Category: Income disparity


Minnesota State Capitol (rbw)

Good news and bad news: Bad news first

As part of the nationwide Republican efforts to undermine public education, Minnesota House Member Pat Garofalo (R-Farmington), who is Chair of the House Education Committee, plans to eliminate state funding for programs that promote racial integration in Minnesota schools. The programs, which in Minneapolis provide some $480 per year per student, are intended to close the achievement gap between racial minorities in the classroom. Worse, Garofalo’s plan would re-work the formulae used to determine funding levels in state schools. The results could end up taking money from under-funded schools and give that money to schools that are already well-funded.

MinnPost reports:

Speaker Kurt Zellers said House Republicans are working “hand in glove” on both the state’s $5 billion budget deficit and on a “fundamental change in how we deliver government.”

Republicans highlighted efforts to streamline state agencies, improve the use of technology and consolidate operations, but the only specific figure was a $172 million savings from a proposed 15 percent state workforce reduction.

Indeed. The Republicans in Minnesota, just as in many other states are seeking to end government’s ability to deliver services.

In fact, the Minnesota State Government has published its bi-annual Tax Incidence Report. It reports a heavily regressive tax burden within the state, even when compared with historical averages. According to the report, the effective state tax rate for a member of the top 1% of income earners within Minnesota was 9.7% in 2008. Meanwhile, the effective tax rate for the poor is 32.5%. Hence, the wealthy are not paying their fair share in taxes.

Yet, the Republicans are also looking to slash funding for the state Medicaid programs, especially programs geared toward the poor and the infirm.

But that is not all. The Republicans are waging all-out war on the poor. Representatitve Kurt Daudt (R-Crown) has introduced a bill that would prevent those who use government assistance EBT cards from withdrawing cash on the cards at ATMs above – get this – $20 per month. The bill, H.F. 171, would also create problems because one of the reasons that people are now able to use the cards to withdraw cash is that many stores are not connected to the state EBT system.

$20 is not even enough to purchase a Minnesota Drivers license (current price – $43). And there are already Republican proposals to require a photo-ID in voting.

In addition, the bill appears to make it illegal for people under the Minnesota Family Investment Program (MFIP) to carry cash at all! Nor could they put any money into a checking or savings account.

Crooks and Liars relates testimony of Angel Buechner, from the Welfare Rights Committee, referring to the efforts of the Republicans on the House Health and Human Services Reform Committee:

“We’ll leave you with this. It is not right to punish a whole group because of the supposed actions of a few. You in this room could have a pretty rough time if that was the case. It is not right to stigmatize and dehumanize women living the hard life of trying to raise children while living 60% below the poverty level. It is not right to use racist, bumper-sticker hate to inflict human misery for political gain.”

Where would the sort of thinking that would make it illegal for poor people to carry cash come from? Well, let’s take a look at a Republican strategy meeting that too place at the conservative Hudson Institute to find out. There, National Review editor Kate O’Beirne suggested that the parents of children on school lunch programs were “child abusers”, because they can not afford a meal. “What poor excuse for a parent can not put together a bowl of cereal and a banana?” as she puts it. She argues that despite the fact that more and more families across the nation are finding it difficult to make ends meet (due to conservative economic policies), that there is no national solution to the problem because it is not “in Washington’s interests” to solve the crisis of child poverty. Perhaps that is because for her, national interests are solely geared toward tax cuts for the wealthy and wars abroad to fight over resources.

Republicans discuss public education and decry school lunch programs (Crooks and Liars)

Another panelist at this hearing said that safety in schools could not be guaranteed because, despite the national scope of the problem, it should not fall under the purview of the federal government. Yes, he essentially makes those two very statements one right after the other. That is the sort of callous bastard that is driving the economic and educational policy of the Republican Party right now.

Some good news…

Luckily, the press is beginning to ask some pointed questions, because Republican Party policies are currently being driven by their corporate benefactors who believe that the sole reason for the existence of the government is to load their own coffers. That is precisely why Republicans would begrudge the poor of any money to spend and why they believe that school lunch programs as a waste of money, despite the fact that they have been shown to improve student performance and help to increase upward mobility in society. There is a way to prevent corporations from holding such a grip on the political process that the process would realign itself to work against the interests of citizens.

Minnesota Democrats have introduced bills in the House and the Senate to rectify the problem. The bills, S.F. 683 and H.F. 914 would amend the Minnesota Constitution to define “person” to mean a “natural person”.

The distinction between “person” and “natural person” is vitally important. British common law has always made a distinction between “natural persons” (meaning people) and “artificial persons” (meaning organizations like churchs, businesses, etc.). Well, the Citizens United decision effectively eliminated the many of those distinctions by allowing corporations to spend an unlimited amount of money on elections. And they did. Now we can see how that has effected the political process. We now have people cutting back on schools so that big companies – already earning record profits – can earn more in tax breaks.

Minnesota is no different in this regard than other parts of the country. A recent article by the Star Tribune highlights the largest lobbying efforts in Saint Paul for 2010. More than $3 million in big business lobbying expenses arose that year and $1.8 million (60%) was due to the Minnesota Chamber of Commerce alone. Big business is trying to buy the political process.

Author Thom Hartmann discusses corporate personhood (The Daily Take, RT)

So be sure to contact your Minnesota State Senators and House Representatives to give support to S.F. 683 and H.F. 914 in order to help the constitutional amendments to come to fruition. You had better believe that they will meet with strong resistance from the Republicans who currently hold majorities in the House and Senate.

