Taxes

Beyond Boondoggles

dlindorff — Thu, 09 Oct 2008 11:23:21 -0400

By Dave Lindorff

Critics of government get all worked up when Washington spends money
stupidly, or does something manifestly stupid. There was a even senator
from Wisconsin, William Proxmire, who used to hand out "Golden Fleece"
awards for such things.

The Pentagon's notorious $600 payments for toilet seats that were
$12 in local discount stores, or $434 paments for hammers that were $10
in the local hardware store were good examples of this.

But nobody seems to be screaming about the incredibly wasteful
rescue of AIG, on which the government has spent first $85 billion and
now another $37.5 billion.

Bad enough that the Treasury Department is pumping an astonishing
$123.5 billion into a private company to prop it up, but what no one
has mentioned is that at the time of the initial announcement of an
$85-billion bailout, the insurance giant's stock had crashed so far
that it could have been bought outright by the government for a scant
$7 billion! That's small change by today's standards.

For $123.5 billion, the taxpayers have gotten warrants that could,
if exercised, end up giving "us" 80 percent of the company, but if the
government had just gone ahead and bought 100 percent of AIG right
away, it would have only cost about five percent of that amount.

Talk about a "Golden Fleece" award!

The money is now flying so thick and fast--$700 billion here, $37.5
billion there, $25 billion to the auto industry, $900 billion to buy up
short term corporate debt, hundreds of billions of dollars more to buy
stakes in failing banks--that we've simply lost sight of what we the
taxpayers are getting for our money, or whether the government is even
bargaiining for good deals.

Treasury Secretary Henry Paulson reportedly came up with the initial
$700 billiion figure for the Wall Street bailout off the top of his
head, with the only consideration being that the number be large enough
to "shock" investors into feeling confident.

Before another dollar of borrowed cash is spent on this binge,
Congress should call urgent hearings to look into what's being paid and
what the taxpayers are getting for their money. Any deals--like the AIG
boondoggle--that were clearly bad should be halted and reconsidered.

My suspicion is that with AIG, ideology intruded. The Bush
administration doesn't want to be seen as simply nationalizing banks
and insurance companies--the kind of thing they condemn Venezuela's
Hugo Chavez or Cuba's Castro for doing. But they are doing that anyhow,
and on a much bigger scale than Chavez or Castro ever dreamed of--just
not overtly. And to avoid overt takeovers, they are spending many
multiples of hundreds of billions of dollars just taking over the
liabilities of companies that they could have taken over lock, stock
and barrel for a fraction of the cost.

Left out of consideration is the incredible carnage this is certain
to cause down the road. Every penny that is being spent on this rolling
bailout is borrowed money. As an NPR reporter quite accurately noted in
a report yesterday on Britain's colossal $900-billion bailout of UK
banks, that borrowed money will have to be repaid by taxpayers over
time, and will come at the expense of other things that the public
wants, like Britain's vaunted National Health Plan, education, etc.

We don't hear much about that on the reporting, even on NPR, about
the US bailout, but it is equally true here. The bailout is doing to
the nation's public funding in a few short weeks what Ronald Reagan and
his budget director David Stockman tried to do over the course of two
presidential terms off office: bankrupt the government to kill off
social spending.

As of this point, if all these allocated funds being thrown at
financial institutiions are spent, there will be no money left for
health care, education, infrastructure, environmental protection,
national parks, Social Security, welfare assistance, or critical things
like consumer protection and worker safety. Truth to tell, there won't
be any money left for the military either--probably the only good thing
you can say about this mess.

It's enough to make one think that this is all some final disastrous
plot by the Bush/Cheney administration to bring on a collapse of what
remnants were left of the old New Deal and Great Society programs
before leaving Washington. And that's not such a wild notion. The whole
eight years of Republican rule in Washington has been a giant wrecking
game.

If some KGB mastermind, back in the late 1960s (perhaps young Vlad
Putin?), had dreamed up a scheme to capture the child of a leading
American political family, and re-program him to become a kind of
"Manchurian Candidate" who would return and work his way into the
presidency, from which high office he would destroy the country, he
could not have accomplished more than President Bush has done.

The financial fiasco and the subsequent bailout boondoggle is the final blow--one from which the nation may well never recover.
____________________

DAVE LINDORFF is a Philadelphia-based journalist and columnist.
His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006
and now available in paperback edition). His work is available at www.thiscantbehappening.net

digg_url = 'http://www.afterdowningstreet.org/node/36728';
digg_title = "Beyond Boondoggles";
digg_bodytext = "By Dave Lindorff\r\n\r\n\r\nCritics of government get all worked up when Washington spends money stupidly, or does something manifestly stupid. There was a even senator from Wisconsin, William Proxmire, who used to hand out \"Golden Fleece\" awards for such things.\r\n\r\nThe Pentagon\'s notorious $600 payments for toilet seats that were $12 in local discount stores, or $434 paments for hammers that were $10 in the local hardware store were good examples of this.\r\n\r\nBut nobody seems to be screaming about the incredibly wasteful rescue of AIG, on which the government has spent first $85 billion and now another $37.5 billion.\r\n\r";
digg_skin = 'standard';

Hang On to Your Wallet! The Government is About to Rescue Us

dlindorff — Fri, 19 Sep 2008 09:55:19 -0400

by Dave Lindorff

When the financial markets started coming undone earlier this week,
the Treasury Secretary and the Federal Reserve stepped in, and with $85
billion of our money (actually our children's money,
since they borrowed it from China and Saudi Arabia), bought foundering
AIG, the world's largest insurance company, and assumed its colossal
pile of crap debt.

