Oil's Slippery Logic

Bush, as usual, is blaming his incompetence on Congress, alleging gas prices are their fault. Congress is actually doing the American people a favor by not allowing such misguided policies to continue, and finally doing what Jimmy Carter recommend we do during the oil crisis of the 1970s – trying to get off oil!

The oil companies have millions of acres of land already, federal land leased to oil/energy companies, which they are choosing not to explore nor drill for oil. The latest claim that they must be given more land and allowed to drill in ANWR is ridiculous .

As Harry Reid, the Senate Majority leader, details: 33.5 million outer continental shelf acres are not being drilled; 34.2 million onshore acres under lease are not being drilled; there are 7,740 active leases in the outer continental shelf and only 1,655 in production; there are over 41,000,000 acres in the outer continental shelf that have been leased for drilling, yet only 8,123,000 acres are in production.

The answer isn’t more tax breaks for oil companies based on the lame excuse that they need such for competitive reasons or because they need such for exploratory purposes, nor is it spending more money drilling every possible piece of land on the planet. The answer, sorry to say, is a lifestyle change for much of the planet (walking more, driving less, consuming locally, etc.) and investment in alternative energies. Jeff Rubin informs, “For the past half century, America has spent the bulk of its infrastructure money on building highways.” This has led to us sprawling outward and driving more, subsidized by cheap gas. Part of the solution to our problem is denser living and public transportation.

Jeff Hooke and Steve Wamhoff declare, “Among the largest five oil companies, less than 8 percent of profit goes to exploration for new oil fields. In the top five oil companies, managers have actually directed most of their excess cash to dividends and stock repurchases, both of which drive up the companies’ share prices and the executives’ stock option values.” And, the claim by the oil industry of an interest in alternative energy – from 2000 to 2005 the industry spent $1.2 billion on alternatives to fossil fuels; the industry earned $383 billion over this same period.

Subsidized (regarding oil companies) implies that gasoline prices paid by consumers do no reflect the full economic cost to society. Some direct and indirect public subsidies are reduced corporate income taxes, lower than average sales taxes on gasoline, government funding of programs that primarily benefit the oil industry or motorists, and hidden environmental costs caused by motor vehicles. As Doug Koplow asserts, “Tax subsidies are the result of selective tax legislation that benefit particular groups of people or industries in the economy.”

States using combined reporting are capturing more of their fair share of taxes from oil companies. Otherwise, companies shift costs and profits between subsidiaries in different states to avoid taxation or lower their rate as much as possible.

A Union of Concerned Scientist's report lists a battery of oil industry subsidies:

• Oil industry taxed at 11 percent ($2 billion per year benefit)
• Low state and local sales tax rates on gasoline, indirect subsidy exceeding $4 billion per year
• Direct government funding of oil and motor vehicle infrastructure and services costing $45 billion a year
• Oil-related health and environmental damage, roughly $232 billion annually

Douglas Koplow and Aaron Martin of Industrial Economics found:

• Maintaining the Strategic Petroleum Reserve costs $5.4 billion
• Tax break for domestic oil exploration and production $2.3 billion
• Support for oil-related exports and foreign production $1.6 billion

The Alliance to Save Energy detail that state and local governments taxed gasoline at about half the rate as other goods resulting in an estimated $2.7 billion revenue loss from gasoline sales.

Mark Zepezauer and Arthur Naiman explain how oil companies are also allowed to deduct 15 percent of the gross income they derive from oil and gas wells from their taxable incomes (the oil depletion allowance), and continue to do that for as long as those wells are still producing. Other shameful tax allowances include the enhanced oil recovery credit and the percentage depletion allowance, among many other tax breaks.

Citizens for Tax Justic further note, “Oil companies can write-off so-called intangible drilling costs, that is, much of their investments in finding and developing domestic oil and gas wells, immediately, even for successful wells.” Another gimmick is passive income limitations, whereby, “the working interest holder who manages on behalf of himself and all other owners the development of wells and incurs all the costs of their operation, may use oil and gas losses to shelter income from other sources.”

The Institute on Taxation and Economic Policy observe that the oil and gas sector is the nation’s lowest-taxed industry, paying an effective income tax rate of only 5.7 percent.

And, comparatively speaking, the U.S. still has some of the cheapest gas on the planet. Of 155 countries surveyed for a CNN Money article, U.S. gas prices were the 45th cheapest. Most of Europe has prices hovering around $8 a gallon. Our cheap gas prices are primarily responsible for our love affair with SUVs, our oversized McMansions, and our unnecessarily long commutes. The U.S. federal tax on gas is 18 cents per gallon, low by global standards. Since 1980, oil use in the UK has stayed flat, in France its dropped 17 percent, but in the U.S. it’s gone up 21 percent.

For Further Reading:
Oil Slickers: How Petroleum Benefits at the Taxpayers Expense.

Pollyanna

In the most recent of his many declarations of incoherence, our unfit leader said the economy is "basically sound."

Which is why banks are failing, automakers and the airlines are shedding jobs, bankruptcy and unemployment are on the rise, and bailouts are aplenty.

I know this guy (including his administration) is an asshole...but how much shit can one man produce?

Leave it to those know-it-all, ivory-tower liberals : Ben Bernanke, Federal Reserve chairman and former Princeton economics professor, testifying before the Senate Banking Committee, gave a more nuanced and reality-based assessment. He noted that consumer spending and exports were moving at a sluggish pace, the housing sector is continuing to weaken, inflation is inching upward, and commodity prices are rising.

Jon Stewart puts it into perspective nicely here.

Tax Burden Shifting: Exemptions

Exemptions are a subtle scourge on our public institutions and a devious tax avoidance scheme written into state statutes by corporate lawyers working alongside on-the-take state legislators. This corporate welfare is yet another scam of planners, site selection experts, business interests, and others who falsely claim that without such an exemption certain businesses would be unable to accomplish a host of things -- remain profitable, support a certain level of workforce, etc. The key to getting an exemption is showing your business is benevolent in some fashion or another. But, as with such vague statutory language, this loose definition has been twisted to the benefit of businesses being able to avoid taxes with far-fetched explanations of what makes them benevolent, and also unfairly subsidizes them competitively against another similar business not receiving the exemption. Another way to get an exemption is to simply have your lawyers and lobbyists pressure state legislators to simply write it into the statutes (sections 70.11, 70.111, and 70.112).

Nearly a third of all the property in the City of Milwaukee is exempt -- roughly $6 billion worth of property that is not taxed! Barbara Miner informs, "Wisconsin now has approximately 16,000 exempt private properties, with a value of $21.7 billion."

The Wisconsin Department of Revenue, in State Tax Incentives For Economic Development In Wisconsin, details the numerous tax incentives available in Wisconsin.

Annysa Johnson reports, “The Congressional Budget Office estimated the value of tax exemptions for hospitals nationally in 2002 at $12.6 billion.” A report by the Institute for Wisconsin’s Future found, “billions of dollars worth of property goes untaxed because it is owned by not-for-profit hospitals and medical centers…many of these hospitals generate millions of dollars in annual income and pay their top executives salaries comparable to corporate executives.”

The Wisconsin Public Service Corporation explains, “Commerical customers with residential electric or natural gas [a storefront with an apartment above it] are tax-exempt from November through April for the portion of energy used for residential purposes…Non-profit organizations [operated for religious, charitable, scientific or educational purposes or for the prevention of cruelty to children or animals] are tax-exempt year round for electric and natural gas use.”

Credit Unions are tax-exempt institutions. As even the Wisconsin Bankers Association states, “To the extent that credit unions use their tax exemption to lower home lending rates, federal and state income tax exemptions are subsidizing borrowing by high-income households.” They find this exemption will cost, over the next 10 years, $400 million in Wisconsin, and $31 billion nationally.

A few of those with property tax exemptions written right into the state statutes are: machinery and equipment used in manufacturing, farm inventories, computer hardware and software, and tax increment districts. In a recent decision, City of LaCrosse v. Wisconsin Department of Revenue and Gundersen Clinic, the Wisconsin Tax Appeals Commission ruled that a host of categories of computerized medical equipment is exempt from property tax.

Those enjoying sales tax exemptions: manufacturing machinery and equipment; manufacturing consumables; pollution abatement, waste treatment and recycling equipment; production fuel and electricity. Steven Walters notes, “The sales tax [in Wisconsin] is expected to bring in $4.2 billion this year. It is the second biggest source of state tax collections, trailing only the $6.4 billion personal income tax.” He also lists the costs of certain exemptions: computer services $136 million; legal services $113 million; advertising $103 million; personnel services $79.4 million; architectural engineering and surveying services $69.2 million; management consulting and public relations $64.1 million; and accounting $59.5 million.

