Tax Policy – Page 20 – The Wrongologist

Friday Music Break – February 27, 2015

With all the talk about Scott Walker’s Republican presidential bid, maybe there should be some equal time for the governor of Minnesota, Wisconsin’s neighbor to the west, Mark Dayton, who is a Democrat. HuffPo reports:

When he took office in January, 2011…Dayton inherited a $6.2 billion budget deficit and a 7 % unemployment rate from his predecessor, Tim Pawlenty, the soon-forgotten Republican candidate for the presidency who called himself Minnesota’s first true fiscally-conservative governor in modern history.

During his first four years in office, Gov. Dayton raised the state income tax from 7.85 to 9.85% on individuals earning over $150,000, and on couples earning over $250,000, raising $2.1 billion/year. He’s also agreed to raise Minnesota’s minimum wage to $9.50 an hour by 2018, and passed a state law guaranteeing equal pay for women.

According to trickle-down economic theory, Minnesota must be losing businesses and jobs, right? Wrong. In the real world, the opposite happened. Between 2011 and 2015, Gov. Dayton added 172,000 new jobs to Minnesota’s economy, or 165,800 more jobs in Dayton’s first term than Pawlenty added in both of his terms.

• Minnesota’s top income tax rate is the 4th-highest in the country, but it has the 5th-lowest unemployment rate in the country at 3.6%.
• By late 2013, Minnesota’s private sector job growth exceeded pre-recession levels, and the state’s economy was the 5th fastest-growing in the United States.

Despite Republican complaints about Dayton’s supposedly anti-business agenda, Forbes ranks Minnesota the 9th-best state for business, while Scott Walker’s Wisconsin comes in at #32 on the same list.

And while Walker was busy blocking people from voting, Dayton actually created an online voter registration system, making it easier than ever for people to register to vote.

Oh, and Dayton is a billionaire. He’s an heir to the Target fortune, and a member of 1% who isn’t a prisoner of the billionaire dialectic.

There you have it, proof that trickle-down economics is bunk. Minnesota proves it.

On to your Music Break:
Whitehorse is a Canadian folk rock duo. Luke Doucet and Melissa McClelland were married in 2006, but both were established and successful singer-songwriters prior to marriage and subsequently. They started to perform together in 2011. She also works with Sarah McLachlan, providing backing vocals at McLachlan’s live shows. Here are two songs from their just released “No Bridge Unburned” album. First up, “Downtown”:

Sample Lyric:
I’m electrified by the city light
I get off where I need to
And with who I like
I’m a diplomat
I’m a subway rat
I like the unfamiliar
I’m not scared by that

Next, “Sweet Disaster”:

Sample Lyric:
Galileo was bluffing
It’s just a mess out here
There’s no compass to guide us
Through the flashes of violence and fear

See you on Sunday.

The Republican Revolution is De-evolution

De-evolution, or backward evolution, is a term in biology that describes the fact that a species can change from a more complex form into a more primitive form over time. So noted. Now on to the commentary below:

America used to have smart, effective Republicans, but alas, not recently, and not in the lifetimes of younger voters. In line with this de-evolution of Republicans, consider Paul Krugman’s take down of what he labels the Charlatan Caucus, a group of supply-side voodoo economists that Scott Walker had to court this week: (brackets by the Wrongologist)

On Wednesday…[Walker] did what, these days, any ambitious Republican must, and pledged allegiance to charlatans and cranks.

Krugman reminded us that the phrase, “charlatans and cranks” was originally coined by Republican economist Gregory Mankiew, who served as George W. Bush’s chief economic adviser. Krugman is speaking about Gov. Scott Walker’s appearance at a New York dinner featuring supply-siders’ Arthur Laffer (of the Laffer curve), CNBC’s Larry Kudlow, and Stephen Moore, chief economist of the Heritage Foundation. More from Krugman: (emphasis by the Wrongologist)

Bowing obeisance before the high priests of bunk – like questioning climate change, evolution, and the current president’s American bona fides – has become a “right” of passage for Republican presidential contenders. Clearly, to be a Republican contender, you have to court the powerful charlatan caucus.

