A Tale of Two Tax Cuts (it’s actually the same cuts, just two different realities)

The subject here is Kansas headlong dive into supply-side economics.   For a quick refresher, here’s how these same economic ideas failed the nation, when it was used for the same experiment (see also here).

So…where are we now….

There was a windstorm of hasty excuses in recent weeks after Kansas reported that it took in $338 million less than expected in the 2014 fiscal year and would have to dip heavily into a reserve fund. Spending wasn’t cut enough, said conservatives. Too many rich people sold off stock in the previous year, state officials said. It’s the price of creating jobs, said Gov. Sam Brownback.

None of those reasons were correct. There was only one reason for the state’s plummeting revenues, and that was the spectacularly ill-advised income tax cuts that Mr. Brownback and his fellow Republicans engineered in 2012 and 2013. The cuts, which largely benefited the wealthy, cost the state 8 percent of the revenue it needs for schools and other government services. As the Center on Budget and Policy Priorities noted, that’s about the same as the effect of a midsize recession. Moody’s cut the state’s debt rating in April for the first time in at least 13 years, citing the cuts and a lack of confidence in the state’s fiscal management.

[full story]

Gov. Brownback also claimed these massive tax cuts would create jobs.  That hasn’t worked out like he said, either.

Using the federal agency’s data, The Star compiled percentages of seasonally adjusted, nonfarm total job growth for Kansas, its four bordering states, a few other Midwestern states, Texas (no income tax), New York (extremely high income tax), and the U.S. average from January 2011 through June 30, 2014.

Texas, 10.5 percent

Colorado, 9.2 percent

Oklahoma, 6.5 percent

U.S. average, 6.1 percent

Iowa, 5.0 percent

New York, 4.8 percent

Missouri, 4.1 percent

Nebraska, 3.8 percent

Kansas, 3.5 percent

Arkansas, 1.9 percent

Kansas has had one of the nation’s poorest rates of employment growth during Brownback’s time in office, including since the first tax cuts took effect in 2013.

There also some more nice charts here on Kansas’ decline, and they include this little bit here…..
Keep in mind that these are actual year-over-year declines in revenues, not shortfalls in projected revenue. And they came at a time when the national economy was recovering (albeit slowly) and most other states were enjoying strong pickups in tax collections.
So while nearly everyone else in country is experiencing a recovery of revenue as the economy recovers, Kansas is stuck drawing down its reserves in order to not tax businesses any more.

BTW…can you guess where Koch Industries, the second largest private company in the U.S., is headquartered?     C’mon guess.

And guess what one of the big tax cuts Brownback pushed was?   C’mon guess.

So…knowing who it is that pushed these tax cuts…is it any wonder at all that their media operatives completely ignore all of this data and continue to claim that tax cuts always work?
By Stephen Moore, of Falls Church, Va., is chief economist at the Heritage Foundation. A version of this piece first appeared in Investors Business Daily.

Ok…I was going to quote the article by Stephen Moore, who is the poster-child for magical tax cuts claims…however, in between the time I first read that article and now, it appears they’ve gotten so many complaints that Moore’s numbers were made up they had to post a correction.

Let me repeat…this guy, Stephen Moore, had to have his job numbers corrected because he was lying about them.    Which leads to the general awareness that they only way conservative math even “works” is WHEN YOU ARE LYING.

So now we’ve seen the same “cut taxes to generate growth” b.s. blown away on both the national stage and on the state level.

California did the exact opposite of Kansas. In 2012, when California was in a dire budget crisis, voters passed a critical ballot initiative undoing the state’s requirement of a two-thirds supermajority vote in the legislature to raise taxes. Through the initiative, California voters passed tax increases for everyone, including the rich, marginally increasing the sales tax while creating new income tax brackets of 10.3 percent for those who earned between $250,000 and $300,000; 11.3 percent for taxpayers who made anywhere between $300,000 and $500,000; 12.3 percent for incomes of $500,000 to $1,000,000; and 13.3 percent for all incomes above $1,000,000. The richest Californians would barely notice it, given the immense wealth in California’s major economic hubs like Silicon Valley, Hollywood, and the wine country.

After monitoring the results, the New Jersey Policy Perspective, a non-partisan think tank, found that California’s tax increases are paying off big time. The state’s coffers will gain approximately $6.8 billion in new revenue every year, all of which will be invested in public education. California saw 2.9 percent job growth in 2013, making it the third fastest-growing economy in the US.

