Tag Archive: Features


Thousands of workers protest in the Wisconsin State Capitol (Wikipedia)

Nearly a month ago, a Tea Party governor who was elected on a tidal wave of corporate money that was legalized by the Citizens United Supreme Court decision took power in Wisconsin. Governor Scott Walker began work on a billionaire-supported regressive agenda in a state long known for its progressive stances on labor and human rights. Once people realized what was happening, they took action and while the first bill got through, efforts to remove the Governor and the Legislators who are responsible are progressing rapidly. The protests are the largest ever seen in Wisconsin and they continue to grow in size. At stake are the right to vote, the right to bargain for wages without a power differential between the worker and the management, the public maintaining control over the infrastructure that it built and maintaining a high quality of life, health and education within the state.

Great work so far everyone. Keep it going!

Wikipedia: 2011 Wisconsin Protests

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Michele Bachmann (Alan.com)

As the winter clouds slowly give way to springtime sun, the United States is waking up to a nightmarish political climate. The Republicans have taken over more state legislatures than at any time since the Great Depression, and well… It looks like that is where we are heading there again. Why? Because the GOP, rebranded by the Kochs’ Tea Party after the intense failures of the Bush Administration plummeted the country to new depths, has retaken control in a November 2010 election in which liberals stayed home.

Uh... wah?!

The Tea Partiers have never been much for civil discussion – here are Tea Baggers waiting to get in at a Health Care Town Hall event in Missouri. Of course, these people were encouraged to behave abysmally by the Tea Party itself – and some were even paid to do it! (Learn how!)

Buoyed by a self-declared national mandate, the Tea Party is now beginning hard work on important new legislation across the country – all guaranteed to either send the U.S. backward to a preliterate tribal society or a post-industrial, pre-Rapture apocalyptic nightmare state. Let’s take a quick look at some of the bills making their way through some state legislatures around the country.

Montana

We have already reported on some of the interesting bills under consideration in Montana. These include important issues such as legalizing hunting with spears and guns with silencers. Tea Partiers like guns… a bit too much… so they have decided that the state government should allow guns in schools, in the state Capitol, and as if that was not enough safety, there is also a proposal to create armed militias in every town.

Tea Partiers do not like regulations very much because the Tea Party benefactors, the Koch Brothers, pollute a lot. So it should not be much of a surprise that there is an attempt to nullify federal laws, including federal environmental regulations. The state is also planning to eradicate incentives to promote the development of wind power and it would also like the government to demonstrate that it has obtained National Park land legally, lest glaciers be allowed a chance to be conserved.

South Dakota

Tea Baggers do not like women very much either. Women in South Dakota may soon be forced to listen to a Christian sermon about abortions prior to obtaining one – of course – it was not as if the decision was tragic enough in and of itself.

Another bill, an interesting and creative combination of Tea Party misogyny and love for guns would have legalized killing abortion doctors as well as defund Planned Parenthood. This law has been tabled… for now…

Texas

And then there is Texas. They do stupid in Texas BIG! Its Board of Education is a joke and it is difficult to understand how students that go through their schools will have the knowledge that they will need to thrive in competitive, technical fields such as biomedical engineering, much less pass a college entrance exam with the state’s reinforcement of creationism in the schools and rewriting of American history in the state educational standards. Oh, and despite the fact that Thomas Jefferson had written the Declaration of Independence and that as president, he doubled the size of the United States in the Louisiana purchase (including some territory in Texas itself) he is no longer recognized as a founding father because he also happened to be suspiciously liberal and agnostic.

Only weeks after the Gabriel Giffords shooting and with shootings on college campuses in the news annually, Texas has decided to allow concealed guns on college campuses within the state.

While we’re discussing guns, there are also bills that will enable guns on party boats and bills that nullify (there is that word again!) federal laws that apply to guns and ammo made in Texas. That should make it easier for the Branch Davidians to regroup in Waco without any pesky ATF interference.

