Let me start by saying I've always been skeptical of last year's tax reform bill (LD 1495). With a repeal referendum a day away, it's time for a solid decision on it. My decision is to vote Yes to repeal.
This is difficult because I am making common cause with some loopy Republican wingnuts while many progressive Democrats and decent social change groups I've supported in the past are on the other side. Below the fold I have included the full text of two of the emails on this issue I've received in the last few days. One is letter-headed "Engage Maine" and the other is from Maine State Senate Majority Leader Phil Bartlett. I'm not going to take these items apart point-by-point. I'll just discusses why I feel these emails lack the full story of what's going on here.
The reason I disagree with the No vote urged by these emails is that LD 1495 violates what should be a solid-rock Democratic principle: It issues the highest-income taxpayers a large rate reduction while giving the rest of us, through elimination of progressive rates in favor of a flat rate higher than the effective rate most of us now pay, ameliorated by a new complex credit, what in the short term amounts nearly to a wash, and what could in very few years become something of a tax increase.
Built into the new law are clearly regressive sales taxes. Previously-untaxed categories of services that can cost lower-income people higher percentages of their income, like car repairs, would be taxed. A few expensive trips to the mechanic (like the $2500 of attention the Subaru we once had needed a few years ago) easily could wipe out the meager income tax savings offered to lower-income taxpayers like us.
Rhetoric saying "income taxes will drop for over 95% of Mainers" may be well true in a surface fashion in the near term. But this is a shallow statement. Even a slight amount of analysis of figures supplied by Maine Revenue reveals that the biggest winners in tax reform will be the richest Maine taxpayers. The initial "drop" for most of us would be razor-thin while inflation indexing is reduced leading potentially to higher taxes in the future.
Careful analysis on this was done by Portland-area accountant (and long-time Democrat) Albert A. DiMillo, Jr. The best critiques of the "95%" rhetoric are found HERE, at a site called called Maine Democrats For Fair Tax Reform.
DiMillo has sparked some heatedcontroversy. Sometimes I don't like the way he argues. But at Maine Democrats For Fair Tax Reform I've found THIS DOCUMENT very helpful because it is a direct critique of many shallow talking points. And it illustrates the upper-income bonanza that ought to remind us of the Bush years instead of celebrate the wondrous progressive thing we've done.
Albert A. DiMillo, Jr.: The MRS report for year 2013, estimates that a group of 4,638 taxpayers with income over $350,810 will get a net income and sales tax cut of $34.8 million. The other 99.3% of Mainers will have a net income and sales tax increase of $3.5 million.
So it's hardly a "fairer tax base" that's being created here, as the letters below would have you believe. Even worse, Senator Bartlett falls into a trap set by years of Republican media talking points: that the rich deserve to get a big amount of money in tax cuts because they pay more, "Higher income people do receive more money back, because they pay more in taxes;"
Well of course they pay more in taxes! They have more of the money. This is not the point. The real question is what rate do they pay? The bedrock Democratic principle ought to be that those who accumulate money well beyond the marginal incomes the rest of us earn ought to pay significantly higher percentages of that income. Now, I'm not in favor of unreasonably high rates on the rich. But they should be charged what they can can afford to pay. Just like the rest of us. Sadly, Senator Bartlett and Engage Maine, et. al. have shown their willingness to back away from this principle. I will not.
Below I have included the full text of these messages, along with basic provisions of the law from Maine Revenue. I won't bother to refute points myself. Read DiMillo for that. Readers can look at these facts and arguments and judge for themselves.
Admittedly I have not been following the junior senator much while I've been away. Fortunately, Contrapositive has. He finds this Moneywatch item written by popular financial commentator Jane Bryant Quinn:
Stop Senator Collins! She Wants to Cut a Key Investor Protection from the Reform Bill
... Last week, devious brokers found their champion. Collins proposed an amendment to the reform bill, to exempt from fiduciary duty brokers who sell only mutual funds, variable annuities, and certain closed-end funds. Furthermore, the Securities and Exchange Commission could expand the exemption to brokers selling other products packaged by their firms. ...
