Working Life Jonathan Tasini's Ruminations on Work, The Economy, and Politics Tue, 03 Mar 2015 18:17:26 +0000 en-US hourly 1 Goldman Sachs’ Tax Scam Mon, 02 Mar 2015 18:13:41 +0000 It’s not enough that Goldman Sachs is a “ financial snake pit rife with greed, conflicts of interest, and wrongdoing.” The company has to dodge paying a fair share of taxes, too.

Per Citizens for Tax Justice:

Goldman Sachs’s latest financial report shows that the company avoided paying federal income taxes on almost half its United States profits in 2014. In fact, the company paid an effective tax rate of just 18.6 percent on $6.8 billion in U.S. profits.

Most of Goldman’s low tax rate (about half the statutory rate of 35 percent) can be attributed to a tax break that allows corporations to write off the so-called cost of issuing stock options to their executives in lieu of salaries. Goldman disclosed saving a whopping $782 million in income taxes through this break in 2014.

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Oink, Oink, Oink: Blackstone CEO Takes Home $690 million in 2014 Sat, 28 Feb 2015 01:26:13 +0000 Just in case you wondered if the pigs weren’t still at the trough looking to take every dollar they could.

Oink, oink, oink per the WSJ:

Blackstone Group LP co-founder and Chief Executive Stephen Schwarzman collected about $690 million in dividends, compensation and fund payouts for 2014, according to a Friday regulatory filing, the highest annual payout ever notched by a founder of a publicly traded private-equity firm.The amount represents a nearly 50% increase over Mr. Schwarzman’s 2013 figure and also tops the $546 million received in 2013 by Leon Black, who co-founded Apollo Global Management LLC. The tallies are according to a Wall Street Journal analysis of securities filings. For 2014, Mr. Black received $330.6 million, mostly in dividends, according to a filing from his firm Friday.

By the way, this is the same guy who has a massive portrait of himself hanging in his home:

Short, grey-haired and softly-spoken, he is renowned for his exotic parties. His Christmas event was themed on 007, with Bond girls sashaying around with trays of nibbles. Then in February, he spent an estimated $3m on a birthday bash featuring private performances by Rod Stewart and Patti LaBelle at a regimental armoury on Manhattan’s upper east side. The venue was decorated to look like Schwarzman’s own living room, complete with a huge portrait of the host himself. Guests included Colin Powell, Donald Trump and mayor Michael Bloomberg.

Just guessing but this guy has a problem with size.

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Elizabeth Warren Opposing TPP, Because Deal Would “gut U.S. regulations” Fri, 27 Feb 2015 13:56:40 +0000 Good to see Elizabeth Warren taking on the Trans Pacific Partnership. Aside from her terrific leadership opposing Wall Street, her views on other issues (for example, her fairly mainstream blindly pro-Israel views) have been less clearly progressive. But kudos on this.

Speaking out:

The Massachusetts senator is stepping up her criticism of the administration’s proposed Trans-Pacific Partnership, a centerpiece of the president’s second-term agenda, saying it could allow multinational corporations to gut U.S. regulations and win big settlements funded by U.S. taxpayers but decided by an international tribunal.“This deal would give protections to international corporations that are not available to United States environmental and labor groups,” Warren said in an interview with POLITICO. “Multinational corporations are increasingly realizing this is an opportunity to gut U.S. regulations they don’t like.”


Opponents of Obama’s trade agenda seized on Warren’s new comments and said they raised the profile of the opposition and made defeating the deals more likely. The administration is asking Congress for “fast-track” status for the TPP, meaning that lawmakers wouldn’t be able to amend the deal, only vote up or down on what the administration negotiates.“Having a champion for working families and the environment speaking up like this against parts of TPP sends a real signal to the rest of Congress,” said Ilana Solomon, director for The Sierra Club’s “Responsible Trade” program. “If you are on the side of helping the environment and working families and taking a stand against corporate power, you have to be against fast-track and TPP as well.” Solomon added that Warren was moving strategically to “elevate these issues at a critical moment when fast track and other trade agreements are coming to a head in Congress.”

Her opposition focuses primarily on the investor-state dispute settlement (ISDS) provisions, which I wrote about here.

Truthfully, I don’t believe that this will have much effect in blocking “fast track” or TPP in the Senate, which has been, on the whole, much more friendly in a bi-partisan way to NAFTA-style so-called “free trade” and “fast track” (which allows a trade deal to be presented to Congress for an up-or-down vote, blocking any ability to offer amendments). But, obviously, her voice carries weight with the larger progressive message and could influence votes in the House where, in my opinion, there is a stronger chance TPP can be blocked because of the opposition of a majority of Democrats and a number of Republicans.

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Until Bankers Go To Jail, I’m Not Paying My Taxes: Splendid Idea, Greg Wise and Emma Thompson Thu, 26 Feb 2015 17:10:47 +0000

Let me give credit, up front, to a splendid idea from the actors Greg Wise and Emma Thompson that clarified my own outrage at a simple reality: the bankers destroyed the economy with their greed and incompetence, the Obama Administration lets each bank CEO off the hook with a negotiated deal for a fine that the institution, not the banker pays, and with no jail time for a single high-ranking Wall Streeter and WE PAY FOR THIS.

That’s right: each one of us, with our taxes, pays for this sleazy deal with the financial elite.

So, first, what did Wise and Thompson just declare:

Greg Wise, the actor married to Emma Thompson, has announced that he and his wife will refuse to pay tax until those involved in the HSBC tax avoidance scandal go to prison.Wise spoke of his anger at HM Revenue and Customs (HMRC) and the bank after details of 100,000 accounts held by HSBC’s Swiss arm revealed how the bank had helped some customers dodge taxes.

“I have actively loved paying tax, because I am a profound f**ing socialist and I believe we are all in it together. But I am disgusted with the HMRC. I am disgusted with HSBC. And I’m not paying a penny more until those evil b**ds got to prison,” he told The Evening Standard.

