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Posts Tagged ‘income redistribution’

Supporters of the H1-B Visa program continuously tell us of the need for it because of a severe shortage of high-tech employees in the United States. This, of course, is not and has never been true. The program has been used by US corporations to lower the wages and benefits they pay to their employees by switching out US workers for foreign labor. That’s it in a nutshell.

Lowes Home Improvement provides us with the latest example of how the visa scam works. On June 7, 2017, the Charlotte Observer reported that Lowes was laying off 125 of its US high-tech workers, and is sending those jobs to Bangalore India. That means we have another 125 skilled and experienced US high-tech workers to fill jobs anyplace in the states. See Lowes Lays of High-Tech Workers–Charlotte Observer

Actually, the US has hundreds of thousands of highly skilled US high-tech workers who cannot find jobs because corporations have outsourced hundreds of thousands of high-tech jobs using H1-B visa workers, or simply brought in hundreds of thousands of H1-B workers. That’s because US companies can bring in 85,000 foreign workers every year under the subterfuge of the H1-B visa.

“Bangalore has been described as the “Silicon Valley of India.” Other major corporations have a growing presence in the IT hub, including Oracle, Dell, IBM and GE, according to a recent Wired story. Another is Wipro, an outsourcing firm used by Observer parent McClatchy,” according to the Observer.

US high-tech workers have experienced numerous layoffs over the last several years because their jobs were exported, or taken by H1-B Visa workers. Some of the employers exporting high-tech jobs include Disney, Intel, Nike, Oracle, Microsoft, Google, Dell, IBM, General Electric, the University of California at San Francisco, Eversource Energy, Abbott Laboratories, PG and E, and many more. That’s thousands of US high-tech workers who have been replaced. Where is this shortage of US high-tech workers? It isn’t in the USA.

The typical American high-tech worker earns considerably more than foreign H1-B workers. According to the New York Times, US businesses only need to pay the minimum of $60,000 a year to its H1-B workers, and they often don’t get any sort of benefits package.

The H1-B visa scam works like this. A US company will hire H1-B Visa folks through a third party. Then American high-tech workers will train their H1-B replacements. Then the H1-B visa worker will either stay in the US or work in say, India, meaning the job has been exported via the H1-B program. The H1-B Visa is only good for three years, so if US jobs are exported using H1-B workers, after three years, the job is no longer governed by H1-B Visa rules. Then the foreign employee can work for quite a bit less than the $60,000 minimum in India or wherever.

The difference in pay and other compensation between the higher compensated US workers and the lower paid foreign and H1-B visa workers is redistributed to the super rich via higher corporate earnings, rising share prices, and surging dividends. The H1-B visa is an income transfer scam, plain and simple. It is time to eliminate this disaster for US high-tech workers.

The Trump Administration claims it is preparing to propose changes to the system that will benefit US workers over Wall Street investors, but we will see.

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More than 200,000 people took to the streets in Washington, DC, Saturday April 29th for the People’s Climate March. Tens of thousands more joined via sister marches across the globe, including Japan, the Philippines, New Zealand, Uganda, Kenya, Germany, Greece, United Kingdom, Brazil, Mexico, Costa Rica and more.

In the U.S., more than 370 marches in nearly all 50 states took place, from the town of Dutch Harbor in Alaska’s Aleutian Islands to the streets of Miami, Denver, Los Angeles, Chicago and other major American cities.

A coalition of communities, faith leaders, labor activists, civil rights champions and climate justice advocates led the march while demanding commonsense protections for the air we breathe, the water we drink and the health of the vulnerable communities who have the most to lose under President Trump’s administration.

The battle over climate change is a sticky one. The fossil fuel industry which own plenty of politicians in both major political parties spends millions of dollars a year denying it’s happening, but my rhododendron is now blooming in early December. Twenty-five years ago, it began blooming in late March and early April. Fifteen years ago, it began blooming in January. I also have roses blooming in snowy December, and that is something that never happened in the forty years I’ve lived in this house.

Quite naturally, the war over climate change is a battle over ever increasing profits and share prices. Major corporations and their shareholders, as well as Wall Street (which controls the Democratic Establishment like puppets), want ever increasing profits because this produces ever increasing share prices and dividends. Getting rid of fossil fuels will force the oil corporations out of business, and cut into the profits and share prices of other manufacturers.

