Today's New York Times article titled "Major Companies Push the Limits of a Tax Break" strikes me as a microcosm of the challenges with the federal tax code.
It also reveals something else. It's a marketing strategy called FUD - Fear, Uncertainty, and Doubt - and it's being used by the rich and powerful to protect tax codes which benefit them by making the rest of us afraid to support efforts to change or eliminate those tax loopholes.
The article describes a 90-year old tax code modification supposedly meant to be helpful to farmers and small businesses. When discussing tax codes as "helpful" it's important to always remember that that help comes with a price tag. That "help" means that the government isn't taxing a transaction. That, of course, means less tax revenues into the federal treasury and, like it or not, we will not see our federal debt lowered and our federal budget come closer to balance unless both sides of the ledger - expenses AND revenues - are tackled.
Don't get me wrong. I don't oppose every tax code meant to help businesses, especially small businesses. What I vehemently oppose is what seems to have happened here. It appears from this article that this incentive originally intended to benefit farmers and small businesses was eventually expanded and perverted into something that the likes of JPMorgan, Wells Fargo, and GE may have abused.
How does that happen and why aren't we capable of doing something about it?
Perhaps this is one possible answer.
Whenever the topic turns to the economy, business, and taxation, we seem to allow the rich and powerful to control the discussion and to set the framework for what to do next. We allow the to do this by employing a strategy those of us in the sales and marketing profession know as FUD - Fear, Uncertainty, and Doubt. Here's how it works.
We allow them to manipulate and control us by controlling the discussion mostly through fear and with heavy doses of uncertainty and doubt. Too many of us are easily (and to some degree, justifiably) frightened by the threat of the loss of the most basic thing needed to survive in a modern society; namely and for starters, a job which pays enough (but not always enough) just for food and shelter.
The things that used to signal the arrival into the middle class - higher education, vacations, and even a little free time to pursue interests outside of two or three part-time jobs - are now available and affordable to fewer and fewer people. All this at a time when taxes are at historic lows, regulation on businesses of all types has been progressively shredded over the last 30 years, the wealth gap is wider than it's been since the Gilded Age, and the federal debt keeps ballooning.
When it comes to taxes, the rich and powerful use FUD to make the same argument they always
make: the beneficial tax treatment of these "...asset exchanges
spur investment and help create jobs." They frame the discussion about raising taxes and doing away with loopholes by saying that if they are taken away there will be
less investment and fewer jobs. My response to that argument is pretty consistently this: if that's true then why is unemployment still just under 8% and why isn't the economy growing faster? You rich and powerful people are getting what you want and it's still not enough?
This is overly simplistic, I know, but I still believe it's a valid stance to take in this argument. It's still a legitimate way to tear down and take back the framing they want to use when it comes to the tax code. If tax breaks like this are so great, then why are we in the terrible state we're in and why aren't the rich and powerful investing more into a recovery?
And when it comes to changing the tax code as a means for helping to reverse the federal government's mounting debt, the discussion must be first and foremost about the sort of code changes like this one that benefit GE and Wells Fargo long before even thinking about code changes such as eliminating mortgage interest deductions.
It's far past the time to end the corporate welfare system. That must begin with changes to the corporate tax codes. They must pay more, not less. Corporations have already proven they'll adapt and, besides, how much more is left for them to outsource overseas? They've refused to do anything except hold us all hostage through fear of job loss while they sit atop record-setting profits.
It's time to call their bluff.
One of the greatest challenges we face for reversing tax codes that benefit only the strong, the wealthy, and the powerful is our ability and willingness to call them out on their FUD strategy and to tell them that, "We're mad as hell and..."Well, you know the rest.
More than that, our elected officials need to know they can't use FUD on us either. If they have the courage to stand up to big money and the power elite, then they need to know that we will stand with them. We need more people like Bernie Sanders and Elizabeth Warren who seem to actually care about the middle class enough to stand up to Wall Street, big corporations, and the infinitesimally small number of wealthy people in America who already have rigged the system far too long and far too much to their advantage.
The wealthy aren't doing anything much to help the rest of us, so why should we keep kowtowing to them and their interests? Let's close tax loopholes that benefit large and wealthy corporations. It's a better place to start than with my home mortgage interest deduction.
