Billionaires Unchained: The New Pay-As-You-Go Landscape of American “Democracy”

See on Scoop.itDidYouCheckFirst

Greg Russak‘s insight:

Is this really what the First Amendment is about?

“But what’s most striking about these groups is who funds them. An analysis by the liberal think tank Demos found that out of every $10 raised by super PACs in 2012, $9 came from just 3,318 people giving $10,000 or more. That small club of donors is equivalent to 0.0011% of the U.S. population.” – Andy Kroll

See on www.commondreams.org

The Economics and Patriotism of Infrastructure Jobs Programs

Infrastructure map courtesy of The Atlantic

The Economics and Patriotism of Infrastructure Jobs Programs

America’s crumbling infrastructure is both a safety hazard and a drag on our economy that is projected to only get worse. If we’re going to tackle the really big challenges of government budgets, deficits, debts, and the economy, then every citizen must understand the realities of what a deteriorating infrastructure means to this country. We then need to demand that our elected leaders stand strong against austerity and, instead, do whatever it takes – including raising taxes on corporations and the wealthy – to improve our infrastructure.

Properly-funded federal and state infrastructure improvement jobs programs would produce immediate and lasting benefits, including but not limited to:

1) Putting large numbers of Americans back to work in good paying middle class jobs which would immediately boost the economy from the bottom up (since trickledown economics has proven to, once again, be an unmitigated and disastrous failure)

2) Making all of us safer and less vulnerable to infrastructure inefficiencies, failures, or acts of terrorism

3) Demonstrating to American companies and to the world a sense of patriotism that includes spending public funds on the infrastructure that is so vital to our economic and commercial success

Putting patriotism and safety issues aside for the moment (although I don’t know why we should), the sheer impact to our economy and our own selfish financial interests are at stake. This is usually motivation enough for most Americans to demand action from our politicians.

I think it ought to be more than just self interest. Americans have become the experts at professing their patriotism at every opportunity. We’re known the world over for our self-proclaimed exceptionalism. It’s why I believe that we ought to be thinking about and talking about funding the repair and expansion of our infrastructure as one of the most truly patriotic things we can do for ourselves and our country.

First, the economics. Math, after all, doesn’t require an emotional investment or belief system. It just is.

The Economics of Infrastructure

In his blog post, “Crumbling Infrastructure Has Real and Enduring Costs,” William A. Galston of the Brookings Institution points out that a study by the American Society of Civil Engineers projects that, “…by 2020, if the mounting investment gap in infrastructure is not addressed, ‘the economy is expected to lose almost $1 trillion in business sales, resulting in a loss of 3.5 million jobs . . . the cumulative cost to the U.S. economy will be more than $3.1 trillion in GDP and $1.1 trillion in total trade.'”

He also tells us that the Building America’s Future Educational Fund report reveals that a lack of a national infrastructure plan puts a serious drag on our economy. The example he cites is “…in 2010, Americans spent a total of 4.8 billion hours stuck in traffic, wasting 1.9 billion gallons of fuel, at a total cost of $101 billion.”

Let these numbers sink in.

$1 trillion – that’s a ‘1’ followed by 12 zeros; $1,000,000,000,000 – in LOST BUSINESS SALES and 3.5 million lost jobs in just 7 years.

$101,000,000,000 wasted sitting in traffic in just one year.

So in addition to patriotism and public safety, do we as Americans really want to waste greater and greater amounts of time, energy, and money sitting in traffic or waiting for delayed flights and trains?

Do you want to waste even more of it in the future?

Do you want American businesses to forego realizing ONE TRILLION DOLLARS in sales between now and 2020?

If not, then ask yourself how or why we ought to buy into Paul Ryan’s thinking that what’s needed most right now is greater austerity.

His budget – which unless I’ve missed it still seems to be the GOP’s position, too – proposes we spend $78 billion, or 25% less, on infrastructure than the White House’s proposed budget of $104 billion per year over the next decade. According to Galston and some think tanks, the White House’s budget is already less than one-half of what’s needed to repair our infrastructure, and yet Ryan would have us believe we need to spend even less.

