Thursday, December 16, 2010

IRS audits up by 11%; richest targeted

Now that's what I'm talking about. Reduce audits on the Little Guy, go after the rich and larger corporations and increase tax revenues. Thanks, Obama, and way to go, IRS! Go get that cash!

Wealthy Individuals, Big Businesses Targeted Most Often
December 15, 2010 | AP

The Internal Revenue Service is making it a bit riskier to cheat on your taxes.

The tax agency increased the number of returns it audited by nearly 11 percent this year, statistics released Wednesday show. Wealthy taxpayers and big businesses were most likely to be targeted.

The IRS also stepped up audits of charities and other tax-exempt organizations.

In all, the IRS examined more than 1.58 million individual returns in the budget year that ended in September, up from 1.43 million the year before.

"We saw individual audits increase, reaching the highest rate in the past decade," said Steve Miller, IRS deputy commissioner for services and enforcement. "The bottom line shows enforcement revenue topped $57 billion, up almost 18 percent from last year."
Overall, a little more than 1 percent of individual returns were audited, either by mail or in person. The IRS audited more than 8 percent of returns with incomes above $1 million.

Taxpayers filed nearly 143 million returns, including those from individuals and married couples. Nearly 389,000 taxpayers reported incomes of $1 million or above.

Corporate audits dropped slightly, by less than 1 percent. But there was a 7 percent increase in the number of audits of firms with $10 million or more in assets.

MB360: Wall St. flush while middle class disappears

Posted by mybudget360

The shrinking of the American middle class is painful to watch. Shopping at the grocery store I've noticed more and more people with unique debit cards that don't look like your typical debit or credit card. These are actually the modern day food stamps and help to take away the stigma of pulling out a pile of paper coupons. My anecdotal observations are confirmed by the data.

Since September of 2009 we have added a stunning 6,000,000 Americans to the nationwide food assistance program. In fact, even as some are touting how great things are in the last month we added 521,000 more Americans to the food assistance program. Let me reiterate, we added half a million Americans to the food assistance program in the latest month of data. Is this really what we have in mind as a recovery? The latest data shows 43,000,000 Americans now receive food assistance. When we chart this data out it is rather startling.

You will notice that from 2000 onward the growth in food assistance participation has shot directly up:

food stamp chart

Source: SNAP

To put this in context, 13.8 percent of all Americans (1 out of 7) are now on some sort of food assistance. If we go back to the deep recession of the 1980s the rate was slightly above 10 percent. We are in all-time record territory here and the numbers just keep on expanding. What is more troubling is many more Americans that were once in the middle class are being thrown out of their homes, losing their jobs, and finding themselves in the unfortunate spot of needing to seek food assistance. An almost seamless transition from the American Dream to being one paycheck away from living in a car. It isn't for want of working. Delta Airlines recently was hiring 1,000 flight attendants and had over 100,000 people apply:

"(ABC) All this for a job where passengers are often rude, hours can be unpredictable and the starting salary is in the upper $20,000s. But flight attendants say they wouldn't trade it in for any other job. (Delta's flight attendants recently voted down a push to unionize.)"

As we've noted before, the chasm between the very rich and the poor has never been this big. We would have to go back to the Great Depression to find similar income inequality.

72,000,000 wage earning Americans make between $0 and $25,000 per year. The top 72 wage earners in the US in 2009 made an average of $84 million. The stock market has certainly recovered but how much of an impact has this had on improving the economic prospects of typical Americans? What we are seeing is a rather common attribute of many Latin American countries. A stunningly wealthy upper crust of society and the large working poor majority. The middle class is virtually non-existent. Clearly we are nowhere near that given we are still the number one global economy. Yet we have now put the car in reverse and the above chart of food stamp participation shows you where we are heading if we do not change course.
We can even see this split in purchasing behavior this holiday season:

"(WaPo) This holiday season, those two worlds have been thrown into stark relief: At Tiffany's, executives report that sales of their most expensive merchandise have grown by double digits. At Wal-Mart, executives point to shoppers flooding the stores at midnight every two weeks to buy baby formula the minute their unemployment checks hit their accounts. Neiman Marcus brought back $1.5 million fantasy gifts in its annual Christmas Wish Book. Family Dollar is making more room on its shelves for staples like groceries, the one category its customers reliably shop."

