Category Archives: Plutocracy

In Honor Of The George ‘W’ Bush Legacy-Rehabilitation Discussion

Posted on by
1

The pundit world is busy rehabilitating the reputation of George ‘W’ Bush. Somehow in today’s America killing hundreds of thousands of human beings illegally invading a country, torture, corruption and “no-bid contracts” to crony insiders, crashing the economy, intentionally creating massive deficits, using phony terrorist-attack alerts to stampede frightened citizens into voting against their own interest, and so much more of the ‘W’ legacy don’t disqualify such a discussion, nevermind instead demanding prosecution for the crimes committed…

In honor of the attempted rehabilitation of George ‘W’ Bush here is a bit from a 2010 post of mine, originally at Open Left. Did Bush Leave Us Bankrupt, Corrupt, Ungovernable?

When you sell the farm, the farm’s gone.

Is it already too late for America? I’m starting to think that the anti-tax, anti-government conservative movement that started in the mid-70s, elected Reagan and led to the terrible Bush Presidency may have effectively destroyed the country, leaving it bankrupt, corrupt, ungovernable, ruled by a wealthy elite — and we’re only now just starting to realize it. To cover tax cuts we stopped maintaining the infrastructure and started borrowing. To satisfy their hatred of government we increasingly stripped away rule of law, regulation, and belief in one-person-one-vote. We are seeing the consequences of all of that coming back to roost now.

… The conservatives destroyed the regulatory structure of the government. They removed the inspectors, administrators, regulators and replaced them with corrupt cronies.

… The conservatives destroyed the rule of law, leaving behind public perception of rule by cronyism, favoritism and mob.

The conservatives destroyed public understanding of democracy, leaving behind a one-dollar-one-vote system that their Supreme Court just formalized, along with a corporate media that works to keep people uninformed. …

[. . .]

More equitable distribution of the fruits of our economy is another step. Our system worked so much better back when the top tax rate was 90%. The returns from our investment in infrastructure were more widely shared. And back when it took many years to build a fortune businesses had an interdependence with their communities. Executives needed the schools and roads and other public structures functioning well. They needed long-range business and community planning. But just imagine trying to do something about the concentration of wealth today.

So where do we go from here. Is democracy over? Is rule of law a thing of the past? Is predatory monopoly control by the largest corporations the way things are and will be? Does the world now move to governance by a wealthy elite?
Or is the winter and the rain and the snow just getting to me?

What are your thoughts?

Read the whole thing here: Did Bush Leave Us Bankrupt, Corrupt, Ungovernable?

—–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Minimum Wage Raise Essential To Fix Our Economy

Posted on by
Reply

The Walton (Walmart) heirs now have as much wealth as up to 40 percent of all Americans combined, and Walmart’s sales have been slowing down. What does the first fact have to do with the second? (Hint: Sign this petition for raising the minimum wage.)

The top 1 percent now rakes in 20 percent of the nation’s income and holds one-third of the country’s wealth. Meanwhile the economy remains stagnant because the incomes of regular people are stagnant and falling – meaning they can’t buy stuff and can’t invest in their own futures.

From the post “40% Of Americans Now Make Less Than 1968 Minimum Wage”:

The chart shows that wages used to go up as productivity went up, but in the 1970s they decoupled. Productivity kept going up but wages stagnated.

Regular people’s incomes have been stagnant since the 70′s while costs keep going up. In fact, 40 percent Of Americans now make less than the 1968 minimum wage if that minimum wage had kept rising along with productivity. If the minimum wage had stayed coupled to productivity the minimum wage would now be $16.50 an hour – which more than 40 percent of Americans now make!

Instead all of those people’s possible additional income went to the top. And that plus changes in taxation is why we have the inequality we have. That is what happened to our economy and to all of us.

Now, here’s another chart. This chart shows that financial-sector and non-financial-sector compensation used to rise together, but in the late 70′s / early 80′s they decoupled. Financial-sector compensation took off, while non-financial-sector compensation did not.

It is as simple as this: If we want our economy and democracy to recover, the minimum wage needs to be raised as a core part of the solution. (But only part.)

