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WEEKLY WONK

Originally Published: 2/7/2015

Obama’s Budget Proposal:  I don’t know why I’m bothering to tell you about this. We all know it won’t go anywhere. Still, I hafta tell ya.

 

Revenues:  Obama is proposing some tax increases on corporations and people receiving income from capital gains. He wants a one-time tax on foreign profits kept overseas by corporations. According to the Washington Post, the tax would be a “one-time mandatory 14% tax on about $2 trillion in profits that corporations have been keeping overseas in order to avoid corporate income taxes here. The tax would be a sizable hit on multinationals and a way to discourage them from parking money in foreign countries.” Check out the chart from the Wall Street Journal on how corporations have “piled up” the money.

 

He also wants to lower the corporate federal income tax rate to 28% from the current 35% and close loopholes. And he wants to increase the capital gains rate to 28% on couples making more than $500,000 a year. It is currently at 23.8%. He also wants to require estates to pay capital gains taxes on securities at the time they are inherited and impose a .07% fee “on the roughly 100 U.S. financial companies with assets of more than $50 billion. (CBC) But he wants to lower taxes on the middle class. “Obama would take the $320 billion that those tax increases would generate over 10 years and funnel them into middle-class tax breaks. His ideas: a credit of up to $500 for 2-income families, a boost in the child care tax credit to up to $3,000 per child under age 5, and overhauling breaks that help pay for college.” (CBS) According to an analysis by the Tax Policy Center, the vast majority of households in the bottom 4 quintiles would pay lower taxes - or receive larger refunds - as a result of these policies.

 

Spending:  In addition to increasing revenues, Obama also wants to increase spending. For the Defense Department, the $35 billion in sequestration cuts would be reinstated and he wants an additional $51 billion “to pay for operations in the conflicts in Iraq and Syria, as well as the continued American military presence in Afghanistan.” (NY Times) That’s a total of $585 billion, “$25 billion more than Congress approved last year,” about $80 billion of which is for spying. (Medium) Obama also wants a 1.2% pay raise for federal employees and troops and he’s proposing consolidating several agencies and increasing the staff. (Washington Post) Most importantly, Obama is proposing about $478 billion over the next 6 years on a public works program - rebuilding roads, railroads, ports, bridges, etc. (Washington Post)

 

Bottom Line:  The NY Times has 3 great charts which demonstrate where Obama’s proposals will take us along with how they comport with what Republicans want. But the bottom line is that, due to expectations of increased economic activity, his proposals would hold the annual deficit to about 2.5% of the GDP - lower than the recommended 3% (see Budget Deficit). It would also hold the total national debt to 73% of GDP. (see National Debt). (Washington Post

 

Personal Data:  President Obama is announcing new rules “requiring intelligence analysts to delete private information they may incidentally collect about Americans that has no intelligence purpose, and to delete similar information about foreigners within 5 years.” (NY Times) Right. And since when do the “intelligence agencies” answer to the president? They’re a government unto themselves.

 

Gaza:  William Schabas, a Canadian law professor who has been chairing the United Nations’ panel investigating possible war crimes “in the 50-day Gaza conflict last summer” has resigned. (TWW, Gaza, 8/23/14; Israel, 8/9/14; Gaza and Israel, 8/2/14; Gaza, 7/26/14; Gaza, 7/19/14) He attributed this decision “to Israeli accusations of personal bias that led to a formal inquiry over whether he should be removed.” Apparently several years ago Schabas said that Prime Minister Benjamin Netanyahu of Israel would be his “favorite” choice as a defendant at the International Criminal Court. (NY Times) Mary McGowan Davis has been appointed to replace him. (Jurist) Davis had served as an Acting Justice of the New York Supreme Court and “has been involved in a variety of matters relating to transitional justice and human rights law since her retirement from the bench.” (American Association for the International Commission of Jurists)

 

Pesticides:  A paper investigating and evaluating endocrine-disrupting chemicals (EDCs) for the European Union (EU) found a link to “fetal abnormalities, genital mutations, infertility, and adverse health effects ranging from cancer to IQ loss.” But, “top EU officials under pressure from big chemical firms which use EDCs in toiletries, plastics, and cosmetics,” buried the report. As many as 31 pesticides are now in use because this report never came to light. The value of the pesticides was probably “billions of pounds.” The Guardian got a copy of the report.