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Wisconsin State Capitol (rbw)

After a Dane County Court ruled that the State was violating a prior ruling to allow protesters into the State Capitol, the scene at the Capitol was quiet once protesters left peacefully in accordance with the part of the ruling that prohibits nighttime sleepovers in the building. However, the cynical action by the Governor was not finished. Members of the Walker Administration claimed that it may take as much as $7 million to repair the damage done during the 2-week sleepover in the building. Though when pressed by the media, the Walker Administration was forced to backtrack, indicating that there was no damage to the building and all that was necessary was a through cleaning, including removing signs taped to the marble interior.

That was not all. The police presence at the State Capitol remains strong, though many officers are working during the day, only to join the protests after their shifts are complete. Democratic Assemblyman Nick Milroy of South Range was tackled to the ground when he tried to enter his office to get his coat. Video of the incident can be seen on WISN.

Because of the lockdown earlier this week, Democratic Legislators moved their desks outside so that they could meet with their constituents. Republicans did not apparently want to meet their constituents, in contrast, because they kept their desks inside during the lockdown. The Dems have kept their desks outside, even after visitors could enter the Capitol again.

After .22 caliber bullets were found in several locations around the State Capitol Thursday, visitors to the Capitol were screened heavily for weapons. Because of the incredibly peaceful nature of the protests so far and because Governor Walker has already admitted to considering to bring thugs in to create trouble, the discovery of the bullets has prompted Wisconsin ex-Attorney General Peg Lautenschlager to say:

“For all we know somebody planted them there — we don’t know if it was a protester.”

Thanks to the 14 Democratic Senators who are still in Illinois on their own dime, under the threat of an unconstitutional arrest, more details of the Koch-supported Budget “Repair” bill are coming to light. The ramifications are profound, including a $1billion cut to education across the state, the budget could end interlibrary book loans, it would force local referendums in order to maintain services, and strip collective bargaining rights for union employees, as well as end their subsidized child care. In a nod to the insurance companies that backed his campaign financially, the bill would also gut the self-supporting Wisconsin State Insurance Fund. This is a crystal clear example of companies giving candidates contributions for political services.

It would not be the only corruption on the part of Scott Walker. The Milwaukee Magazine has outlined cronyism and corruption that occurred in the Milwaukee County pension system under Walker’s watch. He has violated a Dane County judge by refusing entry for demonstrators into the Capitol. He has apparently lied to the press, who are now suing, over the notion that he had received a large number of emails in favor of his budget proposal. He likely broke the law when he mentioned that he had considered sending thugs to create trouble to discredit the protests and he is clearly in the pocket of the Koch brothers, given his friendly relationship with them, and he has been threatening state workers with pink slips if he does not get his way, a form of political coercion. In addition to all of that, Walker likely broke state labor laws by refusing to negotiate with the unions. Laura Flanders discussed these legal issues with Lautenschlager.

With his legal exposure, the story gets worse for Walker. Recall efforts are underway for 8 Republican Senators and they are going swimmingly. The recall of three senators gives the Democrats a majority and the recall of all 8 gives them a 2/3 majority, which they could use to bring about impeachment hearings. Scott Walker’s window to pass his budget is closing and he knows it: Some Republicans may even break with the party if it comes up for a vote.

So do the mainstream media William Rivers Pitt discusses why the mainstream media has not been reporting the huge crowds in Madison, preferring to discuss Charlie Sheen instead. In short, he says “I think they’re scared.” More on media coverage later!

War Room (Clay Bennett, Chattanooga Times Free Press)

This article is Part III in a series of articles regarding government spending. To read the other related pieces, go to my U.S. Federal Debt: Sources and Solutions page.

The Gripes and Wrath

Of all of the portions of the longstanding American dissonance over the U.S. Federal Budget, the king of all disagreements lies in taxation. It should not be a surprise then to understand that it is in taxation where the information regarding the Federal Budget is the most suspect due to all of the myriad political influences involved.

During the 2010 election cycle, the airwaves were filled with Tea Partiers railing against government spending and the need for lower taxes. We often heard of corporate taxes being too high and how they should be lowered. We heard of the economic benefits of reducing taxes. The Tea Party floated on a crimson tide of red ink into Washington D.C. and is now trying to drive the Republican agenda even further toward tax decreases, regardless of what happens with federal spending.

What is the current status of taxes in the United States? Who pays taxes in the U.S.? How do various taxes affect the population and job growth? We will investigate each of these questions in this article. These are rarely addressed in the news, despite the fact that the current budget battles are on the TV all of the time. We will address some of the political motivations of the Media that prevent them from accurately reporting issues of federal finance in a later article.

Tax Rates: The U.S. vs. the World

Considering the invective that can be overheard at any Tea Party rally, one would think that the people in the crowd are being taxed within an inch of their lives. The mere mention of the word ‘tax’ results in a bitter, emotional spew of slogans and booing – a visceral, angry reaction that is fueled by the rhetoric of Republican political candidates. It is one version of their five-minute hate. But is it realistic?

Figure 1 shows the 2006 rate of taxation in the U.S. relative to the world. This includes the total federal, state and local taxes or their equivalents in each case.

Fig. 1: Total Tax Burden by Country (OECD, via Get Rich Slowly)

As you can see, the total tax rate is much lower than that of most other developed countries, and it is roughly half that of nations like Denmark and Sweden.

