Category: Tax Policy

The Health Crisis Now Coincides With a Financial Crisis

The Daily Escape:

Sunrise, St. Augustine Beach, FL – March 2020 photo by Carl Gill

The WaPo reported that a Coronavirus-sparked oil war sent crude prices down on Sunday by 32.3%. That triggered a forced temporary halt of stock trading on Monday, when the S&P 500 index sank 7% shortly after the market’s opening.

This occurred on the 11thanniversary of the current bull market. But, as Greg McBride, chief financial analyst at Bankrate.com, wrote:

“The uncertain economic impact of coronavirus continues to grip markets, with stocks, commodities and interest rates all dropping sharply. Markets hate uncertainty and there is a ton of it currently in play.”

There is no question that there will be more angry Americans now that a health crisis coincides with a financial crisis. Who they focus their anger on remains to be seen. Trump took credit for each rise in the stock market, so will he take ownership now that it’s tanking?

He’s not a broadly popular president, and this will make him less popular, so fewer people will believe him when he tries to lay the blame on others.

The oil price plunge was triggered when Russia announced on Friday that it would no longer stay within the OPEC+ quotas after April 1st. Saudi Arabia then said it would slash prices for its customers in April. In addition, they hinted at increasing production from the current level of 9.7 million barrels per day to 10 million barrels per day.

This is the start of an oil price war between Saudi Arabia and Russia over market share. But the real target for both may just be the US shale oil sector. US banks and other investors have been fueling the shale oil sector’s growth with hundreds of billions of dollars of loans over the years. And the shale oil producers keep ramping up production, despite it being largely unprofitable. They continue to burn through cash.

Brian Sullivan at CNBC warns us: The US oil industry valued its oil reserves, as collateral for its loans, at $60 a barrel. Today’s price is now about $30/barrel.

By sending some of these shale-oil companies into bankruptcy, Saudi Arabia and Russia are hoping that new money will refuse to support the US shale oil sector. Then production in the US will decline and take some oversupply out of the oil market.

Their timing is impeccable. Oil demand is down due in part to the Coronavirus. Chinese manufacturers are producing less and airlines in particular have less need for jet fuel. If OPEC and Russia increase production, and assuming US production still increases while demand globally is in steep decline, then global markets will be awash in oil.

And what does an oil glut do for Iran, already fighting a severe Coronavirus outbreak, and needing higher oil prices for their own economy?

But no worries! We can count on the competent leadership in the White House. And if that doesn’t make you comfortable, you might ask yourself, “Is this 1929 all over again?”

Maybe not, but if it is, who will be our FDR? In the 1930s and 1940s, FDR spent money on America’s democratic infrastructure. That money gave jobs to people. He created a social safety net, and allowed industry to again flourish.

But in the past 30 years, all the money has gone to our industrial infrastructure and to the rich, through tax cuts and subsidies. The easy money party has helped to pump up both stock prices and asset prices, giving us an ever-growing income and wealth gap.

What happens to the health of the people and to the health of economy between now and November is going to be a huge political concern. There’s always a tension between the best health policy, and the best economic policy.

Trump wants economic policy to win out, but the primary beneficiary of that is industry and the rich.

We should remember that when leaders are seen to be incompetent and/or ARE truly incompetent, they try to divert the voters’ attention. What Trump attempts to do in order to divert our attention, is worthy of discussion.

As of today, the fuse is lit. It’s an election year, and we know that Trump won’t go away quietly.

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More About The Virtue of Exciting Candidates

The Daily Escape:

Mt. Assiniboine, Provincial Park, BC, CN – 2019 photo by Talhanazeer. Assiniboine is the pyramid-shaped mountain on the left.

When Wrongo thinks about the Democratic primary candidates, he feels a bit like when he was a breeder of Havanese dogs: “Don’t get too attached to any one of them–we’re only keeping one.”

At the end of the day, we’ll only have one candidate. The question is which is the keeper?

Yesterday we asked: which candidate excited you? Judging by crowd sizes in Iowa, Sanders, Warren and Buttigieg have generated excitement, while Biden has not:

“Mr. Biden has a lot to prove here. I’ve attended some of his town halls and rallies, and they’ve been lackluster, his speeches dull and meandering, and his crowds comparatively small. I’ve been to memorial services that are more exciting. I certainly hope mine is.”

