The favor George W. Bush did for Democrats The supercommittee may be collapsing, and it's because Democrats are using a weapon the last president gave them By Steve Kornacki / Salon

Friday, Nov 18, 2011 5:17 AM 06:34:48 PST

The favor George W. Bush did for Democrats

The supercommittee may be collapsing, and it's because Democrats are using a weapon the last president gave them

By Steve Kornacki

Topics:Opening Shot

The odds of the congressional supercommittee striking a debt reduction deal before next week’s deadline are fading by the hour, and for good reason: Democrats seem to be realizing just how much leverage they really have.
The simple fact that top Republicans in Congress and on the committee have put forward a proposal that includes around $250 billion in new revenue is itself a sign of the Democrats’ strong bargaining position. For two decades, ever since George H.W. Bush turned back on his “Read my lips” anti-tax pledge and faced a revolt from the right, Republicans have almost unanimously opposed the idea of any tax increase under any circumstance. But as jarring as the GOP’s shift seemed, congressional Democrats on Thursday made clear that they see it as wholly inadequate and that they’re ready to reject it without radical restructuring.

Their confidence is well-placed, and it comes from an unlikely source: George W. Bush.
The story goes something like this: When Bush came to office in 2001, his party controlled the Senate only because of Vice President Dick Cheney’s tie-breaking vote. So Bush sought to push his signature tax cut program through the Senate by using the reconciliation process, which makes filibustering impossible. Because it was designed explicitly to encourage deficit reduction, any bill passed under reconciliation can’t add to the long-term deficit. This presented a serious problem for Bush, because his tax cuts were projected to blow a massive hole in the deficit. So, as the Washington Post explained at the time:

To pass the president’s tax cut, its sponsors disguised its cost. One of the main accounting gimmicks to which they resorted was a sunset provision. They had promised — and were bound by the budget resolution — to limit the revenue loss to $ 1.35 trillion over 10 years. But at the end of their efforts they found themselves still well above that level, and so they simply decreed that after nine years most of the cuts in the bill would expire. The assumption was that no future Congress would let that happen — that their artificial repeal of the cuts would itself be repealed by their successors, who would otherwise be accused of condoning a large tax increase.

As you probably recall, the sunset was supposed to occur at the end of last year, but President Obama agreed to a deal with Republicans to extend the Bush rates for two more years in exchange for a temporary payroll tax cut and some modest stimulus measures. It is the looming expiration of those rates, now just over a year away, that is serving as the backdrop for the current supercommittee negotiations.
Republicans are well-aware that a reelected President Obama will not sign off on another extension, at least for the wealthiest income-earners and maybe for all taxpayers. If the Bush tax cuts were to disappear entirely at the end of 2012, it would represent a ten year savings of nearly $4 trillion. This, as Jonathan Chait pointed out, is the frame through which the current GOP supercommittee posturing must be viewed:

Republicans understand this problem, and their offer before the supercommittee is a tactical effort to reduce the potential risk. The GOP is offering to increase tax revenue slightly above current levels – about $250 billion over a decade – in return for locking in the Bush tax cuts permanently. And they are only offering this in return for Democrats agreeing to cuts in entitlement spending and privatization of Medicare.

Realistically, the plan that the GOP has presented is about as far as the party could possibly go right now. And even that might be too far; already six dozen House Republicans have called the idea of agreeing to $250 billion in new revenue — even in exchange for tax reform that would lower the top individual rate significantly and make the Bush cuts permanent — “irresponsible and dangerous.” In other words, there’s really no reason for Democrats to cut a deal right now. What Republicans are offering is essentially a backdoor means of preserving the Bush rates, and given their party’s internal dynamics, there’s just not much room for GOP leaders to compromise any further even if they wanted to.
The smarter course for Democrats, it would seem, is to do nothing and let the automatic spending cuts triggered by a supercommittee failure go into effect and then hope that Obama is reelected and the Bush tax cuts go away once and for all at the end of next year. That would have a more meaningful impact on deficit reduction than any realistic compromise with the GOP now would, and it would spare the sort of deep social safety net cuts that Republicans are also after. More and more voices on the left have been making this case in recent days.
And Democrats on Capitol Hill seem to be hearing it. Thursday began with plenty of buzz about the GOP’s sudden openness to new revenues. But it ended with Democrats offering a clear response: There’ll be no deal as long as you want the Bush rates extended.
“Democrats are in complete agreement,” Sen. Patty Murray, a supercommittee member said. “We have met their offer on revenue but we have said that it has to be fair to the American people and done in a way that doesn’t put the burden on working families and addresses the issues of getting people back to work. We are waiting for them to accept that.”
These are the words of someone who knows that she and her party are operating from a position of strength. The fact that they are is one of the more unlikely consequences of the Bush presidency.