[SIDE NOTE:  I called this back in 2012]

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Obviously the solution is more Tax Cuts, right Mitt?

Pa. Mayor Cuts City Workers’ Pay to Minimum Wage – ABC News 

Unions representing firefighters, police and public-works employees also filed a pair of federal lawsuits against Mayor Chris Doherty and the city that alleged violations of labor law and due-process rights. Doherty last week ignored a court order and cut the pay of about 400 city workers to the federal minimum wage of $7.25 per hour.

The Democratic mayor said it was all the cash-strapped city of more than 76,000 could afford, promising to restore full pay once finances are stabilized. “It’s incredible,” the unions’ attorney, Thomas Jennings, said Tuesday. “I’ve never had a public official just say, ‘I’m not going to obey a court order. I’m not even going to try. He can’t tell me what to do.'”

Finally putting those unions in their place, it would seem. I’m sure paying police and firemen minimum wage will lead to a thoroughly functioning society.

Republicans in Congress shift from not passing jobs bills to try to extend largest tax cut in history by calling it tax hike

WASHINGTON – Republicans are calling it “Taxmageddon,” the big tax increase awaiting nearly every American family at the end of the year, when a long list of tax cuts are scheduled to expire unless Congress acts. It would be, GOP leaders in Congress say again and again, “the largest tax increase in American history.”

Except it wouldn’t be, not when you take into account population growth, rising wages, and most importantly, the size of the U.S. economy. When those factors are taken into account, the largest tax increases were those imposed to help pay for World War II — back when the U.S. raised additional revenue to pay for wars instead of simply borrowing. Nevertheless, it is an exaggeration that has proved too tempting for top Republicans in Congress:

_ “Any sudden tax hike would hurt our economy, so this fall — before the election — the House of Representatives will vote to stop the largest tax increase in American history,” House Speaker John Boehner, R-Ohio, said in a May 15 speech in Washington.

_ “Before we leave for August, I expect to schedule a vote on legislation preventing the largest tax increase in history,” House Majority Leader Eric Cantor, R-Va., wrote in a recent memo to fellow House Republicans.

_ “Millions are unemployed and millions more are underemployed and the country is facing the largest tax hike in history at the end of the year,” Senate Republican Leader Mitch McConnell said Thursday in a speech on the Senate floor.

Anyone in the Republican party honest enough to recall how these tax cuts, originally, were both temporary and designed as stimulus? No….ok…just checking.

Anyone in the media going to call out these guys on camera about the reality of the extenssion?  No…ok…just checking.

Before the 1940s, the individual income tax applied to only a small percentage of the population. By the end of war, the income tax was levied on most working people, with a top tax rate of 94 percent on income above $200,000.

By comparison, the current top rate is 35 percent, on taxable income above $388,350. If Congress does nothing, the top rate would return to 39.6 percent next year — the same rate that was in place for most of the 1990s.

In dollars, next year’s tax hikes would be the biggest. But the size of the economy is 80 times bigger than it was in the 1940s, which is why economists usually measure taxes and government spending as a share of the U.S. economy.

The 1942 tax increase represented more than 5 percent of the U.S. economy, as measured by the gross domestic product, or GDP. The 1941 tax increase was 2.2 percent of GDP, according to a Treasury Department paper published in 2006.

Next year’s looming tax increase would represent 2.6 percent of GDP — a huge tax hike but not the biggest.

Measured another way, the 1942 tax hike increased federal revenue by a whopping 71 percent, according to the Treasury Department paper. The 1941 tax hike increased federal revenue by 32 percent.

By comparison, next year’s potential tax hike would increase federal revenues by 16 percent, according to CBO.

Funny how when we actually use taxes to pay for wars it leads to “Great” generations.   But when we use tax cuts to pay for wars, it’s obviously domestic spending that is causing the problem.   The mind boggles, but when these guys keep getting away with spouting this b.s., there’s no reason to stop.

