News digest / Catching up on news (12.06.2014)

I've been way too busy and there's way too much catching up to do, so here's a selection of important stories from the past month. If you read them then you'll know some of what I do:

"Ebola control: the Cuban approach." By Shah Ebrahim, et al, December 6, 2014, The Lancet. URL: http://www.thelancet.com/journals/lancet/article/PIIS0140-6736(14)62329-1/fulltext

"Judge Allows Glenn Beck Boston Marathon Defamation Lawsuit To Move Forward." By Kyle Mantyla, December 2, 2014, Right Wing Watch. URL:  http://www.rightwingwatch.org/content/judge-allows-glenn-beck-boston-marathon-defamation-lawsuit-move-forward#sthash.Gu8a2LEd.dpuf

"Driessen: Corporate Tax Fate May Hinge on Modeling Omission." By Paul Caron, December 2, 2014, TaxProfBlog. URL: http://taxprof.typepad.com/taxprof_blog/2014/12/driessen.html

"Russia Warns Of Recession In 2015 Amid Sanctions And Low Oil Prices." By Nataliya Vasilyeva, December 2, 2014, AP. URL:http://www.huffingtonpost.com/2014/12/02/russia-recession_n_6255810.html?utm_hp_ref=tw

"Study: Campaign Cash Brings Tax Benefits On Capitol Hill." By Peter Oberby, December 2, 2014, NPR. URL: http://www.npr.org/blogs/itsallpolitics/2014/12/02/368010428/study-campaign-cash-brings-tax-benefits-on-capitol-hill?sc=tw

"Whites greatly overestimate the share of crimes committed by black people." By Ana Swanson, December 1, 2014, Washington Post. URL:http://www.washingtonpost.com/blogs/wonkblog/wp/2014/12/01/whites-greatly-overestimate-the-share-of-crimes-committed-by-black-people/?Post+generic=%3Ftid%3Dsm_twitter_washingtonpost

"Capital controls feared as Russian rouble collapses." By Ambrose Evans-Pritchard, December 1, 2014, The Telegraph. URL:http://www.telegraph.co.uk/finance/economics/11266746/Capital-controls-feared-as-Russian-rouble-collapses.html

"Real world contradicts right-wing tax theories." By David Cay Johnston, December 1, 2014, Al Jazeera. URL: http://america.aljazeera.com/opinions/2014/12/laffer-curve-taxcutshikeseconomics.html 

"Which past is prologue for Putin’s Russia?" By Hannah Thoburn, November 30, 2014, Reuters. URL: http://www.reuters.com/article/2014/11/30/idUS318808040420141130

"Let's talk about 'black on black' crime." By Leonard Pitts Jr., November 30, 2014, Miami Herald. URL: http://www.mcclatchydc.com/2014/11/30/248504/leonard-pitts-jr-lets-talk-about.html 

"In America, black children don’t get to be children." By Stacey Patton, November 26, 2014, Washington Post. URL: http://www.washingtonpost.com/opinions/in-america-black-children-dont-get-to-be-children/2014/11/26/a9e24756-74ee-11e4-a755-e32227229e7b_story.html

"Keynes Is Slowly Winning." By Paul Krugman, November 26, 2014, New York Times. URL: http://krugman.blogs.nytimes.com/2014/11/26/keynes-is-slowly-winning/?smid=tw-NytimesKrugman&seid=auto

"Why Interstellar Should Be Taken Seriously -- Very Seriously." By Paul Stefanski, November 26, 2014, Huffington Post. URL:http://www.huffingtonpost.com/paul-stefanski/why-interstellar-should-b_b_6213002.html?utm_hp_ref=tw

"An Open Letter of Apology to the United States of America [about Benghazi]." By Brian Joyce, November 25, 2014, Huffington Post. URL:http://www.huffingtonpost.com/brian-joyce/an-open-letter-of-apology_b_6219340.html?utm_hp_ref=tw

"Should Putin fear the man who ‘pulled the trigger of war’ in Ukraine?" By Lucian Kim, November 25, 2014, Reuters. URL: http://www.reuters.com/article/idUS368525725520141125

"Why America may be set for success." By Fareed Zakaria, November 24, 2014, CNN. URL: http://globalpublicsquare.blogs.cnn.com/2014/11/24/why-america-may-be-set-for-success/

"Falling apart: America's neglected infrastructure." By Stefe Kroft, November 23, 2014, CBS News. URL: http://www.cbsnews.com/videos/falling-apart-americas-neglected-infrastructure/

"Ukraine gave up its nuclear weapons potential for reassurances it would be defended." By Bennett Ramberg, November 22, 2014, Guelph Mercury. URL: http://www.guelphmercury.com/opinion-story/5151036-ukraine-gave-up-its-nuclear-weapons-potential-for-reassurances-it-would-be-defended/

