While many liberal blogs were celebrating what looked on the surface to be an Obama victory of raising taxes on the über wealthy, they apparently did not notice what was being slipped up their behind.
For starters, the payroll tax, which was lowered in 2011 from 6.2% down to 4.2% in an effort to breathe some life into a moribund middle class, has jumped back up by 2% to its original rate. 160 million American workers will now shell out another $35 to $180 per week depending on their income level. The payroll tax is capped for incomes greater than $113,000 at $2,274. This means that it’s a regressive tax –anyone making over $113,00 will pay less as a percentage of their income, while for everyone else the tax is a net increase of 2%.
So while the plebs are scrounging around to pay that extra tribute to the Empire, our corporate overlords have extracted more blood from the serfs:
The “fiscal cliff” legislation passed this week included $76 billion in special-interest tax credits for the likes of General Electric, Hollywood and even Captain Morgan. But these subsidies weren’t the fruit of eleventh-hour lobbying conducted on the cliff’s edge — they were crafted back in August in a Senate committee, and they sat dormant until the White House reportedly insisted on them this week…
In late July, Finance Chairman Max Baucus announced the committee would soon convene to craft a bill extending many expiring tax credits. This attracted lobbyists like a raw steak attracts wolves. …
General Electric and Citigroup, for instance, hired Breaux and Lott to extend a tax provision that allows multinational corporations to defer U.S. taxes by moving profits into offshore financial subsidiaries. This provision — known as the “active financing exception” — is the main tool GE uses to avoid nearly all U.S. corporate income tax.
Corporations also got another legalized tax avoidance here:
As part of the fiscal cliff deal, Congress also extended another little-known tax break that benefits large multinationals selling products through overseas affiliates. This “pass-through” exemption permits a U.S.-based company to set up a new corporation in a tax haven like the Cayman Islands and sell it a patent owned by the U.S. parent company. Royalties on overseas licensing of that patent would then route to the tax-sheltered firm, instead of the U.S. parent company. The Joint Committee on Taxation says the two-year cost of extending this shelter is $1.5 billion.
The financial services industry, whose leaders had earlier joined a group of other corporate executives pushing for a “fair” solution to the fiscal crisis, is one of the primary beneficiaries of special-interest tax breaks. The active-financing exception, for example, permits banks like Morgan Stanley to avoid the 35 percent U.S. corporate tax rate on interest income from money lent overseas. A handful of other U.S.-based multinational companies with financing arms, such as Ford Motor Co. and General Electric, also use that exemption to lower their tax bills…
…[T]he “active financing” exception … permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely…
Vampire-squid Goldman Sachs and too-crooked-to-fail Bank of America also get tax breaks for moving into the new World Trade Center that replaced the pre-9/11 one:
…This tax provision was created to help revitalize Lower Manhattan’s small businesses but instead helped out these two mega-bailed-out banks and helped to subsidize the construction of luxury apartments. Goldman Sachs alone was reported to have received $1.6 billion in tax-free financing of its new building…
There are many more corporate giveaways in the fiscal spiked dildo that was rammed into Main Street, but you get the idea. America is just one big plantation for our corporate masters to harvest from on a perpetual basis. Yves Smith has a post discussing the permanent cementing-in of a class structure composed of the ‘have all’ and ‘have nothing’:
…The newest chat, with economist James Henry, focuses on how the deal on estate taxes allows the rich to pass on wealth to their children, allowing inequality to persist across generations. And he reminds us that a lot of Congressmen are rich enough that this provision will benefit their families…
I could not have summed up the situation better than the first commenter:
In their mad dash to cling to a sinking ship’s last remaining point above water, the callus elite won’t hesitate to trample all over women and children. In a world of ‘peak everything’ and a dying biosphere, the venal nature of man will surely surface in spades.
