Gordon Gekko Lives – Tom Rossi

I’ve been wondering lately (okay, for many, many years) how people can still hold onto conservative ideas about the economy. Social issues are one thing – there is a legitimate debate about abortion, for example, but for some people, economics seems to be even more of a religious issue than that. People just hold onto their beliefs, despite a wealth (pun intended) of evidence to the contrary.

To track down some of the reasoning of the followers of the tired, old religion of conventional, “free-market” economics, I interviewed démodé economist Charles “Chipmunk” Griedesgud at the Gordon Gecko Center for Economic Satire in Slashington D.C.

Presented here are some highlights of the interview. The entirety of the interview will be published in book form by the same publishers that put out Bill O’Reilly’s weekly treasures. It will be called, Killing… something or other.

Me: Thank you for allowing me to interview you, Mr. Griedesgud.

Griedesgud: Please, call me “Chip”.

Me: Fifth generation at Yale?

Chip: Exactly.

Later…

Me: Ha ha! I’m sure your cat didn’t see THAT coming! Oh… Ahem. The main thing I’ve been wondering about, Chip, is how people can still believe that giving corporations big tax breaks leads to more jobs. The corporations don’t seem to create jobs anymore; they just build factories overseas or buy robots to do the work. Don’t people know these things?

Chip: If we cut taxes on corporations, they will build factories and make jobs… in China and Mexico.

Me: How does that help us?

Chip: But then, you see, the Chinese and Mexican workers will become more affluent.

Me: Uh huh.

Chip: Meanwhile, American workers will accept lower and lower paying jobs…

Me: Waiting for the good part.

Chip: …which will eventually allow them to make the commodities that are demanded by the newly affluent foreign workers.

Me: Yeah. Great.

Chip: So, it still trickles down; it just might go through a couple of extra steps.

Me: Wow. I can’t understand how I never thought of that.

Chip: I sense a little sarcasm in your voice.

Me: Me? Nooooooo.

Chip: Would you, instead, have no job creation at all? I mean, if we balanced things more toward the mythical “middle class,” then there wouldn’t be the concentration of wealth at the top that it takes to start the projects and businesses that do just that.

Me: But isn’t that exactly what happened between the 1950’s and the 1970’s, America’s greatest period of economic growth and shared prosperity? The progressive tax structure taxed the super-wealthy and their corporations heavily, and they all kept right on growing anyway, along with the well-being of their workers and the workers’ families.

Chip: That approximately three-decade period was essentially an illusion of economic bliss. In reality, the so-called “middle class” was stealing from the providers – the wealthiest Americans, who could have built a much LARGER economy, and created even more jobs. They did this through forming alliances known as “unions” and through other underhanded methods.

Me: Those bastards!

Later…

Me: So, what could we expect if we were to follow your prescription, which seems to be the way we’re headed, anyway?

Chip: Well, economic growth and prosperity, of course! Our economy could be growing like the Chinese! And why not?

Me: Do you mean the Chinese economy, or the Chinese population?

Chip: Take your pick.

Me: But won’t this scenario mean that those countries make the same “mistakes”, as you call them, that we made? And won’t they be hurting their economies?

Chip: Yes! That’s exactly what we want! There are two ways to look at winning a competition – you can perform better than the others, or they can perform worse than you!

Later…

Me: So, you say we could head into a period of fantastic economic growth and prosperity. But the “middle class” can’t share in that prosperity, lest they sabotage the whole process.

Chip: That’s exactly right. You asked me about the benefits before: the average income would rise beyond anything we’ve seen.

Me: But wouldn’t that just be a result of the outliers? Wouldn’t the income median and mode be dismally low?

Chip: Well, thanks to years of effort, nobody knows what those even mean. We’ve trained people very effectively to think that averages are everything. We’ve kept telling them about the average income in America being so high and we even invented a term called “GDP per Person” that throws them way off. Complaining about your income just makes people feel ashamed now.

Me: Wow. Just… wow.

Later…

Me: Well, thank you, Mr. Griedesgud, for the interview. I suppose you’ll be going back to work for the rest of the day?

Chip: Work? What work? This story hasn’t changed since 1890! I’m going to dinner with some lobbyists at the “Oval Room”. I love a restaurant with a punny name!

-Tom Rossi

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Tom Rossi is a commentator on politics and social issues. He is a Ph.D. student in International Sustainable Development, concentrating in natural resource and economic policy. Tom greatly enjoys a hearty debate, especially over a hearty pint of Guinness.

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Occupy Movement Endorsed by Washington – Roger Ingalls

After listening to President Obama’s State of the Union address, I couldn’t stop smiling. Similarly, I grinned during the last few months of the presidential election. The Occupy Movement is routinely portrayed by mainstream media and conservatives as a failure; however, reviewing the political chatter during the recent elections and the President’s speech on Tuesday, the Occupy influence is front and center.

Prior to the Occupy Movement, there was no media or political focus on the destruction of the middleclass, tax breaks for the wealthy, tax loopholes for corporations or the disparity between the 1%ers and 99%ers. The movement brought attention to all these topics and they were the main sound bites throughout the entire election season. Fast forward to Tuesday and a significant portion of the President’s time was dedicated to Occupy topics: 1) rebuilding the middleclass, 2) increasing wages for many Americans, 3) returning a fair tax burden to the wealthy and big business, 4) closing tax loopholes for corporations and 5) stopping corporate off-shore cash hoarding.

