Returning to the Good Times: Alexandria Ocasio-Cortez Proposes Raising Tax Rates on the Rich

There they go again. Congresswoman Alexandria Ocasio-Cortez (AOC) recently suggested the United States should raise the top marginal tax rate on the rich to over 70 percent. Republicans, naturally, have attacked her as being crazy, although all the evidence points toward higher marginal tax rates on the rich produces a stronger United States economy for all citizens, not just the rich ones.

As you can see from the graph above, the higher the tax rate on the rich, the stronger is GNP growth. The same can be said for jobs and wage growth. It can also be pointed out that when the rich have fewer dollars to spend, they have less spare change to bribe politicians with political contributions.

The only crazy people out there on this issue are Republicans, as usual, performing their jobs as lying lap dogs of the rich. As I have been saying for years, there is not a shred of evidence that suggests, as the Republican Party lap dogs proclaim, that lowering taxes on the rich has created a single job, and you can see that from the graph.

There is a ton of evidence in the form of peer-reviewed studies that show AOC is correct.

Paul Krugman recently wrote, “Republicans almost universally advocate low taxes on the wealthy, based on the claim that tax cuts at the top will have huge beneficial effects on the economy. This claim rests on research by … well, nobody. There isn’t any body of serious work supporting G.O.P. tax ideas, because the evidence is overwhelmingly against those ideas.”

Reducing taxes on the rich have always reduced gross domestic product, wages, and job creation. It also creates income and wealth inequality since the rich have more income to burn at buying both Republican and Democratic Party lap dogs, such as Mitch McConnell and Ron Wyden. These guys have voted time and again to redistribute income from the 99 to the 1 percent.

The Case for a Progressive Tax: From Basic Research to Policy Recommendations-Journal of Economic Perspectives

Why one editor won’t run any more op-eds by the Heritage Foundation’s top economist–Columbia Journalism Review

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Who’s afraid of Elizabeth Warren Besides Donald Trump? You Should Not Be Surprised

It looks as though progressive, anti-Wall Street, pro main street, US Senator Elizabeth Warren of Massachusetts is getting ready to make a run to become the next United States president. She has always been the champion of the 99 percent and the scourge of Wall Street criminals.

Warren recently took a DNA test showing she has a small percentage of native American running in her bloodstream. For years President Trump mocked Warren’s claim “that family lore says I have Cherokee blood in me.” Trump, true to his immaturity, has always ridiculed her by calling her Pocahontas. This suggests the president and his billionaire backers are terrified of her, and the polls show why he should be scared of her.

During the presidential primaries in 2016, Trump was the only man standing in the Republican field, while Bernie Sanders was still running hard against eventual nominee and Wall Street favorite Hilliary Rodham Clinton. Polls showed Clinton consistently beating Trump by 5 to 10 points at the time, Meanwhile, polls showed progressive candidate Sanders wiping out Trump by 10 to 20 points.

This suggests a significant number of Republican voters would have preferred Sanders over Trump.

In the actual election, Clinton beat Trump by four million votes but lost the electoral college and the presidency. Warren would likely defeat Trump by a greater amount than Wall Street Hillary.

Trump’s popularity is running at 41 percent. Warren, assuming she develops name recognition and a funding machine as Sanders did, would likely wipe Trump out.

However, getting out of the primaries will be tough for Warren. For starters, the Wall Street billionaires who control the Democratic Party, and in particular its leadership; the Democratic National Committee (DNC), would do just about anything to stop a progressive candidate such as Warren, Bernie Sanders or Oregon’s US Senator Jeff Merkley from ever winning the Democratic primary. Wall Street billionaires are terrified of Warren because she actually wants to put an end to business as usual, which is largely based on corruption.

Should Warren win the Democratic presidential primary in 2020, her most bitter foes will be Trump, the Republican Party, the DNC, the Koch brothers, and almost every living billionaire, and perhaps every living billionaire.

Not since President Franklin Delano Roosevelt will the forces of corruption be so united against one candidate. Want proof? The reliably DNC ally Huffington Post has run stories two days in a row denigrating Warren releasing her DNA test results. The last thing the billionaires want is a high visibility presidential candidate talking about bread and butter issues such as forty years of stagnant wages, massive income and wealth inequality, as well as political corruption, Supreme court corruption, and Wall Street corruption.

