Daily Archives: August 28, 2012

Intrepid Report: America’s descent into poverty

By Paul Craig Roberts
Posted on August 27, 2012 by Paul Craig Roberts

The United States has collapsed economically, socially, politically, legally, constitutionally, and environmentally. The country that exists today is not even a shell of the country into which I was born. In this article I will deal with America’s economic collapse. In subsequent articles, i will deal with other aspects of American collapse.

Economically, America has descended into poverty. As Peter Edelman says, “Low-wage work is pandemic.” Today in “freedom and democracy” America, “the world’s only superpower,” one fourth of the work force is employed in jobs that pay less than $22,000, the poverty line for a family of four. Some of these lowly-paid persons are young college graduates, burdened by education loans, who share housing with three or four others in the same desperate situation. Others of these persons are single parents only one medical problem or lost job away from homelessness.

Others might be Ph.D.s teaching at universities as adjunct professors for $10,000 per year or less. Education is still touted as the way out of poverty, but increasingly is a path into poverty or into enlistments into the military services.

Edelman, who studies these issues, reports that 20.5 million Americans have incomes less than $9,500 per year, which is half of the poverty definition for a family of three.

There are six million Americans whose only income is food stamps. That means that there are six million Americans who live on the streets or under bridges or in the homes of relatives or friends. Hard-hearted Republicans continue to rail at welfare, but Edelman says, “basically welfare is gone.”

In my opinion as an economist, the official poverty line is long out of date. The prospect of three people living on $19,000 per year is farfetched. Considering the prices of rent, electricity, water, bread and fast food, one person cannot live in the US on $6,333.33 per year. In Thailand, perhaps, until the dollar collapses, it might be done, but not in the US.

As Dan Ariely (Duke University) and Mike Norton (Harvard University) have shown empirically, 40% of the US population, the 40% less well off, own 0.3%, that is, three-tenths of one percent, of America’s personal wealth. Who owns the other 99.7%? The top 20% have 84% of the country’s wealth. Those Americans in the third and fourth quintiles—essentially America’s middle class—have only 15.7% of the nation’s wealth. Such an unequal distribution of income is unprecedented in the economically developed world.

In my day, confronted with such disparity in the distribution of income and wealth, a disparity that obviously poses a dramatic problem for economic policy, political stability, and the macro management of the economy, Democrats would have demanded corrections, and Republicans would have reluctantly agreed.

But not today. Both political parties whore for money.

The Republicans believe that the suffering of poor Americans is not helping the rich enough. Paul Ryan and Mitt Romney are committed to abolishing every program that addresses needs of what Republicans deride as “useless eaters.”

The “useless eaters” are the working poor and the former middle class whose jobs were offshored so that corporate executives could receive multi-millions of dollars in performance pay compensation and their shareholders could make millions of dollars on capital gains. While a handful of executives enjoy yachts and Playboy playmates, tens of millions of Americans barely get by.

In political propaganda, the “useless eaters” are not merely a burden on society and the rich. They are leeches who force honest taxpayers to pay for their many hours of comfortable leisure enjoying life, watching sports events, and fishing in trout streams, while they push around their belongings in grocery baskets or sell their bodies for the next MacDonald burger.

The concentration of wealth and power in the US today is far beyond anything my graduate economic professors could image in the 1960s. At four of the world’s best universities that I attended, the opinion was that competition in the free market would prevent great disparities in the distribution of income and wealth. As I was to learn, this belief was based on an ideology, not on reality.

Congress, acting on this erroneous belief in free market perfection, deregulated the US economy in order to create a free market. The immediate consequence was resort to every previous illegal action to monopolize, to commit financial and other fraud, to destroy the productive basis of American consumer incomes, and to redirect income and wealth to the one percent.

The “democratic” Clinton administration, like the Bush and Obama administrations, was suborned by free market ideology. The Clinton sell-outs to Big Money essentially abolished Aid to Families with Dependent Children. But this sell-out of struggling Americans was not enough to satisfy the Republican Party. Mitt Romney and Paul Ryan want to cut or abolish every program that cushions poverty-stricken Americans from starvation and homelessness.

Republicans claim that the only reason Americans are in need is because the government uses taxpayers’ money to subsidize Americans who are unwilling to work. As Republicans see it, while we hard-workers sacrifice our leisure and time with our families, the welfare rabble enjoy the leisure that our tax dollars provide them.

This cockeyed belief, on top of corporate CEOs maximizing their incomes by offshoring the middle class jobs of millions of Americans, has left Americans in poverty and cities, counties, states, and the federal government without a tax base, resulting in bankruptcies at the state and local level and massive budget deficits at the federal level that threaten the value of the dollar and its role as reserve currency.

