Merge Left

Real News:

In Southern Spain, Juan Manuel Sánchez Gordillo, mayor of the small town of Marinaleda, is helping organize a growing protest movement against the austerity measures imposed by the Spanish government. Sánchez Gordillo and the landless peasants that follow him are at the forefront of demonstrations seeking a radical change in the country’s economic policies in response to the country’s worsening crisis.

Real News also has an interview with Juan Manuel Sánchez Gordillo:

Juan Manuel Sánchez Gordillo has become the face of the growing protest movement in Spain. The mayor of a small town in Southern Spain called Marinaleda, he has become well-known for leading combative protests and sit-ins, including a protest in a supermarket in which food was taken and redistributed to the poor. But Sánchez Gordillo has backed up his critiques of capitalism with a viable alternative. In his town of Marinaleda, there is full employment, people rent homes for 15 Euros a month, and everybody who works in the agricultural cooperative that was formed, including the mayor, earns the same salary.

From TRNN’s multipart ‘Protests In Spain’ series.

Krugman wipes the floor with the two pro-austerity guests:

Daniel, also, posted about that.

And the segment where Krugman detailed his view of the current situation to the BBC host:

UPDATE: There was another segment with Paul Krugman and an ex finance minister of Greece. It’s at the 6 minute mark:

UPDATE END

And here’s the entire BBC program:

Writing at New Economic Perspectives, Bill Black goes into inevitable territory during an election cycle, in which we are being asked to choose between two brands of “austerity”: The Democratic Version or The Republican one. He’s lays out the problem on very realistic ground and let’s us know who the greater enemy to our economy really is: The Democrats.

After this election is finally over, the Democrats are going to go full bore on Social Security and every other social program they can get their grubby hands on. Nancy Pelosi, openly (and ironically) supported by the Congressional Progressive Caucus, have already signaled their intent over the last few weeks. It’s just a shame we can’t have a debate on this before the election, when it might do more good.

So this piece is well-timed and very worthy of  your attention. In my not-so-humble opinion:

To many people, it seems paradoxical that conservatives target not the worst social programs, but the best.  There is no paradox.  Bad government programs are desirable from the right’s perspective – they discredit government intervention.  Good government programs pose an existential challenge to conservative memes, so they are the prime target for attack.

The attacks from the right, however, do not provide any guarantee of success.  The right’s immense success has come from convincing large numbers of moderates and liberals to join the assault on successful government programs.  The major financial deregulation bills that have shaped the criminogenic environments that produced the epidemics of accounting control fraud that have driven our recurrent, intensifying financial crises have enjoyed strong, even overwhelming, governmental support.  The Garn-St Germain Act of 1982, the state S&L deregulation laws in Texas and California that “won” the regulatory “race to the bottom”, the “reinventing government” assault on financial regulation, the Gramm-Leach-Bliley Act of 1999, and the Commodities Futures Modernization Act of 2000, all enjoyed broad bi-partisan support.  Laws making it extremely difficult for victims of securities fraud to obtain civil remedies passed with such strong bipartisan support that supporters were able to override President Clinton’s veto.

Just as only a conservative Republican like Nixon could begin to normalize diplomatic relationships with China without bearing a crippling political price, only “liberal” Democrats can safely begin the process of attacking Social Security.  The rationale for the liberal assault on Social Security is “there is no alternative” (TINA).  TINA is a particularly nonsensical argument in this context, however, because we are trying to recover from a Great Recession. There are vastly superior alternatives to cutting Social Security benefits, which could force the economy back into recession.  There is also no need to cut Social Security benefits.  The funding required to meet fulfill our promises is modest (relative to the U.S. economy) and poses no threat to our economy.

