Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. How impressively manipulative!On July 28, Andrew Taylor of the Associated Press reported that:Republican leaders were confident ... that they can push through the House the first minimum wage increase in a decade, along with a cut in inheritance taxes on multimillion-dollar estates. A minimum wage increase is long overdue, and repeal of the estate tax would be detrimental to the very people that a minimum wage increase would help. Today, Joel Havemann of the Los Angeles Times reports that the Republicans' odd bedfellows made it through the House, though the measure faces Democratic opposition in the Senate. Why have the Republicans done this? To undermine their Democratic opponents in an election year. In this session, Congressional Democrats both renewed their perennial call for an increase in the minimum wage and fought a spirited and apparently successful campaign against estate tax repeal. Then, writes Havemann, as "Democratic strategists were preparing to use the [minimum wage] this fall in their bid to wrest control of Congress from the GOP ... 50 mostly moderate Republicans last week appealed to their leaders to act. The group threatened to vote against adjourning for the August recess until their party's leaders agreed to give them a chance to vote on a minimum-wage increase. Neatly turning the tables on the Dems. Havemann offers quotes that offer some hope that, contrary to form, the Dems will find the gumption to call the Republicans out on their cynical manipulation. Representative Chris Van Hollen, Democrat of Maryland, called it "the kind of cynical ploy that makes Americans lose faith in their government." And, given the tone of Havemann's and Taylor's coverage, we might also hope that the media will pick the right side in this fight. Fingers crossed. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More Hershey's Treasures!I admit it, I'm one of those -- I haven't owned a television in years. And it's been even longer since I've watched a game show all the way through. So, really, I'd never given any thought to the idea of what "a lifetime supply of X" would mean. If you haven't, either, then check this out:http://www.bobharris.com/content/view/1057/ It's an appalling lot of stuff! Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The WedgeJuly 9, 2006 "As Workers' Pensions Wither, Those for Executives Flourish; Companies Run Up Big IOUs, Mostly Obscured, to Grant Bosses a Lucrative Benefit; The Billion-Dollar Liability." The June 23 Wall Street Journal headline tells the story: GM and other big corporations cut pensions for the rank-and-file--complaining all the while of "legacy costs"--while they pad executive packages. Meanwhile, the Economic Policy Institute reported last week that executive compensation in 2005 has risen to 821 times that of lowest paid workers-up from 649 times in 1999, and 51 times in 1965. Louis Uchitelle's new book, The Disposable American: Layoffs and Their Consequences, details the human cost. Corporations can't easily cut pay; instead, they lay off thousands of workers at a time. If need be, they hire replacements at much lower pay. The laid-off workers, even those with high education and skills, rarely find jobs at anything close to former rates. Suffering from depression and loss of confidence, they struggle to hang onto homes and family. Uchitelle and others blame international trade for skewing the wage structure. After all how can American workers compete with low-wage Indian or Chinese or Mexican workers? Trade, free trade at least, produces gains on both sides. (I distinguish free trade from theft, as when multinationals rip off the natural resources of third world countries.) Even if textile and electronics workers lose jobs to China, American workers overall should gain from lower prices of imports--freeing them to spend more on new goods and services--and creating new jobs. Why should gains from trade mostly benefit the Waltons? I think the focus on trade diverts attention from structure, structure determined by history and policy. Individual states and regions differ markedly in both the level and trends in inequality. Southern states, which began with slave plantations, have remained less equal than Northern states, which began with small farms. While overall US wage inequality has increased during the last thirty years, several states have grown more equal. Clearly international trade can't explain such anomalies. Here's my hypothesis: US inequality last peaked in 1929, at levels we are now again approaching. Then the Depression shrank robber baron fortunes. It collapsed land values, so small farmers could afford land again. In 1935, it brought Social Security. We fought World War II with marginal income tax rates of 94%, and technical training for millions of men and women otherwise lacking the opportunity. VA mortgages and health care followed the war, as did disability insurance, and in 1965, Medicare and Medicaid. The Depression and WW II also inspired the ethos that we were all in this together. In the 1970's US inequality reached a historic low, and began to reverse. The Federal Income tax became less and less progressive; loopholes ate away income taxes for major corporations. At the state level, property taxes--which are essentially wealth taxes--gave way to sales and income taxes. Spending on prisons grew at the expense of schools and health care. Labor unions declined. A briefly egalitarian society morphed back into one rigged for a wealthy elite. In the 1870's, Henry George observed growing wealth and poverty in New York City: "It is as though an immense wedge were being forced, not underneath society, but through society. Those who are above the point of separation are elevated, but those who are below are crushed down." (Progress and Poverty, 1879). Today as then, our own policy drives the wedge, not outsiders bearing cheap tee shirts and screwdrivers. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). The Short Run: Taxing the Poor and the PoorerTaxing the Poor and the PoorerAn item from "The Short Run" in the May/June issue of Dollars & Sense. Imagine the most unfair tax you can. How about a double tax on the incomes of people who are hard-working but poor, a tax that hits them just at the moment they're using the money to support their families? The state senates of Texas and Arizona are considering just such a tax-on the money that undocumented workers wire back home. Supporters of the tax claim that it's only fair, since the undocumented obviously don't pay income tax. Obviously they're wrong. The Urban Institute reports that 75% of undocumented workers have taxes withheld (and typically do not file for income-tax refunds they may well be owed). The Social Security Administration receives about $7 billion each year under false IDs. No documents means no Social Security benefits, so that's quite a windfall! Last year, Georgia rejected a similar tax, the proceeds from which would have funded indigent emergency room care. After all, the undocumented do tend to lack health insurance. Arizona, on the other hand, has outlawed medical care for the undocumented. But, necessity being the mother of invention, that state found an even better use for the anticipated revenue: building a fence on the border. Wonder where they'll find construction workers... Send significant, outrageous, or hilarious tidbits related to the economy to: Short Run Editor; Dollars & Sense; 29 Winter St.; Boston, MA 02108; or email us with "Short Run Editor" in the subject line. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
