Tag Archives: tax reform

Trump’s Economic Siren Song

Siren Song The words “Trump” and “plan” should really never be used in the same sentence. Witness the speech to the Detroit Economic Club.  Here’s what the Reuters News Service gleaned from Trump’s speech:

“Republican presidential nominee Donald Trump on Monday proposed tax breaks for working families and for corporations as he outlined economic plans in an effort to regain momentum lost during a damaging spate of controversies.

Trump said his plan would include imposing a temporary moratorium on new federal regulations and a reduction to the tax burden on working parents with childcare costs.

He proposed cutting the number of federal income tax brackets from seven to three and reducing the top rate to 33 percent from 39.6 percent. He had previously said he would drop that rate to 25 percent, an idea many tax experts said would dramatically reduce government income and balloon deficits.”

First, notice in the second line of the article quoted above that Mr. Trump “outlined economic plans,” NOT offered any specifics —  those will come later, just as every other suggestion made by the Republican nominee will come later, if at all.  If ever.

The Rich Get Richer and 88.7% Get Nothing

Secondly, those “tax breaks for working families” aren’t for all working families just some of them – even the Wall Street Journal noticed:

“It wasn’t clear how such a tax break might be structured and whether it would be available to tens of millions of families that don’t pay income taxes because they have lower incomes. Making child-care expenses fully deductible would provide much larger benefits to the wealthiest families that have larger tax bills.”

Nice.  However, we can clarify this to some extent.  The Tax Policy Center offers this information about working families, tax bills, and who needs the help the most:

“Only 11.3 percent of households in the bottom income quintile will pay federal income tax in 2015. In contrast, 59.3 percent of households in the lowest income quintile will owe payroll taxes. Combined, 60.3 percent of households in the lowest income quintile will owe federal income or payroll taxes.

In many cases, low-income households owe no income tax. That’s because, in 2015, a married couple with two children can exempt $28,600 from income using the standard deduction and personal and dependent exemptions. Generally, smaller amounts can be exempted from smaller households and larger amounts from larger households.”

The arithmetic is simple. Only a bit over 11% of households in the bottom income quintile owe federal income taxes – and these are the ones which would benefit from Trump’s “deduction.”  What the other 88.7% of the families in that quintile get from Mr. Trump’s “plan” is nothing.

Deregulation

We’ve heard this song before.  More specifically, a campaign aide told the Wall Street Journal, this means Trump wants to slash EPA regulation on carbon pollution, and halt the preservation of wetlands and waterways.  Nothing new here.  It’s the same GOP rhetoric of old, conflating all regulation with EPA and conservation rules.  This, while 1/3rd of the residents of California still lived in areas as of 2014 which did not meet Clean Air standards. [LA Times]

Reporters slid by deregulation of the financial sector (read: Wall Street Casino) However, this past May the Republican candidate called for dismantling the Consumer Finance Protection Bureau, and reversing the regulations in the Dodd Frank Act.  [Fortune]  There’s nothing new here either, just more generalized GOP talking points.

Jolly Little Trade Wars?

“At the same time, Mr. Trump has promised to aggressively use executive power to renegotiate trade agreements, to label foreign countries as currency manipulators and to apply tariffs and other penalties to trading partners.”  [WSJ]

Lovely.  First, China is our Number One import partner.  Mexico is second, and Canada third.  [Census FT]  We’ve imported $212.2 billion worth of stuff from China thus far this year; $145.2 from Mexico; and, $137 billion from Canada.  Not surprisingly these three are also our top three export partners, in order: Canada, Mexico, and China. [Census FT] Is Mr. Trump truly suggesting that we get into economic battles with our top three economic partners?  Are we really going to benefit from practicing Hoover-ian Protectionism in relation to our top three partners?

Trump said:

“At the center of my plan is trade enforcement with China. This alone could return millions of jobs into our economy.

China is responsible for nearly half of our entire trade deficit. They break the rules in every way imaginable. China engages in illegal export subsidies, prohibited currency manipulation, and rampant theft of intellectual property. (65 66) They also have no real environmental or labor protections, further undercutting American workers.”

[…] Trade has big benefits, and I am in favor of trade. But I want great trade deals for our country that create more jobs and higher wages for American workers. Isolation is not an option, only great and well- crafted trade deals are.” [Time]

Yes, Chinese manufacturing policies are heinous.  However, what Mr. Trump has on offer IS protectionism and isolation; no matter how politely it’s phrased.   Or how vaguely it’s expressed, as on Trump’s website explanation.  Missing from the Detroit address and the website mentions are the 35% tariffs Mr. Trump proposed last May. [National Review]

Further, Mr. Trump appears to be operating on the happy delusion that simply declaring China to be a currency manipulator will force them to re-negotiate our trade deals.  Not. So. Fast.  Manipulation is in the eye of the beholder.