That didn't help, and the stock market crashed further, falling to
levels not seen in three years. Banks, meanwhile, stopped lending,
figuring to just hold onto their money and try to weather the crash.
The US Treasury and the Fed stepped in again, this time pumping nearly
$300 billion more of our money into foreign money markets, and getting
European and other governments to do the same in an effort to get the
credit markets open again and to stop the stock market swoon. That was
on top of some $700 billion already spent on bailouts.

It didn't work. Thursday, the markets continued to fall, well into
the afternoon, and it looked like another seriously down day. But then
Treasury Secretary Henry Paulson came up with a new idea. He said he
and the Bush administration were considering setting up a new agency to
assume all the bad debt of the banking sector--meaning all those bad
loans they made, and that they lured unsuspecting consumers into taking
out, by way of deceptive marketing techniques and outright fraud.

Note that we're talking about perhaps half a trillion dollars
here--of our money again. And remember, much or even most of this money
will never get repaid, and we're talking about money that could have
funded reduced class sizes in every school in America, a national
healthcare system, a crash R&D program into non-carbon energy and (not or) a strengthened Social Security and Medicare program.

The drones in the Democratic Party leadership in Congress
immediately jumped on the bandwagon, with House Speaker Nancy Pelosi
(D-CA) urging her charges to act quickly to get some kind of a bill out
there to facilitate the bail-out, which could cost anywhere from $600
billion to $1 trillion, but most estimates.

The thing to remember here is that this is not a rescue of the
little guy (though the Democrats say their rescue plan, when it
appears, will include some kind of relief for people unable to pay
their mortgages). Don't hold your breath. Odds are those people facing
foreclosure will still be unable to pay their mortgages, and besides,
there's no way there will be relief for the majority of homeowners who aren't missing their mortgage payments, but who are struggling mightily to meet them each month.

Primarily, who gets helped by this enforced taxpayer largesse are
the fat cats who own all the stock in these financial institutions, all
the executives who pay themselves outsize salaries each year for their
lousy management records, all these hotshot traders who make the deals
that later turn sour, long after they've run off to another job taking
their bonuses with them.

We ordinary people, who live from check to check, will feel the
pain of this "rescue" in the form of higher taxes in coming years, and
in a devalued dollar--because you can bet that all that money they're
printing, and all that added debt they're piling on to the mountain of
debt already out there is going to make the rest of the world pretty
queasy about holding onto dollar-denominated debt, or about buying any
more of it.

When you hear a banker say he's going to help you, it pays to hang
onto your wallet. When you hear a politician say he's going to help
you, hang onto your wallet. If they're both saying the same thing, and
especially if one of them is the head of the Federal Reserve Bank, then
you better really hang on tight.

Not that that will do any good.

The real answer to this crisis is, firstly, a massive dose of
trust-busting, so that no bank or investment bank or insurance company
is so big that its failure becomes a threat to the financial system,
and thus the government has to rescue it with taxpayer money, and
secondly, a return to the era of Glass-Steagall, when it was illegal
for banks to also be in the investment banking busiiness.

All the talk of "efficiencies" and of "better service to the
customer" that has been endlessly parroted to justify mergers like
Citicorp and Travelers, or JP Morgan and Chase Bank, or now Bank of
America and Merrill Lynch is fraudulent. Just to give an example, my
bank, once known as Willow Grove Bank, a small family-owned
institution, was bought by another bank and became Willow Financial.
Almost immediately the staffing levels went down. Recently, the
combined entity, which ran into trouble, was bought by another
institution, Harleyville Bank. Now there are half as many tellers most
of the time. As one teller confided, "Every time we get bought, they
lay people off."

Of course they do. That's what mergers always do. To recoup the
costs of the merger, management cuts back on service and employment.

The truth is, for all the talk about the efficiencies of bigness,
getting a mortgage today isn't any cheaper than it was in the 1950s,
when there wasn't even any such thing as a national bank that would be
"too big to fail."

The real reason we have mega financial institutions is that mega
financial institutions pay mega bucks to managers and make mega
donations to the campaign coffers of politicians. They also get to put
some of those mega-buck managers into key advisory positions in each
administration, Republican and Democrat, to ensure that government
polices allow them to get even bigger and even richer--and to ensure
that when they screw it up, they get rescued at the taxpayers' expense.
__________________

DAVE LINDORFF is a Philadelphia-based journalist and columnist.
His latest book is "The Case for Impeachment" (St. Martin's Press, 2006
and now available in paperback edition). His work is available at www.thiscantbehappening.net

Finding Voters 'Bitter and Frustrated,' Obama is Sounding Like Nader

dlindorff — Sun, 13 Apr 2008 10:55:21 -0400

By Dave Lindorff

I haven’t lived in rural Pennsylvania or in rural Indiana, but I have lived in rural upstate New York, in towns where there are so few Democrats that on some local election ballots, not a single position, from town council to justice of the peace, has a contest. As in China, your option is to vote for the Republican candidate, or to leave that line blank.

