Happy 5th Birthday, Dodd-Frank!

I just read an excellent "explainer" at Vox that lays out how the Dodd-Frank legislation is addressing the issues of the 2008 financial melt down.  Here's a sample:

The Dodd-Frank bill has three pillars... :

• Fixing the broken consumer finance system by ending a system in which consumer protection was a secondary mission for many agencies and making it the primary mission of one agency, the Consumer Financial Protection Bureau.

• Fixing derivatives by having them "be traded on exchanges ... and cleared through central counterparties." Derivatives would be forced into regulated marketplaces, where the risk they posed would be limited.

• Fixing "too big to fail" by "building high quality capital" to make large banks less likely to fail and "cross-border resolutions [of] systemically important financial institutions" so a large financial firm that did fail (like, say, Lehman Brothers) could be shut down in a noncatastrophic way, just as the FDIC does regularly with small banks.

Read the entire explainer at: http://www.vox.com/2015/7/21/9004155/dodd-frank-explainer

And on his blog at Mother Jones, Kevin Drum, notes that the Fed has ... 

announced new capital requirements for large, systemically important banks that could devastate the financial system if they failed. These new requirements can be met only with common equity, the safest form of capital, and are in addition to the 7 percent common equity level already required of all banks:

Read the whole post here: http://www.motherjones.com/kevin-drum/2015/07/big-banks-get-their-new-marching-orders-fed


Update: Better Markets has a PowerPoint presentation on the 5th anniversary of Dodd-Frank available for download here: http://www.bettermarkets.com/cocpowerpoint

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.

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/

Five Years after the 2008 Financial Crisis

Just a quick post to share this link and point out that a recovery is in process despite the Republicans in Congress.  Imagine how much farther along we'd be if there had been bipartisan cooperation and no Republican obsession with defunding the Affordable Care Act.  And imagine how a government shutdown will affect the recovery for those of us not in the top 1%.

http://www.whitehouse.gov/five-years-later

Banks Need to Have More Skin in the Game

If you only contact your US Representative and Senators about one thing this year, it should be about putting in place sensible banking regulations.

Check out this New York Times opinion piece to find out why:

http://www.nytimes.com/2013/08/26/opinion/were-all-still-hostages-to-the-big-banks.html

Here's a sample:

Prudent banks would not lend to borrowers like themselves unless the risks were borne by someone else. But insured depositors, and creditors who expect to be paid by authorities if not by the bank, agree to lend to banks at attractive terms, allowing them to enjoy the upside of risks while others — you, the taxpayer — share the downside.

Implicit guarantees of government support perversely encouraged banks to borrow, take risk and become “too big to fail.” Recent scandals — JPMorgan’s $6 billion London trading loss, an HSBC money laundering scandal that resulted in a $1.9 billion settlement, and inappropriate sales of credit-card protection insurance that resulted, on Thursday, in a $2 billion settlement by British banks — suggest that the largest banks are also too big to manage, control and regulate.

NOTHING suggests that banks couldn’t do what they do if they financed, for example, 30 percent of their assets with equity (unborrowed funds) — a level considered perfectly normal, or even low, for healthy corporations. Yet this simple idea is considered radical, even heretical, in the hermetic bubble of banking.

When we deposit money in a bank, we are lending it to the bank and they invest it.  If banks were risking more of their own money (equity) and that of their shareholders' (potential dividends), they would be inclined to take fewer risks with our money.

Calling out Republican "Insurgents"

It's not just ideology on steroids, it's a plan.  A plan to sabotage the Obama administration.  It involves taking hostages - and they are us.

http://truth-out.org/opinion/item/17993-are-you-prepared-to-shoot-the-hostage

After you read this, you might just want to let Republicans in Congress know what you think.

The Problem Republicans Refuse to Address

Here's an excellent video explaining how the current situation of inequality in America developed.

Inequality exists, but it doesn't have to.  Tell Congress to fix it.  We'll have to lean heavily on Republicans because they don't think it's a problem.

