230 Million Unnecessary Returns

This tax day, April 17, about 230 million American taxpayers will file a federal income tax return if last year's numbers are any indication.  The federal income tax has been with us for nearly a full century, having been started in 1913.  It started out simple enough.  In the first few years, it was fairly straightforward, and only the wealthy really had to pay a significant amount.  Since then, our nation's tax code has grown into a convoluted 60,000 page mess filled with numerous loopholes and deductions.  Up until 1980, Americans typically believed that the income tax was the fairest of all taxes, but since then, most people now rate it as the least fair tax of all.  Originally intended to be progressive, it remains as such up to a point, but then actually becomes regressive above that point especially when other taxes are taken into account.  Just ask Warren Buffett.  And for corporations, 2/3 of them get away with paying zero federal income taxes (and sometimes even negative rates!) because of all the ridiculous special-interest loopholes and subsidies in our tax code.

Several thinkers believe that our tax code is in need of a major overhaul and thus have tried to come up with alternatives.  Americans for Fair Taxation, for example, believes that all our federal taxes can be replaces with one national sales tax of 30%.  Michael Graetz, on the other hand, believes that we can and should replace all income taxes for households earning below $100,000 and single individuals earning below $50,000 (i.e. 90% of the population) with a 10-15% value-added tax (VAT) and a 25% flat income tax for those earning above $50,000 or $100,000 as well as all corporations.  Others believe in a purely flat tax, and still others (such as the TSAP) believe we can and should retain a steeply graduated income tax with a generous personal exemption and no loopholes.  For the record, the TSAP would also support a plan similar to Graetz's if an additional 50% bracket were added for incomes north of $1 million or so and the VAT did not exceeed 10%.

However, we have recently discovered an even better way forward for the 21st century.  Enter the Automated Payment Transaction (APT) Tax.  The APT is a novel idea proposed in 2005 by economist Dr. Edgar Feige.   Basically, it would replace all of our current federal and state taxes (and possibly even some local ones) with one tiny little tax (say, 0.3%) on all automated transactions. This would essentially be the lowest possible rate on the broadest possible base, with no loopholes or finagling. It would actually be quite progressive in practice since the rich make a disproportionally large volume of transactions, and it is literally impossible to evade it or game the system. It is based on simple math, not half-baked voodoo economic theories. And the benefits to replacing the current messy, 60,000 page tax code with something so simple and easy are painfully obvious.  Finally, something most liberals, conservatives, and libertarians can actually agree upon!

Unlike Dr. Feige, however, the TSAP supports retaining an income tax on all individual incomes in excess of $1 million. The first million would be tax-free, while the amount over $1 million would be taxed, preferably at a rate of 50% or higher. Thus, 99.9% of Americans would pay any income taxes at all.  The TSAP also supports various luxury and vice taxes as well.  And to pay down our ludicrously high national debt, we support what should be called the Donald Trump Tax--a one-time wealth tax of 15% on individuals and trusts with net worths above $10 million.

However, if the APT does not come to fruition, the TSAP still supports a graduated, progressive income tax with no loopholes.  The TSAP would consider the following graduated scheme of marginal tax rates (loosely adapted from Robert Reich) to be fair:

Under $20,000: no income tax
$20,000 to $50,000: 5%
$50,000 to $90,000: 10%
$90,000 to $150,000: 20%
$150,000 to $250,000, 30%
$250,000 to $1,000,000, 40%
$1,000,000 to $10 million, 50%
over $10 million, 70%

Unlike the current Byzantine tax code, there would be no loopholes or any deductions other than for state and/or local income taxes paid, and a limited amount (up to 10% of income) for charitable donations. Also, all forms of income (wages, interest, dividends, and capital gains) would be taxed equally, unlike the status quo.   And a top marginal rate of 50% or even 70% is actually pretty tame compared to what it was in the 1950s and early 1960s, which hovered around 90%.   For those worried about the Laffer Curve, rest assured that the most recent study on the matter found that revenue peaks at a top rate of about 76%. 

For corporations, a 20% income tax with no loopholes would be infinitely better than the one we have now, with 2/3 or large corporations (including ExxonMobil, GE, B of A, and BP) currently paying zero income taxes while numerous unfortunate small businesses get hit with up to a 35% tax. Even better would be if the first $1,000,000 per year was tax-free, and only the amount of profit left over after dividends are paid out would be taxable if the company is publicly traded.

And as long as we have a FICA tax for Social Security and Medicare, the wage cap needs to be eliminated completely or set at a very high level such as $10 million or so.

At the very least, though, we definitely need something like the Buffett Rule for as long as we retain our 60,000 page mess of a tax code.  Of course, that doesn't go far enough, but at least it makes the tax code non-regressive at the very top.  50% for every dollar above $1 million with no exceptions would clearly be better, but the proposed 30% is a step in the right direction.

Those who oppose this idea can call us pinkos all they want, but they might just want to listen to Adam Smith, the man who is often considered to be the father of capitalism:

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.  (Emphasis added)

And there you have it.  Even the father of capitalism himself essentially agrees with us, which really says something.

Does Atlas Really Shrug?

One favorite claim by the wealthiest 1% (and their lackeys) is that higher marginal tax rates at the state/local level will cause rich folks to vote with their feet, and take several jobs with them in the process.  During these times of recession and budget crises at all levels of government, when there is clearly a need to raise taxes, the rich love to scare people about this.  But is it true?

