March 2009 Archives

I've been asking around and it seems that most Californians don't know that the budget deal that fires so many teachers also has a huge tax cut just for big, multi-state and multi-national corporations.

But it's true. Last month's budget deal that fires teachers, cuts essential government services, and guts the investments that bring future economic benefits also has a huge tax cut for the largest of corporations. While this part of the deal has been kept pretty quiet, the LA Times had a story, Business the big winner in California budget plan. From the story,

The average Californian's taxes would shoot up five different ways in the state budget blueprint that lawmakers hope to vote on this weekend. But the bipartisan plan for wiping out the state's giant deficit isn't so bad for large corporations, many of which would receive a permanent windfall.

About $1 billion in corporate tax breaks -- directed mostly at multi-state and multinational companies -- is tucked into the proposal.

But wait, won't a big corporate tax cut cause companies to come to California, creating jobs? No, they are already here and it will drive them away, because it is paid for by firing teachers.

A study by the nonpartisan Public Policy Institute of California, released in 2005, found that most companies decide where to locate based not on tax breaks but on factors such as the availability of a highly educated workforce. California's proposed plan would cut spending on higher education by hundreds of millions of dollars.

So how did this happen? This was part of the deal to get a few Republican votes. And why did the Republicans want this so bad? Because they understood who really elected them.

If you look at the independent expenditure reports for the 2008 California election you'll see a massive amount of last-minute money. For example, in the 19th Senate District, a political action committee (PAC) named "Californians for Jobs and Education" put almost $1 million into just one race: $570,653 into defeating Democrat Hannah-Beth Jackson, and another $373,778 to help elect her opponent, Republican Tony Strickland. When you look this group up on ElectionTrack you learn that this money came from corporations like Arkansas' Wal-Mart, Blue Cross of Ohio (Ohio?), Reliant Energy, major real estate companies, and from other PACs.

Now it gets interesting. Many of the contributions to that PAC came from other PACs, especially one called Jobs Pac. When you track down Jobs PAC you find that it is a conduit for huge, huge amounts of money coming from large corporations like Philip Morris, ATT, Chevron, Safeway, Sempra Energy, Verizon, big insurance companies, big pharmaceutical companies, big real estate companies ... and other conduits like the Chamber of Commerce.

Why did these huge corporations put so much money into California state elections? Because we let them, and because of the return on investment they receive from tax cuts like the one that is forcing us to fire so many of our teachers.

There is a key lesson to learn from this. When it comes time to choose, that is when you can really see who is for or against something -- where their priorities really are. And in this case, when push came to shove, in the end who did the conservatives come through for? The large corporations. They danced with the ones that brung them.


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None For You

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There was a positive response to the idea from last week's post, No Schools For You, that suggested,

"If an Assembly or Senate representative demanded cuts to schools, fire, etc. then the schools, fire, etc. in that representative's district receive the entire cut!  This would be an honest application of representative democracy, allowing the citizens of an area to be governed according to their wishes without it affecting all of the citizens in the state."
Seriously, the leaders of the Assembly and Senate should make the few Republican holdouts an offer: if they think government services to the state's citizens are such a bad idea they should stop insisting on so much spending in their districts!  They say that government spending is a problem, why can't they take those Republican governors who are refusing to accept any stimulus money as role models and refuse any state spending in their districts.  Their constituents can then show their overwhelming support for the anti-government ideology that their elected representatives espouse.

Several years ago, then-Senator Phil Gramm of Texas - a Republican - was one of the loudest to complain and complain about spending and "pork" and "earmarks" in the federal budget.  What is called "pork" and "earmarks" are special appropriations of funds by the Congress for specific projects in specific districts: a museum, science lab, agricultural study or bridge that is badly needed is funded by our government.  This is what Republicans call "pork" -- government doing things that citizens need.  Well the biggest, most expensive project in the country at the time was the Superconducting Super Collider, a massive physics lab being built under the ground in Texas, employing hundreds and keeping many construction businesses going.  Well, when it came time to cut some spending the Congress took Senator Gramm at his word and killed the project.

So I think that it would be a very good idea to ask the Republican anti-tax ideologues to put up or shut up.  Give them the opportunity to put their (take away the) money where their mouths are.  If you want spending cuts, let us cut all the spending in your districts -- or please shut up.

Your thoughts?  Leave a comment. 

