FOX NEWS DISINFORMATION CONTINUES

This helps explain why Fox News is a joke ...

They take a simple unsubstantiated assumption, and then claim "most economists" think tax cuts for the rich are an effective way for stimulating the economy ... because, you know, they worked out so well for George W. Bush.

In reality, as I've pointed out before, Republicans seem hell bent on supporting the wealth of the Paris Hilton's of America, even if it doesn't make economic sense for the nation.

If Fox News bothered to do a little homework they would have found a January report from the Congressional Budget Office (CBO), which is respected on budgetary matters by both political parties. The CBO studied how various policy measures would affect growth and employment across the nation. They found "that putting money in the hands of lower-income earners by boosting aid to the unemployed or lowering payroll taxes is a significantly more efficient way to stimulate growth."

This is especially the case when "compared to putting more funds in the hands of those already well-off."

In order to understand why, let's consider what happens to the economy when America pursues two distinct policy options in the short term:

TAX CUTS FOR THE MIDDLE CLASS: Every time the federal government cuts taxes for the middle class, or otherwise transfers $1.00 to you and me (or the states), the policy generates between eighty cents to $2.20 worth of economic activity. Merchants benefit, communities benefit, states benefit. Again, $1.00 in tax cuts for the middle class and government transfer payments get us about this much ...






TAX CUTS FOR THE RICH: If the federal government continues to follow the policies of George W. Bush, and maintains tax cuts for the rich, it will generate between ten cents and fifty cents in economic activity. Yeah, that's right. We actually lose economic activity (as the rich pad portfolios and/or bet on derivative products). But the Paris Hilton's of our nation do quite well, as do our bailed out Wall Street bankers. Again, for every $1.00 in tax cuts we grant to our Wall Street buddies and the Paris Hilton's of our nation we get this ...




In a few words, in the current environment we're flushing our money down a rat hole by cutting taxes for the rich. Worse, we're generating more budget deficits. How do we know this? Because the CBO has been crunching the numbers and this is what they've told us we get in return for every dollar spent ...




It's really pretty simple. President Obama and the Democrats want to transfer money by maintaining tax cuts for ordinary Americans hit hard by Wall Street's stupidity and greed. The big payoff is that it will generate more bang for the buck. The Republicans, however, are holding out for more tax cuts for the rich because, as Sen. Mitch McConnell (R-KY) argued on the Senate floor, the rich have been hit the hardest by this recession (seriously, check out the video).

Ignored by McConnell is how the GOP's failed "tax cuts for the rich" ideology has consistently given us more debt, which you and I have to pay for.

But let's not let the facts get in the way of Fox News' disinformation party ... and a group of people who want nothing more than to see President Obama fail.

- Mark

TEN MYTHS ABOUT OUR BUDGET MESS (and Why The GOP Isn't Serious About Solving It)

Imagine what would have happened if after Pearl Harbor the president had declared war on Japan, and then invaded Korea. Most Americans would have thought FDR was crazy. Taking your eye off the ball to pursue monsters that exist only in your world doesn't win you many fans.

But this is precisely what the GOP is doing with our current budget mess. They are taking their eye off the ball, as they pursue monsters in a world that only they believe is real. Below I consider their Monster Myths, and the very real Budget Realities that should be shaping our current budget debate.


MYTH #1: BUDGET DEFICITS ARE PRESIDENT OBAMA'S FAULT
We hear it all the time. President Obama is to blame for jacking up our budget. Nothing could be further from the truth.

BUDGET REALITY: Consider this. If it weren't for the Bush era policies - tax cuts for the rich, unfunded wars, deregulation induced market collapse, trillions in bailout costs, etc. - our budget deficits would be right about $100 billion - or less - instead of around $1.3 trillion.

Or we can look at numbers this way ...

Either way you cut it, President Obama isn't to blame for this budget mess.


MYTH #2: TAX CUTS FOR THE RICH REDUCES DEFICITS
We've been told this for the better part of 30 years: "We need to cut taxes on the richest Americans so they can invest." The added benefit of increased investments will "trickle down" to the rest of America in the form of economic growth, and more tax revenue.

