Super Cat Food Commission: Ideologues seem destined to tank the Country

The starve the beast anthem seems to have stymied any chance the country has of solving both its unsustainable long term debt problems and its economic growth issues. This is what you get when no one embraces pragmatism, workable solutions, and data.   I continue to think the best solution to much of this is to let the Bush Tax cuts expire and let them scramble from the fall out of the trigger.

Nothing is acceptable to Republicans who have signed their political souls away to Grover Norquist and seem hell bent on keeping the pentagon flush with funds all while supposedly balancing the budget.  There is no way for this to happen simultaneously unless one is prepared to completely do away with all other functions of government which is frankly what I think they want.  We’ll have taxes subsidizing already rich, powerful and profitable corporations and the military industrial complex and the rest of America will be sharecropping in one way or another.

Pat Toomey basically defended this position to Chris Wallace at Faux News on Sunday.  The problem with this position–and with sticking to it like a drug addiction–is that the reality just doesn’t fit the story and it’s not what people want.  How is it possible for a group of ideologues to continually hold the country’s economy hostage to failed ideals rejected not only by experts on the economy but by US citizens in poll after poll? Why was America’s most profitable period a time when taxes were high on both corporations and rich people and the US was winding down its war machine if the Republican paradigm is so correct?  Believe me, this Toomey plan is a bait and switch.

WALLACE: Again, before we get to your plan. What are the stakes if you fail to make a deal. If on November 23rd, the super committee comes up empty and the automatic triggers come in, and we’ll talk about that in a moment. What do you think the impact is on the markets, on the economy and on the U.S. credit rating?

TOOMEY: I think that there will be further erosion of what little confidence remains of our federal government. This has been a dysfunction Senate that I’ve been serving in for the year that I’ve been in office. And this is an attempt to try to make some important progress. It would only be the first of what needs to be many steps because we’ve dug a deep hole for ourselves. I think it’s really important that we’d be successful.

WALLACE: All right. You offered a plan that breaks with the Republican pledge not to raise any tax revenue. Let’s drill down into the plan.

You would cut the deficit $1.2 trillion, which is the mark that is supposed to be met by the super committee with $700 billion in spending cuts and $500 billion in revenue increases. On the revenue side, you get $250 billion by limiting deductions especially for top earners. In exchange, you would lower tax rates, the top rate would go from 35 percent to 28 percent.

Question: why are you breaking with the GOP pledge not to raise taxes in the middle of a bad economy and how many Republicans will go along with you.

TOOMEY: Well, let me — first of all, let me say, if I were king, this is not the plan I’d put on the table. But if we both went into our respective corners and had no flexibility at all, then we wouldn’t get anything accomplish. Number two, the plan that I put on the table is contingent upon pro-growth tax reform.

Every group that’s looked to this, all of the bipartisan commissions, gang of six and the others, have acknowledge that if there is more revenue it has to come in the context of pro-growth tax reform, the kind of reform we’re talking about absolutely guaranteed to create millions of jobs over time and still more revenue.

And, finally, Chris, the other reason to make a tough decision like this, is in the alternative, we are 13 months away from the biggest tax increase in American history. And that’s written into law. That’s going to happen.

WALLACE: You’re talking about the Bush tax cuts expire.

TOOMEY: That’s exactly right.

And so, what we’ve suggested is, as an alternative to an economy destroying tax increase right around the corner, let’s have a reform, let’s simplify the code, let’s lower rates, let’s wipe out some of the loop holes and special interest, favors and deductions. Let’s have the economic growth that would come with that.

And as we lower the rates and contract the value of deductions, we’ll only generate a little revenue so that we can reduce the deficit.

WALLACE: Now, I don’t want to get too far on the weeds, but Democrats immediately rejected your plan because they say that the money that would be lost by lowering those tax rates, basically 20 percent below the Bush tax cuts, would cost over $3 trillion for the economy, and they say the money you’re going to will lose that will increase the deficit is more than money you’ll get from closing these tax loops. That it’s a net loser.

TOOMEY: First of all, that’s not true. You could design this in a way — and as I said, I didn’t invent this. We didn’t invent this. This is an idea that’s been suggested by the Simpson-Bowles commission, by the Rivlin-Domenici.

Now, it’s true that they want to raise taxes more. I think that as you reduce the value of these deductions, if you go too far, you try to create too much revenue, you can do economic damage. But you absolutely can do this in a way that will be pro-growth, that will generate more revenue, that would avoid this huge tax increase that’s otherwise coming and I think that’s a direction we should move in.

