Taxes

Ever since the 1980s cutting taxes for the rich has been a popular cure for unemployment. If the rich have more money—so the story goes—they have more money to invest. After all they already have more money than they can possible spend. If we give them even more by cutting their taxes, they will invest more and thereby create jobs.

During his presidential campaign, four years ago, Sen. McCain was asked how many houses he owns. He could not remember whether it was eight or nine. There is little point in him buying more houses. Ann Romney owns a number of cars, among them two Cadillacs. How many more could she use?

So, having all the houses and Cadillacs (not to mention yachts and other necessities) they could possibly use, the rich will invest their money where they think it will bring in the highest return.

Those investments—so goes the popular story—will create more jobs.

If we want to create more jobs, we should cut the taxes on the rich. Simple, no?

Actually, the matter is a bit more complicated. Let's look at Mr. Moneybags and his terrible problem, he has too much money. He goes to his financial adviser, almost in tears: “Please tell me what to do with my money.”

The financial advisor will list the options: Mr. Moneybags can build some new factories to produce food, clothing, electronic gadgets. But with a lot of people in the US out of work, with middle and working class wages pretty flat for the last ten or more years, no one in our country has money to buy stuff. If Mr. Moneybags produces more commodities, he may find himself unable to sell them.

Creating new jobs in US manufacturing does not pay. So Mr. Moneybags will not do that, even if we do cut his taxes.

He could lend his money to our government, but interest rates are extremely low. The return on government bonds is very small. Not a good investment.

He could invest his money in a bank. That is attractive because banks are, once again, making money.

He could also put his money in financial investments, derivatives, bundled mortgages and other esotheric items. (Warren Buffett comments :”I view derivatives as time bombs,”) He might well make money with those.

But he would not be creating a lot of jobs.

China is thriving. There are more rich people there than ever before. An economically comfortable middle class is growing. Some Chinese have money to buy things. Maybe Mr. Moneybags could build a factory over there (or buy one) and make a good profit. That would be good for him but would not create jobs in the US.

Cutting taxes for the rich is unlikely to create a lot of jobs in the US.

There are three ways to create jobs in the US:

Our roads, schools, bridges and other public works have been neglected. There are many potentials jobs in public works. We could raise taxes on the rich and rebuild our roads, schools, bridges. We could clean up parks, support libraries and museums, build bike paths, skate board parks, trails for ATVs, etc.

We can raise wages. One out of every four jobs in the US does not pay enough to support a family of three. One out of four wage earners cannot buy anything except the most essential goods. Paying more generous wages will increase demand and create more jobs to fill increased demand. Demand will increase if poor people have more money to spend.

Many Americans lack important services: education, health care, counseling or mental health support, legal services, home repairs, all kinds of services for the elderly, etc. A lot of new jobs would open up if we tried to provide everyone with even minimal services.

Cutting taxes on the rich will not create many new jobs in the US to pay for any of these projects.

The slogan that cutting taxes on the rich will create more jobs is a barefaced lie, invented by the rich and their supporters in order to line their pockets.

Welfare?

The unrelenting attack on welfare programs and on welfare recipients continue. Persons on welfare are portrayed as slackers, as persons who are dependent, who refuse to take charge of their lives and to make something of themselves.

Many observers suggest that this continuing denigration of a significant number of Americans is connected to the fact that persons of color are disproportionately represented among welfare recipients.

Here are some facts:

A significant percentage of welfare recipients are children. Since 2004/2005, children, not adults, have made up the majority of welfare cases in California. Some observers claim that two thirds of welfare recipients are children.

Besides children, the elderly consume a significant percentage of annual welfare spending. According to some accounts, 53 percent of the benefit dollars spent on entitlement programs spend go to assist the elderly — not to able-bodied, working-age Americans who choose not to work.

Other welfare recipients that do not fit the negative stereotypes are single mothers. Women who are divorced from a violent husband, or a husband who meets his midlife crisis by marrying a much younger woman, often find themselves unable to get a job that will support them. While they go back to school, the government will support them for a few years so that they can prepare themselves to work and to take care of themselves.

The 'working poor' make up a fourth important category of welfare recipients. One in four jobs in the United States today does not pay enough to lift families out of poverty. The problem is not that people do not work. The problem is that they don't get paid enough to live without some government assistance. According to the most recent data available from the Census Bureau, 104 million people – a third of the population – have incomes below $38,000 for a family of three.

More people can only find part-time jobs. That does not provide enough to live on. Besides part-time jobs do n ot provide health insurance. Part-timers need government help to pay their medical bills.

The fact that so many jobs will not pay enough for a family of three to live on, has the side effect that a certain number of welfare recipients work but their work is not reported to the government so that they can continue to receive some assistance to supplement their meager earnings. That tends to inflate the number of people who are supposedly "welfare dependent."

According to government figures, the number of people who could possibly be "welfare dependent" – dependent on government handouts for many years – is somewhere between 10 and 20% of all welfare recipients. There is absolutely no truth in the scare stories of half the American population being unwilling to take charge of their lives, sitting at home, waiting for their monthly government check.

Obviously these figures do not add up. A central difficulty in this highly politicized debate is that facts are hard to come by. But even if the numbers I have cited are all exaggerated, it remains incontestable that the stereotype of the welfare recipient-as-slacker is just that--a stereotype that bears little resemblance to reality.

