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The IRS, always friendless, now is a pariah. Republicans can’t stop condemning it. Democrats can’t stop agreeing.
Targeting Tea Party groups for scrutiny, even if through incompetence, not intention, turned the IRS into a nasty carbuncle on the governing body.
Carbuncles are never good. Strength-sapping, painful, ugly, they’re to be avoided. Here’s the thing, though: while every politician in Washington is cursing the carbuncle, hardly one has complained of the cancer killing the patient. Allowing unlimited, unaccounted-for corporate spending in elections is a malignancy threatening the life of the republic. Permitting Tea Party, left-wing, libertarian, middle-of-the-road – whatever – groups to define themselves as untaxed social welfare organizations that may accept unlimited, untaxed, secret corporate gifts and sponsor political ads is a sarcoma on democracy.
Nobody wants the IRS singling out applicants based on politics. The American people do, however, want someone, if not the IRS, someone else, somewhere to do something about the perversion of election finance. The IRS is hardly a good candidate for that job. The Securities and Exchange Commission (SEC) could help. A constitutional amendment would be better.
The IRS has some regulatory power. In the Tea Party case, the IRS was examining applications for “social welfare” or 501(c)(4) status, which is commonly used to circumvent campaign finance laws.
The tax code defines 501(c)(4) groups like this: “civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.” These are different from charity organizations, called 501(c)(3), such as food banks and homeless shelters. And they are different from political outfits, which have their very own place – Section 527 – in the tax code.
Over the past decade, an increasing number of political groups sought “social welfare” status instead. That’s because of a 2001 law requiring political outfits to disclose their donors. “Social welfare” organizations don’t have to do that. Politicized “social welfare” groups sprouted even faster after the U.S. Supreme Court decided in the Citizens United case in 2010 that corporations are people free to spend unlimited cash in elections.
“Social welfare” groups provided corporations with the ability to spend untold millions on candidates while keeping that a secret from customers and shareholders.
But here’s the problem: the tax code requires these groups to work “exclusively” to promote social welfare. Regulations permit some political activity but forbid these groups from functioning primarily for politics.
Despite that, many of these groups, from the right-wing Crossroads GPS to the lefty Priorities USA, clearly operate primarily for politics. They spent hundreds of millions in the last Presidential election. Watchdog groups have filed a dozen complaints in the past two years objecting to this apparent violation. The IRS never responded.
Not much enforcement there.
The IRS made a little effort in 2011, but backed off when GOP leaders complained.
Gifts to charities are tax exempt, but those to “social welfare” groups are not. Well, they’re not supposed to be. The IRS sent letters to a group of big donors two years ago informing them that gifts to “social welfare” groups may be subject to tax. Immediately, Republican senators Orrin G. Hatch and Jon Kyl accused the IRS of partisanship. After which the IRS “folded like wet cardboard,” said Sheila Krumholz and Robert Weinberger of the Center for Responsive Politics in a New York Times article.
No enforcement there.
Another government entity that could help cure the dark money disease is the SEC.
No enforcement there either, though.
Languishing at the SEC is a proposal to require publicly-traded companies to disclose the money they pour into these “social welfare” groups – funds described as “dark money” because the source is concealed. The idea is that shareholders have a right to know how their investment is used. And it’s a popular concept, with more comments filed on this proposal than on any other suggested rule in SEC history – half a million – the vast majority in favor.
Citing the IRS scandal, Republicans demanded last week that the SEC kill the proposal to require corporations to unveil their attempts to influence elections. New SEC Chair Mary Jo White refused.
Good sign. But still no actual enforcement.
One method of enforcement is on the move. It is a proposed amendment to the U.S. Constitution that would reverse the Citizens United decision that corporations are people with First Amendment rights to free speech, which includes spending unlimited money on politics. Already, 13 states and more than 300 municipalities have called for approval of the Democracy is For People Amendment. It was introduced in Congress by Independent Vermont Sen. Bernie Sanders and Florida Democratic Rep. Ted Deutch.
It says natural persons who are citizens of the United States may make campaign contributions. Corporations do not fit that definition of human beings, and as a result would be prohibited from making political gifts.
It would allow contributions from Political Action Committees, which are comprised of human beings who get together and donate under the IRS' political committee rules - Section 527. So groups of union members or wealthy CEOs could continue donating.
Move to Amend activists were heartened by a Pennsylvania judge’s recent decision that corporations are not people and thus do not have a constitutional right to privacy. Washington County President Judge Debbie O’Dell-Seneca is no Supreme Court justice. But she understands that there’s an important distinction in the fact that people can be heartened while corporations can’t be. Her decision included this analysis:
“It is axiomatic that corporations, companies and partnership have no “spiritual nature,” “feelings,” “intellect,” “beliefs,” “thoughts,” “emotions,” or “sensations,” because they do not exist in the manner that humankind exists. . .They cannot be ‘let alone’ by government, because businesses are but grapes, ripe upon the vine of the law, that the people of this Commonwealth raise, tend, and prune at their pleasure and need.”
Corporations can’t “suffer” illness. They can, however, kill democracy.
To stop toxic corporate interference in elections, the American people could demand that the IRS, which is supposed to be non-partisan, decide exactly what constitutes political activity. They could hope the SEC will do the right thing. What they should do, however, is pass a constitutional amendment clarifying once and for all that corporations are not human and can’t usurp the rights of human beings.
President Obama went to Austin, Texas, last week in pursuit of an industrial and employment revival. He wants to launch manufacturing institutes to foster American innovation and job creation.
Republicans responded by ridiculing the President, in the same arrogant way that the blooded aristocrats on the British television series Downton Abbey scorned a chauffeur who sought to marry into the patrician Crawley family. “No opportunity for the downtrodden!” the GOP and wealthy vow.