Republicans continue to say that 1+1=3 despite decades of evidence and proof that 1+1 still equals 2.  If tremendous tax cuts and deregulation had such benefits to the economy we’d not have had over ten years of miserable growth and a humdinger of a financial crisis.  Corporate profits are at record highs.  This is not leading to job creation.  Taxes on capital gains are extremely low.  This just keeps leading to bubbles, increased speculation, and paper gains for a few based on nothing but gambling. It’s not bringing any value to the real economy where jobs, products, services, and tax revenues that keep things running are made.  Money keeps pumping into financial contracts which is just paper whose value is detached from real assets until the market crashes.  Increasing taxes on capital gains would close down much of the worthless investment funds that are going after arbitrage profits in all the wrong places.  Tax benefits should go to real investments and long term commitment to growing industry and businesses.  Taxes favor speculation right now.  It’s bringing more volatility and risk to markets and not vaulted liquidity.

It’s ridiculous and it flies in the face of recent economic data to suggest that continuing to hand wealth over to the richest folks is going to do anything other than continue the very same problems that we have now.  We move productive funds away from things that are attached to real sector growth and into speculative activities which blow bubbles and ruin the value of real assets like houses, food, and commodities and create such excessive volatility in equity markets that long term investors experience incredible losses and then small gains continually.  No one benefits but a few gamblers which evidently includes Congress.   Republicans like Boehner, Cantor and Bachus and Democratic leaders like Pelosi benefiting from betting based on insider information as much as Wall Street does.

It seems like there’s a plot to extract as much wealth and income out of the economy as possible before they tank the entire thing and retreat to tax haven islands like Grand Cayman.  How could elected officials be so set on sabotaging the country?  Granted, there are idiotic true believers like Michele Bachmann who create their own reality and narratives and are so removed from facts that you wonder why they’re allowed in public.  There used to be nice places in the country for folks like that to ‘rest’ and spend their days listening to those voices in their head.  Now it seems they’ve all turned up in the Republican Party and have hunkered down in Washington DC.  Okay, this is from Beltway Bob, but bear with the quote,  please.  It’s an indicator that they’re willing–like domestic terrorists–to take us all hostage again.

Six days left for the supercommittee, and it’s not looking good. On CNBC last night, Rep. Jeb Hensarling, the Republican co-chair of the committee, said he and his colleagues had “gone as far as we feel we can go” on taxes, and that “any penny of increased static revenue is a step in the wrong direction.” In other words, Republicans aren’t looking to compromise further. But Hensarling went yet further than that. If the supercommittee fails, he said, Republicans are looking to undo the compromises they have already made.

The issue is “the trigger,” the policy that automatically cuts the deficit by $1.2 trillion in the event that the supercommittee fails. Half of those cuts are scheduled to come from domestic spending (excluding Social Security, Medicaid, and a few other programs that help the poor). That’s the stick for Democrats. Half of them are scheduled to come from the Pentagon. That’s the stick for Republicans. But last night, Hensarling said the defense cuts are too onerous, and so “we’ve got 13 months to find a smarter way to do it.” By “a smarter way to do it,” he means a way that eases the cuts to defense and, since Republicans aren’t going to replace those defense cuts with new taxes, increases the cuts to domestic programs.In comments to reporters Tuesday, Senate Majority Leader Harry Reid was firm on this point: the defense cuts in the trigger were the GOP’s concessions after they refused to include taxes in the trigger, and they’re not going anywhere. “If committee fails to act, sequestration is going to go forward,” he told reporters. “Democrats aren’t going to take an unfair, unrealistic load directed toward domestic discretionary spending and take it away from the military.”

Behind the scenes, the White House has taken a similar line: the trigger can’t be changed to exempt defense and fall more heavily on domestic spending. That isn’t the same as saying the trigger can’t be changed. But Democrats aren’t going to be enthusiastic about keeping the part meant to penalize them for the supercommittee’s failure while helping Republicans move the bit that was meant to be their punishment.

But we’ll see. Democrats haven’t always been known to hold the line on defense cuts. The bigger issue here, however, is that Republicans are setting a bad precedent for future deals. Republicans are talking about unwinding the trigger before the supercommittee has even finished its work. They are, in other words, reneging on the terms of the debt-ceiling deal. So why should Democrats who are hearing this expect they’ll abide by the terms of a deal that calls for revenue-increasing tax reform in six months?

Read the rest of this entry »

Super Cat Food Commission may have reached a Deal

There are nine days left until November 23rd and automatic spending cuts that are supposed to punish deadlock.  Our economy is weak.  Exactly how much recessionary pressure will the austerity pogrom inflict on the country?  Exactly how much will the unemployment rate go up and the economic growth go down when we do the exact opposite thing that all accepted and proven economic theory would have us do?  Well, there’s hints at a deal.  Get ready for a double dipper!

