The Audacity of No Shame: Gingrich/Santorum Edition

Posted: November 19, 2011 | Author: | Filed under: worker rights | Tags: , , , , , | 41 Comments

There are policies  supported by today’s Republicans that go beyond long standing American Values. Is this really still the party of Abraham Lincoln?  Last night at Harvard’s Kennedy School, Newt Gingrich said that child work laws “entrap” poor children into poverty.  He went beyond  this to suggest “that the best way of handle failing schools is to fire the janitors, hire the local students and let them get paid for upkeep”.

“This is something that no liberal wants to deal with,” Gingrich said. “Core policies of protecting unionization and bureaucratization against children in the poorest neighborhoods, crippling them by putting them in schools that fail has done more to create income inequality in the United States than any other single policy. It is tragic what we do in the poorest neighborhoods, entrapping children in, first of all, child laws, which are truly stupid.

“You say to somebody, you shouldn’t go to work before you’re what, 14, 16 years of age, fine. You’re totally poor. You’re in a school that is failing with a teacher that is failing. I’ve tried for years to have a very simple model,” he said. “Most of these schools ought to get rid of the unionized janitors, have one master janitor and pay local students to take care of the school. The kids would actually do work, they would have cash, they would have pride in the schools, they’d begin the process of rising.”

He added, “You go out and talk to people, as I do, you go out and talk to people who are really successful in one generation. They all started their first job between nine and 14 years of age. They all were either selling newspapers, going door to door, they were doing something, they were washing cars.”

“They all learned how to make money at a very early age,” he said. “What do we say to poor kids in poor neighborhoods? Don’t do it. Remember all that stuff about don’t get a hamburger flipping job? The worst possible advice you could give to poor children. Get any job that teaches you to show up on Monday. Get any job that teaches you to stay all day even if you are in a fight with your girlfriend. The whole process of making work worthwhile is central.”

The former House Speaker acknowledged that it was an unconventional pitch, saying, “You’re going to see from me extraordinarily radical proposals to fundamentally change the culture of poverty in America and give people a chance to rise very rapidly.”

I do believe that it’s just a matter of time when we see them suggest the return of forced labor and poor farms.  Earlier today, I found this video from Santorum suggesting the Christian thing to do was to allow people without jobs and food to suffer.  I wasn’t raised Catholic, but my understanding of that particular brand of Christianity is that outreach and care for the poor has been a central part of the church’s core mission for years.  Michelle Bachmann has already suggested letting the unemployed starve.

“Our nation needs to stop doing for people what they can and should do for themselves. Self reliance means, if anyone will not work, neither should he eat.”

Is the new Republican pogrome one that forces the poor to sell the children which is basically what happens in undeveloped nations all over the world?

Are they suggesting we return to a time of indentured servitude and child slavery?  It seems that way to me.  Labor reforms of the 20th century included laws regulating the use of children as workers.   These have essentially been core US values since the very dawn of the 20th century.  The attempts to let children be children instead of the property of their parents and others to be used as slaves was enshrined in national law via Labor Standards Act in 1938.  The movement to end enslavement of children in the US began as early as the 19th century in 1832 New England.

The New England Association of Farmers, Mechanics and Other Workingmen resolve that “Children should not be allowed to labor in the factories from morning till night, without any time for healthy recreation and mental culture,” for it “endangers their . . . well-being and health”

The mental, emotional, and physical development of children is such that they are endangered in many working environments.  They don’t have the physical or mental maturity to make all kinds of basic decisions and they certain don’t have the physical or emotional power to stand up to exploitative adults.   You can see this in  the exploitation of children by pedophiles in positions of power of children like priests, doctors, coaches, scout leaders, and teachers..  Children are the least among us to be able to stand up to bad situations and bad people.  That’s exactly why our laws protect them.  However, the pro-slavery argument of “states’ rights” has resurrected itself in a new brand of neoconfederacy.