This means the battle over climate change is a battle between ultra rich shareholders and millionaire and billionaire CEO’s on the one hand, and the rest of the world’s people on the other. Naturally, the rich and their corporations fund bogus studies showing global warming in not real in order to influence the voters of the 99 percent to believe climate change is a communist plot to destroy the American way of life, when it is really the rich destroying the US middle class way of life. My roses and rhododendron tell me climate change is real, but then, so is the class warfare the rich are waging on the rest of us.

I should point out that the folks at Exxon now admit fossil fuels are causing global warming. The company denied it for decades, but knew as early as the middle of the 1970s that it was happening.

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President Donald Trump is proposing more tax cuts for the rich. He claims there will be no loss of federal revenue with his tax cuts. This is the standard Republican Party Establishment lie.

Given that Trump’s plan is similar to what Trump proposed on the campaign trail, the Committee for a Responsible Federal Budget (CRFB) did a rough cost estimate of his latest ideas and concluded they could cost $5.5 trillion in lost revenue during the first decade.

CRFB estimates the overall cost could go as high as $7 trillion if limits on tax breaks that the plan suggests apply only to high earners. Or the cost could fall to $3 trillion “assuming credits and exclusions are eliminated as well as deductions.”

This means sharp cuts to programs the middle class and poor need, while, no doubt, keeping welfare programs for the rich, such spending more on the military than the next 25 nations combined, 24 of whom are US allies. Corporate subsidies are also welfare for the rich since they help keep corporate profits and the stock market bubble growing, all of which mostly redounds to the rich.

Oh, and we can’t forget the next biggest lie; tax cuts for the rich trickles down the the 99 percent in the form of jobs. There is not one shred of evidence that giving tax cuts to the rich has created a single net job. There is plenty of evidence, on the other hand, that tax cuts for the wealthy have destroyed millions of US jobs.

That’s because the rich usually invest their tax cuts gains in the stock, bond and political markets. They buy up politicians by the barrel full and then have their politicians pass legislation that will keep inflating their stock, bond and housing bubbles, which means exporting millions of jobs overseas and then redistributing the difference between the old higher US pay and the new lower third world slave labor pay to the rich via higher corporate profits, surging stock and bond markets, and rising dividends.

In the meantime, due to the reduced tax revenue, our roads and bridges will continue to crumble, our public schools will continue to be financially gutted, the cost of entering a public park will continue to rise, the unemployment rate will rise, and so on and so forth.

Don’t be fooled by the same lies President Ronald Reagan and Dick Cheney and Arthur Laffer fed us. Tax cuts for the rich will not pay for themselves, nor will they create jobs, but they will corrupt your government more, and it is already the most corrupt in the developed world. Both major political parties are corrupted to the core.

 

This suggests that any working class concerns addressed by Trump during the campaign has been rendered moot. Trump, in other words, is now completely owned and 100 percent influenced by Wall Street and the Republican National Committee and their corporate owners.

By the way, a story in Newsweek puts it a little less scary than I. “‘…while major tax cuts have been enormously beneficial to the wealthy by reducing their taxes and increasing their incomes the most, the distribution of benefit for working people has been comparatively negligible. That is not the argument of some liberal politician—it was the finding of Martin Feldstein, the chief economic adviser to President Ronald Reagan, in his analysis of the Tax Reform Act of 1986.'”

Feldstein, in other words, said the creation of jobs by tax cuts for the rich “has been comparatively negligible.”

Click here for the full Newsweek story.

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Home mortgage applications

To one my stories about how income had finally begun going up in 2016, somebody wrote, “Yes the 80 bucks more a month I’m getting now completely covers the hundreds of dollars my rent has gone up due to rich developers moving in and gouging us all.”

There are a few things to be said about the comment above. As you can tell by the graph above, applications for home mortgages peaked in 2005 and have dropped quite a bit since then. So why are home and rental prices still shooting through the roof?

The big banks in 2007-11 conspired together to keep over 50 percent of vacant houses off the market so as to jack up prices. Home prices have artificially risen since then. The banks have allowed an increasing dribble of these homes back onto the market as prices have artificially and illegally risen.