The importance of a good manufacturing base to our economy is obvious, as is the importance of recycling to our environment, etc. But if the market has decided that these aren’t important things and the government must support these endeavors, then we should at least also be guaranteeing these are well-paid jobs with health care and pension plans. If we’re going to be in the business (of whichever business we might be subsidizing), we should have it on our terms and have these be solid jobs that allow the workers to be happy, productive, and fairly compensated. Consequently, they are able to support their local economy (through purchases). This multiplier effect of locally earned and spent money ripples through the economy and creates jobs and stable communities.

There are a host of “business incentives” (welfare for the rich) in Wisconsin: Economic Development Zones with development zone credits, Tax Incremental Districts with infrastructure improvements financed by tax increments, and Technology Zones with tax credits for high-technology businesses locating in the zone. Granted some of this development would not occur without the subsidy. Therefore, that is a good investment if it occurs in a blighted or declining area. But sadly too often developers, real estate magnates, and builders use this welfare to line their pockets rather than making a catalytic investment (reproducing through the local economy), which would be much better for the long-term health of their city and economy. They build whatever is easiest and will return the quickest buck. They're looking to line their pockets with the largest amount of money in the shortest period of time. They're not trying to develop a sustainable, bustling, safe city environment.

The inequity in the tax burden is at a breaking point. Workers cannot bear the brunt of this burden much longer. The economy is in a recession as this is being written, and we may be headed for another 1929-style depression. Corporations have written the tax code to their benefit. Their share of taxes is minuscule and declining. Their, in essence, looting of public dollars has ramifications on our ability to maintain: parks, libraries, public transportation, sewage, wetlands, pollution, poverty, and employment – to name a few. It has ramifications on everything we do and how we live.

This is the workers' money they are stealing. Without the productive capacity of all the workers in the world applying their craft there would be no product or service to sell. They make the profits and standard of living we all deserve possible. Sadly, they are being exploited. I’m sure we’d all prefer a higher floor for the least among us, rather than a subsidized ceiling where the already-rich take from those working their asses off to make ends meet. Our inattentiveness and inaction with regards to this growing inequality is to our own detriment. Even the middle class is now being squeezed into a paycheck-to-paycheck lifestyle. This is a dismal fact and an abomination for a wealthy, highly-educated country like America.

Why is this? To recapitulate -- about a third of the land and property the rich/well-represented own is exempt from taxation. Capital gains, which are mostly claimed by the rich, are taxed much lower than income. The tax code has a hoard of loopholes, deductions, and write-offs, which benefit the rich. So, the basic story is: workers are working longer, harder, and producing more; but they aren’t sharing in the gains. And all those gains the CEOs and executives are making off Labor’s production are not being completely or fairly taxed, if at all. So we’re making less and having to pay for more while a few greedy bastards stockpile the treasure of our exploited labor.

Jack Norman calculates, “Thirty years ago, residential property accounted for half of all state property taxes. Today, homeowners pay 70 percent of all property taxes, as the business contributions have dropped…The poorest homeowners (incomes below $15,600) paid more than 14 percent of their income in state and local taxes. The richest homeowners (incomes above $70,000) paid about 10 percent of their income in state and local taxes.”

Fred Mohs, former regent with the University of Wisconsin System currently on the board with Madison Gas and Electric, in Barbara Miner's Tax Exempt Milwaukee Magazine article, contends, "The only people left to pay were the peasants and the merchant class, and they eventually solved the problem by cutting off the heads of a lot of people."

Social Security Program Solid

Comptroller General David M. Walker and Rep. Paul Ryan sure have been getting a lot of positive ink from the Journal-Sentinel lately. It’s a shame none of it is warranted. Ryan has wrapped the old Republican sow’s ear in ribbons and bows and is trying to sell it as a silk purse (more here and here). And, Walker is trotting out a supposedly, as far as the Journal is concerned, Paul Revere moment about our nation’s debt, in which the Journal’s latest editorial extrapolates into a Social Security and Medicare horror story.

For starters, Social Security is fine. For the mainstream media to keep pushing these ominous threats about Social Security's impending doom is inexcusable. A third of our seniors are not in poverty because of this program. This is one of the great accomplishments of America (and one of the few remaining in our ever-dwindling social contract). To speak of cutting or privatizing such an exemplary and successful program is breathtakingly ridiculous. Even the Congressional Budget Office admits that Social Security is solvent, as is, without any changes until 2052, and up to 80 percent after that. As Henry Aaron of the Brookings Institution informs in a Washington Post article, the idea that somehow privatizing Social Security, making it dependent on the whims of the stock market, is the answer, is also a myth.

Medicare is a quandary, but not because of it’s entitlement issue. It’s because of managed care and the pharmaceutical industries skyrocketing profits. Seniors consume the most medical care and prescriptions -- private companies are gouging the government through Medicare reimbursement with inflated charges (yet another, in essence, subsidy to big business). We don’t even use our numbers to negotiate prescription drug-price deals for buying in volume (in fact, this was strictly prohibited in Bush’s Medicare bill).

For our health care we spend twice as much as any other developed nation, we get worse results, and 50 million are uninsured.

But, as usual, the recommendations always seem to be: cut services, slash wages, do away with programs, etc. The majority of us are asked to sacrifice and to go without so that private insurance and pharmaceutical company CEOs don’t have to. Their profits, mansions, yachts, and other extravagant lifestyle amenities cannot be disrupted by things like living wages, health care for all, or a generally accepted standard of living where we actually have a middle-class again.

Why not just remove the cap on Social Security? Why isn’t someone demanding that business actually pay the nominal corporate tax rate (rather than the tax sheltered amount they actually do)? Why can’t we regulate the pharmaceutical industry and control costs like all other developed nations? Why can’t we move toward universal health care? The administrative costs of our health care system represent 25 to 30 percent of our total cost. In other countries, the same costs represent only 2 to 3 percent.

This (mis)reporting is a real failure of the Journal-Sentinel editorial board. To be pushing such Social Security doomsday myths and to endorse the worn-out cut and/or do-without “solution” to this public policy matter is irresponsible. And, again, as always, to not connect the bigger economic dots in this health care/retirement element of the class war (that’s what we’re in, let’s admit it) is journalistic deception. Placing these issues in their larger context would seem a no-brainer. Alongside doing a bit of research and/or talking with some sources who may hold an opposite view. Lapping up these doomsday scenarios and regurgitating them into the newspaper as gospel is a disservice to readers.

Wal-Mart Propaganda and (Local) Media Lapdogs

Wal-Mart is trying to build new stores in Cudahy and Muskego. Citizens of both communities are fighting the development. Much of the “journalism” covering this subject could only be described as subdued boosterism. As noted in previous postings here, there really isn’t a development project some local newspapers won’t support. Taxpayer dollars being redistributed to thriving, profitable businesses to subsidize building their private stores, stadiums, museums, parking structures, convention centers, etc. is great public policy!?

Yet this same style “reporting” has the audacity to complain about entitlement program costs, the cost of maintaining parks, the possibility of light-rail, etc. The programs, projects, and infrastructure that benefit us all, or take care of the least among us, are an inefficient waste of public dollars? But a good public investment is subsidizing large profitable corporate interests even as our wages stagnate, our health care and retirement funding is cut, and such subsidies destroy our communities and social fabric?

We indeed have entered into a new era: labor is completely subservient to capital. Corporations are allowed to speculate, cut corners, use tax loopholes, and do anything to increase their profit while avoiding paying their fair share, acting responsibly, or showing any sense of commitment to anything other than profit. Often this corporate speculation is subsidized – done with taxpayer dollars. So even if they fail, the taxpayers are the ones forking over the money (our tax dollars…again…on top of the subsidies) bailing them out and assuming the risk for their poor management, judgment, and greed.

An illogical editorial in the Journal-Sentinel was published simply to say that officials shouldn’t be subjected to recall elections just because they have voted against the wishes of the citizens in favor of big box development [to subsidize and allow a Wal-Mart into the community] rather than against it. Officials are elected to represent and be the voice of their constituents. If those constituents don’t want a Wal-Mart and a public official votes to allow a Wal-Mart, they have every right to “throw the bum out,” in fact, it’s their duty as citizens.

A Google search of the City of Milwaukee reveals 5 Wal-Marts. Add in all the Targets, Kohl’s, etc. – just think off all that square footage of retail space, all the land it is gobbling up, the environmental devastation from the impermeable parking lot surfaces, and the inefficient replication of the same buildings performing the same services every mile or so throughout the region! Are we constructing these blemishes of infrastructure as a representation of our times, hopes, and dreams? Is this the built-environment legacy we wish to leave? Within a 30-mile radius of Milwaukee, there are 16 Wal-Marts! Not only is this development an economic loser, it's a visual, aesthetic disgrace.

Big box, mega-retail oriented development leads to a realignment of spending - away from a diverse set of owners, neighborhoods, mom-and-pop stores, and other community-linked businesses – toward Wal-Mart. Claiming building a new Wal-Mart will draw in customers from areas without a Wal-Mart is not the same as claiming growth will occur because of Wal-Mart. Such development actually just rearranges spending patterns within an area. The gains to the new host community are the losses of another community. And they will soon be the losses to the host community as well, as Wal-Mart begins to attract away customers from other existing businesses. (Here’s what this type of development and business practice does to encourage sprawl and devastate the environment.)