That quote is from Robert Leonard, the news director for the Iowa radio stations KNIA and KRLS. More from Leonard:

“Who is going to get an enthusiastic turnout caucus night? Bernie Sanders will. His support is strong. We’ll see if he can increase it….

Elizabeth Warren has fallen in the polls, but she will have a big turnout caucus night. Her on-the-ground organizing is terrific and her supporters unwavering…..

Pete Buttigieg will also have a big turnout. Watching his several-blocks-long parade of supporters file into the Liberty and Justice Dinner last fall in Des Moines gave me goose bumps…..”

Leonard finishes with this:

“On caucus night, given the soft support I see, if the weather is bad Mr. Biden’s supporters might not come out. It might also depend on what’s on TV….For the other candidates, if their supporters walked outside, slipped on the ice and broke a leg, they still would crawl through snow and ice to caucus.”

He’s alluding to the x-factor, the charisma, the excitement that a candidate creates in voters, and claims that in Iowa at least, Sanders, Warren, and Mayor Pete are showing some of that.

The first thing that most of us want is relief from the Trump assault. In the general election, that starts with telling people the damage assessment, and a plan of repair. The nominee has to say that our government and democracy are in tatters and need to be stitched back together. Constitutional checks and balances have been nearly destroyed by the Republicans.

Maybe we need Medicare for all, free college tuition, and the rest of the progressive agenda, but first, we need to triage our democracy.

To win the presidency, we need to take back Pennsylvania, Michigan and Wisconsin. Are the voters in those three critical swing states ready to sign on to rebuild our social safety net, reform health insurance, and raise taxes on the rich and corporations? Hell yes.

Trump’s 2020 plan is to pump up the Dow while keeping unemployment at historic lows. He’s done that with a $1.5 trillion tax cut without any plan to pay for it. He’ll tout his new “trade deal” with China. He’ll mock and belittle the Democrats and their nominee. Meanwhile, Trump has no health plan at all!

Mitch McConnell’s plan is to make sure Trump is acquitted at all costs, to continue packing the courts, and blocking any meaningful legislation coming out of the House.

What’s the Democratic Party’s 2020 plan? The proposals by the progressive Democratic candidates have merit. Their goals are the right ones for the country and the planet. But, those plans will take several administrations to fully implement. Few voters fully understand the details of how to pay for Medicare for all. Moreover, they absolutely are worried about having their private health insurance taken away. That’s what most Americans have, so that has to be a big concern for Democrats in 2020.

Which of the current flock of Democratic candidates have what it takes to unite and lead the Party to a 2020 victory? Which nominee will have coattails to swing the Senate, hold the House and add to the Party’s roster of statehouses?

The 2020 election will turn on whether individual voters see the Democratic Party’s nominee as a heroic savior of the country, or less of a leader than the execrable Trump.

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Which Democrat Nominee Excites You?

The Daily Escape:

Keyhole Arch, Pfeiffer Beach, Big Sur, CA – 2020 photo by jtmess. For a few weeks every winter, starting with the Winter Solstice, sunset lines up with the hole in Keyhole Arch.

Someone told Adlai Stevenson when he was running for president in 1952 (or ‘56): “Every thinking person in America will be voting for you.” Stevenson replied, “I’m afraid that won’t do—I need a majority.” (Via)

It’s time that Americans recognize that the most important global event in 2020 will be the US presidential election. The reason is blindingly obvious. It’s questionable if the world can be brought back from four more years of Donald Trump. That’s doubly true for the US. That means historic voter turn-out is required.

And if that’s the case, it’s important that the best person challenge Trump in November. Last night’s debate didn’t move us any closer to knowing who that should be. This, from Deborah Long is a useful take:

Three Democratic candidates for president walk into a bar.

The first one says, “I’m going to beat Donald Trump by re-starting the Bolshevik Revolution”.

The second one says, “I’m going to beat Donald Trump by breaking up the big banks and sticking it to the man.”

The third one says, “I’ll be in my trailer. Call me on the horn when they’re ready for my cameo in ‘The Way We Were’.

