What Real Economic Stimulus Looks Like

Via Brad DeLong and Jamie Galbraith, here’s what real economic stimulus looked like:

If the banking system is crippled, then to be effective the public sector must do much, much more. How much more? By how much can spending be raised in a real depression? And does this remedy work? [E]conomist Marshall Auerback….

“[Roosevelt’s] government hired about 60 per cent of the unemployed in public works and conservation projects that planted a billion trees, saved the whooping crane, modernized rural America, and built such diverse projects as the Cathedral of Learning in Pittsburgh, the Montana state capitol, much of the Chicago lakefront, New York’s Lincoln Tunnel and Triborough Bridge complex, the Tennessee Valley Authority and the aircraft carriers Enterprise and Yorktown. It also built or renovated 2,500 hospitals, 45,000 schools, 13,000 parks and playgrounds, 7,800 bridges, 700,000 miles of roads, and a thousand airfields. And it employed 50,000 teachers, rebuilt the country’s entire rural school system, and hired 3,000 writers, musicians, sculptors and painters, including Willem de Kooning and Jackson Pollock.”

In other words, Roosevelt employed Americans on a vast scale, bringing the unemployment rates down to levels that were tolerable, even before the war—from 25 percent in 1933 to below 10 percent in 1936, if you count those employed by the government as employed, which they surely were.

If you’re in a hurry, check out DeLong… He will give you the shorthand. If not, and want a more in-depth view, be sure to read Galbraith’s column. He was one of a few progressive economists that called the game early (March 2009), and in hindsight was pretty much spot on in his analysis. Galbraith’s piece is both a good primer on the history of how Obama’s economic team reacted to the crisis, and a prescient analysis of Geitner’s banking plan, identifying weaknesses in the plan then now playing out. The article is invaluable for understanding why we are struggling still with high unemployment and little movement to implement policy to put people to work. The Obstructionistas in Congress and in the States have by choice given us a socially devastating slow recovery, instead implementing policy that cuts both revenue and spending, prolonging the crisis for millions rather than mitigating its effects on Main St and the middle class. Intent on shrinking government to the size it can be drowned in a bathtub, as Grover Norquist famously quipped, the Norquist tax pledge has held hostage the politicians who signed his pledge to cut taxes to draconian measures shouldered by the unemployed, the elderly, children, the poor and the sick.

Focusing on the short-term, the Obstructionistas have turned common sense and precedent on their heads, giving the American middle class stones when what they have asked for is bread. When government can borrow at negative real interest rates to finance infrastructure projects and help relieve cash strapped State and municipal budgets, there is no better time to take advantage of cheap credit to help create jobs, spur demand, and get people back to work. The prevailing “wisdom” runs counter to such common sense, and the suffering continues. By choice… The slow recovery is because of politics, little else… And from the politics comes this:

For the first time since the 1930s, millions of American households are financially ruined. Families that two years ago enjoyed wealth in stocks and in their homes now have neither. Their 401(k)s have fallen by half, their mortgages are a burden, and their homes are an albatross. For many the best strategy is to mail the keys to the bank. This practically assures that excess supply and collapsed prices in housing will continue for years. Apart from cash—protected by deposit insurance and now desperately being conserved—the American middle class finds today that its major source of wealth is the implicit value of Social Security and Medicare—illiquid and intangible but real and inalienable in a way that home and equity values are not. And so it will remain, as long as future benefits are not cut.

Who, then, claiming to identify with the American middle class, would in their right mind propose cuts to Social Security and Medicare? As it turns out, the President’s Simpson-Bowles “cat food” Commission, the Tea Party caucus in Congress, a presidential candidate, and scads of candidates for lesser office… you get the idea… just about everyone except those progressives that have an appreciation for history and what has gone before.

More on recession dynamics here. And be sure to read this recent post, A Manifesto for Economic Sense.

A Manifesto for Economic Sense, and Why We Need One…

Why are policy makers so immune to doing the right thing when it comes to creating and following policy that will ease the current unnecessary crisis of unemployment and reign in the forces that have taken the world into the financial and economic crisis we still face? Here are two views offered to help understand the problem. First a look at what the problem really is and what policy makers can and should do immediately, and then a look at the hubris and criminality policy makers, particularly those on the right, refuse to acknowledge and address that is exacerbating the problem.

