Category Archives: Economics

Some Things are Worth Repeating…

In this month’s issue of Dollars and Sense, the editors publish an analysis of the aftermath of the crash of 2008 and the ongoing effects on our economy:

Inequality, Power, and Ideology: AnUpdate

Arthur MacEwan, one of the founders of Dollars & Sense and our “Ask Dr. Dollar” columnist, wrote an article for our March/April 2009 issue explaining the origins of the financial crisis that was rocking the U.S. and global economies at the time, and that has shaped the subsequent economic recovery. The article has been included in successive editions of several of the textbooks we publish. Arthur recently wrote the following update of his original article as an Afterword to be included in the forthcoming 18th edition of Current Economic Issues. —Eds.

The article “Inequality, Power, and Ideology” was written in early 2009, as the U.S. economy was in the midst of the Great Recession. I argued that the severity of the recession was brought about by a nexus involving three factors:

  • A growing concentration of political and social power in the hands of the wealthy;
  • The ascendance of a perverse leave-it-to-the-market ideology which was an instrument of that power; and
  • Rising economic inequality, which both resulted from and enhanced that power.

Now, in late 2014, there is reason to hope that the perverse ideology, market fundamentalism, has been somewhat weakened. However, income inequality and the concentration power in the hands of the wealthy seem to be firmly in place. Perhaps the most shocking fact about income inequality is the following: Between 2009 and 2012, as the economy grew slowly out of the recession, 116% of the income increase went to the highest income 10% of the population. Yes, that’s right, the income of the top 10% increased more than the income increase for the whole society, which means of course that the income of the rest of society, 90%, declined in this period. This decline shows up in the drop of the inflation-adjusted median household income, down 4.4% between 2009 and 2012, part of a larger picture of a 8.9% decline between just before the recession, 2007, and 2013. (We don’t yet have the figure for 2014 as of this writing.) So, yes, income distribution continues to get more unequal, after the Great Recession as before the Great Recession.

As to the concentration of power, legal developments (the Supreme Court’s decisions in the Citizens United and McCutcheon cases, in particular) have allowed virtually unlimited and often hidden expenditures in elections by wealthy individuals and corporations—as if their expenditures had not already been too large. And recent elections have underscored the importance of these outlays. Then there is the continuing power of financial institutions. While the 2010 Dodd-Frank bill provided some sections that might have curtailed that power, pressure from the financial sector has delayed or weakened the implementation of many of those sections. Indeed, regulators have recently allowed banks to move precisely in the opposite direction from some Dodd-Frank provisions—e.g., allowing mortgages to be issued with low levels of down payment.

To continue reading click: Dollars and Sense: Inequality, Power and Ideology: An Update

 

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Say NO! to House Bill 386 – NH Taxpayers Cannot Pay Big Business’ Bills!

As explained in the write-up from the New Hampshire advocacy group, Citizen’s Alliance, Republicans in the New Hampshire house have put forward a bill, HB 386 that proposes to lower the tax burden for businesses in New Hampshire.

Unfortunately as stated in the write-up below, this “burden” is only borne by the largest and wealthiest businesses in the state.  These businesses most often are not New Hampshire based or originated, but large global businesses.  They will benefit from this cut but New Hampshire residents will have to make up for it.  It amounts to a deliberate shift of income upward and out of the state of New Hampshire and the tax burden downward onto New Hampshire residents.

The libertarian wing of the Republican party loves to cry about the costs of government and the burden on New Hampshire businesses.  But this argument has no basis in fact and instead relies on a myth created during the Reagan years based on the “trickle down” effect that all citizens would supposedly enjoy.

