Somehow these debates keep taking place without any mention of our military spending, which keeps rising as if there is no shortage of money.  As Carl Conetta notes (also see chart below):

With his decision to boost defense spending, President Obama is continuing the process of re-inflating the Pentagon that began in late 1998 — fully three years before the 9/11 attacks on America. The FY 2011 budget marks a milestone, however: The inflation-adjusted rise in spending since 1998 will probably exceed 100 percent in real terms by the end of the fiscal year. Taking the new budget into account, the Defense Department has been granted about $7.2 trillion since 1998, when the post-Cold War decline in defense spending ended.

The rise in spending since 1998 is unprecedented over a 48-year period. In real percentage terms, it’s as large as the Kennedy-Johnson surge (43 percent) and the Reagan increases (57 percent) combined. Whether one looks at the entire Pentagon budget or just that part not related to the wars, current spending is above the peak years of the Vietnam War era and the Reagan years. And it’s set to remain there. Looking forward, the Obama administration plans to spend more on the Pentagon over the next eight years than any administration since World War II.

The Project on Defense Alternatives has compiled a very useful collection of studies and articles analyzing our military spending here.

The conventional wisdom is that this is the richest country in the world.  Our wonderful market mechanisms have generated great wealth and opportunities which have contributed to a steady improvement in our quality of life.

Well, the U.S. is a rich country and the economy has generated great wealth and opportunities but as for a steady improvement in our quality of life—I guess the question is for whom?

Increasingly it appears that working people are facing a future of never ending work, and at jobs that will provide few if any benefits (material, social, or community).

What leads me to say that?  CNN Money offers one reason:

The percentage of American workers with virtually no retirement savings grew for the third straight year, according to a survey released Tuesday [March 9, 2010].

The percentage of workers who said they have less than $10,000 in savings grew to 43% in 2010, from 39% in 2009, according to the Employee Benefit Research Institute’s annual Retirement Confidence Survey. That excludes the value of primary homes and defined-benefit pension plans [which are different from the more common defined contribution plans—they are pretty rare].

Workers who said they had less than $1,000 jumped to 27%, from 20% in 2009.

The article suggests that workers are going to have to get smart–delay their retirement and use their extra working years to boost savings.  But—are there really going to be good, stable, well-paying jobs for people?  There sure aren’t many now and the predictions are far from rosy.

Compounding the problem is the growing attack on Social Security—a system that remains well funded and administered, although you would never know it from the media and most of our political leaders.  The “consensus” is that the most important thing that government needs to do to save the economy is cut social spending, and social security is on or near the top of most cut lists.  Tragically the consensus is plain wrong.

Regardless, President Obama appears to have embraced this conventional wisdom.  Last month he created a new commission and charged it with developing suggestions for reducing the national debt.  He appointed former Clinton Administration Chief of Staff Erskine Bowles and former GOP Senator Alan Simpson as the co-chairs.

Here is what The Hill has to say about this commission:

The goal of the commission, created through an executive order, is to come up with a fiscal reform plan, which could include tax increases, spending cuts and changes to entitlement programs, aimed at bringing down the deficit to a level equivalent to 3 percent of the country’s economy. That’s the level the White House said is sustainable over the long term.

“Everything’s on the table,” Obama said at a ceremony after he signed the executive order creating the commission. “That’s how this thing is going to work.”

Sadly, everything being on the table means entitlement programs and the commission’s real mission is to provide political cover for an attack on the two biggest and most popular ones: Social Security and Medicare.

Alan Simpson, for example, has spent years trying to dismantle the social security system.  Bowles is only little better.

Unless there is real popular resistance the outcome is easy to predict.  The Commission will recommend cutting Social Security benefits and delaying the retirement age at which people can collect their full benefits.  It is worth remembering that 65% of those over 65 rely on Social Security for over half their income.

Such a future—work harder, work longer and for less—-it sure is a good thing that this is such a rich country.

One of the best examples of this is the new CBS show Undercover Boss.

