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Sunday, October 30, 2011

The Effects Of Tax-Financed Spending V. Debt-Financed Spending




October 29, 2011 at 10:34:16

The Effects Of Tax-Financed Spending V. Debt-Financed Spending

By (about the author)

By Patricia L Johnson and Richard E Walrath

President Clinton was voted into office in 1992 and served for eight years. When he took over the office of President we had three tax rates, 15%, 28% and 31% and the country had been running deficits that added to the national debt for decades.

During his first term in office; the income tax rates in this country were raised by adding two additional categories, 35% and 39.6% for high earners. The tax increases turned the entire system around and by the time Clinton left office we had a $236 billion dollar surplus for FY 2000.

The first thing President Bush did when he entered office was reduce tax rates, mostly benefiting the rich and big business until we reached the current low rate of 10% and high rate of 35%. These rates are scheduled to stay in effect until the end of 2012 due to the fact our Republican controlled congress refuses to increase taxes on the wealthy.

*Republican controlled congress refuses to increase taxes on wealthy.

Whether the various tax increases/decreases were initiated under Republican and/or Democratic Presidents is not as important as the results achieved by the changes.

In the area of Jobs

Under higher taxes 23.1 million jobs were added to the economy during the eight years of the Clinton administration. Under lower taxes approximately 3.0 million jobs were added during the eight years of the George W. Bush administration. On a per year basis, Clinton created more jobs per year than 10 other presidents, from George W. Bush, through Harry S. Truman.

In the area of the National Debt in real numbers and as a percentage of GDP

The National Debt after Clinton's two terms in office, with higher taxes, stood at $5.7 trillion. When Clinton went into office the debt as a percentage of GDP was 66.1 percent. When he left office eight years later, debt as a percentage of GDP was 56.4 percent or an eight-year decrease of 9.7 percent.

The National Debt after Bush's two terms in office, with lowered taxes, stood at $10.0 trillion. When Bush went into office the debt as a percentage of GDP was 56.4 percent. When he left office eight years later, debt as a percentage of GDP was 63.5 percent or an eight-year increase of 7.1 percent.


In the area of Defense

The two wars started in 2001 and 2003 by President George W. Bush will end up costing U.S. taxpayers an estimated $1.3 trillion dollars through FY 2011, as estimated by Congressional Research Service in September of 2010.

This is the first time in the history of the United States that we have gone to war without increasing taxes to provide funding to cover the war costs. Instead of increasing taxes to fund not one, but two separate wars, we lowered base tax rates, increased exemption amounts, increased deduction amounts and added one loophole after another.

The first time taxes were raised to cover expenses due to a war was in 1917 when the War Revenue Act of 1917 raised the top tax rate from 15% to 67%. One year later, the top tax was raised again from 67% to 77%. Whenever this country had additional costs from any war and/or any type of unusual expenses, taxes were raised to cover the extraordinary expenses. In instances where tax rates were not raised to cover the additional costs of war, a surcharge was put in place. During 1944 and 1945 the top tax was raised to a record 94% to cover the costs of World War II.

Raising taxes for high income earners, isn't some sort of punishment for the wealthy due to accomplishments they have achieved in life, it's the right thing to do. It's the way this country has been run since inception. The first tax rate ever imposed on U.S. taxpayers was a low rate of 1% and a high rate of 7%. Using that same logic, our current tax rate for the wealthiest of wealthy should be at 70%, and we are currently taxing the rich at - that rate.

Cutting our budget to the bone isn't going to change the fact that the primary reason our country is teetering on the edge of collapse is greed. The next time you hear one of our politicians telling you tax cuts create jobs, encourage investment and are the answer to all our fiscal prayers, check their net worth on www.opensecrets.org

John Boehner, Eric Cantor, Mitch McConnell and Paul Ryan besides being legislators that are proponents of tax cuts all have something else in common. They are exceptionally wealthy.

Government spending, financed by a tax increase on the rich, gets "more bang for the buck" because it uses money that was not being efficiently and effectively used, while costing the government little or nothing. The cost of borrowing when the spending is deficit financed must be added to the national debt as well as the amount borrowed.

- Patricia L Johnson and Richard E Walrath

Richard E Walrath and Patricia L Johnson are co-owners of the Articles and Answers News and Information sites.

The views expressed in this article are the sole responsibility of the author
and do not necessarily reflect those of this website or its editors.

Saturday, October 29, 2011

Has the U.S. Become a Police State?

AlterNet.org

comments_image COMMENT NOW!
From secret detention centers to warrantless wiretapping, Bush and Co. give free rein to their totalitarian impulses.


Is the U.S. becoming a police state? Here are the top 10 signs that it may well be the case.

1. The Internet Clampdown

One saving grace of alternative media in this age of unfettered corporate conglomeration has been the internet. While the masses are spoon-fed predigested news on TV and in mainstream print publications, the truth-seeking individual still has access to a broad array of investigative reporting and political opinion via the world-wide web. Of course, it was only a matter of time before the government moved to patch up this crack in the sky.