Wow, what intense, biting criticism from a very mainstream source. It reflects how burned the small investor has been in the financial meltdown by the sharks that view us as little more than plankton in the sea.
This time it's Europe and it's a trillion dollars from the people's wallet so that a rotten financial system can cover its bets. I wonder how many times the public hide can be tanned so that the emperors can keep wearing their finery.
TABOR, or the Tax Payer Bill of Rights, is an attempt to limit the tax and spending authority of the State government. Mainers will be asked to adopt TABOR in the upcoming election, 3 November. It is Question 4 on the ballot.
TABOR would limit any increase in spending or taxation (not requiring a special plebiscite) to an "inflation adjustment factor" combined with a "population adjustment index." The "inflation adjustment factor" is defined as:
3. Inflation adjustment factor. "Inflation adjustment factor" means the increase in the Consumer Price Index for the most recently available calendar year as calculated by the United States Department of Labor, Bureau of Labor Statistics. The inflation adjustment factor may not be less than zero.
The Consumer Price Index (CPI) uses a variety of goods and services to determine the increase (or decrease) in the cost of living for an average American household. It covers eight basic areas:
* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)
* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
* APPAREL (men's shirts and sweaters, women's dresses, jewelry)
* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);
* EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
* OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).
Glancing over the list, it's easy to see the categories which do not apply, or do so only in a very small way, to our State government. In fact, the much of the State's budget is composed of items that the average household does not pay for: teachers' salaries and contributions to local public schools, road construction and maintenance, State troopers, environmental monitoring, social services, etc.
Much of the State budget is composed of very expensive goods and services, and this makes sense - we as a people, unable to afford to provide these individually, have combined a small portion of our collective money (through taxes) to provide for these goods and services.
A Government Price Index , compared to the CPI, would look considerably different, since the normal costs to government are considerably higher than the normal costs to the average household.
And this is the problem with TABOR, one which the citizens of Colorado discovered several years into it. When first enacted as part of that state's constitution, people were moving to Colorado in droves, and so the allowable increases were able to keep pace.
TABOR does not allow for a decrease, based upon deflation or a net loss in population.
And it could be worse - should the CPI or population decrease, so spending would have to be reduced.
TABOR is conceived to, in the words of Grover Norquist, "...to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." Many of those that support it do not share this ideology, but just want their taxes reduced, not having realized the breadth of government services the take for granted.
It is an idea that has had a chance to prove its efficacy, and it has failed. TABOR needs to killed and buried, before it does the same to our state.
H/T Gerald: Recent appearances by Marcy Kaptur and a Glenn Greenwald column report this most important yet least discussed effect of the economic crisis.
Yep, it's a silent coup. The truth basically is what Naomi Klein said last fall, what Matt Taibbi wrote last spring, and what Marcy Kaptur has been saying all along on the House floor.
Klein: What I argue in the piece is that we actually have it backwards. It's not the banks that have been partially nationalized; it's Treasury that has been partially privatized by the very banks that created the crisis in the first place.
One (or two) years on - they have learnt nothing October 12, 2009 - The Oil Drum: Europe
Just over one year after it became impossible to deny that the financial crisis that had started in 2006/2007 was a major, systemic event, it is rather depressing to see that nothing has really changed and, to the contrary, if anything has, it is for the worse.
The most striking item, of course, is the continued dominance of politicians by bankers. Banks are universally seen - including by bankers - as being at the heart of the problem, and having created the crisis through reckless behavior and worse. And yet, after having being bailed out at a staggering cost, in a highly asymmetrical way (the losses were socialised, but not the banks), not only have they managed to eliminate the likelihood of any meaningful regulatory change, but more importantly they have managed to maintain the fiction that finance was the reason for earlier prosperity and should thus be protected as a source of future prosperity.