Speaking of the opinions of his Oscar-winning wife, he said: “Em’s on board. She agrees. We’re going to get a load of us together. A movement. They can’t send everyone to prison. But we’ll go to prison if necessary. I mean it, it’s going to be like 1948 all over again.”

What Wise didn’t do–no criticism intended and it’s possible he simply wasn’t quoted extensively enough–was connect the fines to taxes everyone of us pay.I’ve made this point numerous times: the fines are either paid for in higher fees to customers AND/OR by every taxpayer because the fines are deductible.

Take this:

At the Justice Department, senior officials like to congratulate themselves on the headline-making, big bucks settlements they have imposed upon banks and lenders for their part in causing the 2008 mortgage meltdown that sparked the biggest American financial crisis since the Great Depression.But wait a moment. Those settlement figures are not quite what they seem. Buried deep in the announcements of the astronomical sums that Wall Street banks are being forced to pay is a dirty secret: A big chunk of the hundreds of billions of dollars banks have paid in settlements to various federal agencies and regulators since 2010 is deductible from the taxes banks and lenders pay.

When is a fine not a fine? When it can be put against your tax bill.

Because settlements can be deducted from tax liabilities, for nearly every dollar a bank or lender has pledged to pay in cash or pony up in other ways—such as through buying back soured mortgage-backed securities, extending cheaper loans or forgiving failed loans held by struggling homeowners—up to 35 cents will find its way back into bank coffers, a reflection of the 35 percent federal corporate tax rate.

Deep in the legalese weeds of the settlement documents lies buried treasure. Big banks such as Bank of America and JPMorgan Chase will receive deductions against the corporate tax that will amount to between half and nearly three-quarters of their multibillion-dollar settlements, at least. Meanwhile, midsized banks and nonbank lenders generally get to deduct the whole shebang. [emphasis added]

And the greedy fucks at Bank of America (I wrote about their cushy deal here):
Bank of America will pay roughly $4 billion less to the government after-tax than the $16.65 billion it agreed to in a settlement over soured mortgage securities, because parts of the settlement will be tax deductible, the bank said Thursday.[emphasis added]And:

That means that up to $11.63 billion of the settlement would be deductible, depending on how much the bank incurs in costs associated with the consumer relief. With a corporate tax rate of 35%, that suggests savings of $4.07 billion. Bank of America said last month that it expects an effective tax rate of about 31% for the second half of 2014, absent any unusual items, and that would suggest savings of about $3.6 billion.[emphasis added]

J.P. Morgan’s get-out-of-jail deal (I wrote about that sweetheart kiss to Jamie Dimon here):

The majority of the $13 billion settlement JPMorgan struck with the government Tuesday is likely to be tax deductible, reducing the bank’s financial hit.Here’s why: Many of the costs associated with corporate legal cases are treated as deductible under the tax code, in much the same way that a company’s wages or equipment expenses are.

That means JPMorgan will be able to reduce its tax bill because of many of the settlement payments that it must make. [emphasis added]

Understand why YOU and every regular person essentially pays for this: every tax dollar the banks can deduct from these settlements is a tax dollar not given to the Treasury, which means someone else has to pay for the services we need as a decent society. That means YOU pay for their get-out-of-jail deals.And you’ve already paid enough. The crashed economy, the obliteration of trillions of dollars in wealth, the loss of millions of jobs around the world, of pensions that can never be recovered in full…all for their greed and power.

And they have not paid a price. The opposite: Dimon and his band of miscreants throughout Wall Street still rake in a king’s ransom in salary, bonuses and first-class benefits.

Of course, this is tough one: how does one resist the taxman? But, Wise has a point: if tens of thousands of people refused to pay their taxes until bankers went to jail…

At least, the point can be made.

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Simple Choice: 25 Million Kids OR More Useless Tax Cuts For Business? Wed, 25 Feb 2015 15:01:12 +0000

We’ve never had a problem with finding money in the federal budget. Iraq War/Afghanistan/Drones? Pfft…a few trillion, no problem. Tax cuts for the rich? Here, take hundreds of billions of dollars. The problem is PRIORITIES and MORALITY.

Today, the question boils down to: does the Congress want to help 25 million kids and their families have a few dollars more in the household budget–to buy food, clothes and pay for heating–OR would the Congress rather give billions of dollars in useless, wasteful tax cuts to business?

When the American Recovery and Reinvestment Act passed in 2009 (at $840 billion, the “stimulus” bill was too puny, in my humble opinion to deal with the crisis at hand…but I digress), one of the things that it did was to expand the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

As Citizens for Tax Justice points out:

The ARRA expansion of the Earned Income Tax Credit:    Boosted benefits for families with more than two children. Previously families with more than two children received the credit at the same rate as families with two children– 40 percent–but under the expansion these families receive a credit rate of 45 percent. For example, under the expansion the maximum credit for a married couple with three or more children is $6,242. Without the improvement, the maximum credit would be $5,548, the same amount a married couple with two children receives.
Reduced marriage penalties. The expansion increased the income amount at which the EITC phases out for married couples, thus allowing married couples to receive a small benefit boost at higher income levels.

The ARRA expansion of the Child Tax Credit:

Lowered the refundability threshold. The ARRA expansion lowered the income threshold above which a taxpayer can receive a tax credit at a rate of 15 percent of earnings to $3,000, compared to around the threshold of $13,850 it would otherwise have been in 2015. This means taxpayers that even more lower-income families can receive this credit.

Those changes will expire at the end of 2017–and, if they do, will deprive 13 million families–with 25 million kids–of some badly needed money.

Here’s the table that shows what the effect is:

CTJ pegs the cost of making these benefits permanent at $14 billion in 2018, a trivial number, a rounding error in the scheme of things.

