With a combination of safe sleeping and safe parking areas and also converting motel rooms into single occupancy units (SROs), San Diego is heading in the right direction for solving the homeless situation. This is combined with an ordinance that prohibits sleeping in public areas including sidewalks. Finally, a workable solution that gets the homeless off the streets, provides them with some amenities including sanitation facilities and makes the streets and city sidewalks safe for pedestrians again. As a tourist destination San Diego can't afford the spectacle of back to back tents crowding city sidewalks, and the provision of amenities in safe sleeping areas or city sponsored SROs makes the homeless at least somewhat better off than they are without any amenities on public sidewalks. The San Diego Union reported:
The properties being considered include three hotels and one apartment building.
One of the hotels is a 62-unit Ramada Inn on Midway Drive, which the Housing Commission agreed to pursue at its May 12 meeting when it unanimously agreed to apply for $18 million in Project Homekey funding. The estimated purchase price would be $11.6 million, equating to about $182,000 a unit, but adding kitchenettes and other upgrades would increase the overall cost to $29.5 million, or $469,000 a unit.
The city also is submitting a joint $4 million application with Wakeland Housing and Development Corp. to purchase a vacant 13-unit apartment building in Ocean Beach. Purchasing the building would cost $4.5 million, but rehabilitation expenses would increase the cost to $6.8 million, bringing the per-unit cost to $525,000.
The other two properties are a 107-unit Extended Stay America Hotel on Murphy Canyon Road for $40.7 million and a 140-unit Extended Stay America Hotel on Mission Valley Road for $52 million.
Essentially the city is taking the responsibility for providing public housing, something that was abandoned during the Reagan administration. The most dramatic cut in domestic spending during the Reagan years was for low-income housing subsidies. Reagan appointed a housing task force dominated by politically connected developers, landlords and bankers. In 1982 the task force released a report that called for “free and deregulated” markets as an alternative to government assistance – advice Reagan followed. In his first year in office Reagan halved the budget for public housing and Section 8 to about $17.5 billion. And for the next few years he sought to eliminate federal housing assistance to the poor altogether.
Public housing was stigmatized due to failed projects like Cabrini-Green. Cabrini–Green was home to 15,000 people, mostly living in mid- and high-rise apartment buildings. Crime and neglect created hostile living conditions for many residents, and "Cabrini–Green" became a metonym for problems associated with public housing in the United States. Now cities like San Diego are forced to take up the fallen banner for public housing under the metonym of "housing the homeless". The state of California, however, is providing most of the funding.
Other cities have had no problem in providing low cost rental housing. Take Vienna for example, a city which has largely solved the worldwide crisis of soaring rents:
Experts refer to Vienna’s Gemeindebauten as “social housing,” a phrase that captures how the city’s public housing and other limited-profit housing are a widely shared social benefit: The Gemeindebauten welcome the middle class, not just the poor. In Vienna, a whopping 80 percent of residents qualify for public housing, and once you have a contract, it never expires, even if you get richer. Housing experts believe that this approach leads to greater economic diversity within public housing — and better outcomes for the people living in it.
People living in Vienna's social housing pay as little as 3% of their monthly salaries on rent. To boot the availability of low cost public housing keeps costs in the private housing market down.
In 2015, before they bought an apartment on the private market, the Schachingers were making about 80,000 euros ($87,000) a year, roughly the income of the average U.S. household in 2021. Eva and Klaus-Peter paid 26 percent and 29 percent in income tax, respectively, but just 4 percent of their pretax income was going toward rent, which is about what the average American household spends on meals eaten out and half a percentage point less than what the average American spends on “entertainment.” Even if the Schachingers got a new contract today on their unit, their monthly payments would be an estimated 542 euros, or only 8 percent of their income. Vienna’s generous supply of social housing helps keep costs down for everyone: In 2021, Viennese living in private housing spent 26 percent of their post-tax income on rent and energy costs, on average, which is only slightly more than the figure for social-housing residents overall (22 percent). Meanwhile, 49 percent of American renters — 21.6 million people — are cost-burdened, paying landlords more than 30 percent of their pretax income, and the percentage can be even higher in expensive cities. In New York City, the median renter household spends a staggering 36 percent of its pretax income on rent.
Real estate is a place where money literally grows on tree beams. In the last decade, the typical owner of a single-family home acquired nearly $200,000 in appreciation. “Another word for asset appreciation is inflation,” the academics Lisa Adkins, Melinda Cooper and Martijn Konings write in “The Asset Economy,” “an increase in monetary value without any corresponding change in the nature of the good itself or the conditions of its production that would make it scarcer or justify an increased demand for it.” That inflation is creating a treacherous gulch between the housing haves and have-nots. Harvard’s Joint Center for Housing Studies found that, in 2019, the median net worth of U.S. renters was just 2.5 percent of the median net worth of homeowners: $6,270 versus $254,900. Last year, as higher interest rates slowed home sales and caused prices to plateau (and even soften in some overheated cities), the asking price of the median U.S. rental reached $2,000 a month, a record high, according to Redfin. Inflated rent prices line the pockets of landlords while preventing renters from saving for a down payment and ever getting off the treadmill.
Inflation in asset prices, particularly real estate, is causing more people, especially senior citizens, to fall into homelessness. The recent rise in interest rates which supposedly are aimed at curbing inflation have done nothing to bring the cost of housing down. In San Diego county, real estate is still appreciating in value despite the Fed having raised interest rates to highs not seen in recent years. It has done nothing to stop investors and hedge funds that pay cash. I reported previously:
In a deal with the Conrad Prebys Foundation, Blackstone Group, CEO'd by Steven Schwarzman, is buying 5800 rental units in San Diego. According to the San Diego Union, "The deal makes Blackstone one of the biggest real estate holders in San Diego County. It already owns $4.5 billion in assets here — including Legoland and the Hotel del Coronado. The transaction, which also includes Los Angeles-based investment firm TruAmerica as a partner, is expected to close in the next few weeks. The sale of the apartments was praised by Dan Yates, the president of the Conrad Prebys Foundation, who said the portfolio was assembled by Conrad Prebys — a San Diego developer — himself. Yates said the money from the deal will be used for grants primarily in San Diego."
Investors pay cash t buy up cheap rentals, and, therefore, the rise in interest rates doesn't affect them. They don't pay interest. They then give the tenants a 30 or 60 day notice depending on how long they've lived there. Then they refurbish the apartments and rent them out for twice the previous rent. This is the so-called "gentrification" of San Diego neighborhoods. This is why low cost rental units are disappearing just as all the SROs have disappeared. The policies now taking place by the city and county of San Diego to provide converted hotel housing and safe sleeping and parking areas will counteract this trend of higher and higher rents producing more and more homelessness. It's a policy that needs to be continued and increased. It cannot just be a one-off. Eventually, it will put a damper on the private rental market just as it did in Vienna.
Republican Presidents Have Been Mainly Responsible for Increases in the National Debt
by John Lawrence
The Reagan, George W Bush and Trump tax cuts are responsible for most of the US national debt. During the Trump administration, the debt increased by roughly $7.8 trillion, and The George W. Bush administration enacted sweeping tax cuts that will have cost more than $8 trillion by the end of fiscal year 2023. The nation’s fiscal pictured changed in 1981 when President Ronald Reagan enacted the largest tax cut in U.S. history, reducing revenues by the equivalent of $19 trillion over a decade in today’s terms. Although Congress raised taxes in many of the subsequent years of the Reagan administration to claw back close to half the revenue loss, the equivalent of $10 trillion of the president’s 1981 tax cut remained. Donald Trump Built a National Debt So Big (Even Before the Pandemic) that it’ll weigh down the economy for years.
A series of massive, permanent tax cuts have created large federal budget primary shortfalls and continue to exert upward pressure on the debt ratio. In other words, the current fiscal gap—the growing debt as a percentage of the economy—stems from legislation that cut taxes, disproportionately for the very rich. While it is true that the Great Recession and legislation to fight it, along with the costs of responding to the health and economic effects of COVID-19, pushed the level of debt higher, these costs were temporary and did not change the trajectory of the debt ratio. If Congress wants to decrease deficits, it should look first toward reversing tax cuts that largely benefited the wealthy, which were responsible for the United States’ current fiscal outlook.
Therefore, taxes on the rich should increase while spending on the poor and middle class should also increase. Americans want both: social programs and reduced taxes. However, the gross inequality that exists between rich and poor begs the question: why raise taxes on everyone? Shouldn't the rich have their taxes increased while the poor and lower middle class have their taxes reduced? Of course, that 's the ideal solution. However, Republicans represent the interests of the rich so they would never agree to this proposal. They will continue to argue for increasing taxes on the poor while cutting spending that mostly benefits the poor and lower middle class. That's the American situation, writ large, folks. That's all you need to know to understand American politics. It's a struggle between rich and poor. The rich think they deserve all their money even if it runs to billions of dollars while the poor are only trying to get a foothold in the American Dream. The rich think the poor deserve their lot in life because they didn't work hard enough to overcome their poverty. The rich also believe in a meritocracy where they themselves are the winners who made all the right moves and worked the hardest. What's wrong with this picture?
As set up by the Founding Fathers, the mechanics of the American electoral system inevitably lead to a two party system. This is as opposed to a parliamentary democracy as exists in most other democratic nations. Third parties never make it in American democracy precisely because they take votes away from the party whose views they most closely resemble. Example: the Presidential election of 2000. Since with the American voting system, a voter can vote for one and only one candidate, voters waste their votes voting for a third party candidate who has no chance of winning. Ralph Nader ran as the Green party candidate and won almost 3 million votes, votes which most assuredly would have been cast for Gore if Nader weren't running. As it was, Gore won more popular votes than George W Bush who eked out a victory because of the antiquated electoral college system. If Gore had also won the 3 million votes that Nader received, he may have had enough electoral votes to tip the balance. These voting mechanics have enshrined what is called plurality voting or the first past the post system into law. If the approval voting system had been in effect in 2000, Gore would have won. Approval voting is a system in which a voter can cast votes for all candidates he or she approves of. That means that all those who voted for Nader would also probably have voted for Gore giving Gore 3 million more votes.
Why the two party system, which is the inevitable result of plurality voting, is so toxic is that it leads to a government like we have today in which the two parties are diametrically opposed to each other. Instead of working in the best interests of the American people, the two parties end up fighting each other for power. This produces gridlock and a seesawing back and forth regarding policy depending on which party controls which branch of government. The dystopia that results from this winner take all system is that compromise becomes impossible. All the energy goes into winning and making the other party lose. It is all about the competition between the two parties and not about finding solutions to societal problems that benefit the American people. Another factor is that the plurality system of voting at best leads to majority rule. That means that at best each party represents a majority of the American people and not minorities at all. Certainly neither party needs to seek the votes of the poorest Americans who usually don't vote anyway, and, if they did, their interests need not be served by the winning party.
The American system has become a dystopia precisely because one party is only interested in winning, and, if the other party is in power, in making that party lose the next election. They do this by denying insofar as possible that party from making any constructive changes which might benefit the American people. As the American people get disenchanted with the ruling party because it can't bring about constructive change, they inevitably vote for the other party hoping that they can do what the ruling party wasn't able to based on their campaign promises. In a multi party system such as a parliamentary democracy, a party whose only purpose is to deny the ruling party the ability to bring about constructive change and thereby gain power for itself is less likely to be able to pull this off. A center party is more likely to win. The two party system is more likely to breed two extreme parties diametrically opposed to each other with each party vying for power.
Fortunately, because of his skill and dexterous maneuvering, Joe Biden has been able to bridge a lot of gaps in getting things done for the American people. However, it wasn't without the other party's determinattion to make him fail. Republican leader Mitch McConnell said this about President Obama: "The single most important thing we want to achieve is for President Obama to be a one-term president." How they endeavored to do this was to make Obama fail at everything he promised in his campaign to do for the American people. If Obama wasn't able to accomplish his campaign goals, the American people would become disenchanted with him and put Republicans back in power. This is why Republicans never compromise with Democrats in the best interests of getting good things done for the American people. They only see these things as "wins" for the Democrats and hence "losses" for themselves. On the other hand, Democrats are somewhat more magnanimous in that they will vote with Republicans some times when they are in power. Example: Democrats voted 3 times to raise the debt ceiling when Trump was in power even though they objected to the $7 trillion that Trump added to the national debt by giving tax breaks to the rich. The only reason Biden was able to accomplish anything or any American President is able to accomplish anything is when their party controls all 3 branches of government. Even then the other party can filibuster making a mockery of the idea of democratic government.
Inflation is a supply and demand problem. The Fed only sees it as a demand problem: there is too much demand. Therefore, it seeks to reduce the public's ability to demand by reducing wages and creating more unemployment. Problem is that businesses are short staffed. They are trying to hire more workers, not laying them off. There is no "industrial reserve army" of people competing for jobs. Businesses are competing for workers. The reason why prices are going up (hence inflation) is not that there is too much demand, but that there is too little supply. This is caused by supply chain problems which comes down to the fact that most things Americans consume are produced overseas, mainly in China. Also the sanctions on Russian gas and oil combined with Russia cutting off supplies even beyond the sanctions means that everything that is transported including consumer goods is even more expensive. The problem is that the US does not produce much of what it consumes. Again it's a supply problem. Container ships coming from China raise their rates because gas is more expensive. This makes the goods they transport more expensive. When the major things Americans consume come from China (consumer goods) and Russia (energy costs), America is at the behest of countries that it considers enemies. And so is Europe.
The traditional way of fighting inflation is for the Fed to raise interest rates and drive up unemployment. When unemployment increases, demand decreases because unemployed people don't have as much money to spend. In other words money is withdrawn from the economy. This is of course to the detriment of the unemployed people which are usually those on the lowest rung of the economic ladder. But as we've seen during the pandemic, those at the bottom of the economic ladder are usually those who are indispensable workers - grocery workers, agricultural workers, truck drivers, nurses, caregivers. The economy cannot function for anyone without their services. So the only way the Fed can achieve its goal is to drive businesses into bankruptcy. Then all those workers will be in the ranks of the unemployed and be forced to underconsume. Actually, the more that Americans consume, the more greenhouse gasses are created. Underconsumption could have a very salutary effect on the atmosphere and the environment.
Another way to withdraw money from the economy in order to reduce demand is to raise taxes. Again taxes are usually raised on the poor and middle class further immiserizing them. Congress refuses to raise taxes on the rich which Joe Biden has proposed doing. This would help inflation to some extent, but the rich don't consume basic items to the extent that the middle class and poor do. So in order to reduce demand to the point where it is more or less equal to supply, money must be taken out of the pockets of the poor and middle class. The other alternative is to increase supply. But since the US is dependent on supply from foreign suppliers, this is not that easy to do. Long range, the solution is for the US to make more stuff, but corporations have settled on a model of getting stuff produced where labor is cheapest and that means overseas.
When my father was a high school teacher in Highland Park, NJ, he taught a course - Problems in American Democracy. So I'm hopefully carrying on a family tradition by trying to elucidate these problems which, to put it mildly, are probably much different today than they were in 1941! The big problem today is that so many people are detached from reality in terms of being in touch with what the real problems are. One of the real problems is climate change, how to get from here to net zero carbon emissions before planet earth becomes uninhabitable. Another real problem is homelessness and affordability of housing. Another real problem is the 80 million refugees in the world. Another real problem is for Americans to be concerned about world problems and not just confine their attention to what goes on inside the borders of the US. Another real problem is physical and social infrastructure which will be addressed by Biden's Build Back Better bills. But the biggest problem of all, as I see it, is that elections every 2 years make continuity of direction for the US impossible especially when the 2 parties have become diametrically opposed. So today we have the reality that the American government could possibly swing back and forth between Trumpism and what we might call Bidenism. Back and forth between ignorance and enlightenment. To boot the American people are no longer tuned in to authoritative news sources. Too many are only tuned into social media which is greatly responsible for cultivating the divide between two American tribes - the no nothings and the do somethings.
People in the Trump camp could care less about voting for or against their own economic interests. You would think a lot of them would benefit from the initiatives that the Democrats have put forward. But either they are ignorant of them or are willing to vote against their interests just because of the tribe they belong to or out of spite. They are completely irrational. Rationality is not even on the table. Their hate and their spite rules everything as far as they are concerned. They are willing to go down numerous rabbit holes and believe all kinds of conspiracy theories because critical thinking or a concern about human welfare, their own and others, has no place in their consciousness. Their concern and understanding remains at the level of symbols like the American flag. A deeper understanding or analysis of situations is beyond them. What's more this misinformed and ignorant part of the population is significant in number and can easily be responsible for electing ignorant and conspiracy theory infused lawmakers who will do whatever is necessary to pander to their constituents. Thus America as a nation could swerve back and forth between ignorance and rationality as exemplified by Trump's withdrawal from Obama's climate initiatives like the Paris accords and Biden's reinstating them.
Contrast the instability of American democracy with the Chinese system of government in which stability is of utmost importance. They don't want anyone rocking the boat including tennis stars. While this heavy handedness does curtail some of the aspects of western notions of freedom, it preserves the priorities of the long term interests of China itself which has been going in what most experts concede is a very positive direction. According to the World Bank: "Since China began to open up and reform its economy in 1978, GDP growth has averaged almost 10 percent a year, and more than 800 million people have been lifted out of poverty. There have also been significant improvements in access to health, education, and other services over the same period." China has had the goal of eliminating poverty altogether and claims as of 2021 to have done so. According to a Chinese source which admittedly may be biased: "Through continuous efforts, the final 98.99 million impoverished rural residents in China had all been lifted out of poverty, and all 832 impoverished counties and 128,000 villages had been removed from the poverty list by the end of 2020. The strategy of targeted poverty alleviation is China's strongest "weapon" in its final battle against poverty, and a major innovation in the theory and practice of poverty reduction. China's success in poverty alleviation has proven that the problem of poverty, in essence, is how the people should be treated: the people-centered philosophy is the fundamental driving force behind this cause." Independent confirmation of these claims is unclear. The World Bank which is an unbiased source essentially agrees with the Chinese government at to its elimination of poverty: "In 1990 there were more than 750 million people in China living below the international poverty line - about two-thirds of the population. By 2012, that had fallen to fewer than 90 million, and by 2016 - the most recent year for which World Bank figures are available - it had fallen to 7.2 million people (0.5% of the population). So clearly, even in 2016 China was well on the way to reaching its target. This suggests that overall, 745 million fewer people were living in extreme poverty in China than there were 30 years ago. World Bank figures do not take us to the present day, but the trend is certainly in line with the Chinese government's announcement."
So what weapons does the US have in its arsenal for the alleviation of poverty and homelessness? Not many. Biden's Build Back Better plan will help, but the US in recent years has been more interested in funding weapons systems built by the military-industrial complex, weapons that destroy rather than weapons that build. It's only "progressives" that even care about solving the problems of poverty and homelessness in America or in doing something about climate change or about the refugee problem in the world and not just at our southern border. I note that not one Republican voted for Biden's Build Back Better bill in the House. Instead Republican leader Kevin McCarthy went on an 8 hour diatribe in a futile attempt to prevent the bill's passage.
The Caring Component of Biden's Infrastructure Plan
by John Lawrence, April 6, 2021
It's about time that the need for a caring infrastructure is addressed. Caring used to be supplied almost entirely by wives when wives didn't work outside the house. However, they did considerable work inside the house caring for children, sick relatives and elders in addition to taking care of their husband's needs. Now that most wives are required by economic necessity to work outside the home, there is a need for child care for young children not old enough to attend school. There is a need for pre-K education plus babysitting services. Older family members have special needs for care giving as well. Who is to provide for this if wives are in the work force? Rich people can pay tuition for pre-K and child care as well as hiring caregivers for older relatives or paying for senior living facilities. For poorer people, wives have to do all this themselves in addition to working to provide income for the family.
That's why Biden's initiatives provides for a caring infrastructure. However, it is insufficient. The Guardian reported:
Just as our physical infrastructure is crumbling and requires substantial reinvestment in a 21st-century economy, our care infrastructure is fundamentally broken. As the only industrialized country in the world without a national paid family and medical leave program, only 17% of our people have paid family leave through their employers. Hundreds of thousands face daunting waitlists for essential home care. Childcare is the highest household expense for families in much of the United States. And the median annual pay of childcare and home care workers is $25,510 and $17,200, respectively, leading to high turnover and reliance on public assistance.
In the past most elderly people on Medicaid that needed care giving were forced into institutional care like nursing homes. There was no comparable funding level that provided care givers for people to stay in their own homes. Biden's care infrastructure corrects this anomaly by providing money for care givers to provide care outside of nursing homes and other institutions. However, the limitation is that people who qualify for either nursing homes or home care must be on Medicaid. Basically, this means that they have no assets. They could stay in their own home only if they don't own it. If they owned it, that would be considered an asset that would disqualify them from being on Medicaid. So older people on Medicare, but not Medicaid would not qualify under Biden's "care infrastructure" initiative. People with assets like home ownership usually want to pass those assets on to their children. It represents the intergenerational transfer of wealth. That's how white people have built wealth over the generations whereas black people, who were by and large prevented from owning their own homes after WW II, are by and large renters.
Elderly renters are mainly poor people who live off of social security which hardly provides for a decent living much less the intergenerational transfer of assets once the person dies. Biden's pre-election agenda called for an uping of social security payments so that people could have a decent existence just based on social security alone. It also called for an increased amount of social security for people who had been on social security for 20 years, in other words, the really old. The Boston Globe reported:
A critical part of Biden’s campaign plan was not only raising funds for Social Security but also expanding the benefits to reduce poverty among elderly Americans. It would, for example, ensure that benefits for workers who were in the labor force for 30 years or more would be at least 125 percent of the federal poverty line. The oldest beneficiaries would also receive a bump to offset dwindling retirement savings, and widows and widowers would receive a 20 percent increase so that their Social Security benefits don’t get cut in half when their partner dies.
The reason that Biden didn't include this in his "caring infrastructure" initiative is that the cap on wages subject to the payroll tax would (in the minds of politicians) have to be raised to "pay for" it, and Biden has promised not raising taxes on anyone making less than $400,000 annually. Right now, payroll taxes that go toward funding Social Security are capped at the first $142,800 of a taxpayer’s income. First of all the social security trust fund is basically a hoax. Money is available for social security in the same way that money is available for COVID relief, infrastructure and even tax cuts. As Modern Monetary Theory points out, the Federal Reserve creates the money without the need of taxes to pay for it. The same is true for social security. But Biden did not want to complicate the discussion around his infrastructure plan so he left his plan for social security increases behind presumably to be brought up at a later date.
There is much talk about enlisting the help of Republicans for Biden's infrastructure initiative, but it is a not a secret that Republicans will help with nothing Democrats want to do. The working across the aisle thing is a loosely held fiction. Democrats know that they must pass all Biden's bills just with the slim Democratic majority. That gives Joe Manchin of West Virginia, the most conservative Democrat, enormous power. You can bet your booty that West Virginia will get more than their fair share of roads and bridges. He wants to not raise the corporate tax rate to 28% as Biden as suggested. Big deal! Again tax money is not required for government spending. The Federal Reserve just issues the money, and then the Treasury Department sells the bonds. What bonds can't be sold to individuals or foreign governments end up on the Fed's balance sheet. The deficit between money spent and tax money collected is irrelevant. Taxes are only relevant to reduce income inequality as long as they are targeted on the rich. The Fed controls the interest rate, and as long as it keeps it at about zero, the Federal government can keep the amount of money it spends on interest under control.
If Two Democratic Senators Were Not Elected in Georgia Run-offs, There Would Be No COVID Relief Package Under Biden
by John Lawrence, March13, 2021
It was crucial that the two Georgia Democratic Senators were elected. Not one Republican voted for Biden's $1.9 trillion bill. If there were one less Democrat in the Senate, nothing like it would ever have been passed. Republicans are the Party of No. Not one Republican Senator will ever vote Yes on any legislation put forward by a Democrat so that Georgia election was crucial. That's why Republican legislatures not only in Georgia but around the country are scrambling to put restrictive Jim Crow voting regulations in place on the belief that Republican operative Paul Weyrich was right. He said, "So many of our Christians have what I call the goo-goo syndrome: good government. They want everybody to vote. I don't want everybody to vote. Elections are not won by a majority of people, they never have been from the beginning of our country and they are not now. As a matter of fact, our leverage in the elections quite candidly goes up as the voting populace goes down."
So now economist Larry Summers is worried about inflation due to the fact that trillions have been added to the deficit. So far, lawmakers have enacted six major bills, costing about $5.3 trillion, to help manage the pandemic and mitigate the economic burden on families and businesses. Even those economists know that the Federal government doesn't need taxes in order to spend money. The Federal Reserve can create it with a few keystrokes on a computer just the way they did to bail out Wall Street banks during the Great Financial Recession (GFR) of 2008. Of course the public wasn't suppose to know about this "secret" bailout by the Fed. Authorities wanted you to believe that the $700 billion bill passed by Congress provided the bailout. In reality it was much more. Rolling Stone reported: "Washington Post “Fact-checker” columnist Glenn Kessler disputes the numerous studies showing the real bailout outlay was through the Fed, which the Sanders campaign had said was anywhere from $7.7 trillion (the number Bloomberg used in its coverage of secret Fed lending) to $29 trillion (the number the Levy Institute at Bard College calculated, including guarantees and other forms of aid).
So how is it that Larry Summers was not so worried about inflation due to the Fed's trillions of dollars created and given to Wall Street? The answer is that that money was given to rich people which has caused no inflation because rich people are not going to spend money in ways that drive up the Consumer Price Index (CPI). They are mainly going to invest their money in ways that aren't included in the CPI. They are going to purchase assets like stocks and real estate. Consequence: no inflation at least as measured by the CPI. Instead the Wall Street bailout during the GFR as well as the $2 trillion tax breaks of the Trump administration produced asset inflation. It's the reason that home prices and rents are becoming increasingly unaffordable. But Summers is worried about inflation as measured by the CPI which is what happens when poor and middle class people get a trillion dollar bailout. They will spend that money at least partly on consumer goods that are included in the CPI and potentially drive up prices. However, much of the bailout money will go to pay off debts like past due rent and mortgage payments. This is not inflationary. So the real moral of the story is that, according to economists like Summers, bailing out rich people is good, bailing out poor people is bad.
So two lessons are to be learned here. 1) The Fed doesn't need taxes to create money and spend it into the economy whether that money is to bail out banks or to bail out the poor and middles class. 2) Democrats need to enact at the Federal level voting laws which encourage as many people to vote as possible and roll back Republican enacted restrictions on voting at the state level. In order to do the latter, Democrats will have to eliminate the filibuster at least for particular types of legislation. The only reason Biden's $1.9 trillion relief bill passed is that it was done by a process known as "budget reconciliation" which only requires a majority vote in the Senate. A national voting rights bill cannot be passed by that process and is subject to the filibuster which requires 60 votes. The Party of No wouldn't hesitate to use the filibuster to doom any voting rights legislation at the Federal level which means essentially that Jim Crow voting rights would again be put in place to discourage black people from voting. And don't worry about your children and grandchildren having to pay off the national debt. The Federal Reserve doesn't need their money.
Bernie Sanders, Budget Reconciliation and Modern Monetary Theory
by John Lawrence, January 18, 2021
Joe Biden will have no trouble from Congress in passing his $1.9 trillion relief bill. That's because Democrats control all 3 branches, and the filibuster is neutered due to "budget reconciliation." This allows a spending bill to be fast tracked through Congress without the possibility of a filibuster. According to the Center on Budget and Policy Priorities: "The Senate can consider and pass reconciliation bills relatively quickly and with only a simple majority, rather than the three-fifths majority often needed for controversial legislation. That’s because reconciliation legislation isn’t subject to filibuster. Under general Senate rules, legislation can be stalled by virtually unlimited debate and the offering of numerous amendments, with a three-fifths majority vote required to invoke “cloture,” thereby limiting debate and blocking non-germane amendments. For a reconciliation bill, however, the Congressional Budget Act limits Senate debate on the bill to 20 hours and limits debate on the subsequent compromise between the two houses to ten hours."
Modern Monetary Theory (MMT) has shown that deficits don't matter. At least George W Bush didn't think so when he used the budget reconciliation process to give huge tax breaks to the rich which significantly increased the deficit and reduced income to the Federal government from taxes. The use of budget reconciliation did an end run around PAYGO which requires the Federal government to balance its budget and the debt limit which also constrains Federal spending. Both conservatives and liberals will be enthused over the fact that MMT proclaims that either tax reduction or government spending is good for American society (up to a point) even though the debt limit or PAYGO may be violated. This is because government is effectively adding money to the private sector which drives economic activity.
Bernie Sanders and Alexandria Ocasio-Cortez are very familiar with not only budget reconciliation but also MMT because one of its chief adherents, Stephanie Kelton who wrote the book, The Deficit Myth, previously was a Senate advisor to Bernie on the Senate Budget Committee. On December 26, 2014, Kelton was designated as Chief Economist for the Democratic Minority Staff of the Senate Budget Committee, a post that she held in 2015 and early 2016, when she left that position to become an economic advisor to the Bernie Sanders campaign. So the American economy is about to get a shot in the arm that will mostly benefit poor and middle class people (whereas the Bush tax cuts primarily benefited the rich) much to the chagrin of conservatives that hold to the idea that government deficit spending should only benefit the rich through tax cuts.
MMT contends that, since the Federal Reserve creates money by keystokes on a computer and the US dollar is a sovereign currency, the US government can never run out of money. Treasury bonds can always be sold to cover deficits, and, if they can't be sold to the general public, they will end up on the Fed's balance sheet where they may remain forever as an accounting entry. Even the interest paid on Treasury bonds, which is now approximately zero, is not a consideration. Interest on Treasuries owned by the Fed is remitted to the Federal government anyway. So now is the time for massive spending by the US Federal government to 1) expedite recovery from COVID; 2) jump start the economy; and 3) expedite a global response to global warming by converting to renewable energy on all levels including:
"replacing fossil-fuel engines with electric in all public and private transport, super-insulating buildings and replacing inefficient HVAC systems, establishing regional photo-voltaic micro-grid electric networks, replacing gas cooking ranges with electric induction units, buying regenerative-produced farm products and 'meatless meats', replacing all small engine appliances and tools with battery electric power"
And this is not to mention that solar, wind and other forms of renewable energy need to replace fossil fuel electric generating plants.
There is no time to lose. The incoming administration has a lot on its plate. In addition to that they have to run an impeachment trial in the Senate. Let's hope it doesn't slow down any of Joe Biden's initiatives. With Bernie as the Chairman of the Senate Budget Committee, armed with a knowledge of MMT, we can look forward to restoring the US' standing in the world community as well as restoring an economy that works for the poor and not just the well heeled, getting the pandemic under control and mitigating climate change. Thank you Bernie and Alexandria Ocasio-Cortez.
K Shaped Recovery Calls For K Shaped Tax Structure
by John Lawrence, January 4, 2021
It has been well documented that the rich have gotten richer during the pandemic while the poor have gotten poorer. Over a roughly seven-month period starting in mid-March – a week after President Donald Trump declared a national emergency – America’s 614 billionaires grew their net worth by a collective $931 billion. Although the CARES Act led to a diminution of poverty in the early stages of the pandemic, poverty rates have risen since then to around 17% of the population. Among blacks and Hispanics the poverty rate is closer to 25%. The one thing that has benefited minority groups is the fact that for the first time many of them were able to vote by mail because of the pandemic. Before the pandemic many poor voters were not likely to stand in line on a week day to vote thus losing a day's pay. While the many techniques of voter suppression used by the Republican party kept the votes of blacks and Hispanics to a minimum, the last election proved that voting by mail allowed many more poor and especially black voters to cast a ballot
After Joe Biden is finally in office, we will see an increase in programs that will benefit poor and minority communities many of whom are essential workers who sacrificed in many ways to keep the economy going. While the rich got richer during the pandemic, it became clear that poor essential workers should be making more money while rich inessential workers deserve less. However, the results were the opposite of that. People invested in financial assets and people who could work from home by and large did well economically during the pandemic while those workers, without whom the economy would have come to a grinding halt, were working for minimum wage in many cases. Signs went up at nursing homes "Heroes work here", but what they forgot to add was the phrase "at minimum wage." Nursing homes are staffed with CNAs, Certified Nursing Assistants, who make little more than the minimum wage.
The K shaped recovery refers to the fact that the rich got richer while the middle class working from home did well while the bottom half of the economy, the lower half of the K, did worse financially. In any event the tax structure should reflect that fact in order to diminish economic inequality. The rich should be taxed more while the poor and lower middle class should be taxed less and actually subsidized. This is the enlightened purpose of taxation - to reduce economic inequality. According to Modern Monetary Theory, taxes are not important for raising money for government expenditures because the Federal Reserve can make any amount of money available to the government by means of a few keystrokes on a computer. Stephanie Kelton writes:
"But taxes are important in other ways. As the World Inequality Report notes,'the income-inequality trajectory observed in the United States' is partially explained by 'a tax system that grew less progressive.' Taxes can be used to curb astronomical accumulations of wealth. That's important precisely because the wealthy use their money to amass power and influence over the political process: they've rigged the tax code in their favor; they've rewritten labor laws, trade agreements, rules governing patents and protections, and much more. They've made public policy serve their economic interests."
This accumulation of economic and political power by the wealthy has been somewhat redressed recently by mail voting which tends to serve the interests of the poor and lower middle class. If it remains in effect, the voter suppression techniques of the past, used mainly by Republicans to suppress the African American vote, will have been counteracted with the result that the interests of the poor and lower middle class will have been elevated at the expense of the rich.This is what Donald Trump is so mad about - that the pandemic caused a revolution in mail in balloting at his expense. This is largely why he lost, and he's mad as hell about it. So what. The Republicans had it coming. Maybe the pandemic was a blessing in disguise at least in this respect.