The UK’s The Guardian’s take on the Laffer curve (they suffered Reaganomics under Thatcher) : So the Laffer Says Tax Cuts for the Rich?
Paul Krugman weighs in :  The Laffer Test (somewhat wonkish)
Economist’s View: A forum for economists, this post giving a summary of economist’s general support for the Laffer Curve (hint: there isn’t any) : Laughing at the Laffer Curve

[We aren’t posting those articles in support of the laffer curve or supply-side economics from the Cato Institute or the American Enterprise Institute, or other right-wing orgs which dominate the Google search engine.  Both Cato and AEI are in the forefront of pushing any rhetoric that supports the libertarian ideology of getting the rich richer at everyone else’s expense. Since these “thinktanks” feed most national news stories and provide fodder for pundits, we don’t feel we have an obligation to repeat what Americans have drummed incessantly into their ears by corporate media already.]

As a direct result of upward income distribution, big businesses have grown since the Reagan years far faster and higher than real growth in the larger economy.  They have used that wealth to hire slick lawyers and lobbyists to wager with, bargain with, manipulate and cajole our legislators on the state and national level to push bills that favor their profit margins while screwing the American public.

This needs to stop.  The only way we can stop this is to take action to stop it.

Please read the Citizen’s Alliance summary below.  As it says there will be hearings today on the house bill.  If you can’t make the hearing, please call or write (email) the members of the committee to tell them to stop large corporations from shifting their tax burden onto the shoulders of New Hampshire residents.

This bill is currently in the House Ways and Means Committee.

Now for the skinny from Citizen’s Alliance:

NEW HAMPSHIRE CAN’T AFFORD A $120 MILLION BUSINESS TAX CUT

Reducing the rate of the business profits tax (BPT) as proposed in HB 386 would principally benefit the very largest corporations operating in New Hampshire. According to data from the Department of Revenue Administration for 2012, just 397 businesses – or 0.7 percent of all businesses filing a tax return – accounted for two-thirds of all BPT collected that year. All of those businesses owed more than $100,000 in BPT that year.

Cutting the BPT rate to 7.0 percent would mean that most of the revenue loss would flow to these very large businesses, most of whom likely have operations across the country and the globe. Smaller businesses would see little to no change in the amount of taxes they owe. In fact, more than 48,000 businesses – or 75 percent of businesses filing a tax return – already owed no BPT in 2012.

Cutting business taxes will force other taxpayers to pay for the public services that big businesses use and rely on to succeed. Cutting state business taxes creates a vicious cycle. Lower state revenues mean fewer funds are available to provide aid to cities and towns. That, in turn, puts more pressure on local property taxes.

There will be a hearing in front of the House Ways and Means Committee Tuesday 2/17/15 10:30 in Room 202 of the Legislative Office Building.

Sign on in opposition to HB 386 here.

 The proposed business tax cuts would force steep cuts in the public services vital to New Hampshire’s quality of life and its economic future.
  • New Hampshire already faces a substantial budget shortfall in the upcoming FY 2016-2017 budget. Cutting business taxes would only make that problem worse.
  • According to the fiscal note, HB 386 would reduce the business profits tax by roughly $120 million in the FY16-17 biennium and every biennium after that.
  • To put that in perspective, $120 million is nearly one and half times the entire amount of General Fund support provided to the state’s Community College System in the current FY14-15 budget; it is more than three-quarters of amount provided to the University System.
  • In the FY14-15 budget, the Departments of Resources and Economic Development and Environmental Services combined received $67 million from the General Fund.
  • In other words, to afford these tax cuts, you’d have to eliminate these departments almost twice over.
Reducing the rate of the business profits tax (BPT) would principally benefit the very largest corporations operating in New Hampshire.
  • According to data from the Department of Revenue Administration for 2012, just 397 businesses – or 0.7 percent of all businesses filing a tax return – accounted for two-thirds of all BPT collected that year. All of those businesses owed more than $100,000 in BPT that year.
  • Cutting the BPT rate to 7.0 percent would mean that most of the revenue loss would flow to these very large businesses, most of whom likely have operations across the country and the globe.
  • Smaller businesses would see little to no change in the amount of taxes they owe. In fact, more than 48,000 businesses – or 75 percent of businesses filing a tax return – already owed no BPT in 2012.

