“Corporations Are Very Rich People”: Record $824 Billion Last Year As Conservatives Claim Obama Anti-Business
A favorite conservative attack on President Obama is that his policies — and even his personality — amount to an assault on American businesses. “President Obama himself is the most anti-business presidentin my lifetime. With rhetoric not befitting a president he has attacked oil companies, banks, airplane users, Wall Street and anyone who makes money,” wrote Gary Shapiro, president and CEO of the Consumer Electronics Association.
However, according to the latest data, President Obama has been very good for America’s biggest businesses. Last year, in fact, the Fortune 500 made a record $824 billion, topping the previous record set before the Great Recession:
The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy. The 2011 profits are outsized based on two key historical metrics. They represent 7% of total sales, vs. an average of 5.14% over the 58-year history of the Fortune 500. Companies are also garnering exceptional returns on their capital. The 500 achieved a return-on-equity of 14.3%, far above the historical norm of 12%.
Of course, that return to pre-recession level earnings hasn’t translated into job or wage growth for America’s workers. In fact, inflation-adjusted wages fell last year. Big companies are also squeezing more productivity out of their workers, with annual revenue generated per worker increasing by more than $40,000 over the last five years. CEO pay, meanwhile, increased 15 percent last year.
This data also puts the lie to the Republican claim that corporate tax cuts will spur businesses to hire. If all it took were extra cash, businesses would be hiring like crazy. However, they are clearly not doing so — and the effective corporate tax rate is already at a forty year low.
By: Pat Garofalo, Think Progress, May 7, 2012
“Fact, Pseudo-Fact And Pure Imagination”: How Paul Ryan Escapes Scrutiny
Because of his pleasant demeanor, the Wisconsin congressman is rarely pressed on his radical agenda.
House Budget chairman Paul Ryan inhabits two, mutually exclusive spaces in Washington politics. He’s both a crusader for deficit reduction—the recipient of praise and accolades from the Beltway’s collection of deficit hawks—and a pure right-wing ideologue, whose budgets would gut the social safety net, slash taxes on the rich, and load the United States with trillions of dollars in debt. That he’s managed to do this without backlash from the Right or incredulity from the mainstream is a remarkable achievement, and as Jonathan Chait describes for New York Magazine, a product of his studied earnestness and ostentatious love of “wonkery”:
Seeming genuine is something Ryan does extraordinarily well. And here is where something deeper is at play, more than Ryan’s charm and winning personality, something that gets at the intellectual bankruptcy of contemporary Washington. The Ryan brand is rooted in his ostentatious wonkery. Because, unlike the Bushes and the Palins, he grounds his position in facts and figures, he seems like an encouraging candidate to strike a bargain. But the thing to keep in mind about Ryan is that he was trained in the world of Washington Republican think tanks. These were created out of a belief that mainstream economists were hopelessly biased to the left, and crafted an alternative intellectual ecosystem in which conservative beliefs—the planet is not getting warmer, the economy is not growing more unequal—can flourish, undisturbed by skepticism. Ryan is intimately versed in the blend of fact, pseudo-fact, and pure imagination inhabiting this realm.
The thing that comes across in Chait’s piece, more than anything, is the degree to which so many people simply don’t believe that Ryan is a right-wing ideologue. When given a choice between him and their lying eyes, they choose him, despite the fact that his budget would clearly result in a return to the pre-New Deal era, where government was mostly uninvolved in the economic life of the country, to the detriment of everyone.
To wit, Chait relays an interview with New York Times business columnist James Stewart, who assumes that Ryan would raise tax rates on capital gains as part of his budget plan, despite the fact that Ryan has been a vocal opponent of taxes on capital gains. Chait is baffled, and asks him to square the circle:
I asked Stewart why he believed so strongly that Ryan actually supported such a reform, despite the explicit opposition of his budget. “Maybe he’s being boxed in” by right-wing colleagues, Stewart suggested.
This is actually a problem for trying to challenge Ryan’s brand of reactionary conservatism; if the arbiters of mainstream discourse refuse to take Ryan on his stated terms—because he talks nice and works out a lot—then the public is necessarily less informed about what the Wisconsin representative wants for the United States. You can see this dynamic at work in today’s Times profile of Ryan, where we learn a lot about his popularity, his exercise regimen, and his love of noodling (catching catfish with your bare hands), and not very much about his plans or their implications.
Ryan’s ideas should discredit him—they are little more than an updated version of the policies that led us to the worst economy since the Depression. But people like to be hooked, and the earnest congressman is a great salesman.