I find it interesting that we are living in a time where the average person can, with a little research every night, have a good idea of what is going on globally with the economy, the environment, and societal structures. But with that knowledge comes the realization that you are essentially powerless to change the big picture. And so it is with our slide into a truly barbaric future. Having avoided any news this past week, I slept well. Tonight, however, is a different story as I start back into reading up on the latest world events and perspectives from prominent authors. It’s a real horror show developing these days.
We know that our ‘political economy of aristocracy‘ is a major impediment in moving away from our fossil fuel-based system and creating a socially just society, but the elite will do whatever is within their power to hold onto their place in the capitalist hierarchy:
…It is in any individual’s self-interest to preserve that in which they are most invested; but the rich pose a particular danger because their self-interest often leads them to attempt to protect and preserve entire modes of economic activity that society needs to move past in order to avoid colliding with the limitations of natural resources inherent in any specific mode of technology. No more clear example can be imagined that the Koch family interest pouring hundreds of millions and billions of dollars into conservative think tanks and political lobbies that not only deny global climate change, but also actively oppose the development of clean energy technologies. But a more instructive example may be the Walton family interests, which seek to avoid the development of public understanding of how the Wal-Mart business model shifts much of its employment costs onto the government – a modern twist on the methods by which the wealthy “pauperize the multitudes” identified in the Founders’ political economy of aristocracy…
Professor David McNally has an insightful new essay spelling out the machinations of capitalism which the elite have and will continue to carry out in order to preserve the status quo and gross inequality of our political economy. Some excerpts:
…Of course it is better for businesses if there is lots of demand for their goods. But the purpose of a capitalist enterprise is not to make sales; it is to make profits. The ability of firms to accumulate, invest, grow and beat out their competitors depends on profitability. And once capitalism gets into a systemic crisis of the sort that broke out in 2008, profitability cannot be restored without enormous destruction. There are two key mechanisms by which this happens.
The first involves destroying excess or unproductive capital. If firms in one industry after another are forced into bankruptcy and/or gobbled up by the competition, those that remain will eventually restructure and reorganize themselves to produce at lower cost (and higher profits). Having bought up bankrupted assets on the cheap, and having taken over the market shares of failed companies, they will be in a position to invest again.
The second capitalist mechanism for exiting a crisis involves driving down working people’s living standards. Put simply, by devaluing human life and the costs of reproducing people – via lower wages and benefits and reduced “social wages” (the public services available by way of pensions, social assistance, health care and education) – capital reduces its costs of doing business. And it is the latter strategy, reducing the costs of reproducing people, that has dominated thus far.
The reason for this is simple. In addition to funneling trillions of dollars to bail out the financial sector, the world’s central banks, particularly those in the Global North, have lowered borrowing costs to just a hair above zero. This means that faltering companies can stay alive by borrowing money that is virtually free. That is why there has been nothing so far like the wave of corporate bankruptcies witnessed during the Great Depression or across the 1980s. And because such a wave of bankruptcies would once again rock the financial system, nothing like it should be expected in the short term.
That leaves austerity as the capitalist class’ principal strategy. Here, they have racked up considerable success. Not only have public services been drastically curtailed, so have living standards generally. In the U.S., median incomes contracted more than four percent during the “recovery” since 2010 and have now declined to where they stood in 1995. That represents the elimination of all wage gains in the past 17 years. In the U.K., meanwhile, living standards have been pushed 13 percent below their 2008 levels.[4] Now, all of this may be bad for “the economy” in the abstract: reduced incomes mean less spending and less employment. But we don’t live in an economy in the abstract. We live in a capitalist economy whose imperative is profit. And reduced incomes are highly functional for capital.
To that end, governments everywhere have embarked on programs designed to increase the precariousness of everyday life. They know that insecurity makes it harder for workers to fight back, and so they are using every weapon in their arsenal to render workers less comfortable, confident and secure. They are attacking labour rights, undermining job security, driving down wages, benefits and social entitlements, and relying heavily on migrant labourers. Indeed capital’s ideal precarious worker for the age of austerity is the migrant who enters a country bound to a single employer, with no rights to live and stay beyond the length of their employment contract. In Canada, the proportion of entrants admitted under the Temporary Foreign Worker Program is skyrocketing, and the same is true for similar programs elsewhere.