The economic destruction of America benefitted the mega-rich with multi-billions of dollars with which to enjoy life and its high-priced accompaniments wherever the mega-rich wish. Meanwhile, away from the French Rivera, Homeland Security is collecting sufficient ammunition to keep dispossessed Americans under control.

Copyright © 2012 Paul Craig Roberts

Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan’s first term. Associate Editor Wall Street Journal, Columnist for Business Week, Senior Research Fellow Hoover Institution Stanford University, and William E. Simon Chair of Political Economy in the Center for Strategic and International Studies, Washington, D.C. His latest book, HOW THE ECONOMY WAS LOST, has been published by CounterPunch/AK Press. His home page is paulcraigroberts.org.

Mario Piperni on Repug Heresy

Jesus And Republican Hypocrisy

August 27, 2012 By

The following is making the rounds on the internets. It’s a piece from the Tikkun Daily and a column called “The Not-So-Social-Gospel.” It imagines what the New Testament would be like if Jesus was a modern day Republican. It’s a good read.

The Lazy Paralytic

1. When Jesus returned to Capernaum after some days, it was reported that he was at his home. 2. So many gathered around that there was no longer room for them, not even in front of the door; and he was speaking the word to them. 3. Then some people came, bringing to him a paralyzed man, carried by four of them. 4. And when they could not bring him to Jesus because of the crowd, they removed the roof above him; and after having dug through it, they let down the mat on which the paralytic lay. 5. When Jesus saw this he grew angry, “Why did you wreck my roof? Do you have any idea how much that cost to install? Do you know how many tables and chairs I had to make in my carpentry shop to pay for that roof? The reeds alone cost five talents. I had them carted in from Bethany.” 6. The disciples had never seen Jesus so angry about his possessions. He continued, “This house is my life. And the roof is the best part.” The disciples fell silent. 7. “It’s bad enough that you trash my private property, now you want me to heal you?” said Jesus, “And did you not see the stone walls around this house?” “Yes,” said the man’s friends. “Are these not the stone walls common to the towns and villages of Galilee?” 8. “No,” Jesus answered. “This is a gated community. How did you get in?” The man’s friends grew silent. 9. Then Jesus turned and said to the paralytic, “Besides, can’t you take care of your own health problems? I’m sure that your family can care for you, or maybe the synagogue can help out.” 10. “No, Lord,” answered the man’s friends. “There is no one. His injuries are too severe. To whom else can we go?” 11. “Well, not me,” said Jesus. “What would happen if I provided access to free health care for everyone? That would mean that people would not only get lazy and entitled, but they would take advantage of the system. 12. Besides, look at me: I’m healthy. And you know why? Because I worked hard for my money, and took care of myself.” The paralyzed man then grew sad and he addressed Jesus. “But I did work, Lord,” said the paralytic. “Until an accident rendered me paralyzed.” “Yes,” said the man’s friends. “He worked very hard.” 13. “Well,” said Jesus, “That’s just part of life, isn’t it?” “Then what am I to do, Lord?” said the paralytic. “I don’t know. Why don’t you sell your mat?” 14. All in the crowd then grew sad. “Actually, you know what you can do?” said Jesus. “You can reimburse me for my roof. Or I’ll sue you.” And all were amazed. 15. “We have never seen anything like this,” said the crowd.

The Very Poorly Prepared Crowd

1. The day was drawing to a close, and the twelve apostles came to Jesus and said, “Send the crowd away, so that they may go into the surrounding villages and countryside, to lodge and get provisions; for we are here in a deserted place.” 2 But Jesus said to them, “Why not give them something to eat?” They said, “We have no more than five loaves and two fish – unless we are to go and buy food for all these people.” 3 For there were about five thousand men. And Jesus said to his disciples, “You know what? You’re right. Don’t waste your time and shekels. It would be positively immoral for you to spend any of your hard-earned money for these people. They knew full well that they were coming to a deserted place, and should have relied on themselves and brought more food. As far as I’m concerned, it’s every five thousand men for themselves.” 4. The disciples were astonished by this teaching. “But Lord,” said Thomas. “The crowd will surely go hungry.” Jesus was amazed at his hard-headedness. “That’s not my problem, Thomas. Better that their stomachs are empty than they become overly dependent on someone in authority to provide loaves and fishes for them on a regular basis. Where will it end? Will I have to feed them everyday?” “No, Lord,” said Thomas, “Just today. When they are without food. After they have eaten their fill, they will be healthy, and so better able to listen to your word and learn from you.” Jesus was grieved at Thomas’s answer. Jesus answered, “It is written: There’s no such thing as a free lunch.” So taking the five loaves and the two fish, he looked up to heaven, and took one loaf and one fish for himself, and gave the rest to the twelve, based on their previously agreed-upon contractual per diem. But he distributed none to the crowd, because they needed to be taught a lesson. So Jesus ate and he was satisfied. The disciples somewhat less so. “Delicious,” said Jesus. What was left over was gathered up and saved for Jesus, should he grow hungry in a few hours. The very poorly prepared crowd soon dispersed.