Senator Carl Levin promises to tackle "secret money" before leaving at the end of his term

Although I'm sad to hear that Senator Carl Levin (D - MI) will not be running again in 2014, I'm happy to know that one of his priorities during the next two years is doing something about the "secret dollars" flowing into political campaigns.  From Senator Levin's recent email:

A third item I want to tackle is a growing blight on our political system that I believe I can help address: the use of secret money to fund political campaigns. Our tax laws are supposed to prevent secret contributions to tax exempt organizations for political purposes. My Permanent Subcommittee on Investigations needs to look into the failure of the IRS to enforce our tax laws and stem the flood of hundreds of millions of secret dollars flowing into our elections, eroding public confidence in our democracy.

In my opinion, "secret money" as well as big, but not-so-secret money is the main reason the Republicans in Congress are refusing to consider increasing revenue through closing tax loopholes that are essentially welfare for the wealthy and corporations.  As a result, average citizens have to bear cuts like these:  32 of the most damaging Sequester cuts.

Many of the biggest donors to Republicans, for example, the Koch brothers oil & gas barons,  do not like government and have an "I've got mine, to heck with the rest of you" attitude.  Their political agenda includes issues like these:

Repealing health care reform
Dismantling collective bargaining rights*
Fighting Wall Street reform
Keeping corporate money in elections

* Michigan becomes a "Right to Work" state later this month in large part because big money from the Kochs and Michigan's own Dick DeVos was used to bludgeon the Republicans with threats of funding "righter" candidates to run against them.

As Involved Voters, we need to get the message out about what happens when we let our government go up for sale to the highest bidder.  One dollar, one vote is the opposite of democracy and is counter to our Constitution.

How to Separate the Electoral College Even More from the Popular Vote

Plans are afoot in Michigan (and elsewhere) to change how the State awards its electoral votes in presidential elections by dropping the winner-take-all system for one based on the winner of each of the state's congressional districts.

According to the plan, for the 2016 and 2020 presidential elections, Michigan would award 14 of its 16 electoral votes according to the U.S. House district lines drawn by Republicans in 2011 to favor Republican candidates. (As evidenced by the fact that almost twice as many Michigan citizens voted for Democratic candidates as for Republicans, but the Republicans won more of the races.)

Governor Rick Snyder has signaled he is willing to consider this major change in how electoral votes are allocated in Presidential elections.  He told The Associated Press for a story looking at Republican efforts to drop the winner-take-all system in states that have reliably gone for the Democratic presidential nominee in recent elections that he "could go either way."

Here's an example of what the change could mean: According to an analysis by Daily Kos, in 2012, Republican Mitt Romney would have won nine of the districts and President Barack Obama the other five, so Mr. Romney would have pulled nine electoral votes to seven for Mr. Obama, who won the state by 9.5 percentage points.

So, it's clear that the proposal to allot electoral votes by congressional district would run counter to the popular vote in a significant way.

If Synder hopes to be a Governor for ALL the people of Michigan, he'll quash this blatantly Republican-serving plan to do away with the winner-take-all system.  But, unless he hears strong protests from Involved Voters, I think he's likely to go with the flow and support the plan of fellow Republicans.

Update: For a satirical look at this topic, watch Stephen Colbert here: http://www.colbertnation.com/the-colbert-report-videos/423114/january-22-2013/the-word---win--lose--or-redraw

President Obama's Inaugural Address

I listened to the President's Second Inaugural Address live and then watched and listened with colleagues at a get-together to celebrate our success in the 2012 campaign.  If there ever was a 20 minute speech worth multiple listens this is it: http://www.whitehouse.gov/blog/inaugural-address/

For an analysis of where the majority of voters stand on some of the areas the President highlighted during the address - climate change, marriage equality, voting rights, immigration and gun violence, you can take a look at this blog post: http://fivethirtyeight.blogs.nytimes.com/2013/01/22/what-does-public-support-in-obamas-second-inaugural-speech/

One thing I took away from the President's address is that "we, the people" need to get to work to make  our law-makers responsive to us, and to do what we can to ensure that everyone in America can realize the promise of "life, liberty and the pursuit of happiness."