Her underlying point is that the current Democratic candidates show no unifying message. That partly explains why the top four are polling at close to the same numbers. Democrats need to answer the question: Who can deliver a knockout punch to Donald Trump, and repudiate what the Republican Party currently stands for?

Wrongo posted about Economic Dignity last spring. It’s from an article by Gene Sperling, Obama’s Director of the National Economic Council. His take is that the Fed and Congress should implement a full employment monetary and fiscal policy that enables tight labor markets.

Sperling says that implementing the idea of economic dignity would lead to higher wages, and give employers greater incentive to provide advanced training to their employees. And, high demand for labor would give more workers more of the “take this job and shove it” leverage that’s lacking today.

We’ll need more: America needs a return to what Paul Collier calls the “cornerstones of belonging”— family, workplace, and nation, all of which are threatened by today’s market-driven capitalism.

That’s a unifying message for Dems. Hidden behind that message is the idea that America has to return to the ethics of the New Deal. Joseph Stiglitz, Nobel laureate in economics, says: (parenthesis and emphasis by Wrongo)

“Over the past half-century, Chicago School economists, (including Milton Friedman) acting on the assumption that markets are generally competitive, narrowed the focus of competition policy solely to economic efficiency, rather than broader concerns about power and inequality. The irony is that this assumption became dominant in policymaking circles just when economists were beginning to reveal its flaws.”

Stiglitz says we’ll need new policies to better manage capitalism. That means:

  • Dealing with the inequities in health care
  • Paying workers more
  • Rebuilding public assets like roads
  • Passing higher taxes on corporate profits and the incomes of the wealthy

The unifying message is that Democrats will provide Americans with a legal and political framework that allows people to provide better opportunity for their families.

Better opportunity is something all of America wants to believe in.

So, if the Democrats want to win big enough to silence the GOP, the 2020 Democratic Party nominee for president must excite Americans by showing them a path to a better future for their families. Emphasis on the “excite”.

We’re not going to get there by marching with pitchforks. We’re not going to get there with Biden’s nostalgia. We’re going to get there by speaking directly to the needs of America’s families, workplaces and nation.

Not by continuing the tiresome, wonkish recitation of “my policy is slightly better than yours”.

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Trump Gives More Tax Breaks to Corporations

The Daily Escape:

Sunrise at Delicate Arch, UT – 2019 photo by going_postal

While we were all celebrating New Year’s, the NYT published a story about how Trump’s Treasury Department quietly weakened elements of the 2017 Trump tax law, making it even friendlier to wealthy individuals and corporations.

As a result, the tax bills of many big companies are even smaller than what was anticipated when the bill was signed. This means that the federal government may collect hundreds of billions of dollars less over the coming decade than previously projected. The budget deficit has jumped more than 50% since Trump took office. It is expected to top $1 trillion in 2020, partly as a result of the tax law.

Lobbyists targeted two provisions in the original 2017 law designed to bring in hundreds of billions of dollars in revenue from companies that had been dodging US taxes by stashing profits overseas. From the NYT:

“Starting in early 2018, senior officials in President Trump’s Treasury Department were swarmed by lobbyists seeking to insulate companies from the few parts of the tax law that would have required them to pay more. The crush of meetings was so intense that some top Treasury officials had little time to do their jobs…”

Because of the way the bill was rushed through Congress, the Treasury Department was given extra latitude to interpret the law. Add the fact that the law was sloppily written, helped to make the corporate lobbying campaign a resounding success.

Treasury has issued a series of obscure regulations that carved out exceptions allowing many leading American and foreign companies to pay little or nothing in new taxes on offshore profits. The NYT says companies were effectively let off the hook for tens if not hundreds of $billions in taxes that they would otherwise have been required to pay under the 2017 law.

You may remember that the idea behind the Trump Tax Cut was that companies would get the tax cuts that they had spent years lobbying for, but the law would also fight corporate tax avoidance and the shipment of jobs overseas.

A few facts about the Trump tax cut: Republicans used a Congressional process known as budget reconciliation, which blocked Democrats from filibustering and allowed Republicans to pass the bill with a simple majority.

To qualify for that parliamentary green light, the net cost of the bill, after accounting for different tax cuts and tax increases, had to be less than $1.5 trillion over 10 years. But the bill’s cuts totaled $5.5 trillion. To close the gap between the $5.5 trillion in cuts and the maximum allowable price tag of $1.5 trillion, the package sought to raise new revenue by eliminating deductions and introducing new taxes.

