How the game is rigged

Economist Jared Bernstein of the Center for Budget and Policy Priorities explains:

One reason multi-millionaire investors like Gov. Romney face 15% tax rates is because they engage in corporate activities but avoid corporate taxes.  They do so by taking advantage of policy changes that have made it easier to pass capital gains through the corporation to their personal income, where, in the case of PE managers, they tap a double loophole.  First, capital gains are taxed at less than half the rate of normal income, and second, even though these gains are really earnings for the fund managers, they get to claim them as capital gains (this is the notorious “carried interest” loophole).

As my CBPP colleagues Chuck Marr and Brian Highsmith wrote here:

Although businesses operating through C corporations [standard corporations] are subject to corporate taxes, the capital income of non-incorporated businesses is “passed through” to the business owners.  These owners benefit from the same tax deductions and credits as do corporations, but are taxed only at the individual level.  Over the past half century, and particularly during the 1980s and 1990s, states and the federal government significantly expanded the legal benefits of pass-through entities.  These changes have made it easier for firms to operate through such legal structures as S corporations, partnerships, limited liability companies, and sole proprietorships — while also benefiting from limited liability and other provisions that formerly were available only to corporations.

As you see in the figure, the share of receipts passed through to non-incorporated business has almost tripled since 1980s, up from 13% to 35%.

Source: IRS, (h/t: BH)

Moreover, it’s a good example of what happens when you open up these loopholes.   The elasiticities attached to changes in tax rates are wildly exaggerated by conservatives and trickle downers who argue that the slightest increase will end the economy while any decrease will trigger boom times.  The evidence belies their view in terms of jobs, investments, and growth.

But when it comes to sheltering your income (e.g., passing through corporate income to the personal side to tap loopholes like carried interest), how you structure your investment vehicles, your preference for debt over equity financing (debt financing is very much favored by the tax code)—there you see very significant responses.

The question is, as posed above, does any of this add value—real value—to the economy beyond further enriching the rich?  It’s not a simple question and the answer is probably less obvious than it sounds.  There are unquestionably examples of PE firms that have taken over companies and discovered new efficiencies.

But neither is it a coincidence that the ascendency of this type of economic activity and the policies that support it have occurred during a period of sharply increasing inequality, weak job creation, and stagnant incomes for the middle class.

And Republicans think we need more of this, not less.

And don’t whine at me about “double taxation” (corporations paying income taxes, then investors having to pay taxes on dividends). If there weren’t huge benefits associated with being incorporated, not the least of them being the right to buy politicians without having to go to prison if what you do kills a lot of people, then businesses wouldn’t incorporate.

Newt’s dilemma

Former House Speaker Newt Gingrich is taking increasing fire … from members of his own party. And MoJo’s Kevin Drum has a plausible explanation for why:

What’s most ironically amusing about all this, though, is that underlying a lot of the attacks on Newt is the complaint that he’s not conservative enough. Weirdly enough, there’s some truth to this by modern GOP standards. Newt’s tone and temperament are perfectly suited to the no-compromise-no-surrender spirit of the tea party-ized GOP, which is why he’s so appealing to the base during debates. But the truth is that for all his bluster, Newt was perfectly willing to do deals during his time as Speaker. He likes to think of himself as a world-historical figure, and that means getting world-historical things done. Simple obstruction is not really his MO. That makes him doubly unreliable, since obstruction is the sine qua non of movement conservatism these days.

The GOP Establishment can read polls as well as anyone. And they’re in damage-control mode: They know they’ve got a good thing going from a financial standpoint (free money for Bank of America, et al., from the Fed just for starters), and they know they’ll have to at least appear to give a little to keep the gravy train running. So you have Bob Dole — a SOB in his day but fondly remembered by Democrats now compared with today’s GOP — coming out and trashing Newt.

But Newt, although he almost certainly wants the same thing, is willing to tell the GOP primary voting base otherwise. In South Carolina, they wanted to hear that badly enough to believe him. It’ll be interesting to see whether Florida GOP primary voters respond likewise.

I say this with the greatest possible affection for the Irish …

… but subtlety has never been their strong suit:

I deplore eliminationist rhetoric no matter whom it comes from.

At the same time, it is worth noting that the economic policies of austerity enacted in Ireland have not helped that nation’s economy, which just a few years ago was the envy of the world. Indeed, they have had precisely the opposite effect. And yet all the Responsible People here in the U.S. want us to do the same thing Ireland did.

 

The top 13.9%

Sir Charles at Cogitamus:

Just based on the brief things that I have read and heard this morning, it looks like Romney had income over $20 million for both years and paid an effective tax rate of 13.9% in 2010.  Unbelievable.

I pulled my 2009 taxes out of my filing cabinet this morning — I think 2010 is still at my office somewhere — just to see how my wife and I stacked up against Mittens and his wife.  I am an equity partner in my law firm, which means I derive income based on firm profits and that I am treated as self-employed under the law, meaning I pay both the employer and employee sides of the FICA tax.  My income can fluctuate quite a bit from year to year as profits ebb and flow, but I make a pretty nice living by any reasonable standard after 25 years of plying my craft.  My wife is a salaried professional who makes a six figure income in her own right, so in terms of family income we hover right around the top 1-2% depending on the year.  (Typical of most people I know in this demographic, we have virtually no investment income to speak of — we fully fund our retirement accounts, pay our big mortgage and tuition bills, take a nice vacation or two, and try to save a bit, but we do not have capital gains or interest income worthy of mention.)

