Government Owes $2.7 Trillion to Social Security

Government Owes $2.7 Trillion to Social Security

by Allen W. Smith / May 18th, 2013

The government has embezzled all surplus Social Security revenue, generated by the 1983 payroll tax hike, and spent the money on wars and other government programs. None of the money was saved or invested in anything. Social Security is not broken, but at the moment, it is broke. The cost of paying full benefits in 2010 was $49 billion more than Social Security tax revenue for the year. So the government had to borrow $49 billion (probably from China) in order to pay full benefits. And the gap between the cost of benefits and Social Security tax revenue will get bigger and bigger in the years ahead.

Ironwood

The only reason the government has been able to keep the public from finding out about “the great Social Security theft,” for all these years, is because the AARP and the NCPSSM have cooperated with the Social Security Administration in their official talking points about Social Security. The AARP has the following statement posted on its website: “Social Security will be able to pay 100 percent of benefits for the next 20 years.” The NCPSSM has this statement on its website: “Social Security is projected to deliver full guaranteed benefits until at least 2033.” But these statements are not even close to being true, and the leadership of these organizations know that they are deliberately misleading their members, and the public, with these false statements. 

 Social Security doesn’t even have enough money to pay this year’s benefits without borrowing. Its tax revenue for 2010 was $49 billion less than the cost of paying full benefits in 2010. And the gap between Social Security revenue and the cost of paying full benefits will become larger and larger in the years ahead.

The government IOUs in the trust fund are not like the marketable U.S. Treasury bonds held by China and America’s other creditors. Those marketable bonds can be converted into cash at any time by selling them in the open market. The IOUs in the trust fund are like a handwritten note that a bank robber might leave behind in the empty vault, stating how much money he has stolen. The note tells the bank how much money is missing, but it won’t help the bank get the money back. Similarly, the IOUs in the trust fund are a record of how much Social Security money was taken and spent on other programs. But the IOUs are not marketable, and they cannot be converted into cash. And the interest income, that the SSA claims the government is paying, is not cash interest. It is in the form of more of the same worthless IOUs that the trust fund already holds.

The harsh fact is that Social Security does not have any cash reserves. That is why President Obama said that he couldn’t guarantee that Social Security checks would go out on time without a budget agreement, because “There might not be enough money in the coffers to cover them.” The government owes Social Security $2.7 trillion, but the government is both unable and unwilling to repay the stolen money, at least in the short run.

The good news is that the Social Security System is not broken. It works well and has done so for the past 78 years. The problem is that the United States federal government is badly broken, and no “fix” is upon the horizon. The only problem is that,

Social Security does not have enough revenue to pay full benefits, and the government has stolen the cash reserves it is supposed to have in the trust fund. If the government would enact legislation requiring the repayment of the stolen money, perhaps in installments over the next 30 years, Social Security’s short-term problems would be fixed.

Forget about that old propaganda statement the enemies of Social Security have been repeating, over and over, since Social Security was first created. It goes like this: Social Security, in its present form, is unsustainable over the long run. That is just a big lie that the enemies use as a weapon in their war against Social Security. There is nothing basically wrong with the Social Security System, and it would not even be in the news today if crooked politicians hadn’t stolen $2.7 trillion of its money.

Dr. Allen W. Smith is a Professor of Economics, Emeritus, at Eastern Illinois University. He is the author of seven books and has been researching and writing about Social Security financing for the past ten years. His latest book is The Impending Social Security Crisis: The Government’s Big Dirty Secret. Read other articles by Allen, or visit Allen's website.

This article was posted on Saturday, May 18th, 2013 at 8:00am and is filed under Social Security.

The Battle against Food Stamps: War on SNAP

The Battle against Food Stamps

War on SNAP

by Binoy Kampmark / May 18th, 2013

The United States might well be the most powerful nation on earth in terms of military muscle, and wield economic clout despite being severely humbled by the financial crisis. The country of business and capital is not bound to fall off the historical stage too soon. Its poor, however, might. Little is known about the huge swath of poverty that prevails in the country, other than an unhealthy sense that the existence of wealth presumes the existence of poverty. The United States remains transfixed by a gilded age, obsessed, as William Dean Howells suggested, by inequality. The Founding Fathers were less interested in the essence of a democratic impulse than a republican order, one of neat balance rather than levelling justice.

The politics of the belly remains a sensitive business, and political leaders have been concerned what the hungry stomach might do. What matters is wading off starvation, predicting what “nutrition levels” the poor require, and how they might manage the logistics of reaching grocery stores and food outlets. Much of this remains logistical fantasy but important. “We got a picture of a gorge, with farm surpluses on one cliff and under-nourished city folks with outstretched hands on the other,” claimed Milo Perkins, responsible for the first Food Stamp Program implemented in May 1939. Chronic unemployment existed alongside agricultural surpluses that threatened to go to waste.

