Month: May 2013

Who says the IRS didn’t succumb to political pressure?

by digby

Thanks goodness they kept their heads when it came to the really important stuff:

The tax matter at issue was whether these donors had sidestepped the gift tax. Created in 1924, the gift tax acts as a safeguard of sorts, backstopping both the estate tax and the income tax. Before its creation, people could donate all their money before they died to avoid the estate tax or give away their assets to relatives in lower income tax brackets. The gift tax does not apply to donations to traditional charities (the Red Cross), trade groups (the US Chamber of Commerce), or political nonprofits formed under the 527 section of the tax code (Swift Boat Veterans for Truth and America Coming Together). In the 1980s, the IRS said that the gift tax did cover contributions to 501(c)(4)s, yet for decades the agency never bothered donors about the gift tax on their donations to such nonprofits.

That changed in early 2011, when the IRS told five big donors to 501(c)(4) groups that they were being investigated for possibly dodging the gift tax. One of these letters read, “Donations to 501(c)(4) organizations are taxable gifts and your contribution in 2008 should have been reported on your 2008 Federal Gift Tax Return.” That was a potentially a big deal. The way the gift tax works, a donor who in 2008 gave more than $2 million to one or more nonprofits could owe hundreds of thousands of dollars to the taxman—a doozy of an unexpected tax bill. If the IRS vigorously applied the gift tax to these sort of donations, donors would be less likely to give (or would give less) to nonprofits, tax experts say.

In May 2011, news of the IRS’ big-donor probe went public. Republicans reacted furiously. On June 3, 2011, Rep. Dave Camp (R-Mich.), the chairman of the House ways and means committee, sent a letter to then-IRS commissioner Doug Shulman demanding the names and titles of IRS staffers involved in the gift tax probe, and the criteria used to pick which donors to scrutinize. “Every aspect of this tax investigation, from the timing to the sudden reversal of nearly thirty years of IRS practice, strongly suggests that the IRS is targeting constitutionally-protected political speech,” Camp said. (The IRS denied that the probe was influenced by politics in any way.)

The following month, Miller halted the agency’s donor audits. In a public memo, he wrote, “This is a difficult area with significant legal, administrative, and policy implications with respect to which we have little enforcement history.” The IRS would study the gift tax, Miller added, and if it launched future audits of donors, it would do so only after alerting the public.

If nonprofit donors had once worried about getting slapped with a big tax bill, Miller’s memo eased those fears—just in time for the 2012 campaign season, in which politically active nonprofits raised and spent hundreds of millions of dollars. Miller’s memo “gave donors a green light” to finance 501(c)(4)s, Colvin says. “Ever since then donors have been able to give to c-4 organizations who may or may not be active in politics.”

Miller, who lost his job in the latest IRS scandal, was not a political appointee, unlike Shulman, who was named to his post by President George W. Bush. (The staffers who launched the short-lived gift tax probes weren’t political appointees, either.) Yet Marcus Owens, the former IRS director, says Miller’s decision to stop the audits smacked of politics after receiving so much pressure from Congress. “The deputy commissioner’s office does not normally step in to stop audits,” he says. “It’s getting too close to politics at that point.”

Ya think? And yet, somehow, I don’t think this is going to cause quite as much of a stir on the right as the Tea Party “screening” do you?

I was watching Megan Kelly and Dana Perino on the Fox the other day going on about how terrible it had been to target altruistic social welfare groups like Karl Rove’s American Crossroads. I guess this is what they were clutching their pearls over…

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Pope Francis puts works before faith. Amen.

by David Atkins

I have to admit to having been highly skeptical of the new Pope, given his history in Argentina and the conservative bent of the cardinals who elected him. But this is certainly progress:

“The Lord created us in His image and likeness, and we are the image of the Lord, and He does good and all of us have this commandment at heart: do good and do not do evil. All of us. ‘But, Father, this is not Catholic! He cannot do good.’ Yes, he can. He must. Not can: must! Because he has this commandment within him. Instead, this ‘closing off’ that imagines that those outside, everyone, cannot do good is a wall that leads to war and also to what some people throughout history have conceived of: killing in the name of God. That we can kill in the name of God. And that, simply, is blasphemy. To say that you can kill in the name of God is blasphemy.”

