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31 января 2013, 22:15

John Boehner Says Defense Spending Is the Problem with the Economy. Awesome. - [UPDATED]

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Politico’s Glenn Thrush reports this morning that Republicans believe the GDP report showing the economy is shrinking gives them political “leverage” over Obama, since bad economic news is terrible for the President. But Thrush notes that this shouldn’t be the case, since the contraction was the result of spending cuts, which in theory should undermine the GOP argument that we should cut spending as deeply as possible: The fact that the shock this time came from a plunge in defense/federal spending should, in theory, bolster Obama’s contention that budget-cutting and trimming entitlement spending is the worst thing for the economy right now. It should, in a more Spock-like world, be an argument against the sequester cuts and big changes to Medicare and Social Security. Forget about that. All nuance is lost in the howling gale of an economic “contraction” — and the advantage, at least in the current news cycle, shifts to a down-in-mouth GOP. It’s not likely to be a major shift in the dynamics of looming fiscal fights, but Republicans, in the words of one senior Hill staffer I spoke to this morning, “will take any leverage we can get.” Thrush very well be right that people won’t take the right message from the contraction. But in a rational world, what should be glaringly obvious is that the belief that this gives the party “leverage” highlights how absurdly incoherent the GOP message about the economy has become. (Read Steve Benen for all the other problems here.) The economic contraction was driven largely by a steep drop in defense spending. As Ezra Klein details, this shows that “government is hurting the recovery” by “spending and investing too little.” As Ezra notes, “government spending and investment have, at all levels, been contractionary since 2010.” Yet Republicans are responding to the news of the economic contraction by suggesting invalidates their view that we need to further cut spending to help the economy. Hence their claimed “leverage” in the coming battle over the sequestered cuts, half of which is to defense spending. Republicans are actively using the sequester to force Dems to agree to avert it by offsetting it entirely with other deep cuts to social programs, and no new revenues from the wealthy. In response to the contraction, John Boehner tweeted out this hashtag: #spendingistheproblem In other words, the contraction confirms that we need more spending cuts. -- We all agree that spending cuts hurt the economy. Right? Right., Greg Saregent, Washington Post, today Okay, look.  If Obama doesn’t now, finally, explain Keynesian economics to the general public, using actual facts--such as the reason for the economic contraction--and point out that Boehner & Co. either are ignorant of the facts or are willing to deliberately misinform the public about such a critically important matter, then he should resign and let Joe Biden explain it as president.  I mean it. Obama did a stellar job a week before his inaugural address explaining the debt ceiling law and what “raising the debt ceiling” means--and that ti does not mean what the Republicans’ campaign of disinformation was saying it means.  He should do the same now, on this.  Presumably, he’ll enlist as his chief speechwriter for his State of the Union address a speechwriter who understands how to easily explain Keynesian economics and the current “contraction” statistics.  But, just as with his inaugural address, he should not wait until that speech to expose the Republican game plan for what it is: a concerted campaign to misinform the public about critical facts, knowing that the public will not know the accurate specifics, and aware that--as Thrush says, outright--the mainstream press will not sufficiently (or at all) apprise the public of those fact.  In other words: that Romneyism--the flagrant lying, con artistry, as the chief modus operandi--is now at the very heart of what the Republican Party is.The public did catch on to Romney by the fall.  And, thanks largely to Obama’s statements at his press conference on Jan. 14 abou the debt ceiling, they caught on to that, as well.  And if Obama makes an effort to explain to the public basic Keynesian economics, and cites actual facts, actual statistics, about the fourth-quarter contraction, they’ll catch on this time, too.  And, maybe, finally, to the fact that the Republicans have decided upon a strategy of fraud in order to disassemble the social safety network, including Social Security and Medicare.  In his State of the Union address, he’ll have an opportunity to finally educate the public about the actual causes of the Greek meltdown, of the actual effect of Tory austerity in Britain, of the actual cause of economic near-collapse in Spain, in Italy, in Ireland, in Iceland--and of the actual effect of the safety net in Germany, in Holland, and elsewhere.  And maybe he’ll even take that opportunity.  But the State of the Union address is two weeks away.  And in responding to Boehner’s tweet at #spendingistheproblem, there’s no time like the present.  Or at least like the next few days.  Just as with the fiscal cliff and the debt ceiling, the Republicans’ political leverage, whether real or fanciful, will turn out to be ephemeral.  Unless Obama remains mute. ---- UPDATE: Wow.  Either Greg Sargent is channeling me, or I’m channeling him.  He posted this one minute after I posted my post on AB. But as I say in my post, Obama shouldn’t wait the two weeks until the State of the Union address to begin making the point.  Just as he didn’t wait a week until his inaugural address to explain to the public what “raising the debt ceiling” actually means--thus pulling the rug out from under Repubs’ disinformation campaign telling the public that it means increasing spending appropriations.  Sargent titles his post “Make strong case that spending cuts hurt economy, Mr. President!”  (Amen.)  He points out: that Unfortunately, at times, Obama has diluted this message. During his 2010 State of the Union speech, for instance, the President proposed a temporary spending freeze, and said: “Families across the country are tightening their belts and making tough decisions. The federal government should do the same.”   But I think it’s a mischaracterization to describe that as a dilution of the Keynesian message.  It’s actually an outright misrepresentation of economic fact; that’s why that statement has been so detrimental.  And, if necessary, Obama should expressly acknowledge that this was misleading about economic fact, and then explain exactly why.