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Steve Kornacki is Salon's news editor. Reach him by email at SKornacki@salon.com and follow him on Twitter @SteveKornacki More Steve Kornacki

The corporate tax plunge: Down, down, down / Andrew Leonard / Plus four more Economic Justice Articles By Salon

Thursday, Nov 17, 2011 1:00 PM 06:29:01 PST

The corporate tax plunge: Down, down, down

Since the 1950s, American companies have paid a steadily smaller percentage of their profits as taxes

By Andrew Leonard

(Credit: FRED)

Topics:Taxes

We already know that compared to most rich countries in the world, corporations in the United States get off easy when it comes to taxes. We also know that many of the biggest American corporations don’t pay any taxes at all.
But if you are looking for one graphic illustration that speaks the most volumes about how great it’s been to be an American corporation over the past half-century, than you really must contemplate this chart put together by the St. Louis Federal Reserve Bank (Hat tip to Felix Salmon.)

The percentage of corporate profit (after taxes) paid as income tax has been on a steady downward trend since the 1950s. In the last year or so, it has rebounded a trifle since hitting its all-time low during the Great Recession, but still sits comfortably below any other point in the last six decades.
It might be worth remembering that the 1950s were a decade in which “more people joined the middle class than at any time in history.” And yet, one of the great stumbling blocks preventing the “supercommittee” from hammering a long-term deficit reduction deal is the GOP fixation on the premise that taxes on American corporations are too high.

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Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard

Friday, Nov 11, 2011 9:01 AM 06:29:01 PST

How to solve the corporate tax problem

Our globalized economy creates too many loopholes for multinational firms. It's time to push for a universal system

By KeriAnn Wells

(Credit: AP/Mary Altaffer)

Topics:Taxes, Occupy Wall Street, Globalization

This originally appeared on KeriAnn Wells' Open Salon blog.

The United States is teeming for tax reform. Obama speaks eloquently of the rich “paying their fair share” while Republicans pledge never to raise taxes. Warren Buffett is taxed less than his receptionist. Occupiers rally for the 99 percent, while Tea Partyers rally behind 9-9-9.
Meanwhile, 25 of the Forbes top 100 companies paid their CEOs more than they paid Uncle Sam in 2010. Some of the big names are GE, Prudential and Verizon, all of which paid their CEOs well over $10 million, but paid no income tax whatsoever.

That’s right, they paid nothing. This is especially strange since the U.S. recently surpassed Japan as the country with the highest corporate tax rate, weighing in at 35 percent.
But the rate doesn’t tell the whole story. Current rules for multinational corporations (MNCs) allow companies to defer income earned in other countries, effectively paying no taxes at all until the money is returned to the U.S., or “repatriated.” Companies can defer income indefinitely, and are currently salivating at the prospect of a tax holiday that would allow repatriation at a meager 5.25 percent. In the last holiday of 2004, higher corporate margins did not lead to more jobs.
Beyond deferrals, MNCs also can deduct taxes paid to foreign governments from their U.S. tax burden, and can even offset credits earned in high-tax countries onto income earned in low-tax countries.
These complex tax provisions are easy for some firms to exploit, especially if they have lots of tax attorneys. Last year, Bloomberg exposed Google’s fancy tax-avoidance technique known as the “Double Irish” and the “Dutch Sandwich.” (No, it is not a fun game of jump-rope.) While selling America’s intellectual property rights to overseas subsidiaries, Google aligned loopholes in four countries’ tax codes, ultimately reducing its total tax burden to 2.4 percent. In fairness, Google’s CEO made a measly $313,219.
This tendency of MNCs to find complementary loopholes among countries harkens back to the pre-globalization era, when multistate companies would shift operations to the lowest-tax states. The race to the bottom of tax revenues was relieved when states pooled their collective bargaining power to create more consistent tax rules.
To end the race to the bottom, states adopted a new approach to taxation. Known as formulary apportionment (FA), companies divide their total tax burden among host states based on the percentage of sales (and sometimes payroll and property) located in each state, rather than on the elusive headquarters’ location. The apportionment approach increases simplicity (which businesses love) and increases tax revenue (which governments love.) That’s what we call a win-win.
Of course, firms would not be happy with the change if it increased their tax burden. A shift to FA could be paired with lower tax rates to be revenue neutral, so America would no longer have the highest corporate tax rate. Policies designed to be revenue neutral, however, should err on the side of the Treasury, especially if we truly want to reduce the deficit.
The best global scenario is for all countries to adopt apportionment, so that MNCs would have one general tax rule to follow, rather than the current system where MNCs have different rules for every country in which they operate.
In the short term a truly global policy is unlikely. But the EU is now considering moving to apportionment, creating an opportunity for the U.S. to collaborate with Europe. We may even be able to leverage a U.S./EU partnership into a larger OECD policy. Basing taxes on sales would create a reasonably level playing field among all adopting countries. It’s time the private sector stop holding all the bargaining chips.
Even in the less ideal event that the U.S. adopt apportionment unilaterally, we would be at a competitive advantage for start-ups, since companies could avoid being doubly taxed on domestic sales. This would likely spur other countries to adopt FA. Some supporters of FA include Jason Furman, Deputy Director of the Obama Administration’s National Economic Council, and even Larry Summers.
FA would create jobs by removing existing incentives to shift production overseas. Increases in corporate tax revenue would allow the U.S. to invest in education and infrastructure, both known job creators. We would also have more capital to invest in new technology and innovation.
FA would prevent firms from exploiting international loopholes, ensuring that they pay their fair share. In this recession, we need to transfer more of the tax burden to corporations and their wealthy stakeholders, currently the only remaining untapped reserve of revenue. The middle class has been squeezed dry.
In fact, while most of us have seen our incomes grow less than 2 percent per year since 2000, the wealthiest 1 percent saw their incomes grow over 10 percent every year. This inequity has finally percolated into widespread demonstrations and unrest. The time is now for redistributive action.