The panel needs seven votes on a deal to force at least $1.2 trillion in deficit reduction over the next 10 years. Sen. Pat Toomey (R) of Pennsylvania last week broke with his party’s anti-tax pledge to propose some $300 billion in new tax revenues. Democrats are said to be on the verge of a counterproposal, as early as today, to include new cuts in entitlement spending likely to offend their party’s base.

Tax increases and entitlement spending cuts = decreases in aggregate demand = decreases in prices and wages and decrease in economic growth/GDP/Income = more unemployment.  Exactly who are they pleasing with this policy? Themselves?  Their Wall Street Overlords?  The Grinch?

There’s a lot of ignorance built in to this group.

Based on what we do know, however, both sides are playing big time budget baseline games. When they talk taxes, Republicans start by assuming the 2001/2003/2010 tax cuts will all be extended indefinitely. From there, they talk about cutting rates across the board and reducing tax preferences (perhaps with some cap on these breaks). All of this, it is reported, would boost revenue by a few hundred billion dollars over 10 years.

Sounds promising. But by starting by extending the Bush era tax cuts, the Rs would reduce revenues by $4 trillion compared to what would happen if Congress simply lets them expire as scheduled a year from now. So, Republicans would add $4 trillion to the deficit before cutting a paltry $200-$300 billion. In anyplace but Washington this would add up to another $3.7 or $3.8 trillion in red ink. Here, it counts as deficit reduction. Worse, even those dollars appear to result from presumed economic growth rather than policy changes. The wonders of dynamic scoring!

Democrats are playing their own games. While Politico reports this morning that they are proposing $400 billion in Medicare and Medicaid cuts (most of which would come out of the hides of doctors, hospitals, nursing homes, and other providers), the Dems also start by assuming a fix to the ongoing battle over Medicare reimbursements to physicians.  Straightening out this mess could cost as much as $300 billion over the next 10 years. The Ds do say they’d pay for the fix—but with money from the drawdown of troops from Iraq and Afghanistan. This money is fiscal pixie dust, since the troops are already coming home and those funds were never going to be spent.

If the built-in assumption is indefinite extension of those reckless Bush tax cuts, we might as write the nation off as a banana republic right now. This is especially true when you consider what will be downsized in response to rewarding the rich for moving jobs overseas, gambling in the Wall Street Casino, and not expanding business here because the economic outlook will continue to be glum.  There are a few hints on what has to go in order to extend these indefensible tax cuts. What will the Dems trade in order to get some tax revenues placed on the table?

Democrats aren’t offering to simply take the GOP at their word. Their plan is to make any cuts to programs like Medicare and Social Security part of a trigger that would only be pulled if and when Congress passes hundreds of billions of dollars in new revenue.

Multiple Democratic aides confirm their strategy hasn’t changed: Dems will only support this sort of two-step tax reform process if there are serious revenue guarantees and the deal includes a trigger to make sure the revenue materializes.

If that sounds a little Rube Goldbergish to you, it is. But both parties have basically agreed that the Super Committee wouldn’t have enough time between its launch and its deadline to write a full overhaul of the tax code. So Dems are privately insisting that any future promised revenue come with more than a promise. If the GOP can’t deliver the votes for it, then the safety net cuts they want disappear. That’s not to predict that they’ll stick with this demand until the bitter end — for liberal groups, vigilance is key.

Ever heard of out of sight, out of mind?  If the Repubs delay the tax details and the Dems still try to eek something out, how will this work?  Follow that link to a bunch of other links with this short intro.

As the panel’s Nov. 23 deadline approaches and doubts about its ability for success persist, a new approach is emerging in which the panel may opt to postpone politically difficult decisions by deciding the amount of new revenue their deficit-reduction plan would require, but leaving specifics to Congress’ tax-writing committees to fill in next year.

So is this a deal or a punt?

It seems that K Street isn’t giving up on keeping all the lights lit on the tree for their special interests.  This doesn’t bode well.  The meat may get thrown out while the fat and grizzle are still on the plate.

And 125 companies and groups made another pitch to the super committee on the importance of setting aside additional unlicensed spectrum for new technologies like ultra-fast Wi-Fi.

Google, Hewlett-Packard, Microsoft and others said they worry that if the panel gives the Federal Communications Commission authority to conduct incentive auctions, that the FCC’s move last year to open up the spaces between television channels for unlicensed use could be derailed.

“We urge Congress to give the FCC the flexibility to preserve TV band spectrum for unlicensed super Wi-Fi devices and deliver innovation to American consumers and economic growth to our nation,” they wrote in the letter to the co-chairs of the super committee, Rep. Jeb Hensarling, R-Texas, and Sen. Patty Murray, D-Wash.