But how can one be satisfied with guns and treating women like trash alone? There are plenty of other groups to discriminate against! That’s why Texas may make it illegal to be gay in the National Guard (Virginia is trying this one too). Sorry gays, no playtime with guns for you in this middle finger to that Kenyan guy. A bill by Leo Berman would make it illegal to run for president in Texas unless it was possible to see your original, legal birth certificate. But the question is would they believe it is real if the candidate has dark skin?

And there are Tea Partiers in Texas who believe that the immigration situation should be remedied. Why? Because the Arizona bill does not go far enough because it does not have the death penalty for illegal immigration.

Oklahoma

In neighboring Oklahoma, where the public passed an amendment to the state constitution banning the adoption of shariah law, because that was apparently a problem with muslims comprising 0.16% of the state.

Of course, there are new gun proposals, too. Because people may soon be able to carry guns everywhere: College classes, grocery stores (watch out! that pineapple looks OVERRIPE!), and even bars! They deserve bonus points for combining guns and booze.

Don’t worry – illegal immigration proposals were scuttled when the Chamber of Commerce intervened! And women have already been forced to listen to ultrasounds and hear a discussion of a fetus before having an abortion – even if you were a rape or incest victim.

New Hampshire

In New Hampshire, there is a new bill to make it very difficult for students to vote! A new law would allow students to vote in New Hampshire if their parents happened to have a previously established residence in the town where the student lived. Since students generally move away from home and live in the town where they go to school, that means they may be barred from voting at all if they go to school in New Hampshire. And if that were not enough, Election Day registration would also be banned for students that did not understand that their voting rights have been infringed. According to the Republican House Speaker, William O’Brien, well here is a clip from the Washington Post:

New Hampshire’s new Republican state House speaker is pretty clear about what he thinks of college kids and how they vote. They’re “foolish,” Speaker William O’Brien said in a recent speech to a tea party group.

“Voting as a liberal. That’s what kids do,” he added, his comments taped by a state Democratic Party staffer and posted on YouTube. Students lack “life experience,” and “they just vote their feelings.”

Ohio

In Ohio, Republicans have turned on police and firefighters. This is all about union busting. (They have already gone for state employees including teachers).

Tennessee

In Tennessee, Tea Partiers are all about pooh-poohing slavery. Speaking of slavery, the Tea Party there is also gunning for teachers’ collective bargaining rights.

Missouri

In Missouri, a new proposal would eliminate child labor laws for children under 14. Children looking to earn a buck could work up to 80 hours a week! Just think of all of the wonderful free-market capitalism that they could enjoy during their formative years without an education! The bill also specifically allows children under the age of 16 to work in the hotel industry, after hours. Yes, it specifically goes out of its way to mention that. Oh, and the law would bar the Missouri Division of Labor Standards from making sure that employers of children provide safe working conditions.

Missouri is also considering a compact with Arizona and Tennessee that would oppose the adoption of federal Health Care Reform, in another nullification move.

Utah

The same month in which a U.S. Congressional Representative was shot in the head just to the south, the state of Utah voted on a state firearm. They picked a Browning M1911 semiautomatic pistol. How tasteful!

And with guns comes hating women. Did you know that miscarriages are like natural abortions? That is why it is now possible that a woman who has a miscarriage will face murder charges.

Georgia

Oh, and Utah was a lightweight – women who have a miscarriage in Georgia could get the death penalty.

The Georgia Tea Party would also like to enact a few other provisions, including: The “Energy Freedom of Choice Legislation”, which would prohibit cap-and-trade limits to greenhouse emissions; an Arizona-style anti-immigration law (papieren bitte!); tax cuts everywhere, including property taxes!

Arizona

Arizona is the home of crazy. They have already sold several state buildings, including the state Capitol, to private firms so that the state can rent from them at higher cost in perpetuity!

It is possible to carry concealed weapons to bars now. But don’t think of buying beer, cigarettes of any “niceties of life” if you are welfare – you will lose your funding. Oh, and a children’s health insurance program has been repealed for 38,000 kids. This means that billions of dollars in Medicare money may be withheld by the federal government. In other words, Arizona is keeping the government out of Arizonan Medicare – we’ll see how that goes amongst the geriatric population there.