"Special Report: Crimean savers ask: Where's our money?" By Steve Stecklow, Elizabeth Piper and Oleksandr Akymenko, November 20, 2014, Reuters. URL: http://www.reuters.com/article/idUSKCN0J40FJ20141120

"Enough Is Enough: The President's Latest Wall Street Nominee." By Sen. Elizabeth Warren, November 20, 2014, Huffington Post. URL:http://huff.to/1uKQUYB

"Top Obama official: Ky. not ready on new bridge." By Deirdre Shesgreen, November 19, 2014, Cincinnati. URL: http://www.cincinnati.com/story/news/politics/2014/11/19/top-obama-official-ky-ready-new-bridge/19286625/

"Clarke and Dawe - Growth first. Then these other things can be dealt with, whatever they are." ClarkeAndDawe, November 19, 2014, YouTube. URL: http://youtu.be/OTfSZ0D39AI

"Sen. Bernie Sanders On How Democrats Lost White Voters." By Steve Inskeep, November 19, 2014, NPR. URL: http://n.pr/1wUqrVb

"Legal Panel At [Conservative] Federalist Society Begrudgingly Accepts Obama's Immigration Powers." By Sam Stein, November 19, 2014, Huffington Post. URL: http://huff.to/1qVW6DJ

"Stop calling me 'the Ebola nurse'." By Kaci Hickox, November 17, 2014, Guardian. URL: http://gu.com/p/43bqe

"US voter turnout is an international embarrassment. Here's how to fix it." By Bernie Sanders, November 10, 2014, Guardian. URL:http://gu.com/p/436mm

"Про що мовчать розумні українці." By Stanislav Bilchenko, November 9, 2014, Ukraininska Pravda. URL: http://www.pravda.com.ua/columns/2014/07/9/7031378/?attempt=1

"Beyond The Unemployment Rate: Look At These 5 Labor Indicators." By Sonari Glinton, November 7, 2014, NPR. URL: http://n.pr/1vVVOyf

"Capitalism Is Making China Richer, But Not Democratic." By Frank Langfitt, November 7, 2014, NPR. URL: http://n.pr/1qtMeAD

"Fewer Babies Are Born Prematurely, But Many Still Suffer." By Nancy Shute, Novebmer 6, 2014, NPR. URL: http://n.pr/1tgMCT4

"Interstellar Travel? Nah! (Part 2)." By Dr. Sten Odenwald, November 5, 2014, Huffington Post. URL: http://huff.to/1qq537W

Conservatives, do you want the good old days back?

When conservatives implore America to return to the good ole days, they don't understand what that entails.

For instance, a 90 percent top marginal tax rate. Check it out:

But hey, it was the golden age of America, right? So let's try it again and see what happens!

Economists Say We Should Tax The Rich At 90 Percent

By Ben Walsh

October 22, 2014 | Huffington Post

URL: http://huff.to/1FC9ZQL

DC Johnston: How U.S. companies get rich off taxes

My main bearded tax expert David Cay Johnston is back with more perfectly legal scams that big business use to get rich at our expense. Here it is in layman's terms:

Imagine how your bank statement would look if, instead of having taxes taken out of your weekly paycheck, Congress let you keep that dough in return for your promise to pay your taxes years or decades from now—and sometimes, never.

That’s the extraordinary deal Congress gives many big American companies now sitting on hundreds of billions of dollars of what are, essentially, interest-free loans. Apple and GE owe at least $36 billion in taxes on profits being held tax-free offshore, Microsoft nearly $27 billion and Pfizer $24 billion, according to Citizens for Tax Justice, a nonprofit organization respected for the integrity of its numbers even by groups that dislike its progressive perspective.

'Twas not always thus, Johnston reminds us, and as usual, it's Reagan's fault [emphasis mine]:

The use of offshore tax havens to convert profits into expenses stems from a 1986 change to Section 531 of the tax code. Starting in 1909, Congress imposed a 15 percent penalty on corporate cash-hoarding. That was supposed to encourage companies to reinvest and pay salaries and dividends, rather than weaken the economy by stuffing profits into the corporate equivalent of the proverbial mattress.

The 1986 amendment said companies could hold unlimited amounts of cash, provided it was in offshore accounts. Today at least 362 of the Fortune 500 companies have more than 7,800 tax haven subsidiaries, many stuffed with cash, according to a tiny nonprofit research organization, the Institute on Taxation and Economic Policy. 

Johnston also reminds us of the IRS's double standard, one for all of us Joe Schmoes and another for corporations: "For the vast majority of people with regular W-2 jobs, income taxes are taken out before you get your check. Congress does not trust you, so it demands its cut up front and requires your employer, bank and stockbroker to verify what they paid you."