(snip)

The progressive austerians are all the more remarkable because the economists and economic theories they rely on were wholly discredited even before Europe’s suicidal experiment with austerity.  The neoclassical and Austrian economists that push austerity were the same economists who (1) propounded the anti-regulatory policies that caused the global crisis, (2) the opponents of counter-cyclical fiscal policies who predicted that pro-cyclical U.S. fiscal policies would speed the U.S. recovery while counter-cyclical policies would fail to spur growth and would cause inflation, and (3) the deficit hawks who claimed that counter-cyclical U.S. monetary and fiscal policies would cause hyper-inflation.  The predictions of the proponents of austerity have proven consistently wrong and the proponents of counter-cyclical fiscal policies have proven consistently correct.  The predictions of the proponents of counter-cyclical fiscal policies proved correct as to both the direction and the magnitude of the economic recovery.  We argued from the beginning that the stimulus package was far too small and that there would be a financial disaster among many states and localities absent a program of federal revenue sharing.

Please do read the whole thing. It’s worth every minute of your time.

Real News:

Transcript at the link:

BILL BLACK: Well, there were a series of articles in The New York Times covering the recent elections in Europe, particularly in France and Greece, but also mentioning Germany and England. And the common denominator in each of these elections was that the people rose up against the parties imposing Berlin’s austerity program, which has forced Europe back into recession and forced the periphery of Europe back into depression. And they rejected this soundly in these votes.

But the amazing thing was that The New York Times reporters were treating this like, well, these people must be financially illiterate, because everybody knows austerity is the only thing that can be done, and austerity must be done, and it’s good and such. So the more they destroy the economy, the more the New York Times reporters seem to think that destroying the economy is the objective.

And Paul Krugman has been very good. He is, after all, Nobel laureate in economics. He writes a regular column for The New York Times, and for months he’s been explaining how insane the austerity program is. But apparently the New York Times reporters don’t read their own Nobel prize winning economists.

PS. There is an update to the previous post as well.

The Greek people went to the polls yesterday and the pro-austerity parties didn’t fare well. Democracy isn’t conductive to austerity. Wikipedia has the election results:

 Summary of the 6 May 2012 Hellenic Parliament election result

Party		Leader(s)	Votes	%	+/–	Seats	+/–
	New Democracy	Antonis Samaras	1,191,989	18.85%	–14.62	108	17
	Coalition of the Radical Left	Alexis Tsipras	1,061,158	16.78%	+11.15	52	39
	Panhellenic Socialist Movement	Evangelos Venizelos	833.456	13.18%	–30.74	41	119
	Independent Greeks	Panos Kammenos	670,550	10.6%	New	33	33
	Communist Party	Aleka Papariga	536,045	8.48%	+0.94	26	5
	Golden Dawn	Nikolaos Michaloliakos	438,910	6.97%	+6.68	21	21
	Democratic Left	Fotis Kouvelis	386,090	6.11%	New	19	19

So, the Coalition of the Radical Left gets 17% of the vote while the conservative New Democracy gets 19%, but that translates to 52 seats for the Coalition and 108 seats for the conservatives. If you keep reading the Wikipedia article, you learn that the party that gets the most votes, gets a 50 seat bonus. That’s one screwed-up electoral system. I should note that the Panhellenic Socialist Movement is socialist only in its name. It and New Democracy are the two pro-austerity parties. In the 2009 Elections they combined for 77% of the vote (44% for the Movement and 33% for the conservatives).

PS. Tartarus is the Greek word for hell. I initially used the word Hades instead, but then I learned Hades is the abode of the dead.

Rortybomb:

There was a brief debate focused on the following question: would the gains of the economy continue to accrue to the top 1% once the recovery started, or would the top 1% have a weak post-recession showing in terms of raw income growth as well as income share of the economy?  The top 1% had a rough Great Recession.  They absorbed 50% of the income losses, and their share of income dropped from 23.5% to 18.1% percent.  Is this a new state of affairs, or would the 1% bounce back in 2010?