Watching Downton Abbey would be pure escapism, a simple respite from the grind of work and duties of home. That is, except for the disquieting reality that Downton Abbey’s classist mores increasingly intrude on American life. The wealth gap between America’s rich and poor has widened to the point where it was in Downton Abbey days. And that is abetted by the GOP practice of continually cutting taxes on the rich while constantly cutting government services that provide opportunity to everyone else.
Income inequality in America is wide and widening. Just get this: while income stagnated for the middle class, the average annual income of the top .01 percent of U.S. households from 2002 to 2007 rose by 123 percent – a gain of $20 million each.
Even after the crash of 2008, the wealthiest .01 percent did just fine. Now, the stock market and corporate profits are soaring. But only the wealthy are benefitting. The New York Times reported earlier this month that corporate profits in the third quarter of 2012 took the largest share of national income for any time since 1950, while the portion that went to workers fell to the lowest point since 1966.
While making those huge profits, corporations aren’t creating jobs. For those who do have jobs but aren’t in the top 10 percent income bracket, wages fell 7 percent from 2007 to 2008. Unlike the rich, workers didn’t recover after the crash, with median household income declining 1.5 percent in 2011.
And then there’s the poor. In the richest country in the world, the U.S. Census Bureau found 46.2 million people living in poverty in 2011, the highest number in the 53 years that the Census has collected the statistic. These are America’s economic equivalent to Downton Abbey serfs and servants.
This poverty is by far the highest rate among developed countries, while the rate at which taxes and transfer programs reduce American poverty is the lowest for developed countries. Transfer programs include unemployment compensation, a crucial lifeline for millions when the jobless rate remains above 7 percent.
For those unemployed, for the struggling who saw no benefit from record corporate profits and stock market highs, President Obama went to Texas to announce formation of three manufacturing hubs, where innovation would be nurtured and good-paying industrial jobs created. By executive order, these three will be financed with $200 million from five federal agencies.
The President has asked Congress to dedicate $1 billion to create a network of 15 industrial institutes, but Republicans laughed at the proposal.
Instead of investing in America, they insist on tax cuts for the rich. They demand austerity for the rest. They love the sequester, which cut Head Start for poor children and Meals on Wheels for old folks. They’re fine with the sequester costing 700,000 jobs. All those single mothers thrown out of jobs can always work as prostitutes, like Downton Abbey maid Ethel Parks did after being fired for sleeping with a moneyed patrician, right?
Both private sector and government economists have said unemployment would be significantly lower and economic growth significantly higher if Congress had continued stimulating the economy, as it did when President Obama was first elected and Democrats were in control. Republicans reversed that successful course. When Republicans took control of the House of Representatives and began abusing the filibuster in the Senate, the GOP forced the country onto the austerity path that has devastated Greece, Spain, Portugal, Italy and Ireland.
President Obama continues to push for stimulus and jobs because he believes the American government, founded on the premise that all men are created equal, should promote equal opportunity to achieve.
In the three decades after World War II, the government stimulated the economy by constructing interstate highways, sending veterans to college and supporting home ownership. Taxes on the rich were among the highest in the nation’s history. The economy thrived and income inequality declined. Opportunity for every child increased.
Republicans want to kill the government that accomplished that. They want to go back to Downton Abbey days. The rich stay rich; the poor stay servants. There’s a set of rules for the rich: An unmarried Lady Mary deserves forgiveness for sleeping with a distinguished foreign visitor. But there’s another set of rules for the rest: unmarried Ethel Parks gets fired for sleeping above her station in life. The Wall Street bankers whose gambling took down the economy get a bailout. The Main Street bank robber gets a prison term.
Republicans don’t seem to understand that a political system that favors the wealthy in the 21st century while failing the majority is unsustainable. Americans believe everyone is equal. They believe the system of government that their forbearers created should guarantee equity of opportunity to make a life, get a job, buy a picket-fenced home and raise a couple of kids. The New World rejected the Downton Abbey philosophy of privilege based on blood lines and inherited money.
Turn off the TV, GOP.
A century ago, workers were a lot more “flexible” than they are now. Veritable Gumbies in the mills and mines and factories they were, distorting their lives to slog 10 or 12 hours a day, six –even seven – days a week.
Then came the 40-hour week. And weekends. And eventually sick days. And paid vacation days. Now, bosses at mills and mines and factories regard these rules as coddling and consider the workers accustomed to them as unyielding to corporate demands.
The GOP has an app for that. It’s called the Working Families Flexibility Act. This legislation that the Republican majority in the U.S. House is expected to pass this week would force some old-time flexibility into 21<sup>st</sup> century workers. The forced flexibility act would award bosses the power to “offer” compensatory time off instead of overtime pay. Bosses, not workers, would determine when the comp time could be taken. The proposal puts control in corporate hands, obliging wage earners to bend over backward for bosses exactly like their Gumby ancestors were compelled to.
<a href="http://blog.usw.org/wp-content/uploads/2013/05/sad-gumby.jpg"><img class="aligncenter size-medium wp-image-20825" title="sad gumby" src="http://blog.usw.org/wp-content/uploads/2013/05/sad-gumby-300x210.jpg" alt="" width="300" height="210" /></a>
Trade unionists and labor rights activists died to achieve the goal of eight-hour days and 40-hour weeks. They were<a href="http://www.digitalhistory.uh.edu/disp_textbook.cfm?smtID=2&psid=3192"> shot and beaten in the streets</a> during demonstrations organized by the eight-hour movement. <a href="codyjhunter">Their slogan was</a>: “Eight hours for work; eight hours for rest; eight hours for what we will.”
Finally, <a href="http://www.epi.org/publication/issuebriefs_ib190/">in 1938, President Franklin Delano Roosevelt signed the Fair Labor Standards Act</a> (FLSA) as part of the New Deal, which gave workers and families rights and security that previously had been exclusive to the wealthy.