Cutting business taxes will force other taxpayers to pay for the public services that businesses use and rely on to succeed.

  • Cutting state business taxes creates a vicious cycle. Lower state revenues mean fewer funds are available to provide aid to cities and towns. That, in turn, puts more pressure on local property taxes.
  • These cuts will increase the strain on New Hampshire cities and towns and their ability to maintain safe infrastructure and vital services that are central to our shared economic future. State aid to cities, towns, and school districts has already fallen sharply over the last decade – between FY 2000 and FY 2015, such aid is expected to fall by more than $250 million after adjusting for inflation.

Business taxes are already quite low in New Hampshire.

  • According to the Council on State Taxation (COST), the overall level of business taxation in New Hampshire ranked 34th lowest in the country in FY 2013.
  • COST’s research doesn’t look just at the BPT or BET, but at all the taxes business pay(e.g. property taxes, gas taxes, etc.). It finds that the taxes businesses pay in New Hampshire amount to 4.4 percent of private sector gross state product, below the national average of 4.7 percent and less than 33 other states, including Vermont and Maine.
New Hampshire has enacted numerous business tax cuts since 2010, with an untoldimpact on state finances.
  • Since 2010, New Hampshire has made more than half a dozen changes to either the business profits tax (BPT) or the business enterprise tax (BET), from allowing businesses to write off more of their losses for tax purposes to raising the threshold at which businesses owe the BET.
  • Unfortunately, the state still doesn’t know how much all of these changes have cost in terms of lost revenue. If we don’t know the price tag for changes already in place, we shouldn’t put even more on the state’s tab.
Tax revenue in New Hampshire – including business tax revenue – still has yet torecover from the recession.
  • After adjusting for inflation, total General and Education Fund revenue in FY 2014 was nearly $290 million less than what the state collected in FY 2008.
  • The combination of the business profits tax and the business enterprise tax together produced $550 million in FY 2014. That’s 19 percent – or $136 million – less than what they generated in FY 2008, after taking inflation into account.
Business tax cuts are not an effective means of spurring economic growth. Investments in education, infrastructure, and other services are.
  • Extensive economic research indicates that state business taxes, because they are such a small share of business costs, have little to no effect on businesses’ decisions to locate or expand in New Hampshire. Factors like the quality of our workforce and infrastructure are much more important, but New Hampshire won’t be able to provide those if it doesn’t have the necessary resources.
  • As Robert Lynch, Chair of the Department of Economics at Washington College puts it:

 …differences in tax burdens across states are so modest that they are unlikely to outweigh the differences across states in the other costs of conducting business. These other “costs of conducting business” are the most important factors affecting business investment decisions and include the cost and quality of labor, the proximity to markets for output (particularly for service industries), the access to raw materials and supplies that firms need, the access to quality transportation networks and infrastructure (e.g., roads, highways, airports, railroad systems, and sewer systems), quality-of-life factors (e.g., good schools, quality institutes of higher education, health services, recreational facilities, low crime, affordable housing, and good weather), and utility costs.

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Supermajority Requirement to Increase Taxes at Odds with Sound Fiscal Policy

Jeff Lynch talks about the attempt of the GOP to once again put a financial stranglehold on New Hampshire’s revenue system with a constitutional amendment to basically restrict most funding avenues by requiring a 3/5 majority.

As if this hasn’t been tried already with disastrous results in California, bringing the state to its proverbial knees, causing a grid black-out and other financial and infrastructure disasters, leading finally to Proposition 25 which passed in 2010 by the people, ending what some said amounted to a rule by minority.

You’d think maybe the CACR’s supporters just don’t know about the potential disaster such an amendment could cause.  But this isn’t the first time the GOP in New Hampshire has tried push this poison pill to the people .  Oh and then there was CACR 13 from 2012 too.  Obviously ignorance of the possible consequences such a measure would deal the people of New Hampshire really isn’t a justifiable excuse.

