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A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.



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Entries tagged "Mitt Romney"

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Populism and Pain in Obama's 2013 Budget Proposal

February 14, 2012 ·

Mitt Romney said it this way:

"I'm not concerned about the very poor. We have a safety net there. If it needs a repair, I'll fix it. I'm not concerned about the very rich, they are fine....I'm concerned about the very heart of America."

President Barack Obama said it this way:

"We can restore an economy where everybody gets a fair shot, everybody does their fair share, everybody plays by the same set of rules — from Washington to Wall Street to Main Street. That’s the America we believe in."

Both want to appeal to a hurting middle-class electorate. Only one has a populist message with appeal and effect. He most likely will win re-election in 2012.

President Obama wants to align himself as a champion of the Middle Class. Photo by Chrysler Group.Obama's $3.8 trillion 2013 budget proposal, with its 10-year outlook, is by design a populist campaign tool. Though not politically viable now, his newly released budget is critically important in this election year both for the values it reflects, the vision it promotes and the potential it promises.

Obama's budget has a populist tone, appeals to the middle class, and has some good proposals, both on investment and revenue-raising. But it also reflects the strict spending caps mandated this past summer by the Budget Control Act and hits some struggling families hard. It doesn't go nearly far enough in revenue-raising. For instance, it does't propose a tax on financial transactions that would curb Wall Street's worst speculation or propose significant corporate tax reform that would actually raise needed funds. And, by reducing non-security discretionary spending from its current 3.1 percent of GDP to a 50-year low of 1.7 percent over the next decade, a lot of pain will set in when the populism starts to wears off.

Let's start with the good. Among the good proposals on investment side:

  • The extension of the payroll tax cut and unemployment benefits through the end of 2012.
  • School modernization and plans to retain teachers and first responders.
  • Project Rebuild which helps to match unemployed in distressed communities with those communities'  infrastructure needs.
  • A small business tax credit that incentivizes new hiring.
  • Increased child care funding.
  • Improvements in Earned Income Tax Credit and Child Tax Credit.
  • Tax incentives for manufacturers that keep and create jobs here in the United States.
  • A National Infrastructure Bank that would fund projects that increase sustainable transportation and infrastructure investment.
  • A total of $850 million in Race to the Top education proposals intended to improve the quality of education from early childhood through higher education.
  • Efforts to make college more affordable through sustaining Pell grant funding, keeping interest on student loans from increasing, and reining in tuition hikes.
  • A 7 percent increasing in new biomedical research grants.
  • Support for a more sustainable economy through goals of increasing electric car production, doubling the share of "clean energy" electricity sources, and reducing the energy consumed by buildings by 20 percent by 2020.

And, among good proposals on the revenue side:

  • Support sustainable energy and environment innovations by eliminating 12 tax breaks to the oil, gas, and coal industries by $41 billion over the next 10 years.
  • Spend $487 billion less on the military over the coming decade.
  • Make the "Buffet Rule" law, ensuring that millionaires pay a 30  percent tax rate on un-earned income.
  • Let the Bush Era tax cuts for families making over $250,000 a year expire.

On to the bad. Here are some aspects of Obama's proposed budget that aren't as good as they might first seem:

  • According to the Citizen's For Tax Justice, although the Obama plan proposes revenues from letting Bush era tax cuts expire for couples making over $250,000, it makes permanent 78 percent of the Bush tax cuts at a cost of $3.4 trillion over the next 10 years.
  • Obama's proposal to replace the Alternative Minimum Tax with the "Buffet Rule" may not produce any new revenue at all.
  • Details remain undisclosed about corporate tax reform proposals, but Obama has suggested they will be revenue-neutral. How is that a good thing?
  • Even with this modest reduction in Pentagon spending, Obama's budget proposal still leaves an extreme imbalance between military and non-military spending.