In Krugman’s view, with these economists, reality always takes a holiday. Ideology takes precedence. He cites:

• Mr. Moore published a 2004 book titled “Bullish on Bush,” asserting that the Bush agenda was creating a permanently stronger economy.
• Mr. Kudlow sneered at the “bubbleheads” who asserted that inflated home prices were due for a crash.
• Mr. Laffer wrote in the WSJ in 2009, “Get ready for inflation and higher interest rates”. What followed were the lowest inflation in two generations and the lowest interest rates in history.
• Mr. Moore publishes articles with lots of bad numbers. According to Krugman, Moore’s numbers are consistently wrong; they’re for the wrong years, or just plain not what the original sources say. And not surprisingly, his errors always make the case he wants.

But the supply-side ~~economists~~ charlatans continue to have a big influence on Republican politicians. The NYT also reports that the University of North Carolina’s Republican-appointed Board of Governors is closing several academic centers on its campuses dedicated to studying poverty, climate, and social change. That couldn’t also be about ideology, could it? More from The Times:

It’s clearly not about cost-saving; it’s about political philosophy and the right-wing takeover of North Carolina state government…said Chris Fitzsimon, director of NC Policy Watch, a liberal group…And this is one of the biggest remaining pieces that they’re trying to exert their control over.

OK, 29 of the 32 university board members were appointed by the Republican Legislature since 2010, but that doesn’t make the decision about politics?

It’s similar to Scott Walker’s Wisconsin, where our friend of education is cutting the University of Wisconsin’s budget by $300 million. Mr. Walker saw Mr. Laffer’s curve, and bought it. It hasn’t worked out so well for him, since he now has to refinance a $108 million debt payment, increasing the state’s borrowing costs by $19 million over the next two years. The re-fi is a result of Walker’s $600 million tax cut in 2014, which will ultimately lead to a $648 million deficit over the next two years. But, in the big Republican wet dream, he will be president by then, and blame his successor for Wisconsin’s fiscal debacle.

And there is Gov. Sam Brownback (R-KS), whose aggressive tax cuts were heartily cheered on by Republican economists, but which have driven his state into a deep fiscal crisis. North Carolina’s Republican Gov. Pat McCrory has also tasted the charlatan Kool-Aid, but isn’t quite there yet, although he’s working on it.

Back to Krugman. He concludes:

So what does it say about the current state of the GOP that discussion of economic policy is now monopolized by people who have been wrong about everything, have learned nothing from the experience, and can’t even get their numbers straight?

Current-day Republicans seem to have abandoned the idea that there is an objective reality. What are you going to believe, Right-Wing doctrine, or your lying eyes? These days, Right Wing doctrine wins.

In America, there has been a steady drumbeat by conservatives against education. Conservatives really believe in education…but only if it’s the privatized, de-evolved kind.

You can’t have a bunch of people looking too closely at facts, because as is well-known, reality has a liberal bias.

Monday Wake-Up Call – February 16, 2015

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn” − Alvin Toffler

Today’s wake-up call is for Americans who can’t unlearn that trickle-down doesn’t work, and that voting in politicians who espouse it will prolong the nation’s agony. Do people know that the new GOP House began passing a series of deficit-hiking tax cuts that will primarily help the rich at the expense of everybody else?

Rep. Paul Ryan (R-Wis.), chairman of the Ways and Means Committee (which writes tax legislation), wants to make some previous tax breaks permanent. From HuffPo:

The House voted 272 to 142 to make permanent a number of temporary provisions that are aimed at helping businesses earning up to $2 million. The main cut, which would add $77 billion to deficits over 10 years, allows businesses to immediately write off new equipment purchases up to $500,000. Temporary versions of the measure have been passed about a dozen times before, generally as economic stimulus measures.

The GOP then passed a second tax cut, aimed at giving bigger tax breaks for charitable giving. Ryan wants even more tax cuts that would add another $300 billion to the deficit. Those may reach the House floor later this month.

Here’s the Republican strategy: Slice the elephant and eat it a bite at a time. Pass small pieces of tax legislation while ignoring the deficit impact, then when their corporate and wealthy individual patrons are taken care of, remind everyone that the deficit is the biggest, baddest enemy the economy has. Then propose budget cuts that hit the working poor and the middle class. Ryan’s current strategy can be seen here: (emphasis by the Wrongologist)

If you dare try to make these things that we all agree on that need to stay in the tax code permanent, it’s ‘You’re not paying for it; it’s a budget buster; you’re being irresponsible; you’re jeopardizing tax reform.’ Process, process, process…Here’s the problem. What we’re trying to do here, we’re trying to grow the economy. We’re trying to get people back to work.

