Listen to this radio story, featuring Karen Kraut and Ron Deutsch
NEW YORK - Balancing the state budget in New York has been a challenge, as it has for almost every state. Like most others, New York has focused on cutting spending. However, according to a new report, alternatives to those cuts would be a better choice to get states started down the long road to economic recovery.
Ron Deutsch, executive director of New Yorkers for Fiscal Fairness, points out that Wall Street is one sector of New York's economy that has bounced back from the recession and into record profits. To head off painful state budget cuts, which also will send a negative ripple effect through the state's economy, he urges decisionmakers to consider taxing Wall Street's bonuses and excess profits, instead.
"We've spent trillions to shore up the financial sector, and Main Street basically bailed out Wall Street. So, what we're saying is there are a number of different ways Wall Street could help contribute to helping solve our state's budget gap right now."
The report, issued by the United for a Fair Economy Tax Fairness Organizing Collaborative, also suggests tapping into rainy day funds, scrutinizing existing tax breaks and encouraging more federal revenue sharing.
While many would argue against raising taxes in tough economic times, Karen Kraut, director of the Tax Fairness Organizing Collaborative, says the discussion is more complex than that, and legislators need to focus on getting rid of unsound and unfair taxes, too.
"We're also looking at things like closing corporate loopholes and ending tax breaks for businesses that don't produce the jobs that they say they're going to produce."
The report's bottom line is that states do have tools available, other than cutting spending, to balance budgets. It is available online at http://www.faireconomy.org.
Every day, the damage done by the Bush tax cuts for the wealthy becomes clearer.
With 15 million people unemployed, millions of families facing home foreclosure, and state and local budgets decimated by lost revenues, there is a huge struggle to find the resources needed to respond to our economic crisis.
If you're wondering why we're in such bad budgetary straits, remember those Bush tax cuts of 2001 and 2003. Nearly half of the cuts went to W's "base"--the top 5 percent of income earners--while the bottom 60 percent received less than 15 percent. By the end of this year, W.'s fiscal malfeasance will have cost this nation--ready for this?--$2.5 trillion.
These regressive remnants of Bush's presidency are thankfully set to expire on December 31, 2010. But if there's one thing we can count on--like GOPsters calling modest healthcare reform a "government takeover"--we know Republicans and conserva-Dems will pull out all stops in trying to keep that from happening. That's why the work of Responsible Wealth (RW) network is so critical right now. RW is a group of 700 business leaders and individuals in the top 5 percent of wealth and income who've received the lion's share of Bush tax benefits.
The group was key to preventing Bush from permanently repealing the estate tax--which has generated $1 trillion in revenues over the last ten years and is paid by fewer than one percent of families. Now it's turning its attention to ending the Bush tax cuts for the wealthy once and for all by taking the Tax Fairness Pledge and directing their tax breaks to groups that fight for tax fairness that benefits all Americans. (Groups like Responsible Wealth/United for a Fair Economy.) There is a Tax Break Calculator anyone can access to determine the amount they receive from the Bush tax cuts.
Mike Lapham, director of Responsible Wealth and a signer of the pledge, said: "These tax cuts were irresponsible when they were passed in 2001 and 2003. In the midst of a deep recession, they are downright inexcusable. Members of Responsible Wealth recognize that their own prosperity and success would not be possible without the foundation of a strong public education system, an effective transportation network, a strong legal system and more. Responsible Wealth members are more than happy to pay their share to support those public investments that they have benefited so greatly from."
We need people who have benefited from these cuts to step forward and say plainly, "We don't want them and our nation can't afford them."
It's time to rebuild our country and that's going to require ending the Bush tax insanity--support Responsible Wealth's fight for a more progressive tax system.
Read this blog post on TheNation.com.
Virtually every state is groping for solutions to budget gaps of historic proportions. Unfortunately, most states are closing the shortfalls in counterproductive ways that deepen the recession, exacerbate hardships for residents, and stifle economic recovery.
UFE’s Tax Fairness Organizing Collaborative recently published report, “Solutions that Work for Main Street: Progressive Guidelines for Closing Recessionary State Budget Gaps,” provides a set of pragmatic principles for closing state budget gaps in ways that enhance economic recovery, ongoing stability, and more widely shared prosperity.
Key points of the Guidelines include:
Closing Recessionary State Budge Gaps
- Make more money available to state governments
- Make tax increases and tax reform one and the same
- Encourage of federal-state revenue sharing
Defending a More Progressive and Economically Sound Approach
- Don’t equate frugality or efficiency with budget austerity
- Challenge anti-tax mythmakers
DOWNLOAD THE GUIDELINES (PDF 176KB)
"In this period of painfully partisan politics, it's too easy for the focus to be on who won today, instead of the American people's needs. We're witnessing just that in two roiling debates--one over the proposed Consumer Financial Protection Agency (CFPA), another over the recent Supreme Court ruling in Citizens United v. Federal Election Commission. [...]
The new CFPA's sole mandate would be to shield consumers from deceptive and dangerous financial products and practices. It would have the authority to not only write rules to better protect consumers, but also to enforce them. [...]