The attacks on Warren will come from all sides. The big boys are utterly terrified of her. This is precisely why both the Huffington Post, the New York Times and CNN, bastions of the DNC and its billionaire backers, have viciously attacked Warren for her DNA test. Let the battle begin.

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The Dow is up 40% since Trump took Office? So what is wrong with the US economy?

On June 11, 2018 PresidentTrump tweeted, “Stock Market up almost 40% since the Election, with 7 Trillion Dollars of U.S. value built throughout the economy. Lowest unemployment rate in many decades, with Black & Hispanic unemployment lowest in History, and Female unemployment lowest in 21 years. Highest confidence ever!”

Besides the obvious grammatical errors, what is wrong with the above tweet?

For starters, while the stock market has gone up since Trump became president, it has also gone down. The Dow reached a peak of $26,616 in January 2018 and dropped a couple thousand dollars into the $23,000 to $25,000 range since then. Most of the major sundry stock market indexes have dropped since January, such as the Standard and Poor 500. The exception to this has been the NASDAQ, which peaked on June 12th and has been falling for the past month.

The Trump tax cuts, in effect, haven’t done squat to bolster the stock market bubbles, though they may have delayed the current stock market bubble from completely imploding. As you can see from the graph above, investors and institutions, such as corporations, are borrowing in greater and greater amounts in order to buy shares, thereby keeping share prices higher than they would otherwise be.

In addition, the Republican/Trump tax cuts haven’t done anything to stimulate the US economy. CNBC reports the vast majority of tax cuts the rich and their corporations have received are going toward stock buybacks, dividends, mergers, and acquisitions. Typically, mergers and acquisitions result in job losses. CNBC expects corporations to spend $2.5 trillion this year on these things, and most of that money is coming from the tax cuts and retained earnings.

All of this is being done to enhance share prices, which also jacks up CEO compensation. This means the corporate tax cuts are being used to avert a massive popping of the current stock market bubble, which means we’re nearing bear market and recession territory.

All of which suggests the big money boys are throwing good money after bad, like tossing more money into a failing Ponzi scheme, which is kind of what the US stock markets are.

In effect, the Trump/Republicon tax cuts have not stimulated the economy at all, and, as usual, they are destroying jobs. This also means the economy is puttering along based on the actions of former President Barack Obama that saved the nation from the last horrendous Republicon president and his immense and devastating failures. This means the actions of President Trump have nothing to do with the current recovery since his signature legislative achievement is the tax cuts.

The tax cuts have increased the federal deficit by $1.5 trillion. As Paul Krugman, Nobel Prize-winning economist sarcastically wrote in an op-ed in the New York Times, “Good thing we didn’t invest that $1.5 trillion of deficit spending on providing universal daycare, ending all homelessness in the United States, lifting millions of American children out of poverty, and/or making medication-assisted opioid-addiction treatment easily accessible and affordable for all who need it. Clearly, the private sector has allocated that capital much more efficiently.”

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The Evidence is In: The Trump/Republican Party Tax Cuts for the Rich and Their Corporations Fuel Income and Wealth Inequality

As expected, since the Trump and Republican Party tax cuts were written to benefit the rich and their corporations, only the rich and their corporations are benefiting from them, for the most part. The tax cuts were intended to increase income and wealth inequality in favor of the billionaires and multi-millionaires, and that is precisely what they have done, according to a perusal of a story in the May 11, 2018 issue of the Wall Street Journal (Buybacks Surge, Steadying Market, Wall Street Journal).

The Journal reported “U.S. companies are buying back their shares at a record pace, providing fresh support during a rocky stretch for the stock market when many investors have rushed for the exits. S&P 500 companies that have reported earnings for the first three months of 2018 bought $158 billion of their own stock in the quarter…. About 85% of S&P 500 components (companies which are also known as corporations) have reported so far.”

The Journal reports corporations can do this since the “new tax law” is “freeing up cash.” This is something corporations badly need since total US corporate profits fell during the fourth quarter of 2017. One can be reasonably suspicious that before-tax corporate profits during the first quarter of 2018 might also have fallen, especially since the US and world economies are at the tail end of an economic expansion. Those first quarter statistics are not yet available.