“Reasonable people can and do disagree about how countries conduct their monetary policies: what price should the central bank fix, or at what pace should that fix evolve. But to label as manipulation the conduct of monetary policy itself betrays a fundamental confusion about the operation and goals of central banks. If Zhou Xiaochuan,governor of the People’s Bank of China, is a currency manipulator, then Janet Yellen is an interest-rate manipulator.” [WSJ]

As is becoming all too noticeable, Mr. Trump’s understanding of the monetary policies involved is essentially shallow. The Wall Street Journal continues:

“Movements in the nominal yuan exchange rate have almost no long-term impact on global flows of exports and imports or on broader considerations such as average wages. The exchange rate that matters for trade flows is the real exchange rate, i.e., the nominal exchange rate adjusted for local-currency prices in both countries.

The real exchange rate, in turn, reflects the deep forces of comparative advantage such as technology and endowments of labor and capital. These forces drive trade regardless of monetary policy.”

Sorry, Mr. Trump, it seems as though a bit more sophisticated understanding of exchange rates is necessary – and, no, merely declaring China a “currency manipulator” isn’t likely to do much, and certainly not much in terms of wages for American workers.  It really would do Mr. Trump some good if he’d check out the article by the Dean of the Tuck School of Business at Dartmouth in the WSJ. [ Also WPO Blog, CFR, and then of course there are the Federalists]  Little wonder Republican economists are jumping ship.

Bottom Line Towards the Bottom of the Barrel

It isn’t hard to summarize Trump’s “Economic Plan,” – first, it’s not a plan.  It is an aspirational outline of economic ideas, none of which are anything new. Romney suggested declaring China a “currency manipulator” during his campaign, and the anti-regulation rhetoric goes back to the 1971 Powell Memo. It’s rather more a laundry list of Republican wishes – deregulate, repeal the Affordable Care Act, bash China, and ‘act strong.’   In this, Mr. Trump seems to be unable to differentiate between acting and posturing.  The speech was all pose in bad prose.

Comments Off on Trump’s Economic Siren Song

Filed under Economy, Politics, Republicans

Here’s An Offer?

Fat Cat 2The Republican members of Congress evidently love taking hostages… Debt Limits, Budgets, and any other victim conveniently available.  Their litany is perfectly predictable: We’ll vote for __________ if YOU will privatize Medicare, privatize Social Security, cut spending for social safety net programs,  give us everything we want in defense spending even if the Department of Defense doesn’t want it, criminalize abortion and birth control, and most importantly — if we can repeal the Affordable Care Act and Patients’ Bill of Rights.

However, there’s a bit more on their wish list. While not as headline grabbing and eye-catching as their well publicized items mentioned above, the Party has talked about “tax reform” in high generalized terms and has concentrated on sound bites, slogans, and simplistic gimmicks.

Underneath their concern for taxpaying Americans lies a commitment to insure that some Americans are not-quite-so-tax-paying.

Exhibit A  As of April 15, 2013 the core of the Republican Party was sitting on a lovely pile of corporate tax breaks:

“The annual cost of corporate tax breaks, including one that eases shifting profits offshore and out of the U.S. taxman’s reach, has more than doubled to $180 billion since 1987, according to a report released on Monday.” [Reuters] (emphasis added)

About 25% of this total comes from corporate tax deferral,  “the potential indefinite postponement of U.S. taxes on profits held offshore,” [Reuters] So, that’s approximately $45 billion per year uncollected by the Internal Revenue Service because corporations have figured out marvelous ways to keep their profits offshore, and their corporate welfare programs domestic.

The March 18, 2013  GAO Report was more specific:

“Corporate tax expenditures span a majority of federal mission areas, but their relative size differs across budget functions. The 80 corporate tax expenditures had estimated revenue losses in 12 of the 18 budget functions in 2011. Of the $181 billion in estimated corporate tax revenue losses, 81 percent was concentrated in the international affairs and housing and commerce budget functions, exceeding federal outlays in those budget functions.”

We can drill down even further:

“The 24 tax expenditures used only by corporations in 2011 provide support intended to encourage certain activities, such as energy production, or provide support for certain entity types, such as credit unions. A corporate tax expenditure may have multiple purposes: one narrowly focused on a specific activity or entity as well as broader or additional purposes pursuing national priorities or other activities. For example, 7 of the 24 corporate-only tax expenditures are aimed at encouraging or supporting specific energy sources and technologies, and these tax expenditures may also have broader national purposes such as promoting domestic energy production and energy security. In examining their narrowly focused reported purposes, one-third of the 24 corporate-only tax expenditures appear to share a similar purpose with at least one federal spending program.”   [GAO] (emphasis added)

It was probably unnecessary to underline the “energy” references in the report.