Now, for the Ugly: Last year's Budget Control Act mandated $1 trillion in discretionary cuts. Much of that must come from programs that low-income people rely on for critical human needs. After a hard year of cuts in 2011, this budget proposal calls for a devastating 14 percent cut in social spending. Here are some examples where cuts occur:

  • Health care services, career opportunities programs for low-income people.
  • Children's mental health services.
  • Housing for disabled people.
  • Housing for people with HIV/AIDS.
  • Rental Assistance benefits for low-income people.
  • Home heating assistance for low-income people.
  • Community Development Block Grants which help to fund critical human need services.
  • Programs in the Environmental Protection Agency.
  • Programs in the National Park Service.

This budget proposal will appeal to the middle class and puts Obama in a more popular position than Romney as the 2012 presidential election season heats up. But while this budget has the populist thrust of cutting long-term deficit and debt by attempting to balance spending cuts and revenue increases, it falls short. It bolsters some needed programs, but unnecessarily defunds others. By not calling for all of the Bush era tax cuts to expire, not calling on Wall Street to pay its fair share through enacting a small levy on speculative financial transactions, not cutting military base and war spending deeply enough and not calling for the kind of corporate tax reform that will produce revenue, Obama is letting the 1 percent off rather easy, while the rest of us, especially the poor, shoulder  the pain.

Karen Dolan Weighs in on Romney's Latest Gaffe

February 2, 2012 ·

Karen DolanKaren Dolan, an IPS expert on poverty and the nation's frayed safety net, has published an op-ed on CNN's website in response to GOP presidential hopeful's latest "oops" moment:

"I'm not concerned about the very poor." Oops. Mitt Romney messed up. Again. This was a bigger "oops moment" for Romney than when he said a few weeks ago that the $374,327 he earned in speakers' fees over the course of 12 months amounted to "not very much." It was bigger than "I like being able to fire people." It was the biggest since he blurted out that "corporations are people, my friend" at the Iowa State Fair.

Call it a Freudian slip, call it overconfidence emerging from a big win in the Florida Republican primary, call it a classic, out-of-touch-sounding "Rich Romney" gaffe. It may be all of those things, but this comment represents a scripted piece of the Romney campaign strategy. He hopes to co-opt an Obama campaign message aimed at appealing to the middle-class voters each will need in the general election.

Due to CNN.com's editorial policies, we're unable to post the whole thing here. But please read it on their website, and check out some of the 1,800 comments logged so far. Since too many of them are unsympathetic toward the poorest among us, be sure to weigh with your two cents, and spread the word via Facebook and Twitter.

Update: Many conservatives are attacking Romney in the wake of this gaffe. The Daily Kos has a fantastic summary. Here's a sample quote from National Review's Jonah Goldberg: "His language makes him seem like a caricature of a conventionally stiff country club Republican."

Unconventional Wisdom: The President Talks About Inequality

January 26, 2012 ·

A wordle of President Obama's 2012 State of the Union speech. By Kurtis Garbutt.What a difference a week makes. GOP presidential hopeful Mitt Romney finally disclosed on Tuesday that he paid a measly 13.9 percent of his vast income in taxes in 2010 and will probably pay just 15.4 percent on his 2011 earnings. Those rates are far lower than what the IRS demands of you, or the two of us, or Warren Buffett's secretary.

Thanks to the persistence of the Occupy movement and Romney's tin ear, the anger over inequality, recent college grads who can't pay their student debts, and elderly people being thrown out of their homes is boiling over into outrage.

Thanks to this pressure, President Obama devoted much of his State of the Union address to the damage extreme inequality wreaks on our democracy. IPS experts John Feffer, Phyllis Bennis, Sarah Anderson and John Cavanagh all offer their takes on this important speech.

At IPS, we're spreading the stories, facts, and figures about our nation's 30 year march toward extreme inequality in as many ways as we can. IPSers Chuck Collins and Sam Pizzigati have built the leading inequality website. (Please visit www.inequality.org to see what we mean). Chuck's latest book 99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do About It will be released shortly before Tax Day, and he's a featured expert in "We're Not Broke," a new documentary that premiered on Sunday at the Sundance Film Festival, which highlights the growing public outrage toward those in the 1 percent who are key drivers of inequality. Too Much, Sam's weekly newsletter, highlights news and views that show how our world would be considerably more caring, prosperous, and democratic if we narrowed the vast gap that divides the wealthy from everyone else.