Food stamp schemes have remained a feature of the U.S. republic since, a never-ending reminder of Perkins’ symbolic, and actual gorge of inequality. Their effectiveness has been praised for not being geographically restrictive, or periodical (such as school meals). The technical boffins evidently felt that a revision of the term was needed, coming up with the current term SNAP (Supplemental Nutrition Assistance Program) in 2008. Current numbers of recipients (or “participants” as policy analysts prefer) hover around 47 million.

The American Economic Recovery and Reinvestment Act of 2009 (ARRA) increased the SNAP benefit by 13.6 percent beginning April 2009. It was always something of a shock absorber, a measure to make sure the disaffected poor would be able to have something in their belly. But as human vulnerability is treated as weakness by the budget hawks of the GOP, the scheme was always going to come under criticism and eventual savaging.

As of late, the axe man in chief is Paul Ryan, who holds the reins of the House Budget Committee like a horseman of the apocalypse. Previous estimates had projected Ryan’s cuts at hitting families of three by about $20 to $25 a month, making it about $240 to $300 a year (Centre for Budget and Policy Priorities, May 1). The cuts, it seems, promise to be deeper than that – a staggering slash of $135 billion, or almost 18 percent over the next ten years. Chairman Ryan is evidently of the view that the growth of SNAP’s budget is a problem that needs to be rectified, even if it is not contributing to the nation’s long-term budgetary issues.

As senior policy analyst Dottie Rosenbaum points out, writing for the Centre on Budget and Policy Priorities (May 14), “The Congressional Budget Office projects that SNAP spending will fall to 1995 levels as a share of Gross Domestic Product by 2019.” Damn the state coffers, private charities and non-profits such as Feeding America can mop up the mess.

The way Ryan has proposed implementing the cuts will be accelerated, with an initial $125 billion slashed over a period of five years. This promises to involve a few standard tricks of the budgetary trade. One is to implement cuts by changing the criteria for people to receive them. Another might be to set the maximum SNAP benefit at 73 percent of the Thrifty Food Plan. This, as Stacy Dean notes in the Huffington Post (May 19), is the estimate arrived by the U.S. Agriculture Department in terms of assessing a family’s needs to afford a basic, adequate diet. What is promised is an unprecedented across the board reduction that will affect all recipients.

As most SNAP recipients – 80 percent or so – live below the poverty line, with 42 percent earning incomes half that of the poverty line, such cuts will be a vicious battering. In terms of numbers, we are talking about 22 million children, of which 10 million live in conditions deemed “deep poverty”. Keeping a populace fed might be the sacred cow of many states but in the United States, it is a governmental burden that requires lifting. The accountants promise to do violence to the poor – again.

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne and can be reached at: bkampmark@gmail.com. Read other articles by Binoy.

This article was posted on Saturday, May 18th, 2013 at 8:00am and is filed under Children, Food/Nutrition, Poverty.

Welcome to the Brave New World of Corporatized Medicine: Just Hope You Don't Get Sick!

Economy  

Naked Capitalism / By Yves Smith

Welcome to the Brave New World of Corporatized Medicine: Just Hope You Don't Get Sick!

 

"Business freedom" in America increasingly means the God-given right to exploit the vulnerability of the public.

Photo Credit: Andy Dean Photography/ Shutterstock.com

May 13, 2013  |  

One of the most effective scare techniques employed to preserve our grotesquely inefficient, overpriced health care system has been to invoke the red peril of “socialized medicine”. Never mind that foreigners in advanced economies fail to recognize the caricatures scaremongers supply, or that Americans who need emergency care while overseas are almost without exception impressed with the caliber of care and astonished by the low (sometimes no) cost to them. After all, Americans live in the best of all possible worlds, and consumer and business freedom are always better.
In fact, business freedom here increasingly means the God-given right to exploit the vulnerability of the public. The example slouching into view is more corporate control over the practice of medicine. And based on the previews, it will make the horrors falsely attributed to socialized medicine look pale.
Two accounts last week bring the issue home. The first came in the Health Care Renewal blog (hat tip Lysa). It’s a reminder of how the current institutional efforts to regiment doctors undermine the caliber of medical care. It has become distressingly common for HMOs and other medical enterprises to have business-school trained managers putting factory-style production parameters on doctor visits. Outside of foreclosure mills, it’s hard to find similar approaches in other professions.

