Thursday, April 28, 2011

Since 1976, the rich got WAY richer:

According to the Center on Budget and Policy Priorities, the 30 years following World War II were a time of broadly shared prosperity. Income for the bottom 90 percent of American households roughly kept pace with economic growth. 

Since 1976, however, the wealthiest Americans have vastly increased their share of the pie--at the expense of everyone else. During that same period the national debt has ballooned from a little over $1/2 trillion to $14 trillion.

The central question to be decided in 2012 is this: Should those who benefitted more from this problem, contribute more to its solution?

Tuesday, April 26, 2011

As the public streams, Netflix soars:

Netflix profit rises 88 percent

Bloomberg News / April 26, 2011

Netflix may reach almost 30 million subscribers by the end of year, and pass HBO early next year.

SAN FRANCISCO — Netflix Inc., the mail-order and online movie-rental service, reported first-quarter profit rose 88 percent as the pace of adding subscribers accelerated.
Net income grew to $60 million, or $1.11 a share, from $32 million, or 59 cents, a year earlier. Sales increased 46 percent to $719 million, beating analysts’ projections.
The company signed up 3.59 million new users to reach 23.6 million worldwide after saying three months ago that it could reach as many as 23.7 million by March. Chief executive Reed Hastings has said Netflix will support its online business by purchasing rights to additional films and TV shows.
Analysts predicted profit of $1.07, the average of 24 estimates in a Bloomberg survey.
Netflix predicts net income of $50 million to $62 million this quarter, or earnings of 93 cents a share to $1.15 a share. The company forecasts revenue of as much as $798 million.
The company is likely to focus this year on international expansion and fending off increasing competition from streaming services offered by and, said George Askew, a Stifel Nicolaus & Co. analyst.
Netflix may reach almost 30 million subscribers by the end of year, and pass Time Warner Inc.’s HBO early next year, said Scott Devitt, at Morgan Stanley.

Tuesday, April 19, 2011

Alan S. Blinder: Paul Ryan's Reverse Robin Hood Budget

“Why do I oppose Rep. Paul Ryan's plan for reducing the federal budget deficit? 

Worst things first. The plan threatens to eviscerate Medicare by privatizing it—with vouchers that, absent some sort of cost-control miracle, would fall further and further behind the rising cost of health insurance. And to make that miracle even less likely, House Republicans want to repeal every cost-containment measure enacted in last year's health-reform legislation.
Then there's Medicaid, which is a lifeline for the poor. House Republicans want to turn it into a block grant, underfund it, and let the 50 states figure it out.
According to the Center on Budget and Policy Priorities, about two-thirds of Mr. Ryan's so-called courageous budget cuts would come from programs serving low- and moderate-income Americans, while the rich would gain from copious tax cuts. That's courage?
This reverse-Robin Hood redistribution is bad enough in the abstract. Coming on the heels of 30-plus years of rising inequality, it is breathtakingly mean-spirited.
How many Americans know that 72% of Mr. Ryan's claimed budget cuts would go to fund tax cuts that overwhelmingly benefit the rich?
The Ryan plan has received vastly too much praise from people who should know better. For a while, it was even celebrated as "the only game in town," which it never was. It was preceded by both the Bowles-Simpson and Domenici-Rivlin plans, which are vastly superior in every respect. Within days of Mr. Ryan's announcement, President Obama chimed in with his own ideas on deficit reduction—another huge improvement over the Ryan plan. Now we await the Senate Gang of Six's entry.
The House Republican plan is not the only game in town. 
It's only the worst.”
---Alan S. Blinder* - Excerpt from Wall Street Journal Op-Ed: April 19, 2011
*Mr. Blinder, a professor of economics and public affairs at Princeton University, is a former vice chairman of the Federal Reserve.

Monday, April 18, 2011

Joan Vennochi: What's a union to do?

"Unions have legitimate grievances. Somehow, blame for the country’s financial collapse has shifted from greedy CEOs to greedy public employees. Banks and corporations that contributed to the economic meltdown are off the hook, while public workers are losing jobs and benefits. Corporate profits are exploding. Meanwhile, financial institutions are still holding back on loans to small business, refusing to modify home loans in risk of foreclosure, and siphoning billions away from job creation and local economies through exorbitant executive pay. How do you get that important message of unfairness to break through?"

---Joan Vennochi, Boston Globe Columnist: April 17, 2011

Saturday, April 16, 2011


1. Poor Americans don’t pay any taxes.

FALSE. Even though millions of the poor do not make enough to owe income taxes, they still pay plenty of other taxes, including federal payroll taxes, gas taxes, sales taxes, utility taxes and other taxes. When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, according to the Institute on Taxation and Economic Policy.