Newly elected extremist Republican Sen. Mike Lee of Utah has argued that child labor laws are actually unconstitutional.  This is the Tea Party candidate that took down Bob Bennett. It is easy to see the anti-labor regulation ideology of the Koch Brothers and others in the rhetoric.  They clearly want to remove 20th century labor laws.

“Congress decided it wanted to prohibit that practice, so it passed a law. No more child labor. The Supreme Court heard a challenge to that law, and the Supreme Court decided a case in 1918 called Hammer v. Dagenhardt,” Lee said. “In that case, the Supreme Court acknowledged something very interesting — that, as reprehensible as child labor is, and as much as it ought to be abandoned — that’s something that has to be done by state legislators, not by Members of Congress.”

Lee’s reasoning was that labor and manufacturing are “by their very nature, local activities” and not “interstate commercial transactions.” He added: “This may sound harsh, but it was designed to be that way. It was designed to be a little bit harsh.”

The key Congressional law that addresses child labor is the Fair Labor Standards Act of 1938, which placed a series of restrictions against the employment of people under 18 in the public and private sectors.

The Supreme Court unanimously upheld the law in the 1941 United States v. Darby Lumber decision, overturning Hammer, on the basis of the constitutional authority of Congress to regulate interstate commerce. It has hardly run into controversies since.

Lee said he was not opposed to laws regulating child labor, but merely insisted they be controlled by state governments, not Congress. The issue of states rights is particularly popular in Utah, widely known as America’s most conservative state.

The slippery return to slavery and women and children as property is again cloaked in the mantel of “state’s rights”. There’s been a Maine bill already seeking to overturn child labor laws.   There are ongoing efforts in other states to also dismantle laws protecting children from exploitation.  Missouri seems to have jumped on the child labor bandwagon also.

Maine State Rep. David Burns is the latest of many Republican lawmakers concerned that employers aren’t allowed to do enough to exploit child workers:

LD 1346 suggests several significant changes to Maine’s child labor law, most notably a 180-day period during which workers under age 20 would earn $5.25 an hour.

The state’s current minimum wage is $7.50 an hour.

Rep. David Burns, R-Whiting, is sponsoring the bill, which also would eliminate the maximum number of hours a minor over 16 can work during school days.

Burns’ bill is particularly insidious, because it directly encourages employers to hire children or teenagers instead of adult workers. Because workers under 20 could be paid less than adults under this GOP proposal, minimum wage workers throughout Maine would likely receive a pink slip as their twentieth birthday present so that their boss could replace them with someone younger and cheaper.

And Burns is just one of many prominent Republicans who believe that America’s robust protections against the exploitation of children are wrongheaded:

It’s easy to image what kind of jobs children could be forced to do under this new Republican form of child servitude.  Farm labor comes to my mind.  Since Alabama has moved to vacate their migrant worker population, can forcing the unemployed, children, and prisoners to toil in farms for less than minimum wage be far behind?  What kind of country would undo the legal protection of its most vulnerable citizens?  These candidates repulse me.  How disingenuous is it of Newt to suggest that you can move quickly out of poverty by farming your child out as free/cheap labor?

Saturday Morning Cartoons (with a little news thrown in)

Posted: November 19, 2011 | Author: | Filed under: #Occupy and We are the 99 percent!, 2012 presidential campaign, Mitt Romney, morning reads, Super Committee, Surreality, U.S. Economy, U.S. Politics | Tags: , , , , | 30 Comments

Good Morning!!

Herman Cain made another wacky comment about Libya yesterday. First up, he tried to “clarify” his recent brain freeze on Libya at a press conference in Florida. Think Progress has the transcript.

Do I agree with siding with the opposition? Do I agree with saying that Qadhafi should go? Do I agree that they now have a country where you’ve got Taliban and Al Qaeda that’s going to be part of the government? … Do I agree with not knowing the government was going to — which part was he asking me about? I was trying to get him to be specific and he wouldn’t be specific.