Adapted from "It Takes a Pillage: Behind the Bailouts, Bonuses, and Backroom Deals From Washington to Wall Street" by Nomi Prins
Here is a crazy idea for discussion: Not only does the public not know what to do with its anger, it actually fails even to grasp the scale of the enormous screwing we have received in the banking bailout. Most members of the population lack essential concepts and comparative measurement ability due to cognitive deficits directly related to lack of quantitative literacy.
The graphic above (click to see a legible version) illustrates a $17.5 trillion (with a "t") one-year commitment of the public to cover the bad bets of financial industry geniuses.
Meanwhile, conservative thinkers will pull large numbers out of their asses (or maybe the asses of Social Security trustees) and come up with incredibly goofy measures of "unfunded liability," said to be "$74 trillion" for Medicare (THIS is typical). Now that $74 trillion is based on a highly unlikely model that runs in time to infinity, with a ZERO current value. It's just a speculative worst-case scenario.
The various bailout mechanisms Prins and Hates discuss are trillions committed by the U.S. Treasury and Federal Reserve just this past year! But the teabaggers and town meeting bullies get riled over a health plan that won't even cost 1/10 of a trillion dollars in the next year. You'll hardly find a sign at their rally that attacks the financier-gamblers who have really sucked at the teet of the public treasury.
This is quantitative confusion rearing its ugly head in the worst way. I actually applaud them for bringing out as many people as they did two weeks ago in DC. I share some of the critique of Obama. But mostly their message is very badly focused, led by deceptive jackass mouthpieces like Glenn Beck, and hence too laden with bigotry to be considered within the realm of reality. The who, why, and how of the screw-job eludes almost the entire population, not just the teabaggers. But this opens the door for Beck, Limbaugh, and the teabaggers to blame "socialism" or direct anger at low-income home buyers while never mentioning the financier criminal class. Hell, Sean Hannity actually was a shill for one of the worst, Allen Stanford.
Lynn Steen: Counting people, counting dollars, and counting votes are part of the numeracy of life. Unlike the higher mathematics that is required to design bridges or create cell phones, counting appears to require only rudimentary arithmetic. To be sure, when large numbers, multiple components, and interacting factors are involved, the planning required to ensure accurate counts does become relatively sophisticated. So even though the underlying quantitative concepts are typically rather elementary?primarily topics such as multiplication, percentages, and ratios?the mental effort required to comprehend and solve realistic counting problems is far from simple.
I have a sinking feeling that nobody really is in the mood to listen right now.
If you can stay with that to about the 10th minute, you'll hear amazing stories of racism and abuse of reconstruction workers you probably did not think possible in America. It struck me partly because I once had my wages stolen by a company after I had done weeks of on-site work.
Krugman: Neither the administration, nor our political system in general, is ready to face up to the fact that we?ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer.
As readers may remember, I have included Geithner in the list of bad actors. Yesterday, he spun wisdom with George Snuffle-up-olous on the awesome recovery and prospects for new taxes in violation of Obama's promises. The translation is HERE.
Banks Paid $32.6 Billion in Bonuses Amid U.S. Bailout By Karen Freifeld
July 30 (Bloomberg)
-- Citigroup Inc., Merrill Lynch & Co. and seven other U.S. banks paid $32.6 billion in bonuses in 2008 while receiving $175 billion in taxpayer funds under the Troubled Asset Relief Program, according to a report by New York Attorney General Andrew Cuomo.
In the report, the state analyzed 2008 bonuses at nine banks that received TARP financing from the U.S. government. New York-based Citigroup and Merrill, since taken over by Bank of America Corp., received TARP funding totaling $55 billion, Cuomo said in his report.Feeling better about "the economy" now?
The Goldman-Sachs Re-inflation Act overjoys its campaign-funds recipients
Remember last fall when members of Congress were being told "there would be martial law in America if [they] voted no"? Well, it turns out that real risk was that Goldman-Sachs would not be able to continue to rule the world.
"Breathtakingly arrogant," according to Mike Lux, "they should have the Justice Department investigating them for anti-trust violations and all manner of stock manipulation," he wrote at Huffington Post today.