Attempts to regulate and filter internet content are intensifying lately, coming both from telecommunications corporations (who are gearing up to pass legislation transferring ownership and regulation of the internet to themselves), and the Pentagon (which issued an "Information Operations Roadmap" in 2003, signed by Donald Rumsfeld, which outlines tactics such as network attacks and acknowledges, without suggesting a remedy, that US propaganda planted in other countries has easily found its way to Americans via the internet). One obvious tactic clearing the way for stifling regulation of internet content is the growing media frenzy over child pornography and "internet predators," which will surely lead to legislation that by far exceeds in its purview what is needed to fight such threats.

2. "The Long War"

This little piece of clumsy marketing died off quickly, but it gave away what many already suspected: the War on Terror will never end, nor is it meant to end. It is designed to be perpetual. As with the War on Drugs, it outlines a goal that can never be fully attained -- as long as there are pissed off people and explosives. The Long War will eternally justify what are ostensibly temporary measures: suspension of civil liberties, military expansion, domestic spying, massive deficit spending and the like. This short-lived moniker told us all, "get used to it. Things aren't going to change any time soon."

3. The USA PATRIOT Act

Did anyone really think this was going to be temporary? Yes, this disgusting power grab gives the government the right to sneak into your house, look through all your stuff and not tell you about it for weeks on a rubber stamp warrant. Yes, they can look at your medical records and library selections. Yes, they can pass along any information they find without probable cause for purposes of prosecution. No, they're not going to take it back, ever.

4. Prison Camps

This last January the Army Corps of Engineers gave Halliburton subsidiary Kellogg Brown & Root nearly $400 million to build detention centers in the United States, for the purpose of unspecified "new programs." Of course, the obvious first guess would be that these new programs might involve rounding up Muslims or political dissenters -- I mean, obviously detention facilities are there to hold somebody. I wish I had more to tell you about this, but it's, you know... secret.

5. Touchscreen Voting Machines

Despite clear, copious evidence that these nefarious contraptions are built to be tampered with, they continue to spread and dominate the voting landscape, thanks to Bush's "Help America Vote Act," the exploitation of corrupt elections officials, and the general public's enduring cluelessness.

In Utah, Emery County Elections Director Bruce Funk witnessed security testing by an outside firm on Diebold voting machines which showed them to be a security risk. But his warnings fell on deaf ears. Instead Diebold attorneys were flown to Emery County on the governor's airplane to squelch the story. Funk was fired. In Florida, Leon County Supervisor of Elections Ion Sancho discovered an alarming security flaw in their Diebold system at the end of last year. Rather than fix the flaw, Diebold refused to fulfill its contract. Both of the other two touchscreen voting machine vendors, Sequoia and ES&S, now refuse to do business with Sancho, who is required by HAVA to implement a touchscreen system and will be sued by his own state if he doesn't. Diebold is said to be pressuring for Sancho's ouster before it will resume servicing the county.

Stories like these and much worse abound, and yet TV news outlets have done less coverage of the new era of elections fraud than even 9/11 conspiracy theories. This is possibly the most important story of this century, but nobody seems to give a damn. As long as this issue is ignored, real American democracy will remain an illusion. The midterm elections will be an interesting test of the public's continuing gullibility about voting integrity, especially if the Democrats don't win substantial gains, as they almost surely will if everything is kosher.

Bush just suggested that his brother Jeb would make a good president. We really need to fix this problem soon.

6. Signing Statements

Bush has famously never vetoed a bill. This is because he prefers to simply nullify laws he doesn't like with "signing statements." Bush has issued over 700 such statements, twice as many as all previous presidents combined. A few examples of recently passed laws and their corresponding dismissals, courtesy of the Boston Globe:
--Dec. 30, 2005: US interrogators cannot torture prisoners or otherwise subject them to cruel, inhuman, and degrading treatment.

Bush's signing statement: The president, as commander in chief, can waive the torture ban if he decides that harsh interrogation techniques will assist in preventing terrorist attacks.

--Dec. 30, 2005: When requested, scientific information ''prepared by government researchers and scientists shall be transmitted [to Congress] uncensored and without delay."

Bush's signing statement: The president can tell researchers to withhold any information from Congress if he decides its disclosure could impair foreign relations, national security, or the workings of the executive branch.

--Dec. 23, 2004: Forbids US troops in Colombia from participating in any combat against rebels, except in cases of self-defense. Caps the number of US troops allowed in Colombia at 800.

Bush's signing statement: Only the president, as commander in chief, can place restrictions on the use of US armed forces, so the executive branch will construe the law ''as advisory in nature."
Essentially, this administration is bypassing the judiciary and deciding for itself whether laws are constitutional or not. Somehow, I don't see the new Supreme Court lineup having much of a problem with that, though. So no matter what laws congress passes, Bush will simply choose to ignore the ones he doesn't care for. It's much quieter than a veto, and can't be overridden by a two-thirds majority. It's also totally absurd.

7. Warrantless Wiretapping

Amazingly, the GOP sees this issue as a plus for them. How can this be? What are you, stupid? You find out the government is listening to the phone calls of US citizens, without even the weakest of judicial oversight and you think that's okay? Come on -- if you know anything about history, you know that no government can be trusted to handle something like this responsibly. One day they're listening for Osama, and the next they're listening in on Howard Dean.