…

“The Lord has redeemed all of us, all of us, with the Blood of Christ: all of us, not just Catholics. Everyone! ‘Father, the atheists?’ Even the atheists. Everyone! And this Blood makes us children of God of the first class! We are created children in the likeness of God and the Blood of Christ has redeemed us all! And we all have a duty to do good. And this commandment for everyone to do good, I think, is a beautiful path towards peace. If we, each doing our own part, if we do good to others, if we meet there, doing good, and we go slowly, gently, little by little, we will make that culture of encounter: we need that so much. We must meet one another doing good. ‘But I don’t believe, Father, I am an atheist!’ But do good: we will meet one another there.”

It’s not a reversal on LGBT or reproductive rights. But it is an amazing and eye-opening improvement in theological outlook that prioritizes works over faith.

If by chance there is a God who cares about what we hairless monkeys do down here, it’s almost certain that S/He cares far more about what we good do than what version of Him/Her we pray to (or not). To do otherwise would entail a level of detached vanity that would be unbecoming and illogical for a presumably benevolent divine being.

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All religions or no religions

by digby

I have long thought that a necessary approach to dealing with the insistence on the part of certain Christians that their “religious liberty” is impinged if the government requires something their creed does not agree with is to have competing religions demand the same “freedom.” You’d think we could avoid this nonsense after 500 years of bloody European history but apparently not.

Anyway, it’s at least a good way to illustrate why the state should just insist that everyone play by the same rules in the public sector while letting the church do its thing in the private sphere:

The governor of Georgia has ordered that Bibles recently removed from lodges at government parks throughout the state be returned, reports state.

Republican Governor Nathan Deal issued the order after the Georgia Department of Natural Resources removed the Bibles following an atheist complaint about their presence.

Ed Buchner, 67, the former leader of the organization American Atheists, expressed his disapproval last month after finding a Gideon’s Bible in a cabin at one of the state parks. He said that he believed the Bibles violated the Establishment Clause of the United States Constitution, which says that “Congress shall make no law respecting an establishment of religion.”

“Out of an abundance of caution to avoid potential litigation, the commissioner removed the Bibles from the rooms – though they were still available on site – after a complaint from a visitor,” explained Deal.

However, the governor states that both he and the state Attorney General, Sam Olems, believe that the Bibles stand on “firm legal footing.”

“These Bibles are donated by outside groups, not paid for by the state, and I do not believe that a Bible in a bedside table drawer constitutes a state establishment of religion,” he said. “In fact, any group is free to donate literature.”

Well, now. I’ll just let Wonkette take it from here:

Oh? said some sharp kids at American Atheists. Did you say any group? Hey, guys, as it happens, we are a group, and we would just love to donate some literature to be placed in bedside table drawers in Georgia state parks! And so they will be sending the Georgia Department of Natural Resources “enough popular atheist books to place one in every state park cabin in the state.”

In a press release, the group acknowledged that it would really prefer that state-owned facilities be oppressively neutral on matters of religion, but if Georgia wants to play this way, sure!

“American Atheists does not believe the State of Georgia should be placing Bibles or atheist books in state park cabins; however, if the state is going to allow such distribution, we will happily provide our materials,” said President David Silverman.

I’m fairly sure this literature will never make it to those cabins. And frankly, I think it would be better if it were a Muslim group or a b’hai or something fairly exotic that nonetheless these people understand to be a religion. But still, the point has been made.

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Sins of the uncles

by digby

The only good Iranian …

Rep. Tom Cotton (R-Ark.) on Wednesday introduced legislation that would “automatically” punish family members of people who violate U.S. sanctions against Iran, levying sentences of up to 20 years in prison.

The provision was introduced as an amendment to the Nuclear Iran Prevention Act of 2013, which lays out strong penalties for people who violate human rights, engage in censorship, or commit other abuses associated with the Iranian government.

Cotton also seeks to punish any family member of those people, “to include a spouse and any relative to the third degree,” including, “parents, children, aunts, uncles, nephews nieces, grandparents, great grandparents, grandkids, great grandkids,” Cotton said.

“There would be no investigation,” Cotton said during Wednesday’s markup hearing before the House Foreign Affairs Committee. “If the prime malefactor of the family is identified as on the list for sanctions, then everyone within their family would automatically come within the sanctions regime as well. It’d be very hard to demonstrate and investigate to conclusive proof.”