At least two recent, carefully controlled studies say no.  There apparently is little to fear about the alleged adverse effects of "soaking" the rich at the state level, or any level for that matter.  The vast majority of millionaires and billionaires will essentially stay put in the face of a tax hike, and for the very few that do leave, good riddance.  Just ask Donald Trump--despite his repeated threats to leave NYC, he never seems to get around to it.  But why do so many people still believe that there will be a mass exodus of the rich?  Part of it is due to the power of anecdotes, even though the plural of "anecdote" is not "data".  Also, superficial observational data that does not control for other variables can indeed produce spurious relationships.

In addition, the corollary idea that the states that have lower or no income taxes do better economically than states with progressive taxes is also a canard.  In fact, a recent study found that the nine states considered to be "high" in terms of income taxes actually had more economic growth per capita than the states with no income tax at all, despite (or perhaps even because of) the fact that the latter group has more income inequality than the former.  Unemployment rates, on average, were roughly equivalent between the two groups of states as well.  So much for Atlas shrugging.

We feel it is very important to debunk this idea now.  The question is, will our elected representatives listen to the truth?

New Platform

The TSAP has recently updated our platform from its 2009 version, as our dynamic party continues to evolve.  Please take a look at it under our list of pages bar at the top of the page.

State of the Planet Address 2012

On January 24, 2012, the President gave his annual State of the Union Address.  Every year since 2011, the TSAP has been giving our annual State of the Planet Address.  Yes, we know it is a bit of a downer to say the least.  So sit down, take off your rose-colored glasses, and read on:

Our planet is in grave danger.  We face several serious long term problems:  climate change, deforestation/desertification, loss of biodiversity, overharvesting, energy crises, and of course pollution of many kinds.  Polar ice caps are melting.  Rainforests have been shrinking by 50 acres per minute.  Numerous species are going extinct every year.  Soil is eroding rapidly.  Food shortages have occurred in several countries in recent years.  Weather has been getting crazier each year, most likely due to climate change. And in 2010, we had the worst oil spill in the entire history of the world, leaving widespread and severe environmental damage in its wake that will persist for years to come. 

None of this is an accident of course.  These problems are man-made, and their solutions must also begin with humans.  We cannot afford to sit idly by any longer, lest we face hell and high water in the not-too-distant future.  Our unsustainable scorched-earth policy towars the planet has to end.

While we do not invoke the precautionary principle for all issues, we unequivocally do for the issue of climate change and any other environmental issues of comparable magnitude (we support the Rio Declaration's version, to be precise). With no apologies to hardcore libertarians or paleoconservatives, in fact. We are not fazed one bit by the Climategate scandal as it does not really "debunk" the scientific consensus on anthropogenic global warming. The only serious debate is about how fast it will happen, and when the tipping point will occur. It is not a matter of if, but when. And the less precarious position is to assume it is a real and urgent problem. We need to reduce CO2 emissions to the point where the CO2 concentration is at or below 350 ppm. And it is currently at an unsustainably high level, and growing.

Solving the problem of climate change will also help to solve the other ecological crises we are facing, for they all ultimately have the same root causes, not least of which is our insatiable addiction to dirty energy.  However, there is a right way to solve it, and several wrong ways.

The TSAP endorses the ideas embodied in Steve Stoft's new book Carbonomics, most notably a tax-and-dividend system that would tax carbon (i.e. fossil fuels) at the source, and give all Americans an equal share of the revenue generated from this tax. Every dollar raised will be used this way without exception. Yes, prices for various things would undoubtedly rise due to this embedded tax, all else being equal, but the dividend will allow Americans to pay for this increase. The average American would in fact break even, but those who (directly or indirectly) use less energy than average will effectively pay less tax, while the energy hogs will effectively be taxed more, as they should be. Thus it is certainly not a regressive tax, and may even be mildly progressive. This is both the simplest and most equitable way to reduce carbon emissions as well as other forms of pollution, not to mention waste of dwindling non-renewable resources. The real challenge is getting the feds to accept something that won't directly benefit them (in the short term).  Carbonomics also includes other good ideas, such as improving how fuel economy standards are done, and crafting a better verison of the Kyoto treaty.

Though not a part of Carbonomics, we also support raising the federal gasoline (and on-road diesel) tax, raising it a penny a week for two years until it is a dollar higher than it currently is but using that to fund alternative energy sources and public transportation along with highway funding (and including a limited prebate). We call this idea "a penny for progress".

We support ending net deforestation completely, and putting carbon back in the ground through carbon sequestration. One method is known as biochar, a type of charcoal made from plants that remove carbon dioxide from the air, that is subsequently buried. This is also an ancient method of soil fertilization and conservation, originally called terra preta.  It also helps preserve biodiversity. 

We've said this before, and we'll say it again. We need more nuclear power plants as well. Nuclear emits no greenhouse gases directly, and even indirectly it pales in comparison to fossil fuels. Done properly, it is just as green as solar photovoltaic power, produces less radiation than coal power, and is much safer than in the past (and even those dangers were exaggerated). Since nuclear plants take many years to build, we need to get cracking ASAP. Nuclear power is not a substitute to renewables; it is a necessary complement to them since we need a base-loading power source, not just intermittent power. Our nation's irrational fear of all things nuclear needs to die NOW.  Right now.

