Reality-based tax breaks

By now you’ve heard the bitter, widespread debate over whether giving the wealthiest Americans fat tax breaks will ever create jobs.

But everybody agrees on one thing – we shouldn’t just give rich people tax breaks so they can have even more money to do whatever they like with.

Don’t we?

That’s why I was intrigued by this proposal that would tie tax breaks to the actual creation of jobs.

The proposal was floated by Benjamin Barber, a Democratic theorist writing on Huffington Post.

Barber suggests a system of vouchers to make sure they’re creating jobs with their tax breaks.

“Conservatives should certainly welcome the principle of vouchers, which they have been proffering for a long time to the poor for education, groceries and housing – and now, courtesy of Mr. [Paul] Ryan, for Medicare too,” Barber writes, referring to the Republican vice-presidential candidate’s proposal to have the government give future Medicare recipients cash to buy insurance instead of health care. “The premise has been that a voucher prevents "irresponsible behavior" by those being helped, like buying drugs instead of groceries or a golf caddy instead of private schooling for the kids. It's a way to prevent the poor from getting all that "free stuff" Mitt Romney thinks they are always conniving to acquire.

Basically, it’s so simple I’d be surprised if someone hasn’t suggested it before: If you create real jobs, you get a tax break. No job creation, no tax breaks.

While Barber appears to suggest granting the tax cuts first and taking them away if the tax break doesn’t lead to jobs, I’d flip it: base the tax cut on hard proof that the jobs have been created.

Proponents of this latest version of the trickle-down theory should have no problem with the wealthy actually having to prove they’re creating real jobs to earn their tax breaks.

Because nobody wants to give away money for nothing, right?

I think the proposal could be refined to link the quality and number of jobs to the size of the tax cut.

For example, buy a yacht: no tax cut. Enjoy your yacht.

But prove you created a significant number of high-wage jobs with health care benefits and pensions, get a bigger tax cut.

Extending the logic of Barber’s idea, if you outsource jobs, shouldn’t your taxes increase?

Barber has hit on an issue that extends beyond just tax cuts – government officials have been extending all kinds of subsidies to business owners for creating jobs without ever requiring proof that the business owners actually create the jobs, or requiring that the subsidies be returned if the jobs are destroyed.

The very notion that we’ve allowed these huge tax cuts for the wealthy without demanding proof that they lead to real, not just theoretical, job creation, suggests how far we’ve moved away from the sensible fact and data-based world into a realm based on wish fulfillment for the wealthy who dominate our politics. The notion that proponents of the tax cuts want to pay for their extension by eliminating tax breaks that help the middle class, like the home mortgage tax break, also suggest how far our political debate has gone astray. Barber’s proposal suggests a way to get it back from fantasyland.

 

 

 

 

 

Martin Column / Mitt Romney / Paul Ryan / Tax breaks - 08/27/2012

Fight Back Against Citizens United

On the second anniversary of Citizens United, the U.S. Supreme Court ruling that corporations are people, there’s bad news and good news.

The bad news: we’re seeing the full impact of the ruling, with the creation of PACs --- political action committees -- with innocuous Mom and apple pie-sounding names, like Make Us Great Again and Winning Our Future, funded by unlimited anonymous corporate contributions.

The good news is that the ruling has galvanized a grassroots backlash: if you’re mad as hell and want to join the fight to rid our democracy of toxic big money, there’s an explosion of grassroots opposition for you to plug into today, or whenever you’re ready.

First, a little history. Corporate political contributions have been stirring outrage for more than 100 years, since they helped elect Teddy Roosevelt in 1904. Once elected, the savvy Roosevelt got in front of a movement to outlaw those contributions, resulting in passage of the Tillman Act.

But the corporations didn’t just slink away in defeat; they developed ever more creative ways to skirt the law and influence elections.

In Citizens United, eight Supreme Court justices ruled in 2010 that while corporations couldn’t contribute to individual candidates they could give to political action committees that do not, supposedly, have formal ties to a particular candidate.

In their ruling, the justices took a flawed, too narrow view of the way in which money corrupts politics. First, they said that since the PACs aren’t linked to individual candidates, the contributions couldn’t be used to bribe the candidates, or extract a quid pro quo.