31 января 2013, 20:50

Paul Ryan Says Taxes Should Be Raised to Pre-Bush-Tax-Cut Levels. But the Republicans Will Opt Instead For the “Sequester.” Unless, Of Course, the Koch Brothers Intervene.

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There were three big political stories that came out of David Gregory’s fabulously interesting interview of Paul Ryan aired last Sunday on Meet the Press.  One was that Ryan said: Well, we can debate the efficacy of Keynesian economics or not. And I don’t obviously believe– I think the debt is pretty clear it doesn’t work. Another was that he said that if Bill Clinton were president, we would have solved the budget-deficit problem, a statement that he presumably bases on the fact that when Bill Clinton was president, he solved the budget-deficit problem.The third headline-grabber from that interview was that the Republicans will allow the “sequester” to take effect, presumably because they think it’s pretty clear that Keynesian economics doesn’t work, and because Bill Clinton is not longer president.  If Bill Clinton were president, the Republicans would allow him to raise tax rates to the level he did in 2001, this time without having to have the vice president cast the 51st vote in the Senate for the tax increase, and with enough Republican votes in the House to allow a vote on the tax increase.  In other words, if Bill Clinton were president, Ryan and his compadres would not keep refusing to allow the Bush tax cuts on annual incomes of less than $450,000, and tax cuts on corporations, capital gains, and dividends, to expire.  But because Obama, rather than Clinton, is president, they won’t. They should be allowed to expire, Ryan says.  But they won’t be allowed to expire, because Obama is president.Instead, the Republicans will opt to test out the the efficacy of Keynesian economics, or not--depending, probably, on whether the Koch Brothers pick up the phone and disabuse Ryan of his belief that Keynesian economics doesn’t work.  Before Wall Street does.  Here’s what I obviously don’t believe: That if Ryan actually obviously doesn’t believe--thinks the debt is pretty clear it doesn’t work--he has even basic knowledge of past and current economic fact.I’ll take his word for it that he was being truthful about his belief. But I sort of expect that the Koch brothers and others will educate him and other congressional Republicans who hold that belief, very soon.

31 января 2013, 08:11

Jon Swift Memorial Blogroll Amnesty Weekend, 2013

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This coming weekend is the annual Jon Swift Memorial Blogroll Amnesty, the reasoned, proportionate response to some of the Bigger Names suddenly deciding that they needed to cull their recommendations.  Swift’s brilliant (and certainly modest) proposal was that you should instead find five blogs with lower hits than you and recommend (i.e., promote) them, not drop them. I don’t need to tell you to read Brad DeLong or Mark Thoma or Bill McBride—or David Altig or David Beckworth.or Jared Bernstein. Or anyone else who is probably already on the AB blog roll. Things that have been disappearing from view as Blogroll Amnesty Years pass:Single-person blogs Blogs that are not always updated daily Blogs that are not themed but are rather “what the owner feels like mentioning” The following five are my recommendations for this year, in alphabetical order:Andrew Rickard (updated almost every day; in perfect timing, just went on a week’s hiatus) A Boat Against the Current (Mike does update almost every day) The Hunting of the Snark You and Me, Dupree Underbelly (who sent me to Andrew Rickard) and a bonus one, because you can never have enough (a) Canadian content or (b) food blogs, let alone both: Double Trouble, Kitchen Edition (h/t to Skippy the Bush Kangaroo for the reminder)

30 января 2013, 22:21

Chuck Hagel Is a Threat to America’s National Security! And to the Koch Brothers’ Financial Interests.

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The American Future Fund is an Iowa based 501(c)(4) tax-exempt organization affiliated with the Center to Protect Patient Rights, which in turn has reported ties to billionaires Charles G. Koch andDavid H. Koch. American Future Fund was founded by individuals who worked for Mitt Romney's 2008 bid for the Republican U.S. Presidential nomination. Nick Ryan, an adviser to Republican US Representative Jim Nussle, founded the organization in 2007, with Nicole Schlinger, a GOP leader in Iowa, as its president. Its current president is Iowa Republican state Sen. Sandra Greiner. The fund "advocates conservative and free-market principles" and energy positions that include support for drilling offshore and in the Alaska National Wildlife Refuge. Activities In 2010 the American Future Fund reported over 9 million dollars of independent campaign expenditures to the FEC, and 100% of its expenditures benefited Republicans. In 2012 the organization funded ads supporting Mitt Romney's bid for the U.S. presidency. In the same year, it also funded ads attacking Missouri Attorney General Chris Koster and in support of California's Proposition 32, which would prevent unions from collecting political contributions as paycheck deductions. The organization does not disclose the names of those who have provided its funding. -- Wikipedia Add to the Activities list an anti-Chuck Hagel TV ad. Okay. So I happened to catch a segment on CNBC just now (don’t ask; catching segments on CNBC is not quite part of my normal daily routine) that ended with an ad blasting Hagel for … um … a whole lot of stuff geared toward making people think he would have lots of conflicts of interest if confirmed as Secretary of Defense, even if he sells all those financial interests in defense contractor companies that the ad says he has, and in that company that invests in Iran, and stops flying on corporate jets. At the end of the ad, the viewer is told that it’s sponsored by The American Future Fund.  Which I couldn’t identify from memory, since the names of these organizations all sound alike.  And are all very interested in America’s future.  But, having seen the ad, I now knew that Hagel would be a very dangerous guy to have as Defense Secretary.  I just didn’t know who exactly he posed a danger to.  But thanks to Wikipedia, I know now.Sounds to me like Paul Ryan should have consulted the Koch brothers before he declared on Meet the Press last weekend that Keynesian economics has proved to be a failure.  If you get my drift. Those oil and gas subsidies and defense contracts that the Koch businesses receive are important to our national defense ... and to the economy.* *Edited for clarity after initial posting.