And many of the people in these towns, uniformly white, when they talk politics, spend a lot of their time complaining about black people, immigrants (neither of whom can even be found in the vicinity) and the threat to their guns.

Barack Obama is exactly right.

In Hancock, NY and Spencer, NY, there are no factory jobs. There used to be in Hancock, but the companies where hundreds of people used to work have long since folded or moved south of the border, courtesy of the North American Free Trade Act (NAFTA) aggressively promoted and pushed through Congress by Bill and Hillary Clinton during the 1990s. In Spencer, there are no jobs because in the free-for-all bidding by companies for tax giveaways between communities, Spencer had nothing much to offer. The town is so dirt poor that when the library board, of which I was briefly president, got a measure on the ballot to have one extra dollar per taxpayer of school district taxes allocated to support the local little library, which was at that time totally supported by donations, the measure went down to resounding defeat (I was labeled a communist by some for promoting the idea!).

In 1992, neighbors in Spencer told me they were voting for George H. W. Bush—a patrician blue blood if ever there was one—because Bill Clinton, if elected “would take away our guns.”

Of course, he didn’t, and had no intention of doing so, but that didn’t matter.

Don’t get me wrong—the people in Hancock and Spencer are good folks. I'm pretty sure many of them probably give a higher proportion of their meager incomes to charity than do millionaires John McCain and Hillary Clinton. But Obama is right that in their angst and frustration at seeing the good economic times pass them by, at seeing themselves abandoned by the federal government in hard times, and at seeing candidates promise them everything during campaigns, only to ignore them after winning, they are bitter and frustrated.

And they have a right to be, and they should be.

One response to that bitterness and frustration is that they are open to the charlatans in both parties, and especially the Republican Party, who have played on their basest fears. It’s Republicans who have whispered the poison in their ears that their high taxes are because “the Blacks” are getting all that welfare money and are getting all the jobs through “quotas.” It's the Republicans who have warned them about "hoards" of Mexicans coming across the border to steal their jobs. It’s the Republicans who have been warning them that Democrats are going to take their hunting rifles and shotguns away. It’s the Republicans and their Christian fundamentalist front men who have been saying that the Democrats have been causing the nation’s decline by supporting licentiousness and a “gay” agenda. And it's Republicans and Democrats who have been hyping the bogus issue of national defense to keep people from focusing on the deliberate dismantling of the US economy that is underway. (Over years of Republican and Democratic administrations, the tax contribution of US corporations to the national budget has fallen from 50% in 1940 to just 14% today. Between 1996 and 2000, 61% of all corporations and 39% of large corporations paid no taxes at all, and that situation has only gotten worse in the Bush years.)

Anything but the real issue, which is how to provide funds so that the children in places like Spencer and Hancock can get a decent education without bankrupting the local taxpayers, how those communities can get jobs again, so that their children won’t have to move out, how to ensure that everyone in town can have health insurance and access to medical care.

Barack Obama is right. I've seen it in person. The people in rural America are bitter and frustrated, and after years of being played by politicians, they fall victim to the charlatans who tell them it’s all because of “the Blacks,” or the immigrants, or who tell them that their guns are in danger. Or they turn to religions that preach division or apocalypse—a concept that offers the chance of a final, delicious revenge against the rich and the powerful oppressors on Wall Street and in Washington.

Now I don’t know what Obama has in mind to try and turn things around for these good people, but it’s a start that he’s at least talking to them, not down, but honestly.
His talk in response to attacks on his statement about rural residents being “bitter and frustrated” is as good as anything Ralph Nader has said about the power and mendacity of the ruling political elite in America.

As he put it, to wild applause at a rally in Terra Haute, Indiana, explaining the difficulty of appealing to the rural working class voters in Pennsylvania:

“For the last 25 years they’ve seen jobs shift overseas, they’ve seen their economies collapse, they have lost their jobs, they’ve lost their pensions, they’ve lost their health care. And for 25-30 years, Democrats and Republicans have come before then and said we’re gonna make your community better. We’re gonna make it right.
“And nothing ever happens. And of course they’re bitter, and of course they’re frustrated. You would be too, in fact many of you are. Because the same thing has happened here in Indiana. The same thing has happened across the border in Decatur. (Wild applause) The same thing has happened across the country. Nobody’s looking out for you. Nobody is thinking about you.

“And so people end up, they don’t vote on economic issues, because they don’t expect anybody’s gonna help them. So people end up, you know, voting on issues like guns—you know are they going to have the right to bear arms. They vote on issues like gay marriage. You know, they, they take refuge in their faith, and their communities, their families—things they can count on. But they don’t believe they can count on Washington.