Sign this petition calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.” While $10.10 is too low, it’s a start, and it is what is before the Congress. There are other essential things we need to do, but we need to raise the minimum wage to set a floor that is not falling out from under us.

Inequality Holding Back Recovery

The recovery from the economic crash is stagnant, and unemployment remains in emergency territory.

In January Economist Joseph Stiglitz wrote this op-ed for The New York Times, listing four reasons why the terrible inequality we face today is holding back the recovery, “Inequality Is Holding Back the Recovery”:

There are four major reasons inequality is squelching our recovery. The most immediate is that our middle class is too weak to support the consumer spending that has historically driven our economic growth. While the top 1 percent of income earners took home 93 percent of the growth in incomes in 2010, the households in the middle — who are most likely to spend their incomes rather than save them and who are, in a sense, the true job creators — have lower household incomes, adjusted for inflation, than they did in 1996. The growth in the decade before the crisis was unsustainable — it was reliant on the bottom 80 percent consuming about 110 percent of their income.

Second, the hollowing out of the middle class since the 1970s, a phenomenon interrupted only briefly in the 1990s, means that they are unable to invest in their future, by educating themselves and their children and by starting or improving businesses.

Third, the weakness of the middle class is holding back tax receipts, especially because those at the top are so adroit in avoiding taxes and in getting Washington to give them tax breaks. The recent modest agreement to restore Clinton-level marginal income-tax rates for individuals making more than $400,000 and households making more than $450,000 did nothing to change this. Returns from Wall Street speculation are taxed at a far lower rate than other forms of income. Low tax receipts mean that the government cannot make the vital investments in infrastructure, education, research and health that are crucial for restoring long-term economic strength.

Fourth, inequality is associated with more frequent and more severe boom-and-bust cycles that make our economy more volatile and vulnerable. Though inequality did not directly cause the crisis, it is no coincidence that the 1920s — the last time inequality of income and wealth in the United States was so high — ended with the Great Crash and the Depression. The International Monetary Fund has noted the systematic relationship between economic instability and economic inequality, but American leaders haven’t absorbed the lesson.

Translation:

  1. Top 1 percent (a few people) taking most of the gains, income in the middle (lots of people) is falling, they can’t buy stuff.
  2. Middle class disappearing, unable to invest in education or start businesses.
  3. Tax system rigged so gains going to 1 percent not bringing revenue to government, with incomes to the rest falling, revenue to government decreasing. Government can’t afford to invest in infrastructure, research, education, health and other things the help economy.
  4. Inequality that drives such massive amounts to a top few makes even the rich feel poor so they speculate and engage in quick-buck schemes, economy becomes “volatile and vulnerable.”

Raising the minimum wage is at the center of a set of policies. It is one part of what to do if we want economy to work again for regular people and for the future. Other parts include but are not limited to:

  • New tax brackets for higher incomes,
  • restoring the estate tax,
  • restoring corporate taxation,
  • getting rid of tax incentives that encourage corporations to move jobs and factories and profit centers out of the country,
  • possibly a wealth tax to address the deficit and debt,
  • a tax on Wall Street speculation,
  • restoring government services that help lower- and middle-income people obtain affordable higher education and get job training,
  • renegotiating trade deals that pit American workers against exploited, underpaid workers in non-democracies, thereby making American democracy and wages a competitive disadvantage
  • and many other steps to address the changes brought in since the “Reagan Revolution” that drove the huge increase in inequality and decrease in government investment in our economy’s future.

Raising the minimum wage is not only the moral thing to do, it is essential to bringing the low end up and start distributing the gains more fairly.

Even Walmart’s Sales Hurting Now

After the economic crash Walmart was ascendant. More and more people were moving down the income ladder toward the bottom, they were moving from the upper-scale stores to the bottom, i.e. Walmart.

But now so many people have fallen below the bottom that even Walmart’s sales are slowing down. Seeking Alpha recommends a SELL on Walmart stock because,

WMT derives most of its revenues from domestic operations in the U.S. where it has a dense network of stores and logistic centers. However, U.S. growth has almost flattened over the last couple of years eking out a yearly growth rate of just 1 percent.

