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The Truth About the Economy that Nobody In Washington Or On Wall Street Will Admit: We’re Heading Back Toward a Double Dip

by Robert Reich

Wednesday, March 30, 2011

Why aren’t Americans being told the truth about the economy? We’re heading in the direction of a double dip – but you’d never know it if you listened to the upbeat messages coming out of Wall Street and Washington.

Consumers are 70 percent of the American economy, and consumer confidence is plummeting. It’s weaker today on average than at the lowest point of the Great Recession.

The Reuters/University of Michigan survey shows a 10 point decline in March – the tenth largest drop on record. Part of that drop is attributable to rising fuel and food prices. A separate Conference Board’s index of consumer confidence, just released, shows consumer confidence at a five-month low — and a large part is due to expectations of fewer jobs and lower wages in the months ahead.

Pessimistic consumers buy less. And fewer sales spells economic trouble ahead.

What about the 192,000 jobs added in February? (We’ll know more Friday about how many jobs were added in March.) It’s peanuts compared to what’s needed. Remember, 125,000 new jobs are necessary just to keep up with a growing number of Americans eligible for employment. And the nation has lost so many jobs over the last three years that even at a rate of 200,000 a month we wouldn’t get back to 6 percent unemployment until 2016.

But isn’t the economy growing again – by an estimated 2.5 to 2.9 percent this year? Yes, but that’s even less than peanuts. The deeper the economic hole, the faster the growth needed to get back on track. By this point in the so-called recovery we’d expect growth of 4 to 6 percent.

Consider that back in 1934, when it was emerging from the deepest hole of the Great Depression, the economy grew 7.7 percent. The next year it grew over 8 percent. In 1936 it grew a whopping 14.1 percent.

Add two other ominous signs: Real hourly wages continue to fall, and housing prices continue to drop. Hourly wages are falling because with unemployment so high, most people have no bargaining power and will take whatever they can get. Housing is dropping because of the ever-larger number of homes people have walked away from because they can’t pay their mortgages. But because homes the biggest asset most Americans own, as home prices drop most Americans feel even poorer.

There’s no possibility government will make up for the coming shortfall in consumer spending. To the contrary, government is worsening the situation. State and local governments are slashing their budgets by roughly $110 billion this year. The federal stimulus is ending, and the federal government will end up cutting some $30 billion from this year’s budget.

In other words: Watch out. We may avoid a double dip but the economy is slowing ominously, and the booster rockets are disappearing.

So why aren’t we getting the truth about the economy? For one thing, Wall Street is buoyant – and most financial news you hear comes from the Street. Wall Street profits soared to $426.5 billion last quarter, according to the Commerce Department. (That gain more than offset a drop in the profits of non-financial domestic companies.) Anyone who believes the Dodd-Frank financial reform bill put a stop to the Street’s creativity hasn’t been watching.

To the extent non-financial companies are doing well, they’re making most of their money abroad. Since 1992, for example, G.E.’s offshore profits have risen $92 billion, from $15 billion (which is one reason it pays no U.S. taxes). In fact, the only group that’s optimistic about the future are CEOs of big American companies. The Business Roundtable’s economic outlook index, which surveys 142 CEOs, is now at its highest point since it began in 2002.

Washington, meanwhile, doesn’t want to sound the economic alarm. The White House and most Democrats want Americans to believe the economy is on an upswing.

Republicans, for their part, worry that if they tell it like it is Americans will want government to do more rather than less. They’d rather not talk about jobs and wages, and put the focus instead on deficit reduction (or spread the lie that by reducing the deficit we’ll get more jobs and higher wages).

I’m sorry to have to deliver the bad news, but it’s better you know.

Nuclear Disaster: Could It Happen Here?

 

Major Corporations Pay No Taxes

 

The Rich Get Richer While Nurses, Teachers, and Firefighters Get Trounced

Published on Tuesday, March 29, 2011 by Huffington Post

The Deficit Hawks Target Nurses and Firefighters

by Dean Baker

Many people might think that the country's problems stem from the fact that too much money has been going to the very rich. Over the last three decades, the richest one percent of the population has increased its share of national income by almost 10 percentage points (Excel spreadsheet). This comes to $1.5 trillion a year, or as the deficit hawks are fond of saying, $90 trillion over the next 75 years.

To put this in context, the size of this upward redistribution to the richest one percent over the last three decades is roughly large enough to double the income of all the households in the bottom half of the income distribution. The upward redistribution amounts to an average of more than 1.2 million dollars a year for each of the families in the richest one percent of the population.

And this upward redistribution was brought about by deliberate policy. We pursued a trade and high dollar policy that was intended to put downward pressure on the wages of manufacturing workers. The Federal Reserve Board deliberately kept unemployment higher than necessary in order to weaken workers bargaining power. We extended patent monopolies to allow drug companies to jack up prices, raking in hundreds of billions a year. And, we gave the Wall Street banks the benefit of "too big to fail" status so they can borrow with a government subsidy.

These policies and others fueled this enormous upward redistribution. But the deficit hawks don't want us talking about any of these things.

The deficit hawks insist that we have to cut Social Security and Medicare benefits now! They are busy hyperventilating over the enormous deficits, the result of the economic collapse, which was in turn the result of their economic mismanagement. (Wait, we are not supposed to talk about that.)

And the deficit hawks have clear ideas on how they want to deal with the costs of Social Security and Medicare over coming decades. And, it does not involve taking money from the tiny group of wealthy people who have profited enormously at the expense of the middle class over the last three decades.

Nor are the deficit hawks interested in reining in the drug companies, the insurance companies or the doctors. The bloated prices and exorbitant pay of these actors is the main reason that U.S. health care costs are so wildly out of line with health care costs in other wealthy countries.

But deficit hawks don't get paid to go after rich people or the health care industry. Deficit hawks get paid to go after the benefits of middle-income people. This is why we were treated to a Washington Post column by finance industry executive Robert Pozen telling liberals that they should support his plan for raising the retirement age and cutting Social Security benefits for higher-income earners.

When Pozen talks about cutting benefits for higher-income earners he is not thinking of people like Peter Peterson or Robert Rubin. He has his gun sights on people earning $40,000 to $80,000 a year. In other words, Pozen wants to cut benefits for workers like schoolteachers, firefighters and nurses.

These are workers that definitely enjoy somewhat higher pay and a higher standard of living than most of the workforce, but only in Washington deficit hawks' circles are these people living lavish lifestyles that need to be cut back. These workers are quite explicitly the target of the Washington deficit hawk gang.

The deficit hawk crew will even shed some crocodile tears for the poor who earn near the minimum wage and live near the poverty level. They would raise their benefits if not for those greedy plumbers and mechanics who insist on getting the Social Security benefits that they paid for.

In the next few weeks we will be treated to an endless parade of budget experts who will be yapping about "entitlements" and insisting that middle-income workers are living too lavishly. While all these experts have really impressive credentials it is important to remember that these credentials did not prevent this highly paid crew from overlooking the largest asset bubble in the history of the world.

If this group had paid a tenth as much attention to the housing bubble as they are now paying to the deficit projections, we would not be sitting around with 25 million who are unemployed, under-employed or out of the workforce altogether. The deficit hawks are very good when it comes to whining about the deficit and demanding sacrifices from middle-class workers. They just aren't very good when it comes to understanding the economy.

© 2011 Huffington Post

Dean Baker is the co-director of the Center for Economic and Policy Research (CEPR). He is the author of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and the more recently published Plunder and Blunder: The Rise and Fall of The Bubble Economy. He also has a blog, "Beat the Press," where he discusses the media's coverage of economic issues.

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London Marchers Protest Massive Spending Cuts in Britain

Published on Saturday, March 26, 2011 by Los Angeles Times

It was one of the biggest demonstrations since rallies in 2003 against the Iraq war.

by Henry Chu

LONDON –  Tens of thousands of demonstrators whistled, chanted, drummed and marched their way through the heart of London on Saturday to protest massive government spending cuts that threaten to leave almost no part of British society untouched.

Over 500,000 Brits turnout for the anti-cuts march in London, Saturday, March 26, 2011. Photograph: Ian Langsdon/EPA

It was one of the biggest public demonstrations in Britain since 2003, when antiwar rallies were held across the country before the invasion of Iraq. Organizers said up to 500,000 people participated in the march, whose carnival-like atmosphere was briefly marred by black-clad anarchists who smashed a few shop windows, flung paint bombs and attacked luxury icons such as the Ritz Hotel.

The protesters gathered here from all corners of Britain to express their outrage over a whopping $130 billion in cutbacks that the government insists are necessary to tame a runaway budget deficit. The retrenchment is expected to result in a radical shakeup of bedrock social services such as welfare and healthcare and in the elimination of nearly half a million public-sector jobs.

"It's our right to march and to say we don't accept any of this," said Corinne Drummond, 37, a nurse from East London who joined several colleagues for the demonstration, which began in the morning and lasted for hours.

On a gray and occasionally drizzly spring day, a huge of column of protesters snaked its way along some of London's best-known streets, past landmarks such as Big Ben and the Houses of Parliament and through Trafalgar Square and Piccadilly Circus.

They were a motley crowd of civil servants, environmentalists, prison officers, academics, feminists and young parents with toddlers on their shoulders. "Don't believe in the deficit," some placards exhorted, while other signs and T-shirts called for a "general strike now" and exhorted Britons to "make tea, not war."

In Hyde Park, the leader of the opposition Labor Party ridiculed Prime Minister David Cameron's vision of a "Big Society" full of citizen volunteers who plug the holes left by cuts in government spending.

"You wanted to create a Big Society. This is the Big Society, the big society united against what your government is doing to our country," Ed Miliband said in a speech that invoked Martin Luther King Jr. and the American civil rights movement. "We stand today not for the minority. We stand today for the mainstream majority of Britain."

The Labor Party, which was kicked out by voters in May after 13 years in power, acknowledges that some cuts are unavoidable to shrink a deficit built up largely under its watch. But it says the scale and pace of the austerity plan put forward by the Conservative Party-led government will strangle Britain's fledgling economic recovery and hurt the most vulnerable members of society.

Effects of the belt-tightening will begin to be felt more acutely next month, when libraries start closing down, youth programs disappear, social workers get laid off and fewer buses ply the streets. In the northern city of Manchester, police are bracing for the elimination of nearly 3,000 jobs – a quarter of the department's workforce.

Analysts say the spending cuts could change the fabric of British society in a way not seen since the free-enterprise revolution of Margaret Thatcher in the 1980s.

"It's changing the whole ethos of everything," said nurse Rikke Albert, 37. "That's not what I signed up for when I did my training."

© 2011 Los Angeles Times

Thousands Attend Downtown L.A. Labor Rally

By Kurt Streeter, Los Angeles Times

March 27, 2011

Police estimate 5,000 to 8,000 teachers, nurses, Teamsters, electricians, actors and others marched to support their peers in Wisconsin and oppose any similar organized-labor restrictions in California.

Alarmed by recent union losses in a Wisconsin labor battle, thousands of organized workers marched through downtown Los Angeles on Saturday, vowing to fight a similar fate here in cash-strapped California.

Police estimated between 5,000 and 8,000 people attended the protest, which ended in a packed rally at Pershing Square. The event comes in response to the Wisconsin Legislature's approval of a bill this month that curtails the collective bargaining rights of many unions and follows a weeks-long battle.

Marchers cheered speakers such as Teamsters General President James P. Hoffa; Maria Elena Durazo, secretary-treasurer of the Los Angeles County Federation of Labor; and Mahlon Mitchell, president of the Professional Fire Fighters of Wisconsin.

The Wisconsin bill, which was signed by Republican legislators without the support of Democrats, exempted firefighters and other public safety workers. However, Mitchell told the crowd that his union still opposes the action.

"This is a direct attack" on all unions and the entire middle class, Mitchell shouted, warning that similar policies could soon be introduced by politicians in California, which is grappling with an estimated $26-billion deficit. "An injury to one is an injury to us all!"

Mitchell's words were met with loud cheers, chants and beating drums. Flags and placards waved in the air, many of them bashing wealthy corporations and conservative politicians.

Protester Ruben Najara, 49, said he has been working at the Los Angeles Department of Water and Power for just over two decades. A Covina resident who holds an associate's degree from a trade college, Najara said the union job has given him a secure, working-class life and the ability to comfortably raise three children.

He said he fears that on the heels of the Wisconsin law, union collective bargaining power will be steadily eroded throughout the country. "We are willing to make concessions," he said. "But you have to have two sides at the table to bargain."

The march began just outside Staples Center, which served as a staging area for thousands of union members. Leading much of the procession was a sea of burly, black-shirted Teamsters. Behind them, stretching back several city blocks, were nurses, telephone technicians, electricians, truckers, screenwriters, actors, longshoremen, teachers and others.

Among those who showed up to voice support were a group of parents whose children attend Eagle Rock Elementary — a facility they said suffered from inadequate funding.

"Enough is enough," said Amanda Millet, who has two kids at the school. "This year we stand to lose some of our best teachers, the very best. It's amazing that the teachers and their union are being blamed for what is happening with the economy right now.... I see a lot of very nice new buildings housing the LAUSD administration. They should get out of those offices and see what's happening at a school like ours, a place that needs to keep all the good teachers it can."

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Copyright © 2011, Los Angeles Times

How Germany Manages to Have an Export Economy and Provide Plenty of Jobs While the US is Engaged in a Race to the Bottom

by John Lawrence

Germany's economy is doing just fine while the US economy languishes. There are many reasons for this, but one that predominates is the Value Added Tax (VAT). At each stage in the production process, when a product or service changes hands, it is taxed at 19%. So if you're manufacturing a car, for example, when you buy a component like a transmission from another manufacturer, that manufacturer has to pay the VAT before that product can be sold to you. Some products and services like food and doctors pay a lower VAT.

The VAT must be paid on all imports in one fell swoop as they enter the country whereas the VAT was paid in stages by different business entities at each stage along the supply chain within the country. This tends to discourage imports, and make it more profitable to manufacture and sell (and thus provide jobs) within the country of Germany itself. Contrast this with America in which there is no tax on imports (thanks to free trade) so it is cheaper to manufacture abroad and import products into the US thus creating jobs abroad. The VAT acts as a tariff on imports and also provides a loopholeproof source of revenues for the government. In the US many major corporations like GE and Exxon Mobil, for example, pay no income tax even though they make tens of billions of dollars in profits. In fact many of them actually get tax refunds or subsidies! This process defunds the government, frays the safety net for the middle class and the poor and results in the budget being balanced, to the extent that it is, on the backs of the poor and middle class.

For German exports, the VAT is refunded thus encouraging exports at the expense of imports. No wonder Germany has a healthy export economy. This acts like a tariff in reverse. So imports are subjected to a 19% VAT at the border and exports are given a 19% refund at the border. American exports are given no such incentive. In short the US is letting foreign countries eat their lunch and running up their trade deficit in the process because of an antiquated approach to taxation which favors American multinationals while shortchanging American taxpayers.

The following is from an article, "The Foreign Value Added Tax: Making Our Exports Uncompetitive:"

Unknown to most Americans, the United States is losing the ability to compete in global trade because of the little known foreign Value-Added Tax (VAT). Foreign governments use this tax against United States producers as a means to prevent the importation and consumption of U.S. goods, while providing incentives for their countries to export their goods to the U.S. The foreign VAT was a subsidy created after World War II to speed up beneficial other countries' recovery. However, it is still used today by 149 countries to exploit this advantageous position against American trade. We have not used it domestically to off set theirs as a benefit to ourselves. The foreign VAT gives the companies of other nations and their exports the upper-hand by providing incentives in the form of rebates equal to the indirect tax on the exported product. For example, the VAT rate is 19 percent in Germany; therefore the Germans receive a 19 percent rebate from their government on each product exported to the U.S. This acts as a subsidy for a product while encouraging the exportation of products to the U.S. However, the VAT imposes a punishment on U.S. exports by placing a VAT equivalent to the Value Added Tax rate of the importing country. This means all U.S. exports that enter into Germany are taxed 19 percent on top of another 19 percent for the transportation fees of the goods into the country. The VAT destroys American industries’ ability to promote exports, while encouraging foreigners to sell their products to Americans – it must be amended or eliminated. In 2001, European countries had a VAT rate of 19.2 percent. By 2005, 94 percent of U.S. exports received a VAT. In the same year, foreign governments received rebates of $239 billion from the tax while collecting $131 billion from U.S. producers of goods and services. It is not surprising that the U.S. has become a nation promoting imports over exports under these unfair and harsh tax conditions. It can be seen why some companies choose to move overseas to produce their product abroad to avoid this monstrous tax and gain the advantage of it in some cases. Because of this detrimental tax, American firms cannot compete worldwide. Numerous attempts have been made by Congress to offset the tax – in 1974 the Nixon administration was urged to negotiate the tax during the Tokyo Round of global trade talks – only to be ignored by the other countries. In 1972 and 1984, Congress changed the tax system to exempt between 15 and 30 percent of an exporter’s income from U.S. taxes to offset the disadvantage of the VAT. The European Union (EU) complained to the World Trade Organization (WTO) in 1998, saying the U.S. tax exemption, acting as a tax subsidy, was a direct violation of the WTO agreement. In 1999 the WTO ruled in favor of the EU, giving the U.S. one year to change its tax exemption law or face penalties from the WTO. Again in 2000, Americans enacted new tax legislation to offset the VAT, which resulted in yet more EU complaints and another WTO case. The WTO decided in favor of the EU, leading to a ruling in 2002 allowing the EU to impose retaliatory tariffs of $4 billion each year on U.S. imports. By this time 25 European nations enacted the VAT to usurp America’s ability to trade. In 2004 Pres. Bush created new legislation again to offset the VAT. This again led to complaints from the EU – again filing a case with the WTO – arguing export subsidies were provided by the new legislation. In 2006 President Bush and Congress stopped enacting the tax provisions to U.S. exporters, demonstrating how the EU and WTO had successfully usurped the U.S. of its power to promote fair and free trade. During the battle between the WTO and the U.S., all nations were provided full VAT privileges, usurping the U.S. of fair trade. The WTO and EU do not serve in the best interest of the U.S. They are acting to support and promote continuance of this debilitating tax. The only way the WTO will allow us to offset the VAT is to have one of our own. We could feasibly do this if we were to lower our income tax. Until we do get a VAT of our own, our companies and our nation will continue to suffer against this unfair disadvantage.

While the US is straitjacketed by partisan bickering and paralyzed by insane trade policies, Germany and other countries are surging ahead with enlightened, rational thinking which gets translated into effective policies that keep the German government in a position of solvency and keep German factories humming. Meanwhile, the US engages in a race to the bottom encouraging the export not of products but of jobs and defunding the government by giving tax breaks to corporations and the rich.  Another informative article is the following:

In a June 28, 2010, economist Ian Fletcher said “Germany, like the U.S., is nominally a free-trading country.  The difference is that, while the U. S. genuinely believes in free trade, Germany quietly follows a contrary tradition that goes back to the 19th-century German economist Friedrich List …  So despite Germany’s nominal policy of free trade, in reality a huge key to its trading success is a vast and half-hidden thicket of de facto non-tariff trade barriers.” Fletcher quoted from a report by the Heritage Foundation: “Non-tariff barriers reflected in EU and German policy include agricultural and manufacturing subsidies, quotas, import restrictions and bans for some good and services, market access restrictions in some services sectors, non-transparent and restrictive regulations and standards, and inconsistent regulatory and customs administration among EU members.” Another opinion of Germany’s export success as reported in The New York Times, is “the roots of Germany’s export-driven success reach back to the painful restructuring under the previous government of Chancellor Gerhard Schröder.  By paring unemployment benefits, easing rules for hiring and firing, and management and labor’s working together to keep a lid on wages, ensured that it could again export its way to growth with competitive, nimble companies producing the cars and machine tools the world’s economies – emerging and developed alike – demanded.” The same article reported that Germany’s Chancellor Angela Merkel resisted the use of government stimulus spending that the United States and some European partners used to handle the recession.  Instead of extending unemployment benefits like the United States has done several times since the recession began, Germany “extended the “Kurzarbeit” or “short work” program to encourage companies to furlough workers or give them fewer hours instead of firing them, making up lost wages out of a fund filled in good times through payroll deductions and company contributions.  At its peak in May 2009, roughly 1.5 million workers were enrolled in the program,” and the Organization for Economic Cooperation and Development estimated that   “more than 200,000 jobs may have been saved as a result.” As a result, Germany’s unemployment rate at the height of the global recession was 9.0 percent in contrast to the 10.2 percent of the United States.  The German jobless rate in October 2010 was down to 7.0 percent in contrast to the 9.6 percent of the United States.  Germany is one of the few economies experiencing a solid recovery and one of the even fewer economies without a substantial deficit crisis on its hands.  Germany’s exports surged month by month in 2010, but year-end data hasn’t been released yet.

