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The anti-business, socialist President strikes again

Republicans have attacked Barack Obama for being anti-business and socialist over and over and over again since his election in 2008.

So, how’s that been working out?

Well, business profits are up.  Way up.

The Fortune 500 generated a total of $824.5 billion in earnings last year, up 16.4% over 2010. That beats the previous record of $785 billion, set in 2006 during a roaring economy.

The stock market is up.  Way up.

The Dow Jones industrial average has soared 62 percent since President Barack Obama took the oath of office during some of the darkest days of the Great Recession. The Dow was just below 8,000 then and stands near 13,000 today.

Corporations have record amounts of cash on their balance sheets.

Apple Inc. (AAPL), the world’s most valuable business, led U.S. corporations in amassing a record $1.24 trillion of cash last year as memories of the 2008 credit crisis linger, according to Moody’s Investors Service.

Excluding Apple, with $97.6 billion of cash and no outstanding debt, the figure was relatively unchanged at $1.15 trillion, even as revenue and cash flow from operations rose to a record, Moody’s analysts led by Richard Lane said in a report yesterday.

Government (federal, state, and local) is smaller.

For the first time in 40 years, the government sector of the American economy has shrunk during the first three years of a presidential administration.

Spending by the federal government, adjusted for inflation, has risen at a slow rate under President Obama. But that increase has been more than offset by a fall in spending by state and local governments, which have been squeezed by weak tax receipts.

Source: New York Times, based on Bureau of Economic Analysis data

It seems the anti-business, socialist President has actually worked out pretty well for corporate America.

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10 Charts of the Year – Political Polarization

Today’s Chart of the Year comes to us from Peter Orszag, former Director of the White House Office of Management and Budget and current Vice Chairman of Global Banking at Citigroup.

What does this chart mean?

Our political system is so plagued by polarization, it’s difficult to move any legislation forward. In the late 1960s, significant overlap existed in votes cast by the most conservative Democrats in Congress and those cast by the most liberal Republicans. By the late 1980s, the common ground had diminished. Today, it has virtually disappeared.

Catching up

Back at it after a refreshing week away.  Let’s catch up on some of the issues out there:

  • District 112 prepares technology levy for November ballot:  The Eastern Carver County School District will vote in Thursday’s meeting on whether to put a technology levy question to voters this November.  The levy would represent a return to funding technology improvements via levy as opposed to the operating budget (which has been done for the last several years since the previous technology levy expired).   Two scenarios — one that would raise $1.37 million annually, and one that would raise $1.9 million annually — are under consideration.  The tax impact on a $240,000 home would be $60 per year for the smaller levy and $84 per year on the larger levy.
  • Proposed city budget holds levy steady, includes 2% pay increases:  Work continues on setting the preliminary levy for the city of Chaska, with the initial plan holding the total levy steady for the third year in a row (which means for the third year in a row, the tax rate will increase against decreasing property values).  Projections show a total increase in expenses of 1%, including raises for city employees of 2% in 2012 (escalating to 2.25% in 2013, and 2.5% for the remainder of the five-year planning period).  Additional deferrals of equipment purchases and decreased spending on road reconstruction also help to fill the proposed $400,000 deficit.
  • County plans to lower levy by $1 million in response to GOP state budget:  As part of the budget agreement that ended the state government shutdown, the Market Value Homestead Credit was eliminated, which provided about $1 million in property tax savings to Carver County residents.  In response to this change, Carver County is moving forward by reducing their budget by a corresponding amount to prevent adverse impact on taxpayers.  Savings will be achieved by transferring funds out of the County Program Aid received from the state.  As such, the county portion of the average resident’s property taxes will decrease slightly in 2012 compared to 2011.  The County Program Aid was originally targeted towards capital purchases in the 2012 budget.  This savings is on top of $1.3 million in cuts identified before ratification of the state budget.
  • Carver County GOP auction update:  The Carver County sporting clays event has been rescheduled for September 29.  Under pressure from various sources, the auction part of the event has been removed from their website, and disclaimers about Rep. Paulsen and Rep. Kline’s appearances at the event have been added.