“So here’s what’s rich. Sen. Clinton says, `Well I don’t think people are bitter in Pennsylvania. You know I think Barack’s being condescending.’ And John McCain says, `Oh how can he say that? How can he say that people are bitter? You know he obviously is out of touch with the…’”
“Out of touch? Out of touch! I mean, John McCain, it took him three tries to finally figure out that the home foreclosure crisis was a problem and to come up with a plan for it, and he’s saying I’m out of touch?”

“Sen. Clinton voted for a credit card-sponsored bankruptcy bill that made it harder for people to get out of debt, after taking money from the financial services companies and she says I’m out of touch?

“No, I’m in touch. I know exactly what’s going on. I know what’s going on in Pennsylvania, I know what’s going on in Indiana. I know what’s going on in Illinois. (Standing ovation) People are fed up! They’re angry, and they’re frustrated and they’re bitter and they want to see a change in Washington, and that’s why I’m running for president of the United States of America!”

Now who knows whether this is all talk too. Maybe Obama is just one more political charlatan.

What is clear though is that this was a speech that we have not heard from a Democratic politician for decades, and it sure sounded good to hear it.

If Obama sticks to this rhetorical approach in the coming weeks, he will nail this nomination in spite of a concerted attack on him by the corporate media and by the combined forces of the Clintons and McCain.

And if he does win the nomination, and resists the siren calls of the Democratic Party leadership to “move to the middle,” and instead hones this populist message, he will go on to win the presidency.

That’s when the real challenge will come, for an aroused citizenry, in those rural communities and in the larger cities across that nation, to make a President Obama and a Democratic Congress deliver on these words.

For now, they’re pretty powerful words, and just hearing them coming from a Democratic Party frontrunner is an exciting change.
____________
DAVE LINDORFF is a Philadelphia-based journalist and columnist. He lived with his family in Spencer, NY from 1986-1992 and has had a home in Hancock, NY since 1984. His latest book is “The Case for Impeachment” (St. Martin’s Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net

A Manchurian Candidate in the White House?

dlindorff — Thu, 28 Feb 2008 08:34:28 -0500

By Dave Lindorff

With a viral campaign underway via email, right-wing radio, and on the street suggesting that Barack Obama is a black “Manchurian Candidate,” secretly trained as a Muslim fanatic who will insinuate himself into the White House, thence to undermine all that we hold dear, perhaps it is time to look at the Manchurian Candidate we already have in the White House, who, together with his handler over in Blair House, has pretty much done all the damage already.

George Bush came to office in 2001 promising a new era of integrity, civility and “compassionate conservatism,” an era of humble American foreign policy, and a bi-partisan approach to government.

What did we actually get?

Once in office, this chameleon president almost immediately set out to embroil the country in a major war in the Middle East against the nation of Iraq. The game plan was laid out at the president’s first National Security Council meeting, attended by Vice President Dick Cheney (the man holding Bush’s controller), Donald Rumsfeld, Condoleezza Rice, and Treasury Secretary Paul O’Neal (who later spilled the beans about the session).

Bush also famously ignored all warnings about the imminent attack on the World Trade Center and the Pentagon. How much he and the rest of the administration knew about that attack in advance, or whether elements within the administration may have even helped it along, remains the subject of considerable interest and investigation and may never be answered, but it is clear that there were ample warnings about it, and he did nothing—even rudely blowing off a briefer who tried to alert him to the danger. Moreover, it is known that Israeli Mossad agents (who we know have close ties to both the US intelligence apparatus and to the Neocons who infest the Bush White House) did indeed have advance knowledge, and were set up across New York Harbor with a video camera to tape the attack on the Twin Towers (they were subsequently arrested by New Jersey police, only to be later released and sent back to Israel, through intercession by the US government). As well, we know that unidentified people made a killing by placing negative bets, called “puts,” on the stocks, several days before 9-11, of the two airlines that were hijacked, American and United, and of two investment banks that would be seriously hurt by the building collapses, Merrill Lynch and Morgan Stanley. (The puts were placed through an investment bank, Alex Brown, which until a year earlier had been headed by a man who moved over to become the number three person in the CIA.) It’s hard to escape the conclusion that the Bush/Cheney administration, at a minimum, wanted an attack on American soil, and a national disaster that would put the country on a war footing.

Certainly instead of rallying the public and defending the nation’s democratic traditions and its Constitution, Bush and his handlers after 9-11 immediately set in motion a concerted scare campaign to undermine both. While urging the public to buy sheets of plastic and duct tape to construct “safe rooms” in their homes, they rammed through Congress a deceitfully named measure, the so-called Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT Act), which effectively undermined most of the articles of the Bill of Rights (and which appeared, suspiciously, fully drawn up in bill form, only days after the attacks).

At the same time, the president, only one week after the attacks, obtained an Authorization for Use of Military Force for a military attack on the Taliban government in Afghanistan and on Al Qaeda forces in that country, which he subsequently interpreted broadly as an authorization for a global “war” on terror which he then claimed made him effectively a dictator with absolute power both at home and abroad (the so-called “unitary executive” theory). Under this claim of absolute power as commander in chief in time of war, Bush went on to order the use of torture against captives, foreign and domestic, including US citizens, to strip even US citizens of the right of habeas corpus—that is, the right to have their arrest and detention brought before a federal court—and to establish secret torture centers around the globe and on military installations in Iraq, Afghanistan and at Guantanamo Bay on the island of Cuba.