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A new block conservative Democrats in the Congress has formed what they call the Blue Dog Coalition.  Their objective is to block President Obama's health care, energy and union organizing reforms.  This is pretty clearly an effort to attract corporate money; by announcing they have the power to stop Obama's reform efforts, they can soak up millions from companies they would otherwise have to change their polluting or profiteering ways.

Robert Borosage of Campaign for America's Future writes at Huffington Post,

"The new Senate Blue Dogs claim, of course, to be high minded advocates of "fiscal responsibility." But this is often a cover for more parochial concerns. Nelson objects to the Obama budget because it calls for moving to direct lending for student loans, saving billions in subsidies to banks and using that money to pay for increased grant aid. Nelnet, a leading student lender, will be hit badly by the change. Its headquarters happen to be in Nebraska.

Kent Conrad argues piously that the deficits are too high, but that doesn't stop him for opposing Obama's call to save billions by paring the wasteful subsidies that go to agribusiness, leading contributors to Conrad's campaign coffers"

Meanwhile his organization has launched an effort to counter this, called Dog the (Blue) Dogs.
"It is time for progressives to "dog the dogs" -- to call conservative Democrats in the House and Senate and tell them to not be lapdogs for the "Dr. No's" on the right who want to obstruct the administration's common-sense agenda."
Their list includes the following California members:  Joe Baca (43), Dennis Cardoza (18), Jim Costa (20), Jane Harman (36), Loretta Sanchez (47), Adam Schiff (29), Mike Thompson (1).

Note that in the California legislature we have the same problem in the Senate (in particular), with the self-identified "business Dems." At the blog Down With Tyranny! Joshua Grossman wrote a while back,
"Meanwhile, the so-called "Business Dems" number almost half the Democrats in the state legislature and constantly force the watering down of progressive legislation if not ensuring its outright defeat."
Here is my question.  Articles about the Blue Dogs seem to unfailingly label call these legislators 'centerists' and 'moderates.'  A couple of examples: Centrists Flex Power of Veto and Moderate Democrats balking at Obama's spending plans.  Why is this?  What is 'centrist' or 'moderate' about going against the will of the people and the results of the last election or two?  What is 'centrist' or 'moderate' about taking corporate cash and then voting for an agenda that enriches a very few at the expense of the rest of us?
 

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No Schools For You

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Here is an idea for solving California's budget crisis.

What if the California legislature temporarily budgeted for districts according to the wishes of the district's legislators.  If an Assembly or Senate representative demanded cuts to schools, fire, etc. then the schools, fire, etc. in that representative's district receive the entire cut!  This would be an honest application of representative democracy, allowing the citizens of an area to be governed according to their wishes without it affecting all of the citizens in the state.

Wait, you say, why should only certain districts be punished with cuts?  Why should only a few citizens shoulder the burden of balancing the budget through cuts?  The answer is because those are the people who elected the extremist minority who are forcing the cuts, while refusing to ask the rich to pay their fair share and actually cutting taxes for huge corporations.  (Yes, the budget "solution" included a huge tax cut for the Wal-Marts and Exxons.)

With this plan the residents of Santa Clarita (the right-wing bastion of northwest LA County) could get their wish to have no schools, police, road maintenance, firefighters, etc. while the residents of San Francisco could keep their government services.  And the residents of both areas would have what they want.

Or, at least, they would have the opportunity to understand just who they elected.


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I was in Sacramento for some meetings this week, and have a few thoughts and observations.

The first is the most important. The people in and around our government are good, dedicated people who are doing those jobs because they care and want to do the right thing.  You don't make big money in public service.  In the last few decades a government job meant less pay than a comparable "private" sector job and a number of working-environment hassles, like the extra procedures (paperwork and bureaucracy) that are required in public positions to involve transparency and accountability.  And, of course, they have to put up with the Republican-inspired abuse of people who work for the government.  So give these people a break and assume good faith.

After decades of budget cutting our government is universally strapped for resources and it makes for a difficult workday.  The things people went into public service to accomplish are being stripped out from under them by the state's structured-to-fail system (see below).  I hope the Bush years trigger some serious thinking about what things would be like without a government, because we are getting close to that possibility.

The state government is now structurally designed to fail -- and this latest budget deal compounds the problem.  This situation was created on purpose by anti-government ideologues, usually corporate-funded.  Thus really is a choice between government by the people or government by a wealthy few who happen to be in control of large corporations.  To them government is "in the way" of making money.  Government means food and safety inspectors so people don't get sick and workers don't get hurt, and protecting workers and the public costs them profits.  Government means regulations stopping them from dumping stuff in the water or air and properly disposing of waste costs them money.  Government means regulations that make them pay back customers who are overcharges.  Government means regulations requiring delivering goods and services that were promised.  SO you can see why the hate government and regulation -- they keep them from just taking your money and giving nothing back! 