So you have the top of the top doing well once again and we have seen this with a resurgence of banking profits thanks to the generous taxpayer bailouts. At the lower end, organizations like Family Dollar are doing well in a market that is finding many new customers. Customers that may have once shopped at say a Target are going to lower priced places either out of necessity or out of a new sense of austerity. In fact, we have seen the debt burden Americans carry decrease because of bankruptcies, foreclosures, and simply paying down debts:

household debt obligations

The above would be better news if the major decrease was due to paying down already accumulated debts. Yet the problem of course is much of this is happening via debts being written off (i.e., foreclosures). But you have to ask what is happening at a deeper level here. The once standard of the American Dream, owning a home is now being retracted and the blanket is being pulled slowly back. Many Americans cannot afford to own a home because of an employment market that has been sold off to the global market over the past few decades. Some of it is inevitable but a lot isn't. It is naïve to think that there was truly a need to bailout the banking industry instead of actual employment sectors that can give jobs to the 15 million unemployed Americans or the other 9 million who are working part-time but want full-time work. It was also a giant banking pretense regarding toxic mortgages because Wall Street knew full well of the junk they were selling but wanted to milk the game as long as possible and once it blew up, it would hand over the hot potato to taxpayers.

The employment situation for households making less than $50,000 (aka half the population) is still deep in a recession:

"Economists say the biggest obstacle to a robust recovery is the high unemployment rate, which has hit workers with little education and low household income the hardest. The jobless rate for workers without a high school diploma is 15.7 percent – well above the national average and triple the rate for college graduates, according to government data. Meanwhile, the unemployment rate among households that had been making less than $50,000 is 15 percent, well above the national average of 9.8 percent, according to consulting firm Bain & Co."
And this is reflected in the unemployment charts:

unemployment unemployed

Where is the recovery? It isn't happening for working and middle class Americans. The bailouts in fact where a methodical mechanism that shifted resources and money from the vast majority to the few at the top. Many extremely wealthy organizations have earned their keep by fair competition. Yet the banking sector has created the biggest moral hazard in this country with outrageous profits and bonuses that only exist because of the cronyism between Wall Street and D.C. The fact that we are adding hundreds of thousands of Americans to the food assistance program on a monthly basis shows us the disappearing middle class. That is why you don't hear any economists or "analysts" on CNBC talking about the booming middle class. You don't hear about it because it isn't happening. In fact, they are too busy to look at how many of their fellow Americans are paying for daily necessities.

'Technical' party in U.S. mirrors Russia

Post-Soviet Russia invented something called a "technical" party, which is a dummy rival party established by a stronger party (often the ruling party) to siphon off votes from rival parties, and/or uphold the appearance of democratic competition.
This NYT story is about one woman in Siberia from a technical party who went rogue. Not in a Palin way, but in a real way. She wanted her technical party to be a real opposition. And Putin's ruling party, United Russia, reacted fiercely to her impudence.
Somewhat similarly, we have in the U.S. today a technical party called the Tea Party, which was established and funded by Republicans like Dick Armey and the Koch brothers to create the appearance of dissent/competition in the GOP ranks and to distract conservatives from the fact that their party supported the Wall Street bailouts, which the rank-and-file opposed.
Time will tell if this technical party will rise up against its master, the GOP, and seek to become a real alternative. But signs so far are not encouraging. So far it looks like this tactic straight out of Vladimir Putin's playbook has worked as intended: it got the GOP re-elected.
By Clifford J. Levy
December 10, 2010 | New York Times
URL: http://www.nytimes.com/2010/12/11/world/europe/11impunity.html?pagewanted=1&_r=1&hp

Monday, December 13, 2010

Poll: 70% of Americans wants to tax Wall St. to death

(Sigh) We can only dream of such fairness. It'll never happen when Wall Street is cutting the donation checks to Congress and all presidential candidates.


