Category Archives: Taxes

Obama Happy to Cut Broad Range of Services to Preserve Pentagon Pork

In another manifestation of Obama’s continuing move to the right, his latest stunt has been to out-Republican the Republicans as a defender of the Pentagon. The GOP, which is out to cut $100 billion more from Obama’s version, has targeted the Department of Defense for $15 billion from an initial request of over $500 billion. From a statement released by the Administration:

The bill proposes cuts that would sharply undermine core government functions and investments key to economic growth and job creation and would reduce funding for the Department of Defense to a level that would leave the department without the resources and flexibility needed to meet vital military requirements….If the president is presented with a bill that undermines critical priorities or national security through funding levels or restrictions, contains earmarks or curtails the drivers of long-term economic growth and job creation while continuing to burden future generations with deficits, the president will veto the bill.

Contrast this stand-fast position on the military budget with Obama’s willingness to throw pretty much anyone else under the bus. John Walker provided a pithy illustration of the guns v. everything else tradeoff in a mock letter to low income Americans. Key section:

Mubarak’s Billions Beyond the Reach of Law

My mother is not so dumb. I’m visiting her today, and showed an economic analysis of the looting in Egypt by Gamal Mubarak and his cronies to her. The reaction:

That’s terrible. Those bloodsuckers. No wonder he didn’t want to leave. He wanted to make sure his money was safe first.

Turns out she was spot on. As I know by virtue of having read Nicholas Shaxson’s Treasure Islands (out in the UK, due to be published here in April) on tax havens, the world of “offshore” banking is vastly larger and more untouchable than most people realize. He describes in considerable detail about how buffers are built in so that funds become untraceable, and have further protections (as in if the authorities walk in to shut down a banking operation, the money can be moved through rapidly through several banking centers so it cannot be found, much the less seized).

And the de facto offshore banking protectorates of the US and the UK appear to be the state of the art. As George Monbiot observed:

UK About to Implement Massive Tax Break for Banks; Is the US Far Behind? (Updated)

The UK is about to implement a tax code change that amounts to a massive subsidy for large corporations, most of all big banks. The remarkable bit is that this is taking place when the UK is projected to fall short of its budget targets, at a time when the government professes to take that sort of thing seriously. Although we don’t hew to the logic of austerity in the wake of a financial crisis (the better course of action is to encourage debt renegotiations/writedowns, and offset the contractionary impact with fiscal stimulus), a big tax break is contrary to the official policy stance.

For those in the US who have steered clear of the budget drama on the other side of the pond, a story from from the Financial Times just over a week ago will give you a sense of the state of play:

George Osborne says he has little option but to push on with the harshest public spending cuts in living memory because a reversal would alarm the bond markets and plunge Britain into “financial turmoil”.

NJ Public Pension Slugfest Reporting Omits 15 Years of Governors Stealing From Workers

If you live in the world according to the mainstream media, the row between state executives and unions is all about (by implication) greedy unions trying to preserve their perquisites when budget “realities” demand that they suffer. Consider this excerpt from a recent article New York Times article about the fight in New Jersey:

Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy.

And how exactly did the crisis “reveal” that some pension funds were close seriously under water? A more accurate rendition would be that, at least in New Jersey, the state has been raiding the pension kitty for over 15 years.

Dylan Ratigan on Get America Working

Dylan Ratigan is leading town hall events in various cities to help spur the establishment of a job creation movement. The goal is to push for policies that foster higher employment than the ones we’ve seen over the last thirty years, which instead promoted financialization, the use of consumer debt to paper over lack of wage growth, asset inflation and speculation, and increasing income and wealth disparity.

Ratigan wants to create a dialogue among key political groups, including ordinary citizens, investors, small business operators, and corporate leaders. His sessions will focus on four issues, as he outlined in in the Huffington Post:

Auerback/Wray: Liberals need not fear Obama’s tax deal: Why a payroll tax holiday actually helps support tomorrow’s retirees

Yves here. As much as Auerback’s and Wray’s argument does describe the reality of government fiscal operations accurately, I see their political reading as wildly optimistic. Given that disproven ideas like “trickle down economics” still hold considerable sway, I think the concerns about how a payroll tax holiday will serve as a wedge to cut Social Security benefit are valid.

By Marshall Auerback, a portfolio strategist and hedge fund manager, and L. Randall Wray, Professor of Economics at the University of Missouri-Kansas City. Cross posted from New Economic Perspectives.

The commentary in the aftermath of President Obama’s announced tax deal with the GOP has been both predictable and, for the most part, misconceived….

Marshall Auerback: Don’t Get Angry – Get Some Real Change

President Obama can solve the economy’s problems and win back his base, but he has to get with the program first.

For once, let’s praise President Obama (marginally), not bury him. As Bo Cutter has already argued, in the aftermath of the elections, the president probably did the best he could do on taxes. Ideally, the issue shouldn’t have even been something to haggle over in the first place had the Democrats (including the president) dealt with it before the midterms.

That said, the president’s petulant rant directed at his base was pathetic and misconceived in the extreme. The “No Drama Obama” guise clearly does not extend to his now frustrated supporters. Obama still genuinely does not have a clue as to why he has lost the trust of so many progressives. Many would have been prepared to cut him some slack if he had given them anything over the past two years, rather than a perpetuation of Rubinomics — an economically regressive blend of crony capitalism and deficit reduction fetishism.

To deal with income inequality, you need something more radical. You need reforms such as caps on executive pay and probably a system that simplifies the tax structure (to avoid creative tax avoidance), along with a broad base and a few basic, low rates to ensure a modicum of compliance….

“The Mortgage Loan Foreclosure Mess: the Banks’ Gluttony; Problems with MERS and Sloppy Securitizations”

Yves here. This post by Linda Beale, who was involved in the tax angles of securitizations in her prior life on Wall Street, first appeared on Angry Bear and on her blog, A Taxing Matter. It’s a very helpful addition to the discussion of the foreclosure crisis. Because it is also a bit technical at […]

Auerback: On McArdle’s Fuzzy Deficit Accounting

By Marshall Auerback, a portfolio strategist and Roosevelt Institute fellow There are plenty of legitimate reasons to criticize Barack Obama’s dismal stewardship of the US economy, and God knows I’ve voiced quite a few of them, but it does not follow that every criticism made of his economic policies is therefore legitimate. There is quite […]