Yup.  That’s so much more important than feeding hungry children, creating jobs, and fulfilling our obligations to seniors.  It seems that most people will have to search out the bags of dry food while a whole lot of businesses that don’t seem to be able to function without subsidies will still be dining on fancy feast.

Thursday Reads

Good Morning!! There was another Republican debate last night. It was on CNBC, but I just couldn’t stand to watch. Luckily, Andrew Sullivan live blogged it at the Daily Beast. Sullivan isn’t too happy with the Republican choices:

9.51 pm. At this point, I have begun to really lose it watching this crew. There are only two faintly plausible, credible presidents up there, both Mormons. The rest is beyond an embarrassment, and at this moment in history, the sheer paucity of that talent is alarming. Did anyone up there give you confidence he or she could actually lead the world countering this metastasizing debt and unemployment crisis? At best, there were noises about removing burdensome regulation on businesses and a simpler tax code. But who up there could actually bring that about?

Two other things: Romney’s claim that Democrats hate profitable companies. It’s an absurd statement on its face, but as a comment on reality, it’s surreal. Profits are at record levels. If lack of profits is the reason for our employment crisis, there would be no crisis. Second: the boos for questioning a man in power who is credibly accused of sexual harassment and has settled such cases in the past is a sign of real contempt for women in such a situation. Both reveal to me a party hat has completely lost its way.

I’m beginning to wonder if these debates are helping Obama more than his own primary debates did in 2007 and 2008. Next to these doofuses, he seems reassuring. The losers of this debate: Perry and Cain. The winners? Gingrich and Obama.

Earlier, Sullivan wrote Rick Perry’s epitaph:

9.18 pm. Perry collapses. Cannot remember a list of three federal government departments he wants to abolish past the first two. Seriously. And then he says “oops.” He has all but disappeared inside his suit in this debate and is now basically done. And notice the casualness with which he intends to abolish whole government departments. Has he thought through the consequences? Or is he just a bad performance artist?

Watch it:

I’m so glad I didn’t watch!

Actually, I really don’t watch much TV, so I totally missed out on the new nationwide emergency alert test at 2PM yesterday. The Washington Post is very concerned that people like me will miss a real alert if one ever happens. They want an emergency alert system for the internet and phones.

FEMA launched a national alert system for phones in May, called PLAN, that reaches some smartphones on some national providers. The program sends out free text messages about emergency situations. However, only about 50 percent of Americans own smartphones and the program has not fully been adopted across the country.

As for Internet alerts, they work mainly on an opt-in basis. FEMA has an iPad and Android app and Twitter and Facebook accounts. However, this system of requiring Americans to actively seek out FEMA differs dramatically from the PLAN system or the Emergency Alert System. The alert system pushes messages out to Americans whether they want them or not. FEMA works with cable providers to get the word out.

It would be interesting to see the agency undertaking something similar in partnerships with major Internet companies. Could it be possible for the Google logo to turn into an alert message? Or for Twitter’s promoted ads — which appear in user timelines — to be a message from FEMA?

It may not be that long in the future for a truly integrated nationwide alert system. FEMA is working on an Integrated Public Alert and Warning System (IPAWS) that will employ all communication devices.

Ugh. I’d almost rather miss the warning of a nuclear attack or whatever FEMA wants to alert me to. I doubt if I’d be able to do anything to get out of the way of a nuke or a terrorist attack.

We’re hearing more about the Super Committee as the days tick down to the deadline. Supposedly, they’re supposed to figure out $1.2 trillion in cuts by Thanksgiving. Reuters has a gossipy piece on the committee’s secret inner workings: Inside Room 200, home of the “super committee”

Deep beneath the Capitol is a red-carpeted room that recently reverberated to the sound of Democrats and Republicans singing together, and then to their angry exchanges over how to fix the U.S. budget.

Welcome to Congress’s “super committee” room….

“At this point, the most serious adult conversations going in Congress are at the super committee,” a senior aide said.

“Members are driven by a sense that this is a very precarious time in U.S. history that beckons a solution,” the aide said. “But at the same time, members wrestle with political loyalties that they can’t divorce themselves from.”

Democrats are pushing to cut the deficit by up to $3 trillion over 10 years, much higher than the super committee’s target, with a mix of spending cuts and new tax revenues. But Republicans deeply oppose raising taxes, warning of job losses and damage to an already fragile economic recovery.

Read the article if you’re interested in which committee members are making friends and hanging out together. {shudder}

Whiny old Mitch McConnell claims the White House wants the super committee to fail.

After leaving the Republicans’ weekly policy luncheon, McConnell was asked about Senator Charles Schumer’s prediction yesterday that the Super Committee would likely fail to strike an agreement on a plan to cut $1.2 trillion to $1.5 trillion from the deficit over the next 10 years “because our Republican colleagues have said no net revenues.”