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30 января 2013, 21:26

Dell restructuring--all for a tax advantage?

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by Linda BealeDell restructuring--all for a tax advantage? David Cay Johnston writes for Tax Analysts, in Dell's Multiple Restructurings Aid It in Tax Avoidance (2013), about a global reorganization disclosed by Dell in its January 2007 Form 8-K filed with the SEC:  "just before the end of 2006, [Dell] issued more than 475 million shares worth $12 billion to invest in a subsidiary."  In the Form 8-k, Dell notes that "Dell has modified the corporate structure of certain of its subsidiaries to achieve more integrated global operations and to provide various financial, operational and tax efficiencies"  (as quoted in the Johnston article). What Dell did was remake itself in a way that lets it escape taxes on profits earned in the United States by running them through a Netherlands entity and newly formed subsidiaries in Singapore and the Cayman Islands. Dell later quietly dropped the Singapore and Cayman Islands entities in what appears to be a pattern of remaking its corporate structure every few years. This nuanced timing pattern may have great significance as a tool for tax avoidance because IRS corporate audit practices were established on the assumption that companies tend to have stable structures. The IRS rarely audits newly formed entities. The documents suggest that Dell created companies with no apparent purpose except to funnel profits into jurisdictions where they would be untaxed. In some cases, subsidiary names existed for a day or so and then were changed to the names of existing entities. The company shuffled its subsidiaries like a deck of cards -- a deck stacked against shareholders and the IRS. Sometimes the deals used companies with identical addresses, suggesting circular flows in which what would be taxable profits in the United States were run through offshore entities with no discernible purpose except escaping tax.  Id. Describing the work of a couple who sleuthed through Dell's state filings and court papers to examine its tax compliance, Johnston reports: Before one restructuring, Dell Inc. sold products to domestic customers through Dell Catalog Sales Corp., which shared the same address in Texas. The couple distilled from annual corporate ownership and sales tax filings with state governments, as well as stipulations in various civil lawsuits, that Dell then replaced this simple organizational structure with a hierarchy of tax haven holding companies. In all, Dell inserted four new companies between the parent and operating entities, which use the same Texas street address. The result was that a Texas company reported to a Netherlands company that reported to a Singapore company that reported to a Caymans company that reported to what appears to be another Netherlands company that then reported back to the Texas headquarters. This makes business sense? I cannot fathom how -- except to escape taxes. And because Dell publicly discloses its untaxed offshore profits and the expected tax rate upon repatriation of those profits, those numbers support the suggestion that the elaborate creation (and killing) of subsidiaries has one primary purpose--the reduction of taxes owed to the US. Citizens for Tax Justice, in a report last year (Doc 2012-21457 , 2012 TNT 202-22), noted that Dell is one of the few multinationals that discloses how much untaxed profits it holds offshore and the expected tax rate if it brought the money back to the United States. Dell said it had $15.9 billion of untaxed profits offshore on which it would owe a tax of $5.2 billion, or 33 percent. Since that is almost equal to the 35 percent corporate tax rate, it suggests Dell paid virtually no tax anywhere in the world on those profits, because Congress gives a dollar-for-dollar tax credit on corporate income taxes imposed by other countries. So what, Johnston asks, is the public benefit of allowing this kind of corporate shell game?  He suggests that for shareholders, the question is whether they are being told enough to evaluate the risks and rewards of holding Dell securities.  And he concludes probably not.  For the IRS, it is whether regular audit techniques will miss what they should catch. And again, he wonders if the IRS policy of letting companies know what will be audited, sticking to those points, and completing audits in fixed time periods isn't just a giveway to those who are manipulating their tax rates.  Dell's tax counsel, he notes, would undoubtedly advise that they have reviewed each reorganization step and that they are perfectly legal.  But Johnston wants an audit, and one that looks at the whay sophisticated companies are adept at working around audit policies.  Dell's reorganizations, he says, are apparently timed at two-year intervals, injecting considerable complexity into the work of any IRS auditor trying to track their impact. And "the business purpose for this management structure is elusive", he notes, on one set of slides showing a shuffle of entities that ultimately lands a company still located in Texas under a foreign sandwich of companies and ultimately avoiding US tax on the operating company income. He surmises that Dell owes a billion or more in US corporate income taxes that have escaped capture because of this endless restructuring. cross posted with  ataxingmatter