The two key provisions are known by the acronyms BEAT (base erosion and anti-abuse tax) and GILTI (global intangible low-taxed income). Shortly after Trump signed the tax bill, lobbyists from major American companies like Bank of America and General Electric as well as foreign banks, swarmed the White House in an effort to gut the BEAT and GILTI taxes.

Trump’s Treasury Department largely granted the lobbyists’ wishes, turning what was already a massive corporate handout into an even more generous gift to big companies and banks.

In the last 2 quarters of 2019, we saw massive corporate share buybacks. The richest families and corporations pocketed most of that money, with minimal re-investment into company assets, increased employee pay, or benefits.

The folks who didn’t get what they needed were the bottom 90% of Americans. Welcome to the plutocracy where billionaires whine about getting picked on, and the bottom 80% own just 7% of the nation’s wealth.

The mission of the Trump presidency is nearly complete. He’s packed the Supreme Court with reliable conservatives. He’s delivered the Randian wet dream of low corporate taxes while leaving most corporate tax loopholes in place.

Trump’s version of the Republican Party is in their end game: Bankrupting the government, privatizing government’s remaining services, and stealing the silverware on their way out the door.

We have entered the smash-and-grab portion of the GOP’s program. They care, but only marginally, if Trump is re-elected in 2020. Their work is done.

The narrative that our economy is the best ever, was enabled by a record federal deficit. When it’s time to protect Social Security, or provide better access to healthcare, the GOP will cry about the budget deficit that’s likely to be more than $1 trillion/year, from here to forever.

Normalized insanity is in full swing. Welcome to the asylum!

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The Future: Will It Be Just More of The Past?

The Daily Escape:

Wrongo said he wouldn’t look back, but has reconsidered. It’s time to declare war on those who refuse to use facts or science. Think about what these true believers in either faith or ideology have brought us:

Will we continue on this road, or will we make a turn for the better? Will 2020 usher in a better decade than the one we just closed? Doubtful, unless each of us stand up and do what we can to make a difference.

Those who think Trumpism is so new and novel should remember that Norman Lear made a hit TV show about it in the early 1970s. Since then, many American white people have taken a dark turn: They would rather have Trump’s government enforce a whites only voting policy than put in the work required to make our system benefit everyone equally, while decreasing the cut taken by the corporate class.

Building this better society requires hard cognitive work. So far, Americans aren’t up to thinking about solutions beyond “Build that wall!”

Another example: 50% of white people are actively against government bureaucrats making their health care decisions. They insist that something that important should only be decided by employer HR departments and multinational insurance companies.

They’re perfectly fine casting their fates with insurance bureaucrats. Even if those corporate bureaucrats deny their care most of the time. Worse, they’re told by the media that they shouldn’t pay any more damn TAXES for health care when they could be paying twice as much in premiums to insurance corporations.

Remember the song In the year 2525? “If man is still alive…”

That’s 505 years from now. What do you think the odds are that we’re still here?

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America Is OK With a Wealth Tax

The Daily Escape:

Navajo Trail, Bryce Canyon NP, UT – November 2019 photo by biochemistry_unicorn

Over the past year, progressives have made a wealth tax a central part of the policy discussions in the Democratic primary. Both Sens. Bernie Sanders and Elizabeth Warren have proposals to tax the wealth of billionaires to help pay for improvements to the social safety net and infrastructure.

Currently, the US mostly taxes individuals on the income earned from their jobs and investments. The wealth tax is different since it would tax assets like stocks, yachts, artworks, and vacation homes.

Critics of the wealth tax have made a variety of arguments against them. The most prominent that the US government couldn’t enforce them effectively. Consider this from Business Insider:

“Usually, progressives cast Europe as a model for the cradle-to-grave social benefits that nations like Norway provide because of steeper tax rates on richer citizens. But most…countries have ditched them [wealth taxes] over the last few decades.”

Twelve European countries had a wealth tax in 1990, but the number now stands at four: Spain, Switzerland, Norway, and Belgium, which just introduced a limited wealth tax of its own.