Responding today, McConnell said Schumer (D-NY), the Democrats’ primary messenger, is indicative of how Democrats and the White House want this committee to fail.

“It’s pretty clear when Chuck Schumer speaks, he’s speaking from the most partisan Democratic position,” McConnell said today. “And it does raise your suspicion that the folks down at the White House are pulling for failure. Because you see, if the Joint Committee succeeds, it steps on the story line that they’ve been peddling, which is that you can’t do anything with the Republicans in Congress.”

McConnell said the six Republicans on the 12-member committee from the House and Senate want an outcome and “do not believe failure is an option.”

Because of course McConnell and his pals aren’t the least bit partisan, and all they want is what is best for the country. /snark

Meanwhile, President Obama is getting the hell out of Dodge and leaving Congress to its own devices.

The so-called super committee will be busy with final negotiations while President Obama travels to Hawaii, Australia and Indonesia and the White House says President Obama will be getting updates on what is happening.

He likely won’t be receiving extra briefings, but the latest on the super committee meetings will be a part of his regular updates he gets while he is traveling.

Obama is going to Hawaii first for the APEC summit, then Australia for a re-scheduled trip from last year, and then Bali, Indonesia for the East Asia Summit. He leaves Friday for the week-long trip that will have a heavy emphasis on jobs and national security, which the White house says fits right into the president’s number priority – jobs.

The NYT has an op-ed by John Quiggin called Euro Crisis’s Enabler: The Central Bank. Quiggin blames ECB policies for the Eurocrisis.

Far from struggling to manage a “one size fits all” monetary policy, the bank has pursued a “one size fits nobody” policy of monetary contraction, at a time when no European economy is growing strongly. With great reluctance, the bank has agreed to support the markets for European sovereign debt through purchases of government bonds. But, unlike the policy of quantitative easing pursued by the Federal Reserve — in which the United States’ central bank amassed Treasury securities to push down long-term interest rates — the European Central Bank has insisted on “sterilizing,” or neutralizing, its purchases of government bonds by selling the securities to private-sector banks. Such a policy cannot be sustained on a scale sufficient to stabilize financial markets.

This is part of a broader problem: the European Central Bank’s conception of its own role. The bank was established in 1998, at a time when memories of the inflationary surge of the 1970s and 1980s were still fresh. It was therefore given a mandate that focused primarily on inflation, and has interpreted that mandate very narrowly.

Unlike any previous central bank in history, the bank has disclaimed any responsibility for the European financial system it effectively controls, or even for the viability of the euro as a currency. Instead, it has focused almost entirely on the formal objective of keeping inflation rates to a 2 percent target.

Quggin says that the new head of the ECB, Mario Draghi must

announce that the central bank will stand behind the sovereign debt of euro zone members, if necessary at the expense of the 2 percent inflation target. This would give governments the financial resources they needed to recapitalize banks. Since the crisis is largely one of confidence, it is likely that bond markets would stabilize without the need for large-scale bond purchases, once there was a credible commitment to intervene where necessary.

Coach Joe Paterno and President Graham B. Spanier are gone from Penn State.

STATE COLLEGE, Pa. — Graham B. Spanier, one of the longest-serving and highest-paid university presidents in the nation, who has helped raise the academic profile of Penn State during his tenure, stepped down Wednesday night in the wake of a sexual-abuse scandal involving a prominent former assistant football coach and the university’s failure to act to halt further harm.

Spanier’s departure came as the university’s Board of Trustees also ended the 84-year-old Joe Paterno’s career, denying him his wish to finish out the season, his 46th as the head football coach and his 62nd over all at the school.

The defensive coordinator Tom Bradley will take over as interim head coach.

The university’s most senior officials were clearly seeking to halt the humiliating damage caused by the arrest last Saturday of the former assistant coach, Jerry Sandusky, a man who had been a key part of a legendary football program, but who prosecutors have said was a serial pedophile, one who was allowed to add victims over the years in part because the university he had served was either unable or unwilling to stop him.

Here’s a piece by addiction expert Stanton Peele about the link between “disregard for societal constraints and college sports.” Reacting to the Penn State scandal, Peele writes:

Do I really mean college sports teams encourage sexual abuse of children? Not exactly. What I mean is, college sports are so dominant at American universities that even the most heinous sex crimes will be covered over rather than being allowed to disturb the giant university-sports complex. This is perhaps especially evident at Penn State, where 84-year-old Paterno has side-stepped all criticisms during his career, and proceeded to rack up the all-time leading victory total for a major college football coach. This has “established him,” according to the Times, “as one of the nation’s most revered leaders.”