30 января 2013, 20:34

Billions for job piracy even as states cut budgets

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According to Center on Budget and Policy Priority data cited by Louise Story, in 2011 the states enacted $156 billion of austerity measures, between budget cuts and tax hikes. Despite their budgetary woes, however, this did not stop them from throwing billions of dollars a year into the worst kind of corporate subsidy, relocation incentives that move existing facilities from one state to another without creating any new jobs. A new report from Good Jobs First documents their widespread use, which is far more common than most people would imagine. One great aspect of this report is that it goes beyond the two examples of interstate border wars we hear the most about, New York-New Jersey-Connecticut and Kansas-Missouri. We learn about Texas and Georgia vs. the world, North Carolina-South Carolina (especially in the Charlotte metro area), Tennessee-Mississippi (particularly with Memphis as target), and Rhode Island-Massachusetts. In addition, we learn more about the flip side of job piracy, retention subsidies, of which Sears' two in Illinois are the most egregious. For example, Continental Tire moved its North American headquarters and 320 jobs from Charlotte to Lancaster County, South Carolina, in 2009. Georgia gave Ohio-based NCR Corp. (formerly National Cash Register) $109 million to relocate that same year. In 2010, Hamilton Beach received at least $2 million to move from Memphis to Olive Branch, Mississippi, while in 2009 McKesson received $4 million from Mississippi in addition to local incentives to move from Memphis to neighboring DeSoto County. Rhode Island, in a widely publicized move, gave Boston Red Sox pitcher Curt Schilling's video game company 38 Studios a $75 million loan to move from Massachusetts in 2009, only to see the  firm go bankrupt in 2012. There are many more examples in the report, but you get the idea. The existence of relocation subsidies makes it possible for companies to demand incentives to stay in a particular state, i.e., retention subsidies. Two of the three largest ones went to Sears in Illinois, $168 million in 1989 and another $275 million in 2012 when the 1989 deal expired. The second largest was $250 million to Prudential Insurance from New Jersey in 2011. But many more states have had to shell out retention subsidies on a regular basis. The report notes that at least 40 states know how to write no-raiding language into their subsidy programs, because they already have such language banning intra-state relocations from receiving subsidies under various programs. However, as far as I know, far fewer states prevent their cities from giving relocation subsidies to in-state firms, though the report shows that Maine's Employment Tax Increment Financing rules do provide that. What is necessary, the report argues and I wholeheartedly agree, is that states need to tweak their program language to stop rewarding interstate job relocation as well. They need to stop efforts to directly poach existing firms, something Texas is heavily engaged in. The report says there is a "possible" federal role here, to withhold some Department of Commerce monies from states that engaged in job piracy. I, on the other hand, think that federal action is the only way it will happen. As I've written before, voluntary state efforts in the 1980s and 1990s to end job piracy have been utter failures, and the states clearly need an outside enforcement mechanism, which can only be provided by the federal government. With such extensive documentation of how widespread relocation and retention subsidies are, hopefully more people can be mobilized to get the federal action we need. Cross-posted from Middle Class Political Economist.

30 января 2013, 02:07

Oh, No. David Brooks Thinks Social Security and Medicare Are State- and Local-Government Programs. Or Thinks We Do. Seriously.

