Blog on the Run: Reloaded

Tuesday, May 1, 2012 10:38 pm

Odds and ends, school break edition

I’m really enjoying not having to study, but I haven’t been hit by the inspiration for anything lengthy. So here’s what’s going on:

* * *

Pretty much everybody thinks Rupert Murdoch isn’t fit to run a media company. And, hell, we know that. But when Parliament thinks Rupert Murdoch isn’t fit to run a media company, well, that could have real-life, tangible, bottom-line consequences. Because the UK doesn’t let just any old thieving, lying, wiretapping raper of the hopes of the parents of kidnapped children own a media company the way the U.S. does. No, News Corp. could have to actually divest itself of its 40% share of BSkyB. Ouch.

* * *

So on the anniversary of Osama bin Laden’s death, Obama shows up in Afghanistan and commits this country to spend, at the current rate of $2 billion a week, one and a quarter trillion dollars over the next dozen years in that country. One and a quarter trillion dollars, I hasten to add, that the United States cannot spare. I mean no disrespect to the victims of 9/11, and a great deal of respect to the Americans who have had to fight the resulting military campaigns, when I ask: Tell me again who won the war on terror? and/or, Have you people never heard of Pyrrhus?

* * *

I see that not only do the Republicans want to wage war on women, they insist that only straight men can join the fight.

* * *

Finally, Fec reflects on MLK’s call for a national guaranteed minimum income, varieties of which have been endorsed by such wild-eyed liberals as Milton Friedman (who called it a “negative income tax”):

Consider, if you will, that the oligarchy, by virtue of access to the Fed’s ZIRP [zero interest rate policy — free loans to banks], has already achieved the status of guaranteed income. Was MLK in reflection so terribly wrong? As we contemplate the end of unemployment benefits for 700k of our citizens, and underemployment for many more, do not the ravages of outsourcing and global corporatism render a circumstance where the least of us is just as entitled to at least a wage of existence as the bankster supping at the .25% discount window, especially as the proceeds are immediately fed into a gamed engine of guaranteed profit?

If we are bailing out the Europeans for their folly, is it nor more just to provide subsistence wages to our own whose only fault is absence of opportunity, particularly by design of the corporatists who enjoy the very same protections manifold?

Are we not finally at the point where Bernanke‘s famous helicopter drops cash upon the least of us, as it has surely rained bountifully upon our most fortunate?

I assure you that the poor have no wish for anarchy or the imposition of some stringent biblical reconstruction. They merely wish to enjoy those essential things we all aspire to: a full belly, a comfortable home and freedom from financial worry.

To those cretins who proclaim such an idea is socialism, I reply they are too late. Socialism is rife among the fortunate; it is merely those left out who have yet to commit this supposed sin. Is not the greatest act of fairness to now include everyone with income, given that the most criminal among us have already lined their pockets to the point of embarrassment?

If we are headed toward a great conflagration of currency devaluation and hyperinflation, is it not right that the poor finally be allowed to join the bacchanal before its end?

Actually, of this much I am sure: No matter exactly how this country goes down, it will go down never once having given any serious policy thought to the true needs of the least among us. That just isn’t how we roll.

(Also, although I am somewhat sympathetic to my friend’s view of the Occupy movement as it manifested itself today on what was supposed to be a big, national show of strength, I also am somewhat sympathetic to Charlie Pierce’s take: “From the start, I said that the best thing about the Occupy movement was that at least they were yelling at the right buildings. … What I do know is that, if it weren’t for the people in the streets last autumn, the Obama people would be running a very different campaign and Willard Romney wouldn’t look half as ridiculous as he does.”

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Friday, January 27, 2012 8:32 pm

How the game is rigged

Filed under: I want my money back. — Lex @ 8:32 pm
Tags: , , , ,

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.

Saturday, January 2, 2010 4:22 pm

All for naught

Filed under: We're so screwed — Lex @ 4:22 pm
Tags: , , ,

Aughts were a lost decade for U.S. economy, workers:

The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation’s growth.

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism — there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 — and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

And the net worth of American households — the value of their houses, retirement funds and other assets minus debts — has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.

“This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone’s well-being,” said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

Heckuva job, Georgie.

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