Actually it doesn’t seem too far off to draw the conclusion that there’s simply indifference to the possible ways in which dramatic cuts and budget stalemates would effect the citizens.  This kind of budgetary strangulation will effectively starve government services; a chief aim of a Republican party hell-bent since Roosevelt’s New Deal on destroying any remnant of the social contract.  Raising living standards be damned, bringing all people up to minimal decency be damned, let the unfortunate starve and rot in the gutter to save a few of the greedy from paying their fair share.

by Jeff Lynch of the New Hampshire Fiscal Policy Institute

The New Hampshire House of Representatives will soon consider a measure, CACR 1,[CACR = Constitutional Amendment Concurrent Resolution] to amend the state’s constitution to require that an increase in any existing tax or license fee or the creation of a new tax or license fee be approved by three-fifths of both chambers of the legislature.

In each of the past two legislatures, the House rejected attempts to amend New Hampshire’s constitution in the manner envisioned by CACR 1.   Those decisions were well founded, for such constraints not only are at odds with sound fiscal policy, but also erode New Hampshire’s democratic institutions. Indeed, the experiences of other states with similar restrictions in place, as well as those of at least one New Hampshire municipality, demonstrate quite clearly the adverse consequences that can result from inflexible supermajority requirements. More specifically:

 The proposed amendment would undermine New Hampshire’s democratic institutions and empower a very small number of legislators to block action on important priorities.

Proponents of a supermajority requirement have argued that such a requirement would ensure that the decision to increase taxes or fees would reflect broad consensus among members. In reality, a supermajority requirement would increase the likelihood of partisan gridlock at the State House, as it would cede control over any number of important priorities to a minority of the legislature. Ten individuals – the number of Senators required to keep that 24 member chamber from achieving a three-fifths supermajority – could forestall passage of a tax increase. Worse still, they could also delay or halt consideration of other critical legislation, such as the state budget, as they withhold their backing of a tax increase in exchange either for support for state projects in their own districts or for concessions on other, potentially unrelated issues.

Independent analysts and observers in other states have expressed these same concerns. In 1998, the bipartisan California Citizens’ Budget Commission assessed the Golden State’s budget process and argued that its two-thirds vote requirement for approving a budget:

places the power to control or block the budget into the hands of a small minority …thereby promoting gridlock and enhancing special interest group influence. It also allows political parties in the Legislature to avoid responsibility for unpopular budget decisions and blame them on others. The public is left finding it difficult to hold anyone, including the Governor, responsible.[ii]

– Read the rest at: NH Fiscal Policy Institute

h/t to Mark Fernald

Whatever Happened to Overtime?

Here’s an excellent article from Politico magazine on another level of the increasingly easy way that the capitalist system is robbing regular people of their earnings.  While the workers who work by the hour feel their wages squeezed and benefits compressed. Wages have only grown about 18% over the last thirty years, see here, here and here].

While there is much focus on raising the minimum wage and its effect on our most impoverished workers, another struggle needs attention; the growing number of people working on salary.  Increasingly salary pay dominates the lower, and middle management business sector.  While traditionally upper management and executive management have allows worked on salary, the higher pay and the bonus package compensated for the increased responsibility and demand on one’s time.  As CEO salaries increase at an alarming rate in comparison to the average worker, salaried workers below them also have felt the squeeze in order to feed the top.  As explained briefly here in an NPR report, it has become common practice for low level management positions to have salary pay that is exempt from overtime rules or other benefits that hourly workers enjoy.  At the same time, most of the workers still earn in the lowest income brackets and do not enjoy the autonomy, high pay, benefits, stock option plans and other perks that the traditional exempt employee enjoys in exchange for giving up overtime compensation.