The amendment immediately sparked objections from several members of the Foreign Affairs Committee, who noted that the Fifth Amendment to the U.S. Constitution guarantees due process rights to anyone charged with a crime under American law.

“An amendment is being offered literally to allow the sins of the uncles to descend on the nephews,” Rep. Alan Grayson (D-Fla.) said. “The amendment that’s being offered doesn’t even indicate a requirement of knowing violation. … I really question the constitutionality of a provision that punishes nephews for the sins of the uncles.”

Article III of the Constitution explicitly bans Congress from punishing treason based on “corruption of blood” — meaning that relatives of those convicted of treason cannot be punished based only on a familial tie…

“Iranian citizens do not have constitutional rights under the United States Constitution,” Cotton said. “I sympathize with their plight if they are harmless, innocent civilians in Iran. I doubt that that is often the case.”

Don’t they require a course in the constitution for freshman orientation for idiots like these? Somebody forgot to tell him that Iranian citizens actually do have rights under the Constitution, as do all “persons”.

Not all bigots are morons, but this bigoted moron proves that at least one is. And this one is in the US House of Representatives.

Luckily, cooler heads prevailed:

Chairman Ed Royce (R-Calif.) suggested that Cotton withdraw his amendment and narrow its language.

After some back-and-forth with Grayson and Royce, Cotton relented and withdrew the amendment.

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It’s long past time for an international minimum wage

by David Atkins

I’ve been beating the same drum for some time now, but I must point out with pride that the once-unthinkable movement toward international progressive regulation is gaining steam. It’s going to be a hard sell for many progressives who have long resisted a global economy by advocating a retreat to protectionism and localism, to switch course and fully embrace an international, hyper-connected progressivism. But what has come out of Pandora’s Box cannot be stuffed back in without the destruction of civilization as we know it. The only reasonable path toward a progressive future is forward, not backward. Part of that progressive future must include an international minimum wage, as Hamilton Nolan elegantly argues:

The deadly collapse of a garment factory in Bangladesh has sparked calls for better worker treatment. The revelation that Apple manages to avoid almost all taxes has drawn vague calls for tax reform. A more direct path to fairness: let’s just have a reasonable international minimum wage.

We live in a global economy, as pundits are so fond of proclaiming. The global economy is the delightful playground of multinational corporations. They’re able to drastically lower their labor costs by outsourcing work to the world’s poorest and most desperate people. And they’re able to escape paying taxes, like normal businesses do, by deploying armies of lawyers to play various countries’ tax codes off against one another. The result is that money that should, in fairness, go to workers and governments ends up in the pockets of the corporation. The global economy is extremely advantageous to corporations, who owe no loyalty to anyone or anything except their stock price; it is disadvantageous to normal human beings, who exist in the world and not as a notional accounting trick.

In America, we accept the minimum wage as a given. It enjoys broad support. It is the realization of an ideal: that there is a point at which low pay becomes a moral outrage. (Where that point is, of course, is up for continuous debate.) Do not mistake the minimum wage for some sort of consensus of nonpartisan economists; it is a moral statement by our society. A statement of our belief that the economically powerful should not have a free hand to exploit the powerless.

Yet we are all hypocrites. We protect ourselves with a minimum wage, while at the same time enjoying the low consumer prices that come with ultra-low wages being paid to workers abroad. Our own purchasing habits reward companies for paying wages that are sure to keep their workers in poverty for life. We soothe ourselves by saying that these desperately poor workers are still better off than they would be without a job; yet we would reject that argument if an employer here tried to use it to pay us less than the minimum wage. We simply do not care if people halfway around the world who we do not see are exploited, if it saves us money.

Many business interests say that raising the wretched wages in one country will simply send the factories to another, even poorer country. That’s a great reason to institute an international standard that would render that strategy moot. Bangladesh, where more than a thousand garment workers died in the Rana Plaza collapse thanks to the cutthroat quest to drive down prices, represents the bottom of the international manufacturing economy. The minimum wage of garment workers there is less than $50 per month. For all of our lofty rhetoric about a connected world and freedom and opportunity, we happily acquiesce to a system which keeps these workers— desperate, poor, and with little bargaining power— trapped in poverty. Can you live on $50 per month in Bangladesh? Yes, clearly. You can live in poverty.