Think about it: this administration hates unauthorized leaks. With no judicial oversight, why on earth wouldn't they eavesdrop on, say, Seymour Hersh, to figure out who's spilling the beans? It's a no-brainer. Speaking of which, it bears repeating: terrorists already knew we would try to spy on them. They don't care if we have a warrant or not. But you should.

8. Free Speech Zones

I know it's old news, but... come on, are they fucking serious?

9. High-ranking Whistleblowers

Army Generals. Top-level CIA officials. NSA operatives. White House cabinet members. These are the kind of people that Republicans fantasize about being, and whose judgment they usually respect. But for some reason, when these people resign in protest and criticize the Bush administration en masse, they are cast as traitorous, anti-American publicity hounds. Ridiculous. The fact is, when people who kill, spy and deceive for a living tell you that the White House has gone too far, you had damn well better pay attention. We all know most of these people are staunch Republicans. If the entire military except for the two guys the Pentagon put in front of the press wants Rumsfeld out, why on earth wouldn't you listen?

10. The CIA Shakeup

Was Porter Goss fired because he was resisting the efforts of Rumsfeld or Negroponte? No. These appointments all come from the same guys, and they wouldn't be nominated if they weren't on board all the way. Goss was probably canned so abruptly due to a scandal involving a crooked defense contractor, his hand-picked third-in-command, the Watergate hotel and some hookers.

If Bush's nominee for CIA chief, Air Force General Michael Hayden, is confirmed, that will put every spy program in Washington under military control. Hayden, who oversaw the NSA warrantless wiretapping program and is clearly down with the program. That program? To weaken and dismantle or at least neuter the CIA. Despite its best efforts to blame the CIA for "intelligence errors" leading to the Iraq war, the picture has clearly emerged -- through extensive CIA leaks -- that the White House's analysis of Saddam's destructive capacity was not shared by the Agency. This has proved to be a real pain in the ass for Bush and the gang.

Who'd have thought that career spooks would have moral qualms about deceiving the American people? And what is a president to do about it? Simple: make the critical agents leave, and fill their slots with Bush/Cheney loyalists. Then again, why not simply replace the entire organization? That is essentially what both Rumsfeld at the DoD and newly minted Director of National Intelligence John are doing -- they want to move intelligence analysis into the hands of people that they can control, so the next time they lie about an "imminent threat" nobody's going to tell. And the press is applauding the move as a "necessary reform."

Remember the good old days, when the CIA were the bad guys?

The Business of Greed

Retep's Revenge

The Business of Greed – Goldman Sachs



The Wallstreet giant Goldman Sachs has been subpoenaed by a prosecutor in New York. That’s right, finally the culprits who drove our economy into the ground while profiting billions are being asked some more questions. More questions since they lied in front of Congress all those months ago that is. In reality this doesn’t mean much of anything. They are being subpoenaed for information regarding the financial collapse. It has already been proven time and time again that Goldman Sachs and Wallstreet criminals are in fact too big to fail. Simply put, if these large investment firms go under, our economy goes with it. Wait though, hasn’t our economy already gone under? Aren’t there 40 million people on foodstamps? Aren’t 9% or roughly 14 million Americans unemployed entirely? Maybe it’s time for a change. A different way to generate and recycle capital to create a stable economy. Not even just a stable economy, but an economy that is useful to the general population and not only useful to the very rich. Senator Carl Levin released a report which you can find below that pretty much covers every aspect of the financial collapse. Why it happened, who caused it, how to prevent it from happening again.

“The free market has helped make America great, but it only functions when people deal with each other honestly and transparently. At the heart of the financial crisis were unresolved, and often undisclosed, conflicts of interest,” said Dr. Coburn. “Blame for this mess lies everywhere from federal regulators who cast a blind eye, Wall Street bankers who let greed run wild, and members of Congress who failed to provide oversight.”

In the 600+ page report, he explains how:

Goldman told investors that its interests were “aligned” with theirs when, in fact, Goldman held 100% of the short side of the CDO and had adverse interests to the investors, and described Hudson’s assets were “sourced from the Street,” when in fact, Goldman had selected and priced the assets without any third party involvement. New documents also reveal that, at one point in May 2007, Goldman Sachs unsuccessfully tried to execute a “short squeeze” in the mortgage market so that Goldman could scoop up short positions at artificially depressed prices and profit as the mortgage market declined.

Simply put, Goldman sold off their own bad investments (which they said were “sourced from the street”) to other investors knowing that they were not worth nearly as much as they sold them for, and then they bet against them and made money when their investors had to sell them off because those investors were losing so much money.

Some people claim that this collapse was in fact intentionally orchestrated and carried out for various international economic reasons. We can only speculate on those types of things at the moment, but one thing is for sure. The unceasing need for money and power was majorly at fault here. Greed. As a society we need to start exploring other options regarding the way that we conduct business. Clearly the way that we do it now will not allow to benefit the whole of humanity in the future. But hey, maybe that’s what the people who benefit from the system now have in mind. Maybe they’re scared of overpopulation and are trying to depopulate the globe through these covert means. Again, all purely speculative ideas. However that is exactly what is going to happen if we continue to let the business of greed dictate our political and economic cultures.