One can be reasonably suspicious that, as I pointed out in a previous story, much of the tax cut money would be used by corporations and the rich to fuel the stock market higher, rather than create jobs building products for which there is no demand.

The S&P 500 peaked at $2853.53 on January 26 of this year. It has been down ever since, influenced to a large degree by the fall in fourth-quarter profits. The Dow also peaked in January and has been down since then. This is likely why investors are fleeing the stock market.

When the Journal reporters write about “investors,” they are not writing about you and me. They are writing about billionaires, multi-millionaires, Wall Street Banks like Goldman Sachs, hedge funds, wealth fund managers, and other financial institutions that invest mostly for rich people.

So corporate managements are buying their own shares and taking them off the market. This is done in order to push share prices higher, which is a simple case of supply and demand. Reduce the supply of shares on the market, and this should jack up prices, so long as no other variables happen to come along. One of which is the decline in corporate profits.

Of course, there is something else CEO’s of corporations are doing to entice investors into the market.

They are taking the savings from tax cuts and offering higher dividends, which are payments made to shareholders. Notice these payments will go mostly to billionaires and millionaires, along with the higher priced shares due to the buybacks.

So the stock market bubble continues thanks to the Trump/Republican tax cuts for the rich and their corporations. Naturally, this only increases income and wealth inequality. Worst yet, with a recession right around the corner, all that money in buybacks and increased dividends is simply throwing good money after bad.

As a final note, I should point out that the Journal reporters (Ben Eisen and Akane Otani) are either stupid, poor reporters, or liars. They write, “The S&P 500 is up only modestly for the year.” Apparently, they do not count the month of January as being part of the year 2018 because that is when the S&P 500 reached its peak value, at least according to Yahoo. On the other hand, they write, “…many analysts believe major indexes would have suffered losses without the support of buybacks.” This is, of course, the purpose of the buybacks.

There is no doubt about the purpose of the tax cuts for the rich; increase income and wealth inequality in their favor and at the expense of the 99 percent. The federal government is now looking at reducing programs for the infirmed, the needy, the elderly, children, and others, in large measure due to the tax cuts. The federal deficit is now growing, thanks to the tax cuts. Fewer taxes collected mean fewer dollars for government programs that benefit anybody except the rich.

The federal government and the United States Federal Reserve Bank will only print up trillions of dollars to save the rich. The rest of us, being cannon fodder for the rich, are expendable.

For more information on this see Breakdown-of-the-26-trillion-the-federal-reserve-handed-out-to-save-rich-incompetent-investors-but-who-purchase-political-power–JohnHively.Wordpress.com

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The 99 Percent is the Left, and That’s What the Corporate Media Doesn’t Want You to Know

There is a lot of talk out of Republican Party circles about the left and its plots to take away our freedoms, such as our guns. However, this is a lie. The left has been dead for decades. There are no popular parties of communists and socialists. Sure, there are a few remaining members of these old parties, but they are hardly a threat to the status quo. Most of them may be FBI informants anyway.

Nowadays, the left is the old political right on bread and butter issues, the environment, and much more. Remember President Richard Nixon? Over forty years ago he was a hard-line conservative who hated communism but made peace with China, ended the war in Vietnam by withdrawing all US troops, signed legislation creating the Environmental Protection Agency, and offered a public option on national health care which was rejected by the Democrats. Nowadays Nixon would be considered politically far to the left. He would be a big letter “COMMUNIST!”

So when we hear talk about the left from say, Fox News, especially on economics and politics, those folks really mean the 99 percent. That’s right! They mean us! In poll after poll the 99 percent want a $15 minimum wage, higher taxes on the rich, an end to free trade agreements that are designed to export millions of US jobs but which benefits the 1 percent almost exclusively, Medicare for all, greater worker and environmental protections, legislation that will strengthen labor unions, and a lot more stuff that would be in interest of the 99 percent, but which would not necessarily be in the interests of the billionaires who control your government, both major political parties, and all of the major news media that keep you blinded to the things the billionaires don’t want you to know about.