Opponents of all sorts of “living wage” laws say that those who would advocate such a thing misunderstand the inherent economic forces of capitalism. Not true. We understand them all too well. We understand that, as history has amply demonstrated and continues to demonstrate, absent regulation, economic power imbalances will drive worker wages and working conditions down to outrageous and intolerable levels. People will, indeed, work all day for two dollars if that is their only option. That does not make it morally acceptable to pay people two dollars a day. Capitalism must be forcefully tempered by morality if we are to claim to be a moral people. [Emphasis added]

Another way of putting it is that, as I have said before, human life and dignity are incredibly cheap on the open market:

But the biggest problem with this worldview is the failure to recognize that human life and dignity are drearily cheap on the open market. Absent laws to prevent such exploitation, the open market looks like Dickensian England: abundant child labor, eighty hour work weeks, mass immiseration, horrific discrimination, and a host of other evils. It turns out that consumers don’t much care how a product was made so long as it works, and businesses are more than happy to institute revolting practices in order to create even more decadent wealth for owners and investors. Contrary to social conservative claims, there is no amount of religious fervor or charitable giving that even makes a dent in the horror of purely market-driven economics.

Which leads to the other great failure of rational actor theory in libertarian economics: the artificial separation of government and the governed in a democratic society. At least in representative democracies, the government exists as a mutual compact of citizens who choose to prevent the ills and excesses of the coldhearted markets by funding a protective system of checks and balances, social programs, guaranteed infrastructure, worker protections, product regulations, and a host of other goods and services that reduce the ability of the powerful to exploit the powerless on the open market. The choice to pay taxes to regulate meat companies so that consumers don’t have to do the research and take on the purchase risk of which companies’ hamburgers might be tainted, is just as equally valid a decision as the choice between going to Burger King or McDonalds.

There will be great resistance to this idea, not only among multinational corporations whose profits would be impacted, but also among policymakers. That’s because politicians in developed countries have attempted to disguise stagnant wages by, among other things, exploiting “free trade” and cheap labor overseas to deflate the price of imported goods. In some cases an increased international minimum wage won’t affect prices at all (there’s only so much the developed world will pay for a pair of jeans, after all), but in some cases it might. Certainly, multinational corporations will attempt to maintain their current, immoral record profits by passing on the cost of an increased minimum wage to consumers. But some corporations will exercise competitive advantage to take slightly less profit in exchange for greater market share.

We live in a time of great imbalance. Multinational corporations have global power and reach beyond that of any nation-state. The plutocratic class both human and corporate is rootless and able to shift its home base wherever it pleases, threatening to take jobs with them. Products are manufactured cheap in developed countries, sold at outrageous markups in developed countries, and then the profits are lightly taxed by nation-states competing with one another for plutocratic favor–or worse, offshored in advantage-seeking tiny tax havens. Such a system cannot long continue. Balance must be achieved and the multinational corporate class brought to heel. An effective response to climate change demands it if nothing else.

Just as federal minimum wage standards prevent corporations from exploiting poor states while selling to rich ones in the U.S., so too can an international minimum wage compel the same dynamic among federal powers. It’s an idea that is long past due.

Senatorial hobgoblins: Consistency? What a silly old-fashioned concept.

by digby

The Manly Right Wingnuts of the Senate are making it clear who’s boss. And it isn’t the old warhorses of the GOP — or even those pansies in the House leadership.

“Let me be clear. I don’t trust the Republicans,” Cruz said, casting it as a broader distrust of a government that has rung up more than $16 trillion in debt. “And I don’t trust the Democrats. And I think a whole lot of Americans likewise don’t trust the Republicans and the Democrats because it is leadership in both parties that has gotten us in this mess.”

Who’s he talking about? John Boehner, Eric Cantor, Paul Ryan and the rest of the house GOP leadership who he believes are going to give away the store if the Senate allows them to reconcile the budgets the two houses passed in a conference committee. He and Rand Paul, Marco Rubio and Mike Lee want to force them to agree ahead of time not to raise the debt ceiling.

In other words, these four think the House Republicans are too soft. What that makes them is something we aren’t allowed to talk about on the internets.

