Tag Archive for tax cuts

Extreme Inequality or Democracy?

Reposted from CounterCurrents.org

Last autumn, likely due to the Occupy movement, there was a shift of media attention from debt reduction and the cutting of vital public programs (for example, Social Security, Medicare and Medicaid) to the issue of extreme wealth and income inequality in America. Extreme inequality is of concern for many reasons, but Supreme Court Justice Louis Brandeis provided perhaps the most crucial reason when he said: ” We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we can’t have both . “

Many of those who support grossly unequal outcomes attempt to distract the public from the critical extreme inequality in wealth and income here by stressing equal opportunity as the key. Incredibly, they seem to think that we have equal opportunity in America. However, Paul Krugman ‘s January 8th column , ” America ‘ s Unlevel Field “, clearly points out that the playing field in the U.S. today is definitely not anywhere close to being level.

Despite the terribly unequal opportunities that exist, Americans have generally accepted the idea of some reasonable level of wealth and income inequality. The public ‘ s acceptance sprang from the idea that some people have special talents or make special contributions that merit greater rewards.

However, two factors have undercut this support. First, there is a weakening of the connection between reward and merit. In addition, we have now reached an obscene level of inequality that is exemplified in a report from the Heritage Institute . Based on data from 2000, the Heritage Institute showed that CEO pay for major U.S. corporations was wildly out of line with those of our economic competitors. For example the average pay for CEOs in Japan was 10 times the average worker’s wage compared to 531 times here. Of the 26 countries in the report, Brazil had the second largest inequality with a value of 57.

The obscene rise in this inequality in the U.S. is striking, going from a value of 24 times in 1965 to 42 times in 1980 to 85 times in 1990. More recent data show that the U.S. value declined from the 531 times in 2000 to well over 300 times the typical worker’s pay in 2010 . Note that the comparisons are affected by how many major corporations are included in the studies. For example, another estimate for the U.S. in 2000 was 300 times compared to the 531 times mentioned above; regardless, the U.S. is way out of line compared to our economic competitors and the change over time is appalling.

The Heritage Institute report included 2004 and 2006 quotes from Warren Buffett, chairman of Berkshire Hathaway, that address both merit and extreme inequality. According to the report, in a May 2004 letter to shareholders, Warren Buffett wrote about the inadequacy of corporate governance structures among U.S. companies. “(If) Corporate America is serious about reforming itself, CEO pay remains the acid test.” Buffett added: “The results aren’t encouraging.” Buffett criticized lavish pay packages and the “lapdog behavior” of directors, calling the situation an “epidemic of greed.”

In a 2006 shareholder report, Buffett stated: “Too often, executive compensation in the U.S. is ridiculously out of line with performance.” “Getting fired can produce a particularly bountiful payday for a CEO. Indeed, he can “earn” more in that single day, while cleaning out his desk, than an American worker earns in a lifetime of cleaning toilets. Forget the old maxim about nothing succeeding like success: Today, in the executive suite, the all-too-prevalent rule is that nothing succeeds like failure.”

Extreme inequality is even more problematic when it results from questionable behavior and/or political connections. Consider that those in the financial sector, whose unethical and immoral practices almost collapsed the financial system, were not held accountable for their actions. Talk about the lack of a moral hazard! Instead, besides initially profiting from fraud, they became even wealthier due to the taxpayer-funded bailout of the financial sector.

Changes in the tax system played a major role in increasing the level of inequality in America over the past decades. For example, the corporate share of federal taxes went from 28% in the 1950s to an average of roughly 10% over the 2001 to 2010 period. In addition, the top marginal individual tax rate dropped from 91% in 1954 to 35% today. Cuts in the top capital gains taxes for long-term gains from 28% to 15% have primarily benefited those at the top of the wealth scale. Politicians have also greatly weakened the estate tax that worked to lessen inequality somewhat. These changes certainly have played a major role in creating the extreme inequality we see today.

Our method of financing political campaigns, some would call it legalized bribery, makes it particularly easy for large corporations and the wealthy to push for tax reductions and tax loopholes at the expense of small business competitors and the public. Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) and Perfectly Legal : The Covert Campaign to Rig Our Tax System to Benefit the Super Rich–and Cheat Everybody Else , two books by Pulitzer Prize winner David Cay Johnston, provide numerous examples of this corruption and other questionable business practices by large corporations. America: Who Really Pays the Taxes? and several other books by investigative reporters and twice Pulitzer Prize winners Donald Barlett and James Steele also address how the tax code is manipulated to the benefit of the rich and powerful. In The Tyranny of Oil , Antonia Juhasz details how huge energy and financial corporations greatly profit from their corruption of the political system, and how the public bears the cost. Among her many examples are the government’s failure to enforce anti-trust laws and its creation of the “Enron loophole”.

If compensation were indeed based on merit, Americans could accept a reasonable level of inequality. However, as shown above, besides merit, income and wealth are often linked to many other factors, including the corruption of politicians.

Given the dire straits – high levels of unemployment and underemployment, homelessness, lack of health insurance, home foreclosures, huge credit card debts and college loan debts, shortages of food – that many Americans face today, our extreme inequality is intolerable. The current situation demands a drastic overhaul of our corrupt political/economic system to end and to prevent future extreme inequality. Unless we act now, control by the wealthy and powerful will be solidified.