From www.manifestoforeconomicsense.org:

A Manifesto for Economic Sense

More than four years after the financial crisis began, the world’s major advanced economies remain deeply depressed, in a scene all too reminiscent of the 1930s. And the reason is simple: we are relying on the same ideas that governed policy in the 1930s. These ideas, long since disproved, involve profound errors both about the causes of the crisis, its nature, and the appropriate response.

These errors have taken deep root in public consciousness and provide the public support for the excessive austerity of current fiscal policies in many countries. So the time is ripe for a Manifesto in which mainstream economists offer the public a more evidence-based analysis of our problems.

  • The causes. Many policy makers insist that the crisis was caused by irresponsible public borrowing. With very few exceptions – other than Greece – this is false. Instead, the conditions for crisis were created by excessive private sector borrowing and lending, including by over-leveraged banks. The collapse of this bubble led to massive falls in output and thus in tax revenue. So the large government deficits we see today are a consequence of the crisis, not its cause.
  • The nature of the crisis. When real estate bubbles on both sides of the Atlantic burst, many parts of the private sector slashed spending in an attempt to pay down past debts. This was a rational response on the part of individuals, but – just like the similar response of debtors in the 1930s – it has proved collectively self-defeating, because one person’s spending is another person’s income. The result of the spending collapse has been an economic depression that has worsened the public debt.
  • The appropriate response. At a time when the private sector is engaged in a collective effort to spend less, public policy should act as a stabilizing force, attempting to sustain spending. At the very least we should not be making things worse by big cuts in government spending or big increases in tax rates on ordinary people. Unfortunately, that’s exactly what many governments are now doing.
  • The big mistake. After responding well in the first, acute phase of the economic crisis, conventional policy wisdom took a wrong turn – focusing on government deficits, which are mainly the result of a crisis-induced plunge in revenue, and arguing that the public sector should attempt to reduce its debts in tandem with the private sector. As a result, instead of playing a stabilizing role, fiscal policy has ended up reinforcing the dampening effects of private-sector spending cuts.

In the face of a less severe shock, monetary policy could take up the slack. But with interest rates close to zero, monetary policy – while it should do all it can – cannot do the whole job. There must of course be a medium-term plan for reducing the government deficit. But if this is too front-loaded it can easily be self-defeating by aborting the recovery. A key priority now is to reduce unemployment, before it becomes endemic, making recovery and future deficit reduction even more difficult.

How do those who support present policies answer the argument we have just made? They use two quite different arguments in support of their case.

The confidence argument. Their first argument is that government deficits will raise interest rates and thus prevent recovery. By contrast, they argue, austerity will increase confidence and thus encourage recovery.

But there is no evidence at all in favour of this argument. First, despite exceptionally high deficits, interest rates today are unprecedentedly low in all major countries where there is a normally functioning central bank. This is true even in Japan where the government debt now exceeds 200% of annual GDP; and past downgrades by the rating agencies here have had no effect on Japanese interest rates. Interest rates are only high in some Euro countries, because the ECB is not allowed to act as lender of last resort to the government. Elsewhere the central bank can always, if needed, fund the deficit, leaving the bond market unaffected.

Moreover past experience includes no relevant case where budget cuts have actually generated increased economic activity. The IMF has studied 173 cases of budget cuts in individual countries and found that the consistent result is economic contraction. In the handful of cases in which fiscal consolidation was followed by growth, the main channels were a currency depreciation against a strong world market, not a current possibility. The lesson of the IMF’s study is clear – budget cuts retard recovery. And that is what is happening now – the countries with the biggest budget cuts have experienced the biggest falls in output.

For the truth is, as we can now see, that budget cuts do not inspire business confidence. Companies will only invest when they can foresee enough customers with enough income to spend. Austerity discourages investment.

So there is massive evidence against the confidence argument; all the alleged evidence in favor of the doctrine has evaporated on closer examination.