Rents are artificially high as well, and for the same reason. What the big banks have done is commit a crime called “a conspiracy in restraint of trade.” This collusion redistributes income from home buyers and renter (the 99 percent) to share and bondholders of the 1 percent.

90 to 95 percent of US population growth is due to immigration. When population constantly increases while large amounts of housing units are illegally taken off the market, the result jacks up housing prices and rents. See Shadow Inventory: More Houses Will Soon Be Available for Sale–Rismedia.com. See also The 7-Million Housing Shadow Inventory Could Trigger A Price Avalanche–Business Insider.

The government has changed the way it measures inflation twenty times since 1981 so as to reflect a lower rate of inflation than actually exists. This means real wages are actually higher than they would have been under the old methods of measuring inflation, so that when the government tells us wages have been stagnant for thirty-six years, it really means real wages have gone down significantly.

Meanwhile, increases in home and rental prices are not actually counted in the inflation rate. See How to Fix the Housing Component of CPI–Slate. Food and energy prices are not included either, but they used to be. There’s a reason for this; inflation measured against wage increases would demonstrate real US wages have plummeted over the last three and a half decades, rather than stagnated. Both Republicans and Democrats in public office don’t want you to know the real story, and neither does their corporate news media.

Both major political parties are controlled by big corporations, billionaires, hedge funds and Wall Street investment banks, and most of these benefit from this conspiracy in restraint of trade. So don’t expect the US government to do anything about this illegal manipulation of prices. It isn’t going to happen until we get honest government back to Washington.

Editor’s note;

The big banks have conspired against Federal law and supply and demand to withhold product from the market in order to manipulate prices and profits upward so it is the renters and buyers who are ripped off. Much, if not all, of this conspiracy has to do with mortgage backed bonds, and the profits and losses to be had from them. A loss in value of 8 percent in the housing that backs triple B rated bonds sends the value of those bonds down to zero, according to Michael Lewis in The Big Short. Likewise, he writes, a 20 percent slump in the price of housing sends the value of AAA home mortgage backed bonds to zero. A lot of billionaires and millionaire investors lose in this instance. So the big banks conspired to keep over 50 percent of the vacant housing off the market in order to prop up the value of those bonds. However, there are other significant benefits to those banks to keep houses off the market. Buyers and renters pay the price of this conspiracy because the obvious result of the actions of the big banks is to redistribute hundreds of billions, if not trillions of dollars, every year from the 99 to the 1 percent.

Dear Democrats, please note then President Bill Clinton refused to sign legislation that would’ve regulated derivatives. Home mortgage backed bonds are a derivative, since their value is derived from an underlying asset. That’s why they’re called derivatives.

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Rexnord Corporation is closing its ball bearings plant in Indiana, laying off its 350 workers, and exporting those jobs to Mexico. In addition, as part of its US workers severance package, many of those workers are training their Mexican replacements, who will $3 an hour with no benefits. John Feltner is a machinist earning $25 an hour in the Indianapolis, Indiana plant. He resents having to train his replacement, but he’ll lose his severance package of $5,000 if he refuses.

Most of the difference in pay between US and Mexican workers will go straight into the pockets of wealthy shareholders. Rexnord’s share price peaked at $30.82 in April 2014. It’s been dropping ever since. It hit a low of $14.72 on January 15 2016, rose a tad, and has stayed stagnant since, hovering around $22. No doubt CEO Todd Adams is hoping that exporting jobs to Mexico will increase its bottom line and attract investors to bid up the share price and his compensation. His CEO pay is tied to the share price thanks to legislation signed by then President Bill Clinton.

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Exporting jobs and CEO pay tied to corporate share price are two of the biggest factors in the widening gulf between the 1 percent and everybody else because they redistribute income and wealth from one group to the other. Currently, six individuals own more wealth than the bottom 50 percent of humanity, while the 1000 richest individuals own more wealth than the bottom 70 percent. Currently, in the USA, the 1 percent steal 35 percent of all income every year, compared to 8 percent in 1980, thanks to their ownership of such politicians as the Clinton’s, Wyden, Mitch McConnell and Orrin Hatch.