Well we finally have the estimated data for 2010 by income percentile, and it turns out that the top 1%  had a fantastic year.  The data is in the World Top Income Database, as well as Emmanuel Saez’s updated Striking it Richer: The Evolution of Top Incomes in the United States (as well as the excel spreadsheet on his webpage).  Timothy Noah has a first set of responses here.  The takeaway quote from Saez should be: “The top 1% captured 93% of the income gains in the first year of recovery.”

… As you can image, this has increased the percentage of the economic pie that the top 1% takes home.  As Saez notes, “excluding realized capital gains, the top decile share in 2010 is equal to 46.3%, higher than in 2007.”

… It’s also worth mentioning that, pre-Recession, inequality hadn’t been that high since the Great Depression, and we are looking to rapidly return to that state.  It’s important to remember that a series of choices were made during the New Deal to react to runaway inequality, including changes to progressive taxation, financial regulation, monetary policy, labor unionization, and the provisioning of public goods and guaranteed social insurance.  A battle will be fought over the next decade – it’s been fought for the past three years – on all these fronts.  The subsequent resolution will determine how broadly-shared prosperity is going forward and whether or economy will continue to be as unstable as it has been.

The low taxing of capital gains plays a huge part in this. The special treatment it is given should’ve stopped. But, as Meteor Blades says, the 1% thinks taking the 93% of the recovery is the way things should be.

Class War Films:

The National Journal polled Americans on questions surrounding the federal budget deficit (linked from Jon Walker). Did Americans blame the safety-net programs for the deficit in the federal budget?

As important, the survey found Americans unconvinced that safety-net programs represent a major source of the deficit problem. When asked to identify the biggest reason the federal government faces large deficits for the coming years, just 3 percent of those surveyed said it was because of “too much government spending on programs for the elderly”; only 14 percent said the principal reason was “too much government spending on programs for poor people.” Those explanations were dwarfed by the 24 percent who attributed the deficits primarily to excessive defense spending, and the 46 percent plurality who said their principal cause was that “wealthy Americans don’t pay enough in taxes.”  While minorities were more likely than whites to pin the blame on the wealthy avoiding taxes, even 43 percent of whites agreed.

Given that diagnosis, it is perhaps not surprising that relatively few respondents said they would support major reductions in safety-net programs to reduce the deficit. Fully three-fourths of those polled said Social Security should be cut “not at all” to reduce the deficit, and exactly four-fifths said the same about Medicare. Nearly two-thirds even agreed that Medicaid should be entirely spared from cuts; just 5 percent said it should be cut a lot. There was more receptivity to retrenching food stamps and housing vouchers for the poor (only 51 percent said they should be entirely spared), but even so, just 9 percent said they should be cut “a lot.” Twice as many said defense should face big cuts.

And the accompanying graphic:

The 53% who think “the government taxes workers too much to fund programs for people who could get by without help” left me wondering who exactly are those “people who could get by without help.” Because Wall Street, Big Oil, Big Banks and so on certainly don’t need any government help. Another portion will define “people who could get by without help” as those that receive help from safety net programs. Probably many of those exclude themselves from those who get government help that they don’t need. B. Deutsch at ‘Alas! a Blog’ (linked by Meteor Blades), used data from Suzanne Mettler’s “Reconstituting the Submerged State: The Challenge of Social Policy Reform in the Obama Era” that was published in Perspectives on Politics on September 2010 (pdf) and built a revealing table showing how little many people know about the government programs that they receive a boost from:

Percentage of Program Beneficiaries Who Report They “Have Not Used a Government Social Program”
Program	“No, Have Not Used a Government Social Program”
529 or Coverdell	64.3
Home Mortgage Interest Deduction	60.0
Hope or Lifetime Learning Tax Credit	59.6
Student Loans	53.3
Child and Dependent Care Tax Credit	51.7
Earned Income Tax Credit	47.1
Social Security—Retirement & Survivors	44.1
Pell Grants	43.1
Unemployment Insurance	43.0
Veterans Benefits (other than G.I. Bill)	41.7
G.I. Bill	40.3
Medicare	39.8
Head Start	37.2
Social Security Disability	28.7
Supplemental Security Income	28.2
Medicaid	27.8
Welfare/Public Assistance	27.4
Government Subsidized Housing	27.4
Food Stamps	25.4