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The final problem is that, in an effort to reduce the economic concentration of power, the administration is concentrating political power in Washington. If the problem is that talent is fleeing blighted localities, it’s hard to see how you make that better if decision-making and resources are concentrated faraway in the nation’s capital. This is not to make a partisan point. The Republicans do not have a better approach. It’s simply to say that the liberal agenda is not very good at addressing the inequality problem it seeks to solve. The meritocracy is overwhelming the liberal project. --- The Great Migration, David Brooks, New York Times, Jan. 25 Brooks is right; that is not to make a partisan point.  That is to make a nonsensensical point.  A point that Brooks makes again, in his column in today's Times, if in different words. It is, in any event, an inaccurate point.   Okay, I admit it: I’ve become obsessed with David Brooks.  Or, more specifically, with the fact that a New York Times columnist who is regularly referenced by other big-name political columnists and bloggers, operates under a formula in which everything even remotely connected to politics/ideology--and I do mean everything, best as I can tell--falls within one or another breathtakingly broad factual category.  The placement into one or another of these categories depends not on whether the category placement is even remotely accurate as a matter of logic or even (sometimes) actual fact, but instead on which category whatever he’s talking about must fit in order to advance his preference for the decentralization of … well … everything, I guess, other than corporate power.  But especially of government functions. This is so even when he’s arguing in favor of stronger centralization of government functions and of more government functions, but doesn’t realize it.  As, for example, his invocation of the public’s overwhelming support for Social Security and Medicare as … yup! … evidence that “Americans are still skeptical of Washington,” and so “[i]f you shove a big government program down their throats they will recoil.”  An accurate statement if the Americans you’re talking about are the ones who want the government to stay out of their Medicare!  Otherwise, though, there isn’t much evidence that there’s been an 80-year-long recoiling from Social Security and a 45-year recoiling from Medicare, and a populist push to privatize those programs or, to borrow a phrase from Mitt Romney (specifically when talking about emergency disaster aid and Medicaid, but, clearly, he had other programs in mind, too--like almost all federal programs that don’t directly aide, say, the oil and gas production companies--send them back to the states.  From which they didn’t come, in the first place. The two indented paragraphs above come at the end of a column summarizing a new book called The New Geography of Jobs, by Enrico Moretti, with whom Brooks expressly agrees, point after point, paragraph after paragraph.  Until he adds a point of his own, the one he identifies as the final problem.  The one that Brooks thinks cannot be solved by federal money and decisionmaking, because that money would be concentrated in--by which he means, originates from--Washington, and because decisionmaking about how to turn this dynamic around, so that localities other than the big tech and finance centers prosper too, would, if the liberals have their way, be concentrated in Washington.  Brooks sums up the problem. Sort of: The highly educated cluster around a few small nodes. Decade after decade, smart and educated people flock away from Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J. In those places, less than 15 percent of the residents have college degrees. They flock to Washington, Boston, San Jose, Raleigh-Durham and San Francisco. In those places, nearly 50 percent of the residents have college degrees. As Enrico Moretti writes in “The New Geography of Jobs,” the magnet places have positive ecologies that multiply innovation, creativity and wealth. The abandoned places have negative ecologies and fall further behind. This sorting is self-reinforcing, and it seems to grow more unforgiving every year. One small study caught my eye. Robert Oprisko of Butler University found that half of the jobs in university political science programs went to graduates of the top 11 schools. That is to say, if you have a Ph.D. from Harvard, Stanford, Princeton and so on, your odds of getting a job are very good. If you earned your degree from one of the other 100 degree-granting universities, your odds are not. These other 100 schools don’t even want to hire the sort of graduates they themselves produce. They want the elite credential. Brooks is good at using other people’s fact-based arguments.  He just isn’t good at figuring out what they mean.  Or at least what they don’t mean.  Butler University is in Indianapolis, Ind. Presumably, Oprisko and all his colleagues live nearby.  The University of Michigan has a large branch in Flint.  The members of its political science faculty probably live within a relatively small radius of Flint.  So this wasn’t a good example of Moretti’s point, an all-too-valid one that highlights a huge national truth.  A truth that surely cannot be solved by removing whatever funds and help the federal government might offer.  The federal government is not keeping Flint and the other, similar localities around the country, from doing things that might change the economics dynamic so that their young people will be better educated and will want to return there after receiving their degrees.  The federal government is being concertedly demonized as a beast, and starved--the result of the Republican dominance of Washington policymaking for so long.  And, for the same reason, the federal government’s entire fiscal policymaking apparatus has been prevented from attempting to deal with the problems Moretti discusses (and Brooks purports to discuss) by the capture of the public policymaking dialogue by people who want to end or prevent the federal-government’s role in, among many other things, the very sort of problem-solving that Brooks says is needed, except by … who?  Or by what?  Corporations? Local governments? Rush Limbaugh? Brooks, as is typical of him, doesn’t say.  He just says, as always, that “centralized”--by which he means, federal government--power is bad. He doesn’t like it.  Too much like Europe, you know.  Very bad. Brooks didn’t write a Sunday column this week.  I figured he just didn’t want me to mock another of his mindless rants about liberal/Obama government/centralized-headquarters-controlled operations that would undermine creativity and initiative--such as student-loan programs and public universities--so he took the day off.  But instead it turns out that he didn’t write a Sunday column because he was too busy attending various luncheons, dinners, and other meetings at this decade’s National Review review this past weekend about what the hell went WRONG last November, and what the hell can BE DONE to avoid such unfortunate turns of fortune from recurring repeatedly in the coming, say, century. Brooks recounts pieces of arguments of speakers at the conference, and he concludes, surely accurately, that the Republican Party can’t win unless it develops what he calls a “Second GOP,” lead by new politicians who are not anti-government. These folks would develop federal programs that would address the country’s and individuals’ actual problems.  The quest for actual solutions, in other words, would trump anti-government ideology.  It’s just that, as standard bearers for the GOP, albeit the Second one, they would have to pretend that federal programs, like Social Security and Medicare, aren’t big government programs.  Or even small government programs.  They would pretend, I guess, that federal government programs aren’t federal government programs. State programs, maybe? Local-government programs? Chamber of Commerce programs?This would work, remember, because most Americans “recoil” from big (i.e.., federal) government programs. Which is why they “cherish” Social Security and Medicare.  Just so you don't think I've removed a sentence or clause from its context, here’s the full paragraph: Americans are still skeptical of Washington. If you shove a big government program down their throats they will recoil. But many of their immediate problems flow from globalization, the turmoil of technological change and social decay, and they’re looking for a bit of help. Moreover, given all the antigovernment rhetoric, they will never trust these Republicans to reform cherished programs like Social Security and Medicare. You can’t be for entitlement reform and today’s G.O.P., because politically the two will never go together. The Second GOP, Brooks says, “would be filled with people who recoiled at President Obama’s second Inaugural Address because of its excessive faith in centralized power, but who don’t share the absolute antigovernment story of the current G.O.P.”  People who, for example, live in Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J., and would be outraged if the Obama administration offered programs and federal financing to try to assist their cities in upgrading their education and infrastructure systems enough that they again become attractive to companies and startups and young professionals. Some of whom, recall, cherish Social Security and Medicare because of their lack of centralized power.What exactly does Brooks think is an example of Obama’s excessive faith in centralized power?  The operative word here is, example. Even just one or two specific ones, please.  He doesn’t say; after all, generalization and sweeping categorization is his stock in trade. But if he can, and does, eventually provide an example, he might, while he’s on a role, consider identifying a couple of decentralized-power success stories, and explaining why Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J., don’t seem to have had similar options.  Or maybe he can persuade the Second GOP to explain it. Without making too many of us recoil.  

30 января 2013, 02:07

Oh, No. David Brooks Thinks Social Security and Medicare Are State- and Local-Government Programs. Or Thinks We Do. Seriously.