Think you’re getting a deal? Always the low price? Think again! The September 2005 issue of Consumer Reports exposed, “None of the major retailers outpriced the independents for ranges, refrigerators, and other large appliances…What’s more, readers found Wal-Mart no cheaper than other stores overall, despite it’s low-price slogan.” Categories like prices, service, selection, quality, and checkout ease were compared. Overall, the local stores outscored the big competitors by a considerable margin.

By saturating the market with subsidized stores, their strategy to control market share (by buying up all the competition and driving others out of business), Wal-Mart is being publicly financed to compete with similar, already existing businesses that provide the same services; whilst usually paying a lower wage and providing substandard, if any, affordable health care options. For every job a Wal-Mart creates, 1.4 retail jobs are eliminated from the local economy. Yet, we as taxpayers are subsidizing this loss of jobs, the lower wages, and the general degradation of our communities by allowing such renegade retail profiteers into our neighborhoods.

Twenty-seven percent of Wal-Mart associates’ children are on public assistance programs such as Medicaid or the State Children’s Health Insurance Program. Other research found Wal-Marts cause taxpayers to pay more than $2,000 per employee in social safety net costs. As detailed by Wal-Mart Subsidy Watch, “In June 2007, the State Department of Health and Family Services found that, of all employers, Wal-Mart had the largest number of workers participating in Badger Care, the state’s health insurance program for low-income families. In addition, 776 dependents of those workers were in the program. In total, the Wal-Mart workers and their dependents were costing the state about $3.7 million a year.”

Also, women make up 72 percent of Wal-Mart’s sales force but only 33 percent of its managers. As Liza Featherstone reports, gender discrimination is such an issue at the company, “…current and former Wal-Mart employees are charging the company with systematic sex discrimination in promotions, assignments, training, and pay.”

Some discord has arisen over the typical big-box design. There have been calls for more neighborhood-cohesive styling elements to the building. And - although big boxes are eyesores – as we’ve seen, the real dispute about Wal-Mart and big-box developments is over the seasonal, low-wage jobs lacking good healthcare, and the environmental and community impacts of such developments.

To meet Wal-Mart demands for low-prices, suppliers continually have to cut costs – which involves layoffs and/or outsourcing jobs. This exact problem doomed Milwaukee’s own Master Lock. In 1997, Master Lock began importing from Asia and opened a factory in Nogales, Mexico. As Charles Fishman explains, “The Milwaukee employees of Master Lock who shopped at Wal-Mart to save money helped the hand shove their own jobs right to Nogales.” Additionally, Stephen Dobbins in the same articles adds “…you can’t buy anything if you’re not employed. We are shopping ourselves out of jobs.”

Wal-Mart will increase the tax base, some will argue. As Good Jobs First discovered, Wal-Mart, in 30-40 percent of its facilities, contests it's property valuations to diminish their property tax bill. The Super Centers and Discount Stores win about 45 percent of these appeals. The Distribution Centers win about 65 percent of the time. This means less money for local services, schools, projects and programs. So, to keep up the services we all enjoy in our communities, thanks to the likes of Wal-Mart not paying their fair share, you and I pay more (and this is on top of the publicly financed subsidy you're paying for that your city already gave them).

Rather than continuing this beggar-thy-neighbor, war-among-the-states policies, Common Councils and Planning Commissions should be developing regional, state and federal proposals – alliances among public entities, rather than against one another. This encourages old economic staples like comparative advantage and clustering, and takes into consideration the local history of a place. These policy options are much better for all of us, rather than the false promises of job creation and the environmental irresponsibility of big box development.

Afterword:

“With more than $100 billion in personal assets among them, the five Waltons occupy positions six through ten in the Forbes billionaires rankings, twice as rich as Microsoft’s Bill Gates, the guy on top…It [Wal-Mart] uses its economic and political power to extend the scope of the low-wage economy and threatens to extend its business model into other sections of the economy, undermining wages and still more workers,” affirm Glen Ford and Peter Gamble.

For Further Reading:

Big Box Economic Impact
Big Box Swindle
Great American Jobs Scam
Rolling Back Property Tax Payments
Shopping for Subsidies
Wal-Marts Great Tax Dodge

Prophets of Doom

The Journal-Sentinel’s praise of Paul Ryan as of late is getting scary. They have a new editorial bestowing the virtue of his “Road Map for America’s Future,” with a few caveats. This editorial repeats many of the lines they gushed in a previous piece. The problem is that it's mostly rubbish.

First of all, Social Security is fine. For the mainstream media to keep pushing these ominous threats about Social Security's impending doom is inexcusable. Even the Congressional Budget Office admits that Social Security is solvent, as is, without any changes until 2052, and up to 80 percent after that. And the idea that somehow privatizing it, making it dependent on the whims of the stock market, is the answer, is a myth. Wake up, people! This is simply one more, in a long line of Republican schemes to loot the Treasury for their own benefit.

Medicare is a quandary, but not because of it’s entitlement issue. It’s because of managed care and the pharmaceutical industries skyrocketing profits. For our health care we spend twice as much as any other developed nation, we get worse results, and 50 million are uninsured.

Also, the push for 10 percent and 25 percent tax rates, "simplified" rates, or a flat tax has been debunked since the first charlatan plotted it. How about we just remove the write-offs, deductions, exemptions, subsidies, and other nefarious tax code ploys that merely benefit the uber wealthy?

This all ties in neatly with our current recessionary woes. Much of this is due to deregulation. Those whom are merely guided by the profit motive cannot be counted on to regulate themselves. This travesty is just more reinforcement for the case for government intervention. Why do we pay $100's for pills while other nations charge pennies? Because the pharmaceutical industry pays for the politicians that allow such. And it's the same reason why the services provided by private managed care companies are so deplorable.

Ryan should be applauded? I hope this is the Journal's attempt at sarcasm. He’s wrapped the same old greedy, exploitative, reward-the-rich Republican idiom in modified rhetoric and snappy one-liners. Just when I believe the Journal-Sentinel cannot not possibly sink any lower as a newspaper, the bottom falls out.

All of these proposals have been laughed at by actual economists (not pretend ones like Paul Ryan) and proven to be Trojan horses attempting to push through typical regressive Republican policies.

What does Paul Ryan have to say about the war? The money we’ve spent on that travesty could shore up Social Security and Medicare for decades. (Not to mention what could be achieved by simply making corporate tax avoiders pay their fair share.) And the real ludicrous part is that the Journal-Sentinel sees nothing wrong with applauding Ryan’s ridiculous proposal, but can’t connect the dots between money being spent in Iraq and money to take care of our nation's sick and elderly.

The media allowed our horrible president, and has continued to allow him, to spend billions on a fabricated and misguided war. This money could have been spent on our real priorities – Medicare and/or fixing the health care system, public infrastructure, education, etc. In economics that’s called an opportunity cost. But I’m sure Paul Ryan and the Journal-Sentinel, being the great economists they are, knew that.

For Further Reading:
Alarming Parallels Between 1929 and 2007
Bat Boy Lives! As Do Myths About Social Security
Debunking The Social Security Myth
Deregulation & The Financial Crisis
Don't Privatize Social Security
Flat Wrong
Inventing A Crisis
Myth of Social Security's Imminent Collapse
Simple Arithmetic Of Flat Taxes
Tax Plan A Con
What Social Security Crisis?
Why Not The Best?

Cognitive Dissonance

A recently released "study" finds that conservatives are happier than liberals. I guess it's true what they say, ignorance is bliss.

The Voter Fraud Hoax

Voter fraud delirium is the latest in the Republicans attempt to suppress the vote of elderly and low-income constituents, whom usually vote Democratic. As Michael Waldman and Justin Levitt note, "At least 11 percent of voting-age Americans [approximately 21 million Americans], disproportionately elderly and minority voters, lack the necessary papers [for IDs]." Study after study in state after state has shown that voter fraud is a myth.

In Wisconsin a voter identification law would disenfranchise 13 percent of the population. Conversely, positively, same-day registration in Wisconsin is partially responsible for our 10 percent higher than the national average voter turnout. Richard G. Frohling, an assistant United States attorney in Milwaukee, asserts, "There was nothing that we uncovered that suggested some sort of concerted effort to tilt the election." Of the hundreds initially suspected in Milwaukee, 14 faced charges, only 5 were convicted.

The recent case of Indiana is one of the more perplexing. The law there purports to stop "voter impersonation," yet the number of prosecutions for such events ever in the state is zero. Due to the law, election officials recently turned away nuns at their polling place.