So when you hear somebody on television talking about how the left is out to steal your freedoms, like a powerful gang of communists, that really is not true. These groups don’t exist in any serious way. That somebody on television is really out to steal your freedoms by distracting you from the real economic bread and butter issues by focusing your attention on the social issues. That person on the news is a paid employee of the billionaires on the political right. That person has little credibility.

By today’s political right standards, even old arch-conservative Richard Nixon would be a hard-line communist. Nixon was, of course, also a crook who resigned under the very real threat of impeachment. Nowadays, the political servants of the 1 percent can commit all sorts of crimes and get away with it, like torture, waging wars against humanity, and on and on.

Oh my! How things have changed.

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The Trump Tax Cuts, the Current Stock Market Bubble, and the Coming of the Financial Train Wreck of Train Wrecks

The red line in the graph below represents borrowing to buy corporate shares. The blue line represents the growing value of the S&P 500 stock index. Notice the growth in the financial markets is being fueled by record amounts of debt. The growth of both clearly mirrors each other.

Eight months ago, I wrote, “The latest in a long line of stock market bubbles is being fueled by record amounts of debt according to the New York Stock Exchange. This debt is called “buying on margin” (BOM). Notice the acronym of BOM, which is pretty close to bomb, and this current bubble is going to explode. Total BOM hit a record high of $528.2 billion in February 2017.”

By November 2017 (the latest data that is available), total BOM hit nearly $581 billion. Stock prices, in other words, have been bid up with borrowed money, like at an auction.

Once the lunatic Trump tax cuts were passed, the already dangerously obese stock market bubble began expanding even more in anticipation of more after-tax cash going to the rich and corporations, to whom the vast majority of those tax cuts were targeted. This has given corporations and the rich the leverage to borrow on margin even more in anticipation of future increased after-tax earnings.

That is not necessarily always a big problem early in a business expansion when the market is going up, but it’s now late in the ball game. Our economic expansion is 103 months old (as of January 2018), making it the third longest in US history. In terms of numerous indices, such as job, GNP, and wage growth, this is one of the weakest expansions in US history. The vast majority of new income and wealth have gone to the top 1 percent, and not to the 99 percent.

All of this suggests the coming crash is long overdue. When we hit this soon to arrive recession, it should be a train wreck worse than the so-called Great Recession of 2007-09.

November’s total BOM was nearly $80 billion more than twelve months before. This increase is a sign of optimism or foolishness. People and institutions like hedge funds want to get in on the action while the stock markets are rising. What is going to happen when the bubble pops?

Suppose you have $10,000 to invest, so you purchase 100 shares of Home Depot at $100 per share. The market crashes and the share price drops to $40. Now your investment is worth $4,000. That is not a good result, but your investment is still worth something, and can potentially recover if you hang on to it in the long run.

Let’s say you borrow an additional $20,000 from your broker to buy another 200 Home Depot shares at $100 each for a total of 300 shares and at a total cost of $30,000. The market crashes and the share price quickly drops to $40. Now all 300 shares are only worth $12,000 — but you owe your broker $20,000 (plus interest) for borrowing money to buy the stock. The broker calls in his loan. You are forced to sell your shares to get the funds to pay your broker but at the lower share price. You lose $18,000 of your $30,000 investment. But your broker wants the rest of his $20,000 plus interest. You only have $12,000 remaining of your original $30,000 investment, so you owe more than $8,000 to your broker.

So your original $10,000 is wiped out, your loan of $20,000 is annihilated, and you need to come up with $8,000 plus interest to pay back your broker.

During most recessions, it is much more difficult to get credit to pay your broker back, so you may both be out of luck, although you’ll likely be in court defending against him, her or it.

On a massive scale, say trillions of dollars of investments, that’s a recipe for absolute disaster for the whole economy. Corporations of all types (which often borrow to purchase their own shares in order to jack up their share prices), as well as hedge funds, governments, investment banks, commercial banks, small businesses, other wealth management firms, etc…, will likely need to lay off employees in order to pay back the money they owe.

Side Notes

***Let’s also get something straight which the corporate media doesn’t want us to know; tax cuts for corporations are the same as tax cuts for the rich since corporations in great measure pass on their tax cuts to the wealthy via higher after-tax corporate profits, rising share prices and surging dividends.