When comparing the Tea Party and Occupy Movements, the latter has been much more beneficial to Middle America. The Tea Party has done nothing but create gridlock in Washington, slowing economic recovery. They’ve also placed political handcuffs on Republican Speaker of the House, John Boehner. He’s ineffective because the fanatical right is holding the larger conservative party hostage. Even though the Occupy Movement hasn’t received due credit, its original talking points are on the tongues of politicians today. In addition, a fairer tax burden was realized in January when taxes were increased on the wealthy; an original Occupy demand.

The media is no longer discussing the Occupy Movement but Washington’s politicians are endorsing it through action and sound bites.

Who Needs A Tax Break?

The more I read about rich people and big companies who get tax breaks, the more I am coming to the conclusion that the only reason we are not balancing our national budget (I know that is an understatement), is because not everyone is paying tier dues.

Now I accept that there are some who need the extra help – doctors and teachers in areas that go to underserved areas out of a sense of service (Northern Exposure anyone?), but corporate fat cats?

How about those poor deserving millionaires who are designing violent video games? I’m sure these humble citizens are providing a national service. There are a number of examples of different companies as noted by David Kocieniewski in a recent New York Times article.

Here’s a few highlights:

1. Calvin H. Johnson, who has worked at the Treasury Department and is now a tax professor at the University of Texas at Austin. “Those tax incentives — a collection of deductions, write-offs and credits mostly devised for other industries in other eras — now make video game production one of the most highly subsidized businesses in the United States.

2. “Electronic Arts of Redwood City, Calif., shipped more than two million copies of Dead Space 2 in the game’s first week on the market this year. It shows a total of $1.2 billion in global profits the last five years using an accounting method that management says captures its operating profits. But largely because of deferred revenue, deductions for executive stock options and a variety of accounting requirements, the company officially reports a net loss for the period. And the company reports that it paid out $98 million in cash for taxes worldwide in those years.”

3. ” During the last five years, Electronic Arts has claimed tens of millions in tax savings from research and development credits for its various games, according to the company’s regulatory filings. (Company officials declined to specify how much of that total came from the federal government.).”

Most of these tax breaks came about when these companies were just beginning and, as start ups, they needed help. But they reinvested their profits in a sophisticated lobbying system to ensure they keep these benefits.

Helping start ups is an admirable step. However, there needs to be clear limitations in how long this goes on, and a clear understanding that these companies owe a debt to the taxpayer – simply that they pay their taxes in years to come.

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

Warren Buffet – Tax Cuts

A couple of weeks ago, Warren Buffet wrote an article in the New York Times that struck a cord. He begins:

“OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.”

Warren Buffet - very honest account.

The disparity of how much we all pay in taxes is incredibly annoying.  Again, Warren Buffet:

“Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

Class Wars

I agree with the Republicans. I don’t want to pay more taxes but i do want everyone to pay the same percentage. I fail to understand how so many people who define themselves as patriotic cannot see that they are hurting their country. The pride that people take, the money they throw at accountants to help them find every loophole, disgusts me.

The problem is that those who legislate for us tend to be a part of this higher income group, or rely on their donations to keep them in power, since it is money not actions that fuel this democracy. Warren Buffet acknowledges as much when he says: “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.”

The Majority Want Equal Responsibility

Who among the rich and the politicians would support paying the same percentage of taxes that I do? Probably only those who believe in their country and are patriotic. Sadly. wearing a flag pin on your jacket lapel is not enough.

Please Vote Today. Click Here

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Alon Shalev is the author of The Accidental Activist (now available on Kindle) and A Gardener’s Tale. He is the Executive Director of the San Francisco Hillel Foundation, a non-profit that provides spiritual and social justice opportunities to Jewish students in the Bay Area. More on Alon Shalev at http://www.alonshalev.com/and on Twitter (#alonshalevsf).

The Debt Limit: A Republican Shell Game (Roger Ingalls)

Treasury Secretary Timothy F. Geithner has warned that the U.S. government will default, if the debt ceiling isn’t increased by August 2, 2011. He goes on to says, “this would have severe consequences for the economy”.

Lately, the debt limit or ceiling has received a fair amount of press because the Republicans are refusing to vote affirmatively to raise it. Keep in mind that the debt ceiling has been increased approximately 75 times in the past fifty years. Increasing this limit is nothing new and has occurred more frequently under Republican administrations.

The conservatives are trying to handcuff the Obama administration with their no vote. Newt Gingrich orchestrated the same failed-maneuver during the Clinton administration. Republicans won’t increase the limit until the Obama administration makes more budget cuts. Essentially, they want to remove $2.4 trillion from the budget over the next ten years. The President will not cut the budget until tax breaks given to the rich under the second Bush administration are eliminated and tax loopholes are closed for big business. So here we sit, stuck in political mud.

The solution is simple. Look back in time and see what worked. During the Clinton administration, the U.S. had one of the best economic eras in its history. Just undo the George W. Bush  craziness that’s still in place; bring back the Clinton tax brackets, get rid of the mid-2000 corporate tax loopholes and roll back expenditures on Defense. We don’t even need to cut Defense spending all the way back to the 1990s level.  We can double the Clinton-era Defense spending and still save $3 trillion over the next ten years which is $600 billion more than the conservatives want.

The Obama administration needs to man-up and get rid of the irresponsible financial policies put in place under G.W. Bush, as promised. Republican politicians need to quit the political sound-biting and do something constructive for the middle-class.

The debt limit discussion is just a diversionary storm in a water-glass.

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Roger Ingalls is well travelled and has seen the good and bad of many foreign governments. He hopes his blogging will encourage readers to think more deeply about the American political system and its impact on US citizens and the international community.