Tag Archives: Wall Street

Rep. Mark Amodei and the GOP Big Bank Pacification Program

Amodei 3Nevada Congressman Mark Amodei (R-NV2) is pleased with the Republican version of the House Financial Services Committee and Appropriations Committee 2015 version of a budget for the Department of Justice, the SEC, and the Department of the Treasury.   The Big Banks and Wall Street Players are pleased with it too.  They should be, part of the bill is straight out of the Financial Sector Playbook, one being implemented by Eugene Scalia’s law firm to gut the Dodd Frank Act for financial regulation.   A little background is in order.

The Back Story

The recovery from the latest Recession has been impressive, but perhaps not what it could have been had not some Austerianism crept into the mixture.  Public sector employment (teachers, social worker, firefighters, law enforcement….) is trailing or declining in some areas. Private sector employment has done well.

The Department of Labor issued its “employment situation report” six days ago, in which we discovered 288,000 jobs were created, and the unemployment rate is now 6.1%.  [DoL]

Private Sector Job Growth

About the same time, the St. Louis Federal Reserve tracked corporate profits (after tax) currently at $1,906.8 billion. [FRED] The graph looks like this:

Corporate ProfitsThe data points indicate a recovery for the private sector which took a pounding during the Recession but have bounced back quite nicely. Even during the Recession, corporate profits did not fall below levels seen during the period from 1980 to 2000.

The good news is, obviously, that the economy has generated private sector jobs in positive territory for the last 52 months, which should be tempered by watching corporate activities very closely — given the propensity of the financial sector to create booms/busts of increasingly volatile proportions.  There is also the no-so-small question of corporate hoarding. (A matter for another day.)

What’s happened since those days, not so long ago, when ‘irrational exuberance for asset classes and insane valuations” ran amok an crashed the U.S. economy?  When Wall Street creates new vocabulary like “Quantum Entanglement Trading,” some ears need to perk up.  The argument that faster trading combined with new technologies is nothing new under the Sun is perfectly plausible, what is less comprehensible are terms like Dark Pools, upon which some light cast upon Barclay’s transactions is less than pleasing. [BusWeek]

Even less pleasing was the moment when Goldman Sachs “lost control” of its Dark Pool, and Goldman “lost oversight of what was happening in their dark pool and it ended up that a number of people had trades settled at less than best national price.” [Forbes]

The Dodd Frank Act was supposed to rein in some of these excesses, and to give investors more power to insure they were trading “at the best national price.” It was also supposed to put the brakes on some of the more egregious activities in derivative trading.  The Wall Street boys figured out a way around that too:

“…traders have recently forged a path around these so-called margin requirements in order to allow them to harvest larger profits via larger bets: They are repackaging some derivatives known as swaps into another financial product known as futures. Futures are less stringently regulated, meaning investors can stake out larger positions while reserving smaller amounts of cash.” [HuffPo]

The GOP Big Bank Pacification Program

What do we know so far?  First, that the private sector recovery could be stronger (especially if we’d ever decide to DO something about our crumbling infrastructure and backlog of maintenance). Secondly, that Wall Street will be Wall Street, and with the advent of the financialists new ways to generate ‘wealth’ will be created even if these don’t actually add up to any real expansion of manufacturing or commercial activities.  On the corporate side there’s the stock buy back strategy which can be combined with the offshore parking ploy; on the financial end there’s the newly discovered joys of playing in dark pools and renaming your Swaps as Futures. What could possibly go wrong?

And now we come back to the point wherein Representative Amodei tells us how pleased he is with the House Financial Services Committee rendition of an FY 2015 budget providing for those departments and agencies which regulate financial behavior in this country.

Here’s Representative Amodei’s gush over the budget provisions for the Security and Exchange Commission:

“Included in the bill is $1.4 billion for the Securities and Exchange Commission (SEC), which is $50 million above the fiscal year 2014 enacted level and $300 million below the President’s budget request. The increase in funds is targeted specifically toward critical information technology initiatives. (1) The legislation also includes a prohibition on the SEC spending any money out of its “reserve fund” – essentially a slush fund for the SEC to use without any congressional oversight.  In addition, the legislation contains requirements for the (2) Administration to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act, and a (3) prohibition on funding to require political donation information in SEC filings.”  (numbering, emphasis added)

Let us Parse: (1) What’s so wrong about that SEC Reserve Fund?  It was established in the Dodd Frank Act:

“The Dodd-Frank Act established a Reserve Fund for the SEC and gives the agency authority to use the Fund for expenses that are necessary to carry out the agency’s functions. Each year, starting with FY 2012, the SEC is required to deposit into the Fund up to $50 million a year in registration fees, while the remainder is deposited into the Treasury as general revenue. The balance of the Fund cannot exceed $100 million.” [SEC pdf]

And what will the Reserve Fund be used to do? We know that most of the FY 2013 Reserve Fund money went to upgrade EDGAR and other information technology, and then there was the remainder:

“The remainder of the Reserve Fund in FY 2013 will be used on a number of IT projects, including development of Market Oversight and Watch Systems that will provide the SEC with automated analytical tools to review and analyze market events, complex trading patterns, and relationships; development of fraud analysis and fraud prediction analytical models; and deployment of natural speech, text, and word search tools to assist our fraud detection efforts. Additionally, the SEC plans to develop analytical environment, databases, and intake systems for market data, mathematical algorithms, and financial data.” [SEC pdf]

Then the SEC added another project in its FY 2014 budget justification, the Consolidated Audit Trail.

 “The SEC plans to invest Reserve Fund dollars to develop the SEC’s ability to intake CAT data and store it in the EDW, as well as to develop analytical tools and a single software platform that will allow the SEC to identify patterns, trends, and anomalies in the CAT data. The tools and platform will allow seamless searches of data sets to examine activity to reveal suspicious behavior in securities-related activities and quickly trace the origin.” [SEC pdf]

But what happened to these plans to monitor the financial markets with an eye toward reducing the instances of fraud and abuse?

H.R. 3547, the omnibus 2014 spending bill passed by Congress and signed into law by President Obama last week, contains more bad news for the SEC than just the meager 2% increase it provides for the SEC’s budget. A provision in the new law quietly strips away half of a $50,000,000 Reserve Fund that the SEC uses to improve its technology resources.” [Securities Docket]

Not too put too fine a point to it, but — the Congress of the United States found a way to defund the very activities of the SEC which might allow the agency to technologically keep up with the high frequency traders, the dark pools, and the latest Wall Street tech.  That should keep the Big Banks Pacified?

The Big Banks ought to be especially pleased by the label  “slush fund” attached by Representative Amodei to their funds to improve the technological capacity of the agency.  If Representative Amodei is displeased with the “lack of Congressional oversight” over the expenditures in the SEC Reserve Fund, then he may have missed the two documents readily available online wherein the SEC described for Congress precisely what they wanted the Reserve Fund to implement. See: SEC FY 2014 Budget Justification (pdf) the executive summary of the Reserve Fund is on page 10, and the SEC FY 2013 Budget Justification (pdf), the executive summary of the Reserve Fund is on page 9.

Why would anyone, facing the increasing speed and technicality of modern financial market operations, want to call the funds allocated to assist in the improvement of oversight and fraud detection a “slush fund?”  Perhaps because they don’t want the SEC to keep up with the Big Banks, high flying hedge funds, and wealth management groups?

(2) Oh, those regulatory costs and burdens!  This has a familiar ring to it.  Here’s where Eugene Scalia, son of Antonin,  enters the picture:

“Eugene Scalia is a lawyer of extraordinary skill. In less than five years, the 50-year-old son of Supreme Court Justice Antonin Scalia has become a one-man scourge to the reformers who won a hard-fought battle to pass the 2010 Dodd-Frank Act to rein in the out-of-control financial sector. So far, he’s prevailed in three of the six suits he’s filed against the law, single-handedly slowing its rollout to a snail’s pace. As of May, a little more than half of the nearly four-year-old law’s rules had been finalized and another 25 percent hadn’t even been drafted. Much of that breathing room for Wall Street is thanks to Scalia, who has deployed a hyperliteral, almost absurdist series of procedural challenges to unnerve the bureaucrats charged with giving the legislation teeth.” [MJ]

And what has the Scalia Scion done to create this successful stall ball strategy?

“Scalia’s legal challenges hinge on a simple, two-decade-old rule: Federal agencies monitoring financial markets must conduct a cost-benefit analysis whenever they write a new regulation. The idea is to weigh “efficiency, competition, and capital formation” so that businesses and investors can anticipate how their bottom line might be affected. Sounds reasonable. But by recognizing that the assumptions behind these hypothetical projections can be endlessly picked apart, Scalia has found a remarkably effective way to delay key parts of the law from going into effect.” [MJ]

So, when Representative Amodei says he wants the “Administration to report to Congress on the cost and regulatory burdens of the Dodd-Frank Act,” he’s chiming right in, cheerleading if you will, for the stall ball tactics of the Wall Street barons as practiced rather successfully  by their Scalia Scion lawyer.  That should help keep the Big Banks Pacified?