Here is what CBS says about the show (which had its first airing on February 7, right after the Super Bowl):

Each week a different executive will leave the comfort of their corner office for an undercover mission to examine the inner workings of their company. While working alongside their employees, they will see the effects their decisions have on others, where the problems lie within their organization and get an up-close look at both the good and the bad while discovering the unsung heroes who make their company run.

Companies whose chief executives will make the undercover journey include such corporate giants as Waste Management (Larry O’Donnell, President and C.O.O.), 7-Eleven (Joseph M. DePinto, President and C.E.O.), Hooters (Coby G. Brooks, President and C.E.O.), White Castle (Dave Rife, Owner/Executive Board Member) and Churchill Downs (William C. Carstanjen, C.O.O.).

The premiere episode of UNDERCOVER BOSS will follow Larry O’Donnell, the President and C.O.O. of Waste Management, as he works alongside his employees, cleaning porta-potties, sorting waste at one of their recycling plants, collecting garbage from a landfill and even being fired for the first time in his life. O’Donnell’s mission is to garner an up-close look at his company and workforce to see how and where improvements can be made from both an operational and morale standpoint.

For a critical look at the show, including a discussion of how it is filmed, check out this Working Class Perspectives blog entry.

According to a NPR blog discussion of the premier episode, when O’Donnell (the head of Waste Management) is pressed by a reviewer at a post-premier discussion to highlight some of the changes he might make in light of the terrible working conditions he observed, about the only thing he can suggest is a renewed corporate effort to better explain corporate policies to the workers.

That should make everyone feel better–including the female trash collector who, “under the watchful eye of the . . . supervisor surveillance truck, . . .  is reduced to urinating into a tin can rather than compromising productivity by taking a bathroom break.”

To make it into the top 400 in 2005,  you had to report income of at least $100.3 million.  The average reported income for the group was $213.9 million.

A Wall Street Journal article discussing these figures adds the following context:

“Those numbers are really stunning,” says Michael Graetz, a professor of law at Yale Law School and a Treasury Department official under President George H. W. Bush. “One hundred million dollars is an enormous estate to be accumulated over a lifetime, and not what we think of as one year’s income for anybody.”

The new data actually understate the group of 400’s remarkable performance. The income yardstick used by the IRS for its study is known as “adjusted gross income,” and it doesn’t include tax-exempt interest income from state and local government bonds. (An IRS spokesman says nearly 4.5 million investors reported tax-exempt interest income for 2005 totaling $57.7 billion.) Moreover, adjusted gross income, or AGI, is arrived at after deducting various items, such as moving expenses, alimony payments and the self-employed health-insurance deduction. (For those who file Form 1040 for 2007, it’s the amount shown on line 37.)

For its analysis, the IRS relied only on what taxpayers actually reported, without making any independent effort to estimate unreported income. The report doesn’t identify anyone by name because of taxpayer-privacy laws. It’s also important to remember these figures don’t represent wealth or even lifetime earnings — merely income for a single year.

It is hard to get good numbers on the super rich.  They are more than happy to fund studies on the poor–but for obvious reasons don’t like to have their own lives examined.

Watch autoworkers compete to keep their jobs in this video:

Some highlights:

BW: Every American President in the last 30 years has had a major CEO as a member of the Cabinet in the inner circle. You don’t so far. Why is that?

It just has to do with who the particular individuals who were needed at a time of crisis. I thought it was very important to have Larry Summers and Tim Geithner as two of my key economic advisers early on because they had gone through significant global economic crises before.

But I think it is a legitimate point to say that we want and need more input from the corporate community, if nothing else, just so that we can communicate to the corporate community and to the business community the fact that, if you look at our actual policies, as opposed to the speculation around our policies, they have been fundamentally business-friendly.

BW: Let’s talk bonuses for a minute. Lloyd Blankfein: $9 million. Jamie Dimon: $17 million. Now, those were in stock and less than what some had expected. But are those numbers O.K.?

First of all, I know both those guys. They are very savvy businessmen. And I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.

I do think that the compensation packages that we have seen over the last decade, at least, have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.

BW: Seventeen million is a lot for Main Street to stomach.

Listen. $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that and don’t get to the World Series either, so I am shocked by that as well.

. . .