Emmanuel Saez, economist at the University of California, Berkeley, who has analyzed the Warren and Sanders wealth tax proposals, says the European wealth taxes failed because governments created many exemptions that undercut their ability to draw revenue:

“The wealth taxes in Europe have failed by and large….they didn’t raise that much revenue because of big exemptions for asset classes….”

Others argue that the super-rich already donate big amounts to charity. One of Saez’s co-authors, Gabriel Zucman, says that the annual giving of Bill Gates and Warren Buffett equates to ~3%–4% of their wealth, while the other top 20 billionaires’ giving equals ~0.3% of their wealth. Like a really tiny wealth tax. Here’s his chart:

Annual charitable giving of the top 20 richest Americans: $8.7 billion, equaling just three tenths of one percent of their wealth. For the top 400 richest Americans, their taxes paid = 1.5% of their wealth, while their charitable giving = 0.4% of their wealth.

But, the average American paid taxes equal to 5.5% of their wealth, while their charitable giving = 0.3% of their wealth. Joe Six-pack gave the same amount of his assets to charity as did the top 20 billionaires.

If Warren’s 6% wealth tax was enforced on the top 20 richest Americans above, they would pay $60 billion to support the social safety net.

Moreover, despite the nay-saying by the rich, surveys show that Warren’s 2% tax is broadly popular:

(This was an online survey of 2,672 adults conducted by the polling firm SurveyMonkey from Nov. 4 to Nov. 11)

The survey by the NYT and Survey Monkey shows that 75% of Democrats and more than half of Republicans say they approve of the idea of a 2% tax on wealth above $50 million. The proposal receives majority support among every major racial, educational and income group.

The majority of college-educated Republican men disapproved, with only 41.5% approving of it.

The NYT reports that the proposed wealth tax is even more popular than the Trump tax-cut enacted in 2017. Only 45% of Americans said the tax cut was a good move:

“The movement against the Trump tax cuts since then has been powered, oddly enough, by Republicans. They largely still back the law — by 76% over all, compared with 20% of Democrats — but that support has dropped six percentage points since April.”

The shift on the tax cut is highest among high-earning Republicans: Americans earning more than $150,000 a year are far more likely to favor a tax increase on the very wealthy than the Trump tax cuts.

America’s tax code is designed to allow massive fortunes to grow ever larger. Wealth is concentrating in a tiny segment of the population, as the middle class shrinks.

We see that even the most high-minded billionaires can’t even give money away faster than their piles of dough are growing. And when Democrats like Warren and Sanders suggest a way towards tax reform, the GOP and the conservative think-tanks condemn them as socialists who want to punish success.

Most Americans are fed up with a government and an economy that overwhelmingly benefit corporations and the rich at the expense of everyone else. A wealth tax can work if Congress doesn’t get rolled by lobbyists that demand loopholes for their clients.

Wrongo will have no trouble backing a candidate who supports a wealth tax. But, increasing the taxes on corporations and a financial transactions tax should come first.

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Warren’s Mistake on Single Payer

The Daily Escape:

Mount Shasta, CA – November 2019 photo by pkeller001

Wrongo wonders if Elizabeth Warren has made a big mistake in her policy for Medicare for All. She started out running to reform capitalism, but through the debate process, she’s evolved towards single payer health insurance as a main policy. Months ago, she was an increasingly skilled campaigner whose laundry list of policy proposals made her stand out from the pack. Now she’s for nationalizing health insurance, which doesn’t seem to be on brand.

Two of her main rivals, Biden and Buttigieg, essentially want to extend Obamacare while leaving the 170 million Americans covered by private insurance with their current plans. While on her left, her other main opponent, Bernie Sanders, also wants to nationalize health insurance.

The latest New York Times/Siena College poll of Iowa Democrats shows Warren, Sanders, Buttigieg, and Biden bunched within a 5-point range. And while Warren leads, the poll found more sentiment among primary voters for improving the private health insurance system than for scrapping it in favor of single-payer.

Worse for Warren, she and Sanders are both sufficiently well-funded and popular that neither can easily emerge from Iowa or beyond as the candidate on the left. It’s similar on the moderate side: Neither Biden nor Buttigieg are going away after Iowa either.