But, the PRIORITIES and MORALITY of the people running the show on Capitol Hill prefer to piss away billions of dollars on tax cuts for business that don’t do jack for the economy  and, certainly not for 25 million kids.

A year ago, I wrote about Congress’ vote–including Democrats–to flush billions of dollars down the drain through the continuation of “Tax extenders”. Quoting from that post, courtesy of CTJ:

Most of the tax breaks fail to achieve any desirable policy goals. For example, they include bonus depreciation breaks for investments in equipment that the Congressional Research Service have found to be a “relatively ineffective tool for stimulating the economy, a tax credit for research defined so loosely that it includes the work soft drink companies put into developing new flavors,and a tax break that allows General Electric to do financial business offshore without paying U.S. taxes on the profits.■ The tax breaks cannot possibly be effective in encouraging businesses to do anything because they are almost entirely retroactive. The tax breaks actually expired at the end of 2013 and this bill will extend them (almost entirely retroactively) through 2014. These tax provisions are supposedly justified as incentives for companies to do things Congress thinks are desirable, like investing in equipment or research, but that justification makes no sense when tax breaks are provided to businesses for things they have done in the past.

■ The bill increases the deficit by $42 billion to provide tax breaks that mostly benefit businesses, even after members of Congress have refused to enact any measure that helps working people unless the costs are offset. The measures that Congress refused to enact without offsets include everything from creating jobs by funding highway projects to extending emergency unemployment benefits.[emphasis added]

And the price tax for continuing “tax extenders” is going to get steeper in 2018: to the tune of $73 billion.

So, this is a pretty clear choice: spend a paltry $14 billion to help 25 million kids OR hand over $73 billion to corporations that don’t help anyone but the CEOs looking to fatten up bottom lines and boost share prices so they can make more dough.

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A Little Raise Tue, 24 Feb 2015 16:22:51 +0000 It’s still too low in actual terms. But, tipped restaurant workers in New York will get a bump.


Acting state Labor Commissioner Mario Musolino accepted a state wage board’s recommendation to raise the cash wage for tipped workers to $7.50 per hour beginning Dec. 31, marking tipped workers’ first minimum wage raise since 2011.

Musolino accepted four of the five recommendations made by the wage board. He said he is in favor of putting all tipped workers under one class, allowing New York City to raise its minimum for tipped workers by one dollar if and when the Legislature approves a separate minimum wage for the metropolis, and reviewing whether to eliminate the cash wages and tip credits system. He rejected a recommendation that the tip allowance be increased by $1.00 per hour when the weekly average of cash wages and tips equals or exceeds the applicable hourly minimum wage rate by 150 percent in New York City and 120 percent in the rest of New York.

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Stimulus For Greece, Not More Austerity Mon, 23 Feb 2015 16:47:31 +0000 The gun is still being to the head of the people of Greece. Give us more austerity for a better future, cry the bankers. But, truth is more stimulus is the answer.

Per CEPR in a new paper:

The cyclically adjusted budget surplus – which measures the government’s fiscal tightening — moved from 5.7 percent in 2013 to 6.0 percent of GDP in 2014, or just 0.3 percentage points.  In the three years prior, the adjustment had been 3.2 percent of GDP (2012-13), 3.8 percent of GDP (2011-12), and 5 percent of GDP (2010-11).  The paper states: “It should be obvious that this huge drop-off in fiscal tightening would be the main cause of the return to growth.”

The paper describes the considerable economic and social costs of Greece’s adjustment, with output down by about 26 percent and unemployment currently at 25.8 percent, with youth unemployment at 49.6 percent. “Nominal wages have fallen by 16 percent in the private sector …and by 23.5 percent overall. The government has laid off about 19 percent of its work force.” Yet the IMF forecasts more hardship in the years to come, projecting unemployment to be 15.8 percent in 2018 – a decade after the crisis began – and in 2019 for Greece to be more than 9 percent below its pre-crisis GDP of 12 years earlier.

The solution is an “alternative macroeconomic scenario with a moderate fiscal stimulus, which brings the economy much closer to full employment over the next five years, with a lower net debt than currently projected by the IMF. This alternative is just one of many possible scenarios, some of which might include debt cancellation, or more help from the European Central Bank in maintaining low interest rates, especially in light of its recently announced quantitative easing program,” says the paper.

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Greeks Anti-Austerity Fight: Defeating Class Warfare, Racism, Tea-Party-Like Xenophobia Fri, 20 Feb 2015 19:02:07 +0000 To be sure, the austerity mongers around the world want to throttle and silence the new Greek government lest the revolt against austerity spread to other countries. But, in this fight, the Greek government–in particular, Prime Minister Alexis Tsipras and Greek Finance Minister Yanis Varoufakis–are really waging another campaign: against right-wing racism and xenophobia. And there’s something to be learned about this for politics in the U.S.

So, in these very hours, the negotiations are still intense in today’s meetings between Varoufakis and the austerity mongers, principally Germany, who want to continue the austerity policies that have caused deep misery in Europe. Per The Wall Street Journal:

Greece submitted a request to extend its bailout program by six months in a letter on Thursday that was quickly rejected by the German finance ministry as insufficient. Speaking in Paris after a meeting with French President François Hollande, German Chancellor Angela Merkel stood by her government’s stance that the proposal was too vague.
The new Greek prime minister, and his left-wing Syriza party were swept to power on pledges to scrap the deeply unpopular bailout, which they blame for pushing the Greek economy into a deep recession and causing soaring unemployment.As he arrived for the meeting with his eurozone counterparts, Greek Finance Minister Yanis Varoufakis said he believed that a deal would still be struck.

“The Greek government has gone not the extra mile, the extra 10 miles,” Mr. Varoufakis said. “Now we are expecting our partners to meet us not halfway, but one-fifth of the way.”

“I most certainly hope that there is going to be an agreement and I trust that we are going to have one,” Mr. Varoufakis said.

