Debt Default Deadline

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    NEWS ARTICLE from The Associated Press, 7-31-11

    Obama, Congress reach a debt deal

    WASHINGTON (AP) -- Ending a perilous stalemate, President Barack Obama and congressional leaders announced agreement Sunday [7-31-11] night on an emergency deal to avert the nation's first-ever financial default. The arrangement would cut more than $2 trillion from federal spending over a decade ...

    The dramatic agreement, with scant time remaining before Tuesday's deadline [8-2-11], "will allow us to avoid default and end the crisis that Washington imposed on the rest of America," Obama said. Default "would have had a devastating effect on our economy," ...

    Obama ... said that, if enacted, the agreement would mean "the lowest level of domestic spending since Dwight Eisenhower was president" more than a half century ago ...

    In his remarks, Obama said there will be no initial cuts to entitlement programs like Social Security and Medicare. But he said both could be on the table along with changes in tax law as part of future cuts.

    That was a reference to a special joint committee of lawmakers that will be established to recommend a second round of deficit reductions, to be voted on by Congress before year's end as part of an arrangement to raise the debt ceiling yet again ...

    Details apparently included in the agreement provide that the federal debt limit would rise in two stages by at least $2.2 trillion, enough to tide the Treasury over until after the 2012 elections.

    Big cuts in government spending would be phased in over a decade. Thousands of programs -- the Park Service, Labor Department and housing among them -- could be trimmed to levels last seen years ago ...

    Without legislation in place by Tuesday [8-2-11], the Treasury will not be able to pay all its bills, raising the threat of a default that administration officials say could inflict catastrophic damage on the economy ...

    In the first stage under the agreement, the nation's debt limit would rise immediately by nearly $1 trillion and spending would be cut by a slightly larger amount over a decade.

    That would be followed by creation of the new congressional committee that would have until the end of November [2011] to recommend $1.8 trillion or more in deficit cuts, targeting benefit programs such as Medicare, Medicaid and Social Security, or overhauling the tax code. Those deficit cuts would allow a second increase in the debt limit.

    If the committee failed to reach its $1.8 trillion target, or Congress failed to approve its recommendations by the end of 2011, lawmakers would then have to vote on a proposed constitutional balanced-budget amendment.

    If that failed to pass, automatic spending cuts totaling $1.2 trillion would automatically take effect, and the debt limit would rise by an identical amount.

    Social Security, Medicaid and food stamps would be exempt from the automatic cuts, but payments to doctors, nursing homes and other Medicare providers could be trimmed, as could subsidies to insurance companies that offer an alternative to government-run Medicare ...

    But it appeared Obama's proposal to extend the current payroll tax holiday beyond the end of 2011 would not be included, nor his call for extended unemployment benefits for victims of the recession ...


    NEWS ARTICLE from The Associated Press, 8-1-11

    Senate passage of debt ceiling expected Tuesday ...

    WASHINGTON -- A bipartisan bill to increase the nation's debt limit and cut as much as $2.4 trillion in government spending passed the House, overcoming the key hurdle on the road to averting an unprecedented federal default.

    The legislation, which passed Monday evening by a relatively comfortable 269-161 margin, came after a weekend of tense meetings, exhausted staff discussions and, in the end, a compromise worked out at the highest levels of government ...

    The primary sticking point was deciding how to pressure Congress to agree to whatever the bipartisan committee came up with, and what to do if the committee plan failed. The idea was to come up with spending cuts that would be triggered automatically if the committee plan was not adopted.

    Quietly throughout the week, Biden and McConnell had already been trading ideas for so-called "triggers," searching for a formula that would provide enough discomfort so both sides would have an incentive to allow the bipartisan committee to work, but not so much that the results would be intolerable if Congress had to live with them.

    As the talks developed, House Minority Leader Nancy Pelosi was on alert. Among the possible triggers under discussion was one that would change the way cost-of-living increases are calculated for Social Security recipients. At a Saturday White House meeting with Obama, Biden and Reid, Pelosi said she would not accept such a proposal.

    The White House agreed ...

    By Sunday [7-31-11], leaders had settled on a trigger of across-the-board cuts to both defense and domestic agency spending -- but the ratio of the two was still unsettled. At that point the talks deadlocked for much of the day, as Boehner's aides pushed back against cuts in the Pentagon budget.

    Late in the day, a solution was found -- one for which several participants later claimed credit. The "defense cuts" could come out of all security spending, including Homeland Security, the CIA and other parts of the government's national security budget, thus softening the blow to the military ...

    At 8:15 [7-31-11], when the president called ... [Boehner] from the Oval Office, aides were still unsure what the answer would be. "Do we have a deal?" Obama asked, according to a Democratic official familiar with the call ... A few seconds later, Obama said, "Congratulations to you, too, John."


    NEWS ARTICLE from The Plain Dealer, 8-1-11,

    By Sabrina Eaton, The Plain Dealer

    All Ohio Democrats vote against debt ceiling compromise

    The House of Representatives passed a compromise bill to increase the debt ceiling by a 269 to 161 vote, with backing from 174 Republicans and 95 Democrats. Here's how Ohio members of Congress voted:


    Republicans: Steve Austria of Beavercreek, John Boehner of West Chester, Steve Chabot of Cincinnati, Bob Gibbs of Lakeville, Bill Johnson of Marietta, Steve LaTourette of Bainbridge Township, Bob Latta of Bowling Green, Jim Renacci of Wadsworth, Jean Schmidt of Clermont County, Steve Stivers of Columbus, Patrick Tiberi of Genoa Township.

    Democrats: None


    Republicans: Jim Jordan of Urbana, Mike Turner of Dayton

    Democrats: Marcia Fudge of Warrensville Heights, Marcy Kaptur of Toledo, Denis Kucinich of Cleveland, Tim Ryan of Niles, Betty Sutton of Copley Township

    Here's how Ohio members of Congress explained their votes:

    Warrensville Heights Democratic Rep. Marcia Fudge: "This is a job killing bill that puts our nation's economy at risk. I can't in good faith tell my constituents that Medicare, Medicaid, and Social Security are safe under this plan because we don't know what will happen."

    Toledo Democratic Rep. Marcy Kaptur: "It will not create jobs and in fact will be a further downdraft on recovery."

    Cleveland Democratic Rep. Dennis Kucinich: ?We could have avoided this hostage-taking if the President chose to apply his expertise in Constitutional law to invoke the 14th Amendment of the Constitution to raise the debt ceiling. Instead, we are taking America from the New Deal of 1932 to the Raw Deal of 2011." ...

    Niles Democratic Rep. Tim Ryan: "I am deeply disappointed this deal was brokered purely under the Tea Party-led threat of default, and I refuse to endorse these cuts, or the manner in which the American economy was threatened in order to achieve them. This plan kicks the can down the road while virtually guaranteeing that the middle class will get hit again."

    Copley Township Democratic Rep. Betty Sutton: "At a time when so many Ohioans are struggling, this raw deal is all sacrifice for Ohio's working families, but contains no sacrifice for millionaires, billionaires, or corporations that ship jobs overseas."

    Urbana-area GOP Rep. Jim Jordan: "The framework opens the door to dangerous national security cuts and raises the possibility that six Democrats and one misguided Republican could put tax increases on the table ..."


    NEWS ARTICLE from The Associated Press, 8-1-11

    Gabrielle Giffords votes. Senate decides later

    WASHINGTON -- With the nation on the razor's edge of a government default, the last-ditch, bipartisan deal to raise the federal debt ceiling and slash the budget deficit cleared its largest hurdle Monday evening, as the Republican-controlled House easily passed the legislation by a 268-161 tally ...

    House Democratic Leader Nancy Pelosi, D-Calif., defending her choice to support the compromise on the House floor, said there were many reasons not to vote for the legislation, but, she argued, the president had succeeded in securing a debt-ceiling increase through next year -- and had protected Medicaid, Medicare and Social Security benefits from automatic across-the-board cuts should a bipartisan congressional panel fail to agree on cuts to reduce the deficit further ...


    NEWS ARTICLE from The Plain Dealer, 8-2-11,

    By Stephen Koff, The Plain Dealer

    Portman and Brown vote for debt deal, which now goes to the president

    WASHINGTON -- With passage Monday in the House of Representatives, the compromise debt deal fashioned by House Speaker John Boehner, the White House, Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell was assured.

    But some senators waited until today's roll call vote to say whether they'd support the $2.1 trillion deal. Sen. Rob Portman was among them, although the Ohio freshman Republican's druthers were already voiced.

    Portman just voted yes, along with his Democratic Ohio colleague, Sen. Sherrod Brown. The measure passed 74-26 and President Barack Obama is expected to sign it ...

    Brown issued a statement saying,

    "Defaulting on our obligations would be disastrous for the people of Ohio and our economy. I would prefer a more balanced compromise - one that cuts both spending and tax loopholes. But this bipartisan agreement allows us to avoid default while taking an important first step toward reducing the deficit."


    NEWS ARTICLE from The Plain Dealer, 8-2-11,

    By Stephen Koff, The Plain Dealer The Plain Dealer

    Josh Mandel would have voted against debt deal, blasts Sherrod Brown

    WASHINGTON -- U.S. Senate candidate Josh Mandel, who's currently the Ohio treasurer, would have voted against the $2.1 trillion debt-ceiling legislation that will get President Barack Obama's signature later today ...

    An easy majority of 74 senators voted for the measure. The bipartisan majority included Ohio's Sherrod Brown, a Democrat, and Rob Portman, a Republican.

    Issuing a statement in response to our question of how he would have voted were he in the Senate today, Mandel focused on Brown, whom he will oppose in next year's general election if he wins the GOP primary. After he raised an extraordinary $2.3 million in his first quarter of the race, Mandel is considered a favorite of the Republican Party.

    "Sherrod Brown has spent the past four decades trying to get taxpayers to bail him out of crisis after financial crisis that he helped create," Mandel said. "Enough is enough! ...

    Mandel did not mention that his position would have put him at odds with Portman on this vote ...