Download a summary of the report here

Download the full report here

Of the 1%, by the 1%, for the 1%

Vanity Fair
Inequality

Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret.


THE FAT AND THE FURIOUS
The top 1 percent may have the best houses, educations, and lifestyles, says the author, but “their fate is bound up with how the other 99 percent live.”

It’s no use pretending that what has obviously happened has not in fact happened. The upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent. Their lot in life has improved considerably. Twenty-five years ago, the corresponding figures were 12 percent and 33 percent. One response might be to celebrate the ingenuity and drive that brought good fortune to these people, and to contend that a rising tide lifts all boats. That response would be misguided. While the top 1 percent have seen their incomes rise 18 percent over the past decade, those in the middle have actually seen their incomes fall. For men with only high-school degrees, the decline has been precipitous—12 percent in the last quarter-century alone. All the growth in recent decades—and more—has gone to those at the top. In terms of income equality, America lags behind any country in the old, ossified Europe that President George W. Bush used to deride. Among our closest counterparts are Russia with its oligarchs and Iran. While many of the old centers of inequality in Latin America, such as Brazil, have been striving in recent years, rather successfully, to improve the plight of the poor and reduce gaps in income, America has allowed inequality to grow.

Economists long ago tried to justify the vast inequalities that seemed so troubling in the mid-19th century—inequalities that are but a pale shadow of what we are seeing in America today. The justification they came up with was called “marginal-productivity theory.” In a nutshell, this theory associated higher incomes with higher productivity and a greater contribution to society. It is a theory that has always been cherished by the rich. Evidence for its validity, however, remains thin. The corporate executives who helped bring on the recession of the past three years—whose contribution to our society, and to their own companies, has been massively negative—went on to receive large bonuses. In some cases, companies were so embarrassed about calling such rewards “performance bonuses” that they felt compelled to change the name to “retention bonuses” (even if the only thing being retained was bad performance). Those who have contributed great positive innovations to our society, from the pioneers of genetic understanding to the pioneers of the Information Age, have received a pittance compared with those responsible for the financial innovations that brought our global economy to the brink of ruin.

Some people look at income inequality and shrug their shoulders. So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul. There are several reasons for this.

First, growing inequality is the flip side of something else: shrinking opportunity. Whenever we diminish equality of opportunity, it means that we are not using some of our most valuable assets—our people—in the most productive way possible. Second, many of the distortions that lead to inequality—such as those associated with monopoly power and preferential tax treatment for special interests—undermine the efficiency of the economy. This new inequality goes on to create new distortions, undermining efficiency even further. To give just one example, far too many of our most talented young people, seeing the astronomical rewards, have gone into finance rather than into fields that would lead to a more productive and healthy economy.

Third, and perhaps most important, a modern economy requires “collective action”—it needs government to invest in infrastructure, education, and technology. The United States and the world have benefited greatly from government-sponsored research that led to the Internet, to advances in public health, and so on. But America has long suffered from an under-investment in infrastructure (look at the condition of our highways and bridges, our railroads and airports), in basic research, and in education at all levels. Further cutbacks in these areas lie ahead.

None of this should come as a surprise—it is simply what happens when a society’s wealth distribution becomes lopsided. The more divided a society becomes in terms of wealth, the more reluctant the wealthy become to spend money on common needs. The rich don’t need to rely on government for parks or education or medical care or personal security—they can buy all these things for themselves. In the process, they become more distant from ordinary people, losing whatever empathy they may once have had. They also worry about strong government—one that could use its powers to adjust the balance, take some of their wealth, and invest it for the common good. The top 1 percent may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, too divided to do anything but lower taxes.

Economists are not sure how to fully explain the growing inequality in America. The ordinary dynamics of supply and demand have certainly played a role: laborsaving technologies have reduced the demand for many “good” middle-class, blue-collar jobs. Globalization has created a worldwide marketplace, pitting expensive unskilled workers in America against cheap unskilled workers overseas. Social changes have also played a role—for instance, the decline of unions, which once represented a third of American workers and now represent about 12 percent.

But one big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy. Lowering tax rates on capital gains, which is how the rich receive a large portion of their income, has given the wealthiest Americans close to a free ride. Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end. Lax enforcement of anti-trust laws, especially during Republican administrations, has been a godsend to the top 1 percent. Much of today’s inequality is due to manipulation of the financial system, enabled by changes in the rules that have been bought and paid for by the financial industry itself—one of its best investments ever. The government lent money to financial institutions at close to 0 percent interest and provided generous bailouts on favorable terms when all else failed. Regulators turned a blind eye to a lack of transparency and to conflicts of interest.