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KeriAnn Wells is a Master of Public Policy Candidate at the University of California, Berkeley. More KeriAnn Wells

Thursday, Nov 3, 2011 9:37 AM 06:29:01 PST

Could the GOP actually be turning on Grover Norquist?

Dozens of House Republicans may be inching toward a confrontation with one of the most feared leaders on the right

By Steve Kornacki

Grover Norquist (Credit: AP)

Topics:War Room, Taxes

Grover Norquist, who runs a fervently anti-tax interest group in Washington, is best known for the simple pledge that Republican candidates for Congress have learned to ignore at their own electoral peril. Signatories vow that they will:

ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses; and
TWO, oppose any net reduction or elimination of deductions and
credits, unless matched dollar for dollar by further reducing tax rates.

In the 112th Congress, the GOP’s positions has mirrored Norquist’s: No net tax increases, ever. Which is why President Obama’s efforts to strike a “grand bargain” during this summer’s debt ceiling drama failed so miserably. Obama dangled cuts in Social Security, Medicare and Medicaid spending in exchange for Republican support for modest increase in tax revenues. The plan was to cut the debt by $3.5 trillion over 10 years and House Speaker John Boehner was interested — until he discovered that signing off on the $400 billion in new revenues that Obama wanted might prompt a revolt within the GOP conference. So he walked away.
The same dynamic has thus far doomed the debt reduction “supercommittee” that was empaneled as a result of the debt ceiling compromise Obama and the GOP ultimately reached.
But now comes news that 40 House Republicans have joined with 60 Democrats to sign a letter to the supercommittee arguing that “all options for mandatory and discretionary spending and revenues must be on the table” and urging the panel to craft a plan for $4 trillion in debt reduction. Some of the Republican signatories aren’t big surprises; Virginia’s Frank Wolf, for instance, has been one of the few congressional Republicans to publicly challenge Norquist and his anti-tax adamance. But others, like Marlin Stutzman, a Tea Party favorite from Indiana who was elected last year, are.
There are two ways to read this development. One is that a significant number of congressional Republicans may finally be waking up to the fundamental incompatibility of Norquist’s pledge with the sort of deficit reduction that they believe is essential. This could ultimately give Boehner the cover that he lacked during the summer and allow him to sign off on the kind of deal that Obama was offering.
But it’s easy to get carried away. Saying that all options should be on the table during supercommittee discussions isn’t that hard. Even Norquist says he’s fine with the letter. “Consider anything,” he told the Washington Post. “Just don’t vote for a tax increase.” If it ever starts to look like Republicans on the supercommittee are close to a deal with real tax increases, you can bet the pressure from Norquist and the talk radio right that we saw this summer will be back in full force. Let’s see how these Republicans — and how their congressional leadership — reacts to that.
It’s also worth remembering the posture that Eric Cantor, the No. 2 Republican in the House, took over the summer. He won headlines for expressing his openness to closing tax loopholes in order to raise new revenue, but his statement came with fine print that was aimed squarely at Norquist: Any new revenue from the closed loopholes would have to be offset by tax cuts elsewhere. If this is what Republicans who signed the letter have in mind, it does nothing to increase the chances of a deal.
The letter also raises some questions for Democrats, who face pressure from their own base not to make deep cuts in the social safety net. But “all options for mandatory and discretionary spending” would obviously include Social Security, Medicare and Medicaid. There are probably more than a few on the left who’d just as soon see the GOP stick to its anti-tax absolutism, lest a grand bargain that threatens these programs be struck.