Moreover, it is extremely important to understand whom social welfare benefits. Since a significant portion of welfare payments go to supplement the inadequate income of working people, welfare for the poor is, of course, at the same time welfare for the rich, for employers. Consider this example: Walmart is well-known to pay extremely low wages. In some stores the human relations people will tell all new hires how to get on food stamps and other kinds of government assistance. Walmart is quite openly admits that wages are too low to live on. It can charge low prices to its customers because it underpays its employees. It can get away with that because the government helps out. In the end the low prices in the Walmart store are made possible by the social welfare system. The US government welfare system subsidizes Walmart's profits and the savings realized by its customers.

Walmart and many other employers are "welfare dependent." When politicians try to scare up distrust and animosity against welfare recipients they should mention Walmart and its customers among them.

We hear a good deal about American employers whose companies are "lean and mean" and we are invited to admire their can-do spirit, the private initiative that makes companies that had been suffering profitable again. But what makes companies "lean" are the low wages paid to employees – and not those in the front office either. Companies can do that because the government will make up some of the difference between a living wage and what actual American companies pay to their fellow citizens.

What allows companies to be "lean and mean," is the government's social welfare system. American employers are chief among the welfare dependents.

Thank you Uncle Sam.

Here is the story of a very brave woman:

“Today is October 10th, 2012 and I am ready to go to prison.”

by Will Potter on
in Terrorism Court Cases

Today Leah Plante will again appear before a federal grand jury in Seattle, Washington, for the third time, and refuse to testify about her political beliefs and political associations. It is likely that she will be imprisoned for her principled stance against what she calls a witch hunt against local anarchists.
The grand jury is investigating anarchists in the Northwest, following FBI and Joint Terrorism Task Force raids in search of “anarchist literature.” Two other anarchists, Matthew Kyle Duran and Katherine Olejnik, have already been imprisoned for refusing to cooperate.
Plante wrote a powerful statement to her friends and supporters in preparation for today’s hearing. Here is an excerpt:

On the morning of July 25th, 2012, my life was turned upside down in a matter of hours. FBI agents from around Washington and Oregon and Joint Terrorism Task Force agents from Washington busted down the front door of my house with a battering ram, handcuffed my house mates and me at gunpoint, and held us hostage in our backyard while they read us a search warrant and ransacked our home. They said it was in connection to May Day vandalism that occurred in Seattle, Washington earlier this year.

“They want us to feel isolated, alone and scared.”

However, we suspected that this was not really about broken windows. As if they had taken pointers from Orwell’s 1984, they took books, artwork and other various literature as “evidence” as well as many other personal belongings even though they seemed to know that nobody there was even in Seattle on May Day. While we know that knowledge is powerful, we suspected that nobody used rolled up copies of the Stumptown Wobbly to commit property damage. We saw this for what it was. They are trying to investigate anarchists and persecute them for their beliefs. This is a fishing expedition. This is a witch hunt. Since then, thanks to a Freedom of Information Act request, we have learned that this Grand jury was convened on March 2nd, 2012, two months before the May Day vandalism even took place…

This is from a FBI training guide about anarchist "terrorists." "Non-cooperative" is one of the only things they got right.

I do not look forward to what inevitably awaits me today, but I accept it. I ask that people continue to support us throughout this process by writing us letters, sending us books, donating and spreading awareness.I cannot express in words how grateful I am to all those who have shown us support and solidarity, especially our friends, partners and loved ones. We will all get through this together. I know I am a broken record with the following sentiment, but I feel like it’s worth repeating. They want us to feel isolated, alone and scared. I know that even though Kteeo has been held in what is essentially solitary confinement, she does not feel alone. I know that Matt does not feel alone. I know that I will not feel alone. When they try to mercilessly gut communities, we do not scatter, we grow stronger, we thrive. I view this State repression like this: The State thinks it is a black hole that can destroy whatever it wants. In reality, it is much more like a stellar nursery, wherein it unintentionally creates new, strong anarchist stars.

My convictions are unwavering and will not be shaken by their harassment. Today is October 10th, 2012 and I am ready to go to prison.

UPDATE:

Leah Plante was taken into custody for refusing to testify.

Miracle in Iceland

Iceland has a population of some 300,000 people. In 2008 it suffered the same problems experienced by our country, by Greece, by Italy, by Spain, only worse– people and banks had borrowed a great deal of money on the strength of a housing bubble. When the bubble burst the banks went broke and ordinary people lost their homes and their jobs.

What we did, what the Greek government is doing under pressure from the European Union, is to bail out the banks and make the people pay for it. This is known as an "austerity program" which cuts social programs and cuts wages, while banks recover and make more money than ever.

As a result the population is impoverished, business declines, more people are out of work and thus there is less and less money to spend – which is very bad for business. Unemployment in Greece is close to 25%. It is still 8% in our country. Our economy is not recovering at all, or only very slowly.

Iceland, by contrast, is doing well. Their national product is not quite what it was before the crisis but it is growing every year. They are doing better than the rest of Europe. They're doing better than we are.

They chose the opposite policy from the United States and the European Union. They let the banks go broke and maintained social programs and wages. The ordinary people had money to spend and that was one of the factors that helped the economy recover. Now they are thriving.

What is more, the Icelanders jailed the bankers who ruined the economy in the first place. In the US, the US attorney in New York yesterday filed the first criminal case against one of the banks who are responsible for the current crisis, J.P. Morgan. They are working on some other cases, but my bet is that no one will go to jail.

Americans like to quote Lincoln's phrase from the Gettysburg address about "the government of, for and by the people." But our government is not for the people; it is for the banks. The Icelandic government is for the people and they find that to be a good policy.