Day: March 9, 2010

The Creeping Cancer Known As Inequality

As we speak, the divide between rich and poor is widening. mainly because the middle class is disappearing into the clutches of poverty…..

New studies reveal that the social divide between rich and poor in the US has grown much starker in the current economic crisis, and that even before it hit the country was the most unequal of the advanced economies, with great wealth and extreme poverty having become virtually hereditary conditions.

President Barack Obama has done nothing to reverse decades of wage stagnation, mounting poverty, and attacks on the social welfare system. On the contrary, following George W. Bush, he has seized on the crisis to redistribute wealth to a tiny financial elite through the ongoing bailout of the finance industry.

This demonstrates a fundamental political reality: no reform that benefits the broad masses can come from a government and two-party system so openly in the clutches of Wall Street. The financial aristocracy’s grip over all the levers of state power must be broken.

The sharp polarization that reveals itself in fabulous wealth for a handful, on the one hand, and unemployment, wage cuts, homelessness and hunger for broad layers of working people on the other, marks an intensification of longer-term trends.

According to the Economic Policy Institute (EPI), “While many middle-income families have lost jobs, homes, and retirement savings during the latest recession, their economic woes date back much further.” In the 30 years before 2008—the onset of the current crisis—nearly 35 percent of total income growth in the US was cornered by the top one-tenth of 1 percent of income earners. The bottom 90 percent shared only 15.9 percent of income growth in the same period.

The vast polarization of wealth in the US will only intensify. According to the Obama administration’s rosy economic estimates, unemployment will not return to its pre-crash levels before the end of the decade. More realistic observers, however, acknowledge that mass unemployment will be a fixture of US life, and higher-paying jobs destroyed in the recession will never return. Combined with declining home values, skyrocketing health care and higher education costs, chronically high unemployment will result in steadily rising poverty.

Obama defends these obscene pay packages. “I, like most of the American people, don’t begrudge people success or wealth,” he said of the eight-figure rewards for the same financial executives whose firms have benefited from trillions in taxpayer support. “That is part of the free-market system.”

In fact “most of the American people” not only begrudge these ill-gotten gains. They wonder why they have yet to see news footage of bankers and traders arrested and hauled from their plush offices. Now working class anger is becoming increasingly trained on the political system, which, as a year’s experience with the Obama administration has taught, does the bidding of Wall Street regardless of which party controls the White House and Congress.

I would like to thank Tom Eley of wsws.org for excerpts in this piece….

All the news is that the middle clkass is taking it in the butt…..while the wealthy (which is normal) get all the benefits and the bailouts…….as a reader of my blog, Terrant of My Corner To Vent (go to blogroll to get there) has observed that the US is starting to look a lot like Latin America where the middle class is small or non-existent……of course this means nothing to you if you are one of the wealthy……but the middle class needs to find someone, anyone that will watch their backs for them….Washington is NO help at all….

Now It Is Tax Reform?

Inkwell Institute

Budget Deficit Series #3

I was wondering when there would be a new bill dedicated to tax reform….the GOP has been hinting at it for almost a year now…..and now my wait is over….I am talking about the Gregg-Wyden Tax Reform Bill……and I am not disappointed the usual suspect are in there….tax cuts, corporate tax cuts, and on and on…

But I will let the WSJ take it from there:

The plan put forth by Sens. Judd Gregg (R., N.H.) and Ron Wyden (D., Ore.) would lower the number of marginal income tax rates to three: 15%, 25% and 35%. It also would eliminate the alternative minimum tax, which lawmakers scramble to “patch” each year in order to minimize its impact on middle-income taxpayers.

The plan would create a single corporate income tax rate of 24%, but allow small businesses with receipts of up to $1 million to expense all of its equipment and inventory costs.

The plan would target “direct payments and indirect subsidies to businesses each year,” but would leave it to the nonpartisan Congressional Budget Office to identify “the least productive” of those subsidies. Politically, that would be a tough task, as lawmakers fiercely guard subsidies that benefit their states and districts.

The capital gains tax also would see broad changes under the plan. The legislation would exempt the first 35% of capital gains income from the tax. Also, the first $500,000 of investment would be held for at least six months to be considered long-term capital gains income, and the next $500,000 would have to be held for a year to be considered long-term.

As usual this is NOT reform….this is the same thing that ALL health reform plans offer…..not reform but a tweaking of the system to benefit some but not all…..This is just an attempt to slow the criticism for the hyper-partisanship in Washington…..

If they truly wanted to reform the system then they would go with everyone pays a flat 15% of income with those making under $35,000 as exempt……they would call for ALL income to be taxed for FICA…there would be no exemption because of earnings ceiling….

The corporate tax thing….for decades the conservs have been bitching about the US has the highest corporate tax rate in the world….but they fail to mention once the tax breaks, incentives and deductions kick in it will be one of the lowest…..

I will go along with the 24% that these guys are calling for if there are NO breaks, cuts or incentives…..but that is a pipe dream on my part…why?….this section is the one that is most important…..the special interests of the corporations are pushing for this…the rest is just cover to get this section passed……

If they want REFORM then come up with REFORM…tweaking is a cowards way out….but true reform takes guts and hard choices (a future post) and those are sadly missing in Washington.