Another commie liberal attacking America’s true economic achievers…

Warren Buffett’s Statement to Congress on Estate Taxes

Mr. Chairman, Senators, I appreciate the opportunity to express a few views on the estate tax.

I will limit my remarks to three points.

The first relates to the intellectual dishonesty employed by those who use the phrase ‘death tax.’ This term is clever, it is Orwellian, and it is, if you’ll pardon the expression, dead wrong.

More than 2.4 million Americans will die this year. About 12,000 of them will leave an estate that will be taxed when the exemption goes to $3 million, as Senator Grassley mentioned. It will be 9600 estimated and it’s been 19,000 when the exemption was (lower.)

That means that 99-and-a-half percent of estates will be tax-free. You would have to attend 200 funerals to be at one at which the decedent’s estate owed a tax. Indeed, far more people who die receive a large tax benefit. I don’t think that’s generally understood. Namely, a stepped up basis on appreciated assets.

If people insist on renaming the estate tax, it would be more appropriately labeled the ‘death present.’

The second point I would like to make is that in a country that prides itself on equality of opportunity, it is becoming anything but that, as the gap between the super rich and the middle class widens in dramatic fashion…

Twenty years ago, 1987, it took $220 million dollars to make the list. Now it takes $1.3 billion, about a six-for-one increase. The total wealth of the list in 1987 was then $220 billion. Now it’s $1.54 trillion, exactly a seven-for-one increase.

Tax law changes have benefited this group, including me, in a huge way. During that same period, the average American went exactly nowhere on the economic front. His income went from a median $26,061 to $48,201, almost exactly the increase of the CPI during the 20 years.

He’s been on a treadmill while the super rich have been on a spaceship.

Watch The Video/Read The Complete Transcript

Nobody prefers paying taxes…with the possible exception of IRS employees who realize that their tax returns along with those of others keep them employed.

Hardly anyone enjoys coughing up hard-earned money to “the government.”

Everyone likes to rail about taxes especially today, “Tax Day,” April 15.

But taxes are the necessary price for a civil society.

Fire and police protection. Food inspectors. Air traffic controllers. Libraries. Unemployment insurance. Water and sewer systems. Border protection. Medical care for senior citizens. Courts. Public parks and open spaces. Educational, nutritional, and medical programs for pre-school age children. Boards of elections. Enforcement of clean air and water laws.

These and hundreds of other social, economic and political functions are the glue that bond people and their/our institutions together to forge community. Humans are social beings. We need social networks — both informal and formal.

Governments are one type of formal network that at their best reflect the will of their inhabitants through their constitutions, rules, laws, policies and programs. Taxes provide the funds that allow governments to create and maintain these functions.

Are all taxes fair? No. Are tax dollars wasted? Absolutely. Can other formal networks besides governments sometimes perform the same social function without tax dollars. Sure.

This doesn’t mean we don’t need taxes.

At their best, governments are us. We need public structures and institutions that create, maintain, protect, and defend the commons and collective goals. We also need governments to control and define the other major organized structure and institution in our societies that threaten self-governance — the major one being business corporations.

As problematic as governments may be in representing its citizens, they are bastions of self-governance compared to business corporations. Business corporations are in not democratic. Employees have no Bill of Rights protections. Business corporations are not loyal to any people or place. Business corporations, in fact, seek to supplant the role of government not just economically but politically. That’s what drives privatization of public assets and institutions.

Several dozen “Tax Day Tea Parties” are taking place today across Ohio — as part of a nationwide revolt against taxes. They’re billed as nonpartisan. Many I’ve read about are focused on opposing President Obama’s stimulus programs. Whether deliberate or not, the tenor of these brewing tax revolt actions, however, seems to be much more — to reduce the power, authority, and wherewithal of government to:

1. Define and control corporate actions
2. Ensure that governments can’t assume new authorities that may be better in the public rather than the corporate domain — i.e. controlling the issuance of national currency, and/or
3. Decrease the ability of government to meet basic public functions, thereby, opening the door to selling or leasing them to for-profit business corporations.

There’s no question we need a tax revolt. The proposed fiscal year federal budget calls for over $700 billion for military spending (to maintain a military empire with bases and troops in more than 100 nations, including current wars and occupations in several) and $750 billion more to bailout banks that lost trillions in risky and bizarre financial gambles. An increasing amount of our tax dollars are in the form of corporate welfare. None of this increases housing security, health care security, environmental security, job security (expect for bankers and military contractors), or education security. It’s not taxes that are revolting but how and where they’re spent.

Reducing taxes for any of the three reasons above simply taxes democracy by decreasing the ability of governments to set and enforce laws, rules, priorities and programs that reflect the wishes and interests of the vast majority of the public — and against those running national and transnational business corporations.

