Common Myths

  • Republicans are against unions
    Republicans are not always anti-union, but generally side with big business over the interests of labor. But lost in much of the discussions, is the awareness that big business usually consists of unions of owners. These owners collectively bargain with their employees, either with the employees singly or in groups. Quite often those groups of employees are not based on unions, but instead on bureaucratic determinations made by the corporation. Republicans, and often Democrats, will side with the more powerful union of owners against the employees. Why is there a false understanding of corporations? Because clearly the market supports unions of owners over individual large owners and because of decades of misconceptions often fostered by corporations. Somehow many believe unions of owners are efficient and unions of employees or consumers are inefficient. Of course, democracy, a system based on the equality of humans, can be portrayed as inefficient in the short terms and tyranny of the powerful much more efficient. And that gets to the main distinction in the form of unions of owners versus employees, generally corporations are anti-democratic (power decided by wealth) versus unions of labor or consumers (power decided by people).
  • Republican leaders are against regulations
    Look it up, regulations are essentially laws. What Republicans tend to be against are both laws and regulations that force corporations to favor protecting life over profits. Republicans tend to be strongly for regulations and laws that protect corporation profits and protect corportations being held accountable by a democratic society.
  • Social Security is running out of money
    Repeating a lie doesn't make it so. Williams repeats the myth that Social Security is running out of money despite evidence and protestations to the contrary by Krugman. Unfortunately this myth is designed to allow a wealthy minority to steal the savings of generations of Americans.

Cures for the common myth

  • HeadlineUpdate
    William Klein tears apart the headlines to get to the real story.
  • On the Media
    Show that savages co-opted and self-censored media coverage.
  • RIP - Wall Street Journal
    Until recently, perhaps, the best newspaper in the United States. Murdoch decided to squeeze the life out of this golden goose. Previously had fantastic muckracking pieces. The ruling class preferred WSJ to the whitewashed and watered down mass media.
  • Technorati

    Hidden among the millions of blogs and RSS feeds is the vox populi.

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How Tax Cuts for Very Wealthy Increases Taxes on Everyone Else

 

Any day there will be a debate over whether to extend the Bush tax cuts to be continued into the future. As this is not likely to be a revenue neutral and will substantially increase the debt, there will be a question as to whether it otherwise makes economic sense. Lost in the current debate is who will buy the debt generated by the tax cuts. When the government borrows money, it issues debt instruments: treasury bills, bonds, etc. Within a fixed amount of time the US government pays the lender, even if issuing more debt at a faster rate (aka deficit spending). The simple answer as to who buys debt is those who have money to invest.
There are two types of borrowers, taxed and untaxed. Untaxed borrowers include governments, foreign and domestic. Among the taxed ones are US taxpayers. Obviously the very wealthy are a major part of those that have cash to lend the government. When the wealthy buy the debt of the US government they are making a profit off of the rest of the taxpayers and not investing the money in the private sector. When in the First World War it was decided to allow the public to buy the war debt rather than only raise taxes. see: http://en.wikipedia.org/wiki/United_States_Treasury_security .  Since then government bonds have become an important part of an investment portfolio.
And it was during the initial Bush tax cut arguments that the question of paying back the US government debt too quickly took place. One argument that I do not remember seeing is that by eliminating the US government debt, there would not be the opportunity for the wealthy to both profit from investing in government debt in three ways: direct interest profit, hedge/diversification for riskier investments and from not having paid the taxes for which the government borrowing was necessary. Like other investments, there is tax on the interest. And the more the government borrows the more that those who cannot lend the government increasing amounts end up paying in interest payments to those who do.

Here are two methods of stopping the transfer of wealth from those who do not buy government debt to those who are wealthy. First, only give tax cuts to the very wealthy when the debt is at zero. The second is that until the debt is finally paid off, the very wealthy must choose to either go back to the rates that will quickly return the budget to surplus or not be allowed to buy government debt. In this way most people will not have to shoulder the costs of the current system of allowing some to avoid paying regular taxes with money that they turn around and lend to the government. 

 

November 04, 2010 |

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