“Evangelical Myth Won. Wall Street Won. The Banks Won. America Lost”: Since Lies Worked So Well For Republicans, We’ll Have More
The Republican Party base is white evangelicals. So no wonder the GOP lies about the country, the economy and the president worked. The folks who base their lives on religious mythology have spent lifetimes being trained to believe lies. And if you point that out then they kick into victim mode and denounce people who question them as persecutors. Last night they won. Lies won.
As the New York Times noted:
“Republican candidates campaigned on only one thing: what they called the failure of President Obama. In speech after speech, ad after ad, they relentlessly linked their Democratic opponent to the president and vowed that they would put an end to everything they say the public hates about his administration. On Tuesday morning, the Republican National Committee released a series of get-out-the-vote images showing Mr. Obama and Democratic Senate candidates next to this message: ‘If you’re not a voter, you can’t stop Obama.’ The most important promises that winning Republicans made were negative in nature. They will repeal health care reform. They will roll back new regulations on banks and Wall Street. They will stop the Obama administration’s plans to curb coal emissions and reform immigration and invest in education.”
Since the economy has rebounded, health care reform has worked, all that remained for the GOP was to lie. And since the base of the GOP is white aging southern evangelicals the GOP was in luck. These are easy folks to lie to. That’s because they already accept an alternative version of reality. Also, of course since the lies are about a black man, that doesn’t hurt. Yes, race is “still” an issue.
The midterm election boiled down to xenophobia about the “Other.” Ebola was the president’s fault! ISIS was coming to get us! We aren’t safe!
None of this is true, but no matter. In fact judging by actual facts the Obama presidency has been successful in spite of the GOP obstruction. The economy is back. Jobs are up. Health care reform is working. We’ve been kept safe from terror attacks. America is strong.
What we’ll now see is a reinvigorated religious right. And since lies worked so well we’ll have more. Creationism, anti-gay initiatives, anti-choice initiatives, and of course pro-Koch-Brother-Financed lies upon lies to bury climate change debate is on the way.
The Republican-dominated Supreme Court stands ready to back corporate and religious right-financed attacks of the environment, pro-Wall Street laws and all the rest.
Racism won. Evangelical myth won. Wall Street won. The banks won. America lost.
By: Frank Schaeffer, The Huffington Post Blog, Movember 5, 2014
“Me, Pay Taxes?”: How Wall Street Avoids Paying Its Fair Share in Taxes
Like many Americans, you’ve probably just spent a good bit of time figuring out how much you owe in taxes. Most of us fill in the forms and follow the rules. But the rules are a lot more flexible for the largest U.S. corporations, and especially for the major Wall Street financial institutions and their top executives and owners. Banks and financial companies capture more than 30 percent of the nation’s corporate profits, but manage to pay only about 18 percent of corporate taxes while contributing less than 2 percent of total tax revenues, according to the Bureau of Economic Analysis and the International Monetary Fund.
What’s more, the owners and senior managers of our major financial institutions can exploit the loopholes in our individual income tax on a far greater scale than the rest of us. Below is a short guide to a few of the major ways that Wall Street avoids paying its fair share.
But I earned it in the Cayman Islands!: American corporations have developed a panoply of ways to route income through low-tax foreign subsidiaries. This practice goes well beyond the financial sector. Indeed, the latest publicized example involves a manufacturing firm, Caterpillar. Because of the inherently “placeless” nature of many financial transactions, however, financial institutions and their investors are among those in the best position to move income around in this fashion. The major Wall Street banks have thousands of subsidiaries in dozens of countries, all capable of engaging in transactions that enjoy the full guarantee of the U.S. parent company even as they take advantage of the tax or legal advantages of their foreign incorporation. Transactions in the multi-trillion dollar global derivatives market, for example, can pretty much be relocated anywhere in the world with the touch of a computer keyboard.
A way to crack down on the massive potential for tax avoidance this creates would be to simply rule that financial transactions backed up by a U.S. firm are in effect U.S. transactions and subject to U.S. tax law. Whatever international tax rules are designed to protect real manufacturing activity in other jurisdictions from inappropriate taxation should not apply to the passive income gained from financial activities that can easily be transacted from anywhere in the world. For some years U.S. tax law attempted to follow this principle, but starting in 1997 an “active financing” loophole made it much easier for multinationals to avoid taxation on financial transactions by moving profits to low-tax foreign subsidiaries. Combined with so-called “look through” provisions, these international tax loopholes mean that U.S. multinationals get to look around the world for the cheapest places to locate their earnings.