The structural argument. A second argument against expanding demand is that output is in fact constrained on the supply side – by structural imbalances. If this theory were right, however, at least some parts of our economies ought to be at full stretch, and so should some occupations. But in most countries that is just not the case. Every major sector of our economies is struggling, and every occupation has higher unemployment than usual. So the problem must be a general lack of spending and demand.

In the 1930s the same structural argument was used against proactive spending policies in the U.S. But as spending rose between 1940 and 1942, output rose by 20%. So the problem in the 1930s, as now, was a shortage of demand not of supply.

As a result of their mistaken ideas, many Western policy-makers are inflicting massive suffering on their peoples. But the ideas they espouse about how to handle recessions were rejected by nearly all economists after the disasters of the 1930s, and for the following forty years or so the West enjoyed an unparalleled period of economic stability and low unemployment. It is tragic that in recent years the old ideas have again taken root. But we can no longer accept a situation where mistaken fears of higher interest rates weigh more highly with policy-makers than the horrors of mass unemployment.

Better policies will differ between countries and need detailed debate. But they must be based on a correct analysis of the problem. We therefore urge all economists and others who agree with the broad thrust of this Manifesto to register their agreement at http://www.manifestoforeconomicsense.org, and to publically argue the case for a sounder approach. The whole world suffers when men and women are silent about what they know is wrong.

And why we need economic common sense…

Matt Taibbi contributing editor of The Rolling Stone magazine, and Yves Smith, author of Econned, and creator of the blog http://www.nakedcapitalism.com, explain against the backdrop of JP Morgan’s recent loss on (now estimated at nearly $9 billion) of bets hedging the bank’s investment positions, how Wall Street with Mafia-like fixing of bids, continuing government largess in corporate welfare propping up operations, and expertise at gaming the system with depositor funds epitomizes the greed that has played it’s role in destroying municipal, state, and national budgets, causing so much suffering through the resulting austerity measures, bailouts for the wealthiest, reductions in safety net protections to the elderly, children, the disabled, and the poor. Republican senators fawned over JP Morgan CEO Jamie Dimon in hearings earlier in June, ignoring JP Morgan’s record of criminal abuse evident in the fines paid for illegally foreclosing mortgages of military service men and women serving overseas, or for bid-rigging for municipal bonds and CDO fraud for which they paid fines of $228mil and $153mil, respectively, last year. Being too big to fail (privatizing profits, while socializing the risks inherent in gaining those profits) is apparently the neo-liberal corporatocracy the current crop of “trickle-down” economic faith-healers believe is the “American way” to freedom and liberty…

GOP Rep. Paul Ryan’s Budget in Need of Absolution

From Solidarity Notes (Albany, NY) June, 2012

Georgetown Priests and Faculty Take Issue With GOP Rep. Ryan’s Budget Plan

Republican Rep. Paul Ryan, a Roman Catholic, claims that his budget is in keeping with the traditions of his faith, as he cuts social programs, attempts to cut or eliminate parts of Social Security, Medicaid, and Medicare—but there are those who disagree with him on all of his attempts to make life easier for the rich and for Corporate America.

The following is a letter that met Ryan when he recently went to Georgetown University in Washington to explain how his budget and policy views are beneficial to the people:

Dear Rep. Paul Ryan:

Welcome to Georgetown University. We appreciate your willingness to talk about how Catholic social teaching can help inform effective policy in dealing with the urgent challenges facing our country. As members of an academic community at a Catholic university, we see your visit on April 26 for the Whittington Lecture as an opportunity to discuss Catholic social teaching and its role in public policy.

However, we would be remiss in our duty to you and our students if we did not challenge your continuing misuse of Catholic teaching to defend a budget plan that decimates food programs for struggling families, radically weakens protections for the elderly and sick, and gives more tax breaks to the wealthiest few. As the U.S. Conference of Catholic Bishops has wisely note in several letters to Congress – “a just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons.” Catholic bishops recently wrote that “the House-passed budget resolution fails to meet these moral criteria.”

In short, your budget appears to reflect the values of your favorite philosopher, Ayn Rand, rather than the Gospel of Jesus Christ. Her call to selfishness and her antagonism toward religion are antithetical to the Gospel values of compassion and love.