REALITY: After 30 years of tax cuts for the rich we now have a national debt that's gone from just under $1 trillion in 1980 to $14.3 trillion today. The Republican response after more than 30 years of having their grand theory blow up in their face? They're proposing yet more tax cuts for the rich.

MYTH #3: WE CAN FIX THE BUDGET BY CUTTING ENTITLEMENTS
We're told every day about rising Medicare and Social Security costs. Ergo, the argument goes, we need to cut benefits for these programs.

REALITY: After decades of providing favorable legislation for a select few Americans we've created at least $1 trillion in write-offs and charge-offs for corporations and other individuals. The really good part is that you and I pay for it. For example, if you like going to lunch with your business friend, who picks up the tab, guess what? You and I actually help pay for it. It's called a business expense, which the business community gets to deduct from what they pay in taxes. Congress has created so many of these deductions that you and I get to pick up more than $1 trillion in business and other expenses.

The Republican want to ignore that we could go a long way in solving our budget deficits if we went after some of the more than $1 trillion in write-offs and deductions we have in our tax code. Why? Because these deductions help their campaign donors.


MYTH #4: SLASHING SPENDING WILL FIX THE MESS
One of the things we're told is that spending money on the state is a waste. The state can do nothing right. As such, we need to cut back on wasteful federal and state budgets because they drain revenue.

REALITY: Today there is more than $330 billion in uncollected federal taxes. Yet, the Republicans want to cut the budget of the IRS by $600 million (with even more cuts later). What the GOP doesn't understand is that for every dollar the Internal Revenue Service spends on audits, liens and seizing property from tax cheats they bring in more than $10. This is a 10:1 rate of return. So, to simplify, if we allow the IRS to spend ...

... we get $10 in revenue in return ...

While no one likes paying taxes, this sounds like a pretty good investment to me.


MYTH #5: SLASHING SPENDING WILL FIX THE MESS (again)
Again, we're told that state spending is a waste. The state can do nothing right. As such, we need to cut back on wasteful federal and state budgets because they drain revenue.

REALITY: According to the Congressional Budget Office (CBO), for every dollar the federal government spends on public work projects, or transfers to ordinary Americans (in the form of unemployment benefits) it generates between $1 and $2.50 in economic activity. This is what it looks like every time we spend money on regular Americans ...

will get us about ...

MYTH #6: TAX CUTS FOR THE RICH GENERATES GROWTH
Like Myth #3 above, for the better part of 30 years we've been told that if we cut taxes on the rich they will invest and generate more economic activity because the rich know what to do with their money. Ergo, we need to provide the rich with more tax cuts.

REALITY: Of all the lies about tax cuts creating more wealth for everyone this one has to be perhaps the biggest lie of all. In fact, according to the Congressional Budget Office, for every dollar in tax cuts we give to America's richest class we only get 50 cents (and perhaps as little at 10 cents) in return. Or ...

in tax cuts for the rich will get us (maybe) ...

MYTH #7: TAXES ARE TOO HIGH ON CORPORATE AMERICA
A couple of weeks back we heard on "60 Minutes" (from corporate America) that corporate tax rates in America were among the highest in the world.

REALITY: Apart from the fact that corporations should stop whining since they are able to draw from U.S. government funded universities, infrastructures, research centers, its military, legal networks, policing bodies, etc. the reality is corporate tax rates in America are at record LOW levels.

In fact, when we look at what corporations (and what their millionaire CEOs) are paying as a share of tax revenue today versus what they (and you and me) paid years ago, the "high corporate tax rate" meme is, quite frankly, a hoax.

Incredibly, the high tax rate meme gets worse once you understand the difference between the "marginal" tax rate and the "effective" tax rate, which you can learn about here.


MYTH #8: SOCIAL SECURITY/PENSIONS ARE A BURDEN
We know that Social Security has produced surpluses, and that the federal government owes the system at least $4 trillion from what it has borrowed from the program. The Republican response? Lie, and say our retirement system is broke, and then make misleading proposals to cut or privatize Social Security.