This same man declined to report Sandusky directly to police and thus permitted him—as did other university officials—to continue to use the school facilities for “chicken-hawking” (a technical term for seducing children) for 15 years! Pennsylvania officals were disbelieving that their great university could allow such a state of affairs for so long. In the words of the Times, these officials felt that while Paterno may not have committed a crime, he “might well have failed a moral test for what to do when confronted with such a disturbing allegation involving a child not even in his teens. No one at the university alerted the police or pursued the matter to determine the well-being of the child involved.”

Ahh, but the greater glory of Penn State sports was preserved!

That’s it for me. What are you reading and blogging about today?

Taxes are the solution, not the problem

As far as I can tell, if corporations and the top 1% paid anything like a fair share of taxes, budget problems would melt away.

I feel a bit like the recent physicists who seemed to find faster-than-light neutrinos in their data. (There’s the big difference that I’m an amateur at taxes, and they’re anything but amateurs at physics.) But, like them, I’m so boggled by the results that I want to throw it out there for people to pick apart.

Let’s begin at the beginning. The current US deficit is around $1.5 trillion per year. Current US GDP is around $14 trillion per year. Current yearly tax revenues are near $1.1 trillion (IRS pdf, 2008 numbers). In better years revenue is higher, deficits are lower.

An aside: Those numbers are smaller than the multiple trillions of cuts the Super Committee throws around. That’s because they say they need to come up with money for ballooning future costs of social insurance. (The powers-that-be didn’t seem to be worried about the future when tax cuts were implemented.) I don’t consider those future costs a real issue. Social Security doesn’t have any real problems. National health care costs could be cut in half with Medicare for All, based on the evidence from all the industrialized countries that do have national health care systems. (Link is to Congressional Research Service, 2004, pdf. See e.e Table 1, Fig. 1, Fig. 2.) So Medicare for All is the place to start for anyone who is actually concerned about future costs, and not some other agenda.

Further, a healthy deficit level is said to be around 2% of yearly GDP. In addition to other considerations, the ability to buy US Treasury bonds and bills is an important factor in global finance. Zero deficit means the end of that whole asset class, which is not a Good Thing. One wants a sustainable and easily carryable deficit, and 2% is a conservative estimate of that level. Two percent of $14 trillion is $280 billion. (I saw this most clearly expressed somewhere in Krugman’s writing, but all I can find right now is a passing reference here.)

So the yearly shortfall, in round numbers, is $1.2 trillion ($1.5T deficit – 0.280T healthy deficit).

If Fortune 500 corporations actually paid tax on their corporate profits, there’d be much less freeloading from that end. When even Marketwatch headlines “Big Profits, Zero Taxes” you know it’s not a small issue. It’s hard (for me) to find unequivocal numbers on how much difference that would make to revenue, but there are fairly clear data on corporate tax payments as a share of GDP. It’s now at a recent all-time low of 1% of GDP. Moving that back to 4%, about where it was in the 1960s would bring in an extra $480 billion (1% of GDP = $160B, 3% = 480B).

That would entail ending all the corporate loopholes, such as income-shifting in transnationals to whichever tax haven suits them that year, as well as ending special tax breaks for wildly profitable industries such as oil and finance. It would involve adding necessary new taxes, such as a financial transaction tax that would have other beneficial social consequences by slowing down market trading velocity. And it would involve raising rates on large corporations. (Update from comments below: 25 CEOs received more in compensation than their companies paid in taxes. Just mindboggling.)

Then, the other task is to raise taxes on the top 1%. According to the IRS (pdf), in 2008 the top 1% was composed of households making an average of $1.2 million per year. Their effective tax rate is 20% ±5% (CBO pdf, Table 3), and at that rate they contributed well over $350 billion in tax revenue. (For instance, in 2009 the top 1% contributed 36.7% of total income taxes. That proportion is typical during the last decade, plus or minus a few percent. Total income tax revenue in 2008, the last year for which I could find complete IRS data, was $1.081 trillion. 36% of 1.081T = $389 billion.) If their tax rates went to 60%, there would be an extra $700 billion revenue.

So, $700 billion plus $480 billion approaches $1.2 trillion, pretty much the entire yearly shortfall of $1.2 trillion.

That doesn’t pay down the debt. Nor does it provide funds for essential projects such as switching to clean, sustainable energy. But those are one-time charges, as it were, not permanent features of fiscal balance, which I gather is what the Super Committee is worrying about.

Raising taxes on the megarich is not the same as taxing the middle class. It’s not even taxing the upper middle class, such as the heart surgeons and mid-size successful business owners. It involves only having the massively wealthy corporations and households pay something vaguely like their fair share. What’s more, it wouldn’t make a bit of difference to their lifestyles. For an income of $1.2 million per year, that tax increase would drop them from living on $80,000 per month to living on $40,000 per month. They could still jet to Paris for the weekend. Anybody who feels deprived living on $40,000 per month needs therapy, not tax breaks.