But the biggest elephant in the room (make that the elephant in the Volkswagen) is overpopulation.  It does not make for pleasant dinner conversation, but it must be addressed or else all other causes become lost causes in the long run. We need to have fewer kids, or nature will reduce our population for us, and the latter will NOT be pleasant. The TSAP believes in voluntarily reducing the total fertility rate (TFR) to 1.5-1.9 children per woman to do so, along with reducing immigration dramatically, but we do not support draconian and/or coercive measures of population control (like China has used). But the current tax and benefit incentives that reward having more than two children need to be jettisoned at once. We believe more liberty is the answer, not less.   Fortunately, America's TFR has recently dropped to 1.9 (though that is probably just due to the bad economy rather than a secular trend).  But we cannot keep growing and growing, that's for sure (in fact, we need to shrink). And our addiction to economic growth (despite being recently decoupled from well-being) is also part of the problem.  Growth for the sake of growth is clearly one of the most asinine obsessions our nation (and world) has ever had.

Bottom line: we need to take the environment much more seriously than we do now. We ignore it at our own peril.

Facts About the State of the Union

President Obama gives his annual State of the Union Address tonight.   In addition to watching it, you should also look at the following link to get the facts about what has gone on since his last State of the Union Address in 2011:

http://thinkprogress.org/politics/2012/01/24/409088/facts-the-state-of-the-union/?mobile=nc

Down With SOPA!

The Stop Online Piracy Act (SOPA), along with its companion bill Protect IP Act (PIPA), is currently being debated in Congress.  This bipartisan effort, ostensibly to fight internet piracy and counterfeit goods, has been mired in controversy since its inception.  While supporters (mainly those in the entertainment industry) hail it as a necessary step to take, opponents (most Internet users and virtually all of Silicon Valley) fear that it would amount to censorship of the Internet.

Regardless of how you feel about piracy (and counterfeiting), SOPA's vague language goes way beyond that.  It essentially creates a "Great Firewall of America" that would blacklist not only pirate sites, but potentially any site worldwide with user-created content if corporations claim that such content may have been pirated.  Internet service providers could be required to block IP addresses of certain sites and monitor Internet traffic, effectively making such sites disappear from the Web.  The potential for collateral damage (not to mention abuse) is enormous, and there are also security implications to consider.  Such a bill would be a blatant violation of the First Amendment's guaranteed right to freedom of speech.  Additionally, SOPA is unnecessary--there are other means to defeat the foreign and domestic "rogue sites" that are the primary targets, and one alternative bill (the OPEN Act) does so by cutting off funding to such sites (from ads and credit cards) without actually censoring the Internet or any part of it.

It should go without saying that the TSAP opposes this bill, which would chill the free exchange of ideas and essentially end the Internet as we know it.

UPDATE:  It appears that SOPA has been shelved by Congress for now.  And we hope it never rears its ugly head again.

Just How Bad Is America's Wealth Gap?

The latest study on America's growing inequality of wealth and income is really quite sobering indeed: we are worse than the Ivory Coast and Pakistan in terms of inequality, and possibly even worse than Ancient Rome was. And Rome was a society built on slave labor and that prided itself on class distinctions, so that really says something. It's especially scary when we remember what eventually happened to the Romans after centuries of such inequality.

Right now, the top 1% of Americans control roughly 40% of the nation's wealth, which is more than twice as much as it was in Rome (16%) or America in 1979 (19%). Income has also seen a yawning chasm as well, with the share of after-tax income doubling from 1976 to 2007 and the share of pre-tax income nearly tripling. From 1979 to 2007, after-tax income skyrocketed a whopping 281%, despite little gains for the bottom 80%. Meanwhile, the average hourly wage has largely stagnated since 1972 when adjusted for inflation, the federal minimum wage has lagged behind inflation since 1968, and real family income actually declined from 1979-2009 for the bottom 20%.   Things are even worse for younger workers.  And the Bush tax cuts, especially for dividends and capital gains, have greatly contributed to the problem.  There are even some billionaires that pay nothing or next to nothing right now due to all the crazy loopholes.  Thus, since 1979, the rich have gotten richer, and the poor have gotten poorer.  And the middle class continues to shrink.

Bottom line: the problem of wealth and income inequality isn't gonna fix itself. The top 1% can easily afford to share their vast wealth and still be very rich, but due to greed they do everything they can not to do so. Thus they need to be taxed more than they are now--a LOT more. To whom much has been given, much will be expected. The TSAP would consider the following graduated scheme of marginal tax rates (loosely adapted from Robert Reich) to be fair:

Under $20,000: no income tax
$20,000 to $50,000: 5%
$50,000 to $90,000: 10%
$90,000 to $150,000: 20%
$150,000 to $250,000, 30%
$250,000 to $1,000,000, 40%
$1,000,000 to $10 million, 50%
over $10 million, 70%

Unlike the current Byzantine tax code, there would be no loopholes or any deductions other than for state and/or local income taxes paid, and a limited amount (up to 10% of income) for charitable donations. Also, all forms of income (wages, interest, dividends, and capital gains) would be taxed equally, unlike the status quo.  And a top marginal rate of 50% or even 70% is actually pretty tame compared to what it was in the 1950s and early 1960s, which hovered around 90%. 