But, what caught my eye are these two graphs courtesy of the well-known left-wing journal…The Economist:

What do these graphs tell us?First, there is a clear upsurge in a number of European countries in the support for left-wing AND right-wing parties. This is no surprise.

In my opinion, that surge of support is largely because of the hammer of austerity and deep economic misery that the elites have imposed through a whole set of economic policies, principally the obsession about deficit reduction. In the second chart, you can see that what unites the left-right positions is mostly opposition to austerity.

Second, where the left is united, in contrast to the right, is in SUPPORT of immigration and, continued participation in the European Union and, somewhat less, in keeping the Euro. You can make a reasonable progressive argument why the European Union and the Euro are bad things on the economic side–mainly, it allows a brutal allegiance to deficit reduction. But, I see it as much a vision that unity of purpose is preferable to nationalism and the fear of others.

What the Greeks are saying is, in my view, straightforward: the people have had enough of this brutal economic “free market” immoral regime. And, not as explicitly, the message is: the revolt against austerity can take either a progressive direction, or it can veer in a far more terrifying direction of hate, racism, and targeting of people.

Before he became Greece’s finance minister, Yanis Varoufakis gave a speech in 2013, which was just reprinted in The Guardian (the whole thing is really worth reading). He clearly saw, then, what he is trying to avert now:

In 2008, capitalism had its second global spasm. The financial crisis set off a chain reaction that pushed Europe into a downward spiral that continues to this day. Europe’s present situation is not merely a threat for workers, for the dispossessed, for the bankers, for social classes or, indeed, nations. No, Europe’s current posture poses a threat to civilisation as we know it.If my prognosis is correct, and we are not facing just another cyclical slump soon to be overcome, the question that arises for radicals is this: should we welcome this crisis of European capitalism as an opportunity to replace it with a better system? Or should we be so worried about it as to embark upon a campaign for stabilising European capitalism?

To me, the answer is clear. Europe’s crisis is far less likely to give birth to a better alternative to capitalism than it is to unleash dangerously regressive forces that have the capacity to cause a humanitarian bloodbath, while extinguishing the hope for any progressive moves for generations to come.[emphasis added]

This is why Greece must be successful in blunting the austerity mongers who don’t give a damn because, in their minds, the walls they live behind will always shield them from the consequences of the economic repression they inflict. If the Greek government–led by the Syriza party–can give some measure of hope and relief to its people, it’s a message to other angry citizens around the world that the enemy is not immigrants or people “not like us”, which is the basic, underlying message of the right.True, too, here when it comes to the Tea Party. I have argued before that progressives here often criticize the elites and the economic robbery in similar terms, and passion, to some rank-and-file elements of the Tea Party. Everyone hates the bankers and Wall Street. People across the spectrum are sick of a government bought and sold, whether it’s by the Koch Brothers or by the corporate insiders who fund the Clinton Foundation.

But, we should not be surprised when we bow and thank the Wal-Mart company for throwing a few crumbs at workers and call that progress, or lose elections because the Democratic Party pimps for pathetic economic changes–like a poverty-enforcing $10.10-an-hour minimum wage–when, then, a lot of people who are hurting and who we think should be with us, instead, turn to the Tea Party.

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Hold Applause Pls: Wal-Mart Wages Still Poverty Level, Tho Underscores Sad Dems Minimum Wage Prop Thu, 19 Feb 2015 16:30:16 +0000 The problem with press releases and economic gorilla dust is no one bothers to do the math. So, Wal-Mart will get a lot of hugs and free good press from announcing that it will raises workers’ wages–but the truth is it’s still a sham. People working for Wal-Mart will still live in poverty. The only positive part of the announcement–though unintended–is how Wal-Mart’s announcement shows how pathetic the pre-election (is it even still on the agenda?) White House-Democratic Party’s signature minimum wage proposal is.

So, here’s what the generous Walton family is offering its slaves:

Wal-Mart Stores Inc (WMT.N), long criticized for its low wages and employee benefits, said it would spend more than $1 billion to increase pay for half a million U.S. employees this year.The increase announced by the largest private sector employer in the United States will cover about 40 percent of its U.S. workforce, but falls far short of what some labor groups have been agitating for.

Wal-Mart said on Thursday its hourly full-time and part-time workers will earn at least $9.00 an hour, or $1.75 above the current federal minimum wage, starting in April. Current employees will earn at least $10.00 an hour by Feb. 1, 2016.

In context:

Net profit attributable to Wal-Mart rose 12 percent to $4.97 billion, or $1.53 per share, for the quarter ended Jan. 31.


Total revenue rose 1.4 percent to $131.57 billion.

And, the four Waltons occupy the #6-#9 spots on the Forbes 400 Wealthiest people in the country, with a collective wealth of $158 BILLION.And if you do the math on $9-an-hour, you come up with this: if someone actually worked 52 weeks a year, 40 hours a week (and this is not reality because many Wal-Mart workers don’t get that full-time work even if they wanted it), with no paid vacation, no pension, crumbs for health care coverage, they end up earning $18,720 a year.

$18,720 a year.

The federal poverty rate for a family of THREE is $19,790, for a family of FOUR $23,850.

REPEAT: Wal-Mart’s generosity still leaves a family of three or four people (and certainly larger families) earning less than the poverty level.

And, as an aside, those statistics UNDERSTATE how hard it is just to put food on the table.

So, fuck them, the analysis should be: what an outrage that these rich people continue to starve their workers.

Now, as for the Democrats, what Wal-Mart is doing, as a public service, is shining a light on the absolutely shameful Democratic-White House proposal (the one slavishly celebrated by most “liberal”/progressive bloggers, The Nation and the like) to hike the minimum wage to $10.10-an-hour. Last year, I argued that the idea was a very bad idea, on the economics and on the politics.