Old timers like John McCain and Susan Collins are all flummoxed. They point out that the GOP has been complaining for years that the Dems refuse to do a budget through the normal process and now they’re prepared to do it. Cruz and company merely laugh at such old fashioned nonsense. Silly old man. Consistency is for leu–zurs.

Update: Ed Kilgore at the Washington Monthly has a full analysis of the strategy and motivation. Let’s just say that the idea that these guys are “independent” in the sense that they will work with Democrats is wildly off the mark.

From the “what in the hell is wrong with people?” file

by digby

Oh, here’s some good news:

A tour company exposed by The Post on Sunday for bringing tourists to the South Bronx to gawk at food pantry lines, a “pickpocket” park and a housing project, yesterday announced it would stop all tours “effective immediately.”

What? I thought “slumming” went out with the Charleston but apparently, it’s still quite a thriving business worldwide:

The Oxford English Dictionary dates the first use of the word “slumming” to 1884. In London, people visited “slum” neighborhoods such as Whitechapel or Shoreditch in order to observe life in this situation. By 1884 wealthier people in New York City began to visit the Bowery and the Five Points area of the Lower East Side, neighborhoods of poor immigrants, to see “how the other half lives.”

In the 1980s in South Africa, black residents organized “township tours” to educate the whites in local governments on how the black population lived. Such tours attracted international tourists, who wanted to learn more about apartheid.

In the mid-1990s, international tours began to be organized with destinations in the most disadvantaged areas of developing nations, often known as slums. They have grown in popularity, and are often run and advertised by professional companies. In Cape Town, South Africa, for example, upwards of 300,000 tourists visit the city each year to view the slums.

Why do I have a feeling that most of the people taking a tour like this sees it as “education” the same way they see going to a zoo is about “education.” I think the proper word is “entertainment.’

Or worse:

In 1675 Bedlam moved to new buildings in Moorfields designed by Robert Hooke, outside the City boundary. In the 18th century people used to go there to see the lunatics. For a penny one could peer into their cells, view the freaks of the “show of Bethlehem” and laugh at their antics, generally of a sexual nature or violent fights. Entry was free on the first Tuesday of the month. Visitors were permitted to bring long sticks with which to poke and enrage the inmates. In 1814, there were 96,000 such visits.

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The coming war over climate change and judicial nominations

by David Atkins

Jonathan Chait and Greg Sargent both have great pieces today on the coming war over climate change and judicial nominations. Chait’s article in particular is tremendous and worth reading in full. Here’s an excerpt:

The biggest piece of President Obama’s second-term agenda is his widely expected plan for the Environmental Protection Agency to issue new carbon regulations for power plants, a move that could bring the United States in line with the greenhouse-gas-reduction goals it agreed to in Copenhagen and open the way for an international treaty to control climate change. If the administration unveils such a plan, conservatives will undoubtedly challenge its legality. The legal challenge won’t take place for two years, but the two sides are preparing for war already. The field of battle will be the Federal Appeals Court in Washington, D.C.

The D.C. Circuit, as the appeals court covering legal issues arising within the nation’s capital, has assumed a large and growing influence in the ideological wars over the scope of government, and over the last decade its appointments have provoked bitter conflict. During George W. Bush’s second term, Democratic senators filibustered D.C. circuit nominees they considered extreme, causing Republicans to threaten to eliminate the filibuster for judges. Democrats called the threat the “nuclear option,” and the two sides negotiated a resolution when Democrats backed down and agreed not to filibuster judges except in extraordinary circumstances. Bush’s judges on the D.C. Circuit have inserted themselves even more heavily into the policy debate by striking down a slew of regulations in health care, pollution, labor, and other areas, turning the court into one of the right’s most potent weapons during the Obama era.

This in turn is creating yet another fight over the “nuclear option” when it comes to judicial appointees. Chait notes that the D.C. circuit is overloaded and depends heavily on a panel of retired judges to consider many of its cases–and the retired judges are all Republican. The outcome of the fight over court appointees will affect many things, but climate policy most of all:

The Republicans don’t have the votes to actually pass their plan to eliminate all vacancies. Its function is to serve as justification for filibustering any nominees at all, however moderate or well qualified, for the remaining three vacancies. These are the battle lines forming for what appears to be a major partisan war this summer: Republicans insisting not only that they need not approve vacancies in the D.C. Circuit but that Obama’s attempt to fill them represents a kind of tyranny, and Democrats threatening to limit the filibuster as a routine weapon to obstruct appointments. Many things depend on the outcome of this fight, but the prospect for limiting climate change is surely the biggest.