As the outrage grows, change that seemed impossible not long ago becomes possible. IPS is working with the National Nurses United union and a wide range of groups in this country and around the world to build support for a tax on speculative Wall Street trades, which could raise hundreds of billions of dollars for urgent needs, such as jobs and climate programs. The Institute is working with other allies to lay out the shift from a Wall Street casino to a green Main Street economy.

Remember, Wall Street banks and global corporations have driven down wages, working conditions, and environmental standards both in the United States and everywhere else. We need solutions that cross borders. That's why IPS is working with allies around the world — from Occupy Nigeria to groups fighting the U.S. drug war.

A movement for the 99 percent is growing like wildfire, and each and every one of you is part of it.

This post was originally sent out to IPS supportes in our biweekly Unconventional Wisdom Newsletter. Sign up for UW and other IPS newsletters here.

Tax-Haven Abuse Film Hits the Fast Lane

January 26, 2012 ·

(Park City, Utah) — "We're Not Broke," a lively documentary about the ways that wealthy individuals and global corporations dodge taxes, had its world premiere on Sunday at the Sundance Film Festival.

We Are Not Broke film stillThe timing couldn't have been more extraordinary. Just two days earlier, the Associated Press reported that Republican presidential candidate Mitt Romney has up to $32 million in offshore bank accounts, mostly in the Cayman Islands. Two days after the film's debut, Romney bowed to mounting pressure and released his damning 2010 and 2011 tax returns, and President Barack Obama called for a new mandatory 30 percent tax rate on Americans earning $1 million or more each year.

Directed by Karin Hayes and Victoria Bruce, "We're Not Broke" visually and expertly explains how "offshore "banking enables the richest 1 percent and several thousand transnational corporations to avoid regulation, taxes, and accountability.  

Unlike other documentaries about corporate abuses, "We’re Not Broke" inspires viewers to see themselves as agents of change. The film stands out in is its portrayal of ordinary people learning about the offshore system and taking action. It profiles the emergence of US Uncut, and follows how its activists engage in direct action at Bank of America, Verizon, Apple, and other tax dodgers.

There are an estimated 60 tax havens — formally called "secrecy jurisdictions" — around the globe. The countries have loose incorporation rules, bank reporting standards, and financial transparency requirements. People in the U.S. are more aware of Caribbean tax havens such the Cayman Islands, Bermuda, and the Bahamas. But technology and pharmacy companies often create subsidiaries in countries like Ireland and the Netherlands to hold patents and intellectual property to reduce their U.S. tax bills.

The offshore system has spawned a gigantic tax avoidance industry, with teams of lawyers and accountants who add nothing to the efficiency of markets or products. In 2011, reports about General Electric's storied tax dodging dramatized the ways that modern multinationals view their tax accounting departments as profit centers.

At a time when federal and state lawmakers are grappling with huge budget deficits, the impact of corporate tax dodging is getting new attention. Tax havens are costing us more than an estimated $100 billion of lost revenue each year. And a coalition of over 20 U.S. companies have launched their "WIN America" campaign to lobby for a "tax holiday" on $1.2 trillion in overseas profits they want to bring back to the U.S. without paying the back taxes they owe.

"We're Not Broke" portrays the "business case" for closing down the off shore system with profiles of several small business people who are at a competitive disadvantage with global corporate tax dodgers.

The documentary will probably figure into the election debate, given how Obama used his State of the Union address to highlight the tax system's deep inequities in the. If Mitt Romney nails the GOP nomination, the abuses of the offshore system will draw plenty of attention.

Romney's spokespeople argued the candidate was pursuing normal tax reduction schemes. But the offshore system is a rigged game, benefiting a small handful in the 1 percent of wealth holders and a few thousand global corporations. "It may be legal, but these are loopholes that show problems in our tax code," said Nicole Tichon, executive director of Tax Justice Network USA, an organization that promotes tax transparency. "The bottom line is, they're taking advantage of a system that's flawed."

Stay tuned for more information about how you can see, "We're Not Broke." In the meantime, visit the documentary's web site. werenotbrokemovie.com

Chuck Collins, co-author of the Institute for Policy Studies report, America Loses: Corporations that Take Tax Holidays Slash Jobs, is a featured expert in "We're Not Broke." www.ips-dc.org

Should We All Start Praying for Mitt Romney?