It’s not work, it’s investment!: The U.S. taxes capital gains on investments much more lightly than it taxes ordinary income. The details get complicated, but in general the profit on investments is only taxed at a maximum 15 to 20 percent rate, as opposed to a rate of almost 40 percent for high levels of ordinary income. Though its stated goal is to encourage investment and saving, a tax differential of this size can be seen as a subsidy to financial speculation, since it penalizes wage work compared to trading profits, and accrues to any investment held longer than a year, whether or not it can be shown to actually create jobs. In addition to the broad impact of the tax differential, the gap in rates creates a windfall for wealthy Wall Street executives in a position to maximize its benefits. Those who work for big hedge and private equity funds are in the very best position to do that, as they take much of their work income from the investment returns of the fund. Since they are legally permitted to classify this “carried interest” income as capital gains, they can cut their tax rates effectively in half – a windfall that costs the federal government billions of dollars a year, and means that some of the wealthiest individuals in America pay a lower tax rate on their earnings than an upper-middle-class family might.
Who, me, sales tax?: It’s easy to forget at this time of year when we’re all working on our income tax, but the sales tax is also one of the major taxes you pay each year. State and local governments take in more than $460 billion a year through sales taxes charged on everything from cars to candy bars. But Wall Street speculation isn’t charged a sales tax at all. Indeed, you’ll pay more sales tax for your next pack of gum than all the traders on Wall Street will pay for the billions of transactions they undertake every year. The non-partisan Joint Tax Committee of the U.S. Congress estimates that a Wall Street speculation tax of just three basis points – three pennies per $100 of financial instruments bought and sold in the financial markets – would raise almost $400 billion over the next decade. What’s more, such a fee would significantly discourage the kind of predatory trading strategies recently highlighted by author Michael Lewis, strategies that depend on trading thousands of times in a second in order to manipulate stock markets and extract tiny profits from each trade.
This only starts the list of ways Wall Street financial institutions and the people who run them manipulate the system and avoid paying their fair share; there are plenty more, including the use of complex financial derivatives to shelter individual income, the variety of techniques used by hedge and private equity fund partners to avoid effective IRS enforcement, and the continuing tax deductibility of corporate pay above $1 million, as long as it is sheltered under a so-called “performance incentive.” Tax time would be a good time for our elected representatives to get to work closing some of these gaps and loopholes, and leveling the playing field.
By: Marcus Stanley, Economic Intelligence, U. S.News and World Report, April 16, 2014
“A Nation Of Takers?”: Demanding Cuts In Public Assistance To The Poor, While Ignoring Public Assistance To The Rich
In the debate about poverty, critics argue that government assistance saps initiative and is unaffordable. After exploring the issue, I must concede that the critics have a point. Here are five public welfare programs that are wasteful and turning us into a nation of “takers.”
First, welfare subsidies for private planes. The United States offers three kinds of subsidies to tycoons with private jets: accelerated tax write-offs, avoidance of personal taxes on the benefit by claiming that private aircraft are for security, and use of air traffic control paid for by chumps flying commercial.
As the leftists in the George W. Bush administration put it when they tried unsuccessfully to end this last boondoggle: “The family of four taking a budget vacation is subsidizing the C.E.O.’s flying on a corporate jet.”
I worry about those tycoons sponging off government. Won’t our pampering damage their character? Won’t they become addicted to the entitlement culture, demanding subsidies even for their yachts? Oh, wait …
Second, welfare subsidies for yachts. The mortgage-interest deduction was meant to encourage a home-owning middle class. But it has been extended to provide subsidies for beach homes and even yachts.
In the meantime, money was slashed last year from the public housing program for America’s neediest. Hmm. How about if we house the homeless in these publicly supported yachts?
Third, welfare subsidies for hedge funds and private equity. The single most outrageous tax loophole in America is for “carried interest,” allowing people with the highest earnings to pay paltry taxes. They can magically reclassify their earned income as capital gains, because that carries a lower tax rate (a maximum of 23.8 percent this year, compared with a maximum of 39.6 percent for earned income).