“Ah, that’s SOCIALISM!”shouts the Tea Partier. Yes, Denmark and Sweden do have socialist economies. But given that information, we should at least see whether there is a benefit. Below are lists of the top 10 nations in terms of Gross Domestic Product (GDP) per capita from the International Monetary Fund (IMF). Other lists can be found as well on Wikipedia.

Rank IMF (2010) GDP per capita ($)
1. Luxembourg 104,390
2. Norway 84,543
3. Qatar 74,422
4. Switzerland 67,074
5. Denmark 55,113
6. Australia 54,869
7. Sweden 47,667
8. United Arab Emirates 47,406
9. United States 47,132
10. Netherlands 46,418

Excepting Qatar and the United Arab Emirates which do not have income taxes due to the fact that those nations are run on revenues from their oil reserves, each of the countries with a higher GDP per capita has higher taxes than the United States.

In addition, as we will find, considering the higher tax rates, each of those countries has a lower Gini Coefficient, a measure of income inequality. World Gini Coeffficients are found in Figure 2.

Fig. 2: Income disparity (dark red =worst, dark blue = best) (Wikipedia)

Economies with higher Gini Coefficients can face instability and corruption in government as lower classes tend to be crowded out of the political process by wealthy and powerful individuals. Considering that the Gini Coefficient of the United States is actually worse than that of nations like Egypt, there should be no surprises that labor demonstrations are taking place in America.

The Purchasing Power Parity (PPP) index is a measure of the relative purchasing power of currencies around the world. This index is dependent on the development in an economy, the strength of the currency and also on the wages of the people. Nations with a higher Purchasing Power Parity are able to more easily afford a similar, pre-described “basket” of everyday goods (food, clothing, etc.) and services in countries with lower PPP indices. In essence, the PPP is one measure of the wealth of a country in slightly different way than GDP per capita. The GDP per capita describes how much money someone earns on average in a country where the PPP indicates how much one could do with that money.

Remember those countries whose citizens earn more than Americans? All of them – and even the Netherlands, which also has far higher tax rates than the U.S. – have higher PPP than the U.S. This can be seen in Figure 3. It essentially means that when someone travels from Norway to the U.S., they consider prices to be cheap in the way Americans find prices to be lower in Mexico.

Fig. 3: 2003 Adjusted Purchasing Power Parity (Wikipedia)

There are several great reasons for this. Well, taxes actually raise incomes. Progressive radio host Thom Hartmann explains:

When I was in Denmark in 2008 doing my radio show for a week from the Danish Radio studios and interviewing many of that nation’s leading politicians, economists, energy experts, and newspaper publishers, one of my guests made a comment that dropped the scales from my eyes.

We’d been discussing taxes on the air and the fact that Denmark has an average 52 percent income-tax rate. I asked him why people didn’t revolt at such high taxes, and he smiled and pointed out to me that the average Dane is very well paid, with a minimum wage that equals roughly $18 per hour. Moreover, what Danes get for their taxes (that we don’t) is a free college education and free health care, not to mention four weeks of paid vacation each year and notoriety as the happiest nation on earth, according to a major study done by the University of Leicester in the United Kingdom.

But it was once we were off the air that he made the comment that I found so enlightening.

“You Americans are such suckers,” he said. “You think that the rules for taxes that apply to rich people also apply to working people, but they don’t. When working peoples’ taxes go up, their pay goes up. When their taxes go down, their pay goes down. It may take a year or two or three to all even out, but it always works this way—look at any country in Europe. And that rule on taxes is the opposite of how it works for rich people!”

My Danish guest was right. So before we get into the larger consequences of tax increases or tax cuts for the nation’s economic health, let’s parse this business about what tax increases or cuts mean for the rich and for the not-so-rich.

Why is this so? It is a matter of an economic phenomenon called tax incidence that essentially describes how the laws of supply and demand work with taxes on wages. If a government introduces a tax on worker salaries, it happens that those workers will need a little more money in order to be able to purchase food and supplies necessary for daily life. In the very short term this can be a slight problem, though after about a year it means that a number of workers who are taking new jobs would have negotiated higher wages than they would have without the tax increase. The increased wages they receive mean a higher demand for jobs, and that increases wages even more. When all is said and done after a year or two, wages more than make up the amount of money lost to the tax increase!

Companies in the United States understand this quite well – why else do you think that the “business-friendly” party, the Republicans continually asks for tax cuts? Not only does this help Republicans pretend they are on the side of workers, but it is one way of forcing labor prices lower for the wealthy while being able to retain more money for themselves.

But taxes are not fun to pay, you say. Well, then one would expect that people who live in countries with high tax burdens would be unhappy. Yet in 2011, Forbes reported a survey conducted by the Legatum Institute in which they asked citizens around the world about their happiness and standards of living and compiled these into a “Prosperity Index”. Their results were interesting. The United States fared alright at #10. But it was beaten by strong social democracies that each have higher taxes! Here is the top ten, with total tax rates listed just for fun:

Rank Legatum Prosperity Index Rank (2011) Total Tax Rate (%)
1. Norway 43
2. Denmark 49
3. Finland 42
4. Australia 31
5. New Zealand 38
6. Sweden 49
7. Canada 32
8. Switzerland 30
9. Netherlands 39
10. United States 28

Sure, the United States did alright, but the odds are very low that every country ranked higher than the U.S. would have higher taxes by coincidence. In fact the U.S. is ranked more highly than it otherwise would be due to the fact that it holds the world’s reserve currency, which offers the U.S. a extra wealth that other countries do not have access to.