The US model of free trade has largely worked to create a trade deficit in the US, encourage a consumer based economy based on cheap imported products and undermine American workers. While the US encourages the offshoring of US corporations and unlimited imports into the US economy, it gives no incentives for corporations based in the US to export to other countries. As a result it is at a competitive disadvantage, and is losing out in the struggle to supply its government with cash and its workers with jobs. But instead of a rational assessment of this situation and a resolve to do something about it, the US argues about the President's birth certificate and engages in pointless, meaningless culture wars tantamount to arguing about how many angels can dance on the head of a pin.

The Austerity Delusion

by Paul Krugman

Published March 24, 2011 by the New York Times

Portugal’s government has just fallen in a dispute over austerity proposals. Irish bond yields have topped 10 percent for the first time. And the British government has just marked its economic forecast down and its deficit forecast up.

What do these events have in common? They’re all evidence that slashing spending in the face of high unemployment is a mistake. Austerity advocates predicted that spending cuts would bring quick dividends in the form of rising confidence, and that there would be few, if any, adverse effects on growth and jobs; but they were wrong.

It’s too bad, then, that these days you’re not considered serious in Washington unless you profess allegiance to the same doctrine that’s failing so dismally in Europe.

It was not always thus. Two years ago, faced with soaring unemployment and large budget deficits — both the consequences of a severe financial crisis — most advanced-country leaders seemingly understood that the problems had to be tackled in sequence, with an immediate focus on creating jobs combined with a long-run strategy of deficit reduction.

Why not slash deficits immediately? Because tax increases and cuts in government spending would depress economies further, worsening unemployment. And cutting spending in a deeply depressed economy is largely self-defeating even in purely fiscal terms: any savings achieved at the front end are partly offset by lower revenue, as the economy shrinks.

So jobs now, deficits later was and is the right strategy. Unfortunately, it’s a strategy that has been abandoned in the face of phantom risks and delusional hopes. On one side, we’re constantly told that if we don’t slash spending immediately we’ll end up just like Greece, unable to borrow except at exorbitant interest rates. On the other, we’re told not to worry about the impact of spending cuts on jobs because fiscal austerity will actually create jobs by raising confidence.

How’s that story working out so far?

Self-styled deficit hawks have been crying wolf over U.S. interest rates more or less continuously since the financial crisis began to ease, taking every uptick in rates as a sign that markets were turning on America. But the truth is that rates have fluctuated, not with debt fears, but with rising and falling hope for economic recovery. And with full recovery still seeming very distant, rates are lower now than they were two years ago.

But couldn’t America still end up like Greece? Yes, of course. If investors decide that we’re a banana republic whose politicians can’t or won’t come to grips with long-term problems, they will indeed stop buying our debt. But that’s not a prospect that hinges, one way or another, on whether we punish ourselves with short-run spending cuts.

Just ask the Irish, whose government — having taken on an unsustainable debt burden by trying to bail out runaway banks — tried to reassure markets by imposing savage austerity measures on ordinary citizens. The same people urging spending cuts on America cheered. “Ireland offers an admirable lesson in fiscal responsibility,” declared Alan Reynolds of the Cato Institute, who said that the spending cuts had removed fears over Irish solvency and predicted rapid economic recovery.

That was in June 2009. Since then, the interest rate on Irish debt has doubled; Ireland’s unemployment rate now stands at 13.5 percent.

And then there’s the British experience. Like America, Britain is still perceived as solvent by financial markets, giving it room to pursue a strategy of jobs first, deficits later. But the government of Prime Minister David Cameron chose instead to move to immediate, unforced austerity, in the belief that private spending would more than make up for the government’s pullback. As I like to put it, the Cameron plan was based on belief that the confidence fairy would make everything all right.

But she hasn’t: British growth has stalled, and the government has marked up its deficit projections as a result.

Which brings me back to what passes for budget debate in Washington these days.

A serious fiscal plan for America would address the long-run drivers of spending, above all health care costs, and it would almost certainly include some kind of tax increase. But we’re not serious: any talk of using Medicare funds effectively is met with shrieks of “death panels,” and the official G.O.P. position — barely challenged by Democrats — appears to be that nobody should ever pay higher taxes. Instead, all the talk is about short-run spending cuts.

In short, we have a political climate in which self-styled deficit hawks want to punish the unemployed even as they oppose any action that would address our long-run budget problems. And here’s what we know from experience abroad: The confidence fairy won’t save us from the consequences of our folly.

 

Want to Cut the Deficit? Restore Fair Taxes on Corporations and the Wealthy

Published on Friday, March 25, 2011 by CommonDreams.org

by Deborah Burger

If the deficit hawks in Congress are serious about righting our economic ship and reducing deficits in the federal budget and many state capitols, it would we worth listening to the voices rising from the streets suggesting a very different solution than more cuts in safety net programs, education, pensions, and worker’s rights.

Greed at the upper echelons of our society is bankrupting our governments at every level. "Suggesting corporations and the wealthiest Americans pay their fair share," writes Deborah Burger, "usually earns one the reproof of advocating class warfare. But class warfare when practiced by the elites is apparently perfectly acceptable. The average CEO who was paid $27 for every dollar earned by an employer 25 years ago – during which wages have mostly fallen or stagnated – now gets a ratio of about $275 to $1."

This is not a budget fight, it’s a fight for the future of an America in which everyone should be able to retire in dignity, not worry about whether they can go to the doctor when they get sick, or whether there will still be schools for their kids.

How will we pay for it? By increasing the revenues from those who can most afford it, not by punishing those who have the least. By requiring corporations and the wealthiest individuals to pay their fair share, and stop blaming working people for an economic crisis created by Wall Street and exploited by their politician acolytes.

We’ve all heard the arguments. Pass more corporate tax breaks because that’s what makes the economy grow. Except it doesn’t.

Corporate profits per employee are at record levels. At $1.6 trillion, third quarter 2009 corporate profits were the highest ever recorded. Yet official unemployment still hovers near 9 percent, and the real jobless number is probably double that. Whatever big corporations are doing with their record profits, they are not hiring more workers.

Or the argument that our 35 percent corporate tax rate is one of the highest in the world. Except few if any major corporations pay anywhere near that amount. Half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years from 1998 to 2005, according to a recent Government Accounting Office study.

How do they accomplish this? Pages of corporate tax loopholes that render the supposed tax rate meaningless, loopholes not available to the average working family.

Who are some of those tax scofflaws? Bank of America and Citigroup, two of the financial institutions that, unlike workers did actually create the financial meltdown, paid no taxes in 2009. Boeing, just awarded a new $35 billion contract by the federal government to build airplanes, also paid no taxes between 2008 and 2010 despite recording $10 billion in profits those year, reports Citizens for Tax Justice.

Where’s the shared sacrifice from these corporate giants? Not from General Electric which, as the New York Times reported March 24, made $14.2 billion in profits in 2010, but paid no U.S. taxes, and was rewarded with the appointment of their top executive to head President Obama’s Council on Jobs and Competitiveness. Apparently paying no taxes is a model for how to be competitive.

Then there’s the wealthiest Americans who won a two year extension on tax breaks in December and also profited from the near elimination of estate taxes, at a time when the richest 5 percent of Americans control 23 percent of total income, compared to just 12 percent for the 40 percent at the bottom.

According to Merrill Lynch Global Wealth Management and Capgemini Consulting, there were about 3 million high net worth individuals and ultra high net wealth individuals in the US in 2009, those with investable assets, excluding primary residences and consumables, of from $1 million to $30 million.

Calculations by the Institute for Health and Socio-Economic Policy, research arm of National Nurses United, shows that a one-time wealth surcharge of 14% on those assets would more than pay for the $1.6 trillion budget deficit projection for 2011. Or, it would support about 33.8 million households at the national real median income level for 2008, pay for a year’s worth of AIDS medication for about 142 million patients, or create 34 million jobs at $50,000 per year.

In other words, we could more than balance our federal and state budgets without cutting Social Security or slashing pensions for public servants or depriving students of access to a decent education or far too many Americans of access to healthcare.

Turn off the Fox News echo chamber and you can hear the sounds of those calling for economic justice and a more fair tax system every day in the streets of Madison, Columbus, Indianapolis, and other cities across America. They have opened a door that will not be closed, and their voices are getting louder.

Deborah Burger is a registered nurse and a co-president of National Nurses United

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G.E.'s Tax Bill for 2010: $0

 

Corporate Profits At All-Time High As Recovery Stumbles

by Yepoka Yeebo

from Huffington Post, March 25, 2011

NEW YORK -- Despite high unemployment and a largely languishing real estate market, U.S. businesses are more profitable than ever, according to federal figures released on Friday.

U.S. corporate profits hit an all-time high at the end of 2010, with financial firms showing some of the biggest gains, data from the federal Bureau of Economic Analysis show. Corporations reported an annualized $1.68 trillion in profit in the fourth quarter. The previous record, without being adjusted for inflation, was $1.65 trillion in the third quarter of 2006.

Many of the nation's preeminent companies have posted massive increases in profits this year. General Electric posted worldwide profits of $14.2 billion, while profits at JPMorgan Chase were up 47 percent to $4.8 billion.

Corporate profits steadily increased last year as companies continued holding onto record amounts of cash and other liquid assets while cutting costs, laying off workers and wringing more productivity -- defined as the amount of output that comes from an hour of work -- from remaining staff, even as the recession eased.

To put that in perspective, said Lynn Reaser, the chief economist at Point Loma Nazarene University in San Diego, it's important to note that companies were able to bring production back up to pre-recession levels without hiring any more workers.

"We have now recovered all of the output lost in the recession, but we are still down by 7.5 million workers," she said.

In addition to layoffs, some companies continued to cut wages and benefits last year. Sub-Zero, the freezer and refrigerator manufacturer, told workers last year that factories in Wisconsin would have to be shut down, with 500 employees losing their jobs, unless staff took a 20 percent pay cut, The New York Times reported.

Workers were expected to put in more hours without overtime pay, while staff facing fewer hours of work due to furloughs were expected to do as much as they would have in a full workday, according to NPR.

But, economists said, companies may have squeezed as much as they can out of workers, with a decline in profits for non-financial companies in the fourth quarter of last year suggesting that to improve production, companies will have to start hiring seriously again.

On the whole, Reaser said, corporations have significantly improved their balance sheets since the financial crisis. "It's helped pave the way for a significant gain for corporate capital spending, dividend payouts and corporate buybacks, as well as the significant rise in stock prices," she said.

But while the financial sector continued to recover from its 2008 meltdown -- with profits jumping some $51 billion in the fourth quarter, a gain of 51 percent over the previous quarter -- non-financial firms actually saw profits fall by roughly $10 billion, according to the BEA figures.

Part of the reason, said Reaser, was that although high productivity drove down labor costs, persistent unemployment and pinched consumers left companies unable to charge the higher prices needed to boost profits. More companies will start pushing more aggressively to improve profit margins this year, she said.

In order for those efforts to pay off, she said, many companies will have to start hiring -- and keep hiring.

Until the end of last year, companies were able to boost productivity by squeezing their remaining workers, who were eager to prove they were worth their paychecks. "But," said Paul Ashworth, an economist at Capital Economics, "you can't keep getting more out of workers quarter after quarter after quarter."

To ramp up production this year, Ashworth said, companies have already started hiring modestly. Federal figures show the economy added total of 192,000 jobs in February, the most in nearly a year. The unemployment rate fell to 8.9 percent last month, the lowest since April 2009.

Economic growth figures released on Friday also suggested firms were slowly stepping up production. The Commerce Department revised upwards its projections for gross domestic product growth in the fourth quarter of 2010, to 3.1 percent from 2.8 percent.

The new projection, BMO Capital Markets senior economist Sal Guatieri said, is "consistent with an economy growing fast enough to gradually reduce the unemployment rate." But, he said, most of the increase was in business inventories -- companies producing and stockpiling more -- rather than consumer confidence.

Despite positive signs, economists warned that economic growth could be hit by the twin shocks of high gas prices and the impact of events in Japan, which has hampered auto and electronic supply chains. "There are mild headwinds that will slow growth a little bit," said Nariman Behravesh, an economist at IHS Global Insight, an economic and financial analysis firm. "They're not going to derail the recovery, and we're guessing they'll be temporary."

U.S. consumers appear to be growing nervous, thanks to events in Japan, fears over nuclear power, and unrest in the Middle East and north Africa. That anxiety could take an economic toll, with consumer sentiment falling this month to its lowest level since November 2009, according to the Reuters/University of Michigan index.

"The sharp drop in consumer confidence and Japan-related supply chain bottlenecks will likely translate into real GDP growth of only around 2.4 percent in the first quarter, with a bounce back to the 3.5 percent to 4 percent range in the second quarter," Behravesh said, revising his quarterly GDP growth estimate down from 4.2 percent.

The Politicization of Child Hunger

by Rev. Al Sharpton

from Huffington Post, March 25, 2011

In the most powerful nation of the United States, there is an often-overlooked and egregious reality -- starving children. According to the Agriculture Department, there are now 17.2 million children that are at risk of lacking adequate food across the country. Sadly, as the economy still struggles to recover, we will only see these startling numbers rise, especially among those that are already the most vulnerable among us. And if a proposed GOP Congressional bill passes, these disenfranchised and forgotten ones could see what little food they have literally ripped from their mouths if a family member dare fight for his/her rights as a working, contributing member of society. It is beyond despicable; it is the politicization of child hunger.

According to a scathing piece in Think Progress, H.R. 1135 -- recently introduced by a group of House Republicans -- is not only pushing for an overall spending limit on means-tested welfare programs, but in an unprecedented and shocking maneuver, states that all food stamp benefits will be eliminated to any family where an adult is striking against an employer for any reason. Translation: any employee who may be bargaining for fair wages so that he/she may not have to put his/her family through the rigors of governmental aide in the first place, will likely think twice before taking such action now for fear of watching a child starve. It is the highest form of intimidation by those that already yield immense power over the nation's working-class and poor.

There are an estimated 44 million Americans that desperately depend on food stamps today -- an increase of 13 percent from last year alone. And a shocking 1 in 5 children in the U.S. get an adequate amount of nutrition thanks to food stamps. This latest gimmick by the far right to bully families and their children cannot be ignored, nor can we allow them to penalize our little ones as they play a game of politics. In a continuing effort to demonize and eliminate unions in this country, they now feel it is appropriate to use children as a casualty in their war on working families.

When the great Dr. Martin Luther King Jr. went to Memphis, Tenn. in his final march in 1968, he was standing alongside laborers who were collectively chanting for livable wages and benefits. If this proposed legislation were in effect in '68, the children of those marching with Dr. King on that day would not have been able to receive food stamps. The right attempted to hijack the memory of Dr. King last year, and now they are sending a clear signal that they would rather allow the children of those protesting to starve than support the very cause Dr. King gave his life for.

The fact that such an outlandish proposal is even a thought in a civil society like ours is beyond the pale. It is cruel, and lacks any semblance of moral recognition. We all know that politics can and often is a dirty game, but when did our children -- innocent boys and girls -- become targets for self-aggrandizing individuals willing to do practically anything to advance their own (or their party's own) agenda? How do we as human beings think it is OK to take away food from kids because we don't want to pay their parents a decent salary? And how can anyone even think of starving the very young in order to punish a worker? We cannot, nor should we even dream of validating any of these reprehensible ideas.

If children in fact emulate adults, we must ask ourselves, what example are we setting here?

General Electric: King of the Tax Dodgers

Published on Friday, March 25, 2011 by CommonDreams.org

by Chuck Collins

Congressional Republicans are about to cut the Tsunami Warning System from the National Weather Service budget. But if General Electric paid their fair share of taxes, we could reverse this and billions in additional budget cuts.

GE — best known for its light bulbs, refrigerators — and lately, its nuclear reactors — is one of the country's biggest tax dodgers.

Recent filings show that in 2010, General Electric reported global profits of $14.2 billion, claiming $5.1 billion from U.S. operations.

How much did it pay in U.S. corporate taxes? Zero. Actually, less than zero. We taxpayers paid G.E. $3.2 billion.

As David Kocieniewski reports in The New York Times, G.E. "has been cutting the percentage of its American profits paid to the Internal Revenue Service for years, resulting in a far lower rate than most multinational companies."

According to Citizens for Tax Justice, between 2006 and 2010, General Electric reported $26.3 billion in pretax profits to its shareholders but paid no U.S. taxes. In fact, they received $4.2 billion in refunds from Uncle Sam for an effective tax rate of negative 15.8 percent over these five years.

General Electric accomplishes this feat by using is political muscle in Congress and lobbying for special tax treatment and corporate welfare. It also aggressively moves is profits to offshore tax havens including Bermuda, Singapore, and Luxembourg.

While several divisions of GE have struggled over the last decade, GE's accountants think of themselves as a profit center. The company¹s 975-member tax division includes many former Treasury and IRS officials who never a met a loophole they didn¹t love.

Why do we tolerate the behavior of companies like General Electric? These Benedict Arnold corporations reap all the benefits of doing business in the U.S. ­yet avoid their responsibilities for paying. Next time they have a fire at one of their plants, they should call the Fire Department in Bermuda.

GE will only pay its fair share when enough citizens wake up and demand that our politicians crack down on tax dodgers. No politician should be allowed to propose a budget cut or moan about austerity until they crack down on the scofflaws such as General Electric.

See also, Chuck's recent column, Corporate Tax Dodgers, Pay Up ­and his Talking Points on Corporate Tax Dodging.

Chuck Collins is a senior scholar at the Institute for Policy Studies where he directs the Program on Inequality and the Common Good (www.inequality.org). He is co-author of The Moral Measure of the Economy and with Bill Gates Sr. of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes

Plastic Particles Circulating Endlessly in World's Oceans

Published on Thursday, March 24, 2011 by Inter Press Service

by Stephen Leahy

HONOLULU, Hawaii - That plastic bottle or plastic take-away coffee lid that has 20 minutes of use can spend decades killing countless seabirds, marine animals and fish, experts reported here this week.

On remote Pacific island atolls, diligent albatross parents unknowingly fill their chicks' bellies with bits of plastic that resemble food. The chicks die of malnutrition, and when their bodies decay all those plastic bottle tops, disposable lighters, and the ubiquitous bits of plastic detritus get back into the environment in a cruel perversion of 'recycling'.

There is now so much plastic in the oceans it is likely that virtually every seabird has plastic in its belly if its feeding habits mean it mistakes plastic bits for food. The same is true for sea turtles, marine animals or fish, experts say.

Northern fulmars, a common seabird numbering in the millions, have a collective 45 tonnes worth of plastic bits in their bellies, estimates Jan Andries van Franeker, a biologist with the Institute for Marine Resources and Ecosystem Studies at the University of Wageningen in Holland.