When you look at the sheer volume of wealth controlled by the top 1 percent in this country, it’s tempting to see our growing inequality as a quintessentially American achievement—we started way behind the pack, but now we’re doing inequality on a world-class level. And it looks as if we’ll be building on this achievement for years to come, because what made it possible is self-reinforcing. Wealth begets power, which begets more wealth. During the savings-and-loan scandal of the 1980s—a scandal whose dimensions, by today’s standards, seem almost quaint—the banker Charles Keating was asked by a congressional committee whether the $1.5 million he had spread among a few key elected officials could actually buy influence. “I certainly hope so,” he replied. The Supreme Court, in its recent Citizens United case, has enshrined the right of corporations to buy government, by removing limitations on campaign spending. The personal and the political are today in perfect alignment. Virtually all U.S. senators, and most of the representatives in the House, are members of the top 1 percent when they arrive, are kept in office by money from the top 1 percent, and know that if they serve the top 1 percent well they will be rewarded by the top 1 percent when they leave office. By and large, the key executive-branch policymakers on trade and economic policy also come from the top 1 percent. When pharmaceutical companies receive a trillion-dollar gift—through legislation prohibiting the government, the largest buyer of drugs, from bargaining over price—it should not come as cause for wonder. It should not make jaws drop that a tax bill cannot emerge from Congress unless big tax cuts are put in place for the wealthy. Given the power of the top 1 percent, this is the way you would expect the system to work.

America’s inequality distorts our society in every conceivable way. There is, for one thing, a well-documented lifestyle effect—people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviorism is very real. Inequality massively distorts our foreign policy. The top 1 percent rarely serve in the military—the reality is that the “all-volunteer” army does not pay enough to attract their sons and daughters, and patriotism goes only so far. Plus, the wealthiest class feels no pinch from higher taxes when the nation goes to war: borrowed money will pay for all that. Foreign policy, by definition, is about the balancing of national interests and national resources. With the top 1 percent in charge, and paying no price, the notion of balance and restraint goes out the window. There is no limit to the adventures we can undertake; corporations and contractors stand only to gain. The rules of economic globalization are likewise designed to benefit the rich: they encourage competition among countries for business, which drives down taxes on corporations, weakens health and environmental protections, and undermines what used to be viewed as the “core” labor rights, which include the right to collective bargaining. Imagine what the world might look like if the rules were designed instead to encourage competition among countries for workers. Governments would compete in providing economic security, low taxes on ordinary wage earners, good education, and a clean environment—things workers care about. But the top 1 percent don’t need to care.

Or, more accurately, they think they don’t. Of all the costs imposed on our society by the top 1 percent, perhaps the greatest is this: the erosion of our sense of identity, in which fair play, equality of opportunity, and a sense of community are so important. America has long prided itself on being a fair society, where everyone has an equal chance of getting ahead, but the statistics suggest otherwise: the chances of a poor citizen, or even a middle-class citizen, making it to the top in America are smaller than in many countries of Europe. The cards are stacked against them. It is this sense of an unjust system without opportunity that has given rise to the conflagrations in the Middle East: rising food prices and growing and persistent youth unemployment simply served as kindling. With youth unemployment in America at around 20 percent (and in some locations, and among some socio-demographic groups, at twice that); with one out of six Americans desiring a full-time job not able to get one; with one out of seven Americans on food stamps (and about the same number suffering from “food insecurity”)—given all this, there is ample evidence that something has blocked the vaunted “trickling down” from the top 1 percent to everyone else. All of this is having the predictable effect of creating alienation—voter turnout among those in their 20s in the last election stood at 21 percent, comparable to the unemployment rate.

In recent weeks we have watched people taking to the streets by the millions to protest political, economic, and social conditions in the oppressive societies they inhabit. Governments have been toppled in Egypt and Tunisia. Protests have erupted in Libya, Yemen, and Bahrain. The ruling families elsewhere in the region look on nervously from their air-conditioned penthouses—will they be next? They are right to worry. These are societies where a minuscule fraction of the population—less than 1 percent—controls the lion’s share of the wealth; where wealth is a main determinant of power; where entrenched corruption of one sort or another is a way of life; and where the wealthiest often stand actively in the way of policies that would improve life for people in general.

As we gaze out at the popular fervor in the streets, one question to ask ourselves is this: When will it come to America? In important ways, our own country has become like one of these distant, troubled places.

Alexis de Tocqueville once described what he saw as a chief part of the peculiar genius of American society—something he called “self-interest properly understood.” The last two words were the key. Everyone possesses self-interest in a narrow sense: I want what’s good for me right now! Self-interest “properly understood” is different. It means appreciating that paying attention to everyone else’s self-interest—in other words, the common welfare—is in fact a precondition for one’s own ultimate well-being. Tocqueville was not suggesting that there was anything noble or idealistic about this outlook—in fact, he was suggesting the opposite. It was a mark of American pragmatism. Those canny Americans understood a basic fact: looking out for the other guy isn’t just good for the soul—it’s good for business.

The top 1 percent have the best houses, the best educations, the best doctors, and the best lifestyles, but there is one thing that money doesn’t seem to have bought: an understanding that their fate is bound up with how the other 99 percent live. Throughout history, this is something that the top 1 percent eventually do learn. Too late.

There's Two Sides to Every Story: Facts and Propaganda

The Raw Story

Financial strategist: The 1 percent ‘gave’ workers weekends, child labor laws

By Stephen C. Webster
Friday, October 28, 2011

Peter Schiff and Cornel West debate on CNN, Oct. 27, 2011.

In perhaps a preview of a debate to come, Princeton professor Cornel West faced off with financial strategist and radio host Peter Schiff on CNN Thursday afternoon, butting heads over some of the key differences between what could be described as the tea party’s ideology versus the main thrust of “Occupy Wall Street.”

