle class or income inequality, it is they who are “spectacularly wrong.” While the income of the middle class remains stagnant, the income of the top 2% keeps soaring upward and, as their incomes grow, they amass astronomical amounts wealth.

Income inequality is a very real and growing problem in our country.

And with that I leave you with this song by Ben Harper.

There’s a man on the corner
Begging for help
There’s a man that walks past him
And he’s drowning in wealth
Who doesn’t understand
How disappointment destroys the soul

Fanatical Republicans fight for the super rich and against America’s future

Fanatical Republicans fight for the super rich and against America’s future

A Fiscal Cliff

Anyone need further proof of the extremism and detachment from reality that permeates today’s Republican Party? Look no further than its stance on the talks over the so-called fiscal cliff.

The country is facing huge and looming expenses as more and more baby boomers retire, our brave veterans return home from two wars with long term medical care needs, an enormous infrastructure deficit begs for investment spending as does the critical requirement to adequately fund those things will help to make us economically competitive in the long term: basic and applied research and development in science and technology, and our education system. And let’s not forget the key responsibility that any civilized society has, which is to provide a decent safety net for the poor in America.

Protecting the Rich from Taxes

So in the face of all these crucial needs what is the GOP’s contribution to the fiscal cliff talks? What is it they are willing to go to the mat for? To hear the whistle, climb the ladder from their trenches and charge with fixed bayonets to defend? Well, that would be to ensure that those poor rich souls who earn $250,000 or $25 million or whatever don’t suffer a paltry tax rate increase from 35 to 39.6%.

How does anybody with half a brain and a heart not see the lunacy of this position? The rubbish these Republicans peddle that higher tax on the wealthy rates hurt the economy is simply not supported by the facts, as anybody who reads Paul Krugman’s columns knows full well. When the Congressional Research Service said much the same thing the GOP forced it to withdraw the report. Pesky things, facts.

Fanatical Zeal for their Positions

However, the point is that the GOP has adopted an insane and indefensible position on taxes that is incompatible with the future America faces and they defend it with a mindless and almost fanatical zeal. And this is the second of America’s two major political parties.

The Saxby Chambliss Tax Plan Makes no Sense and it Makes Perfect Sense

The Saxby Chambliss Tax Plan Makes no Sense and it Makes Perfect Sense

I listened to Steve Inskeep interview Senator Saxby Chambliss (R-GA) about Tax Reform and the fiscal cliff on NPR during my drive into work yesterday. Chambliss’s argument was not supported by any empirical data and so completely incoherent I wanted to slam my head into the steering wheel. Traffic was really bad, so I didn’t

Chambliss, a member of the Gang of Six, outlined his three-pronged approach to curing our nation’s long-term debt problem: cut federal spending, reform Medicaid and Medicare, and raise revenue by eliminating loopholes and credits. He then accepted the fact that Obama has been elected twice with a campaign that called or letting the Bush tax cuts expire for those making over $250,000, but he went on to say something very misleading:

The small business community in America generates more jobs than any other segment of our workforce, and too many small businesses fall in that category. And if you raise taxes on an individual or a company that is creating jobs, does that really provide an incentive to that company to expand and create more jobs?

And I think the answer is pretty simple. It doesn’t.

Note: Only around 3% of small businesses earn more than $250,000.

Steve Inskeep did push back a little with:

If somebody is making $300,000, $400,000 a year in a small business and the marginal tax rate, the taxes on the upper part of their income, goes up a point or two points or three points, they’re paying more in taxes, but not actually very much more.

And as far as somebody who’s making a lot of money who would pay a lot more taxes, Warren Buffett said the other day, the ultra rich, including me, will forever pursue investment opportunities. In other words, he’s saying don’t say that it’s going to discourage economic activity to raise taxes a little bit.

Chambliss then claimed that raising the tax rate 4% on a small businessman making $400,000 a year may make a difference in him hiring any new employees. Inskeep replied smartly with:

… but somebody who’s making three or $400,000 a year and taxes are raised by a couple of percentage points on the upper part of his income, not his entire income, but the upper part of his income. He’s paying an extra couple thousand bucks. That’s going to stop him from hiring somebody?

And here’s where Chambliss becomes incoherent:

Reforming the tax code does not mean raising tax rates. If that’s all we do, we’ve missed a golden opportunity to really invigorate the economy. And then, secondly, when you reform the tax code, that person that’s making three or $400,000 is the person that’s going to lose those tax credits and tax deductions to a greater extent than somebody who’s making $50,000, let’s say.

So they’re going to wind up, in all probability, paying more in taxes, but it will be in a different way and at a rate that’s actually lower, which will allow them to reinvest what money they do have left over in their business.

Inskeep points out that either way the small businessman would end up paying more in taxes and wonders why he would hire employees under the loophole-closure method but not under the rate-raising method.

Chambliss responded with the Republican mantra about raising revenue with economic activity:

…because of the energizing of the economy, instead of making three or $400,000 in his business, he may make $500,000. And the economy grows and the employment base, and thereby the tax base, grows when you see that economy invigorated like that.

Inskeep missed an opening here to point out that there is no proof that low tax rates on wealthy lead to a robust economy. In fact, many economic studies have completely discredited that theory, and history shows that the economy boomed in post-war America and during the Clinton years when the top marginal rate ranged from 39.6% to 91%. And during the Reagan years the economy did pretty well when capital gains and dividends were taxed at the same rate as earned income.

It’s exactly this kind of incoherency that Bruce Bartlett wrote about in an excellent introspective essay for The American Conservative titled, “Revenge of the Reality-Based Community: My life on the Republican right—and how I saw it all go wrong” that led to his “intellectual crisis”. He criticized the the Bush plan and was ultimately purged from the party. But that wasn’t all – he was banned from Fox News for his heresy.

But when you consider that Chambliss is against raising rates on the top 2% and that as a member of the Gang of Six he wanted he wanted to reduce the top marginal rate by at least 9%; and if you then dispense with any thoughts that Republicans actually care about deficits, what he said starts to make sense.

Let’s review: Bush and Cheney proved “deficits don’t matter” by drastically cutting taxes and keeping them low throughout two very expensive, prolonged wars in Iraq and Afghanistan. Chambliss wants to lower taxes even further.

Republicans don’t want to collect revenue to pay for government. They’d rather cut the taxes of rich people by trillions of dollars than use the money to pay for entitlements and wars. Any real increase in marginal rates will without a doubt raise more revenue, and that’s why Chambliss said this to Sean Hannity on Fox News yesterday:

…there are two things that the president is talking about that are non-starters, Sean, I just don’t see any way forward. One is increasing tax rates on certain individual taxpayers. That’s not going to fly. I’ve never supported a tax increase rate-wise and I’m not going to. Secondly, we’re not even going to discuss revenues until they’re willing to put entitlement reform on the table.

He knows, you know, and I know that there is no way that closing tax loopholes for the rich will raise enough revenue to fill the hole made by cutting the tax rate on the very rich by 9%. They only way to fill the hole would be to raise the rates on capital gains and dividends and collect more taxes from the middle class by eliminating write-offs like the mortgage-interest deduction. He also knows that if the President succeeds in raising rates for the top 2%, then he might also someday, after the economy is running strong again, succeed in raising all rates back to Clinton-era levels, and that would mean we could actually afford to pay for entitlements.

So to summarize, Chambliss is for raising revenue only when it doesn’t really raise revenue, because raising revenue for real would take money from the rich to provide for the elderly, the infirmed, and the poor. And that is something for which Republicans simply will not stand.