Cuts to anti-hunger programs have devastating consequences. Last year, one in six Americans lived below the official poverty level and over 46 million Americans—almost half of them children—used food stamps for basic nutrition. We also know how cuts in Pell Grants will make it difficult for low-income students to pursue their educations at colleges across the nation, including Georgetown. At a time when charities are strained to the breaking point and local governments have a hard time paying for essential services, the federal government must not walk away from the most vulnerable.

While you often appeal to Catholic teaching on “subsidiarity” as a rationale for gutting government programs, you are profoundly misreading Church teaching. Subsidiarity is not a free pass to dismantle government programs and abandon the poor to their own devices. This often-misused Catholic principle cuts both ways. It calls for solutions to be enacted as close to the level of local communities as possible. But it also demands that higher levels of government provide help—“subsidium”—when communities and local governments face problems beyond their means to address such as economic crises, high unemployment, endemic poverty and hunger.

According to Pope Benedict XVI: “Subsidiarity must remain closely linked to the principle of solidary and vice versa.”

Along with this letter, we have included a copy of the Vatican’s Compendium of the Social Doctrine of the Church, commissioned by John Paul II, to help deepen your understanding of Catholic social teaching.

Respectfully,

(Signed by 90 priests and faculty members of Georgetown University, a Jesuit institution in Washington, D.C., at the end of April….)
I guess that means all those Congress members that voted for Ryan’s budget ought to be seeking forgiveness as well.

Paul Krugman’s Playboy Interview

Paul Krugman speaks with Playboy about the financial crisis and why the ongoing slow recovery is unnecessary, the result of politics, not economics. Read the entire article, but here are a few of the “money” quotes:

PLAYBOY: Some of [the] debate is irrelevant to the average person. All they know is they don’t have a job or they don’t have a job that pays enough.

KRUGMAN: The point is there’s a tremendous amount of suffering. A lot of America is much worse off than it was four years ago. I think the main reason you should be angry about it is that it’s gratuitous. This doesn’t have to be happening. We actually have the tools to make most of this go away. If we could throw aside the political prejudices and bad ideas that are crippling us, in 18 months we could be back to something that feels like a much better economy.

On the utility of union organizing:

PLAYBOY: Is it accurate to simplify our modern economy as a choice between working for a high-wage General Motors model versus the low-wage Walmart strategy?

KRUGMAN: I think the choice we made, really without understanding that we were making the choice, was to make Walmart jobs low paying. They didn’t have to be. In a different legal environment, a megacorporation with more than a million employees might well have been a company with a union that resulted in decent wages. We think of Walmart jobs as being low wage with 50 percent turnover every year because that’s the way we’ve allowed it to develop. But it didn’t have to be that way. If the rise of big-box stores had not taken place under the Reaganite rules of the game, with employers free to do whatever they wanted to block union organizing, we might have had a different result. Part of the hysterical opposition to the auto-industry bailout was the notion that we were bailing out well-paid workers with union jobs.

On the policy failures that have prolonged unemployment at demoralizing low levels that hurt the country, its labor force, based on backward political thinking:

PLAYBOY: So people in America today are suffering when they don’t have to be because of policy makers who won’t do the right thing?

KRUGMAN: That’s right. I’ve gotten some grief for my remark that if it were announced that we faced a threat from space aliens and needed to build up to defend ourselves, we’d have full employment in a year and a half. But that’s true. Why couldn’t we do that to repair our sewer systems and put an extra tunnel under the Hudson instead of to fight imaginary space aliens? Everybody in the world except us is doing a lot of investment in infrastructure and education. This is the country of the Erie Canal and the Interstate Highway System. The Erie Canal was a huge public infrastructure project financed with no private or public-private partnership. Can you imagine doing that in 21st century America? We really have slid backward for the past 200 years from the kinds of things we used to understand needed to be done now and then. And all of that because we are shackled to the wrong ideas.

(The interview that appears in the link above in a recent edition of Playboy, so if a little suggestive skin is offensive to you, reader beware.)

Jefferson vs Lincoln: On Inequality and the Lack of Social Mobility

America’s failed promise of equal opportunity

By Alex Gourevitch and Aziz Rana

Americans are increasingly aware that the ideal of equal opportunity is a false promise, but neither party really seems to get it.