Sargent has details on events as McConnell and Reid circle one another for the coming fight:

Reid is eying the possibility of changing the rules via the “nuclear option” — a simple majority vote — to end filibustering on nominations, but not on legislation.

Lending some weight to this threat, the Huffington Post reports that Reid is delaying the push to confirm Richard Cordray as head of the Consumer Financial Protection Bureau until July, after immigration reform is done. A Reid aide tells HuffPo that this is about postponing a major war over all of Obama’s nominees until July — which is also Reid’s target to trigger the nuclear option if necessary.

This — along with Reid’s public statements today — amounts to the sharpest line yet drawn by Reid. The Senate Majority Leader has been striking a delicate balancing act. His challenge has been to slowly escalate the threat level by giving his threats ever more specificity, while simultaneously maintaining an aura of credibility about them. The current threat comes very close to saying that if Republicans obstruct Cordray — and others, such as Gina McCarthy to head the EPA, and Thomas Perez as Labor Secretary — then Reid will push the nuke button.

Indeed, as Sahil Kapur notes, if the GOP blocks those nominations, the pressure on Reid to press the button will get very intense indeed. Major Democratic constituencies (labor, environmentalists) have a big stake in these nominees, and the consumer protection bureau represents a major component of one of Obama’s signature domestic initiatives — Wall Street reform.

The issue of filibusters and obstructionism tends to bring out the worst hypocrisy among political partisans on both sides. I certainly complained about the threat of the “nuclear option” when the shoe was on the other foot during the Bush Administration.

In the end, though, Bush got appointees that were ideologically inclined toward his worldview. Republicans are being far more obstructionist than Democrats were–and that’s taking a moral relativist view about the relative worth of the two political ideologies. As long as Republicans are going to get their nominees because Democrats believe in having a functional government, and Republicans feel free to obstruct at will because they don’t care, we might as well go nuclear and know that if one party gets hold of the White House and a majority of the Senate, the other side is basically out of luck. It’s certainly better than the current dynamic.

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A tale of two crises: a lesson in priorities

by digby

This article in the Atlantic tells two stories about our recent history:

The first story is called: How Washington Saved the Economy. You might begin in 2008, when the Federal Reserve went on an unprecedented spree of asset-buying to un-gunk the banks, push down interest rates, and spur investing in mortally weakened economy. This was followed, in 2009, with an equally historic stimulus package aimed at filling holes in state budgets and sending cash back to families and businesses. The government ran steep $1+ trillion deficits to keep as much money in the weak private sector as possible.

There is little question that monetary and fiscal stimulus blunted the recession — and saved the economy.

The second story is called: How Washington Permanently Scarred the Labor Market. You might begin this story in 2011, when Congress (led by Republican obstructionism) embarked on a historic quest to crush deficit spending by any means necessary. Hold the economy hostage over the debt ceiling? Check. Kill the American Jobs Act while scheduling a too-awful-to-be-a-real-law sequester? Check. Allow the too-awful-to-be-a-real-law sequester to become a real law? Checkmate.

The deficit fell fast. As unemployment ebbed, the ranks of long-term jobless calcified, creating two separate job markets. One broken market for people out of work for more than six months. And another slowly healing market for everybody else. But the combination of a thermostatic recovery and a deep aversion to stimulus crushed any hope that the long-term unemployed would get the help they needed. Long-term unemployment isn’t special just because it’s longer; it’s special because it’s self-perpetuating. Skills atrophy, networks dry up, and employers discriminate, creating a vicious cycle of joblessness that can’t be cured by normal economic growth.

There is little question that, in the last two years, Washington has essentially left the long-term unemployed to fend for themselves — and permanently scarred the labor market.

The article goes on to examine why the first crises was met with such a strong bipartisan solution while the other has just been … left to flounder. The author, Derek Thompson, suggests three explanations:

(1) It’s the basic fact that, without a financial system, there is no economy.

This explanation blames pretty much nobody in Washington.