FACT CHECK: Republicans exaggerate size of ‘Taxmageddon.’
StarTribune.com
http://www.startribune.com/politics/national/158408015.html

CBO: Congress doing Nothing is the Best Tax Scenario

According to a new report from the non-partisan Congressional Budget Office (CBO), the United States federal government debt is projected to peak in 2015 and then drop substantially over the coming decades, all by itself if Congress can just sit on its hands and stop handing out tax breaks to individuals and corporations. Unfortunately, Republicans are bent on extending all of the Bush tax cuts, which the CBO found earlier this year will add $5.4 trillion to the debt in the next decade alone. And the Democrats proposals aren’t much better. President Obama’s proposal to extend the tax cuts for the first $250,000 a family makes and the first $200,000 a single person makes would actually result in an extension of 78% of the Bush tax cuts and would cost $3.5 trillion in the next decade. (This is still preferable to House Democratic Leader Nancy Pelosi’s proposal to extend the tax cuts for the first $1 million of income a family makes.) Congress should, however, increase the budget deficit temporarily if the result will be greater economic growth. But extending the Bush tax cuts would provide very little boost in economic output (compared to proven measures like increased unemployment insurance, food stamps or other types of spending programs).

I’m all for letting the whole shebang expire, go back to the tax rates we had when the budget was balanced…and move forward from there. In every way, form, and fashion the Bush cuts have not worked…they need to die…soon. — Should Congress Just Go Home? http://ctj.org/taxjusticedigest/archive/2012/06/should_congress_just_go_home.php

Kansas….that’s the joke.

Kansas tax act most regressive in nation / LJWorld.com —

Equally important, the act dramatically changes the Kansas tax system, shifting the income tax burden from the wealthy and prosperous to working people. The act provides that all income of business owners is tax-free (except in the unusual case where a regular corporation is used). Although the act was promoted as a boost to small business, there is no limit on the size of business that can be exempt from tax. Income of professionals — such as doctors, lawyers, architects, and accountants —practicing in partnerships will be tax-free. In a law firm, for example, the partners will pay no tax, while the clerical staff will continue on the tax rolls. Income received from partnerships and trusts will be tax-free. Wealthy Kansans who own real estate, stocks, bonds and other investments will simply transfer those assets to a partnership or trust, thereby freeing all their investment income from tax. All income of farmers will be exempt from tax. Who will still be paying Kansas income tax?Only three groups: 1) employees, 2) some retirees and 3) individuals whose investments are so modest that they cannot afford to create a trust or partnership to shelter their investment income.

This will be curious to watch. I think you’ll see a lot of paper flying, as a lot of firms “re-locate”, we’ll probably see a state GDP uptick on paper…and a massive drop off in tax revenue and quality of life for the other 90%. Other states will also lose revenue, as anything that can be funneled through Kansan shell companies will be. And lawsuits will rule the day as the real Kansan economy crumbles in under 5 years. Or maybe not…extreme test cases are always curious. It took nearly 7 years for the largest tax cuts in U.S. history (Bush 2001-3) to crush the economy and cause a debt “crisis” and downgrade. However, in that case you started with a fundamentally strong economy (U.S. economy circa 2000), not one already failing (Kansas 2012). — http://www2.ljworld.com/news/2012/may/27/kansas-tax-act-most-regressive-nation/

Why The Super Committee Failed : An Open Response to My Representative, Jeb Hensarling

Howdy, Jeb, hope you get this.   I’m going to address this to you, personally.  The main reference point for those following along at home is this article in the Wall Street Journal, penned by Jeb Hensarling, entitled ” Why The Super Committee Failed”.

First off, Jeb, a bit of background.  I’ve been watching you folks mangle the finances of the United States for a good long while now.    Now, to be sure, you weren’t in Congress when they first passed the tax cuts in 2001, but you were there and voted for the tax cuts in 2003.  If you don’t recall, you called that bill the “Jobs and Growth Tax Relief Reconciliation Act of 2003”.  Over the next 5 years, it would create zero net jobs.

Unfortunately for most Americans, just because *you* call a bill something, it doesn’t mean it does that.   I’ve noticed this disturbing trend for a while now, and wanted to call your attention to it.  You seem to think if you just call a law something, that is what it will do.   It did not in this case, and I was wondering if you even knew that.  In your article, you don’t mention how you tried the same thing before and it didn’t work.

For those that don’t remember, this was the collection of  tax cuts that both lowered rates (mainly on the wealthy) and *specifically* allowed banks and hedge funds to avoid paying taxes through “qualified dividends”.

 In addition, taxes on “qualified dividends” were reduced to the capital gains levels. “Qualified dividends” includes most income from foreign corporations, real estate investment trusts, and credit union and bank “dividends” that are nominally interest.