MNPublius: Carver County GOP Auction would have been violation of Congressional ethics rules

Jeff Rosenberg at MNPublius adds another layer to the Carver County GOP Auction of elected officials story:  namely, it would be a violation of Congressional ethics rules.

Read more at MNPublius.

This is not an auction

Carver County GOP’s Joe Emmett O’Brien said this about the Sporting Clays brouhaha in City Pages:

It’s not an auction itself.

The site has been taken down, but fortunately our friends at Google cache webpages catalogued by their search engine.  So, we can bring up what the site used to look like (below) — from a site called readysetauction.com:

Note that the means to buy regular tickets is housed back on the carvergop.org website, not readysetauction.com.  Here’s some salient text:

For each legislator, there are five team member tickets available for bidding to have the five-person team exclusive chance to spend the afternoon walking and shooting the Sporting Clays course with your favorite legislator.

Select your ticket and then make a bid. If you are outbid at a later time or day, you will receive an automatic email notification giving you the opportunity to counter-bid.

Remember, all proceeds will directly benefit the Republican Party, so don’t hold back!

But, remember, this is not an auction.

Carver County GOP Auction of Elected Officials: Going once, going twice, gone… [UPDATED]

Our friends over at the Carver County GOP are planning a nice little event next Thursday, September 1 — a sporting clays shooting event at the Minnesota Horse & Hunt Club in Prior Lake.  Here’s a link to the event’s flyer.  Sounds like a fun afternoon.

The twist from your normal political fundraiser, though, comes at the bottom of the flyer (helpfully screenshotted for you below, just in case it magically disappears sometime soon).

Yes, that’s right.  The Carver County GOP was auctioning off access to their invited guests — including U.S. Representatives Erik Paulsen and John Kline, State Senator Julianne Ortman, and State Representatives Joe Hoppe, Ernie Leidiger, and Kirk Stensrud.

Nothing illegal about it, but it certainly sends the wrong message, coming after protracted fights in Washington, D.C. and St. Paul that pitted the pleasures of the well-heeled influence peddlers against the needs of the middle- and working class.

And when folks started to take notice — like the folks at Bluestem Prairie, Common Cause and the Cucking Stool — poof! — it was gone.   The auction site is no more, as the Carver County GOPers scurry away from their plans like a critter being chased by a Republican with a shotgun.

[UPDATE]:  City Pages was able to track down Carver County GOP official Joe Emmett O’Brien, who sent out the original e-mail and was involved in setting up the auction website.  Dissembling ensues.

It should also be reinforced that the original e-mail sent out by the Carver County GOP was sent to all registered lobbyists.  So Ortman, Hoppe, and Leidiger have time to be auctioned off to lobbyists, but not to hold town halls in their district?

About those “people who don’t pay taxes”

Republicans have spent a lot of time lately complaining about the sizable portion of Americans who now don’t pay federal individual income taxes.  Current estimates show that over 45% of taxpaying units have a zero or negative federal individual income tax liability, a percentage that has grown over time.

To them, they say, it’s a “skin in the game” problem.   Minnesota Rep. Michele Bachmann, for instance, recently said “We need to broaden the base so that everybody pays something, even if it’s a dollar. Everyone should pay something, because we all benefit.”

Let’s leave aside for the moment the fact that people who don’t pay federal individual income tax are still being taxed in substantial ways — including payroll tax and gas tax at the federal level (the individual income tax only represents 41% of federal revenue) — and look at just who these “nonpayers” actually are.  Are they “lucky duckies” as the Wall Street Journal like to call them?  And just how did they get to the point of paying no federal individual income tax?

Obviously, the key factor behind most of the folks who fall into the nonpayer category is their income.  Specifically, they don’t have a lot of it.  88% of nonpayers have household incomes of under $40,000.  Of the remaining 12%, almost half of them have incomes of over $100,000, including about 4,000 households with incomes over $1 million (that’s up 53% from 2007, even though the number of households with incomes at that level has fallen over that time).

