The average increase in real income reported by the bottom 90 percent of earners in 2011, compared with 1966, if measured at one inch, would extend almost five miles for the top 1 percent of the top 1 percent.
“Well, it’s much worse, because like 2008 you have an economic and financial crisis, but unlike 2008, you’re running out of policy bullets. In 2008, you could cut rates from 5%-6% down to zero, do QE1, QE2, QE3, you could do fiscal stimulus up to 10% of GDP, you could backstop a guarantee bailout of banks and everybody else. Today, more QEs are becoming less and less effective because the problems are of insolvency not illiquidity. Fiscal deficits are already so large that everybody has to cut them, not increase them. And you cannot bail out the banks because 1) there is political opposition to it, 2) governments are near insolvent and they cannot bail out themselves, let alone bail out the banking system.
“So the problem is that we are running out of policy bullets. We’re running out of policy rabbits to pull out of the policy hats compared to 2008.
“So if a freefall of markets and economy does occur, you don’t have any more of a safety net of enough policy bullets to try to absorb the shocks, because we’ve been spending the last 4 years using 95% of those bullets. So we are running out of bullets.”
A new report by the Annie E. Casey Foundation finds that nearly 8 million children were living in high-poverty areas in 2010 (the latest data available), a 25 percent increase since 2000. The report noted that “research has shown that even when family income is held constant, families living in areas of concentrated poverty are more likely to struggle to meet their children’s basic material needs,” including food, housing, and health care. “The recession has really set back much of the progress that was made in the 1990s when poverty went down,” said Prof. Robert Sampson.
The Occupy Movement brought much-needed attention to the injustice of our economic system, but what are the alternatives to the status quo? Join Transition Berkeley for an enlightening evening introducing some exciting innovative solutions that help build community and a better world. Meet panelists Marco Vangelisti (Slow Money), Mira Luna (Time Banks-Bay Area Community Exchange), Alpha Lo (Gift Circles), and others – and come away inspired and informed about new ways you can be part of positive alternative economies.
Time: 7pm – 9pm
Location: Ecology Center, 2530 San Pablo Ave, at Dwight Way, Berkeley
Donations to Transition Berkeley will be gratefully accepted to support our work in the community.
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This week, Occupy Our Homes, an outgrowth of the Occupy Wall Street movement, successfully helped a 78 year-old former civil rights activist in Atlanta stay in her home, after she was threatened with foreclosure by JP Morgan Chase (while the bank was simultaneously touting its commitment to the values of Dr. Martin Luther King Jr.). Meanwhile, in Detroit, Occupy Our Homes has successfully prevented four foreclosures and is locked in on a fifth, as Michigan Radio reports:
The “Occupy our Homes” movement has taken up the cause of Fred Shrum, another homeowner facing foreclosure in Metro Detroit.
The group is a coalition of anti-foreclosure groups, organized labor, and other activists with the Detroit “Occupy” movement.
So far, their protests on behalf of people facing foreclosure have helped keep four Metro Detroit families in their homes—including one case where protesters blocked a dumpster that came to clear out the house.
Those families were able to re-negotiate terms with their lenders.
Now, the group wants to help Shrum. The Dearborn Heights homeowner sought a mortgage modification when he had to take a pay cut and undergo surgery. But after what he calls a long and confusing back-and-forth with mortgage servicer Wells Fargo, Shrum didn’t get the modification–and now faces eviction.
In cities as far apart as Atlanta, Rochester, and Cleveland, Occupy protesters have prevented foreclosures, which are starting to pick back up again across he country. Foreclosures increased by 8 percent last month, with extremely steep jumps in some states. The New York Federal Reserve has estimated that 3.6 million foreclosures will take place over the next two years.
Occupy the SEC, a working group affiliated with Occupy Wall Street, has submitted a 325 page comment letter to the Securities and Exchange Commission calling for the strict enforcement of Section 619 of the Dodd-Frank Act, known better as the Volcker Rule. “Like much of the 99%,” reads the letter, “we have bank deposits and retirement accounts that are in need of protection through vigorous enforcement of the Volcker Rule,” which would impose new limits on the amount of proprietary trading that banks and other financial institutions can legally engage in. The comment letter—which was drafted during weekly meetings held since November—contains over 300 footnotes and 20 pages of proposed improvements to the regulation.
