On Tammy Baldwin's Small Business Innovation Act

Needed with the newly introduced Small Business Innovation Act of 2013, is a tax code change for the self-employed making sub-poverty [less than $9,750] annually and still getting gouged by taxes at rates exceeding that of multi-billionaires. Why are
entrepreneurial, self-employed individuals making sub-poverty money getting punished by the tax code for being entrepreneurial, innovative and self-employed?

Wisconsin's newest senator, Tammy Baldwin announced her first authored initiative in the U.S. senate, introduced as the United States veers further into plutocratic territory, rivaling now the gilded age in wealth inequity.

Baldwin (D-Wisconsin) is pushing the rights and social utility of startups and small businesses, calling for funneling public money to get folks started in business.

Good for Baldwin.

If Republicans really believe in the value of free enterprise, they'll leap to her side and advocate for what is actually common sense, something you do not often see in Washington.

Baldwin introduces the "Small Business Innovation Act of 2013 to help fuel small business job creation and economic growth that is so desperately needed in Wisconsin. The legislation, Baldwin’s first bill in the U.S. Senate, will help provide startup businesses the capital they need to grow their companies and create jobs."

While we wait for Paul Ryan, Scott Walker and House and Senate Republicans to leap over each other to join Baldwin, one feels compelled to point to a needed change in the tax code for a particular small business, entrepreneurial enterprise—self-employed, low-income Americans.

Self-employed folks looking to make ends meet in a depression-era, jobs-lacking economy who make less than $9,750, are still forced to file income tax forms, if their incomes are above $400 and below $9,750, and they get taxed heavily.

Concomitant with the Small Business Innovation Act of 2013, we need to change the tax code, with real reform, [not pay-backs to the Koch brothers and other billionaires as Republicans advocate], to address how the self-employed, low-income tax payers making below-poverty income are now gouged. 

True also is the fact that tax deductions are available for the below-poverty, self-employed, but tax deductions certainly cannot be counted on in many situations and the fact that Americans—those who happen to be self-employed—are taxed at all while make less $9,750, it is an outrage.

The taxes imposed on the low-income self-employed are vicious, with tax liabilities from combined state-federal taxes comprising some 30 percent in many cases. 

Ask a graduate student who grabbed a gig to make it through school.

Say a new, entrepreneurial, innovative college graduate [or anyone for that matter] lands a freelance editing gig, makes $9,000 in total income; she would have a combined state-federal tax liability of some 30 percent. 

Whereas, someone who works as an employee and makes less than less than $9,750 owes no taxes, and in fact does not have to file (though she should anyway).

This situation begs the question: Why does an entrepreneurial, self-employed individual making sub-poverty money get punished by the tax code for being entrepreneurial, innovative and self-employed?

My question for Republicans is: Will you join Sen. Baldwin in advocating the Small Business Innovation Act of 2013, and blast and change the tax code wherein sub-poverty, self-employed, single Americans pay higher rates than billionaires? 

Timely as always, Paul Krugman asks today: "Do Republicans have anything to offer to "disaffected working-class white voters"?"

The X Economy - It's Bad at Best

Update: Christian Menegatti in RGE Monitor: "The United States is in the 20th month of a recession that has been by far the longest and most severe of the post-war period." See also The Next Big Bad Thing? and Next Shock Coming: Commercial Real Estate.

"The American economy has gone away. It is not coming back until free trade myths are buried six feet under."

The quote above is from Paul Craig Roberts in CounterPunch (Feb. 24, 2009), an impolitic newsletter and political site that regularly tells the world hard truths about the economy and public policy.

Roberts has been warning about the dangers of hollowing out our economy through outsourcing (offshoring), big finance capturing the regulatory bodies, and the legislative branches becoming a sick joke, for years.

Roberts is now conventional wisdom.

From Robert Reich's candid piece in Talking Points Memo, dismissing the optimistic talk about a U-shaped recession, Reich writes that the global economic crisis is an X file:

The X marks a brand new track -- a new economy. What will it look like? Nobody knows. All we know is the current economy can't 'recover' because it can't go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin.