The post describes how a pediatrician, Pauline, who has developed a reputation for treating chronic conditions is at loggerheads with her for-profit practice. The suits don’t like her patient mix. She gets too many tough cases, when they’d rather have basically healthy kids who are there for a cold or ear infection. Mind you, this is only partly a money issue. These visits can be “up coded” so as to get larger insurance/patient payments, but she gets a higher level of patients in less-generous state insurance programs. But some of the pushback is that her practice is perceived as disruptive, since she uses what is perceived as too much of her and staff time, separate and apart from the economics. She’s constantly breaking management’s precious guidelines. One of her turf struggles:

She had set up a visit to see a new medically complex patient and had blocked off 40 minutes, the amount of time she felt she needed to do a good job. The child had a complex genetic disorder, cerebral palsy, and heart, lung, and kidney problems. Both the cardiologist and the nephrologist had called asking her to take this patient. She agreed. After she had scheduled the visit, a manager called her and told her that she was being allowed only 15 minutes to see that patient. After some fruitless discussion with him, Pauline finally said, “Okay, I guess that means that you’ll be seeing the patient instead of me, right?” The shocked voice at the other end of the phone line replied, “What do you mean? I don’t know how to take care of patients.” “That’s exactly my point,” Pauline put in.

Pauline explained that this manager assigned to her office is not even a college graduate. Physicians cannot access the schedule electronically and have no control over scheduling. These functions are controlled by the office manager and (amazingly) by some of the medical assistants who have received some “leadership” training. These medical assistants are even allowed to evaluate the clinical competency and skills of the physicians.

And to add insult to injury, how long did this discussion take? All those minutes the doctor spent fighting with a petty bureaucrat come at the expense of patient care.

As an aside, it’s hard to stress enough that this sort of demoralizing micromanagement and unwillingness to listen to and learn from workers, is a widespread shortcoming of management American-style. And it has weirdly been airbrushed out of the media. When I was a kid in business school, US manufacturers were having their clocks cleaned by Germans and the Japanese. There was a good deal of critical self examination back then. One source of foreign ascendancy was that they had newer factories, so you couldn’t really blame American management for that one. But the second was that it was widely acknowledged that US managers were generally poor at dealing with labor. And this wasn’t “labor” in the union sense, but at having productive relationships with factory workers (note that there has been massive revisionist history since then. When I was in Bschool, none of my classmates, nearly half of whom had worked in major manufacturing companies, had bad things to say about unions.) Now you’ll often see the decline of American manufacturing attributed to unions in an “everybody knows that” tone.

Now before you come running to the defense of management against the doctor, think twice:

So let me add a further nugget about Pauline’s background. In one of her previous jobs, she was made the manager of a pediatric outpatient center within a county hospital caring for a largely indigent population. This center had been running in the red for a good while. Pauline took over and within 28 months she’d streamlined the place and had them running well in the black, while still administering a quality of care that Pauline and her colleagues could be proud of. In short, Pauline could probably tell the managers of her current practice a thing or two about how to optimize patient scheduling without compromising care or cost —if they’d listen.

As bad as that is, most patients are unware of how much their care has been fitted to a Procrustean bed. The deliberate degradation in the name of profits is going to become more obvious, at least if the health care industry has its way.

I strongly encourage you to read this post from Whole Health Chicago (hat tip Lambert) in full. It shows how the future of American medicine is to fire the ones who are unhealthy. No, I am not making that up. The writer, Dr. David Edelberg, describes a recent presentation by a large insurance company. They’ve apparently been hosting similar sessions with physicians in the Chicago area in large medical practices. Here are the key bits (emphasis original):

The speaker at these evenings is always a physician employed by the insurance company. His/her title is medical director (I begin to think there must be dozens and dozens on their payroll) and he always begins by reassuring the audience that he was in clinical practice himself so he understands something of what physicians–especially primary care physicians–are facing. I view this physician more as a “Judas steer,” the animal that leads an innocent but doomed herd of cattle through the slaughterhouse corridors to the killing floor.
• The health industry hopes that individual medical practices and small medical groups will ultimately disappear from the landscape by being financially absorbed into larger groups owned by hospital systems.

And why do the powers that be regard this as desirable? Although the article does not stress this point, doctors have an established revenue stream. So the acquirers buy them out and impose discipline on those artistic, freewheeling doctors. The “practice style,” which used to mean the independence that doctors once enjoyed, is now an Orwellianism and includes hewing to corporate guidelines as to how to operate.
And here’s what to expect:

Physicians are expected to spend a limited amount of time with each patient, and are encouraged to see as many patients as possible during a workday. The insurance companies, sometimes with the token cooperation of a few physician-employees, create vast books of patient-care guidelines to which they believe their physicians must be “accountable” (remember this word, it will crop up again). These guidelines might mean documented Pap smear and mammogram frequency, weight management and exercise, colonoscopies for patients over 50, and getting that evil LDL (bad cholesterol) below 99 by any means possible…

If the chart audit system discovers that a physician, for whatever reason, is an “outlier”–that she’s either not following the guidelines exactly or not getting the results anticipated for her patient population—she’ll be financially penalized. A quick example of what might occur: if your LDL is 115, you may be on the receiving end of a statin sales pitch from your doctor, not because bringing it down to 99 will improve your longevity, but because your refusal to do so will impact her financial bottom line.