As well, even before the 9-11 attacks, the president began a sweeping program of electronic spying, run through the super-secret National Security Agency, on Americans’ telephone and internet activities. It was and remains a program that deliberately avoids seeking warrants and court approval even by the secret Foreign Intelligence Surveillance Act court—a body that has only rejected some five requests for warrants out of hundreds of thousands sought since its establishment in 1978.

Finally, in a perhaps fatal undermining of the Constitution, the president after 9-11 began a practice of simply refusing to enact or obey laws passed by the Congress, effectively rendering the legislative branch an impotent debating club.

Not content to simply explode or dismantle the legal foundations of the American government and rule of law, Bush and his handlers also went about systematically destroying the country’s basic institutions and even its economy.

The education system was fatally ensnared in a test-driven system called “No Child Left Behind,” which has in short order dumbed down public education to an extent shocking even to this already anti-intellectual society, with many schools simply giving up the teaching of art, literature or history, in order to focus desperately on math and reading in order that their students would do well enough on standardized tests to keep the schools from losing their funding.

The dollar has been cast adrift to become the new Lira as the government has gone on an unprecedented borrowing spree to fund endless war and ever-larger military budgets, while erasing the taxes on the wealthy, the super-rich, and corporations. Banks were given free rein to enter into all manner of risky ventures, leading to the current collapse in credit. Corporations were encouraged to ship their production and jobs overseas. Homeowners were encouraged to spend, spend, spend and to mortgage their homes to the hilt and then some. Towns, cities and pension funds were encouraged to invest in fantastic “structured” products that were actually towering card houses. Domestic car manufacturers were encouraged to build every larger, ever more voraciously gas-guzzling vehicles, pumping out ever larger quantities of carbon into the already overstressed atmosphere.

The nation’s infrastructure—its roads, dams, bridges, levies, airports, veterans hospitals etc.--were left to decay, with predictable results, the most dramatic of which was the loss of an entire city, New Orleans, to a routine Category 3 hurricane (after which, the president did nothing to rescue the survivors or fund a recovery).

Surveying at the appalling wreckage left after eight years of the Bush administration, it is hard to recognize the country that he started out with in 2001. A once proud nation—one that only a few years ago was admired around the world and that now is viewed as a pariah and a rogue state—today trembles before a handful of turbaned fanatics holed up in caves in the Hindu Kush, its trillion-dollar high-tech military colossus fought to a standstill in Iraq and Afghanistan by a few thousand brave men and women armed with RPGs, antique AK-47s and home-made roadside bombs. A nation that once was the envy of the world for its free society now has scientists afraid to report their findings, university professors afraid to support outspoken colleagues, members of Congress afraid to defend their Constitution, citizens afraid of their neighbors, journalists afraid of government criticism, lawyers afraid to defend clients...

Hey, this place starts to look and feel an awful lot like the China I lived in back in 1991!

Forget all the nonsense about Barack Obama being a closet Muslim. We already have our Manchurian Candidate in the White House, and he has largely accomplished what he was programmed to do: destroy the country.

The truth is this: If at the end of their second term, Bush and Cheney were to hop on a plane and fly off to a hideout in the mountains on the Afghan-Pakistan border, leaving a "Nya-nya!" note on the White House dining room table, few people would really be very surprised.
_____________________

DAVE LINDORFF is a Philadelphia-based investigative journalist and columnist. His most recent book is “The Case for Impeachment” (St. Martin’s Press, 2006, and now available in paperback edition). His work is available at www.thiscantbehappening.net

No Tax Rebate's Going to Fix This Mess

dlindorff — Fri, 18 Jan 2008 17:34:44 -0500

By Dave Lindorff

When you hear a number like $100 billion (the amount Bush is proposing to give back to people in the form of tax rebates, at about $800 per adult family member) or $145 billion (that $100 billion, plus another $45 billion in business tax breaks—mostly accelerated deductions for capital investment) bounced around, it sounds like a lot of dough, and you might think it would be a good shot in the arm for an economy that is falling into a dead faint.

But let’s think about it on a micro level.

What would my wife and I do with an extra $1600?

Well, to be honest, that’s not quite one month’s mortgage payment.

If we were smart, we’d probably use it to pay down some principle on our credit line, which would over time get us out from under on that dreaded monthly bill a lot sooner. But if we did what most people are likely to do--pay off some bills with it, or one month's mortgage, chances are, given how hard we're all working just to keep going, that we'd then slack off somewhere else just to catch a little break--maybe turn down one assignment, or if we're on an hourly job, turn down some overtime and catch a little more shuteye--and in the end, we wouldn't be adding anything to the economy at all.