Schiff, who recently went down to Zuccotti Park in New York City to speak with protesters on camera, maintained that the economic problems faced by the U.S. are not driven by unmitigated greed on Wall Street, but the interference of government in its affairs.

West pointed out that through the lobbying industry, much of Washington has been either outright bought off, or forced to cope with the culture of greed in order to stay in power, essentially giving the top 1 percent of Americans a much louder voice in government, thereby helping to facilitate deregulation and create more space for corporate corruption.

And while both seemed to agree that “too big to fail” and the bank bailouts were negative development, their opinions diverged again when it came to the Federal Reserve. Schiff, who’s mostly libertarian, pointed to the nation’s central bank as having a key role in allowing market bubbles to inflate and burst. West countered that the Fed and its members are really just the capstone of Wall Street’s greed, allowing the oligarchs to operate in an essentially unregulated environment.

Then they squared off on unions, but Schiff did not seem to recognize that unionization is itself a free market force. Instead he pointed at the unions as causing problems for the free market, and insisted that the 1 percent “gave” the people child labor laws, weekends and other liberties that workers in the U.S. hold dear. West wasn’t having it, and seemed to squirm at the line of attack, repeatedly pointing to the decades of struggle unions went through before winning those key rights from labor bosses.

Neither men saw eye to eye, clearly, but they still managed a friendly conclusion.

“I wish we had more time, because I want to debate my brother Peter on this directly,” West said.

Their host, CNN’s Anderson Cooper, seemed receptive to the idea and suggested that the network would welcome both guests back soon.

This video was broadcast by CNN on Thursday, Oct. 27, 2011.





Stephen C. Webster
Stephen C. Webster
Stephen C. Webster is the senior editor of Raw Story, and is based out of Austin, Texas. He previously worked as the associate editor of The Lone Star Iconoclast in Crawford, Texas, where he covered state politics and the peace movement’s resurgence at the start of the Iraq war. Webster has also contributed to publications such as True/Slant, Austin Monthly, The Dallas Business Journal, The Dallas Morning News, Fort Worth Weekly, The News Connection and others. Follow him on Twitter at @StephenCWebster.

Friday, October 28, 2011

How the 1% got richer, while the 99% got poorer



How the 1% got richer, while the 99% got poorer

It's official: wealth inequality accelerated over the past quarter century. The American dream was never a more hollow promise


guardian.co.uk, Wednesday 26 October 2011 18.13 EDT

A demonstrator tapes a one dollar bill over his mouth in the Occupy Miami protest

A demonstrator tapes a dollar bill over his mouth in the Occupy Miami protest. Photograph: Joe Raedle/Getty Images

The just-released Congressional Budget Office report, Trends in the Distribution of Household Income Between 1979 and 2007, supports a basic claim of the Occupy Wall Street (OWS) movement sweeping the country: that deep economic inequality is corrupting politics, culture and American society as a whole.

CBO reports are almost universally considered and relied upon as epitomes of non-partisan research. Simply put, the CBO report shows that over the last quarter century (1979 to 2007, to be exact), the top 1% of income earners enjoyed far, far bigger real income gains than the other 99%. As a result, the share of total income earned by the top 1% rose dramatically – doubling from 10% to 20% – at the expense of falling shares of income for all of the other 99% of the US population.

No wonder the OWS movement showed genius in crafting and adopting the slogan "We are the 99%." No wonder polls already show a majority of Americans expressing sympathy with the OWS movement barely five weeks after it was born – a stunning achievement relative to comparable mass movements in US history.

The CBO numbers teach some basic lessons. First, the last 30 years of ideological preaching about the superiority of private, deregulated, market-driven capitalism served to enable and mask one of the largest and fastest upward redistributions of income in modern history. The gap between the tiny rich minority and everyone else widened dramatically. The CBO report thus documents the actual class war over recent decades: the real winners and losers. The report thereby exposes the absurdity of the recent bleats from the 1% denouncing modest efforts to limit their huge gains as – horror of horrors – "class war".

Second, the CBO report shows that the US government's transfer payments (social welfare supports for the poor, social security and Medicare spending, and so on) did not offset the upward redistribution of income to the richest 1%. Nor did the federal tax structure. The 1% used its growing wealth to make government taxing and spending policies aid, rather than constrain, the class war they pursued so systematically. The CBO report concludes that the top 1% was the only portion of the total income-earning US population to experience a sharp rise in its share of the total US income taking into account all federal transfers and taxes. Indeed, the top 1%'s share of income rose further after all transfers and taxes are taken into account than before taking them into account. Federal spending and taxing policies were thus complicit in furthering this last generation's sharp turn toward greater income inequality.

Third, the CBO report documents that alongside the staggering fact and impact of the current economic crisis – the second major collapse of capitalism in the last 75 years – there was the preceding and equally staggering fact of massive upward redistribution of income. How are these two facts related? The answer is not difficult to discern.