At least 95 percent of fulmars in the North Sea where van Franeker has been working for three decades have one to several dozen bits of plastic in their stomachs. The same is true for related species like the tiny Wilson's storm petrels, which unknowingly transport an estimated 35 tonnes of plastic from their wintering grounds in the North Atlantic to breeding grounds in the Antarctic, he says.

"If a seabird's feeding habits mean it could mistake plastic for food, then it will likely have plastic in its stomach," he said in an interview at the week-long Fifth International Marine Debris Conference, which ends Friday in Honolulu, Hawaii.

It has been 10 years since the last international marine debris conference and the hope is that industry, civil society, researchers and policy makers will find common ground on the strategies and best practices to assess, reduce, and prevent the impacts of marine debris.

"I sometimes have this kind of dream or nightmare where those fulmars drop all of that plastic on an audience in big conference room like this," van Franeker told IPS. "It would make a very clear statement."

It is a statement that needs to be made with the escalating problem of the world's oceans being filled a staggering amount of plastic, fishing gear, and all other kinds of debris. There is no accurate accounting of exactly how much but it appears to be in the tens of millions of tonnes each year and is mostly from land-based sources.

A 2006 United Nations Environment Program estimate suggested every square kilometer of world's ocean has an average of 13,000 pieces of plastic litter floating on the surface. A walk on an ocean shoreline anywhere in the world will provide ample evidence of the scale of the problem - unless it was recently cleaned up.

The Ocean Conservancy, a U.S.-based NGO, has been leading beach and shoreline cleanups around the world for 25 years. Over that time, nearly nine million volunteers in 152 countries have cleaned up and cataloged 66 million kilograms of trash, according a new report released here in Honolulu.

The top three trash items collected by number of items found were cigarette butts, food packaging and bottle caps or lids. Plastic bags, bottles and straws or stirrers also made the top 10.

"People don't realize that the cumulative impact of marine debris is a major issue for the oceans," said Achim Steiner, executive director of the United Nations Environment Program (UNEP).

UNEP and the National Oceanic Atmospheric Administration (NOAA) are conference co-sponsors. (Full disclosure: UNEP provided travel funding for IPS to attend the conference).

Steiner said marine debris is an "out of sight, out of mind" type of problem but noted there was new science showing that tiny plastic particles called microplastics may be leaching endocrine disruptor chemicals affecting the health of marine species and possibly humans.

"We need to become less reliant on plastics," he told conference participants in a video statement.

About 260 million tonnes of new plastic is made each year. Plastic does not really biodegrade, it only breaks down into smaller pieces until it is microscopic - microplastic particles - that can remain in the environment for hundreds of years.

In 1950, just five million tonnes of plastic was manufactured globally. Today each person in developed countries uses about 100 kgs of plastic annually while less developed use 20 kgs and that number is growing rapidly.

Steiner said policies like South Korea's mandatory Extended Producer Responsibility System (EPR) are not only part of the solution but a new source of jobs and income. The EPR system requires manufacturers and importers to recycle a certain amount of their products. In the five years since the program's launch in Korea, six million tonnes of waste has been recycled, including 70,000 tonnes of plastic, producing a financial benefit of over 1.6 billion dollars.

Keeping plastic trash out of the ocean is as simple as setting up a mandatory deposit system with a high enough value on anything plastic to ensure it is too valuable to throw away, says van Franeker. Germany, the Netherlands and the Nordic countries all have deposit systems for plastic bottles and recycling rates are better than 95 percent as a result.

"Degradable or compostable plastic should be banned. The bio-plastics have as much plastic as those made from oil," he said.

The so-called degradable bio-plastics simply break down into microplastic particles faster than traditional plastics. "We might not be able to see them with our eyes but the plastic is still there," he added.

The industry pushes degradable and compostable plastics so that one-time short term use of plastic can continue, he said. "One time use of plastic is simply unsustainable."

Van Franeker is not anti-plastic. "It is a wonderful material. Real plastic is valuable. It can be made to be safe and reusable."

Copyright © 2011 IPS-Inter Press Service

Corporations Behind ‘WinAmerica’ Tax Holiday Campaign Already Pay Extremely Low Taxes

by Pat Garofalo

from Think Progress, March 24, 2011

As we’ve been documenting, several multinational corporations (along with their Republican allies) have been pushing Congress to enact a tax repatriation holiday, allowing them to bring money they have stashed offshore back to the U.S. at a dramatically lower tax rate. Usually, money brought back to the U.S. is subject to the statutory corporate tax rate of 35 percent.

The corporations pushing for a tax holiday claim that it will allow them to bring funds into the U.S. that they will invest in domestic operations and job creation. However, Congress approved a repatriation holiday in 2004, only to see companies use the money to line their executives’ pockets. The holiday also encouraged corporations to stash more money overseas, because they figured they could sucker Congress into approving holidays over and over.

The White House, as well as some leading Republicans on the relevant tax committees, have thrown cold water on the tax holiday idea. Not to be deterred, a group of corporations, have launched a new website — WinAmerica — to try to convince policymakers of the wisdom of another holiday. It includes pictures of smiling workers and extols the supposed virtues such a tax holiday would provide.

However, many of the corporate supporters behind the WinAmerica campaign already use the various loopholes and giveaways in the corporate tax code to drastically lower their corporate tax rate. Here’s what these companies begging for a new corporate tax cut currently pay in corporate income taxes:

 

 

Corporation	Effective Tax Rate*
Apple	25%
Broadcom	1.4%
Cisco	19.8%
Cognizant	16%
Google	2.4%
Microsoft	25%
Pfizer	17.1%
Oracle	27.1%
Qualcomm	20%

 

On their website, these corporations claim “providing American businesses with incentives to invest at home is a common sense solution that will immediately inject up to $1 trillion into our economy and provide businesses with the certainty they need to help get Americans back to work.” However, Kristen Forbes, who was on President Bush’s Council of Economic Advisers when the last repatriation holiday was approved, said that the holiday “didn’t accomplish the stated goals of bringing jobs and investment to the US.’’

The Congressional Research Service actually found that the largest beneficiaries of the last tax holiday cut jobs over the subsequent two years. So while “WinAmerica” might be good for corporations and their executives, it’s undoubtedly a loss for everyone else.

*Tax rate is for 2010 or 2009, depending on the latest data these companies have made available. Cross-posted on The Wonk Room.

‘Fiscal Conservative’ Richard Shelby Forces NASA To Spend $1.4 Million A Day On Program It Doesn’t Want

by Zaid Jilani

from Think Progress, March 24, 2011

Sen. Richard Shelby (R-AL) is a “self-professed fiscal conservative” who often rails against government spending and the supposed fiscally imprudent policies of his progressive opponents. He recently put out a statement that said, “Washington must put its fiscal house in order. American taxpayers are rightly infuriated by the federal government’s disregard for the same economic principles that govern every household and business budget.”

Yet when it comes to pork barrel spending for his home state, he is willing to go to extraordinary lengths to waste taxpayers’ money. The Chicago Tribune reports today that a provision Shelby inserted into the 2010 budget that has survived both recent continuing resolutions is costing taxpayers more than a million dollars every single day. The “Shelby provision,” as it is called, forces NASA to spend $1.4 million daily on the Constellation moon program, which it already canceled and doesn’t even want:

Congress has again failed to rid a temporary spending bill of language forcing NASA to waste $1.4 million a day on its defunct Constellation moon program. [...]

This so-called “Shelby provision” — named for U.S. Sen. Richard Shelby, R-Alabama, who inserted it into the 2010 budget — is expected to cost NASA roughly $29 million during the three-week budget extension through April 8. It has already cost the agency nearly $250 million since Oct. 1.

Unfortunately, this isn’t Shelby’s only act of defending his home state’s pork. He previously forced NASA to spend $500 million on the Ares 1 shuttle program, which was also canceled by the agency and considered defunct.

This comes at a time when Shelby and his Republican colleagues are voting to cut billions of dollars out of Pell Grants, slash funding for community health centers, send thousands of veterans into homelessness, force the firings of tens of thousands of teachers, gut funding for cancer research and the National Institute of Health, and de-fund public broadcasting. It appears that Shelby is intent on cutting spending as long as it hurts Main Street Americans, but not if it sacrifices his pork barrel and thus electoral interests.

Buried Provision In House GOP Bill Would Cut Off Food Stamps To Entire Families If One Member Strikes

by Zaid Jilani

From ThinkProgress, March 23, 2011

All around the country, right-wing legislators are asking middle class Americans to pay for budget deficits caused mainly by a recession caused by Wall Street; they are attacking workers’ collective bargaining rights, which has provoked a huge Main Street Movement to fight back.

Now, a group of House Republicans is launching a new stealth attack against union workers. GOP Reps. Jim Jordan (OH), Tim Scott (SC), Scott Garrett (NJ), Dan Burton (IN), and Louie Gohmert (TX) have introduced H.R. 1135, which states that it is designed to “provide information on total spending on means-tested welfare programs, to provide additional work requirements, and to provide an overall spending limit on means-tested welfare programs.”

Much of the bill is based upon verifying that those who receive food stamps benefits are meeting the federal requirements for doing so. However, one section buried deep within the bill adds a startling new requirement. The bill, if passed, would actually cut off all food stamp benefits to any family where one adult member is engaging in a strike against an employer:

 

 

The bill also includes a provision that would exempt households from losing eligibility, “if the household was eligible immediately prior to such strike, however, such family unit shall not receive an increased allotment as the result of a decrease in the income of the striking member or members of the household.”

Yet removing entire families from eligibility while a single adult family member is striking would have a chilling effect on workers who are considering going on strike for better wages, benefits, or working conditions — something that is especially alarming in light of the fact that unions are one of the fundamental building blocks of the middle class that allow people to earn wages that keep them off food stamps.

With a record 42 million Americans on food stamps during these poor economic times, it appears that the right is simply looking for more ways to hurt working class Americans.

Will “Bitches” and “Turds” Decide the Fate of Wisconsin?

Published on Wednesday, March 23, 2011 by PRWatch.org

by Mary Bottari

Last week, a local court issued a stay temporarily blocking the implementation of Governor Scott Walker’s radical proposal to do away with most collective bargaining rights for public workers and cripple labor's ability to collect union dues. The court put a halt to the publication of the bill (an act performed by the Secretary of State), so there could be a hearing on whether or not the Wisconsin Senate violated the state’s strong open meetings law in its rush to ram the bill through.
 
This week, Wisconsin Attorney General JB Van Hollen charged into court in defense of secret government. He argued that when legislators break the law -- the courts can’t do anything about it. Apparently legislators, like Senate Majority Leader Scott Fitzgerald, have  “immunity” from the enforcement of their very own laws.
 
Welcome to Fitzwalkerstan, where novel interpretations of long established law is a daily occurrence and the billable hours are stacking up.
 
Pleadings from Fitzwalkerstan
   
Wisconsin's open meetings law requires 24 hours' public notice of meetings or two hours in emergencies. The amended collective bargaining bill was given less than two hours. As word spread via Facebook and Twitter that legislators were pulling a fast one, hundreds of citizen’s showed up at the Capitol but could not get in to watch proceedings. Shut out, they were forced to chant “shame, shame, shame,” under Senate windows.
 
Yesterday, the Wisconsin Attorney General filed a motion on behalf of the Secretary of State Doug La Follette to void the stay. Bizarrely, his client was never consulted. Indeed, the Secretary of State had delayed publication of the law because of his own concerns regarding the legality of the Senate’s unprecedented action.
 
This is just the latest legal madness from Fitzwalkerstan. To ram the astonishingly unpopular proposal though the Governor and his henchmen had to finagle:

• A five second roll call vote at 1:30 a.m. The move was so abrupt, over 20 legislators never had a chance to vote in the Assembly.
• An unprecedented warrant for the arrest of 14 missing Democratic Senators and the deputization of a posse to round them up.
• A gubernatorial budget address in a locked down Capitol in violation of a standing court order on Capitol access.
• An unprecedented  conference committee, formed by fiat, meeting in violation of the open meetings law in a tiny backroom.
• A Senate roll call vote on a substitute amendment no one had ever seen.
• A new Senate rule denying Democrats the right to vote in committee (an insane idea quietly withdrawn.)
• The ongoing violation of the court order to restore Capitol access to as it was in January of 2011.  

These astounding events have many Wisconsinites shaking their heads. “Procedures and open government are important in Wisconsin and I can’t remember another time when these procedures have been this disrespected, “ says UW law professor Bill Whitford, a life-long resident of Madison.  
 
The courts have ruled against Walker twice so far. Thank heavens for the courts! A breath of sanity in an insane world! Or are they?
 
“Bitches” and “Turds,” Oh My!
 
The reputation of Wisconsin Supreme Court took a pounding this week after the Milwaukee Journal Sentinel released emails showing that bickering on the Court had reached a new low. David Prosser, a sitting justice, acknowledged calling the state’s first female Supreme Court Justice  “a total bitch” and threatening to “destroy” her. But he nobly defended his actions telling the paper he had been “goaded” into making such statements by the respected Chief Justice.
 
Prosser is seeking reelection April 5, and is up against a respected Deputy Attorney General JoAnne Kloppenburg. At the first debate last night between the candidates, Prosser again went deep into uncharted territory initiating the topic of “turds.” Prosser quoted a comment on his opponents Facebook page: "Stop the turd, vote Kloppenburg." "Now, am I the turd?" Prosser asked. "That's totally inappropriate."
 
What other terrible rhymes lurk in the random comments of 8,700 Kloppenburg Facebook fans?
 
What Next?
 
The case filed by Wisconsin Attorney General Van Holland is in appellate court right now but may end up in the Wisconsin Supreme Court next week where the polarized court may be forced to duke it out to the utter horror of average Wisconsinites who think the state is quickly spiraling out of control. Walkers poll numbers are tanking, showing that he would lose a "do-over" by seven points. But that do-over may not come for a year. In the meantime, Wisconsin will be awash with Senate recalls, big money ads and dirty tricks the likes of which this state, which prides itself on good government and clean politics, has never seen. An indpendent and adult judiciary will be more critical than ever.

© 2011 Center for Media and Democracy

Mary Bottari is the Director of the Center for Media and Democracy's Real Economy Project and editor of their www.BanksterUSA.org site.

more Mary Bottari

Peak Water Has Already Come and Gone

Published on Wednesday, March 23, 2011 by Inter Press Service

by Stephen Leahy

UXBRIDGE, Canada - Canadian Kevin Freedman is celebrating World Water Day Tuesday by living on 25 litres of water a day, instead of the North American average of 330 litres per day. And he has enlisted 31 others in his "Water Conservation Challenge" to go water - lean, using just 25 litres per day for cooking, drinking, cleaning, and sanitation for the entire month of March.

"People in Canada and the U.S. have no idea how much water they use or how much they waste," Freedman told IPS.

"Although people live on less, it is very difficult to use just 25 litres a day. You can't shower or use a washing machine," he said. "I'm hoping to raise awareness that water is a finite resource."

Nearly a billion people don't have good access to safe fresh water. In a single generation, that number could double as growing demands for water will exceed the available and sustainable supply by 40 percent, according a recent study. "Peak water" has already come and gone. Humanity uses more water than can be sustained, drawing on non-renewable reserves of water accumulated over thousands of years in deep aquifers.

"Water cannot be created, it can only by managed," said Margaret Catley-Carlson, a former senior official with both the Canadian government and at the United Nations, a renowned global authority on water issues, and a director at the Canadian Water Network.

In many countries and regions water scarcity is a fundamental challenge to development, Catley-Carlson told IPS. A lack of access to water can lead to starvation, disease, political instability and even armed conflict.

"Governments see their role as delivering water to the public and industry," she said. "This has to change to sustainably managing water resources for society and the natural environment."

Policy-makers haven't treated water as a valuable resource and as a result water is wasted, with leaky water infrastructure losing 20 to 50 percent of the water it is supposed to deliver. Even water-poor countries in the global south don't make water a top priority because water availability is mainly an issue for women and the poor and they are not well represented in government, she said. Instead limited public funds are spent on things like the military and other priorities.

"It is so frustrating," she said. "We can do without oil but we can't do without water."

On Tuesday, U.N. Secretary-General Ban Ki-moon urged governments to make pro-poor investments in water and sanitation, particularly in urban areas where the need is acute and has grown by 20 percent in the last decade.

This is "a crisis of governance, weak policies and poor management, rather than one of scarcity," Ban said in a statement.

As the world population and economy grows, the water challenge becomes all the greater. By 2030 the global water demand will be 40 percent greater than today's "accessible, reliable, environmentally sustainable supply" according to the U.S.-led study "Charting Our Water Future" by consultants McKinsey and Company.

About one-third of the population, concentrated in developing countries, will live in basins where this water deficit is larger than 50 percent, the report found.

Agriculture accounts for approximately 71 percent of global water withdrawals today and the water challenge is closely tied to food provision, the study notes. Inefficient and inappropriate irrigation accounts for much of this water use. Thirsty crops like maize are grown in dry places like Spain, requiring enormous amounts of irrigated water. Even a low-value crop like sugar cane is grown under irrigation in some places, which Catley-Carlson calls "ludicrous".

Poor policies, subsidies, such as those for biofuels, trade agreements and bad habits are collectively responsible for much of the world's water misuse in food production, she says.

Domestic water use is just eight percent of overall water consumption. Industrial use is the other major user of water. All products have a water component, often called "virtual water", to describe the volume used to make something.

"A desktop computer, for example, requires 1.5 tonnes (1,500 litres) of water; a pair of denim jeans, up to six tonnes; a kilogramme of wheat, one tonne; a kilo of chicken, three to four tonnes; a kilo of beef, 15 to 30 tonnes," says Nicholas Parker, chairman of the Cleantech Group, an international firm that works to accelerate the development and market adoption of clean technologies.

The annual global trade in "virtual water" today is said to exceed 800 billion tonnes, the equivalent of 10 Nile Rivers.

"What people don't often realise is how much water there is in everything we make and buy, from t-shirts to wine," says Parker.

Everyone can become a better steward of water no matter who they are, says Kevin Freedman. The lessons learned through the month-long 25-a-litre-a-day water diet can be applied all year round, he says.

"Everyone in North America can reduce their water use by at least 25 litres. I challenge people to make a pledge to do it," Parker says.
 

Copyright © 2011 IPS-Inter Press Service

Why Governor LePage Can’t Erase History, and Why We Need a Fighter in the White House

by Robert Reich

Wednesday, March 23, 2011

Maine Governor Paul LePage has ordered state workers to remove from the state labor department a 36-foot mural depicting the state’s labor history. Among other things the mural illustrates the 1937 shoe mill strike in Auburn and Lewiston. It also features the iconic “Rosie the Riveter,” who in real life worked at the Bath Iron Works. One panel shows my predecessor at the U.S. Department of Labor, Frances Perkins, who was buried in Newcastle, Maine.

The LePage Administration is also renaming conference rooms that had carried the names of historic leaders of American labor, as well as former Secretary Perkins.

The Governor’s spokesman explains that the mural and the conference-room names were “not in keeping with the department’s pro-business goals.”

Are we still in America?

Frances Perkins was the first woman cabinet member in American history. She was also one of the most accomplished cabinet members in history.

She and her boss, Franklin D. Roosevelt, came to office at a time when average working people needed help – and Perkins and Roosevelt were determined to give it to them. Together, they created Social Security, unemployment insurance, the right of workers to unionize, the minimum wage, and the forty-hour workweek.

Big business and Wall Street thought Perkins and Roosevelt were not in keeping with pro-business goals. So they and their Republican puppets in Congress and in the states retaliated with a political assault on the New Deal.

Roosevelt did not flinch. In a speech in October 1936 he condemned “business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering.”

Big business and Wall Street, he said,

had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by organized mob.

Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me – and I welcome their hatred.

Fast forward 75 years.

Big business and Wall Street have emerged from the Great Recession with their pockets bulging. Profits and bonuses are as high as they were before the downturn. And they’re spending like mad on lobbying and politics. After the Supreme Court’s disgraceful Citizens United decision, there are no limits.  