I think this pretty much nails it. It’s always been ironic (and twisted) that the political party that has embraced the idea of intertwining governance with Christianity, is the same group that looks down at the poor as a pampered group of parasites content in living off the government’s tit. This is the reason they have no qualms in cutting back on social programs with the sole purpose of ensuring that the rich get richer.

Republicans and conservatives hold Jesus as their role model and yet do nothing about tens of thousands of Americans dying needlessly each year from lack of health insurance. I can’t see how modern Republicans can be viewed as anything other than hypocritical heartless bastards. I really can’t.

___

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BuzzFlash on Taxes

Taxes Avoided by the Rich Could Pay Off the Deficit

PAUL BUCHHEIT FOR BUZZFLASH AT TRUTHOUT

Conservatives force the deficit issue, ignoring job creation, and insisting that tax increases on the rich wouldn’t generate enough revenue to balance the budget. They’re way off. But it takes a little arithmetic to put it all together. In the following analysis, data has been taken from a variety of sources, some of which may overlap or slightly disagree, but all of which lead to the conclusion that withheld revenue, not excessive spending, is the problem.

1. Individual and small business tax avoidance costs us $450 billion.

The IRS estimates that 17 percent of taxes owed were not paid, leaving an underpayment of $450 billion. In way of confirmation, an independent review of IRS data reveals that the richest 10 percent of Americans paid less than 19% on $3.8 trillion of income in 2006, nearly $450 billion short of a more legitimate 30% tax rate. It has also been estimated that two-thirds of the annual $1.3 trillion in “tax expenditures” (tax subsidies from special deductions, exemptions, exclusions, credits, capital gains, and loopholes) goes to the top quintile of taxpayers. Based on IRS apportionments, this calculates out to more than $450 billion for the richest 10 percent of Americans.

2. Corporate tax avoidance is between $250 billion and $500 billion.

There are numerous examples of tax avoidance by the big companies, but the most outrageous fact may be that corporations decided to drastically cut their tax rates after the start of the recession. After paying an average of 22.5% from 1987 to 2008, they’ve paid an annual rate of 10% since. This represents a sudden $250 billion annual loss in taxes. Worse yet, it’s a $500 billion shortfall from the 35% statutory corporate tax rate.
3. Tax haven losses range from $337 billion to $500 billion.

The Tax Justice Network estimated in 2011 that $337 billion is lost to the U.S. every year in tax haven abuse. It’s probably more. A recent report placed total hidden offshore assets at somewhere between $21 trillion and $32 trillion. Using the lesser $21 trillion figure, and considering that about 40% of the world’s Ultra High Net Worth Individuals are Americans, and factoring in an annual 6% stock market gain based on historical records, the tax loss comes to $500 billion.
4. That’s enough to pay off a trillion dollar deficit. Reasonable tax changes could pay it off a second time:

(a) A non-regressive payroll tax could produce $150 billion in revenue.

Get ready for some math. The richest 10% made about $3.84 trillion in 2006. A $110,000 salary, which is roughly the cutoff point for payroll tax deductions, is also the approximate minimum income for the richest 10%. A 6.2% tax paid on $1.43 trillion ($110,000 times 13 million payees) is about $90 billion. The lost taxes on the remaining $2.41 trillion come to about $150 billion.

(b) A minimal estate tax brings in another $100 billion.

The 2009 estate tax, designed to impact only the tiny percentage of Americans with multi-million dollar estates that have never been taxed, returns about $100 billion per year.

(c) A financial transaction tax (FTT): up to $500 billion.

The Bank for International Settlements reported in 2008 that annual trading in derivatives had surpassed $1.14 quadrillion (a thousand trillion dollars!). The Chicago Mercantile Exchange handles about 3 billion annual contracts worth well over 1 quadrillion dollars. One-tenth of one percent of a quadrillion dollars could pay off the deficit on its own.

More conservative estimates by the Center for Economic and Policy Research and the Chicago Political Economy Group suggest FTT revenues of a half-trillion dollars annually.

Add it all up, and we’ve paid off the deficit, almost twice. More importantly, the avoided taxes and a few other sensible taxes could provide sufficient revenue for job stimulus without cutting the hard-earned benefits of middle-class Americans.

Paul Buchheit teaches Economic Inequality at DePaul University. He is thefounder and developer of social justice and educational websites (UsAgainstGreed.org, PayUpNow.org, RappingHistory.org), and the editor andmain author of “American Wars: Illusions and Realities” (ClarityPress). He can be reached at paul@UsAgainstGreed.org.