Exhibit B  Speaking of the energy business…  The energy giants have leases on some 40 million acres on on-shore land, and another 40 million + acres in off-shore drilling leases.  [NewYorker]  Nowhere is this process more evident than in western states with lots of BLM managed land. [DenverPost]  This is all supposed to be acceptable because the oil companies are supposed to be paying the landowners, or the federal government in the case of public lands, for these leases.  But wait… can we say “underpayment?”  A Pro Publica report in August 2013 found that not only were the energy companies deliberately underpaying the federal government, they were also finding multiple and creative ways to underpay royalties due to private land owners.

The GAO had a bit to say on this subject as well, and reported on December 6, 2013:

“In fiscal year 2012, companies received over $66 billion from the sale of oil and gas produced from federal lands and waters, and they paid $10 billion to the federal government for developing these resources according to the Department of the Interior. The federal government seeks a fair return on its share of revenue from leasing and production activities on federal lands and waters through the federal oil and gas fiscal system. Under the fiscal system, companies pay royalties, rents, and other payments–payments generally specified in lease terms– and taxes on profits from the sale of oil and gas produced from federal leases.  In May 2007, GAO found, based on several studies, that the government received one of the lowest percentages of value of oil and gas produced in the world. In September 2008, GAO found that Interior had not evaluated the federal oil and gas fiscal system for over 25 years and recommended that a periodic assessment was needed.”

The Department of the Interior recently initiated a contract for the assessment work necessary to determine if the U.S. taxpayers are, in fact, getting a “fair rate of return.”  That’s the good news. The bad news is that this will be the first such assessment in the last 25 years.

Exhibit C  Oh, to be a hedge fund manager, to be carried by carried interest.  The carried interest loophole in the tax code is a beauty, and even earned a place in the top four  CNN Money’s “Worst Tax Breaks.”   CNN Money explains why it bestowed this ranking:

 “That portion, known as carried interest, represents a share of profits from the funds they manage. They are paid that share even if they were not required to invest their own money in the funds. Carried interest is taxed at the long-term capital gains rate of 20% — well below the top two income tax rates of 35% and 39.6%.”  (emphasis added)

Ah, but gee! Whine the proponents of the loophole, we risk our reputations, our client’s money (not ours)  sometimes in long term investments.  We provide “hands on” money management.  And, precisely there is the problem.   If I were to provide consulting services to you we would be in a “fee for service” situation, and the fees I earn would be taxed as regular income.  If, however, I agree to manage your money, agreeing to be one of your financial consultants, and provide that “hands on” service, I get to collect the fee and pay a lower rate than what you would pay on your regular earnings.

The Republican members of the Congress give every appearance of demanding payment up front for SNAP (food stamp) benefits, for Meals on Wheels, for Headstart funding, for Veterans’ programs, for Job Training initiatives, for OSHA inspection improvements, for implementing EPA standards, for education, for the maintenance of national parks, and for anything else which benefits working Americans.  However, when asked how they would pay for these public services the answer is always Austerity Econ 101 — make CUTS.

Increasing the revenue side of the equation is unthinkable — Raising Taxes!   Whatever taxation reform is suggested it would the THE LARGEST TAX INCREASE IN HISTORY!  Somehow it always is.  However, think what might be done with that $45 billion a year stashed away by corporations indefinitely keeping their offshore profits in hand while bemoaning that “too many Americans don’t pay taxes.”

Or, consider what we could invest in energy research and technology if the oil giants were paying a fair return on the profits from their oil and gas leases on public lands?  And, what if hedge fund managers and other financialists were to pay the same rate of taxation on their income coming from investment earnings as the rate paid by other consultants, advisers, and managers?

“But, but, but…”, sputter the advocates for corner offices — Increasing taxes is Anti-Business and Punishes Success!  Balderdash.  It really doesn’t do to whinge about the “47% who aren’t paying taxes” — because they don’t earn enough income to be liable for federal taxation — while consistently opposing any and all efforts to collect tax revenues from those who are the in best position to contribute, and would be contributing more if they’d not figured out ways to make their creative accounting practices align with  their greed.

Worse still, they’d like their cake and to have the opportunity to chow down on it as well.  Consider the recent illumination of a fast food franchise which supports lower taxation while advising its employees on how to apply for SNAP program assistance [HuffPo], or how both McDonald’s and WalMart have become the new Welfare Queens. [BloombergNews]

So, here’s the offer.  Americans would like (1) improved infrastructure construction, maintenance, and rehabilitation.  They’d like (2) more readily available educational opportunities and job training programs.  (3) They’d like Veterans to get better transition assistance to civilian life.  (4) They’d prefer to have SNAP benefits available for working families.  (5) They’d like to see the day when a college education is a realistic dream for their children. (6) They’d like to see their elderly parents and other relatives retire assured that their medical and social needs are being considered so that they can remain independent as long as possible.