    Responding to Mandel's comments on how he would have voted, Ohio Democratic Party spokesman Justin Barasky noted some of the parties who supported the bipartisan bill -- Brown, Portman, House Speaker John Boehner, and the U.S. Chamber of Commerce.

    "Unfortunately Josh Mandel took the extreme Tea-Party position that the United States should go into default and put the nearly 2 million Ohioans who rely on Social Security and Medicare at risk of receiving no benefits," Barasky said. "Mandel's admission shows a stunning lack of interest in Ohio's economy, middle-class, and seniors." ...


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    PolitiFact ARTICLE, 8-2-11

    Rep. Dennis Kucinich says Social Security didn't cause the debt crisis: PolitiFact Ohio

    Kucinich said on the House floor July 15, 2011, that Social Security was being falsely thrown into the debate, and that reducing benefits or raising the retirement age would only "give government more money for tax cuts, spending or repaying the debt."

    "Social Security didn't cause the debt crisis. Social Security had nothing to do with the debt crisis," he said.

    PolitiFact Ohio asked Kucinich's office how he backed up his statement.

    You can see the full story there. Then come back here to comment.

    Commentator 1 wrote on August 02, 2011:

    Of course Social Security didn't cause the debt crisis. Republicans caused the debt crisis by taking a practice (raising the debt ceiling) that had been routine in the past, and turning it into a hostage taking event.

    From here to eternity, going after entitlement programs is just something that's in the DNA of a Republican. That's who they are. Their grand plan has been to drain the treasury of money (tax cuts for the rich) and then claim that we're broke, and try to blame it on the entitlements ...

    THEROOT August 02, 2011 at 11:19AM

    Q: How did the debt grow from $5.8 trillion in 2001 to its current $14.3 trillion?

    A: The biggest contributors to the nearly $9 trillion increase over a decade were:

    2001 and 2003 tax cuts under President George W. Bush: $1.6 trillion.

    Additional interest costs: $1.4 trillion.

    Wars in Iraq and Afghanistan: $1.3 trillion.

    Economic stimulus package under Obama: $800 billion.

    2010 tax cuts, a compromise by Obama and Republicans that extended jobless benefits and cut payroll taxes: $400 billion.

    2003 creation of Medicare's prescription drug benefit: $300 billion.

    2008 financial industry bailout: $200 billion.

    Hundreds of billions less in revenue than expected since the Great Recession began in December 2007.

    Other spending increases in domestic, farm and defense programs, adding lesser amounts.


    PolitiFact ARTICLE, 8-2-11

    The Truth-O-Meter Says:

    Dennis Kucinich on Friday, July 15th, 2011 in a speech in the House of Representatives ... says Social Security didn't cause the debt crisis ...

    Kucinich said on the House floor July 15, 2011, that Social Security was being falsely thrown into the debate, and that reducing benefits or raising the retirement age would only "give government more money for tax cuts, spending or repaying the debt."

    "Social Security didn't cause the debt crisis. Social Security had nothing to do with the debt crisis," he said.

    PolitiFact Ohio asked Kucinich's office how he backed up his statement.

    They referred us to "Social Security: The Trust Fund," a recent report from the nonpartisan Congressional Research Service ...

    Let's take deep breath and walk through it.

    Social Security is a government program funded primarily by dedicated payroll taxes. It's called a pay-as-you-go system because current revenues are used to pay current costs.

    For most of the past 30 years, because of reforms designed by the Greenspan Commission in 1982 to protect Social Security's solvency, collected revenues have exceeded benefit payments to retirees, survivors and the disabled.

    Those surplus funds were credited to the Social Security trust fund. By the end of 2010, the trust fund totaled $2.6 trillion.

    Last year, Social Security began to run a cash flow deficit. Costs exceeded tax revenues, for reasons that included the recession and its high unemployment. Social Security dipped into the trust fund to make up the difference.

    Social Security's trustees projected that the fund would fully cover benefits through 2035, the Congressional Research Service notes, and that it would cover about 77 percent of benefits after that until 2085. Taking action like increasing the payroll tax or lifting the level of income subject to the tax above its current limit of $106,800 would keep the fund fully solvent for the entire 75 years ...

    Social Security is required by law to put its entire surplus into interest-bearing government bonds -- Treasury securities backed by the U.S. government.

    They are IOUs -- assets to Social Security but liabilities to the rest of government. They're one part of government promising to pay back another.

    Once invested, the trust fund money is mingled with money from other sources of revenue in the U.S. Treasury general fund, and it is used for other government purposes that include spending, repaying debts or cutting taxes. For years, the infusion of Social Security's surplus revenue held down the federal deficit -- and, some say, encouraged spending.

    When Social Security operates with a negative cash flow -- that is, when benefits exceed revenues -- it draws on interest from the trust fund securities.

    To pay that interest and honor its IOUs to the trust fund, when the rest of the federal budget is operating at a deficit, the government has to borrow money.

    That contributes to the deficit -- even though Social Security is legally drawing on the surplus that was collected from its dedicated tax, and even though the Congressional Research Service says that "government borrowing from the public is not clearly linked to any particular aspect of what the government does."

    Kucinich was accurate in saying that Social Security didn't cause the debt crisis. If anything, Social Security delayed it by subsidizing other spending and reducing the need to borrow money elsewhere. On the books, the Social Security trust fund has credits approaching $2.6 trillion.

    Social Security's negative cash flow has begun to contribute a relatively small amount to the federal deficit, however, because Treasury has to borrow to cover the trust fund money that has been spent elsewhere. That is a recent development, and that information provides clarification.

    On the Truth-O-Meter, we rate Kucinich's claim Mostly True.


    NEWS ARTICLE from The Associated Press, 8-2-11

    Senate OKs emergency debt limit bill

    The strong bipartisan vote was 74-26. The measure now heads to President Barack Obama for his signature. The legislation makes a down payment on taming out-of-control budget deficits.

    Today's vote capped an extraordinarily difficult Washington battle pitting Tea Party Republican forces in the House against Obama and Democrats controlling the Senate. The resulting compromise paired an essential increase in the government's borrowing cap with promises of more than $2 trillion of budget cuts over the next decade ...

    Questions linger about the effect the grueling political free-for-all will have on the U.S. credit rating.

    Treasury Secretary Timothy Geithner told ABC News that he didn't know whether the debt-limit fight would cause America's AAA credit rating to be downgraded. "It's not my judgment to make," he said. Geithner also said he fears world confidence in the United States was damaged by "this spectacle." ...

    GOP presidential candidates such as Mitt Romney and Michele Bachmann issued statements opposing the legislation ...


    NEWS ARTICLE from The Washington Post, 7-25-11,

    By Ezra Klein

    Obama‚'s and Bush‚'s effects on the deficit in one graph

    What's also important, but not evident, on this chart is that Obama's major expenses were temporary -- the stimulus is over now -- while Bush's were, effectively, recurring.

    The Bush tax cuts didn't just lower revenue for 10 years. It's clear now that they lowered it indefinitely, which means this chart is understating their true cost.

    Similarly, the Medicare drug benefit is costing money on perpetuity, not just for two or three years. And Boehner, Ryan and others voted for these laws and, in some cases, helped to craft and pass them.

    To relate this specifically to the debt-ceiling debate, we're not raising the debt ceiling because of the new policies passed in the past two years. We're raising the debt ceiling because of the accumulated effect of policies passed in recent decades, many of them under Republicans ...


    Commentator 2 wrote on August 01, 2011:

    First the Federal Aviation Administration

    now this......

    Policy Updates in Regional Mobility

    Federal Gas Tax Set to Expire

    According to a Joint Committee on Taxation report, several federal Highway Trust Fund excise taxes will expire on September 30, 2011. These taxes include the following:

    All but 4.3 cents per gallon of the gasoline, diesel, kerosene, and alternative fuels taxes;

    Tax on partially exempt methanol or ethanol fuel.

    Tax on retail sale of heavy highway vehicles.

    Tax on heavy truck tires.

    Annual use tax on heavy highway vehicles.

    (As a reminder, the U.S. Federal Highway Administration presents the following summary of federal highway user taxes.

    The federal gasoline tax is currently 18.4 cents per gallon.) ...

    Here's the problem for those of us who believe that transportation is more than just roads -- Ohio's Constitution (Article XII, Sec. 5a) prohibits the spending of state-levied taxes on road users for anything other than building and maintaining roads.

    There is no such restriction on federal transportation funds. So some federal gas taxes are used to fund public transit capital and operating costs. If some or all federal funding of transportation stops and/or is turned over to the states, the quality and quantity of public transportation in Ohio will be seriously affected.

    Gone will be the federal funding share (up to 80 percent of project costs) for new bus purchases, rail improvement projects in Cleveland, new ore rebuilt bus garages, new bus rapid transit projects, and more. Gone will be operating assistance to small-city and rural transit agencies, most of which will likely cease some or all operations.

    How many Ohioans are affected? The Census shows 8.5 percent of Ohio households have no car -- that's 1 million people. And there are 1.2 million one-car households where 3 million Ohioans live and share cars to reach work, health care, shopping, or school.

    Lastly, 2 million Ohioans are 65 years or older, many of whom may have cars but can no longer drive them safely, the Census shows. Rising gas prices, reduced interest by young people in driving everywhere and an aging populace means we need more funding for transit, not less!


    NEWS ARTICLE from The Associated Press, 8-4-11

    More to FAA shutdown than air service subsidies

    WASHINGTON -- On the surface, the partial shutdown of the Federal Aviation Administration is about whether to cut $16 million in air service subsidies, a pretty small amount in this town. Underneath are layers upon layers of political gamesmanship ...

    The immediate price is high. Already, 4,000 FAA employees have been furloughed, more than 200 construction projects have been halted and an estimated 70,000 other private-sector workers affected. Air traffic controllers and safety inspectors remain on the job because the agency still has money from another pool of funds to pay them.

