VOTE YOUR INCUMBENT OUT OF OFFICE!!!!!
Below you'll see the issues for this session and my comments. What will also happen is that your incumbent will vote for the same leaders Miller and Busch that have held the office for decades. These people are the ones making Maryland a corporate state with huge wealth inequity and it is the delegates and the senate pols from across the state who vote for them each year. Stop sending your incumbent back to do this.....they are not cute and friendly civil servants.....they are killing democracy with quasi-government non-profits and corporate fraud and corruption!!!
10 big topics for the Maryland General Assembly
Wind energy, fiscal concerns, transportation taxes and gun control are among the top issues facing the Maryland General Assembly, which begins its annual 90-day session Wednesday.
You know how a corporate pol handles fracking? Third Way corporate pols in Maryland pretend they are working against it by placing a hold on drilling while pushing using Maryland ports as an exporting terminal for natural gas!! Our legislature has yet to fund a baseline study for Marcellus Shale water quality. This relatively cheap testing is what is needed to take fracking companies to court for contaminating the water table. All across the country the public is taking these companies to court for this only to be told there was no baseline study proving those chemicals weren't always there....and your pols are making sure that data isn't here in Maryland as well as WVA and PA are fracking away and seepage will assure contamination. I am told Maryland isn't fracking because there are no good sites in Maryland and for no other reason. Also, as I said, Maryland pols are already hinting at making Maryland a site for exporting natural gas......WE DO NOT WANT OUR ENERGY PRICES RAISED BY GLOBAL MARKETS AT A TIME WE NEED TO CONSERVE AND PROTECT OUR ENVIRONMENT!!!
'Fracking' for natural gas is polluting ground water, study concludes A Duke University study finds high methane levels in ground water near where fracking, or hydraulic fracturing, has occurred. Fracking is a controversial practice to extract natural gas from shale.
By Mark Clayton, Staff writer / May 9, 2011
In this April 23, 2010 photo, a Chesapeake Energy natural gas well site is seen near Burlington, Pa., in Bradford County. So vast is the wealth of natural gas locked into dense rock deep beneath Pennsylvania, New York, West Virginia and Ohio. But freeing it requires a powerful drilling process called hydraulic fracturing or 'fracking,' using millions of gallons of water brewed with toxic chemicals that some fear threaten to pollute ground water.
Methane levels were 17 times higher in ground water near areas where shale-gas "fracking" wells had been drilled in Pennsylvania, compared with areas where no gas drilling had occurred, a new study has found.
- New warning of poisonous chemicals in natural gas 'hydrofracking'
- Fracking for natural gas: EPA hearings bring protests
- EPA to natural gas companies: Give details on 'fracking' chemicals
- The Monitor's View: Yes, let's frack – with caution
- 'Fracking': Did Energy Department report clear up controversy?
- Controversial path to possible glut of natural gas
Duke University researchers analyzed methane gas in 68 private ground-water wells across five counties in Pennsylvania and New York. The study cited "evidence for methane contamination of drinking water associated with shale-gas extraction."
In shale-gas extraction, water is mixed with chemicals and sand and is injected at high pressure deep into shale formations, which then releases natural gas.
MONITOR QUIZ: News quiz for May 1-7, 2011
The peer-reviewed study, which is being published in the Proceedings of the National Academy of Sciences, is one of the first to conclude that hydraulic fracturing is polluting ground water. And it’s likely to be used as ammunition in court by those opposing drilling in sensitive watersheds.
The hydraulic fracturing approach has dramatically increased available US reserves of natural gas by unlocking gas that was previously trapped in shale formations from the mid-Atlantic to Texas to Colorado. But environmentalists and local residents have long claimed that fracking pollutes ground water with methane as well as with chemicals in the injection fluids.
The Duke researchers said that the presence of methane likely was due to its escape from faulty drill casings.
While the study found high methane levels, it did not find any evidence that the chemicals injected at deep levels to fracture the shale had moved upward to pollute relatively shallow ground water.
"We found no evidence for contamination of drinking-water samples with deep saline brines or fracturing fluids," the study found. "We conclude that greater stewardship, data, and possibly regulation are needed to ensure the sustainable future of shale-gas extraction and to improve public confidence in its use."
Even so, the study was immediately attacked by natural-gas industry lobby groups. They zeroed in on the lack of base-line data to further corroborate that the higher methane levels were caused by drilling and were not naturally occurring.