However, [emphasis mine]:

[I]f you are a multinational, the government takes your word on how much you owe, subject only to the increasingly rare audits by the IRS. Top IRS auditors, paid about $150,000, each find on average $19 million of corporate taxes due each year, according to data the IRS discloses to Syracuse University researchers each month. Even though each auditor finds $126 in taxes owed for each dollar he or she earns in pay (a great return on investment), Congress has been steadily shrinking their ranks for more than two decades. It also hobbles auditors by allowing them to look only at issues the companies have been warned about, a practice similar to food, hospital and pet shop inspectors tipping businesses off that they are coming so they can clean up first.

Let me highlight that: the IRS is the only government agency that makes money -- it enhances our government's fiscal position, making our government less likely to go bankrupt -- and yet Republicans in Congress consistently underfund the IRS as it tries to enforce the tax laws already on the books. 

(So next time Republicans say they won't pass immigration reform because President Obama won't enforce existing laws, you'll know they're hypocrites.)

Perhaps the most perverse thing that happens is this:

Many companies, though, take a much simpler and safer approach when investing their untaxed profits. They buy U.S. Treasuries, those bonds the government sells because it spends more than it collects in taxes. In that way, the federal government pays companies to delay paying their taxes.

This is a classic heads-you-win-tails-I-lose economic plan: The government loans money to big companies interest-free, then borrows it back with interest.

Pretty sweet deal, if you can get it!

Corporate Deadbeats: How Companies Get Rich Off Of Taxes

By David Cay Johnston

September 4, 2014 | Newsweek

URL: http://www.newsweek.com/corporate-deadbeats-how-companies-get-rich-taxes-268303

Summers: Piketty is right about the past, but the future is ours

I'm tired so I'm not going to analyze now in depth Larry Summers' analysis of Piketty's seminal, once-in-a-generation economic treatise, I'm just gonna say what Summers says Piketty's data should lead us to believe [emphasis mine]:

Perhaps the best way of thinking about Piketty’s wealth tax is less as a serious proposal than as a device for pointing up two truths. First, success in combating inequality will require addressing the myriad devices that enable those with great wealth to avoid paying income and estate taxes. It is sobering to contemplate that in the United States, annual estate and gift tax revenues come to less than 1 percent of the wealth of just the 400 wealthiest Americans. With respect to taxation, as so much else in life, the real scandal is not the illegal things people do—it is the things that are legal. And second, such efforts are likely to require international cooperation if they are to be effective in a world where capital is ever more mobile. The G-20 nations working through the OECD have begun to address these issues, but there is much more that can be done. Whatever one’s views on capital mobility generally, there should be a consensus on much more vigorous cooperative efforts to go after its dark side—tax havens, bank secrecy, money laundering, and regulatory arbitrage.

Beyond taxation, however, there is, one would hope, more than Piketty acknowledges that can be done to make it easier to raise middle-class incomes and to make it more difficult to accumulate great fortunes without requiring great social contributions in return. Examples include more vigorous enforcement of antimonopoly laws, reductions in excessive protection for intellectual property in cases where incentive effects are small and monopoly rents are high, greater encouragement of profit-sharing schemes that benefit workers and give them a stake in wealth accumulation, increased investment of government pension resources in riskier high-return assets, strengthening of collective bargaining arrangements, and improvements in corporate governance. Probably the two most important steps that public policy can take with respect to wealth inequality are the strengthening of financial regulation to more fully eliminate implicit and explicit subsidies to financial activity, and an easing of land-use restrictions that cause the real estate of the rich in major metropolitan areas to keep rising in value.

I'm no fan of Summers, yet his last two prescriptions are, I daresay, things you will never hear discussed in depth on Fox, MSNBC, CNBC, CNN or elsewhere. Wherefore the lib'rul media, indeed!

The only thing I will criticize now, is Summers' argument that "productivity" and "entrepreneurship" explain the outsized gains of U.S. managers. A look at average CEO pay among U.S. corporations and others gives the lie to this argument.  Nobody is arguing that U.S. CEOs are that much better, yet they earn orders of magnitude more than their workers.

As wonkish and un-sexy as it may be, I've talked about this before and will continue to talk about the OECD's effort to fight BEPS (tax base erosion and profit shifting) among global corporations. This is indeed a global problem, not just a U.S. problem, and the U.S. cannot hope to solve it in isolation, but must nevertheless play a leading role in ending this global "race to the bottom."

Thomas Piketty Is Right About the Past and Wrong About the Future

By Lawrence Summers

May 16, 2014 | The Atlantic

URL: http://www.theatlantic.com/business/archive/2014/05/thomas-piketty-is-right-about-the-past-and-wrong-about-the-future/370994/

The super rich get the best welfare

By the way, I urge everybody to watch Robert Reich's film Inequality for All that puts the problem in historical perspective, and explains why extreme wealth and income inequality is not just bad for our economy, but for the fundamentals of our democracy.