    The government has been losing about $30 million a day in uncollected airline ticket taxes since the shutdown began on July 23, [2011] when FAA's operating authority expired. If it's not resolved until after Congress returns from its August recess in early September, lost revenue will tally about $1.2 billion ...

    Democrats complain that Republicans ... [are] manufacturing crisis after crisis ...

    Earlier this year, it was the prospect of a government shutdown over tax breaks for higher-income Americans. More recently it was a potential default on the government's financial obligations. Now it's a continued shutdown of the FAA ...

    "This is becoming a very disturbing pattern: A small, uncompromising group ... hurt tens of thousands of innocent people and takes them hostage until they get their complete way," [said] Sen. Chuck Schumer ...

    In this case, what Republicans are really demanding isn't token cuts in air service subsidies but reversal of a federal labor rule in order to make it more difficult for airline workers to unionize, Democrats said ...

    Rep. John Mica, R-Fla., chairman of the House Transportation and Infrastructure Committee ... made the first move leading up to the shutdown in July [2011] when he attached a provision eliminating subsidies for air service to 13 rural communities to a bill to extend FAA's operating authority.

    The FAA has been operating under a series of 20 short-term extension bills since 2007, when the agency's last long-term funding bill expired.

    The Senate approved a long-term bill in February and the House its own bill in April. More than 200 differences between the two bills have been worked out, but a dozen thorny issues remain ...

    The more politically difficult issue is a GOP proposal to overturn a National Mediation Board rule approved last year that allows airline and railroad employees to form a union by a simple majority of those voting. Under the old rule, workers who didn't vote were treated as "no" votes.

    Democrats and union officials say the change puts airline and railroad elections under the same democratic rules required for unionizing all other companies. But Republicans say the new rule reverses 75 years of precedent to favor labor unions.

    The GOP labor provision has the backing of the airline industry. The biggest beneficiary would be Delta Air Lines, the largest carrier whose workers aren't primarily union members.

    Last month, in comments to the House Rules Committee and separately to reporters, Mica said the labor provision was the only issue standing in the way of the House and Senate reaching an agreement on a long-term FAA bill. He said Senate Majority Leader Harry Reid, D-Nev., has refused to negotiate with Republicans on the issue ...

    Sen. Kay Bailey Hutchison of Texas, the senior Senate GOP negotiator on the FAA bill, ... [said] it has been House Republicans who have refused to negotiate with the Senate unless Democrats agreed to concessions on the labor issue ...


    NEWS ARTICLE from The Associated Press, 8-6-11

    Political fighting was a key reason for credit rating downgrade, S&P says

    WASHINGTON -- Standard & Poor's says it downgraded the U.S. government's credit rating because it believes the nation will keep having problems getting its finances under control ...

    S&P said it was the months of haggling in Congress over budget cuts that led it to downgrade the U.S. rating ...

    David Beers, global head of sovereign ratings at S&P, said the agency was concerned about the "degree of uncertainty around the political policy process ...

    S&P may have gone ahead with a downgrade now to be sure it escapes the kind of criticism the agencies got after the 2008 financial crisis. They were accused of contributing to the crisis because they didn't warn about the dangers of subprime mortgages ...

    Asked when the United States might regain its AAA credit rating, Beers said S&P would take a look at any budget agreements that achieve bigger deficit savings. But the history of other countries such as Canada and Australia, which saw cuts in their credit ratings, shows that it can take years to win back the higher ratings ...


    Commentator 3 wrote:

    Technology is the real measure of wealth, money is just a mediator whwhich can be utilized for exchanging and distributing technology.

    I suspect books like "The Lights in the Tunnel" will indeed point society towards more sane ways in which manage the economy.

    What is insane is having the economy dictated (hijacked) by political ideologies that show little comprehension of the bitter pills they want everyone to swallow. The same ideologies show little comprehension as to the ramifications of how advancing technology and automation will transform our economy, nor how society will need to adjust accordingly.

    Dreamers of a future economic utopia, like me, have a very hard sell ahead of them. From my perspective the USA is currently strangled by certain Neanderthal-like political organizations that subscribe to ideologies so incredibly wrapped up in their own sense of righteousness that they don't perceive the fact that they are currently eating their own young. When they finish eating their own kin, they will go after everyone else's.

    My own predilections concerning economic theory have led me to conclude that our current concept of what money, what CURRENCY represents has gotten completely out of hand.

    Currency should be treated as nothing more sacred than as a mundane contractual document, a transaction representing the exchange of goods and services between participating entities.

    Money, the concept of what currency represents, should no longer be treated like fixed units of physical objects.

    Money, "currency", should no longer be treated as if it is physical pieces of gold and silver coins. Maintaining stashes of gold and silver in the King's vault was how economic theory worked in the past.

    However, trying to maintain the same kinds of "stashes" in twenty-first century and beyond will lead to economic ruin. The sooner everyone gets over how freaked out they are over the fact that "currency" possesses no intrinsic value of its own, the sooner everyone realizes the fact that the only value that should be measured should be the value of actual goods and services being exchanged between participating entities, the better off we will all be.

    Where it all went terribly wrong was when "money" itself became the Holy Grail, the ultimate goal that must be acquired and subsequently [stored] in mattresses, within heavily guarded vaults surrounded by motes filled with hungry alligators. The tragedy of this folly is that the intrinsic value of GOODS and SERVICES, for which "money" was supposed to represent, is in danger of being perceived as less valuable than the currency itself ...

    To prevent valuable goods and services from being produced because there is insufficient "currency" is absolutely insane! If the goods and raw materials are there. if there is available labor willing to generate those goods and services, the lack of available currency should never EVER be the reason why such goods and services were never generated.

    In the United States there currently exist certain political agendas attempting to tell everyone that we must cut taxes because, in their view, taxation prevents the creation of jobs which in turns destroys the economy.

    They seem oblivious to the fact that those very taxes they want to cut directly pay the salaries for hundreds and thousands of government employees who, in turn, spend their income out in the market ...

    Granted we obviously need to maintain a stable currency distribution system. To be effective however we must also devise systems that distribute "money" equitably amongst as many individuals as possible. Said differently, systems that help generate equitable distributions of currency is what ultimately helps keep economies running healthy.

    Some may perceive this as nothing more than a veiled threat to generate a "welfare" state. Some might even complain that "welfare" states harm the economy by taking advantage of labor generated by those who perform "honest" work -- presumably performed out in the free market. But what if more and more of that "honest" work ends up being performed by robots, 'slaves' that never complain about their salaries and don't want to unionize.

    The point is that government employees, combined with the products and services they generate, end up making valuable contributions. They end up spreading their currency throughout the entire economy in exactly the same way as those employed out in the free market system ...

    Government employment isn't a problem. Unfortunately, certain political agendas don't see it that way. One might say it's not in their best "invested" interest to see it that way.

    A big difference that separates governments from business, is the fact that no business is allowed to generate money, out of thin air. Governments, however, can generate money, and do so all the time.

    It's the careful management of how much currency government allows to be distributed throughout the free market system that helps sustain a healthy stable economy. Granted, many governments have seriously abused such monetary powers causing massive hyperinflation to ensure.

    But free markets, if left completely on their own resources, unchecked and unregulated, are completely incapable of keeping the economy healthy. Sooner or later many such "enterprises" tend to run the economy into the ground.

    Tbe USSR failed; so did Enron.


    NEWS ARTICLE from The Associated Press, 8-8-11

    U.S. markets fall sharply, Dow closes below 11,000

    President Obama calls US AAA nation despite AA+ Rating:

    NEW YORK -- Stocks plunged Monday as anxiety overtook investors on the first trading day since Standard & Poor's downgraded American debt.

    The Dow Jones industrials fell 634.76 points. It was the sixth worst point decline for the Dow in the last 112 years and the worst one-day drop since December 2008. Every stock in the Standard & Poor's 500 index declined Monday ...

    The price of Treasurys [as investors rushed to buy them] rose sharply, and yields, which move in the opposite direction from price, fell. The yield on the 10-year Treasury note fell to 2.34 percent from 2.57 percent Friday. That matches its low for the year, reached last week.

    "This is largely a flight to safety," said Thomas Simons, money market economist with Jefferies & Co. "The bond market is really trading off of what's going on in the stock market." Money flowed out of stocks and into Treasurys.

    Gold set a record. It rose $61.40 to settle at $1,713.20.

    Crude oil, natural gas and other commodities fell sharply on worries that a weaker global economy will mean less demand. Oil fell 6.4 percent to settle at $81.31 per barrel ...

    More than 69 stocks fell for every one that rose on the New York Stock Exchange. Consolidated trading volume was heavy at 9.7 billion shares, nearly triple the volume in early July.



    Dow's Worst One-Day Loss Since December 2008


    Obviously, a huge news day -- the rioting in London. We've got stock exchange meltdown over here ...

    One trillion, that stunning number is the loss on paper [today], in this country's stock market. The Dow suffering one of the biggest losses of all time, down 634 points ...

    Meanwhile, the Asian markets are sliding tonight. The Nikkei dropping 4 percent, sinking below 9,000 for the first time since mid- March.

    Here to explain what all this means to your job and your money, CNN's Ali Velshi and Erin Burnett in New York, Kyung Lah in Tokyo and Wolf Blitzer in Washington.

    I want to start with Kyung Lah, who's watching the Asian markets closely tonight.

    Kyung, what is the latest over there?

    KYUNG LAH, CNN CORRESPONDENT: Well, let's start with the Tokyo Stock Exchange ... It is falling below the 9,000 level. Psychologically, that is an important level here ...

    MORGAN: Let's to go Ali Velshi.

    And every time I talk to you, Ali, I have seemed to start with the opening line, "what the hell is going on" -- I see no reason to change today. What the hell is going on?

    ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: All right. What it is, you know, markets around the world tend to be very efficient methods of risk versus reward. What everybody has done is figured out that they don't want the risk of stock markets even if there is a likely reward ...

    MORGAN: So, Wolf, let me bring you in here ...


    ... There are so many people out there who fear a double dip recession. That's what really is motivating this decline that we're seeing ...