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Showing posts with label Federal debt. Show all posts
Showing posts with label Federal debt. Show all posts
Monday, January 7, 2013
Monday, February 15, 2010
One Person's Perspective on the Federal Debt as a % of GDP

What's been the history of the Federal debt, what's been happening over time, and who's been in power when it happened?
Initial searches weren't very efficient and it was hard to find a reasonable summary. Here's one of them: http://zfacts.com/p/318.html. The web site owner claims to be an economist who does this in his spare time. Take it for what it's worth.
Ever the skeptic, I decided to check further and to account for Congress and the role they play. I decided to create my own chart. It's attached. The Sources at the bottom include a link to the actual Federal debt tables used to generate the underlying line graph.
Conclusions? Here are mine.
1. Federal debt as a % of GDP went through the roof due to WWII
2. Federal debt marked a steady decline after WWII regardless of who was in the White House and through 35 years of a mostly Democratically-controlled Congress until.......
3. Reagan, a terrific actor (which some mistake for intelligence and oratory skills) and famous co-star to trained monkeys, got elected...yes, I hate the stupid f***...
AND Republicans took control of the Senate
This next point is, IMHO, probably the single most important fact to remember about all of this.
4. The Republican-controlled 106th Congress takes Ronny's "smaller government" religion to its fatal extreme by passing the Gramm-Leach-Bliley Act in November of 1999 which is signed into law by another RWMF and career politician, Bill Clinton.
For those who need a little history review, GLB repealed many of the regulatory safeguards which had been put into place by the Glass-Steagall Act of 1933 which was the federal government's response to the unfettered and unregulated bankers who caused the * FIRST * Great Depression.
Go back further (http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html) and understand how Glass-Steagall was coming under serious attack during Reagan's administration in 1986-1987....at the same time a former J.P. Morgan director and life-long disciple of Ayn Rand, Alan Greenspan, was being made Fed Chairman.
"In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities."
Do you see those words, "mortgage-backed securities"?
5. The upward trend continued on Bush 41's watch and with a Democratically controlled Congress (Dems can be such pussies...or are they just RWMFs of a different stripe? Both, I'd say.)
6. Yes, Clinton was in some ways the benefactor of a booming economy and, yes, some credit for reducing the Federal debt has to go to a Republican Congress
(In case anyone would like a quick primer on how the Federal budgeting process actually works, the roles various branches and departments play, etc., see http://useconomy.about.com/od/fiscalpolicy/p/Who_budget.htm)
7. Finally, it was without a single shred of doubt in my mind or any possibility for any sort of fact-based denial that a Republican-controlled Congress and a half-witted Republican son of a Texas oilman is who put us on this disastrous financial path.
The list of fiscal failures since 2001 is long, but we can start with cut taxes that primarily benefit the wealthiest Americans while waging 2 wars off the books. Add to that, the bottom dropping out of an unregulated financial services sector based too heavily on an overly-speculated real estate market that had so much credit and investment capital tied to it and what did those geniuses think would happen? It leads to a reality in which Wall Street and RWMFs everywhere get all the reward with none of the risk and we taxpayers are left to bail out the whole friggin' mess....
My point is the current pathetic state of our economy and the federal budget is something that began long before Obama came into office, before voters turned Congress back to Dems, and really began when Rs were in charge and is rooted in the desire of RWMFs everywhere to deregulate and get rich.
I have no problem with fiscal responsibility, but to think that a president and Congress can fix the mess of previous administrations over night - or even in a single year - just isn't realistic. And I don't think we'd be in this mess if the justifiable and now obviously needed regulations and oversights of the financial services industry had not been repealed.
If anyone has a better plan than what is being done now, I'd like to hear it. Was allowing all the TARP recipients, GM, and any other recipients of federal money to fail the better plan? In a perfect Randian world, I guess the answer would be, "Yes."
p.s. Snowboard Cross racing at the Olympics is way cool!
Additional Sources
http://www.gpoaccess.gov/usbudget/fy10/hist.html
http://online.wsj.com/article/SB122156561931242905.html
http://www.reuters.com/article/idUSTRE60U09L20100131
http://www.factcheck.org/2010/02/the-big-bank-bailout-bill/
http://topics.nytimes.com/topics/reference/timestopics/subjects/g/glass_steagall_act_1933/index.html
http://www.taxpolicycenter.org/briefing-book/background/bush-tax-cuts/ignore.cfm
http://www.nytimes.com/2007/09/15/business/15atlas.html
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