And then there’s this from the same Milwaukee Journal-Sentinel interview in which Cain appeared not to know anything about Libya, also from Think Progress:

JOURNAL SENTINEL: Would you favor a military strike against Iran to stop that country from developing a nuclear capability?

CAIN: That is not a practical, top-tier alternative and here’s why. If you look at the topography of Iran. Where are you going to strike? It’s very mountainous. That’s what makes it very difficult. Secondly, that would be a decision that would need to be coordinated and discussed with our friends in that part of the world like Israel. But for the United States to unilaterally go in and attack Iran to try and stop them, I would want to consult with the intelligence community, the commanders on the ground in that part of the world, which I have stated before. But we should — I don’t have all the information necessary to make that decision.

Mountains? As Think Progress explains,

But yes, Iran does have mountains. However, as Defense Secretary Leon Panetta noted the other day, the principle reason that an attack on Iran would be a bad idea is not because it is mountainous, but because it won’t achieve the objective of preventing Iran from acquiring nuclear weapons. In addition to that, a strike would all but end the reform movement in Iran, spark a wider regional war and incentivize the regime to weaponize its nuclear program.

As everyone knows by now, Cain has been provided with Secret Service protection, and he’s been telling audiences that he got it because of his high poll ratings and because he’s being “hounded” by the press. From the NY Daily News:

The media horde hounding Herman Cain was not the reason the U.S. Secret Service gave him a security detail, a federal official said Friday.

“Media coverage or the number of media covering is not a factor in the decision of whether or not a candidate needs USSS protection,” a Department of Homeland Security official told the Daily News.

The GOP presidential hopeful — who has been a walking headline in recent weeks due largely to claims he sexually harassed at least four women — has faced threats and racially-fueled rhetoric, The Associated Press reported.

Cain refused to answer questions about the threats.

“The thing about Secret Service is ‘secret,’ so it would not be appropriate to discuss anything about it,” Cain said. “We wanted to move to that next level because of my ranking in the polls and the additional scrutiny I’ve been getting.”

“We’re not scared of you guys…and gals,” an exuberant Cain told reporters.

Is it just me, or are other people beginning to feel like they’ve gone down the rabbit hole and smoked some of whatever that caterpillar was smoking?

There was that recent recent remark from Cain, “We need a leader, not a reader.” It turns out that was a quote from The Simpsons movie. And what about the quote he used at the end of a debate in August:

“A poet once said, ‘Life can be a challenge, life can seem impossible, but it’s never easy when there’s so much on the line.'” (Aug. 11 Republican debate)

That was a direct quote from the Pokemon theme song, sung by Donna Summer!

And the 999 plan came from Sim City IV?

Well, I guess I’m going to have to start watching more TV, because apparently Rachel Maddow explained the whole thing to her audience about a week ago. She says it’s performance art.

Is is possible that Cain could really be scamming the Republicans just to show how stupid they are? Exactly what’s going on here anyway? Actually even some Republicans are getting confused by Cain’s antics. (Warning: link goes to Hot Air)

I can’t tell if he’s joking or not, which is a recurring theme lately in some of his pronouncements about foreign policy. He was joking, I think, when he said he’d offered to make Kissinger secretary of state again. He wasn’t joking, I thought, when he answered a question about whether his grasp of foreign policy is too slight with “9-9-9,” although the Standard’s John McCormack theorized last night on Twitter that maybe he was actually saying, “Nein, nein, nein,” in which case he was joking. The fact that we’ve reached the point where no answer is too goofy to be instantly ruled out as non-serious seems … problematic.

Cain brought up the GOP debate on foreign policy two days earlier.

“That’s a tough subject. You don’t want to get your facts mixed up,” he said.

He defended his view that presidents and presidential candidates don’t need to be immersed in the fine print of world affairs – they simply need to be leaders who can surround themselves with the right people and sift through their advice.

“I’m not supposed to know anything about foreign policy. Just thought I’d throw that out,” he said, a dig at his critics.