Not surprisingly, austerity and growing precariousness have done wonders for corporate profits, which have risen persistently since 2009. However, in the absence of significant destruction of capital, those profits are sitting idle rather than being invested in new means of producing wealth. By early 2012, U.S. corporations were sitting on nearly $2 trillion in cash, a record amount. European firms were doing the same, holding around two trillion euros. And that is the dilemma capital faces at the moment. Austerity has boosted profitability, but it has not made investment attractive. Moreover, the lack of a new investment boom sets limits to just how high profits can rise (indeed, by mid-2012 corporate earnings seemed once again to be faltering). Consequently, the system keeps spinning its wheels unable to acquire the traction required for a sustained recovery and expansion.
And so, the capitalist class and their governments continue to do what they know best: enforce ever-greater sacrifices on working people. Greece, of course, is the center of the austerity storm. Pensions there have been cut in half, wages slashed by a third. Homelessness is soaring and soup kitchens struggle to keep up with those in need of food. Suicide rates have risen alarmingly. Notwithstanding all that, the “troika” – the European Central Bank, the IMF and the European Commission – demand more blood. Already, the Greek government has tabled a budget for 2013 that will cut billions more from pensions, wages and social benefits, notwithstanding their own forecast that the Greek economy will contract once again by nearly five percent. The whole purpose of these cuts is to prove to international capital that Greece will abide by the discipline of financial markets and that, should it receive new “loans” from the troika, it will use this money only to pay back global banks. Perish the thought that some of these funds might find their way to teachers, nurses or pensioners. Indeed, to say the money is “loaned” to Greece is entirely false: these funds enter a special account through which they are channelled directly to banks. And for that purpose the Greek people are being bled dry.[5]…
We now see the corporate elite in America, the beneficiaries of taxpayer bailouts, off-shore tax havens, government contracts, as well as near zero Fed loans, sharpening their blades to cut the throats of the American people:
The corporate CEOs who have made a high-profile foray into deficit negotiations have themselves been substantially responsible for the size of the deficit they now want closed.
The companies represented by executives working with the Campaign To Fix The Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills.
The CEOs are part of a campaign run by the Peter Peterson-backed Center for a Responsible Federal Budget, which plans to spend at least $30 million pushing for a deficit reduction deal in the lame-duck session and beyond.
During the past few days, CEOs belonging to what the campaign calls its CEO Fiscal Leadership Council — most visibly, Goldman Sachs’ Lloyd Blankfein and Honeywell’s David Cote — have barnstormed the media, making the case that the only way to cut the deficit is to severely scale back social safety-net programs — Medicare, Medicaid, and Social Security — which would disproportionately impact the poor and the elderly.
Yet the CEOs are not offering to forgo federal money or pay a higher tax rate, on their personal income or corporate profits. Instead, council recommendations include cutting “entitlement” programs, as well as what they call “low-priority spending.”
Many of the companies recommending austerity would be out of business without the heavy federal support they get, including Goldman Sachs and JPMorgan Chase, which both received billions in direct bailout cash, plus billions more indirectly through AIG and other companies taxpayers rescued.