Pop quiz, hotshots: what was the top marginal tax rate under Eisenhower?  Kennedy?  Nixon? Find the answers and then ponder what you think people mean when they talk about the "good ole' days."  

The Mega-Rich Get the Best Government Welfare

By Hamilton Nolan

April 18, 2014 | Gawker

It's great to be rich. It's extra double great to be super rich. And not just because you have all that extra money—because being super rich actually lets you pay lower taxes.

As Floyd Norris points out today, our wonderful and democratic tax system, in which investment income is taxed at a far lower rate than regular income, means that the super mega ultra rich—who almost always derive a larger portion of their income from investments than any other group—actually end up paying a lower overall tax rate than the merely normal rich, who derive a higher portion of their income from salaries. (The same goes for the non-rich, but more so!) Specifically, "The superrich ($10 million+ income) paid 20.4 percent of their income in federal income taxes in 2011, while the very rich ($500K-$10 million) paid 24.5 percent."

That is dumb as hell.

Even leaving aside any issues of basic economic justice or fairness, here is a bit of worthwhile context: the latest research shows that although the wealth of America has risen by $25 trillion since the depths of the recession, that wealth is not helping us as much as it should, because it's not being churned back into the economy as much as we would expect. From Bloomberg:

His calculations show that since the recession ended in 2009, households have spent 1.7 cents of every extra $1 earned in wealth. That's less than half the 3.8-cent average implied by data between 1952 and 2009.

One reason for the adjustment may be that those enjoying gains in wealth are already rich, so have less propensity to increase spending incrementally.

Hmm if only we could somehow rectify this vexing situation oh yes TAX THE RICH MORE AND THE PROBLEM IS SOLVED.

Reich: 2013 saw huge wealth redistribution

Trickle-down economic theory vs. trickle-up economic fact.

I can't say it any better than this. Read the whole thing and get back to me with any questions!

The Year of the Great Redistribution

By Robert Reich

January 5, 2014 | Huffington Post

One of the worst epithets that can be leveled at a politician these days is to call him a "redistributionist." Yet 2013 marked one of the biggest redistributions in recent American history. It was a redistribution upward, from average working people to the owners of America.

The stock market ended 2013 at an all-time high -- giving stockholders their biggest annual gain in almost two decades. Most Americans didn't share in those gains, however, because most people haven't been able to save enough to invest in the stock market. More than two-thirds of Americans live from paycheck to paycheck.

Even if you include the value of IRA's, most shares of stock are owned by the very wealthy. The richest 1 percent of Americans owns 35 percent of the value of American-owned shares. The richest 10 percent owns over 80 percent. So in the bull market of 2013, America's rich hit the jackpot.

What does this have to do with redistribution? Some might argue the stock market is just a giant casino. Since it's owned mostly by the wealthy, a rise in stock prices simply reflects a transfer of wealth from some of the rich (who cashed in their shares too early) to others of the rich (who bought shares early enough and held on to them long enough to reap the big gains).

But this neglects the fact that stock prices track corporate profits. The relationship isn't exact, and price-earnings ratios move up and down in the short term. Yet over the slightly longer term, share prices do correlate with profits. And 2013 was a banner year for profits.

Where did those profits come from? Here's where redistribution comes in. American corporations didn't make most of their money from increased sales (although their foreign sales did increase). They made their big bucks mostly by reducing their costs -- especially their biggest single cost: wages.

They push wages down because most workers no longer have any bargaining power when it comes to determining pay. The continuing high rate of unemployment -- including a record number of long-term jobless, and a large number who have given up looking for work altogether -- has allowed employers to set the terms.

For years, the bargaining power of American workers has also been eroding due to ever-more efficient means of outsourcing abroad, new computer software that can replace almost any routine job, and an ongoing shift of full-time to part-time and contract work. And unions have been decimated. In the 1950s, over a third of private-sector workers were members of labor unions. Now, fewer than 7 percent are unionized.

All this helps explain why corporate profits have been increasing throughout this recovery (they grew over 18 percent in 2013 alone) while wages have been dropping. Corporate earnings now represent the largest share of the gross domestic product -- and wages the smallest share of GDP -- than at any time since records have been kept.

Hence, the Great Redistribution.

Some might say this doesn't really amount to a "redistribution" as we normally define that term, because government isn't redistributing anything. By this view, the declining wages, higher profits, and the surging bull market simply reflect the workings of the free market.

But this overlooks the fact that government sets the rules of the game. Federal and state budgets have been cut, for example -- thereby reducing overall demand and keeping unemployment higher than otherwise. Congress has repeatedly rejected tax incentives designed to encourage more hiring. States have adopted "right-to-work" laws that undercut unions. And so on.