“I want to talk to commanders on the ground. Because you run for president (people say) you need to have the answer. No, you don’t! No, you don’t! That’s not good decision-making,” said Cain.

Mitt Romney isn’t as practiced a joker as Herman Cain, but some very weird stuff has been coming out about him. The Boston Globe had an article that I’m not allowed to read, because they’ve locked everything behind a pay wall worse that the one at the NYT. Luckily, some other sites did get access to the article, so I’ll link to them. From Alternet:

On their way out of the governor’s office and onto the presidential campaign trail, aides to Mitt Romney almost completely obliterated their electronic records, deleting emails, purchasing hard drives, and replacing computers, a investigation by the Boston Globe found. “The governor’s office has found no e-mails from 2002-2006 in our possession,’’ an aide to the current governor, Deval Patrick, told the Globe. Meanwhile, 11 Romney aides — many of whom went on to work on Romney’s 2008 campaign — purchased their state-issued computer hard drives as they left state employment.

Like other states and the federal government, Massachusetts has a law that requires such files be preserved for the state archives. Moreover, Secretary of State William Galvin, who oversees the state Public Records Law, “said it appeared odd” that aides could purchases state property. “I don’t sell things to people who work for me,’’ Galvin said.

WTF?! Okay, my guess is they didn’t want the citizens of Massachusetts to find out that they did nothing while Romney was Governor except work on their boss’s future presidential campaign. Plenty of people are trying to find out what they’re covering up though. Romney and his aides claim everything they did was legal–although they haven’t provided any evidence that’s true.


Next to these two nutcases, Newt Gingrich just looks like a normal corrupt politician.

CAMBRIDGE, Mass. — A confident and at times defiant Newt Gingrich defended himself Friday against growing questions about his lucrative consulting career, and he acknowledged that how he handles the vetting process will determine whether he can be “a legitimate front-runner” for the Republican presidential nomination.

Calling his recent surge toward the top of the polls “almost disorienting,” Gingrich fielded questions at a news conference here about his myriad money-making ventures in the decade since his tenure as House speaker ended. They include consulting contracts with Freddie Mac, the quasi-public mortgage company, and millions of dollars from health-care corporations seeking access to him.

“Somebody who’s a front-runner for the presidency of the United States should get a full vetting,” Gingrich said. “It’s the nature of the process. If I’m able to answer them [questions] in a way that the American people feel comfortable, then I’ll be a legitimate front-runner.”

Enjoy it while you can, Newt. It won’t last. But for now, the other four crazies in the clown car–Bachmann, Perry, Paul, Santorum–have been virtually eclipsed, and of course Huntsman was never even in the car.

And then there are those jokers on the so-called Super Committee. According to The New York Times, they’re still at a “deep impasse.”

Just 72 hours before a deadline to present Congress with a plan to cut $1.2 trillion from the nation’s deficit, members of a joint Congressional committee remained at a deep impasse on Friday after Democrats rejected a new Republican proposal devised with the help of Speaker John A. Boehner.

Pessimism mounted among members of the committee about their ability to strike a deal by Monday and avert a high-profile failure that would demonstrate anew the inability of the two parties on Capitol Hill to reach consensus about how to attack the nation’s mounting public debt. The partisan divide was also showcased Friday by a vote in the House to reject a Republican-backed constitutional amendment requiring a balanced federal budget.

Despite time running out on the committee created by the summer agreement to raise the federal debt limit, negotiations were in disarray, with Republicans and Democrats even disputing what precisely divided them. One panel member said that he still had slim hope for a deal but that it would take an extraordinary development to end the stalemate and avoid a series of automatic cuts in 2013 that would reduce federal services and make substantial reductions in Pentagon spending.

Whatever. I hope they fail and have to explain to the American people why they’re drastically cutting Medicare and Medicaid.