Buttigieg is a gifted politician. He’s correctly discerned that the path to marginalizing Biden lies not in attacking him, but in confronting Warren on single payer, which he did in the last debate. He would rather that Sanders was the front-running lefty heading into Super Tuesday, than have to confront Warren.

A few more debates, and Mayor Pete may be the last standing moderate alternative to Warren and Sanders, assuming Bloomberg doesn’t get traction along the way.

Sanders is a much better candidate than he was in 2016. He’s making inroads among African-Americans and Hispanics. AOC, a very popular symbol of youth and progressivism, supports him. Sanders is doing well enough with young progressives to keep Warren from now moving closer to the center on single payer.

She went from cautious on single payer to all-in. First, she allowed that there were multiple paths to universal coverage. In an attempt to simplify during one of the debates, she said: “I’m with Bernie”, without having a firm plan.

When pressed by Biden and Buttigieg to specify how she would pay for her vague plan without raising taxes on the middle class, she dodged the question, saying that overall health insurance costs to the middle class would go down. She finally produced a white paper that described a 10-year $20.5 trillion plan to fund Medicare for All without raising taxes on the middle class.

Her opponents are using her proposal to define Warren to their own advantage: Biden and Buttigieg say it’s too radical and too expensive; Sanders says it’s inferior to his plan. While single-payer is popular among Democratic primary voters, several polls of swing state voters suggest that the majority favor a more moderate health insurance plan.

That would seem to be an invitation to embrace positions most Democrats actually prefer.

Warren’s problem is that she seems married to a health insurance program which leaks votes and positions her in a fight for the left of the primary electorate. However, we’re in a time when a coalition of minorities, suburban swing voters, and persuadable blue-collar whites are what’s needed to win states like Pennsylvania, Michigan, and Wisconsin.

Warren should return to her roots of tax and capitalism reform. These are popular policies with Democrats, even with those who are against mandatory single payer health insurance. The continuing rise in inequality requires us to do something to narrow it.

And Warren’s wealth tax could do just that, and finance more robust social programs and spending on infrastructure. The US mostly taxes individuals on the income earned from their jobs and investments, while a wealth tax would levy taxes on assets like stocks, yachts, artworks and vacation homes.

Both Sanders and Warren have an asset tax plan. In Warren’s plan, all net worth under $50 million is exempted, compared to $32 million for the Sanders plan. Business Insider says the Sanders plan would bring in $4 trillion in government tax dollars over a decade. And, Warren’s version would total $500 billion less in the same period.

During this primary season, moderates and progressives will have to understand clearly why they are Democrats, and how they will bridge their differences by November 2020 and deliver massive turnout.

Both wings need to remember that it isn’t enough to win the White House. Legislative gridlock must end.

It wouldn’t hurt if Warren did some thinking about her single payer plan, too.

 

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Sunday Cartoon Blogging – November 10, 2019

Bill Gates is the second-richest person in the world, with a net worth of $106.2 Billion. Here’s what Bill Gates said about Elizabeth Warren’s tax plan:

“I’m all for super-progressive tax systems….I’ve paid over $10 billion in taxes. I’ve paid more than anyone in taxes. If I had to pay $20 billion, it’s fine. But when you say I should pay $100 billion, then I’m starting to do a little math about what I have left over….You really want the incentive system to be there without threatening that.”

Here’s what would actually happen to Gates under Elizabeth Warren’s tax plan: (emphasis by Wrongo)

“The Warren campaign calculates that under Ms. Warren’s plan, Mr. Gates would owe $6.379 billion in taxes next year. Notably, that is less than Mr. Gates earned from his investments last year. Even under Ms. Warren’s plan, there’s a good chance Mr. Gates would get richer.”

Gates won’t have to pay as much as he thinks. The fundamental question is whether it’s ok for a billionaire to add 6% less to his massive fortune under Warren’s plan? Can billionaires still be successful executives if they don’t pocket every last penny they can lay their hands on?

Billionaire Michael Bloomberg doesn’t think the current Democratic presidential field is sufficiently deferential to the rich, so he’s running to make sure we get there.

When you think about it, two billionaires, Bloomberg and Steyer are running as Democrats. A third, Howard Schultz, billionaire behind Starbucks, tried to run as an independent. All wanting the job of billionaire Donald Trump.

