IPS Blog

Last year, as part of the annual celebration of Dr. Martin Luther King Jr’s birthday, one of President Obama’s top advisors paid a visit to Ebenezer Baptist Church in Atlanta, the church of Dr. Martin Luther King. The advisor, Valerie Jarrett, received a standing ovation from the assembled congregation when she shared the story of how Pres. Obama was responsible for the killing of an unarmed Osama bin Laden as members of his family looked on. I share this strange and surreal scene from Ebenezer Church, where the largely African American congregation endorsed the killing of another human being – while in church – because I think it captures the vast historical and moral distance between two distinct periods: the period of the late 1950s and early 1960s, when Dr.King emerged as the symbolic leader of the civil rights wing of the ongoing Black liberation movement and received the Nobel Peace Prize in 1964; and the era of Barack Obama, launched with his ascendancy to the highest political office in the country and the winning of the Nobel Prize in 2008. Two periods and two awards that, when linked, serve as yet another confirmation of the moral decline of liberalism among white and black people over the last four decades.

For the full article click here.

This week in OtherWords, Ron Carver puts today’s gun control debate into a personal and historical context, drawing on his experience on the front lines of the civil rights movement in the 1960s, and research into what prompted the Founders to enshrine the right to bear arms in our Constitution. Donald Kaul finds a striking similarity between the Manti Te’o scandal and the Republican Party’s fantasies, Sam Pizzigati explains what’s wrong with the Washington Beltway’s new “Lexus lanes,” and Martha Burk describes a new advantage French women have over their American sisters.

On our blog, you’ll find my summary of seven steps President Obama can take if he wants to belatedly embrace a progressive agenda, and Sarah Anderson’s four practical suggestions raising much-needed revenue.

Below you’ll find links to our latest work. If you haven’t already subscribed to our weekly newsletter, please do.

1. Second Amendment Vigilantes / Ron Carver
   It’s a myth that the right to bear arms stemmed from the Founders’ wish that Americans be free to stage an armed rebellion against our own government, should it become tyrannical.
2. Border Fears Riddled with Holes / Raul A. Reyes
   Despite the rhetoric from immigration hardliners, we are indeed securing our borders.
3. Making Caregiving Count in France / Martha Burk
   French women who take time off to have kids won’t get a big fat zero in their Social Security accounts like most of their sisters in the United States.
4. A Chance to Invest in TV News / Jason Salzman
   TV stations should say, “we’re sick of gross political ads, too, and we’re going to hire reporters with our election-year ad windfall.”
5. Forget Fake Girlfriends, Republicans Have an Imaginary President / Donald Kaul
   One of our major political parties has become infected with the Notre Dame virus.
6. The Capital of Inequality / Sam Pizzigati
   The Washington region’s increasingly rich elite are now zipping along in Lexus lanes.
7. Coke Still Needs to Get Real / Jill Richardson
   The soda giant’s slick campaign to make us think its products are getting healthier might change public perceptions — but it won’t make soda good for you.
8. Duck and Cover 2.0 / Jim Hightower
   The police-industrial complex aims to deploy thousands of domestic drones in the next few years.
9. The High Cost of Free Trade / William A. Collins
   Negotiations over the new Trans-Pacific Partnership are secret — not even members of Congress get to see the drafts.
10. Automatic Congressional Allegiance / Khalil Bendib Cartoon

     

    Emily Schwartz Greco is the managing editor of OtherWords, a non-profit editorial service run by the Institute for Policy Studies. OtherWords.org

EU finance ministers were scheduled to vote January 22 on whether to authorize 11 member states to proceed with the introduction of a financial transaction tax (FTT). As it turned out, the ministers didn’t even have to take a formal vote because it was obvious that there was sufficient support to move ahead. 

The 11 countries are Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia. It will be possible for other governments to opt in at a later date. And in fact, the Netherlands has expressed interested, but they want to negotiate an exemption for their pension funds. 

Next Steps 

The next step is for the European Commission to make a proposal for the tax. The proposal will be based on one introduced by the Commission in September 2011 that would apply a 0.1% tax rate on trades of stocks and bonds and a 0.01% rate for derivatives trades. As described in the European Council statement released today, the aim of this proposal is “for the financial industry to make a fair contribution to tax revenues, whilst also creating a disincentive for transactions that do not enhance the efficiency of financial markets.” 

The proposed tax is based on the “residence principle,” meaning that a financial transaction would be taxed in each case where a resident of one of the participating EU member states was involved even if the transaction was carried out in a country that is not a participant. 

The tax proposal will have to be adopted by unanimous agreement of the participating member states. EU Tax Commissioner Algirdas Semeta says it is possible that the tax could enter into force beginning January 1, 2014. 