Walmart can’t just raise wages on their own because that will give their competitors an advantage, and soon we’ll all be complaining about Target instead.

Even Walmart needs someone to come along and force wages up. Who could that someone be? It’s up to government – We the People – to make all employers raise wages so they can all have customers again.

Government Needed

All businesses will tell you that if they didn’t do everything they can to boost profits, someone else will, and then they’re screwed. Business is a cut-throat game and you have to fight to survive. You have to fight as dirty as the rules let you fight. Businesses will tell you that if they don’t keep wages as low as possible, deny health insurance, cut safety costs, cheapen products, and everything else they can get away with they will be gone, replaced by businesses that will.

The key to the equation is the “what the rules allow” and the “what they can get away with” part of that dirty fight. Businesses compete on a playing field, and the rules and enforcement of those rules determine the way the game is played.

Every individual business wants to save on labor and other costs. But if all businesses do the same, the result is that no one has any money to spend and all of those businesses are in trouble. This is where government comes in. Government is the essential part of this equation, setting and enforcing the rules in ways that make up for what inevitably happens if all businesses cut wages, costs, etc. And government is essential for enforcing those rules.

From “You Can’t Have Healthy Businesses Without Strong Government”:

Imagine this, though it might be difficult: some people are greedy and want more for themselves, at the expense of the rest of us. Yes, this is shocking, but true!

Government protects us from those who would take advantage and take too much. Government does this both domestically and internationally. At home it protects us from criminals and exploiters. Government also protects us from physical and economic threats from other countries.

[. . .] When too many business reduce costs by cutting employees or paying less, the system collapses from lack of demand. Government is needed to keep businesses from laying off too many people or cutting pay. Sometimes government does this by stepping in and hiring people (or just giving them money like unemployment benefits), or buying things, thereby creating demand, causing businesses to hire.

Crucial to this equation:

When government is strong we have more enforcement of a level playing field for all of us, more education for all of us, more security for all of us, more protection of our environment, more infrastructure so our own startup businesses can flourish and compete, more parks, more promotion of the general welfare.

And when government is weak we end up with a very few greedy, ruthless billionaires and their giant corporations controlling the economy, stifling competition, scamming and defrauding us, and consuming the environment and resources for their own short-term profit.

Sign a SignOn.org petition posted by the Campaign for America’s Future calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.”

It is the nature of our current economic system that things will concentrate into fewer and fewer hands. When you let the ones with more money win the game and set the rules it is inevitable that they will increasingly set the rules to they always win the game. When the winner gets more stuff, eventually a very few winners have to end up with all the stuff.

The Fair Minimum Wage Act

The Fair Minimum Wage Act is up before the Congress. Isaiah J. Poole explains in Time To Demand A Vote To Increase The Minimum Wage:

The Fair Minimum Wage Act would increase the current federal minimum wage, $7.25, to $10.10 in three steps over a three-year period, and then index it annually to inflation from that point forward.

The bill would make an even more significant difference for tipped workers, mostly in the restaurant industry. They currently have a minimum wage of $2.13 an hour that has not increased since 1991. Under the bill, tipped workers would earn a minimum 70 percent of the regular minimum wage.

… House members have in fact had one opportunity to vote on the bill in March, in the form of a motion instructing the House to add the minimum wage increase to a workforce training bill. The motion was unanimously rejected by House Republicans.

The bill, though, deserves a stand-alone vote in its own right. It’s been three years since the minimum wage went up to $7.25, and that increase did not undo the damage done to low-wage workers by decades of congressional failure to keep this wage floor from sinking.

Sign a SignOn.org petition posted by the Campaign for America’s Future calling for “the leaders of the House and Senate to allow an up-or-down vote on the Fair Minimum Wage Act of 2013, which would raise the minimum wage to $10.10 an hour and then index it to inflation.”

—–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Do The Math On Jobs

Posted on by
3

Companies are sitting on $4.75 trillion in cash. ($1.7 T of that is outside the country, untaxed.)