A Tea Party person might interject here once again: But the U.S. has FREEDOM! Let us take a look at that idea a little bit more carefully. What does freedom mean? Of course it can mean things like freedom of speech and freedom of assembly, but it can also mean upward mobility. After all, failing other freedoms, being wealthy can often result in a very different perception of a person by the government. How likely is it for a person in the lower classes to rise up to the higher classes? Two Social scientists, Dorling & Henning have done a study on the relative (im)mobility of citizens in a variety of nations, especially the U.S. and other countries that are listed in the lists above. Their results are in Figure 4, where it can be seen that

Fig. 4: Upward immobility (higher numbers = lower mobility) (Views of the World)

the countries that pay higher taxes all have greater ease in moving from the lower classes to the higher ones in economic status and this may be correlated with income disparity. The U.S. does shine here in terms of educational mobility, though this amazing feature of American society is currently under attack.

At this point, the recalcitrant Tea Partier mutters, “Well, you still have not talked very much about taxation.” This is largely true, though so far we have discussed some of the possible results of taxation when it is done right. We will discuss taxation itself and some more of the side-effects in the next section, in which we specifically look at the history of taxation in the United States.

Taxes in the American Economy

Another farce about taxes, yet it is a commonly held belief that taxes in the United States are high right now even when compared to historical rates. In a recent article, Richard Wolff shows a plot that displays the historical income tax rates in the highest and lowest tax brackets in the U.S. (Figure 5).

Fig. 5: Highest and lowest bracket income tax rates in the U.S. (Richard Wolff)

Taxes on the wealthy had been at recent lows just prior to the Great Depression, but one of the policies that the Roosevelt Administration pursued was to raise income taxes on the wealthiest Americans to 90%. “How draconian!” you may say, “How could he do that?” Roosevelt was quite wealthy himself but his relationship with organized money was quite different from that of President Obama’s. For example, on the eve of the 1936 election FDR gave a speech at Madison Square Gardens. Here is a quote:

For twelve years this Nation was afflicted with hear-nothing, see-nothing, do-nothing Government. The Nation looked to Government but the Government looked away. Nine mocking years with the golden calf and three long years of the scourge! Nine crazy years at the ticker and three long years in the breadlines! Nine mad years of mirage and three long years of despair! Powerful influences strive today to restore that kind of government with its doctrine that that Government is best which is most indifferent.

For nearly four years you have had an Administration which instead of twirling its thumbs has rolled up its sleeves. We will keep our sleeves rolled up.

We had to struggle with the old enemies of peace—business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.

They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me—and I welcome their hatred.

I should like to have it said of my first Administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second Administration that in it these forces met their master.

(This speech is truly worth a listen as the mere words do not quite carry FDR’s oratory. He knew how to give a speech. Here is the link once again.)

Can you imagine President Obama saying something similar? During the week before an election?!! He had the perfect opportunity to do so when he was elected. Instead, he hired Timothy Geithner, one of the people who created the mess as his Secretary of Treasury and kept Ben Bernanke on at the Federal Reserve. The Tea Party may not believe so, but Obama is owned by Wall Street. Goldman-Sachs was one of his largest benefactors during his election.

The 90% tax rates on the wealthy by FDR were intended in part to break the political power of the most wealthy individuals in the country, whose unregulated financial speculation resulted in the Great Depression. (Sound familiar?) In part, the taxes were high in order to fund programs like Social Security and, yes, to redistribute wealth.

But wait a second! Redistributing wealth is bad for the economy, right? Well, let’s take a look. Figure 6 shows annual growth in U.S. GDP since 1929.

Fig. 6: Annual U.S. GDP growth rate, 1929-2009 (Wikipedia)

GDP growth rates in the United states were far higher during the times when the top income tax rates were REALLY high than they are today. In fact, the growth rates tend to be highest when top income tax rates are also highest. This is primarily due to two things.

First, the high tax rate created the Middle Class. With many more people able to purchase products that American companies produced, the economy boomed during the 40’s, 50’s and 60’s.

Second, it turns out that productivity increases during times when the top tax rate is highest. Higher taxes mean higher federal spending and higher spending boosts the economy.

Of course there is that caveat that one can not allow the federal debt to go too high, otherwise it is possible to create stagflation as I mentioned in Part II. Considering this, I was excited to see the correlation between National Debt and the income tax rate that Greg Hollingsworth put on his blog, shown in Figure 7.

Fig. 7: Income Tax Rates and National Debt (CBO data, via Greg Hollingsworth)

Did you notice how as the top income tax rate drops, the U.S. Federal Debt skyrockets? Well, the top tax rate on the wealthy seems rather high, but recall that wealthy people only earn a portion of their money in the form of income. They also earn a lot of money through capital gains. Those taxes are rather low, too. But as you can see lowering taxes has had a profound effect on the American economy. Not only is it running less efficiently than it once had, but the national debt is going through the roof, too.

There is also a growing problem of the income disparity that we mentioned earlier. One problem with having a billionaire is that the billionaire does not invest all of his or her money into the economy. Rather, there is always a sizable portion of those assets that is rather illiquid, meaning that it does not circulate through the economy. This effectively reduces the money supply for everyone else and a BILLION is a very large number, so it represents a rather large loss of capital in the economy. The more billionaires, the greater this problem becomes and this is a motivating factor for the high tax rates on the highest income brackets. The wealthy are, after all, most able to afford the taxes and they have certainly benefitted from having been born and raised in the American economy, so it is a way of paying back to society.