Republicans barely admit the problem exists, or if they do, they think tax cuts are the answer. All facts point in the opposite direction. Despite various tax cuts over the past 30 years, not only have income and wealth inequality dramatically increased, but the ability of individuals to rise out of their own class has declined. Social stagnation is increasingly the norm, with poverty rates the highest in 15 years, real wage gains worse even than during the decade of the Great Depression, average earnings barely above what they were 50 years ago, and more than 80 percent of the income growth of the past 25 years going to the top 1 percent. In fact, since 1983, the bottom 40 percent of households have seen real declines in their income and the same goes for the bottom 60 percent when it comes to wealth. We know what the economic status quo does: It redistributes upwards.

Continue reading here:

The Disingenuous Mr. Romney Comes to Portland

I confess. I was a bad boy at the Romney event last Friday evening at Portland Yacht Services. I openly challenged some of Romney’s disingenuous assertions and after a time the police, at the request of the owner, asked that I leave which I voluntarily did. I have a video clip of my peaceful exchange with the officer. When I inquired who requested my leaving I was given to understand by the police sergeant who escorted me to the exit that it was Phineas Sprague, local business man and host of the event.

I’d like to ask why a campaign event such as this would be publicized as “open to the public” but in fact not be a public event when it comes to the subject of speech. I understood open to the public to mean that anyone from the public was welcomed, regardless of political persuasion. That is what I have always thought “public event” meant. And as a public gathering I naturally thought my speech, particularly my political speech, could arguably be protected. Private ownership of the property on which an advertised “public event” was taking place was used in this case to trump public speech. Had I repeatedly shouted, “fire,” it would have been entirely appropriate for the nearest fifty people to clamor onto my back and shut me up. However, stifling me for challenging Mr. Romney’s thin assertions hardly rises to the level of “fire.”

A fellow that was not even allowed entry into the event and instead stood outside the door listening said nothing whatsoever. His appearance disqualified him. He had the appearance of a fisherman, wore cargo shorts to his mid-calf, had longish hair and a beard, and wore a beret with a non-descript insignia on the front. He described himself as a conservative, actually as an acquaintance of Mr. Sprague. As soon as he entered the event police were signaled by someone inside to remove him. Open to the public, indeed.

I didn’t shout “fire,” at least not in the literal sense. By addressing the platitudes and thin veneer of Mr. Romney’s rhetoric I was calling out the shallowness of the spectacle. A 1%-er put up a private stage for this other 1%-er to shower the crowd with feel good bromides — “When I am President I will create jobs…” “When I am President I will fix the economy…” – saying nothing, really, about how that would be accomplished in any meaningful way. After all it has been over three years since Mr. Romney’s party have openly admitted to on principle opposing every Obama policy and yet the economy improves, albeit slowly but still. It is meaningful that he loves his country, as he offered (I’m sure he does, he has done extremely well here, and in the Caymans…), but the platitude that by bestowing more favors on the 1% he will create jobs and balance the budget is as light as gossamer.

I would have Mr. Romney comment on the fact that one of the last times strong measures were taken to balance the federal budget, by Andrew Jackson, a 75-month depression occurred. These hollow notions are what the 1%-ers — him on the stage and him staging the event — use to whip up support for policies that benefit the 1% more than anyone else. There is a reason why the US Census Bureau citing 2010 census data states one in three Americans is poor or near poor. It is no coincidence major corporations are reporting record profits quarter after quarter, or that a very small minority holds the vast wealth of the country. The wealth of this nation has been systematically redistributed upward through preferential tax treatment and special services that only the wealthiest have access to, among other mechanisms. It’s no coincidence the national conversation shifted to this inequality when Occupiers occupied Wall St, the engine feeding this inequality. The truth of this resonates far and wide.

The Maine Revenue Service recently affirmed that if Maine’s wealthiest citizens were taxed at the same level that most other Mainers are, the 65,000 Maine people threatened to be thrown out of MaineCare, Maine’s Medicaid program, would not fear for their health, their housing, nor their place in society. The politics of the corporation and the 1% does not make for a government of, by, and for the people.