January 23, 2012 ·

Egalitarians seem to be doing a lot of praying since Saturday's GOP primary in South Carolina. If you listen closely, you can almost hear their prayer: Please, Lord, let Mitt Romney win the 2012 Republican Presidential nomination.

Caricature by DonkeyHotey.Why this swelling of affection for one of the richest Americans ever to run for the White House? Over recent weeks, Mitt Romney has put a long-overdue “human face” on American plutocracy at its job-destroying, tax-avoiding worst.

Thanks to Mitt Romney, millions of Americans now understand how private equity kingpins funnel fortunes — to themselves — out of middle class misfortune. And millions more, thanks to Mitt’s on-the-stump candor, now have a window into the world of people so rich that $370,000 — Mitt’s income from speaking fees last year — rates as “not very much.”

Every day seems to bring another “teachable moment” on plutocracy from the Romney campaign: the intricacies of the “carried interest” loophole one moment, the allure of Cayman Islands offshore tax havens the next.

All of this came before Mitt released his tax returns. That release, now expected tomorrow, will only redouble the scrutiny. Mitt has, to be sure, already spilled his basic tax return beans. His overall federal income tax rate last year, Romney has shared, hovered around only 15 percent.

Mitt's campaign as a teachable moment machine does have one other fantastic advantage: Matt had a wealthy father. Even better, Mitt’s wealthy father, American Motors CEO George Romney, released 12 years of his tax returns when he ran for the 1968 GOP Presidential nomination.

These papa Romney tax returns offer a window of their own — into just how amazingly rich people-friendly America’s current tax code has become.

From 1955 through 1966, George Romney reported income of $2.97 million — about $22 million in today’s dollars — and paid 36.9 percent of that in federal income tax.

George in his heyday rated as one of America’s highest income-earners. In 1960, his rewards from American Motors helped bring his total personal income to $661,423, a bit over $5 million today. The IRS only counted 533 taxpayers who made between $500,000 and $750,000 in 1960 — and only 508 taxpayers in the entire country who made more than $750,000.

How did George Romney’s tax rate compare to the tax rate of his fellow rich? George actually paid a smaller share of his income to Uncle Sam than his peers, mainly because he donated almost a quarter of his income to charity and church.

America's 1960 rich in George's $500,000-to-$750,000 cohort — a range that would equal from $3.8 to $5.7 million today — paid an average 45.3 percent of their incomes in federal taxes, after exploiting every tax loophole they could find.

The true millionaires of 1960 — the 306 taxpayers who reported at least $1 million in income, the equivalent of $7.6 million today — paid taxes at a slightly higher rate, 45.8 percent. These millionaires only averaged, in today’s dollars, about a little over $15 million each in income.

How does that $15 million average for America’s richest in 1960 compare to the income of America’s richest today? The 1960 rich, even after adjusting for inflation, only made a tiny fraction of the incomes our rich today are pulling down. Last spring, the hedge fund industry trade journal reported that America’s top 25 hedge fund managers averaged $882.8 million — each — the year before.

signupTheir tax rate? We don’t know that for sure. But hedge fund managers exploit the same “carried interest” loophole that has proved so lucrative to private equity power suits like Mitt Romney.

The top 25 hedge fund manager federal income tax rate most likely floats between 15 percent — the same rate Mitt pays his taxes at — and 18.1 percent, the average federal income tax rate on America’s 400 richest taxpayers in 2008, the most recent year with IRS data available.

So let’s review the bidding here. Today’s top hedge fund managers make 59 times more income than the richest Americans in 1960, after taking inflation into account. Yet the richest Americans of 1960 paid three times more of their income in federal income taxes than today’s top hedge fund managers pay.

Statistics as revealing as these haven’t yet filtered into America’s political consciousness. But just wait. If Mitt Romney gets the Republican nod, the wonderfully illuminating national seminar on inequality that his campaign has become will be running, glory be, straight into November.

This article originally appeared on Sam Pizzigatti's Too Much Newsletter.

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