In 2009, which was a very good year for me (although not in quite up to Mitt’s speaking fee income), we paid an overall federal tax rate of 30.3%.  (We get hit increasingly by the Alternative Minimum Tax, which wipes out a good bit of our mortgage interest deduction.)  We paid an additional 7% effective tax rate to the District of Columbia.

I never complain about my taxes. I feel incredibly fortunate to be where I am in life and would not object to paying a bit more for the greater good.  (And I can assure people that marginal tax rates have no impact at all on our business decisions in terms of trying to make money.)   But when I look at the tax rate paid by this “unemployed” rich kid I see red.  The meager taxes paid on capital gains and the gaping tax loophole that allows ordinary income for these investment management types to be treated as “carried interest” are completely outrageous.

The point isn’t that we’re jealous of wealth or high income. The point is that the wealthy and those with high incomes have rigged the system to be even more favorable to them than to us.

Happy new year!

Sorry I haven’t been around. I’ve been busy.

For one thing, I took a real vacation earlier this month, which I desperately needed.

For another, I’m back in school. Fun, but major timesuck.

So, what’s been going on?

Well, we’re now down to four presidential candidates on my side. Mitt Romney, lying sack (outsourced to Steve Benen). Newt “Swing” Gingrich, flaming hypocrite. Rick Santorum, who wants government small enough to fit into your uterus. And Racist Ron Paul, the “libertarian” who ain’t, exactly.

Really, GOP? Really?

The Times Almighty wonders out loud whether it ought to point out when lying presidential candidates are, you know, lying. And NBC’s White House correspondent, Chuck Todd, worries that the biggest problem in the presidential campaign might be … wait for it … Stephen Colbert.

I may go back into seclusion.

Yes, we Cam

Was curious about whether Cam Newton really got snubbed for the Pro Bowl, so I checked NFL.COM stats. I learned that through Week 16, his NFC ranking was:

- 9th in QB rating (which factors in a lot of affirmative stats as well as how well you avoid mistakes)
- 10th in completion percentage
- 7th in passing yards
- 7th in passing touchdowns

So, no, I don’t think you can say he was snubbed.

However, he did accomplish some remarkable things. In addition to the NFL record for rushing touchdowns by a QB and passing yards by a rookie QB, he also ranks 20th overall, and 2nd among QBs behind Vick, in rushing yards per game, and 2nd overall in rushing TDs with 14.

One other interesting fact: In Newton, Williams and Stewart, the Panthers had three backs who each carried the ball 100+ times and averaged more than 5 yards per carry. If any other NFC team did that this year, I missed it. In fact, I may be wrong, but that might be a first in NFL history. Anyone know? That speaks not only to the talent of those backs but also to the hard work of the offensive line, only one of whose members, Ryan Kalil, is going to the Pro Bowl.

Silent Night

Sleep in heavenly peace.

Merry Christmas to all, and to all a good night.

Why SteveM at Balloon Juice, whom you’ve probably never heard of, is a better political analyst than Tom Friedman

Because he says stuff like this:

In all likelihood, we’ve got 2000 all over again. Romney now, like Bush then, hasn’t always spoken like a flaming wingnut throughout his political career (and didn’t fully behave like one in the governor’s office)—which means that Romney now, like Bush then, is going to be called a “moderate” during the general election campaign no matter what he says in his speeches. Romney’s Massachusetts past, like Bush’s cooperation with Texas Democrats and prattle about “compassionate conservatism,” is going to give him carte blanche to say anything without the mainstream press grasping the fact that if he’s talking wingnut, it means he intends to govern as a wingnut.

Some beat reporter from 2000—I think it was Adam Clymer—said after Bush took office that his right-wing leanings were obvious all through the campaign if you just bothered to read his policy proposals and listen to him on the stump. This stuff was hiding in plain sight. Everyone just ignored it. And they’re probably going to ignore it again.

I cannot and will not predict at this point who will get the GOP nomination. But I’m confident that if Romney is the nominee, this is exactly how it will go down: The mainstream media will ignore what’s in plain sight.

UPDATE: Also at BJ, John Cole deftly eviscerates Rich Lowry and National Review Online, and by extension the entire GOP establishment, which apparently are freaking right the fark out at the prospect that racist anti-Semite Chomskyite goldbug Ron Paul might actually get somewhere in the Iowa GOP caucus:

Basically, Rich Lowry wants you to believe that Ron Paul is too racist to be President, but just racist enough to be a Republican in the House for several decades.

Reason No. 4,263 why I lurvs the Internet, Kill SOPA Edition

The Stop Online Piracy Act has been stopped before it was even enacted:

… the bill would create an Internet “blacklist” that forces ISPs, search engines, financial firms and advertisers to de-list websites accused of copyright infringement, all without any actual court hearing or oversight. The legislation takes aim at the Internet’s domain naming system (DNS), which translates domain names like www.google.com to numerical Internet protocol (IP) addresses.