And, we could do all this — IF we’d start talking about how to reform our tax collection system such that those who should pay are paying.   However, it’s very difficult to bargain with people who say, “What is mine is mine, and what is yours is negotiable.”  — John F. Kennedy

2 Comments

Filed under corporate taxes, Economy, energy, energy policy, Politics, Taxation

Are We Serious About Discussing The National Debt?

OK, let’s talk about the debt and the deficit — but let’s have a serious, adult, conversation.  Here are some suggested rules for this road:

We need to talk about our national debt as a fiscal policy matter, not as a political propaganda talking point.

#1. One of the crucial points we need to acknowledge is that we were involved in two very expensive wars between 2000 and 2013.  We racked up some significant debt during military operations in Afghanistan and Iraq.   The military endeavors in Afghanistan have been, and continue to be, exceedingly expensive:

“The fact remains, however, that if the CRS and OMB figures for FY2001-FY2013 that follow are totaled for all direct spending on the war, they reach $641.7 billion, of which $198.2 billion – or over 30% – will be spent in FY2012 and FY2013. This is an incredible amount of money to have spent with so few controls, so few plans, so little auditing, and almost no credible measures of effectiveness.” [CSIS]

The removal of American forces from Afghanistan will curtail future expenditures, but the debt remains.  Whether we like it or not, we have to pay for both the direct expenditures for military operations, and we have to allocate funds for indirect costs which we may reasonably expect to incur.  There will be Veteran’s benefits to distribute, survivors’ benefits, and other VA services.

Although we are no longer a significant military presence in Iraq, the debt for our military actions and “reconstruction” is still on the books.  As of March 2013, the Iraq war cost $1.7 trillion which should be added to another $490 billion in benefits owed to Iraq War Veterans. [Reuters]

However convenient it may be to run on about “out of control” and “rampant” spending — it is absolutely necessary to be honest about the major elements included in the total indebtedness — and we cannot honestly discuss our national debt without acknowledging its major components, such as the wars in Afghanistan and Iraq.

At some point the national discussion must answer the question: How do we pay down what we owe for these wars without jeopardizing the promises we made to the men and women we sent to fight in them?

Secondly, we need to address the issue raised in the CSIS report, i.e. how we account for and administer our military expenditures?  There have been several attempts to improve Pentagon auditing, but the situation remains alarming.  The Defense Contract Auditing Agency, which is supposed to prevent over-payments, fraud, and abuse is in disarray.

The DCAA has a budget of $573 million, and a backlog of 24,000 audits.  This means that at the rate it is operating it cannot clear its backlog until 2016.  [BusinessIns] Note, it isn’t that the Pentagon doesn’t want to audit its contracts, it is that with current personnel and resources — it can’t.   Audits in 2011 (the last year for which figures are available) the DCAA recouped about 9% of the $128 billion in costs  it audited.   If we apply the 9% rate to the current backlog of $574 billion we could expect to recoup some $54 billion. [BusinessIns]

Therefore, another question we need to raise when discussing “waste, fraud, and abuse” in a significant portion of our national expenditures is:  Have we allocated the resources necessary to perform the audits imperative to the reduction of wastefulness?  It makes precious little sense to argue for either a reduction or increase in allocations to the Department of Defense unless we are willing to provide the necessary fiscal oversight of those allocations.

#2.  There needs to be an agreement as to what does and does not contribute to national indebtedness, especially in terms of earned benefit programs.

First, while we may argue about the philosophy underpinning the Social Security program, there is no argument about how it is funded.   The Social Security Administration explains why some have been confused about the “debts owed to the SSA”:

Most likely this question comes from a confusion between the financing of the Social Security program and the way the Social Security Trust Fund is treated in federal budget accounting. Starting in 1969 (due to action by the Johnson Administration in 1968) the transactions to the Trust Fund were included in what is known as the “unified budget.” This means that every function of the federal government is included in a single budget. This is sometimes described by saying that the Social Security Trust Funds are “on-budget.” This budget treatment of the Social Security Trust Fund continued until 1990 when the Trust Funds were again taken “off-budget.” This means only that they are shown as a separate account in the federal budget. But whether the Trust Funds are “on-budget” or “off-budget” is primarily a question of accounting practices–it has no effect on the actual operations of the Trust Fund itself.  [SSA] (emphasis added)

From 1984 onward the Social Security Administration was empowered to hold special issue securities which are non-public securities, not available on the commercial market, that can be redeemed as the SSA determines it needs in order to make its revenues meet the amount of benefits to be paid.  In short, it was the Reagan Administration’s intent that there be a “savings account for the trust funds” to address the retirement of the Baby-Boomers, and the increased number of beneficiaries who would be eligible for benefits.