There is now also a law that requires abortion doctors to report the names of women who undergo abortions.

And there is the anti-immigration law that allows anyone caught while brown to be arrested if they are not carrying their documentation at all times.

Minnesota

In Minnesota, the new Tea Party legislature is not happy with the Democratic Governor’s plan to raise taxes on the wealthy.

Michele Bachmann and other Republican Congressional delegation members are planning to defund the EPA

In attacks on women, Republicans have decided to ban abortions after 20 weeks of pregnancy, regardless of wether the child will survive more than a few minutes anyway. The bill will be vetoed by the governor, but you can’t blame them for making a statement, can you?

Another Republican, Senator John Carlson of Bemidji, decided that he would introduce a bill that would repeal pay equity for women. Why is it that the Tea Party hates women so much? Here is what he said, from the Minnesota Independent:

“That bill’s been pulled and it won’t see the light of day,” Carlson said Saturday at an Education Minnesota event, the Bemidji Pioneer reports. “I would admit I didn’t do my homework very well.”

“So I author the bill, put it in the hopper, and the next thing I know, all hell breaks loose,” he said. “And I deserve it for being naïve. Quite honestly, I deserve that. I did it with good intentions.”

“Obviously, I’ve been married for 32 years, I have a daughter out in the workforce, and I have a granddaughter — I can’t believe anyone would think I would harm that relationship,” Carlson said.

I wonder just what those good intentions were that would have lowered wages for half of the human race for the simple fact they were not male.

Not to be outdone with misogyny, the Tea Baggers want to get the gays too! They plan to introduce an anti-gay marriage amendment.

Federal Government

With the 2012 elections coming up and the Republicans hoping that Obama will fail, they are planning a budget that is a poison pill for the current economic recovery.

Republicans also plan to send us back a century or two, by cutting scientific researh – especially climate change science and monitoring. The Corporation for Public Broadcasting and Planned Parenthood also take political hits from the government. Meanwhile, nearly a million jobs are on the line with draconian cuts aimed at breaking unions, eliminating programs for the poor. If that were not enough, the GOP plans dire cuts to education and infrastructure development.

The Republicans would also like to defund the EPA for their Koch brother masters. They have even replaced recyclable food containers in the Congressional dining room with non-recyclable styrofoam, provided by an affiliate of Koch Industries. Since they are also planning to slash funding to toxicology clinics, one blogger suggests that the GOP is simply trying to poison America. Considering their impact on the nation so far, it seems that it is safe to say “Mission Accomplished”.

George W. Bush - Mission Accomplished (Wikipedia)

Jon Stewart Defends Teachers (The Daily Show)

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.”

Nearly 100,000 people rallied in Madison Saturday (AP via Huffington Post)

The Events

A HUGE rally took place on Saturday in Madison, Wisconsin as unions continue to fight against the elimination of their collective bargaining rights. It was the largest demonstration since Governor Walker initiated his proposal, with up to 100,000 protesters and no end in sight. Other protests continued across all 50 states as well Saturday in solidarity with the state employees in Wisconsin.

The Distraction

Despite the huge numbers of people involved in every state, the corporate media has seen fit to bury the lead by focusing on labor protests in other countries, Libya in particular, without mentioning that they are in fact being driven by labor. When was the last time that you have heard about demonstrations continuing in Egypt? They are still going on. Once the military junta took over, the American press essentially said, “Oh, look! They have democracy now and everything will be ok!” (Glenn Beck excepted, of course.) They ignore that now that the protesters have gotten some reforms and are working on a route to democracy, they are still in Tahrir Square arguing for better working conditions and wages and that is apparently making the Egyptian army a bit impatient.

But all eyes were on far off Libya Sunday, where it is easier now to declare the initially peaceful demonstrators as “opposition forces” because they have been forced to arm themselves to prevent their own extermination. After arming themselves, they have been pigeonholed into a different commonly used media meme: The old labor and democracy demonstrations are now an ‘uprising’.