Let’s just tax capital gains at earned income rates, as we did under President Ronald Reagan, that notorious scourge of capitalism.
Fourth, welfare subsidies for America’s biggest banks. The too-big-to-fail banks in the United States borrow money unusually cheaply because of an implicit government promise to rescue them. Bloomberg View calculated last year that this amounts to a taxpayer subsidy of $83 billion to our 10 biggest banks annually.
President Obama has proposed a bank tax to curb this subsidy, and this year a top Republican lawmaker, Dave Camp, endorsed the idea as well. Big banks are lobbying like crazy to keep their subsidy.
Fifth, large welfare subsidies for American corporations from cities, counties and states. A bit more than a year ago, Louise Story of The New York Times tallied more than $80 billion a year in subsidies to companies, mostly as incentives to operate locally. (Conflict alert: The New York Times Company is among those that have received millions of dollars from city and state authorities.)
You see where I’m going. We talk about the unsustainability of government benefit programs and the deleterious effects these can have on human behavior, and these are real issues. Well-meaning programs for supporting single moms can create perverse incentives not to marry, or aid meant for a needy child may be misused to buy drugs. Let’s acknowledge that helping people is a complex, uncertain and imperfect struggle.
But, perhaps because we now have the wealthiest Congress in history, the first in which a majority of members are millionaires, we have a one-sided discussion demanding cuts only in public assistance to the poor, while ignoring public assistance to the rich. And a one-sided discussion leads to a one-sided and myopic policy.
We’re cutting one kind of subsidized food — food stamps — at a time when Gallup finds that almost one-fifth of American families struggled in 2013 to afford food. Meanwhile, we ignore more than $12 billion annually in tax subsidies for corporate meals and entertainment.
Sure, food stamps are occasionally misused, but anyone familiar with business knows that the abuse of food subsidies is far greater in the corporate suite. Every time an executive wines and dines a hot date on the corporate dime, the average taxpayer helps foot the bill.
So let’s get real. To stem abuses, the first target shouldn’t be those avaricious infants in nutrition programs but tycoons in their subsidized Gulfstreams.
However imperfectly, subsidies for the poor do actually reduce hunger, ease suffering and create opportunity, while subsidies for the rich result in more private jets and yachts. Would we rather subsidize opportunity or yachts? Which kind of subsidies deserve more scrutiny?
Some conservatives get this, including Senator Tom Coburn, Republican of Oklahoma. He has urged “scaling back ludicrous handouts to millionaires that expose an entitlement system and tax code that desperately need to be reformed.”
After all, quite apart from the waste, we don’t want to coddle zillionaires and thereby sap their initiative!
By: Nicholas D. Kristof, Op-Ed Columnist, The New York Times, March 26, 2014
“Low Wage Jobs Endanger Nothing”: Wall Street’s 2013 Bonuses Were More Than All Workers Earned Making The Federal Minimum
Purveyors of Ferraris and high-end Swiss watches keep their fingers crossed toward the end of each calendar year, hoping that the big Wall Street banks will be generous with their annual cash bonuses.
New figures show that the bonus bonanza of 2013 didn’t disappoint. According to the New York State Comptroller’s office, Wall Street firms handed out $26.7 billion in bonuses to their 165,200 employees last year, up 15 percent over the previous year. That’s their third-largest haul on record.
That money will no doubt boost sales of luxury goods. Just imagine how much greater the economic benefit would be if that same amount of money had gone into the pockets of minimum-wage workers.
The $26.7 billion Wall Streeters pocketed in bonuses would cover the cost of more than doubling the paychecks for all of the 1,085,000 Americans who work full-time at the current federal minimum wage of $7.25 per hour.
And boosting their pay in that way would give our economy much more bang for the buck. That’s because low-wage workers tend to spend nearly every dollar they make to meet their basic needs. The wealthy can afford to squirrel away a much greater share of their earnings.
When low-wage workers spend their money at the grocery store or on utility bills, this cash ripples through the economy. According to my new report, every extra dollar going into the pockets of low-wage workers adds about $1.21 to the national economy. Every extra dollar a high-income American makes, by contrast, only adds about 39 cents to the gross domestic product (GDP).
And these pennies add up.
If the $26.7 billion Wall Streeters pulled in on their bonuses last year had instead gone to minimum wage workers, our economy would be expected to grow by about $32.3 billion — more than triple the $10.4 billion boost expected from the Wall Street bonuses.