    Think about it. In the last few days, if you go back to July 22nd, when the markets, when the Dow Jones, the S&P 500, the NASDAQ began to decline -- since then, Piers, in terms of paper value equity, nearly $3 trillion lost -- 401(k)s, IRAs, people's portfolios, $3.9 trillion gone. It's a real crisis out there ...

    MORGAN: ... We bring in now two men who can exchange the big picture, economist Nouriel Roubini, and Mohamed El-Erian, who is the CEO of the investment management firm, PIMCO ...

    ROUBINI: I think a double dip reselling is at this point very likely. Look at the data for the U.S.:

    The GDP growth has been slowing down, the stalled speed. Consumption is flat. We're not creating jobs. Firms are not doing capital spending. The recession in housing is getting worse.

    Until now, people losing on their home, the value of their home has fallen 35 percent. But now, in the last two weeks, 15 percent of their financial wealth, equity, has also been wiped out.

    So, you have a double whammy on your financial wealth. You feel poorer. You're going to spend less and it's going to become a vicious circle of falling economic activity, falling asset prices, falling wealth, reducing consumption investment ...

    MORGAN: When we come back, we'll go live to Tokyo for the latest on the falling Asian markets.

    MORGAN: I want to end with some breaking news from Kyung Lah, who is in Tokyo with the latest on the Asian markets. Kyung, where are we right now?

    KYUNG LAH, CNN CORRESPONDENT: Well, what started off as a bad day, Piers, is starting to look even worse. Tokyo down 4.5 percent. Australia down some five percent. Honk Kong down 7.8 percent. And Seoul, the Kospi, down 7.8 percent at one point. And it was falling so rapidly that a circuit breaker went into effect, shut down trading for five minutes, because there was so much panic selling going on ...

    That's all for us tonight. Now Anderson Cooper with "AC 360." And he's from Somalia.


    Top -- Home

    TRANSCRIPT of President Obama's speech on 7-25-11

    A Balanced Approach

    The following is the prepared transcript of President Barack Obama's speech Monday night [7-25-11] on debt reduction talks, as released by the White House:

    "Good evening. Tonight, I want to talk about the debate we've been having in Washington over the national debt -- a debate that directly affects the lives of all Americans.

    For the last decade, we have spent more money than we take in. In the year 2000, the government had a budget surplus. But instead of using it to pay off our debt, the money was spent on trillions of dollars in new tax cuts, while two wars and an expensive prescription drug program were simply added to our nation's credit card.

    As a result, the deficit was on track to top $1 trillion the year I took office. To make matters worse, the recession meant that there was less money coming in, and it required us to spend even more -- on tax cuts for middle-class families; on unemployment insurance; on aid to states so we could prevent more teachers and firefighters and police officers from being laid off. These emergency steps also added to the deficit ...

    Because neither party is blameless for the decisions that led to this problem, both parties have a responsibility to solve it ... Basically, the debate has centered around two different approaches.

    The first approach says, let's live within our means by making serious, historic cuts in government spending.

    Let's cut domestic spending to the lowest level it's been since Dwight Eisenhower was president. Let's cut defense spending at the Pentagon by hundreds of billions of dollars.

    Let's cut out the waste and fraud in health care programs like Medicare -- and at the same time, let's make modest adjustments so that Medicare is still there for future generations.

    Finally, let's ask the wealthiest Americans and biggest corporations to give up some of their tax breaks and special deductions.

    This balanced approach asks everyone to give a little without requiring anyone to sacrifice too much. It would reduce the deficit by around $4 trillion and put us on a path to pay down our debt ...

    The only reason this balanced approach isn't on its way to becoming law right now is because a significant number of Republicans in Congress are insisting on a cuts-only approach -- an approach that doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all ...

    Most Americans, regardless of political party, don't understand how we can ask a senior citizen to pay more for her Medicare before we ask corporate jet owners and oil companies to give up tax breaks that other companies don't get.

    How can we ask a student to pay more for college before we ask hedge fund managers to stop paying taxes at a lower rate than their secretaries?

    How can we slash funding for education and clean energy before we ask people like me to give up tax breaks we don't need and didn't ask for? ...

    Keep in mind that under a balanced approach, the 98% of Americans who make under $250,000 would see no tax increases at all. None.

    In fact, I want to extend the payroll tax cut for working families.

    What we're talking about under a balanced approach is asking Americans whose incomes have gone up the most over the last decade -- millionaires and billionaires -- to share in the sacrifice everyone else has to make ...

    "Would you rather reduce deficits and interest rates by raising revenue from those who are not now paying their fair share, or would you rather accept larger budget deficits, higher interest rates, and higher unemployment? ..."

    Those words were spoken by Ronald Reagan. But today, many Republicans in the House refuse to consider this kind of balanced approach ...

    Now, what makes today's stalemate so dangerous is that it has been tied to something known as the debt ceiling -- a term that most people outside of Washington have probably never heard of before.

    Understand -- raising the debt ceiling does not allow Congress to spend more money. It simply gives our country the ability to pay the bills that Congress has already racked up.

    In the past, raising the debt ceiling was routine. Since the 1950s, Congress has always passed it, and every president has signed it. President Reagan did it 18 times. George W. Bush did it 7 times. And we have to do it by next Tuesday, August 2nd, or else we won't be able to pay all of our bills.

    Unfortunately, for the past several weeks, Republican House members have essentially said that the only way they'll vote to prevent America's first-ever default is if the rest of us agree to their deep, spending cuts-only approach.

    If that happens, and we default, we would not have enough money to pay all of our bills -- bills that include monthly Social Security checks, veterans' benefits, and the government contracts we've signed with thousands of businesses.

    For the first time in history, our country's Triple A credit rating would be downgraded, leaving investors around the world to wonder whether the United States is still a good bet.

    Interest rates would skyrocket on credit cards, mortgages, and car loans, which amounts to a huge tax hike on the American people. We would risk sparking a deep economic crisis -- one caused almost entirely by Washington ...

    I realize that a lot of the new members of Congress and I don't see eye-to-eye on many issues. But we were each elected by some of the same Americans for some of the same reasons. Yes, many want government to start living within its means. And many are fed up with a system in which the deck seems stacked against middle-class Americans in favor of the wealthiest few ...

    History is scattered with the stories of those who held fast to rigid ideologies and refused to listen to those who disagreed. But those are not the Americans we remember. We remember the Americans who put country above self ...

    The entire world is watching. So let's seize this moment to show why the United States of America is still the greatest nation on Earth -- not just because we can still keep our word and meet our obligations, but because we can still come together as one nation. Thank you, God bless you, and may God bless the United States of America."



    Reactions to President, House Speaker

    Aired July 25, 2011 - 21:24 ET

    MORGAN: Breaking news, tonight the financial future of this country may rest on something that's just about impossible to achieve in Washington these days, compromise ...

    Joining me now is New York Democratic Senator Chuck Schumer. Senator Schumer, what did you make of both speeches tonight and particularly the emphasis on this word compromise. It didn't sound to me like the Republicans are prepared to compromise very much.

    SEN. CHARLES SCHUMER (D), NEW YORK: Well, they haven't ... moved one dime off their stand of no revenues whatsoever.

    The president put the blame squarely on the shoulders of where it belongs, a bloc of extreme right House Republican who just refuse to compromise at all. And it is leading to disaster ...

    MORGAN: I mean, there is an option. It has not been tested properly legally. No one seems quite sure if it is a legal option for the president. Under the 14th Amendment, he basically goes alone, if it comes to it, rather than default. No default has ever happened before. Would you encourage the president to take that option, if all else failed?

    SCHUMER: Well, I think we ought to avoid that option if we could. It is unclear how the courts would determine it. It is unclear how the credit markets would regard it. It is something that should be explored down the road, perhaps. but not for this scenario ...


    Top -- Home

    Blowing up the House

    By E.J. Dionne Washington Post Writers Group Posted: 07/21/2011

    Media reports are touting the Senate's Gang of Six and its new budget outline. But the news that explains why the nation is caught in this debt-ceiling fiasco is the gang warfare inside the Republican Party. We are witnessing the disintegration of Tea Party Republicanism ...

    The Tea Party lives in an intellectual bubble where the answers to every problem lie in books by F.A. Hayek, Glenn Beck or Ayn Rand. Rand's anti-government writings, regarded by her followers as modern-day scripture -- Rand, an atheist, would have bridled at that comparison -- are particularly instructive.

    When the hero of Rand's breakthrough novel "The Fountainhead" doesn't get what he wants, he blows up a building. Rand's followers see that as gallant. So perhaps it shouldn't surprise us that blowing up our government doesn't seem to be a big deal to some of the new radical individualists in our House of Representatives.

    Our country is on the edge. Our capital looks like a lunatic asylum to many of our own citizens and much of the world. We need to act right now to restore certainty by extending the debt ceiling through the end of this Congress ...

    Republicans need to decide whether they want to be responsible conservatives or whether they will let the tea party destroy the House that Lincoln Built in a glorious explosion. Such pyrotechnics may look great to some people on the pages of a novel or in a movie, but they're rather unpleasant when experienced in real life.


    The new party of Reagan

    By Dana Milbank,

    After he switched to the Republican Party in 1962, Ronald Reagan famously quipped: "I didn't leave the Democratic Party. The party left me."

    Now, the Republican Party is doing the same thing to him -- and Democrats are happy to take Reagan back ...

    100 years after Reagan's birth, it's clear that the Tea Party Republicans have little regard for the policies of the president they claim to venerate.

    Tea Party Republicans call a vote to raise the debt ceiling a threat to their very existence; Reagan presided over 18 increases in the debt ceiling during his presidency.

    Tea Party Republicans say they would sooner default on the national debt than raise taxes; Reagan agreed to raise taxes 11 times.

    Tea Party Republicans, in "cut, cap and balance" legislation on the House floor Tuesday, voted to cut government spending permanently to 18 percent of Gross Domestic Product; under Reagan, spending was as high as 23.5 percent and never below 21.3 percent of GDP ...