If all this weren't enough, the tax system is rigged in favor of the owners of wealth, and against people whose income comes from wages. Wealth is taxed at a lower rate than labor.

Capital gains, dividends, and debt all get favorable treatment in the tax code - which is why Mitt Romney, Warren Buffet, and other billionaires and multimillionaires continue to pay around 12 percent of their income in taxes each year, while most of the rest of us pay at least twice that rate.

Among the biggest winners are top executives and Wall Street traders whose year-end bonuses are tied to the stock market, and hedge-fund and private-equity managers whose special "carried interest" tax loophole allows their income to be treated as capital gains. The wild bull market of 2013 has given them all fabulous after-tax windfalls.

America has been redistributing upward for some time -- after all, "trickle-down" economics turned out to be trickle up -- but we outdid ourselves in 2013. At a time of record inequality and decreasing mobility, America conducted a Great Redistribution upward.

MB360: U.S. income divide is a yawning chasm

Here MB360 reminds us how the U.S. middle class has disappeared in our new Gilded Age of wealth inequality, where the top 10 Percent own 75 percent of all wealth [emphasis mine]:

Since the 1950s the trend has only moved in one direction.  People often talk about top tax brackets and how high income taxes are but if you look at the above chart, the average tax rate for those in the top 1 percent is 23.5 percent.  How is that when the top tax bracket is 39.6 percent?  First, many people have better methods of tax avoidance: IRAs, 401ks, dividend income, real estate deductions, etc.  Since the bulk of wealth is in the hands of the top 10 percent, this group is already lowering their tax burden via these deductions and beneficial tax structures.  Since the typical American is living paycheck to paycheck with little saved for retirement these tax reducers don’t really help.  Besides, their income tax burden share is minimal.  However, their other tax burdens are large as a proportion to their income.  This is usually ignored when people talk about how little the working class pay in this country as they try to scapegoat the disappearing middle class.

More to the point, the middle class by definition should be well, the middle.  In this case, being middle class is a household making $35,000 or more.  We often hear about $250,000 being middle class by the media but by the IRS tax data, this is closer to being in the top 2 percent of AGI.  Not exactly middle class when 98 percent are below you.  Even if we look at the bottom 75 percent, the cutoff here is $70,492; certainly a far away cry from $250,000.  Or even the top 5 percent starting point of $167,728.

Remember the 2012 presidential campaign when Romney said, amazingly, that the middle class was any household making "$200,000 to $250,000 and less"?  And less, indeed. The media didn't put his absurd comment in context, although the IRS income data was right there for them to see -- probably because the Obama campaign's definition of middle class was basically the same. 

Folks, U.S. economic inequality is still the elephant in the room; it was the most under-reported story of 2013.

Happy New Year!  Let's hope it's a more equitable one.

The Great Income Divide: IRS data shows 50 percent of households make less than $35,000 per year. Top 10 percent pay 68 percent of income taxes.

Posted by mybudget360 | December 31, 2013

URL: http://www.mybudget360.com/great-income-divide-tax-rates-who-pays-income-taxes-wealth-inequality-tax-pay/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+mybudget360%2FQePx+%28My+Budget+360%29

Survey: U.S. workers suffer unprecedented anxiety

And it's all because of Obamacare and federal regulations.... Oh, and too-high taxes on corporations, can't forget that one.

Seriously though, Republicans are out of answers and Democrats are too pussy to do what's necessary, like expanding unemployment benefits, raising the minimum wage, expanding Social Security, offering real child care, etc.:

More than six in 10 workers in a recent Washington Post-Miller Center poll worry that they will lose their jobs to the economy, surpassing concerns in more than a dozen surveys dating to the 1970s. Nearly one in three, 32 percent, say they worry “a lot” about losing their jobs, also a record high, according to the joint survey, which explores Americans’ changing definition of success and their confidence in the country’s future. 

And this worry is especially strong among the working poor, aka the Little Guys:

Fifty-four percent of workers making $35,000 or less now worry “a lot” about losing their jobs, compared with 37 percent of ­lower-income workers in 1992 and an identical number in 1975, according to surveys by Time magazine, CNN and Yankelovich, a market research firm. Intense worry is far lower, 29 percent, among workers with incomes between $35,000 and $75,000, and it drops to 17 percent among those with incomes above that level.

Lower-paid workers also worry far more about making ends meet. Fully 85 percent of them fear that their families’ income will not be enough to meet expenses, up 25 points from a 1971 survey asking an identical question. Thirty-two percent say they worry all the time about meeting expenses, a number that has almost tripled since the 1970s.

And it's not even polite to talk about the health and social effects of such anxiety among the working poor, that often clouds their judgment and leads to depression. We haven't even attempted, as a society, to feel that level of empathy with our fellow Americans.