In a time when the “free market” and Wall Street has demonstrated beyond doubt its lack of service to the public interest and lack of public accountability, government provides the best institutional path to authentic public accountability and responsibility.

Tax Day Tea Parties only brews blanket hostility at the government and represents an effort to divert popular anger away from where it most needs to be — against the growing power and rights of business corporations and toward creating a government ruled by people.

- Posted by Greg Coleridge, The American Friends Service Committee and the Program On Corporations, Law & Democracy

Class war anyone?

Whenever you bring up statistics like this, the oblivious opulent tend to screech out about how one is engaging in ‘class warfare.’

Seems to me that its a war that has long been underway, and its pretty obvious who is winning it.

Here from author David Cay Johnston, reporting for The New York Times…

The increase in incomes of the top 1 percent of Americans from 2003 to 2005 exceeded the total income of the poorest 20 percent of Americans, data in a new report by the Congressional Budget Office shows.

The poorest fifth of households had total income of $383.4 billion in 2005, while just the increase in income for the top 1 percent came to $524.8 billion, a figure 37 percent higher.

The total income of the top 1.1 million households was $1.8 trillion, or 18.1 percent of the total income of all Americans, up from 14.3 percent of all income in 2003. The total 2005 income of the three million individual Americans at the top was roughly equal to that of the bottom 166 million Americans, analysis of the report showed.

The report is the latest to document the growing concentration of income at the top, a trend that President Bush said last January had been under way for more than 25 years.

Earlier reports, based on tax returns, showed that in 2005 the top 10 percent, top 1 percent and fractions of the top 1 percent enjoyed their greatest share of income since 1928 and 1929.

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Jared Bernstein, an economist at the Economic Policy Institute in Washington who characterizes the Bush administration’s policies as YOYO economics, based on You (Are) On Your Own, said the differences in income growth explained why so many Americans have told pollsters that they are feeling squeezed.

“A lot of people justifiably feel they are working harder and smarter, they are baking a bigger and better pie, and yet their slice is not growing much at all,” Mr. Bernstein said. “It is meaningless to middle- and low-income families to say we have a great economy because their economy looks so much different than folks at the top of the scale because this is an economy that is working, but not working for everyone.”

The rich with the greatest share of income since 1929? We know what went down the last time THAT happened.

Read The Complete Article

George Lakoff and Bruce Budner of The Rockridge Institute elaborate here on some of the hidden truths and necessary social positives of a progressive taxation system…

Progressive taxation - taxing the wealthy at higher rates than the poor - is a moral issue. Like many moral issues, it sparks heated debate. The debate is borne of conflicting worldviews, values and understandings of values.

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America’s government has at least two fundamental functions: protection and empowerment. Protection includes the police, firefighters, emergency services, public health, the military and so on. Empowerment includes the infrastructure needed for business and everyday life: roads, communications systems, water supplies, public education, the banking system for loans and economic stability, the SEC for the stock market, the courts for enforcing contracts, air traffic control, support for basic science, our national parks and public buildings, and more. We are usually aware of protection. But the empowerment infrastructure, provided by taxes, is usually taken for granted, hidden or ignored. Yet it is absolutely crucial, a fundamental truth about America and why America provides opportunity.

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As Warren Buffet famously observed, he likely couldn’t have achieved his financial success had he been born in Bangladesh instead of the United States, because Bangladesh had no banking system and no stock market.

Ordinary people just drive on the highways; corporations send fleets of trucks. Ordinary people may get a bank loan for their mortgage; corporations borrow money to buy whole companies. Ordinary people rarely use the courts; most of the courts are used for corporate law and contract disputes. Corporations and their investors - those who have accumulated enough money beyond basic needs so they can invest - make much more use, compound use, of the empowering infrastructure provided by everybody’s tax money.

The wealthy have made greater use of the common good - they have been empowered by it in creating their wealth - and thus they have a greater moral obligation to sustain it. They are merely paying their debt to society in arrears and investing in future empowerment.

This is the fundamental truth that motivates progressive taxation.

It is a truth that undercuts conservative arguments about taxation. Taxes provide and maintain the protecting and empowering infrastructure that makes our income possible.

Our tax forms hide this truth. They do not indicate the extent to which taxes have created and sustained the common wealth so you could earn what you have. They make it look like the empowering infrastructure was just put there by magic and that the government is taking money out of your pocket. The most likely truth is that, through the common wealth, America put more money in your pocket than it took out - by far.

Read The Complete Article

Paul Krugman, the Princeton economist who serves as one of the most lucid voices in the media today, thanks to his column in the NY Times, delivers with this expose’ on how in America under the Bush crony system of government, it’s Katrina all the time for the public infrastructure of American society.