How does that solve the problem? I simply cannot believe there’s that much waste and, true to form, Ryan still is unwilling or unable to offer any substantive details.

So as far as the economics go, one would think that numbers like the lost sales, lost jobs, trade imbalances, and lost productivity would be enough to rally the public *and* the business community to demand that something be done immediately to repair, improve, and expand our infrastructure. It’s not like there aren’t precedents to follow with proven outcomes. We – meaning the government hiring both workers and outside companies as contractors – have done big infrastructure projects before.

It took courageous leadership in government to get those projects moving. The private sector was and still is the beneficiary of that leadership. Where is it now?

No, You Didn’t Build That

With all due respect and admiration for the courage and creativity of entrepreneurs and captains of industry everywhere, I remind you that, “NO, YOU DID NOT BUILD THAT!”

You just get to benefit from it. The nation’s infrastructure is, without question or doubt, part of the reason for any commercial success and, hence, at least part of the resulting wealth that’s made possible in America for those who want to start, run, and work in the private sector. Trust me; I’m your fan and one of your biggest cheerleaders. I just think it’s time that you and your followers put your copy of Atlas Shrugged down and join the rest of us in the real world.

Business people everywhere – from the titans running multinational corporations to the small business owner on Main Street struggling to compete with Walmart – owe it to themselves and their self respect to please stop this self-indulgent and self-serving love affair with the Randian mythology. It’s tedious and tiresome and, truthfully, a complete fantasy. Where would you be if your workers quit tomorrow, and when was the last time you built a bridge, an airport, or an electrical power station?

To the business people busying themselves complaining endlessly about the government, please stop your childish whining and please start acting like real leaders. You can start by acknowledging that if you’re going to continue to benefit from everything a democratic society has to offer – including infrastructure – then you are going to have to pay for it. That’s how capitalism works, right? Payment for goods and services rendered?

Yes, I know that means higher taxes than the historically low taxes you pay now. The only sympathy you’re going to get are from fellow wealthy individuals and the people you’ve duped into believing in another fantasy – trickle-down economics.

Look, if your business cannot survive an increase in taxes and the closing of loopholes, well then maybe you’re not such a successful business person after all. Don’t feel bad. Lots of people have tried and failed more than once, including yours truly. It’s what makes me your cheerleader. I know how hard it is. We both know that there are no guarantees, but I will say this; never once did tax obligations figure into my thinking or have any impact on my results.

Real entrepreneurs don’t let things like taxes get in their way; they don’t use them as a lame excuse for not trying, nor are they the cause for why one tries and fails. Only someone who has never started a business would believe such a thing.

It’s only in bad novels by Russians with absolutely no economic credentials where real entrepreneurs give up and disappear because they were somehow defeated by government or society.

To the average citizens who rises in Randian defense of all things private and corporate, including infrastructure, I’d like to ask you a few questions.

How well do you feel you understand the profit motive and the demands it places on the business managers to maximize revenues and minimize expenses?

Have you really thought through what it would be like living in a country where every other river crossing or highway exit extracts a toll from us that goes only to a corporation and their shareholders?

If you have thought about it and you do want to see infrastructure privatized, then I would like to hear how and why you believe that the corporation collecting your tolls will forego maximizing profits and, instead, do what’s best for the nation and for the local community once they’ve built their monopolies modeled on Matty Moroun and his Ambassador Bridge?

It all comes down to money, of course, and, like it or not, it takes money to fund a democracy.

So here we are. We’ve arrived at a point in our political and societal evolution where, hyperbole and ignorance of the facts notwithstanding, American corporations, wealthy individuals, and their toadies in the GOP continue to foist upon us their strategy of fear, uncertainty, and doubt – along with unhealthy doses of outright lies – to keep us at bay and living in fear that they’ll abandon our shores if they can’t keep – and even reduce further – their already historically low tax obligations when they do pay any taxes at all. (Yes, I’m looking at you Mitt Romney, GE, and the rest of you uber-rich individuals and corporations paying very little taxes or actually getting tax refunds.)