Among American workers, poll finds unprecedented anxiety about jobs, economy

By Jim Tankersley and Scott Clement

November 26, 2013 | Washington Post

URL: http://wapo.st/1evjLGj

Heritage's Mike Lee: What's next for conservatives?

You know me, I'm all about equal time and the Fairness Doctrine, so I'm linking here in full a speech on October 29 by former Senator Mike Lee, the director of the Heritage Foundation.

Very quickly, Lee has taken Heritage from a right-wing think tank to an activist wing of the Tea Party; and many on the Right call Lee the leader of the Tea Party movement.  He very much positions himself as outside the "Republican establishment," whatever that is. 

(Everybody except John Boehner and Mitch McConnell? I guess "outside the establishment" is what you call yourself instead of "outside the Beltway" when you're actually located inside the Beltway, like Heritage is.)

Just a few interesting lines I'd like to point out that sound OK on the surface, until you get to the ideas part. Such as:

It’s hard to believe, but by the time we reach November 2016, we will be about as far – chronologically speaking – from Reagan’s election as Reagan’s election was from D-Day! Yet as the decades pass and a new generation of Americans faces a new generation of problems, the party establishment clings to its 1970s agenda like a security blanket.

The result is that to many Americans today, especially to the underprivileged and middle class, or those who have come of age or immigrated since Reagan left office the Republican Party may not seem to have much of a relevant reform message at all.

This is the reason the G.O.P. can seem so out of touch. And it is also the reason we find ourselves in such internal disarray.

And here's Lee's guidepost:

Where do we begin? A generation ago, conservatives forged an agenda to meet the great challenges facing Americans in the late 1970s: inflation, poor growth, Soviet aggression,along with a dispiriting pessimism about the future of the nation and their own families.

I submit that the great challenge of our generation is America’s growing crisis of stagnation and sclerosis – a crisis that comes down to a shortage of opportunities.

This opportunity crisis presents itself in three principal ways: immobility among the poor, trapped in poverty; insecurity in the middle class, where families just can’t seem to get ahead; and cronyist privilege at the top, where political and economic elites unfairly profit at everyone else’s expense.

OK, so far, so good. Sounds like good 'ole liberal rhetoric, I'm liking it.

Lee goes on to talk about breaking up corrupt cronyism of business and government elites, of backing the "little guy" again, and helping the middle class with one of its biggest expenses: health care.  (Lee supports "a comprehensive health reform plan proposed by Representatives Steve Scalise and Phil Roe" that I'm sure you all heard about when it was rolled out in September...?) 

Lee says there are, "[F]our leading challenges facing middle-class families today: the cost of raising children; the difficulties of work-life balance; the time Americans lose away from work and home, stuck in traffic; and the rising costs of and restricted access to quality higher education."  

OK, maybe those aren't America's top four problems, but they're definitely up there, so I'm liking the rhetoric.

He says the Republicans have proposed legislation to address these four challenges.  Now we get into the problems....

To address the cost of raising children -- about $300,000 per child, cites Lee -- he proposes (yep, you guessed it), a tax cut for the middle class.  Yet more right-wing social engineering through the tax system.  I'm against trying to do policy through the tax code.  That's what our tax code is so darn complicated.  Moreover, what's to say the right won't turn around and call these same middle-class families "moochers" and part of the "47 percent" that doesn't pay net income tax?  

Anyhow, Mike Lee says the middle class should keep more of its own money, "not give parents more of other people's money."  That's just dandy, but the median U.S. income is $25,000. Double that and a two-income family with two children would owe only about $500 in income tax anyway.  So what good would a $5,000 tax cut do them?

Mike Lee has the answer: a $2,500 per-child tax credit that can offset income and payroll taxes.  Now he's talking about taking the 47 percent of moochers and exempting them from the only taxes they do pay, Social Security and Medicare.  What about our yawning deficits? What about, "You should pay taxes if you want to participate in our democracy"? No answer. It's just more conservative voodoo economics: cut everybody's taxes, then cry about deficits. And then call the middle-class beneficiaries of this tax system a bunch of moochers.

Next, Lee proposes old-school liberal policies: mandatory flex-time for working parents; and more investment in infrastructure and mass transit, so that people don't spend so much time in traffic.  Fine!  Great!  Welcome to the Democratic Party.  

But there's always a "but."  Mike Lee proposes to to build new highways and mass transit... but by cutting taxes (you knew that had to be part of it!) and shifting responsibility for infrastructure projects to the states.  That's not a solution; that's passing the buck. That's magical thinking.

Finally, Lee proposes opening up the accreditation system for higher education and vocational training. This is a pretty complicated subject and I won't go into it now, except to say that accreditation for alternative forms of education like apprenticeships and e-learning matters because only accredited institutions are eligible to participate in federal student loan programs. In other words, Lee wants to allow more educational-training providers to benefit from federally subsidized student loans. This could be good or bad -- bad if it ends up as a federal subsidy for businesses to provide training to their employees, which would not really be the intention.

