Welfare for the rich…
A new paper by the US Institute for Policy Studies shows that, through a series of cunning tax and accounting loopholes, the US spends $20bn a year subsidising executive pay. By disguising their professional fees as capital gains rather than income, for example, the managers of hedge funds and private equity companies pay lower rates of tax than the people who clean their offices. A year ago, the House of Representatives tried to close this loophole, but the bill was blocked in the Senate after a lobbying campaign by some of the richest men in America.
Another report, by a group called Good Jobs First, reveals that Wal-Mart has received at least $1bn of public money. Over 90% of its distribution centres and many of its retail outlets have been subsidised by county and local governments. They give the chain free land, they pay for the roads, water and sewerage required to make that land usable, and they grant it property tax breaks and subsidies (called tax increment financing) originally intended to regenerate depressed communities. Sometimes state governments give the firm straight cash as well: in Virginia, for example, Wal-Mart's distribution centres receive handouts from the Governor's Opportunity Fund.Guardian/UK | 9.30.08
…and crap for the rest of us:
Like some others, [Newt] Gingrich is calling for the resignation of Hank Paulson, the treasury secretary, for presiding over a train wreck and then failing to persuade people why $700bn was needed to get back on the rails.
Other heads enthusiastically recommended for the chopping block include those of the Democratic House speaker, Nancy Pelosi, for being "too partisan", and the Republican House minority leader, John Boehner, for not being partisan enough.
An unhappy Boehner said before the vote that the bail-out was a "crap sandwich" that he and colleagues were obliged to eat. As it turned out, 133 Republicans and 95 Democrats found it too much to swallow.
Boehner's lament led the Los Angeles Times columnist Jonah Goldberg to extend the analogy. "Two decades of crapulence by the political class has been prologue to the era of coprophagy that is now upon us," he wrote. "It is crap sandwiches for as far as the eye can see."
As they contemplate their vanished savings and plundered pension plans, you can almost hear voters grimly grinding their teeth in agreement.
Many members of Congress found themselves caught between party leadership and angry constituents, and sought to explain themselves.
"We are now in the golden age of thieves. And where I come from, we put thieves in jail. We don't bail them out," said Pete Visclosky, an Indiana Democrat who voted no.Simon Tisdall | 9.30.08
But we’ve been here before.
The following comes from President Andrew Jackson’s July 10, 1832 message regarding his veto of a proposed banking act for reasons that should echo loudly these days:
Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy.Avalon Project | 10.1.08
So the bankers and their congressional lackeys lost Monday, but, as I said before, they would try an end run and here it is. The House junked the Paulson bill. Now, the Senate is reviving it adding sweeteners and claiming the public changed its mind.
The bill has also been renamed. It’s not a "bailout" anymore. It’s a "rescue."
U.S. stocks jumped the most in six years as growing expectations that lawmakers will salvage a $700 billion bank-rescue package helped the Standard & Poor’s recover more than half of yesterday's 8.8 percent plunge.
JPMorgan Chase & Co., Citigroup, Inc. and Bank of America Corp. climbed more than 13 percent as Senate leaders vowed to resume work on the bailout plan this week after its rejection spurred the market's steepest decline in two decades.Bloomberg | 9.30.08
Here is the basic philosophy admitted
It sums up very well capitalism as it is now operates. Chris Mayer writing at Agora Financial’s Rude Awakening:
I don't believe the rescue package will do all that much either way. I think the credit excess of the prior boom needs purging from the system. The losses will happen either way, whether or not the government bails out a bank. It's just a matter of who bears the cost. The government bailout option seems less painful because it dilutes the pain over a large population of taxpayers.In other words, let the rich few reap the profits, but distribute the losses to the poor.
And Mayer says this as though it were a given of good government.
Squibs
'Mark to make-believe’
Wall Street and the Democratic Party
McDonald’s, Finland have better credit ratings than US
Why newspapers losing to Internet
High heel injuries cost millions
Woman accused of being udderly disgusting
Andorra: longevity, healthy diet, warless for 700 years
posted by Tom Nadeau at 5:31 AM
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