Jeffrey Toobin explains, "Nationwide despite an attempt by the Bush Justice Department to crack down on voter fraud, there were only a hundred and twenty federal prosecutions and eighty-six convictions between 2002 and 2006 -- a period in which close to four hundred million votes were cast." As Eric Lipton and Ian Urbina state, "Many of those charged by the Justice Department appear to have mistakenly filled out registration forms or misunderstood eligibility rules."

Karl Rove instituted this devious voter fraud scheme to curb those whom typically vote Democrat from doing such. As Harold Meyerson comments, "Five of the 12 federal prosecutors either sacked or considered for sacking last year had been singled out by Rove and other administration officials for nonperformance on voter fraud...all five came from states where Republicans were embroiled in tight election contests." David Iglesias (District of New Mexico), one of the eight U.S. Attorneys fired in 2006 for failing to find and prosecute voter fraud, after convening an election fraud task force in 2004 never found enough evidence to establish a single case.

With voter turnout abysmally low compared to other nations, the problem isn't that too many are voting, but too few.

Economic Stimulus

The answer to our present economic hardship is not suspending the gas tax (robbing our transportation infrastructure of much needed revenue for repairs and maintenance), nor is it initiating/maintaining regressive tax cuts (robbing our state and federal treasuries of much needed revenues for aid, programs, and operations).

The answer is progressive, uniform taxation. That means making corporations and capital pay their fair share. Of course this coincides with a broader need for trade reform (with revised environmental and labor standards) alongside a reinvigorated industrial/manufacturing policy. Another much needed correction is removing the cap on income taxed for Social Security. And, if anything, gas should be taxed at a higher rate. Plus, a whole host of regulations need to be re-enacted so that these booms and busts are not so severe in the future. It’s enough of this band-aid economic policy that allows the wealthy to takes risks and reap rewards at the expense of working men and women the world over.

Our minimum wage, let-the-bankers-call-the-shots, economy is not sustainable, as witnessed by increasing volatility and bailouts. The U.S. has gone from a leading creditor, manufacturer, and energy producer, to the largest importer of manufactured goods, the number one importer of foreign oil, and a debtor nation.

We have gone from a nation that produced meaningful, useful things, to a nation that buys shit...a lot of shit! Sadly, we’re buying all this shit with debt. We have gone from a nation that had a tax structure that allowed one breadwinner to maintain a good standard of living and provide for a family, while also being able to look forward to a content retirement. Now we’re in the midst of a zero-sum economy where most people are drowning in debt to maintain the appearance of a decent standard of living.

We used to innovate and produce technologies and products that were used worldwide. These days the only ones making money are the hedge fund managers and bankers moving highly risky, “securitized” financial packages around the globe. And even when they lose and their speculation goes belly-up, the taxpayers are the ones whom ultimately pay for the bailout. They get all the profit while we are responsible for all the risk.

Sprawl & Sewer Overflows

Don Behm's April 19, 2008 Milwaukee Journal-Sentinel article goes on at length about the "swelling sanitary sewers," but no mention is made between this phenomenon and it's connection to urban sprawl. This is a glaring and puzzling omission.

As Dr. Jane Frankenberger, an Assistant Professor in Agricultural and Biological Engineering at Purdue University, reports, "The fate of rain that falls on the land is strongly affected by land use. In a forest or grassy area, most rain soaks into the soil (infiltrates), where it eventually is used by growing plants or percolates to ground water. Ground water flows slowly into streams, usually over a period of months, providing steady base flow (flow in streams in times without rainfall) that fish and other aquatic life need. By contrast, most rain that falls on a parking lot runs off immediately, often draining into storm sewers that transport it to a stream or ditch."

As noted by the Envirocast Weather & Watershed Newsletter, "Impervious surfaces can create a number of environmental challenges, such as more frequent and severe urban floods, ... and pollution in the form of storm water runoff." The more we build endlessly upon open space, paving parking lots and highways, we are diverting water with deleterious effects.

American Rivers, of the Natural Resources Defense Council and Smart Growth America, explains, "... sprawl not only pollutes our water, it also reduces our supplies. As the impervious surfaces that characterize sprawling development -- roads, parking lots, driveways and roofs -- replace meadows and forests, rain no longer can seep into the ground to replenish our aquifers. Instead, it is swept away by gutters and sewer systems."

The Alliance for the Great Lakes in the 2007 The Great Lakes Water Quality Agreement inform, "The systems [sewage treatment] are aging and many are inadequate to meet currents needs, including the increased volume of wastewater imposed by suburban growth."

Sprawl and Big Box stores and strip malls are integral in creating impervious surfaces, as detailed by the Sierra Club, "Big Box stores like Wal-Mart threaten our landscape, our communities and the environment by building on the fringe of town, paving vast areas for stores and parking lots, and undermining the economic health of existing downtown shopping areas...Large parking lots contribute directly to non-point source water pollution, which is the leading cause of water pollution in the U.S. Each acre of impermeable parking surface produces runoff of 25,000 gallons of water during a 1 inch storm. By contrast, a one-acre undeveloped site only has runoff of 2,700 gallons during the same storm. Runoff from impermeable surfaces leads to erosion, flooding, and the flow of pollutants like oil, chemicals, bacteria and heavy metals into waterways."

With some suburban areas already fearing the possibility of running out of water, the fact that, "Sprawling development slows the replenishment of underground aquifers, making it harder for communities to cope with drought," as noted by Cat Lazaroff of the Environment News Service, should be a major point of discussion when we are speaking about sewer and sanitation problems and resolutions. In the same article, Betty Otto of American Rivers affirms, "Sprawl development is literally sending billions of gallons of badly needed water down the drain each year ... the storm drain"

The National Resource Defense Council elucidates, "Haphazard sprawl development also brings runoff water pollution to more and more watersheds, degrading streams, lakes, and estuaries. Natural landscapes, such as forests, wetlands, and grasslands, are typically varied and porous. They trap rainwater and snowmelt and filter it into the ground slowly. When there is runoff, it tends to reach receiving waterways gradually. Cities and suburbs, by contrast, are characterized by large paved or covered surfaces that are impervious to rain. Instead of percolating slowly into the ground, storm water becomes trapped above these surfaces, accumulates, and runs off in large amounts into waterways, picking up pollutants as it goes."

Here again, yet another crucial issue the media should be leading the discussion on, but sadly are only reporting a, meaningless without full context, portion of the story. They should be forcing our politicians and corporations to think big about and tackle such an immediate need. Fostering debate, thereby leading the charge to develop sustainable policies dealing with sprawl, sanitation, and, in general, the environment.

Class Warfare

The Milwaukee Journal Sentinel’s take on the Columbian trade agreement, “In a fog over trade,” is just more refuse on the pile of globalization garbage being pushed by the free traders. “Democrats once had a reasonable trade policy. They understood that if the economic pie grows, everyone benefits,” chimes the editorial. The economic pie has grown for the last three decades. (Although this growth was not as stellar as the growth during our belittled three-decade, post WWII, high-tax, semi-protectionist days.) Yet wages over our modern, free trade, period for most Americans have stagnated. Wages have not kept pace with productivity, which was supposed to be part of the deal when it was being pushed in arrangements like the NAFTA. In reality, free trade agreements are a means of reversing the power of labor, which workers have fought decades for.

The implication is globalization is a Pareto improvement. Globalization is a change that makes some better off and only a few, so they hope, worse off. But, as we see, this isn't reality. Some are better off, but many are worse off. It's as if we're reinventing the wheel. Developed countries' workers have earned their fair share of the economic pie (fair wages) and the inherent rights from the struggle to obtain such. To simply allow other laborers (lower wage in totalitarian states) to be exploited, thereby weakening and fracturing Labor as a whole, merely redistrbutes profit upward to Capital rather than Labor. This is neither a productive nor a fair economic model the U.S. should be exporting or participating in.

The countries that have accomplished economic ascendancy have done so by fashioning policies to their own needs, not by following neo-liberal orthodoxy (aka The Washington Consensus). Today, China and India have tariffs ranging between 20 and 30 percent on manufactured goods.

The editorial states, “The United States must live in the real world - the real globalized world. Protectionism doesn't allow for that.” Japan, Canada, and most European countries enjoy a standard of living as well as if not better than ours. On numerous quality of life indicators, these places score better than the U.S. But they also pay better wages, have universal health care, and have better institutional supports for those at the lower rungs of the ladder. Protectionism does allow for that. In fact, almost all countries have used protectionist measures to protect their infant industries and to develop economically throughout time.

Our new unregulated, hyper-financialized and securitized, speculative economy is the prime culprit in the modern-day war against Labor. Capital is opening up borders around the world so they can avoid regulation, environmental concerns, and paying a decent wage. We have morphed from an economy fueled on labor and production into a capitalist casino. Today, circulating money around the world in highly dubious financial transactions is the key to wealth creation.