Billionaire Mark Zuckerberg has said he would fight the Warren’s taxes on billionaires. Tim Perkins, a billionaire venture capitalist compared the “progressive war on the American one percent” to the Kristallnacht and anti-Semitism in Nazi Germany.

Billionaire Stephen Schwarzman, Chairman of Blackstone, compared a tax increase for people like him to Hitler’s invasion of Poland.

Why does anyone care about the tax concerns of these people? They never have to think about money, and neither will their heirs. It’s a familiar story, the astronomically rich are willing to donate large portions of their wealth, so long as interfering with their cozy power relationship with politicians is off the table.

On to cartoons. No plan goes unpunished:

America has a difference of opinion on health insurance:

Bill Barr waves his God flag:

GOP wants to take a few shots at the whistle blower:

Trump misunderstood which turkey could do him a favor:

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The Ethics of Responsibility

The Daily Escape:

John Muir Wilderness, CA -August 2019 photo by petey-pablo

Nobody in America should be rooting for a recession, and no political party should root for one either. Shame on those who are.

US economic policy is often driven by ideology, and those operating policies can change whenever the party in power changes. That seems to be more likely to occur in 2020 than it has at any time since Reagan. Like it or not, Bush I, Clinton, Bush II, and Obama all followed similar economic policies.

Trump has disrupted much of them, returning to a vigorous trickle-down policy, aggressive deregulation and the imposition of unilateral tariffs.

Max Weber, in his 1919 essay on “Politics as a Vocation”, made a distinction between politicians who live by the “ethics of responsibility” and those who follow the “ethics of conviction”. The ethic of responsibility is all about pragmatism; doing the right thing in order to keep the show on the road. But the ethic of conviction is all about moral (ideological) purity, about following the playbook despite the impacts.

An example is the Kansas Experiment, where Sam Brownback, following right-wing convictions, cut taxes to produce a “shot of adrenaline into the heart of the Kansas economy.” Economic growth was below average, state revenues crashed, and debt blew up. But, still a believer, Brownback vetoed the effort to repeal of his laws.

You don’t need more from Wrongo to paint the picture. We’re in a time of the ethics of conviction.

Let’s take a look at two recent articles about the economy. First, from the Economist, which is telegraphing the possibility of a US recession:

“Residential investment has been shrinking since the beginning of 2018. Employment in the housing sector has fallen since March….The Fed reduced its main interest rate in July and could cut again in September. If buyers respond quickly it could give builders and the economy a lift.”

But housing is not the only warning sign. The Economist points to this chart, showing the change in payrolls in the 2nd Quarter of 2019:

It’s clear that much of America is doing quite well. It is also clear that most of the 2020 battle ground states are not. Indiana lost over 100,000 manufacturing jobs in the last downturn, almost 4% of statewide employment. It is among a growing number of states experiencing falling employment: a list which also includes Ohio, Pennsylvania and Michigan.

In 2016, those last three states all delivered their electoral-college votes to Trump, and were decisive in his electoral victory. Trump’s trade war may still play well in these states, but if the decline in payrolls continues, it suggests a real opening for Democrats, assuming they are willing to hammer on pocketbook issues.

Second, the Wall Street Journal had an article about winners and losers in the 10 years since the Great Recession. It isn’t a secret that those left behind are in the bottom half of the economic strata, and there is little being done to help them:

“The bottom half of all U.S. households, as measured by wealth, have only recently regained the wealth lost in the 2007-2009 recession and still have 32% less wealth, adjusted for inflation, than in 2003, according to recent Federal Reserve figures. The top 1% of households have more than twice as much as they did in 2003.”

We also call wealth “net worth”. It is the value of assets such as houses, savings and stocks minus debt like mortgages and credit-card balances. In the US, wealth inequality has grown faster than income inequality in the past decade, making the current wealth gap the widest in the postwar period. Here is a devastating chart from the WSJ showing the net worth of the bottom 50% of Americans:

There’s a big difference between the 1% and the bottom 50%: More than 85% of the assets of the wealthiest 1% are in financial assets such as stocks and bonds. By contrast, more than half of all assets owned by the bottom 50% comes from real estate, such as the family home.

