March 2011 Archives

IS IT TIME TO TRY ANOTHER APPROACH?

You've got to give Governor Brown major kudos for his patience and tenacity in trying to make a deal with the Legislature's Republicans. With the state facing a game-changing $26B budget gap, after already reducing general fund spending over the past several years by an estimated $14B, give or take a few billion, the state is at a precipice. Are we going to face the future with great ambition and vision or are we going to fall off a cliff and perhaps never recover our role in the nation and world as the place that "invents the future"? The Democrats have already agreed to a balanced approach and made an additional $12-14B in cuts to close the gap. But where's the rest going to come from? If we want to decimate the state, then the balance will be cuts as well. Say good-bye to quality education-at any level; care for the neediest Californians; public safety; adequate police and fire-services when man-made or natural crisis appears; maintaining and repairing our infrastructure--roads, bridges, sewers; assuring clean air and water and all the other services and programs we take for granted in a civilized world. The list is long and deep. But the Republicans today don't care--in fact, that don't want government to succeed and some are brazen enough to admit it.

Let's face it: Today's Republican "leaders" in the legislature bear no resemblance to those who preceded them and this "new breed" is committed to dismantling government-sponsored efforts, most of which help the poor and middle class. The wealthy continue to accumulate vast amounts of money and the rest of us continue to suffer as a result. While there may be a few of these "leaders" who realize that politics is the art of compromise, they're under so much pressure and, frankly, so spineless in the face of that pressure, that they're just not willing or able to make a deal. Governor Brown is desperately trying to make a deal and put the state in a position so it can recover and once again prosper. But with a 2/3 requirement to do anything meaningful in this state--like raise taxes or put a measure on the ballot without the tedious and time-consuming signature gathering process, Brown can't and won't win. He's got to be at the point where he realizes that he can't work with these people. For those of us who believe that government plays an important and integral role in making society work, we can only hope that the Governor won't, out of desperation, capitulate to the unreasonable demands being put forth by the few Republicans who are taking on the "good-cop" role with the other Republicans as the "bad cop." Demands like a permanent "hard" spending cap is and must be a non-starter, for example. It's simply bad for the future of this state. Of course, the "good cops" continue to put new and different demands on the table---up to 53 at last count, which would cause anyone to pull out his or her hair, so it's a good thing Jerry doesn't have to deal with that problem.

But what Jerry Brown is also dealing with is the fact that after a decade or more of Republican sound-bites saying that we don't have a revenue problem, we have a spending problem, the public has drunk that kool-aid. Of course, part of the blame falls on Democrats who haven't had an equally as effective and cute sound-bite in response. Instead, they go into great detail about the various nuances and responsibilities of government, the complexities of budgets, etc. It's enough to make one's eyes glaze over---and they do.

The perception is that government is too big and too bloated. Unfortunately, the public also notes that the Democrats have been claiming for years that the sky is falling but it never has----Of course, that's because we have borrowed enormous amounts of money to keep the sky up. Unfortunately, we're about the pay the piper and that may be where we might have to go before the public steps up.

Hopefully Governor Brown will look for another approach. He is very smart, creative and determined, but right now the numbers and the public aren't supportive of the obvious options and I think he's stuck. Of course, one should never underestimate Jerry Brown, but right now the right-wing anti-government ideologues who want to destroy public education and infrastructure so they can privatize the state are winning this battle.


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In 1983 NY hotel-chain-owning billionaire Leona Helmsley said, "We don't pay taxes. Only the little people pay taxes..." As our country migrates from democracy to plutocracy, this more and more appears to be official policy. Again and again we see tax cuts for the wealthy few, tax breaks and subsidies for the big corporations that operate as fronts for those wealthy few, and budget cuts for the things We, the People (government) do to empower and protect each other. Just a few weeks ago we watched as an extension of the Bush tax cuts and a huge cut in the estate tax rate was pushed through. Now we watch as the discussion turns to cuts in Social Security and the rest of the so-called "safety net."

Another indicator of plutocracy (government of, by and for the wealthy) is impunity for those at the top. Leona Helmsley actually went to jail for tax evasion. Even as recently as the early-90s Savings and Loan Crisis our government investigated, prosecuted and jailed more than a thousand bad actors for fraud and other crimes. This time, well, ... not so much. Well ... actually not at all. Times have changed. Don't look back. Deal with it. Suck it up. Let's all get on the same team and keep this ball moving forward down the field at the end of the day. Whatever. Hey, look over there!