<a href="http://www.epi.org/publication/issuebriefs_ib190/">FLSA enforces the 40-hour week with a simple measure</a>. It requires employers to pay time and a half to wage earners for each hour worked beyond 40 in a week. That creates a financial disincentive for bosses to order work beyond 40 hours. That also creates a financial incentive for companies to avoid overtime pay by hiring more workers. That was a significant bonus during the Great Depression.
Employers still could require overtime when they needed it, but it cost them, the way it costs workers who must pay extra for child care or miss coaching a Little League game or forego Sunday dinner with parents.
Now, Republicans want to relieve corporations of their share of the cost. In fact, the GOP scheme <a href="http://www.epi.org/publication/issuebriefs_ib190/">enables corporations to profit on overtime at the expense of workers</a>. It would reduce the financial disincentive of requiring work beyond 40 hours, which means it would also reduce the financial incentive to hire more workers. That would be a tragedy during the Great Recession.
The forced flexibility act would enable employers to give workers comp time off instead of overtime pay. Republicans contend it would be the worker’s choice, but in reality bosses foreclose options when they make it extremely clear they want comp time selected.
And they’ll want workers to “choose” comp time. That’s because <a href="http://www.epi.org/publication/issuebriefs_ib190/">workers won’t be able to specify when they’ll take the compensatory time off</a>. Bosses will have veto power on those requests. And as workers accrue more and more hours of overtime – <a href="http://www.businessmanagementdaily.com/35373/house-bill-would-offer-empl... to 160 a year</a> – to be compensated later as time off, the corporation retains an increasing share of the value of their work.
With overtime pay, the worker gets the money in the next paycheck and spends or saves it as he pleases, earning interest if he banks it. Under the GOP forced flexibility proposal, the boss can deny time off requests for as long as a year, after which the company must pay the wage earner for the extra time worked. By then, <a href="http://www.epi.org/publication/issuebriefs_ib190/">the corporation has kept the workers’ earnings</a>, and the interest on them, for 12 months.
And if the company goes bankrupt before paying for the accumulated overtime, the GOP provides no protection for workers. Workers would lose the earnings that they would have received immediately if they had been paid time-and-a-half in the next check.
The GOP is hyping their forced flexibility bill as a measure to help women. <a href="http://www.usatoday.com/story/news/politics/2013/04/30/house-gop-mommy-b... websites and blogs popular among women, the GOP bought ads</a> asking Democrats if they will “stand up for” working moms by forcing women to contort themselves to employers’ whims. The same party that defeated equity measures for women like the Equal Rights Amendment and the Paycheck Fairness Act now wants the women who voted against them big time in the last election to believe the GOP forced flexibility act is good for them.
Republicans are right that women need flexibility it their work lives. The flexibility to earn 100 percent of what men do in the same jobs, instead of 23 percent less, would be great. But not so great would be a federal law giving bosses the flexibility to force women to work extra hours with a vague promise of compensatory time off some day in the future if the boss feels like granting it.
The GOP forced flexibility act is part of a list of proposals House Majority Leader Eric Cantor, R-Virginia, calls <a href="http://www.nytimes.com/2013/04/25/us/politics/majority-leaders-quest-to-... Life Work.”</a> That’s right, Republicans intend to make life nothing but work. No eight hours for sleep. No eight hours for anything you will. Just work, Gumby, just work.
You are not safe. Not at work. Not at home in your bed. The biggest threat is not terrorism. It’s corporate negligence leading to a blast or collapse or release of toxic chemicals.
Terrorism killed 3,000 Americans on 9-11. But in the dozen years since then, terrorists on American soil have taken the lives of fewer than 25, including those at the Boston Marathon and Fort Hood. By contrast, every year, more than 4,000 perish in American workplaces. These deaths are commemorated every April 28 on Workers Memorial Day. It’s every April 28 because workplace fatalities are relentless.
The explosion earlier this month at the fertilizer plant in West, Texas, that killed 11 first responders and three town residents is a warning to community members that they too may fall victim to workplace dangers. That massive blast should shake Americans out of the delusion that careful corporations and vigilant regulators keep them safe. They don’t. Industry won’t improve safety unless forced. And regulators can’t begin to adequately compel them until properly fanged and funded.
Between the deaths in Boston and West, my union, the United Steelworkers (USW), issued a report on the threat posed to workers and communities by a highly toxic chemical widely used in oil refining. The report is called “A Risk Too Great.” That’s because no industrial process endangers more lives from a single accident than alkylation with deadly hydrogen fluoride (HF).
It’s used by 50 refineries across the country, each storing an average of 212,000 pounds. That endangers 26 million Americans.
Six years ago, at the CITGO refinery in Corpus Christi, Texas, two workers were injured, one critically, when a failure caused a hydrocarbon and HF release, followed by an explosion and fires that burned for days. According to an investigation by the U.S. Chemical Safety Board (CSB), approximately 42,000 pounds of HF was released. Of that, the CSB estimated, 4,000 pounds likely escaped into the atmosphere. Luckily, it blew into an unpopulated area.
At the 23 refineries surveyed by the USW, there were 131 HF releases or near misses over a five year period. That includes one in 2009 at the Sunoco refinery in Philadelphia in which a 22-pound release sent 13 workers to hospitals and one in which a 54-year-old worker died in 2012 after he was exposed to a mixture of HF and propane at the Valero Energy Corp. refinery in Memphis.
The USW has warned about HF for years, but the response from industry is, basically, “Don’t worry, be happy.” OSHA, the CSB and other federal and state agencies lack the regulatory teeth and the funding to effectively respond to the threat.
The fertilizer plant explosion in West is another example of regulatory feebleness. Because of the inherent weakness of self-reporting requirements and because of inadequate funding for OSHA, federal officials were virtually unaware of the dangers at the plant.
After the 9-11 attacks, Congress mandated that any entity with 400 pounds of the explosive fertilizer ammonium nitrite report to Homeland Security. This may be because home-grown terrorist Timothy McVeigh used 4,000 pounds of it to blow up the federal building in Oklahoma City in 1995, killing 168. Or maybe it was the nation’s worst industrial catastrophe, in which a ship loaded with ammonium nitrate docked at the Port of Texas City in 1947 caught fire, exploded and killed nearly 600 people.