All this is something to think about while the news covers the new super ways the Super Committee has found to shred the safety net. Nor is this just a classic “Don’t tax him, don’t tax me. Tax the fellow behind the tree.” The fellow behind the tree has been tax cheating for far too long, and it’s time to rebalance. If the megarich paid their fair share, we could have a future that was more than collapsing bridges and work on their plantations.

Crossposted to Acid Test

Thursday Reads

Good Morning!

It’s amazing what kind of nonsense the right wing can come up with when their interests and myths are threatened.  Here’s the latest Faux News canard about Occupy.  It’s an ACORN plot!  If any one believes that, I have a few bridges across the Mississippi I’d like to sell them.  The Crescent City Connection even comes with tolls!!

How can a group that folded 19 months ago secretly conspire to bolster Occupy protests? Apparently, “sources tell” Fox News that people who used to work for ACORN have now taken on roles helping organize Occupy protests. In fact, Fox News reports that the former director of New York ACORN and his aides are now working for New York Communities for Change (NYCC), which is turn supporting demonstrations.

I’m not sure why this would be especially interesting if true — if folks who used to be involved with one group then started playing a role with another, who cares? — but as it turns out, a spokesperson for Occupy Wall Street said the NYCC isn’t playing a role in the protests anyway. But don’t worry, Fox News’ unnamed “source” said the group really is up to secret misdeeds, adding, “And yes, we’re still ACORN, there is a still a national ACORN.”

It’s safe to assume that Fox News has reliable contacts among progressive activist organizations, right? There’s bound to be plenty of former ACORN staffers and Occupy activists eager to dish to the Republicans’ cable news outlet, right?

Please. It’s really no wonder at all why Fox News’ audience ends up believing so much nonsense.

They do believe the nonsense, which makes Fox News watchers very dangerous in the voting booth.

Dems on the Super Committee are offering up Medicaid and other ‘entitlements’ in order to get tax increases from Republicans.  It didn’t work, but you have to wonder exactly what all they’re willing to put on the table.

Republicans have pressured supercommittee members to reject any deficit-reduction deal that raises taxes — including stimulus spending for the economy would almost certainly be a non-starter for most in the party.

Democrats have said from the beginning that the supercommittee should produce a “jobs plan” that includes “investments” to help the economy.

The supercommittee is charged with devising a plan that will cut at least $1.2 trillion over 10 years from annual deficits, but deep divisions exist on the panel over whether to raise taxes and cut entitlements to meet that goal.

The members met again Wednesday afternoon and Democrats were looking to see if the GOP would present an alternative path to the grand bargain.

You may recall that the grand bargain was the giveaway President Obama offered to Boehner last summer during the debt ceiling talks.  More details are available at this WAPO link.

The panel has floundered since meetings began in September. If the supercommittee fails to reach agreement to trim borrowing by at least $1.2 trillion through 2021, automatic spending cuts of an equal amount would be triggered in January 2013. These cuts would strike especially hard at the Pentagon, an outcome that Republicans are eager to avoid.

Ralph B posted this tidbit downthread last night.  Chelsea Clinton is said to be considering a congressional run.

Clinton has been approached by “the right people” in the New York Democratic Party, according to one source in Albany. While no decision has been made, Clinton is said to be “actively considering” a Congressional run from New York State in 2012.

Chelsea Clinton, 31, is the only child of former U.S. President Bill Clinton and U.S. Secretary of State Hillary Rodham Clinton.

The discussions of running Chelsea Clinton for a house seat grew out of the redistricting plans currently underway in the New York State legislature in Albany.

The plan is to identify an open seat for Clinton in or around New York City where she currently resides with her husband, Marc Mezvinsky. While no specific district has been determined, New York City and Westchester are said to be the focus with New York’s 18th District considered a strong possibility. The 18th encompasses much of Westchester County, just south of where her parents have maintained a home for the past 12 years.

The Daily Beast reports that Herman Cain was delinquent in paying taxes in 2006.  Additionally, he fought paying the bill.

According to court documents obtained by The Beast, Cain and his wife, Gloria, were served in February 2008 with a tax lien totaling $8,558.46 for unpaid income taxes and penalty due for the 2006 calendar year.

Gordon said Cain had filed with the IRS and won a six-month reprieve in paying his 2006 federal taxes as he was undergoing his treatment for stage four lymphoma and believed that filing should also have bought him time with the state of Georgia. “In Georgia, a taxpayer can submit a copy of his federal extension to request an extension of state income taxes,” Gordon said.