    Under the Tea Party Republicans' spending cap, Reagan's military buildup, often credited with winning the Cold War, would have been impossible ...

    But while Reagan nostalgia endures, a number of Republicans have begun to admit the obvious: The Gipper would no longer be welcome on the GOP team. Most recently, Rep. Duncan Hunter Jr. (Calif.) called Reagan a "moderate former liberal who would never be elected today in my opinion."

    This spring, Mike Huckabee judged that "Ronald Reagan would have a very difficult, if not impossible time being nominated in this atmosphere," pointing out that Reagan "raised taxes as governor, he made deals with Democrats, he compromised on things in order to move the ball down the field." ...


    Top -- Home

    The Economy Stabilization Account

    Commentator 4 wrote on 12-24-10:

    Here's a brief history of the contention between the Hamiltonians and the Jeffersonians:


    President Andrew Jackson succeeds in destroying the Second Bank of the United States by withdrawing U.S. funds in 1833.

    Skull and Bones Society formed at Yale.

    William Huntington Russell founded the Order of Skull & Bones in 1832 after he returned from studies in Germany. The Russell family's business - Russell & Co. - was the premier American opium shipper and the third largest in the world. In the 1830s, opium became the world's largest commercial commodity, and was the foundation of great wealth with the smuggling of opium into China.

    January 30, 1835

    ``Aassassination attempt on President Andrew Jackson

    What is believed to be the first attempt to [murder] a sitting President of the United States occurred just outside the United States Capitol Building ...''

    April 12, 1861

    The Civil War began when General Beauregard, in command of the provisional Confederate forces at Charleston, South Carolina, opened fire on Fort Sumter.


    Bankers offered loans to the Lincoln government at a minimum 24 percent interest. So the Legal Tender Act of 1862 authorized the "greenback," a fiat paper currency that was issued directly into circulation by the United States Department of the Treasury.

    The London Times printed the following: "If that mischievous financial policy, which had its origin in the North American Republic, should become [established], then that Government will furnish its own money without cost. It will pay off debts and be without a debt. It will have all the money necessary to carry on its commerce. It will become prosperous beyond precedent in the history of the civilized governments of the world. The brains and the wealth of all countries will go to North America.

    That government must be destroyed, or it will destroy every monarchy on the globe." (Hazard Circular - London Times 1865)

    April 15, 1865

    President Abraham Lincoln is murdered.


    Federal Reserve System was created.

    The Federal Reserve System was created in 1913 by the enactment of the Federal Reserve Act. It consists of twelve regional Federal Reserve Banks

    ``Thomas Jefferson warned 200 hundred years ago that if private bankers were allowed to issue America 's money, indebtedness, foreclosure and suffering would follow. Yet, in 1913, private bankers gained control over America's money by the passage of the Federal Reserve Act.''

    ``Who owns the federal reserve bank[s?

    That is a complicated question ... [In other words, "who knows?"]

    It is historic fact that the plan for the Federal Reserve was created by banking interests in great secrecy at Jekyl Island in 1910 ... The operations of the Federal Reserve are secret, have no active congressional oversight, and are not audited by the GAO or the IRS ...''

    June 4, 1963

    John F. Kennedy signed Executive Order 11110 ... which gave Kennedy, as President of the United States, authority to print United States Treasury Notes.

    November 22, 1963,

    John F. Kennedy is murdered

    Only one day after Kennedy's assassination, all the United States notes which Kennedy had issued, were called out of circulation.

    [Also see The Mysterious Collapse of World Trade Center Building 7 ]

    Commentator 5 wrote on 12-31-08:

    ``In an effort to paralyze the U. S. federal government, just three presidents, Reagan and the Bushes, have incurred most of our current [2008] $11 trillion national debt -- this was not accident or stupidity; it was deliberate policy.

    Paying interest on this debt as it continues to grow should be repugnant to all of us -- what a waste of our tax dollars. So, here is a proposal in the tradition of President Abraham Lincoln:

    Immediately pay off the entire U. S. debt with electronic (and printed when necessary) U. S. Treasury bills, "electronic greenbacks." These treasury notes will pay no interest; and will be "stored" in the U. S. Treasury until the debt-holders give the U. S. Treasury their account numbers for "electronic greenback" direct deposit. All interest payments on notes issued by the Federal Reserve will be banned by law and immediately cease.

    The new greenbacks will be legal tender in the U. S. and must be accepted abroad by U. S. agencies, contractors, and banks chartered in the U. S. no matter where they are operating.

    The U. S. Treasury will maintain an `Economy Stabilization Account', which can have a negative balance. During recessions, this account would pay out more than it takes in. During good times when there is a surplus, this account would receive more than it pays out. This account would have a role in controlling the amount of money in circulation.''


    Top -- Home

    Origin of the Tea Party

    FEATURE ARTICLE from The New Yorker, 8-30-10, by Jane Mayer

    ``Covert Operations

    The billionaire brothers who are waging a war against Obama.

    In Washington, Koch is best known as part of a family that has repeatedly funded stealth attacks on the federal government, and on the Obama Administration in particular.

    With his brother Charles, who is seventy-four, David Koch owns virtually all of Koch Industries, a conglomerate, headquartered in Wichita, Kansas, whose annual revenues are estimated to be a hundred billion dollars. The company has grown spectacularly since their father, Fred, died, in 1967, and the brothers took charge.

    The Kochs operate oil refineries in Alaska, Texas, and Minnesota, and control some four thousand miles of pipeline. Koch Industries owns Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpet, and Lycra, among other products. Forbes ranks it as the second-largest private company in the country, after Cargill, and its consistent profitability has made David and Charles Koch ... among the richest men in America. Their combined fortune of thirty-five billion dollars is exceeded only by those of Bill Gates and Warren Buffett.

    The Kochs ... believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry, especially environmental regulation.

    These views dovetail with the brothers' corporate interests. In a study released this spring, the University of Massachusetts at Amherst's Political Economy Research Institute named Koch Industries one of the top ten air polluters in the United States. And Greenpeace issued a report identifying the company as a 'kingpin of climate science denial.' The report showed that, from 2005 to 2008, the Kochs vastly outdid ExxonMobil in giving money to organizations fighting legislation related to climate change, underwriting a huge network of foundations, think tanks, and political front groups ...

    Charles Lewis, the founder of the Center for Public Integrity, a nonpartisan watchdog group, said, "The Kochs are on a whole different level. There's no one else who has spent this much money. The sheer dimension of it is what sets them apart. They have a pattern of lawbreaking, political manipulation, and obfuscation. I've been in Washington since Watergate, and I've never seen anything like it. They are the Standard Oil of our times."

    A few weeks after the Lincoln Center gala, the advocacy wing of the Americans for Prosperity Foundation [AFP], an organization that David Koch started in 2004, held a different kind of gathering. Over the July 4th [2010] weekend, a summit called Texas Defending the American Dream took place in a chilly hotel ballroom in Austin ...

    Five hundred people attended the summit, which served, in part, as a training session for Tea Party activists in Texas. An advertisement cast the event as a populist uprising against vested corporate power. "Today, the voices of average Americans are being drowned out by lobbyists and special interests," it said. "But you can do something about it." The pitch made no mention of its corporate funders ...''


    Op-Ed Column from The New York Times, 8-28-10,


    ``The Billionaires Bankrolling the Tea Party

    Another weekend, another grass-roots demonstration starring Real Americans who are mad as hell and want to take back their country from you-know-who. Last Sunday the site was Lower Manhattan, where they jeered the "ground zero mosque." This weekend, the scene shifted to Washington, where the avatars of oppressed white Tea Party America, Glenn Beck and Sarah Palin, were slated to "reclaim the civil rights movement" (Beck's words) on the same spot where the Rev. Martin Luther King Jr. had his dream exactly 47 years earlier ...

    There's just one element missing from these snapshots of America's ostensibly spontaneous and leaderless populist uprising: the sugar daddies who are bankrolling it, and have been doing so since well before the "death panel" warm-up acts of last summer. Three heavy hitters rule. You've heard of one of them, Rupert Murdoch. The other two, the brothers David and Charles Koch, are even richer, with a combined wealth exceeded only by that of Bill Gates and Warren Buffett among Americans. But even those carrying the Kochs' banner may not know who these brothers are.

    Their self-interested and at times radical agendas, like Murdoch's, go well beyond, and sometimes counter to, the interests of those who serve as spear carriers in the political pageants hawked on Fox News. The country will be in for quite a ride should these potentates gain power, and given the recession-battered electorate's unchecked anger and the Obama White House's unfocused political strategy, they might.

    All three tycoons are the latest incarnation of what the historian Kim Phillips-Fein labeled "Invisible Hands" in her prescient 2009 book of that title: those corporate players who have financed the far right ever since the du Pont brothers spawned the American Liberty League in 1934 to bring down FDR ...''

    [The stakes for the kleptocracy are higher than ever -- the Kazakh oil of central Asia, and the chance to make Afghanistan another Congo. For more on the U. S. invasion of Afghanistan and the Unocal pipeline, see]

    A revesling commentary on the current "Banana Wars' (Oil Wars) was written by U.S. Marine Corps Major General Smedley Butler, who saw action in Honduras in 1903, served in Nicaragua enforcing American policy from 1909 to 1912, was awarded the Medal of Honor for his role in Veracruz in 1914, and a second Medal of Honor for bravery while "crush(ing) the Caco resistance" in Haiti in 1915. In 1935, Butler wrote in his famous book "War Is a Racket":

    "I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism.

    I helped make Mexico and especially Tampico safe for American oil interests in 1914.

    I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in.

    I helped in the raping of half a dozen Central American republics for the benefit of Wall Street.

    I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912.

    I brought light to the Dominican Republic for the American sugar interests in 1916.

    I helped make Honduras right for the American fruit companies in 1903.

    In China in 1927 I helped see to it that Standard Oil went on its way unmolested.

    Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents."'']