John Feltner and his 350 fellow workers lost their jobs thanks to Bill Clinton, who signed legislation deregulating Wall Street, as well putting his signature on the North America Free Trade Agreement (NAFTA. NAFTA was negotiated by Clinton’s representatives with an eye to getting US corporations to export US jobs to Mexico in order to boost their bottom lines. After he left the presidency, Wall Street rewarded the Clinton’s for their service to the tune of tens of millions of dollars. The Clinton’s are still faithful servants of Wall Street in their war against the middle class, such as the workers at the Rexnord plant.

We also can’t forget Democratic Wall Street Senator Ron Wyden has continuously supported redistributing the income of the middle class to billionaires. The Democratic Party is corrupted to the core by big money, though maybe a bit less than the Republican Party. But then again, maybe not.

“The big picture is that American jobs are leaving this country to exploit cheap labor,” Feltner said. “When you start taking away the middle class, what do you have left?”

This is the sentiment that President Donald Trump played to so effectively during the 2016 presidential campaign. It spoke to John Feltner somewhere down deep.”

“He’d been a loyal union man for years, been raised on the notion Democrats were the party of the working man and made calls for Democrats from union phone banks. But after the trade agreements that Bill Clinton and Barack Obama signed, and after Trump spoke to the plight of workers at places such as Carrier, John Feltner broke ranks.

With the layoff fresh on his mind, he cast his November vote for Trump. He says most of his rank-and-file union members did the same.”

And what were those workers supposed to do? Support Hillary Clinton who aspired to export millions of US jobs to China via the Trans Pacific Partnership (TPP), which was being negotiated on behalf of Wall Street by then President Barack Obama?

Feltner and his fellow employees don’t know what they’re going to do once their jobs are gone. Thank you Bill Clinton. Thank you Barack Obama.

For more on this story, click the following link, Rexnord’s Indiana Plant Exported to Mexico–USA Today

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Student Loans
Student loans are a scam intended to redistribute income from college students to wealthy individual and institutional investors. College students today owe more than $1.4 trillion dollars in student loans, and that figure is getting bigger by the day. Total student loans outstanding exceeded total credit card debt when it hit $1.2 trillion in 2014. Only mortgage debt is greater than student loan debt, but with home values going up, mortgage debt is an investment, whereas student loans have become something of a gamble for a large number of students. (Friedman)

Why do the student loans keep piling up?

About twenty-three years ago, somebody on Wall Street discovered student loans could be securitized. That’s a situation in which investment firms buy student loans from issuers, pool them together, and then issue bonds backed by the loans to wealthy investors. The loan originators earn hefty fees with every loan they sell. The investment firms also obtain a large fee with every bond they sell. (Carrillo)

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For example, a private commercial bank might issue $10 million in student loans at 6 percent interest. A student spends four or five years in college, and then spends ten to twenty years paying off a loan. So that $10 million principal can earn another $10 million in interest or more over the lifetime of the loan. An investment bank might pay $2 million or more for the $10 million in loans from the commercial bank. Then the investment bank will turn around and collect millions in fees from investors for the same loans once they’re bundled together and bonds are issued. The investors might experience a growth in the value of their bonds, so they can sell them, in which case, somebody will get a fee for performing the task. There’s money to be had for all involved in this process, except for the borrowers. (Carrillo)

Most student loans are guaranteed by the federal government. So there’s no risk to investors. It’s free money. The federal government pays the interest on the loans to the investment banks even when the students are still in school. Once the students are out of school, they are required to pay on the interest and the principal to the bondholders. This is how your student loan payments mostly go directly into the pockets of the 1 percent via these bonds. Some of the proceeds go to the service providers.

The Wall Street business strategy on this matter has always been simple: Push the federal government to limit federal grants to college students, and expand the student loan program. That’s precisely what has occurred. In 2016, total outstanding student loans represented roughly 7.5 percent of the United States gross domestic product, up from 3.5 percent only ten years earlier. Nearly 43 million Americans are chained to student loan debt, each with an average balance of $30,000. (Wikipedia)

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While the total number of Federal Pell grants has grown in current dollars since 1976, the cost of education has grown faster. In 1976, for example, the average Pell grant paid 72 percent of the maximum expense of attending a public four year college or university. This figure grew to 79 percent in 1979. Nowadays, the average Pell grant is less than half of that, hovering inside the 32 to 34 percent range. (ACE)