Expand Habitat for Humanity in Honor of Jimmy Carter
by John Lawrence, November 11, 2020
The best way to build wealth among poor people is to expand a program that gets them into a house. The debt industry profits off of poor people whether it's Payday lenders, student loan debt, car loan debt, credit card debt or mortgage debt. The debt industry, aka the banking industry, profits off of poor people's debt. That's why the poor need to build wealth which will also close the economic inequality gap. Home ownership is the main way the middle class builds wealth which is then intergenerationally transferable. Habitat says "In fiscal year 2019, we helped more than 7 million people, and an additional 2.3 million gained the potential to improve their housing conditions through training and advocacy." It's not clear how many new houses that 7 million figure represents because they also help people by doing housing improvements. Looking at Habitat's Form 990 reveals some interesting data. They have annual revenues of approximately $300 million. Revenues less expenses for FY 2018 was about $13 million. Without doing an exhaustive analysis of this Form 990, it would seem that $13 million is a paltry amount of money to build new homes if in fact it all went to building new homes. It is to be noted that the CEO made about $400,000. They also seem to spend an enormous amount on advertising and fundraising.
A government program based on the Habitat model could magnify the number of new affordable homes built per year and could be combined with AmeriCorps which is already working with Habitat. Government service building affordable homes should be an alternative to military service with comparable benefits. One drawback of Habitat is that it does not serve homeless or low income families who can't afford a modest mortgage. So a government program based on the Habitat model should look at improving on the Habitat model. Another thing is that Habitat claims to be a "Christian organization." Does that mean that religiously nonChristian families are not eligible? A government program should not have connections to a particular religion but should be open to people of all or no religions. It should be nondenominational. The people who eventually own the homes have to put in a certain amount of "sweat equity." This is good because it makes the homes more affordable. A program based on FDR's Civilian Conservation Corps could employ youths in public service for 2 years building houses in return for free college education and other benefits. These homes need to be solarized and be built in such a way as to be non-emitting of greenhouse gasses.
The best way to co-opt Trump voters is to offer them economic opportunities. Promised economic opportunities (promised but not delivered) are the thing that pushed Trump over the top in 2016 in the rust belt states. A program of building houses ala Habitat not only would help poor people, who are disproportionately minorities, but would tend to placate poor whites who are mainly Trump voters. That's why programs helping the poor can't be labeled "Black Lives Matter" programs. They can't be just for black people although black people would disproportionately benefit. To design a program only for black people would further alienate Trump voters. Bringing this country together, as Joe Biden has professed he wants to do, means that all programs to help people must of necessity be color blind. Another benefit is that people who contribute to public service in AmeriCorps or the Peace Corps will tend to vote Democratic because they will have seen how Democratic programs have benefited not only themselves but other people as well.
Many people who join the military do so for the benefits and because they have no better prospects after high school. Military service for 5 years gains them a free college education plus many other generous benefits, even a pension. They also get brainwashed to vote Republican. Even those working in the military-industrial complex are brainwashed to vote Republican. As a college graduate the jobs available to me were mainly in the military-industrial complex. Once there I was pressured to vote Republican because it was believed that Republicans would expand funding for the military and hence the military-industrial complex. It was thought that a Democratic administration would cut funding for the military-industrial complex and we could be RIFd (Reduction in Force). Expanding programs in the peace industry should have the opposite effect. I left the military-industrial complex many years ago fortunately, and my economic future doesn't depend on future funding it. Many others are not in the same position.
As the nation transitions from fossil fuels to renewables, it's important that workers in the fossil fuel industry have a path to transition to new jobs. The same holds true in transitioning workers in the military-industrial complex to the peace-industrial complex. It's also important to give young people the possibility of serving their country in a way that contributes to peace and economic stability with comparable benefits instead of serving in the military. The peace industry (like building houses here and abroad) needs to become more important than the war industry. The issue of global warming in particular means that all nations of the world must cooperate and foster a spirit of cooperation while putting their antagonisms aside. Peace, renewable energy, economic development for poor and middle class people need to replace a power structure that fosters political antagonism among the nations of the world. Jimmy Carter not only wields a hammer for Habitat for Humanity in his nineties, but also put solar panels on the roof of the White House (which Ronald Reagan took down). If we had had Jimmy Carter for a second term and Al Gore instead of George W Bush (with his fossil fuel loving vice President, Dick Cheney), we would be further along the path toward replacing fossil fuels with renewable energy and further along the path of dealing with global warming.
Some societies center on social control, others on social investment.
Social-control societies put substantial resources into police, prisons, surveillance, immigration enforcement, and the military. Their purpose is to utilize fear, punishment, and violence to divide people and keep the status quo in place — perpetuating the systemic oppression of Black and brown people, and benefiting no one but wealthy elites.
Social-investment societies put more resources into healthcare, education, affordable housing, jobless benefits, and children. Their purpose is to free people from the risks and anxieties of daily life and give everyone a fair shot at making it.
Donald Trump epitomizes the former. He calls himself the “law and order” president. He even wants to sic the military on Americans protesting horrific police killings.
He has created an unaccountable army of federal agents who go into cities like Portland, Oregon – without showing their identities – and assault innocent Americans.
Trump is the culmination of forty years of increasing social control in the United States and decreasing social investment – a trend which, given the deep-seated history of racism in the United States, falls disproportionately on Black people, indigeneous people, and people of color.
Spending on policing in the United States has almost tripled, from $42.3 billion in 1977 to $114.5 billion in 2017.
America now locks away 2.2 million people in prisons and jails. That’s a 500 percent increase from 40 years ago. The nation now has the largest incarcerated population in the world.
Immigration and Customs Enforcement has exploded. More people are now in ICE detention than ever in its history.
Total military spending in the U.S. has soared from $437 billion in 2003 to $935.8 billion this fiscal year.
The more societies spend on social controls, the less they have left for social investment. More police means fewer social services. American taxpayers spend $107.5 billion more on police than on public housing.
More prisons means fewer dollars for education. In fact, America is now spending more money on prisons than on public schools. Fifteen states now spend $27,000 more per person in prison than they do per student.
As spending on controls has increased, spending on public assistance has shrunk. Fewer people are receiving food stamps. Outlays for public health have declined.
America can’t even seem to find money to extend unemployment benefits during this pandemic.
Societies that skimp on social investment end up spending more on social controls that perpetuate violence and oppression. This trend is a deep-seated part of our history.
The United States began as a control society. Slavery – America’s original sin – depended on the harshest conceivable controls. Jim Crow and redlining continued that legacy.
But in the decades following World War II, the nation began inching toward social investment – the Civil Rights Act, the Voting Rights Act, the Fair Housing Act, and substantial investments in health and education.
Then America swung backward to social control.
Since Richard Nixon declared a “war on drugs,” four times as many people have been arrested for possessing drugs as for selling them.
Of those arrested for possession, half have been charged with possessing cannabis for their own use. Nixon’s strategy had a devastating effect on Black people that is still felt today: a Black person is nearly 4 times more likely to be arrested for cannabis possession than a white person, even though they use it at similar rates.
Bill Clinton put 88,000 additional police on the streets and got Congress to mandate life sentences for people convicted of a felony after two or more prior convictions, including drug offenses.
This so-called “three strikes you’re out” law was replicated by many states, and, yet again, disproportionately impacted Black Americans. In California, for instance, Black people were 12 times more likely than white people to be incarcerated under three-strikes laws, until the state reformed the law in 2012. Clinton also “reformed” welfare into a restrictive program that does little for families in poverty today. Why did America swing back to social control?
Part of the answer has to do with widening inequality. As the middle class collapsed and the ranks of the poor grew, those in power viewed social controls as cheaper than social investment, which would require additional taxes and a massive redistribution of both wealth and power.
Meanwhile, politicians whose power depends on maintaining the status quo, used racism – from Nixon’s “law and order” and Reagan’s “welfare queens” to Trump’s blatantly racist rhetoric – to deflect the anxieties of an increasingly overwhelmed white working class. It’s the same old strategy. So long as racial animosity exists, the poor and working class won’t join together to topple the system that keeps so many Americans in poverty, and Black Americans oppressed.
The last weeks of protests and demonstrations have exposed what’s always been true: social controls are both deadly and unsustainable. They require more and more oppressive means of terrorizing communities and they drain resources that would ensure Black people not only survive, but thrive.
This moment calls on us to relinquish social control and ramp up our commitment to social investment.
It’s time we invest in affordable housing and education, not tear gas, batons, and state-sanctioned murder. It’s time we invest in keeping children fed and out of poverty, not putting their parents behind bars. It’s time to defund the police, and invest in communities. We have no time to waste.
Some people think these are 2 independent phenomena that have nothing to do with each other. In fact they're interrelated. The viruses spill over from animal host reservoirs into human beings when humans are in close contact with animals. As farms, villages, agricultural and mining operations encroach on animal habitat, spillover is not far behind. Many poor people get their only protein from 'bush meat', that is wild animals of all sorts. Especially in China but elsewhere as well people eat all kinds of exotic species. This makes it more likely that there will be a transfer of animal viruses to humans. The virus probably originated from a bat in Wutan's so-called 'wet market' where they sell all kinds of animals both wild caught and farm raised.
Sanitation in many parts of the world leaves a lot to be desired. Diseases of all kinds are rampant. Some of these are confined to local areas, but some like COVID-19 can spread to the rest of the world and cause a pandemic. An estimated 2.5 billion people, more than 35% of the world’s population, lack access to adequate sanitation. Disease started in these areas can spread to the rest of the world in a pandemic so the more the developed world can do to improve these conditions in poor areas of the world, the more the developed world is protecting itself from potential future pandemics. Unsafe drinking water, inadequate availability of water for hygiene, and lack of access to sanitation together contribute to about 88% of deaths from diarrheal diseases.
Water, sanitation and hygiene has the potential to prevent at least 9.1% of the global disease burden and 6.3% of all deaths. The impact of clean water technologies on public health in the U.S. is estimated to have had a rate of return of 23 to 1 for investments in water filtration and chlorination during the first half of the 20th century. Over half of the global population or 4.2 billion people lack safely managed sanitation services. (WHO/UNICEF 2019).
Furthermore, the strain on the world's potable water supply is being exacerbated by climate change. Glaciers store about 70% of the world's fresh water. They release this water gradually during summer months as the glaciers melt. Since the climate is getting warmer, glaciers are releasing water earlier in the year and much of it is just running off never to be productively used. Then when water is really needed later on, the glaciers are spent for the year. Glaciers are receding because of climate warming so that they are containing less and less fresh water each year in the first place. The cold season in which glaciers add more ice to the glaciers is getting shorter each year so there is less ice to begin with. More than 1.4 billion people depend on water from the rivers of the Himalaya. The main rivers are the Indus, the Brahmaputra, the Ganges and the Yellow River. The first 3 drain through India, the last through China.
As earth's population increases there are not only more mouths to feed, there is a greater need for fresh water the supply of which is diminishing. This leads to less crop production, starvation and even worse sanitation and personal hygiene. There is more pressure to trap and eat bush meat which can contain deadly viruses which can spread to the rest of the world as the current pandemic did. Therefore, if we want to live in a safe, habitable world we need to start thinking about sustainable water and food supplies for everyone on the planet and better hygiene and sanitation for all the world's people, not just the few in developed countries. It is more important to spread the knowledge of safe water and sanitation systems as well as sustainable agricultural practices. Population control in one form or other is also necessary because the planet can only support a limited number of people especially if they are all living middle class lifestyles. We need to rethink what a sustainable lifestyle is and not consume a disproportionate percentage of earth's resources.
Instead of Helping American Workers, the Fed Prints Money and Swallows US Debt
by John Lawrence, June 25, 2020
The Federal Reserve is printing trillions of dollars and buying US government debt. The market for US Treasury bonds is a hard sell these days because they pay so little interest: 1.37% for a 30 year bond, less than the inflation rate. China is dumping its Treasuries. It will probably accelerate the rate of dumping if tensions between the 2 countries continue. China was the US' largest creditor till recently when Japan took over that role. While the Federal Reserve has set interest rates effectively at zero, credit card companies are still charging as much as 30% interest which creates a huge number of Americans debtors especially when you throw in student loan debt which stands at $1.5 trillion. In fact, revolving consumer credit card debt reached nearly $1.1 trillion at the end of February 2020, according to the Federal Reserve G19 Report. Americans were paying as much as $121 billion in interest and fees combined by the end of 2019. That's no surprise since the Federal Reserve reported in February 2020 that the average interest rate on credit cards reached an astronomical 16.61%. While billionaires can borrow money at zero percent interest, average Americans pay 16% and up.
The effect of zero interest rates on savings accounts and Treasury bonds is to force everyone into the stock market which, although we're in a recession bordering on depression, continues to go up. It is totally divorced from reality; it wouldn't go down even in a depression like it did during the Great Depression. The Fed is keeping it artificially pumped up because so much American wealth is at stake there.
The Fed is buying Treasuries and mortgage backed securities (MBSs) to the tune of trillions of dollars. Wolf Street reported:
In March (2020) and April combined, the Fed monetized 100% of the additional Federal debt. Over the two-month period of March and April, the US government increased its debt by $1.56 trillion (most of it in April); and over the same two-month period, the Fed bought $1.56 trillion in Treasury securities (most of it in March) and thereby monetized 100% of the additional pile of debt during the two-month period.
The Fed is just swallowing all kinds of debt which is enriching the richest Americans and foreign banks even more. Problem is this forced feeding of cash by the Fed is not trickling down to the American people. It is not creating jobs. Now the Fed is creating even more ways to monetize debt by creating Special Purpose Vehicles (SPVs). These SPVs can buy assets the Fed is not allowed to buy, and they can lend to entities and rich individuals to buy certain assets. Under the arcane Federal Reserve Act, these SPVs require taxpayer backing from the Treasury Department to protect the Fed from losses. The SPVs can buy asset backed securities (ABSs) on a non-recourse basis which means that, if there are any problems, taxpayers take the losses. Indirectly via its Special Purpose Vehicles and its Primary Dealers, the Fed can buy even old bicycles, as long as taxpayers take the losses.
These ABS can be backed by credit card loans, auto loans, student loans, equipment loans, floor plan loans, insurance premium finance loans, some loans guaranteed by the Small Business Administration (SBA), and eligible loans on receivables. The loan amounts will be “equal to the market value of the ABS less a haircut and will be secured at all times by the ABS,” the Fed says.
A little history on Term Asset-Backed Securities Loan Facility (TALF) : At the end of 2010, under orders from Congress, the Fed released data on over 21,000 transactions it performed during the Financial Crisis, which revealed among many other outrageous acts, that the Fed lent to well-connected individuals and all kinds of hedge funds and others under its TALF program so that they would buy certain assets, such as these consumer loan ABS, drive up their prices, sell them to pension funds and others later for a huge profit, and pay back the loans to the Fed.
These well-connected individuals included John A. Paulson, Michael Dell, Christy K. Mack (wife of former Morgan Stanley CEO John Mack), Kendrick R. Wilson III (former Goldman executive and top aide to Hank Paulson Jr.), H. Wayne Huizenga (founder of AutoNation and Waste Management), Jonathan S. Sobel (head of Goldman’s mortgage department), etc. Some very wealthy people made a lot of money off the Fed’s bailout programs even as workers and the economy was in deep trouble.
So the Fed is paying John Paulson money by means of an SPV. Paulson is the guy who bet against the subprime mortgage market in 2007 and made one billion dollars in one day. Goldman Sachs had to pay him off, but eventually due to all the legerdemain in the financial markets, it was French and German taxpayers that paid him for his astute bet. That's casino capitalism at its best. Now he has direct access to the Federal Reserve's money printing press. Why? When there are so many poor and unemployed people in the US, why is the Fed intent on only bailing out financial markets, meaning rich people? Suffice it to say that the Fed is able to buy most anything from rich people and monetize their debt. Because of this and the fact that the rich can borrow at zero percent interest, they engage in risky bets. If they win, they pocket the money. If they lose, the Fed bails them out at zero percent interest.
Compare this with how the situation was dealt with during the Great Depression. Instead of force feeding wealthy people with interest free cash and adding trillions to the US National debt, FDR created the Reconstruction Finance Corporation (RFC). The original legislation establishing the RFC did not limit it to lending to financial institutions; it was also authorized to provide loans for railroad construction and crop lands. In other words it created jobs for average Americans. An amendment passed in July 1932 allowed the RFC to provide loans to state and municipal governments. The purpose of these loans was to finance projects like dams and bridges, and the money would be repaid by charging fees to use these structures. To help with unemployment, a relief program was created that would be repaid by tax receipts. Under the New Deal, the powers of the RFC were greatly expanded. The agency now purchased bank stock and extended loans for agriculture, housing, exports, businesses, governments, and disaster relief. The RFC actually made money on these loans.
So the RFC could actually create jobs for average working people (and not just for hedge fund managers) doing constructive things like building houses and infrastructure. Part of the New Deal was the Works Progress Administration (WPA) relief program which made the federal government by far the largest employer in the nation. A Green New Deal would create money much as the Fed does with a few keystrokes on a computer, but, instead of just providing liquidity to banks, hedge funds and rich people, it would provide money for productive jobs paid for by the government. The government needs to be employer of last resort in order to recreate a full employment economy.
A Green New Deal would convert the American economy from a fossil fuel dependent economy to one fueled by renewable energy. In so doing it would provide good paying jobs for those in American society who have been left out or left behind. The Fed should monetize the $3 trillion backlog in American infrastructure repair and rebuilding. Making the Fed a public bank instead of a bank whose main purpose is to swallow US government debt and give money to rich people in order to provide "liquidity" would go a long way to reducing inequality and bringing the American poor including minorities into the middle class. IMHO the COBID pandemic will insure that the old economy based on 70% consumerism is not coming back. The new normal will be based on government spending to create a Green New Deal or will sputter along at about half its former level.
A detail from a poster for the the Mass Poor People’s Assembly and Moral March on Washington. (Image: Poor People's Campaign)
Hours before President Donald Trump held a Saturday evening rally in Tulsa, Oklahoma, where he gave self-congratulatory, division-sowing speech, the Poor People's Campaign offered a progressive counterpoint with a virtual social justice assembly that uplifted the stories of those suffering from poverty and racial injustice and unveiled a policy platform to spur "transformative action."
"Poverty and racism are systemic problems that need systemic solutions. We are that solution," said Jamilla Allen of Durham, North Carolina, one of the testifiers who spoke Saturday at the online event.
The campagn is co-chaired by Rev. Dr. William J. Barber II, president of Repairers of the Breach, based in Goldsboro, North Carolina, and Rev. Dr. Liz Theoharis, director of the Kairos Center for Religions, Rights, and Social Justice in New York City.
"Those in power today want nothing more than to stop this kind of movement," said Theoharis. "It's why they spend so much time and money trying to deny us the right to vote, why they attack protesters, spread lies meant to narrow our vision and limit our aspirations, divide us up by issue and by region, by race, gender, immigration status, political party."
The digital assembly was broadcast twice on Saturday, and airs for a third and final time on Sunday at 6 pm EST. Organizers say the first broadcast drew 1.2 million Facebook viewers, a tally that doesn't caputure viewers from other media platforms like MSNBC's YouTube broadcast of the gathering. Trump's in-person gathering, in contrast, was far smaller than his campaign expected, wth huge sections of the 19,000-seat arena empty.
Speakers included faith leaders, celebrities, policy experts, and ordinary Americans whose plight, despite being the direct result of deliberate policy choices, is often overlooked or erased.
"The war on the poor in this country seeks to blame the poor people for their circumstances," said testifier said Curtis Bradford of San Francisco. "It wanted me to believe that I was the problem," he said. "I'm still here despite the odds, and I no longer buy into the narrative that poverty is my fault."
The campaign and its partners highlighted other moments from the event on Twitter:
“We’re putting a face on the 140 million poor & low wealth people in this country.” @RevDrBarber
"We will not get rid of our problems by bombing them away, shipping them away, or throwing them behind bars," says Asma Elhuni of the @NewHampshirePPC & the United Valley Interfaith Project #PoorPeoplesCampaign
— Poor People's Campaign (@UniteThePoor) June 20, 2020
Francine Jefferson of @Mississippi_PPC: There's been 600 deaths across MS-over 300 of them, guess what? They’re Black. WE ARE NOT DISPOSABLE! We've proudly been among the freedom fighters for Mississippi. We must stand together w/ the #PoorPeoplesCampaign. https://t.co/Vng8oPF2Sp
— Poor People's Campaign (@UniteThePoor) June 20, 2020
The campaign also urged people to pressure lawmakers to declare their support for the "Poor People's Moral Justice Jubilee Policy Platform"—a set of bold and sweeping policies the movement unveiled on Saturday covering issues from protecting and expanding the right to vote, ending mass incarceration, honoring Indigenous rights, canceling student and medical debt, protecting and expanding Social Security, enacting a federal jobs program, protecting the right to unionize, and establashing universal healthcare.
The document is centered on five principles:
Everybody in, nobody out. Everybody is deserving of our nation’s abundance.
When you lift from the bottom, everybody rises. Instead of "trickle-down," we start with the bottom up.
Prioritize the leadership of the poor, low-income, and most impacted. Those who are on the frontlines of these crises must also be in the lead in identifying their solutions.
Debts that cannot be paid must be relieved. We demand freedom from servicing the debts we cannot pay.
We need a moral revolution of values to repair the breach in our land. This platform abides by our deepest moral and Constitutional commitments to justice. Where harm has been done, it must be acknowledged and undone.
In a statement launching the new platform, the movement explained:
We have seen the brutal murders of George Floyd, Breonna Taylor, Tony McDade, Ahmaud Arbery, Rayshard Brooks, and untold others at the hands of state violence. We have witnessed the death of more than 115,000 people from the novel coronavirus in the United States, more than one-quarter of all cases globally. But in addition to these losses which have made headlines, an unseen 700 people continue to die from poverty and inequality each day. Poverty kills 250,000 people every year in America and it is still not frontpage news. For every day we choose not to address systemic racism, systemic poverty, ecological devastation, militarism and the war economy, and the distorted narrative of religious nationalism that justifies these evils, there is a death measurement.
If if seems a long list of issues to tackle, Rev. Barber says there's no option but to go bold.
"The worst mistake we could make now with all of this marching and protesting in the street would be to demand too little," he said.
The stakes, Barber said, couldn't be greater.
"Now is the time. This is the place and we are the people," said Barber. "Now this isn't about conservative vs. liberal. That's too puny. This isn't about left vs. right. That's too puny. It's about life vs. death."
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The Power Structure Wants the Discussion Circumscribed to Systemic Racism, Not Systemic Inequality
by John Lawrence, June 17, 2020
Let's just talk about systemic racism and not about an economic system in which a few people control all the wealth and the rest get crumbs from the table. The power structure does not want the discussion extended into that area. Let's just integrate black people into the system so that they are not disproportionately poor, only poor proportionally to their percentage of the population. Blacks compose 12% of the American population. 27% of black people are in poverty so the good old American way is to reduce the percentage in poverty to 12%. Then blacks would be proportionately and not disproportionately poor. That's the American way. Don't question systemic poverty and inequality; Confine the discussion to systemic racism.
The American way is to have a few rich people among every ethnic group and then to use this as an example that anyone can get rich in America. So what if the majority are poor. It's more important that you have examples of huge wealth among black people, and that is certainly the case today. American black billionaires on the 2019 Forbes list included American investor Robert Smith with $5 billion, businessman David Steward with $3 billion, media mogul Oprah Winfrey with a net worth of $2.5 billion and American sports executive Michael Jordan with $2.1. There are 615 billionaires in the US; only 6 are black so to be proportionate we'd need about 74 more black billionaires.
Blacks comprised 13.6 percent of the U.S. population according to the 2010 Census, but account for only 1.4 percent of the top 1 percent of households by income. Whites are the overwhelming majority of the top 1 percent of households by income, comprising 96.2 percent. There are 18.6 million total millionaires in the US, but only an estimated 35,000 are black. That may sound like a lot, but the U.S. population of millionaires is 76 percent White. Blacks, Hispanics and Asians make up about 8 percent each. So problem solved if we add another 4% to the black millionaires list. Then they would be proportionately rich at least at the million dollar level.
Many black athletes and entertainers are millionaires or multi-millionaires. Take the NBA, for example, in which 80% of the players are black. The total annual revenue of the NBA is $8.7 billion of which about 50% goes to the players. Since there are 30 franchises with 15 players per franchise, there are 450 active players. That means that the share of NBA revenues going to black NBA athletes is ($8.7 billion)x(1/2)x(.8) = $3.48 billion or an average of $7.7 million per black player. Bingo! The NBA has created way more black millionaires than it has created white ones. That's for sure.
This is the thinking of the power structure, mainly the Republican power structure which is not threatened by having a few more black millionaires and billionaires. However, they are threatened when you talk about everyone, black or white, having a living wage, everyone, black or white having decent housing, medical care and free public education from pre-school through college. They are threatened by talk of taxing the wealthy, taking from the rich and giving to the poor, as it were. That would be socialism much like the People's Republic of France or the People's Republic of Germany or even the People's Republic of Sweden. The power structure can't tolerate that kind of debate. Let's just make black people equal in the number of millionaires, but not change anything else. Then all the poor blacks and whites, for that matter, can aspire to pull themselves up by their own bootstraps as many of their counterparts have done.
Whatever happens we can't change the system to make it inherently more equal, inherently more naturally producing of equal outcomes. Instead, it must produce inherently unequal outcomes so that those who make it in the system will feel like they have really accomplished something and can serve as role models for others to strive harder. Republicans recoiled at all the hippies in the 60s who were having too much fun and not working hard enough. They were even getting free tuition in the California University system and elsewhere. On August 23, 1971, prior to accepting Nixon's nomination to the Supreme Court, Lewis Powell wrote a memo to the US Chamber of Commerce entitled "Attack on the American Free Enterprise System," an anti-Communist and anti-New Deal blueprint for conservative business interests to retake America from the hippies and left wingers. It was based in part on Powell's reaction to the work of activist Ralph Nader, whose 1965 exposé on General Motors, Unsafe at Any Speed, put a focus on the auto industry putting profit ahead of safety, which triggered the American consumer movement. Powell saw it as an undermining of the power of private business and an ostensible step towards socialism.
So they changed the system to criminalize all sorts of behaviors mainly involving drugs so they could incarcerate mainly black people and so they could saddle mainly white people with a ton of student loan debt. Then they would have to work hard paying off their debt instead of partying, surfing, having free love and doing drugs. Well, it certainly has worked. In 2014, African Americans constituted 2.3 million, or 34%, of the total 6.8 million correctional population. About 1 in 3 black boys will have served some time in the penal system during their lifetimes. Profits are up for the private penitentiary corporations and American millenials are buckling at the knees from the weight of $1.5 trillion in student loan debt. So if the percentage of black people in prison gets down to 12%, then this should make the American system non-racist? Wouldn't it be better to eliminate the root causes of incarceration which have to do with poverty and get the incarceration rate down to zero for everyone?
Black Lives Matter: Police Reforms Benefit Whites as Well
by John Lawrence, June 7, 2020
No more "carotid restraints" or chokeholds is a police reform caused by the Black Lives Matter movement, but obviously it applies to whites as well. We don't know how many of the 237 times Minnesota police used chokeholds, blacks were targeted, but probably like all police violence it was disproportionate. Police reforms such as ending "no knock warrants" also obviously apply to whites as well as blacks. The point is that what black people are demanding in terms of police reform doesn't just affect black lives. It affect all lives.
So why stop with just police reform? How about prison reform.Though African Americans and Hispanics make up approximately 32% of the US population, they comprised 56% of all incarcerated people in 2015. African Americans are incarcerated at more than 5 times the rate of whites. The imprisonment rate for African American women is twice that of white women. Although only a small percentage are in prison for minor drug offenses, marijuana possession in small quantities should be made legal on a national basis. Many are in jail awaiting trial. Every day, 465,000 people are held in local jails even though they have not been convicted; legally, they are presumed innocent. Many are there because they cannot afford bail.
Let's not stop at prison reform. How about political reform? Mail-in ballots should be legalized and encouraged in every state. How many poor people can afford to take time off from work to go and vote? These people are probably disproportionately black, but it would help poor people who are white as well. Let's make the election of President be based on popular vote and not the electoral college. Let's do away with the filibuster which prevents legislation from being passed democratically. Let's limit the power of the leader of the Senate to even stop legislation from being introduced. Make it mandatory that legislation created in the House be debated and voted upon in the Senate. Let's outlaw lobbying which lets the richest and most powerful individuals and corporations determine the political agenda.
How about economic justice? That was basically Bernie Sanders' agenda. Let's eliminate poverty and homelessness in the US. Blacks are disproportionately poor and homeless, but there are plenty of poor and homeless whites as well. Instead of spending a trillion dollars a year on the military and military-industrial complex, instead of wasting money on fruitless wars, let's have a Green New Deal and rebuild American infrastructure while at the same time creating hundreds of thousands of good paying jobs. Let's cancel student loan debt which disproportionately affects blacks, but whites will benefit too. Let's have Medicare for All instead of an outrageously expensive health care system which is twice as expensive as any other country's while producing only half as good results.
You get the picture? All the reforms which could come from the Black Lives Matter movement will also bring those same reforms for whites, browns and any other colors. Let's protest to change the course of this whole country for all citizens. Then we have to help the rest of the world with a Green New Deal if we want to create a habitable planet for our children and grandchildren. Black people are leading the way for social justice, for political and economic justice, justice which will turn this country around and help turn this planet around. Let's keep on going.
How the World Could Change When the Current Crisis is Over
by John Lawrence, April 26, 2020
Perhaps we will rethink what is essential and what is inessential. Here's my list of what is essential: 1) Health care; 2) Food; 3) Water; 4) Sanitation (Waste water and trash collection); 5) Education; 6) Transportation; 7) Electricity; 8) The Internet; 9) Grocery stores. 10) Elder care.11) Police, Fire and Paramedic services. Here are some things that are considered inessential now: 1) Spectator sports; 2) Spectator music events; 3) Parades; 4) Conventions; 5) Bars; 6) Restaurants; 7) Barber and beauty parlors; 8) Tattoo parlors; 9) Political campaign events; 10) Large parties like wedding receptions.
Everyone can come up with their own list of what they consider to be essential and what they consider to be inessential. In my opinion the least essential of inessential services are tattoo artists. There are a lot of products and services in our mass consumer culture which are also frivolous and have nothing to do with what is essential or beneficial to human well being.. It seems that the most essential workers are the least paid while the least essential are well paid indeed. Is advertising really essential? You can look up everything you might want or need online using google or amazon. Why do you have to have some irrelevant product or service pounded into you by TV advertising? It's a historical relic. I record most programs so that I can fast forward through the commercials. If I watch a live program, I put it on pause while I do something else for awhile, and then I fast forward through the commercials. In my opinion everything advertised on TV, especially pharmaceuticals, is inessential. They should be prescribed by a doctor. It's the doctor's business to know which pharmaceuticals you need, not yours.
Are hedge funds essential? Is jewelry essential? Are the products of the wedding-industrial complex essential? Many people are having weddings during the pandemic without paying the tens of thousands of dollars that current weddings fashioned by the wedding-industrial complex demand. There are many frivolous consumer items which advertising insists that people need that they don't really need, that are completely inessential. Some are nice to have, but inessential, and some are downright destructive to peoples' health and welfare.
The most essential activity at this time in history is saving the planet from global warming. Production of renewable energy alternatives is absolutely essential. The provision of green infrastructure is absolutely essential. Fossil fuels need to be left in the ground. Getting rid of plastics which pollute the oceans and other waste products that aren't biodegradable is absolutely essential. Rethinking payscales for essential workers like agricultural workers and grocery store workers is essential. If these are the most essential workers, they should be paid more. The same goes for doctors, nurses, certified nursing assistants, the CNAs who do most of the caregiving at nursing homes. CNAs make little more than minimum wage and yet they are exposed to the coronavirus. What this means is that so much that is really essential now is either being ignored or very little money is being allocated to it while huge amounts of money are being allocated to fruitless and frivolous activities.
The most fruitless activity is war and the provoking of war. The trillion dollar annual budget of the military-industrial complex has been shown to be fruitless and meaningless when the real war is against a virus. Unhealthy conditions in poverty stricken areas of the world including refugee camps can breed disease which affects the whole world including "privileged" people in the more advanced nations. Poverty and disease need to be eradicated in all parts of the world. The military cannot do that. Oh, they can be repurposed a little bit to help out with a pandemic, but they can not really do the job that needs to be done. In particular they are vulnerable to the pandemic themselves and all of the weapons of war cannot protect them. The real war needs to be against poverty and disease which are the breeders of war and pandemics. The real war needs to be against global warming. The real essential workers are construction workers who need to be constructing advanced green infrastructure.
What is clear is that real essential workers need to be paid more which argues for a lessening of economic inequality. So much of the wealth is held by people who are absolutely inessential to the health, welfare and betterment of people all around the world. A Green New Deal needs to be prioritized. Wealth needs to be taxed to pay for it. New York state needs to tax Wall Street to make up for its budget deficit. Priorities, priorities. The helping professionals and care workers need to be given more respect and money. Taxing inessential workers like hedge fund managers is what needs to pay for it.
"We are asking people to call on the White House and Congress to enact relief for the people that Jesus cared about," say the Poor People's Campaign co-chairs.
Rev. Drs. Liz Theoharis and William Barber appeared on stage at the Poor People's Moral Action Congress forum for presidential candidates at Trinity Washington University on June 17, 2019. (Photo: Tom Williams/CQ Roll Call)
In an op-ed published Thursday by TIME, Poor People's Campaign co-chairs Rev. Drs. William Barber and Liz Theoharis outlined the "evil" elements of the $2 trillion coronavirus stimulus legislation that President Donald Trump signed last week and demanded a federal COVID-19 relief effort that centers the needs of the nation's most vulnerable.