Unadulterated free trade, virtually non-existent taxes, and the lack of any protectionist measures, as an economic development policy is a modern scheme (neoliberalism and/or the Washington Consensus). This is a ruse that is failing miserably. Developed countries grew at 3.2 percent during the 1960-1980 period. Their growth stalled to just 2.2 percent, from 1980-2000. Over this same time, developing countries growth decreased from 3 percent to 1.5 percent.

Maybe it’s time for America to, rather than jingoism and conceding to business, start applying, again, the principles established in the late 19th and early 20th centuries and strengthened by the New Deal. The standards that allowed one to earn a living wage, afford health care, a home, and be able to retire. This, alongside stronger modernized regulations to curb the risky speculative greed culture. Trying as much as possible to follow the policies of that time of shared prosperity, such as the post WWII period, when the middle-class was created.

55 percent of Americans make under $50,000 a year; and 30 percent make under $25,000 a year. Globalization, which merely allows cheap labor to compete with well-organized labor, benefits the CEOs and shareholders, whom are few in number and contribute nothing to the productive economy. While the wages and rights of the workers, the ones actually producing the goods, are steadily undercut. So, as we see, it’s more of the same old story – the workers make the sacrifice, the rich reap the rewards. I guess this is the "real world" the Journal Sentinel wants to promote?


For Further Reading:
Crunchian Take on Globalization
Economics of Globalization
Essays on Globalization
Essence of Neoliberalism
Global Networks, Imperial Culture
Great Myths and False Promises
Great Myths of Globalization
Labor History
Myth of Foreign Investment Benefits
Rethinking the Global Political Economy
Union Movement's Proud Past
What is Neoliberalism?

Miller Pork

Don Walker’s April 3, 2008 article, from the Journal-Sentinel, “Miller Park: Economic promises got it built. Has it paid?” implies there is a debate among economists about whether communities benefit from stadiums or not. There is about as much a debate among economists on this subject as there is among climate scientists about global warming.

But lets not get bogged down in nuance and fact.

First, we'll start with this corporate welfare defender. In this corner - the number one advocate, expert witness, and stadium-subsidy supporter - why, none other than Bud Selig. (Which is like asking Bill Gates if he thinks one should buy Microsoft.)

Walker states, “Selig believes passionately that such revenue growth did occur in the metropolitan area and commissioned a study released in October 2006 that showed the financial impact.” Amazing! Commissioning a study to show an impact and, low and behold, it does.

Selig then went on to use the well-worn contention about the intangible benefit of a sports stadium to a community. The problem with this type of implied, quasi-analysis is that, through taxation for this stadium, taxpayers felt a tangible deduction in their income. The hopes of everyone gathered at the ballpark to watch the game (direct use), or everyone getting together at the local pub to root on the Brewers (spillover) is all very quaint and well, but it’s not an economic impact analysis and it isn’t an economic development policy. Hoping and wishing should not be public policy.

Most studies show decreased activity in correlated economic sectors and the money being spent is merely a realignment of existing spending patterns. Growth is not occurring. Stadium subsidization is corporate welfare and a zero-sum game. Study after study has been done -- just because you build it, there’s no guarantee anyone is going to come. And, more likely, because you've built it, you now have less dollars in your city for schools, roads, parks, public transportation, etc.

Another hilarious declaration was Selig saying, “It [the stadium] saved baseball for Milwaukee and Wisconsin.” This equivocation reveals the real intent of the whole stadium-booster cabal: use public dollars for private playgrounds or else they will move to another city that will succumb to their bribe. And because this type of extortion is common in so-called economic development practices, it’s happening in every city. If people want to see the biggest welfare mothers driving around in their Cadillac's look no further than the corporate community, whom receive millions of dollars of giveaways, like stadium subsidies, every year.

The numbers the article's proponents cite from the 2006 study also seem to have been pulled from thin air. The talk of increased activity at hotels, restaurants and retail stores is mostly that – talk. Marc Levine of UW-Milwaukee Center for Economic Development [a former employer], the opposing view in the article, states that the actual total employment in the county and employment for hotels is down since the opening of the stadium. When we evaluate a stadium’s impact with measurable indicators we see no such gains in areas such as retail and hotels from having a stadium, as claimed by the boosters. So, I guess we're back to those intangible benefits.

If ifs and buts were candy and nuts, we'd all have a merry Christmas.

Obama Making Corporate Hacks Nervous

John Torinus, of the Milwaukee Journal-Sentinel, wrote a Sunday March 23, 2008 article, Obama speech full of anti-business rhetoric, lambasting Barack's willingness to confront the business community. Everyone should know by now that in our fascist state, where corporate and government interests are one in the same, no such debate should be proposed.

Torinus asserts, "No Wisconsin corporate executive has been charged with corruption...that can't be said for political or religious leaders." He then goes on to say that these executives are actually trying to solve social problems. Hmmm, how are they doing this? By avoiding $1.3 billion in taxes yearly?

But Obama's premise wasn't merely a jab at Wisconsin's business sector, but at the entire corporate ethos, making Torinus' argument misplaced and illusory. Barack is referencing the likes of the Savings & Loan scandal, Long Term Capital Management, Enron, WorldCom, Arthur Anderson, CountryWide, et al. This isn't simply bad judgment by a few; this is the corrupt paradigm under which big business seems to operate these days.

Torinus then states that except for a few bad apples, corporate accounting is practically infallible, while it is government accounting that is full of fuzzy math. I'd have to agree this is true for the Bush administration, but not for most of government. Especially since the mid-1980s, more and more accounting gimmicks, which originated in the private sector, have come to light and have cost taxpayers billions of dollars.

One of his best lines, also a complete distortion, is that none of this is really the corporate sector's fault, but the fault of Congress because they make the rules. The corporations are merely taking advantage of them. Remind me, though, who again is paying for these politicians to get elected? Oh, that's right, the same corporations dodging taxes, increasing the burden on average Americans, and then having their bought-and-paid-for politicians write legislation in their favor. Ethics no longer apply. Scapegoats are aplenty when accountability begins reaching up the hierarchy.

Another absurdity Torinus spews forth, "When a government runs red ink, it either prints more money or raises taxes and then stumbles on. Businesses go under." Actually this is not the case for the big ones, who have their political apparatchiks lobbying and legislating in their favor. They, as we've seen recently, have the Federal Reserve step in and bail them out, passing the bill of their speculation and mismanagement on to the taxpayers.

Also, sorry Mr. Torinus, the rich don't "carry a hugely disproportionate share of the tax burden." As a percentage of income earned, most states tax their low- and middle-income earners more than the rich. (Though, obviously, if his point was that a millionaire pays, in total dollars, more than a poor person...duh! But when we're talking proportions, a better measure to use is percentage of income paid. But as such an astute businessman, I'm sure he knew that.) And while we're at it, Wisconsin has one of the lowest corporate tax rates in the U.S. The low, almost non-existent, corporate tax rate given to Wisconsin business is well known to Torinus. He is the chairman of Serigraph Inc., which paid nothing in Wisconsin corporate taxes in 2003 and 2004. He is also a board member of Wisconsin Manufacturers & Commerce (the lobby for Wisconsin big business), an organization where even when it's members pay no taxes at all still feel taxation is too high.

Please, Mr. Torinus, you and your ilk in the corporate community whom have benefited most from the largess of government over the past three decades, stop baldly lying and presenting a false reality about what a harsh environment you operate in. Stop repeating your same phony lines and baseless claims. The middle-class is disappearing, inequality is rising, unemployment and poverty are rising, CEO compensation is climbing, and the corporate tax rate is continually falling (along with any and all taxation on capital). Spare us your woe-is-me diatribes for the corporate sector.

For Further Reading:
Free Lunch and Perfectly Legal by David Cay Johnston
Big Box Swindle by Stacey Mitchell
The Great American Jobs Scam by Greg LeRoy
Tax Fairness Institute for Wisconsin's Future
White House For Sale

NAFTA & The Myth of Free Trade

John McCain recently indicated his position in the free trade debate and belittled his Democratic challengers by dismissing their reservations about and proposals of possible reform for the North American Free Trade Agreement (NAFTA). Yet, why should we trust McCain's judgment of NAFTA or anything closely resembling economics when he readily admits he doesn't understand the subject?

McCain went on to state, "The fundamentals of our economy are still strong." Huh? I think he's been on the campaign trail a bit too long. You don't have to have be an economics PhD to read the newspapers and grasp that our economy is headed in the wrong direction. Many parties and policies are to blame for this downturn. Reagan/Thatcher deregulation, lower taxation, and decreased protectionism; Greenspan/Rubin/Clinton continued deregulation, balanced budget obsession, and the dollar/stock/housing bubbles; and Bush's even lower taxation, deregulation, and costly and unnecessary war. So as we can see, there is a theme running through the last three decades and much of it is coming to a head.