Just three of the companies — GE, Boeing and Honeywell — were handed nearly $28 billion last year in federal contracts alone. A spokesman for Campaign To Fix The Debt did not respond to an email from The Huffington Post over the weekend…
Now this brings me to Chris Hedges’ last essay which I just read tonight. He’s becoming more apocalyptic as time goes on. Chris knows what I know: we are headed towards a hellish future in which a tiny elite will try to hang on to their wealth and power at the expense of everyone else, including the planet. High tech weaponry and surveillance technology will be used to enslave and control the masses while maintaining capitalism’s grip on society:
…The impending collapse of the international economy, the assaults on the climate, the resulting droughts, flooding, precipitous decline in crop yields and rising food prices are creating a universe where power is divided between the narrow elites, who hold in their hands sophisticated instruments of death, and the enraged masses. The crises are fostering a class war that will dwarf anything imagined by Karl Marx. They are establishing a world where most will be hungry and live in fear, while a few will gorge themselves on delicacies in protected compounds. And more and more people will have to be sacrificed to keep this imbalance in place…
…As the world breaks down, this becomes the new paradigm—modern warlords awash in terrifying technologies and weapons murdering whole peoples. We do the same in Afghanistan, Iraq, Pakistan, Yemen and Somalia.
Market forces and the military mechanisms that protect these forces are the sole ideology that governs industrial states and humans’ relationship to the natural world. It is an ideology that results in millions of dead and millions more displaced from their homes in the developing world. And the awful algebra of this ideology means that these forces will eventually be unleashed on us, too. Those who cannot be of use to market forces are considered expendable. They have no rights and legitimacy. Their existence, whether in Gaza or blighted postindustrial cities such as Camden, N.J., is considered a drain on efficiency and progress. They are viewed as refuse. And as refuse they not only have no voice and no freedom; they can be and are extinguished or imprisoned at will. This is a world where only corporate power and profit are sacred. It is a world of barbarism…
Evil unencumbered by the slightest conscience seems to me to be what has been described above. By comparison, the droogs in ‘A Clockwork Orange’ appear quaint.
Two blog posts caught my eyes this weekend, one on our parasitic war economy and the other on the parasites readying their blueprint to bleed the masses dry. A related article to the first story lays out Obama’s pre-election connections to one of the primary recipients of tax dollars feeding the Military Industrial Complex – General Dynamics, as mentioned also by John Hively here.
In regards to the second blog post on the elite’s blueprint for squeezing the life out of the rest of us, austerity is a failed option because it attempts to preserve the paradigm of perpetual economic growth in a world of depleted resources, and it’s designed to preserve the social hierarchy of the capitalist system. Dr. Dan Bednarz at Health After Oil talks about this in his latest essay:
Socioeconomically, reaching the limits to growth means the impossibility of repaying accumulated debt and that massive unemployment will worsen under current institutional conditions. Politically we are witnessing governments not only caught up in a contraction of tax and revenue bases, but utterly failing and concomitantly repressing their citizens so as to maintain –and deepen- class inequalities and support for too big to fail private entities. This is the antithesis of resilience…
Until recently energy was cheap and seemed limitless, as did other natural resources; climate change risks remain “political,” not corporeal and existential. The overexploitation of natural resources and population growth should be apparent and frightening, but they are not; and wastes and pollution continue to be –from a grossly misguided economic growth point of view- “externalized” or “discounted” for future generations to gag on….
Her hypocrisy–she claims to have great concern and sympathy for poor African schoolchildren, whose plight she compares with the problems of comparatively well-off Greeks–is frankly nauseating in light of the IMF’s contribution to African suffering and misery. The agency’s so-called structural adjustment programs, akin to austerity for Europeans, have forced African nations to slash spending on healthcare, food, and education, and to boost exports of raw materials and privatization of industries by multinational corporations, resulting in dramatically increased national debts. Not for nothing do critics of the IMF and its partner in exploitation in the name of assistance, the World Bank, speak of Africa’s new “overlords.”