"We must invest in education, living-wage jobs, anti-poverty programs, public infrastructure, and a single-payer healthcare program that does away with our privatized, for-profit healthcare system and instead guarantees everybody in, nobody out." —Rev. Drs. William Barber and Liz Theoharis, Poor People's Campaign
Although the third coronavirus relief package provides some cash payments to workers, increased unemployment benefits, and support to small businesses, Barber and Theoharis noted "it also includes a $500 billion fund to bail out corporations, and Trump has already vowed to defy the oversight that Democrats in the Senate and House worked to require."
"Americans who are desperate for aid from their government could not get it without paying a 25% surcharge to the rich and powerful," they added. "In a word, this is evil."
Barber and Theoharis explained that "as Trump and his enablers continue to fumble their response to COVID-19 and sow deep inequities into the social response to this pandemic, the Poor People's Campaign is calling for noncooperation with injustice and inequality," and urging Congress to pursue "permanent changes" to improve the lives of people most affected by the pandemic.
The co-chairs detailed various shortcomings of the most recent relief package as well as what they want introduced going forward:
[The] $2 trillion bill that Congress passed treated corporations like people and people like things—with no provisions for a permanent living wage, paid sick leave for all, or health insurance for the uninsured. It leaves out the majority of homeless, undocumented immigrants, the disabled, and anyone too poor to have to file taxes. It only places a four-month moratorium on eviction filings. It does not include rent freezes nor large-scale debt forgiveness.
We need a relief bill that centers the needs of the homeless, the uninsured, the underemployed and the low-wage workers now deemed "essential," although their wages do not show this. We must invest in education, living-wage jobs, anti-poverty programs, public infrastructure, and a single-payer healthcare program that does away with our privatized, for-profit healthcare system and instead guarantees everybody in, nobody out. We have put forward these demands in our petition "Poverty Amidst Pandemic: A Moral Response to COVID-19."
The Poor People's Campaign, a revival of an effort launched over 50 years ago by Rev. Dr. Martin Luther King Jr., is a national movement that confronts "the interlocking evils of systemic racism, poverty, ecological devastation, militarism and the war economy, and the distorted moral narrative of religious nationalism."
In addition to serving as the campaign's leaders, Barber and Theoharis are preachers and theologians. As such, they expressed alarm that Trump recently discussed reopening the U.S. economy by and packing church pews for Easter, which falls on April 12, despite public health officials' social distancing guidelines and persistent calls for a nationwide shutdown to contain the coronavirus.
"Between now and Easter, we are asking people to call on the White House and Congress to enact relief for the people that Jesus cared about—the poor, the sick, the homeless, the children, the low-wage workers," Barber and Theoharis wrote. "Over the next few months, we are calling for mass noncooperation with the Trump administration's 'return to normalcy' approach to this crisis."
Following an emerging trend of shifting from public demonstrations to online activism in the age of coronavirus, the campaign is organizing a digital Mass Poor People's Assembly and Moral March on Washington for June 20, which the co-chairs said will be the "largest online gathering of poor and low-wealth people and all people of conscience in U.S. history."
Hours after the op-ed was published, the number of confirmed COVID-19 cases worldwide surpassed a million—more than a quarter of which are in the United States. Globally, over 51,000 have died, with at least 5,648 reported deaths in the U.S.
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"Meanwhile, these very same folks had no problem a couple years ago voting for a trillion dollars in tax breaks for billionaires and large profitable corporations. Not a problem."
Sen. Bernie Sanders (I-Vt.) speaks during a Federal Spending Oversight And Emergency Management Subcommittee hearing June 6, 2018 on Capitol Hill in Washington, D.C. (Photo: Aaron P. Bernstein/Getty Images)
In a fiery speech on the Senate floor Wednesday ahead of the chamber's passage of a massive coronavirus stimulus bill, Sen. Bernie Sanders ripped his Republican colleagues for doing everything in their power to ensure that poor and vulnerable people receive less financial assistance than they desperately need in this moment of nationwide crisis.
"Now I find that some of my Republican colleagues are very distressed. They're very upset that somebody who's making 10, 12 bucks an hour might end up with a paycheck for four months, more than they received last week," Sanders said, referring to the group of Republican senators who threatened to delay passage of the stimulus bill over its temporary expansion of unemployment benefits, which they described as overly generous.
"Some of my Republican friends still have not given up on the need to punish the poor and working people." —Sen. Bernie Sanders
In response, as Common Dreamsreported, Sanders vowed to hold up the stimulus legislation with a demand for stronger conditions on the bill's "corporate welfare fund" if the Republican senators refused to drop their objections to the unemployment provisions.
The Senate ultimately defeated an amendment by Sen. Ben Sasse (R-Neb.) that would have limited unemployment benefits and the stimulus bill passed Wednesday night by a vote of 96-0.
"Oh my god, the universe is collapsing. Imagine that?" said Sanders, waving his arms in mock distress. "Somebody who's making 12 bucks an hour now, like the rest of us, faces an unprecedented economic crisis with the $600 bucks on top of their normal, their regular unemployment check, might be making a few bucks more for four months. Oh my word! Will the universe survive?"
Watch:
There is no politician in America who fights harder for the working class than Bernie Sanders.
"How absurd and wrong is that? What kind of value system is that?" asked Sanders, a 2020 Democratic presidential candidate. "Meanwhile, these very same folks had no problem a couple years ago voting for a trillion dollars in tax breaks for billionaires and large profitable corporations. Not a problem."
"But when it comes to low-income workers, in the midst of a terrible crisis, maybe some of them earning or having more money than they previously made—oh my word, we gotta strip that out," Sanders continued. "You see because poor people are down here, they don't deserve, they don't eat, they don't pay rent, they don't go to the doctor, they're somehow inferior because they're poor, gonna give them less. Some of my Republican friends still have not given up on the need to punish the poor and working people."
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The coronavirus has starkly revealed what most of us already knew: The concentration of wealth in America has created a a health care system in which the wealthy can buy care others can’t.
It’s also created an education system in which the super-rich can buy admission to college for their children, a political system in which they can buy Congress and the presidency, and a justice system in which they can buy their way out of jail.
Almost everyone else has been hurled into a dystopia of bureaucratic arbitrariness, corporate indifference, and the legal and financial sinkholes that have become hallmarks of modern American life.
The system is rigged. But we can fix it.
Today, the great divide in American politics isn’t between right and left. The underlying contest is between a small minority who have gained power over the system, and the vast majority who have little or none.
Forget politics as you’ve come to see it – as contests between Democrats and Republicans. The real divide is between democracy and oligarchy.
The market has been organized to serve the wealthy. Since 1980, the percentage of the nation’s wealth owned by the richest four hundred Americans has quadrupled (from less than 1 percent to 3.5 percent) while the share owned by the entire bottom half of America has dropped to 1.3 percent [Saez & Zucman].
The three wealthiest Americans own as much as the entire bottom half of the population. Big corporations, CEOs, and a handful of extremely rich people have vastly more influence on public policy than the average American. Wealth and power have become one and the same.
As the oligarchs tighten their hold over our system, they have lambasted efforts to rein in their greed as “socialism”, which, to them, means getting something for doing nothing.
But “getting something for doing nothing” seems to better describe the handouts being given to large corporations and their CEOs. General Motors, for example, has received $600 million in federal contracts and $500 million in tax breaks since Donald Trump took office. Much of this “corporate welfare” has gone to executives, including CEO Mary Barra, who raked in almost $22 million in compensation in 2018 alone. GM employees, on the other hand, have faced over 14,000 layoffs and the closing of three assembly plants and two component factories.
Our system, it turns out, does practice one form of socialism – socialism for the rich. Everyone else is subject to harsh capitalism.
Socialism for the rich means people at the top are not held accountable. Harsh capitalism for the many, means most Americans are at risk for events over which they have no control, and have no safety nets to catch them if they fall.
Among those who are particularly complicit in rigging the system are the CEOs of America’s corporate behemoths.
Take Jamie Dimon, the CEO of JPMorgan Chase, whose net worth is $1.4 billion. He comes as close as anyone to embodying the American system as it functions today.
Dimon describes himself as “a patriot before I’m the CEO of JPMorgan.”
He brags about the corporate philanthropy of his bank, but it’s a drop in the bucket compared to his company’s net income, which in 2018 was $30.7 billion – roughly one hundred times the size of his company’s investment program for America’s poor cities.
Much of JP Morgan’s income gain in 2018 came from savings from the giant Republican tax cut enacted at the end of 2017 – a tax cut that Dimon intensively lobbied Congress for.
Dimon doesn’t acknowledge the inconsistencies between his self-image as “patriot first” and his role as CEO of America’s largest bank. He doesn’t understand how he has hijacked the system.
Perhaps he should read my new book.
To understand how the system has been hijacked, we must understand how it went from being accountable to all stakeholders – not just stockholders but also workers, consumers, and citizens in the communities where companies are headquartered and do business – to intensely shareholder-focused capitalism.
In the post-WWII era, American capitalism assumed that large corporations had responsibilities to all their stakeholders. CEOs of that era saw themselves as “corporate statesmen” responsible for the common good.
But by the 1980s, shareholder capitalism (which focuses on maximizing profits) replaced stakeholder capitalism. That was largely due to the corporate raiders – ultra-rich investors who hollowed-out once-thriving companies and left workers to fend for themselves.
Billionaire investor Carl Icahn, for example, targeted major companies like Texaco and Nabisco by acquiring enough shares of their stock to force major changes that increased their stock value – such as suppressing wages, fighting unions, laying off workers, abandoning communities for cheaper labor elsewhere, and taking on debt – and then selling his shares for a fat profit. In 1985, after winning control of Trans World Airlines, he loaded the airline with more than $500 million in debt, stripped it of its assets, and pocketed nearly $500 million in profits.
As a result of the hostile takeovers mounted by Icahn and other raiders, a wholly different understanding about the purpose of the corporation emerged.
Even the threat of hostile takeovers forced CEOs to fall in line by maximizing shareholder profits over all else. The corporate statesmen of previous decades became the corporate butchers of the 1980s and 1990s, whose nearly exclusive focus was to “cut out the fat” and make their companies “lean and mean.”
As power increased for the wealthy and large corporations at the top, it shifted in exactly the opposite direction for workers. In the mid-1950s, 35 percent of all private-sector workers in the United States were unionized. Today, 6.4 percent of them are.
The wave of hostile takeovers pushed employers to raise profits and share prices by cutting payroll costs and crushing unions, which led to a redistribution of income and wealth from workers to the richest 1 percent. Corporations have fired workers who try to organize and have mounted campaigns against union votes. All the while, corporations have been relocating to states with few labor protections and so-called “right-to-work” laws that weaken workers’ ability to join unions.
Power is a zero-sum game. People gain it only when others lose it. The connection between the economy and power is critical. As power has concentrated in the hands of a few, those few have grabbed nearly all the economic gains for themselves.
The oligarchy has triumphed because no one has paid attention to the system as a whole – to the shifts from stakeholder to shareholder capitalism, from strong unions to giant corporations with few labor protections, and from regulated to unchecked finance.
As power has shifted to large corporations, workers have been left to fend for themselves. Most Americans developed 3 key coping mechanisms to keep afloat.
The first mechanism was women entering the paid workforce. Starting in the late 1970s, women went into paid work in record numbers, in large part to prop up family incomes, as the wages of male workers stagnated or declined. Then, by the late 1990s, even two incomes wasn’t enough to keep many families above water, causing them to turn to the next coping mechanism: working longer hours. By the mid-2000s a growing number of people took on two or three jobs, often demanding 50 hours or more per week.
Once the second coping mechanism was exhausted, workers turned to their last option: drawing down savings and borrowing to the hilt. The only way Americans could keep consuming was to go deeper into debt. By 2007, household debt had exploded, with the typical American household oweing 138 percent of its after-tax income. Home mortgage debt soared as housing values continued to rise. Consumers refinanced their homes with even larger mortgages and used their homes as collateral for additional loans.
This last coping mechanism came to an abrupt end in 2008 when the debt bubbles burst, causing the financial crisis. Only then did Americans begin to realize what had happened to them, and to the system as a whole. That’s when our politics began to turn ugly.
So what do we do about it?
The answer is found in politics and rooted in power.
The way to overcome oligarchy is for the rest of us to join together and form a multiracial, multiethnic coalition of working-class, poor and middle-class Americans fighting for democracy.
This agenda is neither “right” nor “left.” It is the bedrock for everything America must do.
The oligarchy understands that a “divide-and-conquer” strategy gives them more room to get what they want without opposition. Lucky for them, Trump is a pro at pitting native-born Americans against immigrants, the working class against the poor, white people against people of color. His goal is cynicism, disruption, and division. Trump and the oligarchy behind him have been able to rig the system and then whip around to complain loudly that the system is rigged.
But history shows that oligarchies cannot hold on to power forever. They are inherently unstable. When a vast majority of people come to view an oligarchy as illegitimate and an obstacle to their wellbeing, oligarchies become vulnerable.
As bad as it looks right now, the great strength of this country is our resilience. We bounce back. We have before. We will again.
In order for real change to occur – in order to reverse the vicious cycle in which we now find ourselves – the locus of power in the system will have to change.
The challenge we face is large and complex, but we are well suited for the fight ahead.
The new poor are basically millennials who have gone to college and acquired a huge amount of student loan debt. They were promised that graduating college would catapult them into the middle class. Instead, whatever job they were fortunate enough to get (and many of them landed at Starbucks or equivalent) does not pay enough to make debt payments and also provide the normal amenities of life. Most of their budget consists of paying interest on their debts. Student loan debt has soared from $260 billion in 2004 to $1.4 trillion in 2017; average debt jumped from $18,650 to $38,000 over that same period; and the number of people over 60 with student loan debt has quadrupled in the last decade from 700,000 to 2.8 million.
It used to be that the majority of the working class were either farmers or unionized manufacturing workers who were protected by unions. Then the propaganda machine got busy and told all those farm children that they would be much better off, instead of going to work on their father's farm, going to college instead. Many proudly became "the first in their family to graduate college." What did it matter that, in order to do so, they had to take out massive student loans. Workers, who had lost their unionized jobs, were told the same thing. Go to college and become part of the new (nonunionized) economy because everyone knows that college graduates don't need unions. While farmland may stretch far and wide, farmers and ranchers themselves make up just 1.3% of the employed US population, totaling around 2.6 million people. Today, there are about 2 million farms in operation in the US, a steep decline from 1935, when the number of farms peaked at nearly 7 million. Why milk cows and shovel manure when you can have a professional desk job!
Manufacturing historically created good paying jobs for workers without a college education, particularly for men. The jobs paid well enough so that women did not have to work when they had young children. Unions were strong and owners did not want to risk strikes in their factories due to large capital investments and significant on the job training. Such jobs are much less available in the post-2001 era in the U.S. though they remain available in Germany, Switzerland and Japan. So the solution we are told is for those workers and especially their childrenn since there is no future in being a worker in the manufacturing sphere, to go to college. It's the American way. Each generation has to move a step up the ladder, and the step up for children of manufacturing workers without college educations is to be "the first in their families" to get one. Of course this necessitates their taking on a huge amount of student loan debt, but no worries, this step up will make them better off even if their spouse has to work to afford a house and pay off student loan debt.
However, much student loan debt goes into default because the debt burden is just too big a load to carry. More than 1 million student loan borrowers each year go into default. For many, the payments are proving unmanageable. By 2023, nearly 40 percent of borrowers are expected to default on their student loans. That’s when a person has not made a payment toward their education debt in roughly a year, triggering it being sent to a third-party collection agency. They are les nouveaux pauvres, the New Poor. That's in contrast to les nouveaux riches, the likes of Jeff Bezos and Mark Zuckerberg who have made billions off the high tech industry. But for many whose parents were farmers or manufacturing workers, they were sold a bill of goods that getting a college degree would not only resolve the stigma of being "uneducated," it would also land them a good paying job. Today most plumbers and electricians are doing better precisely because they don't have student loan debt.
Instead, many young people, and millennials especially, have not only a gargantuan load of student loan debt but credit card debt, and car loan debt as well. It's no surprise that the New Poor are mainly young people who can't afford either to buy a house or pay skyrocketing rents. Their parents and grandparents, however, are sitting pretty with assets consisting of a house which is skyrocketing in value and either a defined benefit pension (nonexistent today) or a 401k consisting of stocks which have also skyrocketed in value.They will naturally vote for Trump because of a booming economy (for them).
Meanwhile, the Democratic party, whose base used to consist of farmers and unionized workers, has lost them due to a change in demographics. Their new base naturally should be the New Poor, young people, millennials, student loan debtors and those who are concerned about the planet they're inheriting after climate change ravages it. They are turning to the progressive Democrats like Bernie Sanders and Elizabeth Warren. They are smart enough to figure out that every other advanced industrialized country has a government sponsored public health care plane. They know that the rich are not paying their fair share of taxes which would alleviate them from some of the horrendous economic burdens they are now experiencing, that is if those increased taxes on the rich were used by government to pay for college and health care for all. They want government expanded to provide more benefits not contracted to the point where you could drown it in the bathtub which arch conservative Grover Norquist so famously said.
Les nouveaux pauvres want a Green New Deal, relief from student loan debt, a New Economy. They aren't committed to the capitalism which has made three billionaires more wealthy than 150 million lower income Americans. They want the elimination of the fossil fuel economy replacing it with renewable energy. They want the end of a military-industrial complex which has spent a trillion dollars on disastrous wars in the Middle East. There is a better way these New Poor millennials are finally figuring out, a way out of the mess created by short term profits and rugged individualism, a way that might just win back America's high moral position and leadership in the world.
PERILS TO AMERICA’S DEMOCRACY OF DESCENDING TO A NEO-LIBERAL CAPITALISTIC AUTOCRACY
by Frank Thomas
I agree with Umair Haque's excellent essay, Why America is the First Poor Rich Country, that our historical process of growing income/wealth concentration creates a vicious cycle that persists through generations, effectively corroding our democracy. A theme of inevitably increasing income and wealth concentration under our capitalistic model that the indefatigable researcher, Thomas Piketty focused on in depth. We have an enhanced Free Market Capitalism democracy variant that's dangerously evolving into an Aristocracy - sharp contrast to Europe's constantly refined 'mixed blending’ of socialist and capitalist elements in their multi-party, relatively inclusive Social Democracies. It comes down to a European 'noblesse oblige' culture. That means those with wealth, power, influence recognize that their advantageous positions come with some morally obligated social-economic responsibilities. Unlike the U.S., Europe has on average very low income 'break-levels' where the highest progressive tax rate kicks in for ALL at the same income break- level.
But unlike Europe, we have large numbers in the Top 1%, 5%, 10% income brackets earning increasingly prodigious incomes at much lower tax rates that kick in at very high income 'break-levels.' Besides low inheritance tax rates, this income tax advantage contributes greatly to our nation's huge income inequality and obscenely disproportionate shares of national income and wealth received by the Top 10% vs. the Bottom 90%. The Top 1% has a vast majority of wealth in the economy and control of financial markets. So, we have the 'noblesse' without the 'oblige,' i.e., the most fortunate maximize their income and wealth, with scant attention to a moral obligation to support the lot of the less fortunate and stagnantly progressing middle class. In fact, such 'oblige' behaviour is usually obstructed or given a token last thought by the conservative right.
As I've said before in prior writings, Europe's mature “social democracies” like the Scandinavian countries, Austria, Germany, the Netherlands, Belgium, Switzerland and others are NOT centres of “socialism” where individual freedom and enterprise are lost according to Republicans. This is the constant demonizing ad hominem rant of the American conservative right. With few exceptions, EU countries in the main are quintessentially vibrant capitalistic economies with sound, encompassing, well-managed social welfare and safety nets. An example of a thriving capitalistic economy with an outstanding multi-party structure and social welfare system is the Netherlands. A small country of 18 million people with an economy that has given rise to such world enterprising companies as Unilever, Phillips, Royal Dutch Shell, Heineken, KLM, DSM, ASML.
Europe's social democracies seek to ensure economic and job opportunity fairness, to incentivize opportunities, to provide protections, to restrain corruption and the excesses of capitalism including externalized costs. Europe's social democracies show us that free markets, lower consumption levels (52% of GDP vs. 70% of GDP in U.S.), high societal investments in infrastructure, education, quality social welfare and safety nets can co-exist rather well - even reinforce and complement each other.
In contrast, the U.S. economy and governing system based on a broad, strong working blue collar and middle class is being transformed into a feudal society by a small number of wealthy elites, giant corporations, banks and bought politicians. A society where a fair share in income and asset ownership by the common working folk has disappeared into a 'daily bread', pay check-to-pay check, job survival struggle - now being made appallingly worse by current and rapidly forthcoming technical advances in digitalization, robotization and artificial intelligence. Over recent decades a rough, ultra-demanding, dominant capitalistic paradigm has been in play in America where the working folk are experiencing near zero upward mobility; where a majority of people are failing to progress in good times and are forced to share the brunt of the pain in bad times.
Current levels and trends in income and wealth inequality would certainly have terrified the Founding Fathers. They believed that broad-based property ownership and prosperity were essential to the sustenance of the republic. John Adams wrote that the goal of the democratic government was not to help the wealthy and powerful but to achieve "the greatest happiness for the greatest number." Adams feared that "monopolies of land" would destroy the nation, that an oligarchy arising out of inequality would manipulate voters, creating a system of subordination to all. Does this sound familiar to what's been happening in America?
Since the late 1970s, our nation has been overtaken by the conservative-right, doctrinaire harangue that a minimally regulated ‘market’ economy equates with democracy; i.e., the 'market' is the foundation of our social-economic-political system. Like Umair Haque, I've examined and am haunted by how our free market capitalism politically influences and controls our economic system at the expense of the social welfare system. Simply said, the conservative right proponents of 'market liberalism' ignore how an unfettered 'market' and lobby-influenced politicians can come to function undemocratically. The moneyed elite and corporations inexorably use their leverage to marginalize the rights, wages, social welfare of average Americans, to exploit their tax advantages to the hilt using exotic tax avoidance structures.
The Founding Fathersclearly viewed government as the protector of the many, not the few. In general, they believed economics - not politics - concentrates wealth and power. Their conception of political democracy was that it extends to every citizen equally - one person, one vote. By contrast, the 'market' tends to recognize only money - one dollar, one vote. It cares less about the penniless, those hit by bad times, those unable to pay for decent healthcare coverage, those unable to pay for their children's trade school or college education. The Founders concluded that the rich and wealthy tend to monopolize society's resources and social welfare distribution. They knew that when income and wealth become highly concentrated, like in our country today, political power can never be democratically shared.
To repeat, the Founding Fathers believed wide disparities in wealth result when an elite manipulates politics to extract monies and benefits from the labour of hard-working citizens as well as marginalize their political power. For example, politics and our highest court aligned to form the legal reality of "corporate personhood" in the Citizens United Supreme Court decision. This decision makes corporations and labor unions free as 'citizens' to fund political candidates, to support or denounce an individual candidate (e.g.by political advertising). And there are no spending limits. Many reputable constitutional experts say the unconstrained corporate political spending is eroding our democracy. The Citizen’s United ruling contributes to making the one person, one vote principle fundamentally ever more compromised, if not a joke. We know that the primary goal of a corporate entity is to generate maximum profits for its shareholders. In contrast, most EU countries set and enforce very LOW limits on political spending by corporations and other associations.
After a long history of massively destructive wars and ruthless rulers-dictators-kingships Europeans have come to accept government’s role to hold income and wealth disparities equitably in balance – in order for the ‘market and democracy’ to operate democratically and harmoniously in any meaningful way. That’s why the maximum progressive individual tax rate in EU countries for ALL citizens averages around 51% on an individual ordinary income over $90,000 or euro 80,000.
This compares to U.S. progressive tax rates of 22% on incomes of $39,500 to $84,000, with step-by-step tax rate rises to 35% on incomes of $200,000 to $500,000 to a maximum tax rate of 37% on incomes above $500,000. Latter comparesEU’s maximum average 51% tax rate on all incomes above +-$90,000. Extremely LOW U.S. progressive tax rates on very high levels of ordinary income and even lower rates of 0% to 20% on millions in capital gains – 10% of all American households own 84% of all stock – ensure that the Top 1%, 5% 10%income/wealth classes become richer and richer at the expense of the Bottom 90%.
In Europe, a significant income and social benefit comes from EU redistribution policies that bring a variety of financial gains to every citizen. To name a few using the Netherlands as an example: average student college costs of less than $15,000/year (euro+-13,500) with zero tuition costs in a number of EU countries; quality, reasonable healthcare coverage at an affordable universal monthly premium, of $130 (euro 115) for everyone 18 or above and a government subsidy of up to 70% of the monthly premium for incomes below $35,000 (euro 30,000); a government monthly apartment rental subsidy for low income people of up to 40%, 4-week vacation for everyone partly funded by withheld taxes; up-to-date, quality, well-maintained infrastructure and educational systems.
I'm not suggesting our country should copy the European progressive tax system or economic model which generally works well for most EU countries. And it’s adjusted up or down when societal needs warrant that. The European social-economic model has been achieved by, in addition to other factors noted by Umair, e.g. better economic interactions and redistribution, better public goods, better worker representation, uniform-for-all progressive high tax rates with hardly any deductions. And as mentioned, the highest progressive tax rates average around 51% and generally apply to Everyone with an income above $90,000. Thus, income and wealth distribution is FAR more broadly dispersed in Europe for a good quality-of-life standard for nearly all citizens. Reasonable social welfare benefits and safety nets support those with annual income levels below $35,000.
A good balance between capitalistic market and government social welfare policies has been achieved without the interaction of multiple factors that have caused the great divide in productivity and compensation in America since 1975. Again, I'm not advocating we should adopt a typical European social-economic model like the Netherlands or Sweden, Norway, Germany, Austria. But we could learn a LOT by examining carefully the social-economic workings of these excellent free Market & Government “hybrid” social democracies.
Some radical adjustments indeed are needed to our "economic-social miracle paradigm:" a sky-high costly Military-Industrial complex; an unaffordable, poor coverage basic quality healthcare for all; trillions in investments required for a 3rd world obsolete infrastructure and weak pre-college education system; absence of a united, aggressive, innovative, pragmatic transition to green energy sources and lifestyle supported by a president who denies the existential reality of human-induced fundamental climate change, calling it a hoax, pure scientific rubbish!
Stagnant tax revenue and GDP growth in combination with $trillions needed in infrastructure and education investments, new records of Defence spending, steeply rising health care costs, 2017 tax cuts going mostly to the Top 10% and corporations in GOOD economic times are accelerating federal Deficits, Debt and Interest to new record levels. Thus, there’s little financial cushion for WEAK economic times. Federal deficits have been soaring to $779 (+15%) billion in FY2018, to $984 billion(+11%) in FY2019 to an expected rise of over $1.1 trillion in FY2020.
Obama inherited a huge unemployment level of 9.9% in July 2009; massive federal money pump-priming brought that down to 4.7% in 2016, to 4.1% in 2017. Around 85% of Trump’s Jan. 2017 tax cuts went to the rich and corporations. But data indicates the tax cuts are not being recovered by economic growth and a low 3.8% unemployment in March 2019. We are in a cycle where spending is growing faster than tax revenue generation and we are doing this in GOOD times.
TABLE 1: U.S. FY 2017-2018 & 2019-2020 Budget s Yield High Deficit Trend & Stagnant Growth in Tax Revenues
FY 2016-2017
FY2017-2018
% Growth
TAX REVENUES :Data in Billions
Individual Income Taxes
$1,587.00
$1,684.00
6.10%
Corporate Income Taxes
$297.00
$205.00 30.9%
Payroll Taxes
$1,162.00
$1,171.00 0.7%
Excise Taxes/Other Taxes
$269.00
$270.00
0.4%
TOTAL REVENUES
$3,315.00
$3,329.00
0.40%
SPENDING
FY2016-2017
FY2017-2018
% Growth
Social Security
$945.00
$987.00
4.50%
Dept. of Defense
$569.00
$601.00
5.60%
Other Spending
$2,205.00
$2,195.00
-0.40%
Interest on Debt
$262.00
$325.00
26.6%
TOTAL SPENDING
$3,981.00
$4,108.00
3.20%
DEFICIT
$666.00
$779.00
17.0%
The Jan. 2017 tax cuts aren’t generating sufficient additional GDP growth to make tax revenues higher than they would have been if the tax cuts had never been passed. In fact, the CBO had forecast FY2018 government tax revenues at $3.53 trillion. But, revenues were actually $3.32 trillion or $200 billion less, contributing to a $779 billion deficit (+15%). In FY2019, tax revenues increased less than 1% while spending increased much more causing another sharp increase in the federal deficit to $984 billion (+26%). This occurred with a 2.5% GDP growth rate and a low 3.8% unemployment rate. Same story for FY2019-2020 where the deficit is expected to rise to $1.1 trillion(+11%) with a 2.5% GDP growth rate.
What’s the lesson here? The Trump tax cuts for the rich and corporations in GOOD economic times are in fact helping to accelerate America’s growing budget deficits. The tax cuts are way short of paying for themselves. Tax savings to the rich and corporations do not Trickle Down. Yes, more workers have jobs but mostly at marginal, bare survival wages. And then there are the financial pressures coming from critically needed substantial investments in our infrastructure and pre-college education systems. What happens when the economic situation slows down?
Welcome to the next world of a potential financial crisis of all crises. Despite all the ‘hurrahs’ about our economy’s current 2.75% GDP growth rate and unemployment rate of 3.8% in March 2019, The Joint Committee on Taxation, the Tax Policy Center, the CBO and Penn Wharton Budget Model are warning that the new Trump tax law is going to continue to lead to higher rising $1 trillion annual deficits over next 3 or 4 years.
SUMMARY
The yearsafter WWII into the late 70s through were ones of substantial economic growth, a broadly and equitably shared prosperity. Inflation-adjusted incomes grew at roughly the same rate for all income brackets, approximately doubling between the later 1940s and mid-1970s. The Top 1%’s share of U.S. annual income before taxes (including capital gains) peaked at 23.9% in 1928 before the Great Depression, fell to 10% in 1980, recovered to 23.5% in 2007 before the Great Recession, then fell somewhat, and is now back on path to a 25 % income share of U.S. income. Helped by Trump’s Jan. 2017 tax cuts to the rich and corporations.
The top individual tax rate was reduced to 37% on an increased break-level income $500,000. The corporate Statutory tax rate and Effective tax rate after special deductions were 35% and 27%, respectively. The 2017 tax cut law lowered the Statutory rate to 21%, thereby creating an Effective corporate tax rate today of +-18% after special deductions. Given this gigantic tax cut gift to corporations and the many tax avoidance loopholes still available, is it any wonder corporations paid an obscenely TINY7% share (down from 10% in previous years) of total government tax revenues in FY2018. This monstrously low 7% share will inevitably drop further in subsequent years. It compares to a 50% share of all government tax revenues being paid by personal income taxes and 36% by payroll taxes. This change and the disproportionate income growth advantage of the Top 1% and 10% under the 2017 lowered progressive tax rates on high incomes and annual incomes above $500,000 have intensified our nation’s perilously deep income/wealth divide.
Under Trump’s 2017 tax law, 60 of our largest corporations paidzero taxes on $79 billion U.S. profits in 2018. In fact they received a $4 billion tax rebate. Prior to the new tax law, 30 corporations paid zero taxes. The Effective tax rate of corporations that paid taxes was a TINY 17% in 2018. That rate was the lowest since 1947, and substantially below the new 21% statutory tax rate.
In 1974, the average U.S. CEO salary was 50 times the average worker wage vs. 46 times in Europe. Today, the average U.S. CEO salary is over 310 times the average worker wage vs. 55 times in Europe. That will get ever worse, if possible, under the new 2017 tax law.
Umair Haque is right that the American public has little idea on what led to the extraordinary U.S. income and wealth gap compared to no such development in Europe. In his words:
"Why didn't Europe's "labour share of income" - that is, how much regular people receive - decline, like in the United States? The simple answer, of course, is "more social democracy, and less capitalism." But what does that mean? It means that European structures and institutions are radically different from American ones - so different, that many Americans have little idea such things ever exist.
Having lived and worked in Europe for nearly 40 years, I compliment Umair Haque for an incisive essay on our deep societal disintegration and polarization that keeps intensifying. About all I can say is what others like Umair are saying: we must open our eyes, minds and hearts to our country's severe disunity and structural problems and come to shared solutions. This calls for a reawakening of our civility towards each other, reclaiming cooperatively the social and economic balance and spaces in our society in favour of the small, the ignored, the local accountable community, the cooperative, the small existing and promising upstart enterprise.
Thinking creatively, constructively, cooperatively outside-the-box was what made our nation great before and after WWII through the 1970s. That more pragmatic, compromise, cooperative approach was working reasonably well and fairly for post WWII generations born in the 1920s, 1930s, 1940s, 1950s, 1960s to late 1970s. But things have been going mostly downhill ever since for the average American.
All of the above brings me to some thoughtful words by Leroy Greason - former professor, dean, president of my alma mater Bowdoin College in Maine who died August 28, 2011:
"We are seldom absolutely right. Even when most alive and living beyond ourselves, we had best walk humbly with our gods." As one colleague of Mr. Greason remarked, "His greatest gift was his ability to find common ground among disparate people and to inspire them to work together."
We desperately need qualities like that in these times of overlapping, complex fundamental societal and environmental changes within and outside our traditional spaces and thinking process.