“It’s amazing these guys are this comfortable making these kinds of conclusions with a data set this small, no random sampling, and no baseline information to speak of whatsoever," said Chris Tucker, a spokesman for Energy in Depth, in a statement. Energy in Depth is a drilling industry lobby group.
Researchers said that while they lacked base-line data, the higher levels of methane within one kilometer of nearby gas wells were so strongly correlated statistically that it would be difficult to conclude that they were caused by anything else.
"At least some of the homeowners who claim that their wells were contaminated by shale-gas extraction appear to be right," Robert Jackson, lead author of the study, said in a statement.
Environmentalists hailed the study, which comes on the heels of a Cornell University study that found that the overall process of collecting shale gas produced more greenhouse gases than many had expected. More research is needed, the environmentalists said.
"It comes as no surprise that natural gas is not as clean as the industry pretends," says Deborah Goldberg, an attorney with Earthjustice, an environmental group. "The gas industry has made it virtually impossible to do base-line testing because in order to do that, researchers need to know what they're testing for – not just methane, but the variety of other contaminants being injected into the ground."
Chemicals from the fracking fluids, she adds, are likely to appear decades from now as they work their way up from deeper levels.
Hydraulic fracturing for natural gas is being conducted in shale formations in 32 states, according to an Earthjustice tally. New York has blocked the controversial practice pending results of an environmental review later this year. The Environmental Protection Agency is conducting a study whose results are not expected until 2012.
Know why the state budget is doing better this year? All of the awards from financial fraud, from subprime to LIBOR went primarily into the state general fund and not to the communities that were victims of the fraud. The general fund is sending hundreds of millions out as corporate tax credits so these banks will simply get these fraud penalties back in these tax breaks. Our Third Way corporate pols in Maryland are great Wall Street corporate players!!! Run and vote for labor and justice candidates.
Maryland gets $1 billion Mortgage Settlement
March 13, 2012 By Maryland Reporter
Attorney General Doug Gansler told lawmakers Monday that the ink was still drying on the state’s $1 billion mortgage settlement with the five major banks — Wells Fargo, GMAC, Bank of America, JP Morgan Chase, and Citibank.
“This is a timely briefing because the agreement was literally filed about an hour ago,” Gansler told the House Economic Matters Committee.
Gansler said the state gave up all rights to sue the big five banks for servicing and originating bad mortgage claims, but gained 42 pages of new bank standards for servicing loans in Maryland, like having an individual at the bank contact homeowners when they are in trouble with a home loan.
The state keeps the right to pursue criminal charges against the banks for loan fraud, Gansler said. He indicated the state was interested in going after lawyers involved in the robo-signings.
The state did not give up any rights to fair-housing claims or individual claims, Gansler said.
“The biggest thing we did not give up is securitization claims,” Gansler said. “The banks were packaging sub-prime loans they knew would never be satisfied, and sold them to corporate and individual investors. We will be able to go after those claims in the future.”
Gansler said Maryland was the sixth hardest-hit state in the country for foreclosures and consequently got the sixth-largest settlement, larger than New York’s.
<strong>Help is on the way</strong>
Help is us on the way to people underwater on their mortgages as well as Marylanders who have already lost their homes. Gansler said four pools of money would be available as soon as staffs were set up to distribute them.
The largest pool of money is around $810 million for those on the “brink of foreclosure.” The settlement requires that at least $485 million go to reducing principal and the rest can go to loan modification and short sales, Gansler said. Maryland Consumer Rights Coalition reports that almost none of this money has been used as of yet for mortgage adjustments....it is still in the state's general fund making the budget look flush. THESE POLS ARE ANIMALS!!!!
He said formulas will be established to determine who is likely to go into foreclosure in the near future.
The second pool of money sets aside $64 million for people who are current on their loans but can’t refinance at lower interest rates because they owe more on their home than the current appraised value.
“That money will go to people who are currently underwater,” Gansler said. “Their monthly payments will be dramatically reduced.” He said the banks were happy with this portion of the settlement because it holds down the number of foreclosures in the state.
The third fund established under the settlement makes $59 million available for housing projects.
Gansler said a task force has been setup to consult with government agencies and nonprofits to determine the best use of the money.
“We want to make sure the money is effectively and efficiently used,” Gansler said.
The fourth pool of money will provide $1,800 to $2,000 to Marylanders who have already lost their homes to foreclosure.
