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Republican Balanced Budget Amendment: The Worst Idea In Washington

Bruce Bartlett takes a look at the Balanced Budget Amendment all 47 Republicans signed their names to and pronounces it “quite possibly the stupidest constitutional amendment I think I have ever seen. It looks like it was drafted by a couple of interns on the back of a napkin.”

I think “stupid” is the wrong word. “Dangerous” is more like it. And maybe “radical.” This isn’t just a Balanced Budget Amendment. It also includes a provision saying that tax increases would require a two-thirds majority in both houses of Congress — so, it includes a provision making it harder to balance the budget — and another saying that total spending couldn’t exceed 18 percent of GDP. No allowances are made for recessions, though allowances are made for wars. Not a single year of the Bush administration would qualify as constitutional under this amendment. Nor would a single year of the Reagan administration. The Clinton administration would’ve had exactly two years in which it wasn’t in violation.

Read that again: Every single Senate Republican has endorsed a constitutional amendment that would’ve made Ronald Reagan’s fiscal policy unconstitutional. That’s how far to the right the modern GOP has swung.

But the problem isn’t simply that the proposed amendment is extreme. It’s also unworkable. The baby boomers are retiring and health costs are rising. Unless you have a way to stop one or the other from happening — and no one does — spending as a percentage of GDP is going to have to rise. This proposal doesn’t interrupt those trends. It simply refuses to acknowledge them — or, to be more generous, it rules them unconstitutional. This is the equivalent of trying to keep your kid cute by passing a law saying he’s not allowed to grow up.

Another problem: In a recession, tax revenue plummets and GDP stops growing, but spending has to be sustained, or even increased, to a) give people unemployment insurance and Medicaid and other services they need and b) keep the economy from contracting violently. This amendments includes no provisions for recessions, meaning that when the economy contracted, the government would have to contract as well. That is to say, we’re still not out of one of the deepest recessions in American history, and every Senate Republican has co-sponsored a constitutional amendment to make future recessions worse. It’s just breathtaking.

A world in which this amendment is added to the Constitution is a world in which America effectively becomes California. It’s a world where the procedural impediments to passing budgets and raising revenues are so immense that effective fiscal management is essentially impossible; it’s a world where we can’t make public investments or sustain the safety net; it’s a world where recessions are much worse than they currently are and the government has to do more of its work off-budget through regulation and gimmickry. I would like to say something positive about this proposal, say there’s some silver lining here. But there isn’t. This is economic demagoguery, and nothing more. It’s so unrealistic that it would’ve ruled all but two of the last 30 years unconstitutional, which means it’s so unrealistic that there has not yet been a Republican president who has proven it can be done. And that doesn’t just suggest it can’t be done: It suggests that when Republicans are actually in power and have control of the budget, they know perfectly well that it shouldn’t be done. They’re just pretending otherwise for the moment.

By: Ezra Klein, The Washington Post, April 1, 2011

April 4, 2011 Posted by | Conservatives, Constitution, Democracy, Economy, Federal Budget, GOP, Ideologues, Neo-Cons, Politics, Right Wing, Unemployment Benefits | , , , , , , , , | Leave a comment

Don’t Try This At Home But, How You Can Pull A General Electric On Taxes

There’s been a firestorm this week over the news that General Electric will pay no tax—at least, no federal corporate income tax—on last year’s profits.

But if you’re like a lot of people, your first reaction was probably: “Hmmm. How can I get that kind of deal?”

If General Electric pays close to zero in Federal Income taxes, can you? Brett Arends tells Kelsey Hubbard how even a “regular Joe” can lower their tax bill, especially if they are self-employed.

You’d be surprised. You might. And without being either a pauper or a major corporation.

I spoke to Gil Charney, principal tax researcher at H&R Block‘s Tax Institute, to see how a regular Joe could pull a GE. The verdict: It’s more feasible than you think—especially if you’re self-employed.

Let’s say you set up business as a consultant or a contractor, something a lot of people have been doing these days. And, to make this a challenge on the tax front, let’s say you do well and take in about $150,000 in your first year.

First off, says Mr. Charney, for 2010 you can write off up to $10,000 in start-up expenses. (In subsequent years it’s only $5,000.)

Okay, let’s say you claim $7,000. That takes your income down to $143,000.

