bajahyena: (Default)
The economic policy brainwashing of America began in the time of Reagan. There became a mantra repeated that if you lower taxes, the economy will do better and thus greater tax revenue will be generated. We now know that his policy has failed again and again. Lowering tax rates for the rich/companies does not result in increased tax revenue.

From Wikipedia on Supply-side economics (i.e. Trickle down economics): --------------------

"Andrew Samwick, who was Chief Economist on Bush's Council of Economic Advisers from 2003-2004 responded to the claim:

You are smart people. You know that the tax cuts have not fueled record revenues. You know what it takes to establish causality. You know that the first order effect of cutting taxes is to lower tax revenues. We all agree that the ultimate reduction in tax revenues can be less than this first order effect, because lower tax rates encourage greater economic activity and thus expand the tax base. No thoughtful person believes that this possible offset more than compensated for the first effect for these tax cuts. Not a single one."

...

Before President Bush signed the 2003 tax cuts, the progressive, nonpartisan Economic Policy Institute (EPI) released a statement signed by ten Nobel prize laureates entitled "Economists' statement opposing the Bush tax cuts", which states that:

“Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income."
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I think it's clear that we need cute spending and raise taxes, especially on those that own most of the nations wealth to pay for the Great Recession deficits. These are many of the same people that benefited from risky practices and that took our tax money to bail them out. They are again writing themselves huge checks (27% CEO pay increase in 2010) as they are in a new class of untouchables and unafraid of the government, the workers, or the voters.

Next, we need to fix loopholes in the tax code for corporations. When we see GE which is one of the biggest U.S. companies in the world paying no taxes, I find myself a bit outraged. The company earned 14.2 billion in profits in 2010 and paid NO TAXES. This is because of the ability of U.S. companies to shift profit centers offshore. So, not only have companies been given tax breaks for offshoring jobs but they have been given a pass on taxes by offshoring their profit centers.

While all of this was going on, what was the American worker doing? Busting his ass, that's what!!

American workers have become amazingly productive without reward for their efforts. To understand this you need to realize the job outlook.

From Wikipedia: ---------------------------------------------------------
With further overall employment reduction in 2009 not reflected in the chart above (changes since March 2009), there ultimately was zero net job creation in the 2000-2009 decade in the USA. This is even worse than it seems, given US population growth during that time with no new jobs created for them, creating a shortage of about 18 million jobs relative to previous decades by one estimate by Paul Krugman if this ground was to be made up in five years. To understand such a calculation from another perspective, looking at the chart above, about 17 million net new jobs were created in the 1990-1999 decade relative to population growth. Assuming continuing population growth at about the same rate, for the USA to return to the level of employment of 2000 relative to population, starting from a lost decade, overall about 34 million net new jobs would need to be created by the end of the 2010-2019 decade (new jobs beyond replacements for jobs that are normally lost). By whatever calculation, this vast "jobs deficit", completely unpredicted by almost all mainstream economists, is causing "leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth."
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This is in a time when GDP increased by 40% or $4 trillion a year. Meanwhile, real hourly wages for the american worker declined. http://www.capitalspectator.com/033111d.html

So, we've become vastly more productive and companies are making record profits, but they pay workers less while paying themselves astronomic wages even when they have lead the country into economic catastrophe. In addition, while companies have the benefit of operating in the security of the U.S. they do not pay for this benefit as loopholes in the tax system have allowed these giants to move their profit centers offshore.

I think it's clear that we have achieved not a Democracy but a Plutocracy in this country. In 2005, Citigroup claimed the achievement of this state in the U.S. in a letter that was supposed to remain for the eyes of only it's richest investors. http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report-Part-1

I think it's clearer why we don't see campaign finance reform, corporate tax changes closing these loopholes, or some kind of "non-compete" clause like the ones we all sign to obtain a job that says politicians cannot be employed by large corporate entities up to 5yrs after they leave office (Lobbyists, Board of Directors, etc). Companies are in control. The politicians are bought and paid for. We see the politicians far more worried about who will pay for their re-election campaign than they fear us, the voter.

Yet, even Citigroup mentioned the one risk to this Plutocracy! That we, the voters, would wake up one day and see what was happening. Their one fear was "one person, one vote". I pray that we will wake up, stop fighting each other, and see our government for what it is (bought and paid for) then start tossing out those that do not fight for a balance between the big corporate interests and us. Right now, we are just human collateral damage in the rise of the Corporate State.

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bajahyena

October 2012

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