But one suspects that there is more to the Lagarde affair than mere hypocrisy. The IMF managing director’s Africa reference can be seen as a telling slip of the tongue that calls attention to her true aim–the strategic objective of the global elites whose interests she serves–which is the permanent pauperization of the middle classes of the industrialized world. The objective isn’t to raise Africa up to the level of Europe–not even close to that. Rather, the elites seek to lift Africa only marginally while bringing the West down–meaning, the workers who have become too prosperous and too politically powerful in the eyes of the powers that be–closer to the level of the impoverished inhabitants of the resource-rich continent that was ravaged by imperialism and colonialism. A global leveling off is the real goal. Grinding Greece down is the beginning of what is intended to be a grand restructuring for purposes of creating a new world order in which a few privileged population segments will labor in well-paying, favored industries, including high technology and finance, with decent benefits and opportunities for advancement and upward mobility, while the great masses of workers will be condemned to toil like drones, or serfs, in deadening, dead-end jobs that will barely pay subsistence wages and little or no benefits of any kind.
Hence, the seemingly irrational, international obsession with promoting austerity during times of depression and recession. For the IMF and its backers, mass unemployment isn’t a problem to be solved; it’s a strategy to bemanaged. Degrees of joblessness that have not been seen since the Great Depression are meant to become the new normal; meaningful social safety nets and social services, things of the past.
Already, the argument can be made that “we are all Greeks.” Absent a reversal of the trend, unless the IMF’s iron heel is broken before it can complete its crushing mission, we will soon all be Africans … and Asians … and Latin Americans … anything but the middle class Americans and Europeans we once were … as social services are dismantled and workers rights are shredded in the name of “reform.”
Now on to the two blog posts I mentioned at the beginning:
“More than a decade after George W Bush launched it, the “war on terror” was supposed to be winding down. US military occupation of Iraq has ended and Nato is looking for a way out of Afghanistan, even as the carnage continues. But another war – the undeclared drone war that has already killed thousands – is now being relentlessly escalated.”
The drone wars are all about raising corporate profits, for General Dynamics and other master’s of war. They have President Obama on a leash. He is their good little boy in the white house, ordering the murder of innocent people for profits. Sure, there might be a terrorist that he gets now and then, but the terrorists aren’t his targets; Wall Street analysts tell corporate CEO’s what their profit targets will be every quarter, and every drone strike is intended to push up those profits to reach Wall Street expectations. The more drone strikes, the more drones need to be built, the more profits are obtained, and all at tax payer expense.
That means the drone wars are all about redistributing income from working people to the rich via higher corporate earnings, rising dividends and soaring share prices. The drone wars also mean the president, like President Bush before him, is the terrorist.
Coming soon to your state: The anti-union, education-cutting, free-market-leaning, divide-and-conquer playbook of Wisconsin Gov. Scott Walker.
According to a leading conservative activist, the Walker agenda in Wisconsin is the new conservative game plan for all states in the union. That was the key message delivered at a rally Friday evening in Madison by Tim Phillips, national president of Americans for Prosperity, the conservative nonprofit started with money from the billionaire industrialists Charles and David Koch. “The Wisconsin approach to changing and making state government better is the new model for the country,” he said. “You are the model for the country.”
Here a video of Phillips’ remarks:
Since taking office in January 2011, Walker has slashed collective bargaining rights for public-employee unions, cut funding to public schools by $800 million, signed a controversial voter ID bill that critics say discriminates against students and minorities, and approved a divisive redistricting bill that benefitted his fellow GOP lawmakers. Walker managed to eliminate a $3.6 billion deficit, but did so, his critics say, at the expense of workers’ rights, teachers and students, and the public sector as a whole. In a January 2011 conversation with billionaire businesswoman Diane Hendricks, a top donor of his, Walker admitted that his plan was to “divide and conquer” the unions in Wisconsin. Walker’s agenda has turned Wisconsin into the most polarized state in America.
This agenda, AFP’s Tim Phillips insisted, is the new model for state governments. “Today every other governor in the country and every state legislator in the country is watching Wisconsin,” he said. “Because the Wisconsin approach to changing and making state government better is the new model for the country. You are the model for the country. For fiscal prosperity and economic freedom and getting the state moving again. You’re the model!”…
Collapse of Industrial Civilization 