By Catherine Dodge
December 13, 2010 | Bloomberg

Hitchens: Beck's paranoia worse than Birchers'

Forfeiting a both-houses Republican victory, rational conservatives ignored or excused the most hateful kind of populist claptrap (e.g., the fetid weirdness of Glenn Beck's 9/12 Project). The poison they've helped disseminate will still be in the American bloodstream when the country needs it least.

By Christopher Hitchens
January 2011 issue | Vanity Fair

It is often in the excuses and in the apologies that one finds the real offense. Looking back on the domestic political "surge" which the populist right has been celebrating since last month, I found myself most dispirited by the manner in which the more sophisticated conservatives attempted to conjure the nasty bits away.

Here, for example, was Ross Douthat, the voice of moderate conservatism on the New York Times op-ed page. He was replying to a number of critics who had pointed out that Glenn Beck, in his rallies and broadcasts, had been channeling the forgotten voice of the John Birch Society, megaphone of Strangelovian paranoia from the 1950s and 1960s. His soothing message:

"These parallels are real. But there's a crucial difference. The Birchers only had a crackpot message; they never had a mainstream one. The Tea Party marries fringe concerns (repeal the 17th Amendment!) to a timely, responsible-seeming message about spending and deficits."

The more one looks at this, the more wrong it becomes (as does that giveaway phrase "responsible-seeming"). The John Birch Society possessed such a mainstream message—the existence of a Communist world system with tentacles in the United States—that it had a potent influence over whole sections of the Republican Party. It managed this even after its leader and founder, Robert Welch, had denounced President Dwight D. Eisenhower as a "dedicated, conscious agent" of that same Communist apparatus. Right up to the defeat of Barry Goldwater in 1964, and despite the efforts of such conservatives as William F. Buckley Jr. to dislodge them, the Birchers were a feature of conservative politics well beyond the crackpot fringe.

Now, here is the difference. Glenn Beck has not even been encouraging his audiences to reread Robert Welch. No, he has been inciting them to read the work of W. Cleon Skousen, a man more insane and nasty than Welch and a figure so extreme that ultimately even the Birch-supporting leadership of the Mormon Church had to distance itself from him. It's from Skousen's demented screed The Five Thousand Year Leap (to a new edition of which Beck wrote a foreword, and which he shoved to the position of No. 1 on Amazon) that he takes all his fantasies about a divinely written Constitution, a conspiratorial secret government, and a future apocalypse. To give you a further idea of the man: Skousen's posthumously published book on the "end times" and the coming day of rapture was charmingly called The Cleansing of America. A book of his with a less repulsive title, The Making of America, turned out to justify slavery and to refer to slave children as "pickaninnies." And, writing at a time when the Mormon Church was under attack for denying full membership to black people, Skousen defended it from what he described as this "Communist" assault.

So, Beck's "9/12 Project" is canalizing old racist and clerical toxic-waste material that a healthy society had mostly flushed out of its system more than a generation ago, and injecting it right back in again. Things that had hidden under stones are being dug up and re-released. And why? So as to teach us anew about the dangers of "spending and deficits"? It's enough to make a cat laugh. No, a whole new audience has been created, including many impressionable young people, for ideas that are viciously anti-democratic and ahistorical. The full effect of this will be felt farther down the road, where we will need it even less.

