Monday, April 14, 2014

A Huge Tax Break That Hurts the Rest of Us

Here's something to think about on April 15, Tax Day.

Dean Baker writes in an opinion piece:
(F)or all the sneaky and squirrelly ways that the rich use to escape their tax liability, none can beat the hedge fund managers' tax break. This is the way the rich tell the rest of us, because they are rich and powerful, the law doesn't apply to them. 
The hedge fund managers' tax break, which is also known as the carried interest tax deduction, is different from other tax breaks in that it has no economic rationale. With most other tax breaks there is at least an argument as to how it serves some socially useful purpose. That is not the case with the hedge fund managers' tax break. This is simply a case where the rich don't feel like paying taxes and are saying to the rest of us, "what are you going to do about it?"
You can read more at:
http://truth-out.org/opinion/item/23074-the-hedge-fund-managers-tax-break-because-wall-streeters-want-your-money

As for "what are you going to do about it?" Vote for candidates who will end tax breaks that are geared to make the very rich even richer.  Those tax breaks leave the rest of us paying more than our fair share  to fill in the gaps.  As Warren Buffet has said: “There’s class warfare, all right, but it’s my class, the rich class, that’s making war, and we’re winning.”  The hedge fund managers' tax break is an example of how the rich make war.

Sunday, April 6, 2014

If Money Is Speech, We Have a Right to Know Who is Talking

If you are as fed up with the number, frequency and content of political ads as I am, here is some welcome news.  We do not have to wait for Congress to act in order to find out whose money is speaking.  The FCC (Federal Communications Commission) has the power to force the disclosure of who is paying for ads.  (For example, we deserve to know who those "Americans for Prosperity" are. An organization's name is not enough - who funds the ads.)  But the FCC will only take action if we citizens make our voices heard.

According to a Government Accountability Office (GAO) study:
 “The FCC is responsible for ensuring that the public knows when and by whom it is being persuaded.” Again, this requirement applies to both commercial and political advertising. In fact, the GAO states, “For content considered political or that discusses a controversial issue, broadcasters must follow all requirements for commercial content and additional requirements, such as indentifying officials associated with the entity paying for an advertisement.” 
It is Section 317 of the Communications Act (47 U.S.C. §47) that requires on-air identification of ad sponsors. Explaining the rules it wrote to implement the law, the FCC stipulated years ago that political ads must “fully and fairly disclose the true identity of the person or persons, or corporation, committee, association or other unincorporated group, or other entity” paying for them. “Listeners are entitled to know by whom they are being persuaded,” said the FCC. I think we all get the drift of what’s being required here: specific identification of who is really bank-rolling all this stuff?
Read more about this from the source of the above quote at http://benton.org/node/148065 

Here are some ways to take action:

  • Best way: Contact the FCC chairman and each of the commissioners and urge them to issue updated rules for Section 317 that will require the true identity of those individuals and organizations who are paying for political and issues ads to be listed.  

Chairman Tom Wheeler: Tom.Wheeler@fcc.gov
Commissioner Mignon Clyburn: Mignon.Clyburn@fcc.gov
Commissioner Jessica Rosenworcel: Jessica.Rosenworcel@fcc.gov
Commissioner Ajit Pai: Ajit.Pai@fcc.gov
Commissioner Michael O’Rielly: Mike.O'Rielly@fcc.gov


Involved Voters acting together can help reduce the impact of the recent US Supreme Court's decisions regarding money and political speech.

Saturday, April 5, 2014

"Too Big to Fail" = Subsidies for Mega-banks

The Federal Reserve and the International Monetary Fund agree - mega-banks profit from the assumption that governments will bail them out.

To quote Matthew C Klein at Bloomberg Review:
No matter how you count it, U.S. taxpayers continue to transfer tens of billions of dollars each year to the big banks.
According to an article by David Dayen in The American Prospect (http://prospect.org/article/wall-streets-subsidy-safety-net), in recent reports both the Fed and the IMF..
agreed that mega-banks, in America and abroad, enjoy a lower cost of borrowing than their competitors, based on the perception that governments will bail them out if they run into trouble. This advantage effectively works as a government subsidy for the largest banks, allowing them to take additional risks and threaten another economic meltdown.
Dayen is hopeful, as am I, that chances for reforming the financial system will get better as Wall Street becomes isolated in denying that banks benefit from government largess.