Now of course, you might say, “Well, in fairness, medicine is too much of a cottage industry. Look at how many doctors give unnecessary annual EKGs to patients in low risk groups. How else are we going to get to evidence-based medicine?” The problem is that what we as patients will get isn’t driven by best outcomes, it’s driven by profits. Edelberg explains:

…the subtext of “standardized” always includes the unspoken “spend less money on the patient.” Thus, a doctor might be financially penalized for recommending nutritional counseling to lower cholesterol (“counseling is expensive”) instead of writing a generic statin drug (cheap). Or recommending psychotherapy (“therapy is very expensive”) instead of generic Prozac (cheaper than M&M’s). Or referring patients for massage, acupuncture, or even chiropractic (“expensive, expensive, expensive!”) instead of pushing an over-the-counter antiinflammatory (free to the insurance company, as it’s OTC).

And I shudder to think what becomes of patients who don’t hew to standard templates: the person who had a high body mass but not due to dangerous abdominal fat (which is what creates the health risk) who is pushed to take the latest, greatest diet drug. What about people who don’t buy into the religion of getting your LDL down to below 100 (one reader argued that while it may lower your risk of heart disease, it increases your all-factor death risk by reducing your ability to fight MRSA)? Will they face penalties if they fail to comply?
No, you just will find it nearly impossible to get a doctor to take you:

• Let me close with a best-as-I-recall quote from an insurance company medical director. “We can no longer afford to pay for health care under the PPO model. Our plan is to phase out all fee-for-service care during the next few years. We’ll pay you doctors a finite amount of money to take care of a defined population. We tell doctors, ‘Don’t spend much money and you can keep the difference. Period. Don’t follow guidelines, and you’ll be leaving behind some serious money on the table and we’ll just take it back.’”

In case you think I overstated the implications, Edelberg recapped the discussion that ensued:

One physician piped up…. “But what about the non-compliant patients who won’t take the meds, don’t eat well, don’t have mammograms, continue to smoke? And what about super-health-conscious patients who want their vitamin levels measured and want referrals to acupuncturists?”

Another physician answered wearily for the medical director (who didn’t disagree): “You’ve got to fire patients like that. Get the non-compliant and the super-demanding out of your system. They’ll drag your numbers down. Hit your personal bottom line.”
Hey you, patient. Yes, I mean YOU. Pink slip time! Canned! Take your medical records and don’t let the frosted glass door hit you in the…on the way out.

In other words, if you are high maintenance because you don’t do what your doctor says (and remember, “non-compliant” includes people who don’t follow orders because they think the cookie-cutter approach isn’t right for them) or want higher service or per the example of the pediatrician Patricia’s 40 minute case, have a complicated set of ailments, you’ll be shunted. The brave new world of corporate medicine will eject you.

The rich are unlikely even to know that this change is occurring. There will be a tier of doctors on the high end to cater to patients who want more personalized, cutting edge treatment and might need some prodding. And they can always go abroad if they can’t find what they need here. But for ordinary schlubs, expect to find the doctor’s office become more hostile as the brave new world of corporatized medicine becomes entrenched.

Yves Smith is the founder of Naked Capitalism and the author of 'ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism.'

Why Extra IRS Scrutiny? Because Atlas Shrugged Off Taxes.

Published on Monday, May 13, 2013 by Common Dreams

Atlas Shrugged Off Taxes

by Paul Buchheit

 

 

Ayn Rand's novel "Atlas Shrugged" fantasizes a world in which anti-government citizens reject taxes and regulations, and "stop the motor" by withdrawing themselves from the system of production. In a perverse twist on the writer's theme the prediction is coming true. But instead of productive people rejecting taxes, rejected taxes are shutting down productive people.





Perhaps Ayn Rand never anticipated the impact of unregulated greed on a productive middle class. Perhaps she never understood the fairness of tax money for public research and infrastructure and security, all of which have contributed to the success of big business. She must have known about the inequality of the pre-Depression years. But she couldn't have foreseen the concurrent rise in technology and globalization that allowed inequality to surge again, more quickly, in a manner that threatens to put the greediest offenders out of our reach.

Ayn Rand's philosophy suggests that average working people are 'takers.' In reality, those in the best position to make money take all they can get, with no scruples about their working class victims, because taking, in the minds of the rich, serves as a model for success. The strategy involves tax avoidance, in numerous forms.