Either way, the owner of the West fertilizer plant never reported to Homeland Security that it routinely stored 540,000 pounds of ammonium nitrate next to a school, playground, apartment building and nursing home in the town of 2,800. So, of course, Homeland Security didn’t know.
Long before 9-11 or Oklahoma City, long before the current owner bought the fertilizer plant, OSHA inspected it in 1985. OSHA didn’t return in the ensuing 28 years. But that’s not surprising considering OSHA has so few inspectors that it would take 131 years for it to examine every American workplace one time.
The West plant did submit a risk management plan to the EPA because it kept 54,000 pounds of another hazardous fertilizer, anhydrous ammonia, which could kill large numbers of people if leaked. In its most recent plan, the plant reported no risk of fire or explosion, saying the most serious threat was a 10-minute release of anhydrous ammonia.
The underfunded and overworked CSB, which has only 20 investigators nationwide, recommended in 2002 that the EPA require reporting of hazardous materials like ammonium nitrate. But agriculture and fertilizer lobbyists opposed that, and the anti-regulation Bush administration took no action.
Over the years, the plant in West vented anhydrous ammonia in violation of its permits and moved tanks without informing authorities as required, but encountered only finger wagging and minor sanctions from state regulators in Texas which boasts of its anti-regulatory regime.
Corporations aren’t moral entities. They won’t follow safety rules unless forced.
That’s the problem in Bangladesh. No one enforces safety at the country’s garment factories sewing clothes for U.S. and other Western retailers. A fire at the Tazreen factory in Dhaka in December killed 112 workers who found exit doors locked. Collapse of a factory building in Dhaka last week killed more than 375 and injured 1,000. It occurred after police ordered evacuation, but factory bosses threatened to dock the pay of garment workers who didn’t return.
Whether it’s deadly HF wafting into an unsuspecting community, an ammonium nitrate explosion taking out a nursing home or hundreds of other risks posed by industry to communities and workers, corporations aren’t going to voluntarily limit dangers. The history of deaths shows government must force them. Wimpy regulations and fund-starved inspectors can’t do that.
Americans can pay for safety. Or they can accept thousands of workplace deaths each year as well as workplace catastrophes that kill unsuspecting residents of surrounding communities.
Iciness is the defining feature of Margaret Thatcher, the United Kingdom’s first and only female prime minister, who died last week. She was the cold-as-steel Iron Lady. President Obama, warm, friendly, shaking hands, hugging the bereft, is the opposite.
It’s the same with their philosophies. President Obama, who worked as a community organizer, believes in the power of consensus and collective action. Thatcher, a conservative, scorned compromise and community.
It’s inexplicable, then, that a Thatcher policy would appear in the White House budget released last week. Thatcher once argued for taking milk from the mouths of babes, lobbying to restrict free milk for school children. Similarly, the White House budget proposes taking money out of the pockets of the elderly by cutting Social Security cost-of-living payments. Social Security is community action. It is Americans coming together to care for their parents and grandparents. Thatcher would definitely cut it. Republicans in Congress would. But Democrats should never allow the mean spirit of Margaret Thatcher to materialize in a progressive policy document.
Even in death, which tends to ease loathing, Thatcher is reviled by vast swaths of the United Kingdom. Graffiti gives her a rocky send off. The writing on the wall says: Iron Lady? Rust in Peace. Reaction to a glowing obituary in The Daily Telegraph was so vile that the paper shut down all comment boards on articles about her. Those who still despise her held “death parties” and used social media last week to push the 1930s song, “Ding Dong, The Witch Is Dead,” to the top of the U.K. singles chart.
She evokes this response because she slashed the fabric of British society. She took office in 1979 amid high inflation and unemployment and left office in 1991 amid high inflation, unemployment and a widened gap between rich and poor. In her dozen years in office, she cut social welfare programs, eviscerated trade unions, deregulated, sold state-owned companies and utilities and closed coal mines. All this killed good jobs that supported families and villages across the countryside. Lives were destroyed, communities devastated. This, however, was in keeping with her philosophy of every man for himself, as she said in a 1987 interview:
“There is no such thing as society. There are individual men and women and there are families.”
She refused to allow the United Kingdom to fully join the community of the European Union. The individualist wouldn’t let her country unify with continental society.
Barack Obama is no Margaret Thatcher. In his first inaugural address, he spoke of the need for concerted action for the wellbeing of country and community. In his second, he said it bluntly:
“But we reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future.
“For we remember the lessons of our past, when twilight years were spent in poverty and parents of a child with a disability had nowhere to turn. We do not believe that in this country freedom is reserved for the lucky or happiness for the few. We recognize that no matter how responsibly we live our lives, any one of us at any time may face a job loss or a sudden illness or a home swept away in a terrible storm. The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative.
“They strengthen us.
“They do not make us a nation of takers. They free us to take the risks that make this country great.
“We, the people, still believe that our obligations as Americans are not just to ourselves, but to all posterity.”
In many ways, the budget offered by the White House last week reflects President Obama’s belief in community. For example, to create jobs, it includes $166 billion over 10 years for repair and construction of roads and rails and to launch an infrastructure bank to finance more public works. Also to ease high unemployment, the budget contains aid to states for job training and to retain teachers and first responders.
To pay for these and other programs, the plan proposes eliminating special deals and loopholes that have allowed the rich and privileged to pay a decreasing portion of their income toward the cost of government. It would require the wealthy and corporations to step up and fulfill their responsibilities to the American community that facilitated their prosperity. Millionaires would have to pay a minimum rate of 30 percent. Deductions for the rich would be limited. Loopholes enabling some corporations to pay no taxes at all would be closed.
But the budget also offers to change the calculation for cost-of-living increases given to Social Security recipients to a formula called Chained CPI. Senior citizens, injured veterans, the disabled, children who have suffered the death of a parent would all receive less to offset inflation.
