Running Interference For The Big Boys


They're at it again.

Yes, those fun-loving," reform" minded, tax base-expanding Republicans.

Representative Pat Tiberi of Ohio, a member of the House Ways and Means Committee, has told Think Progress "the tax code shouldn’t be used as a tool to just bring revenue in and beat up people who are trying to be successful…So I think we’ve got to lower the tax rates, both for corporations and for American individuals."       But Tiberi, who apparently never has heard of the payroll tax, state income tax, local and state property taxes, and excise taxes, is not referring to the need to reduce the burden on the poor or the middle class.    He argues "If you don’t have skin in the game, even if it’s ten bucks a quarter, I think it changes the debate on what the role of the federal government is and what the role of state government is."

House Majority Leader Eric Cantor is little better, saying on C-Span 2 "We also know that over 45 percent of the people in this country don’t pay income taxes at all, and we have to question whether that’s fair. And should we broaden the base in a way that we can lower the rates for everybody that pays taxes."

I think we know who Cantor wants to see pay lower taxes.      According to the the Center for Budget and Policy Priorities (its graph, below), the budget passed by House Republicans, authorized by Ways and Means Committee Chairman Paul Ryan of Wisconsin ,would cut the after-tax incomes of people with incomes below $10,000 by 2 percent.     But on average millionaires would enjoy $265,000 in new tax cuts in addition to the $129,000 additional they would get from extension of the Bush tax cuts suppported by Ryan, and their income would increase by 12.5%.

While congressional Republicans target the poor and the middle class, the wealthy remain protected.      Yesterday, the Senate blocked consideration of the Buffett rule, which would have required individuals with incomes above $1 million (minus charitable contributions), to pay at least 30% of their income in taxes.       With one Democrat (Pryor of Arkansas) joining 45 Republicans, the 50 Democrats and one Republican voting for cloture fell nine votes short .        The GOP, a month earlier, had garnered 45 votes to block consideration of a Democratic bid to end taxpayer-funded oil subsidies.

The GOP agenda to expand the share of national wealth coveted by the rich and and cut the middle class out extends beyond individuals to corporations.    In the period 2008-2011, 26 corporations- with a total of $205 billion in U.S. profits- were fed subsidies by the U.S. Treasury, courtesy of the American taxpayer.    In all, they enjoyed an income tax rate of -3.1% and handouts of $78.3 billion.       And the Ryan budget passed by the House would cut the corporate tax rate from 35% to 25%.

But the GOP is taking no chances, especially because it's unlikely the Senate will pass the House budget.   Today, the House, with only ten Republicans in opposition and ten Democrats in support, passed 235-173 a one-year, 20% tax deduction for all businesses with fewer than 500 employees, which would include professionals such as lawyers, consultants, hedge fund managers (you knew they would be included, didn't you?), and the Los Angeles Dodgers.

When Republicans talk about "broadening the tax base," they're talking about making sure elderly people, students, recipients of a child care tax credit or earned income tax credit, and all others poor enough not to pay federal income tax make up for the taxes they're cutting for the wealthy and corporations.       And when Mitt Romney, a supporter of the Ryan budget, accuses President Obama of waging class warfare, he's only disappointed that he and his crowd don't have the playing field all to themselves.







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Corporate Compensation

Security firms paid their top executives a total of $18.4 billion in bonuses last year, and finally we have a President who denounces such waste, fraud, and abuse (as Republicans would call it were it not corporate executives). With Treasury Secretary Timothy Geithner at his side, President Obama on Thursday said in part:

One point I want to make is that all of us are going to have responsibilities to get this economy moving again. And when I saw an article today indicating that Wall Street bankers had given themselves $20 billion worth of bonuses -- the same amount of bonuses as they gave themselves in 2004 -- at a time when most of these institutions were teetering on collapse and they are asking for taxpayers to help sustain them, and when taxpayers find themselves in the difficult position that if they don't provide help that the entire system could come down on top of our heads --that is the height of irresponsibility. It is shameful.