In the 1980s we bailed out the savings & loan industry. Which, as Paul Krugman calculates, cost taxpayers 3.2 percent of GDP, or the equivalent of $450 billion today. Today, we're bailing out the cesspool that is the subprime mortgage industry. Both were caused by excessive deregulation and lack of oversight into the activities of what have become evermore-risky financial schemes. The U.S. has been on a steady path of lowering taxes on its corporations, tearing down trade restrictions (mostly to undercut labors' gains and their bargaining power), and removing any management and boundaries of standards of acceptable business practice. We're letting the foxes watch the hen house. All of this is done to please Wall Street-ers and to cook the books for acceptable quarterly returns for shareholders.

As Nouriel Roubini notes there now exists a shadow financial system, composed of conduits, money market funds, hedge funds and other non-bank financial institutions. "The Fed now can lend unlimited amounts to non-bank highly leveraged institutions that it does not regulate...By lending massive amounts to potentially insolvent institutions that it does not supervise or regulate and that may be insolvent the Fed is taking serious financial risks and seriously exacerbating moral hazard."

We've entered into an era of uber casino capitalism where rules and ethics no longer apply. Aided by bought-and-paid-for government policies, elite capital plunders and pillages the globe in search of higher returns. This is all claimed under the guise of creating jobs, advancing democracy, increasing wages, and advancing civilization. Yet all of these assertions are empirically and demonstrably false.

Alice Amsden, an MIT economist, has demonstrated that most of the successful Asian nations have violated every aspect of the law of comparative advantage on their path to economic success. Ha-Joon Chang, a Cambridge economist, has shown that almost all countries have used protectionist measures to protect their infant industries and to develop economically throughout time. Unadulterated free trade, virtually non-existent taxes, and the lack of any protectionist measures, as an economic development policy is a modern scheme. This is a ruse that is failing miserably. Developed countries grew at 3.2 percent during the 1960-1980 period. Their growth stalled to just 2.2 percent, from 1980-2000. Over this same time, developing countries growth decreased from 3 percent to 1.5 percent.

Alexander Hamilton, America's first treasury secretary, proposed measures to protect America's infant industries. Since 1791, up until the Second World War, the U.S economy grew behind huge tariff walls, with industrial tariffs ranging from 25 to 40 percent. Direct government participation and protection of industry resulted in the economic strength and maturity of the nation. "Within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade," Ulysses Grant (civil war hero, U.S. president 1868-1876) commenting on U.S. trade policy with parallels to England's history of protection and their change in attitude to free trade when they saw that they had gotten all that protection could offer them.

The countries that have accomplished economic ascendancy have done so by fashioning policies to their own needs, not by following neo-liberal orthodoxy (aka The Washington Consensus). Today, China and India have tariffs ranging between 20 and 30 percent on manufactured goods. The productivity gap between rich (developed) and poor (developing) countries is much higher today than it was, so it only follows that tariffs should also be higher. The ratio of per capita income in purchasing power parity between the richest and poorest developed countries was, at most, four-to-one. Today the gap is around fifty-to-one. Today's developing countries will have to impose higher tariff rates than those used by developing countries in the past if they are to provide the actual same degree of protection to their industries. Infant economies cannot compete with mature ones. Free trade agreements between countries with vastly different levels of productivity cannot succeed over the long-term.

From 1993 (NAFTA's inception) to 2002, the U.S. lost 879,280 jobs due to the trade agreement. Wisconsin has lost 23,028 jobs due to NAFTA over this period. Productivity has risen by 48 percent since 1973, yet real hourly compensation has increase by only 20 percent. In 1973 manufacturing accounted for 24 percent of total U.S. employment, it is now only roughly 10 percent. Trade liberalization has been most hurtful to those without college degrees, whom have actually seen their wages decline.

The neoliberal experiment has failed. It's time for a new New Deal. Imagine that -- government restricting corrupt financial practices and putting the people back to work, whilst also initiating some new programs, legislation, and policies aimed at benefiting the majority of the population rather than a select monied few. As Stanley Kutler's recent article states, "The New Deal launched vast public works projects, expanding and improving the nation's infrastructure...More than eight million people working on one million projects, benefited from the program. The Roosevelt administrations enduring legacy came from its reform measures...the Social Security Act...legislation and regulatory commissions for banking, securities, communications, and labor practices." If only we hadn't spent the last three decades tearing apart these policies and legislation, much of today's horrible financial news and depressing economic conditions could have been averted.

And this also ties into immigration, obviously. First, although this is free trade and is supposed to be based on Ricardo's comparative advantage, which is supposed to lead to efficiency and productivity gains. But with the U.S. continually subsidizing farmers, we artificially lower the price of American agricultural exports and hurt developing countries. Such as Mexico, in one area where they can actually produce at a lower cost. Instead, our subsidized agri-business drives Mexican farmers off their land because of our low priced agricultural products. And, because of this, Mexican wages have actually fallen since NAFTA. Hmmm, I wonder where they might go to find better wages?

For Further Reading:
Challenging Neoliberal Myths
Consensus Against Neoliberal Washington Consensus
Economics of Empire
Fair Trade
False Promises on Trade
How the Washington Consensus Endangers U.S. National Security
Myth of Free Trade
NAFTA at Ten: The Recount
Post-Washington Dissensus
Rethinking Global Political Economy
Subprime Bailout Bonanza

CEO Compensation Scam

Long overdue, the House Oversight and Government Reform Committee is looking into the ridiculously overblown CEO compensation. Executives are now averaging pay that is over 300 times as large as their average worker (in the late 1960s, CEOs earned about 25 times as much). CEOs have seen double digit pay increases, year-in and year-out. Average workers have been lucky to see their pay keep up with inflation. If the minimum wage had seen the same increase as CEO pay since 1990, the minimum wage would be $23.03.

Even when they drive their companies into the ground, or merely oversee their company's stock devalue by 80 percent or so, these Captains of Industry walk away with millions if not hundreds of millions of dollars in compensation. The executives' pay, alone, takes roughly 10 percent of aggregate net company earnings. And, the tax code also allows many nefarious ways to avoid or lower taxation on this overly generous compensation.

Additionally, as Dean Baker comments, "The typical CEO is not producing great returns for shareholders. The average return is weak, and in many cases shareholders are incurring loses due to CEO mismanagement."

Yet the mainstream media has to nerve to write stories complaining about workers whom make a living wage, or actually have health insurance and some sort of retirement plan, as if everyday laborers are the cause of companies budgetary problems. We keep getting fed this story that all workers need to be Wal-Mart-ized (low wages, no health insurance, etc.) if we want to compete in the global economy. It's always the unions fault. Those damn Joe and Jane Six-packs! How dare they ask for a wage that allows them to own a home, pay their utilities, afford medical care, and, god forbid, take an occasional vacation.

Hopefully this is just the beginning of the pulling back the curtain on this inverse Robin Hood scheme the elite have been practicing for the last three decades, whereby workers are the enemy and in need of downsizing, while the rich, no matter how horribly they fail, are allowed to extract larger and larger rewards year after year.

Subsidizing Mansions

Here is an alarmingly informative October 18, 2005 article from Professor Peter Dreier (key points are italicized below):

The two major homeowner tax breaks cost the federal government almost $90 billion last year—$70.1 billion for the mortgage interest deduction and $19.3 billion for the property tax deduction.

Less than one-fourth of all low-income Americans (those who have Section 8 rental vouchers or who live in government-assisted developments) receive federal housing subsidies. In contrast, almost two-thirds of affluent Americans—many living in mansions—get housing aid from Washington.

More than half (53.7 percent) of last year's $89.5 billion homeowner subsidies went to the 11.8 percent of taxpayers with incomes over $100,000. More than one-fifth (20.6 percent) of these subsidies went to the wealthiest 2.3 percent of taxpayers with incomes over $200,000—some living in mansions.

Wealthy households are most likely to own homes and to itemize deductions. Half of all homeowners do not claim deductions at all.

62 percent of households with incomes above $200,000 receive a homeowner tax break, averaging $7,219. In contrast, only 3.5 percent of households with incomes between $10,000 and $20,000 get any subsidy, averaging $317.

Only one-third of the 52 million households with incomes between $30,000 and $75,000 receive any homeowner subsidy.

Development, Sprawl and Water

Sprawl: low-density, lacks mixed-use, separates residential from non-residential property, lacks mass transportation options, increases auto-dependence and commute times, consumes more and more green space, and lacks affordable housing.

I know suburbanites feel they can just continue growing outward, building more roads and sewer lines, paving over more and more green space, and this will have no deleterious effects. Yet the real debate we should be having over the Great Lakes Water Compact is that the suburbs (and sprawl) are a misguided, unsustainable pipe-dream. We don’t have enough money to take care of the roads we have now, yet some want us to continue sprawling outward. America has more paved mileage per capita than any other country. Sprawl is merely duplicating infrastructure we already have. People complain about taxes now, yet they want to continue sprawling, which will only require more police, more maintenance, more of everything, which includes more taxes.