The budget mitigates this loss for poorer and older beneficiaries, but the change would be painful for millions of senior citizens.
President Obama has said he would not change Social Security without the tax increases he has proposed for the rich. But Republicans leaders like House Speaker John Boehner, R-Ohio, immediately demanded the nation dive into the wallets of old people while leaving those of the rich perfectly well lined. This is the philosophy of Margaret Thatcher.
British political columnist Hugo Young, a biographer of Thatcher, wrote of her in 2003:
“What happened at the hands of this woman’s indifference to sentiment and good sense in the early 1980s brought unnecessary calamity to the lives of several million people who lost their jobs. . . More insidiously, it fathered a mood of tolerated harshness. Materialistic individualism was blessed as a virtue, the driver of national success. Everything was justified as long as it made money – and this, too, is still with us.”
Democrats must exorcise the evil specter of Margaret Thatcher and promote a budget that respects Americans’ time-honored commitment to each other and to community.
As the U.S. Commerce Department released a report late last month showing corporate profits at a 60-year high, suddenly the big news was about how cheating surely must be rampant in social security disability.
Wait, what?
Also late last month, a Washington Post investigation showed that the 30 companies that make up the Dow Jones industrial average pay a dramatically smaller portion of their profits in taxes than they did a half century ago. Instead of discussing how that impacts government services, all of Washington is talking about slashing Social Security and Medicare.
It’s bait and switch.
CEOs and 1 percenters have elevated that old con to a whole new level. To them, bait is not a lure to a store but a taunt about the poor. “Look over there, a welfare queen!” they goad. “Look, someone not-quite-dirt-poor might get Medicaid,” they needle. Then they laugh all the way to their secret accounts in the Caymans as the 99 percent fight among themselves over how many pennies the government throws at the poor. The rich snicker as the vast majority of Americans are so distracted they don’t focus on record corporate profits, on record low corporate tax payments or on lobbyists buying tax breaks for corporations and loopholes for offshore accounts.
In defense of the 99 percent, it’s hard to concentrate on the big economic picture when household finances are so grim. The Commerce Department reported that in January personal income fell 3.6 percent. Overall, considering taxes and inflation, the decline was the largest in 57 years.
This bad news follows what the Economic Policy Institute (EPI) calls a lost decade for most American families. In its 12th edition of The State of Working America, EPI writes:
“A quarter century of wage stagnation and slow income growth preceded this lost decade, largely because rising wage, income and wealth inequality funneled the rewards of economic growth to the top.”
The top made out like, well, like bandits. Over the past 30 years, CEO compensation rose from 42 times the average blue collar worker’s pay to 380 times.
But CEOs say, “Look away, America. Look away!” Focus instead, CEOs say, on minimum wage! Why should some guy earning the minimum wage of $7.25 an hour, a whopping total of $15,080 a year, get a raise, as President Obama proposes, when the average worker has not? That needling comes from CEOs pulling down 380 times a blue-collar worker’s pay.
Never mind that both blue-collar and minimum wage workers should get raises. Especially since the Commerce Department says corporate profits increased to 25.6 percent in 2012, the highest in any year since 1950 and far higher than the 19.9 percent level common in the years just before the economic collapse.
Corporations have the money for raises. They’re just not giving it to the people whose labor produced the profits.
And they’re sure as hell not giving it to the government either. Citizens for Tax Justice and the Institute on Taxation and Economic Policy evaluated 280 of the Fortune 500 companies and found that 30 paid no federal income taxes at all from 2008 through 2010. The following year, 26 paid no income taxes. None. Zip. Zero.
Some corporations pay. But not much. A Washington Post analysis found that about 50 years ago, corporations included in the current Dow Jones industrial average routinely listed federal tax expenses as 25 to 50 percent of worldwide profits. Now, the Post found, they report less than half that.
These are companies whose lobbyists whine and cry to Congress that the nation’s 35 percent top corporate tax rate is just too terribly high. Among those singing that sad song is Procter & Gamble, which the Washington Post found pays 15 percent. P&G, the world’s largest manufacturer of consumer products, insisted in a statement last year that the United States must “reduce the corporate tax rate.”
Right, so then Procter & Gamble would pay a smaller percentage than a blue collar worker.
“Look away, workers, look away,” the CEOs say. “Look over there, where someone on food stamps is buying cigarettes! If they can buy a pack of cigarettes, then they don’t deserve food stamps, right? Attack food stamp recipients!” the CEOs urge, inciting the 99 percent to fight among themselves.
Last week, the International Consortium of Investigative Journalists began releasing information regarding offshore bank accounts and shell companies belonging to the world’s 1 percenters. The information came from a cache of 2.5 million files leaked to the Washington, D.C.-based group. The files include the names of 4,000 Americans who stashed money in tax havens like the Caymans, where secrecy aids and abets tax evasion and money laundering.
Don’t take the bait as these formerly-secret account holders try to distract you. Ignore them as they try to shift attention to some hapless pregnant teenager on welfare. Instead, focus the mind on this: the politicians who allow off-shore tax evasion, the politicians who establish loopholes so corporations pay no income taxes at all, the politicians who refuse to enforce the provision of the Dodd-Frank financial reform law requiring corporations to report the difference between CEO compensation and average workers’ pay. Time to vote and switch those politicians out of office.
Republicans are suffering grievously from the syndrome that singer Joni Mitchell memorialized in the hit “Big Yellow Taxi” in 1970. The chorus says it all:
Don't it always seem to go
That you don't know what you've got
Till it's gone
They paved paradise
And put up a parking lot
Republicans bellyached for years that government must shrink. It had to be smaller. Cut the budget come hell or high water, they yammered. Well, darn if the sequester hasn’t brought hell and high water to Republican districts across America. Now Republican lawmakers can’t stop carping about how small government shouldn’t occur in their districts. Don’t it always seem to go that you don’t know what you’ve got till you vote to kill it?