The court ignored the well-known fact that the monster PACs do establish informal but strong ties to individual candidates.

In addition, the court misstates the more insidious way massive corporate cash corrupts our government. As Harvard professor Lawrence Lessig points out, large corporate contributions ensure that only those candidates, regardless of party, who can collect those contributions, and espouse a corporate-friendly political agenda, stand any chance.

This creates a political system that thwarts goals of left and right.

If we don’t reverse Citizens United and confront corporate power, we can expect more corporate bailouts with no questions asked, and fewer consumer, environmental, employee and investor protections. We can expect more tax breaks for the 1 percent and more austerity for the 99 percent.

At WheresOurMoney, my colleague Harvey Rosenfield has proposed a constitutional amendment to overturn Citizens United that is easily understood and will withstand any legal challenge. You can read more about it here. There’s a great video with background and ideas about fighting Citizens United here.

You can find groups taking a variety of actions against Citizens United across the country here and here.

 

 

 

 

Action / Citizens United / Martin Column - 01/21/2012

News Flash: Giving Banks Billions Won't Create Jobs

Last year, President Obama signed into law the $30 billion Small Business Lending Fund as a way to stimulate job creation.

"It's going to speed relief to small businesses across the country right away," Obama said at the time.

It was supposed to help create 500,000 jobs.

Well, not so much.

Not only has the program been a dismal failure, with few banks applying to participate, but it turned into another giant taxpayer handout to bankers.

Only $4 billion was handed over to banks under the lending scheme. The bankers didn’t use it to boost small businesses, and it turned out they weren’t even required to. Instead the bankers used more than $2 billion to pay off their bailout debt to the Troubled Asset  Relief Program, according to a story in the October 12 Wall Street Journal (no link).

“It was basically a bailout for a 100-plus banks,” Giovanni Coratolo, vice-president of small-business policy at the U.S. Chamber of Commerce, told the Journal.

None of this should come as a surprise. Bankers said at the time that the problem was not that they didn’t have enough money to lend, but that demand for loans was weak because of the continuing bad economy.

“Until you start to see the economy improve and job growth you won’t see lots of loan demand,” Thomas Dorr, chief financial officer of Bank of Birmingham in Michigan, which received $4.6 million from the program, told Bloomberg. “You can’t force banks to lend.”

The lending program was either just another veiled handout to the banks or another lame attempt at trickle-down stimulus. Either way it contributes to the strong impression that our political leaders aren’t actually working on solutions, they’re getting in our way.

Congress / D.C. Disconnect / Martin Column / President Barack Obama / TARP - 10/13/2011

The President's Odd Jobs Choice

About the only the job that Jeffrey Immelt would be less qualified for than jobs czar would be to lead a crackdown on the influence of big money lobbyists.

Oh wait- there is no crackdown on lobbying.

So Immelt, the CEO of General Electric, will have to make do with the job the president has given him as head of the administration’s reconfigured outside economic advisory council, which is supposed to focus on job creation.

I’ve written before about G.E. as a prime example of how major corporations benefited from the bailout without exhibiting any gratitude to taxpayers.

To say that Immelt is a weird choice for a job creation initiative is an understatement.

Under Immelt’s stewardship, G.E. has shredded thousands of jobs in the U.S. while outsourcing many jobs to India and China. In the years before the financial collapse, G.E. focused on building up its enormous credit operation, which melted down under the weight of bad loans along with the rest of the financial sector. If not for the generosity of taxpayers, who gave G.E. more than  $16 billion in low-interest loans to keep it afloat, Immelt himself probably wouldn’t have a job. In 2008, Forbes named Immelt one of the U.S. most overpaid executives.

His company has engaged in economic blackmail, threatening the state of Massachusetts that G.E. would close plants if state officials didn’t cough up tax breaks. It’s true that Immelt’s GE has embraced green technology – but only wherever there is a substantial government subsidy involved.

Meanwhile, GE is spending more than any other firm on lobbying, while it pays little or no taxes.