Deutch based a cartoon on the data he gathered:

Kevin Drum details the unfairness in the state taxes rates:

[The federal income tax] it’s not as progressive as it used to be, back before top marginal rates were lowered and capital gains taxes were slashed in half. But conservatives are a little less excited to talk about other kinds of taxes. Payroll taxes aren’t progressive, for example. In fact, they’re actively regressive, with the poor and middle classes paying higher rates than the rich.

And then there are state taxes. Those include state income taxes, property taxes, sales taxes, and fees of various kinds. How progressive are state taxes?

Answer: They aren’t. The Corporation for Enterprise Development recently released a scorecard for all 50 states, and it has boatloads of useful information. That includes overall tax rates, where data from the Institute on Taxation and Economic Policy shows that in the median state (Mississippi, as it turns out) the poorest 20 percent pay twice the tax rate of the top 1 percent. In the worst states, the poorest 20 percent pay five to six times the rate of the richest 1 percent. Lucky duckies indeed. There’s not one single state with a tax system that’s progressive. Check the table below to see how your state scores.

On the 1st part of the first episode of Moyers and Company, On Winner-Take-All Politics, Bill Moyers explores how America’s vast inequality didn’t just happen, it’s been politically engineered. The 2nd part is an essay on the Occupy movement. Check the station-finder to find the time Moyers and Company airs and repeats on your PBS station (11am and 7pm on Chicago). Or watch all 57 minutes on BillMoyers.com. There is a transcript there too. Bill, also, has a 5 minute video essay on Bill Guthrie (web only) that was based on his ‘Is This Land Made for You and Me?’ essay.

Description of the first episode:

On Winner-Take-All Politics

January 13, 2012

In its premiere episode, Moyers & Company dives into one of the most important and controversial issues of our time: How Washington and Big Business colluded to make the super-rich richer and turn their backs on the rest of us.

Bill’s guests – Jacob Hacker and Paul Pierson, authors of Winner-Take-All Politics: How Washington Made the Rich Richer — And Turned Its Back on the Middle Class, argue that America’s vast inequality is no accident, but in fact has been politically engineered.

How, in a nation as wealthy as America, can the economy simply stop working for people at large, while super-serving those at the very top? Through exhaustive research and analysis, the political scientists Hacker and Pierson — whom Bill regards as the “Sherlock Holmes and Dr. Watson” of economics — detail important truths behind a 30-year economic assault against the middle class.

Who’s the culprit? “American politics did it– far more than we would have believed when we started this research,” Hacker explains. “What government has done and not done, and the politics that produced it, is really at the heart of the rise of an economy that has showered huge riches on the very, very, very well off.”

Bill considers their book the best he’s seen detailing “how politicians rewrote the rules to create a winner-take-all economy that favors the 1% over everyone else, putting our once and future middle class in peril.”

The show includes an essay on how Occupy Wall Street reflects a widespread belief that politics no longer works for ordinary people, including footage we took at the OWS rally from October – December 2011.

Worthy Reads:

The New York Times: Inconvenient Income Inequality

OpenSecrets: A hard financial look at those SuperPACS

Travis Waldron at Think Progress:

Poverty in America is only getting worse, with data showing rising income inequality and the startling fact that half of all Americans are now either in poverty or considered low-income. Were it not for the government programs that comprise the social safety net, those numbers would be even worse. More than a quarter would live in poverty without the safety net, according to one study, and Social Security alone kept 14 million out of poverty last year. Despite that, Congress — and particularly Republicans in Congress — have made cuts to various programs meant to aid the poorest Americans.