White flight and the “screw the inner-city” attitude is what drove suburbanites outward in the first place. All of this was encouraged by the highway and home-building lobbies. Suburbanites turned their backs on the problems of the city. This was also aided by federal policies. The Federal Housing Administration provided government-insured mortgages to whites in the suburbs (while denying them in the inner-city). Policies have also kept gas prices artificially low, while reserving gas tax and highway toll revenues for road-building rather than mass transit, which subsidizes suburban commuters and continued sprawl.

Another much touted, yet becoming more so destructive, policy tool is tax incremental financing (TIF). These were initially established to bring investment to blighted, low-income areas. But nowadays, more states are loosening their eligibility requirements and allowing affluent areas to reap the benefits. TIFs allow a municipality to issue a bond to pay for part of the costs of the new development. The property tax revenue generated by the development is then used to pay off the bonds. Some municipalities also allow sales tax increments, where the sales tax generated by the new development can be diverted to redevelopment costs.

The City has the trump card in these negotiations. If suburbanites want access to the City's water: 1) move back to the city, 2) pay a ridiculous amount for the water (to offset the negative externalities of such development), 3) pay for mass transit improvements to link inner-city unemployed with suburban employment, or 4) make some effort and recognition to show that suburbanites understand their present water-deprived reality and are willing to work towards a long-term, sustainable resolution.

We cannot keep pretending that we can do whatever we wish and mold nature to our liking. The suburban land of strip malls and highways is a blight and cancer on our landscape. The idea that suburbanites can use Lake Michigan water, take it from the Great Lakes Basin, divert it west of the Subcontinental Divide, and never return it, or somehow return it through pipelines, does nothing to address the unsustainable nature of sprawl, which is devouring our green space and natural habitat nationwide. And, as Barbara Miner reports in her Milwaukee Magazine article The Politics of Water, "One of the world's oldest lakes took less than 50 years to shrink away...diverting the Aral Sea's tributary rivers in order to grow cotton in the desert - turned into a massive ecological disaster." In the last few decades the U.S. population has grown by roughly twenty percent, but urbanized land has grown by over fifty percent. This cannot continue.

The simple fact that certain localities are running out of water is Nature’s way of saying you were not supposed to be there in the first place. The sooner we realize that we can’t keep running from our problems and building over evermore green space with parking lots and highways, the better off we will be, and the better off the planet will be.

For Further Reading:
Fair Faucet
A Firm Hand on the Spigot
Great Lakes Deal Announced
Great Lakes Forever
Options Running Dry
State Struggles on Where to Draw the Line
Those who control oil and water...
Time to start paying waters real price

Vouchers & Private Sector Accountability

As stated in the Journal-Sentinel's February 27, 2008 article, "Researchers based at the University of Arkansas said that city property taxes go up for each student who uses a voucher, compared to what would be the case if that student went to MPS, while state income taxes go down, as do property taxes in most of the rest of the state."

The voucher program doesn't produce better educational results, and it also increases homeowners' property taxes. Somebody tell me what voucher schools are good for again?

As we drive around the City avoiding potholes on roads we wish were maintained better, remember - money spent in one place is money that cannot be spent somewhere else.

Do we want better plowing? We better be prepared to hire more plow drivers and buy more equipment. Do we want the potholes fixed? We better be prepared to pay the costs. Nothing in life is free. OR ... We could cut off the voucher program since it achieves nothing better than the public schools, yet costs us more in increased property taxes, and put those savings toward potholes, snow-plowing, and much-needed infrastructure improvements.

The amenities we so often take for granted are the same ones we complain about when they are not perfectly done. We must remember all the areas that our taxes support. If each of us had to individually contract out for our own services, our individual cost would skyrocket. Although, I also understand the tax burden has been placed too heavily on individual homeowners. It's not a matter of taxes being too high. They're not. The services we want and the standard of living we expect in this community cost money. The problem is that the corporate community is shirking their responsibility and not paying their fair share.

Governments are forced to operate on shoestring budgets as it is. And one of the most ironic things is that one of the largest portions of local, city and state budget costs is private contracts. (Not to mention the tax deferments, exemptions, depreciation schedules, and a host of other tax avoidance schemes that corporations use.) Jobs that used to be public (government run) have, for the sake of "competition" and "the market," been outsourced to private firms. And this too is costing us more than it would have if we'd just kept the jobs publicly run.

For further reading:
Privatizing in the Dark
Stop Wasting America's Money on Privatization
Taking The High Road
Highway Privatization
Tax Hell Hoax
Privatize Equals Redistribute

Corporate Blackmail or How Taxpayers Pockets Are Being Looted in the Name of Economic Development

Here the Journal Sentinel's editorial page goes again on Feb. 22, 2008 pontificating about Oconomowoc's proposed interchange and shopping mall wonderland. The Journal-Sentinel is just so happy to be boosters for taxpayer dollars being spent on private developments. If this such a crucial development and such a can't-miss project, if the market is speaking and telling these wise private developers that they can't go wrong with this plan, why does the public have to pay for it?

This is economic development. We hear so much about how great the free market is and how government needs to get out of the way. Yet every project that a private company moves forward with is in part funded with taxpayers dollars. They have their hand out every time. This form of legalized bribery, what some call employment maintenance and retention policies, where companies play state versus state and city versus city to see who will bid up the subsidy to fatten the blackmail bounty for the company. "Give us money to build here, or someone else will give us money to build there." When is the Journal-Sentinel going to do a multi-part series on this corporate welfare, this looting of public dollars which happens across every city and state?

The editors claim, "Actually, the original expectation for some was that Pabst Farms was going to be a national model for a comprehensive planned development, with commercial, residential and amenities all balanced in green harmony. That dream has fallen by the wayside and is unlikely to be revived to its full extent." Green harmony? Next to an interchange? Alongside shopping malls? This is the comprehensive plan intended to be a national model for how we ought to live?

An even more laughable quote, "Pabst Farms is a critical development for the region. Although plans have been scaled back, it still needs to be done right." I still haven't heard why Pabst Farms is a critical development for the region. It seems that repairing and maintaining the infrastructure we already have, injecting much-needed funds into our schools, rehabilitating blighted buildings and brownfields, and bolstering our public transportation systems are much more important to our regional health and sustainability. These types of development simply mirror the entertainment options we already have in the region. Such developments simply add more sewer lines, more roads to patrol and plow, and merely act as substitutes for identical development elsewhere in the region. This isn't growth. This is a zero-sum game.

People that go shopping at this proposed development are going to be people that are not shopping at Mayfair, the Grand Avenue, or Southridge. People from all over the state and the country are not coming to Oconomowoc to shop. This will lead to a realignment of leisure spending, but no growth will occur. Retail is not economic development. There is a fixed amount of disposable income people have to spend. Retail simply moves this money around. It shuts down competing stores and it does not create jobs. The only location where retail could possibly be implied to be a development catalyst is if it were to take place in an older, disinvested, blighted neighborhood.

Another issues to consider is the pay of the types of jobs created by such development. The jobs will not pay enough for the workers to even afford to live in the homes in the residential part of this plan. It will merely create more seasonal, part-time, substandard or nonexistent health-care benefit, low-wage jobs.

[For a better look at the schemes of General Growth Properties and their ilk, check out Good Jobs First's report Growing At Whose Expense?]

Wisconsin Tax Truths in the Land of Tax Trickery

The following is a point-by-point battery of tax information that will hopefully dispel some common myths and place the taxation discussion in context.

For fiscal year 2002, state and local government spending averaged 19.9 percent of total state income. Wisconsin averaged 21.4 percent, which ranks 18th among the states. And in the middle among neighboring states: Iowa 21.6, Minnesota 21.5, Wisconsin 21.4, Michigan, 20.3, and Illinois 18.1. Yet somehow the media and special interests would have you believe spending is out of control. It isn’t.

Over the last 20 years, spending in Wisconsin has declined steadily relative to the U.S. average, and is now half of the level it was in the mid-80s. Pundits and radio talking-heads bellow about excessive spending and such. They’re wrong and willfully misinforming the public.

There’s been no surge in state and local taxes, which now take a smaller percentage of total income than in the 1980s and ‘90s. Milwaukee taxpayers pay a smaller proportion of their income in city property taxes than do almost all their suburban neighbors in Milwaukee County. Yet from some of the articles being written most lead one to believe the City is overly expensive and the suburbs are a bargain. Yet the reality is almost just the opposite as far as tax efficiency is concerned.

Here are property taxes as a percent of income: 1960 – 2.61%, 1970 – 2.86%, 1980 – 2.76%, 1990 – 2.29%, 2000 – 2.26%. This illustrates how important it is to put things in context and to frame the topic being discussed. As a percent of income, taxes haven’t increased as much as wages. So even though the dollar amount on your property tax bill has increased (the work of inflation and higher assessments due to a booming market), on average, so have your paychecks (even though barely, again, accounting for inflation). One thing to remember - even though, let’s say your home appreciated by 10 percent, that does not mean your property tax is going up 10 percent. The bill depends on 1) the overall appreciation occurring in the real estate market and 2) the total City budget. So, if all values averaged a 12 percent increase, chances are, your bill will go down. And, if you’ve see any pay hike at all, your property taxes are now an even lower percentage of your total income. It should also be pointed out that these taxes pay for: City services, County services, public schools, MATC, and MMSD. The array of services and amenities provided are quite a bang for the buck.