But then there are the cars. They both need servicing. The Volvo, a 1993, is suffering from a case of electronic lock collapse syndrome: the right rear door can no longer be opened. It’s frozen in the locked position. The lock button on the driver’s door came unconnected from the latch mechanism inside the door too, so that door has to be locked and unlocked from the outside with the key. And I figure it’s only a matter of time before some of the other doors get frozen in locked position, which could get really ugly when I need to drive with more than one passenger. So I could use probably $1000 of that rebate to get that mess fixed. That would leave $600 for two alignments, two tune-ups and some new tires.

If I were to do all that, I suppose that would be a little boost to the economy, but not much. It certainly would be nice for the auto electric shop guy, but it’s not going to do much for Detroit. Trust me—that extra $1600 is not enough to tempt me to go out and buy a new car. Heck, it’s only about a down payment and two monthly payments on some piece of junk from the bottom of the Chevy or Ford line-up, and after that I’m stuck with payments for four more years. No, I’ll be staying with my old Volvo and the 2001 Honda Civic.

I suspect most Americans are in the same boat. If you have to worry about the future of your job—in my case a continued flow of assignments from various magazines that keep me afloat—you’re not going to go out and buy some big-ticket consumer item just because you got an unexpected $1600 check from Uncle George in Washington.

Economic theory, regarding the "velocity of money" and all that, says that if I do get the Volvo door problem fixed, and if I do buy those new tires and get the cars tuned up and aligned, that money I spend will flow through the economy, making everything hum a little better (not the tires though, since they're probably made overseas so the extra dollars just get lost to the US economy). That’s probably true to a point. The auto electric guy is likely to get a little pick-up in business—mine and other people with door and light problems they’ve been living with for a while. But will it be enough to convince him to go out and hire another employee? I doubt it. Will he invest in new equipment? Nah. I doubt he’d do that, and even if he did, it most likely would be imported too, meaning an end to the stimulus chain. More likely, he’d take his extra dough and go get his pick-up repaired. It’s belching a bit of smoke these days, and looks like it could use some engine work. But again, I doubt that he’ll be ordering a new F-150. And any parts he buys for his vehicle are likely to be imported too, thanks to globalization. That’ll be good for Mexico’s or China’s economy, but not for ours.

Besides, the thing is, we all know that those IRS rebates are a one-off thing. It’s not like they’re going to make this a regular yearly surprise. So you’d have to be an idiot to take the money and pump up your life-style.

And then there’s another problem. By adding another $145 billion to the budget deficit, the government is contributing significantly to inflationary pressures, and when those gnomes in Zurich, London, Tokyo and Hong Kong see that, they’ll bid down the value of the dollar even more. Our once mighty currency, now worth only half a pound Sterling in Britain, or just over 100 Yen in Japan, is shrinking faster than the polar icecap. And that means that all the products we depend on—our tools, our dishware, our clothes, much of the food we eat, and of course our oil—will get more expensive.

I don’t know about you, but my wife and I spend basically every penny we earn each year, in order to make ends meet. Now some of that is for stuff like mortgage payments, tuition payments, etc., but I’d guess that, counting oil and energy bills, probably half our income goes to buy things that are imported, and that’s probably roughly true for most American families. After all, almost nothing is actually made in the US anymore, and we even buy a lot of raw materials—iron, oil, etc.—from overseas. So if for sake of argument and easy math, we’re making $100,000, that’s $50,000 being spent on imported stuff. Now here’s where things get a little speculative. But suppose that having the government add another $145 billion in red ink to the federal budget leads to an extra 3 percent decline in the value of the dollar against foreign currencies—a not unreasonable scenario. Why, that would mean that the $50,000 I spend on foreign goods in a year would cost me an extra $1500—just about the same amount as that $1600 Bush is proposing to lay on me.

But…that weakened dollar will continue into next year and beyond, while the $1600 rebate is a one-time thing.

So what do we get out of this rebate thing?

Worse than nothing.

There is, unfortunately, no free lunch.
]
In fact, it’s worse than that. To the extent that the extra decline in the dollar puts pressure on the Federal Reserve to take some action to prop the Greenback up, we will see interest rates rise. Now at the moment, we’re in hock to the tune of about $25,000 on a home equity credit line—a result of living beyond our means that is the typical American family’s response to incomes that have failed to keep pace with inflation. While my mortgage is fixed-rate, my credit line is not. So if the fed raises interest rates by .25 percent to prop up the dollar from the effects of that one-off tax rebate, I’m going to be paying an extra $650 annually in interest on my credit line balance.

In other words, this rebate is putting me into the hole right from the get-go!

Thanks a lot George!

So how about we just forget this whole stinking rebate idea. It ain’t gonna work, folks. It might sound good in an election year, but if you look at it closely, you can see it’s really just smoke and mirrors.

There is a solution, though. How about if they end the war in Iraq and bring all the troops home. The government will save several hundred billion dollars a year that’s being spent overseas blowing things up—and that is helping to depress the dollar and raise our tax bills. Some of that saved money can help reduce the deficit. Other chunks of it could be invested in America’s badly decaying infrastructure—repairing bridges, building new schools, etc., maybe building some major levees to protect our coastal cities from the next Katrina or from the global warming flood that we know is coming. And all that will mean jobs for people who need them.