While it might be advisable to decrease the need for the Social Security Administration to dip into its Special Issue reserves, it cannot be rationally argued that the SSA contributes in any significant way to the national debt.

There are alternatives to decreasing benefits, the most common being an increase in the earnings cap.  The current contribution and benefit base is set at $113,700 meaning that all income above that level is not subject to taxation.  [SSA]

“Currently, earned income in excess of $113,700 is entirely exempt from the 6.2 percent payroll tax that funds Social Security benefits (employers pay a matching 6.2 percent). 5.2 percent of working Americans make more than $113,700 a year.” [NYT] (emphasis added)

When the Congressional Budget Office released its report on Social Security in July 2010 (pdf) altogether too many focused on the problems sections and insufficient attention was paid to the options the report presented.  There was, for example, Option 6, removing the cap:

Under this option, Social Security’s total revenues would increase by about 0.9 percentage points of GDP in 2040, or by about 18 percent relative to current law. This option would improve the 75 year actuarial balance by 0.9 percentage points of GDP and would extend the trust fund exhaustion date beyond the 75 year projection period. As a result, payable benefits would be higher from 2039 onward, especially for people born later. This option would primarily affect taxes paid by high earners. (emphasis added)

When we discuss options regarding the “reform” of earned benefits (“entitlements” if you will) ALL the options should be on the table — including the removal of the regressive cap on income subject to the Social Security taxes.   [See also NYT]

There’s nothing intrinsically wrong with discussing “entitlement reform” as part of future budget and funding planning.  However, there is something very wrong about assuming that all such ‘reform’ be borne by the 95% of the U.S. population who are to accept reduced benefits,  for the benefit of the top 5% of income earners.  A person earning an adjusted income of $1,000,000 annually isn’t paying any Social Security tax on $886,300 of his or her income; the equivalent of 16 people who earn the U.S. median wage of $54,000.

Those wishing a fuller account of the elite assault on earned benefits should read, or review, Thomas B. Edsall’s excellent commentary in “The War on Entitlements,” NYT, March 6, 2013.

#3. We need to factor in the impact of the recession.   There’s really no way around this:

“Including all the stimulus spending, tax cuts, bank bailouts and automatic stabilizers, the Great Recession will add about $4.2 trillion to the federal deficit by the time the economy has fully recovered in 2016, based on back-of-the envelope calculations using figures from the Congressional Budget Office and the congressional Joint Tax Committee.”  [MarketWatch]

Or we could review the report from the Dallas Federal Reserve, and the Recession looks even worse if we look at total costs to the overall economy : “Last month, the Federal Reserve Bank of Dallas published a staff paper estimating the costs of the 2007-2009 financial crisis. The conservative estimate came out at 40 to 90 per cent of 2007 output, roughly US$6 to US$14 trillion.” [INET]

Recessions reduce income, reduced income reduces tax collections, reduced tax collections reduce government revenue, reduced government revenue increases debt.

If “tax reform” is advocated as a way to recoup the losses from the Great Recession, then we need to move beyond the Supply Side Hoax.   The notion that lower taxation would lead to more government revenue, was then — and is now — a theory in search of reality.    From the “been there, done that” corner:

“Supply-side economics starts from the generally accepted economic insight that tax policy can influence private-sector decisions by changing the incentives to work and invest. But supply-side acolytes take this relatively mundane observation to an extreme conclusion. They argue that lowering taxes for people, especially for those who have a lot of money to invest, will always lead to better economic results, and furthermore, that lower taxes is the single most critical intervention the government can undertake to stimulate growth.

This assertion—that lower taxes for the rich will lead to improved economic results—is testable. Of course, pure natural experiments in economics are few and far between, but over the last 30 years the United States alternated between economic policies that were heavily influenced by supply-side ideas, then were not, then were again. This variation allows us to compare economic performance in the various eras. If proponents of supply-side theory are correct, then the supply-side eras should outperform the non-supply side era. But that’s not what happened.” [CAP]

Reduced to a single chart we can see the results of the Supply Side Hoax applied to the U.S. public debt.

Supply Side TrendsWhen we apply Supply Side policies the blue line (national debt) increases, when we don’t the national debt is reduced.

It would follow from this that the “No New Taxes” (aka Supply Side Mantra) line makes a lovely and enticing slogan, but the application of the policy hasn’t resulted in better levels of investment growth, significant gains in productivity, better overall economic growth, better employment numbers, more income for the middle class, or better wages for working Americans.  These are all associated with increased federal revenue levels, we would obviously benefit from adopting a more realistic pro-growth tax policy than simply adhering to the narrow “no taxes = pro-growth” incantations from the Supply Siders.