Congress reached a deal Thursday to avert a shutdown that would have begun at midnight tonight, and in doing so, Republicans found another low-income program to target, cutting funding for subsidies that help the poor stay warm during the winter by nearly 25 percent. At the same time, however, the Pentagon’s budget is getting a 1 percent boost, as the Associated Press noted:

Highlights of the $1 trillion-plus 2012 spending legislation in Congress:

—$518 billion for the Pentagon’s core budget, a 1 percent boost, excluding military operations overseas. [...]

—$3.5 billion for low-income heating and utility subsidies, a cut of about 25 percent.

The Low-Income Home Energy Assistance Program (LIHEAP) has become increasingly vital for American families affected by the recession, and it is utilized more and more by military families. One of every five families using LIHEAP is a military family, a 156 percent increase from 2008. Congress, however, decided to cut that program to give a boost to a budget that already makes up 20 percent of the country’s total budget and has been spared in multiple spending agreements this year (the super committee trigger a notable exception).

Plenty of evidence exists that Congress should be focused on investing into programs that boost economic growth and job creation, rather than chasing fiscal austerity toward another recession. If it insists on cutting spending to deal with the deficit now, however, the least it could do is not take the knife to each and every program that helps the poor.

Congress wasn’t satisfied with only half of the people on poverty or low-income…

From ‘Countdown with Keith Olbermann’:

and from ‘Democracy Now’:

Remember when the employees in a corporation paid taxes to the government ? The latest “innovation,” from the sellouts in the Illinois legislature, is letting the corporations pocket the taxes that would be paid to the state of Illinois. David Cay Johnston explains:

Painful as it feels to have a lot of hard-earned income taken from your paycheck for taxes, a new Illinois law does something Americans may find surprising. It lets some employers pocket taxes for 10 years.

You read that right — in Illinois the state income taxes withheld from your paycheck may be kept by your employer under a law that took effect in May. Continental Corporation (CONG.DE), the big German tire maker; Motorola Mobility (MMI.N), the cell phone maker; and Navistar (NAV.N), the maker of diesel trucks for industry and the military, are in on the deal. State officials say a fourth company is negotiating a similar arrangement.

Chrysler and Mitsubishi arranged deals with the state in the depths of the Great Recession in 2009; Ford got one in 2007, since revised to let it keep half of its Illinois workers’ state income taxes.

Instead of paying for police, teachers, roads and other state and local services that grease the wheels of commerce, Illinois workers at these companies will subsidize their employers with the state income taxes they pay.

The deal to let employers keep half or all of their workers’ state income taxes represents a dramatic expansion of a little-known trend in the law: diverting taxes from public purposes to private gain.

Throughout the United States, big box retailers like Wal-Mart (WMT.N), Lowe’s (LOW.N) and Cabela’s (CAB.N), and in some cases entire shopping malls, often negotiate deals to keep sales taxes that customers pay at the cash register, using the money to finance construction of their stores. This gives them a huge advantage over retailers without such subsidies, while reducing revenue to local governments, which in turn creates pressure for higher taxes.

The fourth company David Cay Johnston mentions must be Sears. From Friday’s Chicago Sun-Times article on the latest tax-cut for the CME Group (Chicago Mercantile Exchange and Chicago Board of Trade corporate parent) and Sears:

Under the terms of the tax-cut plan being considered, $100 million of that windfall would go toward Chicago-based CME Group over a two-year period.

The corporate parent of the Chicago Mercantile Exchange and Chicago Board of Trade has threatened to move out of state because of this year’s jump in corporate income taxes that Quinn approved. CME Friday declined to comment.

Another chunk of the windfall would fund a $15 million state EDGE tax credit for Sears, which would enable the company to pocket half of what its existing employees pay in state income taxes and all of the income taxes paid by new workers. Like CME Group, Hoffman Estates-based Sears has threatened to pull up stakes without some form of tax relief.

And how would the State of Illinois pay for that tax-break to CME and Sears? How about taking the money out of Medicaid funds? Maybe eliminating meal-assistance programs? Maybe closing some clinics for the mentally ill?