    Top -- Home

    Real Agenda of the Tea Party

    Commentator 6 wrote:

    I appreciate your coverage of what's happening in Wisconsin. If you are interested in the Koch financing of the tea party, see

    It seems to me that, in 2010, "Archie Bunker" voted for the thieves because he hates Obama.

    Commentator 7 wrote:

    Thank you Commentator 6. The influence of Koch Industries has been getting lots of play here in Madison Wisconsin. Thanks for performing a reminder.

    Here's Mother Jones take:

    I just sent the following letter to my Governor:

    To Governor Scott Walker:

    I have been a Wisconsin public employee for more than 30 years. I have worked at Wisconsin Department of Revenue (DOR), UW Division of Information Technology (DoIT), UW Space Astronomy Lab (SAL), and I am currently employed at Wisconsin Department of Transportation (DOT). I have been a union member since the mid 1980s.

    As I begin to approach retirement, and as I reflect back on the employment choices I made I must admit the fact that it never bothered me that with my professional training and educational background in related data processing fields I could have made more money working out in the private sector. I came to Madison in 1967 at the age of 14 and I never wanted to leave this beautiful city surrounded by its lakes and University environment. Working for the state of Wisconsin was where I wanted to be.

    Last Friday, Wisconsin's state and local public employees offered to accept all of the economic concessions called for in your budget repair bill. This includes pension and health care concessions. You have claimed that these concessions are needed in order to resolve Wisconsin's current budget crisis.

    While it is both unfair and inaccurate to constantly vilify the work of unions as of being the cause of Wisconsin's current economic crisis, the fact that the unions are nevertheless willing to abide by these concessions was the right thing to do. All that the unions asked in return was to keep the right to bargain collectively intact. It is my understanding that you turned the offer down.

    Let me repeat: A solution to Wisconsin's current economic crisis was offered up by the unions and placed in your hands, and yet you turned it down. It is becoming clear to me, and I think to countless others who have bared witness to your refusal to even consider the union's offer, that your primary objective was never about balancing the budget.

    I am astonished to discover that resolving our state's budget has actually taken a secondary seat to what I assume you must sincerely believe is a "greater calling", that of destroying the collective bargaining rights of the Wisconsin's unions - and to achieve that objective by whatever means and at whatever cost it might take.

    I can only assume that you must believe that after this "Greater Calling" has been satisfied will you then focus your energies on fixing Wisconsin's financial crisis ...

    Executing the "final solution" towards the Union will not solve Wisconsin's ailing economy. The solution is to help cure Wisconsin's ailing economy, and the unions and its members are willing to do their part, just like everyone else.


    And in Ohio

    NEWS ARTICLE from The Chronicle-Telegram, 3-9-11, By Cindy Leise

    ``Prison workers fear Kasich intends to sell Grafton Correctional Institution

    A contingent of union officials representing prison workers arrived in Columbus on Tuesday to hear Gov. John Kasich's State of the State speech, only to learn that a report was circulating that the Grafton Correctional Institution would be sold to a private vendor.

    "This was a hit to the gut, and it gives a sick feeling," said Bobbie Peters, president of the Ohio Civil Service Employees Association chapter at Grafton Correctional.

    "I don't know how it will stimulate the economy if all of the profits go to a private company out of state," she said.

    Gov. John Kasich wants to generate $200 million by selling Grafton Correctional and four other prisons to private vendors, according to budget proposals obtained by the Dayton Daily News ...

    "We're all very concerned. We're sick," said Barb Davis, a guidance counselor at the prison on state Route 83.

    Another employee, Tom Thompson, said he is worried about what could happen if he loses his job of 15 years.

    "We have three kids in school, and my wife and I just built a house," Thompson said. "The scary part is that if Senate Bill 5 passes, no one would have bumping rights."

    That means an employee with two years at another prison could keep his or her job while Thompson, with 15 years of experience, loses his.

    Peters, the union president, said she also is worried that prison workers would lose their ability to transfer to other prisons if Senate Bill 5 passes and Grafton Correctional is [sold] ...

    Two of Ohio's 31 prisons, the North Coast Correctional Treatment Facility in Grafton and the Lake Erie Correctional Institution in Conneaut are run by Management & Training Corp., a private vendor out of Utah.

    Contact Cindy Leise at

    Commentator 8 wrote:

    ... If we continue to sell-off or contract-out public services to private corporations we will become an oligarchy and be effectively governed by for profit big business.

    Since the bottom line of any business is profit, it is the business' best interests to keep wages minimal, benefits cheap, and pensions that are hardly livable.

    Is this what we really want as a society? Is the national craze of 'Pension Envy' going to infect our ability to see the big picture and long term negative effects on all workers if this scenario happens?


    NEWS ARTICLE from The Chronicle-Telegram, 4-20-11,

    By Cindy Leise

    Study disputes prison savings if prisons are privatized

    The state is on the brink of selling five state prisons, including Grafton Correctional and North Coast Correctional in Grafton, to private operators without having an accurate way to calculate how much money has been saved, according to a study by Policy Matters Ohio.

    Calculations have been "riddled with errors, oversights and omissions of significant data" according to the study by Bob Paynter, a former Pulitzer Prize-winning reporter at the Akron Beacon Journal and Plain Dealer.

    Paynter said he examined the costs related to the operation of privately operated Lake Erie Correctional Institution in Conneaut and discovered it actually may have cost taxpayers $380,000 to $700,000 more to contract with a private vendor for fiscal years 2006 and 2007 than it would have with the state running it.

    For the 2008-09 biennium, potential savings of 21 percent a year drop to between 1.2 percent and minus 0.3 percent when errors are corrected, according to Paynter's study.

    For 2010, the savings could drop from 13.9 percent to 3.6 percent and for 2011, from 15 percent to 4.7 percent, the study said.

    "It may eventually turn out that private prisons do save money," Paynter wrote in the study called Cells for Sale. "But after 10 years of claiming it, Ohio has fallen well short of proving it."

    In an interview, Paynter said the state is not "comparing apples to apples because private prisons are not dealing with inmates with health problems or behavioral problems."

    "I think this decision was made for political and ideological reasons," Paynter said. "I don't see evidence there has been a rigorous system evaluating potential cost savings."

    In past calculations, Paynter contended the Department of Rehabilitation and Correction used bloated estimates for what the staffing would be at a state institution and ignored costs such as inmate pay and reimbursements for inmate hospitalizations.

    State law requires that a private vendor's price beat state costs by at least 5 percent -- a figure that Department of Rehabilitation and Correction contends it has met.

    At the time Paynter was doing his study, state officials said they planned to come out with new methods of comparing costs.

    Prisons spokesman Carlo LoParo on Tuesday released new cost comparisons showing savings of between 7.2 and 16.6 percent for 2008 to 2010 for both Lake Erie Correctional and North Coast Correctional, which are both owned by the state but operated by the private Management and Training Corp of Centerville, Utah.

    "This is an academic argument we are having," LoParo said. "We're saying we did meet the 5 percent."

    LoParo released new estimates showing a 7.3 percent savings for 2008, 16.6 percent in 2009 and 7.5 percent in 2010 at North Coast, and similar savings at Lake Erie for the same years.

    LoParo called Policy Matters Ohio a left-leaning think tank funded in part by unions and said the cost savings to taxpayers from the sale of the prisons will be real.

    LoParo said the administration of Gov. John Kasich can make the decision itself to privatize the prisons without a vote of the Ohio Legislature.

    But state Rep. Matt Lundy, D-Elyria, said he is offering an amendment to a budget bill in hopes that the Ohio Legislature will be brought back into the decision-making process.

    "I don't want the Ohio Turnpike privatized without a voice or a vote, and I don't want the prisons privatized without a voice or a vote," Lundy said.

    "I've not had anybody tell me privatizing the Turnpike or prisons is a good idea," Lundy said. "I've had them tell me just the opposite."

    Contact Cindy Leise at 329-7245 or


    NEWS ARTICLE from The Plain Dealer, 8-5-11,

    ... Wendy's severed another tie that bound it to its old partner, Arby's, when it announced Thursday that it would move its headquarters back to Dublin, Ohio, from Atlanta.

    Commentator 9 wrote:

    "Kasich and the city are handing Wendy's $12 million in taxpayer money to do what they were probably going to do anyway. Then Kasich takes credit for "convincing" them to move back here.

    What does Ohio gain? Is there any gain in economic activity? A few executives are moving back here, everyone else stays in Atlanta. Will the increased income tax even cover the $12 million giveaway? Doubtful."



    Aired March 14, 2011 - 20:00 [hours] ET

    ``ELIOT SPITZER, CNN ANCHOR: Good evening ... Welcome to our program.

    Breaking news right now. It just keeps getting worse. The last of the three reactors of the Fukushima nuclear power plant in northern Japan is now the scene of an explosion. This was reported just minutes ago on NHK, the Japanese television ...

    SPITZER: If Japan's nuclear emergency continues, fears about the safety of nuclear energy are growing here at home. Some 100 reactors in operation across the country, can we risk the president's push to build more?

    Jeffrey Sachs is here joining us. He's the director of the Earth Institute at Columbia University ...

    SACHS: I don't think the Japanese events, as horrible as they are, are going to do much here at all ...

    We have a lot of crazy policies going on in Washington. One of them is that the Republicans are cutting the science and the warning systems that protect us from this kind of disaster ...

    The majority leader, Eric Cantor ... says we have no money to monitor earthquakes and tsunamis and to keep the National Oceanographic and Atmospheric Administration running.

    What is he talking about? Tax a few rich people, [and] easily pay for what would keep the 300 million of us safe.

    They're making terrible decisions. And this should be a wakeup call to our Congress to stop being so anti- scientific, to stop neglecting these powerful forces of nature ...

    SPITZER: Jeff, you're saying you want a heads up before that tsunami comes over the coastline?

    SACHS: I think it would be nice if we had some science and monitoring here and not to cut these agencies ...