Homelessness is What Happens When You Let the Free Market System Take Over
by John Lawrence
In an article in The California Sunday Magazine titled "3 kids. 2 paychecks. No home." about a family with two working parents that can't afford a 2 bedroom apartment in Salinas, the industrial and economic center of Monterey County, California. Salinas is the hometown of John Steinbeck and where the Steinbeck Museum is located. Steinbeck was one of the most prolific of American authors. He wrote "The Grapes of Wrath" among other novels about the homeless and poverty stricken families in the Great Depression. He wrote about the homeless guys in Monterey who lived in a place they called the Palace Flophouse in "Cannery Row" Many of his books were turned into movies including Grapes of Wrath starring Henry Fonda, Jane Fonda's Dad. Jane Fonda at age 81 is still getting herself arrested in Washington, DC for protesting about climate change.
So what's new? Steinbeck wrote about the poverty in the Salinas Valley. Candido and Brenda and their 3 kids are living out of a Toyota Sienna in a Salinas Food 4 Less parking lot.
"Now they were in the parking lot of Natividad Medical Center, just outside the emergency room. The lot was well lit, and there were bathrooms in the ER waiting room, open 24 hours. The hospital staff was mostly welcoming. At night, however, after everyone fell asleep, Candido had been noticing the tiny flicker of a lighter in a nearby pickup truck and the profile of an older man. Candido kept the van’s dome light on and made sure its doors were locked."
Steinbeck's "The Grapes of Wrath" was burned and banned. Steinbeck received death threats and the FBI put him under surveillance. He was called a communist. That was before he was awarded the Nobel Prize for Literature. The book was banned in many libraries and copies were symbolically burned in towns across America. There is in America a refusal to acknowledge the rights of its poorest citizens to a life of the barest necessities for them and their children. Steinbeck wrote about poverty in the 1930s and 40s. He probably thought that his novels might have convinced enough Americans that every citizen should be entitled to a basic level of existence, but he would have been wrong about that. Almost 100 years later the situation has only gotten worse for the homeless.
"Mornings were the hardest. Everyone was achy, tired from a bad night’s sleep, and on this morning, too, it was all they could do to keep to their routine. Brenda and Candido insisted on maintaining a semblance of order. “We’re not like some people,” Candido would tell the kids. “We wash our clothes. We don’t pee outside. We keep ourselves clean.” In the hospital bathroom, while Candido got ready to go to work and Brenda stayed behind with Adelene, Frankie helped wash and dress Josephat, brushing his brother’s teeth, then his own. Breakfast was whatever Pop-Tarts or granola bars were left over from the food bank. Finally, they straightened up the van, pulled the seats back into position, and put on their seat belts, Adelene in her car seat, Frankie and Josephat in their boosters. They drove the 15 or so minutes into town, fusing with the early traffic, indistinguishable from all the other families starting their day.
"When the van stopped, the boys hopped out. They went around to the trunk, grabbed their backpacks off the built-in clothing hooks, hugged their parents, and walked through the front gate of their elementary school."
Wages for working people haven't gone up indexed for inflation since the Reagan revolution of 1980 which ushered in the second Gilded Age. Meanwhile, billionaires have accumulated more and more money not by building railroads like Jay Gould did in the first Golden age or by developing the steel industry like Andrew Carnegie did, but by manipulating financial instruments. In many cases these financial industries were hedge funds which took over industries like the Hostess Baking Company, manufacturer of Twinkies, loaded it with debt, paid themselves handsomely and then let the industry go bankrupt while thousands of employees lost their jobs. Hedge funds engage in vulture capitalism which seeks to strip a functioning company of its assets, while management and executives feast on the carcass before it is stripped bare and the employees are left to rot, many of them on the streets.
"Today, the region’s 91,000 farmworkers live with stagnant wages (the median pay for farmworkers is $12.79 per hour) and the constant threat of ICE (the majority of these laborers are undocumented). Public health officials describe an epidemic of malnutrition among the workers and their families, and hunger has become widespread. The perverse irony that “The Valley That Feeds the Nation,” the title of a colorful mural in nearby Soledad, is now struggling to feed itself has been lost on nobody. Activists argue that a lack of fair wages in agriculture, in particular, is a key driver of this food insecurity. But for now, charity is what the industry is willing to offer. Last year, at the Food Bank of Monterey County, much of the 12 million pounds of emergency food assistance it provided was donated by agricultural companies"
The Salinas Valley supplies the world with lettuce. Recently this lettuce has been banned because it has been contaminated with E. Coli. bacteria. A spokesman for the CDC said, “Heading into the Thanksgiving holiday, it is critically important to avoid buying or eating romaine lettuce from the Salinas growing area so you can protect yourself and your family.” Is this divine retribution for the many years that wealthy agricultural corporations have refused to pay their workers a living wage? A living wage would be one that allowed its workers to rent a 2 bedroom apartment in Salinas.
"By far the greatest difficulty facing Salinas families, though, is the disappearance of affordable rental housing. In recent years, tech workers from the Bay Area have been relocating to Monterey County, and there are currently plans for a commuter rail that would run from the heart of Silicon Valley to Salinas. This influx of higher-earning tenants into an already congested market has led to a rise in rents, which in turn — together with the exclusionary zoning, no-fault evictions, and barriers to new construction that have beleaguered the rest of the state — is creating unprecedented housing instability among Salinas’s working poor. Over the past eight years, there has been a 37 percent loss of low-rent units in the city, while rents have shot up by almost 60 percent since 2014 — roughly four times the national average. According to the National Low Income Housing Coalition, the “housing wage” necessary to afford a modest two-bedroom apartment in Salinas, whose costs now exceed those of Miami and Chicago, is $29.62 per hour."
It should be pointed out that waiting for the free market to build housing that poor people can afford is like Waiting for Godot. In the play, of course, Godot never arrives. The only trend line in the case of housing is for more and more people especially older and sicker people to be kicked out onto the street. That is the absolute right of landlords to do so if the tenants cannot come up with the rent. In California there is a tiny glimmer of hope, however, as a rent control law will go into effect January 1, 2020. This law will limit rent increases to 5% a year, small comfort to those whose wages will not go up by that amount and who cannot afford the inflated rental prices in the first place.
"Increasingly, the city’s residents have found themselves bereft of adequate shelter altogether. “There’s always been poverty here,” said Reyes Bonilla, who runs Community Homeless Solutions, a local nonprofit. “But homelessness on this scale? It’s an entirely new thing.” He added that many of those coming to his organization for support defy the stereotypes about homelessness: The vast majority of them are working and have simply been priced out of a place to live. Families are doubling and tripling up in overcrowded, substandard conditions; they’re resorting to garages and toolsheds, cars and abandoned properties. In Monterey County, approximately 8,000 schoolchildren were homeless last year, more than San Francisco and San Jose combined. For many of these kids, the safest, most dependable part of their lives is the school they attend."
If there is little hope for a better life even among families in which 2 parents are working full time, what does this say about the future of America? It is the recipe for more gang violence, more drug trafficing, more lives lived on the lam. If one cannot support one's family by legal means, people often resort to illegal means and violence usually goes right along with it. This is the recipe that has been followed in poverty stricken areas of Honduras and Guatemala resulting in mass migrations to the US border of people fleeing poverty and violence. But here, even if they got in, they would only find more poverty and the result of not even having a roof over their heads which they probably had where they came from where rents are not so outlandish.
The US could do a lot to ameliorate this situation not only here but abroad as well. Instead, America is focused on spending a trillion dollars a year on a military-industrial complex whose main job is to use violence towards poor people who have been driven to violence because they have no hope their situations will ever get better any other way. Economic inequality is only getting worse with larger and larger shares of GDP going to those who already have more money than they could possibly spend in a 100 life times while the poor, if they're lucky, live out of Toyota Siennas.
Climate protest in New York City in March. (Michael Nigro)
PARIS — Rich countries have pledged $9.8 billion to help poor nations tackle climate change, the fund coordinating support said Friday, as environmental campaigners slammed the United States for refusing to contribute.
Yannick Glemarec, the executive director of the Green Climate Fund, said 27 countries announced contributions by the end of a two-day conference in Paris.
The United States did not make any pledge, as U.S. President Donald Trump has decided to stop paying into the fund.
They “have turned their backs on the world’s poorest and have once again isolated themselves in global efforts to respond to the climate emergency,” the network said in a statement. It also named Canada, the Netherlands, Portugal, Luxembourg, New Zealand, Austria and Belgium as countries that “failed to deliver their fair share” and called on them to make up the shortfall.
Oxfam International’s Armelle Le Comte called the failure of the United States and Australia to provide funding “appalling.”
But the Green Climate Fund’s Glemarec put an optimistic spin on the shortfalls.
“We will most likely be able to find additional resources” before the United Nations’ annual climate conference, which will be held in December in Santiago, Chile, Glemarec said.
Glemarec said the extra money will increase the fund’s capacity from about $1.4 billion per year now to $2.4 billion per year in the period from 2020 to 2024.
French finance minister Bruno Le Maire, speaking earlier Friday, praised “a great success” that he attributed largely to European countries, noting that almost half of the amount is being provided by France, Germany and Britain alone.
“Many countries will double their contributions,” Le Maire said.
The South Korea-based fund, which provides money to help developing countries reduce their emissions and cope with the impacts of climate change, says it has nearly exhausted some $7 billion received following an initial funding round five years ago.
Former President Barack Obama pledged $3 billion toward the fund, but Trump moved to withhold $2 billion after taking office.
How much poorer can you get than to be homeless? In Ken Burns excellent documentary on country music we find Dolly Parton saying she grew up in a shack with no running water, no electricity and no indoor plumbing. Loretta Lynn said much the same thing about growing up in Butcher's Hollow. At least they had a roof over their heads. Today's 500,000 American homeless, which includes men, women and children, have none of the amenities most people take for granted and this represents progress? In 1946 when Dolly Parton was born, a lot of people didn't have indoor toilets. My Grandparents bought their first house around that time, and they has an outdoor toilet. They were not poor. My Grandfather worked for the Lehigh and Hudson railroad as a station agent and there was even an outdoor toilet at the station. Big deal!
My Grandfather put in indoor plumbing, but at first they got their water from a community well and hauled it a short distance to their house. They did have electricity though thanks to that socialist program that socialist President Franklin D Roosevelt was responsible for - the Rural Electrification Administration. Before that they just had kerosene lamps. Today's American homeless are worse off than many of the world's people who are living in refugee camps. Many of these refugees have had their homes and livliehoods destroyed by American bombs. Take the Nizip 1 refugee camp for example. 30,000 Syrian refugees live in tents provided by the Turkish government. Each unit has a small kitchen, bedding and a TV. People share toilets and showers. They are better off than American homeless, thanks to Turkey, no thanks to America.
American homeless are really refugees living in the US without the provisions of many refugee camps elsewhere in the world. Even with an income of $1000. a month, you are too poor to rent a room in San Diego. I googled "rooms for rent in San Diego" and trulia.com came up with a whole lot of them for about $1000. a month. Many homeless people actually have incomes around that, but still can't afford to pay 80-100% of their income for a roof over their heads. Public housing projects have been demolished in the US. At one time the Cabrini-Green project in Chicago housed 15,000 people. It has been torn down because it became a hotbed of crime. Many other public housing projects have followed suit. But it didn't have to be this way. Most of these housing projects including Cabrini-Green were poorly managed or actually mismanaged. They did not have proper management, oversight, maintenance or security. Today they have largely been eliminated with the result that homelessness has skyrocketed.
They've tried to gentrify public housing by making it a public-private partnership with the result that poor people can't afford it. Section 8, where they give out a housing voucher for part of the rent, is an abysmal failure since there is a waiting line a mile long to get it, and many landlords don't want to rent to section 8 vouchered people. So trying to integrate poor people into the surrounding communities has been just as big a failure as was public housing. The lesson is that, if you're going to provide public housing, you have to provide a whole lot more than just housing. You have to provide security, social workers, proper oversight and maintenance, in short social programs to help people get their lives on track, employment - everything necessary to provide a salubrious and healthy environment. Otherwise, the gangs take over.
All of these other things, the overhead so to speak, can be provided to help homeless people get their lives back on track even if housing is the last thing in the loop. I have suggested campgrounds, which could be provided at minimal cost compared to housing, with adequate sanitary facilities, security and social worker assistance to make life at least livable until housing can be found or built. Instead of a Housing First approach, it would be a Housing Last approach, but sanitation, security and help with whatever problems they have first. Sanitation facilities and lockers could be provided at minimal cost. They could be portable so that none of these campgrounds need to be set up as permanent facilities. Getting people's lives on track and finding employment will allow them to take the first steps to being reintegrated back into society.
Finally, public housing needs to make a comeback because there is no limit to how far rents can be raised in a capitalistic society. Public housing with controlled rents would also compete with private housing to keep prices down. Housing projects are not necessarily bad if proper management and oversight is provided so that crime doesn't flourish there. Especially for families with children, people need a healthy environment for their children to grow up in so that the next generation doesn't repeat the same mistakes as the previous one. There needs to be hope. One last thing. Homelessness has become a lifestyle, even a culture. That needs to change. The US can't afford to have a permanent underclass and still be one of the world's leading nations.
Boofer-In-Chief Could Have Googled Biden Ukraine and Found Out Everything
by John Lawrence, September 28, 2019
Proving he's a total dumb ass, Boofer-In-Chief put pressure on Ukraine's Volodymyr, good ol' Vlod, as he's affectionately called, to investigate the Bidens. You can find out everything by googling, like, for instance, that Hunter Biden was hired by a Ukraine gas company for a no show job paying $50,000 a month. Give me a break. What else do you need to know - that Joe was also Obama's point man on Ukraine at the time? He didn't need to ask ol' Vlod to investigate the Bidens. The information is hiding in plain site. And then when asked if Trump had pushed him to investigate, ol' Vlod personified the deer-in-the-headlights look as he said haltingly, "He ... did...not..push." Vlod has yet to master looking straight into the camera and lying with a straight face like most sophisticated American politicians. He'll learn some day, perhaps. Just because there's no quid pro quo doesn't mean that Trump is not guilty. Here again he demonstrates what a dumb ass he really is and Bernie Sanders is right: he's an embarrassment to the United States.
Meanwhile, there's so much more important news going on in the world that never gets reported as the only thing the American media is concerned with is Trump. Well, he's checked that box: get them talking about me and only me. Why doesn't the media ever report on what's going on at the United Nations? I guess that's only considered important by the rest of the world, but the US is too important to be concerned about what's going on in the rest of the world except to try and dominate it with its 800 military bases and sanctions. Don't forget the trillion dollar military budget. Like a speech given by Greta Thunberg, the 16 year old Swedish activist, on climate change. Trump doesn't deserve to carry her notebook.
Meanwhile, as Bernie likes to point out, billionaires like Jeff Bezos don't pay any taxes. Well Bezos pulled himself up by his bootstraps so he deserves his money, you say? Not exactly, he had a $245,573 loan from his parents to start Amazon. But what about Bill Gates? Didn't he pull himself up by his bootstraps? Not exactly. When he purchased IBM's operating system and made it the beating heart of Microsoft, Bill's mother sat on IBM's board. Wonder if that gave him an entree to IBM's CEO? In the interim Bill Gates has done a lot to make the world a better place with his foundation. Stuff the US as a nation should have been doing if they did not have a single minded focus on militarily dominating the world.
500,000 people go to bed on the streets every night in the good ol' US making a mockery out of the War on Poverty. Republican policies have turned this around into a War on the Impoverished. At least in Appalacia, they might have been poor, but they had rooves over their heads. While the US has presided over the creation of an underclass, a caste of outcasts, China has alleviated poverty for millions of people in a relatively short period of time and they're doing it in other places in the world as well. That is why, according to American conservative intelligentsia, they must be stopped! When people wake up and see how much China is doing for them and how much the US is not doing, they will shift their alliances. But China remains blissfully unaligned, probably laughing at the gridlocked US form of democracy while China powers on doing good in the world. Those do-gooders must be stopped! Do gooders would lead the US down the path to communism. Oh, I forgot, China is already communist. Well, it seems to be working out pretty wonderfully for them and their partners.
According to the World Bank, more than 850 million people have lifted themselves out of extreme poverty as China's poverty rate fell from 88 percent in 1981 to 0.7 percent in 2015, as measured by the percentage of people living on the equivalent of US$1.90 or less per day in 2011 purchasing price parity terms. But who believes the World Bank? Isn't that one of those UN commy organizations?
The American Economy is Not That Great Except for the Rich
by John Lawrence, July 17, 2018
Thanks to the financialization of the economy, rising GDP doesn't mean that more money is going into workers' pockets. When a private equity fund strips a company and sells off the parts, GDP goes up because that economic activity is added into GDP. In 2012,Hostess Products, the makers of Twinkies, filed for bankruptcy under the private equity firm Ripplewood Holdings, and some 8000 workers lost their jobs. Hostess has bounced back and forth among multiple private equity companies with the result that executives of those companies have gotten rich and workers have lost their jobs. In every case the shenanigans of private equity firms and hedge funds have caused GDP to rise, but the only financial gains have gone to the very rich and not to the average worker. Deals like Hostess have helped make the men running the six largest publicly traded private equity firms collectively the highest-earning executives of any major American industry.
The Fed's policy of holding interest rates at zero has caused massive inflation in the real estate and stock markets, but this is not reported as inflation due to the way inflation is computed. Here too this rapid increase in home prices has made the GDP increase while pricing many average people out of the real estate market. Advantage: the rich. Disadvantage: everybody else. The American economy which seems to be in good shape with its various economic indicators like GDP, has mainly benefited the rich while seemingly benefiting everyone. But while economic indicators are all positive, the results are a further divide between the rich and the poor with the rich reaping all the gains of an economy in which the gains and increases go mainly to them.
Adjusted for inflation, the US economy has more than doubled in real terms since 1975.
How much of that growth has gone to the average person? According to many economists, the answer is none or close to none.
In a recent gloomy study of the American economy, Thomas Piketty, Emmanuel Saez, and Gabriel Zucman find that between 1980 and today, almost none of the gains from economic growth accrued to the bottom half of the population. They write, “Looking first at income before taxes and transfers, income stagnated for bottom 50% earners: for this group, average pre-tax income was $16,000 in 1980 — expressed in 2014 dollars, using the national income deflator — and still is $16,200 in 2014.”¹ Piketty, Saez, and Zucman also found that incomes of the top 1% tripled over the same time period.
New York Times columnist David Leonhardt, reacting to this work, concluded “the very affluent, and only the very affluent, have received significant raises in recent decades.”
So the world's largest economy is essentially a bifurcated economy with the rich racking up phenomenal gains while the poor and middle class stagnate. However, some in the middle class are still doing OK. They are mainly the ones who bought stocks and real estate 20 or more years ago. Those stocks and real estate have inflated due to the Fed's interest rate policies. The other middle class group that has prospered are those who have benefited from a transfer of wealth from the previous generation. Those who have inherited neither stocks nor real estate and have had to start from zero are in the worst shape because they are likely to be the ones that have acquired student loan debt to get an education that purportedly would gain them a toe hold in the middle class. But that toe hold has slipped and they have ended up with no real estate (they can't afford a mortgage because of the student loan debt they have to pay off) nor have they been able to acquire stocks at greatly inflated prices.
The intergenerational transfer of wealth has exacerbated the wealth gap between white and black families. The Atlantic reported:
A forthcoming study from Meschede and Joanna Taylor, also a researcher at Brandeis, in the American Journal of Economics and Sociology, makes the point clearly. Building on a 2017 study of theirs that examined wealth accumulation among college graduates—as well as “intergenerational financial transfers,” like when a parent helps a recent college grad out with rent or, say, gives her $1,000 a month to spend on whatever she pleases—the two looked specifically at how family inheritances, which are usually larger and tend to come all at once, factor into building and maintaining wealth.
The two researchers focused specifically on inheritances among families where at least one parent has a college degree. They looked at families like this in order to test the notion that higher education is a great equalizer.
The differences that they found between black and white families were stark. “Among college-educated black families, about 13 percent get an inheritance of more than $10,000, as opposed to about 41 percent of white, college-educated families,” Taylor said in a release announcing the new research. More specifically, white families that receive such an inheritance receive, on average, more than $150,000 from the previous generation, whereas that figure is less than $40,000 for black families.
So far from being an equalizer between black and white families, a college education has only indebted black families on average even more. In other words they are worse off with a college education than they would have been without one. A college education for many blacks and poor whites has only been a debt trap, a debt trap that follows them to retirement where their social security is snatched away from them for repayment of their student loan debt.
So Donald Trump will probably fool a lot of voters who will be sold the bill of goods that the economy is doing great. They will wonder why that is not so for them, but will have to chalk it up to their own failings. Meanwhile, Bernie Sanders, Elizabeth Warren and others will have to try and explain a more nuanced picture - that the economy is doing very well for the rich but not for those at the lower end of the economic spectrum. Again people will probably not have the mental aptitude to grasp that distinction and will probably vote against their own interests.
The Poor People's Campaign and Institute for Policy Studies released a "moral budget" on Monday. (Photo: Poor People's Campaign/Twitter)
A new report released Monday by the Poor People's Campaign and the Institute for Policy Studies declares that "the United States has abundant resources for an economic revival that will move towards establishing a moral economy" and details policies the country can pursue to combat systemic racism, poverty, ecological devastation, the war economy, and "the distorted moral narrative of religious nationalism."
"Our state and national budgets prove that many of our elected leaders and their lobbyists treasure the military, corporate tax cuts, and welfare for the wealthy." —Rev. Drs. William Barber and Liz Theoharis
"Refusal to properly use our resources to address these five interlocking injustices is economically insane, constitutionally inconsistent, and morally indefensible," Rev. Dr. William Barber from Repairers of the Breach told reporters Monday.
"As Rev. Dr. Martin Luther King Jr. has suggested, our state and national budgets prove that many of our elected leaders and their lobbyists treasure the military, corporate tax cuts, and welfare for the wealthy while they give rugged individualism, shame and blame, unfair wages, and a shredded social safety net to the poor," write Barber and Theoharis.
"This is a willful act of policy violence," they explain, "at a time when there are 140 million poor and low-income people—over 43.5 percent of the population—in the richest country in the history of the world."
The budget proposal was published Monday as the campaign kicked off its three-day Poor People's Moral Action Congress, which features a 2020 forum of several Democratic presidential hopefuls, including Former Vice President Joe Biden as well as Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.), in Washington, D.C.
Organizers plan to ask candidates about their stances on policies to end poverty given the report's findings. The forum will also be an opportunity for the candidates to "hear directly from those who have been left out of our debates and discussion for too long," Barber and Theoharis wrote for The Hill Sunday.
"In a country whose constitution requires establishment of justice and promotion of the general welfare," the co-chairs added, "we cannot refuse to talk specifically about how policies and budget decisions impact poor and low wealth people."
The report discusses policies and investments for seven critical areas of the campaign's moral agenda:
1) Democracy and equal protection under the law
The report lays out economic and other benefits of automatic, online voter registration; expanding voting and civil rights for formerly incarcerated individuals; and comprehensive immigration reform.
2) Domestic tranquility
"Lifting poverty wages, restoring the safety net, and guaranteed employment rebuilding our infrastructure, would put trillions of dollars every year into the pockets of those who need and deserve it most," the report says. "A $15 federal minimum wage enacted immediately would raise pay for 49 million workers by a combined $328 billion per year."
3) An equitable economy
This section points out how increasing taxes on the wealthy, corporations, and Wall Street "could pay for a substantial share of the proposals in this report." For example, researchers found that "capital gains taxes on fortunes passed on to heirs would raise an estimated $78 billion per year—approximately the estimated cost of giving every American child a modest savings account at birth that would earn interest and grow, providing a nest egg for education or to buy a home."
4) Life and health
The report notes the disparity between government spending on war and healthcare, and discusses how the U.S. could expand Medicaid in the 14 states that have not yet done so with Obamacare subsidies—or even implement a publicly funded single-payer healthcare system.
5) Our future
By restoring the corporate tax rate to what it was before the Republicans in Congress and President Donald Trump forced through a major cut in late 2017, plus imposing a "tiny tax" on Wall Street trades, the report says the government could cover the costs of childcare support, free college, and other programs that improve the lives of young people.
6) Our planet
Pointing to warnings that inaction on the climate crisis could cost up to $3.3 trillion of the country's GDP annually, the report outlines how "investing in a clean energy transition—and in basic resource rights like clean water—would create jobs, save trillions, and address the needs of the poor and people of color who are already feeling the worst effects of climate change."
7) Peace and the common defense
"Shifting our foreign policy toward peace and diplomacy, and away from military-first responses, would make our world safer—and put hundreds of billions back on the table for security at home," this section says, in addition to detailing the estimated $179 billion in annual savings if the United States ends mass incarceration.
As Theoharis put it to reporters Monday: "We have been investing in killing people. We now must invest in life."
Researchers identified some specific potential sources of more than $1 trillion in funding for the proposals:
$350 billion in annual military spending cuts that would make the nation and the world more secure;
$886 billion in estimated annual revenue from fair taxes on the wealthy, corporations, and Wall Street; and
Billions more in savings from ending mass incarceration, addressing climate change, and meeting other key campaign demands.
"We are a wealthy country," says the report's conclusion. "We can provide robust voting rights, decent jobs, and secure incomes, housing, healthcare, education, peace, and a clean environment for everyone."
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Anti-Trump protesters march in Washington, D.C. on Jan. 29, 2017. (Photo: Susan Melkisethian/Flickr/cc)
In what critics are calling an "insane" proposal by the Trump administration "to make it easier to screw the poor," the White House is reportedly considering sweeping changes to the organization of the federal government, which could be announced as early as Thursday.
According to the Wall Street Journal and the New York Times, as part of this massive reorganization, President Donald Trump may propose:
merging the Labor and Education Departments;
collapsing all social safety net programs "into a new megadepartment" that would replace the Department of Health and Human Services (HHS) and redefine benefit programs like the Supplemental Nutrition Assistance Program (SNAP); and
in "an attempt to strangle" the $3 billion Community Development Block Grant Program, relocating it from the Department of Housing and Urban Development (HUD) to the Department of Commerce.
The looming welfare reorganization, first reported by Politico earlier this month, has been slammed "as a way to institute cuts and conservative policies such as work requirements on more programs," Rewireexplained last week.
"Under the guise of reorganizing healthcare programs, the Trump administration wants to make it easier to slash the basics that families rely on, impose broad work requirements, and further infringe on women's personal decisions." —Reps. Diana DeGette and Barbara Lee
"Under the guise of reorganizing healthcare programs, the Trump administration wants to make it easier to slash the basics that families rely on, impose broad work requirements, and further infringe on women's personal decisions." —Reps. Diana DeGette and Barbara Lee
"Under the guise of reorganizing healthcare programs, the Trump administration wants to make it easier to slash the basics that families rely on, impose broad work requirements, and further infringe on women's personal decisions," Congressional Pro-Choice Caucus Chairs Reps. Diana DeGette (D-Colo.) and Barbara Lee (D-Calif.) told Rewire.
"Families who rely on these programs do so out of necessity—to feed their families, stay healthy, and keep a roof over their heads," the pair of lawmakers added. "Republicans have shown that they have no respect for either women's economic interests or their healthcare. In Congress, we will fight this dangerous proposal and protect the programs that women and their families need to thrive."
Meanwhile, many observers were critical of the possible Education-Labor merger—which was first reported by Education Week—but they also pointed out that Education Secretary Betsy DeVos "is destroying the education system as we know it, and Labor Department is not doing anything for workers," and concluded, "On bright side maybe DeVos will get fired."
Steven Greenhouse, a former labor reporter for the Times, described the merger as a "downgrade," and called out Trump for failing to live up to the "champion of workers" persona on which he campaigned:
Trump campaigned as a champion of workers, but a true champion of workers would not downgrade the federal government's efforts to protect workers by merging the Labor Department with the Education Department--and Trump & Mulvaney hope to do that. https://t.co/iLhqxs0pQC
"This is spelling an end to protected unions, public education, protection of students and workers," warned filmmaker Jessica Ellis.
They are merging (read: shutting down) the Departments of Labor and Education. This is spelling an end to protected unions, public education, protection of students and workers. We are running out of time. And I don't know what to do.
Randi Weingarten, president of the American Federation of Teachers, called the merger "the new parlor game," and referenced Trump's iconic line from his reality televsion show The Apprentice, on which he made a sport of firing people.
The new parlor game... to which Secretary is Trump saying “You’re Fired” @BetsyDeVosED or @SecretaryAcosta —- White House to propose merging Labor and Education into one agency as centerpiece of federal government overhaul https://t.co/9c0ByKpp7W
Citing draft documents and unnamed sources, the newspapers report that this "closely guarded" proposal has been crafted by Office of Management and Budget Director Mick Mulvaney—who is also acting director of the Consumer Financial Protection Bureau (CFPB)—but "the blueprint for the plan was a 2017 list of reorganization recommendations produced by the conservative Heritage Foundation."
As the Times explains: "Mulvaney's proposal is, in part, a back-to-the-future bureaucratic move. From 1953 to 1979, the Department of Health, Education, and Welfare housed most of the nation's social welfare and economic support programs."
"The changes would require approval from Congress, but it isn't clear that lawmakers have the appetite to undertake a far-reaching reorganization, especially at this point in the political calendar," the Journal notes. "Lawmakers have shown reluctance to embrace such plans in the past, and Congress has limited time for major legislation before the November midterm elections."
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Published on Wednesday, April 04, 2018 by Common Dreams
"If we are to truly honor Dr. King's life and spirit, let us recommit ourselves to the fight for justice and no longer accept silence on the things that matter."
Wednesday marked the 50th anniversary of Martin Luther King, Jr.'s assassination. (Photo: Three Lions/Getty Images)
As hundreds rallied in Memphis, Tenn. on Wednesday to mark the 50th anniversary of Rev. Martin Luther King, Jr.'s assassination, progressive civil rights and anti-poverty advocates urged Americans to honor the full breadth of the leader's efforts—which went far beyond his ubiquitous "I Have a Dream" speech and pushed for the eradication of poverty and an end to the U.S. war in Vietnam.
"In this brief celebratory moment of King's life and death we should be highly suspicious of those who sing his praises yet refuse to pay the cost of embodying King's strong indictment of the U.S. empire, capitalism, and racism in their own lives," wrote social critic Cornel West in an op-ed calling on Americans to resist "sterilizing" King's legacy.
If King were alive today, West argues, he would likely be silenced due to what would doubtlessly be a firm stance against U.S. military policy, the Trump administration's aggressive anti-immigrant campaigns, police brutality, and persistent income inequality.
"King's untimely death derailed what could've been the greatest economic justice movement of our time." —A.T. McWilliams, Quartz
"Neoliberal revisionists thrive on the spectacle of their smartness and the visibility of their mainstream status—yet rarely, if ever, have they said a mumbling word about what would have concerned King, such as U.S. drone strikes, house raids, and torture sites, or raised their voices about escalating inequality, poverty, or Wall Street domination under neoliberal administrations—be the president white or black."
When King was killed at the Lorraine Motel in Memphis on April 4, 1968, he was in the city to rally sanitation workers who were fighting for fair wages and recognition of their union. The workers' struggle intersected with the issues King wished to highlight with his Poor People's Campaign, in which he hoped to find "middle ground between riots on the one hand and timid supplications for justice on the other."
The campaign represented "the beginning of a new co-operation, understanding, and a determination by poor people of all colors and backgrounds to assert and win their right to a decent life and respect for their culture and dignity," King said less than a month before he was shot. "It's as pure as a man needing an income to support his family."
"Dr. King understood that true fairness begins with racial and economic equality," said Rep. Barbara Lee (D-Calif.) in a statement on Wednesday. "If we are to truly honor Dr. King's life and spirit, let us recommit ourselves to the fight for justice and no longer accept silence on the things that matter."
At Quartz, A.T. McWilliams wrote that the Poor People's Campaign is more relevant than ever 50 years after King's murder:
King's untimely death derailed what could've been the greatest economic justice movement of our time. Since then, American inequality has grown without interruption. The average income of the bottom half of American earners has stagnated over the past three decades, and they now account for 12 percent of U.S. wealth, while top one percent of American earners have tripled their average income...
And today, just as King propagated in his Poor People’s Campaign, government failures greatly contribute to wealth-loss across racial groups.
In the years leading up to his death, King was also an outspoken critic of U.S. military policy in Vietnam and called for "a radical revolution of values" to shift away from America's imperial impulses to subjugate the people of other nations or overthrow foreign governments.
"When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered," King said in his "Beyond Vietnam" speech, delivered exactly a year before he was killed.
Martin Luther King Jr. was a nonviolent revolutionary. It is up to us to follow in his footsteps and carry forth his mission to abolish racism and poverty. #MLK50#IAM2018pic.twitter.com/fj3zu1cO8U
A new generation appears poised to embrace King's legacy, as several teenagers marched 50 miles from Dundee, Mississippi to Memphis this week to commemorate the leader's work.
"Our hope is to not only honor all that Dr. King achieved, but to be part of continuing his work," Jarvis Ward, one of the teens' adult mentors, told a CBS News affiliate. "We want to show how racial justice, economic justice, and racial reconciliation can be advanced in and by the next generation."
"Dr. King called us to carry his vision forward when he said, 'Now let us rededicate ourselves to the long and bitter, but beautiful, struggle for a new world,'" said Rep. Keith Ellison in a statement. "With each march, chant, and strike, we speed up that day when justice will roll down like waters, and righteousness like a mighty stream."
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Seema Verma (R) speaks during a swearing-in ceremony, officiated by U.S. Vice President Mike Pence (L), in the Vice President's ceremonial office at Eisenhower Executive Building March 14, 2017 in Washington, DC. Verma has been sworn in to be the administrator of the Centers for Medicare and Medicaid Services for the Trump Administration. (Photo by Alex Wong/Getty Images)
Nashville Public Radio reported over the weekend that the Tennessee legislature is finalizing legislation that would add work requirements to the state’s Medicaid program, kicking at least 3,700 Tennessee workers off their health care.