Pro-business goals are breaking out all over. Governors across America are slashing corporate taxes as they slash state budgets. House and Senate Republicans are intent on deregulating, privatizing, and cutting spending and taxes so their corporate and Wall Street patrons will do even better.

But most Americans are still in desperate trouble. Few if any of the economic gains are trickling down.

That’s why the current Republican assault on workers – on their right to form unions, on unemployment insurance and Social Security, on public employees, and even (courtesy of Governor LePage) on our common memory – is so despicable.

And it’s why we need a President who will fight for workers and fight against this assault — just as Perkins and FDR did.

By the way, Maine’s Governor LePage may be curious to know that the building housing the U.S. Department of Labor in Washington is named the “Frances Perkins Building.” He can find her portrait hanging prominently inside. Also portraits and murals of great leaders of American labor.

A short walk across the mall will bring Governor LePage to an imposing memorial to Franklin D. Roosevelt, should the Governor wish to visit.

Governor, you might be able to erase some of Maine’s memory, but you’ll have a hard time erasing the nation’s memory – even if it’s not in keeping with your pro-business goals.

We Need New Tax on Financial Craps

Published on Wednesday, March 23, 2011 by The Providence Journal

by Sarah Anderson

The economic crisis we’re enduring is extremely costly. America faces a critical choice: Who should pay the bill?

We can stick it to the poor by gutting our social-safety net. We can kick the can down the road by short-changing public education and infrastructure. Or we can find more equitable, forward-looking solutions.

One place to look for new revenue: the financial sector that got us into this mess in the first place. Wall Street is one of the most under-taxed sectors of our economy.

Think about the tax bills that ordinary Americans pay when they buy things they need every day. When they fill up their gasoline tanks so that they can get to work, they pay an average tax of 13.2 percent a gallon. When they buy a winter coat, they pay state sales tax of an average of 5.6 percent.

Compare that with the tax rate that hedge-fund investors pay when they buy 100,000 shares of stock. The fees are so small it takes an expert with a magnifying glass to find them in their financial statements.

One way to remedy this imbalance is through a financial-speculation tax. This would place a very small levy (0.25 percent or less) on each trade of stocks, derivatives, currency or other financial instruments. In addition to generating big money for urgent needs, the tax could discourage the short-term speculation that can lead to bubbles.

One Washington think tank has estimated the revenues from a financial speculation tax at $177 billion a year. Some argue that such a tax would destroy thousands of day-trader jobs, since they operate on razor-thin margins — picking up pennies off each of their hundreds, thousands, even millions of trades per day. Many of those jobs probably would disappear.

But I think it’s time to take a hard look at the social value of such financial activities. Wall Street’s oversized paychecks have been a strong magnet for the best and brightest among our university graduates, including many with engineering and math degrees. Instead of working to develop renewable-energy technologies or more efficient transportation systems, they spend their days designing computer programs to swap one currency for another or inventing newfangled derivatives like the ones that blew up our economy.

In other words, making money from money. What the financial sector is supposed to do is to serve the “real economy” — the part that produces goods and services. Instead, Wall Street now dominates the rest of the economy. And big-time speculators are in the driver’s seat.

A small speculation tax would target these high-flyers, raising the cost of their risky activities enough to discourage the most dangerous behavior. For ordinary investors the costs would be negligible, like a tiny insurance fee against the crashes caused by speculators. The future health of the U.S. economy may very well depend on how we pay for this crisis. It seems only fair that those most responsible for the mess should bear most the clean-up costs.

© 2011 The Providence Journal

Sarah Anderson directs the Global Economy Project of the Institute for Policy Studies, a progressive multi-issue think tank, in Washington DC. She’s also the co-author of the IPS report, America’s Bailout Barons: Taxpayers, High Finance, and the CEO Pay Bubble.

more Sarah Anderson

Teach-In at Bank of America: No New Tax Cuts for Corporations and Billionaires!

 

CHART: Taxing Millionaires Would Save Billions More Than Cutting Education And Programs For Main Street

by Zaid Jilani

From ThinkProgress, March 21, 2011

All around the country, right-wing legislators are asking Main Street Americans to pay for budget deficits caused mainly by a recession caused by Wall Street by attacking collective bargaining, and cutting necessary services and investments like college tuition aid and health care for the poor.

As these conservatives are cutting these services for hard-working middle class Americans, they are claiming they are acting out of need for “shared sacrifice.” Yet at the same time, the right continues to advocate for massive tax cuts for the wealthiest among us.

Rep. Jan Schakowksy (D-IL), along with a number of her progressive congressional colleagues, has introduced a plan that demands real “shared sacrifice.” Her plan, The Fairness in Taxation Act, calls for creating new tax brackets for the richest Americans, starting at a 45 percent rate for people whose income is $1 million. Her bracket would impose the highest rate — 49 percent — on billionaires.

A chart provided by her congressional office demonstrates that asking the wealthiest among us to pay a little more would actually save more money than all of the House Republicans’ cuts to domestic spending combined. House Resolution 1, which gutted funding on Pell Grants, low-income housing aid, community health centers, and other important programs for Main Street Americans, cut a total of $61 billion. Meanwhile, Schakowsky’s plan saves $78.9 billion, considerably more:

 

 

In an interview with ThinkProgress, Schakowsky said that she is “hoping” to build enough momentum within Congress to make her proposal the main alternative to the conservative slash-and-burn budget effort, saying that it is a “winner” for Democrats, both politically and on policy grounds. She said that the House Progressive Caucus is planning to do a road show in the summer to campaign on tax justice and endorsed the Main Street Movement that is defending the middle class across America:

THINKPROGRESS: You’ve mentioned a few times the grassroots movement that’s going on…that’s something that we here at ThinkProgress have dubbed the Main Street Movement, all around this country we’re seeing working families rise up. [...] I wonder if you’ve and your colleagues on the Progressive Caucus have thought about similar kinds of tactics [to the Tea Party], a road show, holding rallies, trying to engender grassroots momentum around your proposals.

SCHAKOWSKY: Well, the Progressive Caucus is planning a road show this summer. This will be a central theme of that. [...] But I think this needs to be bigger than that. [...] I like the idea of branding, I like the idea of the Main Street Movement, and I think it is beginning to seriously come together. I think all of the pieces are out there to put this together right now. This is a moment. I want to capture it right now by introducing this legislation that clearly states an alternative that is very popular.

Listen to it:

 

 

Indeed, taxing the super-wealthy is quite popular. A March 2 NBC News/Wall Street Journal poll found that 81 percent of Americans prefer taxing the wealthiest Americans more as their top choice for deficit reduction, while less than a third of Americans endorsed policy options like cutting funding to education and health care.

Update ThinkProgress commenter Jay Kimball used IRS data to put together the following graph showing how the richest 1 percent of Americans is nearly earning more money than they ever have while they are paying the lowest taxes in decades:

Gov. Kasich’s Jobs Plan: Drink More Booze, Hand The Profits To A Private Development Company

 
Gov. Kasich's job creation plan.

by Pat Garofalo

from ThinkProgress, March 22, 2011

Gov. John Kasich (R-OH) has played a leading role in the Republican assault on workers’ rights, pursuing a bill to strip his state’s public employees of collective bargaining rights. But he has also been actively pushing his state’s assets into the hands of private corporations, with his main job creation plan being the formation of JobsOhio, a private entity that will be tasked with coaxing business into the Buckeye state. Similar schemes have not worked in other states, but Kasich has plowed forward nonetheless

Part of Kasich’s plan for financing his new, privatized development agency (of which he will be chairman) includes leasing the state’s liquor stores to JobsOhio, which will then use the money to run its operations. Kasich claims that this will work because Ohioans are increasing their alcohol consumption:

The success of Gov. John Kasich’s plan to recruit new business to Ohio will hinge heavily on just how much Ohioans drink alcohol. Kasich last week unveiled his state budget proposal, which includes a plan to lease the state’s liquor distribution operation — which of late has drawn record profits — and use the cash to fund his private economic development machine.

“Over the years people drink more. It’s just a natural revenue stream,” Kasich said last Tuesday while outlining his proposal, drawing a smattering of laughter from reporters. “So, everybody wanted to buy it. Everybody was interested in it.”

Whether Ohio’s best “natural” asset is its booze intake is up for debate. But all jokes about Ohio’s increasing drunkenness aside, a deeper look at the numbers indicates that Ohio is getting the short end of the stick on this deal. As Ohio Budget Watch found, Kasich’s plan involves the state selling about $7 billion in expected revenue from state liquor stores to JobsOhio for just $1.5 billion:

Profits on liquor sales generate $228 million for the state of Ohio every year. JobsOhio is set to take over liquor sales oversight and own that revenue stream. They, in turn, will sell 30 years worth of that revenue — worth around $6.8 billion — to a group of investors (recruited by a Wall Street firm, who will of course take a cut) in return for a lump sum payment to the state. According to the administration, they expect to receive about $1.5 billion in return for this $6+ billion in state revenue.

And because JobsOhio doesn’t actually have any money to pay even the $1.5 billion, it will “turn to Wall Street to issue bonds to finance the deal.” As Plunderbund noted, “Wall Street, which obviously expects a return on its investment, won’t finance the deal unless Ohio (i.e. Kasich) is willing to allow them to essentially buy a twenty to thirty year revenue stream for pennies on the dollar.” Thus, Kasich is selling his state’s liquor stores at fire-sale prices, even as it faces billions in deficits.

Cross-posted on The Wonk Room

REPORT: Three States Propose Massive Tax Cuts For Millionaires, Tax Hikes for Middle Class

from ThinkProgress, March 22, 2011

Last week, ThinkProgress documented conservative efforts in twelve states to shift the tax burden onto the middle class even while cutting taxes for corporations and the wealthy. In three states, conservatives are going even further, proposing massive estate tax cuts for millionaires even as income inequality is at its worse since the 1920s. Here are the details:

MAINE: Tea Party Gov. Paul LePage’s (I) tax reform package would raise the state’s estate tax exemption from $1 million to $2 million — allowing four hundred of the state’s wealthiest estates to escape taxation. At the same time, the tax plan would raise property taxes on middle class Mainers while freezing health care funding for working parents, cutting money for schools, and raising the retirement age for public workers. Republican legislators want to go even further, and are currently considering eliminating the estate tax altogether.

OHIO: In January, House Speaker William Batchelder (R) called Gov. John Kasich’s (R) proposal to completely eliminate the estate tax one of the Republican-controlled legislature’s “top priorities.” But already, the bill has garnered strong opposition from local governments, who depend on estate tax revenue and are already concerned state spending cuts. Even while finding room for estate tax reductions, Kasich’s proposed budget cuts 25 percent of funding for local schools, $427 million for nursing homes, $1 million for food banks, $12 million from children’s hospitals, and $15.9 million from an adoption program for children with special needs.

NEW JERSEY: In his 2011 budget proposal, Gov. Chris Christie called for raising the state’s estate tax exemption from $675,000 to $1 million even while proposing cuts to the state’s Earned Income Tax Credit and homestead rebates for working poor families. And last year Christie vetoed a bill passed by the Legislature that would have raised taxes on the state’s millionaires to help fund property tax relief for Main Street.

Last December, the federal government set the precedent for estate tax cuts when the bi-partisan tax deal signed by President Obama cut the estate tax rate to its second lowest level since 1931.

– Kevin Donohoe

The Republican’s Big Lies About Jobs (And Why Obama Must Repudiate Them)

by Robert Reich

Tuesday, March 22, 2011

And if all others accepted the lie which the party imposed – if all records told the same tale – then the lie passed into history and became the truth.

– George Orwell, 1984 (published in 1949)

House Majority Leader Eric Cantor was in town yesterday (specifically, at Stanford’s Hoover Institute where he could surround himself with sympathetic Republicans) to tell this whopper: “Cutting the federal deficit will create jobs.”

It’s not true. Cutting the deficit will create fewer jobs. Less government spending reduces overall demand. This is particularly worrisome when, as now, consumers and businesses are still holding back. Fewer government workers have paychecks to buy stuff from other Americans, some of whom in turn will lose their jobs without enough customers.

But truth doesn’t seem to matter. Republicans figure if their big lies are repeated often enough, people will start to believe them.

Unless, that is, those big lies are repudiated – and big truths are told in their place.

What worries me almost as much as the Republican’s repeated big lies about jobs is the silence of President Obama and Democratic leaders in the face of them. Obama has the bully pulpit. Republicans don’t. But if he doesn’t use it the Republican’s big lies gain credibility.

Here are some other whoppers being repeated daily:

“Cutting taxes on the rich creates jobs.” Nope. Trickle-down economics has been tried for thirty years and hasn’t worked. After George W. Bush cut taxes on the rich, far fewer jobs were created than after Bill Clinton raised them in the 1990s.

To his credit, President Obama argued against Republican demands for extending the Bush tax cut for those making more than a quarter million. But as soon as Republicans pushed back he caved. And the President hasn’t even mentioned that the $61 billion Republicans are demanding in budget cuts this fiscal year is what richer Americans would have paid in taxes had he not caved.

“Cutting corporate income taxes creates jobs.” Baloney. American corporations don’t need tax cuts. They’re sitting on over $1.5 trillion of cash right now. They won’t invest it in additional capacity or jobs because they don’t see enough customers out there with enough money in their pockets to buy what the additional capacity would produce.

The President needs to point this out – not just in Washington but across the nation where Republican governors are slashing corporate taxes and simultaneously cutting school budgets. President Obama says he wants to invest in American skills, but many states are doing the opposite. Florida Governor Rick Scott, for example, says his proposed corporate tax cuts “will give Florida a competitive edge in attracting jobs.” They’ll also require education spending be reduced by $3 billion. Florida already ranks near the bottom in per-pupil spending and has one of nation’s lowest graduation rates. If Scott’s tax cuts create jobs, most will pay peanuts.

“Cuts in wages and benefits create jobs.” Congressional Republicans and their state counterparts repeat this lie incessantly. It also lies behind corporate America’s incessant demand for wage and benefit concessions – and corporate and state battles against unions. But it’s dead wrong. Meager wages and benefits are reducing the spending power of tens of millions of American workers, which is prolonging the jobs recession.

President Obama and Democratic leaders should be standing up for the wages and benefits of ordinary Americans, standing up for unions, and decrying the lie that wage and benefit concessions are necessary to create jobs. The President should be traveling to the Midwest – taking aim at Republican governors in the heartland who are hell bent on destroying the purchasing power of American workers. But he’s doing nothing of the sort.

“Regulations kill jobs.” Congressional Republicans are using this whopper to justify their attempts to defund regulatory agencies. Regulations whose costs to business exceed their benefits to the public are unwarranted, of course, but reasonable regulation is necessary to avoid everything from nuclear meltdowns to oil spills to mine disasters to food contamination – all of which we’ve sadly witnessed. Here again, we’re hearing little from the President or Democratic leaders.

Look, the President can’t be everywhere, doing everything. There’s tumult in the Middle East, we’re suddenly at war in Libya, Japan is struggling with the aftermath of disaster, and surely Latin America is an important trading partner.

But nothing is more central to average Americans than jobs and wages. Unless the President forcefully rebuts Republican’s big lies, they’ll soon become conventional wisdom.

Qualcomm Proposes Repatriating Foreign Profits Without Paying Taxes

by John Lawrence

In an article March 18, 2011 in the San Diego Union Tribune, Qualcomm said "it would spend $975 million to build a factory in Taiwan to manufacture low-power Mirasol display screens for e-readers and smart phones." However, there is a caveat. Qualcomm would like to imply that, if it could repatriate the $9.8 billion in cash it is holding offshore without paying taxes or at a sufficiently reduced tax rate, it would build the factory in the US instead thus creating jobs. Qualcomm is going on a campaign along with other firms such as Microsoft, Apple, Cisco, Pfizer and Oracle - no doubt employing the services of well paid lobbyists - to convince the government and anyone else that needs convincing that it would be in the best interests of the US to let these corporations bring this cash that is sitting offshore home. This is called repatriation. But the only thing that is standing in the way of bringing the cash home is the fact that Qualcomm will have to pay a 15% tax on it. This is because the US tax rate for corporations is 35%. Qualcomm has already paid a 20% tax in the country where the cash is being held. The US charges the difference between the local tax rate and the US tax rate on profits earned overseas, but only when that cash is brought back into the country or repatriated. Qualcomm and these other giant corporations are trying to bribe the US government into letting them bring the cash home tax free and are holding out the carrot that that would create jobs in the US. They say that this cash being brought home would provide an economic stimulus to the US economy. But would it?

According to the Union article:

"While some economists say it led to investments and jobs, others contend that nearly all of the repatriated offshore cash [from a previous tax holiday in 2005] flowed to shareholders through stock buybacks and dividends — creating a windfall for investors instead of the spending on factories, equipment, research and job creation that lawmakers wanted.

"Moreover, many multinational companies find themselves with stockpiles of offshore cash in part because they set up foreign subsidiaries to avoid paying high U.S. corporate taxes on their domestic operations, said Adam Looney, a senior fellow at the Brookings Institution in Washington, D.C.

"'They have clearly found this is a way to reduce the amount they're paying in taxes,' he said. 'But one of the disadvantages is you end up with a rising amount of income that is stored abroad.'"

So is Qualcomm committing itself to creating jobs in the US if it could bring the cash home tax free? Of course not. First of all that cash consists of profits it made by selling merchandise offshore plus perhaps some profits made in the US that by devious legal means it shifted offshore to avoid paying taxes in the first place. Smart corporate lawyers advise their clients on how to shift profits by means of subsidiaries to jurisdictions with low tax rates and to shift expenses to jurisdictions with high tax rates in order to offset taxes there.

So how "good" would giving these corporations a tax break be for the US economy? Well not very if it just goes mainly into the pockets of CEOs and shareholders. If it really were so profitable to build a factory in the US, don't you think Qualcomm would find the money to do it out of the $7.9 billion they're sitting on here? They imply that they are trying to make up their mind whether to build the factory in Taiwan where there is a 17% tax rate or to build it here where there is a 35% tax rate as if this is the only consideration. They build factories overseas not only to take advantage of low tax rates but also to take advantage of cheap foreign labor. There is also a growing foreign market to take advantage of. Also the cost of plant and equipment abroad is cheaper. Furthermore, environmental regulations are lax increasing profits even more. So it would only make sense to build a factory in the US if it were profitable to do so irregardless of whether or not they got a tax holiday for repatriating foreign held cash. What it boils down to is that corporations will use any excuse to cheat American taxpayers out of money. Then they blather about budget deficits and how they must be accounted for on the backs of the poor and middle class.

Quoting the San Diego Union article again:

Qualcomm and other multinational companies think it would be good for the economy if this money could be repatriated without such large tax consequences. "There's $1.4 trillion that U.S. companies have so-called offshore," [Qualcomm CEO Paul] Jacobs said at the Qualcomm annual meeting. "So you think about that with respect to the size of the stimulus package. These are real numbers, and so getting that money back into the United States would be very valuable for the U.S. economy, of course. So we've been out talking about repatriation." Last time there was a repatriation tax holiday, companies could bring home their offshore cash at a tax rate of 5.25 percent for one year in 2005. About 840 multinational companies took advantage of the holiday. The amount repatriated surged from an average of $62 billion during the previous five years to more than $300 billion in 2005, according to studies by economists. Supporters of repatriation say the federal government collected taxes that it otherwise wouldn't have. They also claim $187 billion of repatriated funds went to create or retain jobs, buy new equipment or pay down domestic debt. Qualcomm says it brought home about $500 million at the time and used it for acquisitions and hiring in California, North Carolina and Nevada. But economists C. Fritz Foley of Harvard, Kristen Forbes of MIT and Dhammika Dharmapala of the University of Illinois found in a joint academic study that every $1 increase in repatriations during the tax holiday was associated with a 60- to 92-cent increase in payouts to shareholders, even though shareholder distributions were not a permitted use of repatriated funds under the legislation. The report was titled "Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act."