Yes, Jeb, you are one of the who voted *for* creating these exact same huge tax loopholes.

But enough about the past, surely you can remember what you did and don’t need me to remind you that we already tried it your way, and it failed miserably.

In your article, you use the sub-head, to avoid taking any responsibility for anything.

Democrats were unwilling to agree to anything less than $1 trillion in tax hikes, and unwilling to offer meaningful reforms for health-care entitlement spending.

Ok, maybe you don’t understand this, but your were on a “DEFICIT CUTTING COMMITTEE” and, indeed, bringing in more taxes CUTS DEFICITS.   I feel almost silly having to point this out to you, but, in fact, all throughout history governments have used taxes to pay for the debts those same governments create and endorse.  When you voted to cut taxes in 2003, it raised huge deficits.  You claimed then we would naturally “grow our way out” of it.   It didn’t work like that (it can’t…we’ll get to this in a minute).   That’s *why we have this committee*.  And now you seem to be attacking the very idea of using taxes to pay for government debts.

You also complain that “[Democrats were] unwilling to offer meaningful reforms for health-care spending”.   But you already knew this was going to happen.  Your House of Representatives passed the “Ryan Plan” with absolutely no support from anyone but Republicans.   Why did you think you could force it through this committee when it had absolutely no support outside of it?

We’ll get back to that later, let’s move on a little bit further into your piece.

All now know that the Joint Select Committee on Deficit Reduction has failed to reach an agreement. While there will still be $1.2 trillion of spending cuts as guaranteed under the Budget Control Act, we regrettably missed a historic opportunity to lift the burden of debt and help spur economic growth and job creation. Americans deserve an explanation.

I want an explanation on why you don’t understand that if you cut taxes at one point, you have to raise them back at another point, or cut services to pay for them.    And I’m not just an American here (although I am that), I’m also one of your constituents.   You are supposed to be representing me, and instead it appears you don’t understand how basic math works.

I want someone who understands math representing me.

President Obama summed up our debt crisis best when he told Republican members of the House in January 2010 that “The major driver of our long-term liabilities . . . is Medicare and Medicaid and our health-care spending.”

This is a curious technique.  You here have focused solely and completely on only one side of the balance sheet, “our long-term liabilities.”   As you may not be aware, we also have significant “long-term assets”, although again you don’t seem to be aware that these exists or how to tap into them.

 A few months later, however, Mr. Obama and his party’s leaders in Congress added trillions of dollars in new health-care spending to the government’s balance sheet.

And again, this is a lie of omission.  You correctly note that the Affordable Patient Care Act adds to the spending side of the government’s balance sheet.  You neglect to note, once again, that there exists *another side* to the balance sheet, called “revenue”, and the APACA brings in more of that than it spends.  This is why the Congressional Budget Office, CBO, indicated that it would actually cost more to repeal, as you already attempted to do.

CBO and JCT estimate that, on balance, the direct spending and revenue effects of enacting H.R. 2 would cause a net increase in federal budget deficits of $210 billion over the 2012-2021 period. By comparison, last March CBO and JCT estimated that enacting PPACA and the health-related provisions of the Reconciliation Act would reduce federal deficits by $124 billion over the 2010-2019 period.

Perhaps this is why I have such a hard time believing you, Jeb.  The CBO is calling you a liar, or at least very uninformed about the legislation you  are voting for.

Republicans offered to negotiate a plan on the other two health-care entitlements—Medicare and Medicaid—based upon the reforms included in the budget the House passed earlier this year.

The Medicare reforms would make no changes for those in or near retirement. Beginning in 2022, beneficiaries would be guaranteed a choice of Medicare-approved private health coverage options and guaranteed a premium-support payment to help pay for the plan they choose.

This is the “Ryan Plan”.  Look, Jeb, I can see why you don’t call it that, because Republicans have realized that when people know what it is, they do not like it. So, Jeb, the Republicans on the committee tried to force an end-run around Congress to end Medicaid, privatize Medicare, and cut taxes.   Unsurprisingly, this failed miserably…and it’s their fault.

Now on to something else you don’t seem to understand, how job creation works.

The Congressional Budget Office, the Medicare trustees, and the Government Accountability Office have each repeatedly said that our health-care entitlements are unsustainable. Committee Democrats offered modest adjustments to these programs, but they were far from sufficient to meet the challenge. And even their modest changes were made contingent upon a minimum of $1 trillion in higher taxes—a move sure to stifle job creation during the worst economy in recent memory.