The state’s Republican leaders appear to have no qualms about taking health insurance away from Tennesseans who can’t find work or get enough hours at their job—even though taking away someone’s health insurance isn’t going to help them find work any faster, and can actually make it harder to find and keep a job. Instead, debate around the legislation has reportedly centered on how to pay for the new policy. Lawmakers’ own estimates put the price tag for enforcing the new work rules at $10,000 per person disenrolled from Medicaid—which advocates note could be more than the new policy saves.
This is where Tennessee’s proposal gets really evil. Unwilling to foot the bill for their new policy out of the state’s general budget, Republican lawmakers have decided to pay for it with funds from the state’s Temporary Assistance for Needy Families (TANF) program—which provides meager cash assistance to very poor families with children.
While news reports, such as the Nashville Public Radio story noted above, make it sound as though Tennessee’s TANF program is flush with unused cash due to a “booming economy and historically low unemployment,” the real story is much more dire.
Nearly one-quarter of Tennessee children live below the federal poverty line, making it one of the worst states in the nation when it comes to child poverty. But fewer than 1 in 4 poor Tennessee families with children get help from the state’s TANF program, which is one of the stingiest in the country. A Tennessee family of three lucky enough to get temporary assistance can expect to receive a maximum of $185 per month—or a little over $6 a day.
Fewer than 1 in 4 poor Tennessee families with children get help from TANF.
Why is Tennessee failing so horrifically to help so many of its poorest children? In part, this failure is the legacy of 1996 “welfare reform,” which converted the nation’s main source of assistance for poor families—then called Aid to Families with Dependent Children—into TANF, a flat-funded block grant with very little accountability for how the money is spent.
Many states use TANF as a slush fund to close budget gaps, with just 1 in every 4 TANF dollars going to cash assistance for struggling families with kids. But Tennessee has made an Olympic sport out of diverting TANF funds away from poor families in need of help, squirreling away more than $400 million in unspent funds in recent years rather than using the money to help struggling families with kids avoid hunger and homelessness.
Now the state’s lawmakers want to use those unspent funds to bankroll the disenrollment of thousands of struggling Tennesseans from Medicaid.
The bill is expected to clear Tennessee’s conservative Senate in the coming days and has the support of Gov. Bill Haslam (R), who is expected to sign it into law. If passed, both the state’s proposed work rules and their proposed pay-for will require the approval of federal health officials. If the state’s scheme gets a thumbs up from the Trump administration, other states will likely follow suit. Kentucky, Indiana, and Arkansas have all received permission from the Trump administration to enact work requirements for Medicaid, following Trump’s widely criticized invitation to states earlier this year, and more than a dozen states are actively seeking similar approval. Many—if not all—of these states are looking for ways to pay for the costly bureaucracy required to implement this type of policy.
One would be hard-pressed to cook up a more twisted irony than taking money intended to help poor families with children avoid hunger and hardship and using it instead to take health insurance away from, in some cases, the very same struggling workers and families. But there’s a deeper rot at the core of Tennessee’s plan that cuts across conservative proposals to slash not just health care but food assistance, housing, and more—both in Congress and in the states. And that’s an ideology-fueled willingness to spend whatever it takes to take aid away from struggling workers and families—even when bureaucratic disentitlement costs more than it saves.
While Bitcoin, supposedly finance's alternative to traditional banks, is fluctuating all over the place thus being more of a speculative investment rather than a means of doing business, another mobile based banking service, completely independent of traditional banks, called M-Pesa is enabling people in the poorest parts of the world to do business with extremely low transaction charges. The service enables its users to:
*deposit and withdraw money *transfer money to other users *pay bills *purchase airtime and
transfer money between the service and, in some markets like Kenya, a bank account. A partnership with Kenya-based Equity Bank launched M-KESHO, a product using M-PESA’s platform and agent network, that offers expanded banking services like interest-bearing accounts, loans, and insurance.
M-Pesa (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer, financing and microfinancing service, launched in 2007 by Vodafone for Safaricom and Vodacom, the largest mobile network operators in Kenya and Tanzania. It has since expanded to Afghanistan, South Africa, India and in 2014 to Romania and in 2015 to Albania. M-Pesa allows users to deposit, withdraw, transfer money and pay for goods and services (Lipa na M-Pesa) easily with a mobile device.
One might ask how does this service differ from Bitcoin and other blockchain type forms of money currently all the rage in the western world. The difference seems to be that M-Pesa is a practical service that fulfills a need - inexpensive financial transactions that bypass the more expensive banking system. M-Pesa allows for digital wallets just as Bitcoin does.
Supposedly Bitcoin is unhackable, but is it really? Mt.Gox, which was an exchange on which one could buy and sell Bitcoin, lost $400 million dollars. And is the blockchain really necessary in order to secure financial transactions? I don't think so. I don't think every unit of currency needs to be tracked from its birth to its grave which is what Bitcoin does. I think the blockchain is a hoax.
Bitcoin has a way of creating "bitcoins' called mining similar to mining for gold only in this case everything is digital and there is no actual physical substance involved. Hokey to say the least when all you are trying to do are simple financial transactions like M-Pesa is capable of.
One might ask how would a public bank be able to make use of a facility like M-Pesa to enable very low cost financial transactions. This would be similar to a debit card, but would also enable small loans without a huge amount of paperwork and hence higher cost - sort of a debit/credit card combination.
Ellen Brown, author of Web of Debt and The Public Bank Solution, is currently writing a book on the comparison of Bitcoin and public banking. Maybe she can enlighten us as to how a solution like M-Pesa can fit into the public banking solution. There are some exciting things happening that will change the role of traditional banking.
There is no place in this country for a justice system that lets rich people buy their freedom while poor people are locked up or lose their driver’s licenses because they can’t afford to pay money to courts.
"Jeff Sessions’ action makes clear that he and his Justice Department are unconcerned by courts trampling on the rights of poor people." (Photo: AP/Jay LaPrete, archivo)
During the holiday season, many of us think about what we can do to help people struggling with poverty. Attorney General Jeff Sessions, on the other hand, decided just before Christmas to rescind a guidance meant to protect low-income Americans.
The 2016 guidance, issued by former President Obama’s Justice Department, urged state and local courts nationwide to abide by constitutional principles prohibiting the jailing of poor people who cannot afford to pay court fines and fees. Jeff Sessions’ action makes clear that he and his Justice Department are unconcerned by courts trampling on the rights of poor people.
The Obama Justice Department issued the 2016 letter after reports and lawsuits by the ACLU and other groups revealed how modern-day debtors’ prisons function in more than a dozen states, despite the fact that the U.S. two centuries ago formally outlawed jailing people simply because they have unpaid debts.
These efforts revealed that poor people were being locked up in Georgia, Washington, Mississippi, and elsewhere without court hearings or legal representation when they could not pay fines and fees for traffic tickets or other civil infractions or criminal offenses. These efforts also show that modern-day debtors’ prisons result from state laws allowing or requiring the suspension of driver’s licenses for unpaid court fines or fees without first requiring confirmation that the person could actually pay.
Caricature of Speaker Paul Ryan (R-Wis.). (Image: DonkeyHotey/flickr/cc)
Once, at a town hall in Wisconsin, someone asked known anti-poverty crusader Paul Ryan (R-WI) the following question:
“I know that you’re Catholic, as am I, and it seems to me that most of the Republicans in the Congress are not willing to stand with the poor and working class as evidenced in the recent debates about health care and the anticipated tax reform. So I’d like to ask you how you see yourself upholding the church’s social teaching that has the idea that God is always on the side of the poor and dispossessed, as should we be.”
It’s a tricky one, but if you want to simultaneously cut taxes for rich people and benefits for poor people, you need to be ready for it. So, just in time for the tax debate, I’ve written a handy step-by-step guide on how to convince your constituents that a help-the-rich, whack-the-poor agenda is really what’s best for everybody:
1. Say you share the same goals.
Let’s be honest: It sounds pretty bad to say that you want to take from the poor to give to the rich. So, don’t do it! The trick here is to convince people that you’re with them on the importance of helping the poor. You just disagree about “how to achieve that goal.”
Congratulations! You’ve just turned a profound moral question about whether we should help the poor or the rich into what appears to be a minor disagreement between ethically equivalent opinions.
2. Direct attention away from what it means to be poor.
Lots of people think poor people simply don’t have enough money to meet their families’ basic needs. You know better. Tell them what the poor really need is “upward mobility,” “economic growth,” and “equality of opportunity.” Not only do these airy concepts all sound really good—who could be against any of them?—they also let you pivot away from the obvious solution: giving people the money, food, health care, and other necessities they lack.
True, Ryan’s agenda doesn’t provide any of those things. But don’t worry! If you just repeat the lie that tax cuts for the rich spur economic growth, no one will even have time to dig into the intimate connection between inequality of outcomes and inequality of opportunity.
3. Imply that poor people’s personal failings are what’s holding them back.
You can’t pull off the enlightened nice-guy routine if you’re blaming poor people for their problems outright. You need to do it subtly. Instead of saying, “Poor people are poor because they’re lazy,” try saying, “We’ve got to change our approach … and always encourage work, never discourage work.” Never mind that most people who can work already do, or that wages are so low it’s possible (and quite common) to work full-time and still be in poverty. People are predisposed to believe that our success relative to those less fortunate is a result of our superior work ethic and talents, rather than a product of race, class, gender, and/or other forms of privilege and sheer dumb luck. The more you tap into that inclination, the more people will oppose helping those less fortunate and support imposing burdensome requirements on the Have Nots instead.
4. Choose unrepresentative examples and statistics.
Paul Ryan loves to tell people that “our poverty rates are about the same as they were when we started [the] War on Poverty,” which is more or less what the official poverty measure shows. Does it bother him that the official measure excludes the effects of the very programs he says aren’t working? Nope. It shouldn’t bother you, either. You also shouldn’t feel obligated to mention the Supplemental Poverty Measure, which shows that anti-poverty programs cut poverty nearly in half and have reduced poverty by 10 percentage points since the late 1960s. After all, Ryan doesn’t!
Similarly, Ryan likes to lament the case of “a single mom getting 24 grand in benefits with two kids who,” because of the way the safety net is designed, “will lose 80 cents on the dollar if she goes and takes a job.” The extraordinary rareness of this case doesn’t phase him, nor does the fact that his proposed remedies for this problem make life for that single mom—and thousands of others—much worse. He’s fine with leaving those inconvenient details out, and you should be fine with doing so, too.
5. Hammer “focus on outcomes” rhetoric.
Focusing on outcomes is popular in many fields, so this talking point—that “instead of measuring success based on how much money we spend or how many programs we create or how many people are on those programs … [we should] measure success in poverty on outcomes”—is very effective. The fact that nobody actually measures program effectiveness by how much money we spend or by the number of programs we create is irrelevant, as is the large and growing body of research showing that the safety net boosts the long-run outcomes of children growing up in poor families. As long as you contend that we currently don’t focus on outcomes, you can make our anti-poverty programs seem misguided.
There will always be those who oppose funneling money from low- and middle-income Americans to the wealthy and corporations. But if you stick to these tried-and-true steps from Paul Ryan, before you know it, you’ll have convinced a constituency (and perhaps even yourself!) that helping the rich is actually about helping the poor. Or, at the very least, people will be too confused to know the difference.
Editor’s note: This article originally appeared on 34justice.com. It has been edited for length and content.
I'm tired of hearing politicians pander to the citizenry by calling them "hardworking Americans." "Hardworking Americans should keep more of their money." And "They worked hard for their money." No they didn't. The richer they are, the less they worked hard for their money. They sat in an office somewhere and raked in billions. Did billionaires work hard for their money? If so, maybe they should have worked less hard and enjoyed life more. No one needs a billion dollars.
Most rich people simply sit back and collect rent or watch the stock market go up. Is that working hard? They call it passive or unearned income. That distinguishes it from income actually earned in the labor force from an actual job. That's how rich people don't work hard in a capitalist economy. They make money off of money. That's the whole purpose of capitalism: get rich by not working hard. So do these rich people deserve a tax break because they worked so hard? I don't think so.
Many people are one paycheck away from homelessness. They shouldn't be paying any taxes. The rich can afford to pay taxes on all that money they made from not working hard. Yet Republicans want to give these people (those who make their money off of capital gains and corporate profits) a tax break. They are only doing it because their rich donors, who are so greedy no amount of money suffices, demand it. If the rich don't get their tax break, they will stop donating to the Republican party.
After several tax breaks for the rich did not trickle down to the rest of us, they shouldn't have been able to sell this nonsense to the American people again. But they're still at it. They just don't care, really. Tax breaks for hardworking Americans is just propaganda, but a lot of people believe it even though it's never worked in the past.
So the Republicans are going to take money away from hardworking Americans so they can give it to the not hardworking Americans. Furthermore, they're going to cut the money going into health care for the poor. But that's not all, folks. They're going to run the country into another trillion and a half dollars of debt. Is this any way to run a country? I don't think so.
The teflon sobriquet was first applied to Ronald Reagan. Recall how he did a whole lot of illegal stuff, but was never impeached. The Iran-Contra affair involved selling arms to Iran and then using the money to fund the contras in Nicaragua. This was strictly forbidden by Congress under the Boland Amendment which had prohibited further funding of the Contras. But Reagan was a popular President so he got away with it without being impeached. President Nixon was not so lucky with his illegal undertakings. The Watergate scandal involved a break-in at the Democratic National Committee (DNC) headquarters at the Watergate office complex in Washington, DC in 1972. The Nixon administration attempted to cover up its involvement. Nixon would have been impeached and removed from office so he resigned instead, the only President to do so. Evidently, Nixon didn't have the required amount of teflon protecting him.
Trump famously said he could shoot someone in the middle of Fifth Avenue and not lose any voters. Yeah, especially if that someone was poor and black. I doubt if he could shoot a rich white guy and get away with it. Trump can shoot his mouth off without any consequences though. He can say whatever he wants whenever he wants and get away with it. I predict there won't be any consequences to the supposed "collusion" between his campaign and the Russians nor will there be any consequences to his firing of my homey, Jim Comey, the former FBI director. After all Republicans control both Houses of Congress. They don't want to get rid of Trump ... yet.
Trump is the Republicans' "useful idiot." He is totally on board with the Republican agenda of tax cuts for the rich and taking away benefits for the poor and middle class. The Washington Post reported on May 21 that there will be cuts to Medicaid in the Trump budget as well as cuts to all the other anti-poverty programs.
President Trump’s first major budget proposal on Tuesday will include massive cuts to Medicaid and call for changes to anti-poverty programs that would give states new power to limit a range of benefits, people familiar with the planning said, despite growing unease in Congress about cutting the safety net.
For Medicaid, the state-federal program that provides health care to low-income Americans, Trump’s budget plan would follow through on a bill passed by House Republicans to cut more than $800 billion over 10 years. The Congressional Budget Office has estimated that this could cut off Medicaid benefits for about 10 million people over the next decade.
The White House also will call for giving states more flexibility to impose work requirements for people in different kinds of anti-poverty programs, people familiar with the budget plan said, potentially leading to a flood of changes in states led by conservative governors. Many anti-poverty programs have elements that are run by both the states and federal government, and a federal order allowing states to stiffen work requirements “for able-bodied Americans” could have a broad impact in terms of limiting who can access anti-poverty payments — and for how long.
"The costly and dysfunctional state of health care in the U.S. shows the absurdity of entrusting basic human needs to the narcissistic tendencies of capitalism," writes Buchheit. (Photo: Beverly & Pack/flickr/cc)
Americans with wealth and power don't generally care about the middle and lower classes. Even worse, they are doing real damage to the people they don't care about.
But why? Either these well-positioned people are 100 percent out of touch with the realities of middle-class life in our country, or they're contemptuous of those they consider inferior, or they believe so strongly in individual 'freedom' that even the word 'social' is repugnant to them. Or perhaps they're just not smart enough to see the value of people who are different from them.
The assault continues non-stop: Taking away healthcare, either by disposing of the Affordable Care Act or slashing Medicaid; weakening consumer protection laws; repealing fair wage and workplace safety laws; cutting overtime pay; jeopardizing civil rights in the name of "religious freedom"; putting low-income mothers at risk by cutting their maternity care; increasing penalties for minor drug offenses; giving our public lands -- including the homes of Native Americans -- to oil companies; and even denying kids healthy lunches.
The Vicious Cycle of Disdain
A method can be detected amidst the madness, looking at it from the disdainer's point of view.
(1) I'm an individual who succeeded on his own
(2) Poor people could make it if they worked harder
(3) No handouts for those slackers
(4) No regulations to interfere with MY success
(5) Back to (1)
Some evidence comes from a Pew study that found 2/3 of Republicans believing that a person is rich because he/she has worked harder than others. Those disdainful of the poor may not realize that in the eight years since the recession, the Wilshire Total Market valuation has more than TRIPLED, rising from a little over $8 trillion to nearly $25 trillion, with the great majority of that passive wealth going to the very richest Americans. In 2016 alone, the richest 1% effectively shifted nearly $4 trillion in wealth away from the rest of the nation to themselves, with nearly half of the wealth transfer ($1.94 trillion) coming from the nation's poorest 90% -- the middle and lower classes, according to Piketty and Saez and Zucman. That's over $17,000 in housing and savings per lower-to-middle-class household lost to the super-rich.
#1 Possible Reason for the Disdain -- They're Delusional
Ever since University of Chicago economist Arthur Laffer sketched a curve on a napkin to convince Dick Cheney and other Republican officials that lowering taxes on the rich would generate more revenue, conservatives have pounced on the concept, convincing submissive politicians that all tax reductions are revenue-producing. It was proved wrong from the start. Several economic studies have concluded that the revenue-maximizing top income tax rate is anywhere from 50% to 75%.
Conservatives are reluctant to change the status quo, and loathe to have their core beliefs challenged. This is Cognitive Dissonance. It's typical for them to construct their personal beliefs on a moral basis, before all the facts are in, and if necessary to reshape the evidence to fit these beliefs.
So conservatives tend to believe that inequality is part of the natural order, and that any attempt to change it is senseless. Cognitive dissonance kicks in for them with the overwhelming evidence for a collapsing middle class. Rather than re-evaluating their beliefs, they go to the other extreme and DEFEND the widening fracture in U.S. society:
George Will: "How income inequality benefits everybody." Quoting John Tamny, Will agrees that "the best way to spread the wealth around is to leave it in the hands of the wealthy."
The Federalist: "Income Inequality Is Good For The Poor."
Goldman Sachs adviser Brian Griffiths: "We have to tolerate the inequality as a way to achieve greater prosperity and opportunity for all."
The Boston Globe calls the Oxfam analysis of extreme global inequality "irrelevant," and Reuters calls it a "silly stat."
#2 Possible Reason for the Disdain -- They're Narcissistic
The sense of "I'm better than you" is evident in the "white savior" approach to K-12 education, where billionaires assume their money makes them more qualified than lifelong educators to prepare our children for the future.
Numerous studies have shown that wealthier individuals tend to possess a distinct sense of entitlement. As their sense of superiority grows, they care less about the feelings and needs of others, they become anti-social, they are lessgenerous with their money, they become less willing to support the economic needs of all members of society, and they even tend to behave more unethically than average citizens, doing anything necessary to get ahead. And as they degenerate, they move further to the conservative side.
The costly and dysfunctional state of health care in the U.S. shows the absurdity of entrusting basic human needs to the narcissistic tendencies of capitalism. As Time explains about the Ebola virus, "Even though it had been killing people on and off for decades, there were no drugs or vaccines approved to fight it--and there still aren't today, chiefly because there's little incentive for pharmaceutical companies to bring them to market." Little incentive, plenty of profits, lots of disdain for human life.
#3 Possible Reason for the Disdain -- They're Just Plain Dumb
A maxim by the name of "Hanlon's Razor" declares, "Never attribute to malice that which is adequately explained by stupidity." So, for example, it's more mindless than malicious for Health and Human Services Secretary Tom Price to impose work requirements on people who may be sick or disabled, seniors, students, or sole providers.
Numerous studies support the observation that conservatives are somewhat on the dullish side in comparison to liberals. Political conservatism is associated with low-effort thinking. Liberals have more gray matter in the region of the brain that helps people cope with complexity. Lower intelligence in childhood predicts greater racism in adulthood, largely through conservative attitudes.
Brainlessness is apparent in the conservative approach, little though it is, to global warming. Geo-Engineering is the favored approach for groups like the Heartland Institute. Rex Tillerson said climate change is "an engineering problem and it has engineering solutions."
Those 'solutions' include fertilizing the oceans to absorb more carbon dioxide, coating the upper atmosphere with sulfate particles to block the sun, or building millions of wind-powered pumps over the Arctic to bring more water to the existing ice.
No thought to the potentially harmful consequences of massive, untried, expensive, earth-altering productions that may or may not work. Now THAT is dumb.
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The Trump administration will take over in a couple weeks. Essential benefits for tens of millions of low-and moderate-income Americans are in danger of being phased out or canceled immediately. These include the Affordable Care Act, the Medicaid health-insurance program for the poor and further reduction of already squeezed funding for scores of other important programs serving the most vulnerable Americans such as rental vouchers for low-income families, programs to fight homelessness, job training, funding for poor school districts, Head Start for young children and Pell grants to help low-income students afford college.
Republicans are all about cutting non-defense discretionary spending, and that means any program that helps the poor and middle class. After Trump showers tax cuts on the rich and corporations, the Republican Congress will attempt to balance the budget on the backs of the poor. It's what they've been trying to do for years, but Obama stood in their way. Now they have a green light. In the House GOP’s most recent budget plan, 62 percent of a stunning $6 trillion in budget cuts over 10 years would come from programs to help the poor.
Tax cuts for the rich with a pittance of a tax cut for the middle class while adding to the military budget will most likely not only run the country into the ground but will also cut the legs out from under the homed poor making the hard streets of San Diego and America teem with homeless including children and elderly. Rent assistance will be gone; Supplemental Nutrition Assistance Program (SNAP - food stamps) will be gone. The Supplemental Security Income (SSI) program for the elderly and disabled poor will be gone.
The Affordable Care Act Will Be the First to Go
To achieve their goals, Republican leaders plan to push through two major reconciliation bills in 2017. The first would repeal the Affordable Care Act’s coverage expansions which would double the number of uninsured Americans from 29 million to 59 million and leave the United States with a higher uninsured rate than before the ACA. The second reconciliation bill would cut Medicaid, SNAP and other programs. There's nothing the Democrats in Congress can do about these "reconciliation" bills since Republicans control all the levers of power in Washington. They can use a fast-track budget process called “reconciliation” to ram through an agenda without needing a single vote from the other party. Due to reconciliation, the filibuster won't work. And Obama won't be there to stop them. Trump will sign anything his Republican buddies recommend into law.
A Republican trick is to give the states block grants to fund these programs with inadequate pots of money and then let the states (especially red states) do the dirty work of restricting eligibility and cutting funding. You want another bowl of porridge, Tiny Tim? The money is just not there. Why don't you get a job? The money has all been spent on the rich by giving them tax cuts. A shrinking of health, food and cash assistance under Medicaid, food stamps and SSI would take critical benefits away from tens of millions of struggling low-income families and children. Those children will be left behind in school and many of them will likely end up in jail where the Corrections Corporation of America will profit from their incarceration.
Trump's OMB Pick a Conservative Budget Hawk
Trump's pick for Office of Management and Budget, Rep. Mick Mulvaney, a South Carolina Republican is a hard line conservative who will most likely shepherd budget cuts for programs that benefit the poor through the Oval Office. After all Trump promised them jobs not benefits! Let's see how many jobs he actually delivers. Tiny Tim and Grandma will have to go to work. Mulvaney is a fiscal hawk. He never met a budget program that helped the poor that he didn't want to slash. After he was elected to Congress he played a key role in the 2011 showdown between President Obama and House Republicans that ended in the passage of strict budget caps.
“We are going to do great things for the American people with Mick Mulvaney leading the Office of Management and Budget,” Trump said in a statement. “Right now we are nearly $20 trillion in debt, but Mick is a very high-energy leader with deep convictions for how to responsibly manage our nation’s finances and save our country from drowning in red ink.
“With Mick at the head of OMB, my administration is going to make smart choices about America’s budget, bring new accountability to our federal government, and renew the American taxpayer’s trust in how their money is spent,” he added.
This OMB is responsible for producing the federal budget, overseeing and evaluating executive branch agencies and otherwise advising the president on fiscal matters. It’s a position with tremendous, far-reaching power, even if the public doesn’t pay much attention to it. Mulvaney has repeatedly voted against his own party because he thought they weren't conservative enough. That pretty much means he wants to get rid of any and all programs which benefit the poor.
Trump wants a $7 trillion tax cut and a half trillion infrastructure program. This will explode budget deficits. So how does this square with Mulvaney's fiscal conservatism? It doesn't. It's a fundamental contradiction of the Trump administration. But it will certainly play out as Mulvaney tries to squeeze every penny out of any program to help the poor. The poor have no lobbyists supporting them, and they usually don't vote. Every Republican constituency does. The corporatists, the pharmaceutical companies, the military - they need not worry. Their bank accounts will flourish.
Trump Suggested the US Could Default on its Debt (and get away with it)
Trump has been exceedingly casual about America's debt obligations even going so far as suggesting that the US could default on its debt and that would be no big deal. In a CNBC interview in May, he suggested that his experience in offloading private debt would translate nicely to federal obligations. That is, he’d simply persuade the country’s creditors to accept less than full payment. However, if the US seriously considered defaulting, it would upset the world's whole financial system since US Treasuries are the linchpin thereof. The whole shebang is predicated on the inviolability of US Treasuries. Suggesting that the US should screw around with them would produce chaos and panic in financial markets throughout the world and produce a crisis unlike any ever seen before.
The US has $19 trillion in debt, and Trump thinks he can make a deal with US creditors to take a haircut and not be paid back 100 cents on the dollar? Good luck with that. US Treasuries are the foundation upon which the world's financial system is based. Other countries have Sovereign Wealth Funds composed in large part of US Treasuries. The US has only a Sovereign Debt Fund because after all, we're exceptional. We can run up debt with no consequences. Aren't we the protectors of the Free World? Defaulting on US debt or even running up a lot more, Trump style, will turn the US into just another Banana Republic. And the poor will continue to suffer.
Trump and his OMB pick may clash big time. What will happen then? Will cooler heads prevail? Stay tuned.
San Diego One of Most Unaffordable Housing Markets in Nation
In the City of Palo Alto, if you make less than $250,000 a year, you're eligible for a housing subsidy. The city council has voted to study a housing proposal that would essentially subsidize new housing for what qualifies as middle-class nowadays, families making from $150,000 to $250,000 a year.
Here in San Diego the situation is not much better as teachers, police and government workers cannot afford to live in the city they work in. So if middle class, college educated professionals can't afford to live here, how can anyone else lower on the economic ladder afford to live here either? In particular those on the bottom most rung, the homeless, can't even afford a foot in the door.
This report finds that nearly 50% of San Diegans face housing affordability challenges in rentals and homeownership, and over 70% of San Diegans are priced out of the homeownership market....
The City of San Diego is one of the most unaffordable housing markets in the nation. Zillow recently surveyed nearly 300 cities and found San Diego to be one of the most unaffordable six markets in the United States. Both renting and owning in San Diego are increasingly out of reach for average families. The average home price in San Diego is $506,000 according to Zillow – affordable only with an income over $80,000 per year. The average two-bedroom rental in San Diego is $1820 per month, affordable only with an income of $72,800 per year. ...
San Diego’s median income is approximately $73,000 for the city, which is consistent with our estimate that about half of San Diegans are unable to afford a minimally sized unit. A minimal unit would be priced at approximately $400,000 based on current San Diego home prices.
Translating the affordability challenge into wages, the Low Income Housing Coalition estimates that nationally, in order to afford a modest, two-bedroom apartment in the U.S., renters need to earn a wage of $19.35 per hour.
Good luck with that as minimum wage workers will be making $15 an hour 6 years from now and still will not be able to afford a modest two bedroom apartment, that is if rental prices do not go up in the meantime! Fat chance of that. SANDAG estimates that, as the production of new housing falls behind, only 6% of the housing that is being constructed is for people with low incomes. Obviously, there's more money to be made by building housing for upper income people.
The report continues: "As of 2013 there were approximately 120,000 extremely low-income families and only 20,000 affordable units available for them in San Diego. The pace of new construction for very low income, low income and moderate-income units is lagging severely behind the estimated need in San Diego ..." To say the least!
It doesn't have to be this way. The City has squirreled away millions of dollars in off budget funds which could be used for affordable housing and housing for the homeless. Besides that the City of San Diego owns numerous parcels of land on which affordable housing including housing for the homeless could be built. Since they're not recognizing the emergency situation that lack of housing represents, they are actually in violation of a state mandate, Senate Bill 2 from 2007, authored by Senator Cedillo which stated the following:
This bill would add emergency shelters to these provisions, as specified, and would add provisions to the housing element that would require a local government to identify a zone or zones where emergency shelters are allowed as a permitted use without a conditional use or other discretionary permit. ... By increasing the duties of local public officials, the bill would create a state-mandated local program.
That was 9 years ago and the City of San Diego has done nothing about it. This bill "create[s] a state-mandated local program." Still the City insists that emergency housing like the Tiny Homes project requires a Conditional Use Permit (CUP). No it doesn't! The corner of 17th Street and Imperial Avenue is identified on a 2006 general plan map as one of many locations that the city has deemed suitable for emergency shelters. Yet Arian Collins, supervising public information officer for the City of San Diego, said a conditional use permit (CUP) would be needed to put shelters on any of the sites identified in the map. Has he read SB-2 Cedillo which says that, for zones where emergency shelters are allowed, there is no need for a CUP? Are these people dumb or ignorant or they just don't care?
San Diego Has the Money to Build Affordable Housing
Civil engineer Katheryn Rhodes has identified several funds where the City, the County, the San Diego Housing Commission and Civic San Diego are hoarding cash that could be used for emergency shelters and/or affordable housing or even pay for Emergency Shelter Tents and Tenant Based Rental Assistance (TBRA) Housing Vouchers. There's $28.7 million in the Low and Moderate Income Housing Asset Fund (LMIHAF). There's also $259 million in long term assets that can be leveraged by using it as collateral and issuing bonds for much more. So why is the City contemplating issuing over a billion dollars in bonds for a new "Convadium" which, by the way is an architectural monstrosity with a convention center in the basement of a football field, when it is not doing its duty as mandated by the state of California to build emergency shelters for the homeless and affordable housing?
The Successor Agency (SA) to the Center City Development Corporation (CCDC) which facilitated the building of high rise condos in downtown San Diego by private developers has a lot of money at its disposal that's not being used that could be used to build affordable housing. According to Katheryn, they have $66,907,786 in unencumbered bonds plus $3,369,053 in reserves and $21,727,112 in other fund accounts. The Successor Agency cash can be used for any Capital Improvement Projects (CIP) and infrastructure projects including Affordable Housing with the approval of the City Council. Why won't the City Council take action?
The SA evidently is continuing the massive corruption of the CCDC that resulted in using HUD funds for building luxury condos that should have been used for building low income and affordable housing. CCDC President Nancy Graham was taking money from developers who were building the luxury condos tearing down Single Room Occupancy (SRO) hotels that housed many who have become homeless in the process.
Rusty Bee saw a direct connection between the tearing down of inexpensive housing units downtown, the augmentation of the homeless population and the investment buying of luxury high rises that weren't even occupied:
Twenty years in now, hundreds of downtown hotels razed making more people homeless, thousands of apartments and condos still empty, and when and where do the voodoo economics stop? The joke is that San Diego now has a million downtown condos that nobody is stupid enough to buy.
CCDC corruption which involved using money to renovate "blighted" areas to build luxury high rises instead of building affordable housing resulted in the termination of CCDC and "redevelopment." That's why there's a "Successor Agency" which in reality folks is the City Council which has turned over the winding down of CCDC activities to Civic San Diego. Now Civic San Diego has the cash to build affordable housing so why isn't it doing it?
The Capital Outlay Fund has a Cash Reserve Fund Balance of $125,729,000 as of June 30, 2015. When properties are sold, normally any cash money from the sale goes into the Capital Outlay Fund. The Balance in FY-2014 was $40,878,000. The balance in FY-2013 was $35,775,000. So it's building up with no purpose in mind. Money is just being hoarded.
The FY-2015 Comprehensive Annual Financial Report (CAFR) shows a Public Facilities Financing Authority (PFFA) Cash Reserve Fund Balance of $170,448,000. In FY-2014 it was $90,397,000, and in FY-2013 it was $93,902,000 so it too is building up with no purpose in mind. This does not even take into account JPA bonds. So there is plenty of money that could be used for affordable housing and emergency housing for the homeless. If San Diego wanted to get them off the streets, they could take action to do so tomorrow.
The Mayor's Budget
In his new budget released the other day, Mayor Kevin Faulconer did not even mention affordable housing, and gave only lip service to homelessness. There is something in there about housing 1000 homeless veterans, but what about the tens of thousands of homeless mothers and children? There's something in there about providing 24/7 access to restrooms for the homeless and getting serial inebriates off the street, but these are drops in the bucket compared to what needs to be done. The proposed FY 2017 budget calls for no expenditures from the Capital Outlay Fund which could be used for affordable housing. There is likewise no expenditure called for from the PFFA Funds. However, the budget does call for spending over $17 million on golf courses.
The San Diego Housing Commission (SDHC) budget, which is separate from the City's budget, can be found here. From their website it sounds like the SDHC is doing a lot about affordable housing. The question is are they doing all they can and are they using all available resources to do it?
This is from Civic San Diego's website which is also separate from the City's budget:
"Since CCDC's (now CivicSD) inception in 1975, more than 3,500 affordable housing units have been created in downtown neighborhoods, using redevelopment funds, and more than 450 units are in the pipeline. To date, $130 million in downtown redevelopment funds have been invested to produce affordable housing downtown. An additional $38 million have [sic] been committed for projects currently in the pipeline."
