The Real Fiscal Cliff, in Four Charts

Let's juxtapose four charts and draw a picture of the real fiscal cliff. We begin with a common chart, which shows the US tax mix, most recently posted by Owen Zidar:

1. The US Tax Mix, 1934-2012

Earlier in the week, Catherine Rampell posted this:

2. Median Household Income, 2000-2012

And today, business insider had these:

3. Wages as % of US GDP, 1940-2012

4. Corporate Profits as % of US GDP, 1940-2012

Conclusion: the US is taxing the easy-to-tax (see red & blue lines in the first chart), but the easy to tax have less and less at their disposal (chart 2 & 3); the US is not taxing the hard-to-tax (green line in chart 1), but the hard to tax have more and more at their disposal (chart 4). This is the real fiscal cliff.

Activists: inequality is a legal, institutional choice that can be revisited through resistance

Al Jazeera has a short article by a couple of global justice activists and well known justice scholar Thomas Pogge, about growing global wealth inequality, the role of law and legal institutions in fostering and protecting the status quo for those who benefit from it, and the rise in information and collaboration that is empowering resistance from civil society:

The scale of inequality and poverty can appear overwhelming and unchangeable. Yet it is not inevitable. It is the outcome of active choices by people who make and enforce the rules we all live by: rules about global trade, banking, loans, investment, taxes, working conditions, land, food, health and education. These rules are made by people and people can change them.

...Right now, there is a special moment of opportunity. Throughout the world, citizens have access to information in ways once unimaginable. Affordable technologies are revolutionising our ability to communicate with one another and act collectively. The opportunities for new citizen-powered movements to become catalysts for change have never been greater than today. Powerful elites are losing the structural advantages they once enjoyed of being able to maintain secrecy, restrict information and suppress popular movements.  

The authors are launching an activist initiative entitled /The Rules.  This is something to watch as the activists circle around international tax--a technical expertise-laden field that has not worked out important questions of justice in any kind of coherent matter. When Lennon sang about power to the people he did not mention tax havens, but global tax avoidance and evasion appear to be front and center of popular resistance to status quo legal regimes today.

CEOs: welfare is good, but only if it's corporate

From Naked Capitalism, 9 Greedy CEOs Trying to Shred the Safety Net While Pigging Out on Corporate Welfare:

A gang of brazen CEOs has joined forces to promote economically disastrous and socially irresponsible austerity policies. Many of those same CEOs were bailed out by the American taxpayer after a Wall Street-driven financial crash. Instead of a thank-you, they are showing their appreciation in the form of a coordinated effort to rob Americans of hard-earned retirements, decent medical care and relief for the poorest.

...they are gearing up to pull the wool over the public's eyes by cutting Social Security, Medicare and Medicaid. The CEOs are part of the Fix the Debt campaign ... which plans to unleash tens of millions pushing for a deficit reduction deal that favors the rich.

...these Scrooges are so bold as to publicly announce their desire to pick the pockets of fellow Americans while simultaneously pigging out at the corporate welfare trough. Multitasking!

NC provides a sample of what it calls the Fix the Debt CEO Council Hall of Shame (complete list at the Fix the Debt website here):

1. Lloyd Blankfein, chairman and CEO, Goldman, Sachs & Co. Blankfein, infamous for describing his financial activities as "God's work," shared his attitude toward society with CBS news recently. He explained his keen desire to see Americans lowering their sights for the future. ...he gives a pithy summary of what life is going to be like for the 99 percent:

You're going to have to do something, undoubtedly, to lower people's expectations of what they're going to get, the entitlements, and what people think they're going to get, because you're not going to get it.

...Since the financial crash, Blankfein's company, Goldman Sachs, has received tens of billions of dollars in ..."direct and indirect succor from the Fed."...

2. Jeffrey Immelt, chairman and CEO, General Electric Company. ...supporting disastrous financial deregulation, dodging taxes and helping to destroy American manufacturing has not satisfied Immelt. He'd like to add insult to injury by making sure that people who have been screwed by the reckless activities of short-sighted corporate titans like himself are left to starve in their golden years and go without medical care. And as for the poor, well, couldn't they be just a little bit poorer? Immelt thinks that would be swell.

After the 2008 crash, the government gave a giant boost to hard-pressed GE Capital, the company's financing arm, through the Temporary Liquidity Guarantee Program. GE has also helped itself to enormous taxpayer-funded subsidies, especially in green energy. And guess how much GE paid in taxes in 2010? Nothing. ...

3. Jamie Dimon, chairman and CEO, JPMorgan Chase & Co. ... Dimon is deploying a familiar scare tactic on the topic of the so-called fiscal cliff. He's claiming that his company will be forced to cut down on hiring and so on if a budget plan is not tailored to enrich the wealthy. ...Maybe Dimon's company would be better served figuring out what happened to the $6 billion that recently went up in smoke in the "London Whale" derivatives fiasco.

NC covers several more including the CEO of Honeywell (of powerpoint "union busting for dummies" fame), all at the link.

Corporate welfare alive and well and surviving austerity budgets across the US

This is fascinating, and isn't it a bit amazing that it isn't a common measurement undertaken by the government?

The New York Times spent 10 months investigating business incentives awarded by hundreds of cities, counties and states. Since there is no nationwide accounting of these incentives, The Times put together a database and found that local governments give up:

• $80.4 billion

  in incentives each year
• 1,874No. of programs

An interactive map follows, which shows which states give what amount and for what projects.  Big bubbles over Texas, the most generous state when it comes to corporate welfare.

Considering how much budget trouble most of the states are in--most have significantly cut social spending--the $80B figure seems astounding, especially if the incentives don't pay off. For example, here's a paper that shows tax incentives aren't typically worth their high cost even if they play a role in securing an investment (itself a dubious proposition).

Here's a fun part of the Times story:

The Times identified 48 companies that have received more than $100 million in state grants since 2007. Some 5,000 other companies have received more than $1 million in recent years.

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No one shoud be surprised to see this list (does anyone NOT own or use any of the products or services of these companies?), and yet it ought to be universally shocking just how much welfare the world's most fierce proponent of the free market gives to its top companies, and this is only on the state, county and city level. Consider some of the top welfare recipients:

•  General Motors: Awarded at least $1.77 billion ($1.76 billion since 2007) from 208 grants in 16 states. 

• Amazon: Awarded at least $348 million ($304 million since 2007) from 22 grants in 9 states. The online retailer has been building more distribution centers across the nation, which have created thousands of jobs. In several states, Amazon.com has used those jobs as a tool to negotiate delays in online sales tax collection. 

• Microsoft: Awarded at least $312 million ($232 million since 2007) from 20 grants in 4 states. The Fortune 500 corporation benefits from a state program in Washington that allows high-tech companies to waive sales tax on many purchases. It has also benefited from local incentives aimed at data centers, which do not tend to hire many people. 

• Dow Chemical: Awarded at least $217 million from 187 grants in 7 states. When the longtime Michigan-based company decided to build a solar factory, the state kicked in $140 million and the federal government $20 million. The total aid is around the same amount Dow is spending on the project.

This draws a pretty clear picture about the shifting of state resources: because of declining tax revenues, states have moved away from health care (cut by 31 states), services to the elderly and disabled (cut by 29 states and DC), K-12 education (cut by 34 states and DC), higher education (cut by 43 states), etc (all discussed here).  The Times report shows clearly that corporate welfare has emerged on top in terms of state budgetary priority.

Oh, so much more at the links.