There are other key attributes that tend to drive whether one is a nonpayer or not:  46% of nonpayers are elderly and 64% of nonpayers have dependent children.

So how did we get to this situation?  The short answer is that both parties have filled the tax code with targeted credits.  In the immediate WW-II period through the Nixon Administration, the percentage of nonpayers stayed pretty close to 20%.  The introduction of the Earned Income Tax Credit in 1975 spiked that percentage up slightly such that the percentages tracked closer to 25% until the late 1990s.

Since then, the tax code has been littered on a bipartisan basis with multiple credits that have, in part, caused the sharp increases we have seen in recent years.  The first step was the introduction of the Child Tax Credit in 1998, which gave a $400 tax credit for each dependent child on the return.  This credit was expanded in 1999, 2001, and 2003 (reaching its current level of $1,000).  In 2001, the child and dependent care credit was expanded, and in 2003, the new lowest tax bracket of 10% was established and taxpayers got a cut in capital gains and dividend taxes (this contributes greatly to the wealthy folks who fall into the nonpayer category).  In 2008, taxpayers received stimulus checks, and in 2009, the stimulus bill included the Making Work Pay Tax Credit (replaced in 2011 by a temporary payroll tax cut).

These provisions, building one upon the other and in combination with the weak economic conditions, have created the 45%-plus nonpayer rate we have seen in recent years.  Removing these tax credits would fully cut the number of nonpayers in half.

The real question, then, is where do we go from here?  Should we follow Republican logic to its conclusion, remove the credits, and raise taxes on 60 million lower-income Americans?

That’s where the question gets tougher.  Removing credits like these actually impact all Americans, and the middle class and wealthy would take the brunt of the damage.  Except for the earned income tax credit, all of the credits noted above provide greater benefits to the top three quintiles of Americans than they do the poorest in our society.  In total, the top 20% earn twice as much as a percentage of income (and far more than that in real terms) as the bottom 20% from these provisions.

As such, removing these credits — in and of themselves — is not a solution.  Not only would it take money out the pockets of those who can least afford it, but it would further squeeze middle-class families AND take substantial money away from the wealthy — the so-called “job creators” Republicans have been so anxious to protect.

The real answer to what we’re facing is a return to principles embraced on a bipartisan basis in 1986.  Simplify the tax code by removing all but the most essential credits and deductions.  Lower rates across this wider tax base.  Treat all income the same, regardless if it was earned through work, earned as a capital gain or dividend or inherited.

Such reform would accomplish goals that both parties have:  more people would be paying in, the tax code would be simpler (it shouldn’t be used as a backdoor way to handout money), and it can continue to be just as progressive (or even more so) than before.

What’s more popular than Congress? Just about everything. [UPDATED]

From a Washington Post story:

Here’s the percentage of Americans that approve of…

40% Barack Obama’s performance as President at its lowest point (Gallup, 2011)

39% Cloning sheep (ABC, 1997)

37% Bill Clinton’s performance as President at its lowest point (Gallup, 1994)

37% Corporal punishment for juvenile offenders convicted of vandalism (L.A. Times, 1993)

31% Believe in alien abductions (CNN, 1997)

24% Richard Nixon’s performance as President at its lowest point (Gallup, 1974)

23% Behavior of banks (Gallup, 2011)

22% George W. Bush’s performance as President at its lowest point (multiple polls in 2008)

21% Behavior of organized labor (Gallup, 2011)

19% Behavior of big business (Gallup, 2011)

19% Behavior of HMOs (Gallup, 2011)

18% Human cloning (Johns Hopkins, 2002)

14% Behavior of BP during Gulf oil spill (Washington Post, 2010)

14% Performance of Congress (CNN, 2011)

[UPDATE:  New data points added in italics above for comparison]

The certainty myth

The recent fight over the debt ceiling has featured a lot of talk about “certainty”.  Specifically, how a lack of certainty about government regulation and the perceived excess spending by the federal government.