This all looks good on paper, but then why are there still so many homeless and the numbers are only getting larger? The City Council promptly approved Mayor Faulconer's budget, and it will take effect July 1.
San Diego Has Land It Could Build Affordable Housing On
Not only is the money available, land is available as well. The City of San Diego owns several parcels of land on which affordable housing could be built. But instead of doing that, the City wants to sell the land and place the proceeds in the Capital Outlay Fund, another Fund where money is accumulating with no declared purpose in mind.
The City's Real Estate Asset Department (READ) is supposed to ask the public if there are potential uses for surplus property owned by the City, but so far it has failed to do so. At the Committee for Smart Growth and Land Use meeting on February 16, 2016, the items on the agenda were all about selling off surplus parcels, not asking the public if there were alternative uses for them like building affordable housing.
The Legislature reaffirms its declaration that housing is of vital statewide importance to the health, safety, and welfare of the residents of this state and that provision of a decent home and a suitable living environment for every Californian is a priority of the highest order. The Legislature further declares that there is a shortage of sites available for housing for persons and families of low and moderate income and that surplus government land, prior to disposition, should be made available for that purpose.
Did they? Hell, no. For example, the property at the SE corner of Jamacha and Cardiff has been cleared for sale in accordance with California Government Code Section 54220. City departments were also notified and given an opportunity to retain the property. No City department has any current or foreseeable use for the property and the property has been determined to be excess to the City’s needs. So why isn't the property being used to build affordable housing? And there are tons of other city owned properties that the City doesn't need that could be used for this purpose as well.
Want to know more? Contact Mary Carlson, Asset Manager of READ. I couldn't find any contact information for her. Maybe that's intentional. Their website isn't very informative either. Nothing about all these properties they're trying to sell off to investors at fire sale prices.
There are currently 28 properties throughout the City up for sale. ...
READ is required by State Law to offer the property to internal and external agencies for a minimum 60 day period to see if they have interest in purchasing or leasing the property to provide low income housing, park and recreation or open space purposes, school facilities construction or use by a school district for open space purposes or for enterprise zone purposes if located in such a zone.
The READ files reviewed last December did not include a reply from the Parks and Open Space Department to the READ email sent July 16, 2013 initiating the for sale proposal. The noticing email basically said if we don’t hear from you in 60 days, we are proceeding with the sale.
It is getting pretty obvious that READ would rather offer the properties to rich investors and developers and pay realtor commissions than to have them developed for affordable housing or parks. By the way who picks the lucky realtors who have commissions falling into their laps like manna from heaven?
Murtaza Baxamusa, PhD, AICP, is the Director of Planning and Development for the San Diego County Building and Construction Trades Council Family Housing Corporation, said:
America’s Finest City has an ugly problem.
The homeless population in San Diego is among the four largest in the nation and getting worse, with over 8,700 people living without shelter. [Actually several times that amount; that's just the "official" count.] And while this kind of weather is rare in San Diego, it is not new, yet even after anticipating the storm for months and knowing the severity of our homelessness problem, there was marginal galvanization of resources by local government. Simultaneously, the city was able to commit hundreds of millions of dollars in public funds for supporting downtown development with an expanded convention center and a Chargers stadium that the NFL does not want, all of which will likely be built in the very neighborhood these people call home.
Next Time: Part 2 of 3: Homeless Population Undercounted
Classical economics divided income into two types: earned and unearned. Earned income came from productive labor combined with capital investment. Unearned income was considered parasitical and consisted of rent, interest and dividends. It was not considered as adding to GDP but as subtracting from it. It was money made by manipulating money much as feudal landlords made their money in what has been called a rentier economy.
Today most of the money earned by the 1% which is driving the income inequality gap is made in the financialized, rentier economy but is now considered earned income. New methods have been devised to make money not by productive labor and investment but by manipulating financial instruments. One such manipulation consists of stock buybacks.
Why would a company buy back its own stock, stock that was issued in the first place supposedly to give the company money it needed for productive investment to produce goods and services. The answer is very simple. When a corporation buys its own stock (often with borrowed money), the stock usually goes up at least temporarily. That gives the executives of the company and activist hedge funds time to cash in their stock grants, options and garden variety stocks and make a killing. The boost in stock value also impresses Wall Street which cares solely about the short term financial indicators for a company and not at all about what the company did to achieve those indicators.
When a company uses its profits or even borrowed money to buy back its own stock, that's money that is not being used for research and development or to expand production or to make a better product. The money that the executives and hedge funds make is strictly because of financial manipulation, but in a financialized economy it's considered to be additive to GDP. The measurement of GDP is no longer linked wholly or even mainly to production, but now consists to a large extent of income that is made in the rentier economy.
Carl Icahn, a big investor in Apple, is always trying to get them to buy back their stock so he can cash in. The billionaire activist investor lobbied Apple to buy back billions worth of its shares to boost value to shareholders. In April 2014 Apple boosted its buyback plans by $30 billion and even split its stock for the first time in nine years. Satisfied? Never. Icahn's taking another swing at getting Apple to buy back even more stock, saying the shares could double to more than $200 apiece.
Another way the parasites make money which makes the GDP figures look good is to not pay taxes. The tax code has been completely captured by the large corporations and their lobbyists which has shifted the burden away from corporations and onto the average working person - the 99%. Both Democrats and Republicans are complicit in this arrangement, one example of which is the tax giveaway they are getting ready to implement.
The bad news is that key leaders of the Democratic Party—including the president—are getting on board with Republicans, despite some talk about confronting income inequality. Influential Democrats intend to negotiate with Republican counterparts on the size and terms of post-facto tax “forgiveness” for America’s globalized companies. This is real money they’re talking about—a giveaway of hundreds of billions
Why haven’t voters heard about this from candidates? Because Republicans and Democrats both know it would make angry voters even angrier.
The major multinationals complain about a tax problem that most citizens would love to have for themselves: Thanks to a loophole in the tax code, the companies do not have to pay US taxes on profits they have earned in foreign countries until they bring the money home to American shores. Altogether, the globalized US companies have accumulated $2.1 trillion in untaxed profits, most of it parked in overseas tax havens.
The multinationals are waiting for Congress to forgive them their debts.
Oh, but forgive the debts of the little guy? Never!! While corporations expect to have their debts forgiven, there is no such help for for the average American or average debtor nation like Argentina or Greece. For the rest of us the commandment is "Thou shalt PAY UP." Wall Street has adamantly stuck to this first Principal of Finance which is sancrosanct, so sancrosanct in fact that bankruptcy rules for the average American are being tightened while at the same time they are being loosened for corporations. You think student loan debtors can go bankrupt? Guess again.
After all part of the vulture capitalist's playbook is to buy a company with borrowed money, load it down with debt, strip its assets, raid its pension fund, then take it into bankruptcy in order to destroy its union. Having accomplished all that and by the way added to GDP while so doing, the company can then be taken out of bankruptcy, taken private and then taken public again in order to get another infusion of cash from an Initial Public Offering (IPO) which is immediately gobbled up by the hedge fund (another name for vulture capitalist) itself. All of these shenanigans make money off of money, do nothing for productive investment but do add to GDP.
Congress let these corporations have a "tax holiday" in 2004 on the hope and promise that these corporations would spend their largesse doing research, investing in America and creating jobs. What happened? The 15 companies that benefited the most from a 2004 tax break for the return of their overseas profits cut more than 20,000 net jobs and decreased the pace of their research spending. One of the beneficiaries was Qualcomm, a major whiner for another tax holiday. On his way out the door Paul Jacobs exhorted his employees and shareholders to “Send your Congress people your opinion that you’d like American companies to be able to bring offshore money back to the United States to either reinvest or return to shareholders.” Qualcomm had $21.6 billion in overseas profits in 2014. And those poor shareholders - most of them in the 1% - are having to make do without their money. Oh, Boo Hoo.
As a result GDP is no longer a measure of the health of an economy. If a tornado wipes out a town, the money spent to rebuild that town adds to GDP, but does not constitute a contribution to the economy that adds anything except to restore what was already there. In the same way hedge funds add nothing productive to the American economy, but they do increase GDP. So GDP as a measure of anything productive is passe. It is merely a measure of the cash that changes hands regardless if it changed hands as a result of winning a bet in a casino or in the casino of Wall Street or it changed hands because someone bought something that was actually useful.
If GDP doesn't measure the exchange of productive goods and services or productive investment, why does every politician and pundit insist on "growing the economy" meaning increasing GDP? We would be better off in some ways if GDP were diminished and the emphasis was on a sustainable economy, an economy which valued the health and welfare of the average person instead of the 1%. All the money that is made from the oil and gas industries needs to diminish if we are to make any progress with global warming. All the money made by Wall Street on fees, interest and derivatives needs to diminish if the economy is to be placed on a more solid financial footing.
Consumers contribute 70% of GDP. If we start growing our own food and fixing our own cars and buying less junk, this will diminish GDP, but the average American will be better off. They would have less debt. If we stop going into debt, GDP would go down. But so would the inequality gap as corporations earned less profit and Americans took on less debt. How to make America great again? Pay down your debt, do more for yourself instead of buying goods and services in the cash economy, buy and work local and stop patronizing large corporations and Wall Street banks.
The only way that the central bank of the US, the Fed, knows to grow the economy is to lower interest rates and force more debt on American citizens. This is what monetary policy amounts to. Fiscal policy, in which the government would create jobs directly by providing money for infrastructure revitalization, is non-existant thanks to Republicans who won't approve expenditures by government that would actually create jobs and the military-industrial complex which gobbles up every available dollar.
If American citizens don't take on more debt, the economy goes to hell in a handbag. The only way around this is to start a public bank. Then the local economy can be served directly including creation of good jobs without reliance on Wall Street. By the way sports fans, the plan for the new San Diego "Convadium" would involve the City of San Diego issuing a billion dollars in bonds, a plan they are touting as requiring no taxpayer funding, but which will involve huge payments to Wall Street for fees and interest. These bonds will be backed by nothing except hotel taxes. Who's liable here if the plan goes south?
"Trying to rise into the middle class these days is a road to debt peonage. It involves taking on mortgage debt to buy a home of one's own, student loans to get the education needed to get a good job, an automobile loan to drive to work, and credit card debt just to maintain one's living standards as the debtor falls deeper and deeper into the hole. Many recent graduates find that they have to pay so much on their student loans that they must live at home with their parents and cannot afford to get married and start a family, much less qualify for a mortgage. That is why consumer spending has not risen since 2008. Even when income rises, many families find their paychecks eaten up by debt service."
Bernie Sanders is addressing the problem of debt peonage, which is gradually enslaving the American middle class, directly by calling for free public education and Medicare For All. He is also addressing the US tax code which has been rigged in favor of the wealthy and the corporations starting with Ronald Reagan's and Alan Greenspan's meddling. Republican Presidential candidates would only hasten the descent of the American middle class into debt peonage by giving further tax breaks to the rich while transferring even more of the tax burden onto the middle class and the poor.
The American dystopia that is becoming more likely is one in which a small percentage owns the means of production and rent producing assets while the vast majority eke out a living doing menial labor that can't be done by robots and automatons. Andrew F. Puzder, CEO of the parent company of Carl’s Jr., has announced he’s investing in machines because he doesn't want to pay employees $15 an hour or to pay for their health care. Puzder makes more in one day ($17,192) than one of his minimum-wage employees working full time makes in a year ($15,080), The Nation reported last year.
Work for nothing or be replaced by a robot - that's the choice for the 99%. But robots are taking middle class jobs now and will take more in the future, minimum wage or no minimum wage. So what's the solution? Start your own business, become self-employed, stay away from student loan debt or start or become a member of a cooperative enterprise. You have no future as a minimum wage employee regardless of the minimum wage. Take the bull by the horns instead of trying to convince the cow not to shit on you.
The American dystopian vision of the future is even more appalling than the feudal era in which human labor was actually needed to make the economy work. Sure the 1% controlled the wealth; it was a rentier economy but human labor was necessary. Now humans as well as their labor are expendable. The future could hold a life of abundance and leisure for everyone but that is not likely unless wealth is more evenly distributed. It won't be more evenly distributed unless consumers stop consuming, take matters into their own hands and start producing for themselves. The sad truth is you can make more money as a self-employed laborer than you can working a 40 hour week for MacDonald's even if you just do a couple of jobs per week! Why work for $10. an hour for someone else when you can make five times that much as a self-employed doing exactly the same work?
Amy Goodman did a recent show about the refugees living in a camp in Calais, France. She walked around the camp interviewing several refugees all of whom spoke good English. Most of these people were sleeping in tents similar to the ones you see on the sidewalks of San Diego. Some had built simple structures. As she walked around, I began to notice some facilities that they had there which are nowhere to be found for the San Diego homeless. First I noticed a dumpster. There's no dumpster for San Diego's homeless. The trash just gets left on the street.
Then I noticed a whole row of Port-a-Potties. San Diego had one Portland Loo which they are getting rid of. Unlike San Diego's homeless, the refugees in Calais, who are from all over the Middle East - Syria, Iraq, Afghanistan, Pakistan - everywhere the US has bombed, had a place, places, to go to the bathroom. There were other services. A barber and a restaurant were mentioned. A little later there was a guy doing laundry. There was running water - a sink with faucets. Are there facilities like this for San Diego's homeless? No. Not at all.
America's homeless numbering some 600,000 have become a sub-class. While George Orwell in his book 1984 divided society into four classes - alphas, betas, gammas and deltas - the American homeless have surely metamorphosed into zetas. They have no services, no civil liberties, no human rights because the US does not believe in human rights. Sleeping in public or in vehicles is even being criminalized. US laws criminalizing sleeping in public have grown 60% in recent years.
I was rousted out of my van in which I was sleeping on an Encinitas street several years ago. It seems the homeowner, whose house I was sleeping in front of, had called the police. He had a beach front estate. The cop said "How would you like to look out your window and see this?" What, you mean a properly licensed Ford E-150 van has no right to be parked on a public street because it's a visual eyesore to some private property owner who doesn't exclusively own the public streets?
• City council members in Columbia, South Carolina, concerned that the city was becoming a “magnet for homeless people,” passed an ordinance giving the homeless the option to either relocate or get arrested. The council later rescinded the ordinance, after backlash from police officers, city workers, and advocates.
• Last year, Tampa, Florida — which had the most homeless people for a mid-sized city — passed an ordinance allowing police officers to arrest anyone they saw sleeping in public, or “storing personal property in public.” The city followed up with a ban on panhandling downtown, and other locations around the city.
• Philadelphia took a somewhat different approach, with a law banning the feeding of homeless people on city parkland. Religious groups objected to the ban, and announced that they would not obey it.
• Raleigh, North Carolina took the step of asking religious groups to stop their longstanding practice of feeding the homeless in a downtown park on weekends. Religious leaders announced that they would risk arrest rather than stop.
In Calais, the refugees wait for a chance to get through the Chunnel to the UK. Six to seven thousand people are camped out in makeshift tents. Each night members of the camp set out along the highway to the Channel Tunnel, where they attempt to cross into Britain by jumping on top of or inside trucks or to somehow get on the high speed train. In the meantime they had some services which make life livable - bathrooms, dumpsters, barbers.
Tiny Home Confiscated by Police
In San Diego a tiny home that a homeless man parked on the sidewalk was confiscated by police and the man, Michael Clark, was taken to jail. It was parked in front of the International Love Ministries of God in the 400 block of 16th Street. There is a movement afoot to provide tiny (60 square feet) homes for the homeless in San Diego. They just need somewhere to put them and hook-ups for utilities or at least communal facilities. They're lockable - so possessions are secure not left on the street to be looted or vandalized.
They've already done this in Nashville. A Good Samaritan in Nashville used the GoFundMe site to raise $50,000 to build six tiny homes. With the cooperation of a church owned vacant lot, he set them up for the homeless.
The point is that the homeless need a variety of solutions at different stages before they can reintegrate into the mainstream society. Many of these partial solutions elevate their quality of life without costing much money. Just providing lockers and Portland Loos or Port-a-Potties would alleviate some of the worst problems for both the homeless and for society at large. At San Diego events such as the Summer Pops series for the San Diego Symphony, they provide dozens of Port-a-Potties and even portable hand washing facilities. But yet no one in San Diego government or San Diego's ubiquitous philanthropists can provide them for the homeless. Even a vacant lot with Port-a-Potties and sinks with faucets would provide some of the facilities that Europeans are providing for refugees there. The homeless are America's refugees and are worse off than their counterparts in France.
San Diego's Homeless Sleeping on the Streets
San Diego has the fourth largest homeless population in the nation. Nearly 48% of those without housing are sleeping on the streets. San Diego's homeless population rose to 8,742 in 2015 from 8,506 in 2014, a 2.8% increase that bumped it into the top four for the first time behind the metropolitan areas of Seattle, Los Angeles and New York City.
Father Joe's Villages and other agencies and organizations are doing a lot to help the homeless. Housing First is a concept that has caught on in many places where the homeless are housed and social services provided to help them with their life situations whether it's addiction or joblessness or something else. The problem is that there are never enough of these various services to do more than to put a minor dent in the problem. They are partial solutions not comprehensive solutions.
San Diego's sidewalk tent cities keep growing. So there should be a ladder of solutions where all those who don't get into Father Joe's or other programs at least get something - even a dumpster and a Portland Loo or a safe vacant lot to sleep or put a Tiny Home on. Many of these solutions for those on the street cost practically nothing and could be implemented immediately without waiting for a shelter bed to be available.
American taxpayers have shelled out roughly $1.6 trillion on war spending since 9/11, according to a new report from Congress’ nonpartisan research arm. That’s roughly $337 million a day or $14 million per hour every single day for 13 years. Result? The Middle East is totally destabilized and terrorism has risen. US bombing pushes more people into the arms of ISIS every day according to the European refugees at Calais that Amy Goodman interviewed. US bombing kills 200 civilians a day according to one of the refugees. Is it any wonder they hate us?
Despite spending $14 million an hour on war, US and San Diego authorities can't even provide the homeless with a dumpster or a safe place to sleep off the sidewalk. The only impetus to solving this problem has been when some bigwig woke up recently and figured out that some homeless man had been calling 911 repeatedly and cost taxpayers $537,000 in ambulance services alone when he was taken to the emergency room on numerous occasions.
Compassion-R-Not-Us but economic incentives just may be. In this tourist town it's disheartening for local consumers and out-of-towners to have to step over homeless people and/or their trash and/or human feces on their way to Petco Park or Sea World or some other tourist destination. The authorities are afraid that, if they provided more services which would cost practically nothing like Loos and Dumpsters and safe vacant lots, the homeless would flock to San Diego. Well so what? Maybe we could pride ourselves on being a compassionate city which is doing its best to solve the homeless problem like a lot of other cities have. Contrary to the cities which have criminalized homelessness, some cities are actually trying to solve the problem. In eight years, Utah has reduced homelessness by 78 percent.
Utah solved homelessness by giving people homes. In 2005, Utah figured out that the annual cost of emergency room visits and jail stays for homeless people was about $16,670 per person, compared to $11,000 to provide each homeless person with an apartment and a social worker. So, the state began giving away apartments, with no strings attached. Each participant in Utah’s Housing First program also gets a caseworker to help them become self-sufficient, but they keep the apartment even if they fail. The program has been so successful that other states are hoping to achieve similar results with programs modeled on Utah’s.
Phoenix and Salt Lake City Ended Homelessness Among Vets
Two years ago the city of Phoenix, AZ announced that it had ended homelessness among veterans. Salt Lake City, which was in a friendly competition with Phoenix to see which city would be first to end homelessness among veterans, announced that it had done so about a year later. However, this does not solve the homeless problem in general - just among vets. The point is that, while some cities are criminalizing homelessness, other cities are doing their best to solve the problem. My point is that to solve the problem in a comprehensive manner requires giving those that can't be housed and provided with a social worker because of lack of funds or whatever, something while they are still "homeless" - Port-a-Potties, lockers, a safe vacant lot, a transit pass, a bicycle - SOMETHNG!
The concept of "homeless magnet" be damned. We should endeavor to become a homeless magnet and take pride in our efforts to solve the homeless problem. Instead of spending trillions of dollars fighting wars which have only exacerbated the terrorism problem, America should realize the error of its ways and defund militarism. But too many people are making too much money from it. They have created the refugee problem, the terrorism problem and the homeless problem by benign neglect. It's a world wide war on poor people so the rich can live a pampered, protected life in luxury real estate while others sleep on the street without even sanitation facilities.
No wonder Washington, DC is the only city where salaries are going up in line with productivity for everyone, not just the rich. The average compensation for an employee in Washington, DC in 2015 was $119,934. The Washington, DC suburbs dominate the list of the most affluent places in the United States. Among more than 3,000 counties across the nation, Loudoun County, VA is the richest, with a median household income of almost $119,000. Maryland’s Howard County and Virginia’s Fairfax, Arlington and Stafford counties also made it into the top 10. The city of Falls Church, VA, where the median income is $121,000, is the richest city in the nation.
The outsized military-industrial complex and America's first priority, fighting wars, along with lobbyist salaries make the Washington, DC area the richest in the nation while hundreds ofthousands of American refugees sleep on the streets. The only well paying jobs in America as of 2016 are on Wall Street or Washington, DC. College graduates take note.
Safe Parking Lots
In San Diego there is a group that sponsors safe parking lots for the many thousands of vehicular homeless - those living in their cars - because, although most of them work, they still can't afford a motel room. A group called Dreams for Change has provided safe parking lots in San Diego, Chula Vista and Vista. The San Diego location is at 766 28th Street just across from the New Life Church and just off the Martin Luther King freeway. They ask that you call (619) 497-0236 before you come. Sleeping in your car is illegal as I found out many years ago although I parked on the street and was only rousted out twice in two years. One of them was my fault for violating my own rules of never parking where I stood out like a sore thumb. A Neighborhood Watch guy got me.
The idea of the Safe Parking Program was developed by seeing the rise in newly homeless due to sudden loss of employment and homes. A student group from SDSU School of Social Work and Cal Western Law School researched and started the ground work for the Safe Parking Program to be a viable program here in San Diego.
We at Dreams for Change believe an individual’s vehicle is often times their last asset. We see the value of this asset which allows them to continue to access resources, look for employment and get to and from school. A loss of their vehicle is seen as one of the final step[s] to chronic homelessness; thus we focus on stopping the downward spiral of homeless and bring stability to families and individuals.
The idea is that, since the traditional programs to house or shelter the homeless only accommodate about half the actual homeless at any given time, things should be done to ease the situation for those that are left over, who haven't been accommodated by social services or Housing First or those who have fallen through the cracks. That is the point of this article - that society should spend a pittance to provide some services to those who are still on the street whether it be lockers, used bicycles, a safe place to sleep, port-a-potties or Portland Loos, sanitation facilities.
If society wants these people to be cleaned up, providing some basic sanitation facilities might be a good place to start. Ditto for the streets. Another point: if you want homeless off the streets and into shelters, provide some accommodation for their possessions and their pets. All these things could be done at little expense and would also provide the benefit of getting the homeless and their material possessions off the streets so a walk in certain areas is not so intimidating for the average homed person.
Human Rights for the Homeless aka American Refugees
• Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his [or her] control.
• Motherhood and childhood are entitled to special care and assistance. All children, whether born in or out of wedlock, shall enjoy the same social protection.
Income and wealth inequality is only getting worse. It's not hard to understand why. Certain corporations have a lock on economic activity throughout the world. Mom and Pop operations have been forced out of business or have merged with the Big Guys. Artificial intelligence, automation, robots and computers have taken over many menial but used-to-be-better-than-minimum-wage jobs like check-out clerks, bank tellers and customer service operators. Other jobs have been off shored to cheaper labor jurisdictions.
The rest of us, college graduates included, have been reduced to being expendable appendages of the large corporate machines to be sucked in and spit out at their pleasure. When our skill sets are outmoded, we will be laid off and fresh talent will be acquired. The job pool is shrinking because the number of necessary jobs is shrinking. Today, there are approximately 1.2 million fewer jobs in mid-and higher-wage industries than there were prior to the 2008 recession, while there are 2.3 million more jobs in lower-wage industries. According to the Bureau of Labor Statistics most jobs in the next decade won't even require a college education. They are jobs that can't be done by robots: care givers, nurses, house cleaners, gardeners, retail.
Another reason for income and wealth inequality is that the US Federal Reserve's quantitative easing policy screws savers who get zero interest on their life savings while injecting money into the largest Wall Street banks. This money is siphoned off by wealthy investors and hedge funds. It never enters the real economy. It only encourages the average Joes and Janes to take on more debt. Ninty percent of the money supply is created by private banks who loan money into the economy through their policy of fractional reserve banking. As the money supply increases, so does debt.
Wall Street Banking Giants Create Most of the US Money Supply
Fractional reserve banking is a simple concept that has become more complicated and convoluted as it has evolved over the years. In its simplest terms, if a bank takes in a deposit of $100 from 10 people or $1000 total, it loans out $900 of that keeping $100 back as a reserve in case someone wants their deposit back before the principal and interest on the loans start flowing in. Their premise is that not everyone will demand their deposit back at the same time. If, however, everyone does want their money back at the same time, there could be a run on the bank unless the bank can borrow the money from some other entity like another bank or the Federal Reserve
Thus money is created by the bank with a few keystrokes on a computer and is fed into the economy as debt. The banks are at the top of the food chain since they create the money and loan it out on interest. Thus the US economy is a debt based economy. Bad things happen when people all demand their money back at the same time or collective debt becomes so big and untenable that it can't be paid back. This is what happened in the 2008 financial crisis when mortgages were given to people who couldn't pay them back and hence defaulted. Eventually this whole financial structure, which was a house built upon sand instead of a rock, to use a Biblical metaphor, collapsed.
It is to be noted that when a bank creates money, it is not backed by gold. Nixon took us off the gold standard in 1971. Money not based on anything but the government's say so is called fiat money. Thus all money created by private banks is fiat money, and, although the government says it is all good, it is the private banks that actually create it, not the supposedly democratically elected government.
The Federal Reserve has also been involved in money creation recently with a process called quantitative easing (QE). When the government needs money beyond the revenues it takes in by means of taxes, it goes into debt by issuing bonds. Sometimes those bonds are bought by Joe and Jane Average Investor or sometimes by other countries like Japan. However, much of the time they are bought by Wall Street banks. Then the Federal Reserve turns around and pays cash for those bonds taking them off the hands of the big banks. The result is that the banks end up with more money and the loans disappear on the Federal Reserve's balance sheet which is sort of like a black hole. Effectively, the government never has to pay those loans back.
Quantitative Easing for the People
There is another way that money could be created and injected into the economy. It might be called quantitative easing for the people (PQE) as Britain's Leader of the Labor Party, Jeremy Corbyn has termed it. He proposes to give the Bank of England a new mandate to upgrade the economy to invest in new large scale housing, energy, transport and digital projects. The investments would be made through a National Investment Bank set up to invest in new infrastructure and in the hi-tech innovative industries of the future.
The money creation (or printing if you like) would entail the government issuing a bond that a National Investment Bank would buy. Then the central bank would take that loan on its balance sheet in return for cash that the bank would then use to pay for infrastructure. The end result is that the government would owe the central bank the amount of the loan, but because the central bank is a financial black hole, it would never have to pay.
In Addition to Pocketing the QE, Wall Street Bankrupts Cities
The City of Los Angeles is paying a Wall Street bank $200. million annually in fees just to manage its money. The Huffington Post revealed:
LOS ANGELES, CA- At a lively downtown rally in front of the Bank of NY Mellon in Los Angeles, the Fix LA Coalition unveiled a groundbreaking research report, entitled "No Small Fees: LA Spends More on Wall Street than Our Streets," revealing that Wall Street charges the City of Los Angeles more than $200 million in fees. Coalition members called for action to reduce the high fees and put that money back into neighborhood services. After the rally, Fix LA Coalition members delivered the report to elected officials in City Hall.
In addition LA like a lot of cities that have gone bankrupt (Birmingham, Alabama for instance) has been snookered into interest rate swaps that end up costing much more money than if they had kept the original loan at the original rate. Then to get out of these toxic deals, they have to pay a substantial "termination fee."
Lisa Cody, SEIU 721 Research Analyst and report co-author stated: "Based on what we know, there are some concrete steps we can take to save LA millions. For example, we can start with Mellon Bank to renegotiate a 'swap' deal that was supposed to save the city money, but is instead costing LA almost $5 million a year. To fix this toxic deal, the bank wants $24 million more in fees. In 2012, NY Mellon charged the city $26 million in termination fees for another swap they had sold us that turned out to be a terrible deal for LA."
LA is not the first and probably won't be the last to be tricked into engaging in a fancy derivative deal that was way over the heads of the city employees that were talked into it by Wall Street hit men. If they had formed their own Public Bank of Los Angeles, they could not only have avoided being ripped off, but they could have actually made money and then be in a position to fix all those potholes they've been screaming about. And they could have created their own money supply the way Wall Street does it: fractional reserve banking.
In August 2014 the Fix LA coalition released the following statement:
Los Angeles Becomes Largest U.S. City to Take Action on Toxic Bank Deals; Unanimous Vote Requires City to Renegotiate or Terminate Multi-Million Dollar Interest Rate Rip-Off on Behalf of Taxpayers
Unanimous City Council vote sends strong message to Bank of NY Mellon, Wall Street: LA is not your ATM
The Los Angeles City Council voted 14-0 Wednesday to renegotiate or terminate without penalty a toxic swap deal the City entered into with two Wall Street banks, Bank of New York Mellon and Dexia. The measure, advanced by Fix LA, a coalition of clergy, unions and community groups aligned to restore city services and expand middle class jobs in the public sector, could save the City as much as $138 million. The International Business Times, noting the significance, reported that Los Angeles is now the largest city in the nation "to challenge ballooning Wall Street levies that accompany similar interest rate swap deals throughout the nation."
The motion further calls on the banks to return unfair profits and fees paid since 2008, estimated at more than $65 million to date. The deal costs taxpayers $4.9 million annually.
Los Angeles is now spending $290 million a year in financial fees or more than the entire city budget for maintaining its vast array of streets and highways. LA isn't the only sucker to enter into an interest rate swap in 2007 which was essentially a bet that interest rates would not fall below 2%. Then when the Federal Reserve, with its policy of QE, lowered interest rates to zero, LA and many other jurisdictions found themselves on the wrong end of a bet and were forced to shell out much more than they would have if they had kept the interest rate on the original loan.
The next sucker: Puerto Rico. Puerto Rico ran itself into debt and then tried to make up for it with interest rate swaps. Recent credit downgrades allowed Wall Street to demand hundreds of millions more in short-term lending fees, credit-default-swap termination fees, and higher interest rates. Between 2012 and 2014, Puerto Rico paid nearly $640 billion to terminate swaps in addition to $12 million annual swap payments. As a result Puerto Rico is in the same situation as Greece - borrowing money in order to make debt payments which is the same as borrowing money on one credit card to make the payments on another.
The Chicago Public School Teachers' Pension and Retirement Fund has brought suit against 10 of Wall Street's biggest banks including Goldman Sachs, JPMorgan Chase, Citigroup and Bank of America for colluding to prevent the trading of interest rate swaps with the result that it cost the Fund more money.
If these jurisdictions - whether they be cities, counties or states - formed public banks as the state of North Dakota did, there would be no outflow of cash to Wall Street. Money would stay at the local level and could be used to support local businesses and create jobs repairing and building infrastructure.
An Infrastructure Bank Would Mean Good Jobs in a Much Needed Enterprise
If the government creates money and puts it in an infrastructure bank, that money would be spent into the economy by creating jobs to build and repair infrastructure. Thus good jobs would be created at the low and middle parts of the economic spectrum. This money would have a multiplier effect as the job holders would spend their paychecks on the necessities and luxuries of life. American GDP is based on 70% consumer spending so that would go up. Thus the democratically elected government - not private banks - would be in charge of creating the money supply and it would be to the advantage of average workers not high end financiers. Since the big banks are the current recipients of the QE largesse, that money goes into the pockets of billionaires in various ways and drives wealth and income inequality.
Or the government, instead of the private Wall Street banks, could create money itself directly and inject it into the economy in a variety of ways as Abraham Lincoln did when he had the American government create and spend greenbacks into the economy. This money, therefore, does not create debt as money created by private banks and loaned into the economy does. It's a bottom up rather than a trickle down method. Problem is that most money created today does not trickle down into the real economy.
Australian blogger Prof. Bill Mitchell agrees that PQE is economically sound. But he says it should not be called “quantitative easing.” QE is just an asset swap – cash for federal securities or mortgage-backed securities on bank balance sheets. What Corbyn is proposing is actually Overt Money Financing (OMF) – injecting money directly into the economy.
Mitchell acknowledges that OMF is a taboo concept in mainstream economics. Allegedly, this is because it would lead to hyperinflation. But the real reasons, he says, are that:
It cuts out the private sector bond traders from their dose of corporate welfare which unlike other forms of welfare like sickness and unemployment benefits etc. has made the recipients rich in the extreme. . . .
It takes away the ‘debt monkey’ that is used to clobber governments that seek to run larger fiscal deficits.
So the government could just create money and inject it into the economy in one of two ways: directly to the people in the form of a basic guaranteed income or through an infrastructure bank that creates jobs. In the first instance money would be transferred directly to people to bolster consumption. In the second case jobs would be created that would get needed work done. Or a combination of both could be used.
A third way of reducing income inequality would be to redistribute money from the 1% to the 99% through the tax code. This is the method that Bernie Sanders advocates. Taxes on wealth and financial transactions would provide additional monies which could be transferred to the 99% through social programs such as Medicare-For-All, or it could be given directly in terms of a deposit to checking accounts as was done in the Economic Stimulus Act of 2008. Money was deducted from tax liabilities or deposited directly to American citizens.