That meme will end soon. It will be replaced with: “growth is being stifled by the deficit”.

The NYT’s Upshot notes that a number of Republican governors are proposing tax increases — and in every case, the tax hike would fall most heavily on those with lower incomes, while they propose simultaneous tax cuts for business and/or the wealthy. Krugman analyzes it thusly:

If you look for an overarching theme for overall conservative policy these past four decades…It has been about making the tax-and-transfer system harsher on the poor and easier on the rich. In short, class warfare.

Class warfare. These folks keep bottling snake oil and voters keep buying it. Lowering income taxes on the wealthy doesn’t create jobs. Why would it? The focus of the GOP on cutting income taxes is solely intended to protect the rich.

Wrongo has run businesses for 35+ years and never saw taxes as an impediment. Taxes are paid out of profits, not revenue, and paying taxes means you are running a profitable business. Cutting taxes for small business can be a disincentive: Why should the owners expand the business when their net is greater, and they didn’t have to increase sales? For large corporations, tax cuts mean that people in the C-suite get richer. Nothing. Filters. Down.

Here is your Monday tune to fight the Plutocracy. “Rich Man’s War” by Steve Earle, from his 2004 album, “The Revolution Starts Now”:

And some Monday hot links:

The Westminster Dog Show starts today. Wrongo and Ms. Oh So Right are attending.

Researchers are using drones and satellites to spot lost civilizations. Remote sensing technology is revealing traces of past civilizations that have been hiding in plain sight.

Lobbyists move though the revolving door back to House and Senate committees. There is a profound change taking place among Capitol Hill staff, as many GOP lawmakers are handing the keys to K Street corporate lobbyists. Public Citizen’s Paul Holman notes that Speaker John Boehner, has “encouraged new members to employ lobbyists on their personal and committee staff.”

More than 4,000 Fort Carson soldiers are heading to Kuwait, where they will become one of America’s largest ground forces in the troubled region. Did you know that the Army has kept a brigade in Kuwait since the end of the Iraq war in 2011?

Majority of public school students are now considered low-income. Another success brought to you by trickle-down economics.

Unaffordable rents here to stay say experts. They aren’t likely to ease up for at least two years, according to the latest Zillow Home Price Expectations Survey

Monday Wake Up Call – February 2, 2015

Waaay too many Mexican appetizers last night, not to mention margaritas and beer. Anyway, another national football excess is in the record books, congrats to Tom Brady and the Patriots.

Get your day started with this hilarious meditation on football vs. baseball by the great George Carlin:

https://www.youtube.com/watch?x-yt-ts=1422579428&v=qmXacL0Uny0&x-yt-cl=85114404

Monday’s hot links:
There’s no such thing as Nacho cheese. On the day after the Super Bowl, when so much nacho cheese was consumed, this shows how little can be taken for granted. Inquiring minds are wondering—do people expect nacho cheese to be a particular flavor? Or color? Or texture? Or is it just any cheese that happens to be on nacho chips? Here’s the truth: There are no standards for nacho cheese, it is just whatever we believe it to be. Does this bring up deeper, non-cheese-related existential questions?

Yosemite Park reported the first confirmed sighting of a rare Sierra Nevada red fox (Vulpes vulpes necator) in nearly 100 years. Park wildlife biologists documented a sighting of the fox on two separate instances (December 13, 2014 and January 4, 2015) within the park boundary. The Sierra Nevada red fox of California is one of the rarest mammals in North America. Estimates say there are fewer than 50 in the US. Check it out:

Mississippi has the highest vaccination rate for school-age children. It’s not even close. Last year, 99.7% of the state’s kindergartners were fully vaccinated. In California, epicenter of the Disney measles outbreak, almost 8% of kindergartners (41,000 children) were not immunized against mumps, measles and rubella. In Oregon, it was 6.8%. In Pennsylvania, it was nearly 15%! The secret of Mississippi’s success stems from a strict mandatory vaccination law that lacks the loopholes found in almost every state.

Leaving Afghanistan has become one of the most difficult operations the US military has ever undertaken. A Colonel in charge of packing up Afghanistan last year called it “a logistics Super Bowl.” Here is Lt. Gen. Raymond Mason, who headed Army logistics until he retired last year:

Certainly in our lifetime, it’s one of the biggest, if not the biggest operation in terms of complexity, size, and cost.