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Steve Kornacki is Salon's news editor. Reach him by email at SKornacki@salon.com and follow him on Twitter @SteveKornacki More Steve Kornacki

Thursday, Nov 3, 2011 4:45 AM 06:29:01 PST

America’s corporate tax obscenity

A new report about companies' finances won't just enrage you -- it'll make you run to the nearest protest

By Andrew Leonard

(Credit: Reuters/Jose Luis Magaua)

Topics:Taxes

In 2010, Verizon reported an annual profit of nearly $12 billion. The statutory federal corporate income tax rate is 35 percent, so theoretically, Verizon should have owed the IRS around $4.2 billlion. Instead, according to figures compiled by the Center for Tax Justice, the company actually boasted a negative tax liability of $703 million. Verizon ended up making even more money after it calculated its taxes.
Verizon is hardly alone, and isn’t even close to being the worst offender. Perhaps most famously, General Electric raked in $10.5 billion in profit in 2010, yet ended up reporting $4.7 billion worth of negative taxes. The worst offender in 2010, as measured by its overall negative tax rate, was Pepco, the electricity utility that serves Washington, D.C. Pepco reported profits of $882 million in 2010, and negative taxes of $508 million — a negative tax rate of 57.6 percent.

Altogether, according to “Corporate Taxpayers & Corporate Tax Dodgers 2008-10,” a blockbuster new report put together by the Citizens for Tax Justice and the Institute on Taxation and Economic Policy that will have you reaching for your hypertension medicine before you finish reading the third page, 37 of the United States’ biggest corporations paid zero taxes in 2010. The list is a blue-chip roll-call.
As the authors acidly note, “Most Americans can rightfully complain, ‘I pay more federal income taxes than General Electric, Boeing, DuPont, Wells Fargo, Verizon, etc., etc., all put together.’ That’s an unacceptable situation.”
The “high taxation” lie
Reading through this report, you will find yourself seized by an irresistible desire to hurl yourself headlong into the nearest OccupyYourLocalCity protest. In an era of crushing government deficits and mass unemployment, corporate America is not only skating blissfully free of its civic responsibilities, but continues to complain that it is paying too much in taxes. Even worse: Congressional Republicans and many Democrats agree! Listening to our politicians talk, you would imagine that corporate America’s neck is permanently under the tax man’s steel-tipped boot. When, in fact, the exact opposite is the truth.
The list of companies that paid zero taxes is only the beginning of the travesties documented by the report. The authors looked at the tax filings from 2008-2010 of 280 of the nation’s biggest, most successful corporations. These companies reported $1.4 trillion worth of profit during a period when most Americans were struggling to stay afloat. The authors discovered that the average effective tax rate — what the companies really paid after government subsidies, tax breaks and various tax dodges were taken into account — was only 18.5 percent, less than half the statutory rate. Fully a quarter of the 280 companies paid under 10 percent.
Remember that fact, the next time someone tries to tell you that American corporations pay the highest income taxes in the free world. The only number that counts is the “effective tax rate.” One of the interesting tidbits provided by the authors is that in many cases, the tax rate on foreign income for many of these companies is actually higher than the effective U.S. rate.
The most distressing part of the tale is the big picture: The overall trend line is pointed in exactly the wrong direction. If you break out just the years 2009-2010, the effective tax rate was 17.3 percent. “In 2008, 22 companies paid no federal income tax, and got $3.3 billion in tax rebates. In 2010, 37 companies paid no income tax, and got $7.8 billion in rebates.” When measured as a percentage of total GDP, over the last three fiscal years, “total corporate income tax payments fell to only 1.16 percent of the GDP … a new sustained record low since World War II.

Corporate taxes paid for more than a quarter of federal outlays in the 1950s and a fifth in the 1960s. They began to decline during the Nixon administration, yet even by the second half of the 1990s, corporate taxes still covered 11 percent of the cost of federal programs. But in fiscal 2010, corporate taxes paid for a mere 6 percent of the federal government’s expenses.