Corporations Stopped Paying

In the past twenty years, corporate profits have quadrupled while the corporate tax percent has dropped by half. The payroll tax, paid by workers, has doubled.

In effect, corporations have decided to let middle-class workers pay for national investments that have largely benefited businesses over the years. The greater part of basic research, especially for technology and health care, has been conducted with government money. Even today 60% of university research is government-supported. Corporations use highways and shipping lanes and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business.

In effect, corporations have decided to let middle-class workers pay for national investments that have largely benefited businesses over the years.

Yet as corporate profits surge and taxes plummet, our infrastructure is deteriorating. The American Society of Civil Engineers estimates that $3.63 trillion is needed over the next seven years to make the necessary repairs.

Turning Taxes Into Thin Air

Corporations have used numerous and creative means to avoid their tax responsibilities. They have about a year's worth of profits stashed untaxed overseas. According to the Wall Street Journal, about 60% of their cash is offshore. Yet these corporate 'persons' enjoy a foreign earned income exclusion that real U.S. persons don't get.

Corporate tax haven ploys are legendary, with almost 19,000 companies claiming home office space in one building in the low-tax Cayman Islands. But they don't want to give up their U.S. benefits. Tech companies in 19 tax haven jurisdictions received $18.7 billion in 2011 federal contracts. A lot of smaller companies are legally exempt from taxes. As of 2008, according to IRS data, fully 69% of U.S. corporations were organized as nontaxable businesses.

There's much more. Companies call their CEO bonuses "performance pay" to get a lower rate. Private equity firms call fees "capital gains" to get a lower rate. Fast food companies call their lunch menus "intellectual property" to get a lower rate.

Prisons and casinos have stooped to the level of calling themselves "real estate investment trusts" (REITs) to gain tax exemptions. Stooping lower yet, Disney and others have added cows and sheep to their greenspace to get a farmland exemption.

The Richest Individuals Stopped Paying

The IRS estimated that 17 percent of taxes owed were not paid in 2006, leaving an underpayment of $450 billion. The revenue loss from tax havens approaches $450 billion. Subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes are estimated at over $1 trillion. Expenditures overwhelmingly benefit the richest taxpayers.

In keeping with Ayn Rand's assurance that "Money is the barometer of a society's virtue," the super-rich are relentless in their quest to make more money by eliminating taxes. Instead of calling their income 'income,' they call it "carried interest" or "performance-based earnings" or "deferred pay." And when they cash in their stock options, they might look up last year's lowest price, write that in as a purchase date, cash in the concocted profits, and take advantage of the lower capital gains tax rate.

So Who Has To Pay?

Middle-class families. The $2 trillion in tax losses from underpayments, expenditures, and tax havens costs every middle-class family about $20,000 in community benefits, including health care and education and food and housing.

Schoolkids, too. A study of 265 large companies by Citizens for Tax Justice (CTJ) determined that about $14 billion per year in state income taxes was unpaid over three years. That's approximately equal to the loss of 2012-13 education funding due to budget cuts.

And the lowest-income taxpayers make up the difference, based on new data that shows that the Earned Income Tax Credit is the single biggest compliance problem cited by the IRS. The average sentence for cheating with secret offshore financial accounts, according to the Wall Street Journal, is about half as long as in some other types of tax cases.

Atlas Can't Be Found Among the Rich

Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs in 2005, even though they made up about 60 percent of the richest .1% of Americans. A recent study found that less than 1 percent of all entrepreneurs came from very rich or very poor backgrounds. Job creators come from the middle class.

So if the super-rich are not holding the world on their shoulders, what do they do with their money? According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate.

Ayn Rand's hero John Galt said, "We are on strike against those who believe that one man must exist for the sake of another." In his world, Atlas has it easy, with only himself to think about.

Paul Buchheit is a college teacher, an active member of US Uncut Chicago, founder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

Economy  

AlterNet / By Paul Buchheit

Ayn Rand USA: In 20 Years Corporate Profits Are Up 4X and Their Taxes Have Fallen by 50% -- Meanwhile the Workers' Payroll Tax Has Doubled

Corporations have decided to let middle-class workers pay for national investments that have largely benefited businesses over the years.

 

 

 

 

 

May 12, 2013  |  

 

 

Ayn Rand's novel "Atlas Shrugged" fantasizes a world in which anti-government citizens reject taxes and regulations, and "stop the motor" by withdrawing themselves from the system of production. In a perverse twist on the writer's theme the prediction is coming true. But instead of productive people rejecting taxes, rejected taxes are shutting down productive people.

Perhaps Ayn Rand never anticipated the impact of unregulated greed on a productive middle class. Perhaps she never understood the fairness of tax money for public research and infrastructure and security, all of which have contributed to the success of big business. She must have known about the inequality of the pre-Depression years. But she couldn't have foreseen the concurrent rise in technology and globalization that allowed inequality to surge again, more quickly, in a manner that threatens to put the greediest offenders out of our reach.

