Phony IRS “Scandal” — We’ve Been O’Keefe’d Again

See also: The Latest Lie: IRS Targeted Conservatives

Guess what. We’ve been O’Keefe’d again. It turns out that the “IRS Targeted Conservatives” story is just one more made up, phony, right-wing victimization fantasy lie.

James O’Keefe is the guy who made a video supposedly showing him in a “pimp costume” getting advice from ACORN employees on ow to run a prostitution ring. Except the video was doctored, he never wore a “pimp costume” and ACORN employees never did any such thing. But the story sounded good … so it went wide and ACORN was defunded by Congress.

And here we go again. It turns out the IRS was NOT singling out “Tea Party” groups for audits. The IRS was scrutinizing ALL groups applying for c4 status by asking additional questions. No audits. And only SOME (1/3) of those groups were conservatives — OTHERS were liberal, etc. Doesn’t matter, the right put out a victimization story making it sound like only conservatives were targeted for political reasons. (And Christians are a persecuted minority, Whites are discriminated against, etc.) The “mainstream” news media picked up and spread the lie, and here we are.

Again: Only 1/3 of the organizations that received extra scrutiny were conservative. The rest are not identified, but liberal and progressive organizations are reporting that their applications received the same scrutiny as conservatives. (And by the way almost 70% of the applications that were flagged WERE engaged in campaign activity that would disqualify them from c4 status.)

See:

Bloomberg News: IRS Sent Same Letter to Democrats That Fed Tea Party Row

Daily Kos: Liberal groups received same IRS letter that ignited Tea Party outrage

Washington Monthly: Two Rather Important Details About the IRS “Scandal”

From the Inspector General’s report on what happened, page 8:

Figure 4 shows that approximately one-third of the applications identified for processing by the team of specialists included Tea Party, Patriots, or 9/12 in their names, while the remainder did not. According to the Director, Rulings and Agreements, the fact that the team of specialists worked applications that did not involve the Tea Party, Patriots, or 9/12 groups demonstrated that the IRS was not politically biased in its identification of applications for processing by the team of specialists.

Look at how MANY of us fell for one more “pimp costume” story.

James O’Keefe never wore a “pimp costume” into an ACORN office, and conservative groups were not singled out for scrutiny by the IRS. But because of the right’s ability to spread these smears both are now firmly “true” in the public mind. Partly because the rest of us fell for it and helped amplify it.

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See also: The Latest Lie: IRS Targeted Conservatives

“Spreadsheet Error” Economists Blame “The Left” Not “Science”

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In an op-ed in the NY Times today the “spreadsheet error” economists tell us all we need to know about their research and their conclusions. In the op-ed, Reinhart and Rogoff: Responding to Our Critics, skip to the last paragraph:

“Now we are being attacked by the left — primarily by those who have a view that the risks of higher public debt should not be part of the policy conversation. “

“The left?”

I think these two words tell the whole story. All the economists and other scholars who are criticizing the errors and selective use of favorable data in work represent “the left.” Actual science that looks at the real world to see what actually happens is “the left.”

Downward Spiral

Here is the situation:

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

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.”

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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

The 1983 Strategy Behind Today’s Social Security Attacks

Suppose you’re in a bar and you overhear a couple of guys in the next booth talking about a plan to steal from people’s houses. As you eavesdrop the plan unfolds: one will come to the front door pretending to be from the gas company warning the homeowner about a gas leak down the street. While he distracts the homeowner at the front door, the other one will sneak in the back door and take stuff.

So the next day the doorbell rings, and there’s a guy saying he is from the gas company. He says he wants to talk a while to warn you about a gas leak down the street…

This is what is happening with this constant drumbeat of attacks on Social Security. The attack on Social Security never goes away, it only escalates. As we go into this next round of attacks — this time it is even coming from the President* — it is more than useful to understand the background of this campaign against the program.

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Read The Shock Doctrine

There is no better way to understand what is happening to us than to read The Shock Doctrine. Shock-Doctrine tactics are why we have so many “manufactured crises” and why the right and Wall Street seem to come out on top from each one.