There are about 12,000,000 unemployed.

Do the math. Right now companies could use the cash they are sitting on to hire every unemployed person at $395,000 a year, and have cash left over.

Will Social Security Cuts Be The Democratic Party’s “New Coke?”

Posted on by
1

All the smartest people in the executive suites just knew that the taste of Coca-Cola needed “reform.” Rival Pepsi was advertising to the “New Generation” and Coke’s executives came to believe their product wasn’t what the “cool” people wanted to drink. Everyone they talked to at the executive-level strategery seminars, and all the other executive-level geniuses they spoke with daily agreed. They were the elites, and they all knew better than their old-fashioned, uncool customers what the company needed. So they all drank the Kool-Aid and came up with “New Coke.” We all know what happened next. (Hint: it was bad.)

It couldn’t have gone better for Pepsi if Pepsi had placed those executives there themselves.

Continue reading →

Jobs

Posted on by
Reply

Everyone knows that during the depression the government hired unemployed people to work on the infrastructure, parks, etc., and isn’t doing that this time.

Back then We the People were in charge, at least to more of an extent than today. So We the People did things to make our lives better. We the People doing things together to make our lives better is called democracy.

Now government just makes the lives of the wealthiest even better. This is plutocracy.

Elite-Pundit “Grand Bargain” Frenzy Just Like “Run Up” To Iraq War

Posted on by
Reply

The “Grand Bargain” is about showing the world that we can hurt people, so they will know we are “serious.”

Reading Jason Linkins’ HuffPo account of elite-pundit thinking about the “Grand Bargain,” Passing ‘Grand Bargain’ Voters Don’t Care About Is Critical To Confidence In Government, Apparently, I am struck by the similarity between the (elite pundit) Joe Klein quote Linkins references, and the elite-pundit thinking about invading Iraq.

Time Swampland contributor Joe Klein — who is confident that Congress will agree to a “grand bargain” — says that people like me who contend that voters don’t place a high priority on a grand deficit deal are correct but we need to pass a grand deficit deal anyway because reasons, shut up:

There are those on the left who will object that the deficit issue is overblown and not even a priority among voters. They are right. But we have reached the point where some sort of deal is necessary to restore the public’s, the business community’s and the world’s faith that the U.S. government can, occasionally, take significant action. I predict—tepidly, with no great confidence—that the Congress will finally decide it is time to act.

In other words, Klein is saying the elite punditry has made such a big deal about something we all know is the wrong thing to do, that the public has to see us follow through — “take significant action” — or they’ll lose confidence in the country’s ability to make things happen following a pundit frenzy like this one.

Now let’s remember the words of elite pundit Tom Friedman on why invade Iraq.

Tom Freidman, on Charlie Rose, May 29 2003: (link is CS Monitor, Thomas Friedman, Iraq war booster),

“And what we needed to do was to go over to that part of the world and burst that bubble. We needed to go over there basically uhm, and, uh, uhm take out a very big stick, right in the heart of that world and burst that bubble. And there was only one way to do it because part of that bubble said ‘we’ve got you’ this bubble is actually going to level the balance of power between us and you because we don’t care about life, we’re ready to sacrifice and all you care about is your stock options and your hummers. And what they needed to see was American boys and girls going house to house from Basra to Baghdad uhm, and basically saying which part of this sentence don’t you understand. You don’t think we care about our open society, you think this bubble fantasy we’re going to just let it go, well suck on this.”

Friedman said we had to invade Iraq so the world can see that we can use our immense power to hurt people there. Because Iraq is in “that part of the world.”

Joe Klein says we have to do the Grand Bargain to show the world that we can use our immense power to hurt people here, too.

That’s balance for ya.

The “Grand Bargain” is about hurting regular people (“shared sacrifice”) who have been sacrificing since Reagan. The rich have gotten tax cut after tax cut. Their corporations get breaks and subsidies. Wages have been stagnant since Reagan broke the unions, but prices have gone up. People used up their savings, then went into debt. Meanwhile government services for We the People have been cut, cut, cut. Our infrastructure is crumbling. Our transportation and electrical and other systems are just a mess. The safety net has collapsed. College has become unaffordable. Poverty is soaring and the middle class is disappearing.

