Political Nutz

Observations on the pathetic state of American politics

Monthly Archives: April 2011

System is “Rigged in Favor of America’s Banks and Bankers”

Once again I find myself agreeing with David Stockman. In an interview for “The Daily Ticker”, Mr. Stockman asserts that current economic policies favor the financial industry at the expense of the middle-class workers.  This is no surprise to those of us hit with monthly fees on our checking accounts that pay a measly 0.1% interest while the Federal Reserve is giving money to the bailed out banks interest free.

Stockman says, the Fed’s lending policies turn

capital markets into a rip-roaring casino that really is not productive for the real main street economy and is generating windfall gains for to a very limited number of people for no good purpose

Spring in DC: The Absentee Congress

It looks like a typical spring week in the nation’s capital, temperatures in the mid 70’s, occasional rain showers.  Too bad our nation’s “leaders” aren’t there to enjoy it.  They are on spring break, like a bunch of school kids.  No budget? Ah, that can wait, and wait, and wait.  Those millions of unemployed folks? They can wait too. Wars costing us millions of dollars a day? Let John McCain figure it all out.

With a country confronting numerous critical issues the folks who are supposed to be solving those problems are off lounging in their local districts or, more likely, on some lobbyist-funded junket to a foreign country.  We’ll hear the excuses.  “We have to get back and hear from our constituents.”  “It’s critical to have face-to-face contact with overseas business contacts.” 

Maybe so; but not now. If there’s a people’s list of the country’s priorities none of these trips is on it.  Every day some congressional talking head reminds us that America is in crisis mode.  Our elected officials ought to actually behave accordingly and be in relentless discussions to figure out a way out of the many messes they got us into.  When the banks were in trouble it only took a weekend for Mr. Paulson, President Bush and their Wall Street cronies to come up with $800 billion and plans to make sure  no CEO’s lost their yachts or second homes.  But it seems unemployment, deficits, people losing their homes, a broken health care system aren’t really that important after all. 

An Old School Republican Speaks Out

There was a time when the Republican Party stood for fiscal restraint and political (not social) conservatism. Those rational views unfortunately predate the formative years of most of the current GOP leaders, like Rep. Paul Ryan.  It’s wonderful to hear from one of the old-school Republicans in today’s New York Times op-ed pages. David Stockman, President Reagan’s Director of the Office of Management and Budget makes a clear argument that America can’t get out of its fiscal woes by solely taxing the rich (the Obama plan) or squeezing more out of the poor and elderly (the Ryan debacle).

I have no optimism however that there will be a rational compromise in the current Congress. The Republicans have a pathological obsession with giving still more breaks to corporations and the wealthy while reducing benefits for the ill, the elderly and the unemployed.  And President Obama’s tiny tax increase on the top 2% just isn’t enough to turn around decades of reckless spending, a large part of it on military intervention and boondoggles for the corporate elite.

S&P Warns U.S. about Deficit

Who are these nit wits at Standard & Poors anyway?  These are the same guys who rated all those worthless mortgage-backed securities as essentially risk-free and thus help bring about the Great Recession of 2008These people ought to be in prison instead of telling Congress how to manage the nation’s debt. 

One thing is certain….  no matter what happens with the deficit, the managers at S&P and the Wall Street investment bankers will pocket huge bonuses–paid for by the rest of us.

Corporate Welfare: Funded by Me and You

I can’t just leave this article without comment. Writing in the New York Times, UC-Berkeley professor Laura D’Andrea Tyson tries to justify further reductions in corporate tax rates. Her article begins with a chart showing the 40% nominal corporate tax rate in the U.S. compared to much lower rates in other parts of the world.  She fails to mention that companies in the U.S. pay at an effective rate of about 6% and that many of the very largest pay no taxes at all.

Eventually, the esteemed professor gets to some “promising ways to pay for a significant reduction in the corporate tax rate.”  She writes:

Prof. Michael Graetz of Columbia Law School told the Senate Finance Committee that the shortfall in corporate tax revenues resulting from a cut in the corporate tax rate could be offset by the imposition of a corporate withholding tax on dividend and interest payments to shareholders and bondholders.

So think about that for a moment.  Who receives dividends and interest payments? Who are the shareholders and bondholders?  Well, they are you, me, employees, pension funds.  Working class folks who are already paying our fair share of taxes.

How about an “excessive income” tax on the CEOs and other top executives who are reaping seven and eight figure salaries and bonuses while the rest of us haven’t had a real raise in pay in over thirty years?