Ayn Rand's philosophy suggests that average working people are 'takers.' In reality, those in the best position to make money take all they can get, with no scruples about their working class victims, because taking, in the minds of the rich, serves as a model for success. The strategy involves tax avoidance, in numerous forms.

Corporations Stopped Paying

In the past twenty years, corporate profits have quadrupled while the corporate tax percent has dropped by half. The payroll tax, paid by workers, has doubled.

In effect, corporations have decided to let middle-class workers pay for national investments that have largely benefited businesses over the years. The greater part of basic research, especially for technology and health care, has been conducted with government money. Even today 60% of university research is government-supported. Corporations use highways and shipping lanes and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business.

Yet as corporate profits surge and taxes plummet, our infrastructure is deteriorating. The American Society of Civil Engineers estimates that $3.63 trillion is needed over the next seven years to make the necessary repairs.

Turning Taxes Into Thin Air

Corporations have used numerous and creative means to avoid their tax responsibilities. They have about a year's worth of profits stashed untaxed overseas. According to the Wall Street Journal, about 60% of their cash is offshore. Yet these corporate 'persons' enjoy a foreign earned income exclusion that real U.S. persons don't get.

Corporate tax haven ploys are legendary, with almost 19,000 companies claiming home office space in one building in the low-tax Cayman Islands. But they don't want to give up their U.S. benefits. Tech companies in 19 tax haven jurisdictions received $18.7 billion in 2011 federal contracts. A lot of smaller companies are legally exempt from taxes. As of 2008, according to IRS data, fully 69% of U.S. corporations were organized as nontaxablebusinesses.

There's much more. Companies call their CEO bonuses "performance pay" to get a lower rate. Private equity firms call fees "capital gains" to get a lower rate. Fast food companies call their lunch menus "intellectual property" to get a lower rate.

Prisons and casinos have stooped to the level of calling themselves "real estate investment trusts" (REITs) to gain tax exemptions. Stooping lower yet, Disney and others have added cows and sheep to their greenspace to get a farmland exemption.

The Richest Individuals Stopped Paying

The IRS estimated that 17 percent of taxes owed were not paid in 2006, leaving an underpayment of $450 billion. The revenue loss from tax havens approaches $450 billion. Subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes are estimated at over $1 trillion. Expenditures overwhelmingly benefit the richest taxpayers.

In keeping with Ayn Rand's assurance that "Money is the barometer of a society's virtue," the super-rich are relentless in their quest to make more money by eliminating taxes. Instead of calling their income 'income,' they call it "carried interest" or "performance-based earnings" or "deferred pay." And when they cash in their stock options, they might look up last year's lowest price, write that in as a purchase date, cash in the concocted profits, and take advantage of the lower capital gains tax rate.

So Who Has To Pay?

Middle-class families. The $2 trillion in tax losses from underpayments, expenditures, and tax havens costs every middle-class family about $20,000 in community benefits, including health care and education and food and housing.

Schoolkids, too. A study of 265 large companies by Citizens for Tax Justice (CTJ) determined that about $14 billion per year in state income taxes was unpaid over three years. That's approximately equal to the loss of 2012-13 education funding due to budget cuts.

And the lowest-income taxpayers make up the difference, based on new data that shows that the Earned Income Tax Credit is the single biggest compliance problem cited by the IRS. The average sentence for cheating with secret offshore financial accounts, according to the Wall Street Journal, is about half as long as in some other types of tax cases.

Atlas Can't Be Found Among the Rich

Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs in 2005, even though they made up about 60 percent of the richest .1% of Americans. A recent study found that less than 1 percent of all entrepreneurs came from very rich or very poor backgrounds. Job creators come from the middle class.

So if the super-rich are not holding the world on their shoulders, what do they do with their money? According to both Marketwatch and economist Edward Wolff, over 90 percent of the assets owned by millionaires are held in a combination of low-risk investments (bonds and cash), personal business accounts, the stock market, and real estate.

Ayn Rand's hero John Galt said, "We are on strike against those who believe that one man must exist for the sake of another." In his world, Atlas has it easy, with only himself to think about.

Paul Buchheit teaches economic inequality at DePaul University. He is the founder and developer of the Web sites UsAgainstGreed.org, PayUpNow.org and RappingHistory.org, and the editor and main author of "American Wars: Illusions and Realities" (Clarity Press). He can be reached at paul@UsAgainstGreed.org.