So now regular people have to “sacrifice” to pay off the money the government borrowed to give the rich their tax cuts and subsidies. That’s the “Grand Bargain” in a nutshell.

P.S. Please read Linkins’ piece, it’s short. Linkins concludes,

” … a deal that will further immiserate Americans with painful cuts to earned benefit programs (like chained CPI) at a time when everyone’s still struggling to get by. Why anyone thinks this would restore the public trust is beyond me. Pundits really need to get out more.”

—–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Fight This New Push To Lower Corporate Taxes

Posted on by
1

There is a big push going on to again reduce tax rates for the giant multinational corporations. See if you can guess who will make up the difference? (Hint: it will be you paying through cuts, and smaller companies that are trying to challenge the incumbency of the giant multinationals.)

Recently in the post Beware the New Corporate Tax-Cut Scam: LIFT Is A Big LIE, I warned about the LIFT coalition of large corporations trying to get rid of taxes on profits made outside the country. Of course this would result in giant companies moving jobs, factories and profit centers out of the country.

The executives who run the giant multinationals want to be let off the hook for paying taxes on profits they make outside our borders. As an Apple executive said to The New York Times, giant multinationals “don’t have an obligation to solve America’s problems.” And to prove it, American corporations are holding $1.7 trillion in profits outside the country – just sitting there – rather than bringing that money home, paying the taxes due and then paying it out to shareholders or using it to “create jobs” with new factories, research facilities and equipment.

Continue reading →

Surprising Studies Find DC Does What Wealthiest Want, Majority Opposes

Posted on by
Reply

A new study, Democracy and the Policy Preferences of Wealthy Americans, by Professors Benjamin I. Page, Jason Seawright and Larry M. Bartels sought to gauge the political and policy priorities of the wealthy, and how these concerns contrast with the concerns of the rest of us. Amazingly, the priorities of the 1% match up with the priorities of our political class, while the priorities and needs of the vast majorities of us are ignored.

The study questioned people with wealth that placed them in the top 1%. They were asked what they felt were the “very important problems” facing the country. The most common response was the budget deficit, with 87 percent believing this to me the most important problem. This contrasts with the rest of the population, with only 7% saying this is the country’s most pressing problem. Of course jobs and the miserable state of the economy for people what are not in that 1% were cited by regular people as the most important problem.

The 1%’ers want “entitlement programs” like Social Security and healthcare cut while the American Majority want (and need) them expanded.

Continue reading →

Cyprus Lesson: Watch Your Bank

Posted on by
2

There is a lesson from the Cyprus situation: If you are a large depositor you need to watch your back bank. You can’t just assume someone will bail out the banks — and you. The big banks have been able to keep governments from reigning them in, while getting governments to bail them out. That game is over.

From now on you have to take a look at the bank’s books and business practices and decide for yourself if your money is safe.

Right now it looks like large depositors in Cyprus’ banks are going to take a 30-40% “haircut” – meaning when the banks reopen 30-40% of their money will be gone. This is the “bailout” alternative to the banks failing and all of the money going away.

The Cyprus lesson is that deregulation and “keeping government from meddling with business” means it’s all on you now, on your own, by yourself, to watch out for your own interests. And that’s expensive. Really, really expensive.

It’s the libertarian dream, home to roost.

Not Greece

Cyprus is not like Greece. The government didn’t borrow a lot of money. What happened is that their banks failed. Cyprus’ banks seven-or-eight times the size of Cyprus’ economy when the EU average was three times, in-part because they offered tax-haven status to depositors around the world. In particular they attracted wealthy Russian and British tax-evaders. If the banks fail they will lose their money. And they were doing what big banks do with depositors’ funds — bad loan, speculation, investing in Greek bonds… It turned out that when something is unsustainable it can’t be sustained, and this time it wasn’t. The banks failed.