Please note that Paul Jacobs doesn't say how giving Qualcomm an immense tax break at a time when the government is running a huge deficit would be "very valuable for the US economy."  And he doesn't commit to the proposition that the cash Qualcomm is sitting on here wouldn't be used for stock buybacks or CEO salary padding once the foreign cash entered the US tax free. After all money is fungible. Would Qualcomm be in favor of a law which would require them to invest all the money in factories here employing X number of people? And would those jobs be guaranteed to stay here for say 10 years? And would Qualcomm commit to no stock buybacks (which raise the value of existing stock) for a period of 10 years. Or would they commit to no executive salary padding for 10 years? Mum is the word on those issues.

This just goes to show how screwed up the tax laws are in general. The way to encourage corporations to invest in factories here instead of overseas is not to give them tax breaks to repatriate profits. The way to do it is to not let them sell into the US market from abroad with out paying the piper at the border. Last year more than 50% of the profits of US corporations were made from their investments abroad. The US market is becoming one of diminishing returns. The main reason Qualcomm wants to repatriate the money is not to build factories here but to line the pockets of CEO Paul Jacobs and other US based investors. You can't blame them for that. These corporations are out to make a buck, and one of the main ways they do that is to not pay taxes. And this has resulted in huge deficits for the US government.

According to Yahoo finance:

Paul Jacobs, the chief executive of Qualcomm Inc., was given a $17.6 million compensation package last year, about 1 percent more than in 2009, as the wireless chipmaker continued to benefit from the rise of smart phones and tablet computers and the spread of high-speed networks. Jacobs' pay package included $1.1 million in salary, a 19 percent increase from 2009, when he took a voluntary pay cut in conjunction with other cost-reduction measures at the company. At the time, it was planned that the CEO's salary would return to the $1.1 million level. The CEO received a $7,500 bonus related to the company's patent award program, comparable with past years. Qualcomm gave Jacobs $3.4 million in cash incentive pay. This is 6 percent lower than the amount in 2009, but the company said in a Securities and Exchange filing Wednesday that it reflects mathematical rounding, not poorer performance. The company noted in the proxy filing that Jacobs' pay is based on his leadership in accomplishing strong operating performance for the year, returning $4.2 billion to shareholders in dividends and stock buybacks and adding $700 million to the company's cash pile, plus various strategic expansions and partnerships.

Now Paul Jacobs isn't the only US investor who would profit from repatriating as much cash as possible from overseas while paying as little as possible in taxes. His father, Qualcomm founder Irwin Jacobs, is a billionaire and is without a doubt still invested in Qualcomm stock. Paul has three brothers, one of whom works for Qualcomm, but all of whom (and their extended families) are probably highly invested in Qualcomm stock. So they would obviously like to repatriate all that cash sitting overseas and to do so with the minimum tax liability. This is the situation that many corporate CEOs find themselves in. The cash is there and their major investors including families and close friends are here. 

So how would you encourage corporations to invest and create jobs in the US rather than creating them abroad and then selling their products by importing them into the US market. The obvious answer is to make them pay a price for their access to the US market, but this goes against the prevailing modus operandi of free trade. Tariffs used to accomplish this goal by equalizing costs here and abroad making it more profitable to build factories and create jobs here. If corporations had to pay a 20% tariff or VAT tax like they do in Germany when their products hit US shores, that would tend to equalize the difference in tax rates between Taiwan, for example, and the US. The other advantage corporations get from building factories abroad is that in many cases, not only are the workers cheaper, but also the environmental regulations are more lax. This results in greater profits.

Corporations will only invest in the US when it is profitable to do so. Instead of letting them bribe the US, state and city governments to get tax giveaways, which results in a race to the bottom and gives right wing Republicans an excuse to bust unions and balance budgets on the backs of the poor and middle class, the government needs to take the bull by the horns in such a way that corporations cannot any longer get away with what amounts to highway robbery of the American taxpayer.

Again from the Union article:

"Qualcomm has about a dozen foreign subsidiaries. Its overall corporate tax rate for its 2010 fiscal year was 20 percent, according to its annual report. The main reason it didn't pay a higher rate was much of its income was generated at foreign subsidiaries in countries with low tax rates."

Qualcomm is a good example of how corporations maximize shareholder value and CEO pay packages by shifting factories abroad in order to take advantage of low paid workers and also shifting profits abroad in order to take advantage of low taxes. Their only problem is getting the money back here without paying taxes on it as well.

The Human Cost of Slashonomics

Published on Monday, March 21, 2011 by The Nation

by Katrina vanden Heuvel

An important new initiative from Half in Ten, a national campaign to reduce poverty by 50 percent over the next ten years, and the Coalition on Human Needs, is putting a face on irresponsible “slash and burn” deficit reduction by showing how it would damage real lives. The organizations are collecting people’s stories so that the cruel consequences of draconian cuts to key federal programs are plain to see.

Consider the story of Carolyn, who was in her 40s when her husband of 25 years left her with two daughters. She had never received any kind of assistance and describes turning to her local community action agency as “the hardest thing I had ever done.” Her fears were quickly allayed as she “was treated with respect and was never made to feel like a drain on society.” She enrolled in a workforce development program that helped her with tuition and books while she attended community college. 

“I went to college five days a week and spent the weekend working, so I never had a day off,” writes Carolyn. “When I graduated I became a Registered Nurse, able to support myself and my family. I couldn’t have done it without the Federal Workforce Development Program and the supportive services the local Community Action Agency provided.”

But the Boehner-led “so be it” Republicans would nearly eliminate funding for Community Service Block Grants (CSBG) for the remainder of 2011, and President Obama proposes cutting it in half in 2012. The cuts would disrupt the antipoverty services provided by 1,065 community action agencies nationwide to over 20 million low-income people, including 5 million children, 2.3 million seniors and 1.7 million people with disabilities. What makes the cuts even more insane is that the agencies generate $6.54 from state, local, and private sources for every federal dollar received, according to the Coalition on Human Needs.

People like Carolyn would be hit doubly hard—not only would the community action agencies reach fewer people, but the kind of workforce development programs that allowed her to change her life would also be slashed by Republicans. In fact, at a time when 14 million Americans are out of work, more than 8 million adults and youth would lose access to job training and other employment services. Job training under the Workforce Investment Act programs for adults, youths, and dislocated workers would essentially be shut down until July 2012.

But, hey, at least folks can turn to higher education, right? Actually, not really. At a time when the US is now 12^th in the world in the percentage of 25 to 34 year olds with a college degree, the GOP bill would result in 9.4 million low-income college students losing all or some of their Pell grant. It would reduce the maximum Pell grant by a whopping 17.4 percent! (Obama would increase Pell Grant funding by 20 percent.)

The GOP cuts would be a disaster for students like this senior at University of Missouri who anonymously writes, “I will be applying to medical school at the end of this year. I come from a single-parent household and my mother makes about $20,000/year; hardly enough to put me through college. Without federal aid such as the Pell Grant, I would not have enough money to attend college at all.” 

The student also works as a medical assistant at Planned Parenthood, where the GOP would eliminate all federal funding. That means zero funding for 820 health centers that do 90 percent of their work on preventive, primary care.

“I know first-hand how important the services we provide to people really are,” writes the Mizzou student. “The majority of our patients literally cannot afford to go anywhere else, and without our care, they simply would not receive services such as cancer screenings, birth control, and so much more.”

Nor would many of them be able to heat their homes, if the Chainsaw Republicans have their way, and President Obama’s 2012 budget isn’t much better. Despite the fact that a record number of households are expected to need assistance to pay for heating or cooling, the cuts in the GOP bill would essentially wipe out the Low-Income Home Energy Assistance (LIHEAP) contingency fund for 2011. The contingency fund provides aid during periods of particularly severe weather or energy price increases. Obama’s cut of about $2.5 billion would deny assistance to more than three million households.

That doesn’t sit very well with Kimberly Thompson, who turned to her local community action agency when her 89 year old, very independent grandmother was facing “nursing home institutionalization.” Through the CSBG, the agency was able to purchase a walker for her, deliver a hot lunch daily, and “provide a home care worker to do light housekeeping and help her with personal care.” The agency also signed her up for LIHEAP and “weatherized her home which lowered her utility bills and gave her more money each month to buy food and medicine.”

“All of these services enabled my grandmother to stay at home for the rest of her life until she died at the age of 92, three years later,” writes Thompson. “If she didn’t have those community services, she would have had to move to a nursing home which would have been a much greater cost to the government—and therefore, the taxpayers—and also would have caused her much emotional distress.” 

What is most maddening about the budget debate is that few legislators are talking about alternatives like increasing revenues by closing obscene tax loopholes and corporate giveaways and making the wealthy pay their fair share. Instead, the proposals hit the most vulnerable people the hardest—lower-income people, children, seniors, people with disabilities, unemployed workers, and others. (For a “Better Budget for All” check out this report.) 

Kudos to Half in Ten and the Coalition on Human Needs for collecting these stories and making these budget cuts real. If you have a story to tell, please share it. The only way we win this budget battle is to show the very real consequences of these abstract numbers being thrown around Washington, DC, and then organize and demand alternatives.

© 2011 The Nation

Katrina vanden Heuvel is editor of The Nation.

 

more Katrina vanden Heuvel

George Carlin on the American Dream

 

OB Rag Supports American Workers

from the OB Rag, March 18, 2011

 

Hamilton High School Students Walk Out to Protest Cuts, Teacher Layoff Notices

From the Los Angeles Times, March 18, 2011 | 11:25 am

 

At least 1,500 students at Hamilton High School walked out Friday morning to protest layoff notices being issued to some of their favorite teachers.

Students packed the sidewalks around the high school in a show of support for teachers and support staff who were among about 7,000 L.A. Unified School District employees to receive layoff notices recently as the district grappled with cutting its budget.

“It has been extremely peaceful,” district spokeswoman Ellen Morgan said of the protest.

The district said about 1,500 students participated in the demonstration; others doubled that estimate. The school’s marching band led banner-waving student protesters in a march around the campus before listening to a series of student leaders address the gathering on the need to fight to keep their educators.

Although cuts have not been finalized, the directors of two popular and successful Hamilton programs -- the humanities magnet and the music magnet -- have been informed by L.A. Unified that their positions are being eliminated.

Like school districts across the state, L.A. Unified has prepared for the worst and sent out "potential" notices. "Teachers here are amazing," senior Naomi Hecht told Los Angeles Times columnist Steve Lopez. ("L.A. students fight for quality education as their teachers get layoff notices.")

-- Richard Winton and Irfan Khan

Photo: Hamilton High School students sit in a grassy area in front of the school during a walkout Friday g to protest layoff notices being issued to some of their favorite teachers. Credit: Irfan Khan / Los Angeles Times

Trade Unions in City Confront a Rise in Nonunion Projects

By CHARLES V. BAGLI

Published: March 18, 2011 by the New York Times

A luxury apartment building is rising at 23rd Street and 10th Avenue, and, across town, one is being created inside an old Salvation Army building overlooking Gramercy Park. Other residential buildings and hotels are going up on 11th Avenue, West 18th Street and East 23rd Street.

All are signs that New York City’s real estate industry is clawing out of the recession. But they are noteworthy for another reason: they are being constructed without any union labor.

For most of the last century, the city’s construction unions were a symbol of labor strength in a pro-labor town, and their involvement in large projects was almost never in doubt. But just as public employees’ unions across the country are in the fights of their lives, the city’s major building unions are facing their own moment of reckoning.

While they are still a major presence, their share of the city’s $20 billion to $30 billion in annual construction work has dropped significantly in recent years. There are no official statistics; according to unionized construction companies, two out of five construction jobs in the city are now nonunion, though unions put the number at one in four. All agree that for many years, at least 85 percent of building jobs were union ones.

And the companies and unions are about to enter what may be their most tense contract negotiations in years, with the employers demanding large concessions and already angering labor leaders by taking their campaign directly to the workers with a Web site and in small group meetings around the city; subway ads may also be forthcoming.

“There’s enough pressure on everybody,” said Bobby Bonanza, business manager for the Mason Tenders District Council, which represents about 13,000 workers affected by the contracts. “We don’t need another Wisconsin in this town.”

The employers have backed off an initial demand for wage cuts, but they are still aiming for a 25 percent cut in labor costs, by reducing benefits and changing some work rules. They say these changes would allow them to better compete with nonunionized companies, which are winning jobs from developers because their costs are 20 to 30 percent cheaper.

“A combination of market erosion and the recession has permanently changed the financial structure of real estate in New York City,” said Louis J. Coletti, president of the Building Trades Employers’ Association. “This is not about a race to the bottom. It’s about our common enemy: nonunion contractors.”

All told, the negotiations involve 30 different unions and as many as 60,000 steamfitters, ironworkers, crane operators, laborers and carpenters. Union leaders say they have made numerous concessions since the recession started, including wage freezes on non-Manhattan projects, that have reduced overall labor costs by as much as 20 percent. But, they say, employers are now trying to increase profits by cutting benefits and exaggerating the loss of market share at a time when the national political climate has turned against unions.

Not so long ago, starting a large construction job, particularly in Manhattan, with nonunion labor was considered a provocation likely to ignite a pitched battle with carpenters, ironworkers and laborers intent on closing down the job. But during the building boom of the late 1990s and most of the last decade, there was enough work to go around that union workers were not terribly bothered if some jobs went nonunion.

But as the cost of land and construction materials skyrocketed, some developers began to become more cost-conscious and began looking for savings in labor costs, particularly by choosing cheaper nonunionized contractors. And lenders began to scrutinize costs more closely.

The unions and unionized employers argue that union laborers are more skilled and safer than nonunion laborers, and that it is far easier to mobilize large numbers of workers when they are organized. But over the last few years, nonunion construction companies like Flintlock became skilled in putting up midsize 10- to 30-story buildings, the kind of building where, along with interior finishing and renovation, the unions have been losing most of their market share.

Unionized contractors still have a lock on megaprojects like big office towers, including those under construction at the World Trade Center. But union leaders, construction executives and developers are closely watching a project in Long Island City, Queens, where H. Henry Elghanayan, a residential developer whose company traditionally uses union contractors, is expected to select a nonunion outfit to build a large complex with 700 apartments.

“If traditional construction managers that stuck with the unions start losing nine-figure jobs,” said one executive of a union contractor, who refused to be named so as not to further anger the unions, “that’s a game changer.”

Mr. Elghanayan said in an interview that he had yet to select a contractor. But, he added, “Everyone’s pressing to get total development costs down.”

David Von Spreckelsen, vice president of Toll Brothers, said his company built the first of two towers at its Northside Piers project in Williamsburg, Brooklyn, with union contractors. But as construction costs escalated in 2008, Toll Brothers turned to a nonunion contractor for the second tower, prompting unions to protest with five giant inflatable rats. The company now has three apartment buildings under construction in Manhattan with nonunion labor.

And this week, the developer of the Atlantic Yards megaproject in Brooklyn said it was seriously considering using a prefabricated method to build its residential high-rise. While most of the workers would be unionized, there would be fewer of them and they would earn less money because much of the labor would be done in a factory, where wage scales are lower than on the site.

The construction unions have long been the backbone of the city’s blue-collar middle class. A journeyman carpenter, for example, is now paid $46 an hour, with health, pension and other benefits bringing the total cost to $85. The total compensation for mason tenders, a less skilled position, is $58.

“We make a good salary, probably more than most office workers,” said Marc Spring, a union plumber for 25 years whose father was a union plumber for 40 years. “But we work harder than they do, out in the elements.”

 Mr. Spring acknowledged that “times were tough,” one reason that his local had already made concessions. Still, Mr. Spring said, he resents the constant talk of givebacks. “I don’t see how the developers aren’t making money,” he said.

Besides some benefit reductions, the employers want changes in some decades-old work rules, beginning with overtime. Workers now earn double pay for overtime; the construction companies want to reduce it to time and a half.

On most jobs, the workday starts when workers arrive at ground level, but on large jobs with many men sharing a hoist, it can take another half-hour to reach the actual work site on a high floor, and another half-hour to descend at the end of the day. Employers are proposing that workers be paid only from the time they reach their station to the time they leave it, and some unions have already agreed to this change.

They also want to end a requirement by the operating engineers, who operate cranes, bulldozers and other heavy equipment, that three workers be in place to work even when only one is needed. Although they are a tiny fraction of the work force, they are the highest-paid, often earning well over $200,000 a year, including overtime.

James Conway, an official of Local 14 of the Operating Engineers, declined to comment.

The employers, however, are wary of pressing too hard, because a strike by just one union could be enough to shut down many of the city’s major construction projects.

And despite the animosity among the unions and their employers, Ruth Milkman, a sociology professor at the CUNY Graduate Center who studies unions, said they have an important common ground. “Once you allow nonunion, lower-cost bidders to undercut the unions, it threatens everybody,” Professor Milkman said. “So there is a mutual interest at work here.”

The Military Industrial Complex - Part 3 - the Naval Electronics Laboratory

by John Lawrence

This is the third in a series of articles about my personal experiences inside the military-industrial complex. Parts 1 and 2 can be found here and here.

A friend of mine once said, "They change the names to protect the guilty," and that certainly could apply to the Naval Electronics Lab where I worked for about six years after leaving UCSD with a MS degree in Information and Computer Science. Luckily, I got a summer job there which I converted to a full time job just before my daughter was born (Caesarian) which would have cost a lot of money had it not been for the medical insurance which came with full time employment. But the name change bit. After a couple years they announced that, henceforth, NEL would be known as the Naval Electronics Laboratory Center. This evidently seemed like some sort of grand culmination to some people who actually gazed off into the distance as if some magnificent denouement had occurred. Actually, nothing much had happened except the name had been changed to protect the guilty. In later years they changed the name a couple more times to NOSC (Naval Ocean Systems Command) and then NRAD - Naval Research and Development and finally SSC San Diego or SPAWAR. People actually get paid to sit around and dream up name changes and move blocks around on organization charts.

In my experience nothing much was accomplished by NEL, NELC, NOSC, NRAD, SPAWAR. I was given a couple of unmemorable make work projects. I finally realized that if I was to accomplish anything and not be completely bored, I would have to create my own projects. I had been working on a source coding scheme at UCSD with Professor Pieter Schalkwijk who had developed a method that came to be known as the Schalkwijk algorithm so I decided to carry on with this work and it was actually funded for a while. I worked with another engineer by the name of Al Roth who developed a hardware version and I developed the software. We were able to obtain a patent for this work called "Variable-to-block-with-prefix Source Coding Technique", and I felt that at least I had accomplished something although its relevance to any actual naval system was not immediately apparent. Later I saw a way to generalize Schalkwijk's work, and I ended up writing a paper called "A New Universal Coding Scheme for the Binary Memoryless Source." which was published in the IEEE Transactions on Information Theory.

Meanwhile, I was becoming increasingly disenchanted with NEL(C). First of all I was completely philosophically averse to the military-industrial complex after my time as a student radical at UCSD during the Vietnam war. To my amazement my Top Secret clearance sailed through. I guess they failed "to connect the dots." Since I had gotten married and was expecting a child, I needed a job, and I wanted to stay in San Diego. That was the only reason I went to work there - to support my family. When my marriage broke up a few year later I had no real reason to remain employed there, and I couldn't wait to leave. I rebelled against the informal dress code and stopped wearing a tie and dress shirt. I eventually got banished to Battery Ashburn which was a windowless WW II bunker far away from Building 33, the main building, not that any of the other offices were all that scenic or comfortable. Nobody knew or cared what I did or what I was up to. There was some code that they put down on my time card so that I got paid. I let the multiple levels of management worry about that. I took two hour lunch breaks, came in late and left early. During mu lunch breaks I went to a nearby Presbyterian Church and they were nice enough to let me use one of their Sunday School rooms to practice my trumpet. I had decided that I wanted to make a major effort to be a musician.