In 2007 and 2008, the entire economy stood on the brink of collapse, and the only way to save it was by a historic all-hands-on-deck response from the Federal Reserve and Congress. In retrospect, you could say that we went too far to protect the biggest banks (some of which are even bigger, today) without ensuring similar financial protection for homeowners. And yet, while millions of underwater homeowners are an acute tragedy, you might say, they won’t guarantee a lasting national depression. Without enough gainfully employed homeowners, you won’t have a strong housing market. Without a banking system, you won’t have a housing market, period.

(2) It’s all the Republicans’ fault.

This explanation blames half of Washington.

Let’s be crystal-clear about this: There is no doubt that Republican policies are disproportionately to blame for the shift away from stimulus. That’s an easy story to tell, and I don’t think Republicans would even dispute it. After all, they’ve argued that cutting spending would help the economy. The GOP has thoroughly convinced itself that spending-side efforts to fix unemployment are unworkable.

But there’s something else, too.

In the last year, there has settled, even among the Democrats, a kind of reserved defeat that shows a stunning lack of urgency toward the crisis of long-term joblessness. From abandoning the payroll tax cut in late 2012, to quietly acceding to sequester, to going silent on unemployment, nearly all of Washington — not just the right — has essentially stopped talking about the most important economic issue of our time.

High-ranking Treasury officials officials I’ve spoken with on background couldn’t name any specific proposals they have to help the long-term unemployed. Instead, they’ve argued that general economic growth stuff, such as infrastructure spending, should be enough to put these 4 million people back to work. But the economic literature objects: Fighting vast long-term unemployment with general economic growth policies is like fighting pneumonia with Vitamin C.

So, why aren’t even Democrats scrambling to fight for the long-term unemployed?

I’m pretty sure you know the last explanation don’t you? It’s very simple: $$$$$

This explanation blames everything about Washington. Money might not buy elections. But it does buy the attention of electeds. It subtly but substantially biases them toward the issues that most concern the rich.

Read on. Thompson takes you through the entire money morass of DC, elections and the more subtle but even more powerful incentives playing out in today’s Versailles on the Potomac. It’s deeply disturbing.

This blog post by Matt Bruenig at DEMOS illustrates the dichotomy in terems of the recent high-fiving over the recovery of the stock market to pre-recession highs:

{These] stock market moves are sadly interpreted by many as an indicator that the economy is back. This interpretation is helped along by local news stations in particular, which seem to think reporting on the economy should primarily consist of relaying the Dow Jones and S&P 500 movements of the day. Needless to say, these recent stock market moves do not indicate the overall health of the economy, certainly not for those Americans who work for a living.

For starters, the index prices do not even tell us that much about how well the stock market itself is doing. The price-to-earnings ratio for the two major stock indices are still lagging behind their pre-recession levels. This suggests that stock prices would be even higher if the investors were more confident about the future profit levels of the firms represented in those indices.

More importantly, stock prices only track investor expectations of future profits. When you buy stock in a company, you buy an ownership share in the future profits of that company. If stock prices are going up, it means investors expect higher future profits. But higher future profits have no necessary relationship to gains for working people. In fact, one of the ways businesses might book higher profits, and thereby increase their stock valuation, is by reducing the amount they pay to their workers.
[…]
Of course the fixation on stocks is rather predictable. All sorts of people hold stock, but the wealthy especially. According to the 2010 Survey of Consumer Finances, while 17.9 percent of all families have stock holdings, 52.4 percent of those in the wealthiest 10 percent of families do so. Just 4.3 percent in the poorest 25 percent of families hold stock. The numbers are even more skewed when you look at the amount of stock held. In 2010, The median family held $17.8 thousand of stock, the median family in the wealthiest 10 percent held $131 thousand of stock, and the median family in the poorest 25 percent held just $1.1 thousand of stock.

The joy over the return of the stock market is a thinly veiled celebration of the returning net worths of the wealthiest among us, that being who economic and financial reporting is primarily targeted at. Just remember that the next time you see the state of the stock market is used to describe the overall state of the economy.

The decoupling of the business of America from the workers of America is quite a story that took place over the course of a relatively short period of time. It just goes to show what a concerted effort by people with money and power can do. Of course, there are some examples in history that show what a concerted effort by the masses can do too. I wonder if that pendulum’s going to swing …

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How to force Apple and other multinationals to pay their fair share

by David Atkins

I’ve often written of the need for stronger international regulation to counteract multinational corporate influence. The burgeoning outrage surrounding the tax practices of companies like Apple and Google that use legal accounting gimmicks to avoid taxes in developed nations by pretending they operate elsewhere or don’t do business in those countries serves as a perfect example. If there were international law regulating what constitutes “doing business” in a country, as well as regulations controlling the abuse of offshore tax shelters, it would go a long way toward solving the fiscal situations of many nation-states in a cooperative rather than competitive way.