You can also write off all legitimate business expenses. Mr. Charney emphasizes that this only applies to legitimate expenses.

He didn’t say, but everyone seems to understand, that this can be quite a flexible term. Even if you buy a computer, a cellphone and a car primarily for business use, you can use them for personal purposes as well. If you happen to take a business trip to Florida in, say, January, no one is going to stop you from enjoying the sunshine or taking a dip in the pool.

So let’s say you manage to write off another $10,000 a year in business expenses.

That brings your income, for tax purposes, down to $133,000.

You’ll have to pay Medicare and Social Security taxes (just like GE). Because you’re self-employed, you have to pay both sides: the employee and the employer. That will come to about $19,000.

However, you can deduct half of that, or $9,500, from your taxable income. So that brings your total down to $123,500 so far.

Now comes the creative bit. The self-employed have access to terrific tax breaks on their investment and retirement accounts. The best deal for many is going to be a self-employed 401(k), sometimes known as a Solo 401(k).

This will let you save $43,100 and write it off against your taxes. That money goes straight into a sheltered investment account, as with a regular 401(k).

Why $43,100? That’s because with a Solo 401(k), you’re both the employer and the employee. As the employee you get to contribute a maximum of $16,500, as with any regular 401(k). But as the employer you also get to lavish yourself with an incredibly generous company match of up to 20% of net income.

Yes, being the boss has its privileges. (And if you’re 50 or over, your limit as an employee is raised from $16,500 each to $22,000.)

You can save another $10,000 by also contributing to individual retirement accounts—$5,000 for you, $5,000 for your spouse. If you use a traditional IRA, rather than a Roth, that reduces your taxable income as well. If you’re 50 or over, the limit rises to $6,000 apiece.

If you contribute $43,100 to your Solo 401(k), and $10,000 to two IRAs, that brings your income for tax purposes down to just over $70,000.

We haven’t stopped there either, says Mr. Charney.

Now come the usual itemized deductions. You can write off your state and local taxes. Let’s say these come to $10,000.

You can write off interest on your mortgage. Call that another $10,000. That’s enough to pay 5% interest on a $200,000 home loan.

That gets us down to about $50,000 And we’re not done.

If you’re self-employed, health insurance is probably a big headache. But the news isn’t all bad. You can write off the premiums for yourself, your spouse, and your kids.

And if you use a qualifying high-deductible health insurance plan—there are a variety of rules to make sure a plan qualifies—you get another break. You can contribute $3,050 a year into a tax-sheltered Health Savings Account, or $6,150 for a family. You can write those contributions off against your taxable income. The investments grow sheltered from tax. And if you spend the money on qualifying health costs, the withdrawals are tax-free as well.

So call this $10,000 for the premiums and $6,150 for the HSA contributions. That gets your income, for tax purposes, all the way down to about $34,000.

If you have outstanding student loans, you can write off $2,500 in interest. And you can write off $4,000 of your kid’s college tuition and fees.

Then there’s a personal exemption: $3,650 per person. If you’re married with one child, that’s $10,950.

Taxable income: just under $17,000. That’s on a gross take of $150,000. You’d owe less than $1,700 in federal income tax.

And it doesn’t stop there. Because now you can bring in some of the tax credits. Unlike deductions, these come off your tax liability, dollar for dollar.

GE got big write-offs related to green energy. There are some for you too, although on a small scale. You can claim credits for things like installing solar panels, heat pumps or energy-efficient windows or boilers in your home. Let’s say you use a home equity loan to pay for the improvements and take the maximum $1,500 write-off.

That gets your tax liability down to $200.

Can we get rid of that? Sure, says Mr. Charney.

If your spouse spends, say, $1,000 on qualifying adult-education courses or training programs, you can claim $200, or 20% of the cost, in Lifetime Learning Credits. (The maximum is $2,000.)

That wipes out the remaining liability.

Congratulations. You’ve pulled a GE. You owe no federal income taxes at all.

OK, it’s just an illustration. Few will be quite so fortunate. On the other hand, it’s not comprehensive either. There are plenty of other deductions and credits we didn’t mention. You could have written off up to $3,000 by selling loss-making investments. Your spouse may be able to use a 401(k) deduction as well. There are lots of ways to tweak the numbers.

