Tag: 2012 Democratic National Platform

Sep 05 2012

Corporate Welfare Has Not Created Jobs

Cross posted from The Stars Hollow Gazette

The 2012 Democratic National Platform talks big about job creation and rebuilding the middle class which has been taking hits since the Reagan tax cuts in 1984. While it touts the fact that the private sector has created jobs and the manufacturing sector is growing, its not enough. Most of the jobs that have been created are low paying. The Democratic Party has done little to debunk the lie that the wealthy corporations and individuals are job creators. By rubber stamping the past policies of giveaways to corporations and extending the Bush/Obama tax cuts, the Democrats have made the problems for the ever shrinking middle class even worse.

In two articles at Common Dreams, writers Paul Buchheit and John Atcheson debunk the “job creators fraud” and lay out the real problem ailing the economy, “corporate welfare”. In Mr. Buchheit’s article, he concisely cuts through the “job creator” nonsense with the facts.

Based on IRS figures, the richest 1% nearly tripled its share of America’s after-tax income from 1980 to 2006. That’s an extra trillion dollars a year. Then, in the first year after the 2008 recession, they took 93% (pdf) of all the new income.

He also notes that the wealthiest 10% own 83% of the financial wealth (pdf) and only pay 15% tax under the premise that they would create jobs. Instead they put that wealth into tax fee accounts overseas (pdf).

Mr. Atcheson breaks it down noting that the 15% tax rate allows the wealthy to avoid some $59 billion in taxes per year and by sheltering profits off shore, “(c)orporations are given $58 billion a year in tax breaks (pdf).” Hedge fund managers are given a tax break that allows them to pay only 15% on their earnings, avoiding at least $2.1 billion in taxes a year. Yet, as he further points out:

We spend $59 billion on social welfare programs, but more than $92 billion on corporate subsidies.  According to the Environmental Law Institute, fossil fuel industries alone get more than $70 billion in subsidies, with most going to the oil and gas sector.  Yeah, we certainly can’t afford to deprive Exxon of its record profits just to give money to needy kids.

Add to that $1.2 trillion the $9 trillion in low interest and no interest loans from the Federal Reserve and $700 billion bank bailout that these corporations and banks are making huge profits on and paying no taxes. You have, Mr. Buchheit notes, “$10 trillion in misdirected dollars.  Just 1/10 of that would create 25 million jobs, one for every unemployed or underemployed worker in America. Or a $45,000 a year job for every college student in the United States.”

These are the facts that Mr. Buchheit’s lays out:

The Wall Street Journal noted in 2009 that the Bush tax cuts led to the “worst track record for jobs in recorded history.” 25 million people remain unemployed or underemployed, with 30 to 50 percent of recent college graduates in one of those categories. Among unemployed workers, nearly 43 percent have been without a job for six months or longer.

For the jobs that remain, most are low-paying, with the only real employment growth occurring in retail sales and food preparation. A recent report by the National Employment Law Project confirms that lower-wage occupations (up to about $14 per hour) accounted for 21 percent of recession losses and 58 percent of recovery growth, while mid-wage occupations (between $14 and $21 per hour) accounted for 60 percent of recession losses and only 22 percent of recovery growth.

The minimum wage is shamefully low, about 30% lower (pdf) than the inflation-adjusted 1968 figure. And the tiny pay can’t be blamed on small business. Two-thirds of America’s low-wage workers, according to another National Employment Law Project (pdf) report, work for companies that have at least 100 employees.

All these job woes persist while productivity has continued to grow, with an 80% increase since 1973 as median worker pay has stagnated. [..]

With the bulk of their assets buried in “low-risk investments (bonds and cash), the stock market, and real estate”, the wealthy are not creating jobs:

… Only 3 percent of the CEOs, upper management, and financial professionals were entrepreneurs (pdf) in 2005, even though they made up about 60 percent of the richest .1% of Americans. A recent study found that less than 1 percent of all entrepreneurs came from very rich or very poor backgrounds. They come from the middle class.

There is ample evidence that more jobs were created when the top marginal tax rates were high.

Instead of cutting our social safety net, as President Obama has agreed to do in his “Grand Bargain”, we need to end the corporate welfare programs and put an end to the lie that if we tax the wealthy less they’ll create jobs.