Still, the income disparity is continually growing. In fact, thanks to tax loopholes that are available to the wealthy (but not the Middle Class), the world’s third richest man, Warren Buffet, famously complained that he pays a lower tax rate than his middle-class secretary. He has class, so he asked the Bush Administration and the Obama Administration after that to raise his taxes. He even argued that it would be good for the economy. He is still waiting for that to happen. In fact, the disparity in incomes in the U.S. is at its greatest size ever – bigger than the disparity at the beginning of the Great Depression, as is seen in Figure 8.

Fig. 8: Share of pre-tax household income received by the top 1%, 0.1% and 0.01% incomes, 1917-2005 (Wikipedia)

Right now 1% of the population earns more than 20% of all of the income in the country. Much of that money sits idle when it could be re-invested into the economy.

Figure 9 shows just how bad the situation is. The three bars in the plot show the Real, Estimated and Ideal fractions of income held by each quintile of the population according to a survey of the U.S. population by Michael Norton of Harvard Business School.

Fig. 9: U.S. Income Distribution: Real, Estimated and Ideal (The Atlantic)

The results show that the actual income disparity is far worse than the perceived one, and very very far from the ideal held by the average American. In fact the American ideal has the top 20% of income earners only earning 30% of income! That is even more socialist than Denmark!!

People are beginning to realize this and they are beginning to wake up out of the hypnotized slumber they have felt since Ronald Reagan and they are getting angry about this. Especially when they take a look at the relative growth rates of each income bracket over time (Figure 10) But there is one more thing that REALLY makes people mad.

Fig. 10: Growth in US Wages by Tax Bracket (Discover Magazine)

Something is still missing, though… Hmm…

Corporate Taxes

…and that missing thing is the corporations. Now I know what a Tea Partier would say: “We can’t have high corporate taxes because companies will just move away.” Regulations could prevent that, and corporations should pay their share because they use and abuse our natural resources and national infrastructure all of the time.

If you were to ask the Heritage Foundation, they would show you this diagram (Figure 11):

Fig. 11: Corporate Tax Rates in OECD Countries (Heritage Foundation)

Oh no! America’s corporate tax rates are among the highest in the world! America is doomed!! All the companies will move away!

Not so much… Those are the official tax rates, not the actual ones. There are lots of tax loopholes for companies. Rachel Maddow did a great piece in October, 2010 in which she mentioned that GE, Bank of America and Citigroup (the latter two playing a significant role in starting the Great Recession) paid $0 in corporate taxes. Yes, companies that earn billions of dollars per year pay less than you do in taxes and that is closer to the rule than the exception, though most small businesses do not share in those benefits. And yet, the Republicans keep asking for tax breaks for the rich and for corporations – out of fear that tax loopholes might be closed. It is possible for them to make the argument for lower taxes because the current tax rate is ostensibly so high. That is why the difference between the official tax rate has not been lowered so that it reflects reality.

There is more.

The pre-New York Times FiveThirtyEight blog posted an entry with a plot, Figure 12, that is the coup de grace.

Fig. 12: Taxes as share of GDP by type, 1935-2014 (Tax Policy Center, via FiveThirtyEight)

Look at Figure 12. Look at the Corporate Tax Rate. Look at the Social Security Income & Retirement Tax Rate. The reason that corporations now pay very little in actual taxes now is that since the time of Eisenhower, the decrease in the corporate tax rate has been funded by the increase in taxes on entitlements as a direct result of Republican federal policy.

Corporations extract resources that are owned by the public. They make a profit for themselves from those resources and they do not repay the public. That is where tax policies are today. So when you see that the budget deficit has swelled and that the middle class is doing poorly, it is a direct result in the drop in high-income taxes and corporate taxes. The effect is so profound that wealthy industrialists like the Koch brothers will save money by spending hundreds of millions of dollars to corrupt the political process so that they can buy the policies that they would like. They get a free ride with billions of dollars in the bank, but you get to pay for their exploits with middle class wages. Isn’t it about time that we had a discussion with our Tea Party friends? I thought so.

References and Links

Views of the World: Income Mobility

Wikipedia: Income Disparity

Wikipedia: Legatum Prosperity Index

Wikipedia: GDP per capita

Wikipedia: Purchasing Power Parity

Wikipedia: Tax Incidence

Wikipedia: U.S. Recessions

100,000 people showed up to rally against the GOP in Madison Saturday (John Hart, State Journal, via Madison Capitol Times)

After a weekend of protests that spread through all 50 states, the numbers continue to rise as rallies continue. The protests in Ohio are growing quite large as well. More that 20,000 people rallied in Columbus on Monday, protesting more Koch-supported union-busting Tea Party legislation passing through the legislature there.

One hiccup did occur as Governor Walker refused to allow protesters into the State Capitol Monday, though he was hit with a restraining order by a Dane Country judget. In addition, police refused to enforce the Governor’s order to clear the building, arguing that they “are not the Palace Guard”. It is public relations like these that explain why more than one million Wisconsinites are willing to sign a petition for Scott Walker’s recall. That is about 1 in 4 voters in the state asking for his recall, and that is only after one week.