REALITY: As I've been pointing out year after year, social security is not in trouble. In fact, it's one of the few "profitable" government programs we have. Every president knows this because they've been borrowing hundreds of billions from the program for years. We now owe Social Security trillions in back pay. Oh, and federal pensions aren't really underfunded either. We're just getting ripped off by the private sector, in more ways than one.

MYTH #9: WE NEED TO BE MORE LIKE THE RUGGED RED STATES
Remember Sarah Palin on the 2008 presidential campaign trail, telling us how we needed to do what they do in Alaska? Indeed, how many times did you hear Sarah Palin say how much she appreciated being in the American south because the people there reminded her of the rugged individualists in her home state? There's a reason why this was the case. They're a bunch of Red State Welfare Queens too.

REALITY: While Sarah Palin and other Red State politicians likes to wax nostalgic about the rugged individualists they represent, for every dollar most Red Staters pay into our nation's treasury they take out more than they put in. So, for example, for every dollar Alaskans pay into our nation's treasury box they take out $1.84. However, for every dollar California puts in we get 78 cents in return. 

MYTH #10: GOVERNMENT = SOCIALISM
We've all watched as Fox News, Rush Limbaugh, and virtually every Tea Bag groupie has piled on, telling the world that "the State is the problem."

REALITY: OK, time to have a little fun. I posted on this a few years back (and in the fall). Unless you're a conservative, this helps illustrate how intellectually bankrupt the "hate-the-state" mentality really is.



Moral of the story? The Republican party and their Tea Party brethren are not serious about the budget. They never have been. Why else would they have introduced misleading stories and a budget with no numbers? They would rather peddle myths about trickle down economics, and blame President Obama for our budget mess, than deal with our budget realities. It's all about creating a political narrative.

Put more simply, the GOP has no problem with the state appearing bankrupt, or allowing it to go broke, because it makes their "private sector" ideas look better. It's part of their 30 year race to the bottom strategy.

Unfortunately, in spite of overwhelming evidence that debunks their smoke & mirror lies, their strategy appears to be working.

- Mark

GREENSPAN vs. GREENSPAN CAGE MATCH ... WE LOSE

"... A New Paradigm
of Active Credit Management."

- ALAN GREENSPAN (October 5, 2004)

Translation: "I don't see no credit 
market Chernobyl-like meltdowns in America."

One of the things you get when you follow free market ideologues long enough is that their words come back to haunt them. In this case former Federal Reserve Chair (1987-2006), Alan Greenspan, claimed in 2004 that credit markets were just fine. Big private market players, rather than "over regulated" banks, were spreading money and credit around efficiently.

Private market players (our shadow banking system), Greenspan argued, know what they're doing. Even if they were funding the purchase of toxic assets, and providing easy money that helped create our housing bubble, they were the ones who were on the hook if they lost money -- so the argument went. The market not only knew best according to Greenspan but, in this case, had created a "new paradigm of active credit management."

No Chernobyl-like credit market meltdowns were on his horizon.

Then the September 2008 credit market meltdown happened. Ooops.

Mr. Greenspan spoke up again on Sunday (Aug. 1). He claimed that we should repeal President Bush's tax cuts for the rich because we can't afford them. Specifically, he said (in typical Greenspanspeak):

"We believe it is appropriate to let those tax cuts that go to the most fortunate expire,"

I have only one question. Where the hell was this Alan Greenspan when President Bush said we needed tax cuts for the rich in 2001?

If  you recall, when George W. Bush ran for president in 2000 he gained considerable support telling America that the surpluses generated during the Clinton administration was "your money." It didn't matter that we had a $5.6 trillion national debt to pay down. In his mind budget surpluses should be given back to the American taxpayer in the form of tax cuts. So, instead of paying down our national debt (where were the Tea Bag crazies then?), President Bush proposed tax cuts, most of which would go to the nation's wealthiest Americans.