But an add-on for the popular Internet browser FireFox, called DeSopa, would circumvent DNS blockades with the click of a button.

W00t!

Now, I’m willing to concede that there probably are some legitimate issues behind this. But the U.S. copyright cartel, particularly post-1994, has a history of bribing congresscritters to kill flies with sledgehammers and then bill the American people for B-52s and nukes.

House Judiciary (including my congresscritter, Howard Coble) will mark up the bill next month. Guys and gals, do everyone a favor and just kill this puppy. It hits the Legislative Trifecta: It’s ill-conceived, unworkable and unconstitutional.

Gloat? Moi?

A number of my friends are Kansas Jayhawks fans, and I love them all dearly.

Still: In your face, guys.

He’s back

John Robinson — my longtime boss, editor, co-conspirator and friend — left the News & Record recently after 27 years, almost 13 of them as the paper’s top editor. He was among the nation’s first and most prolific blogging newspaper editors, and although the project ultimately fell victim to a resource crunch tied to the Crash of ’08, his leadership on the N&R’s Town Square project got national attention not just in the industry, but also in such general-interest publications as the The New York Times, the Los Angeles Times and the Wall Street Journal.

JR believes in sharing credit, and he backs his people to the hilt. Any good reporter from time to time will have to write unflattering things about powerful people with thin egos, thinner tempers and the resources to make life difficult if they choose. Any good newsroom employee, regardless of discipline, also, in this day and age, must spend time looking around corners for what the next important thing in the news business might be. I did a lot of both, and slaying those dragons was much easier knowing that no matter the stakes, as long as I was prudent and ethical, JR had my back. He took a lot of crap over me, and he never once complained to me about it. And during my dad’s final illness, when I spent the better part of a month bedside in an ICU 100 miles away, the only thing he said was, “Do what you need to do. The office will still be here when you get back.” That’s not just the mark of a great boss. That’s also the mark of a great friend.

I mention all this because, now that he’s shed of the News & Record, JR has started a new, personal blog, called “Media, Disrupted.” (I’ve added a link to it in the blogroll on the lower right side of this page, to0.) Go check it out. And keep an eye on him. Even if he wanted to retire, which he doesn’t, I’m pretty sure Susan wouldn’t let him. So I’m betting that shortly after the new year, he’ll be into something new, different and very much worth watching. And he’ll still be tweeting (@johnrobinson).

 

A season in hell

Seventy years ago this month …

The cruelty of the winter, its savagery towards German and Russian alike, was gruesomely illustrated for a rearguard of 3rd Rifle Regiment on the fourth Sunday in Advent of 1941. It happened at Ozarovo. Through his binoculars the second lieutenant spotted a group of horses and troops standing on a gentle slope in the deep snow. Cautiously the German troops approached. There was a strange silence. The Soviet group seemed terrifyingly motionless in the flickering light of the snowy waste. And suddenly the lieutenant grasped the incredible-horses and men, pressed closely together and standing waist-deep in the snow, were dead. They were standing there, just as they had been ordered to halt for a rest, frozen to death and stiff, a shocking monument to the war.

Over on one side was a soldier, leaning against the flank of his horse. Next to him a wounded man in the saddle, one leg in a splint, his eyes wide open under iced-up eyebrows, his right hand still gripping the dishevelled mane of his mount. The second lieutenant and the sergeant slumped forward in their saddles, their clenched fists still gripping their reins. Wedged in between two horses were three soldiers: evidently they had tried to keep warm against the animals’ bodies. The horses themselves were like the horses on the plinths of equestrian statues-heads held high, eyes closed, their skin covered with ice, their tails whipped by the wind, but frozen into immobility. The frozen breath of eternity.

When Lance-corporal Tietz tried to photograph the shocking monument the view-finder froze over with his tears, and the shutter refused to work. The shutter release was frozen up. The god of war was holding his hand over the infernal picture: it was not to become a memento for others. …

On 20th December 1941 a very worried Guderian flew to East Prussia to see Hitler at his headquarters. He wanted to persuade him to take the German front line back to more favourable positions, if necessary over a considerable distance.

The five-hour interview was of historic importance. It showed the Fuehrer irritable, tormented by anxiety, but resolved to fight fanatically; it revealed a powerless and obsequious High Command, resembling courtiers in uniforms; and it showed Guderian, alone but courageous, passionately arguing his case and fearlessly giving Hitler his frank opinion on the situation at the front.

The first time the word retreat was mentioned Hitler exploded. The word seemed to sting him like the bite of an adder. It conjured up for him the spectre of the Napoleonic disaster of 1812. Anything but retreat!

Passionately Hitler tried to convince Guderian: “Once I’ve authorized a retreat there won’t be any holding them. The troops will just run. And with the frost and the deep snow and the icy roads that means that the heavy weapons will be the first to be abandoned, and the light ones next, and then the rifles will be thrown away, and in the end there’ll be nothing left. No. The defensive positions must be held. Transport junctions and supply centres must be defended like fortresses. The troops must dig their nails into the ground; they must dig in, and not yield an inch.”