When the push runs into the shove, a discussion of tax policy in regard to the reduction of the national debt should realistically incorporate the means why which federal revenues can be increased, without exacerbating the already serious level of income inequality, stagnating wages and salaries, and burdens on the American middle class.

If we’re truly serious about discussing the means by which we are to address the level of the national debt, then pontificating and nibbling around the edges of the 15% of the Federal Budget which concerns non-defense discretionary spending doesn’t suffice.   Are the advocates of cutting the food assistance programs really trying to convince us that they are taking important steps to curtail federal spending when those programs comprise some 0.24% of the federal budget? [InteractiveCP]

There are, indeed, some very serious questions to be answered when the question of the National Debt is raised: Not is sound bites and slogans, but in sound economic thinking and earnest efforts on behalf of working Americans.

 

Comments Off on Are We Serious About Discussing The National Debt?

Filed under Economy, Politics, privatization

Bits and Interesting Pieces

Jig Saw Puzzle** That stalwart champion of free enterprise, Las Vegas’s own Sheldon Adelson, is complaining about his competitors offering lower room rates, and diminishing his profits. [LVinc]  Perhaps if he’d saved a bit of that moolah he pitched at GOP candidates in the last election…?

** If an endorsement from Governor Sandoval is supposed to be an effective repellant to ward off pesky intra-party competition — it’s not working, at least not in the run for 2016, in the Lt. Governor’s Office department.  Ray Hagar has more in the RGJ.  Muth complains here.  More from Ralston here.

** Governor Sandoval had an opportunity to help prevent the possibility of private guns sales to ineligible persons, and he blew it.

“Nobody — least of all Sandoval, a former attorney general and federal judge — wants felons or the mentally ill to get guns. But the fact remains, the governor had a chance to make it more difficult for that to happen, and he chose not to take it. And while this incident was resolved without tragedy or bloodshed, the next one may not be.”  [Sebelius]

Amen.

** There was the “transportation” of James F. Brown, and now Nevada’s Rawson-Neal Psychiatric Center is losing its accreditation.  [LVRJ] The Nevada Progressive has more + video.

** Talking Point Memo lists the “8 biggest losers”  should Congress fail to pass a comprehensive immigration policy reform bill.  And, might we add radical right wing Nevada politicians in a state in which the Hispanic population is projected to increase from about 687,166 in 2010 to approximately 802,432 by 2016? [StateDemographer pdf]

** Oh, my goodness and glory… Senator Harry Reid spoke about the effects of climate change and its association with wildland fire danger, and predictably the right wing goes off the rails.  From the Damned Pundit:

“Reid was stating the obvious. For decades scientists have been pointing at factors like warmer spring temperatures, lighter winter snowpacks and earlier growth creating an abundance of dryer fuel, and linking those factors to more — and more intense — Western wildfires.”

Here’s the predictable piece from the Elko Daily Freepers, a portion of the litany of “fact checking” provided in an attempt to advance the deniers’ fantasies: “Pay no attention to the fact there has been no appreciable global warming in 15 years despite a dramatic increase in carbon output from all sources — a phenomenon none of the global warming models can explain.”  Thus we are supposed to ignore this data from the Arctic studies?  Or, the Cambridge University study projecting that Arctic methane release could cost the global economy about $60 trillion over the next decades?

By the way, the old “prescribed burn” system which the EDFP writer would prefer to see restored — it’s not necessarily a thing of the past, witness the 2008 Prescribed Fire Guide (download) for forest and wildland management. [SJEl.org]

** So, why is Representative Steve King (R-IA Xenophobia) still on the House Subcommittee on Immigration?  NRDC would like to know.   Oh, wait — Rep. Michele Bachmann (R-MN6) is still on the House Permanent Select Committee on Intelligence.   There’s more on Representative Cantaloupe Calves here.

**  It’s really hard to gin up any sympathy for the Bankers when they do stuff like mistake a foreclosed home for the one across the street and remove all a person’s belongings — then they trashed or sold all her stuff, and the bank is now refusing to pay for  replacements. [Crooks & Liars] Original story from Channel 10 here.   The First National Bank of Wellston is “disputing” the lady’s $18,000 claim for replacing lost personal property.  Her response: “I’m not running a yard sale here. I did not tell them to come in my house and make me an offer,” she said. “They took my stuff, and I want it back.” [ColumbusDispatch]  The FNB of Wellston has $94,813,000 in assets, and $56,598,000 in outstanding loans, it has reserves of $590,000. [BankTracker]   This story has hit other  national blogs, such as Think Progress.

** Members of the Senate who are drafting taxation reform legislation have promised their colleagues they’ll keep their suggestions secret for the next 50 years.   Transparency? Accountability? Anyone? The story, if not the suggestions, have leaked already — into Politico and The Hill.