The dirty little secret is that our military knows how to get people, weapons and supplies into a war zone, but has little experience getting them back out. This may cost the taxpayers more than $2 billion before it is done.

China has sent drones to Nigeria. As the Boko Haram insurgency enters its 7th year, China is busy building a better relationship by selling drones, MRAP vehicles and smart bombs to Nigeria, (most of which the US has been unwilling to provide to Nigeria due to human rights concerns). China wants to become a first tier exporter of military equipment, and is looking to lock up Nigeria as a supplier of oil. On January 25, 2015, a photo appeared online showing a Chinese CH-3 UCAV drone which crashed in Nigeria’s Borno Province. Borno is the area where much of the Boko Haram violence occurred in 2014.

Your thought for the week: We hear all the time from yahoos on the web and yahoos in Congress something like this:

Isn’t it unfair that corporate dividends are taxed twice?

The answer is no, and here’s why:

A corporation is a legal entity. If it has an “accession to wealth” (meaning, a profit in tax legalese), in our system, the corporation must pay taxes. A stockholder is also a legal entity. If a stockholder receives a dividend, he/she also has an “accession to wealth”, and thus, pays a tax.

Why is this hard to understand? No one claims that when a worker gets paid a wage, and pays a tax on that income, and later spends some of that after-tax income paying someone to mow their lawn, that it is double-taxation for the lawn guy to pay income tax.

This is really simple folks: Money moves from entity, to entity, to entity, and each time, income tax applies.

And, if someone makes the argument that the shareholder is the corporation, they don’t get what a corporation is. It’s a separate legal entity that exists to protect shareholders from the business’s liabilities. The fact that it pays taxes is a normal consequence, and the entire point of its existence.

Transforming America, Part I

For the past few months, this blog has featured this quote:

He didn’t know what was defeating him, but he sensed it was something he could not cope with, something that was far beyond his power to control or even at this point in time, comprehend –Hubert Selby Jr.

Let’s start this year with a meditation about one transformative idea. Not something that is peddled by the DC think tanks, but an idea that lurks just below the surface.

All of us have wondered, like the characters in Selby’s “Requiem for a Dream” (and maybe, with increasing frequency) “hey, something is wrong here”. Maybe you accept mainstream logic, but now you’ve come to realize that things are getting out of control, despite the constant messaging from your ideological god of choice that tries to pull you back to conventional thinking.

Here is the transformative idea for today: The free market isn’t a beautiful self-correcting machine. Instead, it is consuming our society and our environment for the benefit of a very few.

And it isn’t an orderly process; the trajectory is more like a slow free-fall in which the market system moves downward devouring everything, unless it is met by real opposition. In fact, the globalized version of the free market makes life horrible for lots of people, creating a constant need for intervention.

For a couple of examples, you don’t get the Russian Revolution(s) without the Czar trying to play ‘catch up’ with the West. You don’t get the Cuban Revolution without the crimes of the Batista regime.

When there is a backlash against corporatism, especially on the periphery, capitalists come up with a solution. Anyone is better than a bunch of reformers who want society to pay attention to people’s well-being rather than to profits.

With globalization, local thugs became very useful. Folks like Shah Reza Pahlavi of Iran, the Saud family in Saudi Arabia, Mubarak in Egypt, Suharto in Indonesia, and Hussein in Iraq. Most of the time, these folks did the job big business wanted done (even if it was messy). And the American government protected US corporate assets in-country, and propped up the compliant local politicians. The profits got privatized, and the losses socialized, since our taxes paid for the military aid to the dictators, while the corporates skimmed the profits. And much of those profits remained offshore, out of reach of our taxing authorities.

Today, the useful thugs working on behalf of the American Empire are in Washington DC. They have made our political system a self-replicating support system for free market capitalism. We have retained only a veneer of our democracy, while moving rapidly in the direction of an authoritarian business-state combine, an improved version of Mussolini-style corporatism.

Oswald Spengler, who’s “Decline of the West” argued in the 1920’s that the urban culture of Northern Europe was a “Faustian” world, (his term for one of 8 global cultures) characterized by bigness and rationality, eventually to be dominated by the soldier, the engineer, and the businessman.