In other words, the current wage rules have become manipulated as a means for big business to increase their profit margins at the expense of workers.  Unfortunately many young people enter into this work culture unaware of the extent to which they are being duped.  Also, with our current culture of disallowing workers to discuss their pay rates, the shame associated with many low wage workers not wanting to share their pay rates and the fear of retribution if they complain, what would they do anyway?

While this article talks about the options that Obama has for making changes in the rules, the fact is, nothing will change until the people who suffer the hurt get out and demand change.  But nevertheless, its a very good article about the rise in an average worker’s work week, the increased pressure on workers and the lack of any increase in compensation.  Once we understand the problem, in a democracy its our responsibility to do something to fix it.  Its our country, our state, our local government, our lives.  In actuality, big business fears the collective power that would take place if all workers joined together and refused to support a corrupt system with their hard labor and lives.

Whatever Happened to Overtime?

by Nick Hanuer

If you’re in the American middle class—or what’s left of it—here’s how you probably feel. You feel like you’re struggling harder than your parents did, working longer hours than ever before, and yet falling further and further behind. The reason you feel this way is because most of you are—falling further behind, that is. Adjusted for inflation, average salaries have actually dropped since the early 1970s, while hours for full-time workers have steadily climbed.

Meanwhile, a handful of wealthy capitalists like me are growing wealthy beyond our parents’ wildest dreams, in large part because we’re able to take advantage of your misfortune.

So what’s changed since the 1960s and ’70s? Overtime pay, in part. Your parents got a lot of it, and you don’t. And it turns out that fair overtime standards are to the middle class what the minimum wage is to low-income workers: not everything, but an indispensable labor protection that is absolutely essential to creating a broad and thriving middle class. In 1975, more than 65 percent of salaried American workers earned time-and-a-half pay for every hour worked over 40 hours a week. Not because capitalists back then were more generous, but because it was the law. It still is the law, except that the value of the threshold for overtime pay—the salary level at which employers are required to pay overtime—has been allowed to erode to less than the poverty line for a family of four today. Only workers earning an annual income of under $23,660 qualify for mandatory overtime. You know many people like that? Probably not. By 2013, just 11 percent of salaried workers qualified for overtime pay, according to a report published by the Economic Policy Institute. And so business owners like me have been able to make the other 89 percent of you work unlimited overtime hours for no additional pay at all.

Read more at: Whatever Happened to Overtime?

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Its the Economic Inequality Stupid!

A recent financial investor report issued by non-partisan economists at Standard & Poor’s rating service, concluded that slow US economic growth is directly attributable to income inequality.   This is no left of center political organization and they are not driven by ideology. S&P helps investors make money, so what they say shouldn’t be taken lightly.  Today they warn that income inequality in the US is at its highest levels since the 1920’s and this inequality is dampening US GDP growth  “at a time when the worlds biggest economy is struggling to recover from the Great Recession and the governments need to support an aging population.”  S&P economists are just informing investors of where the US economy is headed.  They go on to say that there isn’t enough demand for goods and services to maintain strong economic growth because the middle class doesn’t have the purchasing power  needed to drive our economy. They warn, that high income inequality can feed on itself, as the wealthy use their resources to influence the political system toward policies that help maintain that advantage, like low tax rates on high incomes, tax avoidance loop holes, subsidies for corporations, and low estate taxes, and under investment in education and infrastructure.
Sound eerily familiar to what’s been going on in the US over the last 3 decades?  Sure does.
Today one political party, the GOP is pushing an ideology of more tax cuts for the rich & corporations, keeping their generous tax loopholes and subsidies, and refusing to revise the outdated tax code. They oppose any efforts for campaign finance reform and getting secret money out of our elections.  Do you ever wonder who is paying for all those misleading commercials?  The GOP also opposes raising the minimum wage, supports privatizing Social Security, supports turning Medicare into a premium support voucher program, while slashing funding for programs that actually help the poor & middle class. They also promise to dismantle the NLRB, it’s part of their war on unions and labor and keeping US wages low.  They are also against efforts to lower interest rates for student loans.  Why would they want to make it harder to get a good education?  S&P concludes that investment in education would add 2.4% annually to our GDP growth over the next 5 years.
Then why would the GOP support spending cuts to education and our crumbling infrastructure, if it would help improve our economy?  So do they really care about it?   Then they have the gall to say ” where are the jobs” then blame the President for slow economic growth caused by the policies they so strongly support.
.
Without coming out and saying it, this S&P report clearly points a finger at the flawed GOP policies of trickle down economics, and cuts to education and infrastructure.   Without a doubt, the future of our country’s middle class isn’t a top priority for the GOP.  The just play lip service to their constituents, while catering to the powerful and secret donors that play them like a fiddle, while the American Dream is burning.
The results of the this mid term election guarantees this trend will continue, sadly at your expense.
Dennis Dubois
House candidate for Strafford District 10
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Carpenters Get Hot on Cheating Contractors