As he pointed out in his book The Age of Turbulence, Greenspan supported tax cuts at the time because "chronic surpluses could be almost as destabilizing as chronic deficits." We have two problems here. First, while we had a budget surplus in 2001, we hadn't started to run "chronic" surpluses. Second, Greenspan ignored how previous Republican tax cut policies had effectively quadrupled our national debt between 1981 and 1993.

What's key here is that Alan Greenspan knew all of this. Yet he still supported tax cuts that would primarily benefit the wealthy (yes, he understood the Bush proposal) to deal with "chronic surpluses."

To be sure, Greenspan was careful to say at the time that he supported tax cuts in general, and not necessarily President Bush's tax cut proposal. But he was being politically naive, at best. More probably, as an Ayn Rand sycophant, Greenspan was using his position to help get more money into the hands of private market players. More bluntly, he was playing a parlor game and was deliberately disingenuous.

Whatever inspired him, with decades of experience in Washington, Greenspan had to know that his congressional testimony supporting tax cuts would give President Bush the political gravitas - or greenlight - he needed to ram his tax cut program through congress. Ten years later, and with an additional $5 trillion added to our national debt, Mr. Greenspan is now saying "Hey, I think we need to pay for these tax cuts."

Still, perhaps we shouldn't be so hard on Greenspan and his sudden fiscal two-step. As chair of President Reagan's National Commission on Social Security Reform (the "Greenspan Commission") Alan Greenspan supported raising social security (FICA) taxes on the middle class in 1983 to help pay for projected social security shortfalls.

Got that? To deal with looming deficits in 1983 a tax hike on middle-class America was fine. This helps explain why the payroll (FICA) tax was raised in the 1980s (yes, President Reagan raised taxes). But to deal with real deficits in 2001 ($5.6 trillion) Mr. Greenspan was fine with tax cuts, most of which would go to America's wealthiest class.

Are you kidding me? How do you go from, "Let's raise taxes on the middle class to pay for projected shortfalls" in 1983 to "In spite of an actual $5.6 trillion debt, let's take projected surpluses and use them for tax cuts, which will go primarily to the rich" in 2001?

Now, in 2010, we have Mr. Greenspan saying that we should allow tax cut legislation that benefitted primarily the richest Americans to "expire" because we can't afford them. I guess you're never wrong if you're an intellectual schizoid ...

So, which Mr. Greenspan should we go with? Mr. We-Should-Pay-Our-Bills-So-Let's-Tax-The-Middle-Class? (1983), or Mr. To-Hell-With-the-Deficits-Taxes-for-the-Rich-Are-OK-by-Me? (2001), or Mr. Ooops-Now-We-Should-Pay-Our-Bills? (2010). Will the real Mr. Greenspan please stand up. Cue the music...




For my money, we also run into problems when we sit down and do the math.

What we find is that the billion dollar surpluses, generated in part by the social security tax hike, were effectively handed over to America's wealthiest during the Bush years -- making it one of the greatest transfers of wealth in human history. No wonder the far right is afraid of discussing class warfare. They're winning, and they don't want America to find out how it happened.

Today America finds itself staring at bloated budget deficits (a product of Bush's failed policies), more than $12 trillion in debt (due to a failed trickle-down theory), and another social security hole that Republicans claim can only be fixed with more tax cuts and deregulation.

(To be sure, the vast majority of our projected social security short fall is attributed to slowing wage growth and increased inequality in America. These are two economic shifts that Greenspan's commission didn't anticipate. Then again, they probably didn't anticipate the Republican Party tearing up the post-war social contract, which helped slow wage growth and increased income gaps in America.)

In all cases, Mr. Greenspan now concedes there was a flaw in his model, and that he was shocked by the results of the casino mentality that he helped create.



Incredible. Still, the damage has been done. And Alan Greenspan was there egging it on, every step of the way.

While Greenspan 2010 seems to be channeling Greenspan 1983, the reality is Greenspan 2001-2006  -- and the policies he rubber stamped during his time at the Fed -- is emerging as the winner in this Greenspan vs. Greenspan Cage Match.

