Tag: income gap

–Visualize a busload of passengers, speeding down a narrow, winding, ice-slicked mountain road, and driven by a crazed, blind driver.

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Visualize a busload of passengers, speeding down a narrow, winding, ice-slicked mountain road, and driven by a crazed, blind driver. That’s our economy and that’s our Congress.

Republicans keep focus on federal pay Washington Post, by Ed O’Keefe

A bill under consideration Tuesday by the House Oversight and Government Reform Committee would force workers to pay 1.5 percent more toward their pensions over three years beginning in 2013.

Take more dollars out of workers’ pockets and send it to the government for destruction: What an economic growth concept!

But the bill under consideration today is just one of several GOP proposals to curtail federal pay and benefits that is moving through the legislative process.

The Securing Annuities for Federal Employees Act of 2012: The bill would calculate federal retirement based on a federal employee’s highest five years of earnings instead of the current rate, which calculates the highest three years. Sponsor: Rep. Dennis A. Ross (R-Fla.). Status: In committee, most likely headed for a full House vote.

“Highest five” is lower than “highest three.”Another plan to take money out of workers’ pockets, and send it to a government that has no use for it.

Honest Budget Act: The bill would make it more difficult for Congress to pass appropriations bills without first approving a budget. It also tightens rules on paying for natural disasters that increase overall spending. Tucked within the bill, however, are provisions that would freeze all within-grade step increases for federal employees. Sponsor: Rep. Martha Roby (R-Ala.). Status: Proposed last week.

If there is a natural disaster, the government won’t help the victims unless money can be stolen from some other Americans — maybe you and me. And then, there is the inevitable war on federal workers, by preventing raises. That ought to improve the quality of workers.

Extending the Federal Pay Freeze One More Year: The bill would extend a pay freeze for federal employees, congressional staffs and lawmakers for one more year, beginning in 2013. Sponsor: Rep. Sean Duffy (R-Wis.). Status: Passed the House last week.

I guess government workers, widely (and wrongly) viewed as lazy, inept, uncaring bureaucrats, are an easy target for the debt bullies.

Down Payment to Protect National Security Act of 2012: The bill would extend the federal employee pay freeze through June 2014 and cut the federal workforce by 5 percent through attrition. Supporters say those cuts would shore up sequestration cuts in defense spending set to take effect next year. Sponsors: Sens. Jon Kyl (R-Ariz.), John McCain (R-Ariz.), Lindsey Graham (R-S.C.), John Cornyn (R-Tex.), Kelly Ayotte (R-N.H.) and Marco Rubio (R-Fla.). Status: Unveiled last week.

The military/industrial/political complex does not want those defense cuts. Way too much money given to PACs to allow that. Better to cut the wages of a federal worker. Hey, those D.C. people can’t even vote for anyone in Congress, so who needs them? Like shooting fish in a barrel for the debt bullies.

If the Republicans tried this stunt on any other class of worker — auto worker, miner, transportation worker, soldier, and on and on, there would be an outburst of indignation. But federal workers? Does anyone really care about them? Better to protect the arms manufacturers.

These proposals are stupid from an economic sense, a humanitarian sense and a common sense, none of which are owned by Congress — especially the pious right.

I award three clowns to: Dennis A. Ross, Martha Roby, Sean Duffy, Jon Kyl, John McCain, Lindsey Graham, John Cornyn, Kelly Ayotte and Marco Rubio.

ClownClownClown

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–How to starve the goose that lays the golden eggs: Taxing business

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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Where did you get your money? Unless you inherited it, you obtained your money by working for a business. It either was your business or someone else’s business. If you inherited your money, your parents or other benefactor worked for a business to obtain their money.

Whichever scenario is appropriate to your situation, the money you received came from a business, and that money is part of what was left over after the business paid its bills — including its taxes.

Keep that in mind as your read excerpts from this Time Magazine article:

The Corporate Tax Rate Is Lowest in Decades; Is Business Paying Its Fair Share?
By CHRISTOPHER MATTHEWS, February 6, 2012 |

As the nation frets over slow growth and large budget deficits, much has been made over how much Americas are and should be paying in income tax. President Obama and Democrats have argued that the wealthiest among us are not paying their fair share.

But there is another source of federal revenues that receives less attention: corporate income taxes. According to the Wall Street Journal’s recent study of Congressional Budget Office numbers, corporations are paying an effective rate of 12.1%, the lowest in at least 40 years.