See this stunning segment from Grit TV w/Laura Flanders including Lux, Matt Taibbi, and Rob Johnson:
How'd you like to invest in something that the government has set up so that it is guaranteed to rise in price over time? That's what the carbon cap and trade would do with carbon credits--insure their increasing value by making them scarcer going forward. And both the Chicago Mercantile Exchange and Goldman-Sachs just love the idea!
Hood and the two other big processors, Horizon Organic and Organic Valley, say cutting contracts, pay and production are necessary to absorb overproduction and offset softening demand. Organic Valley, a nationwide cooperative, told Maine organic dairy farmers last month that its sales growth had dropped to near zero from about 20 percent six months ago.
"Our inventory is overstocked," said John B. Cleary, the cooperative's New England regional pool coordinator.
For many farmers, the changes coincide with crushing debt resulting from the cost of turning organic, which can run hundreds of thousands of dollars. In addition, the price of organic feed has doubled in the last year. Credit has dried up for some, and others say it is nearly impossible to sell cows and so thin their herds.
The Bangor Daily News had coverage of this issue beginning in early March, HERE. See also, HERE for some updated stories from earlier this spring.
We still buy the stuff. The product is notably better than conventional milk in every way. But it sure isn't like a few years ago when it was actually hard to find organic milk in stock.
This is a lesson about boom-bust cycles. Marx would analyze it in terms of an "epidemic of over-production" and a crisis of capitalism.
ROBERT SCHEER (Cashing In on ?Government Sachs'): ... the chairman of the New York Federal Reserve Bank made millions off his secret purchase of Goldman Sachs stock, "in violation of Federal Reserve policy," as the WSJ put it, at a time when the N.Y. Fed was ostensibly overseeing the antics of the Wall Street firm, has barely registered a blip of outrage.
When N.Y. Fed Chairman Stephen Friedman bought stock in the company that he once headed, and where he still serves as a director, he was already in violation of Federal Reserve policy and was hoping for a waiver to permit him to hold his existing multi-million-dollar stock stash and to remain on the Goldman board. The waiver was requested last October by Timothy Geithner, then the president of the N.Y. Fed and now Treasury secretary. Yet, without having received that waiver, Friedman went ahead in December and purchased 37,300 additional shares. With shares he added in January, after the waiver was granted, he ended up with 98,600 shares in Goldman Sachs, worth a total of $13,330,720 at the close of trading on Tuesday.
Funny how the bailout process always seems to operate in favor of Goldman Sachs and its insiders, whether they be with the firm directly or ostensibly serving the public. Rules don't matter to them because no one in government is inclined to hold them to account. Goldman Sachs seems to own our government.
Naomi Klein on Rachel explains the real bailout: transfer of the risk of financial collapse from the gamblers to the public
Naomi Klein pushes more information here in five minutes than most normal people (including Rachel Maddow) can in an hour. It's no wonder it looks like a private "recovery" is on the horizon--the fraudsters now own the public treasury.
What have they spent the money on? "It's sure not shaking out to communities..."
Representative Marcy Kaptur was a leader in the "skeptics caucus" over the bank bailout last fall. She had reason to be skeptical, as it turns out. No surprise to me. HERE is a link-rich post with lots of very recent material about who's gotten money and what they've done with it--to the extent anyone knows. Representative Kaptur refers to an Inspector General's report, found HERE.
Below I have some more media, links, and some additional background material I've had in draft form while I've been too busy to finish and post. Well, here it is, although it reads more like notes:
H/T Atrios: "How many here make less than $250,000 a year?"
Pensacola Tea Party
That's a beautiful job done by Sinfonian right in the belly of the beast.
Goes to show though that lots of Americans have short memories, and little grasp of details or sense of proportion. Therefore many are extremely vulnerable to these astroturf campaigns designed to co-opt their justifiable anger. The Republicans sense the opening and are willing to drive through it hard, no matter the cost to our country.
Maybe we could ask the teabaggers to come to their senses and shine their bright lights upon the cast of characters from the last decade who have bled us all dry with their cut-and-spend policies, wars, and war taxes.