Guderian rejoined: “My Fuehrer, the ground in Russia at present is frozen solid to a depth of four feet. No one can dig in there.”

“Then you must get the mortars to fire at the ground to make shell-craters,” Hitler retorted. “That’s what we did in Flanders in the first war.”

Guderian again had to put Hitler right on his facts. “In Flanders the ground was soft. But in Russia the shells now produce holes no more than four inches deep and the size of a wash-basin-the soil is as hard as iron. Besides, the divisions have neither enough mortars nor, what’s more important, any shells to spare for that kind of experiment. I myself have only four heavy howitzers left to each division, and none of them has more than 50 rounds. And that is for a front sector of 20 miles.”

Before Hitler could interrupt him Guderian continued: “Positional warfare in this unsuitable terrain will lead to battles of material as in the First World War. We shall lose the flower of our Officers Corps and NCOs Corps; we shall suffer gigantic losses without gaining any advantage. And these losses will be irreplaceable.”

There was deathly silence in the Fuehrer’s bunker at the Wolfsschanze. Hitler too was silent. Then he stepped up close to Guderian and in an imploring voice said, “Do you believe Frederick the Great’s grenadiers died gladly? And yet the King was justified in demanding of them the sacrifice of their lives. I too consider myself justified in demanding of each German soldier that he should sacrifice his life.”

Guderian realized at once that with this bombastic comparison Hitler was merely trying to evade the issue. What Guderian was talking about was not sacrifice as such, but useless sacrifice. He therefore said calmly, “Our soldiers have proved that they are prepared to sacrifice their lives. But this sacrifice ought only to be demanded when the end justifies it. And I see no such justification, my Fuehrer!”

From the horrified expressions on the faces of the officers present it was clear that they expected Hitler to explode. But he did not. He said almost softly, “I know all about your personal effort, and how you lead your troops from in front. But for this reason you are in danger of seeing things too much at close quarters. You are hamstrung by too much compassion for your men. Things look clearer from a greater distance. In order to hold the front no sacrifice can be too great. For if we do not hold it the Armies of Army Group Centre are lost.”

The argument continued for several hours. When Guderian left the situation room in the Fuehrer’s bunker late at night he overheard Hitler saying to Keitel, “There goes a man whom I have not been able to convince.”

For-profit education: The “bugs” are features

I’m not saying for-profit education can’t benefit students. It probably can, if investors are willing to bake that feature into their business model. But I’m pretty sure that that feature is not baked into any existing model:

By almost every educational measure, the Agora Cyber Charter School is failing.

Nearly 60 percent of its students are behind grade level in math. Nearly 50 percent trail in reading. A third do not graduate on time. And hundreds of children, from kindergartners to seniors, withdraw within months after they enroll.

By Wall Street standards, though, Agora is a remarkable success that has helped enrich K12 Inc., the publicly traded company that manages the school. And the entire enterprise is paid for by taxpayers.

Agora is one of the largest in a portfolio of similar public schools across the country run by K12. Eight other for-profit companies also run online public elementary and high schools, enrolling a large chunk of the more than 200,000 full-time cyberpupils in the United States. …

The New York Times has spent several months examining this idea, focusing on K12 Inc. A look at the company’s operations, based on interviews and a review of school finances and performance records, raises serious questions about whether K12 schools — and full-time online schools in general — benefit children or taxpayers, particularly as state education budgets are being slashed.

Instead, a portrait emerges of a company that tries to squeeze profits from public school dollars by raising enrollment, increasing teacher workload and lowering standards.

Current and former staff members of K12 Inc. schools say problems begin with intense recruitment efforts that fail to filter out students who are not suited for the program, which requires strong parental commitment and self-motivated students. Online schools typically are characterized by high rates of withdrawal.

Teachers have had to take on more and more students, relaxing rigor and achievement along the way, according to interviews. While teachers do not have the burden of a full day of classes, they field questions from families, monitor students’ progress and review and grade schoolwork. Complaints about low pay and high class loads — with some high school teachers managing more than 250 students — have prompted a unionization battle at Agora, which has offices in Wayne, Pa.

A look at a forthcoming study by researchers at Western Michigan University and the National Education Policy Center shows that only a third of K12’s schools achieved adequate yearly progress, the measurement mandated by federal No Child Left Behind legislation.

No one could have predicted, right? It was absolutely inconceivable that private, for-profit companies would take tax money and not act in the public interest. It would have been impossible to see that coming. But we want to drug-test people getting unemployment benefits.

“What we’re talking about here is the financialization of public education,” said Alex Molnar, a research professor at the University of Colorado Boulder School of Education who is affiliated with the education policy center. “These folks are fundamentally trying to do to public education what the banks did with home mortgages.”

Because that worked out so well and all.

Look, folks, this might be the most important, overarching issue of our time in this country: The IGMFY folks want to steal everything. Everything. And they’re using the power of government to do it. They stole our retirement, they stole our home equity, they’re doing their damnedest to steal our Social Security and now they’re going after the money we spend to educate our children. Enough is never enough with these people, and this crap will keep on until they have taken everything we have or until we bust them in the chops hard enough to make them stop and send them whimpering back into their corners.