Former Michigan governor John Engler wrote in the Wall Street Journal that “American businesses and workers are at a severe competitive disadvantage because U.S. companies are burdened with both statutory and effective rates that are higher than those faced by most foreign-headquartered competitors.”

Sorry, Mr. Engler… that’s just not true.  And even if it were true I still don’t get it.

U.S.corporations are sitting on record profits, they have never had more cash on hand.  They have the lowest effective tax rate in the world. Worker productivity has nearly doubled over the past 30 years.  The bottom line for American companies has never been better.  Why is there this incessant whining about mythical high taxes and the negative effect it has on U.S. business?

Taxation Myths

Much of the discussion stemming from Rep. Ryan’s and President Obama’s budgets has focused on taxes. The Republicans continue the tax cut drum beat bemoaning how America’s terrible tax burden on the rich and on corporations is crippling the economy.  And their solution is to cut services for the sick, the poor, and the elderly.  Of course, most of these claims about current tax rates are utter nonsense.  Taxes on individuals and corporations are at historically low levels–period.  That’s a fact. 

I don’t like paying taxes any more than the next person.  But I love the national parks, I like rolling onto to Interstate 90 without hitting a two foot pothole every mile, I enjoy getting the mail delivered to my door and in spite of the sleepy air traffic controllers I’m glad airplanes rarely run into one another.  I’m willing to pay for these services.  I do wish Bill Gates and General Electric would pay taxes at least at the same rate I do. If they did, we wouldn’t have this ridiculous deficit mess in spite of the billions we spend blowing up people in Islamic countries.

There’s a series of charts from the Center on Budget and Policy Priorities that demonstrate the trends and current state of U.S. tax policy.  They show all those facts that the Republican Party just ignores.  Such as: the effective tax rate on the wealthiest Americans is around 16% vs. the 25% most of us pay.  Over the past 30 years income gains for the richest among us have skyrocketed while middle- and lower-class families have barely kept pace with inflation.

Tax fairness and a little corporate less greed would go a long way in solving America’s fiscal problems.

“A Snake Pit Rife with Greed”

Those are some of the words in a Senate subcommittee investigation of Goldman Sachs‘ practices leading up to the collapse of the mortgage market and the Great Recession.  Surprise, surprise!  I’ve recently read several books (including All the Devils are Here) on the Recession and it’s ever so clear that many banks knew the collapse was coming and in fact structured their investments to profit from the demise of the housing market.  There was obviously unethical and illegal behavior at dozens of firms like Washington Mutual, Countrywide, AIG, Ameriquest and especially Goldman Sachs.  So it’s nice that the Senate excoriates these people and of course the SEC fined Goldman $550 million last year.  But when all is said and done, the big wig investment bankers lied and defrauded clients causing countless Americans to lose their homes and life savings.  And they all pocketed millions of dollars….   and none of them has spent a minute in prison where they belong.

Bush v. Gore II, Wisconsin Style

How convenient!  That super-close election for Wisconsin Supreme Court has suddenly turned into a landslide win for the Republican incumbent, Justice David Prosser.  Waukesha County Clerk Kathy Nickolaus says she somehow failed to report over 7,000 votes for Mr. Prosser on election night.  Just an unfortunate human error, says Ms. Nickolaus, who used to work for Mr. Prosser when he was the speaker of the state Assembly.  Ms. Nickolaus was also given immunity from prosecution in a 2002 criminal investigation into illegal activity by members of the assembly Republican Caucus.

None of the states other 71 counties reported any ballot counting/reporting errors.

Government Shut Down? Bring it on

The Tea Party folks don’t understand democracy.  They are the minority; that means they don’t get their way on every issue.  So if they can’t figure out how to compromise then let’s shut down the federal government and find out if voters really want a couple of dozen right-wing extremists trying to run the country. 

In Trump We Trust? I Don’t Think So

Donald Trump

Image by Gage Skidmore via Flickr

What’s up with Donald Trump and his obsession with where President Obama was born?  If he really wants to be president he needs a little more substantial plan for running the country.

Under no circumstances would I want this guy to be president but at least he sounds honest about where he stands. He notes that Mr. Obama’s biggest accomplishment was the 2008 campaign and that the President has no deal-making skills.  I can’t disagree.  On foreign policy Mr. Trump is very clear: “I’m only interested in Libya if we keep the oil.” He correctly points out that Afghanistan has become an endless cycle of we build something, al-Qaeda blows it up.

Still, I’m sure I don’t want an egomaniacal, billionaire celebrity running America. We have bunch of those people in Congress and they are totally inept.