“That doesn’t sound like a lot of money for someone who’s been foreclosed on,” Gansler said.
He said homeowners can still pursue litigation against the banks for fraud.
“This is just extra money they get from the banks,” Gansler said.
Wonder where the Transportation Trust fund for Maryland went? They aren't telling as no public demands for accountability has been met. We know this....the affluent Washington beltway has had lots of transportation projects completed as the rest of the state has been left with projects on hold. A new Montgomery County transit system and an ICC toll road may well have eaten the entire Trust. So who will pay to rebuild this transportation trust? We have tolls on roads, tolls on bridges all increased and now higher gas taxes....all hitting the middle and lower class the hardest. Gas taxes pay for transportation infrastructure so what if you have an electric or hybrid car......you win a free pass or lighter burden in maintaining the roads.....the gas guzzlers owned usually by the lower class pay the way. Maryland has the most regressive tax policy in the country with gambling and regressive fees and tolls that hit the middle/lower class with much of the revenue burden in the state. Could that be one of the reasons for wealth inequity in Maryland?
TAX THE WASHINGTON SUBURBS TO REPLENISH THE TRUST FOR BUILDING ACROSS THE STATE!!!
Oregon wants to tax hybrid drivers who aren't buying enough gas
The Ford C-Max Hybrid SEL delivers lower mileage than some of its rivals. Mike Bertha, Philly.com
Posted: Thursday, January 3, 2013, 8:39 AM In Oregon, state officials have proposed a tax on folks who drive energy efficient cars because they're not buying enough gas. The state uses money generated from taxes at the pump to repair roads and bridges. But, people who drive hybrids can get more than 55 miles per gallon and, subsequently, aren't paying as much tax because they're filling up less frequently. So, Oregon officials are proposing that people who own hybrids should pay a per-mile tax. How would the drivers report the number of miles they've acrued? It's 2013, so a smartphone app, of course. The tax rates would be left up to the state's lawmakers, who could opt for a flat rate, instead. [KPIC]
School construction in Baltimore is all about tying many of our public schools to a $2.4 billion credit bond municipal loan to Wall Street. Remember, the economy is at the same House of Cards level as 2007 with $600 trillion in derivatives leverage even riskier than before and all levels of government maxed with budget strains. Economists predict we will see another US collapse in the next few years. SO WHY ARE THESE THIRD WAY POLS TYING OUR SCHOOLS TO WALL STREET FINANCIAL INSTRUMENTS RATHER THAN SIMPLY SHOUT FOR THE MONEY STOLEN IN FRAUD AND NEEDING TO COME TO THE CITY ALREADY? Baltimore has plenty of money owed it that never makes it here. We have a state that allows money that has been awarded by courts to underserved communities to never arrive.....they simply are added to the state general fund. WE DO NOT WANT OUR SCHOOL SYSTEM TIED TO WALL STREET!!!
Muni Debt Is Bubble Near Bursting, Marketfield’s Aronstein Says
By Dunstan McNichol - February 5, 2010 16:09 EST
Feb. 5 (Bloomberg) --
The $2.8 trillion municipal bond market is a bubble about to burst, as housing and technology did in the past 10 years, said Michael Aronstein, the money manager whose Marketfield Fund returned 31 percent in 2009 by betting correctly on commodity-price swings.
Lulled by ready access to low-cost credit, politicians have piled up unsustainable debt service that the public will soon demand they stop paying, he said.
Bankers are selling municipal bonds based on unrealistic assumptions of population and revenue, and will be held accountable when they can’t be repaid, he said in an interview. Aronstein also saw weakness in emerging markets such as China and India, which have been saturated by years of investment and will be harmed as investors return funds to the U.S. to capitalize on a strengthening dollar.
“I think we’re getting quite close,” he said of the collapse of the municipal market. “You’ll see people trying to withdraw money from the municipal bond funds. The big risk comes when you start seeing the tightening credit cycle.”
Aronstein, who manages the $102 million Marketfield Fund and is chief investment strategist at Oscar Gruss & Son Inc. in New York, recommended buying credit default swaps on debt issued by California, the U.S.’s lowest-rated state. He said investments in so-called BRIC Index funds, funds based on returns from Brazil, Russia, India and China, will prove costly because the opportunities for realizing gains in emerging markets has passed.