My resolve was to remain at NEL(C) until my paper was published in the IEEE Transactions and then quit and become a musician. Finally, I got word that it would be published and I quit without giving the customary two week notice. I just walked in one day and announced, "This is my last day." I guess that was burning my bridges behind me. I was tired of a meaningless, unproductive work life, and my back hurt from sitting at a desk all day. I was proud that at least I had done something meaningful with my paper in information theory although most of that work was done on the sly. It wasn't funded. I left the military-industrial complex for the last time and never looked back.

My experience at NEL(C) was similar to what I had experienced before at General Dynamics, Lawrence Livermore and Picatinny Arsenal. There was a lot of insignificant make work, layers and layers of middle management and department heads that spent the majority of their time back in Washington coaxing money out of Pentagon and Congressional coffers. The more successful department heads were able to coax more money than the unsuccessful ones and, therefore, had larger departments and higher GS ratings. Cost plus contracts gave the incentive to maximize costs in order to maximize profits, or in the case of civil service, to build larger departments under you and obtain higher GS ratings which in turn would result in higher salaries. Any meaningful work was done by PhDs at Jet Propulsion Laboratory, Lincoln Laboratories or similar places and in the halls of academia by the likes of my first adviser at UCSD, Irwin Jacobs. In fact Jacobs had so much contract work from the MIC that he eventually quit teaching and started his own company, Linkabit, in order to capitalize on that. Later he went on to found Qualcomm and become a billionaire. The engineers at places like NEL(C) were contract monitors at best. Or they had little meaningless projects doled out to them from the pot of cash their department head was able to assemble. There was no rhyme or reason to any of this. None of the individualized puzzle pieces fit together into any sort of coherent, unified whole. There was no mission into which the various departments fit and did their appointed tasks as part of a comprehensive effort that provided a needed component of naval warfare. It was middle class social welfare brought to you by the military-industrial complex. Instead of the saying about the Societ Union's MIC - "We pretended to work, and they pretended to pay us" - in the good ole USA, the appropriate counterpart was "We pretended to work, and they actually did pay us and they paid us quite well!"

I was happy to leave the MIC to which I was philosphically opposed and besides I didn't like the lifestyle of sedentery work - sitting at a desk all day. I wasn't happy to be part of the ostensible war effort although, with the degree of incompetence represented by NEL(C), I felt if anything that the war effort was being set back. I have no regrets; in fact I'm happy I didn't spend 30 wasted years there, bored out of my gourd, just in order to retire and get a pension. The hours have never dragged since I left; I've never been bored. My life has taken on more meaning and I believe that I am making a contribution to society as opposed to being a parasite consuming taxpayer money for doing little of any significance besides collecting a paycheck. I am glad though that I made use of my time there (on my own inititaive and only partly funded) to advance the cause of information theory which at least represents some sort of scientific truth - blowing the truth as my friend Morty would say - instead of shoveling the bullshit. The method I developed later became know as the Lawrence algorithm, and, after generalizing the theory to the non-binary case, I obtained another patent, "Multilevel Digital Compression based on Lawrence Algorithm".

Michigan Moves Against Governor’s “Financial Martial Law” Bill

from OB Rag, March 18, 2011

 
A crowd armed with signs gathers at a rally in Lansing on Wednesday, March 16, 2011, to protest Gov. Rick Snyder's budget. / SUSAN TUSA/ Detroit Free Press

After Thousands March in Michigan, Recall of Governor Floated

By Ian Millhiser /

ThinkProgress / March 17, 2011

Yesterday, thousands of Main Street Movement protesters marched on the Michigan Capitol to protest Gov. Rick Snyder’s (R) constitutionally flawed assault on Michigan workers. Michigan’s voters, however, can do far more than simply make their displeasure known to Snyder and his allies in the state legislature. Michigan’s constitution is unusually easy to amend, and Snyder and his allies become eligible for a recall in just over three months.

For the remainder of this article, please go here.

Thousands of Michigan Workers Protest Snyder’s Power Grab

by Mike Hall /aflcionowblog /Mar 16, 2011

More than 5,000—and the crowd is growing—Michigan union, community, education and other activists are on the Lansing Capitol grounds and inside the state House this afternoon to protest Gov. Rick Snyder’s (R) new “financial martial law.”

The Detroit Free Press reports that the crowd chanted “Take Michigan Back” as UAW President Bob King told the crowd, “This is one day in a long battle.”

For the remainder of this article, please go here.

Michigan Governor’s Anti-Union Power Grab Is Unconstitutional

By Ian Millhiser / ThinkProgress / March 16, 2011

Michigan Main Street Movement Protesters March Against Gov. Snyder’s “Financial Martial Law” Bill

Although Wisconsin Gov. Scott Walker’s (R) anti-union crusade has received the biggest headlines, Michigan Gov. Rick Snyder (R) is poised to sign an even more drastic assault on working Americans into law. Last week, the Michigan legislature passed a “financial martial law” bill that allows Snyder to appoint “emergency financial managers” with the power to terminate collective bargaining agreements:

Contracts & Collective Bargaining Agreements. The bill would authorize the emergency manager to reject, modify, or terminate one or more terms and conditions 0f an existing contract.

After meeting and conferring with the appropriate bargaining representative and, if in the emergency manager’s sole discretion, a prompt and satisfactory resolution were unlikely to be obtained, the emergency manager could reject, modify, or terminate one or more terms and conditions of an existing collective bargaining agreement.

There’s a pretty serious problem with this power grab, however — invoking it would violate the Constitution. The Constitution forbids state laws “impairing the Obligation of Contracts.” This provision provides a robust limit on a state’s ability to dissolve contracts between the government and a private party. As the Supreme Court explained in United States Trust Co. v. New Jersey, state laws impairing such contracts must be “reasonable and necessary to serve an important public purpose.”

The bill does contain some language requiring the emergency manager and the state treasurer to determine that they are not violating this constitutional limit before a collective bargaining agreement can be blown up, but Snyder’s own budget gives the lie to any claim that an assault on working Americans is “necessary” to ensure that Michigan governments can pay their bills. Snyder proposed a massive $1.73 billion business tax cut even as he was arguing that his anti-union power grab was necessary to restore the state’s fiscal balance.

The consequences of Snyder’s actions could be stark. If a state is free to break contracts whenever they feel like it, than no one will agree to do business with the state. Investors will refuse to buy the state’s bonds, and state contractors will demand all payments upfront out of fear that the state will accept their work and then tear up the contract requiring the workers to be paid. Creditors will charge the state enormous interest rates to secure against the risk that the state will just waive its hand and make its obligation to repay go away.

In other words, Snyder is so determined to chip away at collective bargaining, he’s demanded a power that he cannot constitutionally use and that would drive his state into an even deeper financial hole if he ever tried.

The Republican Assault on America

by Andy Cohen on March 18, 2011, from the OB Rag

in: American Empire, Civil Rights, Culture, Economy

An interesting thing is happening in American politics and policy these days.  Almost two months ago, protesters in Wisconsin stood up to have their voices heard in opposition to their newly elected governor’s budget plan that would strip public employee unions of any power whatsoever, a move Governor Scott Walker (R-Koch Industries) has repeatedly called necessary to help solve the state’s looming budget crisis.  It was the first salvo in a national movement by Republicans to promote their corporate agenda and eliminate individual rights and protections.

If you’ve picked up a newspaper or perused the internet in the last two months, you are surely aware of the protests that raged in the capital city of Madison.  Walker insisted it was about the state’s budget, but it wasn’t.  Setting the desire to strip collective bargaining rights aside, the governor’s bill includes a measure empowering his office to sell off any state owned asset to private interests without requiring the approval of the legislature, and without requiring interested parties to bid on the property.  The governor can simply pick his favorite corporate interest and seal the deal with a handshake.

Through Walker’s actions we have gotten a pretty good look at the real motives behind the drastic moves Republicans want to take.  And it has become abundantly clear that what Republicans are trying to force through across the country at the state and federal levels alike have nothing to do with budgetary concerns–as they insist–but everything to do with Republican and Conservative ideology and the desire to effectively neuter the Democratic Party and decimate government in general.

What we’re seeing Republicans attempt under the guise of fiscal responsibility is something far more sinister than we could possibly have imagined.

The so called budget repair bill requires that public employees contribute five percent more toward their pension, and 12% more toward their healthcare, which the unions had readily agreed to.  But at the same time Governor Walker wrote in $160 million in corporate tax breaks into the bill.

In difficult fiscal times it is reasonable to ask EVERYONE to tighten their belts and contribute their fair share.  Republicans are DEMANDING that workers ante up—which they’ve done—but exempting their corporate benefactors from any responsibility whatsoever.  The unions in Wisconsin gave Scott Walker EVERYTHING he was asking for that was directly related to budgetary matters, yet he refused to take ‘yes’ for an answer.

This was not about the budget, and Walker proved it during his 20 minute phone call with “David Koch,” the Buffalo Beast editor who impersonated the billionaire Tea Party patron.  The goal was clearly to enforce Tea Party/Conservative ideology on the entire state of Wisconsin, and worse.

It all started in Wisconsin, but it hardly ends there.  Nearly identical efforts at destroying unions were pushed through the legislatures of Indiana (without success) and Ohio (successfully).

But it gets worse.  Much worse.  In Michigan, newly elected Governor Rick Snyder (R-Bechtel Corp.) is looking to take his power grab even further.  Snyder has forwarded a bill to the senate that gives him the power to unilaterally determine whether a municipality is in dire financial straits, and to assign an “emergency financial manager” to take over and eliminate the duly elected government.  The emergency financial manager would have the authority to break contracts, fire elected officials…..basically this appointed individual would become the Czar of the town, city, county, school board, etc., with virtually no accountability to anyone but the governor.  The administrator could only be removed by a majority vote in Michigan’s House of Representatives and a two thirds vote in the Senate.

The Senate even removed wording put in by the House of Representatives that would have prevented control to be handed over to corporations.  This means that a private company could (and likely would) become the government authority of a municipality, with zero accountability to the people who live there.

The bill has been described even by Republican supporters as “financial Martial Law.”

In Pennsylvania, newly elected Governor Tom Corbett (R-Coal Mining Industry) has done two things that have raised eyebrows:  First, he appointed C. Alan Walker, a major campaign contributor, the CEO and owner of Bradford Energy and Bradford Coal, to head the Department of Community and Economic Development.  According to a story by Pro Publica, Corbett’s budget gives Walker the authority to “expedite any permit or action pending in any agency where the creation of jobs may be impacted.”  That means Walker can bypass any existing environmental regulations and expedite permits for any project that he determines will create jobs, which is very good news for energy companies who can’t afford to be bothered by environmental safety……you know, things such as clean air to breathe, and clean water to drink.

Corbett also eliminated the state’s adultBasic health plan, which provided medical coverage to 41,000 of the state’s low-income workers, with another 500,000 people waiting in line to qualify.  The program was funded by Pennsylvania’s allotment of a $200 billion settlement with Big Tobacco in 2000.  The money–by law–was to be used to “make Pennsylvanians healthier and to fund the health of future generations of Pennsylvanians.”  Corbett decided that the program was not financially sustainable, so he did away with it.

In Florida, newly elected governor Rick Scott (R-Medicare Fraud) has put forward a budget that cuts public education funding by $1.75 billion, while simultaneously instituting $1.6 billion in corporate tax breaks.

And it’s all being fueled by the billionaire Koch brothers, the creators of the astro-turf Tea Party movement; the money behind Americans for Prosperity; the anti-government financial warriors and owners of the largest privately held oil company in the country.  Koch industries, you see, would benefit HUGELY if their anti-government efforts succeed:  It would mean fewer environmental regulations, allowing their oil and chemical interests to pollute as much as they want, saving them millions of dollars in profits.

But even more poignant is the effort by Republican lawmakers to turn the responsibility of governing over to private industry.  Republicans hate government, and it seems that they would like to make it disappear altogether.  Government is supposed to be there to serve its people; those who cannot stand up for themselves in the face of overwhelming corporate power and greed.  Government is supposed to protect its constituency from corporate overreach.  It is supposed to be on the side of the people.  But this latest breed of newly elected Republican lawmaker sees as its duty to promote the welfare of Big Business over the welfare of society and individual rights.  And they are literally looking to put corporate interests in charge of our social welfare.

This is the world where people vote against their own best interests, where corporate greed trumps the will and welfare of the people.  This is the world we now live in.

The Forgotten Millions

Published on Friday, March 18, 2011 by The New York Times

 

by Paul Krugman

More than three years after we entered the worst economic slump since the 1930s, a strange and disturbing thing has happened to our political discourse: Washington has lost interest in the unemployed.

Jobs do get mentioned now and then — and a few political figures, notably Nancy Pelosi, the Democratic leader in the House, are still trying to get some kind of action. But no jobs bills have been introduced in Congress, no job-creation plans have been advanced by the White House and all the policy focus seems to be on spending cuts.

So one-sixth of America’s workers — all those who can’t find any job or are stuck with part-time work when they want a full-time job — have, in effect, been abandoned.

It might not be so bad if the jobless could expect to find new employment fairly soon. But unemployment has become a trap, one that’s very difficult to escape. There are almost five times as many unemployed workers as there are job openings; the average unemployed worker has been jobless for 37 weeks, a post-World War II record.

In short, we’re well on the way to creating a permanent underclass of the jobless. Why doesn’t Washington care?

Part of the answer may be that while those who are unemployed tend to stay unemployed, those who still have jobs are feeling more secure than they did a couple of years ago. Layoffs and discharges spiked during the crisis of 2008-2009 but have fallen sharply since then, perhaps reducing the sense of urgency. Put it this way: At this point, the U.S. economy is suffering from low hiring, not high firing, so things don’t look so bad — as long as you’re willing to write off the unemployed.

Yet polls indicate that voters still care much more about jobs than they do about the budget deficit. So it’s quite remarkable that inside the Beltway, it’s just the opposite.

What makes this even more remarkable is the fact that the economic arguments used to justify the D.C. deficit obsession have been repeatedly refuted by experience.

On one side, we’ve been warned, over and over again, that “bond vigilantes” will turn on the U.S. government unless we slash spending immediately. Yet interest rates remain low by historical standards; indeed, they’re lower now than they were in the spring of 2009, when those dire warnings began.

On the other side, we’ve been assured that spending cuts would do wonders for business confidence. But that hasn’t happened in any of the countries currently pursuing harsh austerity programs. Notably, when the Cameron government in Britain announced austerity measures last May, it received fawning praise from U.S. deficit hawks. But British business confidence plunged, and it has not recovered.

Yet the obsession with spending cuts flourishes all the same — unchallenged, it must be said, by the White House.

I still don’t know why the Obama administration was so quick to accept defeat in the war of ideas, but the fact is that it surrendered very early in the game. In early 2009, John Boehner, now the speaker of the House, was widely and rightly mocked for declaring that since families were suffering, the government should tighten its own belt. That’s Herbert Hoover economics, and it’s as wrong now as it was in the 1930s. But, in the 2010 State of the Union address, President Obama adopted exactly the same metaphor and began using it incessantly.

And earlier this week, the White House budget director declared: “There is an agreement that we should be reducing spending,” suggesting that his only quarrel with Republicans is over whether we should be cutting taxes, too. No wonder, then, that according to a new Pew Research Center poll, a majority of Americans see “not much difference” between Mr. Obama’s approach to the deficit and that of Republicans.

So who pays the price for this unfortunate bipartisanship? The increasingly hopeless unemployed, of course. And the worst hit will be young workers — a point made in 2009 by Peter Orszag, then the White House budget director. As he noted, young Americans who graduated during the severe recession of the early 1980s suffered permanent damage to their earnings. And if the average duration of unemployment is any indication, it’s even harder for new graduates to find decent jobs now than it was in 1982 or 1983.

So the next time you hear some Republican declaring that he’s concerned about deficits because he cares about his children — or, for that matter, the next time you hear Mr. Obama talk about winning the future — you should remember that the clear and present danger to the prospects of young Americans isn’t the deficit. It’s the absence of jobs.

But, as I said, these days Washington doesn’t seem to care about any of that. And you have to wonder what it will take to get politicians caring again about America’s forgotten millions. 

© 2011 The New York Times

Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. Krugman was the 2008 recipient of the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics.

more Paul Krugman

Mad Scientists in the Lab of Democracy

Published on Friday, March 18, 2011 by The San Francisco Chronicle

by David Sirota

Supreme Court Justice Louis Brandeis once said that states are the "laboratories of democracy." Oft repeated over time, the aphorism has helped impart legitimacy to the rough and tumble of state lawmaking. We've heard "laboratory" and we've imagined staid scientists in white coats rigorously testing forward-thinking theories of societal advancement. It's certainly a reassuring picture - but there is a darker side of the metaphor. States are indeed laboratories. The problem is that today, those laboratories are increasingly run by mad scientists.

We're not talking about the usual Dr. Frankensteins trying to bring alive new corporate giveaways through harebrained cuts to social services (though there are those, too). We're talking about true legislative sadists looking to go medieval on America. Behold just five of the most telling examples:

The Anti-Life Pro-Life Act: After anti-abortion Republicans in Congress tried to narrow the legal definition of rape, Nebraska Republican State Sen. Mark Christensen took the assault on women's rights one step further with a bill to legitimize the murder of abortion providers by classifying such homicides as "justified."

The Let Them Eat Corporate Tax Cuts Act: As poverty rates and hunger have risen, so too have corporate profits. The Georgia legislature's response? Intensify the inequity with a bill to create a regressive sales tax on food that would then finance a brand new corporate tax cut.

The Demoralize the Workforce Act: Wisconsin Gov. Scott Walker didn't just threaten to deploy the National Guard against state workers unless they accept big pay and pension cuts. Apparently, that was too Kent State and not enough Ludlow Massacre for him. So he pressed to statutorily bar those workers from ever again collectively bargaining.

The Child Labor Act: Missouri State Sen. Jane Cunningham's proposal to eliminate child labor laws would allow corporations to employ any kid under 14 and would terminate restrictions on the number of hours that kid can be forced to work. The legislation is proof that when Tea Party ideologues refer to "the '50s," some of them aren't referring to the 1950s - they are referring to the 1850s.

The Endorsing Your Own Demise Act: Between trying to legalize hunting with hand-thrown spears and pressing to eliminate education requirements for those seeking the office of State Superintendent of Schools, Montana's Republican lawmakers are also considering legislation to officially endorse catastrophic global climate change. That's right, in the face of a Harvard study showing that climate change could destroy Montana's water supplies, agriculture industries and forests, State Rep. Joe Read's bill would declare that "global warming is beneficial to the welfare and business climate of Montana."

If you don't live in one of these states, it's easy to tell yourself that these bills don't affect you. But history suggests that what happens in one "laboratory" is quite often replicated in others - and ultimately, in the nation's capital. That's why we should all hope saner minds cut short these experiments before they get even more out of control.

© 2011 The San Francisco Chronicle

David Sirota is a best-selling author whose upcoming book "Back to Our Future" will be released in March of 2011. He hosts the morning show on AM760 in Colorado. E-mail him at [email protected], follow him on Twitter @davidsirota or visit his website at www.davidsirota.com.

more David Sirota

As the Global Economy Trembles, Our Nation’s Capital Fiddles

by Robert Reich

Thursday, March 17, 2011

Why isn’t Washington responding?

The world’s third largest economy suffers a giant earthquake, tsunami, and radiation dangers. A civil war in Libya and tumult in the Middle East cause crude-oil prices to climb. Poor harvests around the world make food prices soar.

All this means higher prices. American consumers, still reeling from job losses and wage cuts, will be hit hard. (Wholesale food prices surged almost 4 percent in February, the largest upward spike in more than a quarter century.)