Paradise was among the first to go. Specifically, the paradise of American parks. The National Park Service, complying with the mandate that it slash about 9 percent of its budget through September, reduced hours, cut staff and stopped providing some services such as campgrounds, based on recommendations from each park superintendent.
Among the campgrounds shut down are those at Wind Cave National Park in South Dakota. The state’s Republican Senator John Thune is feeling particularly grumpy about that. He accused the Park Service of closing his campgrounds instead of cutting wasteful and duplicative spending, examples of which he neglected to offer.
He’s singing the whiny sequester tune popularized by Republicans who refused to raise taxes on the rich to reduce the impact of $1 trillion in indiscriminate, across-the-board budget cuts they demanded. They all said they wanted smaller government. They huffed and they puffed and they threatened to take down the nation’s economy until they got it.
Now that it’s here, now that it’s affecting their constituents, Republicans contend the $1 trillion in indiscriminate, across-the-board budget cuts they demanded should have been specifically targeted to eliminate only “waste, fraud and abuse.”
That’s a confusing assertion, though, from the party insisting on smaller government, the party whose members swore loyalty oaths to Grover Norquist, the anti-government lobbyist who infamously said government must be shrunk small enough to drown in a bathtub. Even if every speck of waste, fraud and abuse that anyone could ever uncover were eliminated, it wouldn’t add up to $1 trillion. And it wouldn’t shrink government.
Government might be more efficient, but it wouldn’t be smaller. Smaller government requires cutting actual services and programs – like Thune’s campground.
So far, Republicans haven’t wailed about cuts to programs for struggling families such as unemployment benefits, public housing, daycare aid for poor working women, the home heating help called LIHEAP, or the food assistance called WIC that impoverished mothers use to feed their babies.
There has been no Republican backlash about the Energy Department laying off 250 workers and furloughing another 2,600 at the nation’s largest Superfund cleanup site, Hanford Nuclear Reservation in Washington State, where radioactive contamination began with the Manhattan Project and continued for 40 years.
Instead, Republicans protested cuts to programs more likely to affect wealthier constituents. That is, constituents more likely to make campaign donations.
They’ve griped like crazy about the decision to stop White House tours, about the Federal Aviation Administration (FAA) closing 149 control towers at small airports and about the reduction in service at National Parks.
The FAA announcement that it would be forced to close the towers in order to slash $637 million from its budget as sequestration requires sent Republicans from rural areas into a tizzy.
One after another stepped up to say stuff should be cut, somewhere, you know, but not their control tower. Several suddenly experienced the realization – something Democrats have been saying for years – that slashing federal spending harms the economy.
Here, for example, is Republican Congressman Blake Farenthold of Texas contending the FAA should preserve a tower in his district to prevent damage to business:
“A closure of the air traffic control tower at Victoria Regional Airport will have a negative economic impact on the city of Victoria, Texas and the surrounding region.”
Similarly, here’s Republican Congressman Dennis A. Ross railing against closure of the tower in his Florida district because it’s needed for the annual SUN ’n FUN Fly-In convention:
“SUN ’n FUN not only provides incredible economic value to Lakeland, but it serves our children by investing $1.4 million dollars annually in education. It is unacceptable to cut this important funding.”
Rep. Ross suggested, instead, eliminating “waste, fraud and abuse to make our government more responsible, effective and efficient.”
Like every other Republican who opted for abolishing “waste, fraud and abuse” instead of cutting services to his own district, Ross failed to specify any examples.
Republicans may have some difficulty spotting waste, fraud and abuse because they’re a little too close to it. Incensed that visiting constituents will be denied visits to the White House, the GOP-controlled House Committee on Oversight and Government Reform devoted its “government oversight and reform” efforts to producing a video criticizing the sequester-caused White House tour cancellations.
That video definitely qualifies as waste.
Republicans never knew what their districts had gotten from the federal government. Until it was gone. Until after they’d paved it over with the sequester. Now they’re stalled in an economically barren parking lot of their own creation.
It’s hard to believe considering what happened in 2008 on Wall Street and in Washington, but banking is built on trust.
A worker hands his hard-earned dollars to a teller and trusts the money will be deposited and available for withdrawal when needed. Despite the crash on Wall Street, workers still trust bankers to safeguard deposits from robbers and reckless investments.
Granting banks a little less credulity might be wise. Just consider what happened in the past two weeks. A U.S. Senate investigation revealed that the 2010 Dodd-Frank banking reforms utterly failed in the case of the $6.2 billion “London Whale” gambling loss at JPMorgan Chase. Then a U.S. House committee passed seven measures to weaken Dodd-Frank. And there was the European Union’s demand that Cyprus expropriate money from depositors to prevent that nation’s big banks from failing. That means no depositor can trust that a government won’t dip its hands into savers’ accounts to bail too-big-to-fail banks. The trust is gone, baby.
Last week’s bad banking news began in Cyprus. It’s a cautionary tale about trust in both politicians and bankers. Cyprus is a tax haven for wealthy Russians the way the Caymans are for wealthy Americans. The Cypriot financial institutions, which made bad bets on Greek debt, are teetering on the edge of bankruptcy and were closed last week to stave off bank runs.
The European Union, which includes Cyprus but not Russia, was not eager to provide loans to secure moneyed Russians. Euro zone finance ministers and representatives of the International Monetary Fund (IMF) and European Central Bank worked out a deal under which Europe and the IMF would provide $13 billion to bail out the banks if the country took $7.5 billion from depositors’ accounts.
Cypriot and European officials betrayed depositors, particularly small ones whose savings of less than $130,000 supposedly are insured. The newly elected president of Cyprus, Nicos Anastasiades, turned on his own people. He rejected a proposed deal under which Cyprus would take 12.5 percent from depositors with more than $130,000 euros and about half of that from smaller account holders. Anastasiades demanded the rich, often Russian oligarchs, pay less, which meant, of course, the smaller depositors, everyday Cypriot workers, would have to pay more.