Sep 04 2012

Exposing the Lies in the 2012 Democratic National Platform

Cross posted from The Stars Hollow Gazette

The Democratic National Convention formally convenes at 5 PM EDT in Charlotte, North Carolina. The 2012 Democratic National Platform was released to the press Monday afternoon. I haven’t read it in its entirety but  I was drawn to read the housing section because of these two tweets from FDL‘s David Dayen:

Stabilizing the Housing Market and Hard-Hit Communities.

For more than a decade, irresponsible lenders tricked buyers into signing subprime loans while too many homeowners got in over their heads by buying homes they couldn’t afford. But when the housing bubble burst, it hurt everyone, including responsible homeowners who played by the rules, but saw their home values decline and their neighbors’ houses sit vacant. The housing market’s dramatic collapse did more than punish millions of innocent Americans; it also triggered the economy’s downward spiral into recession. President Obama took swift action to stabilize a housing market in crisis, helping five million families restructure their loans to help them stay in their homes, making it easier for families to refinance their mortgages and save hundreds of dollars a month, and giving tax credits to first-time home buyers. He also cracked down on fraudulent mortgage lenders and other abuses that contributed to the housing crisis. Democrats have held the largest financial institutions accountable by requiring them to provide relief for homeowners still struggling to pay their mortgages and to change practices that took advantage of homeowners. Democrats also understand the importance of helping communities fightback against the foreclosures that threaten entire neighborhoods, which is why the President proposed to expand the successful neighborhood stabilization efforts in his American Jobs Act. Too many people still owe more on their homes than they are worth. That is why Democrats are fighting to give every responsible homeowner the chance to refinance their home, spurring investment in communities that have been hit hardest by foreclosure, and taking whatever steps we can to avoid more foreclosures. The President remains committed to creating an economy that’s built to last, where homeownership is an achievable dream for all Americans

Emphasis mine

David is right, this has to be the most outrageous lie since Paul Ryan took to the stage at the RNC Convention.

From the September 1 New York Times Editorial: Still No Justice for Mortgage Abuses:

The Office of Mortgage Settlement Oversight, the monitor of the settlement, released a preliminary report last week showing that 138,000 homeowners had received some form of relief from March 1 through June 30. That is roughly the number that would have been expected under various aid programs in effect before the settlement. Worse, with some three million borrowers now in or near foreclosure, according to Moody’s Analytics, it is nowhere near the level of relief needed to fix the housing market. [..]

Short sales are better than foreclosures, in part because they prevent vacancies that depress house values. But they are not punishment for wrongdoing in any meaningful sense; rather, they allow banks to get higher prices for underwater properties than they could have gotten in foreclosure sales.

Nor do they fulfill the settlement’s main purpose: to keep underwater borrowers in their homes by reducing the principal on their mortgage loans. According to the monitor’s report, $8.7 billion of debt has been written off in short sales versus only $750 million of principal reduction from loan modifications.

And the fraud continues, thanks to MERS. Don’t let the rosy housing price increases fool you:

(N)ew foreclosures continued to be filed – 256,000 people had a foreclosure added to their credit reports in the June quarter – but that figure was the lowest since mid-2007, the Fed said.

In stark contrast to this improving backdrop are the legal battles still being waged over wrongful foreclosure practices. The glacial progress in these cases is not surprising, given the crowded courts and combatants’ usual stalling tactics.

What is surprising is the fresh evidence these cases are turning up of cockeyed mortgage practices, during both the boom and the bust. As these matters are adjudicated, perhaps we will finally learn whether these practices were intended or accidental. [..]

A foreclosure from Ohio highlights this problem. The facts from this matter are central to a prospective class action filed by a borrower, who contends he was charged improper court costs and legal-related fees in his foreclosure.

The case involved legal moves taken against a bank in 2007 that did not even have an interest in either of the two mortgage liens associated with the foreclosed property. Even though the bank should never have been dragged into the matter, it was – generating $775 in court costs and legal fees paid by the borrower, documents show. Only two years later, during the discovery process, did it emerge that the bank had no ownership in the underlying property.

That $775 may not sound like much. But Paul Grobman, a lawyer in New York who represents the borrower, said he believed the collection of what he called improper legal charges is rampant in foreclosures.

Here is the entire platform:

Document the lies.