Use of Funds

Although some press reports have said the funds will go towards bailing out European banks, there is no agreement yet on how revenues will be allocated. International campaigners who have been advocating for financial transactions taxes for several years will be redoubling their efforts to demand that revenues to go towards social and environmental purposes. 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington, DC www.ips-dc.org

Most progressives aren’t exactly thrilled with President Barack Obama’s track record so far. Sure, he came out in favor of gay marriage, raised taxes on at least some of the richest Americans, made history by being the first non-white man to occupy the White House, and called for ending oil and gas subsidies.

In general, however, he riled the progressive base instead of rallying it. Given that hardened conservatives continue to accuse him of being a “communist” anyway, he might as well give a true progressive agenda a shot. Chances of that may look slim in light of his corporate-sponsored inaugural festivities, but he did get that memo about how he’s got to finally do something about guns.

Here’s my cheat sheet for our commander-in-chief, in case he wants to get back in touch with his inner anti-war community organizer.

Dear Mr. President,

You and I have never met even though I grew up in Hyde Park and right-wingers keep insisting that you’re heavily influenced by my organization. (Isn’t that kooky? Look it up if you don’t believe me.) Anyway, I know you’re busy but in case you’ve got a minute or two to spare, here are seven action items for your consideration. I’ve tried to keep it short, but there are lots of hyperlinks for you to explore.

Sincerely,

Emily Schwartz Greco

1) Stop climate change. Surely you’ve noticed by now that the weather got pretty odd during your first term in office. After all, heavy winds are felling the White House’s stately Christmas trees and you wound up embraced by New Jersey Gov. Chris Christie (a potential GOP presidential contender) right before Election Day because of Superstorm Sandy’s devastation. Uttering the words “climate change” out loud is nice and all, but actions speak louder than words. The best way you can prove that you’re serious about climate change is to nix the Keystone XL pipeline. While you’re at it, bravely declare that fracking is environmentally devastating and do what you can to stop that scourge. Along with mountaintop removal mining. End your love affair with nuclear reactors and see if you can end our reliance on that dangerous source of power faster than Germany.

2) Adopt a foreign policy that respects human rights. You can start by ending all forms of government-sponsored torture, which would require punishing U.S. officialswho have anything to do with it. No, making them the next CIA chief doesn’t count, as bad as things turned out for Gen. David Petraeus. And keep that promise you made four years ago and shut the Guantánamo prison. Oh, and by the way: One great way to respect human rights is to kick your nasty remote-controlled killing habit. Drone warfare won’t make the world a safer or better place.

3) Embrace spending priorities that benefit the rest of us instead of rich folksand corporations. With private pensions becoming an endangered species, it’s time to strengthen Social Security rather than gutting it. You can do this and balance the budget at the same time if you get creative about new revenue sources, such as a Wall Street tax. And put the Pentagon on a diet. That’s what we’ve always done after wars wound down and supposedly we’re wrapping up operations in Afghanistan and Iraq.

4) End the wars on drugs and undocumented immigrants. Speaking of pointless and pricey wars that are finally winding down, why not admit that the Drug War isn’t working and never will? Make sure the good people of Washington State and Colorado get what they voted for when they passed marijuana-legalizing ballot measures last year. And go a step further and push for nationwide decriminalization of a drug that at least 100 million of us have tried, including, uh, you. Another thing that might help Latin Americans and Latinos, two of the communities that have suffered the most over the Drug War's four decades, is a saner immigration policy. Yes, Latinos backed you over Romney, but they had to hold their noses because of those record deportation rates. See if you can do something at the federal level to update immigration laws that might stop the outbreak of oppressive legislation in states like Arizona and Alabama.

5) Address America’s corrosive racial and class disparities, such as the racial wealth divide and the overly black and brown composition of our outrageously huge incarcerated population. The increasingly privatized prison-industrial complex isn’t good for anyone, especially undocumented immigrants, unless you think corporations are people. But if they were, you wouldn’t have gotten a second term, right?

6) Help fix our broken food system. You could get started by getting Michelle to dump Beyoncé as one of the faces of the Let’s Move campaign now that she’s becoming the face of Pepsi. For a change, how about not letting every single application for an untested genetically engineered thing we eat or feed our animals glide through the approval process? Use the power of your post to get the country to eat further down the food chain which would be great for our personal health and the entire planet by serving a vegan banquet at the next State Dinner. See if the Farm Bill could do less for corporate agribusiness and more to give the powerful local-food revolution even more momentum. Do something about factory egg and livestock farms.

7) Take steps to alleviate our growing care crisis before it crushes us all. It’s still mostly a below-the-radar challenge compared to everything else on this list, but the growing numbers of senior citizens aren’t just making the cost of Medicare harder for the federal government to shoulder. We don’t have enough geriatric doctors or any system to increase the numbers of qualified professionals who we need to provide our elders with decent care of any sort. We’ll need at least 1.6 million new caregivers by 2020 and it won’t be easy to recruit them unless U.S. labor laws are updated. Experts predict that the number of seniors in the United States will nearly double by 2030. Sure, it’s possible that robots will solve this problem. Just like it’s possible that you’re going to take all my advice.