** Jobs, Jobs, Jobs — and by CBO lights, the GOP is on the hook for killing about 1.6 million of them.   [Politicususa]  Just think of how many more they can kill if they make good on their pledge to Shut Down The Government unless President Obama agrees to repeal Obamacare?

Comments Off on Bits and Interesting Pieces

Filed under Adelson, banking, ecology, Gun Issues, Immigration, Nevada politics, Taxation

Nevada Roundup and other matters with bonus charts

It’s been too long since the last roundup of Nevada blogs and commentary.  There are some good items and pearls of wisdom to be had from the following posts.  See Nevada Progressive for a description of the New And Improved Bi-Partisan Senator Dean Heller — lest we believe that the Senator is “evolving.”  There’s also a cogent bit of election analysis available from The GleanerSteve Sebelius recounts the Heartbreakers.   Blue Lyon adds a pertinent note on the Senatorial race.  Buzzlzarwnd  adds some more information on the 2012 results.

Speaking of things Congressional, The Nevada View offers an explanation of the components of the national debt in a short video.  More on the Fiscal Cliff (or gentle slope) from Vegas Jessie.  This would be a good time to review a previous post from On My Blotter about the arguments for extending tax cuts for middle class Americans.   There’s a highly recommended read on using the GDP as an indicator of economic health from the Nevada Rural Democratic Caucus blog.   And, there’s a timely reminder that the Congressional Republicans are holding tax cuts from middle income families hostage in order to secure tax cut extensions for millionaires and billionaires from The Gavel.

Click on the chart to go to the President’s address on extending middle class tax cuts.  (Video)

The CBPP provides another perspective on this subject, illustrated by this chart indicating that tax cuts for the very wealthiest among us are NOT a way to economic recovery.

Oh, and by the way — the tax issue Wall Street doesn’t want to talk about (carried interest) is coming to the fore, read more at Business Insider.

Comments Off on Nevada Roundup and other matters with bonus charts

Filed under 2012 election, Congress, Economy, Heller, Nevada politics, presidential race, Taxation

Heller’s Wonderful Word Salad Explains…Something?

Appointed/Anointed  Senator Dean Heller (R-NV) was one of 26 members of the United States Senate to vote against the debt ceiling bill.  [vote 123]  Why? Heller stated: “I voted No on the largest debt increase in history. We need long-term, structural changes to rebuild our economy.”   Really?

First, no one was voting on the largest debt increase in history — they were voting to pay off debts already accumulated. Moving on.

Heller continued:

“I respect the effort by all involved to reach a compromise, but this agreement simply does not make the long-term, structural changes necessary to rebuild our economy. Congress has again shied away from making the tough decisions necessary to seriously address our nation’s need for fiscal health and economic growth. Twice I have voted in favor of forward-looking plans that would prevent tax increases, protect Social Security and Medicare and require Congress to send a Balance Budget Amendment to the States.

“Without a fundamental transformation in Congress’ approach to budgeting, we cannot stabilize our economy and foster substantial growth and investment. An effective plan would provide significant savings, institute tax reform, create jobs and outline a sustainable approach for reducing our nation’s debt.  This deal falls short of providing a clear path to reaching these goals,” Senator Heller said.”

Would anyone like a little cracked pepper on this word salad?  Or, to extend the food analogy, once masticated and swallowed this word salad is remarkably insubstantial.  We’re left with more questions than answers.

(1) What, pray tell, are “long-term, structural changes?”  Would this be a “balanced budget amendment” which the Tea Party radicals are seriously considering — all rationality notwithstanding?  Or, if the political winds begin to blow against the BBA does this artful phrasing become something else altogether?

(2) What are the decisions “necessary” to rebuild our economy?  We can discount “tax cuts” because a tax cut never built a road, bought equipment for a VA hospital, put food on a tray in the lunchroom cafeteria, hired a home health aide for a senior citizen, bought a text book for a school, built a dam, or repaired a levee.  A “tax cut” never bought a communications system for a fire department, trained a police officer, or commissioned a Coast Guard cutter.  “Tax cuts” never constructed an Interstate Highway overpass, bought prescription drugs for a wounded warrior, equipped a Border Patrol Agent, or even put a modern gun in the hands of a soldier.

Does Senator Heller believe that the top 0.05% of American income earners are really “job creators?”  Here’s a simple question:  If a person works hard and makes over $1 million per year as a surgeon, an athlete, or as the owner of a construction company, that person pays about a 25+% marginal tax; BUT if the same person does nothing but speculate on the stock market and “earns” the same amount, he or she pays only 15%.   Which is a “job creator?”