By: Jamelle Bouie, The American Prospect, April 30, 2012
“Campaigning In Fiction”: Mitt Romney’s Campaign Pledges Raise Questions For Conservatives
Republican presidential candidate Mitt Romney is making campaign promises that could produce an economic miracle – or a more predictable list of broken vows.
Romney says he wants to put the nation on a path to a balanced budget while also cutting an array of taxes, building up the Navy and Air Force and adding 100,000 active-duty military personnel. He says he would slash domestic spending and reduce tax loopholes but has offered few details.
His comments raise eyebrows in Congress, long accustomed to easier-said-than-done promises. And even some conservatives have their doubts.
Christopher A. Preble, a vice president for the libertarian Cato Institute, says Romney’s promise to push military spending to 4 percent of the national economy would require dramatic increases that would raise, not lower, the federal deficit.
Citing “the absurdity of Romney’s plan,” Preble wrote recently that the candidate “hasn’t said what other spending he will cut, or what taxes he would increase.”
“Until he does,” Preble wrote, “it is logical to conclude that he plans to pile on more debt.”
Romney says he will avoid that problem by making courageous cuts to federal programs if elected.
“I have three major ways that we can get ourselves to a balanced budget,” he told voters this month in Warwick, R.I. “Number one is to eliminate some programs. Stop, eliminate them. Not just slow down their rate of growth. But look at programs and say, `Too many, too big, too expensive, too ineffective, get rid of it.’ Some programs you’re going to like. I’m going to ask for sacrifice. But the sacrifice will not be taking more from your wallet…. I’m not going to give anybody any free stuff.”
Other Romney proposals would make states responsible for programs such as Medicaid, and reduce the federal workforce by 10 percent “through attrition.”
It’s not uncommon for candidates to promise unspecified spending cuts. Often, however, they find it extremely difficult to fulfill the pledges once elected. That’s one reason the nation’s debt has soared under Republican and Democratic presidents and congresses alike.
Romney has shown little willingness to cut popular programs so far. He joined President Barack Obama, and bucked some House Republicans, by backing an extension of low college loan rates for middle-income students, a $6 billion government cost.
Voters may understand that candidates can’t or won’t keep all their promises.
“You campaign in fiction, and govern in fact,” said Tom Davis, a former congressman who headed the Republicans’ House campaign committee from 1998 to 2002.
He noted that Obama quickly backed off his campaign promise to close the Guantanamo Bay prison. Obama also pledged to tamp down Washington’s partisan tone and to overhaul immigration laws, neither of which has happened.
Davis said it’s the general thrust of Romney’s proposals that matters most, not every specific item.
“What he’s trying to do is sketch a different vision,” Davis said. Details of how Romney’s proposals will pan out, if he’s elected, “will be determined by Congress and events,” he said.
Rep. Steve LaTourette, R-Ohio, said Romney’s proposals “are aspirations” more than firm promises. If elected, Romney may have to revisit his current rejection of tax increases and his vow to leave Social Security and Medicare unchanged for current and soon-to-be recipients, LaTourette said.
Romney and Obama “have to come to the realization that a big deal,” which includes tax increases, spending cuts and changes to Social Security and Medicare, “is the only way” to address the nation’s deficit dilemma, LaTourette said.
Romney calls for a host of tax cuts. But independent analysts say they will worsen the deficit unless offset by deep and politically unpopular spending cuts.
Romney would keep the Bush-era tax cuts, and further reduce all marginal income tax rates by 20 percent. He says he would lower the corporate tax rate, eliminate the estate tax, push a balanced budget amendment to the Constitution and make $500 billion in unspecified domestic discretionary spending cuts in 2016.
He wants wider exploration for energy, including oil drilling in the Arctic National Wildlife Refuge, or ANWR.
Such promises draw loud cheers at GOP rallies. But for decades, Republican-run and Democratic-run congresses alike have rejected ANWR drilling, a balanced budget amendment, deep spending cuts and other mainstays of Romney’s campaign.
Whether these campaign ideas are called proposals, aspirations or promises, they are easier to talk about than to achieve.
By: Charles Babington, The Huffington Post, April 27, 2012
“Larger Deficits, More Inequality”: The House Republicans’ Head Scratching Economics
Whether you worry about the sluggish recovery, budget deficits, or widening inequality, you should be scratching your head at what the House of Representatives is up to this week.
On the one hand, the House will likely pass the small business tax cut sponsored by House Majority Leader Eric Cantor, which adds $46 billion to the deficit, largely benefits very high-income taxpayers, and has little potential for creating jobs. On the other hand, the House Agriculture Committee has approved a proposal, as part of its deficit reduction mandate, to cut $36 billion from the Supplemental Nutrition Assistance Program—formerly food stamps—a program that goes mainly to low-income households and is one of the best policies we have for creating jobs in a weak economy.