The message from Big Money America and the GOP is clear: they are completely and utterly devoid of care or concern for this country and its citizens outside the now well-known 2%.

Where’s The Patriotism?

Galston reminds us that we’ve pulled together as a nation under both Democratic and Republican administrations before to do big infrastructure projects. We’ve done what’s been needed before. We can do it again.

A federal (and state) infrastructure program now would put lots of people to work. In addition to safer and more efficient infrastructure, big and bold new projects – hell, even repair and rehabilitation projects – would mean lots of decent paying middle class jobs for Americans. That is exactly what is needed right now to get the economy growing faster and better. What we don’t need and can’t afford is more austerity and more of our fellow citizens left with little choice or opportunity outside of working in retail or the fast food industry.

We need a sense of patriotism.

Federal infrastructure projects are patriotic and need to be talked about as patriotic. They are physical and enduring evidence of the love and devotion we should have to our country and to each other. Our society simply cannot operate without infrastructure, so programs to repair and improve it is service to our country, isn’t it?

Since the days of the Erie Canal, infrastructure projects have proven to deliver huge economic and societal benefits both at the time they are undertaken and for generations to come. We Americans need to remember this every time we merge onto an interstate, get on a train, board an airplane, turn on our lights, or buy bananas in January. None of that is possible without infrastructure, and that infrastructure was built by Americans for Americans.

Our roads, airports, railways, and sea ports have become too small, too old, and crumbling too quickly after decades of use for us to stand by and let it happen. They’re more and more unsafe and, for all the true capitalists out there, it’s a drag on our economic vitality and growth that will only get worse unless we do something about it.

And when it comes to defining what it means to be an American, letting our infrastructure deteriorate turns us into a second-rate first-world nation. It’s an embarrassment and a shame on all of us. We’re always making lots of noise about being number 1. I don’t know about you, but I never hear any Americans proudly proclaiming, “We’re #33!”

It’s time to show some real patriotism outside of military excursions. It’s time for Americans to rally together to demand that our elected officials put us to work fixing and rebuilding America’s infrastructure.

It’s good for us citizens. It’s good for business. It’s good for America.

Sounds like patriotism to me.

Sources:

(1) Galston, W. (2013, January 23). Crumbling Infrastructure Has Real and Enduring Costs. http://www.brookings.edu/blogs/up-front/posts/2013/01/23-crumbling-infrastructure-galston?cid=em_alert012813

(2) Plumer, B. (2012, March 30). What Paul Ryan’s budget actually cuts – and by how much. http://www.washingtonpost.com/blogs/wonkblog/post/what-paul-ryans-budget-actually-cuts–and-by-how-much/2012/03/20/gIQAL43vPS_blog.html

(3) Berfield, S. (2012, May 3). Matty Mouron, Detroit’s Border Baron. http://www.businessweek.com/articles/2012-05-03/matty-moroun-detroits-border-baron

Next Big Battle in Washington: Bush’s Tax Cuts

A short quiz. Answer only Yes or No.

1. Are you an individual earning $200,000 or more, or a family making $250,000 a year or more?
2. Is your estate worth $1million or more?
3. Did your personal wealth grow, your overall financial condition improve, and/or your confidence in the economy strengthen after 2001, 2003, or at any time over the last 9 years?
4. Are you in favor of extending tax cuts to benefit those who answered “Yes” to questions 1 through 3 knowing that doing so is projected to potentially add $2trillion (trillion, with a “T”) to the deficit?

If you answered “Yes” to any of the above, I can understand why you would support the GOP’s desire to extend and even make permanent the changes to the tax code made in 2001 and 2003.

If you answered “No” to any of the above and still support the so-called “Bush Tax Cuts” the only explanations that seem reasonable to me are:
a) you may not have known these facts or,
b) you’re simply choosing not to acknowledge them.

Here’s another very revealing fact.

According to 2006 data from a joint study by the Census Bureau and the Bureau of Labor Statistics, 2,240,000 households, or 1.93% of the 116,011,000 total American households, have incomes over $250,000. That is one-point-nine-three percent. Not quite 2 out of every one hundred households.