whatever 011On Thursday in Seabrook, NH, the carpenter’s local 118 got busy drawing attention to large contractors cheating labor out of pay and benefits and the state out of revenue. Focusing on a drywall company known as Metro-Walls, the carpenters held what they call a “banner line” to inform passersby of this issue.

The carpenters made their intent clear to remain in front of the construction site as long as Metro-Walls continued operating in violation of the law.

“Missclassification is the biggest problem in the industry right now, its destroying the industry slow but sure. We definitely intend to fight this to the bitter end, we’re not going anywhere, as long as misclassification continues, we’ll be on the front lines.”

“The real victims here are the guys being misclassified and they don’t even know it.” said Johnnie Berry, organizer for Carpenter’s Local 118.

Missclassification of workers involves the practice of cheating works out of workman’s compensation, unemployment eligibility and any future social security benefits.  Since the employer pays either all or a portion of the costs for these programs through payroll deductions, the incentive is high for unscrupulous employers to skirt payment of any of these, keep the employee entirely “off the books” and pay the employee cash instead, or “under the table” as commonly referred to.

We contacted Jim Craig, the Commissioner of Labor whose department handles the enforcement of labor law in New Hampshire. We asked to what extent its a problem in New Hampshire, “It hasn’t been qualified yet in New Hampshire, but I think there’s an enormous underground economy, I think its a national problem.”

We asked about why enforcement seems too slow for many, “You know the trouble with this is these guys move fast, ” explaining that in the construction business in particular a contractor may be on a project for a limited time and also the department handles many investigations that complicate their ability to allocate manpower on just this issue, “We also have to investigate many other labor issues.” he said adding, “We’ve come a long way — we have better enforcement, we have a couple inspectors working just on this issue now.”

We also asked Mr. Craig about the process wherein those found in violation often receive reduced fines and as such operate with labor fines as a cost of doing business, “We’re trying to change that and one way is with attorneys representing the department and we’re working on trying to change the definition of employee, making it more clear.”

As a result misclassification, employers unfairly compete for large contracts due to their reduced labor cost and also avoid responsibility for accidents or injuries on the job.  These costs then fall to the public in lost work time, unpaid medical care and strains on local assistance programs to deal with basic unmet needs to workers and families.

Metro-Walls is one of many companies working on two shopping center expansion projects on Lafayette Road in Seabrook, NH and has a substantial history of labor law violations according to reports made by Local 118 of the New England Regional Carpenters, Manchester New Hampshire.

One of many projects occurring on Lafayette Road.  Metro-Walls is contracted for hanging sheetrock.

One of many projects occurring on Lafayette Road, Seabrook, NH.  Metro-Walls holds the contract to hang sheetrock.

The Department of Professional Employees provides a detailed explanation of the most common types of misclassification on their website here.

More information can be found at the IRS website Independent Contractor (Self-Employed) or Contractor?

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Right-Sizing the Federal Government

From Mark Fernald

Republicans argue that the Federal government is too big. Democrats
argue that revenues are too low. The fight is over money, but the real
debate is over the size and scope of the government.