(3) And, Representative Amodei is only too pleased to help the corporations and Big Banks hide their political donations — because he doesn’t want the SEC to be able to require corporations and large banks to tell the  public and their shareholders about their political activities!

Representative Amodei gives every appearance of being a major cheerleader for Team Wall Street, and its efforts to avoid regulation, supervision, and monitoring by the Securities and Exchange Commission — no doubt he, and other Republicans in Congress, will be delighted to participate in the GOP’s Big Bank Pacification Program.

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Filed under Economy, financial regulation, Politics, Republicans

Questions and Answers

>Overnight Express News Round UpAggregation: Where’s the Gun Safety/Background Check bill in the Nevada Assembly? Answer here.  Who’s the big winner in the Nevada Legislative biennial lottery?  Answer here.  From which states is an undocumented worker most likely to be deported? Answer here.  Is a grazing permit a “revocable privilege” or a “property interest?” The answer so far, but there’s probably more litigation to come.

Dept. of No Surprises:  Now, who would have guessed that the beneficiaries of various and sundry tax breaks (hereinafter called Tax Expenditures) are those in the top brackets of U.S. income earners?  Answer: Everyone, including the non-partisan Congressional Budget Office.    What are the most “Cringeworthy” Quotes from Wall Street?  Let’s start with “That’s why I’m richer than you…

Contrary to the steady drum beat of radical assertions that the Social Security Administration won’t be around to help young workers when it’s time for them to retire, there’s “Social Security’s challenges continue to be modest and manageable.”  There’s more here from the CBPP.

Women Where Daily?  Members of the Armed Services Committee are seeking answers from top military brass on issues related to acts of sexual assault (predominantly against women) in the U.S. military. More here.   The ladies of the Senate confronted military leadership concerning the problem, more here.  An ex-Army prosecutor reached out to Senator Gillibrand, more from the Buffalo News.  And, Senator Boxer has teamed up with a former Marine to push the issue to the foreground.

Women can say silly things — there’s this nugget:

“I think that more important than that is making certain that women are recognized by those companies. You know, I’ve always said that I didn’t want to be given a job because I was a female, I wanted it because I was the most well-qualified person for the job. And making certain that companies are going to move forward in that vein, that is what women want. They don’t want the decisions made in Washington. They want to be able to have the power and the control and the ability to make those decisions for themselves.” Rep. Marsha Blackburn [ HuffPo]

What’s “THAT?” The reference goes back to equal pay for equal work legislation.   And, what sort of “recognition” would the ladies like from corporate America?  Money would be nice?  No one is talking about women being employed — the pay question refers to those who are already in the workplace and already getting paid an overall average of 75 cents on every dollar a man can earn.   “They” don’t want the decisions made in Washington?  Let’s go to the next line “They want to be able to have power and control and the ability to make those decisions for themselves.”   The question was about what women will be paid for their work.  Exactly what “power, control, and ability” do they have when facing an employer who discriminates based on gender?  Dear me, is Rep. Blackburn suggesting the ladies unionize?   The entire point is that in discriminatory situations the women do NOT have the power, or the control, or the ability to obtain equal remuneration for equal work.  However, we have to remember that Rep. Blackburn voted against the Lily Ledbetter Act… and the Paycheck Fairness Act of 2009.

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Filed under financial regulation, Nevada legislature, Social Security, Taxation, Women's Issues

Late Night Recommended Reading Roundup

Newspapers glassesThe Nevada Progressive connects the dots in “The Secretive Climate Denial Campaign in Our Backyard.”  The AFP connected to the NPRI, the NPRI connected to the Tea Party, the Tea Party connected to the Republicans, now hear the Words of the Koch Brothers!  Highly recommended reading.

Stay tuned to the Sin City Siren for information about the upcoming Las Vegas, NV hate crime event.  Calendar marking information for those in the area here.

Talk about a business tax is waning in the Nevada Legislature; In case you missed it,  The Nevada View has a good summary, complete with a must see chart on taxation in the Silver State.  Buzzlzarownd discusses tax topics in the current session of the Assembled Wisdom.

L’Affaire Brooks  is covered in the Nevada State Employee Focus blog, and there’s more from Steve Sebelius at Slash/Politics.