Today's Plutocracy Indicator

From the NY Times, G.E.'s Strategies Let It Avoid Taxes Altogether

The company reported worldwide profits of $14.2 billion, and said $5.1 billion of the total came from its operations in the United States.

Its American tax bill? None. In fact, G.E. claimed a tax benefit of $3.2 billion.

So not only did GE, the highly-profitable recipient of federal contracts and bailout money, not pay taxes, we paid them $3.2 billion!

Revolving Door Writes The Loopholes

How does GE accomplish this? By taking advantage of the "revolving door" where people move back-and-forth from government agencies to the corporations those agencies are supposed to oversee. From the NY Times story,

Its extraordinary success is based on an aggressive strategy that mixes fierce lobbying for tax breaks and innovative accounting that enables it to concentrate its profits offshore. G.E.'s giant tax department, led by a bow-tied former Treasury official named John Samuels, is often referred to as the world's best tax law firm. Indeed, the company's slogan "Imagination at Work" fits this department well. The team includes former officials not just from the Treasury, but also from the I.R.S. and virtually all the tax-writing committees in Congress.

While Congressional staffers they write the loopholes into the laws. Then they go to their reward at corporate headquarters for very high pay. Then they go work in the agencies to make sure the rulings go their way. They then go collect again. It is a lucrative game. They're the winners -- they call themselves "producers." We're the losers -- they call us ... "losers."

Who Really Benefits?

The use of the general term "corporations" to describe the beneficiaries of these policies is really a smokescreen that masks the fact that really a very few people are benefiting. Yesterday's post, Lobbyists Admit Corporate Tax "Holiday" Didn't Work, But Demand It Again, pointed out that it is a very few actual people that we are really talking about here,

Corporate wealth is really just personal wealth, held at arms length from the person to mask what is going on. The wealthiest 1% own 50.9% of all stocks, bonds, and mutual fund assets. The wealthiest 10 percent own more than 90 percent. The bulk of us own less than 1 percent. When you hear about "corporate" holdings, think about this chart from the Working Group on Extreme Inequality:

At The Expense Of The Rest Of Us

These benefits accrue to the wealthy few at the expense of the rest of us. What many people don't understand is that it is also at the expense of other companies. Our infrastructure and public structures - roads, education, courts, customers - are the soil in which good companies can grow. When tax dodgers are able to avoid contributing to our communities and country, the overall environment for the rest of our businesses deteriorates and our worldwide competitiveness declines. We see it all around us every day.

Ungrateful Bastards

For all the benefits huge multinational companies like GE get from We, the People -- subsidies, contracts, bailouts, tax breaks and customers, they aren't very rateful and certainly are not about to give anything back. Barry Ritholtz at The Big Picture writes,

Yet another reason why you don't bailout companies whose inability to manage risk allowed themselves to become destroyed: They not only do not deserve to continue with the same management/shareholders/creditors who all created the insolvency in the first place, but they are ungrateful bastards as well.

Even Reagan

Even tax-cutter Ronald Reagan balked when he learned that GE (for which he had been spokesman) didn't pay its taxes. From the NY Times story,

In the mid-1980s, President Ronald Reagan overhauled the tax system after learning that G.E. -- a company for which he had once worked as a commercial pitchman -- was among dozens of corporations that had used accounting gamesmanship to avoid paying any taxes.

"I didn't realize things had gotten that far out of line," Mr. Reagan told the Treasury secretary, Donald T. Regan, according to Mr. Regan's 1988 memoir. The president supported a change that closed loopholes and required G.E. to pay a far higher effective rate, up to 32.5 percent.


Isaiah Poole, in Rewriting Eric Cantor's Cant On Jobs,

"So let's stop the demagoguery about overtaxed corporations and have a dialogue instead about a tax code that taxes all people fairly. A tax system in which a billionaire like Warren Buffett pays taxes at a lower rate than his secretary is not fair, and an unfair tax code, one that's riddled with loopholes, perverse incentives and ways to game the system, keeps us limping and unproductive."

Terrance Heath has been writing a series on The Truth About Tax & Spend Conservatism,

... the truth about "Tax & Spend Conservatism" is that it isn't about raising or cutting taxes, but about whose taxes are raised and whose taxes are cut. It's about, as Robert Borsage put it, who gets hit with the tab for the great recession.

Resources

Public Campaign fact sheet titled, GE's Corporate Tax Dodging that begins,

General Electric spent $235.2 million in political money since 2000--paid no federal income taxes in 2008, 2009, and 2010.

and points out:

G.E. cut American jobs and exported them overseas.