Traditional protectionist approaches don’t work because it’s simply too easy for corporations to shelter their profits and headquarters in low-tax countries. The European Union is facing this difficulty as the low-tax havens of Ireland and Luxembourg undercut any nationalistic approach to solving the problem:

At a time when unemployment in the European Union is at record levels, nations eager for jobs remain hesitant to alienate multinational companies by raising their taxes. Instead, countries such as Spain, Greece, and Hungary have imposed hefty sales tax increases, a hit borne most severely by poor people.

“I am skeptical whether the different countries have the political courage to take on the corporate tax avoidance game,” said Sven Giegold, a member of the EU parliament from Germany’s Green Party. “You need consensus of the participating partners, and I do not see the leadership to force through a global model.”

In December, the European Commission, the governing body of the EU, declared war on tax evasion and avoidance, which it said costs the EU 1 trillion euros a year. It encouraged its members to create “blacklists” of tax havens.

Still, the commission instructed them to single out only non-EU countries as havens — even though member-nations such as Luxembourg, the Netherlands, and Ireland encourage multinational companies to legally dodge billions of dollars in taxes around the world…

Similarly, the Organization for Economic Cooperation and Development, an influential publicly funded think tank on international tax policy, used to cite potentially harmful tax behavior by member states, including Luxembourg, the Netherlands, Ireland, Belgium and others. It stopped issuing those reports in 2006 because of “a lack of political interest” from member nations, said Pascal Saint Amans, director of the OECD’s Center for Tax Policy and Administration.

“The Europeans say one thing and do another,” said H. David Rosenbloom, the head of the international tax program at New York University’s law school and an attorney at Caplin & Drysdale in Washington. “The EU can’t do anything as long as it’s got Luxembourg and the Netherlands and Ireland” within the union….

“What is clearly needed, however, is greater coordination in taxation, to prevent one national regime from undermining another, and to address loopholes and mismatches. That is precisely what the Commission is proposing,” she said.

It’s very important to read that two or three times. European countries are raising sales taxes and slashing corporate taxes not because they have villainous, corrupt leaders, but because it’s too easy for multinational corporations to play countries off one another by shifting badly needed jobs away from higher tax countries. America has a similar problem with state-by-state corporate taxes: after all, there’s a reason that every credit card company seems to be headquartered in Delaware, and it isn’t the nice weather.

Trying to force each nation-state to enact some sort of corporate tax reform is not only politically unrealistic, it’s also a fool’s errand. All it takes is a few nation-states taking advantage of every one else to spoil everything.

But in the absence of a badly needed stronger international regulatory model, there is a possible short term solution that may work:

Perhaps the best compromise of that sort has been served up by University of California economist Alan Auerbach, who argues that policymakers need to get outside the worldwide versus territorial debate. His proposal relies on what he calls “the destination principle”: taxing companies where their products are used. Under this scheme, foreign sales wouldn’t be taxed by the US government, but more than that, all cross-border transactions—including foreign expenses—would no longer affect tax payments.

That means that companies get something they want—their legitimate foreign sales earnings would only be taxed by the foreign country. But they’d also lose the ability to move US profits overseas through the kinds of artificial transactions Apple is accused of. Combined with domestic changes to reduce the tax preference given to debt financing and simplified expensing, Auerbach says these reforms would not only make for a clearer system, but also one that makes it more lucrative for companies to invest in the US.

There may be complications involved in that model of which I’m not yet aware (manufacturing in a developing country but only paying taxes in developed countries with consumer bases might create its own host of problems), but it seems to be at least the basis of an elegant solution that is fairer to both corporations and nation-states in a globalized world. But, of course, implementing it effectively would require simultaneous cooperation from the nation-states with the largest consumer bases, which in turn would likely require at least international trade compacts and treaties. Not an easy thing to do, obviously.

But few nations are going to be able to solve this problem on their own, even with theoretically progressive politicians in charge.

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