The Concept of a Basic Guaranteed Annual Income
The concept of a Basic Income in the U.S. goes back to Thomas Paine, one of the driving forces for independence and reducing inequality during the American Revolution. More recently, it’s been supported by very non-liberal individuals like Fredrick Hayek, Milton Friedman, and Richard Nixon. This would eliminate poverty in one fell swoop. All the anti-poverty programs could be rolled into one with much fewer administrative costs. Just as Medicare-For-All would simplify and reduce medical costs, a basic guaranteed income would amount to Social-Security-For-All. The state of Alaska already has such a program called the Alaska Permanent Fund which hands out money to each resident on an annual basis. In 2015 each man, woman and child received $2,072.00. For a family of four that was a nice basic income of approximately $8000. Sweet!
In the Netherlands a number of cities are experimenting with a basic income after the city of Utrecht announced that it would give no-strings-attached money to some of its residents. Tilburg, a city of 200,000 inhabitants close to the border with Belgium, will follow Utrecht’s initiative, and the cities of Groningen, Maastricht, Gouda, Enschede, Nijmegen and Wageningen are also considering it. A recent study conducted in 18 European countries concluded that generous welfare benefits make people likely to want to work more, not less.
In Switzerland, the necessary 100,000 signatures have been obtained for holding a referendum on whether Swiss citizens should receive an unconditional basic income of €2,500 per month, independently of whether they are employed or not. Other countries such as Finland and Catalonia are also moving in the direction of a no-strings-attached guaranteed income. This would do more to reduce inequality and poverty than perhaps any other measure.
If Tilburg’s basic income project gets the green light from Netherland’s state secretary of social affairs, the town will provide an extra paycheck to a pilot group of 250 people starting in January 2016, Tillburg officials said. The city has not confirmed the amount of the stipend, but in Utrecht checks will range from around €900 ($1,000) for one adult to €1,300 ($1,450).
Although the classic basic income theory proposes universal payments across the population, the two Dutch experiments will only focus on residents who are already recipients of social assistance. Those in the program will be exempt from the severe job-seeking requirements and penalties in Dutch law.
Authorities aim to test how citizens react without that sword of Damocles over their heads. Will the money encourage them to find a job or will they sit on their couches comfortably?
A guaranteed income could be means tested. Why not? Rich people don't need an extra $1000. a month. It would reduce poverty, increase consumption and bolster GDP. Rich corporations would probably increase the price of staples as people had more money to buy them causing inflation. That's why the behemoth world wide franchise operations need to be broken up so they don't collude to raise prices on staples thus defeating the purpose of the basic income. With fiat money entering the real economy instead of the billionaire economy, inflation could become a concern.
Hyperinflation is always a concern when fiat money is created. When that money is spent by consumers, it will still wind up in the hands of a few major corporations, and that would be a problem. They could just keep raising prices. That's why breaking up those large behemoths by using the Sherman Anti-Trust Act is important. Money can also be pulled back by the government by taxation if inflation threatens to get out of hand.
As Ellen Brown says: "Thus there are many ways to recycle an issue of new money back to the government. The same money could be spent and collected back year after year, without creating price inflation or hyperinflating the money supply."
However, when fiat money ends up in the pockets of billionaires as has been the case with QE, inflation is not a concern because it doesn't enter the real economy and prices don't rise. Income inequality though becomes a major concern as does the influence of big money on the political system. Billionaire money has bought and paid for the political system through lobbying and campaign donations with the result that the US is effectively no longer a democracy but a plutocracy.
What’s really scary is the general acceptance of a status quo in which most people are getting poorer and poorer, even while recent studies demonstrate that so-called “trickle-down” economics actually means an upwards flow of income until it stagnates as hoarded wealth. This stymies wealth creation in the economy, as the Institute for Policy Studies concluded after using standard economic multiplier models to show that every extra dollar paid to low-wage workers adds about $1.21 to the US economy. If this dollar went to a high-wage worker it would add only 39 cents to GDP. In other words, if the $26.7 billion paid in bonuses to Wall Street punters in 2013 had gone to poor workers, GDP would have risen by some $32.3 billion. ...
One of the main advantages of a universal basic income is that it would free people from the tyranny of the job market in which they are mere commodities by guaranteeing the most basic human right of all, that of material existence.
With inequality increasing some way or ways must be found to redress the balance. The alternative is to wake up and find ourselves in a neo-feudal society controlled by a few behemoth corporations employing only a few high level people at good wages. The rest of the population would be employed in low level service type jobs and live in relative poverty. What money they had would be spent in the troughs of the giant corporations and end up in the pockets of the 1%. Even if the 99% were given money to spend, it would still end up there - in the pockets of a few. An infrastructure bank funded by government created fiat money would provide people with decent jobs in which workers could maintain a sense of dignity and improve the quality of the nation's infrastructure at the same time.
In addition recipients of a basic income should have to give something back in terms of creating a better life for poor people around the world. Instead of armies with guns and weapons which have cost trillions and produced mainly negative results, a Peace Army could help poor people around the globe attain at least a minimally acceptable lifestyle in terms of clean water and sanitation, adequate nutrition, energy and education.
Installing solar around the world will not only provide energy for people who don't have anything but the most primitive kind while cleaning up the environment at the same time. The commitment of rich nations to help poorer nations convert to renewable energy could be manifested by funding unemployed and underemployed Americans to help build such infrastructure around the world.
It's not good for people to be idle. If they have no other job, they should at least be required to perform community service. If they have another job so that the basic income is just a supplement, this would be the ideal situation.
Income inequality will only increase as long as Wall Street banks control the money creation process, and the rest of US citizens keep going into debt whether it be with mortgages, student loans, car loans or credit cards. Local jurisdictions should take back the money creation process from Wall Street by creating their own public banks. Then the people will have the say in who gets the QE.
The Pope is visiting the US this week to make the case that we should take climate change seriously and start doing something about it. He is really making the case that we should change our paradigm from one of individual self-fulfillment to one of "we're all in this together," from individual salvation to collective salvation of our earthly home. This has far reaching implications. We need to be concerned about what's happening to the earth as a whole, to humanity as a whole, and not just to our own family, town, state, country.
The Pope doesn't mince words. Far from being the conservative head of a 2000 year old bureaucracy, he is using his moral megaphone and authority to speak out on the major problems of our day - global warming and capitalism - and the two are interrelated. You can't have the entire sum of people on the planet involved with saving the planet from runaway climate change without getting involved with the collective plight of all those people in their daily lives. The Pope is putting the emphasis and focus on the plight of the poor, which is really what Jesus was all about.Finally.
How many look at the refugee crisis and compare it to Jesus' parable about the Good Samaritan? The phrase "Good Samaritan" means someone who helps a stranger, whether he or she be an "illegal immigrant," a refugee or whatever. We are all in this together; we are all human beings. We put the plight of the poor, the defenseless, the destitute before the worship of money. Capitalism turns that ethic around. Wall Street and its minions worship money.
Is Capitalism the Dung of the Devil? The Pope Says So
The Pope, himself, has labeled capitalism the "dung of the devil" since doing things naturally the capitalist way results in exploitation of the environment with a consequent worsening of the climate change situation. That's how profits are made. So the Pope is calling on us to stop being capitalists, to stop exploiting the environment for personal, selfish gain. The Pope blames "unbridled capitalism" for ruining the earth and immiserating the poor. Jim Wallis, founder of Sojourners said, "How we decide the morality, the integrity, the righteousness of an economy is not how the wealthiest do but how the poorest do." That is even more radical than communism or socialism.
The Pope has written, "Whatever is fragile, like the environment, is defenseless before the interests of a deified market, a market that does not take into account the fundamental rights of the poor and underprivileged." The capitalist economy is for the "best and the brightest," the entrepreneurs, the college graduates, those who start with nothing and make a billion dollars.
And devil take the hindermost, meaning those who aren't the best and the brightest, but the Pope, as did Jesus before him, speaks for them, those who are left behind by capitalism: the homeless, the mentally ill, those who cannot cope, those who aren't the sharpest blades in the drawer, in other words - the hindermost. Capitalism promotes the ethic of valuing the richest and the smartest, who are perfectly capable of fending for themselves. Is it any wonder that there is runaway wealth creation at the top of the social spectrum? A good thing? I don't think so.
Right wing pundits want us to admire and emulate the rich. They want us to be in favor of policies that promote the rich. We too can be rich some day if only we are willing to work hard. We can all aspire to be Donald Trump and fly around in a helicopter with our name emblazoned on the side. The Pope takes the opposite tack. We should be in favor of policies that help the poor and middle: the 99%.
... the Pope’s words are very important because he wields enormous moral authority. Would that the leading moral authorities from the world’s other major religions had the gumption to stand up and add their voices in the fight against climate change.
The Pope blames human greed for exploitation of the environment and an economic system that is geared to profit making rather than to rational development of natural resources which would benefit all mankind rather than just those at the top. The Pope’s 184 page encyclical is a radical statement: a condemnation of business as usual and a call for a restructuring our political and economic priorities.
To Save the Planet We Must Leave Fossil Fuels in the Ground
To be absolutely clear, we need to leave fossil fuels in the ground and convert to renewables as quickly as possible, not in a leisurely fashion. But this mindset obviously has not sunk in yet as corporations and countries seek to exploit the latest opportunity which has been provided by climate change itself: drilling for oil in the Arctic region at the top of the world. Global warming has proceeded twice as fast there as anywhere else with the result that the ice cap is melting, the Northwest passage is opening and drilling opportunities are presenting themselves. In addition shipping companies are lusting after the opportunity to shave miles off of shipping routes. Has anyone stopped to think about what an Exxon Valdez magnitude oil spill would mean in that pristine environment?
Whole communities in the Arctic are going to have to leave their traditional way of life and move elsewhere or be wiped out. The town of Kivalina, Alaska may cease to exist because the sea ice is melting making it too dangerous to hunt the whales which are their traditional source of food. In addition waves now wash across their town because there is no barrier protecting them any more. "Global warming has caused us so much problems," said Joseph Swan, Sr., a Kivalina elder. "The ice does not freeze like it used to. It used to be like 10 to 8 feet thick, way out in the ocean."
Meanwhile, corporations and countries are forging ahead to exploit Arctic resources seemingly totally oblivious to the need to leave the fossil fuels and the profits in the ground. The planet still holds vast reserves of fossil fuel that could be extracted economically. However, according to a new analysis, a third of the world’s oil, half of its gas, and 80 percent of its coal reserves, worth trillions of dollars, must remain unused if we are to have a good chance of avoiding potentially devastating climate change.
That means that a whole lot of people are going to have to squelch their primal urge to get rich and realize the capitalist and American dream of creating wealth for themselves. Leaving the exploitable profits behind is the anti-capitalist mindset that needs to be adopted if humanity is to survive. The lust for profit has characterized capitalist mentalities from time immemorial. Just one example: the "conquering" of the New World in the Age of Exploration in the 16th century. The explorers were after gold and other resources, and they didn't hesitate to kill indigenous people to get them.
How Do We Change the Capitalist Mentality When That is Essentially the American Dream?
So how to change that mentality and get people to cooperate and distribute the earth's resources more equitably, instead of seeking to gain selfishly, in order to save the planet and humanity as a whole? Will the US government's "slow as you go" reductions, which seek to reduce carbon emissions from US power plants, targeting a 32 percent drop from 2005 levels by 2030, be sufficient? Will the "cap and trade" approach which lets corporations continue to pollute if they pay other corporations for "credits" work? Will selfish capitalistic appeals to selfish interests work?
Naomi Klein doesn't think so. The author of This Changes Everything: Capitalism vs the Climate, and one of the Pope's advisers, despite being a secular feminist, thinks that we have to change our selfish, capitalistic mentality if the earth is to remain habitable for human beings. Pope Francis agrees. The Dalai Lama agrees. Who doesn't agree? Capitalists and Republicans who want to maintain the "traditional way of American life." We should all aspire to get as rich as Donald Trump. You see America is based on capitalistic exploitation. It's traditional. If you changed that, America wouldn't be America any more.
So what do we need in order for Americans to listen and take this thing seriously? An American Pope? Someone in the position of authority to say we need to cooperate to save the West from burning up and consuming more and more financial resources just to fight fires? How much money will go to recover from Hurricanes like Katrina and Sandy? Do we need to convert the trillion dollars spent annually on the military-industrial complex to fighting fires?
This is money that needs to go to the prevention of these climate disasters in the first place which means money that needs to go to converting to renewables post haste not by 2030 or 2050. At the rate that climate disasters and extreme weather are manifesting themselves, major disasters requiring major amounts of money will be happening by 2030. Climate change refugees will be migrating from all over the world. The current European refugee crisis is just a harbinger of things to come. Wars will be fought over resources.
Who's going to pay for fighting wildfires - private corporations? The fossil fuel industry? I don't think so. All of us pay through taxes. Would you rather pay taxes to fight fires and house refugees or would you rather pay taxes to convert to renewables and leave fossil fuels in the ground? Of course there's another way to generate the money to convert to renewables at a faster rate.
It's the way Abraham Lincoln used to fight the Civil War, build the transcontinental railroad and construct the land grant colleges. He printed greenbacks, the 19th century version of quantitative easingthat bypassed Wall Street and benefited all of America not just the rich. Today the government could just print the money with a few keystrokes on a computer, and, instead of giving it to Wall Street banks as it has done with its quantitative easing policy, it could just use it to create jobs converting to renewable energy at a faster rate. All dollars are fiat money meaning they aren't backed by gold or anything else. It's just that the current US policy of printing fiat money gives that money to the rich. It could just as well print fiat money and give it to the poor and middle instead: quantitative easing for the 99% instead of for the 1%.
Greenbacks could be printed again and used to put people to work converting our power plants to renewable solar on a massive scale. Subsidies could be given to get fossil fuel burning cars off the road and get people into electric vehicles in the same way that Obama initiated the "cash for clunkers" program. Well now, every gas burning internal combustion engine is a clunker that needs to come off the road. The government could make this happen if people were subsidized to the necessary extent. Electric vehicle production plants would be humming putting people back to work making good wages.
Caring More for the Earth and One Another Than Caring for Money
We could live in a country powered entirely by renewable energy, woven together by accessible public transit, in which the opportunities of this transition are designed to eliminate racial and gender inequality. Caring for one another and caring for the planet could be the economy’s fastest growing sectors. Many more people could have higher wage jobs with fewer work hours, leaving us ample time to enjoy our loved ones and flourish in our communities.
Sound good? Bernie Sanders is calling for much the same thing. Of course this whole Ronald Reagan, Horatio Alger, rags-to-riches American dream of starting with nothing and becoming a billionaire will have to be seen for the sham that it is. None of these high tech billionaires, not Elon Musk, not Richard Branson, not Bill Gates, not Irwin Jacobs are going to come up with a technological solution that is magically going to "fix" the environment while keeping capitalism in place. Capitalism was never benign. And technology can be part of the solution, but it can't solve the inhumane basis of capitalism because it is part and parcel of it.
And what Bernie is talking about: if medicare-for-all, free community college, a financial transaction tax, raising taxes on the rich to where they were under the Republican Eisenhauer administration, if these measures are socialism, then count me in.
Francisco Pizarro conquered Peru in order to steal its gold from the Incan empire. He captured the Incan chief, Atahuelpa, and demanded a ranson of a roomful of gold. After taking the gold he killed Atahuelpa anyway. This is the legacy of capitalism. Regarding money more than human lives. The veritable worship of money for money's sake. This is the Wall Street mentality. Who cares about the earth? Sissies that's who. Real men are conquistadors. They conquer. All is fair in love and war. I guess that means that rape is fair because that happens in love and war.
Last year, 2014, was the hottest on earth since record-keeping began in 1880 underscoring warnings about the risks of runaway greenhouse gas emissions and undermining claims by climate change contrarians that global warming had somehow stopped.
Extreme heat blanketed Alaska and much of the western United States last year. Records were set across large areas of every inhabited continent. And the ocean surface was unusually warm virtually everywhere except near Antarctica providing the energy that fueled damaging Pacific storms.
But don't look over here. Keep you eyes on the antics of Donald Trump who wants to build a wall along the Mexican border. Note to Trump: with regard to immigration, you haven't seen anything yet. You could follow Hungary and build a wall, but what is the world going to do with all the refugees otherwise known as illegal immigrants - put them in concentration camps? Climate change refugees are already on the move. This is only the beginning. All the capitalists and billionaires in the world cannot solve this problem within the constraints of capitalism and American fundamentalism.
Some hopeful signs: in July 2015 anti-fossil fuel protests swept Vermont and Maine. The actions, along with others across the United States and Canada, were staged in remembrance of the Lac-Mégantic rail disaster on July 6, 2013, when a 74-car freight train carrying crude oil derailed and exploded in Lac-Mégantic, Quebec, killing 47 people and destroying much of the town. "Fossil fuels are harmful and violent to communities along every point of production, from extraction to combustion," said Meaghan LaSala, a member of SEEDs for Justice in Maine. "We’re here to say that we’re not going to let the oil be transported by train along Lake Champlain any longer."
I will close with a quote from my collaborator, Frank Thomas, whose erudition on this subject is nonpareil:
"The risks to Mother Earth are simply too great to gamble on a "life as usual" acceptance of a potentially massive ecological and human extermination event – especially knowing the speed and scale of the CO2 and CH4 pollution trend line we are now on. Placing all bets and blame on cycles and natural variability for the obvious human disproportionate disturbance of nature’s environmental balance on the only planet known to harbor human life … is a bet we should all pass on for the sake of our children’s children and their children’s children."
Since 1997, San Diego County has required all families applying for California's version of welfare called CalWORKs to submit to warrantless, suspicionless, unannounced home searches and interrogations by District Attorney investigators. As of June 2013 about 150,000 families, or about 9,300 families each year, have been subject to these searches. This policy, called Project 100% or P100, diverts money away from the poor and has not been shown to be effective at detecting or preventing fraud. San Diego is the only place in the whole nation which has such an intrusive, untargeted policy making it America's finest city - NOT - for the poor and vulnerable. These searches are a violation of the Fourth Amendment to the Constitution which forbids "unreasonable searches" of peoples' homes.
Money to fund the DA office's P100 search program is money taken away from the CalWORKs program which could have gone to help needy families. In fact almost $2 million per year could instead be used to hire 42 new welfare-to-work employment counselors. Not only are blanket home searches ineffective, they are harmful to children and parents in crisis. Simply for requesting government aid for which they are potentially eligible, families are forced to endure the frightening and degrading intrusion into the private spaces of their homes by law enforcement officials.
People signing up for welfare have to agree to these unscheduled searches, and make themselves available at all times during the day since, if they're not home when the inspector arrives at the door, they get turned down for welfare benefits. When the inspector comes, she must invite him in or forego benefits. Investigators for the program - not social workers mind you, but accusatory and sometimes rude investigators from the DA's office - pay over two thousand unannounced visits a month, taking note if they find a man's name on a prescription bottle in the medicine cabinet or boxer shorts in a sock drawer. If the inspector finds a pair of work boots in her closet, he will accuse her of harboring a man in her home and she will lose benefits. If there are two toothbrushes in her toothbrush holder, she will lose benefits. Investigators have even threatened to take the applicant's children away if they find any evidence of welfare fraud. These situations have actually happened to real people.
One inspector picked up a Victoria's Secrets bra with the erasure tip of a pencil and waved it in her face claiming that, if she were really poor, she wouldn't have such an expensive bra in her dresser. Who was she trying to impress - a boyfriend perhaps? The same technique was used on a pair of her sexy panties. If she didn't have a boyfriend, what would she have needed those for? Anything that would tip off the inspector that she may have lied on her application is grounds for denying her a few hundred measly dollars a month. Authorities are looking for evidence that the applicant has a secret job or a boyfriend who could pay bills.
The general idea is that being really poor means you should naturally give up any ideas you might have about privacy or dignity. If you are poor, you should have to give up your Constitutional rights such as the Fourth Amendment. You are not afforded the benefit of being protected from unreasonable searches. Welfare fraud is subject to harsh penalties while bankster fraud goes unpunished. No bankster would have to undergo a peremptory search of his premises despite the massive frauds involving billions of dollars that some of them have committed.
And what about the Balboa Park Centennial Inc (BPCI) that spent almost $3 million of taxpayer money with no results whatsoever. Are they being investigated for fraud? Hell, no. They are part of San Diego's white collar, white faced elite. They can waste any amount of money whatsoever and the DA's office will look the other way. Only City Councilman David Alvarez is questioning where millions of taxpayer dollars meant for the Balboa Park Centennial Celebration have gone. The insiders on the BPCI paid themselves handsomely, and they have taken the money with impunity, with no obligation to pay it back despite their pathetic results. No one is accusing them of fraud. No one is carrying out unreasonable searches and seizures at any of their homes. There are two standards of justice - one for the rich who steal millions and one for the poor who may, if they're lucky, get a few measly bucks to pay their electric and water bills.
In Matt Taibbi's book, The Divide, he chronicles the experiences of Maria Espinosa, Karen Bjorland, Markisha and the couple, Diego and Anna [more about them next time], as they were hassled by the P100 program in San Diego:
Maria Espinosa was a pioneer. The sifting-through-the-dresser-drawer search she experienced in the early years of the George H. W. Bush presidency was an informal precursor to a [program that] would become formalized in her new home county of San Diego. In San Diego County ... the state preemptively searches for evidence of fraud in the homes of the tens of thousands of people who have applied and are applying for cash assistance via CalWORKs, the California version of Temporary Assistance for Needy Families or TANF - what we used to call welfare.
Today, every single person who applies for aid and is accepted has to be preemptively searched. These people are almost all non-white. And while in L.A. in the late 1980s the person visiting the home of someone like Maria Espinosa was just a social worker from the local welfare office, the state has since upgraded. In San Diego now it's a law enforcement official, a representative of the district attorney's office, who comes in to look through your underwear drawer. The city has a team of investigators whose sole purpose is to conduct the searches for this program ... .
One hundred percent compliance, that's the idea. No outliers, no excuses. Fraud must not be tolerated, not even the smallest kind. So the program must be large, and appropriate resources must naturally be devoted to crime detection. In just one year, 2011, the county conducted an astonishing 26,000 home searches.
P100 generates, by the thousand, stories that sound like testimonials culled from refugees of some distant, low-rent, third-world despotate. The stories are terrible, humiliating, abusive.
On the other hand, Taibbi continues:
... while the San Diego District Attorney's Office spent more than a decade sifting through thousands of dresser drawers and bringing felony cases all the way to court for frauds as small as four hundred dollars, executives in the same general area of Southern California, at companies like Countrywide and Long Beach Mortgage, were pioneering the mass fraud scheme that involved the sales of toxic mortgage-backed securities.
... Not one home was searched. No banker ever had someone pick up his underwear by a pencil and wave it in his face.
Twenty-six billion dollars of fraud: no felony cases. But when the stakes are in the hundreds of dollars, we kick in 26,000 doors a year in just [San Diego] county.
Finally, six women who had experienced these travesties got together and with the help of the ACLU filed a lawsuit. In Sanchez v, the County of San Diego, they argued before the United States Court of Appeals, Ninth Circuit, that these intrusive home searches were a violation of their Fourth Amendmant rights. They lost. The argument that prevailed was basically that, by virtue of their applying for taxpayer supported aid, the state's interest took precedence over their right not to have their homes peremptorily searched, that they had forfeited that portion of their Constituional rights.
However the minority opinion of the Court was quite striking. They wrote the following:
[A visit from a social worker] is a far cry from the program carried out by the County of San Diego, whose Project 100% home visits entail a law enforcement agent - trained not to give advice to welfare applicants - walking through the applicant's home in search of physical evidence of ineligibility that could lead to criminal prosecution either for welfare fraud or other crimes unrelated to the welfare application. In light of the significant differences in scope and implementation between the home visits at issue in Wyman [a precedent case] and those challenged here, I disagree with the majority's conclusion that the home visits do not rise to the level of a Fourth Amendment search. Nor do I agree with the majority's improper discounting of the Appellants' heightened privacy interest in their home. In the majority's view, even if the home visit is a search, it is reasonable because the Appellants' relationship with the state as potential welfare recipients “reduce[s] the expectation of privacy even within the sanctity of the home.” ... By suggesting that welfare applicants may be treated the same as convicted criminals, the majority ignores the limits - implicit and explicit - in [another precedent case].
Courts have been chipping away at the Constitutional rights of the poor and people of color for many years while giving a free pass to rich, white collar and white faced criminals. The County of San Diego with its P100 program is the worst offender along these lines in the entire US. If you're black or brown and live in the ghetto, you don't get protection against illegal searches and seizures. Whether it's possession of microscopic amounts of drugs or accusations of welfare fraud, that's just the way it is.
Sadly, those who "occupied" Wall Street and city squares across the country in 2011, were right: All of the income gains have concentrated at the top, while the rest of us saw a deterioration or stagnation in our wages and income.Food is distributed by a food bank in Deposit, New York. The converted beverage truck delivers fresh produce, dairy products and other grocery items to people in need. (Photograph: Spencer Platt/Getty Images)
We can’t seem to stop having record numbers of people living in poverty in the United States. The richest continue to get richer and the rest of us continue to see our incomes get lower and lower.
New Census Bureau figures released Wednesday, show that 15 percent of the U.S. population lived in poverty in 2011. Over 46 million Americans lived at or below the poverty threshold of a household income of $23,201 per year for a family of four. One in five of our children live in poverty and over one-third of black and Latino children are struggling through impoverishment.
In 2011, we saw the first one-year increase in income inequality [L1] since 1993. The top 5% gained 5.3% in income in 2011 over 2010. The lowest quintile saw little change, but the second-lowest, middle, and fourth-lowest quintiles all experienced a decline in income over the year. Sadly, those who “occupied” Wall Street and city squares across the country in 2011, were right: All of the income gains have concentrated at the top, while the rest of us saw a deterioration or stagnation in our wages and income.
This data also confirms that safety programs work. According to the Census Bureau, unemployment benefits kept 2.3 million of us out of poverty in 2011, Social Security benefits kept over 21 million people out of poverty and, if we count the nutrition aid of the Food Stamps program as income, it would show that 3.9 million people were lifted above the poverty line in 2011.
Increasingly, all of the boost in wealth is concentrated at the top and record numbers of poverty persist, while the middle and lower-economic classes are losing ground. Now is not the time to lower taxes on the wealthiest by cutting proven, effective anti-poverty measures such as Unemployment Insurance, Supplemental Nutrition Assistance, the Earned Income Tax Credit, Social Security, and new coverage benefits gained from the health care reform law.
The rich shouldn’t be rewarded while the rest of struggle.
If you’ve never heard of state-funded General Assistance (GA) programs, you’re hardly alone. A “safety net of last resort” for very poor people—often childless adults—who don’t qualify for other forms of public assistance, there aren’t too many of them still in existence. Not too long ago most states offered them, but in recent decades they have been eliminated or severely restricted. Now, only thirty states maintain GA programs, and the benefit level for most falls below one-quarter of the poverty line, or less than $2,750 per year.
Pennsylvania Gov. Tom Corbett unveils his 2012-13 state budget proposal before the Pennsylvania House Chamber Tuesday, Feb. 7 2012 in Harrisburg, PA. (AP Photo/Bradley C Bower)
In a recent report for the Center on Budget and Policy Priorities (CBPP), Liz Schott and Clare Cho call this trend “especially troubling” since “a growing number of jobless and elderly” are exhausting their unemployment benefits and continue to be unable to find work.
“Poor, childless adults are becoming even more vulnerable to severe hardship than in the past and are doing so in greater numbers,” write the authors.
One state that still maintains a GA program is Pennsylvania where 68,000 people—or just about one in every 200 residents—receive about $205 per month (five counties offer a little more, twenty-eight counties a little less). But when Republican Governor Tom Corbett released his budget in February he proposed eliminating the program entirely as of July 1. A final budget must be passed and signed by that date, and with Republican majorities in the House and Senate, legal aid lawyer Michael Froehlich of Community Legal Services in Philadelphia says, “It’s not looking good.”
The prospect of the sudden elimination of the safety net of last resort is especially troubling when one considers who is eligible for it: disabled or sick adults without children; domestic violence survivors, many of whom have just fled abusers (lifetime benefit capped at nine months); adults participating in alcohol and other drug treatment programs (also capped at nine months); adults caring for someone sick or disabled, or an unrelated child; and children living with an unrelated adult. In all, over 90 percent of recipients are temporarily or permanently disabled.
“Only twelve states have GA programs for employable people, and Pennsylvania isn’t one of them,” says Schott. “It just serves unemployable people or a small number of persons for whom work is not appropriate, most of whom are children.”
The GA program also serves as a sort of bridge loan while people wait for the Social Security Administration (SSA) to consider a disability claim. Froehlich says that process may take eighteen to twenty-four months, and upon approval of the claim the SSA reimburses the state for the GA benefits it paid during the wait.
“Individuals with pending disability claims use their General Assistance as a bridge that keeps them alive while their claim is pending,” says Froehlich.
Froehlich and Community Legal Services are part of PA Cares for All, a coalition of more than 100 organizations that are trying to save the program. They press their case on both moral and economic grounds. The moral argument is pretty clear, and the coalition lays it out in a letter to state legislators: “These cuts will eliminate a lifeline for people in desperate crisis. This is not how Pennsylvanians want our government to treat abused women, people with disabilities, orphaned children, and people struggling to overcome drug addictions.”
But it’s the economic case that is perhaps more convincing in these times of budget cuts that routinely target the most vulnerable and least politically powerful people. The $205 per month enables many people to rent a room, pay for transportation to needed appointments, cover co-pays or escape abuse.
“If you eliminate the only source of income for these 68,000 Pennsylvanians overnight—folks who’ve already been determined by their doctors to be temporarily unable to work—it’s not like they are just going to disappear,” says Froehlich. “They are going to show up in the shelter system. Worst case scenario they’re going to show up in the criminal justice system.”
According to the coalition, GA’s $205 monthly payment is a bargain compared to the monthly costs that would be incurred by the state if people are left destitute: homeless shelters run $1,050 per month, per person; foster care $600 to $1,800; incarceration $2,750; and state psychiatric hospitals average $20,584.
“Why are we ditching a system that keeps people off the street and housed in favor of a shelter system that costs five times that?” asks Froehlich.
One current GA recipient, 62-year-old “Suzy,” has been receiving assistance for two years while waiting on the SSA to process her application for disability benefits. She lost her home three years ago after working as a college professor, in catering and food service, and as a tutor, and then caring for her two elderly parents until their deaths.
“I’ve had a bit of an eclectic career, but it has suited me,” she says.
After losing her home Suzy found herself on the streets—“a place I never imagined I would be.” The GA assistance enables her to rent a room in transitional housing. Even though her disability prevents her from working, she’s interviewed for jobs anyway (to no avail) because she’s so desperate for more money. She says the prospect of losing this last bit of assistance is overwhelming.
“It’s too enormous and it’s to the point where I almost go into a willful forgetfulness because I really don’t know that I can deal with it,” she says. “At this point I don’t even have money to buy a toothbrush or a toiletry, and I’m not talking fancy, the dollar store will do.”
Suzy says that a friend recently asked her what she would do if her assistance is cutoff on July 1? She replied, “Jump off a roof.” The friend told her not to do that.
“And I said, ‘You know something? I’m beyond at this point—I’m too tired. I’m beyond saying, Oh no, I won’t do that anymore.’ I just don’t know, because it leaves you with nothing and a crushing burden,” she says.
Suzy did manage to write a letter to her legislators lobbying them to vote against cutting the program, and Froehlich is hopeful that more Pennsylvanians will join in that effort and also participate in a lobbying day on May 7 as they become aware of the issue. But it’s a tough road ahead. The governor’s budget proposes significant cuts to K-12 education, higher education and programs for homelessness, mental health and other disability services. Without additional pressure, the GA program might be last in line for restored funding if any of the governor’s cuts are reversed.
Froehlich says educators, colleges, universities and human services people are all doing an excellent job turning their people out to lobby.
“But it’s very difficult for somebody who is really at the end of their rope to get on a bus, go to Harrisburg, and meet with their legislators,” he says.
What frustrates Froehlich and the coalition most of all is that none of these cuts would be necessary—to any of the programs—if the Legislature would take up the revenue side of the equation. For starters, a planned phased reduction of a corporate “capital stock and franchise tax” beginning this year could be delayed; and corporate loopholes could be closed—like “the Delaware loophole,” which allows three out of four companies in Pennsylvania to avoid paying state taxes by claiming a Delaware address. These loopholes represent billions in potential revenues, while the state’s Department of Public Welfare estimates that eliminating the GA program will save just $150 million per year.
“I’m bewildered by these people, I really, really am,” says Suzy. “They are just throwing people away. I guess it’s their solution for the poor, if everybody just dies then that pesky, pesky, little problem will go away.”
Read the full article with additional resources at The Nation.
Greg Kaufmann is a Nation contributor. His column, This Week in Poverty, posts every Friday morning. His work has also appeared on Common Dreams, AlterNet, Tikkun.org, NPR.org, CBS News.com, and MichaelMoore.com. Constructive comments and ideas will also be read at [email protected]. Please follow him on Twitter as well.