In Tuesday’s post on the New York Times Economix blog, Bruce Bartlett, who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Reps. Jack Kemp and Ron Paul, asks the question, “Do small businesses create jobs?” He appropriately cites the research showing that politicians’ worship of small businesses as jobs creators is misguided, and that it is start-up firms, not small firms per se, that are the job creators. Moreover, many of those who would benefit from the tax cut are affluent doctors, lawyers, and stockbrokers—hardly the local mom and pop store that most people imagine when they hear the phrase “small business.”
Bartlett is scathing on the Cantor bill:
There may be policies that would increase the number of business start-ups and aid employment this way. But an across-the-board tax cut for every small business, defined only in terms of employment, is nothing but …[a] giveaway unlikely to create any jobs whatsoever.
Bartlett’s indictment is backed up by standard “multiplier” or “bang-for-the-buck” analyses from the Congressional Budget Office and private analysts like Mark Zandi, chief economist of Moody’s Analytics. In contrast to an increase in SNAP benefits, which they find to be among the most cost-effective measures for stimulating economic growth and job creation in a weak economy, both the Congressional Budget Office and Zandi find business tax cuts similar to the Cantor bill to be among the least effective. The economic growth and job creation impact per dollar of nutritional assistance spending is six to eight times larger than that of an across-the-board tax cut.
Here is what the House is doing with these two measures: It is adding $46 billion of tax cuts, nearly half of which will go to those making more than $1 million, to the budget deficit. According to the official Joint Committee on Taxation estimate, about $45 billion of it will be received in 2012-13, when the economy could in fact use a boost to jobs. At the same time, any stimulus from the tax cut will be wiped out by the $8 billion of the $36 billion SNAP cut that also would occur in 2012-13.
The bottom line on these actions is that they produce larger budget deficits, more inequality, and no net new jobs. So when I see the House moving in exactly the opposite direction of what is fair and makes economic sense, I’m inclined to ask: “Is it really more politically appealing to cut taxes for millionaires and increase the budget deficit than to maintain food benefits for the poor that also give an extra boost to the economic recovery?”
By: Chad Stone, Chief Economist at the Center on Budget and Policy Priorities, Washington Whispers, U. S. News and World Report, April 19, 2012
“Faith-Based Budgeting”: The New Testament According To Disciple Paul Ryan
Probably everyone has heard the New Testament story in which Jesus entered the temple and told the money changers, “You know, if you got a massive tax break, the benefits would probably benefit poor families eventually.” Or something like that, right?
That seems to be the message I’ve been hearing from the right this week. Over the weekend, evangelical megachurch pastor Rick Warren said the Bible “says we are to care about the poor,” but he also said he opposes “wealth redistribution,” adding, “When you subsidize people, you create the dependency.”
He’s not the only one adopting this theological approach.
House Budget Committee Chairman Paul Ryan (R-Wis.), whose budget plan recently passed the House in a party-line vote, says his faith contributed in shaping the proposal, which he says is consistent with Catholic teachings.
“A person’s faith is central to how they conduct themselves in public and in private,” Ryan said in an interview released on Tuesday by the Christian Broadcasting Network. “So to me, using my Catholic faith, we call it the social magisterium, which is how do you apply the doctrine of your teaching into your everyday life as a lay person?”
To be sure, Ryan’s spiritual beliefs are his own business, and his religious beliefs are between him and his conscience. I’m not going to pretend to be a theologian or try to interpret Scripture for him.
I can, however, point out the nation’s Roman Catholic bishops — the leaders of Ryan’s faith tradition — have urged Republicans to adopt a budget strategy that “requires shared sacrifice by all,” including additional tax revenues and eliminating unneeded military spending. In a letter last year, the bishops also characterized “massive cuts” to programs that benefit the poor as unacceptable. “The needs of those who are hungry and homeless, without work or in poverty should come first,” the bishops said, articulating a principle that the Ayn Rand acolyte considers ridiculous.
I can also point out that Ryan’s budget plan is simply brutal towards the poor.
The House Republican agenda gets “at least 62 percent of its $5.3 trillion in non-defense budget cuts over ten years from programs that serve people of limited means,” while also “giving a massive tax break to the wealthy.” This means redistributing wealth in the wrong direction — taking money from SNAP, Medicaid, and education, and redirecting that money towards those who are already rich.
If his read on the New Testament is that Jesus would cut food stamps while giving millionaires a tax break, Paul Ryan has a far more creative mind than I do.
I hate to break it to the right-wing Budget Committee chairman, but praying that dubious numbers will somehow add up doesn’t count as a budget shaped by faith.
By: Steve Benen, The Maddow Blog, April 12, 2012
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