2. The wealthiest Americans carry most of the burden.

FALSE. It is true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government. Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners.  That’s because, once you reach $106,800 of income, you pay no more for Social Security. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800. The Internal Revenue Service issues an annual report on the 400 highest income-tax payers. Despite skyrocketing incomes, their tax burden has been slashed. The actual share of income paid in taxes by the richest 400 Americans is only 16.6 percent. Compare that to the vast majority of Americans whose share of income going to federal taxes has jumped from 13 percent in 1961 to 23 percent in 2007.

3. Corporations are investing in America.*

FALSE. At this very moment, America’s corporations are sitting on close to $2 trillion in cash that is not being used to build factories, create jobs or anything else. Instead, that money acts as an insurance policy for managers unwilling to take the risk of actually building the businesses they are paid so well to run. Corporate profits in 2008 alone were $1.8 trillion--up 12% from 2000. And yet corporate income-tax revenues, during the last decade, actually declined by more than 23 percent.

4. A rising tide lifts all boats.*

NOT LATELY IT HASN'T. When Reagan was elected president, the top marginal tax rate was 70 percent. He cut it to 50 percent and then to 28 percent starting in 1987. It was raised by George Bush (senior) and Clinton, and then cut by George W. Bush. The top rate is now 35 percent. Since 1980, the average income of bottom 90 percent of Americans—has increased by 1 percent. In other words, for each dollar the bottom 90% of Americans made in 1980, their 2008 income was up by one penny. On the other hand, the average income of America’s top 1% more than doubled. And the super rich (the top one-tenth of 1 percent) saw their income quadruple during that same period. Today, the top 300,000 Americans now enjoy almost as much income as the bottom 150 million.

"The Mad Men who once ran campaigns featuring doctors extolling the health benefits of smoking are now busy marketing the dogma that tax cuts mean broad prosperity, no matter what the facts show."
---Professor David Cay Johnston
Syracuse University and columnist for

*Both of the charts (above) were  prepared by Professor David Cay Johnston from information provided by the IRS.

Emerson College shows young artists how to become entrepeneurs:

By Allison Knothe
Boston Globe
These things aren’t just a big part of college living. For some Emerson College students, they’re businesses that they’re starting after having gone through the Emerson Experience in Entrepreneurship program, or E3. The program trains students how to begin and run a start-up by teaching skills such as drawing up financial forecasts and developing marketing strategies.
Since it started in 2005, more than 30 student businesses that range from a public relations firm to a company that rents local artwork to offices have been created through the program. On April 23, 18 students in E3 will vie for $5,000 for their ventures by presenting their business plans during the program’s annual exposition. The expected crowd of 200 will include judges, venture capitalists, students, and family members.

Julia Kurz, an E3 student who plans to start a pole-dancing studio called Pole Star Dance, is organizing free pole dancing lessons during the expo. Kurtz has raised $40,000 from family and friends to fund her start-up, which aims to provide exercise and empowerment to women. The 21-year-old senior who is majoring in marketing communications hopes to win the $5,000 prize, but has other expectations as well.
“I’m just really excited to present my idea to a room full of people who don’t already know about it,’’ said Kurz, who already works part time as a pole dancing instructor teaching women up to age 65. “It’s sort of like my company’s little graduation into the real world.’’

Thursday, April 14, 2011

My favorite excerpts from President Obama's speech on the economy yesterday at George Washington University:

Now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s.  We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt.  And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs, and win the future.

We can solve this problem.  We came together as Democrats and Republicans to meet this challenge before, and we can do it again.

But that starts by being honest about what’s causing our deficit.  You see, most Americans tend to dislike government spending in the abstract, but they like the stuff it buys. 

Most of us, regardless of party affiliation, believe that we should have a strong military and a strong defense.  Most Americans believe we should invest in education and medical research. 

Most Americans think we should protect commitments like Social Security and Medicare.  And without even looking at a poll, my finely honed political skills tell me that almost no one believes they should be paying higher taxes.

Any serious plan to tackle our deficit will require us to put everything on the table. One vision has been championed by Republicans in the House of Representatives. And they paint a vision of our future that’s deeply pessimistic.
Think about it. In the last decade, the average income of the bottom 90% of all working Americans actually declined.  The top 1% saw their income rise by an average of more than a quarter of a million dollars each.  And that’s who needs to pay less taxes? 

They want to give people like me a two hundred thousand dollar tax cut that’s paid for by asking thirty three seniors to each pay six thousand dollars more in health costs?  

That’s not right, and it’s not going to happen as long as I’m President.

The fact is, their vision is less about reducing the deficit than it is about changing the basic social compact in America.  There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires.  There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. 

And this is not a vision of the America I know.