Doesn’t that seem particularly relevant to today’s America? Spengler thought that democracy is simply the political weapon of money, and that the media is the means through which money operates a democratic political system. Importantly, he said:

The ‘tragic comedy of the world-improvers and freedom-teachers’ is that they are simply assisting money to be more effective.

So here we are. One day, it was 2014, the next day, 2015. What has changed? Nothing. What will change? Nothing, unless you begin a process of thinking about one transformative idea:

The free market doesn’t self-correct. Therefore, it is an ideology that must be changed.

The struggle between market forces and societal needs has always existed. In the 20th Century, we evolved a series of social democracies that kept the rights of the people balanced against the rights of the corporations, with some of the pushback actually coming from businesses themselves.

But today, well-funded efforts to roll back New Deal and New Society social welfare programs are well advanced. And there are only so many times that this blog and others can point out that many Americans have been unemployed since 2008.

The political question is what happens to this great new underclass in America? An underclass that has grown large because of the past 7+ years of economic disparity. Since the free market system that is grinding up our society is a utopian fantasy, we should be able to turn to our democratic system to help solve the real failures of our economic system.

But, our democratic system has been co-opted by the free marketers. So, who can ordinary people turn to for help AGAINST the market?

The corporatists and their captured politicians have a term, “there is no alternative” or TINA. It has come to mean that “there is no alternative” to free markets, free trade, and globalization, if our society is to prosper. They stress TINA to keep ordinary people from seeing that we need to constrain the worst of free market excesses.

The unbridled free market has to die.

Who Gets the Dynamic Score?

No, it isn’t Kobe, it’s the corporations that backed the GOP in November. When Republicans took control of both houses of Congress, they won an important new power: They now can change how the Congressional Budget Office (CBO) scores tax cuts and budget cuts. The changes they are planning can be used to make tax cuts appear less harmful to the deficit.

For years, the GOP has wanted to change the way that the (supposedly) nonpartisan CBO calculates — or, in Washington speak, “scores” — the budgetary impact of changes to the tax code. The methodology that the Republicans want to use is called “Dynamic Scoring”. Dynamic Scoring has been popular among conservatives since the 1970s. Instead of just figuring out how much more money a tax increase would produce for the Treasury, or how much a tax cut would cost in lost revenue, the GOP wants to use complex computer models to try to predict the long-term, and broader impact of hikes and cuts on the economy, since they are looking for proof of GDP and tax revenue growth.

Here’s how it would work. In January, Republicans will be in charge of the CBO, which produces official budget projections and the Joint Committee on Taxation (JCT), which calculates how tax laws affect revenue.

Today, when the CBO and the JCT calculate the impact of tax laws on government income, they consider how Americans might alter their behavior in response to tax rate changes. But the two staff departments do not evaluate how tax legislation could affect economic growth—largely because those sorts of impacts are hard to predict.

Republicans have believed this as an article of faith since the days of St. Ronnie. Tax cuts lead to greater economic activity, which in turn produces greater tax revenues—a perpetual motion revenue machine that is the wet dream of most Republicans. Scott Walker used this kind of “math” in Wisconsin. The result? A $2.1 Billion budget shortfall. Oh, and there is Kansas, where another Republican governor, Sam Brownback, is staring at $1.3 billion in deficits after cutting taxes and hoping for economic growth.

Math can be much easier when the answer is whatever you want it to be. But, the new math is the first step toward passing the Republican version of tax reform.

A keystone of any successful tax reduction plan is that they ought to be revenue neutral, that is, tax receipts will not go down, despite tax cuts. Using this form of new Republican math, you can inflate the value of possible future revenues from today’s tax cuts. That can be sold to the American people as a new version of “revenue neutral” although it is really a new version of “take the nickel little boy, it’s bigger than the dime”. This is extremely appealing to Republicans, since it makes tax cuts appear to cost the government less than they actually do – it allows them to say that tax cuts mostly pay for themselves—and wave the JCT-CBO seal of approval to justify that claim.

Democratic leaders and progressive economists reject dynamic scoring as an accounting gimmick, pointing to the aftermath of the Bush tax cuts as evidence that tax breaks do not create tax revenue. The Washington Examiner reports that Kenneth Kies, a GOP-nominated former director of the JCT, says that this accounting device falls:

Somewhere between pure mathematics and theology.