The Supreme Court's Citizens United ruling in January granted unabated financing of campaign communications by corporations, equating political spending with the right to freedom of speech, as listed in the First Amendment.
The...ruling will only make efforts to re-regulate the financial industry more difficult in the years to come, so long as financial institutions have the ability to amplify their "voices" by simply writing a larger check. [...]"
Read the full op-ed by Mazher Ali on CommonDreams.org.
The Insight Center for Community Economic Development recently released a report, Lifting as we Climb: Women of Color, Wealth, and America's Future (PDF 493KB), which lays out the massive disparities of wealth between white women and women of color.
"It's rather shocking," said Meizhu Lui, Director of Insight's Closing the Wealth Gap Initiative and contributor to the report. [...] "Even for those of us who have been looing at the wealth gap for a while, we were shocked and amazed at how little women of color have."
One of the report's most grim findings is that while single white women between the ages of 36 and 49 have median net assets of $42,600, their non-white counterparts have only $5.
Much of the report's data was based on the Center's analysis of the Federal Reserve's 2007 Consumer Finance Surveys released prior to the economic larger collapse, which provides sufficient reason to believe that the numbers are worse today.
The report takes into account various factors exacerbating racial wealth disparities amongst women in the US. These include institutional factors, such as tax structures or access to education or fair lending, generational trends in asset-building, and even family and cultural factors, such as parental or marital situations.
"The popular image is that [women of color] spend too much...running up credit card and consumer debt, but the cost of living has risen faster than income, and they need to go into debt for basic daily necessities," said Lui. "It's compounded because unemployment is twice as hight in the Black community than it is in the white community."
The Insight Center intends to use this report to encourage government officials to implement measures to help close the racial and gender wealth gaps, as has been done with past legislation. Lui notes, "It's not about behavior. It's about government policies. [...] Our government knows how to build wealth for people. They've done it for others and they can do it for all of us."
Read the report (PDF 493KB)
Read commentary on the report by Tim Grant in the Pittsburg Post-Gazette.
Sears: "While the economy is still sour for the vast majority of Americans, and for most of the rest of the world as well, the world's billionaires appear to be doing quite nicely. Forbes published is 24th annual list of the world's richest people today. And, though the stock market crash caused a sharp drop in the number of billionaires from 1,125 in 2008 to just 793 last year, like an endangered species in an ideal environment, their numbers are close to being fully restored.
There are now 1,011 citizens of the world with wealth topping seven figures, and the 10 richest--3 of them are Americans--all saw their wealth increase by a total of $342 billion. So if the rest of us are still struggling to get by, why are those who don't need to struggle at all doing so well? Mike Lapham, Director of the Responsible Wealth project at United for a Fair Economy says for the American billionaires, at least, the answer is a combination of several factors."
Lapham: "We have a society that, in general, disproportionately values certain types of work over others. We also give a lot of tax advantages to investment over earned income. For example, the wealthiest folks are getting a huge portion of their income in capital gains. Starting back in 1997, we cut the capital gains rate from 28 percent to 20 percent. We cut it even further under George Bush down to 15 percent.
So if you're one of the top 400 taxpayers, you probably have about two-thirds of your income in capital gains and you're getting taxed a much lower rate than you're getting taxed on other things. That's one of the simplest ways that wealthy folks are amassing more and more wealth. But, if you're in one of the bottom quintiles in our society, you're paying almost all of your income on basic necessities...so you're not gaining much year over year.
The folks at the very top have figured out how to invest in things that are sheltered. They can invest in things that give them tax credits. They can take advantage of loopholes with the amount of money that they have that the average person just doesn't have. [...]"
"President Obama met Thursday afternoon with members of the Congressional Black Caucus, ostensibly to talk about efforts to get health care legislation passed. But the leaders also discussed jobs and high unemployment in the African-American community.
After the meeting, the White House in a statement said the president 'acknowledged the progress that has been made on the economy, while also expressing his concern for long-term unemployment. He requested that members provide specific recommendations to the challenges concerning job creation.'
Studies have shown that blacks and Latinos have been disproportionately hit by the dismal economy. According to the organization United for a Fair Economy, unemployment in those communities hit a 27-year high in 2009.
Democratic Rep. Barbara Lee of California, chairwoman of the 43-member Congressional Black Caucus, attempted to mute her members' public complaints about the president that preceded the caucus' White House meeting Thursday.
Emerging from the White House, Lee said caucus members have 'been working with the president since before he was the president,' and that she didn't know where reporters had heard 'grumblings' about Obama."
Read the full story by Liz Halloran on NPR.org.
"William Diaz of the 462nd Transportation Battalion feels like he's fighting a war on two fronts. In April, the 39-year-old U.S. Army Reserve corporal is being deployed to Kuwait for a year-long tour.
But for the past few months, Diaz has been fighting another very painful battle in his own backyard: American Servicing Corp., a division of Wells Fargo, is seeking a court order to foreclose on his two-family home in Elizabeth, N.J., a predominately Latino city. [...]
'I am being deployed. I can't say no. If I do, I face court martial. But I feel like I am being forced to choose between my family and my duty to my country,' says Diaz.