For corporations, a 20% income tax with no loopholes would be infinitely better than the one we have now, with 2/3 or large corporations (including ExxonMobil, GE, B of A, and BP) currently paying zero income taxes while numerous unfortunate small businesses get hit with up to a 35% tax.   Even better would be if the first $500,000 per year was tax-free.

Resurrect the estate tax (aka "death tax") to 50% for all estates worth $2 million or more.  If the Republicans really believe in "meritocracy" like they claim to, why then do they support unlimited tax-free inheritances for the filthy rich?

A modest financial transactions tax (0.25% per transaction) would also raise about $150 billion and charge it all to Wall Street.  Plus, it would help discourage reckless speculation by the parasites that got America into the mess we're in now.  And speaking of Wall Street, other changes are in order as well, including re-imposition of the Glass-Steagall Act that prevailed from 1932 until its repeal in 1999.

In addition, we should seriously consider a one-time 15% wealth tax on those with a net worth above $10 million, similar to the one Donald Trump suggested in 2000 to pay down the national debt.  They would get ten years to pay it, with interest added for every year.  Of course, our debt is much larger now than it was back then (three times larger in fact), but it's a good start nonetheless.

We can just hear the whining and squealing right now.  But taxes are the price we pay for civilization.

The War Is Over--At Least in Iraq

On December 18, 2011, after nearly nine years of occupation, the Iraq War is finally over.  Just in time for the holidays, the last remaining troops have been removed from Iraq and can finally come home.  This is certainly cause for a celebration.  And unlike Vietnam, we actually won this war for the most part despite the fact that our victory was rather Pyrrhic indeed.

However, Afghanistan is another story.  Our troops are still there, and it is still not entirely clear when we will get out, despite the fact that we got Bin Laden in Pakistan and neutralized many other senior members of Al-Qaeda.  And we need to promptly end that war as well, and leave on the prevailing (somewhat) high note lest it become the next Vietnam.

War is over, if you want it.

Will Healthcare Deform Survive the Supreme Court?

The healthcare reform deform bill that was signed into law in 2010 and whose most controversial aspect, the so-called "individual mandate", will be phased in starting in 2014, is now being taken to the Supreme Court after an appeals court recently struck down the mandate.  And much more is at stake than just this particular law.  Regardless of which way they rule, a landmark precedent will be set that will influence future court decisions, rightly or wrongly.

We at the TSAP believe that the individual mandate is unconstitutional and must be struck down.  There are several reasons why such a mandate is wrong on principle.  Not least of which is that forcing people to buy an overpriced, defective product from a private company year after year under penalty of law is about as constitutional as a poll tax.  But what about the rest of the 2400 page law?

Many folks, especially those in the insurance industry, are terrified that getting rid of the mandate but leaving the rest of the law intact would create an unsustainable death spiral where people will wait until they get sick to buy insurance (due to the another provision that requires community rating and guaranteed issue, i.e. everyone pays the same and no one can be turned down), making costs skyrocket out of control.  While it would most likely hit the insurance industry's bottom line quite hard, the fear is really quite exaggerated.  For example, while Massachusetts currently has an individual mandate along with community rating and guaranteed issue, New York does the same but without the individual mandate, and yet the latter actually has lower premiums than the former.  Granted, both states have ridiculously high rates, but individual mandates don't appear to make rates any lower or make the system any more successful.   And New York's insurance industry is hardly in a death spiral.

The best solution, of course, is a single-payer system similar to Canada's.  An excellent plan can be found here, for example.  But will Congress have the intestinal fortitude to finally stand up to the greedy insurance industry and its deep-pocketed lobbyists, who will do everything they can to fight it?

Americans are Still Having Fewer Kids in 2010

We have already noted the latest news from the 2010 Census that shows that, across the board, Americans are having fewer children than they did ten years prior.  It turns out that the drop in births has been even greater, mainly as a result of the Second Great Depression (yes, that's what it really is for everyone but the top 1%).  The total fertility rate has dropped from 2.1 children per woman in 2006 to 1.9 in 2010, the lowest it has been in about two decades.  While some folks may view that as something to fear, we at the True Spirit of America Party consider this to be good news.  And it couldn't come soon enough.

We have already noted in the past that overpopulation is NOT a myth--it is (or soon will be) a reality that we need to deal with, or it will deal with us in ways we probably won't like.  It is the elephant in the Volkswagen than no one wants to talk about, but ignoring it will not make it go away.  The latest projections show that if current demographic trends continue, the world's population (which is already  7 billion and counting) will grow to a whopping 9.3 billion (or possibly even as high as 10.6 billion) by 2050.   From 2050 to 2100, the population would either decline to 6.2 billion or continue growing to 15.8 billion, depending on only a relatively small difference in the world's total fertility rate.  It truly boggles the mind how the Earth can sustain 9 billion people, let alone nearly 16 billion, when several credible sources say that we have already exceeded the planet's long-term carrying capacity many years ago.  Let that sink in for a minute or two.

In 2008, the USA alone was predicted to grow to as high as 438 million people by 2050.  Most of that growth would be due to immigration, but a significant chunk would be due to fertility, including the historically higher fertility of immigrants.  Though with current reductions in fertility and slowing of immigration (both likely due to the severe recession), if persistent, would reduce that forecast number significantly, even the lowest projections predict a sizeable increase in the population to over 350 million by then nonetheless.  And despite being only 5% of the world's population, we consume 25% of the world's natural resources, so any further increase in the number of Americans has much more of an impact than the same number increase in, say, a typical Third or Fourth World country.  But ultimately, there is no country that can realistically keep growing and growing forever without adverse consequences.  And even if we manage to cut our per-capita consumption in half, allowing the population to subsequently double will completely negate any progress made, despite a reduced standard of living.