In my opinion, it should be $20-an-hour if you just do the math. And, at the very least, it should be $15-an-hour because that’s what can actually move people.

So, when Chuck Schumer and the other Democratic “leaders” (I use “leaders” quite loosely) whined and moaned after the 2014 elections that there was too much focus on the minimum wage and “poor people” and not on the “middle-class” and that’s why Democrats lost, he and the others were dead wrong.

It’s because when you propose raising peoples’ wages to levels that even Wal-Mart will match (by 2016) and when those numbers still leave people in poverty, why would they vote for you?

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Austerity Mongers On Brink of Destroying Greece, Finance Minister Makes Case In NYT Tue, 17 Feb 2015 18:15:26 +0000 The austerity mongers, who have essentially ravaged economy after economy around the world, are on the brink of destroying Greece. But, Yanis Varoufakis, Greece’s finance minister, isn’t ready to be broken.

Yesterday, the austerity mongers had another hack at Greece:

IT WAS 18 against one on February 16th, for the second time in less than a week. The Eurogroup of finance ministers presented Yanis Varoufakis (pictured right), their Greek colleague, with a draft statement that he rejected as “absurd” and “unacceptable.” The meeting, which had been billed as a last chance for Greece to reach a deal with its creditors before its current bail-out expires on February 28th, broke up acrimoniously. Later, the Greek government claimed that an earlier version of the statement, which it deemed acceptable in principle, had been replaced with a “radically different text” demanding that the bail-out be extended.Jeroen Dijsselbloem (pictured left), the Dutch Eurogroup chairman, brushed aside Mr Varoufakis’s objections, insisting that there was still “time and ample room” to agree a deal. The bridging loan that Greece is seeking was simply a different word for a bail-out extension, he said. But Alexis Tsipras, the radical left prime minister whose Syriza party won last month’s Greek election on an anti-austerity platform, would lose credibility both with voters and, more important, his party’s far left if he were to climb down. Observers in Athens predict more posturing before Mr Varoufakis makes a last-minute U-turn and agrees a deal.

To be clear, the vote does not tell the story. The pressure being exerted on Greece comes principally from Germany–the most obsessed of all austerity mongers–and the International Monetary Fund, whose historic role is to impose austerity measures in return for badly needed loans and, then, no matter the circumstances, keep its boot pressed firmly against the neck of any country that dares utter a peep. And they are surely being rooted on by the Pete Petersen’s of the world who run around hyping multiple phony debt and deficit crisis scenariosas a cover for slashing-and-burning society’s social spending and principled spending on the needs of people.


Earlier Monday, the German finance minister, Wolfgang Schäuble, told German radio that he was “very skeptical” about the chances of a deal. He also accused the anti-austerity Greek government of behaving “pretty irresponsibly.” Mr. Schäuble said Mr. Tsipras was “insulting those who have helped Greece in the past few years.”…
In response to Mr. Schauble’s remarks, the Greek government spokesman, Gavriil Sakellaridis, told a Greek radio station, “I could also say that Germany’s behavior is irresponsible, but I don’t want to trade characterizations.” He added, “Who is irresponsible and who is responsible is subjective.”Athens wants “a solution on the political level,” Mr. Sakellaridis said. “We don’t see this like a game of poker. Neither are we bluffing.”

The IMF:

Christine Lagarde, the managing director of the International Monetary Fund, which has a lending agreement with Greece until early 2016, also prodded Greece to accept a continuation of the bailout.“If an extension is sought by the Greek authorities from the Eurogroup and addressed with a commitment to continue to consider the current program, then we continue to work together,” she told the same news conference. But by failing to stick to commitments that the I.M.F. still needed to assess in a coming review, Greece would risk not receiving its loan disbursements, she suggested.

In the midst of all the calls for more austerity from Germany and the IMF, Varoufakis penned a thoughtful and, for The New York Times, humorous oped today. Varoufakis spent a lot of time in his academic career writing about and thinking about game theory. But, he says this negotiation isn’t about game theory with bluffs and strategies played out in some abstract way:

The great difference between this government and previous Greek governments is twofold: We are determined to clash with mighty vested interests in order to reboot Greece and gain our partners’ trust. We are also determined not to be treated as a debt colony that should suffer what it must. The principle of the greatest austerity for the most depressed economy would be quaint if it did not cause so much unnecessary suffering.I am often asked: What if the only way you can secure funding is to cross your red lines and accept measures that you consider to be part of the problem, rather than of its solution? Faithful to the principle that I have no right to bluff, my answer is: The lines that we have presented as red will not be crossed. Otherwise, they would not be truly red, but merely a bluff.

But what if this brings your people much pain? I am asked. Surely you must be bluffing.

The problem with this line of argument is that it presumes, along with game theory, that we live in a tyranny of consequences. That there are no circumstances when we must do what is right not as a strategy but simply because it is … right.[emphasis added]


One may think that this retreat from game theory is motivated by some radical-left agenda. Not so. The major influence here is Immanuel Kant, the German philosopher who taught us that the rational and the free escape the empire of expediency by doing what is right.How do we know that our modest policy agenda, which constitutes our red line, is right in Kant’s terms? We know by looking into the eyes of the hungry in the streets of our cities or contemplating our stressed middle class, or considering the interests of hard-working people in every European village and city within our monetary union. After all, Europe will only regain its soul when it regains the people’s trust by putting their interests center-stage.[emphasis added]

Stand strong, Greece.

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The Economist Tells Us: Chocolate Is Good, Except If You Are A Bear Fri, 13 Feb 2015 19:44:30 +0000 Whew. Though to paraphrase Dylan, I really don’t need The Economist to tell me this.


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Obama’s Tax Plan: The Good and The Ugly Thu, 12 Feb 2015 19:30:28 +0000 Some things you gotta like in the president’s tax plan. Other things…not so much.