 

Spain:  Tens of thousands of people marched in Madrid last Saturday to show support for the Podemos party - Spain’s anti-austerity party. Could it be heading the way of Greece? (TWW, Greece, 1/31/15) “Podemos (‘We Can’) was formed just a year ago, but produced a major shock by winning 5 seats in elections for the European Parliament in May. It is currently topping opinion polls in the run up to local, regional, and national elections this year.” (Reuters)

 

Surveillance:  The Investigatory Powers Tribunal in Great Britain, the organization that governs the sharing of intercepted electronic communications between Britain and the U.S., has ruled that the bulk of the communications was “unlawful.” It declared that “regulations covering access by Britain’s GCHQ (TWW, Meet GCHQ, 6/22/13) to emails and phone records intercepted by the U.S. National Security Agency (NSA) breached human rights law. . . The ruling appears to suggest that aspects of the operations were illegal for at least 7 years - between 2007, when the Prism intercept program (TWW, Prism, 9/13/14; FISA Court, 8/24/13; Microsoft Corporation, 7/13/13; Surveillance, 6/8/13) was introduced, and 2014.” (Guardian)

 

Fracking:  A couple of weeks ago Scotland banned fracking. (Herald Scotland) Now Wales has banned it, “until its safety is proven.” (Edie)

 

Alabama:  The U.S. Circuit Court of Appeals for the 11th Circuit denied the Alabama attorney general’s motion for an extended stay on the order that a ban on same-sex marriages is unconstitutional. (TWW, Alabama, 1/31/15) The attorney general, Luther Strange, wanted the stay to continue until the Supreme Court reviews the issue. Strange has filed a request with the Supreme Court to block the Appeals Court’s decision. (Reuters)

 

California:  State regulators allowed oil companies “to drill more than 170 waste-disposal wells into aquifers suitable for drinking or irrigation. . . Hundreds more inject a blend of briny water, hydrocarbons, and trace chemicals into lower-quality aquifers that could be used with more intense treatment.” Most of the wells are in the Central Valley, where there’s an historic drought. (San Francisco Chronicle)

 

Illinois:  Chicago is the next Detroit. According to Paul Buchheit, “Chicago is being privatized. Assets are being sold off, Wall Street debt is mounting, and the mayor [Rahm Emanuel (D)] conducts business with multi-millionaire donors who often reap benefits from their connections to City Hall.” (Buzz Flash)

 

Texas:  The Supreme Court halted the execution of convicted murderer Lester Bower “as it considers whether to hear his full appeal including the assertion that his 3 decades on death row amounted to cruel and unusual punishment.” (Reuters)

 

WisconsinGovernor Scott Walker (R) has proposed his new budget. He wants to slash hundreds of millions of dollars from the state’s public universities over the next 2 years. But he’s also calling for a nearly $500 million basketball stadium in Milwaukee for the Bucks. (ESPN) A coliseum to placate the uneducated masses.

 

Corporate Taxes:  Where did those huge piles of cash held by corporations (Wall Street Journal) (see above) come from? According to John McKinnon at the Wall Street Journal: “For years, many other countries have been slashing corporate-tax rates in an effort to hold onto company headquarters and jobs and attract new investment. They also have moved to a system known as territorial taxation that generally seeks to tax firms only on their domestic profits, not their global earnings, as a further inducement to firms. As a partial concession, the U.S. for many years has allowed firms to defer federal tax on their foreign earnings until the money is brought home - a sort of hybrid of world-wide and territorial taxation. But the result has been anything but a happy medium. As the tax differential has grown between the U.S. and the rest of the world, U.S. firms have chosen to leave more earnings offshore, where the U.S. tax is deferred. That means they typically can’t make use of the cash for dividends, stock buybacks, or domestic reinvestment. Some have even sought to move overseas to escape the U.S. tax system and reunite with their cash.”

 

Income Inequality & Unions:  I’ve told you about this before. The Economic Policy Institute (EPI) has updated the data and put it in a very interesting chart. What we now know is that as union membership falls, income inequality rises. According to Colin Gordon, a professor of history at the University of Iowa and a senior research consultant at the Iowa Policy Project: “Labor unions both sustained prosperity, and ensured that it was shared. The impact of all this on wage or income inequality is a complex question (shaped by skill, occupation, education, and demographics) but the bottom line is clear: There is a demonstrable wage premium for union workers. In addition, this wage premium is more pronounced for lesser skilled workers, and even spills over and benefits non-union workers. The wage effect alone underestimates the union contribution to shared prosperity. Unions at midcentury also exerted considerable political clout, sustaining other political and economic choices (minimum wage, job-based health benefits, Social Security, high marginal tax rates, etc.) that dampened inequality. And unions not only raise the wage floor but can also lower the ceiling; union bargaining power has been shown to moderate the compensation of executives at unionized firms.”