So they have used the power that comes from their access to corporate resources to set up a state system that is giving them what they want.  They pay petition-gatherers to get anti-government initiatives on the ballot, and then they flood the TV and radio with lying ads that trick people into voting against their own interests -- and here we are.

Here are just a few of our designed-to-fail structural problems: 

  • Term limits mean that thinking must be short term, and encourages passing problems along instead of solving them, because then the problems will be "not on my watch." People who are effective in their jobs are forced out, and voters who want to keep them there are prevented from doing so.
  • The campaign-finance system puts corporate-backed candidates in office by necessitating big money to win elections.  And corporations, designed to amass resources, are perfect vehicles for pushing the interests of the few who control them. 
  • The two-thirds budget requirement means that a few anti-government extremists are able to sabotage the process, keeping any budget from passing and shutting down the state.
  • The disappearance of political reporting in California media means the state's citizens are uninformed about what is going on.  The corporate-owned media concentrates on sitcoms and what Britney is wearing, and does not let the people find out what government is about.

These are just some of the structural problems, and the system is. of course, structurally designed to keep us from fixing them.  The only way we are going to address this is to get lots and lots of people involved.  The election of Barack Obama tells us this is possible but I despair at amount of work that will have to be done to accomplish it.   

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Corporate Tax Trickery

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Here we go again with the "corporate taxes are passed along to the consumer" lie. Instead of telling the public about harm to the public interest from budget cuts, teacher layoffs, privatizing public resources, police cutbacks, etc., instead we hear about how taxing the rich is a terrible thing.

What am I talking about? See The Tax Foundation - Tax Foundation TV, Radio Ads Show That Corporate Income Taxes Cost the Average American Household $3,190. They have a couple of ads their corporate funders are paying them to run.

And of course there is the usual scholarly proof that we should all give ever more money to the corporate rich,

"Research from the Congressional Budget Office shows that in a global economy where capital is highly mobile but workers can't easily move abroad, workers end up bearing the brunt of corporate taxes. In 2007, Economist William Randolph found that 70 percent of corporate tax burdens fall on employees through lower wages and productivity, while the remaining 30 percent fall on company shareholders."

Taxes are not a cost that can be "passed on to the customer." Taxes are calculated as a percentage of profits, after all costs are figured in. A well-run business charges the most it can get for its product or service. If the business has competitors it has to price its product or service in some relationship to competing products or services. Were a business to add to to prices to cover taxes this would increase the price above what had been determined to be the optimal price! If a company were able to raise prices to cover taxes the it would mean the company was previously negligent in not pricing as high as the market would bear.

And if the company was negligent, then increasing prices to cover taxes would increase profits, which would increase taxes, which would require an additional price increase, which would increase profits which would increase taxes. Etc. - you get the picture. It's a silly idea.

In the same way, a properly-run business has as many employees as it needs. When profitability caused them to apy taxes, it means they employed the correct number of people to realize that profit, and certainly are not going to lay someone off because they made a profit that was taxed.

But one step further on this. A corporation itself is neutral on taxes. After all, a corporation is just a bundle of contracts, and doesn't really have interests any more than a chair has interests. It is the owners who have interests and it is a good idea to think about any "passing on" involving corporate taxes is that it can lower the amount of money that is "passed on" to those people at the top of the economic ladder. Realizing this changes the way the brain understands the problem here. The fundamental question then becomes WHO is benefiting from our economy, and our legal infrastructure that creates and protects corporations. It really is about which people are getting the cash, and seen in this light, this idea of lowering or elimminating corporate taxes takes on a new meaning.

This ad plays on public misunderstanding of taxes - a misunderstanding previously created by the same crowd. (Similar to the idea that if you earn a penny over $250K all of your earnings are taxed at the higher rate.) So it is like a further step in a strategy of creating increasing ignorance, so that you can further harvest the public... (Why can't WE think in terms of multi-stage strategies, but to instead increase public understanding and appreciation of democracy?)

So, when will we start hearing about the harm caused to the public interest by reduced taxes on corporations and the rich causing us to lay off teachers, cut police and firefighters, defer infrastructure maintenance, etc.? When do we hear about how this hurts, instead of always about how taxes hurt the rich?


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This page is an archive of entries from March 2009 listed from newest to oldest.

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