Before we line up on one side or the other, we should look at recent
history.

Over the past forty years, federal spending has averaged a little over
20% of Gross Domestic Product (GDP). When the economy has been strong,
federal spending as a percentage of GDP has dipped below 20%. When the
economy has been weaker, that figure has been several points higher.
[1] <http://www.whitehouse.gov/omb/budget/Historicals>

During the same forty years, federal revenues have averaged about 18%
of GDP. As a result, the federal government was in deficit for all but
three of those years.

During the Clinton budget years (1994-2001), federal outlays as a
percentage of GDP declined from 21% to 18.2%. During the following
eight Bush budget years (2002-2009), that percentage rose from 19.1%
to 25.2%, as the Great Recession, and spending for two wars and
Medicare drug coverage, all had an effect. (The Obama stimulus
increased spending by 1.5% of GDP.) [2]
<http://www.factcheck.org/2012/06/obamas-spending-inferno-or-not/>

During the Obama budget years that have been completed (2010-2012),
spending as a percentage of GDP was 24.1%, 24.1%, and 22.9%, while
revenues as a percentage of GDP have been 15.1%, 15.4% and 15.8%
(estimate).

As the economy improves, the gap between spending and revenues will
narrow, but there will continue to be a significant gap.

Social Security and Medicare are not part of our current deficit
problem. Revenues for those programs are about equal to spending. As
the retirement of the baby boomers continues, expenses will rise
faster than revenues, and those programs will have to use their
reserves. Medicare is projected to exhaust its reserves and be unable
to pay all its bills in 2024 [3]
<http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/downloads/tr2012.pdf>
while Social Security is projected to exhaust its reserves and be
unable to pay full benefits in 2033. [4]
<file://localhost/%255b4%255dhttp/:www.ssa.gov:oact:tr:2012:tr2012.pdf>

By 2040, Medicare costs are projected to increase from 3.7% of GDP to
6% of GDP. Social Security will increase from 4.9% of GDP to 6.4% of
GDP in 2035. [5]
<http://www.nasi.org/learn/socialsecurity/economy-share>

If we are to keep our promises to seniors, the federal budget,
relative to GDP, will have to increase by several percentage points.

Republicans have other ideas. In 2011, every Republican in the Senate
voted for a constitutional amendment that would mandate a balanced
budget, and that would limit federal spending to 18% of GDP. [6]
<http://www.opencongress.org/vote/2011/s/229>
If implemented, this amendment would require huge cuts in Social
Security and Medicare, or huge cuts in everything else, or a cut of
17% across the board–seven times as large as the sequester.

The goal of the Republican Party is to reduce the federal government
to a size we have not seen since before the days of Medicare,
Medicaid, the EPA, food stamps, Head Start, and student loans. Do we
really want to go back to those days?

There are alternatives. Cuts can be made to eliminate federal subsides
for agribusiness, ethanol, and fossil fuels. The defense budget can be
cut by eliminating weapons the Pentagon does not want, and by bringing
home troops that are stationed in countries that no longer need our
military assistance.

On the revenue side, we could eliminate special tax rates for hedge
fund managers and investment income, enact a financial transaction tax
(both to raise revenue and cut speculation in the stock market), and
limit or eliminate deductions for luxuries, such as the mortgage
interest deduction on second homes and mansions.

These changes would reduce the deficit by hundreds of billions of
dollars a year.

Changes are also needed for Social Security and Medicare so that they
can be self-sustaining programs in the long term. A balanced approach
of revenue increases and benefits adjustments makes sense to
many–unless you are a Republican sworn to oppose all tax increases,
which then leaves only benefit cuts.

It’s budget season in Washington. The media will focus on the clash
between the parties. You should look for the alternate visions of the
parties.

Democrats want to gradually decrease spending, and increase revenue,
so that the two balance somewhere near 21% of GDP. Republicans want to
radically change the scope and mission of the federal government,
reducing it to a size not seen in a couple generations.