But it wasn’t just wealthy Russians and Brits on the line here … Cyprus’ businesses also have their money in Cyprus’ banks. So here’s the thing: If the banks just fail it would mean that every business in Cyprus would lose their money too, and be unable to make their payrolls, pay their creditors, even pay their rent.

When Banks Fail You Lose Your Money

Here is something that most people don’t understand: When banks fail every depositor loses their money. In the depression banks failed and depositors lost their money. Regular people around the country lost their savings. This is what causes bank runs – people trying to get their money out in time. The ones who don’t get there in time lose everything.

Since the depression American banks are insured up to a certain amount by the Federal Depository Insurance C-something (FDIC), and this has prevented these bank runs. When bank fails the FDIC steps in (usually on a Friday evening), closes the bank and arranges for another bank to take over the insured accounts (usually by Monday morning) and regular depositors hardly even notice the change.

European depositors with $100,000 Euros or less are also insured, so these Cypriot depositors will be repaid at some point. Amounts over that will have to wait for the banks to be liquidated, and might or might not get some pennies on the Euro.

On top of that, when banks fail you can’t get normal financing. It becomes difficult to borrow to meet the next payroll even though you have more than that due from receivables, or to get financing to upgrade your equipment even though your cash flow can handle the payments…

So governments have to step in when there is a systemic banking-system failure. If they don’t the entire economy in that country basically just shuts down.

The Cyprus Deal Means You Have To Watch Your Bank

So Cyprus needs to bail out its big banks or lose everything, and the government is making a deal with the International Monetary Fund and German and other banks for a loan to keep things going. It looks like the Cyprus bank bailout deal means depositors with amounts over the insured level are “taking a haircut” and losing 40% of their money.

Before this happened in Cyprus you usually large depositors could stick their money in a generic “bank” and if something happened a government would step in and get you most, if not all, of your money. Banks were generic banks, they held you money and when you needed it you could just get it.

But now there is a lesson: banks can fail and government might not step in and bail everyone out. You can lose your money.

You can lose your money.

This means you have to pay attention to which bank you are putting your money in. You need to look at the particular bank you are putting your money into and understand if they are playing games, speculating, hiding things from their books, making bets with a “London Whale,” using fantasy valuations or “repos” to make their books look better, laundering money for drug dealers or terrorists, etc.

It’s on you, because government’s aren’t doing it. Whether it is due to deregulation or “regulatory capture,” the banks are doing what they want, when they want and to whom they want. And no one is holding them accountable. You can lose your money.

Government is no longer functioning when it comes to big banks, so you have to do the work yourself. You can lose your money so you have to know if your bank is on the level. Good luck with that.

Anti-government types, you got what you wanted. Government is not “meddling” with businesses – at least not with the big banks. So sit back and enjoy the ride.

—–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

DC Should Talk About Fixing The TRADE Deficit

Posted on by
Reply

The economy is not working for We, the People. But even with $4 trillion already cut from deficit projections, a deficit drop of about 50 percent as a share of gross domestic product, and Congressional Budget Office projections that the deficit is stable for the next 10 years Washington remains focused on even more economy-killing austerity. It’s talking only about what and how to cut instead of how to meet the needs of the people of the country and grow the economy.

This fight over spending cuts led to the “sequester,” which might take us back into recession. The fight will now roll into another manufactured crisis over the continuing resolution, with a government shutdown as the hostage, and of course this will be a further drag on the recovery.

Economics 101, Europe’s austerity experiment and the experience of history all tell us that cutting government is contractionary policy. Cutting government cuts economic growth and costs jobs, which leads to to lower tax revenue and higher government expenditures. Economics 101 and the experience of history also tell us that government investment in jobs, infrastructure, education, research and the rest grows the economy, which fixes deficits. Cutting deficits and debt is important but clearly should not be done when the economy is weak. This is the time to invest, and the investment returns will pay for the investment and more.

Again: There is no real discussion or debate about what we ought to be doing to make this economy work for working people. There is only discussion of what and how to cut. This is the wrong approach to our economic problems.

CAF is presenting job-creating and economy-growing ideas that ought to be debated so we can begin to turn this economy around and make it work for all of us instead of just a few of us. Jobs and growth fix deficits.