The 99% were falling ever further behind the top 1%. The latter's exploding luxury consumption shaped tastes and standards defining the "American dream." With real wages stagnant in the US since the 1970s, the 99% tried to reach or keep the dream by sending more family members out to work more hours, and borrowing ever larger amounts, over the last 25 years. Eventually, their exhaustion and stress from increased work, coupled with unsustainable levels of accumulated household debt (for homes, college expenses, automobiles and credit cards), brought the economy to the brink of crisis.

Meanwhile, the speculative excesses of the 1% who were enjoying unprecedented income and wealth gains took the US economy over the brink. Such consequences of a falling share of the national income for 99% of the US population were key contributors to the current crisis – and are key contributors to its depth and duration. In sum, the last generation's upward redistribution of income helped to cause the current global capitalist meltdown.

To fully appreciate the social impact of the fast-deepening income inequality, it needs to be seen alongside the equally fast-deepening wealth inequality in the US. If citizens here possess any appreciable wealth, it takes the form of their homes. US housing prices have fallen through the crisis (since 2007). Over the same time, the rising use of home equity as collateral for loans has cut the portion of home values owned by occupiers, while raising the portion owed to banks. The combination of falling home prices and falling owners' equity in those homes yields another massive upward redistribution of wealth. That is because stock markets "recovered" – thanks to massive infusions of government money into financial institutions. Wealth in the form of stocks and bonds thus rose relative to wealth in the form of home ownership. Stock and bond ownership is highly concentrated in the US, much more so than home values. The result is deepening inequality of wealth distribution alongside greater income inequality.

The claims and promises of US capitalism to be an engine that builds and sustains a vast "middle class" and that constantly "delivers the goods" seem more hollow today than ever. Questions, criticisms and opposition bubble up across the country. The CBO report reflects, as well as documents, the underlying economic realities. However inadvertently, it thereby supports the rising tide of protest.

Tuesday, October 25, 2011

Immunity and Impunity in Elite America: How the Legal System Was Deep-Sixed and Occupy Wall Street Swept the Land

CommonDreams.org

As intense protests spawned by Occupy Wall Street continue to grow, it is worth asking: Why now? The answer is not obvious. After all, severe income and wealth inequality have long plagued the United States. In fact, it could reasonably be claimed that this form of inequality is part of the design of the American founding -- indeed, an integral part of it.

Income inequality has worsened over the past several years and is at its highest level since the Great Depression. This is not, however, a new trend. Income inequality has been growing at rapid rates for three decades. As journalist Tim Noah described the process:

“During the late 1980s and the late 1990s, the United States experienced two unprecedentedly long periods of sustained economic growth -- the ‘seven fat years’ and the ‘long boom.’ Yet from 1980 to 2005, more than 80% of total increase in Americans' income went to the top 1%. Economic growth was more sluggish in the aughts, but the decade saw productivity increase by about 20%. Yet virtually none of the increase translated into wage growth at middle and lower incomes, an outcome that left many economists scratching their heads.”

The 2008 financial crisis exacerbated the trend, but not radically: the top 1% of earners in America have been feeding ever more greedily at the trough for decades.

In addition, substantial wealth inequality is so embedded in American political culture that, standing alone, it would not be sufficient to trigger citizen rage of the type we are finally witnessing. The American Founders were clear that they viewed inequality in wealth, power, and prestige as not merely inevitable, but desirable and, for some, even divinely ordained. Jefferson praised “the natural aristocracy” as “the most precious gift of nature” for the “government of society.” John Adams concurred: “It already appears, that there must be in every society of men superiors and inferiors, because God has laid in the… course of nature the foundation of the distinction.”

Not only have the overwhelming majority of Americans long acquiesced to vast income and wealth disparities, but some of those most oppressed by these outcomes have cheered it loudly. Americans have been inculcated not only to accept, but to revere those who are the greatest beneficiaries of this inequality.

In the 1980s, this paradox -- whereby even those most trampled upon come to cheer those responsible for their state -- became more firmly entrenched. That’s because it found a folksy, friendly face, Ronald Reagan, adept at feeding the populace a slew of Orwellian clichés that induced them to defend the interests of the wealthiest. “A rising tide,” as President Reagan put it, “lifts all boats.” The sum of his wisdom being: it is in your interest when the rich get richer.

Implicit in this framework was the claim that inequality was justified and legitimate. The core propagandistic premise was that the rich were rich because they deserved to be. They innovated in industry, invented technologies, discovered cures, created jobs, took risks, and boldly found ways to improve our lives. In other words, they deserved to be enriched. Indeed, it was in our common interest to allow them to fly as high as possible because that would increase their motivation to produce more, bestowing on us ever greater life-improving gifts.

We should not, so the thinking went, begrudge the multimillionaire living behind his 15-foot walls for his success; we should admire him. Corporate bosses deserved not our resentment but our gratitude. It was in our own interest not to demand more in taxes from the wealthiest but less, as their enhanced wealth -- their pocket change -- would trickle down in various ways to all of us.

This is the mentality that enabled massive growth in income and wealth inequality over the past several decades without much at all in the way of citizen protest. And yet something has indeed changed. It’s not that Americans suddenly woke up one day and decided that substantial income and wealth inequality are themselves unfair or intolerable. What changed was the perception of how that wealth was gotten and so of the ensuing inequality as legitimate.