    SPITZER: Well, look, my editorial comment is not only are you exactly correct but where the cuts are being discussed is in the worst possible place. It's actually where the investments for the future [need] to be made ...''

    [It's embarassing when a prominent Congressional tea bagger publicly displays her ignorance of where the battles of Lexington and Concord were fought, but it is a serious problem when apparently the majority of those with tea bags for brains want to cut spending with no idea that the United States can not afford its empire, especially oil wars like the military adventure in Afghanistan to secure the "Unocal" pipeline.

    For more on the Unocal pipeline and the run-up to the Afghan War, see]


    The Truth-O-Meter Finds:

    ``Marcia Fudge on Tuesday, March 1st, 2011 in an interview on C-SPAN said "There are corporations in this nation, some of the biggest corporations in this nation, who do not pay taxes."

    Early this month, Democratic Rep. Marcia Fudge of Warrensville Heights appeared on C-SPAN's "Washington Journal," public affairs television program where viewers phoned in to ask her questions.

    A caller who identified himself as James, an Akron small-business owner, discussed some of the tax write-offs he uses as a small businessman, and said larger businesses "game the system" by writing off things like parties, food and clothes.

    Fudge agreed with him, calling for an overhaul of corporate tax policy, saying: "There are corporations in this nation, some of the biggest corporations in this nation, who do not pay taxes."

    "It is not that they are cheating," Fudge continued ... We have given them tools."

    We thought examining Fudge's tax claim would be worthwhile, since representatives of some of the nation's biggest companies, such as Cincinnati's Procter & Gamble, argue that Congress should be cutting business taxes ...

    Are some large U.S. businesses not paying taxes, as Fudge claims?

    To back up her assertion, Fudge's office cites media reports about particular companies -- like General Electric and Bank of America -- that did not pay 2009 taxes as well as a July 2008 report from Congress' Government Accountability Office that showed it's relatively common for big companies to pay no taxes.

    Between 1998 to 2005, GAO found that about 72 percent of large foreign controlled companies and 55 percent of large U.S. controlled companies reported zero tax liability for at least one year.

    About 57 percent of foreign controlled large companies and 42 percent of U.S. large companies paid no taxes in two or more years, and a third of the foreign companies and one quarter of their U.S. counterparts paid no taxes for at least four of those years.

    Just 45 percent of large U.S. companies and 28 percent of foreign companies reported a tax liability for each of the eight years. The report defined large companies as those with at least $250 million in assets, or at least $50 million in receipts ...

    The nation's big business representatives don't dispute the report's findings, even as they stress it should not be misconstrued to mean businesses are evading taxes they owe ... [Most of the tax liability was probably eliminated by campaign contributions, lobbyyists for the kleptocrats, etc. Moammar Gadhafi probably pays no taxes in Libya either -- all perfectly legal. And what about the oil depletion tax credit?]

    Our research finds solid ground beneath her claim that some large U.S. companies don't pay taxes. That's why we rate her statement as True.''


    LETTER to The Sun-Sentinel, 3-10-11:

    ``During last fall's frenzied election process, American citizens were exposed to the cries of Tea Party members who wanted their country back from big government.

    I too want my country back ... from the Supreme Court of the United States ...

    The conservative majority, under the leadership of Chief Justice John Roberts, in the Citizens United case, ruled to allow corporations ... to [secretly] donate unlimited amounts ...

    The big spenders did not wish to be identified. Republicans in the Senate successfully filibustered the Disclose Act which would have required lavish contributors to [publicly] identify themselves.

    Common Cause has alerted us ... Justice Clarence Thomas, although required, failed to reveal his wife's income of over $680,000 from the Heritage Foundation ...

    Has the integrity of the Court been challenged when the billionaire Koch brothers, Tea Party supporters, issue invitations to Justices Scalia and Thomas to attend their confidential meetings?

    May I have my country back?''

    Celine E. Riedel, Avon Lake


    LETTER to The Sun-Sentinel, 4-11-11:

    Kasich takes from middle class to help out Ohio's wealthy

    William Shakespeare, in 'As You Like It,' compared the world to a stage where all the men and women are merely players.

    One of the prominent players is our very own governor, John Kasich, who has set his stage in Ohio. He struts the boards posing as Robin Hood, while reversing Robin Hood's role: stealing from the middle class and giving to the wealthy. He zealously promotes his budget proposals aimed at privatization wherever possible and the elimination of unions' right to collectively bargain.

    Kasich facilitated his union-busting career while working as managing director of the Columbus banking division of Lehman Brothers. When Lehman Brothers collapsed in September 2008, thanks to the manipulations of Kasich, the state pension fund lost an investment of $480 million.

    It is possible that Kasich's next appearance on stage may be as a presidential candidate in the 2012 election. He can count on the billionaire Koch Brothers to have his back financially.

    If Kasich succeeds in becoming the chosen Republican candidate in the election, Americans will have to decide if they wish to appear on the world's stage as a democracy or a corporation.

    Celine E. Riedel, Avon Lake


    LETTER to The Plain Dealer, 3-8-11:

    Kasich's and Lehman Brothers' hard sell of bad securities worsened Ohio pension funds' woes

    It's bad enough that our governor would try to balance the state budget by taking collective bargaining rights from public unions (Senate Bill 5) or via the newly proposed curtailing of overtime compensation for private workers (House Bill 61), but consider that the former Lehman Brothers executive helped to cause this same budget shortfall through the public pension's loss of $457 million.

    A recent public records request shows that Gov. John Kasich was pivotal in pitching toxic assets to OPERS, STRS and the OP&F pension funds, and made direct contact with the state pension fund managers, despite statements made to the contrary.

    The documents indicate that not only was Kasich pitching to the state funds, but that his colleagues at Lehman Brothers, whom Kasich had introduced to OPERS, STRS and OP&F, were trying to sell the pension funds these worthless securities as late as Aug. 25, 2008 -- only 21 days before the collapse of Lehman.

    The governor clearly has some explaining to do.

    The Plain Dealer's endorsement of Kasich for governor should be re-examined in light of these revelations. It's clear now that the public workers and all of the middle class were the mark in an elaborate con that stains the credibility of this newspaper and strains the finances of our state.

    Miles R. Heilman Lorain


    LETTER to The Sun-Sentinel, 4-2-11:

    Under Governor Kasich's reign, corporations winning, middle class losing

    After three short months of Gov. Kasich's reign, a clear picture emerges. It is not a pretty picture. It is a picture of winners and losers.

    The big winners are Kasich's billionaire friends and multi-national corporations. He privatized jobs creation and formed JobsOhio. He plans on selling or leasing the lottery, prisons and the turnpike. Corporations will be getting our tax money instead of Ohioans.

    Kasich would rather send our taxes to out-of-state corporations than help keep Ohioans employed in good-paying jobs. He is helping corporations feed at the state trough of money. He does not seem to care that this money will be going out of Ohio.

    The big losers are the middle class, the poor and handicapped. He is cutting help for the mentally handicapped. He is trying to dismantle the Office of Consumer Counsel, which helps consumers with problems concerning big business. He is trying to ram through Senate Bill 5 [SB5], which would hurt many Ohio workers.

    He derailed the 3C Corridor project, which would have given us a choice for travel, with looming high gas prices. Leasing or selling state entities would subject employees to job loss or substantial pay and benefit cuts. He is denying federal funds for transit projects, which are 'pass-thru' funds. He is cutting aid to cities and schools, pushing them to the brink. Cities and schools will have to seek local tax increases ...

    In Kasich's perfect Ohio, we will be a minimum-wage, right-to-work state where corporations can pillage and plunder the state at will. This is not the Ohio we the people want, nor need!

    Geza John Vamos, Cleveland

    Top -- Home


    Stop Coddling the Super-Rich

    ... While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks.

    Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as "carried interest," thereby getting a bargain 15 percent tax rate.

    Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they'd been long-term investors ...

    Last year ... I paid ... only 17.4 percent of my taxable income -- and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent ...

    To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes.

    The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes.

    It's a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

    Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

    I didn't refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone -- not even when capital gains rates were 39.9 percent in 1976-77 -- shy away from a sensible investment because of the tax rate on the potential gain ...

    I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what's happened since then: lower tax rates AND far lower job creation ...

    I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn't mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

    Twelve members of Congress will soon take on the crucial job of rearranging our country's finances. They've been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion ...

    Job one for the 12 is to pare down some future promises that even a rich America can't fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues.

    I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

    But for those making more than $1 million -- there were 236,883 such households in 2009 -- I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains ...

    My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice.

    Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.


    NEWS ARTICLE from The Plain Dealer, 8-16-11

    Real cost of Afghanistan, Iraq wars impossible to assess

    WASHINGTON -- When congressional cost-cutters meet later this year to decide on trimming the federal budget, the wars in Afghanistan and Iraq could represent juicy targets. But how much do the wars actually cost the U.S. taxpayer?

    Nobody really knows.

    Yes, Congress has allotted $1.3 trillion for war spending through fiscal fear 2011 just to the Defense Department ...

    Besides what Congress appropriated, the Pentagon spent an additional unknown amount from its $5.2 trillion base budget over that same period. According to a recent Brown University study, the wars and their ripple effects have cost the United States $3.7 trillion, or more than $12,000 per American ...

    According to Defense Department figures, by the end of April the wars in Iraq and Afghanistan -- including everything from personnel and equipment to training Iraqi and Afghan security forces and deploying intelligence-gathering drones -- had cost an average of $9.7 billion a MONTH ... roughly the entire annual budget for the Environmental Protection Agency ...

    Since the U.S. government issued war bonds to help finance World War II, Washington has asked taxpayers to shoulder less and less of a burden in times of conflict. In the early 1950s Congress raised taxes by 4 percent of the gross domestic product to pay for the Korean War; in 1968, during the Vietnam War, a tax was imposed to raise revenue by about 1 percent of GDP.

    No such mechanism was imposed for Iraq or Afghanistan, and in the early years of the wars Congress didn't even demand a true accounting of war spending, giving the military whatever it needed ...