The 56-year-old Aronstein predicted the collapse of commodity prices in 2008, then reversed course in the first quarter of last year, putting one-fourth of his fund’s assets in commodities such as palladium and zinc. By the end of the year, the metals had returned more than 50 percent.
Municipal finance faces a collapse because the public sector is relying on “unlimited access” to credit, Aronstein said. That access will dry up as the cost of debt service begins to consume unmanageable shares of government budgets, prompting taxpayers to demand cuts in bond payments.
“There’s always a feature in the economy that lives off its credit,” he said, citing the technology and housing sectors. “The next phase of it is government. They’re operating under the same kind of illusion of infallibility and unlimited access to credit.”
To mitigate future public excesses, Aronstein said, legislation should be enacted that would hold elected officials to the same standards of fiduciary accountability and conflict of interest restrictions as money managers, he said.
To contact the reporter on this story: Dunstan McNichol in New York at email@example.com.
Maryland is the most corporate and captured state in the union and it is that way in large part by Martin O'Malley.....a possible Presidential candidate in 2016. Look at Maryland's campaign finance laws being considered this session. Notice that it increases donations to $25,000 at a time when ordinary people are shouting loudly against these kinds of big donations. Let's be clear....Maryland has absolutely no oversight of any government business so saying there will be laws for more oversight is a window-dressing for the object of the legislation and that is this lifting of donations. Run and vote for labor and justice candidates next elections....these guys are dirty!!!
Panel discusses raising Maryland campaign contribution limits
Posted: Wednesday, June 20, 2012 10:00 am | Updated: 11:22 am, Wed Jun 20, 2012.
By LEN LAZARICK, Maryland Reporter
A commission studying Maryland’s campaign finance laws appears likely to recommend raising current limits on campaign contributions, which haven’t been increased in 19 years.
At an Annapolis meeting Monday, the commission took no formal vote on a final recommendation, but seemed to reach a consensus on raising the amount an individual may contribute to state election campaigns during a four-year election cycle from $10,000 to $25,000.
The new rule was proposed by Del. Jon S. Cardin, D-Baltimore County, a commission member who chairs the election law subcommittee of the House Ways and Means Committee.
The commission also reached consensus on raising the limit for any single candidate from $4,000 to at least $5,000 or even $7,000 in any four-year cycle. Indexing the limits to inflation also was discussed.
“The aggregate amount is a much more meaningful number” than the limit on donation to a single candidate, Cardin said. “Most people are making contributions of significantly smaller amounts over a term.”
Commission member Marty Madden, former Republican leader in the state Senate, said any increase in the limits made little difference unless the commission proposed limiting the contributions from limited liability corporations. Every LLC, which real estate developers often create for each project or parcel, is treated as an individual.
This has allowed business owners, particularly commercial developers, to avoid contribution limits by contributing from multiple LLCs under their control.
“We have to look at disclosure at who is behind the LLCs,” Madden said. Currently, these corporations must list only a resident agent, who is often unrelated to the controlling interest behind the LLC.
Attorney Bruce Marcus, the commission chairman, said there is really little distinction in Maryland law between other corporations and LLCs. “There is no reason why they should be treated differently,” he said.
At the start of the meeting, commission member Larry Gibson, a University of Maryland Law School professor and political consultant, said that in the studies that he and his students conducted over the years of the campaign finance laws in neighboring Pennsylvania and Virginia, “no one can find any correlation between any system (of controls) and corruption or perception of corruption.”
Virginia, for instance, “doesn’t pretend to have any limits on contributions,” Gibson said.
At its next meeting July 16, the commission plans to discuss a total ban on contributions from business corporations, as in federal elections. Madden pointed out that 21 states currently ban contributions from corporations, but Maryland has long permitted business contributions.
The commission also discussed banning political contributions from companies doing business with the state, but will take that up again in next month.
Also on the agenda this summer are dozens of items that include public financing of campaigns, controls on independent expenditures in support of candidates and new enforcement procedures for violations of campaign laws.
IN MARYLAND OUR THIRD WAY CORPORATE POLS ARE CREATING A SOCIETY THAT RECRUITS THE BEST OF THE BEST IN THE WORLD THROUGH POLICIES LIKE ALLOWING WEALTHY IMMIGRANTS TO BUY THEIR GREEN CARDS AND CITIZENSHIP, LIKE BUILDING WORLD CLASS PUBLIC UNIVERSITIES DESIGNED TO RECRUIT THE WEALTHY STUDENTS OF THE WORLD WHILE BEING TOO EXPENSIVE FOR MARYLAND CITIZENS, AND ALLOWING A DEVELOPMENT CABAL OF CORPORATE NON-PROFITS TAKE OVER THE GOVERNMENT AT ALL LEVELS....LEAVING MARYLAND CITIZENS NO VOICE!!!