In 2010 and 2011, companies were allowed to deduct the full cost of the purchases of new equipment, while normally these costs would be expensed over several years. In 2012, this deduction will go down to 50% and be eliminated altogether thereafter, causing the effective tax rate to return to roughly the 25.6% average effective tax rate corporations paid since the late 1980s, according to CBO forecasts.

Is this good for you? Is it good for the economy?

Of course that 25.6% number is still quite a bit lower than the nominal tax rate of 35%, the highest in the world behind only Japan. So why aren’t corporations paying what the law says they should? Certainly, some are. According to Howard Barnet, a tax attorney with Carter Ledyard & Milburn, it all depends on what kind of corporation you are. He says that large, multinational corporations have many more strategies available to them to reduce tax burdens than smaller, domestic firms do.

It would seem, then, that whatever your concept of fairness is with regards to personal tax rates, the corporate tax regime in America is blatantly unfair, with some corporations not paying enough and others shouldering too heavy a burden.

Actually, there is no tax fairness. See: Which taxes are fairest? Which taxes are least fair? Talking about which taxes are fairest is like talking about which religion is best.

Oddly enough, the best way to make corporations pay their fair share may be to do away with the corporate tax altogether. No matter what Mitt Romney says, corporations aren’t people. Their profits, however, are ultimately distributed to people, whether it be shareholders or employees.

Correct.

It is true that corporate America is currently hoarding cash . . .

Wrong. It is not possible to hoard cash, unless you bury it in your backyard. Whatever you do with cash, it goes into someone else’s hands — with just one exception: The purchase of T-securities.

Economist and blogger Ed Dolan argues for shifting the burden of income tax from the corporation to its proprietors, saying at the very least that the corporate tax rate should be lowered, its loopholes eliminated, and that capital gains should be taxed as ordinary income. He also suggests that the corporate tax could be eliminated altogether, and replaced with more broad based taxes on energy or consumption.

Shifting corporate taxes to proprietors, or to any other private parties, makes no sense. It solves no problems. It would remove dollars from the economy.

So are we moving to a point where we officially eliminate taxes on corporations? For obvious reasons, this is not politically feasible. Most proposals in Congress involve lowering the nominal corporate rate but at the same time removing loopholes that allow companies to pay well below the nominal rate.

It’s not politically feasible only because the public has not been educated. A modicum of courage would be required for a politician to say truthfully, “The government doesn’t use the tax money paid by businesses, and in any event, businesses don’t really pay taxes. You do — as an employee or owner of a business. The tax money comes right out of your pocket.”

We simply should eliminate the corporate tax and allow the dollars to go into the economy rather than to disappear as tax payments. The federal government doesn’t need or use tax money, so why do we want corporations to undergo that added expense?

The latest GPO budget report says corporations will pay $329 billion in federal taxes this year, about 10% of all federal taxes collected. That’s $329 billion removed from the economy and destroyed — for no purpose whatsoever — money that if left with businesses, would grow the economy, reduce unemployment and benefit every American.

As with so many arguments about economics, the corporate tax discussion devolves to a discussion of Monetary Sovereignty. If you understand Monetary Sovereignty, you know that corporate federal taxes take money out of your pocket and slow the economy.

Business is the goose from which we all receive our golden eggs. Taxing business is like stealing the goose’s grain, then cooking the goose.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–EU: The only cure for Greek sickness is Greek suicide

Mitchell’s laws: The more budgets are cut and taxes inceased, the weaker an economy becomes. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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To solve Greece’s financial problems, the EU and Greece’s creditors demand that Greece commit financial suicide, with increased taxes and reduced spending. (This, in effect, is what our Congress, especially the right wing, prescribes for America.)

Greek Reforms a Must for Deal
The Fiscal Times, Lefteris Papadimas and George Georgiopoulos, Reuters, January 31, 2012

Greece must make “difficult” decisions in the coming days to clinch a debt swap agreement and a 130 billion euro bailout package needed to avoid an unruly default, the government said on Tuesday. Near-bankrupt Greece is struggling to convince skeptical lenders it can ram through spending cuts and labor reform to help bridge a funding shortfall driven by a worsening economic climate and its previous reform plan having veered off track.