How have these companies managed to cut their tax liabilities so far? The answer includes a mixture of targeted tax breaks that impact specific industries or companies, accounting games that corporations play with stock options, and sweeping adjustments to tax law such as changes in the rules in how companies can write off the value of depreciating equipment. The accounting rules for so-called accelerated depreciation are now so accommodating that companies can write off 75 percent of the cost of new equipment immediately.
A look at the list of the 10 corporations receiving the biggest tax-subsidy breaks from the U.S. government will defeat the ameliorating effects of any medication: Wells Fargo, AT&T, Verizon Communications, General Electric, International Business Machines, Exxon Mobil, Boeing, PNC Financial Services Group, Goldman Sachs Group, and Procter & Gamble. “56 percent of tax subsidies,” write the authors, “went to four industries: financial, utilities, telecom, oil/gas/pipeline.”
The companies that pay
However, not all companies are tax dodgers. Of the 280 companies analyzed by the authors, about 25 percent of the total paid close to the statutory rate, a little over 30 percent. But there’s no rhyme or reason to who pays or who doesn’t.

DuPont and Monsanto both produce chemicals. But over the 2008-10 period, Monsanto paid 22 percent of its profits in U.S. corporate income taxes, while DuPont actually paid a negative tax rate of –3.4 percent. Department store chain Macy’s paid a three-year rate of 12.1 percent, while competing chain Nordstrom’s paid 37.1 percent. In computer technology, Hewlett-Packard paid 3.7 of its three-year U.S. profits in federal income taxes, while Texas Instruments paid 33.5 percent. FedEx paid 0.9 percent over three years, while its competitor United Parcel Service paid 24.1 percent.

The authors conclude on a wistful note, with a list of what Washington could do to bring sense and reason to corporate taxation, while providing the government with desperately needed revenue. But as the authors themselves readily acknowledge, their recommendations exist in an alternate universe from the one that we actually happen to live in.

Unfortunately, corporate tax legislation now being promoted by many in Congress seems stuck on the idea that as a group, corporations are now either paying the perfect amount in federal income taxes or are paying too much. Many members of the tax writing committees in Congress seem intent on making changes that would actually make it easier (and more lucrative) for companies to shift taxable profits, and potentially jobs, overseas. Meanwhile, GOP candidates for president are all promoting huge cuts in the corporate tax or, in several cases, even elimination of the corporate income tax entirely.

And that, ultimately, is the most enraging fact about the new report from the Citizens for Tax Justice and the Institute on Taxation and Economic Policy. It won’t make a darn bit of difference.

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Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew Leonard

Another hidden supercommittee menace The "secret farm bill" could overhaul U.S. agriculture for the next five years with no public debate By Maggie Severns / Salon

Thursday, Nov 17, 2011 5:00 AM 18:02:34 PST

Another hidden supercommittee menace

The "secret farm bill" could overhaul U.S. agriculture for the next five years with no public debate

By Maggie Severns

Rep. Collin Peterson, ranking Democrat on the House Agriculture Committee (Credit: Reuters)

Topics:Jeb Hensarling, Agriculture, Supercommittee

The congressional deficit supercommittee is pulling into the home stretch. Whether the secret, round-the-clock negotiations among its 12 members will yield a budget-cutting deal before its Thanksgiving deadline is the subject of intense speculation in Washington.
Republican co-chair Jeb Hensarling indicated on MSNBC on Tuesday night that the Republicans have gone as far as they are willing to go when it comes to compromise. House Democratic Whip Steny Hoyer, D-Md., Sen. Mark Warner, D-Va., and others held a press conference this morning urging the supercommittee to “go big” on an agreement over deficit reduction. The White House, in the meantime, is bracing for failure, according to the Washington Post.