Walker’s political future may be doomed, but he plans to continue to do damage before he leaves. The Governor, who was ousted from Marquette University for cheating while still only garnering a 2.4 GPA, is gutting the Wisconsin state educational system with cuts of up to $900 million in aid to schools. Meanwhile, the damage continues to build. Restaurants are leaving the Wisconsin Restaurant Association for its support of the Walker Budget “Repair” Bill.

As the national assault on education continues, including the Detroit school districts packing up to 60 pupils per classroom and all of the Providence teachers being fired in one swoop, more and more evidence of criminality and conspiracy begin to arise.

The Media are doing their part to aid Governor Walker’s disinformation program. Fox “News” has once again been caught lying,
when it turns out that a reporter who claimed to be punched by a protester – well, was not punched by a protester. They have been shouted down by protesters to the tune of “Fox News Lies” (because it does), but there has been no violence directed toward them. Fox’s response to “Fox News Lies” has been to argue that the protesters have a lot of “vitriol toward the media” and that the protesters want to shut down communication. Watch the link to see the worst, most dishonest reporting ever. Good Grief.

But Fox News is not the only complicit new organization helping the Tea Party out. The New York Times has once again taken to burying the lead. Oh, sure the real news is right there – on page 23 – but you have to get past the misleading headlines first. Keith Olbermann, now of Fok News, has exposed a piece in which a “regular union guy” from Janesville, WI argued against the teachers’ right to collectively bargain. Well, it turns out that the New York Times failed to report that the “regular union guy” was not actually a member of a union, the plant he supposedly worked for has been closed for years, and they misspelled his name. Oops.

Word is slowly getting out that Minnesota, with a bigger biennial budget deficit than Wisconsin, is closing its gap by taxing the rich. Wisconsin should do the same, since the wealthy and corporations in Wisconsin actually pay lower taxes than their fair share. And if those other companies are like Koch Industries, they have gotten rich by demanding bailouts and robbing from the states anyway.

The cyber-activist group, Anonymous, is also getting involved. They have taken down the Americans for Prosperity website as their first attack on a Koch-run organization. They say:

“[i]t has come to our attention that the brother, David and Charles Koch- the billionaire owners of Koch Industries-have long attempted to usurp American Democracy. Their actions to undermine the legitimate political process in Wisconsin are the final straw. Starting today we fight back.”

Billionaire contributions to Wisconsin state tax rolls has dropped quite a bit recently (Real News Network)

The Real News has done a great piece in which they describe the poor conditions that currently face Wisconsin billionaires. Oh sure, they have increased their wealth overall, but their rank on the Forbes 400 list has dropped on average by a couple of places. You can only imagine the difficulties! Since 2001 that the estate tax rates on billionaires has dropped by nearly half though they have found ways around them too. This occurs at the same time that state and federal governments cut back on services for the people who really need them. Did you know that the overall tax burden of billionaires has dropped as well at the same time that we are being told that we must “share the sacrifice”? Watch Real News’ Paul Jay discuss whether billionaires are putting in their fair share and watch to the end to see how simple it would be to balance state budgets across the country.

Artist depiction of Michele Bachmann's inner thoughts (yo2boy)

US Federal Budget

Fear not! Michele Bachmann know’s who to turn to to solve the Federal Budget Deficit! Sure, we all know that the Tax Code is a Weapon of Mass Destruction, but who better to handle WMDs than Glenn Beck? Do not get all of the apocalypse porn get to you and do not let the fact that he can not tell the difference between a socialist and a fascist bother you, but he is full of … it.

Returning to the real world, the US Budget is a big point of contention, with Republicans gearing up to defund everything that makes America a modern nation. Rachel Maddow has a great piece on how the GOP is defunding the Corporation for Public Broadcasting but how it wants to give more money ($40 billion) to big oil. Meanwhile, Representative Anthony Weiner (D-NY) asks the GOP why they want to get rid of government health care for the middle class, but they do not want to get rid of their own government health care. Current Office of Management and Budget (OMB) estimates suggest that the Tea Party/Republican proposal to cut $100 billion in discretionary spending would kill nearly 1 million jobs and cause the second Republican-induced recession in three years.

News from Abroad

A number of people are dead after a shallow 6.3-magnitude earthquake strikes Christchurch, New Zealand. The earthquake was followed by magnitude 5.5 and 5.6 aftershocks as well.

Fired upon in a sneak attack Thursday evening, protestors swelled in numbers Friday as they took back Pearl Square in Manama, Bahrain. They had been calling for a constitutional monarchy and now they are calling for the king’s head. After the king told hospitals not to treat demonstrators, Britain and France have stopped exporting crowd control weapons to Bahrain, but will the US do the same in the nation where it holds a huge naval base?

While students protest in Algiers, Trade Unions continue to protest in the streets in Tunisia. Workers are also calling for higher wages in Egypt, though the mention of the labor movements that brought down dictatorships in these two countries is simply called a “democracy” movement by the corporate American press.
Cracks appear in the Gadhafi regime as the military attacks jets to attack the crowds. Violence against the nonviolent protests has been fruitless throughout the Middle East and Libya is no different: Demonstrators now occupy several major cities, including the second largest city Banghazi, despite reports of heavy casualties there and in Tripoli. Two Libyan military jets also landed in Malta seeking asylum rather than fire on civilians.

In Pakistan, an American arrested for murder in Lahore is a CIA covert agent. Relations with Pakistan are already tense due to numerous civilian deaths after a large number of American drone attacks on its supposed ally. This also comes just a day after American airstrikes in Afghanistan kill 64 civilians, according to the Kunar provicial governor.