The “deficit” is entirely a manufactured crisis. The “sequester” is a manufactured crisis, like the :debt ceiling” crisis and the “fiscal cliff” crisis and the other crises again and again. People around Reagan said the tax cuts (combined with dooubling the military budget) were a strategy to cause deficits that would force spending cuts. It was called “strategic deficits.”

George W Bush said the shift from surpluses to deficits after his tax cuts was “incredibly positive news” because it would bring 99on a deficit crisis that would stampede opeople into accepting cuts.

This is the Shock Doctrine at work. Create a crisis, terrify people, then force “reforms” that shift the wealth upwards to the billionaires.

Both Sides Are NOT To Blame For Sequester!

If you are a citizen in a democracy you need to have correct information about important issues so you can make decisions and know who to hold accountable for things they do. But you wouldn’t know anything if you follow America’s corporate news media. For example, you certainly wouldn’t know that the deficit is currently falling at the fastest rate since the end of WWII. (Only 6% of the public knows that the deficit is falling, not rising.)

Watch as NBC News (March 1 broadcast) blames “both sides” and “Congress” for the sequester cuts that could bring in a new recession:

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“Congress” has left town – not that Republicans adjourned without doing allowing votes.

“No serious attempt all week long” to stop this.

“President didn’t rise above political rhetoric.”

“Both sides maintained the blame game.”

Bob The Businessman: An American Success Story

This is the story of Bob The businessman.

Suppose a local businessman, let’s call him Bob, went around town raising money from the townspeople to open a car dealership. Dozens and dozens of people in town invested, putting in $1,000, $5,000, and a few putting in as much as $50,000 and $100,000. Bob raised a lot of money for his business.

After a while the investors found out Bob the Businessman was using some of their money to help his brother run for Mayor and several cousins to run for city council, and some of it to make his wife head of the Arts Council for a good salary. Then they learned that he was using some of it to fund a local organization that did nothing but push for tax breaks for . . . businesses just like Bob’s. (And to push for “deregulation” letting Bob use his company’s money to do things like … fund the organization.)

In the election his brother was elected Mayor and his cousins took over the council. Once in charge of the city, they pushed through a big contract for Bob to supply cars to the city (many of which the city didn’t even need.) The city also exempted Bob’s business from taxes, even giving it subsidies.

This all of course made the car dealership very profitable, and the investors started asking when they are going to get a dividend. But they found out that Bob’s business has opened a subsidiary based at a post office box in the Cayman Islands. This Cayman Islands subsidiary had been buying cars from the manufacturer at wholesale and turning around and selling them to Bob’s parent company for just under what the dealership sells them to the public for. As a result all the profits went to the Cayman Islands subsidiary, and Bob wasn’t bringing any of it back to distribute to the shareholders!

Next the investors learned that Bob had been living really high on the hog, paying himself many millions of dollars.

When the local investors got fed up, they gathered to protest in front on Bob’s business. “You shouldn’t be using our money to get your brother elected mayor,” said one. Another said, “You shouldn’t be using our money to give to the arts council!”

By then Bob owned all the newspapers and TV and radio stations in town, and they were all telling the rest of the town that the protesters were all communists. His brother the mayor sent the police to arrest them.

Next Bob got the city to relax the regulations that specified how well the cars he sold should work, and started selling cars with defects to the townspeople. The city also limited lawsuits. The customers cheated by Bob couldn’t do anything about it!

Over time Bob’s actions forced all of the honest, responsible car dealers to either operate the way Bob did, or go out of business. The character of the whole town changed.

Eventually, though, Bob’s business practices became so bad that most of the townspeople went to the city and demanded that they do something about it. The city conducted an “investigation” and reached a settlement with Bob’s car dealership. The dealership agreed to pay a modest fine, which meant the investors were on the hook to pay it out of any dividends they might receive. (The city’s lawyer who negotiated with Bob later left and got a very high-paying job working for … Bob.) Bob got to keep the enormous amounts he had been paying to himself.

Bob lived happily ever after.

This fable in no way is meant to make you think about the way that modern American corporations and the current American political system operate.