But instead, the state sent a notice of overdue taxes in October 2007, and then proceeded with the tax lien four months later, he said.

Cain’s accountant fought the Georgia Department of Revenue on behalf of his client well into 2008 and the two sides finally settled the matter in November 2008. A court formally withdrew the state tax lien on Dec. 8, 2008, court records show.

Gordon said the campaign was researching the exact date on which Cain made the payment to extinguish the lien

Robert Reich thinks that Wall Street is still out of control.

Dodd-Frank is rife with so many loopholes and exemptions that the largest Wall Street banks – larger by far then they were before the bailout – are back to many of their old tricks.

It’s impossible to know, for example, the exposure of the Street to European banks in danger of going under. To stay afloat, Europe’s banks will be forced to sell mountains of assets – among them, derivatives originating on the Street – and may have to reneg on or delay some repayments on loans from Wall Street banks.

The Street says it’s not worried because these assets are insured. But remember AIG? The fact Morgan Stanley and other big U.S. banks are taking a beating in the market suggests investors don’t believe the Street. This itself proves financial reform hasn’t gone far enough.

If you want more evidence, consider the fancy footwork by Bank of America in recent days. Hit by a credit downgrade last month, BofA just moved its riskiest derivatives from its Merrill Lynch unit to a retail subsidiary flush with insured deposits. That unit has a higher credit rating because the Federal Deposit Insurance Corporation (that is, you and me and other taxpayers) are backing the deposits. Result: BofA improves its bottom line at the expense of American taxpayers.

Wasn’t this supposed to be illegal? Keeping risky assets away from insured deposits had been a key principle of U.S. regulation for decades before the repeal of Glass-Steagall.

The so-called “Volcker rule” was supposed to remedy that. But under pressure of Wall Street’s lobbyists, the rule – as officially proposed last week – has morphed into almost 300 pages of regulatory mumbo-jumbo, riddled with exemptions and loopholes.

It would have been far simpler simply to ban proprietary trading from the jump. Why should banks ever be permitted to use peoples’ bank deposits – insured by the federal government – to place risky bets on the banks’ own behalf? Bring back Glass-Steagall.

The EU announced a Debt Accord late last night which caused a rally in both Asian stocks and the Euro.

The MSCI Asia Pacific Index gained 0.9 percent to 120.25 as of 11 a.m. in Tokyo, set for the highest close since Sept. 9. Standard & Poor’s 500 Index futures added 0.8 percent. The 17- nation euro climbed 0.5 percent to $1.3979 and rose 0.3 percent to 106.26 yen. Treasury 10-year notes erased earlier gains. Copper, zinc and lead jumped more than 1.4 percent in London and crude climbed 1.9 percent in New York.

French President Nicolas Sarkozy said the euro region’s bailout fund will be leveraged by four to five times, and investors have agreed to a voluntary writedown of 50 percent on Greek debt. Sarkozy plans to call Chinese leader Hu Jintao today to discuss contributions from the Asian nation to a fund European leaders may set up to fight the crisis, a person familiar with the matter said.

The news of a deal is “certainly mildly positive news for markets,” Adarsh Sinha, head of strategy for Group of 10 foreign exchange at Bank of America, said in a Bloomberg Television interview in Hong Kong. “We have got a plan out but a lot of the details aren’t in place.”

CNN announced the details late last night.

French President Nicolas Sarkozy said Greek bondholders voluntarily agreed to write down the value of Greek bonds by 50%, which translates to €100 billion and will reduce the nation’s debt load to 120% from 150%.

Sarkozy said the leaders agreed to boost the firepower of the EU bailout fund, known as the European Financial Stability Facility, “by four or five fold.” He added that officials have negotiated additional funding from the International Monetary Fund.

The writedowns were one of three inter-related problems political leaders must solve to devise a comprehensive solution to Europe’s debt crisis. They must also determine how to leverage a government-backed bailout fund and stabilize the banking sector.

EU leaders had pledged to resolve these issues Wednesday at their summit in Brussels. But given the bondholders’ resistance, it was unclear until the early hours of Thursday if the leaders would be able to follow through.

Earlier, the European Council issued a statement saying heads of state had agreed to raise capital requirements for banks vulnerable to losses on euro-area government bonds.

Under the terms outlined by EU officials, banks would be required to sharply increase core capital levels to 9% to create a buffer against potential losses. The amount to be raised would be determined after accounting for declines in the value of euro-area government bonds, including debt issued by Greece.

Based on market rates in September, banks will need to raise a total of €106 billion to meet the new targets, according to the European Banking Authority.

So, that’s the headlines that have grabbed my attention today.  What’s on your blogging and reading list today?