Yes, there’s a big difference between deficit and indebtedness, and the Nevada Rural Democratic Caucus blog makes this clear while providing some ammunition with which to push back against the Republican’s Tocsin in regard to the Great Big Horrible Debt Which Will Consume Us Faster Than An A Speeding Meteor… or something.

Speaking of Things Financial:  Begin with the post on Crooks and Liars  about the depredations of HSBC; then proceed to “Call the Waaambulance!” for C&L’s observations on the bankers’ pearl clutching fainting couch landing after being assaulted, I say Assaulted, by Massachusetts Senior Senator Warren.  The Huffington Post describes the whining from Wall Street. Now, read the New York Times article concerning the $35 million settlement agreed to by a mortgage firm that was involved in a six year scheme to prepare and file perhaps a million (or more?) fraudulently signed documents.   Unsettling huh?  If you aren’t sufficiently annoyed by the corporate cavorting over the U.S. tax system — read “The Loophole Lobby.”

What is it that scares Republicans even more than the thought of increasing the minimum wage?  Politicususa has the answer.   And, then there’s the Tennessee Congressional Representative, who during a nostalgic tale of How I Grew Up Self Sufficient Making The Minimum Wage inadvertently made the President’s point for him.  Oh, and by the way, back in the days of the Bush Administration there were 65 Republicans pushing for an increase in the minimum wage. Who’da thunk it.

Then they went on vacation — The Congress is on vacation — again — meanwhile the Violence Against Women Act re-authorization sits awaiting action in the House.  Meanwhile, a prosecutor in Detroit is spearheading efforts to tackle the huge backlog of untested rape kits in police storage.

No, radical gun enthusiasts — Chicago is NOT proof that reasonable controls on guns don’t work.  Look at the Chart.

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A Capitol Crime? Tax on 1% Unacceptable, Tax on 99% OK?

The fight begins over the extension of the payroll tax cuts in the aftermath of the voting on December 1, 2011:

“Republicans proved tonight they are more interested in tax cuts for millionaires than tax cuts for the middle class. The legislation they blocked would have put $1,500 in the pockets of the average middle-class family in America and across Nevada next year. The bill was fully paid for by asking millionaires to pay just over three percent on their incomes above $1 million.

“Republicans spent this week trying to convince us that they support middle-class tax cuts, but tonight a majority of Senate Republicans voted against their own bill – calling into question whether they support middle-class tax cuts at all.

“I was encouraged to see one Republican join Democrats in asking millionaires to pay their fair share. But because every other Republican continues to insist on protecting millionaires, middle class families could face a $1,000 tax increase next year. Democrats will not stop fighting to avoid that outcome. I hope Republicans will decide that the economic security of hard-working Americans is more important than protecting the wealthiest one percent.”  — Senator Harry Reid (D-NV) December 1, 2011

One theme we’ve not heard from the broadcast media is “Republicans in Disarray,” although the commentary from House and Senate GOP leadership was calibrated to express support for the extension of the payroll tax cuts, but evidently not strong enough to secure the usual lock-step coordination seen in other Senate votes.

Acknowledging that Republican opposition to middle-class tax cuts was untenable, Republican leaders spent this week trying to convince the world that they supported middle-class tax cuts:

Cantor: “You Aren’t A Republican” If You Vote Against Payroll Tax Cut Extension. According to the Hill, “During the closed-door meeting Boehner and Majority Leader Eric Cantor (R-Va.) urged rank-and-file members to support the extension, saying it was necessary for a party that historically opposes tax increases, a leadership aide said. Cantor told members that ‘taxes are a Republican issue and you aren’t a Republican if you want to raise taxes on struggling families to fund bigger government,’ according to a source in the room.” [The Hill, 11/30/11]

Boehner: “If You Guys Think That Not Extending the Payroll Tax Cut Is Politically Advantageous, You’ve Got to Be Kidding Yourself.” According to Roll Call, “House Republican leaders bluntly warned their Members on Wednesday that opposing an extension to a popular payroll tax cut is politically unsustainable. According to a Republican source in the GOP’s weekly conference meeting Wednesday, Speaker John Boehner (Ohio) told his conference that ‘if you guys think that not extending the payroll tax cut is politically advantageous, you’ve got to be kidding yourself.’” [Roll Call, 11/30/11]

McConnell: “Republicans Are Going To Put Aside Their Misgivings And Support This Extension.” McConnell also said, “There’s a lot of sentiment in our conference, clearly a majority sentiment, for continuing the payroll tax relief that we enacted a year ago in these tough times.” [CQ, 11/28/11]

But last night, (December 1, 2011) a majority of Senate Republicans bucked McConnell, voting against the Republican plan and exposing their true colors: Republicans want to give tax breaks to millionaires, but not the middle class.