The Mean Income for this over-250K group? $448,687.

Here’s another interesting fact from that study. Out of the 2,240,000 American households earning more than $250K, 1,984,000, or 88.57%, reported themselves as “White Alone” households.

I didn’t look up any new data on estate wealth. What I have offered in the past are these facts.

According to research conducted at the University of California-Santa Cruz and updated as recently as this month, as of 2007:
-> the top 1% of Americans held 34.6% of all privately held wealth
-> the next 19% held another 50.5% of all privately held wealth
That means 85% of privately held wealth was and probably still is held by the top 20% of Americans.

That same study reveals that in 2007:
-> the top 1% of Americans held 42.7% of all Financial Wealth (defined as total net worth minus the value of one’s home)
-> the next 19% held another 50.3%
93% of financial wealth is held by the top 20% of Americans.

If you still have any kind of investments left, an IRA or 401K that hasn’t completely dissolved, own a home in a high-priced market, or a business that hasn’t had to close its doors during the economic boon created under Bush and a GOP-controlled Congress, then perhaps your estate might be valued at $1million+. I know that mine is nowhere near that number. I sincerely hope that yours is, and that you and your heirs won’t be worrying about this for a long, long time.

According to a July 21st USAToday article, some proposed Democratic and bipartisan changes would increase the exemption to as much as $5million while also lowering the tax rate from 55% to 35%.

Maybe that will put you wealthy supporters of the GOP and the Bush Tax cuts at ease; all 1.93% of you.

Here’s the New York Times article that prompted this posting.

Next Big Battle in Washington: Bush’s Tax Cuts
By DAVID M. HERSZENHORN

WASHINGTON — An epic fight is brewing over what Congress and President Obama should do about the expiring Bush tax cuts, with such substantial economic and political consequences that it could shape the fall elections and fiscal policy for years to come.

Democratic leaders, including Mr. Obama, say they are intent on letting the tax cuts for the wealthy expire as scheduled at the end of this year. But they have pledged to continue the lower tax rates for individuals earning less than $200,000 and families earning less than $250,000 — what Democrats call the middle class.

Most Republicans want to extend the tax cuts for everyone, and some Democrats agree, saying it would be unwise to raise taxes on anyone while the economy remains weak. If no action is taken, taxes on income, dividends, capital gains and estates would all rise.

The issue has generated little public attention this year as Congress grappled with health care, financial regulation, energy, a Supreme Court nomination and other divisive topics. But it will move to the top of the agenda when lawmakers return to Washington in September from their summer recess, just as the midterm campaign gets under way in earnest. In recent days, intense discussions have begun at the Capitol.

Beyond the implications for family checkbooks, the tax fight will serve as a proxy for the bigger political clashes of the year, including the size of government and the best way of handling the tepid economic recovery.

“It has enormous ramifications for the fall and clearly will be one of the dominant issues,” said Senator Ron Wyden, Democrat of Oregon. “This is code for the role of the federal government, the debate over the size of government and the priorities of the nation.”

At a closed-door meeting of the Senate Finance Committee on Thursday, participants said Democrats were clearly divided while Republicans wanted assurances that any bill would be developed openly, allowing them to propose amendments. In a sign of how combustible the issue could be, Senator Max Baucus, a Montana Democrat and the committee’s chairman, has so far refused to make that commitment.

Both parties are still charting strategy, but some lawmakers, Congressional aides and administration officials said Democrats must try to pass a bill before the election and not wait for a lame-duck session. “You can’t play chicken with this much of the tax system,” said a senior Republican Senate aide, who spoke on the condition of anonymity given the sensitivity of even the timing of the debate.

If no tax legislation is passed, all the major tax reductions passed under President George W. Bush in 2001 and 2003 will expire, with rates reverting overnight on Dec. 31. The top marginal income tax rate, for example, would go back to 39.6 percent from 35 percent now, with corresponding increases in rates for lower income brackets.

Given the partisan gridlock of recent months, there is a chance that the battle could go down to the last minute, or even — in the face of a stalemate — that the tax cuts could be allowed to expire completely, a development that Republicans are already heralding ominously as the largest tax increase in history and that lawmakers in both parties say could be the worst outcome.