And even if we can do that once, we’ll have to watch out forever. Because they will be back. The price of liberty is eternal vigilance, and that vigilance needs a 360-degree field of fire.

In which I get fan mail*

Got this today:

Dear MoveOn member**,

You should run for office.

No, really. You, Lex Alexander, should run for elective office: maybe city council or school board in Greensboro, or the state legislature in Raleigh.

Oh, dear.

I mean, really.

*Yes, I am aware this was spam.

**Just for the record, I am not now, nor have I ever been, a member of MoveOn.

Yes, I am a geek. Your point?

Some 4,000 pages’ worth of Sir Isaac Newton’s papers have been posted online, including an annotated first edition of his Philosophiæ naturalis principia mathematica.

This, kids, is the kind of thing that made me get all squeeee!!! about the Web when it was new.

Quote of the day, “All-American Muslim” edition

Commenter “justcorbly” at Ed’s place:

What religion you practice, if any, has nothing to do with being an American. It takes courage and thought to put away our natural wariness and fear of people who seem different than us. But, defining Americans by faith or genetics or anything other than adherence to the Constitution is a very dangerous game. People who can’t agree to that might want to re-examine their commitment to democracy.*

Sometime after I left the newspaper but before I landed where I am now, I applied for an online PR job at Lowes HQ in Mooresville. It would have been interesting to be involved in the discussion that led to this decision, because anyone with half a brain could have seen this disaster coming a mile away. I’d like to think I could have prevented a bad decision. I’d also like to think that if I couldn’t head it off, I would have resigned, but the truth is that I don’t know whether I would have or not. At any rate, here’s a lesson for PR n00bs: Anytime you get petitions from a group with “Family Association” in its name asking you to do something, it’s almost invariably a good idea to do exactly the opposite.

*Cue the trolls saying, “But America isn’t a democracy, it’s a republic.” And it is. A democratic republic. Morons.

Quote of the day, American Psycho edition

Atrios:

There are people who have the job of being political hacks. Of being [jerks].  I get that. I don’t have a problem with these people. It’s their jobs to argue for things based on what the politics is. I don’t think they should be obeyed, but their existence doesn’t bother me.

The problem isn’t that people listen to political hacks, the problem is that they assume they’re right. You know, “the politics of mortgage relief is bad” trumped “the politics of people being thrown out of their homes and the economy being horrible is bad” based on this kind of advice.

The point is, I get that the sociopaths are in the room. But don’t necessarily obey them, and more than that … don’t necessarily assume they really know what they’re doing. They’re sociopaths, after all.

I’m not sure whether Atrios intended his remark to cover American “journalism” or just the political sphere, but, believe me, it covers a lot of the D.C. media establishment at least as much as it covers politicians and their minions.

Best. Troll. Repellent. EVAR.

Ken at Popehat responds to groundless legal threats by “Marc Stephens,” who apparently is posing as a lawyer. Just for the record, making legal threats against someone who has spent five years as a federal prosecutor and another dozen as a federal criminal defense attorney is an even stupider gambit than threatening a libel suit against someone who has been committing investigative journalism for a quarter-century. Which is saying something:

Marc, kindly take this post — the link to which I will email to you — as a formal, legally binding, 100% certified style invitation to snort my taint.

Commenter “bill quoted” speaks for all of us, I think, when he repurposes this snippet from “Bull Durham”:

Stephens: I want to bring the heater. Announce my presence with authority.

everyone: To announce your what?

Stephens: My presence with authority.

everyone: To announce your presence with authority?! This guy’s a first ball fastball hitter, he’s looking for the heat.

Stephens: So what? He ain’t seen my heat.

everyone: All right, Meat. Give him your heat.

[Stephens throws it and Ken hits a home run.]

everyone: Well, Ken really hit the [expletive] out of that one, didn’t he?

 

 

WordPress, I like my current theme just fine …

… and I’m ready for the silly-ass message on my new-post screen suggesting that I try a new one to GO AWAY.

My kind of boss

Meet my brother Frank.

Frank bet employees at one of his plants that if they met a 100% efficency goal, he’d shave his head.

So they did.

So he did.

Gimmick? Well, yeah.

On the other hand, 100% efficiency.  And a boss who visibly keeps his promises.

I’m just sayin’.

 

Worth remembering

Both major political parties suck, but only one is illegally trying to keep large numbers of people from voting:

A Baltimore jury Tuesday found Paul Schurick, former Gov. Robert L. Ehrlich Jr.‘s campaign manager, guilty of election fraud and related charges for his role in an Election Day 2010 robocall.

The jury found Schurick guilty on all four counts, including election fraud and failing to include an Ehrlich campaign authorization line on the calls. After the verdict was read, Schurick clutched his wife, who burst into tears.