With my challenges I am taking back my little piece of ground and occupying it. There is a fire in our republic and I will cry fire.

I have a great deal of respect for the Portland Police, or I should really say, police in general. They do an incredibly difficult job policing our cities and towns. They deal with situations most of us would balk at, some of which put their very lives at risk or in danger of severe harm. They are required to make careful sometimes life changing split-second decisions that are expected to be blameless. Not just anyone possesses the courage to face such a job so organic to the proper functioning of our society. I have a great deal of respect for those that aspire to do so. (On the other hand, I have little respect for the militarization of local police under a dubious banner of national security. This is a slippery slope we have slid way too far down already.)

The police, as far as politeness and respect for my person were concerned, carried out Mr. Sprague’s bidding in an entirely appropriate manner. The space was his and I admit he had the prerogative. My speech obviously upset Sprague and by instructing the police to ask me to leave, he obviously did not think my speech was protected speech. I think really, though, we never even approached that question. My challenges to Mr. Romney were not part of the script for the evening and that may have been what upset him.

I respectfully followed the officer’s polite request that I leave Mr. Sprague’s property. The officer is part of the 99% and I respect that his unions are under attack by people like Mitt Romney, and those that provide stages for Mr. Romney to deliver the 1%’s song and dance routine. Think of me as someone throwing a metaphorical rotten tomato at a lousy performer.

For more on the disingenuous Mr. Romney, Brad Delong offers:

Mitt Romney Rises to Amazing Heights of Incoherence in Michigan

Governor LePage Is Not Helping

The drag that state and local budget problems are contributing to the economic recovery looks dismal, as in depression economics dismal. The contribution to real GDP from states and local economies is in negative territory with the pain of cutbacks being shouldered by real people in the form of cuts to education and lay-offs of police, fire fighters, teachers, draconian cuts to the elderly, the disabled, the poor. This policy of focusing on cuts rather than raising revenues to balance state and local budgets is being done under the baseless notion that austerity and tax cuts to business will grow the economy, but the numbers, over and over and over, tell a story diametrically opposite to that “business-friendly” narrative.

The irony here is that there is nothing “business friendly” about it. Small businesses are suffering through the lack of consumer demand these policies contribute to. Laid-off workers don’t buy goods and services. Small businesses feel the brunt of this stifling of demand, laying off their workers, foregoing new investment to grow their business, purchasing less inventory. Those that benefit from the tax cuts already enacted add little to growth as the wealthy to whom these cuts go either save their windfall or invest for their own benefit. Again, the numbers show state and local contributions to real GDP are negative – putting the brakes on the economic recovery. These mythological “job-creators” are not creating jobs, and to consider this the only way to grow Maine’s economy is wrongheaded.

st_locgdp

                                                          Source: Bureau of Economic Analysis

As a vocal proponent of this austerity in the face of budget shortfalls Governor LePage is more the problem than the answer. Selling our future short for the temporary gain to the wealthiest in Maine is not in the interest of the long term prosperity of our State. Repeating the meme that it is so does nothing to make it so. But the Governor seems completely innoculated against that logic. As noted previously, even the Maine Revenue Services acknowledges that fairer taxation that brings the wealthiest Mainers into line with other taxpayers would cover the DHHS shortfall.

And the infection of this idea is not just a disease confined to the Blaine House. Senator Snowe has been a vocal proponent of a federal balanced budget amendment, the very thing that has hog-tied state governments creating this scenario of cutting benefits that serve the interest of all people, the 100%, although primarily the middle and lower income families while cutting the taxes on the wealthiest, not because it is good policy but because it is what they demand and have the resources to get. This Congress is, after all, the best that money can buy…

Paul Krugman puts this problem of destructive austerity from state and local budget cuts while failing to raise sufficient revenues more starkly:

It’s hard to overstate just how wrong all this is. We have a situation in which resources are sitting idle looking for uses — massive unemployment of workers, especially construction workers, capital so bereft of good investment opportunities that it’s available to the federal government at negative real interest rates. Never mind multipliers and all that (although they exist too); this is a time when government investment should be pushed very hard. Instead, it’s being slashed.

What an utter disaster.