Lee concludes in very un-Tea Party-like fashion [emphasis mine]:

Especially in the wake of recent controversies, many conservatives are more frustrated with the establishment than ever before. And we have every reason to be. But however  justified, frustration is not a platform. Anger is not an agenda. And outrage, as a habit, is not even conservative. Outrage, resentment, and intolerance are gargoyles of the Left. For us, optimism is not just a message – it’s a principle. American conservatism, at its core, is about gratitude, and cooperation, and trust, and above all hope. It is also about inclusion. [Ha! -- That made me LOL. -- J]  Successful political movements are about identifying converts, not heretics.

But anger sure can pack a town hall meeting!  A message of exclusion -- of welfare-mooching minorities, gate-crashing illegals, and culture-subverting gays and intellectuals -- sure turns 'em out at the polls!  Indeed, Lee's message here is not hopeful -- it's hypocritical and delusional. Anger and fear are the real drivers of today's Republican Party, not optimism.

Interestingly, in a recent highly quoted interview about politics, English comedian Russell Brand quoted the same phrase: that the Left's problem is that it is always looking for heretics -- those who are not pure enough -- while the Right is looking for allies. That may be true of Britain, but the opposite is true in the U.S. right now. The Tea Party is on a perpetual RINO hunt; whereas Democrats are too embarrassed to even call themselves "liberal" anymore; they're grateful to let any politician put a [D] behind his name, even he's a Republican by 1991 standards.

Fund the IRS to reduce the deficit

This story will drive my dear Republican friends crazy because it's true:

The Internal Revenue Service’s limited, focused exams of federal tax filings—known as correspondence exams—can yield a $7 return for every dollar spent, the Government Accountability Office found in a December report. Even more complex face-to-face investigations yielded a return of $1.8 for every dollar spent.

My man David Cay Johnston mentioned similar stats in his well-researched books Perfectly Legal and Free Lunch and in his articles on tax policy. Recently, Johnston cited a report by Citizens for Tax Justice that found that, [emphasis mine]:

Every dollar invested in the IRS’s enforcement, modernization and management system reduces the federal budget deficit by $200. Here’s another metric. Every dollar the IRS “spends for audits, liens and seizing property from tax cheats” garners ten dollars back.

And as WaPo describes, Mississippi, one of our 50 "laboratories of democracy," increased its spending on tax collection at the state level and got an even better return: $23 for every dollar spent on tax collection!

So why isn't the Grand Old Tea Party demanding that the IRS and every state do the same, to shore up our deficits and restore our fiscal health? Could it be they don't really care about budget deficits at all, only lowering taxes for themselves?.... 

How Mississippi turned $3.5 million into $80 million

By Niraj Chokshi

September 5, 2013 | Washington Post

URL: http://wapo.st/1aaf3vu

Eskrow: Where did U.S. wages go?

Here's Eskrow's key observation, one that you cannot even make nowadays in America without being accused of a socialist bent [emphasis mine]:

We don't have a problem of inadequate wealth. The problem is inadequate wealth distribution. For 99 percent of Americans, wage growth has lagged significantly behind increases in productivity. As the authors [of the briefing paper "A Decade of Flat Wages"] note, this is true "regardless of occupation, gender, race/ethnicity, or education level." Since the Great Recession productivity has grown by 7.7 percent, while wages have actually fallen for the bottom 70 percent of earners.

[...] Between 2001 and 2012 productivity grew by 22.2 percent, while wages grew only 0.8 percent. 

My Republican friends, take special note of the phrase, "...regardless of occupation, gender, race/ethnicity or education level."  This phrase should stifle your knee-jerk reactions to blame those other people for America's economic woes.

So the facts are indisputable.  The question is: what are the causes? Eskrow points out a few:

A companion report from EPI, The State of Working America, 12th Edition, identifies some of the causes: Growing inequality. Policy inaction which eroded the value of the minimum wage. The weakening of employees' rights. Tax policy. Wall Street deregulation.

Other factors are left unmentioned, including problems in corporate governance and the distorting effect of changing executive compensation on corporate management practices.

Eskrow also blames another cause: "centrist" Democrats, aka 1990s-era Republicans who today call themselves Democrats: 

The word "centrist" is placed in quotation marks because polls show that their economic views are to the right of the American mainstream. On issues such as corporate taxation, Social Security benefits, and free trade, they stand to the right of most Americans -- and sometimes to the right of most registered Republicans.

Forget Republicans in Congress, they're nuts.  We need Democrats to be Democrats again, grow a spine, or get out of office.

Where Have America's Wages Gone?

By Richard (RJ) Eskrow

August 28, 2013 | Huffington Post

URL: http://huff.to/1ds6Asl

No accident U.S. is most unequal

I'll continue to hammer away at America's growing wealth inequality that is here by design, not by accident. What do I mean? 