Eternal Vigilance

Here in Michigan there is a lame duck legislative session during which Republicans will try to push their Tea Party-style agenda while the five incumbents defeated by Democrats are still around.

Despite clear messages to the contrary from the majority of Michigan voters, the Republicans will go ahead with plans for legislation:

• Undermining workers' rights
• Instituting voucher-style "reform" of public schools
• Cutting taxes even further for corporate special interests

I guess they're hoping we're all busy preparing for the holidays and won't notice what they're up to.  But, being an Involved Voter means being committed to eternal vigilance.  So, let your State Representative and Senator know you're watching and will remember what they do when the next election comes around.

Republicans at the national level haven't gotten the messages of the November 6 election yet either.  They're still resisting tax rate increases on the wealthy - protecting them at the expense of everyone else and claiming they are all "job creators."  A recent opinion piece by self-made billionaire, Warren Buffett, pokes holes in their arguments and makes the case for a fairer tax structure.  See the article here: http://www.nytimes.com/2012/11/26/opinion/buffett-a-minimum-tax-for-the-wealthy.html?ref=opinion and then tell your Representative what you want him or her to do.

Campaigning for a Balanced Solution to the "Fiscal Cliff" Problem Begins Now

OK Involved Voters, we've had our day of rest.  Time to lobby the House of Representatives with its Republican majority for a balanced solution to the "fiscal cliff" problem.

Here's what I sent to my Michigan 7th District Representative via his web site:

Dear Representative Walberg:  I am hopeful that the message you are taking away from the results of Tuesday's election is that the majority of Americans want Congress to work with the President to avoid the "fiscal cliff".  So, please, tear up your Grover Norquist "no taxes ever" pledge and see that the richest among us are finally asked to pay their fair share of taxes.  Favoring millionaires at the expense of education, R&D, rebuilding infrastructure, and public safety makes NO sense.  Please read and believe the report of the Congressional Research Service which shows that continuing tax breaks for the rich is NOT a path to creating jobs in the US.

Please add your voice to the call for fact-based compromise.  Call, email or write - today - before spin takes it toll and delusion sets in again in the Republican House.

Ideology's Collateral Damage

The Tea Party Caucus in the US House of Representatives is once again choosing to support their narrow ideology over the interests of the majority of Americans.  This time by refusing to vote on the Senate's bipartisan compromise that would have extended the payroll tax holiday for two months until a compromise can be reached on a longer extension.  For most of us, even a two month continuation of the break in deductions from our paychecks makes a difference.

Steve Benen of The Washington Monthy describes the scene in the House at this link: http://www.washingtonmonthly.com/political-animal/2011_12/literally_walking_away_from_a034239.php

So it appears that even during this season of peace on earth and good will to all, House Republicans are operating from their minds & egos with their hearts nowhere in sight.

We Need the American Jobs Act and the Buffet Rule

A recent New York Times/CBS News poll indicates that most Americans support the individual provisions contained in the American Jobs Act that President Obama has proposed:

Cut payroll taxes
Good idea 56%, bad idea 30%
State aid to prevent public-sector layoffs
Good idea 52%, bad idea 40%
Infrastructure investments
Good idea 80%, bad idea 16%
Small business tax cuts
Good idea 81%, bad idea 14%

Also, a 71% majority believes any deficit reduction plan should include a combination of both tax increases and spending cuts.

Source: Steve Benen's blog, Political Animal

The President is expected to call for a new minimum tax rate for individuals making more than $1 million a year to ensure that they pay at least the same percentage of their earnings as middle-income taxpayers. (Nicknamed the Buffet Rule after billionaire Warren Buffet who advocates that America's richest should be contributing more in taxes.)

The ball is now in Congress's court.  It will take considerable pressure from Involved Voters to get Republicans to agree to give us what we need and do it now.