The real dynamic score will be by America’s corporations and financial firms.

Think it won’t happen? Incoming Chair of the House Ways and Means committee (which has jurisdiction over tax reform), is Rep. Paul Ryan (R-WI). Last week, in an interview with the Washington Post, Ryan said he will push to make sure that the two congressional budget scorekeepers use dynamic scoring when evaluating GOP tax reform legislation. Sen. Orrin Hatch (R-Utah), incoming Chair of the Senate Finance Committee, said last week that he was open to implementing the change.

Ryan and Hatch can implement dynamic scoring by simply ordering the two budget scorekeepers to accept this budgeting method. If such direct intervention seems too heavy-handed, Republican legislators have another option: They can appoint directors at the CBO and JCT who will use the kind of assumptions the GOP favors. Democrats can do nothing to prevent that.

So, what will stop Congress from using politically motivated economic models that incorporate rosy assumptions? Absolutely nothing.

Behold the future − you voted in the Republicans.

In practice, Dynamic Scoring is just another way for Republicans to enact tax cuts and block tax increases. It is not about honest revenue-estimating; it’s about using smoke and mirrors to institutionalize Republican ideology into the budget process.

Monday Wake Up Call – November 3, 2014

Are you tired because you got an extra hour’s sleep last night? Let’s get your brain started with a question: Who benefits it the government funds the development of new technology?

Answer: Private corporations.

Economist Mariana Mazzucato’s book about the role of the State in innovation, The Entrepreneurial State says that the image of a useless State at odds with a dynamic private sector is a myth. Mazzucato reveals in multiple case studies that the opposite is true; the private sector is only willing to invest after someone in a garage has a good idea that must be commercialized, or after the State makes a seed investment.

She describes how it worked with Apple’s iPhone and Google’s search engine. In both cases their popular consumer products benefited from state financing of basic research. For the iPhone, some of the technologies that make it “smart” were funded by the US government, such as the global positioning system (GPS), the touchscreen display, and the forerunner of the voice-activated personal assistant, Siri.

As for Google, development of its fundamental search algorithm was funded by the National Science Foundation. Plus, of course, there’s that thing called the Internet, another government funded venture, which makes the iPhone “smart”, and makes Google searches useful and valuable.

The right-wing myth is that the government needs to be completely out of the way of business, except for providing tax and regulatory incentives for private companies, to make them “want” to create the products they sell.

But, in the real world, many successful companies harvest the work of others and repackage proven technologies into successful products. In the 21st Century, companies often just mine the surface of their technology estate. When “innovative” companies are hugely profitable, often they buy back their shares and/or raise dividends, but do not invest that much in their long-term futures.

Finally, despite the fact that some companies directly benefit from taxpayer-funded technologies, they “underfund” (via tax breaks and holding profits offshore) the government that helped develop technologies that led to their success.

The obvious way for the public to ‘profit’ from socialized risk is to retain some ownership of the technologies that underlie those successes.

Another myth that needs to be exploded is that companies will not introduce new products if they can’t own 100% the intellectual property behind the products. Not true. Today, they often share their technology ownership with other firms. And it is inconceivable that a growing public estate of licensable technical know-how would sit under-exploited, if it could be licensed by corporate America.

Monday’s breakfast buffet of linkage:

Heard of the 27 Club? The idea is that pop stars are more likely than the general population to die at age 27. Not true, but they do tend to die much younger than the rest of us.

Of course milk is good for you! Well, maybe not as much as the milk-industrial complex wants you to believe. Swedish researchers took two groups, one with 61,000 women and the other with 45,000 men, and followed them for 20 years to see if milk intake was related to fractures or to death. Apparently, not so much. Maybe you should give Almond milk a try.

Using CDC data, a study finds that high rates of ADHD diagnoses correlated directly with state laws that penalize schools financially when students fail. An ADHD diagnosis can take a student out of the statistics. The five states that have the highest rate of diagnoses — Kentucky, Arkansas, Louisiana, Indiana and North Carolina — are all over 10% of school age children. The five states with the lowest percent diagnosed — Nevada, New Jersey, Colorado, Utah and California — are all under 5%.

The US has changed its H-1B record retention policy. The US Department of Labor said that records “are temporary records and subject to destruction” after five years, under a new policy. But, the H-1B visa lasts 6 years. The total database is about 1GB, so what’s the issue?