…Federal officials were oblivious. “We are extremely pleased with the response that every element of the federal government, all of our federal partners, have made to this terrible tragedy,” declared Michael Chertoff, the secretary for Homeland Security, on Wednesday. When asked the next day about the situation at the convention center, he dismissed the reports as “a rumor” or “someone’s anecdotal version.”

Today, much of the Gulf Coast remains in ruins. Less than half the federal money set aside for rebuilding, as opposed to emergency relief, has actually been spent, in part because the Bush administration refused to waive the requirement that local governments put up matching funds for recovery projects - an impossible burden for communities whose tax bases have literally been washed away.

On the other hand, generous investment tax breaks, supposedly designed to spur recovery in the disaster area, have been used to build luxury condominiums near the University of Alabama’s football stadium in Tuscaloosa, 200 miles inland.

But why should we be surprised by any of this? The Bush administration’s response to Hurricane Katrina - the mixture of neglect of those in need, obliviousness to their plight, and self-congratulation in the face of abject failure - has become standard operating procedure. These days, it’s Katrina all the time.

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Most disturbing of all, the number of Americans without health insurance jumped. At this point, there are 47 million uninsured people in this country, 8.5 million more than there were in 2000. Mr. Bush may think that being uninsured is no big deal - “you just go to an emergency room” - but the reality is that if you’re uninsured every illness is a catastrophe, your own private Katrina.

Yet the White House press release on the report declared that President Bush was “pleased” with the new numbers. Heckuva job, economy!

————

Future historians will, without doubt, see Katrina as a turning point. The question is whether it will be seen as the moment when America remembered the importance of good government, or the moment when neglect and obliviousness to the needs of others became the new American way.

Read The Complete Essay

It is simply amazing to me that this fraud of a program was able to ever be enacted in the first place. But then, the power of the Corporate State cannot be underestimated. This from Smartmoney.com…

You can tell a lot about a product by the way it’s sold, and the Bush administration has hawked Medicare’s prescription-drug benefit - “Part D” - almost as honestly as it rolled out the Iraq war. The results are going to start slamming millions of seniors right here, right now, in the fall of 2007.

To see why Part-D Day is at hand, you first have to understand the nasty process by which Medicare added a drug benefit.

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The administration and its allies went to unusual and controversial lengths to pass the drug benefit. In 2004 it sent a series of “video news releases” hyping the program to media outlets around the country. These prepackaged broadcasts seemed like news reports, and some TV stations aired them as such, but they were actually political ads. In May 2004 the Government Accountability Office found that these news stories constituted “covert propaganda” and violated publicity or propaganda prohibitions, but the GAO lacked the authority to punish anyone.

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Throughout the debate over the drug benefit, President Bush told Congress it would not cost more than $400 billion over 10 years, but soon after the legislation passed, it emerged that administration officials knew that information was false. From June through November 2003, Medicare’s accountants estimated the real cost of the program would run between $500 billion and $600 billion, according to congressional testimony in 2004 by Richard Foster, Medicare’s chief actuary. But Thomas Scully, then Medicare’s administrator, told Foster he would face “extremely severe” consequences if he revealed the truth to Congress. And Foster says a top lawyer at Medicare told him that Scully had the authority to gag him. That lawyer was Leslie Norwalk - a name to keep in mind.

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In this description, disseminated by the administration and picked up by countless journalists (including, unfortunately, me in a prior column), the gap in coverage seems to be a manageable $1,450. The very name “doughnut hole” suggests a small problem. Maybe the difference between “prescription costs” and “out-of-pocket expenses” will be confusing enough to make you stop thinking about the whole issue.

Try this on for size instead. Under Medicare’s drug benefit, you pay $4,270 of the first $5,871 in prescription costs you incur.

Packs a much stiffer wallop - both rhetorically and financially - than the first definition, doesn’t it? But it’s the same numbers, just expressed more clearly (and honestly). To get Part D’s “catastrophic” coverage, which pays for 95% of prescription costs, you’ve got to pay the premium for your policy, then a deductible, then 25% of your initial drug costs, and then, on average, another $3,000 or so to get you through the “doughnut hole.” That’s the real cost of structuring Part D as a giveaway to pharmaceutical companies. Maybe it would get some more attention if we started calling it the “Mom’s missing her meds” tax.

And this is just touching on part of this disconcerting report. Read the complete article Here

This is interesting, from the Computer and Communications Industry Association…

Fair Use Economy Represents One-Sixth of U.S. GDP

Fair Use exceptions to U.S. copyright laws are responsible for more than $4.5 trillion in annual revenue for the United States, according to the findings of an unprecedented economic study released today. According to the study commissioned by the Computer and Communications Industry Association (CCIA) and conducted in accordance with a World Intellectual Property Organization methodology, companies benefiting from limitations on copyright-holders’ exclusive rights, such as “fair use” – generate substantial revenue, employ millions of workers, and, in 2006, represented one-sixth of total U.S. GDP.