The most accurate way to compare taxes in Wisconsin with those of other states is to look at all the forms in which taxpayers give money to support state and local government, Such as state taxes (income and sales), local taxes (property taxes and sales), and fees for services. On this broadest measure of how much government takes from its citizens, Wisconsin ranks 15th. Wisconsin funds services more from taxes than fees. Again, putting things into perspective, taking a more holistic view, we see that Wisconsin is not the tax hell certain factions claim it is.

Increases in individual income and property taxes are due to the decade-long shifting of tax burden from businesses to individuals. A series of exemptions for business property over the last 30 years has significantly reduced business property tax costs. This, in turn, has increased the taxes paid by homeowners, from below 50 percent of property taxes in 1970 to nearly 70 percent today. When businesses pay less, homeowners pay more. The next time you here some supposed expert pushing for lower taxes, try to get a handle on the fine print. The majority and consensus of research has shown that lower taxes alone do not attract nor create jobs. The next time someone says we need to provide a subsidy, create a TIF, exempt a business, provide a tax break, etc., be very leery. There is no free lunch. A tax deduction for business is an increase for homeowners.

The fiscal gaps of the early 1990s were closed by raising regressive sales and excise taxes. Taxes were not raised on the rich, corporations were not asked to pay more. This is just another example of how those with the most means are not asked to sacrifice for the sake of community. When budget gaps need to be closed, average taxpayers pay more, and/or services for those taxpayers are cut. Concurrently, corporations and other well-connected are sheltering income, avoiding taxes, and putting their hands out for taxpayers subsidies. We have gotten rid of welfare as we knew it. Too bad it has morphed into an inverse Robin Hood scheme, where, today, the primary welfare recipients are the well-to-do.

The share of Wisconsin taxes generated by corporate income taxes dropped by over 50 percent between 1979 and 2002 from 11.3 to 5 percent. The share of income taxes paid by working families grew from 47.4 to 54.5 percent. A 2000 review of state records showed that 11 of the 15 largest banks paid no corporate income tax. In the business year ending 2002, almost 2/3 of Wisconsin businesses subject to tax reported no income and paid no corporate income tax. Of the 4,851 corporations with total revenue of at least $100 million, 65 percent paid Wisconsin corporate income of $0 in 2003. These businesses sure are exemplary corporate citizens. If only there were a way for two-thirds of the citizenry to avoid paying income taxes.

Since the 1980s, the federal government has been steadily shifting more responsibilities to the states. Between 2000 and 2003, the United States saw a federal-to-state tax shift of historic proportions: the share of total tax burden borne at the state and local level jumped 15 percent. This is the largest shift since 1947-50. Since 1962, the share of total federal receipts collected from the regressive payroll tax has risen from 17 percent of total receipts to 40 percent, an increase of 135 percent. Meanwhile, the total share supplied by progressive income and corporate taxes has dropped from 63 percent of total receipts to 52 percent, a decline of 17 percent. Since 1962, the share of federal revenues contributed by corporations has declined by two-thirds, while the share contributed by individuals has risen 17 percent. If you’re beginning to see a trend here – the rich paying less, average taxpayers paying more – you’re very perceptive.

State tax policy has grown in importance because of its use as an instrument to foster economic development. Over the past 25 years, state governments have engaged in wasteful competition against each other for business investment and jobs. The sales and use tax accounts for nearly one-third of state tax revenue. The personal income tax replaced the sales tax as the single most important source for revenue for the states, which accounts for about one-third of state tax revenue. The corporate income tax accounts for less than 6 percent of state tax revenues. State property taxes and estate taxes generate very little revenue (less that 5 percent of total state revenue). Specialized excise taxes account for approximately 20 percent of total state tax revenue. The states collect about 40 percent of their total revenue through taxes. And more and more, through the years, average citizens have been shouldering more of the burden.

In 1997, Citizens for Tax Justice concluded that Wisconsin’s corporate tax burden ranked 44th in the nation. A Federal Reserve Bank of Boston study, in 2003, found that Wisconsin ranked 50th among all states and the District of Columbia in terms of the share of total state and local taxes paid by business. The Institute for Taxation and Economic Policy found Wisconsin’s corporate tax rate was 26th nationally when measured as a percent of individual income taxes. A January 2004 study undertaken by Ernst and Young found that Wisconsin ranked 45th nationally in the share of all state taxes paid by corporations. The share of taxes paid by business declined 47 percent during the last 30 years. Business doesn’t pay squat here in Wisconsin. These stats just underscore the shamelessness of the corporate community and their talking heads when they beg, plead and lie for more tax breaks. What we have established is a commitment-free business community, whose social costs are almost completely incurred by taxpayers. So, not only are taxpayers covering the majority of costs for the services we all desire, taxpayers are also filling the coffers of corporate crooks whom have been steadily siphoning more and more public dollars into private accounts through subsidies, tax breaks, tax havens, and such.

Workingmen and women pay about 80 percent of Wisconsin’s general purpose taxes. Workingmen and women also pay the majority of property taxes statewide (68 percent), while industry’s share of the property tax declined from 18 percent to 4.5 percent between 1970 and 2004. And guess who gets to make up that 13.5 percent decline in the share of the property tax paid by business? You do, silly, the average homeowner.

The tax rates for the highest income households in Wisconsin dropped from 10.8 in 1977 to 6.75 in 2002. In Wisconsin in 2002, the richest one percent of taxpayers paid 8.1 percent of their income in state and local taxes, the least by far of any income group, and only 5.9 percent after deducting from their federal taxes. The poorest 20 percent of taxpayers paid 10.2 percent in state and local taxes in 2002, and middle-income taxpayers paid the most, 11.9 percent. Now can’t we all agree that this should be the other way around? Those with more means should pay more. We have been creating and solidifying an impoverished underclass, due to our regressive policies and increasing inequality. We are giving a hand to those who need it the least. I’d rather see $400,000,000 in our taxes go to creating 1,000 jobs, paying $40,000 a year, for 10 years; rather than seeing $400,000,000 go to Miller Park.

Since 1974, residential property owners have carried and even greater tax burden with the reduction in manufacturing property tax revenue due to the establishment of the Machinery and Equipment deduction which eliminated as much as 50 percent of the property tax revenue in some communities. This is just another lobbying triumph of the business community that transferred more of the tax burden onto everyday citizens.

And, for those who say we pay too much for education: Only 24 percent of Wisconsin adults 25-and-over are college graduates, which ranks the state 32nd in the country. With all the talk of the “knowledge-based economy” and the importance of having a college- educated workforce to fill jobs and for creating new ones, this ranking doesn’t bode well for Wisconsin’s future.

Per-person income in Wisconsin has been below the national average for several decades, and was 2.3 percent below in 2003. Hmmm, so we’ve been earning less than the average and yet we’re being continually asked to pay more so that more well-off individuals and businesses can pay less. Isn’t a big selling point of the lower-taxes cabal that by allowing the rich to pay less, in turn it will help grow business, thereby increase jobs and wages? But if empirically we see that isn’t true, isn’t it about time we say enough is enough?

State and local taxes play a relatively small part in business location decision-making. The facts are in, the research has been done. Many other factors, well ahead of taxes, weigh much more heavily in business location decisions than taxes. Continuing this bribery and shake-down policy only exacerbates inequality, makes average taxpayers pay more than their fair share, contributes to inefficiency and wastefulness, and simply transfers money from workers to the rich.


Works Cited

Brunori, David State Tax Policy: A Political Perspective.

Collins, Chuck; Chris Hartman; Karen Kraut, and Gloribell Mota 2004 “Shift Tax Cuts” United for a Fair Economy. April.

Institute for Wisconsin’s Future 2006 “TPA/TABOR Jr.: A State Fiscal Illusion.” Feb.

Institute for Wisconsin’s Future. “Project Taxes: Tax Fairness”

Johnson, Nicholas and Daniel Tenny 2002 “The Rising Regressivity of State Taxes.” Center on Budget and Policy Priorities. Jan.

Norman, Jack 2005 “Exposing the Wisconsin Tax Hell Hoax.” Institute for Wisconsin’s Future. Jan.

Norman, Jack 2003 “Some facts about property taxes in Milwaukee.” Institute for Wisconsin’s Future. Nov.

Statz, Bambi 1997 “Windfall for the Wealthy.” Institute for Wisconsin’s Future. Jan.

Wisconsin Education Association Council. 2004 “Tax Shifting and Business Taxes in Wisconsin.” Research Bullets. May.