While foreclosure rates hit a four-year low in 2011, the early signs for 2012 don’t look good when it comes to housing, as banks have begun to work through a backlog of foreclosures that were delayed by the foreclosure fraud scandal. In fact, the New York Federal Reserve anticipates that 3.6 million foreclosures will occur in the next two years, piling on to the 1 million in 2010 and the 800,000 last year. “The ongoing weakness in housing has made it more difficult to achieve a vigorous economic recovery,” said New York Fed President William Dudley. “Housing has inhibited economic activity through a number of channels. ” (HT: Realty Biz News)
While attention has been focused on the activities of that great vampire squid, Goldman Sachs, investment firm BlackRock has been quietly taking over the American economy. In a presentation scheduled for 2:30 pm on Saturday, January 7 at the Labor and Employment Relations Association meetings at the Palmer House in Chicago, Professor Gerald Davis of the University of Michigan’s Ross School of Business documents the extensive reach of BlackRock.
Billionaire Stephen Schwarzman, Poster Child For Tax Loopholes, Says Poor People Lack ‘Skin In The Game’ On Taxes
Our guest blogger is Seth Hanlon, Director of Fiscal Reform at the Center for American Progress Action Fund.One of Mitt Romney top fundraisers and fellow 1-percenter Stephen Schwarzman was recently on television questioning the civic involvement of nearly half of Americans. Asked on Bloomberg TV whether he would be willing to pay higher taxes to help solve the country’s fiscal challenges, the billionaire Schwarzman responded by pointing at the approximately 45 percent of households who will not owe income taxes this year (an abnormally high number due to the recession) and said:
You have to have skin in the game….The issue is the concept that we’re all in this together, solving problems together…. The concept that half of the public isn’t involved with the income tax system is somewhat odd, and I’m not saying how much people should do, but we should all be part of the system.
This “skin in the game” myth, which implies that people who don’t owe federal income tax in a given year don’t contribute to the public good, is both factually misleading and fundamentally insulting. And it’s particularly offensive coming from a guy who’s been the most zealous defender of a loophole that allows billionaires like him to pay a lower federal tax rate than many middle-class workers.
First, all Americans pay taxes. The “tax system” Schwarzman refers to includes federal payroll taxes and state and local sales taxes, which claim a bigger share of income from those in the middle and bottom than from those at the top. All told, even the very poorest quintile pays about a sixth of their modest incomes in taxes. These other, more regressive taxes may not be noticeable to billionaires like Schwarzman, but the fact that everyone pays them shows that we are all already “part of the system.”
Moreover, it’s likely that many families won’t owe federal income tax this year precisely because they have too much skin in the game. Among the major reasons a household might not owe income taxes:
– They worked (paying both income and payroll taxes) for years or even decades but lost their jobs in the Great Recession and saw their incomes fall under the low thresholds where the income tax kicks in.
– They worked their whole lives (again, paying taxes on their wages) but are now retired and rely principally on Social Security benefits, which are mostly untaxed.
– They are students and their income-earning years are mostly ahead of them.
– They work at low-paying jobs while raising children, and qualify for the Earned Income Tax Credit. (Tax data shows that most EITC recipients only claim the credit for short periods; on net, recipients pay hundreds of billions in federal income tax over time.)
What’s particularly galling is to hear Schwarzman, of all people, sermonize about how low-income people need to pay higher income taxes to prove that they have skin in the game. Schwarzman, co-founder of the Blackstone Group private equity firm, is the most zealous defender — and probably one of the biggest beneficiaries — of the “carried interest” tax loophole.
This loophole allows some of the world’s richest people, among them private equity and hedge fund managers, to treat the bulk of their income as capital gains. That means most of their income is taxed at less than half the top income tax rate, and exempt from payroll taxes to boot.
Schwarzman in 2010 infamously compared President Obama’s proposal to close the carried interest loophole to Hitler’s invasion of Poland, and declared of his industry’s lobbying efforts, “It’s a war.” The proposal was defeated in Congress.
If he’s really in the spirit of “solving problems together,” Schwarzman should stop repeating myths about less fortunate Americans not having skin in the game, and spend some time thinking about whether billionaires like him really need or deserve special tax breaks.
The sluggish economy pushed down U.S. birth rates last year and immigration reached the lowest levels since 1991, combining to lead to the slowest population growth in the U.S. since 1945, when the population actually dropped by 0.3 percent. Between April 2010 and July 2011, the U.S. population grew by 2.8 million people, or 0.7 percent, according to the Census Bureau. And the net increase of immigrants in the U.S. was 703,000, down from a peak of 1.2 million in 2001.