Friday ReadsPosted: November 18, 2011 | Author: dakinikat | Filed under: FBI raids, Federal Budget and Budget deficit, income inequality, investment banking, lobbyists, morning reads | Tags: Budget Deficit, buying congress, Jack Abrahamoff, Lobbyists, low corporate taxes, reporting corporate taxes, supercommittee, who are the 1 percent? |24 Comments
Republicans are asking Obama to try to ‘break the log jam” in the subcommittee. I’m not surprised given the President’s known ability to give everything away at the bargaining table. I’m also sure it’s because they can get their lousy policies through and then when they backfire and people get mad, they’ll blame Obama.
Republicans are calling for President Obama to jump into the deficit-reduction talks gripping Washington, reflecting the widespread view that the congressional supercommittee is now headed for a failure.
Lawmakers and congressional aides familiar with the deliberations say the talks have reached a hard impasse, with Republicans locked in an internal struggle over whether to agree to higher tax hikes to cut a deal.
“It’s hard to see us getting a deal unless he comes in at the last minute,” Sen. Dan Coats (R-Ind.) said of Obama, who is on a nine-day trip to the Pacific and not scheduled to return to Washington until Sunday.
“We’re in the two-minute drill and closing in on a ‘Hail Mary’ and the quarterback is on the sidelines.
“Unless the leadership, including the president, steps in and saves this thing, I think the consensus is, in terms of coming up with a credible package, all is lost,” Coats added.
There was a surprising lack of urgency on Capitol Hill Thursday as members of the supercommittee talked past one another. Some lawmakers not on the super-panel shrugged at the inaction, saying they were planning to go home for the Thanksgiving recess and noting they don’t have to vote on any deal until next month. Meanwhile, House and Senate leaders indicated they are in no rush to jump in and broker an agreement.
E.J. Dionne, Jr. at Truth Dig says the easiest way to cut the deficit is to do nothing. His thinking reflects some of the things that I’ve been supporting. It includes letting the Bush Ta Cuts expire. I hate to see the triggers on some things, but getting the Pentagon budget trimmed down would be a positive as far as I’m concerned.
Democrats have put huge spending cuts on the table—and keep offering more and more and more. All the Democrats ask in return is that the cuts be balanced by some revenue.
By rejecting their offers, Republicans induce Democrats who are anxious for some deal—any deal—to keep coming their way. The Republican approach is wrong and irresponsible but brilliant as a negotiating strategy. As my Washington Post colleague Ezra Klein wrote this week: “Over the past year, Republicans have learned something important about negotiating budget deals with Democrats: If you don’t like their offer, just wait a couple of months.”
Finally, the Republicans decided they needed to look slightly flexible. So they came up with $300 billion in supposed revenue from a promised tax reform in a plan that also included a proposal to slash tax rates for the rich. There is a lot more tax cutting here than revenue. Rep. Jeb Hensarling, R-Texas, co-chairman of the super committee, who said on Tuesday that this was the GOP’s final offer, reversed field Wednesday afternoon and declared himself open to other ideas.
Even Democrats inclined to capitulate know how shameful agreeing to such a deal would be. And mainstream, centrist deficit hawks should be grateful if a deal on such terms is killed. What Republicans want to do in effect is to make at least 90 percent of the Bush tax cuts permanent. This would only make deficit reduction even harder in the future.
That’s where the do-nothing strategy comes in. Championed early this year in The New Republic by New York Magazine writer Jonathan Chait, it looks even better now because of the spending cuts scheduled to go through if the super committee doesn’t act.
Jack Ambramoff is sure biting the hands that used to feed him. He’s written an article for Bloomberg and calls congress criterz “Willing Vassals” that are up for anything as long as they can cash in. Now that he can no longer make a profit from the game, he’s got some suggestions to end it.
There is only one cure for this disease: a lifetime ban on members and staff lobbying Congress or associating in any way with for-profit lobbying efforts. That seems draconian, no doubt. The current law provides a cooling off period for members and staff when joining K Street. The problem is that the cooling off period is a joke.
Here’s how it works. “Senator Smith” leaves Capitol Hill and joins the “Samson Lobbying Firm.” He can’t lobby the Senate for two years. But, he can make contact with his former colleagues. He can call them and introduce them to his new lobbying partners, stressing that although he cannot lobby, they can. His former colleagues get the joke, but the joke’s on us.
Because the vast majority of lobbyists start on the Hill, this employment advantage is widely exploited. It cannot be slowed with a cooling off period. These folks are human beings, not machines — and human beings are susceptible to corruption and bribery. I should know: I was knee-deep in both. Eliminating the revolving door between Congress and K Street is not the only reform we need to eliminate corruption in our political system. But unless we sever the link between serving the public and cashing in, no other reform will matter.