The exhaustive report, released today at a briefing on Capitol Hill, quantifies for the first time ever the critical contributions of fair use to the U.S. economy.  The timing proves particularly important as the debates over copyright law in the digital age move increasingly to center stage on Capitol Hill. 

Read The Full Study

Good posting on Wrynet dissecting some of the deceptive arguments and illusionary enticements of so-called ‘public/private partnerships’ and who is really benefitting from them.

Truthout has a good posting here with some articles regarding this tragic event and some of its potentially likely underlining causes. This includes a provocative and well-reasoned analysis from AlterNet regarding why this tragedy is the result of conservative ideology…

The tragic collapse this week of a stretch of I-35 spanning the Mississippi river in Minnesota was shocking but should come as no surprise. America’s core infrastrucure has been falling apart in very visible ways during the past few years. It’s a predictable outcome of the rise of “backlash” conservatism; we’ve swallowed 30 years of small-government rhetoric, and it’s led us to a point in which our infrastructure, once the pride of the developed world, is falling apart around us. We’re reaping what we’ve sown.

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One of the primary reasons for that is that there aren’t organized constituents lobbying for public goods like highways and bridges - people take those things for granted. A thousand grifters have gained office promising to cut taxes as if they existed in a vacuum, without mentioning the cost; no politician has ever won office promising to keep highways from collapsing on their constituents. For 30 years, we’ve been told by a series of right-wing snake-oil salesmen that they could deliver more and better public services while constantly cutting the taxes that pay for them, but it was always a fraud. The result is that the United States enjoys the third-lowest tax burden among the 30 most advanced economies as its public spaces gradually come apart at the seams.

I would argue that skimping out on infrastructure investments in the name of a low tax burden is a triumph of ideology over commonsense, but it goes beyond that. Conservative philosophy stresses limited government, not bad government, and nothing can change the fact that the public sector remains the only way to organize collectively when there’s no profit involved. So nobody seriously believes that the the hidden hand of capitalism is going to step in and inspect and repair bridges that are open to the public. When lawmakers don’t fund that work, they know full well that it won’t get done.

Read The Full Article

Some colleagues of mine posted some insightful comments on this incident as well.

I think we are beginning to see the tip of the iceberg.

Nationwide we appear to be falling further and further behind with infrastructure maintenance. A recent example was the steam line rupture in New York City. There are plenty of other things — billions of dollars worth of water lines - some in excess of 100 years old - needing replacement. Yet governments don’t want to spend the necessary money to correct these deficiencies because it isn’t the “political thing to do.” Hey, can’t raise taxes or rates. Leave it for the next guy.

I’m at 33 years of local government service, and I don’t like what I see. Frustrating is putting it mildly.

It’s going to become a very real problem for all of us.

Unfortunately, I believe this individual is completely correct here. As our nation continues to more and more resemble the former USSR and authoritarian east bloc nations in the political sphere, that resemblance will begin to manifest itself in the realm of our physical infrastructure as well.

Another, from the Twin Cities, posted this…

I’m also nauseated and angry over reports this morning that our state administration was told in 2001, 2005 and 2006 that the bridge was structurally deficient, and was prone to single fatigue. Our governor this morning is assuring me and other citizens that 179,000 other bridges in the country have the same designation, so there’s nothing to worry about. It’s not the time to go on a political rant, but I know a lot of other people are shocked and angry. As I look at the devastation from one bridge collapse here, it’s hard for me not to think about our brothers and sisters in New Orleans who still haven’t recovered from Katrina in 2005. We have a lot of work to do.

Yes, we do.

E-Democracy.Org has put up a wiki to highlight news, videos, photos and more about the I-35W bridge collapse here. Interesting stuff, and an interesting use of citizen-driven information platforms to better communicate news and information.

Here is an interesting analysis and comparative study of the Canadian health care system vs. the American one (if you want to call that a coherent system). It seems that Canadians have become healthier than Americans over a thirty year span in the controlled social experiment of public vs. private care.

Publicly funded health care has its problems, as any Canadian or Briton knows. But like democracy, it’s the best answer we’ve come up with so far.

Should the United States implement a more inclusive, publicly funded health care system? That’s a big debate throughout the country. But even as it rages, most Americans are unaware that the United States is the only country in the developed world that doesn’t already have a fundamentally public–that is, tax-supported–health care system.

That means that the United States has been the unwitting control subject in a 30-year, worldwide experiment comparing the merits of private versus public health care funding. For the people living in the United States, the results of this experiment with privately funded health care have been grim. The United States now has the most expensive health care system on earth and, despite remarkable technology, the general health of the U.S. population is lower than in most industrialized countries. Worse, Americans’ mortality rates–both general and infant–are shockingly high.

Read the complete report in Yes! Magazine