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Posts Tagged ‘budget’

When the government increases taxes on the rich, they have less money to purchase politicians, which means government can pretty much follow policies the majority of voters want, such as creating jobs by spurring the demand for goods and services. Minnesota’s next-door-neighbor is Wisconsin. Governor Scott Walker slashed the state’s budget and programs in order to make room for millions of dollars of tax cuts for mostly out-of-state billionaires and millionaires. The result was a decrease in demand for goods and services and nearly last in the nation in job creation.

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A flutter of fear ran through Congress yesterday, desperately searching for a Democratic spine to run up. The flutter of fear found its target as President Obama sided with Wall Street and the Republican Party against his own Democratic Party, the Democratic base, and the American public.

When this Congress works together to get something done, it’s almost always on behalf of the 0.01 percent, and it’s almost always a profoundly bad one for the 99 percent. The omnibus spending bill that the House passed last night is just about the most corrupt and dangerous piece of legislation to come out of Washington in a long time. A few spineless Wall Street Democrats caved in to Republican hostage demands to avoid a government shutdown. So did Obama, the ultimate Wall Street Democrat. He could have sent a strong message with his veto pen to the 114th Congress since any deal this bad shouldn’t have gotten his signature, regardless of a shutdown threat from Republicans.

So what’s so bad about this deal that a government shutdown is preferable besides the fact that it was written in large measure by Citicorp lobbyists? A lot of things, but one stands out more than the rest.

The Republicans have stuck a little piece of legislation in the funding bill that will force taxpayers to bail out much of Wall Street derivative losses.

Financial derivatives are bonds backed by a real assets, such as home mortgages and student loans. Currently, there are $700 trillion in outstanding derivatives in the world, while the yearly world economy produces only about $70 trillion a year. The US derivative markets has about $230 trillion outstanding, compared to an economy that produces about $16 trillion in goods and services a year.

JP Morgan and Chase Bank hold about $150 trillion of this toxic financial wasteland called the derivatives market.

Should the derivative markets take a nose dive, under the Republican proposal, US taxpayers could owe the big banks a large portion of that $230 trillion. It’s going to be bailout time when the next recession hits. Massively rich, but remarkably stupid, investors know they don’t have make smart investment decisions since the taxpayers are going to be forced to bail them out. In other words, Republicans have decided to redistribute massive amounts of cash from the American middle class for years to come to the 1 percent should their gamble on these derivatives fail. President Obama also said yes to bailing out Wall Street in the future.

President Obama has always been a servant of Wall Street. Quite naturally, he was never likely to veto this budget bill, but one can always hope the president developed a spine and became an FDR or Elizabeth Warren type of Democrat for the American people.

This is bad policy for the nation, for the world, for the middle class, and basically for just about everybody except a few rich Wall Street fat cats. No doubt, some Democrats such as Wall Street Senator Ron Wyden will fight for this bill. Others, however, such as Sherrod Brown, Elizabeth Warren and Jeff Merkley will not do as Wall Street commands.

What else did Obama and his Republican Party agree to do in this budget?

The Republican Party and President Obama and a massive portion of the Democratic Party are all about redistributing income and wealth from the 99 to the 1 percent. Now the battle will go to the senate. There is some hope there to stop this madness.

Click below for the rest of the story.

Why President Obama Should Veto This Budget and Shut Down the Government–Readersupportednews.com

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The Republican led House of Representatives want to allow derivative traders, including the biggest investment banks on Wall Street, to be able to gamble on derivative trading with taxpayer money. And they’re threatening to shut the government down again if they aren’t allowed to screw the American people, like last time, and the time before that. The Republicans want to duplicate the same situation that led to the recession of 2007-09, which was the most severe economic downturn since the Great Depression, and both of those economic disasters were created by Republican economic policies designed to enrich the most affluent at the expense of everybody else. US Senator Elizabeth Warren is fighting back. This demonstrates how corrupted by big money the Republican Party is, and why it can only attract far right wackos to serve as congressmen and women.

According the New York Times, “The fight has centered on elements of Dodd-Frank that address the culprits of the financial crisis, including the sort of derivatives trading that helped push the insurance giant American International Group to the brink of collapse in 2008. One bill would amend the so-called Volcker Rule, a centerpiece of Dodd-Frank. Another bill that lawmakers plan to include in the government funding plan was essentially written by lobbyists for Citigroup.

If included in the final spending bill, the proposals would represent the greatest threat yet to Dodd-Frank, the most comprehensive regulatory overhaul since the Depression and one of the Obama administration’s signature legislative achievements. Other than a tweak here or a delay there, Dodd-Frank has largely survived a surge of Wall Street lobbying.

The legislative changes are only one front in Wall Street’s attack on Dodd-Frank. Wall Street has also lobbied the regulators who are putting Dodd-Frank into effect, with varying degrees of success.”

Check out the link below for more on the New York Times report.

Wall Street Seeks to Tuck Dodd-Frank Changes in Budget Bill–New York Times

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Federal Budget Cuts That Make Sense

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During an economic downturn, the government spends money it doesn’t have by borrowing. As people lose their jobs, the government spending increases, thereby taking up the slack in demand caused by the layoffs.

Technically, we’ve been out of recession for a few years, but his year the deficit should be over a trillion dollars. That’s because the demand for goods and services is remarkably low due to the redistribution of income and wealth from the 99 to the 1 percent over the last three decades.

Thirty years ago, the 1 percent received about 8 percent of all income generated in the USA. That figure had held steady, more or less, from 1940 or so until the ascendency of Ronald Reagan as president.

Think about this; the four decades from 1940 to 1980 created the greatest number of jobs in US history, had budget surpluses now and then, and saw the standard of living for most Americans rise. That was in an economy half the size of today’s economy. That’s because the demand for goods and services was strong because the 99 percent had more money to spend.

Nowadays, the 1 percent has legislatively stolen about 27 percent of all US income, and during the last two years, those people have legislatively robbed the rest of us of 93 percent of total income growth.

Look at the numbers closely. From 1940 to 1980, 100 percent of national income minus the 8 percent for the 1 percent left 92 percent of national income for the rest of us to spend on stuff, which created jobs through effective demand. Nowadays, 100 percent of national income minus 27 percent for the rich gives the rest of us 73 percent to spend.

That has left the demand for goods and services extremely weak, which is why the economy is so sluggish. The economy, however, is most likely in a state of slow motion collapse. The only things stopping the economy from a rapid collapse are the New Deal (Social Security, unemployment insurance, etc…), the Great Society Programs of President Lyndon Johnson (food stamps, etc…) and the federal deficit. Those programs create demand.

To stop the economy from imploding because of a lack of demand, the government has been forced to borrow money and find ways to spend it to take up the slack caused by the redistribution of income from the 99 to the 1 percent. That includes borrowing to sustain unemployment insurance and food stamps.

That’s the reason for the size of the federal deficit in a very large nutshell.

One other point should be made. Politicians from Wall Street Obama to Wall Street Mitt from John Boehner to Nancy Pelosi know this, and so does the media, but nobody’s going to say a word to the 99 percent.

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