And now for some real earthshaking news. I don’t have the ability to explain it to you, but even I know it’s big. From the Journal Nature:

At the heart of the weirdness for which the field of quantum mechanics is famous is the wavefunction, a powerful but mysterious entity that is used to determine the probabilities that quantum particles will have certain properties. Now, a preprint posted online on 14 November1 reopens the question of what the wavefunction represents — with an answer that could rock quantum theory to its core. Whereas many physicists have generally interpreted the wavefunction as a statistical tool that reflects our ignorance of the particles being measured, the authors of the latest paper argue that, instead, it is physically real.

“I don’t like to sound hyperbolic, but I think the word ‘seismic’ is likely to apply to this paper,” says Antony Valentini, a theoretical physicist specializing in quantum foundations at Clemson University in South Carolina.

Go read it. I’m sure we’ll be hearing much much more about this once the paper is published. That’s it for me. What are you reading and blogging about today?

“Occupy Congress?” Now You’re Talking!

Posted: November 18, 2011 | Author: | Filed under: #Occupy and We are the 99 percent!, Congress, corruption, jobs, U.S. Economy, U.S. Politics, unemployment | Tags: , , , , , | 13 Comments

According to Greg Sargent, labor and progressive organizations are forming a coalition to “Occupy Congress.”

The coalition — which includes unions like SEIU and CWA and groups like the Center for Community Change — is currently working on a plan to bus thousands of protesters from across the country to Washington, where they will congregate around the Capitol from December 5-9, SEIU president Mary Kay Henry tells me in an interview.

“Thousands of people have signed up to come to Capitol Hill during the first week in December,” Henry says, adding that protesters are invited to make their way to Washington on their own, too. “We’re figuring out buses and transportation now.”

One idea under consideration — pending various permitting and other logistical issues — is to have a series of tents set up on the lawn outside the Capitol, each representing a state, with the number of unemployed in each state prominently displayed. But the optics are still being worked out.

The demands they are talking about aren’t very radical though. They’re planning to pressure Republicans to go along with Obama’s jobs proposal. As Sargent points out, that doesn’t really jibe with the nature of the Occupy movement, which rejects both corporate political parties. But Henry argues that

Occupy Wall Street had created a “framework” — which she described as “we are the 99 percent” — within which such activities would fit comfortably.

“The reason we’re targeting Republicans is because this is about jobs,” she said. “The Republicans’ insistence that no revenue can be put on the table is the reason we’re not creating jobs in this country. We want to draw a stark contrast between a party that wants to scapegoat immigrants, attack public workers, and protect the rich, versus a president who has been saying he wants America to get back to work and that everybody should pay their fair share.”

It’s a start, and the SEIU may not be able to control the message if lots of people with more creative ideas show up to the protests.

In line with the influence of the Occupy actions on the mainstream types, I clicked on a Google news link to the conservative Washington Times that read “Occupy Wall Street: What should be done with the protesters?” I expected to find a screed encouraging law enforcement to crush the protesters. Imagine my surprise when I read this instead:

As irritating or disruptive as some may find the Occupiers, they are the conscience of America, like it or not. Their very physical presence is a reminder that the decline of America happened not because they didn’t believe in the American dream, but because the greed of Wall Street and the banks stole that dream.

Yet our government continues to reward the top 1% with corporate welfare and the lowest taxes in more than 50 years. And Congress, which made that largesse to the wealthy possible, is in the pockets of those very same people and their lobbyists.

Yes, the protesters are predominately young, unemployed, maybe even scruffy, and, yes, the homeless have found a haven and free meals with them, and, yes, the Occupiers’ persistence after more than two months is like a mote in our eye, reminding us all that we can no longer do business as usual.

The fact that OWS sites have sprung up across the country and now the world has prompted us to face ourselves. We can no longer ignore the joblessness and poverty that scars our great country. It is not an abstract concept, some numbers on a bean counters’ balance sheet. It’s real. It’s people. It’s your kids and mine. It’s returning vets who find themselves on the scrap heap of our economy.

Holy sh&t! Can you believe it? Could it be that change is really happening?