Prosecutors said the call, which was made as Democratic Gov.Martin O’Malley swept to a re-election victory, was designed to suppress black votes. …

Outside Clarence M. Mitchell Jr. Courthouse in Baltimore, State Prosecutor Emmet C. Davitt said he hopes the jury’s decision “sends a message” to political campaigns to clean up their acts.

“This type of behavior has always existed, but it seems like it’s … becoming more of a problem,” Davitt said. “We certainly respect the First Amendment, but the courts have made clear … that the First Amendment does not protect fraudulent speech. Clearly that was the case here. It wasn’t just political speech. It was fraudulent speech.”

Yup, but fraud is just how they roll.

How to end Occupy Wall Street

Sir Richard Branson, founder of Virgin Airways, has an idea, but the IGMFY crowd won’t like it:

There is a fundamental problem with capitalism. And that is that it’s the only system that works, but it does bring extreme wealth to a few individuals. Therefore, if you’re lucky enough to be one of those few individuals, you have to make sure you use that responsibility extremely well, and that you use that wealth to create more jobs and to try to sort out some of the intractable problems of the world. As a business leader, I’m no more successful than a doctor or a nurse or a journalist, but I have that wealth, and with wealth—as they say—comes responsibility.

In short, you need to know when enough is enough, and you need to stop screwing less fortunate people just because you can — two things sociopaths are fundamentally incapable of doing.

Oh, well.

In which we return to Civics 101 for the benefit of the Milwaukee police chief and everyone else who was out back smoking dope when they should have been in class

Racism is over. Really:

A black Milwaukee driver is seven times as likely to be stopped by city police as a white resident driver, a Journal Sentinel analysis of nearly 46,000 traffic stops has found.

Similarly, Milwaukee police pulled over Hispanic city motorists nearly five times as often as white drivers, according to the review, which took into account the number of licensed drivers by race.

Police also searched black drivers at twice the rate of whites, but those searches didn’t lead to higher rates of seized weapons, drugs or stolen property.

The review found that the disparities spanned all seven police districts. The two with the greatest racial discrepancies – Districts 1 and 6 – have the lowest crime rates, and both have predominantly white populations.

The disparities found in Milwaukee are greater than other large metro police departments where traffic stop data is collected, including Charlotte, Kansas City, Raleigh and St. Louis.

The explanation for this ought to be good.

Milwaukee police officials did not dispute the newspaper’s findings, but said traffic stop rates track more closely with suspect and victim demographics than with driving population estimates.

What the hell does that even mean?

In an interview at police headquarters, Police Chief Edward Flynn acknowledged the department’s targeted crime-fighting approach can result in disparities because high-crime neighborhoods tend to have larger minority populations.

“I would say it’s not an unexpected consequence,” Flynn said. “If we are going to heavily engage with those communities that are both victimized and from whence a significant majority of our offenders come, we are going to generate disparities because of where we’re physically located.”

If he were talking about burglary arrests, this would make sense. But traffic stops? Uh, no.

Police stopped black and Hispanic drivers about five times as often as white drivers solely for equipment violations. Police have wide discretion when enforcing equipment violations such as a broken taillight or overly tinted windows.

Because there’s a well-known correlation between tinted car windows and high-crime areas.

The Journal Sentinel shared its findings with researchers who have studied racial profiling data in Wisconsin and other states. All confirmed the methodology and results of the newspaper’s analysis.

Good to know, but I’m not exactly shocked.

Wisconsin’s data collection law, which was passed when Democrats controlled the state Legislature and governor’s office, was created to determine if minorities were disproportionately stopped or searched. The data include information on the race, age and gender of drivers; reasons for stops and searches; and whether a driver was arrested, cited or given a warning during a traffic stop.

The statute went into effect in January but was repealed in June after Republicans had gained control of state government and responded to complaints from some law enforcement agencies that the form used to record traffic stops created unnecessary paperwork and took too much time to complete.

Funny how much Republicans like to claim that we live in a post-racial society and then destroy the evidence to the contrary.

Flynn credited his department’s proactive patrolling approach as a key factor in driving down the city’s crime rate. Since he took over in 2008, the Police Department has reported double-digit declines in violent and property crimes.

Flynn said he is willing to admit that his more aggressive strategy can lead to drivers being stopped more often in high-crime areas. He likened the situation to being frisked at an airport security checkpoint – a necessary safeguard.

Actually, growing numbers of Americans are coming around to the absolutely correct conclusion that a lot of airport security is a bullshit hassle, not a necessary safeguard, and that the two things most likely to prevent or stymie a hijacking are locking cockpit doors and passengers being prepared to fight back, neither of which has a thing to do with airport security (but then, where would our justification for an $80 billion corporate welfare program be?). But, hey, chief, don’t let the facts get in the way of a good story.

“Yes, of course we are going to stop lots of innocent people. The point is, do folks understand what their role is as a cooperative citizen in having a safe environment?” Flynn said.

In fact, chief, I don’t have any role to play in being a “cooperative citizen in having a safe environment” besides refraining from crime myself and reporting those who do not. Other than that, the Constitution actually suggests another role entirely for citizens, and I’ll let Esquire’s Charlie Pierce take it from here:

Actually, chief, my role as a citizen is to protect my rights against the arbitrary intrusion of state power. It is to resist (peacefully) searches without warrants, and arrests without cause, and trials without effective counsel. That is the role spelled out for me in the first 10 amendments of the Constitution. I do not have a “role” as “a cooperative citizen” in any of these matters. I am an American with the rights thereof. You serve that reality or you do not serve anyone at all.