We might also try to do something about reducing that massive outflow of dollars that’s making our currency do a disappearing act. An easy way to do that would be to slap higher taxes on gasoline and to tax cars based on how bad their gas mileage is. Before long, most Americans would be driving less and buying smaller, fuel-efficient cars, and we could significantly reduce the single biggest item on our import bill: oil.

Don’t get me wrong. I’ll be happy to get that $1600 check George Bush is calling for. I’m certainly not going to return it to the Treasury! But let’s not be pretending that it’s going to jump-start the sick economy.

It might even end up making things worse.

_________________________________________
Dave Lindorff is a Philadelphia-based journalist and columnist. His latest book is "The Cast for Impeachment" (St. Martin's Press, 2006 and now available in paperback). His work is available at www.thiscantbehappening.net

Reid Immediately Calls For Middle-Class Tax Cuts

Bob Geiger — Tue, 14 Nov 2006 12:29:32 -0500

Immediately refuting the campaign lies spewed by Republicans guaranteeing across-the-board tax increases from a Congress controlled by Democrats, incoming Senate Majority Leader Harry Reid (D-NV) opened the lame duck Senate session yesterday by calling for tax relief for middle-class Americans.

In what will be one of his last opening statements as Senate Minority Leader, Reid called for the passage of tax breaks for middle-class families and businesses as well as appropriations bills that include funding for veterans’ health care, education and energy programs.

“For too long, Americans have watched as Washington has ignored their needs, and concentrated on special interests instead,” said Reid, Monday on the Senate floor. “Families have struggled with high health care costs… only to see big drug companies get billions from Congress. Ranchers in Nevada have struggled to fill their tanks with gas… only to see Big Oil companies get tax breaks. In the weeks and months ahead, Democrats will focus our energies on the real challenges facing America, and take concrete steps to protect the country and help working families get ahead.”

Reid proposed that the post-election Congressional session be used in part to extend critical middle-class and business tax cuts including the following:

Deductions for college tuition

Deductions for state and local sales taxes

Deductions for out-of-pocket expenses incurred by teachers

For business, extending the Research and Development, Work Opportunity, and Welfare-to-Work tax credits

Reid pointed out the fact that, despite the GOP-controlled Senate moving heaven and earth in the last two years in attempts to pass the "Paris Hilton" Estate Tax Cut for the wealthiest Americans, they have allowed tax breaks benefiting the middle class and working families to languish and expire.

And, after a campaign season that saw the GOP trying scare every voter in America with talk of Democratic tax hikes, the Republicans' refusal to extend these cuts would -- in an ironic bit of truth -- effectively result in a GOP-instigated tax increase for middle-class families next year.

"Unless we act to extend this relief in the next few weeks, families will be facing a tax increase next year," said Reid. "That is unacceptable. We need to act."

How much you want to bet that lame-duck GOP leader Bill Frist tries to join it with a whopping tax cut for Ms. Hilton?

You can read more from Bob at BobGeiger.com.

Warren Buffet: Estate Tax Should Stay

Bob Geiger — Mon, 26 Jun 2006 21:14:32 -0400

This is not shaping up to be a good week for Republican ideology. First, General George W. Casey, the top American commander in Iraq, http://www.nytimes.com/2006/06/25/world/middleeast/25military.html?_r=1&... " target="_blank"> announced a plan to sharply cut the number of troops there and targeted a withdrawal of a large part of U.S. presence in Iraq by the end of 2007.

This all sounds an awful lot like the ideas Congressional Democrats have been speaking of and which the White House and the GOP have ridiculed as a "cut and run" strategy.

Ouch.

Then Warren Buffet, the second richest man in the world, after Bill Gates, -- and also from my home state of Nebraska -- http://news.yahoo.com/s/nm/20060626/pl_nm/financial_buffett_taxes_dc
" target="_blank"> said today that Congress should retain the estate tax that Republicans seem so eager to get rid of to benefit people like, well, Buffet himself.

"I would hate to see the estate tax gutted," Buffett said at a New York City news conference in which he announced he was transferring a large part of his $44 billion fortune to the Bill & Melinda Gates Foundation.

"It's a very equitable tax," Buffett said. "It's in keeping with the idea of equality of opportunity in this country, not giving incredible head starts to certain people who were very selective about the womb from which they emerged."

Wow, that's exactly what Democrats said in the Senate a couple of weeks ago before Republican attempts to repeal the tax were soundly defeated.

Ouch again.

Tune in tomorrow when we'll see if Bill Gates announces that the Bush tax cuts do indeed only benefit people like him and promptly gives his entire 2005 tax rebate to the Democratic National Committee and Planned Parenthood.

Update: Apparently, Bill Gates, the richest man in the world and his father http://www.usatoday.com/money/industries/technology/2003-01-12-gates_x.h... " target="_blank">also believe GOP attempts to gut the estate tax are bogus.

You can reach Bob Geiger at geiger.bob@gmail.com

Frist Slapped Again -- This Time on Estate Tax

Bob Geiger — Thu, 08 Jun 2006 16:58:24 -0400

Blogging from Yearly Kos

I'm sure when Senate Majority Leader Bill Frist (R-TN) mapped out his ideal scenario for June, he envisioned banning gay marriage, outlawing flag burning, cutting taxes on multi-million dollar estates and making the gun people happy by passing an NRA-friendly carry-permit bill.