This speculation changes daily, making it hard to tell how things will unfold over the next week. But what if the supercommittee does succeed in “going big”? What would that deal look like? Yes, a deficit agreement could result in changes to programs like Social Security and Medicaid. What has been less noticed is that a supercommittee deal could — and likely would– end up rewriting other policies in ways that are entirely unexpected.
Enter the so-called secret farm bill, an oddball piece of deficit reduction legislation that could rewrite agriculture policy in the United States in one behind-closed-doors deal.
“There’s no question that the farm bill is what agriculture wants to do,” said a budget expert who works closely with farm states. Essentially, the farm bill could become a part of deficit reduction because the House and Senate Agriculture Committees are trying to take advantage of the way the supercommittee’s process was set up. Congressional committees can submit recommendations to the supercommittee on ways they would like to see spending cut in their programs.
The House and Senate Agriculture Committees, led by agriculture’s “Big Four,” Sens. Debbie Stabenow, D-Mich., and Pat Roberts, R-Kan., and Reps. Frank Lucas, R-Okla., and Collin Peterson, D-Minn., appear poised to try to submit their suggestion in the form of the farm bill.
The farm bill, approved every five years by Congress, has more to do with your life than you might think. This legislation sets most food and agriculture policies in the United States, from food stamps to food safety measures and crop subsidies. If the Big Four submit a bill that spends less money than the old farm bill did, it could be passable as deficit reduction and potentially get swept through Congress on the coattails of a deficit reduction plan. Though it’s impossible to tell exactly what such a plan would look like, it’s logical that states the Big Four represent — Michigan, Kansas, Oklahoma, Minnesota — and other farm states would be well-represented.
But if the secret farm bill become law, some people will go ballistic. Anti-obesity advocates, food safety watchdogs, and food policy advocates have been waiting for Congress to write the next farm bill, which is a rare opportunity for them to plug new policies, such as targeting food stamps so they encourage low-income families to buy healthy foods. But if the new farm bill is written and debated behind closed doors, as is happening right now, they will have to wait another five years for that opportunity.
“A farm bill that preserves the status quo instead of addressing a food system that causes disease and wrecks the environment isn’t even marginally serious about deficit reduction,” wrote food writer and activist Mark Bittman in an Op-Ed for the New York Times last week.
It sounds batty, but slipping relatively small pieces of legislation into large, high-stakes bills is a proven way to get a bill passed. The health care reform bill that passed last spring, for example, included a major rewrite of a 40-year-old student loan program that was similarly folded into health reform at the last minute. It was the biggest piece of education-related legislation to get passed Congress in years and it was barely reviewed.
Corn states vs. rice states
The Big Four stand to gain two things by slipping their farm bill into a deficit agreement:
First, they avoid a scenario where the supercommittee simply caps the amount of money budgeted for agriculture in coming years, giving the agriculture committees less autonomy in their decision-making.
Second, if they reauthorize the farm bill now they can avoid what would likely be a messy, public battle over food policy and agriculture reform slated to take place next summer, in the middle of an election cycle.
Insiders and advocates say the possibility of the secret farm bill becoming the law of the land depends on a number of things happening in the coming weeks.
First, the Big Four need to come to an agreement and actually submit a plan that saves the $23 billion to $25 billion over 10 years, as the supercommittee has asked it to do. There are three areas where the agriculture budget could get slashed: nutrition programs such as food stamps, conservation programs that help preserve land and prevent pollution, and crop subsidies.
It’s likely that around half of the cuts, ranging from $13 billion to $15 billion over 10 years, would come from dropping crop subsidies and replacing them with an expanded crop insurance program that would enable farmers to collect a larger share of their losses from insurance during years with poor profits.
Currently, internal divisions are preventing the committees from agreeing among themselves, says a source who works on Capitol Hill. The division line within the Big Four and other congressmen who are trying to lobby them currently falls mostly between corn states, such as Minnesota, and rice states, such as Arkansas.
Collin Peterson of Minnesota, for example, is a strong supporter of the new insurance plan. Corn is somewhat volatile and corn farmers would gain from having expanded insurance. Rice, on the other hand, is a less volatile crop and thus benefits more from straight cash subsidies, making it likely that congressmen from rice-producing states are opposing the new insurance deal. Sen. John Boozman, R-Ark., for example, recently emphasized the importance of keeping the “farm safety net” (subsidies and insurance) intact in a deficit deal and played down the need for crop insurance in his state when speaking to the Arkansas News. Unsurprisingly, Arkansas grows almost half of the U.S. supply of rice.
That’s the debate within farm states. The interests of those not representing farmers, such as people concerned about reducing agriculture pollution or reforming the food stamps program so it encourages families to buy healthier food, don’t figure into this equation, and are likely to be overlooked by the secret farm bill.
Food stamps would also likely see a small cut, because the the program is popular but constitutes an estimated two-thirds of the costs of the current farm bill, making it hard for the Big Four to plot out a way to reduce spending without at least a minor reduction in spending on food stamps.
The Big Four will likely try to sell the new insurance program as having big cost savings though it might not, in fact, save money. During years with good crop prices and yield, offering government-subsidized insurance to farmers is relatively inexpensive. But during years when crop prices and/or yields fall, the government will dole out more money to farmers who have experienced losses, resulting in much less savings.
There’s a good chance the supercommittee won’t fall for agriculture’s bait-and-switch with regard to crop subsidies. But the committee could make a deal that hits its deficit reduction mark and looks good on paper while ignoring the variations in actual agriculture savings. An expanded crop insurance program could be popular, too. As one Capitol Hill veteran noted, “Congress loves temporary disaster relief.”
If the supercommittee does accept the farm bill and then manages to strike a deal before Thanksgiving, then the farm bill heads to Congress as part of the deficit reduction agreement. Congressmen will have to swallow the entire agreement or none at all. It’s unlikely that many would change their vote on the $1.2 trillion bill because of the relatively small, $23 billion agriculture component, meaning that if the supercommittee makes a plan that wins approval, the secret farm bill would become law regardless of who loves or hates it.
“The outside has really been shut out of the process,” commented a source on Capitol Hill. With this and other “secret” bills, there’s no knowing what surprises might be waiting if the supercommittee does in fact make a deal.