(3) What does this mean: “… forward-looking plans that would prevent tax increases, protect Social Security and Medicare and require Congress to send a Balance Budget Amendment to the States?”    Forward looking?  There’s nothing particularly “forward” about privatizing Social Security; Republicans have wanted to dismantle that program since its inception in during the Depression.

What’s “forward” about eliminating Medicare as we now know it, and replacing it with a voucher program which makes payments directly to the health insurance corporations?    “Premium support” is nothing more than a euphemism for a direct payment to one of the health insurance giants in order to “bribe” (“incentivize”) them to offer some kind of health care insurance to the elderly.  The result is socialism for the corporations and the “free market” for senior citizens.

(4) What would a balanced budget amendment mean for the states?  The first thing it means is that the federal government wouldn’t be there when the states needed it.   Have a Hurricane?  YOYO!  The federal government may not be able to access funding to meet the costs of cleaning up after an unusual weather event.  Have a major natural disaster like an earthquake?  Forget it Memphis, St. Louis, or the Bay Area.  YOYO!  The San Andreas and New Madrid faults should sit quietly while the Congress balances its finances.  We might want to remember that former Representative Heller was not initially in favor of sending federal money to assist in the aftermath of Hurricane Katrina, saying, “I’d prefer to give relief to the Gulf Coast region with a couple of ropes attached — and they aren’t lifelines.”  After voting in favor of extreme right wing amendments, then-Representative Heller ended up voting in favor of H.R. 1227 in 2007.

Would this BBA mean that the government would function like a family or a family business?  Absolutely not.  No family functions without incurring some indebtedness — there are car payments, house payments, medical bills, and college loan expenses.  No business can run for very long when it is under-capitalized, hasn’t a reliable line of credit, and can’t borrow to meet unexpected news — good or bad.  A so-called “balanced budget amendment” is fiscally irresponsible, economically irrational, and financially infeasible.   However, it sounds like a very good idea to those who are marginally economically literate, a category which appears to encompass most members of the Tea Party.

(5) What is a “fundamental transformation in Congressional approaches to budgeting?”   Good question, because Senator Heller doesn’t provide any real clues.

(6)  What is involved in a plan to “stabilize our economy and foster substantial growth and investment?”   If we want stability in our economy then the most obvious move would be to reward long term investment in manufacturing and finance.   Continuing the Bush Tax Cuts, and the loopholes for hedge funds, simply means putting ever more money into short term quick profit trading strategies.  Allowing banks to participate in proprietary trading with assets secured by private accounts just means that more money gets poured into the Wall Street Casino.  These elements do not reduce market volatility — they reinforce it.

(7)  What Plan?  “An effective plan would provide significant savings, institute tax reform, create jobs and outline a sustainable approach for reducing our nation’s debt.”

No one is seriously opposed to “significant savings,” but savings on what?  Do we privatize Social Security — which hasn’t contributed a penny to the national debt, but in fact actually owns some of it in the form of Special Issue Securities?  How does that save anything?  Do we privatize Medicare?  How are we saving anything when instead of paying beneficiaries and providers we are pouring the money into the coffers of the insurance companies?  If we wanted to save some money in the Medicare program why don’t we allow the Department of Health and Human Services to negotiate prescription drug prices?

Can we really experience “significant savings” if the beleaguered American Middle Class is made to shoulder even more of the expenses for our national safety net and economic automatic stabilizer programs, for our basic social services, and for our national defense?

Yes, this would make it appear as if some “tax reform” were in order, but is Senator Heller speaking of shifting the burden from middle and working class Americans  toward those who have been benefiting from volatile markets? Is he speaking of closing tax havens, tax loopholes, and tax breaks for the top 0.05% in order to ease the burden on the other 99.5%?

(8) What jobs?  This analysis from the Economic Policy Institute doesn’t sound like the current debt deal is a “job creator,” in fact it appears to have the opposite effect.  In words:

“The agreement would reduce spending by at least $1 trillion over 10 years through budget caps on non-mandatory programs, with additional reductions under discussion in a second phase. While the bulk of the cuts are back-loaded – coming more in the future – the near-term cuts would still have an immediate impact. Applying conventional multipliers, the reduction of $30.5 billion in calendar year 2012 would reduce GDP by 0.3%, and result in roughly 323,000 fewer jobs (as depicted in the table below).”

In pictures:

Senator Heller’s statement manages to say everything and nothing.  There are all the right focus group buzz words:  “rebuild our economy;”  “tough decisions;” “economic growth; ” “forward looking; ” “stabilize our economy; ” “foster substantial growth…”  However, without giving substance to his own statements all that Senator Heller has provided his constituents is less  a definitive pronouncement of policy and more like the product of a random phrase generator.

2 Comments

Filed under Economy, Heller, national debt, Nevada politics