The last point I want to make with respect to just our policies on business, generally, and this goes to your first question about the perception of us being anti-business: This year I will sign legislation that will cut corporate taxes by about $70 billion— their tax obligations will be reduced by about 10% because of bonus depreciation and some other steps that we intend to take. This notion, somehow, that we have been putting this enormous tax burden on business is just not true. It is not supported by the facts.

And even some of the more controversial proposals that we have put forward, like health care, if you actually analyzed what’s on the table there, certainly small businesses are a net winner, one of the biggest winners. Because it would provide significant subsidies to them to provide insurance for their workers and allow them to pool with other small businesses and individuals to get a better rate. Large businesses who are already providing health insurance to their employees would end up benefiting from significant changes in delivery systems that would promise to lower costs over the long term.

You would be hard-pressed to identify a piece of legislation that we have proposed out there that, net, is not good for businesses.

The U.S. Economy and China: Capitalism, Class, and Crisis

by Martin Hart-Landsberg

The U.S. economy is in bad shape and people are understandably seeking solutions.

Many, encouraged by mainstream media and politicians, believe that China’s trade policies bear primary responsibility for the structural decay of our economy and that recovery will require, above all, pressuring the Chinese government to implement “market-freeing” policy changes that will bring the U.S.-China trade relationship into balance.

Despite its popularity, this nation-state approach to understanding the dynamics of the U.S.-China relationship is seriously flawed.

It encourages people to see U.S. industrial problems, falsely, as the outcome of a contest between China and the United States, in which the Chinese government has boosted the well-being of its citizens at U.S. expense, through “unfair” practices. As a consequence, it leads to counterproductive policy recommendations.

In this paper, I offer an alternative approach to understanding the U.S.-China trade relationship; one that relies on a class-based analysis of (global) capitalist dynamics.

It leads, not surprisingly, to very different economic insights and political challenges.

For example, it reveals that the threat to U.S.-based manufacturing activity comes not from China, but from the operation of a transnational, corporate-shaped, regional production system, in which China serves as the region’s final assembly platform.

It also reveals that, while both transnational capital and elites in China have greatly benefited from the operation of this system, Chinese workers have paid a high cost; in fact, Chinese workers experience many of the same negative consequences from its operation as do workers in the United States.

It also explains why both the Chinese and the U.S. governments have responded to the current world crisis with strategies designed to maintain the status quo, despite the negative effects of this decision on working people.

In short, my analysis reveals that it is capitalism—not competition between China and the United States—that is the source of our economic problems.

Our challenge, then, which I briefly address in the conclusion, is to draw on the above insights to develop a strategy capable of both illuminating and contesting capitalism’s destructive logic—a task that puts U.S. workers in solidarity, rather than competition, with workers in China. . . .

Continue reading the entire article (which was published by Monthly Review in February 2010) HERE.

As with all posts, the comments section is open!

The website visualizingeconomics.com offers the following picture of trends in top federal marginal tax rates.   As one can see, the top tax rate has fallen substantially.  And it will remain quite low by historical standards even if President Obama allows the Bush-era tax cuts to expire in 2011.

To be clear: we are looking here at the top marginal federal tax rate.  In other words it is the federal tax rate applied to income that exceeds the top bracket (we currently have six tax brackets, each with higher tax rates).  Currently the top bracket begins at $373,650.  Thus, the top tax rate is the rate at which income above $337,650 is taxed.

You can see a history of US tax rates and brackets here.

It sort of leaves you speechless, doesn’t it?  Actually, it is easy to forget that we created corporations—in fact we initially made them pay for a charter which limited their lifetime and set the terms within which they could do business—for example they were normally chartered for only one activity, making it impossible for them to become large conglomerates with interests in many different markets.  We have come a long way since then.

How long?  Well, the public relations firm Murray Hill, Inc. has decided to test the limits of this corporate personhood trend.  It has decided to run for Congress in the Republican primary in Maryland’s 8th congressional district.  To be clear, it is doing this to protest the Supreme Court’s decision.

The firm says that it wants to “eliminate the middle man” and run for Congress directly, saving time and money.  According to its web site statement:

Until now,” Murray Hill Inc. said in a statement, “corporate interests had to rely on campaign contributions and influence peddling to achieve their goals in Washington. But thanks to an enlightened Supreme Court, now we can eliminate the middle-man and run for office ourselves.”