Per Citizens for Tax Justice:

The president’s budget includes a healthy dose of progressive tax reform proposals. Some, like the sensible proposal to shift education tax breaks away from the best-off Americans and toward the middle class, have already been abandoned. Others, including the president’s plan to eliminate some tax preferences for capital gains, never stood a chance. But a few, like President Obama’s already enacted (but set to expire in 2017) expansion of two low-income tax credits for working families, are likely to be ratified as part of the annual budgetary give-and-take. And politics aside, these proposals signify a clear and sensible policy shift toward giving middle-income working families the tools they need to get ahead.

  • Ending “stepped up basis” for capital gains: The federal income tax has long had a loophole wealthy investors could drive a truck through: the complete forgiveness of federal income tax liability on the value of stocks and other capital assets passed on from decedents to their heirs. The president’s plan would end this tax break for heirs inheriting more than $200,000 for a married couple ($100,000 for singles). While the tax policy community has long agreed that the so-called “stepped up basis” is absurd, few elected officials have actively sought to repeal it—until now.
  • Taxing wealth more like work: Current law imposes a top tax rate on capital gains that, at 23.8 percent, is well below the 39.6 percent top tax rate on wages. By hiking the top capital gains rate to 28 percent for the very best-off Americans, President Obama’s plan would at least slightly reduce the tax preference for wealth over work. Notably, even if the president’s plan were enacted, the top rate on investment income would remain fully 11.6 percent below the top rate on wages.
  • Shifting education tax breaks down the income ladder: The President proposed to simplify and restructure the hodgepodge of education tax breaks currently allowed, repealing tax breaks used primarily by upper-income families (such as the “529” savings incentive) and expanding the middle-income American Opportunity Tax Credit.Simpler and fairer? Sounds good. Sadly, Obama quickly abandoned the 529 reform in the wake of heated opposition.
  • Tripling the child care credit: Recognizing that dependent care expenses can be unaffordable for working parents, the president proposes to substantially increase an existing tax credit against child care expenses, tripling the potential tax credit for some working families.
  • Boosting wages for low-income working families: the Earned Income Tax Credit provides a needed wage subsidy for workers near or below the poverty line, but generally shortchanges workers without children. The budget blueprint would make permanent an existing, temporary boost to the EITC and make needed new expansions for childless workers.
  • Adequately funding the Internal Revenue Service. With no apparent knowledge of the irony, Congress routinely creates dozens of new tax breaks each year, charges the IRS with the responsibility of administering these tax breaks, and then slashes the agency’s annual administrative budget. President Obama’s budget would reverse that trend: the $2 billion boost in IRS funding the president proposes would help offset the billions in funding cuts the agency has suffered in recent years.

…And the Not-So-Good Ideas

While the president’s outline of individual tax reforms would clearly be a win for tax fairness, some provisions would needlessly complicate the tax code. On the corporate side, President Obama’s efforts are far more timid, offering billions of dollars in tax savings to offshore tax dodgers while continuing to embrace a misguided vision for “revenue-neutral” corporate reform.

  • Low-rate “transition tax” on multinational corporations’ offshore cash. Faced with the prospect of large multinationals such as Apple and Microsoft avoiding U.S. tax by stashing their profits in offshore tax havens, Obama proposes a one-time, 14 percent “transition tax” on these profits, after which they will never be subject to additional U.S. tax. Apparently driven by the philosophy that something is better than nothing, Obama’s plan would, in fact, give $82 billion in tax cuts to just ten of the biggest tax avoiders. A better plan would require these companies to pay the 35 percent tax they have adeptly avoided to date.

  • Reinventing the wheel: We already have a federal income tax credit designed to offset expenses for two-earner couples, and, as previously noted, the President sensibly wants to expand it. So his proposal to to create a new “second earner” credit that doesn’t even require such couples to incur child care expenses is unnecessary and wasteful.

  • Doubling down on “revenue-neutral” corporate tax reform: Our corporate taxes are among the lowest in the developed world as a share of the economy. So the president’s proposal to eliminate wasteful loopholes and give the money right back to corporations in the form of a lower 28 percent tax rate is unwise at a time when the nation’s is struggling to raise adequate revenue.

  • More tax breaks for General Electric and Apple: If you were going to make a list of corporations that need additional tax breaks, GE and Apple would not be high on the list, especially considering their notoriously low and sometimes non-existent corporate tax rates. But by permanently extending the “active financing” loophole and “CFC look-thru rules”, President Obama will be enshrining the pair of temporary tax breaks that allow GE and Apple to escape paying their fair share in taxes.

  • Looking for infrastructure funding in all the wrong places: It’s well documented that the nation is underfunding its transportation infrastructure, and it’s equally obvious that Congress’s failure to increase the gas tax since 1993 is the main culprit. But rather than calling for a long-overdue gas tax hike, the president would use the revenues from his one-time corporate “transition tax” to fund infrastructure improvements. While this plan would certainly put a dent in the nation’s transportation funding deficit, this one-shot solution would do nothing to shore up transportation funding in the long-term.

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Obama’s Tax Plan Terrific…For Corporate Tax Dodgers Wed, 11 Feb 2015 19:24:33 +0000 It’s nice the president wants to go after tax dodging corporations who stash dollars overseas. But, it seems like he’s offering those dodgers a sweet deal.

In his new budget, he’s proposing a “transition tax” which would tax overseas cash stashed away at a 14 percent rate. What a deal for some big corporations, per Citizens For Tax Justice:

This proposal would provide huge tax cuts to many corporations currently holding profits, often actually earned in the U.S., in low-rate foreign tax havens. Ten of the biggest offshore tax dodgers would receive a collective tax break of $82.4 billion.


  • Apple currently holds $137 billion of its cash offshore. Under current rules, the company should pay $45 billion when these profits are repatriated. But the Obama plan would allow it to reduce its tax bill to $18 billion — a $26.9 billion tax break.