For cash-strapped families like his, all it takes is one hiccup—a jump in interest rates, an illness, the loss of a job, a pay cut—to find themselves staring down the barrel of financial ruin.
These days, the contrast between struggling families on Main Street and bankers on Wall Street who are prospering at their expense could not be sharper. In the midst of the worst financial crisis since the Great Depression, with the U.S. unemployment rate hitting 10 percent and more than 1.4 million Americans filing for bankruptcy in 2009, Goldman Sachs celebrated one of the most profitable years in its 141-year history. In January of this year, Goldman Sachs doled out a hefty $16 billion in bonuses for the 2009 year, up from $10.9 billion in 2008—a pretty staggering feat given that a little more than a year ago, Goldman was forced to take American-taxpayer dollars just to stay alive.
The human tragedy all too frequently goes unnoticed amid the noise and finger-pointing in Washington, D.C., and Wall Street over who is to blame for the subprime debacle and its ensuing economic ramifications. But the trauma, the hardship, the heartache being felt by millions of ordinary Americans who have lost their jobs, their homes and their life savings—most of them Black and Latino—is still very real and still very raw. [...]
In fact, a study by United for a Fair Economy examining housing and racial bias found the subprime-lending mess has caused the greatest loss of wealth to Blacks and Latinos in modern U.S. history. During the past eight years, Black borrowers have lost between $72 billion and $93 billion from subprime loans, while Latino borrowers have lost between $76 billion and $98 billion during that same time period, according to the report.
Ironically, the tax dollars that supported the bailout of Wall Street's 'too-big-to-fail' banks and helped pad their bonus coffers came largely from struggling middle-class families—from people like Diaz, already working hard to make ends meet. [...]
As the real-estate market pushed to its peaks in 2005 and 2006 and home prices across the nation literally doubled, new homes couldn't be built fast enough. This voracious demand encouraged lenders to loosen their guidelines by offering loans to borrowers with even the shakiest credit. Wall Street banks cheered them on, extending generous credit terms to lenders and offering loan officers extra money to push subprime mortgages. [...]
Goldman continues to profit handsomely from the subprime-mortgage fallout. During the boom, Goldman Sachs bought thousands of subprime mortgages, many of them from some of the most toxic lenders in the business, and packaged them into high-yield bonds. [...]
In fact, Wall Street investment banks, including Goldman Sachs, were subprime-mortgage lenders' single most important source of capital and therefore had a lot of power and influence in the subprime-mortgage market, according to a report issued by Center for Public Integrity. [...]"
Read the full article by Sam Ali, Luke Visconti and Barbara Frankel on DiversityInc.com. Scroll down for additional commentary from Luke Visconti in dialogue with readers.
"There is a push underway by Republicans in Congress to trade their support for a jobs bill for a more favorable estate tax.
The left says it is a blatant case of the rich holding the poor hostage. The right say it is the only way to get a reasonable compromise on the estate-tax issue. [...]
Republicans want a full repeal of the tax or a version more along the lines of a proposal by Senate Minority Whip Jon Kyl (R., Ariz.) and Sen. Blanche Lincoln (D-Ark.), which would cap the tax at 35 percent on estates worth more than $5 million.
Republicans aren’t likely to win a full repeal (especially not in these populist times) but they may get something close to the Kyl-Lincoln plan.
Lee Farris, Estate Tax Policy Coordinator at the left-leaning United for a Fair Economy called the plan to link the estate tax to the jobs bill 'an outrage.'
'Why are Senators Kyl and Grassley more worried about enriching the heirs of multimillionaires than about helping Americans hit hardest by the recession?' she said in a statement. [...]"
Read the full blog by Robert Frank.
"In a series of comments over the past few days, Senators Kyl and Grassley have made clear their willingness to hold up unemployment benefits for struggling Americans as a bargaining chip to permanently weaken the federal estate tax, and further enrich America's wealthiest families.
'Why are Senators Kyl and Grassley more worried about enriching the heirs of multimillionaires than about helping Americans hit hardest by the recession?' asks Lee Farris, Estate Tax Policy Coordinator at United for a Fair Economy (UFE). 'It is an outrage that they are willing to hold struggling Americans hostage in their efforts to secure another huge tax cut for the wealthy Wall Street crowd that crashed our economy in the first place!'
The $15 billion jobs bill that passed on Wednesday did not extend unemployment benefits or the COBRA health insurance subsidy. As a result, more than a million people will run out of benefits next month if the deadline is not extended, prompting Congress to begin debate over extending those benefits. But Senators Kyl and Grassley are ready to block it to get their way.
Minority Whip Senator Kyl, who has been a leader in efforts to weaken the federal estate tax, stated on Feb. 24 that Republicans will block consideration of the new unemployment benefits bill unless they get 'a path forward fairly soon' to voting on a permanent, and weakened estate tax. And earlier this month, Senator Grassley said that 'timely consideration of permanent bipartisan estate and gift tax reform' is 'essential to completing action on' a previous jobs bill."
Read the full press release on CommonDreams.org.