This immense GDP differential only speaks to one price we pay for Wall Street’s bonus reward culture. Huge bonuses, the 2008 financial industry meltdown made clear, create an incentive for high-risk behaviors that endanger the entire economy.
And yet, nearly four years after passage of the Dodd-Frank financial reform, regulators still haven’t implemented the modest provisions in that law to prohibit financial industry pay that encourages “inappropriate risk.” Time will tell whether last year’s Wall Street bonuses were based on high-risk gambles that will eventually blow up in our faces.
Low-wage jobs, on the other hand, endanger nothing. The people who harvest, prepare and serve our food, the folks who keep our hotels clean, and the workers who care for our elderly all provide crucial services. They deserve much higher rewards.
By: Sarah Anderson, Moyers and Company, Bill Moyers Blog, March 12, 2014; This post originally appeared at Other Words
“Bad Incentives Haven’t Gone Away”: You Still Need To Care About Sky-High Wall Street CEO Pay
According to a new regulatory filing, Bank of America CEO Brian Moynihan received a compensation package for 2013 worth $14 million, a $2 million increase over 2012. This places Moynihan third on the list of big bank CEOs, behind Goldman Sachs chief Lloyd Blankfein, who made $23 million last year and JPMorgan Chase’s Jamie Dimon, who made $20 million. Moynihan’s top underlings also received multi-million dollar compensation packages of their own.
With these numbers, it seems that Wall Street’s biggest banks are trying to put the financial crisis of 2008 firmly in the rear view mirror. (Never mind that many of them, most prominently JPMorgan, are still paying out hefty fines, penalties and settlements due to their actions in the lead up to that crisis.) Nothing more to see here! Back to business as usual! All’s well that ends profitably!
Over at the New York Times’ Dealbook this week, Ohio State University professor Steven Davidoff even lamented the outsized attention still garnered by CEO pay at Wall Street firms, when, for instance, tech CEOs sometimes make much more. “This double standard for finance and technology doesn’t make sense,” he wrote, adding that “perhaps it is time to call a truce on the Wall Street bias in looking at executive compensation.”
But there’s a good reason for the focus on Wall Street pay. For tech firms, misaligned incentives aren’t likely to crash the economy. For Wall Street, however, short-term risk-taking in pursuit of bigger bonuses can cause systemic problems, as several studies have shown. That’s why the Dodd-Frank financial reform law included new regulations meant to tie executive compensation at banks to longer-term performance (and it didn’t hurt that reining in Wall Street pay makes for good politics).
Sure, Davidoff is right that sky-high CEO pay deserves a broader look across the board. After all, it’s a big driver of income inequality. As the Economic Policy Institute has found, “Executives, and workers in finance, accounted for 58 percent of the expansion of income for the top 1 percent and 67 percent of the increase in income for the top 0.1 percent from 1979 to 2005.” Not only that, but taxpayers are subsidizing these big pay packages thanks to a loophole allowing corporations to write off CEO pay that is “performance based.” (Rep. Lloyd Doggett, D-Texas, has introduced legislation to fix that particular problem, but given what the Republican-held House is interested in these days, I wouldn’t expect it to come up for a vote anytime soon.)
But the fact remains that Wall Street pay is unique due to its ability to cause harm to the wider economy. The simple solutions for reining in pay that would work in other industries – such as higher taxes, more transparency and stronger unions – don’t reduce that risk. And the fixes in Dodd-Frank, while helpful, haven’t done enough, as professor J. Robert Brown Jr., an expert in corporate law, wrote recently:
Executive compensation is not adequately bounded by legal standards under state law. Efforts to address these concerns by Congress have been useful but remain incomplete. The system as it currently exists does not ensure that compensation will be based upon actual performance or that the approach will not encourage excessive risk taking.
Now, Wall Street will tell you up, down and all around that its new pay packages are not like those of yesteryear. And maybe that’s even the case for now. But as 2008 fades further and further into memory, it’s worth remembering just how the economy was brought to the brink and what still hasn’t been done to fix those problems. Without firm rules, there’s nothing stopping Wall Street from slipping right back to the same old bad habits when it thinks everyone has lost interest.
By: Pat Garofalo, U. S. News and World Report, February 20, 2014
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