Labor protests in America – On Wisconsin!

Protests continue strong in Wisconsin as Egyptians purchase pizzas for state employees over the internet, saying ‘We Stand With You As You Stood With Us’ in a beautiful statement of solidarity. The protests in Madison met for the eight day as another round of mammoth protests are scheduled for Tuesday across the country.

Tea Party New Jersey Governor Christie faces the possibility of protests as he plans to force staff to pay more toward benefits. Labor unions have already marched in Trenton in solidarity with demonstrators in Wisconsin. Angry union workers filled the Statehouse in Indianapolis as Tea Partiers in a legislative committee approved a measure to eliminate collective bargaining rights for state employees, approving a Chamber of Commerce-supported “Right to Work” bill. The Tea Party Governor of Michigan will not push for a similar measure, saying he won’t “pick fights” with unions by following the same path as Wisconsin’s Walker. In nearby Illinois, workers from Chicago are joining the Madison protests. More workers joined protests across the state of Nevada in solidarity with the Wisconsin state employees, while hundreds gathered in Helena, MT to argue against state budget cuts, crazy legislation and for solidarity with Wisconsin.

More protests are scheduled around the country Tuesday, including:

Little Rock, Arkansas
Phoenix, Arizona
Palmdale, California
Sacramento, California
Denver, Colorado
Des Moines, Iowa
Annapolis, Maryland
Boston, Massachusetts
Springfield, Massachusetts
Saint Paul, Minnesota
Santa Fe, New Mexico
New York, New York
Columbus, Ohio
Providence, Rhode Island
Montpelier, Vermont
Madison, Wisconsin

Clarence and Virginia Thomas (credits in photo)

It is now well known that the Governor of Wisconsin has made to demonize teachers and care givers while making the decision to lower their living standards rather than to govern in a way that lifts the living standards of everyone. For those of you who are wondering how the state reached this predicament, we would need to go back to the foundation of the Tea Party with the help of the Koch Brothers and Dick Armey.

But that would not be the entire story because the Tea Party needed a little more help to get off the ground. The reason is not that the Tea Party had trouble finding funding because the Koch Brothers have billions. Rather, the trouble was that the Tea Party could not use that money to legally fund campaigns because of the McCain-Feingold Campaign Finance Law. So the Koch Brothers,
who hold a gathering of conservative operatives every year, invited Supreme Court Justices Clarence Thomas and Antonin Scalia to their soirée in 2009.

Well, it just so happened that the Supreme Court was hearing a case around that time, Citizen’s United vs. Federal Election Commission and by an amazing coincidence, that case just happened to deal with campaign finance law! When the Supreme Court Ruling on the case came out, it became clear that it was a bonanza for Corporations. Equating corporate money to “free speech” and a corporation to a person, the majority opinion, written in part by both Scalia and Thomas, ruled that companies could anonymously donate as much money as they wanted to any political candidate. In short, the decision opened the floodgates for corporate money in elections, which was already widely perceived to be a problem – even under McCain-Feingold.

The decision was strongly repudiated by lawyers, elections officials, lawmakers and voting rights advocates alike. In his dissenting opinion, Justice Stevens sharply rebuked the decision:

At bottom, the Court’s opinion is thus a rejection of the common sense of the American people, who have recognized a need to prevent corporations from undermining self government since the founding, and who have fought against the distinctive corrupting potential of corporate electioneering since the days of Theodore Roosevelt. It is a strange time to repudiate that common sense. While American democracy is imperfect, few outside the majority of this Court would have thought its flaws included a dearth of corporate money in politics.

The result of this decision was a resounding victory for Republicans across the country. A huge influx of corporate cash, much of it from unknown donors. Some funds from foreign sources may have been funneled (read: laundered) through the U.S. Chamber of Commerce. All of this meant a huge cash disadvantage for Democrats around the country.

The corporate money fueled misinformation and attack ads everywhere. It funded smear campaigns by the Chamber of Commerce, who hired a consultant to develop a strategy of hacking Union computer systems, planting false documents and alerting authorities after a false-leak to the “accounting fraud” information they “learned” about their adversaries. But they also set up malware and virus attacks on liberal groups. They also used the campaigns to try to force public policy to accept the outsourcing of jobs that their constituents have profitted heavily from.

These illegal operations took their toll. Russ Feingold, who had spent his career on improving the electoral process and eliminating untoward corporate influence also fell victim as Tea Party candidates, with coffers filled by the Koch Brothers won elections everywhere.
Corporate contributions reached a record $220 million in 2010, effectively throwing the same amount of support as a whole political party behind pro-corporate Republicans. Their agenda was and is about maintaining a corporate stranglehold on elections so that the government becomes a source of funding for entrenched and politically connected companies. Any funding on social programs is therefore inefficient to their ends and must be stopped. That includes Social Security, Medicare, Unemployment, you name it.

It is *only* through this lens that you can understand why Wisconsin Governor Scott Walker would create a budget deficit to precipitate a false crisis while refusing to raise taxes by $25 per person per year to solve the problem (that is all it would take). The Koch Brothers do not want to pay taxes and they and their news commentators such as Glenn Beck prey on the unassuming sense of fairness of normal people to convince them that raising taxes on the wealthy would be tantamount to theft. This is despite the fact that the world’s third richest man, Warren Buffett, publicly stated that it was wrong for him to pay a lower tax rate than his middle-class secretary. Buffett is diametrically opposed to the Kochs on the taxation issue: Warren Buffett and Bill Gates want to pay more taxes and they think other wealthy people should do the same in order to preserve democracy in the country.