Unfortunately, that's bad news for the rest of us.

- Mark

UPDATE (12/17/12): I just found this Tom Tomorrow cartoon. It pretty much explains the post ...

GOP BUDGET PROPOSAL ... DIGGING US INTO A BIGGER HOLE

House Republicans claim that their 2012 Budget Proposal will help dig America out of a financial hole. Their claims are both misleading and based on faulty assumptions. In fact, if the GOP's "digging-us-out-of-a-hole" budget proposals were implemented their actual impact would look like this ...

That's right. When it comes to digging us out of our current budget mess the GOP would effectively bury us in more debt.

How do we know this? First, we have a decades long history of the GOP's trickle-down promises and subsequent budget disasters. Second, the Republicans don't have a clue about "cause and effect" when it comes to understanding the sources of our current budget mess.

What's really driving our "out of control" deficit spending ($1.3 trillion this year) and soaring national debt ($14 trillion) are: (1) the costs associated with Wall Street's bailout in perpetuity program (which will cost us trillions); (2) the costs of funding President Bush's tax cuts for the rich (almost $2.5 trillion through 2010); (3) President Bush's blundering wars project (tied into growing defense related expenditures);  and (4) the losses associated with the economic down turn, which cuts hundreds of billions in income and tax receipts from our nation's economy. Check it out here:

The frustrating thing is that this isn't really "new" news. Citing CBO data, the Center on Budget and Policy Priorities reported as far back as 2005 that the biggest factors contributing to growing debt loads during the Bush administration were war and Bush era tax cuts. In fact, if we continue the Bush era tax cuts for the rich they will add an additional $1.3 trillion to $3.28 trillion to our national debt by 2018. Nice.

What this means is that if we didn't have to pay for Wall Street's bailout in perpetuity program, the costs associated with the economic down turn, and President Bush's bungling wars project and unfunded tax cuts for the rich policies, we could be running budget deficits approaching zero.

Better yet, if we went after tax deductions and write-offs that benefit only a select few, and pursued corporate tax dodgers, we could be running budget surpluses! Let me repeat: We could be running budget surpluses if we focused on the real sources of our budget mess.

Yet the House GOP doesn't want to discuss any of these issues. Instead, the GOP's 2012 Budget Proposal - which is essentially "trickle-down" on steroids - focuses on cutting social programs, as if war, market collapse, Wall Street's bailout in perpetuity programs, and unfunded tax favors have nothing to do with budget deficits.

Oh, and the GOP also wants to continue cutting taxes on the rich.

Ignoring reality, my friends, is how we dig ourselves a bigger budget hole.

- Mark

WHY THE SUPER RICH NEED TO PAY MORE ...

Many who believe in the free market want the rest of us to believe one thing. The growing gaps in wealth and income we see in America today are a result of the super rich being smarter, harder working, and more deserving than the rest of us. They deserve all the money they have because they earned it.

Nice try. But I don't buy this argument, and neither should you. Here's why.

The growing gaps in wealth and income we've seen in America since 1979 are a direct result of very specific policies that work against the interests of the middle class. Specifically, if we want to understand why the rich have gotten richer while the bottom half of America has seen their financial position stagnate or lose ground we can start by looking at how favorable legislation, generous tax cuts, and a series of market bailouts have redistributed wealth to the super rich in America.

If you want a picture of where these policies are taking us as a nation take a look ...

In graph form this what's actually been happening ...

The impact has been staggering as we are now seeing property and wealth gaps that are only rivaled by what we saw during the Gilded Age (but then again, at least the Robber Barons produced something tangible) ...

(If you prefer graph form ...)

What this means is that, yes, there is a massive redistribution of wealth going on in America. Only it's not going in the direction many believe it is.

Worse, these policies are deliberate, damaging and depriving the state of much needed resources to deal with the demands of society. This quote from Alternet.org synopsizes what's been happening succinctly ...