Protest against economy of the rich and their war taxes at the Federal Building in Bangor
Banks with taxpayer money could buy toxic assets Fri Apr 3, 2009 7:12pm BST
By Jonathan Stempel and Karey Wutkowski - Analysis
NEW YORK/WASHINGTON (Reuters) - Banks that received billions of dollars of taxpayer money to bolster their capital could place bets on the same toxic assets that got them into trouble in the first place -- and with government support.
It is unclear whether U.S. regulators will prevent banks receiving government aid from participating as buyers in the $1 trillion Public-Private Investment Program (PPIP)...
Treasury Secretary Geithner explained a couple of weeks ago about how in the government plan "banks will have the ability to sell pools of loans to dedicated funds" to "private-sector participants" while "investors will compete to have the ability to participate in those funds and take advantage of the financing provided by the government."
Let me get this straight. Geithner's "investors" turn out to be the same banks that can't on their own get rid of their toxic assets. But they think dealing them between themselves is just peachy when staked to a load of taxpayer money.
I'm not sure if New York Times columnist Paul Krugman will be able to save America from itself (and Timothy Geithner). But I am glad he is trying:
Financial Policy Despair Published: March 22, 2009
Krugman: Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy ? specifically, the "cash for trash" plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson. This is more than disappointing. In fact, it fills me with a sense of despair.
Krugman: Far more important is the extent to which our claims of financial soundness ? claims often invoked as we lectured other countries on the need to change their ways ? have proved hollow.
Indeed, these days America is looking like the Bernie Madoff of economies: for many years it was held in respect, even awe, but it turns out to have been a fraud all along.
On the reported loss of perhaps tens of billions of dollars from the government-controlled Pension Benefit Guaranty Corporation (the outfit that guarantees private-sector defined-benefit pension plans) due to extremely ill-timed investment decisions, Krugman just blogged about the underlying causes of such recklessness. It is likely
the reason [for the bad decisions] was that the Bush administration, like many conservatives, was under the spell of the following pseudo-syllogism:
The stock market captures the essential spirit of capitalism.
Therefore, stocks will go up.
Will the Obama Administration crack under the strain of its herculean attempts to maintain the fantasies Krugman correctly decries with every breath these days? Or will they read Krugman seriously and come to their sense. Only time will tell.
This Week' Transcript: Timothy Geithner Treasury Secretary Timothy Geithner on "This Week with George Stephanopoulos"
GEITHNER: George, we came into this crisis as a country without the tools necessary to contain the damage of a financial crisis like this. In a case of a large, complex institution like AIG, the government has no ability, had no meaningful ability to come in early to help contain the fire, contain the damage, prevent the spread of that fire. Restructure the firm, change contracts where necessary, and helped make sure that the financial system gets through this...
STEPHANOPOULOS: But it would have been the right thing to do, right?
GEITHNER: If we had the legal authority, that's what we would have done. But without that legal authority, we had no good choices. We were caught between these terrible choices of letting Lehman fail -- and you saw the catastrophic damage that caused to the financial system -- or coming in and putting huge amounts of taxpayer dollars at risk, like we did at AIG, to keep the thing going, unwind it slowly at less damage to the ultimate economy and taxpayer.
Huh? They got TARP from Congress in about two weeks. Any authority they wanted could have been enacted in that bill. They chose to enact a massive privatization of control of government regulatory and financial authority--what Matt Taibbi calls "The Big Takeover" in his recent Rolling Stone piece--rather than the other way around where the public would take over and resolve bankrupt private entities.
This constitutes a hosing of the public. The last person on Earth who needs even more authority is Timothy Geithner.
Maine Owl is a news, comment & nature photography blog. The Owl is proprietor. He is a long-time peace & justice activist now residing in the Bangor, Maine area. Ms. Owl occasionally blogs here as Tammy. Our team also is enhanced by Gerald, formerly of Turn Maine Blue and now of the smashing blog Dirigo Blue.