So, tell me, chief, what part of “to protect and to serve” do you not understand? Because from where I sit, it looks like all of it.

Quote of the Day, democracy edition

From Digby at Hullabaloo, a better political analyst than anyone now working for The New York Times or Washington Post:

Both parties are woefully corrupt and inept, but only one of them is engaged in systematic vote suppression. It doesn’t make the other side heroes, but it does show one important distinction between the two.

When the Republican Party is running around trying to keep legally entitled people from voting, I think it’s fair to ask why they hate freedom and why they hate America.

Yeah, I’ll go there: If the jackboot fits, supporters of Wisconsin Gov. Scott Walker can damned well wear it.

The New Brownshirts:

This was posted before I knew about the case of Andy Stephenson, a voting rights activist who died in 2005. His access to medical care was likely impeded by a Free Republic campaign that claimed Stephenson was faking his illness. It went on right up to the day pancreatic cancer killed him. Even with the Stephenson case in mind, however, those freepers seem downright tame compared to the unprincipled slobberers running those pro-Walker Facebook pages and threatening, harassing, and intimidating with apparent impunity.

It’s well past the time to discard the blasé, eye-rolling dismissal, “Oh, it’s just the Internet,” when people like Mary find themselves targeted in this manner. It’s time to stop giving the trolls that run pages like “Operation Burn Notice” carte blanche to wreck lives and frighten others into silence. If this campaign of harassment results in someone actually getting hurt or even killed, the people behind it won’t back down. I doubt they’ll even express regret.

Because sadly, there are people in this world who only grasp the concept of right and wrong on the basis of whether or not their friends and associates approve. Their actions are not grounded in empathy or a sense of ethics, but on whether or not they can get away with something. A person they dislike, someone like “Mary” being physically injured in the offline world as a result of their posts won’t faze them one bit.

Quite the contrary. Safe behind their wall of anonymity, where they can count on approval rather than rejection for their conduct, they’ll cheer and give each other high-fives.

The only language that bullies understand is violence. Perhaps the violence of hard time in prison will get a message through to them: America is no place for thugs.

 

“When the Constitution became a puppet show.”

Charles Pierce on the impending 25th anniversary of Iran-Contra:

It remains the great lost opportunity. If the crimes of what became known as the Iran-Contra scandal had been investigated the way they should have been — which is to say, had they been investigated all the way up to criminal indictments at the top of the executive branch, and impeachment inquiries into the conduct of relevant officials, including the president — the political world would have been changed utterly, as Mr. Yeats once put it. The ongoing project of turning Reagan into a secular saint at least would have been slowed to a crawl had an inquiry proven in court that he engaged in peddling arms to a terrorist-sponsoring state. (Instead, when we all went nutty on the subject of terrorism in the aftermath of the 9/11 attacks, Iran-Contra hardly got a mention and, to this day, people seem more concerned about the Muslim influence on Butterball turkeys than in the fact that Saint Ronnie once sold missiles to the mullahs.) The George H.W. Bush administration might never have happened, for all that would have meant to George W. Bush’s eventual career. Criminalizing the constitutional crimes that are the inevitable result of the theory of the “unitary executive” might have encouraged the nation to ignore the ravings of an authoritarian lycanthrope like Richard Cheney.

I can remember what happened instead. Washington decided, quite on its own, that “the country” didn’t need another “failed presidency,” so what is now known as The Village circled the wagons to rescue Reagan from his crimes. There was the customary gathering of Wise Men — The Tower Commission — which buried the true scandal in Beltway off-English and the passive voice. There was a joint congressional investigation that served only to furnish people like Oliver North with legal loopholes that prevented their incarceration. There was poor Lawrence Walsh, the special prosecutor, whom everybody wished would simply go away, but who pressed on, making a case that ultimately forced President Poppy Bush to pardon everyone except Shoeless Joe Jackson on his way out the door in 1992.

The press was next to useless. (Mark Hertsgaard’s On Bended Knee is the essential text here.) Hell, the scandal was uncovered by two guys in Beirut with a mimeograph machine. And while there was some excellent work done in spots by the elite American press, the general tone was that the scandal was “too complex” for the country to follow, which led to its having “dragged on too long” and to the eventual dissipation of its political force. (This was a trial run for the infantilization of political self-government, by which the self-governing public is treated as though it were made of candyglass. The masterwork in this regard was the haste to settle the “dangerous uncertainity” surrounding the 2000 presidential election, when almost every poll indicated that the country was perfectly willing to live through a constitutional crisis so long as the crisis followed the Constitution.) This was, of course, nonsense. The Whitewater scandal was insanely complex, largely because there was virtually nothing to the damned thing, and that dragged on all the way to an impeachment trial in the Senate.