How about ditching the empire, peace instead of war, dismantling prisons and replacing them with schools, sustainability initiatives in energy, environmentally-friendly everything, legalizing most drugs; you know what the left has been advocating for the last several decades.

As for President Obama: Don't tell the world to go shopping and watch your neighborhood for terrorists as Bush did. We need an acknowledgement of the scale of the crisis and a declaration that only real change change can save the economy.

Perhaps heeding the advice of Seymour Melman, Ralph Nader, Jeffrey St. Clair, deep ecologists, radical economists ... hell, anyone who was under FBI surveillance in the 1960s-70s would help. As Noam Chomsky says: Hegemony or Survival.

Roubini Says Stress Test Data Overstate Macro Econ Health

Update II: As those elitist liberals hash out how to avoid a depression, the GOP and its leading journals, Human Events for example, are busily at work solving the real problem: Investigate NOW The Compelling Evidence That Barack Obama Was Born In Africa! Tea anyone, perhaps some Kool-Aid? [Photo by Russell Wallace taken at the state capital TEA Party where some 3,000 white people gathered to protest anything not Republican.]

Update: Paul Krugman in his column in the Times sums up a note of optimism, after expressing similar concerns of Nouriel Roubini's in the piece below: Krugman believes that Obama administration economists understand the imperative of: "Persistence." Without writing it, Krugman is suggesting that the GOP TEA set should not deter the course for economic recovery. In other words, ignore the fools and press on.

It's not Nouriel Roubini's (Dr. Doom) job to make us feel good. Good thing. [By the way, you can get a free subscription and access to Nouriel Roubini's Global EconoMonitor and you should consider it.] Roubini calls the stress tests "fudge tests".

On Nouriel Roubini's Global EconoMonitor, Nouriel explains that actual macro data for 2009 are already worse than the more adverse scenario in the stress tests. The actual macro data for Q1 on the three variables used in the stress tests – growth rate, unemployment rate, and home price depreciation – are already worse than those in FDIC baseline scenario for 2009 aand even worse than those for the more adverse stressed scenario for 2009.

Check out: Stress Testing the Stress Test Scenarios: Actual Macro Data Are Already Worse than the More Adverse Scenario for 2009 in the Stress Tests. So the Stress Tests Fail the Basic Criterion of Reality Check Even Before They Are Concluded ...

Conclusion: Actual macro data for 2009 are already worse than the more adverse scenario in the stress tests. These are not stress tests but rather fudge tests

This financial crisis was one due to opacity and lack of transparency in financial markets and due to regulators that were asleep at the wheel. But now the administration officials and regulators have decided to add to the fog of opacity by adding to the lack of transparency in financial markets: regulatory forbearance that allows banks such as Well Fargo to declare charge-off rates and to set aside reserves for loan losses that make no sense relative to the state of the economy and relative to their loan book; partial suspension of mark-to-market accounting that allows – starting with Wells Fargo – to hide losses and reduce the amount of write-downs on securities; likely reinstatement of some variant of the uptick rule that will restrict shorting of stock and will artificially boost equity prices (a form of legalized manipulation of the stock market by regulators that are trying to prevent short-sellers to do their job, i.e. make stock prices reflect fundamentals and prevent bubbles in stock prices); and now stress tests that fail the basic test of a reality check by making assumptions – that even in the worst case scenario that is designed from start to be too mild to be a sensible realistic stress test scenario – that are obsolete based on actual data for the economy as of Q1 of 2009. Call it a generalized 'fudge test' rather than a true 'stress test'.

Obama Needs to Nationalize

Update II: Krugman - "Nationalization is actually as American as apple pie."

Update: Time Magazine - "According to Reuters, there are over 8,300 FDIC-insured banks in America. Last August, dour economist Nouriel Roubini told Barron's that 1,400 banks in the U.S. would eventually fail."

The Obama administration can pivot fast, but there is no doubt that Wall Street and policymakers (some of whom are being earnest) want more specificity on how Obama will manage the bank bailout plan.

As part of the American Recovery and Reinvestment Plan, Obama needs to move decisively on the bank bailout with lots of a details, clear timeliness and delineated scope in a manner that would make project management professionals proud.

Treasury Secretary Timothy Geithner didn't provide any of that yesterday.