In this case, you’ve paid no federal income tax, and meanwhile you’ve saved $19,000 toward your retirement through Social Security and Medicare, and $53,000 through your 401(k) and IRAs. You’ve paid most of your accommodation costs (that is, the interest and property taxes on your home), covered your health-care costs and quite a lot of personal expenses through your business account, paid $4,000 toward your child’s college costs and had about $2,000 a month left over for cash costs.

Who says GE has all the fun?

By: Brett Arends, The Wall Street Journal, April 1, 2011

April 4, 2011 Posted by | Big Business, Corporations, General Electric, Medicaid, Medicare, Politics, Tax Credits, Tax Evasion, Tax Liabilities | , , , , , , , , | Leave a comment

From Memphis To Madison: A Dream For The Middle Class That Cannot Be Allowed To Die

“I Am a Man” read the sandwich board posters worn by public sanitation workers in Memphis. Their strike in 1968 came at a time when African American men were still called “boy” to their faces. Their fight for dignity, fair wages and the hope of a better future for their families drew the support of Dr. Martin Luther King Jr., who was assassinated in that city 43 years ago today.

The critical services that public employees provided in our communities then and now range from the most humble, such as garbage collectors, to the most dangerous (police officers and firefighters) to the most profoundly influential on the lives of our children. 

Yet in state after state, the collective bargaining rights of dedicated teachers and other public employees have been denied or are in serious jeopardy just as they were in the civil rights era. The same politicians pushing these laws are attacking affirmative action, assailing voting rights and pushing laws to block any path to citizenship for millions of hardworking immigrants in this country.

King made clear connections between what he called “our glorious struggle for civil rights” and collective bargaining rights. He called the labor movement “the principal force that transformed misery and despair into hope and progress . . . [and] gave birth to . . . new wage levels that meant not mere survival but a tolerable life.”  

Heirs of King’s legacy who serve our communities see similarities between the struggle in Memphis then and the struggles in Madison and Columbus now.

Dian Palmer, a public health nurse in Milwaukee whose family moved to Wisconsin from Mississippi for better jobs and greater opportunity, starkly remembers the days when her family faced housing discrimination in their new home state because of the color of their skin.  

Palmer is “disgusted” by the ways that what is going on today reminds her of those times. Last month Wisconsin state legislators stripped away collective bargaining rights, wages and benefits from nurses like Palmer, teachers and other public workers and made cavalier comments about how they should all just “get over it,” she says.

Lynn Radcliffe, an administrative assistant in the Cleveland schools’ special education program, testified to Congress last month that today’s public employees are facing the same harsh treatment the Memphis sanitation workers did — “being treated as less than, disrespected and economically deprived of earning a decent wage to take care of their families.”

The powerful business interests that align today against working people hearken back to the “downtown business improvement association” that opposed justice for the striking Memphis sanitation workers. Today’s shadowy 527 groups funded by the Koch brothers and their oil conglomerate — and other bad-actor corporations and executives — would destroy our nation’s last real defense against unrestricted corporate power and Third World wages and working conditions for all. 

The Memphis city workers in 1968 tapped into the spiritual power of our common humanity — a source of power that seems to be gaining traction as people stand up for state and local workers today. A key part of King’s theology was the stranger on the Jericho road, which turned around conventional thinking about uniting with people who we perceive as not being like us.

 We saw this spirit reflected in the tens of thousands of people who rallied in Wisconsin, Ohio and other states to fight for a vibrant middle class for all workers. Protesters from all walks of life accepted King’s challenge: “The question is not, If I stop to help the [sanitation workers], what will happen to me?  The question is, If I do not stop to help the sanitation workers, what will happen to them?” 

In today’s jobless recovery, people of color and women are being hit hard. As public services are cut along with collective bargaining rights, women are disproportionately among those laid off and facing income cuts.  The “underemployment” rate of discouraged and part-time workers is roughly 15 percent for whites but 25 percent for black and Hispanic workers. 

This week, at pulpits, synagogues and other locations nationwide, ordinary people will commemorate King’s death by standing together to tell the powerful interests and the politicians who carry out their wishes that enough is enough.