“The strength of America,” Murray Hill Inc. says, “is in the boardrooms, country clubs and Lear jets of America’s great corporations. We’re saying to Wal-Mart, AIG and Pfizer, if not you, who? If not now, when?”

Murray Hill Inc. plans on spending “top dollar” to protect its investment. “It’s our democracy,” Murray Hill Inc. says, “We bought it, we paid for it, and we’re going to keep it.”

The campaign’s designated human, Eric Hensal, will help the corporation conform to antiquated “human only” procedures and sign the necessary voter registration and candidacy paperwork. Hensal is excited by this new opportunity. “We want to get in on the ground floor of the democracy market before the whole store is bought by China.”

Campaign Manager William Klein promises an aggressive, historic campaign that “puts people second” or even third.

You have to watch its campaign video–here

For more on corporate personhood visit the Reclaim Democracy website

State and local governments all over the country are in trouble as a result of the recession and the enormous tax breaks they have been giving business.  As the Economic Policy Institute explains:

states face a two-year $357 billion budget shortfall for the fiscal years 2010 (which began in July) and 2011, while local governments face an additional $80 billion shortfall. The American Recovery and Reinvestment Act passed last February has provided much-needed relief, but its $106 billion in aid to states totals only about 25% of the $437 billion state and local shortfall. The rest of the $331 billion has to be met by spending cuts and tax increases.

State and local governments cannot run deficits (unlike the federal government).  Therefore they can only balance their budgets in two ways: cut spending or raise taxes.  The reality is that cutting public spending will do far more harm to state and local economies (in terms of employment and quality of life) than will an increase in taxes on the wealthy and corporations.

So, what can we learn from the Oregon experience.  One is that people may finally be prepared to defend their interests in what has been a rather lopsided class war to this point.   Hopefully the victory in Oregon will encourage legislatures in other states to take a similar (and even stronger) stand against more giveaways at popular expense.

Another lesson that must be learned from the Oregon experience is that those with power are well aware of what is at stake. According to the Oregonian, “Tuesday’s tax vote left business leaders frustrated across Oregon, lamenting the bitter tone of the campaign and damage they perceive to the state’s economic climate.”

Lamenting the bitter tone?  Who are they kidding?  It was the campaign against the measures (led by “Oregonians Against Job Killing Taxes”) that falsely claimed public workers were going to enjoy huge raises and the state had enormous reserves hidden away, and refused to change its claims regardless of the evidence presented.

Among those business leaders most upset with the outcome are some of Oregon’s most well known (and beloved) corporate heads, for example Phil Knight (Nike) and Tim Boyle (Columbia Sportswear).  Knight gave some $100,000 to the anti-Measures campaign, Boyle approximately $75,000.

Here is what Phil Knight had to say about Measures 66 and 67 in an article he wrote for the Oregonian:

Measures 66 and 67 should be labeled Oregon’s Assisted Suicide Law II.

They will allow us to watch a state slowly killing itself.

They are anti-business, anti-success, anti-inspirational, anti-humanitarian, and most ironically, in the long run, they will deprive the state of tax revenue, not increase it.

The current state tax codes are all of those things as well. Measures 66 and 67 just take it up and over the top.

Hmmm—anti-success?  Anti-humanitarian?

According to the Oregonian, Intel, the state’s largest employer, “tried to steer clear of the tax fight.”  Why?  “One of the reasons we chose to remain neutral was to be in a position after the election to participate in discussions with business, government and labor leaders who want to shape the state’s future,” said Jill Eiland, Intel’s Oregon public affairs manager”.

One can only wonder as to what kind of future corporations have in mind for us.  Lets be clear—corporate taxes have been falling for some time in Oregon and nationally, in terms of rates and shares of tax revenue.  And profits have been rising.   And the great majority of us have suffered as a consequence of the policies that underpinned those trends.  A little push back is all Measures 66 and 67 represent—but as corporate responses make clear, those on top are determined to defend their gains regardless of the costs to the rest of us.