I remember encountering this same mentality a few years ago, when it was more laughable than dangerous. I didn't like Bill Clinton: thought he had sold access to the Lincoln Bedroom and lied under oath about sexual harassment and possibly even bombed Sudan on a "wag the dog" basis. But when I sometimes agreed to go on the radio stations of the paranoid right, it was only to be told that this was all irrelevant. Didn't I understand that Clinton and his wife had murdered Vince Foster and were, even as I spoke, preparing to take advantage of the Y2K millennium crisis—remember that?—in order to seize power for life and become the Nicolae and Elena Ceauşescu of our day? These people were not interested in the president's actual transgressions. They were looking to populate their fantasy world with new and more lurid characters.

There is an old Republican saying that "a government strong enough to give you everything you want is strong enough to take away everything you have." This statement contains an essential truth that liberals have no right to overlook. But it is negated, not amplified, if it comes festooned with racism and superstition. In the recent past, government-sponsored policies of social engineering have led to surprising success in reducing the welfare rolls and the crime figures.

This came partly from the adoption by many Democrats of policies that had once been called Republican. But not a word about that from Beck and his followers, because it isn't exciting and doesn't present any opportunity for rabble-rousing. Far sexier to say that health care—actually another product of bipartisanship—is a step toward Nineteen Eighty-Four. Ten percent unemployment, on the other hand, is rather a disgrace to a midterm Democratic administration. But does anybody believe that unemployment would have gone down if the hated bailout had not occurred and GM had been permitted to go bankrupt? Why not avoid the question altogether and mutter about a secret plan to proclaim a socialist (or Nazi, or Jew-controlled: take your pick) dictatorship?

Again, there is a real debate about the pace and rhythm of global warming, and about the degree to which it has been caused (or can be slowed) by human activity. But at the first Tea Party rally I attended, at the Washington Monument earlier this year, the crowd—bristling with placards about the Second Amendment's being the correction—was treated to an arm-waving speech by a caricature English peer named Lord Monckton, who led them in the edifying call-and-response: "All together. Global warming is?" "Bullshit." "Obama cannot hear you. Global warming is?" "bullshit." "That's bettah." I don't remember ever seeing grown-ups behave less seriously, at least in an election season.

Most epochs are defined by one or another anxiety. More important, though, is the form which that anxiety takes. Millions of Americans are currently worried about two things that are, in their minds, emotionally related. The first of these is the prospect that white people will no longer be the majority in this country, and the second is that the United States will be just one among many world powers. This is by no means purely a "racial" matter. (In my experience, black Americans are quite concerned that "Hispanic" immigration will relegate them, too.) Having an honest and open discussion about all this is not just a high priority. It's more like a matter of social and political survival. But the Beck-Skousen faction want to make such a debate impossible. They need and want to sublimate the anxiety into hysteria and paranoia. The president is a Kenyan. The president is a secret Muslim. The president (why not?—after all, every little bit helps) is the unacknowledged love child of Malcolm X. And this is their response to the election of an extremely moderate half-African American candidate, who speaks better English than most and who has a model family. Revolted by this development, huge numbers of white people choose to demonstrate their independence and superiority by putting themselves eagerly at the disposal of a tear-stained semi-literate shock jock, and by repeating his list of lies and defamations. But, of course, there's nothing racial in their attitude …

As I started by saying, the people who really curl my lip are the ones who willingly accept such supporters for the sake of a Republican victory, and then try to write them off as not all that important, or not all that extreme, or not all that insane in wanting to repeal several amendments to a Constitution that they also think is unalterable because it's divine! It may be true that the Tea Party's role in November's vote was less than some people feared, and it's certainly true that several of the movement's elected representatives will very soon learn the arts of compromise and the pork barrel. But then what happens at the next downturn? A large, volatile constituency has been created that believes darkly in betrayal and conspiracy. A mass "literature" has been disseminated, to push the mad ideas of exploded crackpots and bigots. It would be no surprise if those who now adore Beck and his acolytes were to call them sellouts and traitors a few years from now. But, alas, they would not be the only victims of the poisonous propaganda that's been uncorked. Some of the gun brandishing next time might be for real. There was no need for this offense to come, but woe all the same to those by whom it came, and woe above all to those who whitewashed and rationalized it.