***As an aside, your government has allowed a conspiracy in restraint of trade in the housing market to be the primary fuel that ignited this current stock market bubble. See The Big Banks Are Manipulating the Housing Market–JohnHIvely.wordpress.com.

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Study Shows the Democratic Party Paid a Massive Price for Letting Labor Unions Die So the Party Could Embrace Wall Street

“With its financial contributions and grassroots organizing, the labor movement helped give Democrats full control of the federal government three times in the last four decades. And all three of those times — under Jimmy Carter, Bill Clinton, and Barack Obama — Democrats failed to pass labor law reforms that would bolster the union cause. In hindsight, it’s clear that the Democratic Party didn’t merely betray organized labor with these failures, but also, itself.”

When Bill Clinton became president he took the party straight into the loving arms of Wall Street executives and investors, and the best way to do that was to get rid of labor unions by exporting tens of millions of labor union jobs to poverty wage nations. It began with Clinton and his Wall Street wife, Hillary, and NAFTA. The difference between the old US wages and benefits and the poverty wage workers in poverty-wage nations have always gone straight into the pockets of the rich via higher corporate profits, rising dividends, and surging share prices.

President Barack Obama followed the Clinton’s footsteps in redistributing income and wealth from the 99 to the 1 percent via this and other legislative paths. Of course, they were assisted in this massive redistribution of income and wealth by such Democrats as Wall Street Senator Ron Wyden, who was ever so happy to join the Republican party stalwarts in doing this. The result was ominous, for the Democratic Party, the nation, and the 99 percent.

Between 1978 and 2017, the union membership rate in the United States fell by more than half — from 26 to 10.7 percent. Naturally, this decline coincides with the redistribution of income and wealth engineered by the entire Republican Party, as well as the Wall Street controlled Democratic Party with such luminaries as Ron Wyden, Earl Blumenauer, Bill Clinton, Hillary Clinton, Barack Obama and Joe Biden. The decline in labor union membership due to exported jobs also fuels the massive income and wealth inequality the United States suffers from today, thanks in large part to Bill and Hillary, Barack and Wyden and other Democratic Wall Street loyalists as Earl Blumenauer.

In a new study that will soon be released as a National Bureau of Economic Research working paper (NBER), James Feigenbaum of Boston University, Alexander Hertel-Fernandez of Columbia, and Vanessa Williamson of the Brookings Institution examined the long-term political consequences of anti-union legislation by comparing counties straddling a state line where one state is right-to-work and another is not. Their findings should strike terror into the hearts of Democratic Party strategists: Right-to-work laws decreased Democratic presidential vote share by 3.5 percent.

This could have been a golden age for American liberalism. The Democratic Party — and the progressive forces within it — have so much going for them. The GOP’s economic vision has never been less popular with ordinary Americans, or more irrelevant to their material needs. The U.S. electorate is becoming less white, less racist, and less conservative with each passing year. Social conservatism has never had less appeal for American voters than it does today. The garish spectacle of the Trump-era Republican Party is turning the American suburbs — once a core part of the GOP coalition — purple and blue.

If the Democratic Party wasn’t bleeding support from white working-class voters in its old labor strongholds, it would dominate our national politics. Understandably, Democratic partisans often blame their powerlessness on such voters — and the regressive racial views that led them out of Team Blue’s tent. But as unions have declined across the Midwest, Democrats haven’t just been losing white, working-class voters to Republicans — they’ve also been losing them to quiet evenings at home. The NBER study cited by McElwee found that right-to-work laws reduce voter turnout in presidential elections by 2 to 3 percent.

The Democratic leadership had a choice; side with the 99 percent or side against them and with the 1 percent. Obama, the Clintons, Wyden and other Wall Street Democrats chose to side with Wall Street and corporate parasites against their own grassroots. Now many of the grassroots have abandoned the Party that no longer represents them. Who can blame them? Oh, that’s right! The Democratic Leadership and their corporate news media blames the grassroots and calls them “deplorables,” but only after the leadership has exported tens of millions of working-class jobs.

http://nymag.com/daily/intelligencer/2018/01/democrats-paid-a-huge-price-for-letting-unions-die.html?utm_source=fb&utm_medium=s3&utm_campaign=sharebutton-b

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