Thursday, December 20, 2012

You can dock your billions anywhere you want to

There's only one shopping day left to get your Mayan calendars before they are gone for good. The layoff of calendar makers helped drive up initial unemployment claims by 17,000 from the week before. Total claims are down 21,000 compared to a similar week last year.

If you were concerned about people losing Federally extended unemployment benefits if we start down the Fiscal Bunny Slope, it turns out not to be a widespread problem. According to today's ETA press release only NY state is still getting Federal extended benefits. You see the Republicans made off with that during the last phony crisis by severely limiting eligibility state by state. The needs of actual people don't matter of course.

There are unconfirmed rumors that Obama is willing to give into the Republican demand for 'chained' CPI for calculating Social Security and veterans benefits. This is the most cruel approach to CPI they've come up with yet, as increases will depend on lifestyle choice rather than actual prices.

As people on Social Security are confronted with higher prices and adjust their lifestyle accordingly, the CPI will reflect their lower spending rather than the price increase. In simple terms, if grandma spends a dollar on chicken instead of two dollars on beef because beef has doubled, this shows as no increase. If she stops buying meat in favor of cat food, would that show as a decrease in prices? Probably. As rents increase and seniors are pushed into cheaper housing or no housing, this doesn't show in the CPI. Over time benefits will be squeezed more and more as a comfortable lifestyle in old age becomes 'chained' by ever lower means.

The truth is that this isn't new policy, just a new wrinkle. The CPI has been counting the increased power of personal electronics as price decreases for a long time, this is just one of many point shavers put in place by Reagan. Clinton built factors into the food stamp calculation that steadily cut benefits to the point that even Bush was shamed into increasing them. It was actually Bush that was the 'food stamp President', not Obama.

By some calculations benefits should be 70% higher than they are today. This would not only improve the lives of seniors and the disabled, but stimulate the economy as well. How to pay for it? If today's workers received the wages that their grandfathers enjoyed there would be no shortfall in funding future benefits even without lifting the cap on rich people's Fica contributions.

The simple fact is that working people should make double what they currently are paid on average. This doesn't even factor in the remaining union workers who still get full pay. Once that there are only 'second tier' union workers left the average of wages will be even lower.

Employers are constantly whining that they can't get skilled workers, but they don't pay skilled worker wages for new hires. The average factory worker in the US gets maybe $28/hour (it's probably gone lower since this number was calculated). Second tier workers are lucky to get half that, and increasingly employers are 'locking out' workers to eliminate benefits for the second tier. A 'lock out' is where the employer goes on strike for lower wages even if the employees are willing to accept the status quo. The math is simple, a 'half pay' worker pays half the Fica contribution. It's a 'flat tax', except for rich people, they pay hardly anything. Low wage workers are also part of Romney's 47% who pay no income tax and are 'takers' getting government 'handouts' like Medicaid and child credits.

But golly, the rich are the job creators. Not so much, according to the IRS only 3% of the 0.1% of top earners could be in anyway classified as entrepreneurs. The rest invest very 'conservatively', they don't hire anybody and engage in behavior that costs jobs. Even the actual job 'creators' in this group 'create' most of their jobs in China so that they can 'off shore' the profits and pay no taxes.

Economists studying international banking estimate that between 20-30 Trillion USD are residing in tax haven countries. There aren't huge money bins there of course, the transactions are handled from here as 'foreign' investments, and the money flows freely around the world including into the US. Just without those pesky taxes. Just because the 400 foot 'yacht' is registered in the Caymans, doesn't mean it can dock in Miami. You got to show 'job creators' respect, or else they'll leave. So goes the rightwing talking point ala Ayan Rand's novels. Sounds like they already left. We need to start treating them as foreign nationals, 'that green card will cost you $20 billion'.


Anonymous said...

The US economy is today a consumer driven economy by 80%. The goods arriving in the US come in at or near the retail price. The commercial for BDO, a accounting and consulting corporation takes place in a US container port. The conversation goes who does your "logistics"? The reply is BDO. The next question is who does it over there? The rply is BDO also. The 79 cent I-POD sells for $200 here the difference stays off shore. The people handing the containers and the goods inside are just expences and do not add any value to the inported goods and all the profits remain outside the US.