You get to weigh in again on election day, 2014.

/Mark Fernald was the Democratic nominee for Governor in 2002. He can
be reached at //mark@markfernald.com/ <mailto:mark@markfernald.com>
/. This column, with supporting footnotes, can be found at
//www.markfernald.com/ <http://www.markfernald.com>

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Corporate Prison Leaders Tell the Truth About Themselves

prison factory

From our friend Arnie over at Inzane Times, weighing in on the ugly truth about the corporate prison system and their efforts to get our Congress and state legislators to sell off justice:

Corporate Prison Leaders Tell the Truth about Themselves

March 17, 2013 by aalpert

FORM 10-K IS A TREASURE TROVE OF INFORMATION

Maggie Hassan made it pretty clear during her successful campaign for governor that she has no interest in turning over control of New Hampshire’s prisons to for-profit corporations.  The majority of Executive Councilors elected in November feel the same.  While the State is still formally reviewing proposals from four private companies to build and operate its prisons, the chance that a contract for prison operation would be drawn up in the next two years is about as close to zero as it can get.  So why have at least two of the companies (CCA and MTC) bothered to invest in lobbying services to defeat HB 443, a bill which would ban private prisons in New Hampshire?

Read more on: Corporate Prison Leaders Tell the Truth About Themselves directly from the source.

For more on the privatization of public services: check this excellent article at truthout.org : Five Poisons of Privatization

thanks to the folks over at the Privatization Blog

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Worthy of a Repeat

Although from March 15, this editorial by Nancy Martland deserves repeating in the “My Turn” section of the Concord Monitor deserves repeating in light of the controversy surrounding wind energy proposals in the western highlands of New Hampshire.

“My Turn: Let’s make state energy policy fair”

By NANCY MARTLAND
For the Monitor
Friday, March 15, 2013

A March 11 Monitor editorial, “Planning New Hampshire’s energy future,” stated:
“Above all, lawmakers would be foolhardy to grant cities and towns veto power
over state approval of wind farms and transmission lines.”

Really? Most people I talk to at first refuse to believe me and then are shocked
and outraged to learn that towns have no decision-making role in the state
energy regulatory process. Or that a Site Evaluation Committee permit preempts
all local ordinances and regulations.

The very idea that a state agency can permit a project over towns’ objections
while excluding them from participation in the decision goes outside what most
people understand as democracy.

It would be one thing if the process were perceived to be fair, but many argue
that the rules and process currently in place are stacked in favor of big
corporations and that the present system is fundamentally unjust. Why? Because
towns have no decision-making role and opposition therefore involves legal
action. Who is best suited to wage legal warfare, small towns with limited
budgets or big corporations who have fleets of lawyers at their command? The
term “railroaded” is especially apt, since the doctrine of preemption originated
with 19th-century railroad barons who did not want to deal with localities while
acquiring land.

Surely the Monitor is not in favor of big corporations riding roughshod over
local communities that seek to protect themselves from damaging energy projects.
Surely some formula which allows affected towns a role in the decision-making
process is only fair. Surely the Monitor does not suggest that simply because a
project is proposed, it should be allowed to proceed even if the process is
unfair and a remedy is available.

Which is more important: a streamlined regulatory process or a fair shake for
everyone?

Incidentally, the state of New York “changed the rules with the game under way”
by removing eminent domain when New York Regional Interconnect, a proposed HVDC
line similar to Northern Pass, was on the table. The project was withdrawn,
since it could not complete its route with taking land forcibly. Guess what?
Champlain Hudson Power Express was proposed soon thereafter. Anybody who thinks
Hydro Quebec will let a little thing like a rules change stop it from selling
the United States its power needs to pay more attention. It’s amazing how
adaptable businesses can be when there’s a lucrative product to bring to market.

(Nancy Martland lives in Sugar Hill.)

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