The Vast Trade Deficit Drains Our Economy And Jobs

Recently the 2012 U.S. international trade deficit in goods and services was announced. It fell slightly in 2012 (due in part to a decline in petroleum imports), to $540.4 billion from $560 billion in 2011. But 2012 saw a record trade deficit of $315 billion with China – approaching $1 billion a day. That is $540 billion a year drained from our economy, $315 billion of that just to China.

This vast trade deficit represents the loss of millions of jobs, tens of thousands of factories and entire industries. It hits at our ability to fix our economic problems. In particular, this problem affects our manufacturing companies, which provide solid, middle-class jobs and exports that strengthen the country.

Instead of the current focus on budget deficits, Washington should be talking about how to fix this vast trade deficit. Here are some of the things they should be talking about — and doing.

Fix Currency

Countries manipulate their currency rates because a “weak” currency means products made there are much more price-competitive. China’s currency is still estimated to be at least 20 percent below “market” rate, meaning goods made in China cost at least 20 percent less than goods made here, even before you factor in other things China does to give itself a trade advantage.

Confronting currency manipulation offers the biggest “bang for the buck,” requiring no tax dollars and reaping huge returns, shrinking the federal budget deficit by between $78.8 billion and $165.8 billion over three years.

Fixing this one problem could create between 2.2 million and 4.7 million jobs and increase GDP between 1.4 percent and 3.1 percent, helping manufacturers in particular, gaining between 620,000 and 1.3 million of those jobs. It would reduce the U.S. trade goods deficit by at least $190 billion and as much as $400 billion over three years.

Reform Trade Agreements

A $540 billion trade deficit doesn’t come from balanced trade; it is the result of one-sided trade agreements we have entered into. These trade agreements exposed America’s companies, workers, factories and tax base to direct competition with non-democracies, impoverished and exploited workers and countries that do not protect the environment. That could only go one way.

We have a democracy, in which people have a say. So they say they want good wages, safe workplaces and a clean environment. When we open that system up to direct, unregulated competition from places where people have no say and are told they can’t have those things, we put our democratic system at a competitive disadvantage in world markets. We make it a disadvantage to protect the environment, pay well, provide benefits, protect worker safety and the other things that we do and others do not do. Those become just “costs” to be eliminated.

Those trade agreements could have had different terms that lead to different results that lifted working people on both sides of the trade border instead of pushing terrible and increasing worldwide inequality. They could have lifted environmental protections on both sides of trade borders. They could have increased worker and consumer protections. They still can.

Our country’s trade agreements can still be reformed to do these things, rebalancing trade and lifting people and the environment. Future trade agreements should learn the lessons.

Bring Back The Bring Jobs Home Act

Last year Senate Republicans filibustered the Bring Jobs Home Act, but the bill had tremendous public support. It should be revived.

The Bring Jobs Home Act would have cut taxes for U.S. companies that move jobs and business operations to the United States, and ended tax loopholes that reward companies for shipping jobs overseas. The bill would have allowed companies to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the United States. It would have closed a loophole allowing a company moving jobs overseas to deduct various relocation costs.

Additionally, any new bill should tax the overseas income of U.S. corporations the same way domestic income income is taxed, so there would be no tax advantage to them from shifting income and jobs overseas.

Strengthen Buy America In Federal And State Procurement

There is no reason our own government should be undermining American manufacturers. “Buy America” provisions should be a mandate on federal, state and local government purchases, consistent with our trade laws. To accomplish this, our bottom line should be:

  • All federal spending should have “buy America” provisions giving American workers and businesses the first shot at procurement contracts.
  • New federal loan guarantees for energy projects should require the utilization of domestic supply chains for construction.
  • Our military equipment, technology and supply purchases should have increased domestic content requirements.
  • Renewable and traditional energy projects should use American materials in construction. State-level spending should have similar requirements, as well as strategies for getting them in place.

Many state-level procurement laws are very weak. As a result, a lot of tax dollars go to purchase goods made overseas instead of goods made in the USA. States should also strengthen their procurement policies to promote buying American-made materials.