I will not allow Medicare to become a voucher program that leaves seniors at the mercy of the insurance industry, with a shrinking benefit to pay for rising costs.  I will not tell families with children who have disabilities that they have to fend for themselves.  We will reform these programs, but we will not abandon the fundamental commitment this country has kept for generations.

We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society.  And I refuse to renew them again.

I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. 

I don’t need another tax cut.  Warren Buffett doesn’t need another tax cut.  Not if we have to pay for it by making seniors pay more for Medicare.  Or by cutting kids from Head Start.  Or by taking away college scholarships that I wouldn’t be here without.  That some of you wouldn’t be here without. 

And I believe that most wealthy Americans would agree with me.  They want to give back to the country that’s done so much for them.  Washington just hasn’t asked them to.

This larger debate we’re having, about the size and role of government, has been with us since our founding days.  And during moments of great challenge and change, like the one we’re living through now, the debate gets sharper and more vigorous. 

That’s a good thing. 

As a country that prizes both our individual freedom and our obligations to one another, this is one of the most important debates we can have.

But no matter what we argue or where we stand, we’ve always held certain beliefs as Americans.  We believe that in order to preserve our own freedoms and pursue our own happiness, we can’t just think about ourselves.  We have to think about the country that made those liberties possible.  We have to think about our fellow citizens with whom we share a community. 

And we have to think about what’s required to preserve the American Dream for future generations.

This sense of responsibility – to each other and to our country – this isn’t a partisan feeling.  It isn’t a Democratic or Republican idea.  It’s patriotism.

Wednesday, April 13, 2011

NY Times Editorial: Truth and lies on tax and spending

Here are two numbers to keep in mind when thinking about the House Republicans’ budget plan: They want to cut spending on government programs over the next decade by $4.3 trillion. And they want to cut tax revenues over the same period by $4.2 trillion.

Government spending needs to be brought under control. But slashing vital services just to pay for more tax cuts is bad public policy and bad economics.
It won’t fix the deficit, no matter what the Republicans claim.
We’ve seen this play before. President Ronald Reagan promised that tax cuts would spur more economic growth and pay for themselves. During his tenure, the deficit hit what was then a peacetime high of 6 percent of gross domestic product, and he eventually decided that he had no other alternative but to raise taxes to try to close the gap.
The Clinton years disproved the notion that higher taxes would inevitably stifle economic growth, or cost politicians their jobs. Taxes were raised in 1993, including higher income tax rates on the wealthiest. The economy was strong, and the stock market surged. Taxes were then cut in 1997 in a deal with the Republican-controlled Congress, but by then the combination of higher tax rates on the wealthy, a strong economy and a rising stock market was boosting revenues significantly.
By the end of President Bill Clinton’s term, the federal budget had been in surplus for four straight years.
President George W. Bush and Congress undid that progress with $1.65 trillion in tax cuts, heavily skewed to high earners. The economic recovery of the Bush years was extraordinarily weak by historical standards. By early 2009, shortly before Mr. Obama took office, the Congressional Budget Office projected a budget deficit for that year of more than $1 trillion.
These are the economic facts, which Americans need to hear. The Republicans certainly won’t tell anyone. And, so far, the Democrats haven’t had the political courage to challenge them head-on.
President Obama’s proposed budget for fiscal-year 2012 does call for a mix of tax increases and tax cuts, but he hasn’t made a serious effort to explain the need for substantially more revenue.
The bigger test will come on Wednesday, when Mr. Obama presents a long-term deficit reduction alternative to the Republican proposal. It must include significant sources of revenue, as well as defense cuts and a long-term plan for bringing spending on health care and other entitlements in line with revenues.
As a matter of fairness, raising income taxes must start with requiring the richest Americans — who have been the biggest beneficiaries of Bush-era tax cuts — to pay more. But even that won’t dig the country out of its hole. The middle class is also going to have to pay higher taxes. That is the only way to pay for needed services, tackle the deficit and slow the borrowing and the rise in interest payments.
That means higher income taxes further down the income scale than Mr. Obama has previously called for, and new sources of tax revenue, like energy taxes or a financial-transactions tax or a value-added tax.
Those details are the easy part. More than anything, Mr. Obama must change the political debate, by rebutting, once and for all, the tax-cuts-above-all ideology that has gotten this country into this deep mess.
Here are a few more numbers to consider: Stimulus spending since Mr. Obama took office — including tax cuts — accounts for about $600 billion of the current $14.2 trillion in accumulated debt. The Bush-era tax cuts coupled with major new spending for two wars and a Medicare drug benefit, have added $3.2 trillion to the debt.
Mr. Obama must make the case for tax increases, based on reality, not ideology. Then, and only then, can a serious debate on the deficit begin.