  • Microsoft would see a $17.7 billion tax cut on its $92.9 billion in offshore profits under Obama’s proposal.

  • Large financial companies with substantial offshore cash would benefit handsomely from the president’s proposal: Citigroup would enjoy a $7 billion tax cut, while JP Morgan Chase would get a $3.8 billion tax break. Bank of America and Goldman Sachs would receive tax breaks of $2.6 billion and $2.4 billion, respectively.

Tax them at the rate that existed when they made the profits: 35 percent.

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Left-Right Alliance Will Sink “Fast Track”: Nothing New Tue, 10 Feb 2015 13:53:27 +0000 From talking to people here and there, I think there is a pretty strong chance that “fast track”–and, perhaps, even TPP–will be defeated in the House thanks to a left-right alliance. That alliance is nothing new, however. Even if The New York Times has just discovered it.

The Times’ Jonathan Weisman, one of the great conveyors of elite conventional wisdom, hails his discovery:

An odd marriage of convenience between liberal Democrats and Tea Party Republicans is squeezing President Obama on his ambitious trade agenda, forcing the White House and top Republicans to fight a two-front war on an international economic effort the president hopes to secure before he leaves office.An alliance between the likes of Representatives Louie Gohmert and Dana Rohrabacher — two of the House’s most conservative members — and Rosa DeLauro and Louise Slaughter — ardent liberals — is unlikely enough. But as the political fringes expand on each end, they are challenging another strange-bedfellows alliance between Mr. Obama and Republicans like Representative Paul D. Ryan and Senator Orrin G. Hatch, who have joined together in a push to secure “fast-track” trade promotion authority before the administration completes a major trade agreement with 12 partners along the Pacific Rim.


The new breed of populist conservatives who have come to the House since the 2010 Tea Party wave are less enamored of the pitches of Wall Street and big business, on issues like reauthorizing the Export-Import Bank and raising the gasoline tax to fund the rebuilding of the nation’s infrastructure.The White House understands that trade promotion authority will be a tough sell with Democrats. Instead, the president’s strongest supporters include two men he has frequently battled: the House speaker, John A. Boehner of Ohio, and Senator Mitch McConnell of Kentucky, the majority leader.

But even as most liberal Democrats have become disenchanted with the trade agenda advocated by a variety of American business interests, it is the erosion of support in the rank-and-file right that has Mr. Obama sweating the most. In 2002, the last time Congress approved such authority, the House passed it by a bare majority, 215 to 212, with 190 Republicans carrying the load, and only 27 Democrats coming along for the ride.

The alliance goes all the way back to NAFTA. If you look at the vote here, you can see that the negative votes included 156 Democrats, 43 Republicans and 1 Independent (that was, of course, Bernie Sanders when he served in the House). To be clear, the Republican votes were largely from what we generally refer to as “conservatives” who have been mostly horrendous on virtually every other issue. On this issue, they saw NAFTA in sometimes weird ways–an attack on U.S. sovereignty by a global conspiracy.In other ways, they saw NAFTA pretty accurately–opposition from Republican southern members who hailed from textile dependent regions who said NAFTA would be a death-knell for those jobs, a position which brought them into alliance with more “liberal” members who also campaigned against NAFTA based on the accurate view that these so-called “free trade” deals would kill tens of thousands of jobs that would evaporate and reappear in Mexico, and, eventually, in Asia.

The point to see is that, like opposition to Wall Street, the opposition to so-called “free trade” has resonance among a slice of people that is broader than a narrow prism of what we view in politics. I think if Bernie Sanders runs, that’s what he is counting on and will try to appeal to.

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Bernie Sanders: Struggle to prevent oligarchy w/economic & political power in hands of billionaires Mon, 09 Feb 2015 22:42:15 +0000 Say it like it is, Bernie.

Today, Bernie Sanders gave a speech at the Brookings Institution–if ever there is a bastion of the establishment, elite “group think” and conventional wisdom, Brookings is the one. Still,Sanders did not hold back. I suggest reading his lead-up to the policy part of his talk–he charts his political campaigns, basically pointing out that each time he ran, he started out a vast underdog but eventually won by speaking truth to power:

Today, the most serious problem we face is the grotesque and growing level of wealth and income inequality.  This is a profound moral issue, this is an economic issue and this is a political issue.Economically, for the last 40 years, the great middle class of our country – once the envy of the world – has been in decline. Despite exploding technology, despite increased productivity, despite the global economy millions of Americas today are working longer hours for lower wages, and we have more people living in poverty than at almost any time in American history.

Today, real unemployment is not the 5.7 percent you read in newspapers. It is 11.3 percent if you include those workers who have given up looking for jobs or who are working part time when they want to work full time.  Youth unemployment is over 18 percent and African-American youth unemployment is near 30 percent.  Shamefully we have, by far, the highest rate of childhood poverty of any major country on earth. Despite the modest success of the Affordable Care Act, some 40 million Americans continue to have no health insurance while even more are underinsured or have heavy co-payments or deductibles on their insurance.  We remain the only major country on earth that does not guarantee health care to all people as a right.


Meanwhile, while the middle class continues to disappear, the wealthiest people and largest corporations are doing phenomenally well and the gap between the very, very rich and everybody else is growing wider, and wider and wider.  The top 1 percent now own about 41 percent of the entire wealth in the U.S., while the bottom 60 percent own less than 2 percent of our wealth.  Today, incredibly, the top one-tenth of 1 percent – the richest 16,000 families in the U.S. – now own almost as much wealth as the bottom 90 percent.Today, The Walton family – the owner of Wal-Mart and the wealthiest family in America – is now worth $153 billion. That is more wealth than the bottom 40 percent of Americans.

Over the past decade, the net worth of the top 400 billionaires in this country has doubled – up by an astronomical $1 trillion in just 10 years.