Economic and regulatory trends over the past decade have not only favored stock investments over housing, but they have also made it harder for the less affluent to even buy a home. The share of families in the bottom 50% who own a home has fallen to 37% in 2016, (the latest year for which data are available), from 43% in 2007. OTOH, homeownership among the overall American population is higher since 2016.

Weber’s ethics of conviction have driven our politics since well before the 2008 recession. We know what it caused: inequality, demonstrated by lower wages for the 90%, and a devastating decline in net worth for the bottom 50%.

Can we turn the car around? Can we elect politicians who will follow Weber’s ethics of responsibility at the local, state, federal and presidential levels in 2020?

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Monday Wake Up Call – June 24, 2019

The Daily Escape:

View from Angels Landing summit, Zion NP Utah – 2019 photo by SurrealShock. 86,000 people visited Angels Landing over the four-day Memorial Day weekend in 2018.

On Sunday, the NYT reported: (emphasis by Wrongo)

“In the last decade, private land in the United States has become increasingly concentrated in the hands of a few. Today, just 100 families own about 42 million acres across the country, a 65,000-square-mile expanse, according to the Land Report, a magazine that tracks large purchases. Researchers at the magazine have found that the amount of land owned by those 100 families has jumped 50 percent since 2007.”

The West is a patchwork of public and private lands. Land ownership in the West has always been concentrated in the hands of the federal government, which owns about 50%. Now we learn that the rest of the West is quickly moving into the hands of a very few people.

The large purchases by these new private landholders come as the region is experiencing the fastest population growth in the country. That drives up housing prices and the cost of living. Some locals are fearful of losing both their culture and economic stability.

Rocky Barker, a retired columnist for The Idaho Statesman, has said this is a clash between two American dreams, pitting the nation’s respect for private property rights against the notion of beauty-rich publicly-owned lands set aside for the enjoyment of all.

In the West, there is an evolution of an economy based in minerals extraction, to one based on recreation; from a working class culture to a more moneyed one. The NYT article focuses on one family, the Wilks brothers, Dan and Farris, who made their money ($3.5 billion) in fracking. They sold out, and bought a vast stretch of mountainous land in southwest Idaho.

The Wilks brothers see what they are doing as a duty. God had given them much, and in return, “we feel that we have a responsibility to the land.”

The Wilkses now own 700,000 acres across several states, and have become a symbol of the out-of-touch owner. In Idaho, they have closed trails, and hired armed guards to patrol their land, blocking or stymieing access not just to their property, but also to some publicly owned areas. They also hired a lobbyist to push for a law that would stiffen penalties for trespass, and the bill passed.

This has made locals angry, as they have hiked and hunted on these lands for generations. Some emailed the Wilkses, asking permission to cross their property. They were surprised to receive a response suggesting they first visit PragerU, a right-wing website that was financed by the Wilkses and share their opinions of its content.

This is an example of a test for land use. Should you have to tell landowners your political views before you get to use their land?

Welcome to the future. Concentration of land ownership is a natural consequence of our free market capitalism. Our capitalist system isn’t designed to prevent concentration of ownership, whether it be of corporations or land.

That requires politicians who are not beholden to corporations and capitalists.

Our ancestors left Europe because by the 1600s, much of the land had already been bought up and was either inaccessible, or available in small lots for rent. America has been in the process of being divided up in the same way since the 1700s.

We talk about wealth inequality, and this story shows again that it is much more than numbers on a ledger. It is the power to own vast chunks of America, to decide how that land will be used, and to charge for that usage if they desire.

Battles over both private and public land have been a defining part of the West since the 1800s. For years, fights have played out between private individuals and the federal government.

OTOH, Americans in the West have made private ownership of wilderness a sacrament. They even contend that private use of public lands should be a right. Now, when the results of concentrated private land ownership become clear, when suddenly, a river or a mountain range they’ve enjoyed using for decades has a fence around it, their bellyaching begins.

But when the Wilkses, who made their money in fracking talk about how they feel they have a responsibility to the land, that has to be seen as hypocrisy.

The people in the West should Wake Up and give thanks for every inch of every national park. They should willingly pay additional taxes to keep our national parks in prime condition.

And they should finally see the wisdom in higher income taxes on corporate profits, and in Elizabeth Warren’s taxes on individuals with greater than $50 million in assets .

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