From 1947 until the mid-1970s, the fruits of our bountiful productivity were shared reasonably fairly with working people. As productivity rose so did workers’ real wage ... This wasn’t socialism. There were still plenty of rich people who earned a significant slice of the productivity harvest. But much of that wealth was plowed back into the economy through taxation rates that between 1947 and 1980 hovered between 70 to 91 percent on incomes over $3 million (in today’s dollars). Much of that money was used to build our physical and knowledge infrastructures, and to fight the Cold War. Unions were supported by public policy and workers' real wages rose steadily after accounting for inflation. Wall Street was tightly controlled and the middle-class grew like never before.

Then something happened.

It wasn’t an act of God, or the blind forces of technological change, or the mysterious movements of markets. Nor did the super-rich become enormously smarter than before. Instead, flesh-and-blood policy makers decided that deregulation and tax cuts should become the order of the day starting in the mid-1970s.

The decision to go after labor by attacking unions - which includes having the WTO pushing for and implementing uniform financial and investment codes globally, while winking and nodding at incoherent labor standards - is a big part of this strategy.

I bring all of this up because I've been getting correspondence from many people who continue to believe that we live in some kind of free market wonderland, where those with the most money are some kind of Economic Supermen. In their world market players have gotten smarter, stronger, and play by the rules.

Their logic for how the economy works is naive and goes something like this.

Because people want to make money they will act nice to you. This means they will do what they need to do to secure your trust. They will then produce goods you will like and then purchase. They will make good products because they want you to return to purchase more goods. Similarly, if you get a bad product you will not return and the merchant will go out of business. Homo Economicus rules the day, but Caveat Emptor!

If everyone understands and learns these lessons we all live happily ever after. The end.

I know. Kind of makes you feel warm and fuzzy all over, doesn't it? This is the way life is supposed to work according to our free marketeer proponents.

Unfortunately, according to the free marketeers who live in this market wonderland, the state ruins everything. How? The state gets in the way of all that is good and efficient because the state can't do anything right (yes, the logic is kind of circular).

This perspective is pushed in spite of a mountain of evidence to the contrary.

One of the incredible points lost on our free marketeers is that over the past 100 years the profit motive has not been behind some of humanities greatest inventions or achievements. Benjamin Franklin's lightening rod, penicillin, and Jonas Salk's polio vaccine are examples of this. The best selling gun in history was not produced in the USA, nor was it a product of the profit motive.

At the end of the day there is much more to the human spirit than trucking and bartering for profit. To see the world otherwise is silly. In fact, if you think about it, while it has done good the profit motive has also done much to perpetuate many kinds of social myths, market evils, and moral turpitude.

For example, throughout history market players have shown themselves to be perfectly happy living in a world where women are second class citizens. According to this mind-set, which was sanctioned by free marketeers, men are sturdier and must bring home the bacon so women can stay home and tend to their natural duties. That it kept women from competing in the workplace was a side benefit.

As well, slavery was once viewed as a natural product of efficient market forces. And it was sanctioned in the Bible too. If you can make money and God says it's OK why mess with someones property?

Even trafficking in drugs, Nazi goods, illegal arms, and females are often viewed as "just business." That these activities undermine the human condition should not matter, according to those who make money from these markets. The profit motive, the argument goes, should not be messed with.

The point is that humanity has found numerous ways to justify wealth accumulation and obnoxious gaps in social stature. Today our free market culture has latched on to the notion that current levels of accumulated wealth and outlandish compensation packages are tied to mysterious market forces. These market forces are justified because they have been determined by talent and initiative alone.

At least this is what you are supposed to believe.

The reality is quite different. The widening gaps in wealth and income that we have seen over the past 30 years are a direct result of specific policies that were designed to shift trillions of dollars in wealth from one class in America to another. These policies, as I point out in my book, are tied to favorable legislation, tax cuts for the rich, and a series of market bailouts that most Americans either don't understand, or don't make an effort to understand.

The result of this very deliberate race to the bottom strategy is that (1) gaps in wealth and income in America have increased, (2) America's richest class now pay marginal tax rates of 15% on phenomenal income gains (derived largely from financial bets backed by you and me), and (3) our nation now owes more than $15.6 trillion (up from $1 trillion in 1981) as a result of paying for unfunded tax cuts, reckless wars, and budget shortfalls due to the market collapse.