Koch Strategy

Burying the lead is a tried and true anti-democratic tactic that is used by entrenched media in order to help diffuse trouble for authorities. Despite that 50,000 people protested across the country and that 100,000 people protested within Madison itself and countless thousands of others across Wisconsin this weekend, CNN, the New York Times, CBS, ABC and NBC are under-reporting the events. Fox News is mischaracterizing teachers and nurses as violent and greedy fat cats.

In order to understand why, just consider when was the last time that you saw either a Dixie Cup or a Georgia Pacific commercial on one of their stations. Sure, they will post Union ads, but when the crisis is over, they expect to continue getting ad revenue from Koch Industries. The Koch brothers have vowed to continue their fight, and the media is only one of their tactics in order to end the disagreement over their proposals for workers’ bargaining rights, health insurance and benefits.

The Koch brothers do have things roughly where they expected to be at the moment. The Governor submitted his ghost-written proposal, the Assembly has passed its version of the bill, sticking it to the guys who disagreed with it with the quick vote, but there is that nagging problem of those pesky Democratic Senators. You had better believe that the Koch brothers will buy a lot of ad time to pressure them into returning and Walker will ask the legislature to pass one piece of regressive legislation after another until they do. (However, Walker would do that even if the Dems were present in the Senate.)

The protests are a LOT larger than they expected, too.

The Tea Party, after all, was constructed just for this reason: A trojan horse, riding a wave of popular anger only to turn on the people who elected it in order to support the corporate interests of Koch Industries. The Kochs founded the Tea Party through its PACs and they have already used it to divide and conquer the public. Now, the public must try to divide and conquer the Koch minions like Walker and the Legislature. And the Koch brothers will do *anything* to get their way, so the strategy of the people must be broad-based as well.

How the public can win against the billionaires

Even though the media is beginning to side with the Kochs, their ad revenue would drop remarkably if their viewer/readership were to decrease. People who support the protesters can not expect to have their voices heard on the airwaves, but they should demand that it is. A lot of news today can be found on the internet and there are certainly a good number of places that ARE reporting the labor protests. The places that are supporting the labor movement include, but are not limited to:

The Madison Capitol Times
The Appleton Post Crescent
Harpers
Mother Jones
MSNBC (Rachel Maddow is awesome!)
The Real News Network
The Daily Kos
The Huffington Post
Truth Out
Buzzflash
…and others that I have not listed here, though you can find the links in my blogs. The Daily Show and the Colbert Report have really good fact-checking as well. All of the above news sources should be supported because without them, it would be much harder to get the word out.

The mainstream, mass-market media are not quite so helpful. This includes:
ABC News
CBS News
CNN
The Milwaukee Journal Sentinel (has published quite a few negative editorials)
The New York Times
The Washington Post
…and most of all:
Fox News who have portrayed the protesters as violent.

I have also heard anecdotally that a number of TV stations and local papers have been characterizing the demonstrations negatively. Remember, local news sources need to compete for thin resources and ad-buys are very important. This means that they can be swayed by big money, and the Kochs have plenty of it.

BUT…

All of that ad money will useless if people no longer watch their channels or read their papers. The people can have a lot of influence over programming when they organize. You will be surprised!

People who are marching are doing their part of the job. They are putting pressure on the Government and they are making their voices heard. To help them out, everyone who supports the protesters should do whatever they can to assist. Here are a few things that will take just a few minutes a day:

1. Call on the State Attorney General, J.B. Van Hollen, (608) 266-1221, to begin investigations into ethics violations by Governor Walker regarding the phone call, his tendency to give friends fat pay raises and his handling of the proposal. Call for investigations into the Republicans in the Legislature as well. Are they working with the Kochs too?

The Attorney General is a Republican as well, and the Governor has asked him to find ways to get the Democratic Senators to return. You should not expect the State Attorney General to do something right away, but if people call him, write letters to local newspapers and sign petitions calling for investigations, AND KEEP UP THE PRESSURE, then we may see either Hollen or Walker crack under that pressure and make more mistakes. Then they may accidentally reveal more corruption and links to the Kochs like the phone call did. If more information about either person is exposed, then they may be forced to part ties to defend themselves and then they may turn on each other. That is the goal: The Kochs know that pressure helps people make mistakes. Let’s use it on them.