As David Mizner at Daily Kos notes, one suggestion that is growing among our top economists is: Nationalize the banks we now subsidize. See Krugman, Stiglitz, Roubini, Taleb, Baker Agree: Nationalize.

The voters don't care about free market ideology (such as it is) and what the pundits will say to nationalization: They want decisive action now as bleeding jobs turn the futures of Americans bleak.

As Krugman writes this morning, "And the argument that our culture won’t stand for nationalization — well, our culture isn’t too friendly towards bank bailouts of any kind. Yet those bailouts are necessary; and even in America they may be more palatable if taxpayers at least get to throw the bums out. Oh, and not a week goes by without the FDIC taking several smaller banks into receivership. Nationalization is actually as American as apple pie."

Obama Bashes Bush

Update: Can America Handle a Brilliant President? Barack Obama Shines During His First Prime Time News Conference, Even if He Punted a Few Answers. Hey, He Called on Helen Thomas! Happy Days are Here Again.

Promising a clean break from George W. Bush, Obama sets the stage for cleaning the GOP's political clocks.

See "I won't return to the failed theories of the last eight years. "In his first press conference, the president dismisses his opponents on the stimulus package as out of touch.

License granted for a total war on recession

Update: Wall Street Journal: "We are running out of the traditional ammunition that's used in a recession, which is to lower interest rates. They're getting to be about as low as they can go. And although the Fed is still going to have more tools available to it, it is critical that the other branches of government step up."
- Barack Obama in a news conference in which he called for a government spending stimulus program.

The incoming Obama administration has just been granted a political license to pursue virtually anything it wants in fiscal policy in light of the seriousness with which the Fed is addressing the economic situation facing the world.

Reducing its key rate to a historic low, near zero, the Fed said it would use “all available tools” to fight the recession; in other words War against the recession by any means necessary.

Reads the Fed's statement:

For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent.

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably. In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability. In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time.

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level. As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant. The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities. Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses. The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco. The Board also established interest rates on required and excess reserve balances of 1/4 percent.

Dems Get What They Can from Bush for Auto Industry

Update: Obama Pledges Public Works on a Vast Scale

Democrats Set to Offer Loans for Carmakers reads the headline from this morning's NYT.

Faced with staggering new unemployment figures, Democratic Congressional leaders said on Friday that they were ready to provide a short-term rescue plan for American automakers, and that they expected to hold a vote on the legislation in a special session next week.
- David M. Herszenhorn and Bill Vlasic

The fact is George W. Bush would throw the country into a near depression if he thought that he could get back at the United Auto Workers (UAW) for not supporting his war on the working class and not being one of his crony Iraq War contractors for whom the myth of the free market and competitive innovation remain not very funny jokes.

For now, Democrats will get what they can for the Big Three and next year show the Republicans the meaning of the terms: jobs creation, stimulus and economic rescue for domestic industries as Bush fades off like a prolonged and terrible nightmare for which one gets very busy, very early during the morning to get to work and forget the passing nightmare ever happened.

Union Busting Writ Large

As America enters what is feared to be a long and deep recession, one question is whether we save or let fade our auto industry.

The GOP has long been hostile to the auto industry's unions so any union-busting opportunity not used is a wasted opportunity, in their view: Let 'em crash, millions of jobs lost, so what?

House Republicans sitting in their fantasy world spouting free market bromides are capable of anything.

But does anyone believe that saving the millions of jobs that depend on the domestic auto industry is not in itself sufficient cause to act?

The new Congress and President will act, and Republicans as a Party opposing comprehensive measures will find themselves by the political wayside very quickly.

The economy will be geared toward establishing a middle class and raising families by this new administration.

Health care reform and the whole array of initiatives addressing the concerns of real people will become policy next year, and the Republicans will scream while they lose a generation or two of voters who will see the results.

The Wall Street crisis and recession of 2008 will become Barack Obama's 9/11, used to show Bush and the Republicans what the American people are capable of when challenged to act together for the common good and spoken with honestly as fellow citizens.

But unlike Bush, Obama will not lie to the American people and use crises to line the pockets of political allies in opposition to common efforts.