It's time for those who benefited most from our nation's failed experiment in deregulation and tax cuts for the rich to pay up.

More specifically, taxing the super rich is not class warfare. It's our way of saying you didn't really earn your money over the past 30 years. You now need to pay for the financial gains you received from our decades long experiment with favorable legislation, unfunded tax cuts, and market bailouts that collapsed our economy and created our budget nightmare.

It's really that simple.

- Mark

THE BENEFITS OF GOING AFTER TAX AVOIDANCE SCHEMES

Have you ever had a roommate that eats all your food and leaves the utilities on? To be sure, they pay a significantly larger share of the rent because they have the room with a balcony and their own bathroom. But then they eat your food, ask you to drive to them places (since "you're going anyways"), bring home "guests" on a regular basis, borrow money they forget to pay back, and then remind you of the one time they brought home beer when it's time to pay the utilities.

When you bring up what you've spent on gas driving them around, what you've spent on food they've eaten, and what utilities cost since they moved in and started turning up the air/heat they simply say that they pay more in rent. Then they add that you need to start watching your budget because they only eat snacks and take shorter showers than you.

Unless you're a complete fool these roommate situations don't last very long.

I bring this up because the rich and their congressional Ooompa Loompas in Congress have been complaining for years about the rich paying more in taxes and how our budget is in shambles because America spends more money than it takes in every year. They ignore that just 12 short years ago we were running budget surpluses that could have effectively paid off our national debt (then $5.7 trillion) by 2011.

Then America's rich decided to eat our groceries and bring home guests (as it were).

Like the roommate described above, conservatives like to point out that the rich pay "more of the rent" but then ignore how our nation's finances went down the crapper once they decided to mooch and go cheap when it comes to paying the daily bills. To solve the imbalance conservative members of Congress demand cuts in federal spending programs, but only if they are  programs that support America's working class.

Rarely, if ever, do conservatives say we need to go after federal spending programs (tax exemptions, write-offs, and other subsidies) that primarily benefit the rich. In fact, if you add up all the subsidies and taxes that benefit primarily the rich (again, tax exemptions, write-offs, and other subsidies) it's clear that budget expenditures for tax cuts and subsidies transfer more than $1 trillion of our nation's wealth to help subsidize the lifestyles of America's rich and famous each year.

More specifically, if you add it all up, tax avoidance for America's richest class cost our nation about $1.4 trillion dollars. Indeed, if we did something about tax avoidance schemes (exclusions, credits, capital gains, loopholes, tax subsidies from special deductions, etc.) that allow corporations like GE to make more than $44 billion between 2008 and 2010 but receive almost $5 billion in tax refunds we would have no annual budget deficits.

It would also go a long way in reversing the great tax shift - from corporations to individuals - that has been going on for decades.

But let's not lose sight of the real story here. Taxes avoided by America's richest class through assorted subsidies and tax avoidance schemes would effectively pay our annual budget deficits and stabilize our nation's finances.

It's time to get us back on the budget surplus path by going after the spending programs (tax avoidance schemes) that took us away from it.

- Mark 

MAKING JESUS PROUD?

We already know that tax cuts for the rich do little but add more debt to our nation’s financial ledger. So the real question is, Who Ultimately Pays for the Tax Cuts?

In testimony before House Ways and Means Committee, Brookings Institute scholar Jason Furman presented a nice matrix that helps explain who benefits and who pays for Bush's tax cuts under different scenarios. To make a long story short, whether we pay for Bush’s tax cuts by raising taxes (now or later), or by cutting services, Bush’s tax cuts achieve one thing: The richest Americans gain at the expense of the vast majority of Americans.

Put another way, the tax cuts are a massive transfer of wealth from the ‘have-nots’ to those who already ‘have.’ Nice.

Oh, an added 'benefit' is that we now owe trillions more in national debt. Jesus must be proud.