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Maggie Severns is a program associate at the New America Foundation. Follow her @maggieseverns. More Maggie Severns

Video: 99% v 1%: The Data Behind the Occupy Movement - Animation by Mariana Santos and Simon Rogers / Common Dreams

99% v 1%: The Data Behind the Occupy Movement - Animation

It has been the rallying cry of the Occupy movement for the past two months - but is the US really split 99% v 1%? As poverty and inequality reach record levels, how much richer have the rich got? This animation explains what the key data says about the state of America today

by Mariana Santos and Simon Rogers

© Guardian News and Media Limited 2011

Video: Robert Reich: “The days of apathy are over” The former U.S. labor secretary vigorously defends OWS during a speech at Berkeley VIDEO By Peter Finocchiaro / Salon

Wednesday, Nov 16, 2011 11:30 AM 22:42:21 PST

Robert Reich: “The days of apathy are over”

The former U.S. labor secretary vigorously defends OWS during a speech at Berkeley VIDEO

By Peter Finocchiaro

Topics:Occupy Wall Street

Thousands of students and activists gathered yesterday at the University of California, Berkeley, to listen as former U.S. Labor Secretary Robert Reich delivered a rousing speech on the importance of the Occupy Wall Street movement. The address, which followed a “daylong strike and peaceful demonstrations against big banks and education cuts,” implored students to continue pursuing the issues they were passionate about, and to be persistent in the face of opposition:

I urge you to to be patient with yourselves, because — with regard to every major social movement of the last half-century or more — it started with a sense of moral outrage. Things were wrong. And the actual coalescence of that moral outrage into specific demands, or specific changes, came later. The moral outrage was the beginning. The days of apathy are over, folks! Once this has begun, it cannot be stopped, and will not be stopped.

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The students are coming! California collegians rebel against a failing system By Gary Kamiya / Salon

Wednesday, Nov 16, 2011 6:00 PM 22:39:01 PST

The students are coming!

California collegians rebel against a failing system

By Gary Kamiya

• 

Students and Occupy San Francisco protesters march along the Embarcadero as part of a demonstration in San Francisco on Wednesday. (Credit: AP/Jeff Chiu)

Topics:Occupy Wall Street, Occupy SF, Education

From the Free Speech Movement to SDS and the anti-Vietnam War protests, many of the most important American protest movements have historically been spearheaded by students. In recent years, students, buffeted by hard times and growing up in an apathetic, me-first civic culture, have been as passive as the rest of the population. But in the last two years soaring tuition costs, draconian cuts in faculty and classes, and the prospect of a jobless, student-loan-burdened future, have begun galvanizing some collegians into action. And the Occupy Wall Street movement has lit a fire under more of them, and broadened their movement into a structural demand for social justice and equity.