Now is not the time for orthodoxy and lies, and such a state of crisis that is now before us can open up and clarify much of the current social arrangements that is hidden or at least unacknowledged.

As a friend (an anti-bigotry type) puts it, "When the Republicans block saving jobs these 60 next days, this will show the blue collar workers who vote Republican what the Republicans really think of them."

So when Mitt Romney starts talking about excess labor costs and excess retiree costs, our rejoinder should be: Hey, fuck you Mitt, people died so working families can join the middle class, not that we think you're much on labor history.

Autoworkers and All Americans Are Worth Subsidizing

Excellent piece in the New York Times Sunday on the disaster of General Motors and its workers brings to the fore several questions.

- Should the United States government help American companies like GM by subsidizing the health insurance of employees?

- Should the government reward innovations that benefit the national war effort for the environment and alternative energy?

Sure, we have not yet declared war for a sustainable environment and the development of alternative energy; most of our domestic wars are ostensibly waged against something: Drugs and so forth.

How about a war for the environment and alternative energy? For full employment?

The 2,700-word piece illustrates well the desperation of and passion working people have for: Working.

Said ... Andy Richardson, who recently took office as the new president of (UAW) Local 95. 'If G.M. wants to build lawn chairs in Janesville, we’ll do it,' he said.

Beyond the make-believe, free market world of the Republicans who like McCain think buy-American initiatives are a "disgrace" lies the reality of a shattered community with families facing financial oblivion.

"Community and political leaders from Janesville have pleaded with G.M. management to consider putting a new, small car into the plant. Workers don’t expect that to happen, though, and they see little hope of a reprieve," reports the NYT piece.

A reprieve, a Manhattan-Project size regearing of industry and the social contract that recognizes the reality that those who want to work are, as LBJ used to say, worth the risk and deserving of the respect of going to the well with.

- via mal contends

Warren Buffett Says Confidence is Oxygen

"You want to be greedy when others are fearful. You want to be fearful when others are greedy. It's that simple. ... They're pretty fearful. In fact, in my adult lifetime, I don’t think I’ve ever seen people as fearful economically as they are right now."
- Warren Buffett, October 1, 2008 on the Charlie Rose Show

Why the Charlie Rose show featuring an exclusive conversation with Warren Edward Buffett, regarded as the world's greatest investor and chair of Berkshire Hathaway, is not endlessly broadcast this week is a mystery of the American political culture.

Even as House Republicans scream (at the apparent urging of Newt Gingrich) that the Emergency Economic Stabilization Act 2008 is a slippery slope to socialism, Buffett's reasoned defense of the Bush-Paulson-US Senate-Everyone-except-the-GOP-House Members Act assures that not only may the bailout bill produce a net profit (if conceived of in those terms) for American taxpayers, but the fear and loathing epitomized by the House Republicans (though not singled out by Buffett in the interview) is ludicrously removed from reality.

The insistence by some progressive Democrats that similar investments be made in the American people directly is certainly called for, but stemming the fear [the VIX or Volatility or Fear Index remains extremely high] is imperative during this time of what Buffett calls a financial "Pearl Harbor".

The psychosocial superstructure holding up our economy ought not be bombed, especially now.

As Buffett says: "Confidence is key. ... You don't want to do too little too late."

Hitting McCain Hard Now

"What we've seen the last few days is nothing less than the final verdict on an economic philosophy that has completely failed" - from Salon.

That's our man.

Bush on the Economy

From Slate's Jacob Weisberg who collects Bushisms:

"The economy is growing, productivity is high, trade is up, people are working. It's not as good as we'd like, but—and to the extent that we find weakness, we'll move."—Washington, D.C., July 15, 2008

Click here to see video of Bush's comments. The Bushism is at 7:55.

Kevin Phillips on the Economic Numbers Racket

Update II: Americans are doing considerably worse than the usual economic measures let on.

Update: Debt Rattle, Fire and Iceland; Central Banks Signal Deepening Concern at Outlook as G-7 Meets

via MAL Contends

In the Harper's May issue (not available online yet), Kevin Phillips has a vital piece discussing why the American economy is in worse shape than is acknowledged by bipartisan elites who have been participating not in some "grand conspiracy, just accumulating opportunisms."