The Invest in American Jobs Act of 2013, announced Tuesday, is a good start and deserves support and discussion. The Act strengthens Buy America preferences, closes loopholes and improves transparency in the federal waiver process.

These are a few examples of the things that Washington should be talking about. These proposals solve real problems in practical ways that help the American people.

—–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary

Taxes Aren’t Theft, Tax Cuts For The Wealthy Are Theft

Posted on by
1

The Speaker of the House last week said that taxing people to pay for government is theft. Let’s look at just where actual theft is occurring.

Michael McAuliff and Sabrina Siddiqui covered the story at the Huffington Post, in John Boehner Compares Tax Proposals Of White House To Stealing,

We don’t have a revenue problem. We have a spending problem,” Boehner added. “How much more money do we want to steal from the American people to fund more government? I’m for no more.”

Yes, the old “taxes are theft” argument again. This is the line of reasoning that says government is bad, that decision-making by We, the People is bad, that people are “takers” and the wealthy are “producers” and “job creators,” and that the people are lazy and “don’t want to work” and if you let them assemble together and vote they become a mob that will steal everything from the rich who are rich by Divine Right, etc…

Keep in mind that in a democracy We, the People make decisions and government spending by definition is We, the People deciding to do things that make our lives better.

In honor of Speaker Boehner’s argument that taxes are theft, this is from August 2010: (even though the post will say June 12, 2012…)

Tax Cuts Are Theft

Conservatives like to say that taxes are theft. In fact it is tax cuts that are theft because they break a long-standing contract.

The American Social Contract: We, the People built our democracy and the empowerment and protections it bestows. We built the infrastructure, schools and all of the public structures, laws, courts, monetary system, etc. that enable enterprise to prosper. That prosperity is the bounty of our democracy and by contract it is supposed to be shared and reinvested. That is the contract. Our system enables some people to become wealthy but all of us are supposed to benefit from this system. Why else would We, the People have set up this system, if not for the benefit of We, the People?

The American Social Contract is supposed to work like this:

virtual_cycle

A beneficial cycle: We invest in infrastructure and public structures that create the conditions for enterprise to form and prosper. We prepare the ground for business to thrive. When enterprise prospers we share the bounty, with good wages and benefits for the people who work in the businesses and taxes that provide for the general welfare and for reinvestment in the infrastructure and public structures that keep the system going.

We fought hard to develop this system and it worked for us. We, the People fought and built our government to empower and protect us providing social services for the general welfare. We, through our government built up infrastructure and public structures like courts, laws, schools, roads, bridges. That investment creates the conditions that enable commerce to prosper – the bounty of democracy. In return we ask those who benefit most from the enterprise we enabled to share the return on our investment with all of us – through good wages, benefits and taxes.

But the “Reagan Revolution” broke the contract. Since Reagan the system is working like this:

virtual_cycle_diverted

Since the Reagan Revolution with its tax cuts for the rich, its anti-government policies, and its deregulation of the big corporations our democracy is increasingly defunded (and that was the plan), infrastructure is crumbling, our schools are falling behind, factories and supply chains are being dismantled, those still at work are working longer hours for fewer benefits and falling wages, our pensions are gone, wealth and income are increasing concentrating at the very top, our country is declining.

This is the Reagan Revolution home to roost: the social contract is broken. Instead of providing good wages and benefits and paying taxes to provide for the general welfare and reinvestment in infrastructure and public structures, the bounty of our democracy is being diverted to a wealthy few.

… read the rest of Tax Cuts Are Theft

Also see see Tax Cuts Are Theft: An Amplification by Sara Robinson.

And while you are at it here are some other posts in the Reagan Revolution Home To Roost series:

Reagan Revolution Home To Roost — In Charts
Reagan Revolution Home To Roost: America Drowning In Debt
Reagan Revolution Home To Roost: America Is Crumbling
Finance, Mine, Oil & Debt Disasters: THIS Is Deregulation

See the Reagan Revolution Home To Roost series.

–

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF. Sign up here for the CAF daily summary