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

Deficit Is Falling Dramatically, But Only 6% Know That

There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?

Congress should just repeal the sequester – we don’t need it. We have 10 years to fix the long-term deficit situation. We should not be stampeded by deficit-scare propaganda and instead take the time to carefully consider the right approach. That way we won’t make the mistakes that Europe is making.

Deficit Falling

Here is a chart of the deficit as a percent of GDP: (Data sources below)

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What Do Republicans, Rubio And Rand Have If They Don’t Have Deficits?

Koch-funded Florida Tea-Party Sen. Marco Rubio gave the “Republican Response” to the President’s State of the Union speech. Then Koch-funded Kentucky Tea-Party Sen. Rand Paul gave the “Koch-funded Tea-Party” Republican response. (Did the networks ever air a Progressive Caucus response to Bush’s SOTUs?) They scared people with wild stories of deficits, taxes, job losses and “big government.”

Before going over what they said let’s set the stage with a few items that explain reality (always a good idea before discussing things Republicans say):

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WILL “Job Creators” Really Not Hire If They Have To Pay Taxes?

House Speaker Boehner and Senate Minority leader each claimed this week that higher taxes on the wealthy will cause the “job creators” to cut jobs and “hurt growth.” The Heritage Foundation makes specific claims about how this will happen. Let’s take a look.

The Heritage Claim

The Heritage Foundation purchased a Twitter promotion that shows up if you look for the hashtag #my2k, which President Obama has asked people to use when tweeting about the $2,000 he claims the average middle-class person will pay in additional taxes if the portion of the Bush tax cuts that was for people below $250K expire. (Note – almost all of that will be paid by people approaching that $250K top end. Regular middle-class people won’t pay anywhere near $2k in additional taxes.)
Heritage’s Twitter promotion sends people to a Heritage post, 4 Reasons Warren Buffett Is Wrong on Tax Hikes. Heritage trots out the old “job creators” myth, saying wealthy people are the people who “create jobs” with their money, and won’t hire people if they have to pay taxes. Here is one of Heritage’s 4 claims:

According to Treasury figures, 1.2 million Americans who employ people are paying their taxes through the individual income tax, and they would be hit head-on. The amount that their taxes would go up could be roughly equivalent to one employee’s salary, meaning that’s one person they can’t hire in the new year.

I heard about Heritage’s claims from several major sources including Marketplace and the Newshour (repeated to their audiences without examining whether it made sense.) So I think it is worth examining.

Let’s Dig Into This Claim

Let’s take a closer look at this claim that the average “small businessperson” will not hire one person because of the additional tax.
Let’s say the potential employee’s salary is $25,000. If the Bush tax cuts expire the top rate goes up by 4.6% on income above $250K (after all deductions.) $25,000 is 4.6% of about $544,000. So the Heritage claim is that a businessperson who has an income from their business — after all personal deductions — of about $794,000 ($250,000 plus the 544,000 on which the additional tax would apply) “can’t” hire a needed person.
(If the potential employee would have made more, this employer’s taxable income rises if the tax means the employer won’t hire someone. If the employee that can’t be hired makes $30,000 the employer has to have an income of $902,000 to pay that much additional tax.)

The Problems With The Claim

This claim relies on the reader not understanding how these taxes are calculated, why business hire and fire and how businesses make profits. Heritage bases the claim on the idea that a business-owner cold not hire someone they needed to make them around $800-900,000 after all deductions.
Businesses want to keep costs down and that means they don’t hire people unless they really, really need to. They hire people when doing so will make them more money, they lay people off when it will save them money. Employees are only hired or kept on the payroll if they are needed, and not hiring one necessary person would therefore hurt the business that was successful enough for the owner to make at least $794,000 after all deductions.
So assuming the business owner knew what he or she was doing, and only had the number of employees that were needed, the following year the business would do worse without that needed employee, and the owner would make less. Would an employer really do this? Of course not.
Let me ask another question. How come every time I closely examine a conservative economic claim it falls apart, and was really about fooling people into giving more money to rich people, not making things better for all of us?