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The final problem is that, in an effort to reduce the economic concentration of power, the administration is concentrating political power in Washington. If the problem is that talent is fleeing blighted localities, it’s hard to see how you make that better if decision-making and resources are concentrated faraway in the nation’s capital. This is not to make a partisan point. The Republicans do not have a better approach. It’s simply to say that the liberal agenda is not very good at addressing the inequality problem it seeks to solve. The meritocracy is overwhelming the liberal project. --- The Great Migration, David Brooks, New York Times, Jan. 25 Brooks is right; that is not to make a partisan point.  That is to make a nonsensensical point.  A point that Brooks makes again, in his column in today's Times, if in different words. It is, in any event, an inaccurate point.   Okay, I admit it: I’ve become obsessed with David Brooks.  Or, more specifically, with the fact that a New York Times columnist who is regularly referenced by other big-name political columnists and bloggers, operates under a formula in which everything even remotely connected to politics/ideology--and I do mean everything, best as I can tell--falls within one or another breathtakingly broad factual category.  The placement into one or another of these categories depends not on whether the category placement is even remotely accurate as a matter of logic or even (sometimes) actual fact, but instead on which category whatever he’s talking about must fit in order to advance his preference for the decentralization of … well … everything, I guess, other than corporate power.  But especially of government functions. This is so even when he’s arguing in favor of stronger centralization of government functions and of more government functions, but doesn’t realize it.  As, for example, his invocation of the public’s overwhelming support for Social Security and Medicare as … yup! … evidence that “Americans are still skeptical of Washington,” and so “[i]f you shove a big government program down their throats they will recoil.”  An accurate statement if the Americans you’re talking about are the ones who want the government to stay out of their Medicare!  Otherwise, though, there isn’t much evidence that there’s been an 80-year-long recoiling from Social Security and a 45-year recoiling from Medicare, and a populist push to privatize those programs or, to borrow a phrase from Mitt Romney (specifically when talking about emergency disaster aid and Medicaid, but, clearly, he had other programs in mind, too--like almost all federal programs that don’t directly aide, say, the oil and gas production companies--send them back to the states.  From which they didn’t come, in the first place. The two indented paragraphs above come at the end of a column summarizing a new book called The New Geography of Jobs, by Enrico Moretti, with whom Brooks expressly agrees, point after point, paragraph after paragraph.  Until he adds a point of his own, the one he identifies as the final problem.  The one that Brooks thinks cannot be solved by federal money and decisionmaking, because that money would be concentrated in--by which he means, originates from--Washington, and because decisionmaking about how to turn this dynamic around, so that localities other than the big tech and finance centers prosper too, would, if the liberals have their way, be concentrated in Washington.  Brooks sums up the problem. Sort of: The highly educated cluster around a few small nodes. Decade after decade, smart and educated people flock away from Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J. In those places, less than 15 percent of the residents have college degrees. They flock to Washington, Boston, San Jose, Raleigh-Durham and San Francisco. In those places, nearly 50 percent of the residents have college degrees. As Enrico Moretti writes in “The New Geography of Jobs,” the magnet places have positive ecologies that multiply innovation, creativity and wealth. The abandoned places have negative ecologies and fall further behind. This sorting is self-reinforcing, and it seems to grow more unforgiving every year. One small study caught my eye. Robert Oprisko of Butler University found that half of the jobs in university political science programs went to graduates of the top 11 schools. That is to say, if you have a Ph.D. from Harvard, Stanford, Princeton and so on, your odds of getting a job are very good. If you earned your degree from one of the other 100 degree-granting universities, your odds are not. These other 100 schools don’t even want to hire the sort of graduates they themselves produce. They want the elite credential. Brooks is good at using other people’s fact-based arguments.  He just isn’t good at figuring out what they mean.  Or at least what they don’t mean.  Butler University is in Indianapolis, Ind. Presumably, Oprisko and all his colleagues live nearby.  The University of Michigan has a large branch in Flint.  The members of its political science faculty probably live within a relatively small radius of Flint.  So this wasn’t a good example of Moretti’s point, an all-too-valid one that highlights a huge national truth.  A truth that surely cannot be solved by removing whatever funds and help the federal government might offer.  The federal government is not keeping Flint and the other, similar localities around the country, from doing things that might change the economics dynamic so that their young people will be better educated and will want to return there after receiving their degrees.  The federal government is being concertedly demonized as a beast, and starved--the result of the Republican dominance of Washington policymaking for so long.  And, for the same reason, the federal government’s entire fiscal policymaking apparatus has been prevented from attempting to deal with the problems Moretti discusses (and Brooks purports to discuss) by the capture of the public policymaking dialogue by people who want to end or prevent the federal-government’s role in, among many other things, the very sort of problem-solving that Brooks says is needed, except by … who?  Or by what?  Corporations? Local governments? Rush Limbaugh? Brooks, as is typical of him, doesn’t say.  He just says, as always, that “centralized”--by which he means, federal government--power is bad. He doesn’t like it.  Too much like Europe, you know.  Very bad. Brooks didn’t write a Sunday column this week.  I figured he just didn’t want me to mock another of his mindless rants about liberal/Obama government/centralized-headquarters-controlled operations that would undermine creativity and initiative--such as student-loan programs and public universities--so he took the day off.  But instead it turns out that he didn’t write a Sunday column because he was too busy attending various luncheons, dinners, and other meetings at this decade’s National Review review this past weekend about what the hell went WRONG last November, and what the hell can BE DONE to avoid such unfortunate turns of fortune from recurring repeatedly in the coming, say, century. Brooks recounts pieces of arguments of speakers at the conference, and he concludes, surely accurately, that the Republican Party can’t win unless it develops what he calls a “Second GOP,” lead by new politicians who are not anti-government. These folks would develop federal programs that would address the country’s and individuals’ actual problems.  The quest for actual solutions, in other words, would trump anti-government ideology.  It’s just that, as standard bearers for the GOP, albeit the Second one, they would have to pretend that federal programs, like Social Security and Medicare, aren’t big government programs.  Or even small government programs.  They would pretend, I guess, that federal government programs aren’t federal government programs. State programs, maybe? Local-government programs? Chamber of Commerce programs?This would work, remember, because most Americans “recoil” from big (i.e.., federal) government programs. Which is why they “cherish” Social Security and Medicare.  Just so you don't think I've removed a sentence or clause from its context, here’s the full paragraph: Americans are still skeptical of Washington. If you shove a big government program down their throats they will recoil. But many of their immediate problems flow from globalization, the turmoil of technological change and social decay, and they’re looking for a bit of help. Moreover, given all the antigovernment rhetoric, they will never trust these Republicans to reform cherished programs like Social Security and Medicare. You can’t be for entitlement reform and today’s G.O.P., because politically the two will never go together. The Second GOP, Brooks says, “would be filled with people who recoiled at President Obama’s second Inaugural Address because of its excessive faith in centralized power, but who don’t share the absolute antigovernment story of the current G.O.P.”  People who, for example, live in Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J., and would be outraged if the Obama administration offered programs and federal financing to try to assist their cities in upgrading their education and infrastructure systems enough that they again become attractive to companies and startups and young professionals. Some of whom, recall, cherish Social Security and Medicare because of their lack of centralized power.What exactly does Brooks think is an example of Obama’s excessive faith in centralized power?  The operative word here is, example. Even just one or two specific ones, please.  He doesn’t say; after all, generalization and sweeping categorization is his stock in trade. But if he can, and does, eventually provide an example, he might, while he’s on a role, consider identifying a couple of decentralized-power success stories, and explaining why Merced, Calif., Yuma, Ariz., Flint, Mich., and Vineland, N.J., don’t seem to have had similar options.  Or maybe he can persuade the Second GOP to explain it. Without making too many of us recoil.  