Phillips cites John Williams, a California-based economic analyst and statistician, who dubs this predilection over the last several decades to paint an overly-rosy picture of the economy and Americans' financial health: "Pollyanna Creep."

Myself, I call it, lying.

Although Phillips does not write it, like in most dysfunctions of government, the Bush administration is the worst.

Americans know perfectly well that American elites have functioned as a collective Squealer—the character who is a pig in George Orwell's Animal Farm, who contra reality on the farm incessantly squeals how well everyone is doing and how blessed is the state of Animal Farm in all respects.

One does not need to be a reader of CounterPunch, or for that matter a reader of John Edwards and Dennis Kucinich, to know that this taboo analysis is instructive to American families and impolitic towards the squealers.

Writes Phillips:

We might ponder as well who profits from a low-growth U.S. economy hidden under statistical camouflage. Might it be Washington politicos and affluent elites, anxious to mislead voters, coddle the financial markets, and tamp down expensive cost-of-living increases for wages and pensions?

I think we indeed might ponder these points and consider them in the next election, and especially the white working class demographic which seems to focus on gays and their own god deemed vengeful and unloving towards other tribes, especially around election time.
Concludes Phillips:

The U.S. dollar, off more than 40 percent against the euro since 2002, could slip down an even rockier slope. ... The credit markets are fearful, and the financial markets are nervous. If gloom continues, our humbugged nation may truly regret losing sight of history, risk, and common sense.

Unless we enforce a reversal of the major economic and political trends in our society, no manner of preventing gays from marrying or asking for god's wrath is going to help our fellow citizens in this grand American experiment.

Daily Kos Headlines

Good stuff at Kos:

- Ashcroft: "History will not judge this kindly" (Update w/Video)

- "Mr. Barammobama going to win it all!"

- Getting ready for the third wave of financial panic

- Why Elizabeth Edwards is Wrong

- [Update][w/Video] IN-06 Dem. Candidate Barry Welsh Punched in the Face

- Inflation Is Getting Worse

- Levittown Lovin’ Obama – Seriously (Photos!)

- Colin Powell praises Obama

Coming Destruction of U.S. Economy, Says Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration, Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review.

Not a man to ring alarms loudly.

Roberts is sounding the alarms now.

From CounterPunch:

On December 8, Chinese and French news services reported that Iran had stopped billing its oil exports in dollars. ...

(T)he evidence is that foreigners are not finding dollar-denominated assets sufficiently attractive. The dollar has declined dramatically during the Bush regime regardless of the fact that oil is billed in dollars. Iran is dropping dollars in response to the dollar's loss of value. This is a market response to a depreciating currency, not a punitive action by Iran to sink the dollar. ...

Offshoring interests and economic dogmas have combined to create a false picture of America's economic position. While the ladders of upward mobility are being dismantled, Americans are being told that they have never had it better.
###

American dollar's decline: From symbol of hegemony to shunned currency

Update: Critics Assail Weak Dollar at OPEC Event

Like everything else, the administration has touched, corrupted and razed, Bush’s stewardship of the dollar has been less than competent and honest.

Readers of the foreign and left press are aware that should the neocons continue to dictate foreign policy, not just political and humanitarian disasters will ensue; some speak of suggestions and precursors of economic disasters.

One sign: The Dollar's weakness.

Sure, economists will tell you that this is a necessity to offset trade deficits, among other considerations.

But the foundation of the neocon project of an American empire led by an economically stable America will no longer be seen by the world as plausible - moral, fiscal and political considerations aside.

From The Independent in the UK.

The dollar's decline: from symbol of hegemony to shunned currency

The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.

After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.

"An American businessman over here who is given the choice would take anything but the dollar," David Buik of Cantor Index said yesterday. "I would want to be paid in yen, and if not yen then the euro or sterling."

Matthew Osborne, of Armstrong International, added: "The majority would say sterling. There are a few dealers in the City who may take the view that they'll take dollars now, while they're cheap, and hold on to them for 12 months.

More at The Independent in the UK.

For an insightful interview on American economic and military idiocy, see Gabriel Kolko in the German SPIEGEL ONLINE.
###