This forces many students to borrow money to help finance their higher education, and it also plays straight into the hands of wealthy investors. The interests of those investors seem to coincide with the concerns of many politicians within the federal government and both major political parties. Student loan default rates jumped from 2010 to 2013. Along with other corporate media sources, CNN reported in 2012 that “The percentage of borrowers who defaulted on their federal student loans within two years of their first payment jumped to 9.1% in fiscal year 2011, up from 8.8% the previous year, according to U.S. Department of Education data.” Investors began selling off their bonds, resulting in declining values. Something had to be done to restore investor confidence, and so the federal government doubled student loan interest rates on all new loans from 3.4 to 6.8 percent on July 1, 2013. (Sheehy)

This increased the return on investment while doubling the burden on the 99 percent who take out new loans to finance what is called the American dream, but it’s really becoming the American nightmare. This is rightly called income redistribution. The doubling of student loan interest rates benefited smaller Wall Street investment banks, as well as such Wall Street heavyweights as JP Morgan/Chase and Goldman Sachs. Loan originators and investment companies receive billions of dollars in fees every year from new student loans. Both JP Morgan/Chase and Goldman Sachs are publicly traded corporations. Both corporations are listed among the Dow Jones Industrials, and both keep their stock prices rising, in part, to the securitization of student loans, which benefits their affluent shareholders.

The more interest students are forced to pay, the higher the bonds can sell for, and the more attractive they are to investors, especially since the government guarantees them. (Carrillo) In this way, America’s higher education policies have been legislatively constructed so as to redistribute the income of the 99 to the 1 percent via higher student loan debt.

Wall Street banks also rigged the game even more against student loan borrowers by having the government make it almost impossible to discharge student loan debt through bankruptcy. Students are tied to the debt until it’s paid, or they die. This leaves less money for students to spend when they graduate, forcing them to curtail their purchases, and weakening the economy in the process.

When the US congress and President Obama allowed the interest rate of new student loans to double to 6.8 percent in 2013, the public outcry was so heavily against it that politicians had to reduce student loan interest rates within a year. The burden for students and their families had been too great. The rate was dropped to 4.9 percent in 2014, which was still 50 percent higher than in 2012. (Lobosco)

Bernie Sanders was right when he declared the government could provide free public education to its people. The money is there, and always has been. During the economic crisis of 2008-2009, the federal government and the Federal Reserve gave out tens of trillions of dollars to rich investors, investment banks and hedge funds. Politicians called these actions “quantitative easing” and “bailouts.” (Irvin) See The $26 Trillion Bailout to Save Incompetent but Rich Investors-JohnHively.wordpress.com. If trillions of dollars to bail out the rich are there whenever they need it, why isn’t that money also available when the rest of us need it?

The answer, of course, is simple.

Like many other issues, student loans are a corrupt, financially rigged game that shows how the government acts as a conduit in redistributing income from the 99 to the 1 percent when it doesn’t have to. Just follow the money and you will know who is corrupting your government.

Works Cited
Friedman, D. (May 17, 2014). Americans Owe $1.2 Trillion Dollars In Student Loans. New York Daily News. http://www.nydailynews.com/news/national/americans-owe-1-2-trillion-student-loans-article-1.1796606

American Council on Education, (ACE) http://www.acenet.edu/news-room/Documents/FactSheet-Pell-Grant-Funding-History-1976-2010.pdf

Merganser Capital Management, Investment Memo http://www.merganser.com/PDF/Memo/2015-Q3.pdf
http://money.cnn.com/2012/09/28/pf/college/student-loan-defaults/

Carrillo, R. (April 14, 2016). How Wall Street Profits From Student Debt, Rolling Stone. http://www.rollingstone.com/politics/news/how-wall-street-profits-from-student-debt-20160414

Irvin, N. (October 29, 2014). Quantitative Easing is Ending, Here’s what it did, in Charts. New York Times. October 29, 2014. https://www.nytimes.com/2014/10/30/upshot/quantitative-easing-is-about-to-end-heres-what-it-did-in-seven-charts.html?_r=0

Sheehy, K. (July 3, 2013). What the Stafford Loan Rate Hike Means for Students. US News and World Report. http://www.usnews.com/education/best-colleges/paying-for-college/articles/2013/07/03/what-the-stafford-loan-interest-rate-hike-means-for-students

Lobosco, K. (June 30, 2016). Student Loan Intereest Rates Are Going Down. CNN Money. http://money.cnn.com/2016/06/30/pf/college/student-loan-interest-rates/

Wikipedia, Student Loans in the United States. https://en.wikipedia.org/wiki/Student_loans_in_the_United_States

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neil-gorsuch-cartoon-matson

On February 17 2017, the US senate will resume its duties; one of which will be to confirm or reject Neil Gorsuch as President Donald Trump’s choice to be the next US Supreme Court Justice.