Bottom line:  the current trend toward lower fertility (and less immigration) ought to continue, and is good news overall, but we still really need to be careful how many more immigrants we let into our already overpopulated nation of 308 million and counting.  We ignore the elephant in the Volkswagen at our own peril.

We Support the Wall Street Protests

The TSAP fully supports the Occupy Wall Street Protests.  The richest 1% of the population, who owns 42% of the nation's wealth, has for decades benefited tremendously at the expense of the other 99%.  This is especially true for the top 0.1% and applies a fortiori to the top 0.01%, many of whose bankers, stockbrokers, hedge fund managers, and corporate tycoons and CEOs are guilty of the following:

• Recklessly causing the 2007-2008 financial crisis and the resulting economic depression (yes, it's a depression, not a recession) that we are still stuck in.
• Ruthlessly foreclosing homeowners whose mortgages are underwater.
• Ruthlessly laying off employees they feel are redundant, while outsourcing jobs overseas.
• Demanding huge tax cuts and huge tax loopholes for themselves, promising to create jobs, then pocketing the savings in the form of 7 or 8-figure salaries and bonuses instead.
• Trashing the environment, and only cleaning it up later when it is a tax write-off.
• Allowing their own wealth and income to greatly outpace inflation, while leaving the majority of Americans behind, and having the audacity to call it "economic growth".

So of course the protesters have a right to be out in the street demanding our country back from the greedy.  However, there are some caveats we need to be aware of.  Some idiots out there have decided to resort to violence, which we do NOT support, and that has much potential to ruin the movement.  In fact we would not be surprised one bit if the violence (and threats of violence) was a false-flag operation by the authorities and lapdogs of the ultra-rich in an attempt to discredit the movement.  Also, some idiots and conspiracy nuts have been recorded making anti-Semitic remarks, which we also unequivocally condemn.  This protest really has nothing to do with any particular ethnic or religious group; it is fundamentally a socioeconomic class issue, and framing it as something that it is not can only hurt the movement.  But again, we would not be surprised if that was false-flag as well. 

Finally, we must note that there are several decent people and even philanthropists in the top 1% and even the top 0.01%, Warren Buffett being a notable example.  But there are enough parasites at the top for the current situation to be a problem for most of America, and for the sake of virtually everyone we absolutely MUST raise taxes on the top 1%--and dramatically so for the top 0.1%.  Taxes are the price we pay for civilization, and anything less would be uncivilized.

Will President Obama Finally Stand Up to Congress (and their Ultra-Rich Sponsors)?

Lately, President Obama has been calling for increased taxes on the filthy rich to help balance our nation's ridiculously unbalanced budget, a legacy of ten years of tax cuts for the wealthy and two lengthy wars (not to mention the worst recession since the Great Depression).  In fact, he had wanted to let the Bush tax cuts expire for the two highest brackets at the end of 2010, but the greedy Republicans in Congress (showing who they really care about) threatened to filibuster the extension of unemployment benefits and leave millions of struggling Americans high and dry.  So Obama capitulated and reluctantly extended the tax cuts for two more years, making the deficit so high that we exceeded the $14.3 trillion debt ceiling a few months ago and we almost defaulted before he was able to persuade Congress to finally raise the ceiling at the eleventh hour.

And now Obama is back to talking tough.  But will he finally walk the walk?  Let's hope he does, for the sake of over 99% of Americans.

Debt Ceiling Disaster Averted--For Now

On August 2, Congress approved a deal that raises the debt ceiling enough to cover us through 2012 while appointing a bipartisan commission to deal with reducing the deficit in the long run.  However, there is currently no real solution on the table.  Real solutions would include jacking up taxes on the rich (like they were before Reagan took over), closing corporate tax loopholes, ending the current wasteful wars, cutting our bloated "defense" budget in half, and actually fixing entitlement programs rather than gutting them (like the Republicans) or ignoring the problems (like far too many Democrats these days).  The TSAP has repeatedly noted all the ways to fix our budget and economy, but it looks like our advice will not be heeded as long as Americans keep voting for spineless Democrats and crazy Republicans. Wimps to the left of me, crazies to the right--stuck in the middle with you, to paraphrase a popular 1970s song.

How Bad is Our Economy? Just Ask a Mexican

Take off your rose-colored glasses and sit down.  Ready?  OK, here's the truth, warts and all:

You know the American economy is doing bad if even Mexican (and other) immigrants won't come here anymore.  Just a few years ago, the nation was flooded with a seemingly unstoppable flow of immigration, both legal and illegal, thanks to NAFTA wrecking both countries (while simultaneously enriching the elites in both countries) and Bush being too busy invading and looting other countries to protect our own borders.  But once our economy's bubble burst, millions of jobs disappeared--as did the much of the flow of desperate job-seekers from other countries.  Of course, there are other factors at work here, such as the declining birth rates in Mexico and other Latin American countries, the non-passage of the amnesty bill, as well as Obama getting marginally tougher (but not nearly tough enough) on rogue employers who would rather exploit illegal immigrants for cheap labor than hire native-born Americans at a decent living wage.  But the biggest factor, at least in the short term, has been the lack of jobs on this side of the border.  Now that's just sad.