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29 января 2013, 22:27

Republican Governors: Take from the Poor, Give to the Rich, and Suck the Federal Teat

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These local stories in Louisiana, Kansas, Nebraska, and North Carolina speak quite eloquently for themselves. Gov. Bobby Jindal is proposing to eliminate Louisiana’s income and corporate taxes and pay for those cuts with increased sales taxes http://www.nola.com/politics/index.ssf/2013/01/gov_bobby_jindal_calls_for_eli.html Gov. Dave Heineman made a bold proposal … end the income tax for working Nebraskans and corporations. It would also end the taxation of small business, Social Security and retirement income. … As a means to make up for the lost revenue, Heineman’s proposal would also end $5 billion in sales tax exemptions. http://www.dailynebraskan.com/news/article_9e1bcc1c-5fa1-11e2-ba02-0019bb30f31a.html State personal and corporate income taxes would be eliminated, sales taxes would be charged on services, and North Carolinians would pay state sales tax on groceries under a tax reform proposal with significant support in Raleigh. http://www.news-record.com/home/589530-63/nc-tax-reform-plan-is Brownback: Keep full sales tax, cut income taxes further http://www.kansascity.com/2013/01/15/4012878/brownback-keep-full-sales-tax.html These proposals all lower revenues collected. This will give these red states more bargaining power when they run into the inevitable fiscal crisis, so they can suck the Federal government teat even more effectively than they do now. Fiendishly clever. Cross-posted at Asymptosis.

28 января 2013, 20:30

The future of YOUR health insurance premiums

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by Maggie Maharrun75441: Maggie Mahar writes on future insurance premium increases something consistently arises in the debate on the PPACA. The complete post can be found at healthinsurance.orgThe future of YOUR health insurance premiums Today, many Americans are asking, “Will my premiums go up in 2014?” There is no simple answer. According to Families USA, the Affordable Care Act (ACA) will have a positive effect on the typical family’s budget. Using an economic model that can factor in all provisions of the Act, Family’s USA estimates that by 2019, when the law is fully implemented, “the average household will be $1,571 better off.” Even high-income families will save: thanks to rules that limit co-pays, and reward providers for becoming more efficient, “those earning $100,000 to $250,000″ will spend $779 less on medical care.” But these are “averages.” They don’t tell you whether your premiums will rise or fall. The answer will depend on: your income, your age, your gender, whether a past illness or injury has been labeled a pre-existing condition, who you work for, and what type of insurance you have now:If you work for a large company: The ACA will have a “negligible” effect on your premiums says the Congressional Budget Office (CBO). This doesn’t mean that your costs won’t climb in 2014. As long as medical product-makers and providers continue to raise prices, premiums will edge up each year. But in 2012 average premiums for employer-based insurance rose by just 3 percent for single coverage and 4 percent for families, a “modest increase” when compared to 8 percent to 12 percent jumps in past years. And on average, employee co-pays and deductibles remained flat. Granted, a 3 percent to 4 percent increase still outpaces growth in workers’ wages (1.7 percent percent) and general inflation (2.3 percent) percent). But as reform reins in spending, annual increases for large groups could fall to 2 percent – or less.If you work for a small company with more than 50 employees:Your boss will be more likely to offer affordable benefits, in part because, if he doesn’t, he will have to pay a penalty. Moreover, he will find insurance less expensive. Today, small businesses pay 18 percent more than large companies because the administrative costs of hand-selling plans to small groups are sky-high. But starting in 2014, businesses with fewer than 100 employees will begin buying insurance in exchanges where they will become part of a large group, and eligible for lower rates. Finally, some companies with fewer than 25 employees will receive subsidies that cover 50 percent of what they lay out for insurance.If you work for a small firm where many employees are older, female, or suffer from a pre-existing condition: Your premiums may well fall. Today, most states let insurers charge small firms more if many of their workers are older or are women.  They also can jack up premiums if just a few workers fall ill or are injured.This post originally appeared on healthinsurance.org. To find out more about the importance of where you live, whether you are a woman, whether you are young (20-something to 30-something) or older (in your 50-65), your income, and your health status please click there.Or if you like, you can return to HealthBeat to comment. run75411

