Allison Kilkenny: Unreported

Class war: Criminalizing poverty

Posted in class divide, poverty, United States by allisonkilkenny on June 16, 2010

As opposed to supporting raising wages and passing a public option in order to forge a more egalitarian future, it appears members of the elite have committed themselves to controlling the growing underclass by criminalizing poverty.

David Walker, a lackey of billionaire and Social Security pirate, Pete Peterson, openly pined for the days of debtors’ prison, which is actually already a reality in six states.

WALKER: You know, the fact of the matter is we have to change how we do things. We are on an imprudent and unsustainable path in a number of ways. You talk about debtors’ prisons, we used to have debtors’ prisons, now bankruptcy is no taint! Bankruptcy is an exit strategy! Our society and our culture has changed. We need to get back to the opportunity, we need to move away from entitlement, we need to provide reasonable risk but we need to hold people accountable when they do imprudent things. It’s pretty fundamental.

Right! We need to hold people accountable. Er, poor people – not the rich people, who sold them the shit mortgages, and gave them credit cards with astronomical interest rates. Those people are entrepeneurs and can go free.

Digby has been reporting on the demonization of the unemployed. Sen. Orrin Hatch (R-UT) has proposed an amendment that would demand mandatory drug tests for welfare and unemployment beneficiaries. Because, as one of this blog’s less enlightened commenters put it, “you gotta make sure they’re not on the crack pipe.” After all, we know the only reason people are unemployed is because they’re all a bunch of Welfare Queen drug addicts. Mind you, cocaine addicted Yale and Harvard grads won’t face this obstacle when re-entering the business world. This is just a filter for the undesirables.

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Reviving the Dream

Posted in Barack Obama, class divide, Economy, politics, worker rights by allisonkilkenny on March 10, 2009

Bob Herbert

workers4Working families were in deep trouble long before this megarecession hit. But too many of the public officials who should have been looking out for the middle class and the poor were part of the reckless and shockingly shortsighted alliance of conservatives and corporate leaders that rigged the economy in favor of the rich and ultimately brought it down completely.

As Jared Bernstein, now the chief economic adviser to Vice President Joseph Biden, wrote in the preface to his book, “Crunch: Why Do I Feel So Squeezed? (And Other Unsolved Economic Mysteries)”:

“Economics has been hijacked by the rich and powerful, and it has been forged into a tool that is being used against the rest of us.”

Working people were not just abandoned by big business and their ideological henchmen in government, they were exploited and humiliated. They were denied the productivity gains that should have rightfully accrued to them. They were treated ruthlessly whenever they tried to organize. They were never reasonably protected against the savage dislocations caused by revolutions in technology and global trade.

Working people were told that all of this was good for them, and whether out of ignorance or fear or prejudice or, as my grandfather might have said, damned foolishness, many bought into it. They signed onto tax policies that worked like a three-card monte game. And they were sold a snake oil concoction called “trickle down” that so addled their brains that they thought it was a wonderful idea to hand over their share of the nation’s wealth to those who were already fabulously rich.

America used to be better than this.

The seeds of today’s disaster were sown some 30 years ago. Looking at income patterns during that period, my former colleague at The Times, David Cay Johnston, noted that from 1980 (the year Ronald Reagan was elected) to 2005, the national economy, adjusted for inflation, more than doubled. (Because of population growth, the actual increase per capita was about 66 percent.)

But the average income for the vast majority of Americans actually declined during those years. The standard of living for the average family improved not because incomes grew but because women entered the workplace in droves.

As hard as it may be to believe, the peak income year for the bottom 90 percent of Americans was way back in 1973, when the average income per taxpayer, adjusted for inflation, was $33,000. That was nearly $4,000 higher, Mr. Johnston pointed out, than in 2005.

Men have done particularly poorly. Men who are now in their 30s — the prime age for raising families — earn less money than members of their fathers’ generation did at the same age.

It may seem like ancient history, but in the first few decades following World War II, the United States, despite many serious flaws, established the model of a highly productive society that shared its prosperity widely and made investments that were geared toward a more prosperous, more fulfilling future.

The American dream was alive and well and seemingly unassailable. But somehow, following the oil shocks, the hyperinflation and other traumas of the 1970s, Americans allowed the right-wingers to get a toehold — and they began the serious work of smothering the dream.

Ronald Reagan saw Medicare as a giant step on the road to socialism. Newt Gingrich, apparently referring to the original fee-for-service version of Medicare, which was cherished by the elderly, cracked, “We don’t get rid of it in Round One because we don’t think it’s politically smart.”

The right-wingers were crafty: You smother the dream by crippling the programs that support it, by starving the government of money to pay for them, by funneling the government’s revenues to the rich through tax cuts and other benefits, by looting the government the way gangsters loot legitimate businesses and then pleading poverty when it comes time to fund the services required by the people.