Washington Post: “In A Surprising Turn, More Republicans Voted Against The GOP Plan Than In Favor Of It.” “All but a handful of Democrats voted in favor of their party’s proposal, but in a surprising turn, more Republicans voted against the GOP plan than in favor of it. Senate Minority Leader Mitch McConnell (R-Ky.) predicted this week that a majority of his conference would vote for the party’s plan to extend the payroll tax cut. The vote suggests that rank-and-file Republicans remain divided on the merits of keeping the tax cut, leaving their party vulnerable to criticism from Democrats that they would raise taxes on the middle class as Americans are struggling economically.” [Washington Post, 12/2/11]

Politico: “Mass Defections Reflect The Payroll Extension’s Unpopularity Among Rank-And-File Republicans.” “The mass defections reflect the payroll extension’s unpopularity among rank-and-file Republicans, even as GOP leaders move to make the Obama proposal more palatable to their caucus and block Democrats from seizing the mantle of the tax-cutting party. The divided conference also portends how difficult it will be for Speaker John Boehner to move a payroll tax cut extension through his chamber without significant Democratic backing… [A] surprising number of Republicans defected from their party’s proposal – 26 in total, despite comments from Senate Minority Leader Mitch McConnell earlier this week that the GOP would support a payroll tax cut extension.” [Politico, 12/2/11]

Reuters: “Republican Ambivalence Toward Any Extension of the Payroll Tax Cut Was Evident” “Republican ambivalence toward any extension of the payroll tax cut was evident in the Senate as a majority of the party’s 47 senators voted against the Republican plan.” [Reuters, 12/2/11]

New York Times: Republicans Leaders “Struggle”, in “Political Bind” “Republican leaders’ struggle this week to find a strategy that could unite their party reflected the political bind it is in. Nearly 7 in 10 Americans said the policies of Republicans in Congress favored the rich, a New York Times/CBS News poll found in October.” [NY Times, 12/2/11]

Wall Street Journal: Republican Leaders “Fear The Politics Of Allowing A Tax Increase To Hit Virtually All Wage-Earners” “The vote suggests a disconnect between Republican leaders of both houses, who fear the politics of allowing a tax increase to hit virtually all wage-earners on Jan. 1, and many rank-and-file Republicans, who say the payroll-tax cut doesn’t create jobs and oppose short-term tweaks to the tax code.” [WSJ, 12/2/11]

Associated Press: Vote “Exposed Rare Divisions Among Senate Republicans” “But in a vote that exposed rare divisions among Senate Republicans, more than two dozen of the GOP’s 47 lawmakers also voted to kill an alternative plan backed by their leader, Mitch McConnell, R-Ky., to renew an existing 2 percentage point payroll tax cut.” [AP, 12/2/11]

Los Angeles Times: “Deep Resistance” Within GOP to Payroll Tax Cuts.  “Both bills met with GOP opposition, illustrating deep resistance within the ranks despite party leaders’ efforts to coalesce around the politically volatile issue.” [LA Times, 12/2/11]

The vote was a rejection of McConnnell’s effort to corral his caucus – Sen. Thune Called Republican Proposal “The Right Way” Minutes Before Voting Against It:

Thune Called The Republican Proposal “The Right Way” “There is a right way and wrong way to do this. This is the wrong way in the Democratic proposal. The Republican proposal is the right way.” [Floor Speech, 12/1/11]

…Minutes Before Thune Voted Against The Republican Plan. [Roll Call Vote 220, 12/1/11]

Part of the disconnect may stem from the anti-government’s high priest, Grover Norquist who told House Republicans that voting against extending the payroll tax holiday (usually interpreted by the GOP as “raising taxes” when discussed in the context of the expiration of the Bush Tax Cuts) is not really really really raising taxes.