If Immelt has had any previous innovative ideas about substantially reducing unemployment, he’s kept them to himself. This is the person our president chooses to lead his jobs effort? For Immelt and other corporate and financial titans, the “too big to fail” bubble has never really burst. They’re continuing to rake in profits and shape government policies in their own interests, while the majority who don’t have access to power are shut out from financial security as well as political influence. Rather than challenging this unequal equation, our president has chosen to try to climb into the bubble himself.

Around the Web / Executive Pay / Martin Column / Too Big To Fail - 02/02/2011

Listening to Our History

Driving through the west, headed towards home from a cross-country road trip with my wife Stacie and dog Billie, there's endless hours on the highway, no Internet and not much radio except for hard-right talk.

Hearing the voices passing through the desert states is a grim reminder of the forces we're up against, who now characterize themselves as the real "community organizers," who represent the real people.

It’s not just the right wing. Lots of people have adopted the timid trickle-down theories embodied by our political leadership: "Don't get too tough on BP or they’ll take away our jobs. Don't cross Wall Street, we need to keep the market stable."

We’re in Winslow, Arizona, wondering whether a boycott will worsen the dire poverty we see in front of us. It’s easier and more politically expedient to make immigrants the scapegoats for lack of jobs and economic uncertainty than it is to question a system that is seriously out of whack, that offers the biggest rewards to those who gamble on our collective losses without risking their own wealth.

That's what a big chunk of the financial system like hedge funds and derivatives has become. Cynical and bloodthirsty, producing nothing except profits for the few. And the gesture toward financial reform winding its way through congressional conference committee does little to change that.

I understand the fears of friends and family that the money they have saved and invested over the years will be lost if we challenge Wall Street and the robber barons of our time. The financial industry has shown that if it doesn’t get what it wants it is capable of wrecking our economy and causing great suffering for others. But this kind of blackmail undermines democracy. We deserve a financial system that provides both transparency and financial security.

Traveling through the country, along roads adjacent to rail lines and mile-long freight trains, I kept thinking about our nation's history and those rare moments of courageous leadership like Teddy Roosevelt tackling the railroad trusts, and FDR and his team creating the New Deal to save the financial system from its own excesses. And the creation of the GI Bill, which was designed to bolster possibilities for people who risked their lives for our country, and had played a huge part in the creation of a vital middle class. These were moments when audacious politics met pragmatic problem-solving.

I attended the Personal Democracy Forum in New York City earlier this month. The topic of the wide-ranging conference was “Can the Internet Save Politics?”

One of the most inspiring speakers was Daniel Ellsberg. Amid all the excitement over the possibilities for political activism and engagement with new social media, Ellsberg reminded us that one of the most important ingredients is the same as it always was: moral courage.

Ellsberg was the Pentagon military analyst who leaked a secret Defense Department account of the disgraceful political decisions that led the country into the Vietnam War and its outcome. Plenty of people on the inside knew what was happening in Vietnam, Ellsberg said, but they had kids to put through college and mortgages to pay. They were not about to step outside the system and jeopardize their careers.

Not everybody has the nerve or inside information to be a whistleblower like Ellsberg. But we can demand a financial and economic system where we don’t have to sacrifice our financial security to those who gamble against our futures.

We can demand that our president delivers on his campaign promise of real change. There can be no real change without confronting corporate power over our government and political system. We are as controlled today by the financial and oil industries as we were by the railroad barons when Teddy Roosevelt took them on. TR said one should speak softly and carry a big stick. President Obama has been doing the opposite. We need to demand that Barack Obama follow TR’s suggestion.

Action / Martin Column / President Barack Obama - 06/20/2010

Size Matters

The administration that promised change we can believe in and the highest level of transparency in history now delivers “too big to fail” banks - bigger, more complicated and secret than ever.

First, the Obama administration and the Democratic majority in Congress continued policies that assured a number of large financial institutions that taxpayers had bailed out after the financial collapse got even larger and more powerful.

Now the administration and congressional leadership have proposed a scheme that leaves the big banks in place, with a regulatory scheme that provides more questions than answers, with secrecy that treats the banking system like a CIA covert operation.

Martin Column / Too Big To Fail - 11/09/2009