Critical Life Skills Most Entrepreneurs Lack

HARVARD BUSINESS REVIEW

HBR Blog Network

The Skills Most Entrepreneurs Lack

by Bill J. Bonnstetter  |  10:00 AM April 1, 2013

Entrepreneurs are a unique group of people, but they behave in patterns. In fact, as I recently wrote here on HBR, my firm's research shows that most serial entrepreneurs display persuasion, leadership, personal accountability, goal orientation, and interpersonal skills. But in that same study, we also discovered a set of skills they do not possess.

To rehash our methods, we assessed subjects identified as serial entrepreneurs on what personal skills they possessed. Then they were compared to a control group of 17,000. As before, this group was assessed on their mastery of 23 practical, job-related skills. We measured whether skills were well developed, developed, moderately developed, or needed developing.

After analyzing the data, we found four distinct skills lacking in most serial entrepreneurs, three skills statistically significantly and one other also noticeably lacking. The statistical significance is derived by comparing the lowest ranking skills to the entrepreneurs' top skills, as evaluated in the first study.


Empathy is one of the qualities serial entrepreneurs lack most. Entrepreneurs build things and solve problems for people, but according to this study they do this in hopes of a return on investment. Entrepreneurs may have high empathy on an intellectual level, in that they want to produce a product or service that will help someone. This is often, however, also tied to the entrepreneur receiving a return for their time and effort, which people with high empathy do not generally expect.

Entrepreneurial-minded people are not proficient in managing themselves and their time. In many jobs, managing personal day-to-day tasks might take away from accomplishing larger company goals, which are critical to entrepreneurs. Since entrepreneurs typically have many projects underway at one time, they simply do not have time to micromanage each. Often they need assistance managing everyday tasks and should hire or delegate them to someone who has mastered this skill.

This leads to another skill entrepreneurs lack: planning and organizing. Similar to self-management, if entrepreneurs spent time planning and organizing every task or meeting, they would never get anything else done. Once again, hiring someone to keep their calendar, organize meetings and events, keep the office de-cluttered, and help keep them on schedule can put them at an advantage.

Entrepreneurs also do not excel above the control group when it comes to analytical problem solving. They have high utilitarian motivators (potential future gains, monetary returns, new products or ideas), so their focus is often on making a quick decision. They have a sense of urgency in decision-making, and by nature they do not have time to collect and analyze the data. They see numbers as getting in their way, and they should - everyone who has told them an idea wouldn't pan out has used data and logic to illustrate that point. For example, Martin Luther King Jr. stated, "I have a dream." He did not say, "I have a plan and strategy." Entrepreneurs have the vision, but need to employ people to create an executable strategy and carry it through.

Entrepreneurial-minded individuals possess a distinct set of skills that lead to great leadership and ideas. Perhaps the skills they have not mastered are equally important. With an understanding of those weaknesses, they can compensate for them by surrounding themselves with people who excel in these areas. As a leader, realizing other's strengths and dovetailing them into your own weaknesses is key to developing a team that will carry out your grand vision and achieve goals.

More blog posts by Bill J. Bonnstetter

 

More on: Entrepreneurship, Managing yourself

Bill J. Bonnstetter

Bill J. Bonnstetter is chairman of Target Training International, Ltd.

Is Cutthroat Capitalism Pushing a Growing Number of Baby Boomers to Suicide?

Hard Times USA  

AlterNet / By Les Leopold

Is Cutthroat Capitalism Pushing a Growing Number of Baby Boomers to Suicide?

 

American baby boomers are taking their own lives like never before.

 

 

 

Photo Credit: Shutterstock.com/Straight 8 Photography

 

 

May 10, 2013  |  

 

 

There's no question about it--American baby boomers are taking their own lives like never before. Suicide rates in the United States jumped dramatically for 35- to 64-year-olds between 1999 and 2010, according to a new report from the Centers for Disease Control and Prevention (CDC). These self-inflicted deaths increased from 13.7 per 100,000 to 17.6. As a result, in 2010 more people died from suicide (38,364) than from car accidents (33,687).

The increase in suicide is particularly acute for older folks: Those aged 50-54 years saw their rates increase from 20.6 per 100,000 to 30.7, a jump of 49.4%. For those aged 55-59 years the rates increased by 47.8%.  The rates for women, although much lower than for men, also climbed: "Among women," the report states, "suicide rates increased with age, and the largest percentage increase in suicide rate was observed among women aged 60–64 years (59.7%, from 4.4 to 7.0)."

Is Wall Street's version of capitalism driving up our suicide rates?

We really don't know why humans take their own lives. But we can get a sense of what events correlate with increasing and decreasing suicide rates. Ileana Arias, CDC deputy director, provides some suggestions:

“It is the baby boomer group where we see the highest rates of suicide. There may be something about that group, and how they think about life issues and their life choices that may make a difference....The increase does coincide with a decrease in financial standing for a lot of families over the same time period."