Tuesday, April 12, 2011

US jobs on the comeback trail. Slow but steady uphill climb:

March 2009 – March 2011*

*Source: US Department of Labor, Bureau of Labor Statistics.
Nonfarm payroll employment month-to-month change (seasonally adjusted).

Monday, April 11, 2011

Speaking of FAIRNESS:

Banks Are Off the Hook Again

"Americans know that banks have mistreated borrowers in many ways in foreclosure cases. Among other things, they habitually filed false court documents. There were investigations. We’ve been waiting for federal and state regulators to crack down.

Prepare for a disappointment. As early as this week, federal bank regulators and the nation’s big banks are expected to close a deal that will be a wrist slap, at best. All homeowners will suffer as a result. Some 6.7 million homes have already been lost in the housing bust, and another 3.3 million will be lost through 2012. The plunge in home equity — $5.6 trillion so far — hits everyone because foreclosures are a drag on all house prices.

We know that robo-signing was not an isolated problem. Many other abuses are well documented: late fees that are so high that borrowers can’t catch up on late payments; conflicts of interest that lead banks to favor foreclosures over loan modifications. The deal does not call for tough new rules to end those abuses. Or for ramped-up loan modifications. Or for penalties for past violations. (If approved,) you can add foreclosure abuses to other bank outrages, like bailout-financed bonuses and taxpayer-subsidized profits."

---NY Times Editorial  April 9, 2011

The missing ingredient is FAIRNESS:

As the national debate heats up over how to cure the country's long term financial woes and the president weighs in this week with his ideas, consider this excerpt from:

The President Is Missing

"Mr. Obama is conspicuously failing to mount any kind of challenge to the philosophy now dominating Washington discussion — a philosophy that says the poor must accept big cuts in Medicaid and food stamps; the middle class must accept big cuts in Medicare (actually a dismantling of the whole program); and corporations and the rich must accept big cuts in the taxes they have to pay. Shared sacrifice!

I’m not exaggerating. The House budget proposal that was unveiled last week — and was praised as “bold” and “serious” by all of Washington’s Very Serious People — includes savage cuts in Medicaid and other programs that help the neediest, which would among other things deprive 34 million Americans of health insurance. It includes a plan to privatize and defund Medicare that would leave many if not most seniors unable to afford health care. And it includes a plan to sharply cut taxes on corporations and to bring the tax rate on high earners down to its lowest level since 1931."
---Paul Krugman, April 10, 2011

Monday, April 4, 2011

As tax time approaches, ask yourself: WHAT'S WRONG WITH THIS PICTURE?

During the past 30 years the rich got MUCH richer. The top 1% of American families cleaned up. The top 20% did OK. But the overwhelming majority of American workers (80%) either stood still or fell behind.

And while our national debt goes up, up, up, millionaire tax rates go down, down, down. When you connect the dots (above), you'll see who's winning (below). Chances are pretty good that its not you:

*All three graphs courtesy of Mother Jones Magazine March/April issue.

Saturday, April 2, 2011

General Electric is just the tip of the iceberg. Do the math:

1) EXXON MOBILE - Profits: $19 billion, US Taxes: ZERO
2) GENERAL ELECTRIC - Profits: $14.2 billion, US Taxes: ZERO
3) CHEVRON - Profits: $10 billion, US Taxes: ZERO
4) BANK OF AMERICA - Profits: $4.4 billion, US Taxes: ZERO
5) CITIGROUP - Profits: $4 billion, US Taxes: ZERO


Think about that for a second. While the country’s been reeling from a massive and devastating recession, a handful of America’s most profitable corporations paid no US taxes whatsoever on profits of over $40 billion. In fact, we gave them money!

No wonder CEO compensation jumped by 27% according to USA Today while average salaries for everybody else--as they have done for most of the last 30 years--remained essentially flat. Those CEOs and the companies they run have performed nothing short of a mathematical miracle.

While paying zero dollars in taxes to help reduce the deficit, they’ve managed to convince the rest of taxpaying America to:

a) Eliminate collective bargaining for nurses, teachers, cops and firefighters,
b) Cut the top tax rate for millionaires and billionaires from 39% to 35%,
c) Give corporations huge tax incentives to ship American jobs overseas, and
d) Cut billions of dollars of domestic spending for society’s most vulnerable citizens.

And that’s just the tip of the iceberg.

During the past two years in a terrible economy corporate profits have been steadily rising across the board. What is their secret? Simple. Lay off seven million Americans. Cut or cap the salaries of everybody left in the workplace. Charge $3.60 a gallon for gasoline. Pay no taxes. Then reach into the public piggy bank and grab billions more in tax rebates!

For one percent of America, the term “terrible economy” refers to how badly they claim to feel after taking your job and shipping it to China.

For the rest of us, it refers to a tax system that helped and encouraged them do it.