Baltimore's Shadow Government- The Baltimore Development Corporation
"The City of Baltimore Development Corporation (BDC) is a 501(c)(3) corporation contracted with the City of Baltimore to provide economic development services. With a mission to retain and expand existing employers and attract new ones, we work collaboratively within City government, and with private partners, to deliver services that will help your business grow."
From the 11/30/07 Baltimore Sun:
"Baltimore Development Corp. is a nonprofit that holds a contract with the city to craft long-term development strategies and to negotiate with private companies on its behalf. In part because the entity's board is appointed by the mayor, the Maryland Court of Appeals ruled last year that the BDC is a public body.
The agency has negotiated some of the city's most significant development deals, including the convention center hotel that is under construction downtown. It is also overseeing the more recent effort to build a new venue to replace the 45-year-old 1st Mariner Arena."
The BDC has used controversial eminent domain methods to acquire property for the greater good of Baltimore. Does it seem right for a "public" organization that really is a 501(c)(3) corporation to be allowed to go around planning the future of Baltimore and taking buildings away from private owners? Why can't the city do this on its own? Why do we need another government (one that is not accountable to the people) to do this? Where does the BDC get its funding? Couldn't the BDC favor connected developers when it redistributes land and buildings? These are issues that readers of mine have brought up to me. The BDC board and staff is made up of some very well connected individuals.
The BDC is not the only mysterious and seemingly unnecessary quasi-governmental organization in Baltimore. The Midtown Community Benefits District and the Charles Village Community Benefits District are two other groups that come to mind. Both are partially funded by extra property taxes the city has in these areas. Recently the city admitted it made a mistake and had been collecting too much money from property owners. The money is supposed to fund maintenance services for the areas. Of course the city should already be properly maintaining these areas. Does all the money collected go to maintenance services? If it does not where else is it going? According to this older article from the City Paper the money is going to quite a few people.
There you have it. I am not a conspiracy kind of guy at all. I think the intent of these groups was probably good. I just do not see why we need bureaucracies within bureaucracies. Baltimore has a very inefficient bureaucracy, that problem is not solved by creating quasi-governmental bureaucracies within it. The setup of the BDC makes it especially prone to corruption and favoritism. Who are all these quasi-governmental groups really accountable to?
We must remember that the major goal for Third Way corporate democrats that hold the leadership in all of Maryland politics is developing the next Wall Street global bubble and that is education businesses and global health systems.
To do that you need people willing to take what all Americans see as public institutions that should not be profit-driven and should work in the public interest and turn these institutions into private sector businesses driven by profit-maximization. So, to do this you will place corporate people in leadership positions while pushing academics out of these positions......and you therefore must pay them more. That is for what O'Malley has worked his entire career and as he has delivered Maryland totally to that purpose, this is why he was tapped for higher office.
Whether the U of M turn to the Big 10 or the much maligned Indy race, these Maryland corporate pols see policy as making Maryland international news. This idea of professionalizing all public operations has to do with creating a tiered class within America much like that seen in Third World countries. When you have an administrative sector receiving inflated salaries much like the private sector CEOs, you buy loyalty at a time you are trying to transition the US from democracy to plutocracy....when you impoverish the masses you need a few committed administrators holding the line!!! WE ARE SEEING THE LOWER-LEVEL WORKERS CONTRACTED OUT AND PAID POVERTY WAGES.
Six-figure state salaries raise concerns Originally Published in the Examiner Government Transparency
by Hayley Peterson, Staff Writer
MPPI IN THE NEWS
AUGUST 1, 2012
Government watchdog groups are growing concerned about the lofty salaries that some state employees are paid in Virginia and Maryland.
More than 11,500 state employees earn more than six figures annually -- 6,194 in Virginia and 5,501 in Maryland, The Washington Examiner reported Wednesday. Of those, 1,165 earn at least $200,000. Most of the top earners are higher education and medical professionals, according to state records.