On top of austerity measures already taken that regularly bring droves of angry protesters onto the streets, Greece’s lenders have demanded it make extra spending cuts worth 1 percent of GDP – or just above 2 billion euros ($2.6 billion) – this year, including big cuts in defense and health spending. In a sign of the challenges the government faces in pushing those through, a Greek union official said the country’s major unions were gearing up for more anti-austerity protests next month after an early grace period for Papademos’s government.

Talks (with creditors) have struggled over further cuts in labor costs in the private sector, which Athens has resisted over fears they could deepen a brutal recession and impose additional hardship on the poor, Greek officials say. The prospect of elections as early as April has further complicated the talks, with political leaders in Papademos’s national unity coalition eager to distance themselves from any cuts that herald more pain for ordinary Greeks.

Increasingly exasperated by Athens’ failure to live up to pledges on the reform front, European partners have demanded all Greek parties commit to measures agreed under the bailout irrespective of who wins the next elections. A German minister went so far as to call for Athens to surrender control of its budget policy to outside institutions if it could not implement reforms, though Berlin has toned down the debate after an indignant reaction from Greek officials.

Germany, the rest of the euro nations and Greece’s creditors are angry that Greece won’t take the economic cyanide being offered as a cure for what ails them. Sadly, Greece keeps trying to please the mob, because it doesn’t understand there is no solution but to return to Monetary Sovereignty, an asset they never should have surrendered.

Because Greece now seems balanced on the edge of the precipice, I’m taking the liberty of reprinting much of a post I wrote on November 8, 2011, titled “What would happen if Greece returned to the drachma?”

The key to a smooth transition from euros to a Monetarily Sovereign currency, the drachma, is to create sufficient demand for the drachma to prevent excessive inflation.

Let’s say the Greek government announced that heretofore:

1. The drachma would be the official currency of Greece. The Greek government would exchange one drachma for one euro, in unlimited amounts. Accounts at Greek banks that currently are stated in euros, would be stated in drachmas.

2. Payments by all Greek governments, local and national, would be made in drachmas, not in euros. This would include payments on domestic and foreign debt, payments of government salaries, and payments for goods and services. The payments would be made at the rate of one drachma for one euro.

3. Domestic business must pay salaries and domestic suppliers in drachmas

4. Taxes paid to the Greek government and to any sub-governments must be made in drachmas, not in euros.

5. Greek banks would domestically lend only drachmas, and all domestic creditors, including banks, must accept drachmas in payment for debts.

6. The Greek government would continue to issue bonds, not because it needs to borrow, but to help regulate interest rates, which in turn, help regulate demand for drachmas. The bonds would carry a high enough interest rate to create demand for drachmas.

Greece would become Monetarily Sovereign. Its “debt problem” instantly would disappear, as it would have the unlimited ability to pay any bill of any size, any time. Demand for the drachma would be established, to mitigate against inflation.

There it is. The “crisis” disappears. I expect one or more of the PIIGS will do this, sometime this year, unless the EU forgets about casting everyone into austerity hell, and begins to give (not lend) euros to its members.

There is no reason for the EU not to become the financial version of a United States of Europe. Remember, the original 13 colonies were separate entities, with different customs and leaderships, in trouble and with many similarities to today’s European nations.

It helped then to have a common enemy — financially destructive British taxes. Today the euro nations have a common enemy: Financially destructive monetary non-sovereignty. As Ben Franklin said, “We must, indeed, all hang together, or most assuredly we shall all hang separately.”

Barring individual returns to Monetary Sovereignty, the euro nations should heed Ben’s advice.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY

–John Mauldin discusses the Medicare dilemma, then doesn’t say how to solve it. Here’s the solution:

Mitchell’s laws: Reduced money growth never stimulates economic growth. To survive long term, a monetarily non-sovereign government must have a positive balance of payments. Austerity = poverty and leads to civil disorder. Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
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In the previous post, I discussed the “needless Medicaid dilemma.” Today’s post is related: It discusses the needless Medicare dilemma.

John Mauldin publishes what he terms, “an investment and economic newsletter,” titled “Thoughts from the Frontline.” It comes to me via Email, though I seldom look at it, because in my humble opinion, Mr. Mauldin is a boasting, self-promoter, who knows little of economics.

I must be wrong; many people disagree with me, Mr. Mauldin seems to support his family by publishing what I consider to be nonsense – though no worse nonsense than is published by virtually all other media writers.

I did, however, read one of his articles, because of the title: “Who Can Afford Health Care?” Most of the article mentions wealthy people who accept Medicare and Social Security, though they could afford to pay their medical bills and for retirement. He doesn’t blame them. He says, he would do the same.