Compared to a real-estate scam masterminded by crooks and loons in Arkansas that somehow led to hearings on what the president did with his pee-pee, Iran-Contra was a straightforward constitutional B&E. The Reagan people wanted to fight a war in Central America. Congress did its constitutional duty and shut off the money. The administration then broke the law by arranging private funding for its pet war. One of the ways it did that was to sell military hardware to the government of Iran, which sponsored not only terrorism, but also the kidnapping of various American citizens abroad. All of this was in service to a private foreign policy, devoid of checks and balances, and based on a fundamental contempt for the Constitution and the rule of law. As [the National Security Archive's Peter] Kornbluh writes, the following ensued:

There were illegal arms transfers to Iran, flagrant lying to Congress, soliciting third country funding to circumvent the Congressional ban on financing the contra war in Nicaragua, White House bribes to various generals in Honduras, illegal propaganda and psychological operations directed by the CIA against the U.S. press and public, collaboration with drug kingpins such as Panamanian strongman Manuel Noriega, and violating the checks and balances of the Constitution.

Iran-Contra was the moment when the country decided — or, alternatively, when it was decided for the country — that self-government was too damned hard, and that we’re all better off just not knowing. It was the moment when all the checks and balances failed, when our faith in the Constitution was most sorely tested, and when it was found most seriously wanting. Iran-Contra is how all the crimes of the subsequent years became possible.

I would make three  additional points.

First, contra (pardon the pun) Pierce, the Archive’s Christian Mixter makes clear that although Reagan broke the law, prosecuting him would have been “a close call” because he had been advised by then-Attorney General Ed Meese that the sales of missiles to Iran via Israel were legal. (Lawyers supposedly can’t just pull this stuff out of their rear ends and get away with it, and yet they do.)

Second, if the news media ever were liberal, they stopped being liberal the instant Jimmy Carter was elected (remember how allegations that Hamilton Jordan had used cocaine were pursued as feverishly as Watergate had been?).

Third, it’s true that Iran-Contra made the crimes of the Bush 43 administration possible, but I return again to this: The pardon of Richard Nixon by Gerald Ford for the crimes of Watergate made Iran-Contra possible.

I miss the rule of law.

Theft baked in

Fraud and conspiracy were written into the computer code that handled mortgage foreclosures, reports Matt Stoller at New Deal 2.0 (h/t Fec):

The same banks that ran the corrupt home mortgage securitization chain are now committing rampant fraud in the foreclosure crisis. Here’s New Orleans Bankruptcy Judge Elizabeth Magner discussing problems at Lender Processing Services, the company that handles 80 percent of foreclosures on behalf of large banks (emphasis added):

In Jones v. Wells Fargo, this Court discovered that a highly automated software package owned by LPS and identified as MSP administered loans for servicers and note holders but was programed to apply payments contrary to the terms of the notes and mortgages.

The bad behavior is so rampant that banks think nothing of a contractor programming fraud into the software. This is shocking behavior and has led to untold numbers of foreclosures, as well as the theft of huge sums of money from mortgage-backed securities investors.

Here’s how the fraud works: Mortgage loan notes are very clear on the schedule of how payments are to be applied. First, the money goes to interest, then principal, then all other fees. That means that investors get paid first and servicers, who collect late fees for themselves, get paid either when they collect the late fee from the debtor or from the liquidation of the foreclosure. And fees are supposed to be capitalized into the overall mortgage amount. If you are late one month, it isn’t supposed to push you into being late on all subsequent months.

The software, however, prioritizes servicer fees above the contractually required interest and principal to investors. This isn’t a one-off; it’s programmed. It’s the very definition of a conspiracy! Who knows how many people paid late and then were pushed into a spiral of fees that led into a foreclosure? It’s the perfect crime, and many of the victims had paid every single mortgage payment.

(That would be the same Wells Fargo that just took over all the branches of Wachovia, which had been a venerable institution in this state for decades.)

A prediction: No one will go to prison for this. That’s because a federal bankruptcy judge is waving a red flag, banging on a fire alarm and yelling, “Fraud! Fraud!” and the Justice Department is doing exactly jack squat. IANAL, but I could run the Justice Department better than Eric Holder. In fact, my kitchen table could run the Justice Department better than Eric Holder.

Quote of the Day, rich people edition

Duncan “Atrios” Black:

The truth is, Our Galtian Overlords are frequently just [jerks] because they are [jerks], not because being [jerks] will actually make them any richer.

Media criticism …

… outsourced to Duncan “Atrios” Black:

When Village elders like David Brooks or similar write their various tributes to the joys of other people suffering in order to purge the nation of its sins, and by sins they mean the Lewinsky affair and not banksters stealing all the money, I think their idea of personal austerity is like cutting HBO from the cable bill or something. They have no understanding of what it might be like to be without a job for years after spending your life living mostly paycheck to paycheck. It isn’t about one fewer trip per month to the Outback.

In the old days, journalism of Brooks’s type, replete with errors of fact and context, would be called “bad journalism,” and its perpetrators would be fired. Now they get slots on the New York Times op-ed page and cushy TV-talk-show gigs.

Music for the season

Big Star, “Jesus Christ”:

Merry Christmas.