"In these times of austerity these kinds of salaries seem out of line," said Kimberly Burns, president of the nonprofit group Maryland Business for Responsive Government. "Public service is a very valiant and needed part of society, but some of these salaries seem extreme." University of Maryland at Baltimore President Jay Perman is earning a base salary of $710,000 and Virginia Tech professor Pendleton Montague is earning $387,600.
"I could only aspire to make that kind of money in the private sector," Burns added.
By contrast, former Maryland state employee Neil Bergsman said that when he worked for the government, he was earning six figures -- and yet it was one-third of the salary that someone with a similar job in the private sector would be making. Bergsman was formerly the chief financial officer of the Maryland Department of Juvenile Services.
"Maryland state government compensation is in line -- and in fact, I think below -- comparable with private-sector positions," said Bergsman, now director of the Maryland Budget and Tax Policy Institute, a nonprofit think tank.
Maryland Public Policy Institute President Christopher Summers argued that when pension benefits are factored into state worker salaries, then state workers appear better off than private-sector employees. About 100,000 employees work for each state.
"Surprise, surprise: It pays to be a Maryland state government worker," Summers said. "This has been known for some time."
Government workers' pension benefits were buffered from the recession, while many private-sector workers, most of whom are enrolled in 401(k) plans that are directly affected by market performance, saw their retirement savings obliterated by the recession.
Summers attributed the competitive salaries of government workers, at least in Maryland, to strong public sector unions.
But in Virginia, union membership isn't required as a function of state employment, and yet state workers' salaries are comparable with those in Maryland.
"There is no check and balance on what [government] employees get," said Fairfax County resident Frederick Costello, a retired scientist and member of the Fairfax County Federation of Citizens Associations. "I don't know where it's going to stop."
PLEASE MAKE THIS COMING YEAR ABOUT BUILDING DEMOCRATIC ORGANIZATION IN YOUR COMMUNITIES......THESE INCUMBENT POLS ARE NOT YOUR FRIENDS AND WILL NOT STOP GIVING ALL THAT IS PUBLIC TO THESE 1%. THIS ARTICLE DOES A GOOD JOB GIVING THE BIG PICTURE.....LET'S TURN THIS ALL AROUND BY RUNNING AND VOTING FOR LABOR AND JUSTICE CANDIDATES IN NEXT ELECTIONS!!!!!!
The Financial War Against the Economy at Large Sunday, 06 January 2013 06:48 By Michael Hudson, Naked Capitalism | News Analysis
The New York Stock Exchange on Wall Street. (Photo: kainet)Today’s economic warfare is not the kind waged a century ago between labor and its industrial employers. Finance has moved to capture the economy at large, industry and mining, public infrastructure (via privatization) and now even the educational system. (At over $1 trillion, U.S. student loan debt came to exceed credit-card debt in 2012.) The weapon in this financial warfare is no larger military force. The tactic is to load economies (governments, companies and families) with debt, siphon off their income as debt service and then foreclose when debtors lack the means to pay. Indebting government gives creditors a lever to pry away land, public infrastructure and other property in the public domain. Indebting companies enables creditors to seize employee pension savings. And indebting labor means that it no longer is necessary to hire strikebreakers to attack union organizers and strikers.
Workers have become so deeply indebted on their home mortgages, credit cards and other bank debt that they fear to strike or even to complain about working conditions. Losing work means missing payments on their monthly bills, enabling banks to jack up interest rates to levels that used to be deemed usurious. So debt peonage and unemployment loom on top of the wage slavery that was the main focus of class warfare a century ago. And to cap matters, credit-card bank lobbyists have rewritten the bankruptcy laws to curtail debtor rights, and the referees appointed to adjudicate disputes brought by debtors and consumers are subject to veto from the banks and businesses that are mainly responsible for inflicting injury.
The aim of financial warfare is not merely to acquire land, natural resources and key infrastructure rents as in military warfare; it is to centralize creditor control over society. In contrast to the promise of democratic reform nurturing a middle class a century ago, we are witnessing a regression to a world of special privilege in which one must inherit wealth in order to avoid debt and job dependency.
The emerging financial oligarchy seeks to shift taxes off banks and their major customers (real estate, natural resources and monopolies) onto labor. Given the need to win voter acquiescence, this aim is best achieved by rolling back everyone’s taxes. The easiest way to do this is to shrink government spending, headed by Social Security, Medicare and Medicaid. Yet these are the programs that enjoy the strongest voter support. This fact has inspired what may be called the Big Lie of our epoch: the pretense that governments can only create money to pay the financial sector, and that the beneficiaries of social programs should be entirely responsible for paying for Social Security, Medicare and Medicaid, not the wealthy. This Big Lie is used to reverse the concept of progressive taxation, turning the tax system into a ploy of the financial sector to levy tribute on the economy at large.