Part 1 of this series covering the Reagan years can be found here. This post relies on data from the following sources: Federal Income Tax Rates History, Social Security and MedicareTax Rates, Historical Capital Gains and Taxes and Party Control of Congress and the Presidency. In the first part we pointed out that Reagan under the tutelage of Ayn Rand lover Alan Greenspan flattened the tax code to just two rates: 15% for anyone making less than $56,427. and 28% for anyone making more than that amount. This effectively raised taxes on the poor and lowered them on the rich compared to the day Reagan entered office when the tax rate was zero on the poor and 70% on the rich. Reagan and Greenspan also drastically raised Medicare and Social Security (payroll) taxes which affect mainly the poor and middle class. Bush Sr served from 1989 till 1992 when Clinton took over. In 1991 under a Democratic Congress, Bush Sr raised taxes despite his pledge not to. Remember his campaign promise: "Read my lips. No new taxes." However, despite the big brou ha ha, Bush did not raise income taxes on the poor and middle class; he only raised them on the rich. You would think that, if the middle class and poor were paying attention, they would have been satisfied with this development and reelected Bush in 1992. But the Republicans and right wing media talking heads raised such a hue and cry, convincing voters that Bush Sr had raised taxes on all people and not just the top few percent, that Bush was defeated and Clinton elected. What Bush did was to add a third tax bracket of 31% for incomes over $135,336 while leaving unchanged the two lower tax brackets. Bush "unflattened" the tax code slightly which should have raised a cheer among the middle class, but it didn't due to the fact that they were convinced by the right wing punditry that Bush raised taxes period, end of story. They didn't distinguish whom Bush raised taxes on. They only paid attention long enough to understand that Bush raised taxes.
Bush Sr also raised FICA and SECA (Social Security and Medicare) taxes. These went from 7.150% for employees and employers in 1987 to 7.51 in 1988 and 1999. The corresponding rates for the self-employed went from 14.3% in 1987 to 15.02% in 1988 and 1989. So what Bush gave with one hand to the poor and middle class in the form of not raising their income taxes, he took away with the other by raising FICA and SECA taxes which affect mainly the poor and middle class. The net effect was to make the total tax burden on the middle class as great or greater than the tax burden on the rich since the rich pay little FICA and SECA tax compared to their total income. Bush Sr and the Republicans were at it again in 1990, a year in which they raised FICA and SECA taxes to 7.65% for employees and employers and 15.3% for self-employed where they have remained to this day. So Bush Sr was not such a traitor to his class as one might think from just considering the income tax structure alone. The net effect was that he raised taxes on the poor and middle class much more than he raised them on the rich.
Bush Sr had a Democrat controlled Congress during his four year term and they managed to raise the capital gains tax from 28% to 28.93% in 1991, a piddling amount compared to the huge decreases which were to come later during the Bush Jr administration. So the rich had their capital gains taxes raised for the last year of the Bush Sr administration through no fault of Bush's own. It was the Democrats who pushed this tax increase through.
Clinton took over in 1993 and with a Democratic Congress unflattened the tax code even more adding two tax brackets at the high end. The following is the tax table for married couples filing jointly, inflation adjusted.
Despite the fact that Clinton raised only taxes on the rich and kept them the same on the poor and middle class, a fact that the vast majority of voters should have been happy with, Republicans managed to tag Clinton and the Democrats with the "tax and spend" and "big government" labels. FICA and SECA taxes remained the same under Clinton.
In 1994, half way into Clinton's first term, Republicans took over control of Congress. Despite that fact the income tax code remained substantially unchanged for the rest of Clinton's Presidency with the result that, by the time Clinton left office in 2000, there was a budget surplus and the nation was on track to eliminate the national debt entirely.
Capital gains taxes were a different story. They went from 28.93% in 1991 to 29.19% in 1993. The poor and middle class swallowed the Republican hogwash about Clinton raising their taxes and elected a Republican Congress in 1994. The Republican Congress slashed the capital gains tax all the way back to 21.19% in 1997 where it stayed for the remainder of the Clinton Presidency. So despite the fact that during the Clinton years income taxes were raised on the rich, capital gains taxes which affect primarily the rich were substantially reduced. The net result was that taxes on the rich were effectively lowered and despite that fact Clinton was able to run budget surpluses during his last few years in office. Go figure!
George W Bush was elected in 2000. Then the tax cutting which led to huge deficits began - with a vengeance. "You know how to spend your own money better than the government does." The Republicans were great at formulating slogans and defining the situation. What were the Democrats supposed to say to that: "The government knows better how to spend your money than you do"? Consequently, in 2001 the top tax rate was lowered by .5% from 39.6% to 39.1%. The middle three tax rates were lowered .1%, and the tax rate for the poor, the lowest tax bracket was not lowered at all. The net effect was to give the rich a big tax cut, the middle class a modest tax cut and the poor no tax cut. Here is the tax table:
In 2002 another half a percent was cut for the four highest tax brackets and in addition a new bracket was added at the bottom thus reducing taxes on the poor to 10% up till an income of $14,967. The 15% tax bracket was the only one not cut thus making a mockery out of tax cuts for the middle class. Here is the tax table for 2002:
Table 3 - 2002 - Married Filing Jointly
Marginal Tax Brackets Tax Rate Over But Not Over
10.0% $0 $14,967
15.0% $14,967 $58,246
27.0% $58,246 $140,752
30.0% $140,752 $214,464
35.0% $214,464 $382,967
38.6% $382,967
In 2003 there was another tax cut ... of course ... but only for the rich and upper middle class, not for the middle class or the poor!! 3.6% was cut off the top tax rate! 2% was cut from the next three tax rates leaving the bottom two tax rates all the way up to an income of $69,265 virtually untouched!! All the while the right wing propaganda machine was out to convince everyone that Bush Jr was cutting taxes for E..V..E..R..Y..B..O..D..Y. Here are the sad results:
Table 4 - 2003 - Married Filing Jointly
Marginal Tax Brackets Tax Rate Over But Not Over
10.0% $0 $17,072
15.0% $17,072 $69,265
25.0% $69,265 $139,810
28.0% $139,810 $213,039
33.0% $213,039 $380,409
35.0% $380,409
After 2003 the income tax cutting frenzy for the rich was over at least for the remaining years of the Bush Jr administration. The 2003 tax table was for all intents and purposes the tax structure that President Obama inherited when he became President in 2009. The same tax structure remains in effect till this day, Obama having failed to end the Bush tax cuts due to Republican intransigence and obstructionism and to raise the top rate back to the 39.5% that it was in the last years of the Clinton administration. As a consequence structural budget deficits continue to add immense sums to the national debt, and there is Republican pressure to cut spending on social programs like Social Security, Medicaid and Medicare but, of course, they don't want to reduce spending on the military. Obama may force their hand by ending the wars in Iraq and Afghanistan and talking up his desire on the campaign stump to spend half the savings on deficit reduction and half on rebuilding infrastructure, but he will need a Democrat controlled Congress to do anything of the sort.
In addition to the Bush Jr income tax cuts for the rich, he also cut capital gains taxes substantially during his term in office, an even greater boon to the rich than the income tax cuts. Capital gains taxes went from 21.19% in 2000 to 21.17% in 2001 and 21.16% in 2002. Then in 2003 they went all the way down to 16.05%. That was followed by a drop to 15.07% in 2006 and further down to 15.35% in 2008 where they remain today. The combined income and capital gains tax cuts which benefitted primarily the rich produced disastrous budget deficits, and, since structurally the Bush tax cuts remain in effect, the Obama administration is forced to run huge budget deficits which Republicans disingenuously blame him for although they refuse to raise taxes on the rich or let the Bush tax cuts expire which would ameliorate the situation.
Raising the top income tax rate back to 39.5% and the capital gains tax back to 28.93% (an almost doubling of capital gains tax) where they were under the Clinton administration would do a huge amount to eliminate the budget deficits that Obama is unfairly being tagged with. Adding more tax brackets for incomes above $382,967 where the highest rate now kicks in would also provide even more desperately needed revenue. Today when the Fortune 400 is composed exclusively of billionaires, tax brackets in the millions and billions of dollars are appropriate and only fair. Obama has presented this rather cleverly as the Buffet rule: a boss shouldn't be effectively taxed less than his secretary. Today most billionaires pay an effective tax rate around 15% since most of their income is composed of capital gains. The only way to implement the Buffet rule is to raise the capital gains tax since the income tax no matter how high it becomes for millionaires and billionaires will hardly affect them. In addition a financial transaction tax could raise as much as $100-$200 billion a year.
LINDSTROM, Minn. — Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.
He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.
Yet this year, as in each of the past three years, Mr. Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned-income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.
There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Mr. Gulbranson and many other residents who describe themselves as self-sufficient members of the American middle class and as opponents of government largess are drawing more deeply on that government with each passing year.
Dozens of benefits programs provided an average of $6,583 for each man, woman and child in the county in 2009, a 69 percent increase from 2000 after adjusting for inflation. In Chisago, and across the nation, the government now provides almost $1 in benefits for every $4 in other income.
Older people get most of the benefits, primarily through Social Security and Medicare, but aid for the rest of the population has increased about as quickly through programs for the disabled, the unemployed, veterans and children.
The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.
And as more middle-class families like the Gulbransons land in the safety net in Chisago and similar communities, anger at the government has increased alongside. Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it and resent the government for providing it. They say they want less help for themselves; less help in caring for relatives; less assistance when they reach old age.
The expansion of government benefits has become an issue in the presidential campaign. Rick Santorum, who won 57 percent of the vote in Chisago County in the Republican presidential caucuses last week, has warned of “the narcotic of government dependency.” Newt Gingrich has compared the safety net to a spider web. Mitt Romney has said the nation must choose between an “entitlement society” and an “opportunity society.” All the candidates, including Ron Paul, have promised to cut spending and further reduce taxes.
The problem by now is familiar to most. Politicians have expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and mushrooming debt. In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.
The recent recession increased dependence on government, and stronger economic growth would reduce demand for programs like unemployment benefits. But the long-term trend is clear. Over the next 25 years, as the population ages and medical costs climb, the budget office projects that benefits programs will grow faster than any other part of government, driving the federal debt to dangerous heights.
Americans are divided about the way forward. Seventy percent of respondents to a recent New York Times poll said the government should raise taxes. Fifty-six percent supported cuts in Medicare and Social Security. Forty-four percent favored both.
Support for spending cuts runs strong in Chisago, where anger at the government helped fuel Mr. Cravaack’s upset victory in 2010 over James L. Oberstar, the Democrat who had represented northeast Minnesota for 36 years.
“Spending like this is simply unsustainable, and it’s time to cut up Washington, D.C.’s credit card,” Mr. Cravaack said in a February speech to the Hibbing Area Chamber of Commerce. “It may hurt now, but it will be absolutely deadly for the next generation — that’s our children and our grandchildren.”
But the reality of life here is that Mr. Gulbranson and many of his neighbors continue to take as much help from the government as they can get. When pressed to choose between paying more and taking less, many people interviewed here hemmed and hawed and said they could not decide. Some were reduced to tears. It is much easier to promise future restraint than to deny present needs.
“How do you tell someone that you deserve to have heart surgery and you can’t?” Mr. Gulbranson said.
He paused.
“You have to help and have compassion as a people, because otherwise you have no society, but financially you can’t destroy yourself. And that is what we’re doing.”
He paused again, unable to resolve the dilemma.
“I feel bad for my children.”
Middle-Class Blues
Mr. Gulbranson has tried several ways to make a living in the storefront he bought from his father in 1979. He ran a gift shop, then shifted to selling jewelry. Nine years ago, he moved the gold scales to the back and bought equipment for screen-printing clothing. Through it all, he has never made more than about $46,000 in a year.
Meanwhile, the cost of life — and of raising five children — has climbed inexorably.
“I used to go out and try to have a meal at Perkins, which is a restaurant here, and get out of the store with $5,” Mr. Gulbranson said. “And now it’s probably up to $10.”
In recent years he has earned so little that he did not pay federal income taxes, although he still paid thousands of dollars toward Medicare and Social Security. The earned-income tax credit is intended to offset those payroll taxes, to encourage people with lower-paying jobs to remain in the work force.
Mr. Gulbranson said the money covered the fees for his children’s sports leagues and the cost of keeping the older ones on the family’s car insurance.
“If we didn’t get these government things, then probably my kids could not participate in some of the sports they do,” he said.
Almost half of all Americans lived in households that received government benefits in 2010, according to the Census Bureau. The share climbed from 37.7 percent in 1998 to 44.5 percent in 2006, before the recession, to 48.5 percent in 2010.
The trend reflects the expansion of the safety net. When the earned-income credit was introduced in 1975, eligibility was limited to households making the current equivalent of up to $26,997. In 2010, it was available to families making up to $49,317. The maximum payout, meanwhile, quadrupled on an inflation-adjusted basis.
It also reflects the deterioration of the middle class. Chisago boomed and prospered for decades as working families packed new subdivisions along Interstate 35, which runs up the western edge of the county like a flagpole with its base set firmly in Minneapolis. But recent years have been leaner. Per capita income in Chisago excluding government aid fell 6 percent on an inflation-adjusted basis between 2000 and 2007. Over the next two years, it fell an additional 7 percent. Nationally, per capita income excluding government benefits fell by 3 percent over the same 10 years.
Mr. Gulbranson’s business struggled as other companies, particularly construction firms, stopped ordering logo-emblazoned shirts. In 2009, the family claimed the earned-income credit for the first time on the advice of their accountant, who was claiming it for herself. The share of local families claiming the credit climbed 33 percent between 2000 and 2008, the most recent year for which data are available.
To make extra money, Mr. Gulbranson refereed 40 soccer games on Tuesday and Thursday nights last fall. His wife sold clothes at equestrian events and air-brushed novelties at craft fairs, driving around the country with a one-ton trailer hitched to a 20-foot van.
Their difficulties, Mr. Gulbranson said, have made it hard to imagine asking anyone to pay higher taxes.
“I don’t think most people could bear to pay more,” he said.
Instead, he said he would rather give up the earned-income credit the family now receives and start paying for school lunches for his children.
“I don’t demand that the government does this for me,” he said. “I don’t feel like I need the government.”
How about Social Security? And Medicare? Can he imagine retiring without government help?
“I don’t think so,” he said. “No. I don’t know. Not the way we expect to live as Americans.”
A Starring Role
Bob Kopka and his wife often drive to the American Legion hall in North Branch on Thursday nights, joining the crowd gathered in the basement bar for the weekly meat raffle. Almost everyone present relies on the government to pay for their medical care.
Mr. Kopka, 74, has had three heart procedures in recent years. His wife recently had surgery to remove cataracts from both eyes.
Without Medicare, Mr. Kopka said, the couple could not have paid for the treatments.
“Hell, no,” he said. “No. Never. She would have to go blind.”
And him?
“I’d die.”
Few federal programs are more popular than Medicare, which along with Social Security assures a minimum quality of life for older Americans.
None are more central to the nation’s financial problems. The Congressional Budget Office projects that government spending on medical benefits, even taking into account the cost containment measures in the 2010 health care law, will rise 60 percent over the next decade. Then it will start rising even more quickly. The cost of caring for each beneficiary continues to increase, and the government projects that Medicare enrollment will grow by roughly one-third as baby boomers enter old age.
Spending on medical benefits will account for a larger share of the projected increase in the federal budget over the next decade than any other kind of spending except interest payments on the federal debt.
Medicare’s starring role in the nation’s financial problems is not well understood. Only 22 percent of respondents to the New York Times poll correctly identified Medicare as the fastest-growing benefits program. A greater number of respondents, 27 percent, chose programs for the poor. That category, which includes Medicaid, is slightly larger than Medicare today but is projected to add only half as much to federal spending over the next decade.
Medicare’s financial problems are much worse than Social Security’s. A worker earning average wages still pays enough in Social Security taxes to cover the benefits the worker is likely to receive in retirement, according to an analysis by the Urban Institute. Social Security is still running out of money because the program must also support spouses who do not work and workers who earn lower wages. But Medicare’s situation is even more dire because a worker earning average wages still contributes only $1 in Medicare taxes for every $3 in benefits likely to be received in retirement.
A woman who was 45 in 2010, earning $43,500 a year, will pay taxes that will reach a value of $87,000 by the time she retires, assuming the money is invested at an annual interest rate 2 percentage points above inflation, according to the Urban Institute analysis. But on average, the government will then spend $275,000 on her medical care. The average is somewhat lower for men, because women live longer.
Medicare is often described as an insurance program, but its premiums are not nearly high enough. In simple terms, Americans are getting more than they pay for.
But many older residents in Chisago say this problem belongs to younger generations. They paid what they were told; they want to collect what they were promised.
Some, like the Kopkas, have savings they can tap. Mr. Kopka still owns the landscaping business he started after leaving the Navy in the early 1960s. He and his wife own a three-bedroom home on three acres, valued by the county at $153,700. The mortgage is paid. They hope to pass the house to their children.
Others have nothing else. Barbara Sullivan, 71, moved last year to the apartments above the Chisago County Senior Center in North Branch. Waiting on a recent Friday for the hot lunch, which costs $3.50, she watched roughly 20 people play bingo for prizes including canned soup and Chef Boyardee pasta.
“Most of the seniors around here are struggling to make it,” she said.
She counts herself among them. She lives on $1,220 a month in Social Security benefits and relied on Medicare to pay for an operation in November.
She believes that she is taking more from the government than she paid in taxes. She worries about the consequences for her grandchildren. She said she would like politicians to propose solutions.
“We’re reasonable people,” she said. “We’re not going to say, ‘Give it to me and let my grandchildren suffer.’ I think they underestimate seniors when they think that way.”
But she cannot imagine asking people to pay higher taxes. And as she considered making do with less, she started to cry.
“Without it, I’m not sure how I would live,” she said. “With the check I’m getting from Social Security, it’s a constant struggle on making sure that I pay my rent and have enough left for groceries.
“I haven’t bought a Christmas present, I haven’t bought clothing in the last five years, simply because I can’t afford it.”
Keeping a Promise
Representative Cravaack often says he entered politics to lift the burden of debt from the shoulders of his two sons.
“I vision that I open up their backpacks and I put in a 50-pound rock and zip it back up again,” Mr. Cravaack told the Minnesota Freedom Council in October 2010. “And I say, ‘Sorry, son, you’re going to have to hump this the rest of your life.’ Because that’s exactly what we’re doing to our national debt right now to our children.”
Mr. Cravaack, a 53-year-old Navy veteran and a retired pilot for Northwest Airlines, was grounded by sleep apnea in 2007. He and his wife, an executive at the drug company Novo Nordisk, decided he would stay home with their sons. He soon became the first man to serve as president of the Chisago Lakes Parent Teacher Organization.
In August 2009, while driving the children to North Branch, he heard a talk radio host urging people to protest President Obama’s health care legislation. Mr. Cravaack and about two dozen others spent more than two hours the next day in Mr. Oberstar’s North Branch office before a staff member told them the congressman would not meet them. The rejection convinced Mr. Cravaack that Mr. Oberstar should be replaced. One of the other protesters, a woman who had taken her six children to the office, became Mr. Cravaack’s campaign scheduler.
Two weeks after speaking to the Freedom Council, he beat Mr. Oberstar by 1.6 percentage points, or 4,407 votes. Voters in Chisago, the southern tip of an expansive district, provided the margin of victory.
“We have to break away,” Mr. Cravaack told supporters, “from relying on government to provide all the answers.”
Mr. Cravaack has said he drew unemployment benefits during a furlough from Northwest in the early 1990s. He did not respond to several requests for an interview, nor to an e-mail with questions about his views and about whether his family has drawn on other benefits programs. This account is based on a review of his public statements.
Shortly after arriving in Congress, Mr. Cravaack voted with a vast majority of House Republicans for a plan to remake Medicare by providing money to its beneficiaries to buy private insurance. Senate Democrats have rejected that plan.
But Mr. Cravaack has also consistently said the government should not reduce its largest category of spending — benefits for the current generation of retirees. He also says he does not support cuts for people who will turn 65 over the next decade.
“If you’re 55 years and older, you don’t have to listen to this conversation because we have to keep those promises,” Mr. Cravaack told The Daily Caller last April. “People like myself, 52, if you’re 54 or younger, we’re going to have a conversation.”
Tomorrow, Tomorrow
The government helps Matt Falk and his wife care for their disabled 14-year-old daughter. It pays for extra assistance at school and for trained attendants to stay with her at home while they work. It pays much of the cost of her regular visits to the hospital.
Mr. Falk, 42, would like the government to do less.
“She doesn’t need some of the stuff that we’re doing for her,” said Mr. Falk, who owns a heating and air-conditioning business in North Branch. “I don’t think it’s a bad thing if society can afford it, but given the situation that our society is facing, we just have to say that we can’t offer as much resources at school or that we need to pay a higher premium” for her medical care.
Mr. Falk, who voted for Mr. Cravaack, said he did not want to pay higher taxes and did not want the government to impose higher taxes on anyone else. He said that his family appreciated the government’s help and that living with less would be painful for them and many other families. But he said the government could not continue to operate on borrowed money.
“They’re going to have to reduce benefits,” he said. “We’re going to have to accept it, and we’re going to have to suffer.”
One of the oldest criticisms of democracy is that the people will inevitably drain the treasury by demanding more spending than taxes. The theory is that citizens who get more than they pay for will vote for politicians who promise to increase spending.
But Dean P. Lacy, a professor of political science at Dartmouth College, has identified a twist on that theme in American politics over the last generation. Support for Republican candidates, who generally promise to cut government spending, has increased since 1980 in states where the federal government spends more than it collects. The greater the dependence, the greater the support for Republican candidates.
Conversely, states that pay more in taxes than they receive in benefits tend to support Democratic candidates. And Professor Lacy found that the pattern could not be explained by demographics or social issues.
Chisago has shifted over 30 years from dependably Democratic to reliably Republican. Support for the Republican presidential candidate has increased relative to the national vote in each election since 1984. Senator John McCain won 55 percent of the vote here in 2008.
Residents say social issues play a role, but in recent years concerns about spending and taxes have predominated.
Voters in the North Branch school district have rejected increased financing for local schools in each of the past three years. In 2010, the district switched to a four-day school week, striking Monday from the calendar to save money.
Some of the fiercest advocates for spending cuts have drawn public benefits. Many, like Mr. Falk, have family members who rely on the government. They often cite that personal experience as the reason they want to cut government spending.
Brian Qualley, 49, has a sister who survived a brain tumor but was disabled by its removal. The government pays for her care at an assisted-living facility. Their mother scrapes by on Social Security.
Mr. Qualley said that the government should provide for those who need help, but that too much money was being wasted. Mr. Qualley, who owns a tattoo parlor in Harris, north of North Branch, said some of his customers paid with money from government disability checks.
“They’re getting $300 or $400 tattoos, and they’re wearing nice new Nike shoes that I can’t afford,” he said, looking up from working a complicated design into the left leg of a middle-aged woman. “I guess I shouldn’t say it because it’s my business, but I think a tattoo is a little too extravagant.”
But Mr. Qualley said he did not want to reduce benefits for the current generation of retirees. Rather, he said his own generation should get less, because they have time to prepare. This is a common position among the young and healthy in Chisago.
Mr. Qualley said he was saving some money for retirement, although, he added, “I don’t have a 401(k) or anything like that.”
“I also have a job that I don’t necessarily ever want to — or have to — retire from,” he said.
What if his hands start to shake as he gets older?
“Actually,” he said, the electric needle falling silent in his hand, “it’s my shoulders and neck that bother me most.”
Safety in Numbers
Barbara Nelson has little patience for people who say they will not need government help. She considers herself lucky she has not, and obligated to provide for those who do.
“Catastrophes happen in life,” she said, sitting in a coffee shop in Taylors Falls. “To be so arrogant that you think it won’t happen to you, that somehow you’re going to be one of the special ones, I disagree with that.”
Ms. Nelson, 61, who describes herself as a centrist Democrat, also dismisses the claim that people cannot afford to pay more taxes.
“Anyone who can come into a coffee shop and buy coffee is capable of paying more,” she said. “If someone’s life can be granted, in terms of adequate health care, if that means I give up five cups of coffee a month, that is a small price to pay.”
Gordy Peterson, 62, who has used a wheelchair for 30 years since a construction accident, has reluctantly reached a similar conclusion.
“I’m a conservative,” he said by way of introducing himself. He built his own house before his injury and paid for it in cash. He still thinks the government should operate that way. He never intended to depend on federal aid and said he sometimes felt guilty about it.
But for the last three decades, he has received a regular check from the Social Security disability insurance program, and Medicare has helped to pay his medical bills.
“Here I’m getting money, and everybody is struggling,” he said. “Even though it ain’t no cakewalk for me.”
Mr. Peterson used a workers’ compensation settlement to buy a farm that he managed with his brother-in-law, who is mentally handicapped and also on government disability.
“He was my legs, and we worked it,” Mr. Peterson said.
They grew corn, soybeans and rye, and even kept steers for a while. In good years they earned enough to live on. In bad years they lived on the government’s checks. Life would have been very difficult without them, he said.
Mr. Peterson, an easygoing man who looks down when he thinks and smiles sheepishly when he offers an opinion, looked down after completing the story of his own dependence on the safety net.
“It’s hard to beat up on the government when they’ve been so good to you,” he finally said. “I’ve never really thought about it, I guess.”
Lately, the government has been very good, indeed. The county, with federal financing, bought a corner of Mr. Peterson’s farm to build a new interchange for Interstate 35. He used the money to open a gas station at the edge of the farm in 2008 to serve the traffic that rolls off the new ramp. The business is prospering, and he no longer worries that he will need to depend on Social Security.
“But you can’t take that away,” he said. “My own sister has only Social Security. That’s all. That’s all she’s going to have. And if you take that away from her, Christ, she’d be a street person. I don’t think we can cut them off on that.”
How about higher taxes?
Maybe a little higher, he said. Maybe.
“I’m glad I’m not a politician,” he said. “We’re all going to complain no matter what they do. Nobody wants to put a noose around their own neck.”
Greenspan's Fraud is the title of a book by Dr. Ravi Batra. In light of what's currently happening in Washington regarding the extension of the payroll tax cut, it is prescient. Greenspan engineered an increase in the payroll or FICA or Social Security tax in the 1980s at the behest of then President Ronald Reagan which effectively raised taxes on the poor while Reagan cut the income tax and effectively lowered taxes on the wealthy. The ostensible reason for this increase in payroll tax was a crisis in funding Social Security 35 years out (sound familiar). Republicans worked themselves and the American public up into a lather over a non-existent Social Security crisis. The real purpose of this supposed crisis was to shift the tax burden from the rich to the poor just as it is with Republicans today who don't really want to extend the payroll tax cut engineered by President Obama. Instead, they have pledged Grover Norquist not to raise taxes except ... they might make an exception for the payroll tax. In other words their pledge is to not raise taxes on the rich while they have no problem with raising them on the poor. They are showing their true colors ... again: protect the finances of the rich while exploiting those of the poor and middle class. Such was the brilliance of Greenspan's plan in the early eighties that hardly any Americans knew or realized what he was actually up to including the Democrats who went along with it. Personally, I've been self-employed since 1976, and I never realized that Greenspan had doubled my FICA taxes in 1983 so that I ended up paying higher payroll taxes than rich people paid in capital gains tax. Such is the reality of Republican subterfuge.
From Greenspan's Fraud, the book:
Greenspan's economics has extracted trillions of dollars in taxes from the American middle class and sharply enriched the rich, who are essentially people like himself and his friends - multimillionaires, politicians, and businessmen. ... His policies have led to the pooring of America as well as the world, while a tiny minority has raked in millions, even billions, in profit. He may be a legendary figure in the eyes of many, but when you carefully explore what he has wrought, the aura of public reverence around him can evaporate quickly.
This book will show that because of Greenspan's beliefs or support for certain policies, family income and real wages have declined for a broad swath of Americans, while CEOs have earned millions in stock options and capital gains; US manufacturing has been decimated and the country is saddled with more than half a trillion dollars of trade deficit per year; nearly two million lucrative jobs have vanished since 2000, and millions of people have been downsized.
In December 1981 President Reagan selected Greenspan to chair a blue ribbon commission to "save" social security. When it became obvious that the Federal budget deficit was ballooning due to Reagan's 1981 tax cuts, Greenspan ginned up the Social Security crisis which allowed the payroll tax to be increased, and, since Social Security and the general fund had been part of the unified budget since 1969, the increase in revenues from the increased payroll taxes masked the Federal budget deficits due to Reagan's tax cuts. In simple terms the excess revenues from social security taxes offset the deficit in the general fund due to Reagan's tax cuts. But rather than raise the income tax, which would have increased taxes disproportionally on the wealthy, Greenspan's plan was to raise the payroll tax which is a tax primarily on the poor and middle class. In addition Greenspan also later proposed cutting benefits for social security beneficiaries.
The Reagan-Greenspan theology required that the income [taxes] remain small even if it became necessary to coax money out of the destitute because this is essentially what the commission proposed in 1983. Instead of the general budget that actually faced a massive deficit, the commission insisted that the Social Security Trust Fund faced a giant shortfall, some 30 to 75 years in the future, when baby boomers would retire in large numbers. Never mind that in 1983 itself, the Trust Fund's receipts began to rise because of increasing employment, while the general budget suffered an even larger deficit of $208 billion.
In fact, by the end of the year, the Fund earned a small surplus. But the Greenspan commission relied on "forecasts" that showed a gargantuan deficit looming in the Fund, not five to ten years hence, but more than half a century later. It proposed eliminating the Social Security deficit expected from 1983 all the way to 2056 by overtaxing workers in advance, and generating an adequate surplus in the process.
So the money taken in in payroll taxes which was not used to actually make payments to social security recipients was transferred to the general fund and used to defray the budget deficits brought about by Reagan's tax cuts on the wealthy. In place of the money so used non-marketable Treasury bonds of an equivalent amount were placed in the Social Security Trust Fund (SSTF). Today they amount to $2.5 trillion. This is the amount owed to the SSTF by the general fund. Every year the surplus payroll tax revenues were spent in the general fund and IOUs of a similar amount were placed in the SSTF. The surplus dwindled over the years until today more money is actually being paid out to Social Security recipients than is being taken in in payroll taxes. That means that those non-marketable Treasury bonds in the SSTF must be cashed in and money taken from the general fund to make up the difference. Hence the general fund must accumulate an even larger deficit or it must raise taxes to make up the difference. This is why Republicans are again insisting that Social Security is in crisis. Pay-go demands that the amount paid out from the general fund to make up the difference between what is received in payroll taxes and what is paid out be paid for. Republicans want to make up the difference, as Greenspan wanted to do years ago, by cutting benefits. What they don't want to do is to raise income taxes on the wealthy to do so. Instead of honoring the special non-marketable Treasury bonds in the SSTF which would require either higher deficits or raising the income tax, Republicans want to cut benefits either by raising the retirement age or cutting the cost of living allowance. More extreme right wing Republicans, such as Paul Ryan, want to privatize social security so that the IOUs in the SSTF never will have to be honored. Both Paul Ryan and Alan Greenspan are devotees of Ayn Rand whose philosophy consisted mainly of unadulterated greed and to hell with the poor and middle class.
But Greenspan reserved his most draconian tax increase for the self-employed.
The Greenspan proposal would prove to be a crippling burden for the poor and the self-employed, because it sought to lift rates over and above those provided by a 1977 law. Today, [2005] a full-time minimum-wage earner, working for 2000 hours annually at a wage of $5.15 per hour, earns about $10,000 annually On that she has to pay a Social Security and Medicare tax of 7.65 per cent, or $765. which leaves her with $9,235. Add to this a state and local sales tax averaging 8% in big cities, and she forks over another $739 to meet her minimum consumption.
This sum of over $1500 in taxes can make a difference between homelessness and living in an apartment, between three meals a day and malnourishment, between a doctor visit and living with illness.This is why the commission's tax propopsals amounted to coaxing money out of the destitute, i.e., the millions who subsist on the minimum wage.
A worse outcome awaited for those working for themselves. Today [2005], a self-employed individual earning $30,000 a year, has to pay nearly 15% in Social Security taxes. Once $4500 is deducted in self-employment contributions, an individual is left with little to support a family, especially when his income is subject to the sales and income tax as well.
The Social Security or FICA tax is regressive; there are no deductions or exemptions. It's a flat tax that everyone, rich or poor, pays at the same rate. And it is only paid on the first $106,000. of income. All income over that amount is tax free as far as FICA taxes are concerned. This is why it's essentially a tax on the poor and middle class while the income tax which has higher tax rates for higher income earners is progressive and hits the rich more than the poor although today the highest tax bracket is 35% for income over about $380,000. That means that millionaires and billionaires pay income tax at the same rate as someone earning $380,000. There are no higher tax brackets for the truly rich.
Greenspan convinced his fellow commissioners and Congress to go along with his scheme and his proposals were enacted as Social Security Amendments in 1983. Greenspan's proposals also guaranteed that the maximum taxable wage base (which today is $106,000) would increase year after year so that Social Security taxes would increase on an annual basis. The reality of the situation is that the payroll tax increases of 1983 have been used primarily to fund the tax cuts of wealthy individuals and corporations. They don't want to give up the financial benefits they gained by having payroll taxes reduce their income taxes for 38 years. So they are in the process of reducing social security benefits by a combination of raising the retirement age, scaling back cost of living adjustments or possibly raising the payroll tax rates. The point is that there is no Social Security crisis if the non-marketable Treasury bonds in the SSTF are honored which is essentially the social contract entered into in 1983 by Greenspan and Reagan. If in fact these Treasuries were marketable instead of unmarketable bonds, they could be redeemed on the open market by the SSTF. In that case they would simply be rolled over by the Treasury Department and effectively become part of the ever increasing deficit and national debt. Alternatively, revenues could be sought from other sources most likely the income tax which has been kept low for decades due to the pilfering of the SSTF by the general fund.
Since Congress controls the rules regarding Social Security, they can change them at any time without any recourse by the American people. This means that they can bypass the implied contract to reimburse the IOUs in the SSTF with impunity effectively finessing the whole situation. A better way to place more money in the SSTF would be to lift the $106,000 cap on income subject to the Social Security tax meaning effectively that the rich would pay Social Security tax on all of their income, the same way the poor do.
Food is distributed by a food bank in Deposit, New York. The converted beverage truck delivers fresh produce, dairy products and other grocery items to people in need. (Photograph: Spencer Platt/Getty Images)