The anti-tax fanatic Grover Norquist summed the matter up nicely when he famously said, “Our goal is to shrink the government to the size where you can drown it in a bathtub.” Only they didn’t shrink the government, they enlarged it and turned its bounty over to the rich.

Now, with the economy in free fall and likely to get worse, Americans — despite their suffering — have an opportunity to reshape the society, and then to move it in a fairer, smarter and ultimately more productive direction. That is the only way to revive the dream, but it will take a long time and require great courage and sacrifice.

The right-wingers do not want that to happen, which is why they are rooting so hard for President Obama’s initiatives to fail. They like the direction that the country took over the past 30 years. They’d love to do it all again.

Two Americas, Two Tax Codes

Posted in Barack Obama, class divide, Economy by allisonkilkenny on March 9, 2009

Dorothy Brown 

Leonna Helmsley: "We don't pay taxes. Only the little people pay taxes."

Leonna Helmsley: "We don't pay taxes. Only the little people pay taxes."

WARREN BUFFETT knows there’s something very unfair about the American tax system. He’s often complained that while his 2006 tax rate (for federal income taxes and Social Security withholding) on $46 million of income was 17.7 percent, his secretary’s combined tax rate was 30 percent.

There are effectively two tax systems in America: one for the very rich and one for the rest of us. Income from stock dividends and capital gains, which makes up a disproportionate amount of the earnings of the very rich, is taxed at 15 percent. But the bulk of what the rest of us earn — wages and interest from savings accounts — is taxed at up to 35 percent. Though President Obama’s recent tax proposals are progressive and comprehensive, his reforms don’t do nearly enough to address this significant disparity.

Yes, President Obama’s plan would eliminate the loophole that has allowed hedge fund titans, whose income comes in no small part from management fees, to be taxed at just 15 percent instead of the ordinary income tax rate.

Families earning more than $250,000 and singles earning more than $200,000 would likewise see taxes on their wages and interest increased to a top rate of 39.6 percent from 35 percent. And the rate on both capital gains and dividends on the sale of stock would increase, but only to 20 percent from 15 percent. These changes lessen the unfairness in our tax system; they don’t eliminate it.

The gap between the tax rates for the rich and the rest of us is relatively recent. Until 1921, capital gains were taxed at the same rate as ordinary income. Then Congress enacted a law that taxed capital gains at 12.5 percent while ordinary income was taxed at as much as 58 percent.

In the decades since, the tax rate on capital gains varied — sometimes it increased, sometimes it decreased. But with the exception of a brief period in the late 1980s, it was always lower than the tax on ordinary income. That was not the case for stock dividends, which were taxed like wage income and savings account interest — that is, until President George W. Bush and Congress in 2003 gave dividends the same preferential treatment as capital gains. The Bush tax cuts moved our tax system too far in the wrong direction.

There is a flip side to raising the tax rates for dividends and capital gains. In this market, there won’t be too much capital gain to worry about. So how should we treat capital losses?

Under current law, capital losses that exceed capital gains can be deducted up to $3,000 (losses above that limit can be carried forward indefinitely into future tax years). If we increase the tax rate on capital gains, then a more generous limit on capital losses should almost certainly be allowed. During the presidential campaign, Senator John McCain proposed increasing the $3,000 offset against ordinary income to $15,000. It’s an idea worth dusting off.

The question of how to tax capital gains and dividends is one of fundamental fairness. Why should tax law treat income from savings accounts differently from income from a diversified stock portfolio? Either we push up the rates on corporate dividends and capital gains or we lower the rates on wages and interest: it’s all income and it should all be taxed at the same rate.

Dorothy Brown is a professor of tax law at Emory University.

David Brooks: Protecting Us From Poor People

Posted in class divide, Economy, politics by allisonkilkenny on February 20, 2009
ts-brooks-190

David Brooks: Dreaming of Killing Poor People

At 7:14 AM this morning, I learned that the recession is being caused by dumb, poor people. David Brooks, one of many elite and clueless New York Times’s writers, injected some crazy into his normally awful column:

Our moral and economic system is based on individual responsibility.

BAM! Right out the gate, I got slapped across the face with Brooks’s giant, wet fish of a declarative statement.  Here I’ve been, assuming the American tax system unfairly favors large corporations and the upper echelons of our society, but apparently we’ve been operating on a level playing field this WHOLE time! I can’t believe I’ve been so silly, assuming the minimum wage is slave labor, and it reenforces a de facto caste system where the poor are forever poor, and the rich elite hoard all wealth, prosperity, and power among their tiny tribes forever, and ever, and ever..

Thanks, David! These stupid poor people just need to take some darn responsibility for all of those shady mortgages sold to them with the ludicrous interest rates from subprime bandits working on commission. 

Keep reading…

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