Jeb, really…you passed a “Jobs Cuts Creates Jobs” bill back in 2003.   It didn’t create any net jobs.   And now you are claiming, again in the face of history, that raising taxes can’t ever work to stabilize an economy, and can’t be a harbinger of job growth as a result of that stabilization.

And again, need I remind you, Jeb…you were on a “deficit cutting committee”.  Raising taxes cuts deficits.   Or…does that last sentence not make sense to you?   I understand you have taken a pledge to a lobbyist group to never raise taxes in return for election support, but does that lobbyist money really change your perception of reality so completely?

Here’s why I ask that.   You claimed, at certain points in the debate, to be open to raising revenues…[from an older interview]

[Jeb] continued: “We put a half a trillion dollars of revenues on the table. Some of that fees. But 250 [billion] of it is what most people call static tax revenue. But that is in the context, Candy, of bringing down marginal rates — fundamental tax reform to make the tax code fairer, simpler, more competitive to create jobs.”

“But it’s something Democrats have rejected, as you know, it’s not enough, that it’s just a token amount,” Crowley noted.

“Well, first, Candy, I hope I’m never in Washington to where I consider $250 billion the American people’s money to be a token.” Hensarling explained. “Republicans, we want more revenues, we just want to raise it by growing the economy.”

But now I get to see what it was you called “new revenues”. [from this latest article]

Republicans were willing to agree to additional tax revenue, but only in the context of fundamental pro-growth tax reform that would broaden the base, lower rates, and maintain current levels of progressivity. This is the approach to tax reform used by recent bipartisan deficit reduction efforts such as the Bowles-Simpson fiscal commission and the Rivlin-Domenici plan.

Does everyone understand what Jeb is saying here?   Jeb, I’ve shown rather conclusively that the math doesn’t work like this, even in theory.   I’ve also shown, again using real world numbers, how this “tax cuts pay for themselves” thing simply DOES NOT WORK.   It didn’t work over the last decade, while you were on the inside.   That you are so close to this, and still cannot see it, makes me seriously question your perception of reality, or your honestly in conveying it to your constituents.  Or perhaps you are simply being paid too much not to see it.

Finally, Jeb, we see that a bit part of the problem was that you didn’t understand the problem.

Unfortunately, the committee’s challenge was made more difficult by President Obama. Since the committee was formed, he has demanded more stimulus spending [1] and issued a veto threat against any proposed committee solution to the spending problem [2] that was not coupled with a massive tax increase.

1] This is a reference to the President’s jobs bill.  Part of which already passed.  Stop complaining about things you support and called for in this same article only because someone else does them, Jeb, it makes you look petty.

2]  You were on a deficit cutting committee.  The deficit is the difference between revenue and spending.  That you focused only on spending and refused to entertain realistic notions of how government revenue is raised (hint: natural growth from “stimulative” low rates can’t work…see: math), makes it obvious why you failed so hard…you simply do not understand the totality of the actual problem.

Finally, your responsibility avoiding conclusion…

Ultimately, the committee did not succeed because we could not bridge the gap between two dramatically competing visions of the role government should play in a free society, the proper purpose and design of the social safety net, and the fundamentals of job creation and economic growth.

I think it’s that last one where you personally failed so hard, Jeb.  You don’t understand seem to understand how basic math works, and build your policy positions of those misconceptions.   You haven’t read your history, and instead just repeat the same tired talking points.    You don’t understand that we tried the exact same thing you are advocating now, and it led to economic collapse.

At the very least, you could take some modicum of responsibility for you own failure.  At the very least.

UPDATE: Finale….I didn’t realize I missed your second-to-last paragraph.   This is probably a better reason why the committee failed…you thought, all along,  you could simply undo the results of that failure by playing the fear card again.

A great opportunity has been missed, but America’s fate will not be sealed by the failure of a temporary congressional committee. Spending cuts will begin anyway in 2013, but in a manner many of us, including our secretary of defense, believe could fundamentally harm our national security. I am committed to ensuring that full deficit reduction is realized, but Congress must work to achieve these savings in a more sensible manner that does not make us less safe.

Jeb…this is completely untruthful.  The entire impetus for your committee was to avoid these cuts by making a deal.  Now you’ve refused to make a deal, and want to go back on the cuts that were supposed to encourage you to make a deal.   Now you call those same cuts a threat to national security…but they weren’t enough of a threat while you were  on the committee to raise taxes to pay for the tax cuts, and wars we’ve had going on the last decade?