Our nation's unemployment rate is still hovering above 9%, over 3 1/2 years after the recession began and fully two years after the recession was supposedly over.  Our jobless pseudo-recovery since June 2009 has consistently had an unemployment rate at least double what it was during the "prosperity" of 2005-2007.  And for the first time in decades, our unemployment has been higher than Canada's since 2009.  Meanwhile, the Dow Jones has made tremendous gains since its low in March 2009, nearly doubling since then and returning essentially to pre-crash levels.  And the largest corporations have boasted record profits in 2010 and early 2011, while simultaneously outsourcing more and more jobs to other countries.  In other words, it was the best of times (for the filthy rich, mega-corporations, and Wall Street) and the worst of times (for everyone else).

So when does a recession officially become a depression?  The old joke is that a recession is when your neighbor loses his job, and a depression is when you lose your job.  Using that definition, the majority of Americans were in their own personal recession even before the crash of 2008, and now many people are in their own personal depression, all while the elites mock their suffering and do everything they can to avoid (heaven forbid) paying their fair share of taxes.  And at least as far as jobs go, while still not quite as bad as the Great Depression, we unfortunately appear to be in an L-shaped recession similar to Japan in the 1990s.  And up until the Great Depression, the term "depression" was routinely applied to less severe economic contractions (it was actually a euphemism back then to call it such).  Either way, it really seems to be all about semantics as far as the politicians are concerned.

The Clock is Still Ticking

The President and Congress still have not agreed on the issue of the debt ceiling.  As we have noted before, failure to raise the ceiling by August 2 will all but guarantee a default, which will be catastrophic.  And the Republicans know it, that's why they would never dream of doing such a thing during a Republican presidency--it's painfully obvious who the American people will blame if such a crisis ever did unfold, and it's not Congress that will take the heat.

To John Boehner and the Republicans:  STOP PLAYING CHICKEN WITH THE ECONOMY RIGHT NOW!  Why are you so afraid of you and your uber-rich buddies paying somewhat higher taxes that you would be willing to either a) risk default on the debt, which hurts all Americans, or b) dismantle the social safety net, which hurts the most vulnerable Americans?  And God forbid we stop waging pointless wars of aggression across the globe, of course.

To President Obama:  If the Republicans want to play hardball, do your Constitutional duty and ignore the ceiling for the time being in order to prevent a default.  They are throwing a tantrum at the very idea of having to pay their fair share of taxes--don't give into their demands.  You have already made more than enough concessions to them as it is, and when you give them an inch, they take a mile.  It's up to YOU to be the adult among the overgrown children we so foolishly elected in 2010.  Oh yeah, and by the way, END ALL OF THE WARS by December.  All of them.  That should save a fortune.

Happy Fourth of July!

Today, our great nation is 235 years old.  Actually it is older than that, but we did not declare independence from Britain until July 4, 1776.  Happy Birthday America!

Americans Are Having Fewer Kids

The latest news from the 2010 Census shows that, across the board, Americans are having fewer children than they did ten years prior.  While some folks may view that as something to fear, we at the True Spirit of America Party consider this to be good news.  And it couldn't come soon enough.

We have already noted in the past that overpopulation is NOT a myth--it is (or soon will be) a reality that we need to deal with, or it will deal with us in ways we probably won't like.  It is the elephant in the Volkswagen than no one wants to talk about, but ignoring it will not make it go away.  The latest projections show that if current demographic trends continue, the world's population (which is already nearly 7 billion and counting) will grow to a whopping 9.3 billion (or possibly even as high as 10.6 billion) by 2050.   From 2050 to 2100, the population would either decline to 6.2 billion or continue growing to 15.8 billion, depending on only a relatively small difference in the world's total fertility rate.  It truly boggles the mind how the Earth can sustain 9 billion people, let alone nearly 16 billion, when several credible sources say that we have already exceeded the planet's long-term carrying capacity many years ago.  Let that sink in for a minute or two.

In 2008, the USA alone was predicted to grow to as high as 438 million people by 2050.  Most of that growth would be due to immigration, but a significant chunk would be due to fertility, including the historically higher fertility of immigrants.  Though with current reductions in fertility and slowing of immigration (both likely due to the severe recession), if persistent, would reduce that forecast number significantly, even the lowest projections predict a sizeable increase in the population to over 350 million by then nonetheless.  And despite being only 5% of the world's population, we consume 25% of the world's natural resources, so any further increase in the number of Americans has much more of an impact than the same number increase in, say, a typical Third or Fourth World country.  But ultimately, there is no country that can realistically keep growing and growing forever without adverse consequences.  And even if we manage to cut our per-capita consumption in half, allowing the population to subsequently double will completely negate any progress made, despite a reduced standard of living.

Bottom line:  the current trend toward lower fertility ought to continue, and is good news overall, but we still really need to be careful how many more immigrants we let into our already overpopulated nation of 308 million and counting.  We ignore the elephant in the Volkswagen at our own peril.

The Clock is Ticking

Just recently, the latest attempt to raise the national debt ceiling failed.  We have already reached the debt ceiling of $14.3 trillion last month, and there is fear that if we don't raise it by August 2, the nation will default, which would be catastrophic to our already weak economy.  The reason is that most of the money in the budget has already been committed when the budget was approved in March, which unfortunately requires more borrowing just to pay the interest on the debt, let alone everything else in the budget.  The government can trim a little here and there with accounting tricks for now to prevent a default, but that can only last for so long.