The Air Force doesn’t have enough mechanics for its new F35 fighter: The reason is political. The Air Force was counting on training A-10 mechanics, but Congress is blocking the Air Force’s plan to retire the A-10 aircraft. It could take 12 months longer than proposed to get the F-35 in the air, if the A-10 stays online.

International News:

Japanese journalists didn’t do independent reporting about the Fukushima melt-down, they simply reported the press releases of Tokyo Power and the government. Now some are speaking out. Sound familiar?

The war between the banks and phone companies over mobile banking in Kenya heats up. After the huge success of mobile banking in Kenya, commercial banks began to invest in mobile phone-based banking, including selling their own SIM cards instead of using those issued by mobile phone providers. Now, the mobile phone operators are crying foul.

When the TuNur project in the Tunisian Sahara comes online in by late 2018, it will provide clean and reliable power to more than 2.5 million UK homes. The project will be connected to the European electricity grid via a dedicated cable from Tunisia to Italy. The UK participated in funding the project.

Your wake-up song is from Trigger Hippy, a new roots super-group founded by Black Crowes drummer Steve Gorman, and singer Joan Osborne. It is an amalgam of country, blues, soul and rock. Here is “Rise up Singing”, so time to rise up:

Let this thought guide your week:

Service to others is the rent you pay for your room here on earth. – Muhammad Ali

Sunday Cartoon Blogging – October 5, 2014

Our country is hated abroad, and frightened at home. We have reached a point where we could reasonably refer to the great American Republic in the past tense. We have edged into a post-constitutional era, no longer a nation of laws, but an autocracy run by law evaders and law ignorers, a culture in which corruption is no longer a form of deviance, but the norm.

We all live in a Mafia-run neighborhood:

By now, everyone knows about the evils of bankers and their Washington facilitators: Wall Street lobbies Congress for favorable deals, Congress then approves them at taxpayer expense. When things are this bad, the very structure of our society is threatened, and voters have to stress fundamentals over issues. We need to move beyond the divisive cultural issues, all the single issues, even critical things like the environment, war and peace, and the “economy”, and focus on structural issues. We have to leave the culture wars and even big political differences behind, and make alliances among voters–because right now, none of us are being heard.

Will White House security improve with new leadership?

However, a new threat jumped the fence:

For months, the Ebola outbreak was confined to West Africa, a region more than 8,000 miles away. But this week a patient was diagnosed with the deadly virus in Dallas, Texas, bringing Ebola hysteria right on home. We have heard typical reassurances from the CDC, while some politicians have engaged in fear-mongering. But, unless lots of Americans plan on exchanging bodily fluids with people who live or work in West Africa, we’ll be fine.

Politicians talk about terror and say: “we could all be killed”. They speak about Ebola and say: “we could all be killed”. Mothra could also come back, and you know the nation isn’t prepared for Mothra. Where will we get enough Raid? Do we have Godzilla’s cell number? OK Obama, what are we supposed to do?

Meanwhile, the actors in the Middle East continue to mis-hear each other:

And in HK, not only no hearing, there is no listening:

Sunday Cartoon Blogging – August 3, 2014

For those on vacation, or without access to the Interwebs, here is a summation of this week’s wrong:
• The Senate couldn’t pass a bill to impose taxes on companies that move overseas
• The House didn’t vote on Mr. Boehner’s immigration bill because Sen. Ted Cruz blocked it
• We brokered a 72-hour cease-fire between Israel and Hamas that lasted 90 minutes
• The Times of Israel took down a blog post that made a case for genocide
• Mr. Obama admitted that we torture

That’s not a lot of humor to work with, but here are the best. Congress hurries to not finish their work:

Ted Cruz driving baby Boehner:

Genocide of Palestinians is contemplated in the Times of Israel:

Yochanan Gordon framed his premise as “a question for all the humanitarians out there”:

Prime Minister Benjamin Netanyahu clearly stated at the outset of this incursion that his objective is to restore a sustainable quiet for the citizens of Israel. We have already established that it is the responsibility of every government to ensure the safety and security of its people. If political leaders and military experts determine that the only way to achieve its goal of sustaining quiet is through genocide is it then permissible to achieve those responsible goals?

Umm, wasn’t that the excuse Nazis gave the world about Jews, Gypsies, and Homosexuals?