This is just so….two-faced, Jeb.  It’s no wonder you have such low approval, one has to be a complete fool to take what you say at face value.   You always thought you could wiggle out of the “trigger” on the committee, which is why you took a hard line, refused to compromise, and failed so completely.   At least your whole plan is clear now.    As a voter, that’s important to me.    Hopefully my follow Texans, and residents of the 5th district, feel the same in 2012.

Obama: Tea Partiers Should Thank Me for Tax Breaks

http://www.cbsnews.com/8301-503544_162-20002677-503544.html

Old, white, Republicans (i.e. The Tea Party) won’t thank you for anything, Mr. President. It’s beneath them.

UPDATE: I’ve been planning a longer version on this one.  The difference between what the Tea Party *thinks* is happening in this country and what is *really* happening in this country is astounding.

“In all, we passed 25 different tax cuts last year. And one thing we haven’t done is raise income taxes on families making less than $250,000 a year — another promise that we kept,” he told supporters at the Arsht Center for the Performing Arts. “So I’ve been a little amused over the last couple of days where people have been having these rallies about taxes. You would think they would be saying thank you.”

The president argued that America is on the road to recovery and headed in the right direction — something an overwhelming number of Tea Partiers disagree with.

“One of the great things about running for president,” Mr. Obama said, “is it gives you a little perspective because you realize that these things go in cycles, the mood of the media and how things get portrayed. And so you’re like a genius for about a month and then you’re an idiot for about six months. Then, you know, you’re smart again for — you’re not as smart as you were, but you’re a little smarter than they thought you were, then you’re an idiot again.”

People shouldn’t focus on the day-to-day politics and polls, he said.

“What you’ve got to focus on is that true North, that lodestar, which is, are the things we’re doing over the long term going to help not just this generation but the next generation? Is this going to make America stronger?,” he said.

Note: the title of this post came from the linked article.  Obama doesn’t say “me”.   (“In all, we passed 25 different tax cuts last year…You would think they would be saying thank you.”)  it is a bit trolly and just indicative of what the media has become nowadays.

That’s part of the disconnect.   Old people with lots of time on their hands watch a lot of TV and a lot of news.  That’s who the Tea Party is, which is why they get so much news coverage.  They also tend to be wealthier, so despite them being a very small segment of the overall population, they are a targeted news demographic (and make up roughly 98% of Fox News viewers).   So they get a lot of coverage and have the time to make a lot of noise.  My other piece will be a bit longer, but that’s the general tilt of it.

Profit, Baby, Profit!!

HOUSTON — ExxonMobil (XOM), the world’s largest publicly traded oil company, reported income Thursday that shattered its own record for the biggest profit by a U.S. corporation, earning $14.83 billion in the third quarter.

Bolstered by summer’s record crude prices, the company said net income jumped nearly 58% to $2.86 a share in the July-September period. That compares with $9.41 billion, or $1.70 a share, a year ago.

The previous record for U.S. corporate profit was set in the last quarter, when ExxonMobil earned $11.68 billion.

Revenue rose 35% to $137.7 billion.

via ExxonMobil posts biggest quarterly profit ever, $14.8B – USATODAY.com

A couple things to point out here real quick, first up is the fact that net income (profit) rose 58% while revenue (total income) only went up 35%.  That means that Exxon, already setting records for profits, has been increasing their profit margin over the last year.

When you take a closer look at another article, you can see exactly how that was done.

Despite the surge in profit, Exxon said oil production was down 8% in the third quarter, compared to the same period last year.

So just to set this straight, Exxon made record profits, in the billions, by producing less oil than they did last year.

You know what’s better than working less and making more?  Having an entire political party trying to help you make even more money with less work, and cut your taxes, while you sit on an ever growing pile of cash.

Let’s see what the business response would be to “Drill, Baby, Drill.”…

Big Oil: Sure, we’ll drill, baby.  When we’re good and ready and the price of oil is both high enough and stable enough to ensure a healthy return.  What?  You think you can order us to drill?  HAHAHA!!!  This isn’t socialism, you can’t control industry through democracy.

Now give us those leases, stat!

I keep hearing that the secret to success and energy independence is drilling, working hard, and tax cuts.  Yet I what I see here is something working less, producing less oil, getting tax cuts, and RAKING IN BILLIONS OF DOLLARS of profits.