We at the TSAP were against raising the debt ceiling back in January, but that was before the budget was passed and the money already committed.  Now, however, we denounce Boehner and the Republicans' asinine and ideological attempt at playing chicken with our nation's finances, for very obvious reasons.  Now that both parties have already ordered their dinner and ate most of it, one party decides to dine and dash--only in this case it's not just a restaurant but the entire nation.  And the penalty would be far worse than a mere few hours of washing dishes.

The only way out of this, ironically, is to raise the ceiling just enough to get through the rest of the fiscal year (e.g. to about $15 trillion), but tie it to significant tax hikes and spending cuts.  These would include:

Tax Hikes

• End the Bush tax cuts immediately for the top two brackets, and the rest of them effective one or two years later.
• Create a new 50% bracket at $1 million and up immediately, and possibly even a 60% or greater one at $10 million.
• Close ALL loopholes in the tax code that benefit those with high incomes.
• No more tax breaks or loopholes for large corporations--absolutely NONE.
• Remove the tax cap on Social Security immediately, so everyone pays their fair share.
• Pass a financial transactions tax of 0.25%.
• Raise the alcohol taxes and other excise taxes significantly.
• Raise the gas tax by a penny a week until it is $1.00 greater than it is now.
• Consider significant tariffs on imports from countries where workers are paid next to nothing.

Spending Cuts

• End the wars in Iraq and Afghanistan, with a complete withdrawal by December 31, 2011 (Iraq) and no later than July 1, 2012 (Afghanistan).
• Get out of Libya as soon as Gaddafi is captured or killed, if not sooner.
• Cut the defense budget (including the hidden parts) in half within a year, and close all unnecessary overseas military bases.
• No more subsidies to large corporations or Big Agro--NONE.

Do all of those things and the budget should be balanced for several years to come.  But of course that would require logic and common sense, two things that are unfortunately lacking on Capitol Hill.  It really makes you wonder if there's something in the drinking water over in DC.

Ding Dong, Bin Laden is Dead!

It's now offical, Osama bin Laden, the terrorist who masterminded the 9/11 attacks, is dead.  For real, this time.  We finally got him in Pakistan.

It sure as hell took long enough--nearly ten years in fact.  Our troops had him virtually cornered in Tora Bora in December 2001, the third month of the war, but for some reason (*cough* Bush *cough* Cheney *cough*) he managed to slither away despite supposedly being on dialysis at the time.  What followed after that was near-decade-long quagmire, not least because our leaders really dropped the ball by going into Iraq rather than finishing the job in Afghanistan.  The fact that he was killed in Pakistan yesterday confirms the theory that he fled there after Tora Bora.  The same country McCain ridiculed Obama for wanting to hunt Al-Qaeda in, ironically.


All this pretty much guarantees that Obama will be re-elected in 2012 of course.  Which is a good thing in our view, especially considering who he is likely running against.

So, can we FINALLY bring our troops home now?  Preferably alive?

Why Reverse Robin Hood Economics Must End

A new book, Winner-Take-All Politics: How Washington Made the Rich Richer, shows what we have known for quite some time now.  For the past three decades, our economy has grown dramatically, while nearly all of those gains have gone to the top 1%, especially the top 0.1% whose education and skills are not significantly better than those just below them.  Meanwhile, most Americans saw little to no improvement, the middle class has shrank, and the bottom 40% has actually seen a decline in their real standard of living since 1980.  So much for the trickle-down theory that the conservatives promised.  More like the reverse of Robin Hood:  rob from the poor, and give to the rich.

However, it was not always like this.  From the end of WWII through the 1970s, America's massive prosperity was actually shared.  In fact, those at the bottom actually gained somewhat more than those higher up the ladder, and poverty rates plummeted from 1950-1970 as wages rose with the economy, reaching an all-time low in 1973.  We had essentially full employment and relatively low inflation until the early 1970s when stagflation and the oil crises unfolded.  Back then, we actually made stuff that was worth something, and laying Americans off to exploit cheap Third World labor was considered unpatriotic at best.  And believe it or not, it was actually possible for the vast majority of workers to support a family on only one income and a 40-hour workweek.  Though far from being a true golden age (just ask any black person who was around then, for example), our real economy was probably the best it had ever been before or since. 

Why was this quasi-golden age possible?  Of course, the aftermath of WWII that devastated other countries but left us relatively unscathed partly explains our massive growth.  But that in itself does not explain why prosperity was shared so equitably compared to previous or later eras.  So let's look at Washington's influence, which is quite obvious.  In the 1950s and early 1960s, the top marginal tax rate was about 90%, and about 70% from the mid-1960s until 1981.  Not only that, but inflation-adjusted thresholds for the top rate were also much higher then as well.  The minimum wage, first instituted in 1938 under FDR, had been repeatedly increased faster than inflation until it peaked in 1968 at $10/hr (in 2010 dollars), after which it had begun lag inflation.  And the effective minimum wage was even higher in most industries due to the strength of labor unions at the time, which Washington supported (or at least did not try to undermine).  Under such conditions, companies rightly thought it silly to pay paper-pushing CEOs hundreds of times what the average workers make and give them massive bonuses on top of that.  Instead, they invested their wealth in all of their workers, productivity enhancements, and thus invested in America as a whole.  And of the high taxes they paid, a great deal was spent on public infrastructure that spurred economic growth.  The 1960s also saw an expansion of social welfare programs as well, known as the Great Society.  In other words, contrary to what conservatives like John McCain often claim, it seems that is entirely possible to both create and spread wealth at the same time.