So far, the beleaguered Frist is zero for two.

The latest defeat came today in the Senate, when a vote to invoke cloture (end debate) on the House Death Tax Repeal Permanency Act of 2005, which would have repealed federal estate taxes on inherited wealth, went down in flames. The cloture motion, which requires 60 Senators voting to end debate and invoke a full Senate vote on the issue, failed 57-41, when the GOP could only strong-arm four Democrats into voting to proceed while two Republicans -- George Voinovich of Ohio and Rhode Island's Lincoln Chafee -- voted with the Democrats to kill the measure.

Frist, who is somehow still full of himself despite a number of major defeats as Majority Leader, pushed forward with the vote, thinking he could overcome objections from conservative Democrats and gain enough support to end debate and bring the bill to a vote -- he was wrong.

"The audacity of the Bush Administration and their Congressional allies truly knows no limit," said Ted Kennedy (D-MA) in a statement after the vote. "In spite of all of the urgent problems facing our nation – from the ongoing war in Iraq, to the devastating hurricane damage along the Gulf Coast that has not yet been repaired, to the outrageously high gasoline prices that are squeezing American families – the top Republican priority is eliminating the estate tax for the richest families in the country."

The Joint Committee on Taxation estimated that the repeal of the estate tax would cost more than $700 billion in the decade after it would have become effective in 2011 and Frist was unable to convince enough Senators that it was politically advisable to support yet another tax cut for the wealthiest Americans while contributing still more to the biggest budget deficit in U.S. history.

Republicans tried mightily to paint Democrats as the bad guys on this, despite the fact that the estate tax now hits less than one percent of American families.

Senate Minority Leader Harry Reid (D-NV) said that this issue was yet another distraction in Frist's bag of tricks leading to the midterm elections and called it a fitting follow-up to the GOP's silly attempt to ban gay marriage.

"We are wasting precious days on these divisive issues when there are so many other matters that deserve and demand our attention," said Reid.

The measure had passed the House of Representatives 272-162 in April 2005, but is dead without Senate approval.

"This is about allowing the wealthiest Americans, much of whose wealth accumulation has never borne a tax, to escape taxation at a time when we're up to our neck in debt and at war,'' said Senator Byron Dorgan (D-ND) yesterday.

And so we move on to the next wedge issue -- flag burning -- in a month that Bill Frist and the GOP leadership hoped would provide enough hot air to blow them to victory in November.

That isn't going to happen, warned Kennedy.

"The dollars that Republicans now want to spend on the ultimate tax break for the rich - allowing the heirs of multimillionaires to inherit their enormous wealth tax free - are dollars that should be used to help all Americans," said the Massachusetts Senator. "The American people deserve better; and in November they will insist on a new Congress that truly shares their values and cares about their needs."

You can reach Bob Geiger at geiger.bob@gmail.com

Bush's Tax Cuts Get Through Senate

Bob Geiger — Fri, 12 May 2006 10:57:34 -0400

The Senate voted yesterday to provide $70 billion in tax cuts over the next five years, thus extending still further the first time in the history of the United States that tax cuts have been given so extensively in a time of war. The cuts, which focus on large cuts to tax rates on dividends and capital gains, are tilted heavily in favor of the wealthy and provide little tax relief to middle and lower-income Americans.

The measure passed 54-44, in what was an almost exclusively party-line vote. For the record, the three Democrats who crossed the aisle to vote with the Republicans on this were two of the usual suspects -- Ben Nelson (D-NE) and Mark Pryor (D-AR) -- along with Bill Nelson (D-FL). Both Nelsons are up for reelection this year which may explain Bill Nelson's ill-advised vote -- Ben Nelson is by far the biggest DINO (Democrat in Name Only) in the Senate so his vote is no surprise.

Republicans Olympia Snowe (R-ME), Lincoln Chafee (R-RI) and George Voinovich (R-OH) voted against the tax cuts, which Bush will sign almost immediately.

"Let me make it perfectly clear: This legislation is good news for working Americans and for the economy of this country," lied Senator Trent Lott of Mississippi.

Senate Minority Leader Harry Reid (D-NV) tried to shed some light on the reality of the cuts.

“Bush’s tax plan offers next to nothing to average Americans while giving away the store to multi-millionaires," said Reid. "The tax reconciliation bill giveaway on capital gains and dividends will do much more for ExxonMobil board members than it will do for ExxonMobil customers. Their tax plan takes the country in the wrong direction.”

You can reach Bob Geiger at geiger.bob@gmail.com

Granny Bee – Christmas Present

Fri, 09 Dec 2005 05:50:06 -0500

Granny is now regularly featured on The Paul Berenson Show (Scroll down for archived shows)

Listen to your granny!

Granny Bee

12/8/05 - Christmas Present (1:14) Real .mp3

Carolyn Kay
MakeThemAccountable.com

House GOP Pushes Ahead With Tax Cut Agenda