That’s easier said then done considering the foxes write the rules about how they can behave in the coop. One thing they have managed to do is arrange to avoid taxes. Check out the nifty chart from Felix Salmon at Reuters. It graphs corporate taxes as a percentage of corporate profits. Can you say magically disappear?
Once upon a time, the corporate income tax generated a significant share of tax revenues; now, it’s bumping along in the 2%-of-GDP range. Yes, the marginal rate of corporate income tax is high, at 35%. But US companies are extremely good at not paying that.
But at least we know the aggregate amount that corporations pay in taxes. What we don’t know — because they won’t say, and no one’s forcing them to say — is how much any given public company pays.
Follow the article to this link to CNN Money that shows you why reporting requirements allow corporations to hide their true tax positions.
During the past few months I’ve repeatedly asked three big companies in the tax-wars cross hairs — GE (GE), Verizon (VZ), and Exxon Mobil (XOM) — to voluntarily disclose information that would refute allegations that they incurred no U.S. federal income tax for 2010. All have refused, saying they won’t disclose anything not legally required. They still manage to complain about the allegations, however. I suspect that if I called the rest of the Fortune 500, I’d get 497 similar responses.
As a society, we need the “taxes incurred” information to inform our current tax debate. Investors, too, would benefit; knowing the tax that companies actually incur would be a useful analytical tool.
The solution, as I’ve said before, is for the Financial Accounting Standards Board to require companies to disclose information from their tax returns for the most recent available year and the nine years before that. This information, from lines 31 and 32 of their returns, would take at most one person-hour a year per company to provide. Adding a 17th tax metric to the 16 already available hardly seems like an invasion of corporate privacy.
Here’s an interesting read in the New York Review of Books by Jeff Madrick entitled “America’s New Robber Barons”.
So it’s worth knowing who is in that group of very rich with runaway incomes. Several news reports in recent weeks have cited a seminal 2010 study that uses IRS tax returns to find out who belongs to the top 0.1 percent. The authors deserve mention because they are often left out when their results are cited: Jon Bakija of Williams College, Adam Cole of the US Treasury, and Bradley Heim of Indiana University. This was not a Treasury study, however, but a private if scholarly one.
One key finding of the study is that three out of five of those in the top 0.1 percent of tax filers are executives or managers of financial and non-financial companies. Overall, more are from non-financial companies. Does this partly exonerate Wall Street, suggesting it is really Main Street where the problem lies?
In fact Bakija, Cole and Heim’s analysis shows the opposite: it turns out that much of the increase in wealth of non-financial executives was also tied to the rise in stock prices. Keeping in mind that stocks options appear as wages in the data, it seems Wall Street itself was often a main source of income growth for “non-financial” managers as well. (Lawyers were another large category of tax payers in the top 0.1 percent, and though there is not direct data for this, one can fairly assume that many of those in corporate firms made a lot of money from the booming business on Wall Street.)
Next, think about how these executives managed their businesses. If they wanted a big pay check they had to orient their strategies to push up their stock prices—that is, often to appeal to the financial fads and fashions of the day. These strategies typically have included cutting labor costs and R&D in order to boost short-term profits. This delighted their advisers on the Street. Stock investors soon loved nothing better than consistent increases in quarterly profits, and not coincidentally, stock options accounted for an ever-growing proportion of executive pay over the past thirty years. We used to say once that Wall Street worked for business, but over the past thirty years business has come to work for Wall Street.
It is just as interesting to explore the factors that the authors found out probably did not cause the surge at the top. Economists typically posit sophisticated technologies (often related to digitalization) as a source of growing inequality: because these technologies require better educated and smarter workers, those who have mastered them are rewarded handsomely. But there was no surge at the very top in other nations like Japan or in Western Europe, which also adopted the same technologies.
Similarly, some have argued that globalization led to higher incomes at the top because skilled workers can sell themselves globally at ever higher salaries. Again, however, such skilled workers have not seen a surge at the very top in Europe or Japan.
One reason for the discrepancy between the US and other countries is that boards of directors in the US are especially willing to give their CEOs and other high level executives big raises and generous stock options. Lucian Bebchuk of Harvard has done a lot of research on this so-called “governance” issue. Meantime, as Bebchuk’s work shows, shareholder influence over executive compensation is far too weak. And there is also the issue of culture itself. America—with its admiration for the self-made man—tolerates high remuneration for the men and women at the top and lower wages in the middle and the bottom. Culture likely matters.
So, that’s a few things to get you started this morning. What’s on your reading and blogging list today?
“I’m not surprised given the President’s known ability to give everything away at the bargaining table.”
Now hold on a minute. That’s exactly what left left/prog critics of Obama said last Summer about this very deal. Also on The Hill is another story about the Dems who called this deal Satan Sandwich deciding maybe it tastes pretty good after all.
Maybe Obama knew what he was doing before?
“knew” in what sense? Like he knew new he wanted to push bad policy or he knew better than to push bad policy but did it any way or he knew that the republican policy was right or what exactly?