    NEWS ARTICLE from The Associated Press, 8-21-11, By The Associated Press

    [So called " tax-cutter" Republicans want to raise taxes on workers]

    WASHINGTON -- News flash: Congressional Republicans want to raise your taxes.

    Impossible, right? GOP lawmakers are so virulently anti-tax, surely they will fight to prevent a payroll tax increase on virtually every wage-earner starting Jan. 1, [2012] right?

    Apparently not.

    Many of the same Republicans who fought hammer-and-tongs to keep the George W. Bush-era income tax cuts from expiring on schedule are now saying a different "temporary" tax cut should end as planned.

    By their own definition, that amounts to a tax increase.

    The tax break extension they oppose is sought by President Barack Obama ... This policy helps the 46 percent of all Americans who owe no federal income taxes but who pay a social security tax on practically every dime they earn ...

    At issue is a tax that the vast majority of workers pay, ... Workers normally pay 6.2 percent of their wages toward a tax designated for Social Security. Their employer pays an equal amount, for a total of 12.4 percent per worker.

    As part of a bipartisan spending deal last December [2010], Congress approved Obama's request to reduce the workers' share to 4.2 percent for one year; employers' rate did not change. Obama wants Congress to extend the reduction for an additional year. If not, the rate will return to 6.2 percent on Jan. 1 [2012].

    [Is it possible that, since 2010, Republican political strategy has been centered on minimizing Democrat election money and maximizing Republican election money? Republican governors in Wisconsin and Ohio are attacking unions to prevent them from donating to Democrats. On the national level, Republicans are protecting their own billionaire donors.]

    ARTICLE by Robert Greenwald, 8-1-11

    Koch Economics and their Debt Default Advantage

    We are seeing the result of Koch Economics and what happens when a few tycoons accrue the billions necessary to invest in politicians, nonprofit foundations and ideological think thanks.

    Pay for active duty soldiers and veterans' benefits would freeze without raising the debt ceiling.

    Embassies, emergency assistance, IRS and all the accounting at the Treasury Department, airport security, education, student loans and unemployment insurance, food inspection, transportation work and government contracts with thousands of businesses will all be left in the lurch if the government defaults.

    There's even a chance Social Security checks will be delayed or withheld altogether.

    Through their political contributions, the Koch brothers are on the front lines of this debt debacle, and they are in position to use the economic crisis to advance their ideological and economic goals of eradicating social services ...

    With allies like Sen. Jim DeMint, Americans for Prosperity is pushing a bill so extreme it would require Congress vote and approve a constitutional amendment before the more urgent issue of government default ...

    The debt ceiling vote, an action so routine Ronald Reagan raised it 18 times and the [Bush] administration seven times, has forced some economic experts to question if the U.S. is a good investment anymore. This too is advantageous for the Koch brothers' ideological agenda. If it hurts the economy it helps whomever the Kochs support in the upcoming election, who in turn will favor politics that boost the Koch brothers' profits.

    But it also hurts working families and policymakers. Folks who borrow money would see their interest rates rise on their car payments, mortgages, you name it ...

    Our debt is the manifestation of Hamilton's dream, chiefly: 'The national debt ' created through the federal assumption of state war debts ' was created to' get the holders of bonds, necessarily wealthy and powerful people, to have a vested interest in the fixity and stability of the federal government.'

    The Koch brothers' hidden influence in this debt fracas is [a] Hamiltonian nightmare: the wealthy and powerful people took their vested interest and own the whole store.

    The Koch brothers could end this bickering with a few phone calls, ... Instead, the brothers are content to foment discord, disillusionment and potentially default, much to the detriment of all of us.


    TRUTH-O-METER from Politifact, 8-22-11

    Sen. Sherrod Brown says Wall Street hedge fund managers pay a lower tax rate than a typical sheet metal worker or a teacher ...

    Ohio's Sen. Sherrod Brown said in an interview that Congress needed to turn its focus to job creation exclusively. And he said that tax reform should close loopholes that the debt-ceiling deal didn't touch.

    For example, he said, "They didn't close the tax loopholes for Wall Street hedge fund managers who pay a lower tax rate than does a sheet metal worker in Parma or a school teacher in Cleveland."

    That got PolitiFact Ohio's attention. Could wealthy Wall Street investors have a lower tax rate on their compensation than average workers?

    We asked Brown's office how he supported his remark. Press secretary Allison Preiss responded with a pile of sources.

    Let's start the review by identifying our subject. Hedge funds are investment funds similar to mutual funds, but are not subject to the same rules and regulations, are typically more aggressive, and traditionally have been limited to wealthy investors. Most set very high minimum investment levels.

    Managers of hedge funds typically charge investors 2 percent for managing their money, meaning that a $10 billion hedge fund takes in $200 million in fees. Managers also can collect a percentage of the profits from trades they make, usually 20 percent.

    AR Magazine, the hedge fund trade publication, began estimating compensation in the industry a decade ago, the Reuters news agency said earlier this year, noting that "calculating the earnings of top hedge fund managers involves a degree of guesswork and alchemy, since funds don't publicly disclose compensation."

    AR's annual report on the 25 richest hedge fund managers said they collected about $22 billion in compensation last year.

    Topping the charts in hedge fund pay was John Paulson of Paulson & Co., who earned a reported $4.9 billion. That is billion with a B, and that is for the year 2010 ...

    A study by the University of Chicago Graduate School of Business and the National Bureau of Economic Research found that the top 25 hedge fund managers combined appear to have earned ... [an] average pay [of] $3.2 million a year.

    Using the federal income tax rate schedule for 2010, a single individual earning $3.2 million (or $4.9 billion) would fall in the top tax bracket that applies to wages, bonuses and other compensation, which is 35 percent. That rate starts at income of about $370,000.

    BUT hedge fund managers typically don't pay taxes on their income the same way other Americans do, as PolitiFact has noted before.

    The bulk of hedge fund managers' income is typically considered "carried interest" [A big TAX LOOPHOLE] -- that is, their share of profits from the funds they manage. When a fund has capital gains and those gains flow to the manager, they are taxed as a capital gain, not as ordinary income.

    The tax rate on capital gains is 15 percent, rather than the 35 percent on compensation that would be paid by everyone else ...

    (The taxpayers with the top 400 incomes paid an average rate of 18.11 percent in 2008, according to the most recent update of the Internal Revenue Service, which issues an annual report on the top 400 taxpayers.)

    Hedge fund managers don't necessarily pay even 15 percent, however. They can pay no current income tax at all, by leaving their carried interest money in the hedge fund and deferring the tax bill to a later date -- even decades later -- when they eventually cash out of the fund.

    What about the other two individuals in Brown's statement?

    According to the most recent figures from the U.S. Bureau of Labor Statistics, in May 2010, the average salary for a sheet metal worker in the Cleveland area, spanning Elyria to Mentor, is $47,200.

    According to a May 2010 survey by The Plain Dealer, using information from the Ohio Department of Education, the average teacher salary in Cleveland is $65,575.

    Using the federal income tax rate schedule, both single individuals and heads of households at those income levels would fall in the tax bracket of 25 percent.

    That 25 percent is higher than the capital gains rate of 15 percent that the carried interest tax loophole allows hedge fund managers to pay on their income.

    On the Truth-O-Meter, that gives Brown's statement a rating of True.

    Top -- Home

    COLUMN from the Plain Dealer, 9-7-11, by Connie Schultz

    [The Tea Party Express stops in Avon]

    AVON, Ohio -- It's not every day you walk into your local baseball park and see Mrs. Ohio posing with Ben Franklin and Uncle Sam for a photo op.

    It's happened to me exactly once -- last Saturday [9-3-11], after I walked through the gates of Avon's All Pro Freight Stadium for the only Ohio stop on the cross-country Tea Party Express.

    Ben, Sam and the Mrs. were standing arm-in-arm at the entrance, smiling for a couple of people with cameras. In full costume, in 90-degree heat. Now, that's patriotism.

    Promotions for the Tea Party event promised thousands of activists, and maybe appearances by former "Saturday Night Live" comedienne Victoria Jackson and a couple of presidential candidates, too.

    It didn't quite turn out that way. Jackson was a no-show, as was every presidential candidate. The throng of rumored activists stayed home, too.

    I counted fewer than 450 in attendance, and that included vendors, volunteers, on-stage performers and two policemen.

    In fairness, I should point out that some reports offered different attendance numbers. AvonPatch put it at 500. The Elyria Chronicle reported "hundreds."

    WTAM radio, which hosts shows by Glenn Beck and Rush Limbaugh, claimed that 1,000 showed up.

    The Lorain Morning Journal reported a whopping 2,000. Two thousand. Now, it's possible that the Journal thinks one conservative equals five liberals ...

    Women who approached me at the Tea Party were universally nice. Even when they made it clear they took issue with some of my opinions, they did so with respect, and provided their names whenever I asked. I thanked them for reading my column, and then we talked about grandchildren and shoes.

    Now, the men were different. With the exception of a self-identified fellow pug lover, most men who approached me acted as if they were scared to death. I'm not sure why, but I was definitely flattered.

    Three men suggested I leave quickly, "if you know what's good for you." A few came up to me and shouted, "Hey! Connie Communist!" Because they're just that clever ...

    The longest and most fiery speech of the day came from Apostle Claver T. Kamau-Imani of He hails from Texas, and he's not keen on compromise.

    "We do not stand for bipartisanship," he bellowed. "Do not be yoked together with nonbelievers."

    The list of heathens is very long in Apostle Claver's world:





    Small-dog owners. (I may be mistaken about this.)

    Oh, and this: "I have nothing in common with someone who doesn't believe in Jesus Christ," he said.

    Big applause ...

    Until I started asking some of these merrymakers if they agreed they should avoid associating with nonbelievers, Jews, for example ...

    After three hours, I left the Tea Party event with two impressions:

    Most of the attendees were patriotic Americans who have more in common with people like me than they want to believe.

    All of them deserve better than the extremists claiming to be their leaders.

    For related information, see

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