Even before these global shocks the U.S. recovery was fragile. Consumer confidence is at a five-month low. Housing prices continue to drop. More than 14 million Americans remain jobless, and the ratio of employed to our total population is at an almost unprecedented low.

So you might think our elected representatives would want to avoid a repeat of what happened the second half of 2010 when the fragile recovery began tanking. They’d certainly want to prevent a double-dip recession.  

You’d think they’d be creating booster rockets to counter these recessionary forces – freeing up more spending, exempting the first $20,000 of income from payroll taxes, imposing a moratorium on bank foreclosures, giving Americans another six months to file their income taxes, lending states whatever money they need to prevent more of their own budget cuts.

Think again.

Amazingly, the big debate in Washington is about how whether to cut $10 billion or $61 billion from the federal budget between now and September 30.

House Majority Leader Eric Cantor recently stated the Republican view succinctly: “Less government spending equals more private sector jobs.”

In the past I’ve often wondered whether they’re knaves or fools. Now I’m sure. Republicans wouldn’t mind a double-dip recession between now and Election Day 2012.

They figure it’s the one sure way to unseat Obama. They know that when the economy is heading downward, voters always fire the boss. Call them knaves.

What about the Democrats? Most know how fragile the economy is but they’re afraid to say it because the White House wants to paint a more positive picture.

And most of them are afraid of calling for what must be done because it runs so counter to the dominant deficit-cutting theme in our nation’s capital that they fear being marginalized. So they’re reduced to mumbling “don’t cut so much.” Call them fools.

The U.S. economy is flirting with another dip at a time when the global economy is teetering and most Americans are still in economic trouble. But nothing is being done in our nation’s capital because knaves and fools are in charge.

Wisconsin Protesters Storm Washington

by Andrew Leonard, from salon.com

A Republican fundraising event gets an unwanted surprise: Boisterous solidarity for embattled public sector workers

Wisconsin Governor Scott Walker may have won the first round of his battle against public sector unions, but judging by the energy visible in this video, the war is a long way from over. On Wednesday, hundreds of protesters crashed a fundraising event for the Wisconsin Republican Party in Washington D.C. A Salon videographer caught the action.

My favorite part: an interview with two Wisconsin high school girls, one of whom flashes a bright smile through her braces as she proudly notes that she's already participated in "around 30" protests so far.

 

 

Michigan's 'Emergency Manager Law' Epitomizes State-Level 'Shock Doctrine'

Published on Wednesday, March 16, 2011 by Michigan Messenger

Michigan Gov. Rick Snyder to get Emergency Manager powers this week

by Eartha Jane Melzer

Public workers in Michigan lost job security yesterday as the state House signed off on a bill that allows the governor to appoint people to take over financially troubled local governments and schools and cancel labor contracts.

Less than two months after Gov. Rick Snyder asked the Legislature to expand the state’s ability to intervene in communities facing budget problems, the Republican-controlled House and Senate have finalized a bill that gives unprecedented power to appointed Emergency Managers.

The Local Government and School District Fiscal Accountability Act creates a range of triggers for state involvement in local communities and allows the governor to appoint managers to fire local elected officials, break labor agreements, suspend collective bargaining rights for five years, order millage elections, take over pension funds and even dissolve local governments.

The law also contains a provision added by the Senate that gives towns a chance to avoid takeover by entering into a budgeting consent agreement with the state and becoming exempt from collective bargaining agreements.

“The Governor will sign,” spokeswoman Sara Wurfel said Tuesday afternoon. “He believes this was an important step forward and will be a key tool to help indicate and address fiscal problems earlier and more clearly in Michigan’s cities and schools with the hopes of avoiding the appointment of an emergency manager to begin with.”

Critics say that the Emergency Manager legislation is part of a nationwide Republican effort to consolidate political power by undermining unions.

In an interview with FOX News last week Wisconsin State Senate Majority Leader Scott Fitzgerald acknowledged that the (apparently successful) effort to end collective bargaining and break unions in that state is aimed at hurting Democratic chances in the 2012 presidential election.

“If we win this battle and the money is not there under the auspices of the unions,” he said, “Obama is going to have a much … more difficult time getting elected and winning the state of Wisconsin.”

“The distinction between Michigan and Wisconsin is that Governor Snyder is a lot smarter than Governor Walker,” said American Federation of Teachers Michigan President David Hecker. “He is going after things in other ways.”

“Yes, some school districts and cities are in financial difficulties that have to be addressed,” he said, “but you don’t do that by wiping out the powers of elected officials, or by wiping out collective bargaining …this will wreak havoc on cities and school districts.”

The new law is likely to hit Snyder’s desk as busloads of union members and other concerned people roll into the Capitol to protest both the Emergency Manager bill and the proposed state revenue sharing cuts that could drive many communities into receivership.

AFL-CIO affiliated unions, Working Michigan, Michael Moore and others are mobilizing for a noon protest at the Capitol under the banner “NO to GOP attacks on Michigan’s middle class.”

City council members and residents from Benton Harbor are expected to join the rally in Lansing today.

Benton Harbor is the poorest town in Michigan and since last year its finances have been under the control of Joe Harris, the emergency financial manager appointed by Gov. Jennifer Granholm.

Harris and the city council have clashed over cost cutting measures and under the new Emergency Manager bill Harris will have the power to disband the council.

Benton Harbor is already experiencing corporate-style restructuring.

Jean Klock Park, the city’s public lakefront, has been leased to a non-profit associated with the locally headquartered Whirlpool Corp. and turned into an elite private golf course.

Though much of the concern around the Emergency Manager bill has focused on the loss of benefits and jobs that will come when labor contracts can be shredded, another expected impact is increasing privatization of city assets.

Benton Harbor City Commissioner Dennis Knowles told WNDU.com that the city’s commissioners hope to join with other communities in a class action suit challenging the new Emergency Manager law.

© 2011 Michigan Messenger

Eartha Jane Melzer wrote this for the Michigan Messenger.

Naomi Klein on Union Busting Bills: "A Frontal Assault on Democracy, a Corporate Coup D’Etat"

  

Also see Paul Krugman's "Shock Doctrine, USA."

Safety on the Cheap

by Robert Reich

Tuesday, March 15, 2011

Can we please agree that in the real world corporations exist for one purpose, and one purpose only — to make as much money as possible, which means cutting costs as much as possible?

The New York Times reports that G.E. marketed the Mark 1 boiling water reactors, used in TEPCO’s Fukushima Daiichi plant, as cheaper to build than other reactors because they used a comparatively smaller and less expensive containment structure.

Yet American safety officials have long thought the smaller design more vulnerable to explosion and rupture in emergencies than competing designs. (By the way, the same design is used in 23 American nuclear reactors at 16 plants.)

In the mid-1980s, Harold Denton, then an official with the Nuclear Regulatory Commission, said Mark 1 reactors had a 90 percent probability of bursting should the fuel rods overheat and melt in an accident. A follow-up report from a study group convened by the Commission concluded that “Mark 1 failure within the first few hours following core melt would appear rather likely.”

Sound familiar?

The National Commission appointed to investigate the giant oil spill in the Gulf of Mexico last April recently concluded that BP failed to adequately supervise Halliburton Company’s work on installing the well.

This was the case even though BP knew Halliburton lacked experience testing cement to prevent blowouts and hadn’t performed adequately before on a similar job. In short: Neither company bothered to spend the money to ensure adequate testing of the cement.

Nor did Massey Energy spend the money needed to ensure its mines were safe.

And so on.

Don’t get me wrong. No company can be expected to build a nuclear reactor, an oil well, a coal mine, or anything else that’s one hundred percent safe under all circumstances. The costs would be prohibitive. It’s unreasonable to expect corporations to totally guard against small chances of every potential accident.

Inevitably there’s a tradeoff. Reasonable precaution means spending as much on safety as the probability of a particular disaster occurring, multiplied by its likely harm to human beings and the environment if it does occur.

Here’s the problem. Profit-making corporations have every incentive to underestimate these probabilities and lowball the likely harms.

This is why it’s necessary to have such things as government regulators, why regulators must be independent of the industries they regulate, and why regulators need enough resources to enforce the regulations.

It’s also why the public in every nation is endangered if the political clout of its biggest corporations — BP, Halliburton, Massey, G.E., or TEPCO — grows too large.

Dennis Kucinich Gives 'Em Hell in Wisconsin

 

The Republicans Creed: “To Hell With The Common Folk”

by Frank Thomas

Did I hear correctly that Wisconsin passed legislation aimed at eliminating the bargaining rights of workers? If true, it’s clear the ultra-right is determined to turn America into a governing autocratic anachy with the common folk being common servants at slave wages to serve the viscious avarice of the Kochs and like company. If this isn’t symptomatic of the war being declared on working class Americans, then I don’t know what is. It’s the Republican game plan of shifting the blame, shame, and pain onto the middle-class for systemic economic breakdowns caused by the upper class. I’m very sad for my country!

That the money-influenced bought Gov. Scott Walker and his  promotion of ending the basic rights of unions to represent workers as a way to reduce a state deficit he helped create is disgusting beyond words. The situation  we have now of other crony Republican Governors humping this solution to structural deficit problems – whose  primary origin lies in other directions – reminds me of the film, “Saving Private Ryan” in WWII. George Marshall initiated the assignment of an Army Ranger team to rescue Private Ryan since his three brothers had already been killed in battle actions. The code name given this very dangerous mission by the rescue team was “FUBAR.”

FUBAR meant, “F****d Up Beyond All Recognition.” This is exactly how I would describe the state of our governmental affairs today in handling deficits and a steady trend – that has been accelerating the last three decades (see my study of historical job growth) – of destroying and minimum-wage Wall-Marting of middle class jobs.

Wisconsin is setting a destabilizing societal divisive precedent of entrenching the upper 10% class that owns +85% of all wealth while placing all other blue-collar Americans in a fight to simply economically survive, and this struggle is only made worse without fair, effective union  representation. Is this what thousands of Private Ryan common folk soldiers nobly fought and died for in WWII? An expanding Have and Have Not Divide making us all ultimately the LOSERS ?

People, including the President, will get just what they deserve if they cannot muster the courage to stand up to the monied-interests’ rape  of our democracy by, among other ways, eliminating the average working man´s collective bargaining rights for obtaining a decent standard of living and job growth prospects. Until people unite and say, “Enough is Enough,” cannibalizing middle-class social nets such as Social Security and Medicare/Medicaid will be next on the ultra-right’s hit list. Gov. Scott Walker´s trampling on worker-bargaining rights in concert with job and benefit cut threats is just more nails in the coffin on America’s already sad state of social-cultural cohesion and equity for ALL citizens.

Yes, the right word for our current chaotic, brain-dead approach to  “Saving Our Nation’’  and solving in a banking, fiscally and economically balanced, creative fashion (like North Dakota) the nation’s short and long-term structural deficits can also best be described as  “FUBAR:  F****d Up Beyond All Recognition.”

Benjamin Disraeli (British Prime Minister and Novelist, 1804-1881) long ago principally captured admirably our race to institutionlizing an increasingly morally corrupt, massively class divided society based on money and survival of the fittest:

"Two nations; between whom there is no intercourse and no sympathy; who are as ignorant of each other's habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets; who are formed by a different breeding, are fed by a different food, are ordered by different manners, and are not governed by the same laws." "You speak of -- " said Egremont, hesitatingly, "THE RICH AND THE POOR." 

Frank Thomas
The Netherlands
March 15,2011

Newt Gingrich's Family Values

 

The Crisis is Our Unwillingness to Make Rich Pay Their Share

Published on Friday, March 11, 2011 by The Capital Times (Wisconsin)

by John Hallinan

U.S. corporations are sitting on $2 trillion in cash -- trillion, not billion. The same people who shipped millions of jobs overseas, caused the financial crisis, and pay themselves multimillion-dollar bonuses every year are now sitting on a mountain of cash. Yet both state and local governments feel the need to give them more tax cuts. To what end? So they can create more profits and sit on bigger piles of cash, so they can play monopoly as they buy each other out, or so they can give themselves even bigger bonuses? There is no indication that they are interested in doing anything to spur the economy.

In December we heard the Republicans tell us that people making over $250,000 per year couldn’t afford a 4 percent tax increase, and it would be terrible for the economy to increase their taxes. Thirty years ago they were paying 70 percent in taxes. Now they pay half that, but a 4 percent increase is just too much to bear.

Now we are told that state workers making $40,000 to $60,000 per year are stealing the state blind. The same workers who for the last two years have taken over a 3 percent pay cut in the form of furloughs are now told they haven’t sacrificed enough. Now they must forfeit 7 percent or more of their pay, and give up their right to negotiate their future. What is appalling is the state workers were willing to give up the money to help out the state. All they asked was to keep their right to negotiate. Yet the wealthiest in our country aren’t willing to give up anything to help our country out of the financial mess they created.

In 1980 Ronald Reagan told the biggest lie ever perpetuated on the American public. He condemned Jimmy Carter for running a $40 billion deficit, and then told everyone he could cut taxes and balance the budget. Voodoo economics -- that’s what George H.W. Bush called Reagan’s economic plan. He was right, and by the mid ’80s the budget deficit had ballooned to over $200 billion.

Of course it was the rich who walked away with virtually all of the Reagan tax cuts. During the last 25 years the Republicans have doubled down over and over again, giving more and more tax cuts to the rich. While the rich have gotten incredibly wealthy, the poor have gotten poorer. It is a reverse Robin Hood economy where we take from the poor and give to the rich. It has been the greatest transfer of wealth in the history of our country -- the 400 richest have more than the 155 million poorest.

Ballooning government deficits weren’t a problem when Republicans were in the White House, but with a Democratic president, it is suddenly a crisis. The recession we’ve been living through proves the fallacy of Milton Friedman, Reaganomics, Ayn Rand, Alan Greenspan and the rest who told us that markets are self-correcting and regulation is bad. Banking regulations kept this country out of serious recession for 70 years, but once the regulations were repealed it took only a decade to bring the world’s economy to its knees. Yet Republicans refuse to acknowledge how wrong they were as they continue to try to gut government regulations.

Every time a politician tells you he wants to make the government more business friendly, what he’s really telling you is that he wants to increase taxes on your children and grandchildren. Every environmental law that is weakened will mean a cleanup to be paid for by future generations. Every bad business practice that is endured will be funded by taxpayers having to clean up the mess at some later date.

Now we are told that everyone must sacrifice to bring state and federal government budgets in line. But somehow the sacrifices once again all fall on those at the bottom of the economic ladder. Once again businesses are given tax cuts, money is found to increase spending on roads, but education, health care and help for the poorest in our society are cut.

There isn’t a financial crisis at either the state or the federal government. The crisis is our unwillingness to ask those who have gained the most from our society pay a fair and equitable share from the wealth this society has allowed them to accumulate. It is the honest, Christian, and patriotic thing to do.

© 2011 The Capital Times

John Hallinan is a Stoughton, Wisconsin resident.

When Republicans Take Over the House, the Senate and the Presidency in 2012, What Happened in Wisconsin Will Happen on the National Level Only Worse

by John Lawrence

With the stroke of a pen Republican Governor Scott Walker of Wisconsin ended collective bargaining rights for workers in Wisconsin. How is it possible that 50 years worth of hard fought for rights can be ended with the stroke of a pen? Well, the Republicans control both houses of the bicameral legislature and the Governorship in Wisconsin. They can do whatever they want. If tomorrow they wanted to sell off state owned assets to their cronies, they could do it. In fact that's already in the budget bill that they're getting ready to pass next. The only reason that any of this has even come to national attention is that the 14 Democratic Senators, one of whose prescence was required to establish a quorum, left the state so that the original budget bill couldn't be passed. Now that they're back, Republicans have their quorum and can proceed to pass whatever they want. If tomorrow they want to pass a bill declaring that the moon is made of green Wisconsin cheese, they can do it.

These same battles are being fought out in every state in which Republicans have control of the political structure - namely, Ohio, Michigan, Florida and New Jersey among others. Voters, are you happy now? Governor Walker's bill also gives power over the state's Medicaid system known as BadgerCare to a political appointee taking it away from the legislature where it currently resides. Poor people kiss your health care good-bye in the state of Wisconsin. Other states will seek to follow suit. A little talked about provision of Walker's bill is that it would cut off $834 million in funding to the public school system. This would effectively cripple public schools already underfunded and double class sizes. Voters, are you happy now? But wait there's more. 

The Walker Budget bill expands the school voucher program to rich kids who want to attend private school and have the state government pay for part of their tuition. The voucher program was a poison pill started ostensibly to help poor black kids get a better education. But Walker's bill would let anyone regardless of income get a government voucher for private school tuition at the same time he is defunding the public school system. This is from the Milwaukee Wisconsin Journal Sentinel:

Voucher advocates have made clear for more than 20 years that their goal is to replace public education with a system of universal vouchers that includes private and religious schools. The heartbreaking drama currently playing in Milwaukee - millions of dollars cut from the public schools while vouchers are expanded so wealthy families can attend private schools in the suburbs - may be coming soon to a school district near you. ... The voucher program started in 1990, billed as an altruistic effort to help a few struggling community schools serving mostly poor black kids. There were only seven schools and 300 students, with the program costing $700,000. To most legislators, it seemed a worthwhile effort, sort of like throwing a few dollars in the church missionary basket. Even then, however, backers, such as Milwaukee's Bradley Foundation, envisioned a full-scale voucher program. Michael Joyce, the late head of the foundation, made no secret of his belief that public schools were akin to socialism. Vouchers were his free-market alternative. Bit by bit, budget by budget - as part of a long-term strategy - the program grew. The expansions always were couched in fine-sounding rhetoric that cloaked the program's harm to public education. This year, taxpayers are paying $131 million for the private school tuition of 21,000 students - making vouchers, in essence, one of the state's largest school districts, on par with Madison, Racine, Kenosha and Green Bay. With the expansion, vouchers will become the state's second-largest district, just behind Milwaukee. All along, hard-core voucher proponents were using poor black kids as pawns in their voucher chess game. More than a decade ago, a strategy paper for the Milton and Rose D. Friedman Foundation likened vouchers for low-income children to a "viable beachhead," a way "to win and hold new ground in the long march to universal school choice." Today, in Milwaukee, that long march is just about over. Vouchers are to be open, eventually, to any Milwaukee family, no matter how rich, to attend a private school anywhere in the county. The children of Milwaukee millionaires could conceivably receive $6,442 next year to help pay the $20,423 high school tuition at the private University School. The Walker budget goes out of its way to help voucher schools and harm Milwaukee Public Schools. While voucher funding will increase, with no limit on how much, MPS faces untold millions in budget cuts. Some of those cuts are directly due to vouchers, which reduce the amount of state aid MPS otherwise would receive. Milwaukee taxpayers, meanwhile, are forced to pick up the tab for more than a third of the voucher bill; already they pay $50 million a year. Overall, Walker is cutting $834 million in public education - eliminating state funding for school nurses, Advanced Placement courses, alternative education and children at-risk programs. There are also significant cuts in programs such as the school breakfast program, Head Start and bilingual aid. Funding for special education and other essential programs is flat, with no additional money even if need increases. ... Taken as a whole, the Walker budget is a blueprint for expanding private schools and destroying public schools. And there's nothing to stop this tragedy from spreading to the entire state. Unless, of course, legislators do the right thing and protect the American dream of a free and public education for all children.

So in addition to busting unions and privatizing the state's power plants, Walker's stealth plan includes defunding public schools and using the state's supposedly limited resources to fund an unlimited voucher program that pays part of a wealthy kid's tuition at a private school. Of course, poor kids will hardly be able to take advantage of Walker's Brave New World voucher program as they won't be able to afford the rest of the tuition. They will have served their purpose as "beachhead establishers." Again government taxpayer funds are used to help the wealthy at a time in which there is supposedly a budget crisis. But wait there's more. Walker's ginned up, phony "financial crisis" was brought on in the first place by his having given $140 million in tax cuts to corporations just after taking office. Then like Chicken Little he rushed out to announce that there was a $137 million budget deficit and draconian measures including busting unions, privatizing power plants and the public school system, screwing with BadgerCare and making elected state officeholders political appointees would of necessity have to be taken. Er, Walker you could rescind those tax breaks to your cronies... Just a thought.