Friday Reads

Posted: November 18, 2011 | Author: | Filed under: FBI raids, Federal Budget and Budget deficit, income inequality, investment banking, lobbyists, morning reads | Tags: , , , , , , , | 24 Comments

Good Morning!

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?

More Journalistic Malpractice from WAPO

Posted: November 17, 2011 | Author: | Filed under: The Media SUCKS, the villagers, We are so F'd | Tags: , , | 14 Comments

The Yellow Kid of Yellow Journalism

Predictably, WAPO propaganda specialist Lori Montgomery and her cronies have produced more junk journalism based on bias instead of any actual knowledge of economics or interviews with folks that would actually know about economics.  This time she teamed up with Rosalind Helderman to push her same disinformation about Social Security within the framework of the super committee.  Then there’s the added confidence fairy story. It’s about time we consider WAPO to be a source of malinformation and place it on newsstands in the same category as Globe Magazine.  Well, maybe not quite the same category.  At least the Globe only spins lies about celebrities and alien invasions. Can WAPO just turn their coverage of the federal budget over to Pete Peterson and at least be honest about its obvious dependence on biased think tanks instead of real economics?  Why do we have to suffer through bad writers like Lori Montgomery when we can just cut out the middle man? Why hide the real source of this nonsense?

Even as supercommittee members struggled to chart a path to a compromise that would not alienate their respective political bases, a bipartisan group of lawmakers from the House and the Senate planned to renew a call Wednesday for the panel to pursue a more ambitious deal that would require major surgery to Medicare, Medicaid and Social Security, as well as historic tax increases.

Yup.  Just what we need.  More ambitious cuts that send us straight to a depression.  As usual, WAPO writers just can’t help wrongly inserting Social Security into any talk of the federal deficit. How many times do actual economists need to point out that Social Security is a stand alone program with its own source of financing?

Robert Kuttner of the American Prospect shreds WAPO and its biased coverage.  WAPO  also continues to spew the confidence fairy nonsense.  Some how, every one will feel all snug and warm and the economy will recover if we take money away from the vast majority of American households to protect the comfortable few.   Wow, just imagine the need for the safety net programs if we downgraded the 1% from filthy stinking rich to stinking rich.  Whatever would happen to sales at Tiffany and Mercedes Benz dealerships?  Oh, the humanity!  Oh, the economic devastation!  Hully Gee!  WAPO just keeps making up these story lines!

Wednesday’s Washington Post deserves some kind of perverse award for advocacy journalism—in this case, for advocating the proposition that dire economic consequences will ensue if the congressional Super Committee fails to cut a deal for drastic deficit reduction. This is, of course, one side of an argument.

Those on the other side, including myself, have argued that austerity in a deep recession makes no economic sense and that as a matter of politics, the Obama administration would be far better advised to let the automatic sequester formula take effect, knowing that it would have to be reopened because of Republicans’ horror of deep defense cuts and the expiration of the Bush tax cuts.

Moreover, Social Security does not belong in this conversation, and Democrats are better off, substantively and politically, defending it against Republican proposed cuts rather than lumping it in with budget talks.

But I digress. The Post has been an editorial champion of the Super Committee and austerity politics, and of the bogus claim that Social Security is partly responsible for the current deficit, which has seeped into the news coverage of the predictably biased Lori Montgomery.

In yesterday’s Post, the lead piece on deficit politics, by Montgomery and Rosalind Henderman, includes the subtitle, “Pressure mounts from all sides as deadline nears.” Reading the piece, we learn that “talks have focused on a tax package of as much as $650 billion over the next decade”—a Republican claim that the Post took at face value in order to drum up support for the deal. The Republican arithmetic has been thoroughly demolished by Bob Greenstein, whose analysis was just a keystroke away from Montgomery’s wishful keyboard.