Many Americans who once accepted or even cheered such inequality now see the gains of the richest as ill-gotten, as undeserved, as cheating. Most of all, the legal system that once served as the legitimizing anchor for outcome inequality, the rule of law -- that most basic of American ideals, that a common set of rules are equally applied to all -- has now become irrevocably corrupted and is seen as such.

While the Founders accepted outcome inequality, they emphasized -- over and over -- that its legitimacy hinged on subjecting everyone to the law’s mandates on an equal basis. Jefferson wrote that the essence of America would be that “the poorest laborer stood on equal ground with the wealthiest millionaire, and generally on a more favored one whenever their rights seem to jar.” Benjamin Franklin warned that creating a privileged legal class would produce “total separation of affections, interests, political obligations, and all manner of connections” between rulers and those they ruled. Tom Paine repeatedly railed against “counterfeit nobles,” those whose superior status was grounded not in merit but in unearned legal privilege.

After all, one of their principal grievances against the British King was his power to exempt his cronies from legal obligations. Almost every Founder repeatedly warned that a failure to apply the law equally to the politically powerful and the rich would ensure a warped and unjust society. In many ways, that was their definition of tyranny.

Americans understand this implicitly. If you watch a competition among sprinters, you can accept that whoever crosses the finish line first is the superior runner. But only if all the competitors are bound by the same rules: everyone begins at the same starting line, is penalized for invading the lane of another runner, is barred from making physical contact or using performance-enhancing substances, and so on.

If some of the runners start ahead of others and have relationships with the judges that enable them to receive dispensation for violating the rules as they wish, then viewers understand that the outcome can no longer be considered legitimate. Once the process is seen as not only unfair but utterly corrupted, once it’s obvious that a common set of rules no longer binds all the competitors, the winner will be resented, not heralded.

That catches the mood of America in 2011. It may not explain the Occupy Wall Street movement, but it helps explain why it has spread like wildfire and why so many Americans seem instantly to accept and support it. As was not true in recent decades, the American relationship with wealth inequality is in a state of rapid transformation.

It is now clearly understood that, rather than apply the law equally to all, Wall Street tycoons have engaged in egregious criminality -- acts which destroyed the economic security of millions of people around the world -- without experiencing the slightest legal repercussions. Giant financial institutions were caught red-handed engaging in massive, systematic fraud to foreclose on people’s homes and the reaction of the political class, led by the Obama administration, was to shield them from meaningful consequences. Rather than submit on an equal basis to the rules, through an oligarchical, democracy-subverting control of the political process, they now control the process of writing those rules and how they are applied.

Today, it is glaringly obvious to a wide range of Americans that the wealth of the top 1% is the byproduct not of risk-taking entrepreneurship, but of corrupted control of our legal and political systems. Thanks to this control, they can write laws that have no purpose than to abolish the few limits that still constrain them, as happened during the Wall Street deregulation orgy of the 1990s. They can retroactively immunize themselves for crimes they deliberately committed for profit, as happened when the 2008 Congress shielded the nation’s telecom giants for their role in Bush’s domestic warrantless eavesdropping program.

It is equally obvious that they are using that power not to lift the boats of ordinary Americans but to sink them. In short, Americans are now well aware of what the second-highest-ranking Democrat in the Senate, Illinois’s Dick Durbin, blurted out in 2009 about the body in which he serves: the banks “frankly own the place.”

If you were to assess the state of the union in 2011, you might sum it up this way: rather than being subjected to the rule of law, the nation’s most powerful oligarchs control the law and are so exempt from it; and increasing numbers of Americans understand that and are outraged. At exactly the same time that the nation’s elites enjoy legal immunity even for egregious crimes, ordinary Americans are being subjected to the world's largest and one of its harshest penal states, under which they are unable to secure competent legal counsel and are harshly punished with lengthy prison terms for even trivial infractions.

In lieu of the rule of law -- the equal application of rules to everyone -- what we have now is a two-tiered justice system in which the powerful are immunized while the powerless are punished with increasing mercilessness. As a guarantor of outcomes, the law has, by now, been so completely perverted that it is an incomparably potent weapon for entrenching inequality further, controlling the powerless, and ensuring corrupted outcomes.

The tide that was supposed to lift all ships has, in fact, left startling numbers of Americans underwater. In the process, we lost any sense that a common set of rules applies to everyone, and so there is no longer a legitimizing anchor for the vast income and wealth inequalities that plague the nation.

That is what has changed, and a growing recognition of what it means is fueling rising citizen anger and protest. The inequality under which so many suffer is not only vast, but illegitimate, rooted as it is in lawlessness and corruption. Obscuring that fact has long been the linchpin for inducing Americans to accept vast and growing inequalities. That fact is now too glaring to obscure any longer.

Glenn Greenwald

Glenn Greenwald was previously a constitutional law and civil rights litigator in New York. He is the author of the New York Times Bestselling book "How Would a Patriot Act?," a critique of the Bush administration's use of executive power, released in May 2006. His second book, "A Tragic Legacy", examines the Bush legacy. His just-released book is titled "With Liberty and Justice for Some: How the Law Is Used to Destroy Equality and Protect the Powerful." He is the recipient of the first annual I.F. Stone Award for Independent Journalism.