Wednesday, April 2, 2014

Supreme Court Decisions and Income Inequality

Yesterday, economist Joseph Stiglitz testified before the Senate Budget Committee.  Today the US Supreme Court announced its 5 to 4 decision declaring limits on the total amount of money individuals can give to candidates, political parties and political action committees unconstitutional.

Stiglitz's prepared remarks on income inequality are worth reading and can be found here: http://www.nextnewdeal.net/stiglitz-why-inequality-matters-and-what-can-be-done-about-it.

Here is the section of his remarks that made the connection with the Supreme Court's decision for me (highlighting mine):
(W)e pay a high price for this inequality, in terms of our democracy and nature of our society. A divided society is different—it doesn't function as well. Our democracy is undermined, as economic inequality inevitably translates into political inequality. I describe in my book how the outcomes of America’s politics are increasingly better described as the result of a system not of one person one vote but of one dollar one vote. One of the prices we pay for the extremes to which inequality has grown and the nature of inequality in America—both inequality in outcomes and inequalities of opportunities—is that we have a weaker economy. Greater inequality leads to lower growth and more instability. These ideas now have become mainstream: even the IMF has embraced them. We used to think of there being a trade-off: we could achieve more equality, but only at the expense of giving up on overall economic performance. Now we realize that, especially given the extremes of inequality achieved in the US and the manner in which it is generated, greater equality and improved economic performance are complements.
More information about the Senate Budget Committee hearing can be found at:  http://www.budget.senate.gov/democratic/public/index.cfm/2014/3/meet-the-witnesses-joseph-stiglitiz-and-raj-chetty  There are links to more information about the two economists, Stiglitz and Chetty, at that site.

Tuesday, April 1, 2014

Learn How Wall Street Has Been Rigged Against You

Here's a link to a recent interview of Michael Lewis by Terry Gross about his latest book, Flash Boys.  Lewis outlines the problem and how a group of traders figured out how things were rigged and started a new exchange to even the playing field for investors.

http://www.npr.org/2014/04/01/297686724/on-a-rigged-wall-street-milliseconds-make-all-the-difference

From the interview summary:
You'd be surprised to hear what investment banks do to get that nanosecond edge, and how they often use it in ways Lewis describes as predatory. The victims range from some investment houses to individual investors. Lewis says high-frequency trades can end up hurting the returns on your retirement accounts. The FBI, Wall Street regulators and New York's attorney general are investigating high-frequency trading, and whether it has created an uneven playing field.

Monday, March 31, 2014

Are We Revisiting the 1920's?

Here's an article from Think Progress that cites some evidence that income inequality is at 1920's levels.  I don't think anyone would claim those days to be worth repeating.  Thirty years of policies favoring those with the highest incomes have taken their toll.

http://thinkprogress.org/economy/2014/03/31/3420998/wealth-inequality/

The following graph is from the article.  The whole thing is worth reading.



Friday, March 21, 2014

A Meaning of "Rent" That Many Aren't Familiar With

In his post at Triple Crisis, James K Boyce quotes one of the clearest explanations of the economists'  term "rent" that I've seen:

Rent isn’t just the monthly check that tenants write to landlords. Economists use the term “rent seeking” to mean “using political and economic power to get a larger share of the national pie, rather than to grow the national pie,” in the words of Nobel laureate Joseph Stiglitz, who maintains that such dysfunctional activity has metastasized in the United States alongside deepening inequality.

When rent inspires investment in useful things like housing, it’s productive. The economic pie grows, and the people who pay rent get something in return. When rent leads to investment in unproductive activities, like lobbying to capture wealth without creating it, it’s parasitic. Those who pay get nothing in return.
The entire article is worth reading and can be found here:  http://triplecrisis.com/rent-in-a-warming-world/