Well, what does all this have to do with my main theme that Walker's power play of union busting and privatizing will look like child's play compared to what will happen on a national scale after Republicans win big in 2012? Simply this: if with a stroke of a pen Walker could reverse 50 years of progress in workers' rights, with the stroke of a pen the new Republican President backed by a Republican House and Senate (not to mention a Republican Supreme Court) can with a stroke of a pen put an end to Social Security and Medicare. The precedent has already been established that, despite a worker's having paid into social security over a lifetime, he or she has no constitutionally protected right to any of that money. Congress has the right to change the laws governing Social Security and Medicare at any time that they so choose.

This is from the Supreme Court's ruling in the Flemming vs Nestor case:

"The fact that workers contribute to the Social Security program's funding through a dedicated payroll tax establishes a unique connection between those tax payments and future benefits. More so than general federal income taxes can be said to establish 'rights' to certain government services. This is often expressed in the idea that Social Security benefits are 'an earned right.' This is true enough in a moral and political sense. But like all federal entitlement programs, Congress can change the rules regarding eligibility--and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn, as for example with student benefits, which were substantially scaled-back in the 1983 Amendments.

"There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense. That is to say, if a person makes FICA contributions over a number of years, Congress cannot, according to this reasoning, change the rules in such a way that deprives a contributor of a promised future benefit. Under this reasoning, benefits under Social Security could probably only be increased, never decreased, if the Act could be amended at all. Congress clearly had no such limitation in mind when crafting the law. Section 1104 of the 1935 Act, entitled 'RESERVATION OF POWER,' specifically said: 'The right to alter, amend, or repeal any provision of this Act is hereby reserved to the Congress.' Even so, some have thought that this reservation was in some way unconstitutional. This is the issue finally settled by Flemming v. Nestor.

"In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right."

So these rights could go out the window with a stroke of a pen regardless of whether or not it had even been an issue in the campaign. And, although it is unthinkable to the average middle class American, Social Security benefits could be abruptly ended for everyone including current recipients with the stroke of a pen. It's not unthinkable, and the thinkable is definitely possible. Did Scott Walker make union busting a campaign issue? Of course not. The plan was to bust the unions, privatize the power plants and school system on a stealth basis before anyone knew what hit them. Thanks to the 14 Democratic Senators who absconded from Wisconsin, it didn't quite turn out that way. But that will not prevent Republicans from abolishing Social Security and Medicare when they gain control over the national governmental apparatus in 2012.

So voters and Tea Partiers, I ask again will you be happy then? After you have given total control of the US government to Republicans and they have ruined the public education system, privatized everything they can get their hands on and ended Social Security and Medicare? Of course they will be happy because Rush Limpballs, Glenn Beck, Fox News and assorted hate mongers will tell them that they have practically entered the Promised Land of Low Taxes and Small Government (except for the military-industrial complex). The billionaire Koch brothers will use their billions to run ads convincing voters of how happy they will be if only they will elect a Republican President in 2012 along with Republican majorities in the House and Senate. And like lemmings, Tea Partiers will follow them off the cliff. And all those mooches on taxpayer's money - the welfare queens, seniors and poor people - forget them. They are losers who should go out and get a job.

Facts, Schmacts: Welcome to the New Age of Unreason

Published on Saturday, March 12, 2011 by CommonDreams.org

by John Atcheson

How the hell did this happen?

Thirty-five and two hundred years ago, our Founders established a nation and Constitution based on the Enlightenment conviction that science and reason was the ultimate basis for legitimacy and authority.

Now we’ve tossed aside the Age of Reason, and we’re plotting our course based on myths, irrational biases, blind faith, and for all I can tell, the random tossing of chicken bones.

A collection of Plutocratic high priests have successfully ended the Age of Reason, replacing it with the Age of Unreason, in which power and wealth are the source of legitimacy, and science and reason are scorned as “elitist.”

Catch the irony in this – a collection of the nation’s economic elite are labeling the essentially democratizing forces of knowledge and reason as “elitist,” and Americans are buying it.

It’s as if we put pyromaniacs in charge of the fire department and declared it good.

As a result, we are getting “eye-of-Newt” solutions to real world problems.

Look at the debate over our budget.

Republicans have been pushing deficit reduction like a dealer pushes smack, and Democrats, addicted to compromise, are buying it like it was the last fix in town, abandoning all thought of an aggressive stimulus package and gutting programs they once endorsed.

Yet we know that stimulus spending created more than 3 million jobs, and we know that cutting spending during an economic downturn is disastrous.

For example, in 1937, when Roosevelt’s extensive public works investments had restored wages, profits, and production to pre-Depression levels and lowered unemployment, Roosevelt was convinced to tackle the deficit by cutting government spending. The result? Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938. Manufacturing output fell by 37% from the 1937 peak.

But those are just facts, and the Plutocrats and their political vassals don’t want us to be confused with the facts – in the New Age of Unreason, fealty, spells and ideological incantations are the order of the day.

Or take the recent hearings on climate change. The science on global warming is simple, incontrovertible, and chilling Carbon dioxide retains heat, we’re putting huge amounts of it into the atmosphere, it has already warmed the Earth, and further warming will be disastrous.

But  Congressional Republicans assembled a collection of largely discredited denialists with a record of financial and political motivations for distorting the science and held an anti-Enlightenment hearing worthy of Dark Age necromancers dancing with the dead.

On and on it goes – embracing the belief that tax cuts, supply-side and trickle down “theory” create prosperity and that tax increases hurt the economy – a form of medieval magical thinking that real-world empirical data exposes as false.

The idea that big Gubmint’ regulation is what crashed the economy.

The idea that our largely secular founders were intent on forming a “Christian nation.” 

The belief that immigrants steal jobs from Americans.

Or the preposterous notion that the free market is the font of all good things if left to its own devices – this after all three attempts at laissez-fair economics by this country caused epic income inequality followed by catastrophic economic collapse.

And now, the cause of our current economic meltdown is being passed off as the solution to it, and no one bats an eye.

And where is the press as this retreat into abject ignorance proceeds?

They seem willing to parrot whatever is being said. ‘Balance” has become the sin-qua-non of journalism, replacing truth, accuracy, context and reality. Thus, the fool and the wise man are given equal treatment and equal authority. Somewhere, Ben Franklin is weeping.

Ah, and how about the Democrats? Where are they as the nation flirts with conjurers and tricksters intent on taking over? Except for a few brave souls, they deserve the greatest scorn of all – they have cringed, cowered and compromised with a philosophy that is guaranteed to wreck the economy, destroy the middle class and turn the average citizen into little more than later-day serf.

Obama, in particular, shares the blame for this retreat from reason. He hasn’t  confronted this dangerous slide into ignorance, he’s endorsed it.

Tax cuts during an economic slow down? Sure.

Ignore climate change? Why not?

Financial reform that doesn’t address the root problems? Oaky dokey.

Attempt to strip workers of their rights? Mums the word.

 Health care reform that strengthens the insurance industry—the source of our national health-care ripoff? Sure, you betcha.

None of these things pass any test based on reason or reality, but hey, this is the New Age of Unreason … Plutocrats, like some later day Rasputin, call the tune, not reason and empiricism.

In the pre-Enlightenment epistemology, there was a special place in hell for the cowardly -- those who witnessed evil, but did not confront it – it is the hottest and most punishing of places.

If the Democrats and Obama are going to compromise away their integrity and embrace the Age of Unreason, they’d do well to remember that.

A bedraggled and impoverished people living as serfs in a nation diminished by their cowardice and complicity will be their legacy, and they will be scorned by those they abandoned for the politically expedient compromise, and the plutocrat’s payola.

John Atcheson's writing has appeared in the New York Times, the Washington Post, the Baltimore Sun, the San Jose Mercury News, the Memphis Commercial Appeal, as well as in several wonk journals. He is currently at work on a fictional Trilogy that centers on climate change.  Atcheson's book reviews are featured on Climateprogress.org. Email to: [email protected]

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Undaunted! More Than 100,000 Wisconsinites Rally "To Take Our State Back!"

Published on Sunday, March 13, 2011 by The Nation

by John Nichols

"Wow! You go away for a couple of weeks and look at what happened!" shouted state Senator Jon Erpenbach, as he surveyed a crowd that organizers estimated at well over 100,000 that had rallied to welcome home Wisconsin's dissident senators.

Erpenbach and 13 other senators fled the state Capitol in mid-February, when Governor Scott Walker and his Republican allies were using their legislative majorities to strip state, county and municipal workers and teachers of their collective bargaining rights. That move blocked a vote on the legislation for three weeks, before the Republicans finally adopted a "nuclear strategy" to force adoption of the anti-union measure.

While opponents of the bill suffered a momentary legislative defeat, they enjoyed a dramatic political victory -- as a mass movement built, attracting hundreds of thousands of Wisconsinites to mass rallies in Madison and communities across the state and causing the collapse of Walker's approval ratings even in Republican-sponsored polls.

That movement now proposes to recall at least three Republican state senators who backed the bill, shifting control of the chamber to the Democrats and restoring a system of checks and balances to what is now one-party government in Wisconsin.

Ultimately, the movement seeks to remove Walker from office. And its plans no longer seem unreasonable, as poll numbers suggest that the governor would be defeated by virtually any Democratic challenger in a new election.

The political dynamics are intense, and even the most optimistic critics of the governor understand that there is much work to do.

But, on Saturday, they celebrated the return of the senators.

It was a remarkable scene.

Madison Firefighters Local 311 members marched through the crowd, with pipes and drums blaring. The Rev, Jesse Jackson, actress Susan Sarandon and actor Tony Shalhoub (a Wisconsin native) joined the line of march as the firefighters wove their way through a crowd that filled the Capitol Square. Outside a hotel opposite the Capitol, the 14 senators appeared.

The deafening roars of approval shook Madison's downtown before the firefighters led the senators through the crowd to a stage set up at an entrance to the Capitol. A procession that should have taken minutes took an hour, and when the group approached the stage it was almost impossible to move. But, finally, they arrived to chants of "Thank you! Thank you!"

Their messages, passionate and pointed, suggested support for the removal of their Republican colleagues and a sense of solidarity with a movement that has made the rights of workers central to a broader message about democratic renewal.

"We are going to take our state back. We are going to take our rights back," declared state Senator Julie Lassa, a central Wisconsin Democrat who told the crowd, "I have never been prouder to be a Wisconsinite."

That was a common sentiment Saturday.

And there was a lot of pride to go around at the biggest rally yet -- a gathering that former Wisconsin gubernatorial candidate Ed Garvey put at close to 150,000.

It was the largest political rally ever in Madison.

And it was one of the largest pro-labor rallies in American history.

From the start, the numbers have told the story of Wisconsin’s resistance, and its resilience.

The tens.

The hundreds.

The thousands.

The tens of thousands.

The hundreds of thousands.

Wisconsinites from every background, every religion, every politics and every job have filled the Capitol Square for the past month.

Their message has been clear and unequivocal. They oppose Scott Walker’s assault on working families. They oppose the lawless actions of legislative leaders who are more determined to advance the governor’s political agenda than to respect their colleagues or to serve the interests of the whole state.

This has been an exhilarating, frustrating, depressing and empowering time.

Emotions have soared and collapsed.

But Wisconsinites are a resilient people. Nothing Scott Walker does to the citizens of the state will be as long-lasting or meaningful as what those citizens will do for the state when they remove him—and those who have supported him—from office.

Wisconsin’s resilience is rooted in its traditions. Wisconsinites learned to work hard in factories and on farms.

Most Wisconsinites can trace their roots to a homestead on a country road. The is and will always be “America’s Dairyland,” a farm state with a regard for those who work the land.

So when the farmers of Wisconsin arrived Saturday, on tractors that rolled in from across the state, Wisconsinites brought this movement full circle.

The tractorcade, organized by the Wisconsin Farmers Union and Family Farm Defenders, began a day of rallying at the Capitol that drew the largest yet—and that signaled the determination of Wisconsinites to keep fighting the Walker agenda.

“The governor wants to divide us,” explained western Wisconsin farmer Joel Greeno, who will ride his tractor into the Capitol Square this morning. “But that won’t happen. The governor’s got his corporate contributors. But the state employees and the teachers, they’ve got us. Farmers understand that when you cut funding for road crews and schools, our rural communities get hurt. And we’ve been hurt enough.”

Wisconsin workers and farmers have, in the words of the tractorcade organizers, decided to “Pull Together!” That’s a slogan that recalls the historic organizing of the farmer-labor movements of the upper Midwest, which had their expression in Wisconsin in the Progressive Party that sent Robert M. La Follette Jr. to the US Senate and elected Phil La Follette as governor in the 1930s.

It has been a long time since Wisconsin has been this united, and since the farmers and workers of the state have spoken in so loud and clear a voice.

On Saturday, one of the returning senators may have put it best. Referring to the decision of the senators to leave for Illinois in order to open up a broader debate, Bob Jauch, a Democrat from northern Wisconsin told the crowd: "We did not weaken democracy when we went to the land of Lincoln. We strengthened it."

Then tens and tens and tens of thousands who were listening to him roared their approval, chanting what has become the slogan of the movement: "This is what democracy looks like!"

© 2010 The Nation

John Nichols is Washington correspondent for The Nation and associate editor of The Capital Times in Madison, Wisconsin. A co-founder of the media reform organization Free Press, Nichols is co-author with Robert W. McChesney of The Death and Life of American Journalism: The Media Revolution that Will Begin the World Again and Tragedy & Farce: How the American Media Sell Wars, Spin Elections, and Destroy Democracy. Nichols is also author of Dick: The Man Who is President and The Genius of Impeachment: The Founders' Cure for Royalism.

more John Nichols

How to Create Jobs: Government Investment Funded by Those Who Have Jobs

by John lawrence

All those spending cuts Republicans are proposing will do nothing to help the jobs situation. In fact they will make it worse. It will take government spending, not eliminating the jobs of public workers like teachers to both create new jobs and maintain old ones. Unlike Keynes I don't propose deficit spending to create jobs. I propose taxing those who already have jobs particularly those who make vast amounts of money like hedge fund managers and corporate CEOs. Taxing those who have a job will not result in their losing their jobs. It will just result in a slightly lower standard of living. If by so doing jobs can be created without adding to the deficit, economic activity will increase and the tax base - and hence government revenues - will be augmented. The pump will have been primed. But just cutting government spending and reducing the tax base by giving more tax cuts to the rich will diminish the number of jobs as people get laid off because of the spending cuts. It's a vicious circle with a built-in race to the bottom - the bottom being no public services or investment in infrastructure or support for those who are destitute.

And on what grounds are the Republicans asking for tax cuts and spending cuts at the same time? Tax cuts reduce the revenues that government needs not only to function at the present level but to increase the number of jobs created by investments in infrastructure and needed public services. Do you really think that the rich, having their taxes reduced, are going to create jobs? That myth has been totally shattered by looking at the historical facts. That tax cutter, George W Bush, created a total of zero net jobs during his eight years in office. At the same time he doubled the national debt. If Republicans have their way, the number of jobs will diminish at the same time that spending cuts will result in the nation as a whole becoming more impoverished. It's a race to the bottom. Spending cuts reduce the number of jobs which reduces the tax base which reduces government revenues which leads to another round of spending cuts and round and round we go until we spiral downward in a race to the bottom and Third World status. We will become a nation mostly comprised of serfs and peons with a small number of corporate overlords.

Some people are doing fantastically well. Those people can certainly be taxed and the money spent to provide jobs for others. This will prime the pump of the economy, and allow the US to work its way out of the hole we're in. Doing the opposite - cutting taxes and reducing government investment - will further accelerate the downward spiral. The wealthy just are not going to create jobs. Far from being the job creators, they are the job destroyers at least of American jobs. Most of the jobs they create are in foreign countries. Most of their (private) investment is in foreign countries. Most of the money they make is made outside the US and so they pay no taxes on it. Their lobbyists see to it that that loophole remains open. So both as a source of government funding and as a source of job creation, they are a total waste and a total loss, but they are determinimg government policy. Who is advancing the countervailing theory that what is needed is more taxation of those who can afford to pay and more job creation spurred by the Federal government? No one. Certainly not President Obama. He subscribes to trickle down economics - a theory that has been disproved and discredited by history.

The US is literally falling apart. Teachers are being ruined by spending cuts to education. Doubling classroom sizes will drive them to insanity. It's absolutely nuts. Obama is not taking a stand. He is standing by while Republican governors are obliterating unions and, therefore, the middle class. He pledged to put on "comfortable shoes" and walk the picket line with union members, but he couldn't be farther away from that campaign rhetoric. Where was he when the protesters in Wisconsin were out in the streets? He probably couldn't find his comfortable shoes but I'm sure he was looking for them just like Bush looked for the weapons of mass destruction in Iraq. Just where could those comfortable shoes be? Not over here. Under the bed? Nope, not there. Let's see ... A few voices crying in the wilderness are advancing the thesis that loopholes need to be closed that allow corporations to pay a lower share of total taxes than at any time in history. But those voices are by and large falling on deaf ears. A large number of Americans would rather vote for the party that proposes to let them hold on to their guns and is against abortion and gays even though this party is screwing them in their pocketbooks. They vote against their economic interests either because they swallow the hogwash that the wealthy are the job creators or because they believe the right wing echo chamber of Fox News, Rush Limbaugh and Glenn Beck or because they don't realize what is happening to them.

If tax cuts and spending cuts become the modus operandi, the US can expect an economy in ruins by 2012. Obama's chances of being reelected will be toast. The resultant Great Depression will make the last Great Depression seem like a walk in the park. At least the less urbanized folk of the 1930s could grow their own vegetables and raise a few chickens. Today urbanized and suburbanized Americans are dependent on  having all their needs met by the market economy. Their level of self sufficiency is near zero. As more and more fall out of the middle class, they go straight to homelessness and excruciating poverty not to a deurbanized level of hard self sufficient work. They go to nonwork and a dependency on charitable handouts most of which will completely vanish under Republican auspices. Homeless shelters will close due to lack of funding. The homeless will be forced to steal food. Republican charity? - forget it - it's an oxymoron, a contradiction in terms - there is no such thing as Republican charity. Will the billionaires among us provide charity for the poor once government funding dries up? I doubt it. I doubt they have the resources to pick up the slack once government spending has diminished due to the downward spiral. The one thing government will continue to spend on though is the military-industrial complex. We have to make sure the American people are fully protected even though they may be starving to death and dying in the streets due to lack of health care. And Republicans will reduce the size of government by outsourcing its spending on the military to private corporations. See, no government spending. Just corporate spending (with public money). Miraculously, jobs are created in the private sector (funded by public money). Yea, Republicans - you will have reduced the size of government and increased the number of private sector jobs. The collusion between government and corporations will be complete. There will be no hue and cry about deficit spending as the deficit continues to skyrocket. The right wing echo chamber will suddenly be mum about deficit spending. But that's OK as long as the deficit spending is on the military. We Americans cannot be too safe even if we are starving in the process.

Franklin Delano Roosevelt had the right idea in the 1930s: tax the rich and use the money to provide jobs for the poor and middle class. The Republican philosophy of cutting government spending and giving tax breaks to the rich will guarantee that the US will become a third rate nation with large numbers of destitute people where once there was a middle class. When Obama is defeated in 2012, the new Republican President will be sure to cut spending (on the public) even more in order to give more tax breaks to the wealthy and increase spending on the military. The right hand giveth; the left hand taketh away. The US will become a nation of destitute peons with enormous military capabilities.