Several days ago, the Guardian reported Trump had urged Wall Street Senate Majority Leader Mitch McConnell to eliminate Democrats potential use of the filibuster to stop Gorsuch, which is the so-called nuclear option. The story provided no analysis, and for a good reason, which I’ll get to below.

Anyway, Gorsuch needs sixty out of 100 possible senate votes in order to be confirmed to the post. The nuclear option would eliminate the sixty vote threshold, by instituting a fifty-one vote threshold. The Republicans hold fifty-two seats in the US senate, while the Democrats hold forty-eight. That means eight Democrats must vote to sustain Gorsuch’s nomination, or the candidate will fail. If Gorsuch fails to get sixty votes, the Democrats can filibuster his nomination, putting an end to it, unless the so-called nuclear option is used by Republicans. That’s not going to happen.

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The nuclear option would mean the end of the filibuster in the US senate. The filibuster has been used to ensure a sixty vote majority is always needed to pass any legislation. The result has been years of gridlock. Politicians of both major political parties have abused the filibuster over the years, so as to ensure they can fail to solve the problems that have perplexed the nation, and have a ready made excuse for the folks back home.

Once the sixty vote threshold is eliminated, however temporarily, a simple up and down vote for Gorsuch can take place. However, Republican voters might get a bit angry the nuclear option isn’t being used for their issues. The Republican Party establishment, with control over the white house and both houses of congress, could easily end legalized abortion. That’s what their base wants them to do.

However, doing so would eliminate abortion rights as a wedge issue with which to manipulate the emotions of grassroots Republicans, and divert their attention from other things, such as passing trade treaties that make it easy for US corporations to export US jobs overseas, and redistribute the difference between the older higher US pay and the new lower foreign wages to the 1 percent via higher corporate profits, share prices and surging dividends.

Likewise, the Democratic establishment will not want the nuclear option used. Then they’d need to please the grassroots of their base for a simple up and down vote can occur over numerous issues that conveniently cannot reach the sixty vote threshold. This includes a vote for amnesty of undocumented immigrants. A vote for the Dream Act can occur. A vote for a renegotiated NAFTA can take place. A vote to raise tariffs on US goods manufactured overseas and exported to the United States can occur. A vote to raise the minimum wage would be a great opportunity. A vote to rein in the excesses of Wall Street can be had. A vote to tie CEO compensation to corporate crimes can take place, such as corporate money laundering of Mexican drug cartel money.

The Republican and Democratic establishments, which are the major corporations, Wall Street executives, and billionaire investors who control the politicians of both political parties, will not want to see an aroused Republican base demanding simple majority votes on issues dear to their hearts, and which have been carefully cultivated by the corporate media. That would be against the financial interests of the establishment members. So, too, would the nuclear option be against their interests.

Like the conservative news media outlets, these issues are things the Guardian editors dare not mention. The Guardian is regarded as a liberal newspaper, and so the aim of the story is to raise the interest of liberal readers. However, the first duty of any editor is to edit and omit all news stories with a view to what the news ought to be, and that is closely related to the second duty of an editor, which is to never offend advertisers. The advertisers in major media news outlets are largely politically and financially powerful corporations. The loss of their advertising dollars would be a sharp blow to any news media outlet, such as the Guardian. The Guardian editors must walk a tightrope; keep liberals reading, while pleasing major corporate advertisers.

batshit-insane-donald-trump-supporter-moments

So expect the Democratic establishment to come up with at least eight Wall Street senators willing to vote for Gorsuch to avoid the nuclear option. Expect Wall Street Senator Ron Wyden to be the first to cross the aisle on behalf of Gorsuch to avoid raising the hopes of Democratic and Republican voters everywhere should the nuclear option be used.

 

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