As a result, a deal was struck under which 9.9 percent would be taken from the wealthy and 6.75 percent from those with less than $130,000, effectively nullifying their insurance.
Naturally, the working people of Cyprus went crazy. Their president had focused on protecting rich foreigners. And he decided it was fine for the government to reach into workers’ savings accounts and grab money to rescue big banks.
Cypriots asked how a depositor could trust any bank in the Euro Zone now that finance ministers had determined that countries could confiscate money from insured accounts. A 26-year-old Cypriot, Andreas Andreou, told the New York Times he’d withdraw all of his money as soon as the banks re-opened, adding:
“I’d rather put the money in my mattress.”
Trust is seriously breached when a mattress seems safer than a bank vault. Cypriots pointed out that no one should feel immune. If Cyprus can pinch depositors, any government can.
In 2008, the U.S. Congress did not take bailout money from depositors, but instead from every taxpayer. And it wasn’t a mere $700 billion in Toxic Asset Relief Program (TARP) money. Including loans and other help offered by the Treasury Department, Federal Reserve and FDIC, it’s more like $4.76 trillion, with $1.54 trillion not paid back.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was supposed to give taxpayers some trust that the banks would be sufficiently regulated, that too-big-to-fail wouldn’t happen again. But the London Whale drowned that fantasy.
JPMorgan Chase, long considered the safest Wall Street bank, an institution whose managers lobbied hard for a lily-livered Dodd-Frank, has paid more than $8.5 billion since the crash in fines, settlements and other litigation expenses.
Joshua Rosner, co-author of the New York Times best seller, “Reckless Endangerment,” analyzed JPMorgan for consulting firm Graham Fisher & Co. and wrote in a report titled “JPMorgan: Out of Control:
“JPM has a reputation of being the best managed of the biggest banks. This has enabled the company to employ its muscle with elected officials and thwart regulatory efforts.”
Regulators saw no evil as a JPMorgan trader in London lost $6.2 billion last year. A scathing Senate investigative report released March 14 says the nation’s largest bank fought with and dodged federal regulators, misinformed investors and the public and circumvented internal and federal rules.
Less than a week after the Senate released the report, a House committee passed seven bills that would gut Dodd-Frank’s already weak-kneed regulations governing the very derivatives that the London Whale traded.
This action is an example of right-wing Cypriot President Anastasiades’ view of government: protect the wealthy and influential and compel the workers to pay.
It didn’t go over well in Cyprus. After massive street demonstrations, the Cyprus Parliament unanimously rejected the initial plan to seize money from small depositors’ insured accounts to rescue the banks.
But unless Americans step up the way Cypriots did and demand real regulation, as well as send the message that they don’t trust Wall Street by moving their money to community banks and credit unions, they can bank on being bilked. Again.
Just four months ago, Americans told the Romney-Ryan team: “No.” The electorate rejected them. Many voters objected to Mitt Romney and Paul Ryan treating them the way arrogant 1 percenters treat “The Help.”
Rep. Ryan, a Republican from Wisconsin, exposed his condescension toward the masses when he described 60 percent of Americans as “takers.” Mitt Romney illustrated his when he referred to 47 percent of Americans as slackers too lazy to take responsibility for their lives, a moment captured on video by a member of “The Help,” Scott Prouty, who was working as a bartender at the $50,000-a-plate fundraiser where Romney said it.
Last week, Ryan revealed the election loss left him unchastened. He remains intent on telling “The Help” what to do. The princeling of the royal Republican team reprised his prosperity-for-the-rich-austerity-for-the-rest budget. Although the public rejected that path in November, Ryan continues to insist he’s correct and the majority is wrong. He doesn’t care what they want. Like any pampered princeling, he doesn’t tolerate challenges from “The Help.”
He said as much at a news conference after releasing a budget that even the conservative Wall Street Journal described as nearly a twin to the one he and Romney ran on. Here’s what Ryan said after he was asked why he was pushing ideas that the American people spurned in November:
“The election didn’t go our way — believe me I, I know what that feels like. . .That means we surrender our principles? That means we stop believing in what we believe in? . . .We think we owe the country solutions to the big problems that are plaguing our nation. . .We’re showing our answers.”
What Ryan calls answers are the same old schemes, the ones to which the majority of Americans said, “No!” But the consensus of the populace doesn’t matter to Ryan. During the campaign, he and Romney made it perfectly clear they don’t like and don’t respect “The Help.”
The contents of the Ryan budget demonstrate that as well. His proposal, like his previous budgets, would damage or destroy government programs that workers cherish, from Medicare and Medicaid to Pell Grants and food stamps. While Ryan’s budget slashes the living daylights out of those, it awards the wealthy and corporations additional gigantic tax breaks.
He takes from the poor and gives to the rich. That’s the motto of medieval royalty. It’s not the reigning philosophy of the 21st Century.
Americans told him that last November. Congress told him that twice previously by refusing to pass either of his earlier two “Path to Prosperity” budgets, both of which were also based on Ryan’s path-for-the prosperous-to-loot-the-people’s-treasury concept.
Still, Ryan insists on austerity for the non-rich. He demands for America the government-imposed asceticism that has devastated citizens in European nations from Great Britain to Greece. He demands for America what austerity did to Italy – a country now reeling as unemployment rises above 11 percent and 1,000 businesses a day go bankrupt.
No. The American people said no. They said they wanted another way.
Congressional progressives also released a budget last week. It’s another way. Called the Back to Work Budget, its provisions are ones that a majority of Americans have supported in poll after poll. It raises taxes on the richest. It creates jobs immediately. It protects social safety net programs like Medicare, Medicaid and Social Security.
It would create as many as 7 million jobs the first year with investments in infrastructure, education and struggling communities. Over time, it would cut the deficit by $4.4 trillion, partly by ending tax breaks for moving jobs and profits overseas and for luxuries such as corporate jets.