Obama is arguably the most politically naive and inept President of our lifetime. Only Carter is in his league in this regard. The man has no clear understanding of consequences, both unintended and intended, and just doesn’t know how to deal with his political enemies. They get exactly what they want from him and still get to pin all the blame on him and call him a socialist, etc. Not only is he the worst negotiator ever, but since he has no moral center from which to work he goes for whatever he thinks makes his job the easiest at the time. The man has never stood his ground for anything.
If he has no principles, then the Republicans aren’t his enemies.
If anyone can tell us “how it’s done” it’s Jack Abramoff.
Like a “reformed pickpocket, Jack was deep inside “the game” and his insights may be welcome as these thieves – and that is exactly what they are – feed from the trough at our expense.
Newt is just the latest “bag of baloney” to feel the exposure of corruption carried out within sight of the very same congress we elect to protect us. Characterizing his tenure as a “historian” is as egregious an excuse as one can invent to justify his deeds.
There will be no reforms for regulations offered by congress since so many of them are firmly in the pockets of lobbyists who are eager to hire them as “consultants” for wages far greater than they could have ever earned as public servants.
Until there is a strong enough desire to close out those loopholes we will always be at the mercy of these factions whose only intent is to fatten their own wallets.
He was on TV last night calling Gingrich corrupt.
I’ll take it, but I’d find it very hard to forgive him for his involvement with the Marianas Islands nightmare.
There’s nothing much to admire in Abramoff–he wasn’t called ‘Casino Jack’ for nothing. But he knows the inside track of this racket probably better than anyone. I heard him last night as well and he slammed Eye of the Newt for the hypocrite he truly is. This is just one more nail in Newt’s reputation coffin, despite the fact that it comes from one of the more infamous lobbyists. In fact, I think Abramoff can actually do a service. I’d go so far as to say he could, in fact, have a moment of redemption by pointing out all the ins and outs, the guilty parties, the way the dead bodies are buried.
Could get very interesting!
I agree completely with you and as someone else pointed out he was trying to impeach Clinton while carrying on an affair with his staffer while his wife was battling cancer. He is currently making money off a dead pope, quoting him as if John Paul II had endorsed him. Newt Gingrich is an example of what a public servant shouldn’t be, and how this corruption must end, and frankly he continues to believe he can get away with it by calling himself a historian. The man is sickening.
Why Michelle Bachmann needs to be institutionalized: Has any one ever run for president that is this far out of touch with reality?
You have to question the mindset of somebody this stupid who one day looked into the mirror and decided to run for president of the free world.
BTW: this applies to all the nimrods running on the GOP ticket. Especially those who had it firsthand from “god” that they should do it.
The Republican Party: “We welcome ignorance!”
Great comment Pat…
We’ve had the equivalent in office now since 2000. She is just following precedent. It isn’t her fault that the American public and Republicans in particular have no use for people who have cogent thoughts, are well informed and are willing to do the right thing.
So thinking Elvis’ birthday is the day he died is more important than thinking the American Revolution started in Concord, NH? Nimrod indeed.
The Occupy protests in New York yesterday had a nice little coda in the evening. Pro-Occupy messages were beamed Bat-signal-style onto the side of the Verizon building. Here’s an interview with the guy behind it:
Wow, I have missed so many juicy posts this week…I hope I can read them all and catch up soon.
I saw this link of memeorandum this morning: Treasury Admits What Everybody Already Knew: Taxpayer Losses On GM Bailout Are Going to be Massive – Hit & Run : Reason Magazine
I’m not sure about the source…
and this: Woman Gets Jail For Food-Stamp Fraud; Wall Street Fraudsters Get Bailouts | Matt Taibbi | Rolling Stone
So is food stamp cheat (who already paid back the money) will go to jail for 3 years on tax payer money. Which means that the tax payers will now be paying to jail a mother and more than likely also pay the bill for foster care for the children.
Yep this GOP judge is really setting an example!!??
Meanwhile the crooks on Wall Street . . . . . . .
Reason is a right wing rag. But I haven’t read the story. I guess it could be true.
@BB 12:50, I thought it was a right wing rag…that is why I questioned it. Eek!
More on the drones I saw flying over Gila National Forest yesterday.
Apparently drones have been used to watch US citizens before — and more are planned.
We are only a few steps away from having armed drones targeting us — anyone who is suspected of wrong doing or committing a crime — or anyone who happens to be near a suspected evil doer. Illegals sneaking across the boarder — shot them — oops wrong car.
The militarized polices forces of the US will want one of these new toys.
After watching the drones in action — I’m not seeing a bright future for the US.
drones for GOP convention next year in Tampa
Glen Greenwald column re: Militarized Police.
Followed to logical conclusion — drones are going to be the newest toy — provided by Homeland Security for any reason the cops grant writers can come up with.