And part of what we're going to need is for folks on Wall Street who are asking for help to show some restraint and show some discipline and show some sense of responsibility. The American people understand that we've got a big hole that we've got to dig ourselves out of -- but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up.

This is great, but unfortunately talk is no substitute for action. The Washington Post reports that the Obama Administration has finished drafting the central elements of its bailout/rescue plan, whose strategy probably will be announced in approximately one week. And

In finalizing the plan, officials have made a policy decision that could dismay lawmakers. The administration is likely to refrain from imposing tougher restrictions on executive compensation at most firms receiving government aid but instead retain looser requirements initially included in the Treasury's $700 billion rescue program, a source familiar with the deliberations said. Officials are concerned that harsh limits could discourage some firms from asking for aid.

Particularly excessive, but still indicative of corporate greed, is the example of Robert Nardelli, the chairman and chief executive of Home Depot and now chairman of Chrysler Corporation, about whom the Washington Post reported in January, 2007.

Home Depot's board of directors and Nardelli said they "mutually agreed" to the resignation, which took effect Tuesday. Under the terms of a separation agreement negotiated when he joined the company in 2000, Nardelli, 58, is to receive about $210 million in cash and stock options, including a $20 million severance payment and retirement benefits of $32 million....

Last year, he received more than $30 million in compensation and stock options. During his six years at the company, he earned about $125.57 million in annual salary, bonuses, stocks and other payments, according to Equilar, a compensation research firm in San Mateo, Calif.

It's hard to sympathize with the likes of Nardelli, who was under fire at Home Depot, then moved on to Chrysler, where he has requested a government bailout. Yet, if the Post's report is correct, the Administration worries that strict limits on compensation of corporate executives would unfairly discourage those captains of finance from demanding free money from American taxpayers. On this point at least, in what is truly an upset, President Obama appears to be wrong and the junior senator from Missouri correct. A partial transcript from the blog of a statewide radio news network in her state quotes Claire McCaskill (hardly a reliable liberal) as asserting (video below) on the floor of the Senate:

So here's what this bill's going to do. This is called the Chief Executive Officer Pay Act of 2009, and it's very simple. Going forward if you want taxpayers to help you survive, if you want the people at your financial institution to have a job tomorrow, then you're going to have to limit everyone's pay at your company to the same salary that the President of the United States makes. Now once they're off the public dole, once the taxpayers aren't footing the bill, then it's not as much our business what they get paid. But right now they're on the hook to us. And they owe us something other than a fancy waste basket and $50 million jet. They owe us some common sense. And if any of them think it's a hardship to take the salary of the President of the United States, I dare them to say so out loud right now. Because that's not going to instill confidence.

What is going to instill confidence for the men and women in these companies to realize that everyone in this country needs to tighten their belts. It's time for everyone to realize that we must have our financial institutions survive, but not with a culture that thinks it's ok to kick the taxpayer in the shins while they drink champagne and fly in fancy jets. It doesn't work. Not in the United States of America.

McCain at Carnegie-Mellon

John McCain's speech on economics on April 15, 2008 (April 15- quite clever, huh?) at Carnegie-Mellon University in Pittsburgh, Pa. was unintentionally revealing.

McCain declared:

As president, I will also order a prompt and thorough review of the budgets of every federal program, department, and agency. While that top to bottom review is underway, we will institute a one-year pause in discretionary spending increases with the necessary exemption of military spending and veterans benefits.

That's right. Everything gets cut in real terms except the Pentagon. Exempting veterans benefits is commendable, but treating the military as a sacred cow will contribute to the 'favorite son' status the Pentagon has enjoyed at least the past seven years amidst redundancy and exorbitant waste.

The senator promises "no more corporate welfare -- no more throwing around billions of dollars of the people's money on pet projects, while the people themselves are struggling to afford their homes, groceries, and gas ." However, there is less to this than meets the eye. Are "pet projects" those a President McCain doesn't favor? And will there still be "no more corporate welfare" when a President McCain declares that people no longer "are struggling to afford their homes, groceries, and gas?"