And speaking of McCain’s tax cuts, meant to reward hard working small businesses, doan’cha know.  Here’s who gets most of ’em.

Straight to the fact check.

Fact check: McCain tax cuts give $200 billion to corporations, $4 billion to oil companies?

The Verdict: True. Obama’s statement accurately reflects two studies of McCain’s tax proposals.

So the idea here is to give Exxon a tax break in order to “motivate” them to work harder…after they’ve already realized, much like OPEC, that they can make more money by producing less.  Nice.  Not bad work if you can find it.

Heck, you even get to party with and bang government officials in order to help keep “taxes” lower.

Guess who else gets to enjoy McCain’s tax cut reward for their hard work?

Oct. 27 (Bloomberg) — Five straight quarters of losses and a 70 percent slide in its stock this year haven’t stopped Merrill Lynch & Co. from allocating about $6.7 billion to pay bonuses.

Goldman Sachs Group Inc. and Morgan Stanley, both still on track for profitable years, have set aside about $13 billion for bonuses after three quarters, down 28 percent from a year ago. Even some employees at Lehman Brothers Holdings Inc., which declared the biggest bankruptcy in U.S. history last month, will get the same bonus they received a year ago.

The worst financial crisis since the Great Depression, a $700 billion taxpayer bailout, public outcry over excessive pay and the demise of three of the biggest securities firms won’t deter Wall Street from offering year-end rewards to employees on top of their salaries, compensation experts say.

[full story]

These are the kind of people that *really* benefit from McCain’s tax cuts, and have enjoyed *tremendous* benefits from Bush’s tax cuts…but I repeat myself.

The City of Dallas recently laid off over 400 teachers because of a $65 million shortfall for the year.  Over the last 90 days Exxon made of profit of about $1,900 a second.   That’s over $150 million a day.  In profit.

Exxon is based in Dallas County.

Doesn’t it seem like, oh, I don’t know…rational public policy…to actually bring in enough money in taxes to pay for public services?

Some might say the market should solve the problem, but I would rather tax Exxon and have Dallas county schools, than cut taxes on Exxon and get Exxon-branded Education Centers.   And DISD isn’t even that good a school district.    It did, however, get shafted like the rest of the country by No Child Left Behind, which was underfunded….BECAUSE OF TAX CUTS.

Giving even more tax cuts to Exxon and Goldman Sachs and their respective execs is not doing to do a damn thing to motivate them to work harder.

Making sure your kids, and your neighbor’s kids, have FREAKING TEACHERS in school trumps “executive compensation” in my humble opinion.

Giving massive tax cuts to folks who squeeze the commodity market and sell bullshit securities, while our schools and fire departments lay off people, doesn’t seem like sound public policy to me.

Maybe my priorities are wrong. Maybe if I believed that the highest ideal a human could strive for was “Profit, baby, profit” I could go along with McCain’s tax policy.

But I don’t, and I can’t.

So I won’t.

Biden’s Response to McCain Tax Lie Gets More Coverage Than the Lie

WASHINGTON (AP) — Democratic vice presidential candidate Joe Biden said Thursday that paying more in taxes is the patriotic thing to do for wealthier Americans. In a new TV ad that repeats widely debunked claims about the Democratic tax plan, the Republican campaign calls Obama’s tax increases “painful.”

Under the economic plan proposed by Democratic presidential candidate Barack Obama, people earning more than $250,000 a year would pay more in taxes while those earning less – the vast majority of American taxpayers – would receive a tax cut.

Although Republican John McCain claims that Obama would raise taxes, the independent Tax Policy Center and other groups conclude that four out of five U.S. households would receive tax cuts under Obama’s proposals.

Noting that wealthier Americans would indeed pay more, Biden said: “It’s time to be patriotic … time to jump in, time to be part of the deal, time to help get America out of the rut.”

News from The Associated Press.

Biden’s gaffe, if you want to call it that (and they will), will probably get a lot more airplay that McCain’s dissassembling.

I found a really good graph comparing the two tax policy proposals from the candidates.

You can see it here.

McCaina and Obama's Tax Plan

McCain vs Obama (re: Taxes)

And Biden is right, it is time for the rich to start paying their fair share. They haven’t been since Bush’s massive upper class tax cuts. Now some people think that a higher ratio for the rich is some kind of class warfare, but what they often forget is the VAST majority of wealth in this country in concentrated in a few small portion of the populace. There are larger differences in income and wealth now in the U.S. than ever before.