- Mark

WE'RE STILL ON THE CLIFF

So a bi-partisan Congress passed legislation on tax rates last night (257-167). On the surface this is a big victory for the vast majority of Americans, who won't see their income tax rates rise. President Obama is the clear political winner here, even if he had to redefine "rich" as those making more than $400,000 per year.

However, there were a lot of poison pills that had to be swallowed in order to get this agreement. And we did not avert the fiscal cliff (more on this below).

THE DEAL
This is a clear victory for President Obama because certain tax deductions and exemption will be eliminated, tax rates will be raised on investment income, while taxes on inherited wealth (the so called "death tax" on multi-million dollar estates) will be reinstated.

While the vote means the vast majority of Americans will not see their income tax rates go up, those making more than $400,000 ($450,000 for married couples) will pay a marginal tax rate of 39.6 percent (instead of 35 percent). President Obama did get a victory (of sorts) because he was also able to get a limit on itemized deductions for those making over $250,000 a year ($300,000 for married couples).

While those making between $500,000 and $1 million will only pay about $15,000 more in taxes, those making above $1 million will pay about $170,000 more in taxes per year. The biggest hit will be on people earning more than $2.7 million annually. They will pay about $440,000 more in 2013.

THE CRITICISMS
Critics of the bill from the right say the bill does little, if anything, because it really doesn't touch long-term spending issues, like Medicare. And they would be correct. In fact, included in the bill is an extension of unemployment benefits (1 year) and refundable tax credits for college students and low-income families.

Critics from the left argue while the vast majority of Americans will not see their income tax rates go up 77 percent of America's wage earners will see their payroll (or social security) tax rate go up 2 percent (i.e. return to it's "normal" rate). This will pull more than $100 billion out of the hands of the middle class (a little over $80 per month for someone earning 50,000 a year) in 2013.

But wait there's more. The good people at Nakedcapitalism.com found at least eight major subsidies in the legislation that help out everyone from NASCAR and Disneyland to Goldman Sachs and Railroad companies.

Here's the nuts & bolts behind the our latest corporate giveaway:

* NASCAR: $43 million in subsidies to builders of racetracks and associated facilities.
* RAILROADS: Over $100 million in subsidies for Railroads.
* HOLLYWOOD/DISNEY: Tax breaks that amounted to $150 million in 2010 and 2011 for "certain film and television productions."
* MINING: Tax incentives for mining companies to buy safety equipment.
* GOLDMAN SACHS/TRUMP: Tax exempt financing for New York "Liberty Zone" buildings. This is little more than subsidy for Manhattan apartment and office construction that will benefit, according to Bloomberg "Goldman Sachs and Bank of America Corp."
* INCOME TAX BREAKS: $9 billion in subsidies for U.S. firms that lend to subsidiaries abroad and earn income from that loan. So, yes, Coca Cola U.S. can lend to their firms abroad and then not pay taxes on income from that transaction.
* REPATRIATED PROFITS/TAX BREAKS: Related to above, tax credits are offered for U.S. firms earning money abroad.
* R&D GIVEAWAY: Bonus depreciation allowances and Research & Development credits, which added up to more than $110 billion for 2010 and 2011. 

So, yeah, if you add up all the tax breaks, we actually give more back to corporate America in subsidies than we take in from the $100 billion we get from raising the social security tax level by two points.

THE REALITY ... WE'RE STILL ON THE CLIFF
Here's the worst part. The fiscal cliff was not entirely averted.

Our debt ceiling was reached on New Year's Eve while sequestration, or automatic cuts of $110 billion, goes into effect in early March (unless Congress finds the same amount in spending cuts).

So, this is what we have. We dealt with the tax rate issue yesterday. But congressional bickering over automatic spending cuts (sequestration), and our ridiculous but seemingly annual debt ceiling theater under our current GOP-led Congress will dominate the headlines over the next three months.

Here's the real fun part. There's no debt ceiling in the Constitution.

So, prepare for more of the same in 2013.

Seriously, is this any way to run a country?

- Mark