Well, it turns out that this is not even the whole story yet. Clarence Thomas’ wife, Virginia, was a long-time lobbyist for the Heritage Foundation. And the Heritage Foundation was founded by the Koch Brothers! Even more: Clarence Thomas has not reported his wife’s nearly $700,000 per year income on their joint tax filings for several years, likely due to the fact that it is against the Supreme Court Code of Conduct for a Justice to engage in fundraising activities of any sort.

It gets even better: The group Citizens United spent over $100,000 on ads that supported his candidacy for the Supreme Court Bench! His wife also began two groups, Liberty Central and Liberty Consulting, which have profited from the Citizens United Ruling! Hence, Thomas has failed to report several conflicts of interest from which he was required to recuse himself. It may therefore be possible to vacate the Citizens United decision with the help of the Justice Department.

What kind of Justice is Clarence Thomas? Despite the fact that he has not asked a single question in hearings for 5 years now. (Sonja Sotomayor famously asked more questions on her first day of court than Thomas had in his entire time on the bench.) When it came out that Thomas had hidden his ethics violations with tax evasion, he claimed that he made a mistake on his tax forms because did not understand the corresponding tax law. So there you go – he is either corrupt or incompetent or both.

The progressive group, Common Cause is calling for an investigation of Justice Thomas and has filed a bar complaint with the Justice Department. If guilty could conceivably be impeached, though it would only be the second time in U.S. history in which a Supreme Court Justice faced impeachment.

On a lighter note, here is Stephen Colbert’s take on Clarence Thomas’ finances. Enjoy!

Protestors stayed overnight in the Wisconsin State Capitol (Wisconsin State Journal via AP, MSNBC)

Wisconsin state employees and thousands of supporters continue their fight across the state to protest Tea Party Governor Scott Walker’s proposal for massive cuts to state worker pay along with plans to terminate their collective bargaining rights, after threatening at the beginning to call out the National Guard if protests were to erupt. Hundreds of protestors camped out in the rotunda of the State Capitol overnight to show their support for worker’s rights. This is all over a state budget deficit of $145 million – or $25 per person in the state. More protestors packed the Statehouse in Columbus, Ohio as public employees in that state fight to keep their collective bargaining rights as well. The bill in the Ohio State Legistlature is sponsored by Tea Party member Shannon Jones (R-Clearcreek), who has a problem with people who wish to be paid living wages. Meanwhile, Florida’s Tea Party Governor Rick Scott has proposed cutting funding for historically black colleges. During discussions with state legistlators, he assumed all of Florida’s black state legislators had grown up poor. This comes roughly one month after Maine’s Tea Party Governor told the NAACP to “Kiss my butt” after declining an invitation to speak to the group on Martin Luther King Day. Undaunted by his own scandal, Florida Tea Party multimillionaire Governor Rick Scott has introduced his “7-7-7” mission – seven steps to eliminate 700,000 state jobs in seven years. That is right, he plans to eliminate jobs for 5% of the people in his state during the recession, but hey, everyone wants small government, no? Of course, each of these Tea Partiers and their multi-millionaire funders and many other Tea Partiers around the nation had planned to attack worker’s rights all along, even while claiming during the last election campaign that they would be fighting for jobs: Yours.

Elections have consequences. Russ Feingold, the pro-labor progressive who lost to a Tea Partier in November has decided to continue to fight for workers rights even as his successor works against them in the U.S. Senate. But we were warned. The Tea Party are the party of, for and by unadulterated corporate power. Who has been invited to provide information at Tea Party-run Congressional hearings on the Federal Budget? Corporate Shills from Koch Industries, Big Oil, conspiracy theorists, and southern secessionists. Thank Ron Paul for the secessionist.

Protests have begun in Libya as the wave of disquiet continues to spread through the Middle East. This includes a march on government offices. More protests are scheduled across the country today (Thursday). Two protestors were shot and killed during continued unrest in Yemen as protestors step up their demonstrations against the government. Authorities in Bahrain have sneak-attacked sleeping protestors in the capital Manama’s Pearl Square. The Bahraini king is not yet ready to deliver the Constitutional Monarchy that has been proposed by the protestors, who continue to demonstrate after rejecting a $3,000 per family bribe to be paid by the government. In Iran, thousands attend the funeral of a man killed during protests earlier this week.

It is not a wave of protests, but feathery chaos spreading in other activity around the world as nations celebrate International Pillow Fight Day.

Minnesota Public Radio (MPR)


http://minnesota.publicradio.org/www_publicradio/tools/media_player/syndicate.php?name=minnesota/news/programs/2011/02/15/midday/midday_hour_1_20110215_64

On Minnesota Public Radio’s Midday, Yale Political Science Professor Jacob Hacker discusses his book, “Winner Takes All Politics: How Washington Made the Rich Richer — and Turned Its Back on the Middle Class,” at the University of Minnesota Hubert H. Humphrey Institute for Public Policy. There are a number of great points in the discussion. Hacker provides a clear picture of how the situation in Washington has become so pro-corporate, beginning with the organization of right-wing political groups in the 1970s and he offers a glimpse to the great world we could create if we reorient Washington’s priorities to serve the public rather than the few.

Burj Al Arab, Dubai. (Cajie)

The signs of an increasing gap between the rich and the poor are around us. When is too much not enough?