And they got a whole bunch worse with Bush’s tax policy, which included a massive tax cut and starting a war, both of which McCain endorses. BTW, Bush was the first President to cut taxes during a war. Taxes were increased to pay for every U.S. war in history (except for the one with Mexico…which was paid for by Texas).

Some people will dismiss the Obama’s proposal “Class Warfare”. What I see it as is something made to avoid actual class warfare. You know, the killing and robbing kind.

But enough on that, let’s talk about McCain’s lies. McCain thinks that Obama is going to raise taxes on “Middle Class Americans” because McCain thinks that “Middle Class Americans” make around two or three million dollars a year.

Now, McCain might have been joking about that, but he wasn’t joking when he said that the Americans wouldn’t pick lettuce for $50/hour.

And now he wants to cut taxes, mostly for the richest 1%.

That’s just not responsible government. You can’t cut out earmarks and balance the budget. We had a $406,000,000,000 shortfall this last year, and the total for earmarks is around $16-18,000,000,000. That’s not going to even get us close…

For instance, estimates from watchdog groups of total earmark spending in fiscal 2008 range from $16-18 billion. Current estimated outlays for the federal government in fiscal 2008 are $2.9 trillion (PDF). That’s less than one percent.

To put it another way, the current projected deficit is roughly $400 billion. Even if John McCain got rid of every earmark (an impossible task), it would only make a small contribution to deficit reduction. (See Factcheck.org’s takedown of McCain’s exaggerated claims of how much it can save by reducing earmarks.)

[full post]

So you could cut out every single infrastructure improvement project in the country (what “earmarks” often are) and that wouldn’t bring us anywhere near to balancing the budget. You can’t stop going to the movies when your salary is less than your rent and hope that somehow those “savings” balance the books.

What we need now are responsible politicians that don’t feed people the bullshit line that you can cut taxes to increase tax revenue in each and every economic situation.

This isn’t the 70’s, with a top marginal rate in the 70’s (percent).

This is the 00’s, with a top marginal rate in the teens (maturity-wise).

It’s a new situation and it needs a better solution than the one Bush offered (the one McCain was against before he was for it…both of which were *way* before he started lying about the whole thing).

If we look to history, the answer is easy. It we “make our own history” in the Neocon way, then we can happily make the same mistakes that have been made since time immemorial.

Sorry about that whole “U.S. economic collapse” thing (Straw and A Camel’s Back)

There’s an ooooold saying about the tipping points in life.

This ones comes from deep in the desert, back in some of the first communities our species ever built.

The wiki says the story goes like this.

The idiom the straw that broke the camel’s back is from an Arab proverb about how a camel wearing shoes is loaded beyond its capacity to move[citation needed]. This is a reference to any process by which cataclysmic failure (a broken back) is achieved by a seemingly inconsequential addition (a single straw). This also gives rise to the phrase “the last/final straw”, used when something is deemed to be the last in a line of unacceptable occurrences. A variation of this idiom is “the straw that broke the donkey‘s back”.

One of the earliest published usages of this phrase was in Charles Dickens‘s Dombey and Son where he says “As the last straw breaks the laden camel’s back”, meaning that there is a limit to everyone’s endurance, or everyone has his breaking point. Dickens was writing in the nineteenth century and he may have received his inspiration from an earlier proverb, recorded by Thomas Fuller in his Gnomologia as ‘Tis the last feather that breaks the horse’s back.’

So it goes from the Desert to Dickens and back to Dicks in the Desert (of Wall Street). Or something.

Why I’m bringing this up is that, uh, I’m one of those straws, maybe even the proverbial one.

You see, in order to provide for my little media endeavor, and take some time to write and enjoy life, I’ve taken the step of cashing out a 401K I’d been bulding for the last few years. Silly, I know, but when one needs capital and one has been saving for that reason, it was an easy call.

The fact that I got my check on the exact same day that the shit hit the fan makes me wonder about the weight of my piece of straw.

We’ve been told that the camel was mighty and healthy and beyond danger. That It could withstand war and famine and plague and pestilence and keep walking through the desert undisturbed. That it could go faster, even, if we just whipped it harder.

Now we know better.

Just like they did thousands of years ago, halfway around the world.