We are uniting to stand up for the dream of what Martin Luther King Jr. called “a tolerable life.” In today’s terms, that translates as  “a middle class life.” A path into the middle class for millions of Americans — black, white, Latino, Native American and Asian American — is not a dream that we will allow to die.

By: Benjamin Todd Jealous and Mary Kay Henry, The Washington Post, April 3, 2011

April 4, 2011 Posted by | Class Warfare, Collective Bargaining, Congress, Corporations, Democracy, Equal Rights, Governors, Human Rights, Immigrants, Income Gap, Jobs, Labor, Middle Class, Politics, States, Union Busting, Unions, Wisconsin | , , , , | Leave a comment

Women And “Husband Issues”: We Work Hard, But Who’s Complaining?

When a couple dozen brawny, uniformed and helmeted firefighters, led by a bagpipe player, marched through a crowd of pro-union protesters in Madison, Wis., last month, I knew, almost to a certainty, that Gov. Scott Walker had picked a fight with the wrong crew.

As the firemen assembled on the Statehouse steps, the swelling, boisterous crowd, which had raucously encircled and occupied the Capitol for days, pushing back against Governor Walker’s plan to strip public employee unions of their collective bargaining rights, all of a sudden slipped into silent reverence.

While the plan exempts policemen and firemen, the first responders rallied under the oldest first principle of militant unionism: An Injury to One is an Injury to All. And the presence of these mostly white, husky, mustachioed firemen — many with soot still speckling their uniforms — had highlighted a major issue that generally goes undetected by the news media when covering labor conflicts.

In short, it’s what my old union called “the Husband Issue.”

Allow me to explain.

I spent five years as an organizer, and hundreds of hours in the living rooms, at the kitchen tables and on the porches of countless low-wage nursing assistants, hospital food workers and clinical lab scientists, trying to talk them into our union.

These were almost always women. No surprise, really. Whatever growth there has been in organized labor over the last few years — and there hasn’t been much — has been primarily among service workers, that near-invisible class of underpaid workers who clean bedpans, vacuum hotel rooms and mop the floors of operating rooms. I recall one heady organizing drive in Southern California that unionized 9,000 hospital workers, and they were almost exclusively low-wage immigrant women.

Most of those I was recruiting had never been in a union before, had no relatives in unions, and were being introduced to a strange new concept, collective bargaining. For any question a woman had, whether about dues, strikes, seniority, pensions or what she had to gain from forming a union, I had an answer ready to go. (Dues give you power; strikes are rare; every one deserves to retire with dignity. You want a direct say in your wages and benefits, don’t you?).

There was one rebuff, nevertheless, against which I was utterly powerless. It had nothing to do with politics, the boss or dues. Seven simple but devastating words: “I need to ask my husband first.”

Despite the endless training we got on how to ease workers’ doubts, we could never really establish a convincing response for the Husband Issue. It would shift the dynamic so suddenly, and require treading on such volatile emotional territory, that we would often politely say goodbye and scuttle out the door.

(For the record: No man I ever spoke to said, “Excuse me, I have to check first with my wife,” before signing a union card.)

In the current storm over public employee unions rattling the Midwest, this issue of gender is usually overlooked. Women, working as state clerks, teachers and nurses, dominate the organized public sector. And just as Rust Belt Republicans have deftly exploited longstanding stereotypes about public workers as lazy, pampered and gorging themselves on the taxpayers’ teat, they have also made cynical use of gender clichés to try to keep female-dominated unions in their place.

The reality that women are increasingly the breadwinners, providing the financial stability for middle-class families through a good union job, doesn’t seem to inform the Republican state of mind. Instead, women’s income and benefits are still perceived by many as strictly supplementary to the nuclear family, if not entirely superfluous. And therefore they are a prime target for budget cuts.

In addition, pink-collar jobs already require a saint-like disposition and an overall doing-more-with-less attitude. Cutting the pensions of these female workers, freezing their wages and curtailing their rights seems, to many, one of a piece with the suffering and forbearance reserved for our mothers.

The error committed by the antiunion governors is that their attack this time around was so slashing that it cut to the very marrow of organized labor: middle-class white men who saw their futures and their rights threatened. In Ohio, Gov. John Kasich even signed a law that goes so far as to prohibit policemen and firemen from negotiating over their staffing, or even the number of patrol cars and trucks at their disposal.