OK, it’s clear now.  Allowing the Bush Tax Cuts, which predominantly benefit the 1%, to expire is “raising taxes,” but allowing for the extension of the payroll tax cuts, which benefits the other 99%,  is NOT.  [TP]

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Filed under Boehner, Heller, McConnell, Reid, Republicans

Finally, someone says it: Demand Is The Job Creator

After 30 years of supply side hoaxterism, and a steady drum-beat of support for economic policies which serve the interests of large corporations, literally at the expense of small business and working Americans — a venture capitalist says it:

” I’ve never been a “job creator.” I can start a business based on a great idea, and initially hire dozens or hundreds of people. But if no one can afford to buy what I have to sell, my business will soon fail and all those jobs will evaporate. ” [Hanauer]

Conservatives have tried, and largely succeeded, to tell the American public that in spite of hard evidence to the contrary The Stimulus Failed.  They’ve tried, and largely succeeded in convincing the minimally or only ideologically informed that no spending programs will produce permanent economically successful results.  What they’ve failed to grasp, and what is so succinctly stated by Hanauer is that NO business or enterprise is permanent.

A lack of demand is associated with several of the common factors for small business failure.*   Small businesses don’t fail because of “government regulations,” or because of “the Bank;” they fail because their numbers don’t add up.  The number one reason for small business failure: “There is not enough demand for the product or service at a price that will produce a profit for the company.”  [NYT]   This covers a host of other issues:  Did the start-up try to compete with a company that can operate with economies of scale?  Did the business open up in a declining market?  Did the business over-expand?

Even a cursory review of the typical lists of reasons for start-up and small business failure will yield evidence that the owner failed to initially understand demand levels, failed to physically locate in areas of high demand, or became overly optimistic about the overall level of demand and over-expanded the operations.  Failure to do proper budgeting and accounting within the firm means that there was no accurate way to determine if the demand was sufficient to keep the company floating above the profit line.   These elements return us to the starting point: The business failed because there wasn’t enough demand to produce a profit for the company.

Missing The Point

Conservatives speak as though every job created in the private sector is “real” or “permanent,” when the uncomfortable FACT is:

“Seven out of 10 new employer firms survive at least 2 years, half at least 5 years, a third at least 10 years, and a quarter stay in business 15 years or more. Census data report that 69 percent of new employer establishments born to new firms in 2000 survived at least 2 years, and 51 percent survived 5 or more years.” [SBA] (pdf)

The Tax Relief Coalition (read: US Chamber of Commerce, NFIB, National Association of Manufacturers, National Association of Wholesalers & Distributors, Associated General Contractors, and International Foodservice Distributors Association) opposed the American Jobs Act because:

“America’s job creators… are critical to the effort to rebuild our economy and create the jobs necessary to put our unemployed back to work. Unfortunately, the Senate is expected to take up yet another bill that, if enacted, would seriously impair our ability to accomplish that goal.” (Tax Relief Coalition, Letter To Congress, 11/30/11) [Republicans] (emphasis in original)

The serious impairment?  A 0.5% tax on top level incomes, which the Republicans in the Senate deemed “punitive.”  Senate Republicans sustained their filibuster of S. 1917, the Middle Class Tax Cut Act, extending the payroll tax reductions for working Americans on December 1, 2011. [roll call 219] The bill contained a tax surcharge on millionaires and billionaires, the “job creators” our venture capitalist cited as not creating any jobs.  Only 20 Senators could be found to support Senator Dean Heller’s unfortunate “hit everyone but the millionaires and billionaires” proposal, S. 1931 to extend the tax cuts.  [roll call 220]

As long as conservatives continue to oppose any measures which would increase demand (i.e. put money in the pockets of those most likely to spend it), and so long as they continue to put the interests of the upper 1% before the interests of the remaining 99%, the economy will be variously described as “moderate,” or “sluggish,” or “slow.”  [FED Beige Book]

Reality Check

Small businesses are, indeed, crucial to the American economy:

“Small firms:
• Represent 99.7 percent of all employer firms.
• Employ about half of all private sector employees.
• Pay 43 percent of total U.S. private payroll.
• Have generated 65 percent of net new jobs over the past 17 years.
• Create more than half of the nonfarm private GDP.
• Hire 43 percent of high tech workers (scientists, engineers, computer programmers, and others).”  [SBA]

However, 30% of the new starts will be gone in two years,  50% will be gone in five years, and only 25% will be around for fifteen years or more.  Those left by the wayside will not have found “enough demand for the product or service at a price that will produce a profit for the company.”

Notes and references: * Jay Goltz, “Top Ten Reasons Small Businesses Fail,” NYT, January 5, 2011.  Robert Longley, “SBA: Why Small Businesses Fail,” USGinfo.  Patricia Shaefer, “Why Small Businesses Fail: Top Seven Reasons,” BusKnowHow.  Melinda Emerson, “Reasons Businesses Fail: 5 Reasons why,” Small Business Trends, April 5, 2010.

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Filed under Economy, filibuster, Heller, Senate, Taxation