2. Call for Federal Elections Commission investigations into the political operations of the Koch brothers. Are they donating money to their political organizations legally? We should know. Let us force the Koch brothers to spend their money to defend themselves legally. That means they will funnel less money to their own groups to mess with public elections.

3. Call or write your local Television Stations to ask for fair reporting of the protests. This is VERY important, as important as the protests themselves! Be sure to mention that you will migrate to other news sources if they do not begin treating teachers and care givers favorably. This link to Wikipedia has a list of all of Wisconsin’s TV Stations. Click on the station call sign and you will go to a Wikipedia page on that station that will have an address to the actual station website. You can find all appropriate contact information there.

4. If the media is not reporting, then you have to spread the word. Be fair, be accurate, and if you are not sure on details, describe what you know and what you do not. No one has all of the information, but we all try to do our best and we ask questions when we are uncertain about something. Spread the word via texting, Facebook, Twitter, email, telephone, smoke signals or even two paper cups on a string (not Dixie cups!). Form groups, networks and call lists have dinners, lunches and get togethers and let people know when you find something out.

5. Boycott companies and news sources that support the Tea Party, Scott Walker and the Budget “Repair” bill. I have already posted a partial list of companies with links (it is my most popular article so far) and I also have a post on Koch Industries and their related products for more information. The Kochs love the idea of free markets with no regulations. Let us use a market-based approach to show them what happens when they try to take away rights in ‘free markets’! They count on us to buy their products, so if they support taking away benefits and wage-bargaining rights, let us have an impact on their pocketbooks too.

6. Remember who supports the Budget ‘Repair’ Bill for the next elections! AND NEVER, EVER VOTE TEA PARTY AGAIN! That will be soon. Put this on your calendar: There is a State Supreme Court Election April 5th. Prosser is a part of the Court’s conservative majority. Vote Kloppenburg to reduce the power of the Tea Party in the court. VOTE!

7. RECALL Current Legislators and (eventually Governor Walker). The Daily Kos has provided links and information regarding the Republican Senators who can be recalled this year.

8. Discuss this with everyone – even your conservative relatives. This is a civil rights issue and billionaires are trying to take rights away from workers.

9. Wash, rinse, and repeat. This is a waiting game. It will take a while because billionaires have deep pockets. We essentially need to make it very expensive for them to meddle in the political system so that they stop doing it. You have two choices: Stick it out for the long haul and win OR the Kochs get their way and everyone will eventually have an impact to their livelihoods (especially the Tea Partiers themselves).

Remember, the more organized the public is, the easier it will be to get rid of Walker, the Kochs and their cronies. Everyone who supports the state employees should help because once the Kochs take care of them, they will come after the next group. They are all about power and they are working hard to take it all for themselves, so you have to work hard as well to keep your rights.

There are more of us than them. Public opinion strongly favors the workers. Tell other people you know about how they can help. We can do this and we are all in it together.

Father Coughlin (Library of Congress, via Wikipedia)

History is often said to repeat itself and if there is a correspondence between the situation in the United States today and during the Great Depression, then Father Charles Edward Coughlin was to President Roosevelt what Rush Limbaugh and Glenn Beck are to President Obama. Initially a supporter of Roosevelt, his concerns over socialism and affinity toward Hitler and Mussolini led him to denounce Roosevelt to the wide audience of his popular radio show. There are, however, some difficulties with the comparison between Coughlin and Limbaugh and Beck. Father Coughlin was actually taken off the air by the Government. Wikipedia explains how:

The administration decided that although the First Amendment protected free speech, it did not necessarily apply to broadcasting, because the radio spectrum was a “limited national resource” and regulated as a publicly owned commons. New regulations and restrictions were created to force Coughlin off the air. For the first time, operating permits were required of those who were regular radio broadcasters. When Coughlin’s permit was denied, he was temporarily silenced. Coughlin worked around the restriction by purchasing air time and having his speeches played via transcription. However, having to buy the weekly air time on individual stations seriously reduced his reach and strained his resources.

Wikipedia: Father Coughlin