Dr. Arias is referring to research that shows a correlation between the rise of suicide rates and economic hard times. For example a 2001 study by sociologist Augustine J. Kposowa found:

"After three years of followup, unemployed men were a little over twice as likely to commit suicide as their employed counterparts. Among men, the lower the socio-economic status, the higher the suicide risk. Among women, in each year of followup, the unemployed had a much higher suicide risk than the employed. After nine years of followup, unemployed women were over three times more likely to kill themselves than their employed counterparts."

More Older Workers Join the Ranks of the Long-Term Unemployed

In winner-take-all capitalism, if your job disappears during a massive sustained job crunch, you will have a hard time finding another one. In fact, the older you are, the more likely you are to enter the ranks of the long-term unemployed (out of work a year or longer).    

The 2008 Wall Street financial meltdown killed more than 8 million jobs in matter of months. Reckless bankers, not the unemployed workers, caused the destruction of jobs:

• By the end of 2011 more than 31 percent of the total unemployed had been jobless for a year or longer, according to a Pew Trust study.
• It also found that "unemployed older workers were the most likely to have been jobless for a year or more."  
• At that time, "more than 42 percent of unemployed workers older than 55 had been out of work for at least a year, a higher percentage than any other age category."

But wait, doesn't egalitarian Scandinavia have even higher suicide rates?

For decades, Scandinavia was known for its egalitarian economies and its high suicide rates. In fact, for much of the post-WWII era, countries with more egalitarian societies seemed to have suffered higher rates of suicide. This led to a widely accepted narrative that described countries like Denmark, Norway and Sweden as having fundamentally flawed socialistic economies that kill the desire to take risks and live fully. Allegedly, their high taxes and cradle-to-grave social benefits harm the most fundamental instincts to compete, to create and to thrive. While some claimed the higher suicide rates came from the lack of sunshine during the long northern winters, the dominant explanation always centered on the evils of Scandinavian egalitarianism.

But blaming egalitarianism no longer works since we now have a new leader in suicides -- ruthless, American-style capitalism. The most recent comparative suicide rate statistics for all age groups and genders show that we have higher suicides rates than Scandinavia: (per 100,000 people) :

• Denmark 11.3
• Norway 11.9
• Sweden 11.9
• U.S. 12.0

If we singly out the male suicide rates, normally three times higher than the female rates, the U.S. clearly leads the pack:

• Denmark 15.3
• Norway 15.7
• Sweden 16.1
• U.S. 20.0

Of course, die-hard anti-socialists still could argue that Scandinavia has become more capitalistic and unequal, while the U.S. is growing more socialistic thereby lowering the Scandinavian suicide rates while increasing ours. However, it's painfully obvious that American inequality is growing more extreme by the day. If the anti-egalitarian mythology were true, the U.S. should have the lowest suicide rates in the world. So maybe, it's time to consider alternative explanations.

A counter-narrative to the egalitarian myth of suicide:

Wall Street bankers and hedge fund managers gambled the economy into the ground. Through mergers, acquisitions and leveraged buyouts they're still creating and recreating a form of capitalism that throws millions of older workers out on the street. To enrich themselves, financial elites helped to destroy defined pension plans as well as unions, which provide enormous protections for older workers. Wall Street also helps companies load up on debt that can bankrupt the pension funds that still exist. And now our financial barons are leading the charge for cuts in Social Security and Medicare to pay for the damage Wall Street has done to the economy. In short, the Wall Street version of capitalism makes life enormously insecure for the many, while enriching the few.  

If you're a baby boomer who has spent a lifetime working hard, you could be hurting if Wall Street destroys your job and wipes out your savings. Because you are old, you could wind up lost among the long-term unemployed without much of a chance of ever finding a job again. At the very least, you are under a great deal of economic stress, the likes of which very few Scandinavians would ever experience.  

Do suicide rates go down when Americans fight back?

Perhaps some scholars should test the following hypothesis: Do suicide rates in America go down when empowering movements arise? Did the rate of suicide among African Americans decline during the civil rights movement? Did suicide rates among women and the LBGT communities also decline as these movements emerged? Was there even a dip when Occupy Wall Street took center stage?

In short, what would happen to our overall feeling of self-worth if a major movement emerged to take on the Wall Street plutocrats and their Washington enablers? What if unemployed workers were part of a mass movement for jobs and justice as they were in the 1930s? Wouldn't that make us feel more hopeful?  

Well, a national movement to take back our country from Wall Street sure would bring a smile to this boomer.  

Les Leopold is the executive director of the Labor Institute in New York, and author of How to Make a Million Dollars an Hour: Why Hedge Funds Get Away with Siphoning Off America's Wealth (J. Wiley and Sons, 2013).