In terms of income, as opposed to wealth, almost all of the new income generated in recent years has gone to the top one percent. In fact, the last information that we have shows that, in recent years, over 99 percent of all new income went to the top 1 percent.

In other words, while millions and millions of Americans saw a decline in their family income, while we have seen an increase in senior poverty throughout this country and millions of elderly Americans are trying to live on Social Security checks of $10,000 or $12,000 a year, over 99 percent of all new income went to the top 1 percent.

The top 25 hedge-fund managers made more than $24 billion in 2013, equivalent to the full salaries of more than 425,000 public school teachers.


We need a major federal jobs program to put millions of American back to work.  The fastest way to do that is to rebuild our crumbling infrastructure: roads, bridges, water systems, waste water plants, airports, railroads and schools. It has been estimated that the cost of the Bush-Cheney Iraq War, a war we should never have waged, will total $3 trillion by the time the last veteran receives needed care. A $1 trillion investment in infrastructure could support 13 million decent-paying jobs and make this country more efficient, productive and safer. Along with Senator Barbara Mikulski I introduced that legislation two weeks ago.We must understand that climate change is real, caused by human activity and is already causing devastating harm.  We must listen to the scientific community and lead the world in reversing climate change so that this planet is habitable for our children and grandchildren. We must transform our energy system away from fossil fuels and into energy efficiency and sustainable energies. Millions of homes and buildings need to be weatherized, our transportation system needs to be energy efficient and we need to greatly accelerate the progress we are already seeing in wind, solar, geothermal, biomass and other forms of sustainable energy.  Transforming our energy system will not only protect the environment, it will create good paying jobs.

We not only need to create jobs, we need to raise wages.  The current federal minimum wage of $7.25 an hour is a starvation wage. We need to raise the minimum wage to a living wage, $15 an hour over the next few years. No one in this country who works 40 hours a week should live in poverty. We must also demand pay equity for women workers who today earn 78 percent of what their male counterparts make for doing the same job.  We must also end the scandal regarding overtime pay.  It is absurd that so –called “managers” making $25,000 a year do not earn time-and-a-half, even if they work 60 hours a week.  Further, we need to make it easier for workers to join unions by passing card check legislation.

And, finally:

I have ticked off a number of very important issues, but let me suggest to you that the struggle that we are engaged in right now is much more than sum of all of these parts. The unprecedented struggle that we’re engaged in now against the Billionaire Class is not just about preserving Social Security, Medicare and Medicaid, or whether we create the millions of jobs our economy desperately needs. It’s not merely about whether we raise the minimum wage, make college affordable, protect women’s rights or take the bold initiatives we need to reverse climate change and save our planet. It’s not just about creating a health care system which guarantees health care to all as a right, or addressing the abysmally high rate of childhood poverty.The real struggle is whether we can prevent this country from moving to an oligarchic form of society in which virtually all economic and political power rests with a handful of billionaires.  And that’s a struggle we must win.[emphasis added]

I don’t think he necessarily persuaded many of the elite in the room. But, what is striking–and something we need from a president–is someone who isn’t searching for an poll-tested and focus-group driven economic agenda. Rather, we need someone who knows what he or she stands for, has traveled with those beliefs for many years and is willing to stand up and describe principles and positions no matter the audiences.

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Wall Street/Banks Thank YOU For Your Generous Contribution To Their Bottom Line Wed, 04 Feb 2015 19:33:14 +0000 If you want to know why the Wall Street elite and the bankers who robbed us blind are laughing all the way to their mansions, it’s because the joke is on YOU. On every American. Because after they robbed the country, and destroyed millions of jobs and trillions of dollars in value, YOU get to pick a nice part of the tab.

To recap: none of the Wall Street/bank executives have gone to jail. All the limp Justice Department and the SEC have been able to do is slap Goldman Sachs on the wrist with a puny fine of $550 million, give a little pinch on the cheek to JPMorgan Chase with a pathetic $153 million fine, put the cost of the $16 billion settlement deal on Bank of America shareholders and customers (because those are the people who will pay most of the cost), and, just the other day, let Standard & Poor’s skate away paying $1.37 billion despite a culture of deceiving and misleading investors.

And, to hammer this point again, not a single high executive running those operations has gone to jail or lost a job.

But, this is where it gets better. YOU GET TO PAY PART OF THE FINE. It’s nicely tax deductible:

The rating agency Standard & Poor’s, which was accused of helping to cause the financial crisis with its inflated assessments of mortgage investments, is eligible to deduct half of the $1.37 billion settlement with state and federal prosecutors it agreed to this week, according to the U.S. Public Interest Research Group, a consumer-oriented nonprofit. The result would be a roughly $245 million reduction in its tax bill, the research group calculated.Which payments are deductible and which are not is often a mystery to the public. The overwhelming majority of cases, whether with a government agency or private individuals, are settled, enabling companies to hide just how much of the agreement’s sticker price is eligible for a write-off.


Many of the banks accused of shady mortgage deals and foreclosures that contributed to the financial crisis were able to deduct part of their multibillion-dollar settlements. The same day in 2013 that JPMorgan Chase announced a $13 billion deal with the Justice Department, for example, the bank’s chief financial officer emphasized that $7 billion of the total would be deductible. And $11.63 billion of Bank of America’s record $16.65 billion settlement in August is eligible for a tax break, experts said.[emphasis added]

You pay for this. Because the taxes these thieves claim as deductible from the total amount of the fine is money the Treasury never sees or, in the case of corporations that get refunds, has to pay out.Someone has to pay for that.


In either tax money that goes out the back door to fill the coffers of the thieves.

Or, in reduced services–cuts to Medicare, for example–that are called for by the Serious People who bang the drum about the non-existent deficit crisis…some of the same people who, by the way, made their money in the very financial system that robbed us (Robert Rubin at Citibank comes to mind).

Ain’t American capitalism great?

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