Financial lobbyists quickly discovered that the easiest ploy to shift the cost of social programs onto labor is to conceal new taxes as user fees, using the proceeds to cut taxes for the elite 1%. This fiscal sleight-of-hand was the aim of the 1983 Greenspan Commission. It confused people into thinking that government budgets are like family budgets, concealing the fact that governments can finance their spending by creating their own money. They do not have to borrow, or even to tax (at least, not tax mainly the 99%).
The Greenspan tax shift played on the fact that most people see the need to save for their own retirement. The carefully crafted and well-subsidized deception at work is that Social Security requires a similar pre-funding – by raising wage withholding. The trick is to convince wage earners it is fair to tax them more to pay for government social spending, yet not also to ask the banking sector to pay similar a user fee to pre-save for the next time it itself will need bailouts to cover its losses. Also asymmetrical is the fact that nobody suggests that the government set up a fund to pay for future wars, so that future adventures such as Iraq or Afghanistan will not “run a deficit” to burden the budget. So the first deception is to treat only Social Security and medical care as user fees. The second is to aggravate matters by insisting that such fees be paid long in advance, by pre-saving.
There is no inherent need to single out any particular area of public spending as causing a budget deficit if it is not pre-funded. It is a travesty of progressive tax policy to only oblige workers whose wages are less than (at present) $105,000 to pay this FICA wage withholding, exempting higher earnings, capital gains, rental income and profits. The raison d’être for taxing the 99% for Social Security and Medicare is simply to avoid taxing wealth, by falling on low wage income at a much higher rate than that of the wealthy. This is not how the original U.S. income tax was created at its inception in 1913. During its early years only the wealthiest 1% of the population had to file a return. There were few loopholes, and capital gains were taxed at the same rate as earned income.
The government’s seashore insurance program, for instance, recently incurred a $1 trillion liability to rebuild the private beaches and homes that Hurricane Sandy washed out. Why should this insurance subsidy at below-commercial rates for the wealthy minority who live in this scenic high-risk property be treated as normal spending, but not Social Security? Why save in advance by a special wage tax to pay for these programs that benefit the general population, but not levy a similar “user fee” tax to pay for flood insurance for beachfront homes or war? And while we are at it, why not save another $13 trillion in advance to pay for the next bailout of Wall Street when debt deflation causes another crisis to drain the budget?
But on whom should we levy these taxes? To impose user fees for the beachfront reconstruction would require a tax falling mainly on the wealthy owners of such properties. Their dominant role in funding the election campaigns of the Congressmen and Senators who draw up the tax code suggests why they are able to avoid prepaying for the cost of rebuilding their seashore property. Such taxation is only for wage earners on their retirement income, not the 1% on their own vacation and retirement homes.
By not raising taxes on the wealthy or using the central bank to monetize spending on anything except bailing out the banks and subsidizing the financial sector, the government follows a pro-creditor policy. Tax favoritism for the wealthy deepens the budget deficit, forcing governments to borrow more. Paying interest on this debt diverts revenue from being spent on goods and services. This fiscal austerity shrinks markets, reducing tax revenue to the brink of default. This enables bondholders to treat the government in the same way that banks treat a bankrupt family, forcing the debtor to sell off assets – in this case the public domain as if it were the family silver, as Britain’s Prime Minister Harold MacMillan characterized Margaret Thatcher’s privatization sell-offs.
In an Orwellian doublethink twist this privatization is done in the name of free markets, despite being imposed by global financial institutions whose administrators are not democratically elected. The International Monetary Fund (IMF), European Central Bank (ECB) and EU bureaucracy treat governments like banks treat homeowners unable to pay their mortgage: by foreclosing. Greece, for example, has been told to start selling off prime tourist sites, ports, islands, offshore gas rights, water and sewer systems, roads and other property.
Sovereign governments are, in principle, free of such pressure. That is what makes them sovereign. They are not obliged to settle public debts and budget deficits by asset selloffs. They do not need to borrow more domestic currency; they can create it. This self-financing keeps the national patrimony in public hands rather than turning assets over to private buyers, or having to borrow from banks and bondholders.