The idea is to spend government money immediately to stimulate the economy and create jobs, which, in turn, will lower government costs and the deficit in the long run as less is paid out in unemployment benefits, food stamps and other aid, while at the same time more is paid into the government in taxes by the newly employed. This is stimulus Ryan once believed in – of course, that’s when there was a Republican in the White House.
The Back to Work Budget doesn’t balance. But economists like Nobel Prize winner Paul Krugman and public policy experts like former Secretary of Labor Robert Reich have repeatedly pointed out that the federal budget does not have to balance. It is not at all like a family budget, Reich has emphasized. In fact, he explains, it’s crucial when unemployment strains family budgets for the federal government to spend to stimulate the economy and create jobs.
While Ryan claims his austerity budget would balance in 10 years, that’s highly doubtful since he cuts taxes on the rich and never explains what loopholes he would close to offset that massive loss of income – if that’s even possible.
That’s among the budget secrets Ryan doesn’t deign to share with “The Help.”
It’s revealing that when Ryan ran for vice president last fall, he lost his home precinct, his hometown, his home county, and his home state. As well as the majority of the country. Once Americans got to know Paul Ryan, they didn’t like him or his ideas or his attitude toward them.
Ryan says he’s not going to change anything just because America rebuffed him and his ideas. Instead, he’s ordering Americans to do his bidding. Again.
Ryan is confused about what his job is.
The American people don’t serve Paul Ryan. They’re not “The Help.” He’s “The Help.” And right now, by demanding austerity that Americans already rejected, Paul Ryan is back-talking the boss. It’s insolent, insubordinate and disrespectful.
The U.S. Attorney last week confirmed Americans’ fears about Wall Street. The banks, Eric Holder said, were not just too big to fail, they were also too big to jail.
That means bankers operate beyond the pale, outside the historical fence line encircling civil society. Past the pale is where barbarians resided, returning regularly to rampage. These days, bankers operate from beyond the pale, raiding civilization with impunity.
Unlike vulnerable ancient villages, however, the United States has considerable power over these banker barbarians. Banks, after all, are nothing but corporations. Corporations are legal constructs that citizens have the right to rebuild to properly serve society. European countries began doing that last week. Their first steps included limiting banker bonuses and giving shareholders binding say on CEO pay.
It started on Sunday, March 3 when the Swiss voted to grant to those who own corporations – the shareholders – the right to determine executives’ and directors’ pay. In addition, the referendum outlawed golden handshakes and golden parachutes. These are massive handouts to corporate executives – like the $78 million that Swiss-based healthcare products corporation Novartis proposed as a goodbye gift for CEO Daniel Vasella.
Nationwide outrage scuttled Vasella’s windfall and withered referendum opponents. The measure, called the Minder Initiative after its author Thomas Minder, passed with 68 percent of the vote. Even before Vasella, the Swiss were annoyed that the country’s biggest bank, UBS, had to be bailed out and that another huge bank, Credit Suisse, gave its CEO $76 million in shares in 2010.
So they did something. They changed the rules to tame banker barbarians and rogue corporations.
Two days after the Swiss referendum, the European Union’s finance ministers voted 26-to-1 to limit banker bonuses. Beginning next year, a bonus may not exceed the amount of a banker’s annual salary. Or, if the bank’s owners – the shareholders – approve, a bonus may be as high as twice the salary.
The intent is to reduce risk taking. When bankers win big gambles, they’re rewarded with big bonuses. When they lose, taxpayers bail them out. The E.U. lowered the bonus payments, lowered the wagering incentive, and lowered the chances of another bailout.
Only Britain, a major banking center, voted to continue the current regime of taxpayer-financed bank gambling. Prime Minister David Cameron took a considerable risk himself to side with banks since the vast majority of the British electorate, suffering under austerity, resents the banking industry for crashing the economy, extracting bailouts and pocketing regal pay.
In addition to capping banker bonuses, the measure stiffens capital requirements for some 8,300 European banks in the 27 European Union countries to prevent another financial crisis as well as mandating that the banks publish detailed information on profits, taxes and subsidies.
Although, obviously, the United States isn’t an E.U. member, the measure appears to affect some American banks and bankers. For example, it likely would cap the bonuses of executives working in New York for London’s Barclays and those working in London for Wall Street bank Citigroup.
That’s good for the United States, which looks like a legislative sissy compared to Switzerland. Congress gave American shareholders a faint say on pay – they may vote, but only every third year and only as a non-binding advisory. Congress said corporate executives and directors are free to ignore the people who own the company and pay themselves whatever they want.
In addition, Congress required corporations to report the ratio of a CEO’s compensation to that received by the company’s median worker. But corporations aren’t doing it – because no one’s enforcing it.
These measures were included in the 2011 Dodd-Frank law, which was hyped as legislation to prevent another Wall Street bailout.
Attorney General Eric Holder eroded confidence in that on Wednesday when he testified that criminal Wall Street bankers are too big to jail. Here’s what he said:
"I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy."
If these banks are so big that prosecuting outlaw executives in one will take down the economy, then it’s impossible to believe that taxpayers won’t be forced to bail them out again when Wall Street loses its next big gamble.
What Eric Holder said is that these banks operate beyond the pale, outside the rules of society because they’re too gargantuan for society to hold accountable. They can do anything they want. They can gamble like crazy, and when it fails, suffer no consequences. Taxpayers will backstop their losses. And prosecutors will decline to prosecute. That is exactly what happened in 2008.
The E.U. has refused to stand by helplessly again, like The Three Bears, while some European version of Goldman Sachs ransacks their financial house. The Swiss and the 27 European Union countries voted to change the rules in order to restrain corporate renegades and ensure banks operate in ways that benefit society.
What they did is not enough. But it’s a good start. The vast majority of Americans abide by society’s rules and live inside the pale. They need legislation to yank bankers back within that fence.
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