And Mr. Netanyahu told the White House not to force a truce with Palestinian militants on Israel. He apparently advised the Obama administration “not to ever second guess me again” on the matter.

So, it looks increasingly like we need a 3-State solution:

In yesterday’s speech, President Obama said “We tortured some folks” and that “we shouldn’t be too sanctimonious”. The President:

It is important for us not to feel too sanctimonious in retrospect about the tough job those folks had… A lot of those folks were working hard under enormous pressure and are real patriots…That needs to be understood and accepted. We have to as a country take responsibility for that so hopefully we don’t do it again in the future.

Apparently, some people didn’t agree:

"We tortured some folks." Nope. Actually the CIA and the military did that. Don't try to put that shit on the rest of us, Obama.

— onekade (@onekade) August 1, 2014

What would cause Mr. Obama to make this “apology” for torture? Has he lost touch, or is he living in a bubble of intelligence advisers that he can’t or won’t fire?

This is reminiscent of the way that J. Edgar Hoover controlled (or intimidated) presidents in what we used to think was another age. Who, or what, is making this president say such crap, and not take what are to most of us, obvious actions?

Is GDP Growth Enough?

A strong 2014 Q2 GDP report came out yesterday, registering 4% annualized real GDP growth, better than what we have seen in several years. This is good news, but it is worth looking at it in the context of the full recovery of the US economy. The House of Debt Blog has a chart showing recoveries after every post WWII recession in the US, updated to include Q2, 2014:

The red line is the Great Recession, compared to our recovery from 9 other post-war recessions. The slight uptick at the end of the red line reflects yesterday’s GDP report. Despite this recent fun news, we remain in the weakest economic recovery in history. Reportage from the New York Times:

The US economy rebounded in the spring after a dismal winter, the Commerce Department reported on Wednesday, growing at an annual rate of 4% for the three months from April through June.
In its initial estimate for the second quarter, the government cited gains in personal consumption spending, exports and private inventory investment as the main contributors to growth. The increase exceeded economists’ expectations and further cemented their views that the decrease in America’s overall output during the first quarter was most likely a fluke tied in large part to unusually stormy winter weather as well as other anomalies.

The NYT says that first quarter numbers were also adjusted upward:

During the first quarter, output shrank by 2.1%, less than had been reported, according to the Commerce Department’s newly revised GDP figures, also released on Wednesday. The department had previously said first-quarter output decreased 2.9%.

Now for the issues in the data: (emphasis by the Wrongologist)

While the economy seems generally to be bouncing back from the recession, overall growth remains lackluster. Wages have failed to rise significantly, an area of concern that Janet L. Yellen, chairwoman of the Federal Reserve, noted when she appeared before Congress this month.

In fact, Doug Short at the DShort blog provides a very helpful series of charts on wages and hours for the private workforce. The Bureau of Labor Statistics (BLS) has been collecting these data since 1964. The BLS numbers provide excellent insights on the income history of the private middle class wage earner. First, average hourly wages adjusted for inflation have remained unchanged since the Nixon Administration:

But that isn’t the bad news. Average weekly hours worked have been declining since the Johnson Administration:

Finally, DShort multiplies the real average hourly earnings by the average hours per week. This produces a hypothetical number for average weekly wages of this middle-class cohort, currently at $694 — well below its $827 peak back in the early 1970s:

$694 per week equates to a $36,000 annual wage. Then the person has to pay taxes, social security, rent, etc. So, purchasing power has declined for the middle class worker. Tomorrow, the July Jobs Report comes out. Then we’ll see if the fun times continue.

In a consumer-driven economy where wages have failed to rise, there can be no sustained economic growth. Media reports say that the economy “rebounded”, that it “exceeded economists’ expectations”. But have economic conditions for average people improved? No, for them, this is a paper rebound, not a real one.

Tracking the economy of ordinary people continues to go unremarked and untargeted by lawmakers. The economic health of average people is an afterthought to the politicians, who consider it a vague byproduct of ‘GDP’ and ‘growth’. In the real world, GDP growth does not directly correlate with improvements in the average person’s well-being.

Workers desperately need more hours at better paying jobs. How does prosperity return if wages stagnate while wealth concentration continues?

The Wrongologist

Geopolitics, Power and Political Economy

Category: Tax Policy