Ron Forthofer a retired professor of biostatistics from the University of Texas School of Public Health. Since his retirement,he has been a volunteer for peace and social justice. In addition, he was a Green Party candidate for Congress and for governor of Colorado.

Let’s be clear.

Can they read?

Know what the power-mongers are REALLY saying

Let’s clarify a few terms that are being thrown around these days.

  1. Fiscal conservative – commonly used in the corporate media to describe those people who want to further enrich the top one percent. These people do not resemble the Republicans of my earlier days. At a fund raising dinner George Bush said, “You are my base: the haves and have-mores.” For all of Obama’s nice talk, evidence is that this is also Obama’s base. Under George Bush the US entered into very expensive wars, bailed out the financial industry with little benefit to the tax payers who bailed them out, instituted tax cuts only for the wealthy, and turned a federal surplus into a debt. President Obama has only furthered those same policies and that debt.
  2. Tax cuts – That sounds very appealing to those of us who work for a living and actually produce a service or goods. However those “tax cuts” are only for the wealthy and for large corporations. The ordinary person or small entrepreneur has not benefited from them. Indeed, we are burdened with hidden taxes. We entered into a social contract, an annuity, with the government in regard to Social Security, Medicare, and Public Pensions. The government has repeatedly borrowed from these sources, claiming them as a revenue source, without repaying. If your uncle repeatedly borrowed from your life savings without repaying, those savings would also dwindle, regardless of how much you had set aside or how sound your saving plan was. When we pay into Social Security and Medicare and can’t collect from it, we are being dealt hidden taxes. When we bail out corporations and banks with taxpayer money, both we and our children will be taxed for that.
  3. Tax cuts for the wealthy create jobs – If that is so, where are the jobs? This policy has been tried many times in the last 30+ years and never produced jobs.
  4. The best and the brightest – This is what they called the very people who created the financial crisis and cheated with ordinary people’s investments and with public funds. Yet we were asked to bail them out to the tune of $750 billion+ so that they would not leave their positions with banks and Wall Street firms. Perhaps the term is fitting only in that they are the best and brightest crooks.
  5. We have to tighten our belts – Only so that large corporations, CEOs, and banks can loosen theirs.
  6. Economic Stimulus – Several Nobel Laureate economists warned that Obama’s “stimulus” would fail because it was not large enough to create jobs that would bring much needed tax revenues and demand for goods and services. A small stimulus was worse than none, because it did not have a lasting effect and demonstrated that inadequate government stimulus to the economy does not work. What if you had a disease for which your doctor prescribed a certain medicine, but you only took a fraction of that medicine. Would that mean that you did not use the medicine appropriately or that the medicine does not work?
  7. Jobless Recovery – Now that is an oxymoron. There cannot be a jobless recovery. Ask someone whose income, Social Security or Pension is reduced to the point of not being able to meet basic human needs, or someone who lost their job due to down-sizing or outsourcing if there is a “recovery” in their jobless lives.

We need to be very vigilant and sensitive to the fact that corporate media is part of larger plan to misinform and redirect our democracy. Marketing strategies tell us that someone exposed to a slogan six times will believe it. The misuse of the above terms is much more frequent than that, and works with many people.

Image courtesy of SXC.hu

The rich get richer and the elderly and kids pay for it.

We also need to be careful not to fall prey to accusing our neighbor of not deserving just a little more than we have. That is a strategy meant to distract us from looking clearly at how this “crisis” was manufactured and who is benefiting hugely from it. The culprit is not the neighbor across the street who took a reduced salary in order to save a pension, or receives a meager Social Security benefit after years of paying into the system. Watch the movie Inside Job for a look at just one portion of the enormous robbery that has taken place.

And remember that we are our brother’s keeper. That is not only a moral injunction; it is also an economic one because:

“We all do better, when we all do better”.

Government waste imperils environment

As seen in the The Longmont Ledger, March 27, 2011

By Tom Lopez, Longmont

Deriding government subsidies for renewable energy that reduce our dependence on foreign oil, while ignoring the huge subsidies going to the oil industry, which is drowning in profit, makes no sense to any critical thinking person.

How short-sighted can people be to ignore the fact that man-caused carbon-dioxide levels are killing our planet? How many permanent ice sheets melted, dying coral reefs identified, ocean ph levels dropped, low-lying islands drowned and people dying from breathing foul air will it take to convince this talk-show tainted mindset that we have a perilous environmental problem on our hands?

Meanwhile, some make the ludicrous claim that every significant tax cut has resulted in increased government revenues. No one has ever supplied quantifiable evidence to support that claim. It is true, however, that any tax cut reduces government revenue by that exact amount so before anyone claims increased government revenue, he must first cover the revenue lost from the tax cuts.

Compare the $1.5 trillion cost of George W. Bush’s war in Iraq and his half-trillion dollar prescription-drug giveaway, plus the hundreds of billions annually to tax cuts for the well-off and the more than $2 trillion Wall Street meltdown to the cost of increased unemployment insurance for the out-of-work, food stamps for the hungry, the $200 billion program for renewable energy and health insurance for all that actually saves money and you will clearly see where the real government waste exists.