Daily Archives: July 29, 2011


Senator Scott Brown, Please Respond To My Pleas About the Economy

Here is a message I just emailed to Senator Scott Brown of Massachusetts.

I am not surprised, but I am disappointed in your stance.

You have taken an adamant stand against the only thing that can rescue our economy. We must raise taxes on the wealthy for several reasons.

1. We need the revenue

2. Putting such a disproportionate amount of money in the hands of the wealthy makes it impossible for us to have a sustained jobs recovery.

3. Cutting spending will sink the economy into a second recession and actually cause the deficit to rise.

Your actions are totally inconsistent with your stated goals.

Please educate yourself on macro-economics. You are making huge decisions about a very technical matter for which you are ill prepared.

In a previous telephone message, I asked Scott Brown to give me some hint that he understands the principles of macro-economics. Nothing he has done or said so far leaves me the slightest indication that he knows what he is doing when it comes to making decisions on the economy.


U.S. May Be On The Verge Of Another Revolution

Here is a happy thought to ponder. The post U.S. May Be On The Verge Of Another Revolution talks about an interview by Thom Hartmann with author Neil Howe.

On last night’s The Big Picture with progressive talk show host Thom Hartmann, author Neil Howe discussed how he and William Strauss came to accurately predict today’s political crisis in their 1997 book “The Fourth Turning,” and offered speculation as to what might happen next.

The two essentially agreed that the United States may be in for a series of events on the magnitude of the revolution, civil war or great depression.



THe book that was mentioned in the interview was The Fourth Turning. When I am ready to read it, I will put in a library reservation.


We Really Need a Wealth Tax

Back on August 26, 2010, I posted an article that merely asked the question, Time For A Wealth Tax?

That brief item mentioned the pros and cons of such a tax and why it was needed to stimulate the economy.

Since that post, I have read Robert Reich’s book, Aftershock: The Next Economy and America’s Future.  It became abundantly clear from reading that book, that the need for the wealth tax extended beyond the need for a temporary stimulus.  The distorted distribution of wealth in this country is what is robbing the economy of enough consumer demand to sustain full employment.  Without the middle class being able to buy all that a full employment economy could produce (minus net exports), there is just no reason for the free market economy to employ all the people who want to work.

Eliminating the Bush tax cuts for the wealthy is a step in the right direction toward eliminating the skewed distribution of wealth.  However, I have come to see that the biggest untapped reservoir of income to be taxed is the very money that we do not now consider to be income.  The wealth of the super rich is growing by far more than the amount that is ever declared as income.

How can wealth of the super rich be growing so much and yet there doesn’t appear to be enough income in the economy to account for it?  The reason is that much of this growth is in unrealized capital gains.  How much of Bill Gates’ 40 odd billions of dollars in wealth was ever classified as income to be considered for taxation and how much is unrealized capital gains? As long as he continues to hold onto his large amount of Microsoft stock, the gain will never be taxed. If he passes this stock on to his children at his death, the stock cost basis will automatically be adjusted to its value on the date of his death.  What was unrealized before is just forgotten in the eyes of the government and will never be taxed.

Unrealized capital gains’ addition to the wealth of the super rich may be unrealized in the technical sense, but the loss of income in the middle-class is definitely being realized.  As I have mentioned above, the heirs can then realize the capital gains and still not pay taxes on it.

So much of the increase in wealth that would be classified as income and therefor taxable if it were being collected by the middle class is shifted to unrealized capital gains when it is accumulated by the wealthy.  So not only are the wealthy paying lower tax rates on the money they do have to declare as income, there is a lot more money that they don’t even have to classify as income.

The citizens are left to wonder why our tax collections aren’t keeping up with the cost of the government services we are voting for ourselves.  Aren’t accounting rules just grand if you can stack them in your favor?


What Were They Thinking?

What Were They Thinking? by Elizabeth Drew is the best piece I have read so far that explains what is going on in the President’s mind.  It is very scary piece.

First, this piece answered the question I posed in my previous post Pelosi: Boehner’s Plan Is A Jobs Killer, “Why do we hear from Boehner, McConnell, and little bit from Reid, but hardly ever anything from Pelosi?”

Elizabeth Drew provides this insight,

Finding a solution to reducing the deficit that was agreeable to Boehner, to Cantor, to former Speaker Nancy Pelosi, to Senate Minority Leader Mitch McConnell, and to the President was no small task. The men, who had rudely and unwisely excluded Pelosi, now the minority leader, from their deliberations, could no longer avoid dealing with her. They’d considered Pelosi a bit of a pain, insistent as she was on standing up for liberal principles.

Drew goes on to explain many of the mysteries about Obama himself.

The speech Obama gave on April 13 marked his conversion to fiscal centrism; to being the fiscally responsible Democrat. In that speech he stated that he wanted to reduce the debt by $4 trillion—thus aligning himself with the Republicans—but also asked for revenues to partly offset that reduction. It was all about reelection politics, designed to appeal to this same group of independents. “And that’s why,” I was told by the person familiar with the White House deliberations, “he went bigger in the deficit reduction talks; bringing in Social Security is consistent with that slice of the electorate they’re trying to reach.” This person said, “There’s a bit of bass-ackwardness to this; the deficit spending you’d want to focus on right now is the jobs issue.”

Drew also goes on to disparage the phrase I love to hate, “Winning the future.”

But even more significant is the question of how our leaders, in particular the President, ended up with such misguided policies—emphasizing budget- cutting over growth. The Republicans exploited the need to avoid an economic collapse that could result from not raising the debt limit by demanding that programs that Congress had agreed to should now be unagreed to.

The President began the year with the unfortunate slogan “Win the Future”—which emphatically meant growth and investment. He ended up in Republican territory, at least rhetorically accepting the highly flawed conception equating the federal government with a household: he and Goolsbee repeated the sampler-stitched maxim “We must live within our means,” ignoring that at times the government simply must borrow in order to meet the people’s needs, as is the case now, with high unemployment. It’s no time for austerity. Instead, the government is borrowing in order to give tax cuts to the wealthy and pay for at least two wars.

Again, kudos to MardyS for posting the link to this article on his Facebook page.


The Centrist Cop-Out

In The Centrist Cop-Out, Paul Krugman ends with:

But making nebulous calls for centrism, like writing news reports that always place equal blame on both parties, is a big cop-out — a cop-out that only encourages more bad behavior. The problem with American politics right now is Republican extremism, and if you’re not willing to say that, you’re helping make that problem worse.

I am quite willing to say that and have been saying it for quite a while.

A tip of the hat to MardyS for posting this article on his facebook wall.