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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Saying “Fiscal Cliff” Is Taking Sides

The term “fiscal cliff” is a one-sided propaganda phrase that misinforms and triggers public fear and anxiety. The fiscal cliff is not a “cliff” and the country isn’t going to fall off anything at the end of the year. Journalists: don’t help the misinformers — don’t say or write “fiscal cliff.” Congress: when people are scared and misinformed our Congress should pause, step back and help inform us instead of rushing to take advantage of the fear.

What The Fiscal Cliff Is

At the end of the year the Bush tax cuts expire and several budget cuts start to phase in (including military spending cuts.) This reduces the deficit, and some of those cuts will slow the economy if nothing is done to restore them in the next several months. That is the “fiscal cliff” that you are hearing so much about. Except it isn’t a cliff, it kicks in gradually, Congress has a lot of time to work it out and can fix anything that is a problem.
That’s right, if nothing is done in the next several months — there is no “cliff” at the end of the year — some of those cuts will slow the economy. All the screaming and hysteria are about putting pressure on the “lame duck” Congress to do something in a big hurry, outside of the accountability of democracy and before the President and progressives have more leverage.

What The Fiscal Cliff Is NOT

Most people I talked to over Thanksgiving apparently think the “fiscal cliff” is the government runs out of money on December 31 because the deficit is so big and all kinds of terrible things happen on January 1. This is sort of the opposite of what is going on. Even the few who didn’t think it was about the country running out of money were misinformed in one way or another, with most thinking something terrible happens January 1.
The “fiscal cliff” is about taxes going up and budget cuts, which reduce the deficit. And absolutely nothing in anyone’s life will change on January 1, or for some time (weeks, months) after.
That’s right, all the people who were hysterically screaming about the deficit are hysterically screaming now because of deficit cuts. Go figure. But the reason is that they have an agenda.

Journalists Should Not Help Misinform And Scare People

The very term “fiscal cliff” misinforms and scares people. Some media outlets, like FOX News, exist to misinform and scare people. But responsible media outlets should try to help the public understand complicated issues, not help scare and misinform.
Any journalist using the propaganda phrase “fiscal cliff” is taking the side of misinforming and scaring.

Settle Down, Beavis

Everyone should settle down. There is no “cliff.” No one is going to fall off of anything. And after the first of the year the President and progressives have much more leverage in this fight than they do now — hence all the pressure to act before then.
When people are this misinformed and scared the Congress owes it to the public to stop, take a break, work to inform the public and not act in a panic. Journalists, especially, owe it to the public to inform, not misinform and scare.
Update – I wrote this and went to bed. I wake up, and there is a perfect example in the Monday NY Times titled, Debt Reckoning, The Fiscal Deadline In Washington. The write-up in the morning NYTimes email is “The New York Times is beginning a new online feature that will chronicle the talks on the fiscal cliff between President Obama and Congressional leaders.”
The clear message of this headline and summary is that the country is in crisis because of debt. The public cannot help but get the impression that the country goes broke in a few weeks. As I explained above (and as Paul Krugman explains today’s in Fighting Fiscal Phantoms) this is really the opposite of what is happening.

This post originally appeared at Campaign for America’s Future (CAF) at their Blog for OurFuture. I am a Fellow with CAF.
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What The Public Hears

In my local paper today
Above-fold front-page headline, story about how public employees are draining the state. They are not tasking vacations, and then getting all their vacation and sick pay when they retire… Getting their vacation pay is draining the state. “No vacations for taxpayers.” “They’re cashing in by retiring with whopping final paychecks worth, in some cases, more than $500,000 in unused time off.”
Page 2, The Kochs’ quest – a story about how the Koch brothers are fighting to save America from bankruptcy.

“The country was headed toward bankruptcy, they agreed. Fink told them bluntly that Obama’s administration represented the worst of what Charles and David fear most: a bloated, regulation-heavy, free-spending government that could plunge the country into another deep recession. That day, Fink advised two of the richest men in the nation that it would be the fight of their lives to stop the government spending spree and to change the course of the country, starting with the 2012 election.”