Greenstein and Horney’s analysis at CEPR demonstrates that the Toomey plan is not a balanced approach to deficit reduction.  As I said yesterday, it is a bait and switch or some kind of Wimpynomics.  Toomey will gladly “reform” taxes Tuesday for devastating budget cuts in social programs today. Nearly all the Republican plans begin with saving the Bush Tax Cuts which have done all kinds of damage to the budget and have had little impact on the economy.  Republican suggestions include some weird bargain that would cut spending immediately and postpone overhauling the tax code.  I still argue that the Bush Tax Cuts must go or we will be permanently locked into a death spiral.

Senator Pat Toomey and other Republicans on the Joint Select Committee on Deficit Reduction (“Supercommittee”) portray their new offer to raise close to $300 billion in revenues (under a plan to reduce deficits by about $1.5 trillion over ten years) as a significant concession, and some observers have suggested it represents a welcome first step toward a balanced deficit reduction plan to put the budget on a sustainable path.  But a closer examination of the proposal raises grave concerns and indicates that, in fact, it adds little balance.

It uses savings from closing tax loopholes and narrowing other tax expenditures mainly to set tax rates permanently at levels well below those of President Bush’s tax cuts, and to make permanent both the highly preferential treatment of capital gains and dividend income under the Bush tax cuts and the temporary hollowing out of the estate tax for estates of the wealthiest one-quarter of 1 percent of Americans that Congress enacted in late 2010.  Consequently, the proposal seems designed to make only a modest revenue contribution toward deficit reduction and then to take revenues off the table for the larger rounds of deficit reduction that must follow.  Moreover, even while yielding modest savings, the revenue component would make the package less balanced by conferring large new tax cuts on the wealthiest Americans while forcing low- and middle-income Americans to bear most of the plan’s budget cuts as well as its tax increases.

By permanently locking in tax rates well below the Bush levels, the plan would remove the potential to secure $800 billion in deficit reduction by letting the Bush tax cuts for households with incomes over $250,000 expire on schedule at the end of 2012, and it would remove the leverage that the scheduled expiration of these tax cuts provides to those who seek balanced deficit reduction with a substantial revenue contribution.  It also would remove the potential to secure a substantial deficit reduction contribution from tax reform.

The most absurd storyline in WAPO pointed out by Kuttner is that some how the failure of the super committee will act like the Grinch that Stole Christmas. Neil Irwin and Ylan Q. Mui write some absurd piece that suggests that people will be more apt to spend for the holidays–due to the perpetually present confidence fairy–after they completely gut Social Security, Medicare and Medicaid.  Wow.  That makes absolutely no sense.  How would causing income to go down and expenses to go up for seniors cause them to go on a shopping spree?  How would it give businesses more confidence knowing congress drained them of a source of revenue–in the case of the medical professions–and decreased the income to their customers?  WAPO must have some crazy back-asswards macroeconomic models at play!

I can’t wait for Dean Baker and some other economists to take this on again.  At the moment, Baker is taking on how the austerity meme is killing the Euro which–if it happens–will undoubtedly send us right back into a global depression and keep us there for some time.   Here’s two short paragraphs that point to the root of all our current economic problems.  It’s still a lack of demand brought on by the vast wealth and income destruction caused by banks that overleveraged and engaged in pure speculative activities.  Their bad investment portfolios wounded many western economies.  This austerity kick will most likely mortally wound us all.

The absurdity of this situation is that the eurozone countries would not need outside support from the BRICs if the ECB was prepared to pursue these policies today. Just as is the case now with the United States, there is no shortage of wealth in the EU, in the sense that it has the ability to produce vastly more goods and services than it is currently producing. The main problem is simply a lack of demand.

We have known how to generate demand since Keynes wrote his masterpiece in the ’30s. However, rather than pursue the simple steps needed to restore the eurozone’s economy to stable growth, the ECB is adhering to an ideological agenda that will destroy the euro and throw the economy into an even more severe recession than the last one. This is an extraordinary tragedy unravelling in slow motion in front of the world.

How much more can our civilization endure of policy via junk science and right wing ideology?   How can we actually solve any problems when we have huge national papers basically pushing ignorance agendas?  We are so f’d.

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