But wait, haven't we all been told by the right-wingers (i.e. lapdogs of the ultra-rich) that all of these things somehow destroy the economy and cost millions of jobs?  Apparently, these things work in practice, but not in theory.  At least not what would eventually become the orthodox theory of economics. 

Enter Ronald Reagan in 1981, who promised to fix the economy that was reeling from recession and inflation at the time.  One of the first things he did was cut taxes, primarily for the top bracket.  The top marginal rate was cut to 50%, and then to 28%.  By the time he left office, the threshold for the top marginal rate had also shrank to below $100,000 in today's dollars.  He also let the minimum wage lag behind inflation, cut various social programs, weakend business regulations, helped undermine unions, encouraged globalization (read: offshoring/outsourcing jobs) and increased "defense" (read: war) spending.  CEOs got richer, while their employees saw no improvement or got poorer.  Then Bush I raised taxes slightly, but continued in his predecessors footsteps.  Clinton raised taxes more, especially at the top, but they were still lower than they were in Reagan's first term.  While he presided over the longest continuous economic expansion in America's history, he too helped to promote further offshoring/outsourcing via NAFTA and gutted the social safety net further.  Bush II continued the Reagan/Bush tradition of cutting taxes for the rich and weakening regulations, especially financial regulations.  Over time, our manufacturing base, once the wonder of the world, has been gutted and replaced by a two-tier service economy with a massive financial sector at the top and low-wage jobs at the bottom.  All throughout this time, the poor and middle class borrowed more and more money just to maintain the standard of living they had a few decades ago, let alone keep up with the rich Joneses, who gained unprecedented levels of wealth.  By 2007, our nation's economic inequality had reached the levels we had in 1929, and like then, the bubble finally burst and the economy crashed in 2008.  And we are still reeling from the crash nearly three years later, with unemployment more than double the 2007 rate and poverty at a 15-year high.  And now the deficit and national debt are at an all-time high.

Another trend that occurred in parallel with this was inflation, which really took off when Nixon abandoned the gold standard in 1971.  Now, the Feral Reserve can print as much money as they want and keep interest rates artificially low.  This, along with lower taxes on the rich and weakened financial regulations, also helped to fuel massive bubbles, such as housing, commodities, credit, derivatives, and the stock market.  In addition, massive inflation (what cost $1 in 1970 now costs $5.62 in 2010, and that's a conservative estimate) hits the poor the hardest all while helping to conceal stagnant or declining real wages.  In fact, it got so bad that the Fed actually had to cause a recession (by jacking up interest rates to double-digits) in 1980-82 just to slow down inflation.  Going back much farther, we see that what would have cost $1 in 1774 (just before the American Revolution) would have still cost about the same in 1912.  Then the Feral Reserve was founded in 1913, the gold standard was abandoned in 1933 (but reinstated from 1946-1971), and what would have cost $1 in 1774 or 1912 would now cost a whopping $22--again a conservative estimate.  Just like boiling a frog by gradually turning up the heat, this has been a clever way to rob from the poor and middle class and give to the rich, with most of the former being none the wiser.

It seems that the American Dream is now running in reverse.  If we continue on our current path, each generation can expect to be poorer, not richer, than the previous one.  Not to mention more heavily taxed to pay for the excesses of the past.  But not the top 1% of course.  Nevermind that they benefit the most from the mere existence of government to protect their massive wealth and to provide a stable infrastructure to enable them to earn it, as even Adam Smith (the veritable god of capitalism) so astutely observed. 

There is nothing necessary, just, or sustainable about our nation's economic policies of the past few decades.  Extreme concentration of wealth at the top hurts just about everyone in the long run.  If we are to recover from the predicament our nation is in, we need to get back to doing what once made America great.  Merely repealing the Bush tax cuts is not nearly enough.  We must raise the top marginal rate to at least 50% for every dollar above $1 million, and perhaps even 70% for every dollar over $10 million, with no loopholes this time.  The (apparently missing) million-dollar bracket that once existed must be restored.  We must eliminate the tax cap on Social Security payroll taxes.  We must remove corporate loopholes so that the largest corporations like GE and ExxonMobil (who somehow managed to pay zero taxes last year) would start actually paying taxes for once. We must raise the minimum wage to at least $10/hr, which is what it would have been if it had kept up with inflation since 1968, and index it to inflation from then on.  We must repair our frayed social safety net.  We must restore reasonable regulation on the financial sector.  And we need to restore tariffs on imports made with cheap Third World labor, and use that revenue to put unemployed or underemployed Americans to work fixing our declining infrastructure and revitalizing our dilapidated manufacturing base.  The government has redistributed wealth upward for decades now, and it's time to halt and reverse this ugly trend ASAP.  While some may denounce these measures as "socialist" or even "communist", that would make Truman, Eisenhower, Kennedy, Johnson, and Nixon communists.  And these Cold War presidents would all spin in their graves at such an accusation to say the least.

The time to end this massive injustice is now.  But will our elected officials have the intestinal fortitude to stand up to the ultra-rich?