Another Manufactured Budget Crisis; And the Fix…

Maine Governor Paul LePage’s proposal to drop 65,000 needy Mainers from MaineCare, Maine’s Medicaid program, to close a supposed budget deficit has even seasoned legislators looking hard at which programs to trim and which belts can be tightened, even more than they have already been over the past decade. After granting roughly 600 of Maine’s wealthiest a tax cut that totals about $122 million over the next few years, it is hard to understand what exactly the Governor has in mind. It certainly isn’t raising revenues from the most likely source of revenue that even Congress is contemplating at the Federal level… taxes on the wealthiest, who currently enjoy the lowest tax rates they have enjoyed in decades (see below). But here in Maine, even the Governor’s own staff at the Maine Revenue Services* agrees, making the tax code in Maine fairer would alleviate the budget “crisis.” As Representative Seth Berry puts it: “simply requiring the wealthiest 1% to pay the average effective state and local rate would balance the budget.” He goes on to say that if federal tax offsets were included the revenue generated would cover the budget shortfall and protect those MaineCare recipients the Governor is threatening to close schools over if the budget funding their care is not slashed.

Read Rep. Berry’s entire post here on his blog, BerryBlog.

*”According to MRS, Maine’s wealthiest 1% now pays an average effective state and local tax rate that is 14% lower than the statewide average. Accounting for federal offsets, the gap grows to 22%.  The wealthiest 1% includes only 6700 tax filers, each making an annual average of $750,786 AGI.
Restoring tax fairness does not mean Maine’s wealthiest 1% can’t use existing deductions, credits, and other loopholes to bring down their tax liability.  They can do so, just so long as they don’t go below what the rest of us pay.”

As If Citizens United Isn’t Enough: The Republican National Committee Wants the Whole Enchilada

Corporate contributions directly to the campaign coffers of candidates running for office is the intent of the brief filed with the Fourth Circuit federal appeals court on January 10, 2012. This filing claims that the ban enacted in 1908 is unconstitutional by virtue of recently upheld Free Speech rights relying on the Citizens United decision. Part of this strategy is to make the face of the corporate donor not that of Exxon/Mobile, Halliburton, or GE, but mom-and-pop-sized small business:

“Most corporations are not large entities waiting to flood the political system with contributions to curry influence. Most corporations are small businesses. As the Court noted in Citizens United, “more than 75% of corporations whose income is taxed under federal law have less than $1 million in receipts per year,” while “96% of the 3 million businesses that belong to the U.S. Chamber of Commerce have fewer than 100 employees.” While the concept of corporate contributions evokes images of organizations like Exxon or Halliburton, with large numbers of shareholders and large corporate treasuries, the reality is that most corporations in the United States are small businesses more akin to a neighborhood store…”

Lawyers representing the Republican National Committee contend that the ban on direct corporate contributions to candidates now is based on the argument that such a ban only prevents an end-run around individual donors, folks like you or me, and that is simply not a good enough reason to maintain the ban.

The efforts to disenfranchise millions of voters through the ALEC-inspired legislation introduced in 34 states in 2011 seems all part and parcel with this effort to make the individual contributions of non-corporate donors less important than those of corporate donors. It is a bald-faced endorsement of the hypothesis that corporations are persons, and as such, are more important than the individual, natural persons that eat, drink, breathe, enable corporations to exist through the agency of laws natural persons enact, to the detriment of those natural persons.

An Idea Whose Time Is Not Now, and Likely Should Never Be

Unlike other ideas which do come in their appointed time and then spread like wildfire – the Occupy Movement comes to mind – this idea proposed by House Republicans to require a high school diploma or GED, or enrollment in courses to obtain one or the other, or alternatively, adult education courses, to be eligible to receive unemployment benefits seems another example of the short-sightedness endemic in House Republicans these days. Yet another attack on middle class workers that have long been in the work force, played by the rules, and find themselves out of work through no fault of their own. Hard to see what justifies this type of tinkering-around-the-edges policy proposal, but with the current majority in the House this certainly isn’t the first piece of legislation, nor will likely be the last, that leaves one scratching their head (if not cursing profusely). Read more here from Robert Greenstein at the Center on Budget and Policy Priorities.

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