This has been a favorite line of conservatives to explain the economy’s weak performance.  How can companies grow with health care reform ramping up and Dodd-Frank waiting to get implemented and the Obama Administration advocating expiration of some of the Bush tax cuts?

And — if you don’t really think about it too deeply — it all sounds perfectly logical.  But, in fact, it’s not how business really operates.  Sure — all other things being equal — a stable regulatory environment is better for business than not.

But when in American history have businesses been assured of stability?  Business is not, nor has it ever been stable or predictable.  And it should never be.

Besides, we know that the real uncertainty that is causing businesses not to hire and not to expand is uncertainty of demand — not of government regulation.  Consumers have retrenched since the 2008 housing crisis and subsequent recession — doubling their personal savings.

When you have an economy that is 70% driven by consumer demand, a 2-3% reduction in spending is significant.  In fact, we see that the economy is still about $1 trillion in demand behind pre-recession levels, and some economists peg the total lost demand since 2008 at nearly $6 trillion.  You see now why a $800 billion stimulus package didn’t make everything sunshine-and-roses — it was far too small to turn the economy around on its own.

At a time when we’re fighting three wars and are still recovering from the worst recession in 70 years — one that was largely caused by bad actors in our corporate community — it’s foolish to be a business and assume stability and even more foolish to be a citizen or a legislator and take steps to immunize business from the aftereffects of problems that they helped to create.

The Clean Air Act and Clean Water Act — instituted in its modern form by Republican Richard Nixon — were a response to corporate failures to be good citizens.  Sarbanes-Oxley, instituted in 2002 by Republican George W. Bush, was a response to numerous failures of corporations to live by the normal rules of the market.  These were bipartisan reforms designed to protect Americans from corporate malfeasance.

Today, such normal logic has been turned on its head.

The Dodd-Frank bill, a relatively mild response to the Wall Street meltdown that tanked the economy languished in Congress for nearly two years before being passed on essentially a party-line vote.  Banks that were “too big to fail” before are now bigger thanks to federal action that allowed them to vacuum up the other banks of similar size.

Modest consumer protections — such as the establishment of the Consumer Financial Protection Bureau — that would require such radical steps as simplifying mortgage disclosure forms so you don’t have to be an attorney to understand them, improving transparency of credit card agreements, and trying to provide deeper understanding to consumers of how credit scores work are attacked as “big government” trying to control your life.

The one surefire way to get this economy up and running again is to stop putting the needs of corporations and the wealthiest among us ahead of the needs of the larger population.  We need to stimulate demand among the working classes.  How do we do that?  Investment in education.  Investment in infrastructure.  Investment in health care.  Investment in new technology.

This is not the time for forced austerity.  We are never going to solve our current fiscal problems without growing this economy.

Now is the time for selected and targeted investment in those things that will drive growth in the future and protect the vulnerable in our society, while aggressively weeding out and cutting other programs.  We can’t allow special interests to go to the front of the line and cripple our economic recovery at the expense of the American people.

The Town, Washington Post Director’s Cut edition

Yesterday, Speaker of the House John Boehner had a meeting with his caucus in order to rally support for his plan to resolve the debt ceiling crisis.  As part of the meeting, House Majority Whip Kevin McCarthy showed the group a clip from the movie The Town to fire up the troops.  Here’s how the Washington Post recounted the critical part of the scene:

One character asks his friend: “I need your help. I can’t tell you what it is. You can never ask me about it later.”

“Whose car are we gonna take,” the character says.

And here’s the scene itself from the movie:

Did you catch it?  The Post left out the last line of the dialogue from Ben Affleck’s character:  “And we’re going to hurt some people.”  No ellipsis to indicate a line was left out.  Why would the Post not give the full dialogue?  Is the Post supposed to be in the business of covering up for politicians?

How did the gathered Republicans react to the clip?

After showing the clip, Rep. Allen West (R-Fla.), one of the most outspoken critics of leadership among the 87 freshmen, stood up to speak, according to GOP aides.

“I’m ready to drive the car,” West replied.

Right off the cliff, no doubt.

[h/t MNPublius]

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