Police officers and firemen? Who is going to successfully argue that these guys are pampered and spoiled?

Call it what you want, and ascribe it to whatever motivation you please, but there’s just a radically different emotional atmosphere, a very divergent set of optics and ultimately an explosive political dynamic established when stoic firemen in bulky parkas and red helmets are on the picket line rather than teachers in pink T-shirts.

For better or for worse, they are still the Alpha Males of American society, our designated and respected protectors. They might be routinely taken for granted as a reliable conservative force, but someone forgot they are also still union men. These are men who recall clearly how the old-line male-dominated industrial unions — the steelworkers, autoworkers, miners and millworkers — have been whittled down or expunged. And to fiddle around with their livelihoods is like watching someone push your dad around. The reaction is an instinctive anger, horror and a sensation of the bottom falling out.

So, when those firemen took the steps of the Madison Capitol a few weeks ago, I was among those heartened and stirred. I could not resist, though, feeling more than a twinge of disappointment. I fear if it had been just some state home care workers or public school kindergarten teachers up there on the steps, it would not have ignited the same public sympathy and this fight would not be taken as seriously as it is.

By: Natasha Vargus-Cooper, Op-Ed Columnist, The New York Times, April 2, 2011

April 3, 2011 Posted by | Class Warfare, Collective Bargaining, Employment Descrimination, Equal Rights, Governors, Income Gap, Jobs, Labor, Media, Middle Class, Politics, Union Busting, Unions, Wisconsin, Women | , , , , , , , | Leave a comment

Lawmakers And Lobbyist: Cutting Out the Middleman

For six years, Doug Stafford was a lobbyist for the National Right to Work Committee, an anti-labor group financed by business and conservative interests. His job changed last year but his duties did not when he became the chief of staff to Senator Rand Paul, Republican of Kentucky. Mr. Paul is a chief sponsor of the National Right to Work Act, which he said would end forced unionization and “break Big Labor’s multibillion-dollar political machine forever.”

Brett Loper’s career path is a similar one. When he was an executive for the Advanced Medical Technology Association, an industry group, he lobbied hard against President Obama’s health care reform. Now, as the chief policy adviser for Speaker John Boehner, he is helping to organize the effort to repeal the health care law. The only difference is that the taxpayers are paying his salary.

There has long been a regular shuttle service between Capitol Hill and Washington’s K Street, but the numbers now are striking. Since last year’s Republican victories, nearly 100 lawmakers have hired former lobbyists as their chiefs of staff or legislative directors, according to data compiled by two watchdog groups, the Center for Responsive Politics and Remapping Debate. That is more than twice as many as in the previous two years.

In that same period, 40 lobbyists have been hired as staff members of Congressional committees and subcommittees, the boiler rooms where legislation is drafted. That again dwarfs the number from the previous two years.

While some of those lobbyist-staffers were hired by Democrats, the vast majority are working for Republicans. Representative Raul Labrador, a freshman from Idaho, hired John Goodwin, previously a lobbyist for the National Rifle Association, as his chief of staff. Representative Fred Upton, chairman of the Energy and Commerce Committee, hired Howard Cohen, a longtime lobbyist for the health care industry, as his chief counsel.

In many cases, those hiring lobbyists were Tea Party candidates who vowed to end business as usual in Washington. As The Washington Post reported, when Ron Johnson ran against Wisconsin’s Senator Russ Feingold, he accused Mr. Feingold of being “on the side of special interests and lobbyists.” Now that he is a senator, Mr. Johnson has hired as his chief of staff Donald Kent, whose firms have lobbied for casinos, defense industries and homeland security companies.

Ethics laws put limits on elected officials who move to lobbying firms. But there is nothing to stop lobbyists from getting immediately hired on Capitol Hill. This year’s class of staffers argues for a tough ban. After collecting millions from industries or unions or others, lobbyists should not be allowed to turn around and write laws that favor these special interests.

By: Editorial, Opinion Pages, The New York Times, April 2, 2011

April 3, 2011 Posted by | Big Business, Congress, Conservatives, Corporations, Democracy, Democrats, GOP, Labor, Lawmakers, Lobbyists, Politics, Republicans, Teaparty, Union Busting, Unions | , , , , , , , , , , | Leave a comment

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