Republicans seem to have something against tax increases. I get that. But it's still not crazy to think we can win some important revenue battles during Obama 2.0. And given this country's pressing needs – from repairing our infrastructure to rehiring teachers – it would be crazy not to try.

A big question, of course, is how to peel off the 17 House Republicans needed to win anything (assuming all Dems and President Obama are in favor). Openings will come, though, when Republicans need votes from across the aisle on something or other. The even more important challenge is to push progressive reforms into the center of the debate so they get plucked when the stars are aligned.

Here are four that are not only solidly progressive but also have bipartisan potential:

1. Close the carried interest loophole

OK, people, if we can't fix this one during the second Obama administration, I'm giving up on Washington once and for all and becoming a goatherder. How can we continue to allow gazillionaires to pay only a 15 percent tax rate on the profit share ("carried interest") they get paid to manage hedge and private equity funds?

Ray Dalio of Bridgewater Associates, for example, was the highest-earning hedge fund manager in 2011, raking in $3 billion. Forbes calculates that if Dalio had paid ordinary income tax rates, he would have contributed an extra $450 million to the Treasury.

The loophole is so off-the-charts absurd even some hedge fund managers are ready to give it up. Bill Ackman, of Pershing Square Capital, has said he expects the loophole to disappear and thinks his peers won't even mind that much.

Formerly problematic Dems have also changed their tune. Back in 2007, a fix passed the House but never made it through the Democratic-controlled Senate because of obstructionism from Senator Chuck Schumer (D-NY). Thankfully the Senator from Wall Street land has had a rethink.

2. Cap the deductibility of executive pay

The more corporations pay their CEO, the less they owe in taxes. A 1993 law aimed to fix this perverse incentive by capping executive pay deductions at $1 million. The problem is it left a huge loophole for "performance-based" pay. Oracle CEO Larry Ellison, for example hauled in $76 million in stock options and other so-called "performance-based" pay in 2011 – all of it fully deductible. And contrary to Clinton era thinking, stock options do not improve performance. This became abundantly clear after the dot-com crash and the 2008 crisis, when boards helped CEOs recoup their losses by handing out boatloads of new options.

As for bipartisan, "purple" potential, Senator John McCain (R-AZ) co-sponsored a bill in 2009 that would've tightened up the loophole and former Senate Finance Chairman Charles Grassley (R-IA) has made supportive comments. There are also two recent precedents. Both the bank bailout and the health care reform legislation included $500,000 caps on pay deductibility with no performance pay exemptions for financial and health insurance executives. Guess what? The world didn't end.

3. Adopt a financial transaction tax

This is the idea of putting a very small tax on each trade of stocks, bonds, and derivatives. Tax the Wall Street casino? Fat chance, you might say. But there's actually huge momentum on this, both at the grassroots and the policy level.

About a dozen European governments have committed to coordinate such a tax. The details still need to be hammered out, but the proposal on the table is for a tax of 0.1 percent on stock and bond trades and 0.01 percent on derivatives.

Sure, you might say, but have Europeans ever met a tax they didn't like? How are you going to sell this in the land of the "free"?

One major selling point is that by taxing each trade, this tax would discourage the controversial high-speed trading that now dominates markets. The chief economist at the Commodity Futures Trading Commission, the nation's top derivatives regulator, recently found that this automated speed trading is sucking significant profits from traditional investors. And a growing number of these traditional investors are coming out in support of financial transaction taxes.

Even for tea partiers, if forced to pick from a menu of options for raising massive revenue, what do you think they'd go for? One of the numerous proposals (e.g., value added taxes) that would hit the middle class? Or one targeted at the bigtime gamblers on Wall Street who benefited the most from the bailout so hated by the tea party?

4. Close offshore tax havens loopholes

The rampant use of tax havens to stiff Uncle Sam has sparked outrage across the political spectrum. In a nationwide poll, nine out of ten small business owners said it was a problem when big businesses used offshore loopholes to avoid paying their taxes. In the same poll, in which Republicans outnumbered Democrats 2-to-1, two-thirds of small business owners said big business did not pay their fair share of taxes. Even Rush Limbaugh has acknowledged that something is wrong when General Electric pays no taxes despite earning tens of billions in profits.

Closing tax haven loopholes could raise at least $100 billion a year. To move in this direction, Congress could increase reporting requirements. Under the Dodd-Frank financial reform legislation, energy corporations will now have to report on their profits, taxes and other government payments, by nation. This should be extended to cover all corporations. The intent of the Dodd-Frank disclosure is to combat corruption, but it could also help combat tax avoidance. A recent survey of chief financial officers of multinational corporations found 75 percent worry about the reputational impact of their company's tax disclosures.

Let's not be intimidated by Grover Norquist and his irrational tax-hating minions. Obama's legacy — and our nation's economic future — will be determined by our ability to build a solid and progressive revenue base. 

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies in Washington, DC and is a co-author of the Institute's yearly Executive Excess reports on CEO pay. www.ips-dc.org Distributed via OtherWords (OtherWords.org)