The thrust of the article had to do with one of his daughters who has growths on her thyroid, and the doctor recommended removal of the gland:

She is the one child I have with no insurance. I knew it and kept hoping she would get a job that included insurance. Now that looks like a bad economic choice.

I gently asked the doctor about costs. It was not as much as I feared, but definitely not cheap. As maybe in the mid-range of tens of thousands of dollars. His fee was the minor part. (I was actually surprised at how low as it was. I make more than that for an hour-long speech, and what skills and training do I have? Just saying.)

This is an example of what I see as his boasting with false modesty. A real turn-off. Anyway:

But then he quietly said that the costs would go up a lot if it was malignant, as just the drugs to kill a thyroid cancer would be $25-30,000.
[…]
I didn’t bother to call other hospitals to negotiate a better price, or find a less expensive doctor. I simply had them schedule it. This is my daughter. It is her life, not a new car. Time seems to be of the essence. And life has blessed me that I can afford it.

But that’s the point. How many people find themselves in that situation and their father can’t step in? Or there is no father? You then go to a free clinic or an emergency room and try to get someone to help you, even though it’s not an emergency. Or you put it off until it is an emergency, or it’s too late.

Right. That is the real issue, although right-wingers tend to downplay it. They seem to think poor people are lazy bums who deserve their poverty, and if they want insurance they should pay for it.

Then Mauldin talks about:

(Our) system that we expect to take care of all the needs that, in my youth, were considered as minor. And that is expected to take care of the homeless and the mentally unstable. Drug users. And a lot of people who do not take care of themselves with a simple, healthy diet and exercise, but expect full service when their bodies rebel, crowding out the service and driving up the costs for those who are in real need.

Medicare fraud? It costs us into the hundreds of billions. Doctors who test for everything because they are afraid of being sued if they miss something, running up costs sky-high? An unbelievable lack of technology in this day and age, because of government rules? Insurance and paperwork? Costs that are the highest in the world by a wide margin, yet no better outcomes?
[…]
It seems simple. We need to have more-universal coverage. But there is a limit as to what any nation can afford.

Just when he was within an eyelash of the truth – we absolutely do need universal health insurance coverage — he veers off into ignorance about economics. What is that “limit to what any nation can afford”? He never says. He never indicates how America is not just “any” nation, but a Monetarily Sovereign nation. Seemingly, he doesn’t know the difference between America and a monetarily non-sovereign nation like Greece.

Then it gets worse:

We have promised the Boomer generation more health care than we will be able to afford, without major reforms in what we spend our taxes on. And if we raise taxes enough to even come close to what we need, the shock to our economic body will mean recessions, higher unemployment, and fewer jobs which pay less.

He’s right about the effects of taxes. But, he implies that taxes pay for federal spending. They do not. If taxes fell to $0 or rose to $100 trillion, neither event would affect by even $1 the federal government’s ability to support universal health care insurance. That is the essence of Monetary Sovereignty. Unlike you and me, the U.S. federal government creates dollars by spending.

Raising taxes as much as will be needed to pay for the currently planned programs will take decades of adjustment, and could cause a depression in the meantime.
[…]
There are no easy choices. As we will see, raising taxes has consequences in the short and medium term. The transition to where 30%, then 40%, of the economy will be taxes will be wrenching. If we can believe the polls, dialing back health care will not be popular. Raising taxes is no less popular. We want more health care, and we want someone else to pay for it. But there is no one else. It is just “we the people.”
[…]
There will be costs for whatever choices we make, even if we decide to do nothing at this time.

Because of his false belief that taxes pay for federal spending, he seems left with no solutions – just as Congress and the President are. (Perhaps he should feel proud to be in such noted company.)

He is correct about one thing however: Raising taxes and cutting benefits both are terrible ideas. Unfortunately, he and our leaders, don’t understand the third approach, the sole solution: Federal support for universal healthcare — free Medicare for everyone.

Not only would that provide a health benefit for all Americans, but the added federal spending would stimulate the economy and reduce unemployment.

Rodger Malcolm Mitchell
http://www.rodgermitchell.com


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No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia. Two key equations in economics:
Federal Deficits – Net Imports = Net Private Savings
Gross Domestic Product = Federal Spending + Private Investment and Consumption + Net exports

#MONETARY SOVEREIGNTY