28 января 2013, 07:51

The Netherlands' role as corporate tax haven a "stain on the nation's reputation"

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by Linda BealeThe Netherlands' role as corporate tax haven a "stain on the nation's reputation" As Europe, the US, and other countries continue to face sluggish economies in the midst of extraordinarily high corporate profits, substantial accumulation of new wealth in the hands of even fewer people, and inordinate influence of corporatist approaches on democratic governance, a public backlash is growing and legislatures are beginning to notice. Here in the US, President Obama's second inauguration speech acknowledged the necessity of cooperative approaches to the dire problems we face today.  Those problems-- poverty, limited opportunity due to lowerclass status, lack of educational access, climate change and infrastructure needs--all relate to the increasing inequality among our people, the ability of the wealthy to buy secure and safe lifestyles for themselves while the majority are left to struggle with potential loss of jobs, homes and health.  People are starting to notice the inordinate power of huge multinational corporations and their owners due to the influence of wealth and the way the wealthy have been able to capture almost all of the gains of the last few decades for themselves.  Perhaps we are on the cusp of a new populism that will reclaim the American economy and the American system for ordinary people. In the Netherlands, the backlash against unfair tax policies may be happening even more clearly than here.  The Netherlands has become an infamous tax haven for corporate giants (renowned for using the "Dutch sandwich" structure to avoid taxation).  Yahoo's arrangement, described by Jesse Drucker in a Bloomberg story today, illustrates the problem perfectly. Inside Reindert Dooves’ home, a 17th century, three-story converted warehouse along the Zaan canal in suburban Amsterdam, a 21st-century Internet giant is avoiding taxes.  The bookkeeper’s home office doubles as the headquarters for a Yahoo! Inc. (YHOO) offshore unit. Through this sun-filled, white walled room, Yahoo has taken advantage of the law to quietly funnel hundreds of millions of dollars in global profits to island subsidiaries, cutting its worldwide tax bill. The Yahoo arrangement illustrates that the Netherlands, in the heart of a continent better known for social welfare than corporate welfare, has emerged as one of the most important tax havens for multinational companies. Jesse Drucker, Yahoo, Dell Swell Netherlands $13 Trillion Tax Haven, Bloomberg.com (Jan. 23, 2013).  Many of the Dutch companies created by MNEs like Yahoo, Google, Merck, and Dell are sham companies that "only exist on paper".  $10.2 trillion dollars went through 14,300 of those sham companies in 2010. Id.  Merck has 54 subsidiaries in the Netherlands and routed more than 7 billion euros in royalties between 2002 and 2010 through an Amsterdam subsidiary that has no employees.  Id. The Labour Party and People's Party for Freedom and Democracy took power in November and are "fed up with these so-called PO Box companies", according to a parliamentarian from Labour.  Id.  Another parliamentarian (from the Dutch Socialist Party) noted that while governments are cutting their budgets, multinationals are avoiding taxes, and the Netherlands is functioning as a connecter to the tax havens. The anti-tax avoidance concern is growing across advanced nations. As the article notes, the European Commission, has also noted the problems with tax avoidance and evasion and has advised its member states to adopt anti-abuse rules.  Similarly, the OECD is discussing a proposal to make it harder for companies to use shams like the Dutch sandwich structure to shuffle profits into tax haven islands and avoid taxes in OECD countries.  And the UK has scheduled a second parliamentary hearing this month on the issue.  Id. Tax treaties are supposed to protect companies from double taxation on the same income by two different jursidictions, but tax lawyers have developed sophisticated structures that allow companies to enjoy double non-taxation.  The article describes Dell's use of a Netherlands subsidiary (with no Netherlands employees) to claim credit for about three-fourth's of Dell's worldwide income and achieve substantial tax savings--about $4 billion since 2004.  Id.  The US Is challenging Dell's claim that it is appropriately using the Netherlands and Singapore arrangement to avoid US taxes. And of course these same MNE giants are the ones that are accumulating billions overseas on which they are seeking special legislation to allow them to repatriate cash to the US at low (or negative) taxes. See earlier Angry Bear and ataxingmatter posts on this issue. Hopefully, even the Republicans in Congress will realize that this corporate game of tax avoidance using international subsidiaries that have no employees is a sham and will take action to eliminate loopholes that permit hugely profitable companies to pay minimal corporate taxes. cross posted with ataxingmatter

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28 января 2013, 06:53

Health Care Thoughts: PPACA Health Exchange Oops

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by Tom aka Rusty Rustbelt Health Care Thoughts: PPACA Health Exchange Oops On March 1, 2013 employers were supposed to notify employees in writing of information relating to the health insurance exchanges, including a 1) description of services, 2) employee eligibility for a premium tax credit IF the employee purchases an exchange insurance product, and 3) the downside of the employee purchasing through the exchange. On January 24th the Department of Labor announced the suspension of the notice rule, because there is very little guidance currently available, as the feds are behind on implementation actions and exchanges are still in a confused infancy. It is possible the DOL will require the notices to be issued in late summer or fall, ahead of an October (?) startup. I am now putting the probability of a major delay of exchange start ups at 30%.