 

Immigration:  Senate Democrats filibustered - 3 times - a bill that would block Obama's immigration reforms done through executive order. (TWW, Immigration, 11/22/14) The legislation, however, would also fund the Department of Homeland Security, which only got funded until February when the budget was done. (TWW, Budget Deal, 12/13/14) (Washington Post)

 

Breastfeeding:  The Supreme Court agreed with Nationwide Insurance, saying that they were within their rights when they refused to offer breastfeeding accommodations for a new mother. The Supremes said the company’s decision wasn’t sexist because “men can lactate, too.” (Democratic Underground)

 

Net Neutrality:  Federal Communications Commission (FCC) chair, Tom Wheeler, wrote a piece for Wired. He wrote that he was, this week, circulating to commission members “proposed new rules to preserve the Internet as an open platform for innovation and free expression.” Sounds lofty. But what does he want to do? He’s proposing that the FCC “use its Title II authority to implement and enforce open internet protections. . . These enforceable, bright-line rules will ban paid prioritization, and the blocking and throttling of lawful content and services. I propose to fully apply - for the first time ever - those bright-line rules to mobile broadband.” Sounds good. Now, can he get the votes?

 

Education:  Researchers at the Washington Center for Equitable Growth found that the United States could ultimately enrich everybody by improving educational performance for the typical student. The U.S. ranks 24th on the OECD’s list of countries’ math and science scores. But this study found that by moving our ranking up to 19th - not a lot - would increase the nation’s GDP over the next 35 years - which could lead to roughly $900 billion in higher government revenue. Now that’s paying for itself.

 

Air Fare:  According to the Department of Transportation, “the U.S.’s busiest airports are seeing airfares rise at roughly double the rate of inflation going back to 2011.” The Washington Post reported that you can go anywhere in the world and find cheap airfare - except the United States. “Go to Bangkok, where airfares for North American travelers are down 7% over the last year (according to Kayak). Or Milan, where airfares are down 13%. Or New Delhi, where airfares are down 11%.” Since there are fewer airlines, they are controlling the air lanes and can charge just about what they want. Check out the graph of air fare increases at the country’s 10 busiest airports from 2011 to 2014. Fare is up “11% at LaGuardia, 9% at Chicago-O’Hare, 6% at Boston, and 16% in Atlanta.”

 

Herbal Supplements:  The New York State attorney general has accused Walmart, Walgreens, Target, and GNC of “selling dietary supplements that were fraudulent and in many cases contaminated with unlisted ingredients.” They ran tests on “popular store brands” from the retailers and found that “roughly 4 out of 5 of the products contained none of the herbs listed on their labels. In many cases . . . the supplements contained little more than cheap fillers like rice and house plants, or substances that could be hazardous to people with food allergies.” For example, at GNC, 5 of 6 samples of “Herbal Plus” were “either unrecognizable or a substance other than what they claimed to be.” In pills labeled ginkgo biloba they found only rice, asparagus, and spruce. New York’s AG issued cease-and-desist letters to the 4 retailers. The NY Times has a complete list of the products that were analyzed.

 

Monarch Butterflies:  A new report by the Center for Food Safety (CFS) “reveals the severe impacts of herbicide-resistant genetically engineered (GE) crops on the monarch population, which has plummeted over the past 20 years.” It’s Round-Up again. (Nation of Change) Add this to the EU pesticide issue (see Pesticides above), and it seems clear we have to stop this stuff.

 

Keystone XL Pipeline:  The Environmental Protection Agency (EPA) has asked the State Department to reconsider a key finding “that led its Keystone XL review team to suggest that the pipeline wouldn’t worsen climate change.” The EPA claims that the sharp decline in oil prices “makes it more likely that the project would significantly increase emissions of greenhouse gases.” (Inside Climate News

 

Investing in Fossil Fuels:  The University of Maine's state-wide system “became the first public land grant institution - and first university system - in the United States to divest any of its fossil fuel holdings, in step with world-wide grassroots efforts to take on the powerful industries driving global warming.” It took 2 years of student organizing and protests to get it done, but it got done, all except for coal divestiture. They’ll keep working on that. (Common Dreams)

 

Jobs:  The U.S. added 257,000 jobs in January. The unemployment rate is relatively unchanged at 5.7%. (Washington Post) They also revised upward the job numbers for November and December. This makes 11 straight months of jobs gains above 200,000, “the first time that has happened in nearly 2 decades.” (Guardian) Matt O’Brien at the Washington Post wrote that, “Booming jobs and falling gas prices make this the best economy in 15 years.”

 

S&P:  Standard & Poor’s has agreed to pay $1.5 billion to settle “a series of lawsuits over its ratings on mortgage securities that soared in the run-up to the 2008 financial crisis.” It will pay $1.5 billion for its role in taking down the entire U.S. economy? Not enough. $687.5 million will go to the U.S. Department of Justice and $687.5 million will go to 19 states and the District of Columbia. (Reuters)

 

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