The New York Times reports "[since] 2002, the company has eliminated a fifth of its work force in the United States while increasing overseas employment."

This post originally appeared at Campaign for America's Future (CAF) at their Blog for OurFuture. I am also a Fellow with CAF.


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In following the horror of nature rearing its awesome and unlimited power upon our friend and ally, Japan, it becomes ever more clear how fragile our hold is and how potentially insignificant we are in nature's plan. So the question is: why do we continue to taunt her power? We build in flood plains, fire zones, ignore the true signs of global warming and talk about building more nuclear power plants. When will be get the message?

These are all things we can do something about. We can stop building in flood plains and high fire areas, we can address the sources of global warming and climate change and change our behaviors (if not too late). These are conversations we've been having regularly, especially in California and this is good. Ignoring the fact that the Koch brothers, their other oil and coal-burning billionaire buddies deny and lie about the changing climate, the importance of their carbon-burning products and their impacts on the planet, we know that they are in this strictly for the money. Truth and nature be damned.

But what we haven't been talking about and are facing immediately and dramatically, is what happens when nature challenges the "safety" of nuclear power plants. Ninety miles from where I live, in Santa Barbara, is PG&E's San Luis Obispo's Diablo Canyon nuclear power plant, so aptly named as its meltdown would create a hell for those of us downwind. How many are downwind? Well, you start in Santa Barbara and then go straight through Los Angeles, down the coast to San Diego and you get a sense of the magnitude of danger such a situation would create. Oh, and did I mention that Diablo is sited on an earthquake fault? No biggie.......

Of course, it IS big and the fact that Japan has 54 of these facilities is no less mind-boggling as Mother Nature has shined her often harsh countenance on the Rising Sun many times over the past decades and the latest on March 11, 2011 (not to be ignored is the human imposition of nuclear destruction on this nation in 1945).

With all sources of electricity to cool the nuclear reactor rods out-of-commission---back up diesel generators badly damaged by the earthquake, and an estimated 8 hours of battery time to keep the rods cool enough so they don't melt and release radioactive material into the atmosphere, we are either facing or will face-down a Chernobyl/Three-Mile Island incident. So the next time we start talking about building more nuclear power plants, let's remember that Mother Nature can neither be fooled nor beaten when her powers are unleashed.

There are many lessons to be learned from this incident. Most important is that we are powerless in the face of nature's wrath when unleashed. We live in earthquake country in California. So, why are we cutting emergency facilities, the people who are our first-responders and otherwise destroying the very government that will be called upon if and when we face the inevitability that nature will act harshly -- perhaps tomorrow, perhaps decades from now but inevitably? And while we ponder this, we need to prepare. And while we do that, let's remember that nuclear power is not harmless and no amount of protection we develop can ensure against such a catastrophe. For those of us old enough to remember the campaign to substitute margarine for butter we should remind ourselves that "It's not nice to fool Mother Nature." Let's not allow ourselves to find out why. Let's reject building more nuclear power plants and find other safer ways to generate the power we need to fuel the future.....so we have a future to fuel.

And to the people of Japan we send you our prayers and hopefully our promise that we will not make the world any more dangerous than it is today---mother nature notwithstanding.


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NYT On Jerry Brown

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In The New York Times today Maureen Dowd writes about Governor Jerry Brown in Governor Brown Redux: The Iceman Melteth. Some notable excerpts,

The shock of dark hair is gone, but Jerry Brown is still Jerry Brown. The prickliness, bluntness, questioning, calculating. That against-the-grain attitude; disdain for materialism, emptiness and politics as usual; that Jesuit-Buddhist outlook.

And yet, Jerry Brown is very different. The Howard Beale rants have become amiable riffs. Instead of tossing off insults, as when he called the Clintons the Bonnie and Clyde of American politics, he offers dry wit. He is less coiled.

On the Tea Party,

He was a precursor to the Tea Party, and he admits he tends to be a "tear-it-apart guy." "But I feel I'm in a more constructive mode at this time of my life," he said. "I understand hostility and alienation from the soulless bureaucratic state, but the Tea Party is a tear-it-apart group. We have to have continuity along with change if we're going to hold the place together."

On spending,

Was he cheap as a child? "During World War II, to get butter, we had little ration tickets," he says. "I thought it was kind of fun." His uncle Frank, he says, was so tight he had a pay phone in his house.

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This page is an archive of entries from March 2011 listed from newest to oldest.

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