From both political and policy perspectives, the tax issue is dizzyingly complex, and even some of Washington’s most grizzled legislative operatives say they cannot predict the outcome.

Some liberals want Mr. Obama to keep his promise to raise taxes on the rich, and the White House’s budget forecasts rely heavily on rolling the top income tax rates back to their pre-2001 levels. Some fiscal hawks warn that extending the tax cuts would add more than $2 trillion to the federal budget deficits at a time when the national debt is becoming an economic concern and a political issue. Political economists are fiercely divided.

So are Democrats. In recent days, fiscal conservatives like Senators Kent Conrad of North Dakota and Evan Bayh of Indiana expressed support for extending the tax cuts at all income levels, at least temporarily.

Senior administration officials said there was no interest in such a plan at the White House, which intends to have Treasury Secretary Timothy F. Geithner lead an effort to make the case that continuing tax breaks for the rich will not help lift the economy, but eliminating them will help reduce the deficit.

“We do not buy into the theory that because the economy is still recovering, extending tax cuts for the highest earners is a necessary or effective policy response,” said Gene Sperling, counselor to Mr. Geithner.

“While we are supporting measures like small-business lending and tax cuts to spark growth,” Mr. Sperling added, “it is also important to show the world that we are following through on our commitment to long-term fiscal discipline.”

But the questions go far beyond the basic issue of whether to allow the top two marginal income tax rates to rise.

Congress must also wrestle with the estate tax, which lapsed last year but will automatically be reinstated effectively at a 55 percent rate on Jan. 1 for estates larger than $1 million. Lawmakers must also deal with an array of other provisions, including tax rates on dividends and capital gains, and the Alternative Minimum Tax, which has been adjusted annually to prevent millions of middle-class families from paying higher tax bills. The child tax credit would also be reduced.

There are many permutations of permanent or short-term extensions of various provisions.

Negotiations are expected to start in the Senate, where it is hardest for Democrats to advance legislation because of Republican filibusters. But some Democrats say a fallback plan would be to have their larger majority in the House approve a continuation of the lower rates just for the middle class right before the election, almost daring Republicans to oppose them.

In that case, Democrats say, Republicans who opposed the bill would be blocking a tax cut for more than 95 percent of Americans to defend tax cuts for a relatively few wealthy households. Republicans are readying an arsenal of economic data to portray the Democrats as endangering the precarious recovery and harming small-business owners, some of whom are taxed at the top personal income tax rates.

In the weekly Republican radio address on Saturday, Representative Mike Pence of Indiana promised an all-out push to extend the tax cuts for everyone. “House Republicans will oppose this tax increase with everything we’ve got,” he said.

The issue is further complicated by the rising concern among voters about the federal deficit, which would be increased by roughly $1.5 trillion over 10 years just by continuing the tax breaks for the middle class. Many economists say the nation’s debt load is already headed to risky levels.

A decision on the tax issue could come just as Mr. Obama’s National Commission on Fiscal Responsibility and Reform reaches a Dec. 1 deadline to propose remedies for addressing the long-term debt problems. “The big questions before us now are whether we should make some of these tax cuts permanent, and if so, which ones,” Mr. Baucus said at a recent public hearing. “But that’s not the only challenge. There’s another elephant in the room — the budget deficit. And that elephant is growing.”

At Thursday’s closed committee meeting, in a testy exchange described by several witnesses, Senator Orrin G. Hatch, Republican of Utah, pushed for developing the bill openly in committee rather than having Democrats bring it straight to the floor.

In a statement, Mr. Hatch lambasted Democrats. “They can talk about the wealthy all they want, but this is about stopping a job-killing tax hike on small businesses during tough economic times, ” he said.

But some lawmakers, including Mr. Wyden, say the deficit concerns and the attention on the debt commission could help forge a deal: a short-term continuation of the tax cuts for the middle class, and perhaps some new tax breaks for businesses, that would buy lawmakers time to undertake a broad overhaul of the tax code in the next Congress.