One the one hand, we have government policies that help out the rich: the tax code (that gives U.S. corporations an effective tax rate lower than any official rate among G-20 countries, encourages overseas outsourcing and offshoring of income, favors capital gains and executive stock options over wages, protects 401-k and IRAs for rich people who save anyway, and has dramatically lowered inheritance tax over the past 30 years); deregulation of banking combined with the $30 trillion TBTF bank bailouts; deregulation of health, safety and environmental codes; fraudulent H1B visas that displace U.S. workers to cut corporate costs; and allowing more money -- and more independent money -- into our elections.  

One the other hand, we have government policies that hurt workers and the poor: a regressive tax system that targets workers; Social Security cuts; laws against unions; public transportation fee hikes and service cuts; public employment cuts; public education cuts; falling real minimum wage; and exploding student debt that is immune from personal bankruptcy.

Some anti-worker policies are well-intended. For example, cities often seek to outbid each other with ever-growing subsidies and tax breaks to attract large retailers that promise job creation... with the unintended effect of ruining local mom-and-pop businesses that used to offer better wages and benefits -- wages and benefits that never come back -- and degrading their local tax base.  

We Democrats and liberals can't ignore inequality or its root causes and hope they go away, or fear accusations of "class warfare" for our speaking out. Class warfare is already being waged against the poor and working class, whether we admit it or not.

The U.S. Has The Worst Income Inequality In The Developed World, Thanks To Wall Street: Study

By Mark Gongloff

August 15, 2013 | Huffington Post

Hey, who says America is in decline? The U.S. is still more awesome than the rest of the world at making at least one thing. And that thing is income inequality.

A new paper by economists Facundo Alvaredo, Anthony B. Atkinson, Thomas Piketty, and Emmanuel Saez lays out just how much better at making inequality the U.S. is than everybody else and tries to explain how it got that way.

Since the 1970s, the top 1 percent of earners in the U.S. has roughly doubled its share of the total American income pie to nearly 20 percent from about 10 percent, according to the paper. This gain is easily the biggest among other developed countries, the researchers note. You can see this in the chart below, taken from the paper, which maps the income gains of the top 1 percent in several countries against the massive tax breaks most of them have gotten in the past several decades. (Story continues after chart.)

The higher the dot, the more income inequality has grown in that country. See the red dot waaaay up in the left-hand corner, far away from everybody else? That is the United States, where the top earners have made more while getting their taxes slashed by over 40 percent.

This echoes an OECD study from earlier this year that found the U.S. had the highest income inequality in the developed world. It followed only Chile, Mexico and Turkey among all nations.

So how did America get so darn great at ratcheting open the chasm between the haves and have-nots? Thank the dynamic duo of Wall Street and Washington, which have been working so well together for the past few decades to make laws that favor banks. Turns out this Axis Of Making It Rain has also been making laws that favor the exorbitantly wealthy. Win-win. Unless you are poor, in which case: Sorry, be born to richer parentsnext time, maybe?

One thing you'll notice in this chart is that, typically, the bigger the tax cuts given to the 1 percent (the horizontal scale on the chart), the bigger the income inequality. This is consistent with other studies that have shown the tax code has a big effect on income distribution. That's one way Washington has boosted inequality: By slashing taxes on the rich, for freedom and growth and trickling down on the poor. Unfortunately, the paper points out, contrary to what you will hear from conservatives, lower tax rates on the wealthy offer no obvious benefits to growth, or to the poor.

One other thing you'll notice from the chart is that the United Kingdom has slashed taxes on the top 1 percent almost as aggressively the U.S. has, and yet the share of income going to the top 1 percent is not nearly as big. So there's something else going on here besides just tax breaks.

That something is Wall Street, more or less, as Matthew O'Brien of The Atlantic points out. The same politicians that have busily been slashing taxes on the wealthy have also been loosening fetters on banking, allowing the financial sector to swell to bloated size and mop up ever-more income while contributing ever-less back to the economy. Again, this is consistent with other studies that have attributed much of the rise in in inequality to the pay being sucked up by bankers and overpaid CEOs.

At the same time, U.S. lawmakers have also made it easier and more tax-friendly for the wealthy to pile up more capital gains on their investments. As O'Brien puts it, "The top 1 percent leveraged itself to the market, and haven't looked back."

One nifty benefit to having nine metric craptons of money is that you can use it to buy politicians to help you craft the laws you like, particularly those that will help you end up with 10 metric craptons of money. The poor and middle class, meanwhile, just get ever more discouraged about the political system and stop bothering to fight it, increasingly turning the whole process over to the wealthy and the politicians they own, according to arecent paper by Frederick Solt at Southern Illinois University. Sound familiar?