On Wednesday, 500 to a thousand college students from all over California converged at Justin Herman Plaza, the center of the Occupy SF movement, and marched through the financial district along with their non-student brethren. For a weary movement, it felt a little like a very young, very smart cavalry had come riding to the rescue.
“We’re part of a contingent from U.C. Berkeley and multiple campuses,” said John Stehlin, 29, a graduate student in geography at U.C. Berkeley. The U.C. students had been inspired by a fiery speech in Sproul Plaza given Tuesday by Robert Reich, the former U.S. secretary of labor who represents the progressive road not taken by Obama.
“We had planned to protest the Board of Regents meeting today,” Stehlin went on. “but they canceled it for spurious reasons, claiming ‘rogue elements’ were going to commit violent acts. To me, it’s an attempt to avoid confrontation and silence our protests. So we decided to go ahead with our march anyway. Our point is that higher education is a right. It’s a social good. But the Board of Regents have been running higher education as a business. They go to Sacramento hat in hand asking for money for education, but they’re part of the system.”
Stehlin see the regents as captive of a corporate mentality.
“We’ve never had one regent try to close the corporate loopholes in Prop. 13,” he said, referring to the 1978 anti-property tax initiative that was largely responsible for the decline of California’s public education system. “They are the 1 percent. Some of them make money off their corporate affiliations, like Richard Blum. I’m not saying they’re a malicious cabal. But this is another way that something that is ostensibly public is being leveraged for private gains.”
Stehlin pointed me to a sign with a list of student demands, including closing the Proposition 13 loopholes, increasing taxes on the wealthiest, increasing federal sales tax on Wall Street transactions, reducing underwater debt to Wall Street to improve the economy and reversing tuition increases, layoffs and cuts to public education and essential services.
Sabine Gueltzow, 28, was another Cal student, a junior majoring in psychology. She was from East Germany, had a green card, and her tuition was paid for by a special Blue and Gold scholarship, but “I have to go to work to support myself; I’m barely scraping by,” she said.
Gueltzow said she had come out because she was concerned about the inequities in American society and the flawed priorities of the Board of Regents. “I come from East Germany, which at least tried to ensure more social equality,” she said. “Obviously it was deeply flawed in the execution. But the idea was right. I work as a nanny, and I know people who had a baby three years ago that they’re still paying for. I don’t think it’s right that someone has cancer and loses his job and can’t get health insurance because he has a pre-existing condition.”
As for the regents, “They’re in a difficult position,” Gueltzow said. “The state government cut the budget, and even if you cut all their salaries it wouldn’t make any difference. And I think they should have a background in business. But they shouldn’t be a CEO of a company making billions of dollars. They should be working more for the students than for Bank of America. They need to work with us on the way the budget is allocated.”
“Ultimately, we’re the future,” she went on. “This country is not going to run if we don’t get quality higher education. If people aren’t educated, the gap will get even worse. We’re not here just for us, we’re here for those who come after us.”
At once inspired and humiliated by having my country’s flaws accurately criticized by someone from East Germany, I found an older woman holding a sign.
Kathryn Johnson was an administrator and policy analyst who worked at San Francisco State. “I’m a veteran of the ’60s – I had to come out,” she said. “I’m so happy to see some resistance.” Johnson said she had been at S.F. State for 16 years. “We have a mission of social justice. And our ability to have access and do outreach is being destroyed. Overcrowded classes, cutbacks — our original mandate is being undermined. I know there’s money, if we close the corporate loopholes. It’s a matter of political priorities.”
Johnson’s husband, Anatole Anton, 72, was an emeritus professor of philosophy at S.F. State. “I was involved in the creation of the ethnic studies department. Now, all of the 1960s departments are being cut. Environment, women’s studies, sexuality – they’re all being cut.”
But if he was dismayed at the slashing of programs he helped establish, Anton beamed when asked about the Occupy movement. “I find it a breath of fresh air,” he said. “You hear so much about the Tea Party movement, and their issues are so narrow. This is about deeper issues. It’s been a long time coming.”
Signs in the ethnically diverse crowd ranged from “Refund Education: Make the Banks Pay” to “TAs for Ethnic Studies” to “Regents: You Can Run But You Can’t Hide” to “Rogue Element” to the Situationist “We are here to occupy your [heart sign]” to “Instead of coming to destroy we come to rescue the common welfare!” A huge banner proclaimed “The Regents are the 1%.”
Before the march began, the crowd — mostly from the U.C. system, with lesser numbers from the state and city colleges — was exhorted by a lineup of speakers that included several professors. Bob Samuels, a professor at UCLA, said that the country could pay for free universal public education if it wanted to. Wars in Afghanistan and Iraq have cost $150 billion, enough to pay for five years of public education across the U.S., he said.
Bob Meister, a professor of social science at U.C. Santa Cruz, opened his speech by saying he was accustomed to attending meetings of the Board of Regents. “You drove them away!” he said to roars from the crowd. “I would much rather spend my day with you.” Meister went into a detailed indictment of how the crisis of higher education was “not merely a response to budget cuts.” Deriding the meetings between the regents and the state as “a Punch-and-Judy show,” he said that the state and regents had a long-term plan to expand “that was not a plan to maintain academic quality.” Driven by promises that they would be part of a 20 percent that would prosper in a declining economy, students borrowed at a rate above that of the non-student population, resulting in a “tuition price bubble.” Today, Meister pointed out, even that bargain had collapsed: “The 20 percent are not getting ahead. The 1 percent are getting ahead.”
The most bomb-throwing speech, however, was made by U.C. geography professor Gray Brechin, author of “Imperial San Francisco,” a bestselling critique of the city’s roots in mining and its associated power interests. Brechin launched into a blistering attack on both regent Richard Blum and the San Francisco Chronicle, claiming that the local paper refused to run stories about his alleged conflicts of interest because he and his wife, Sen. Dianne Feinstein, were too powerful. “The mass media are there to keep you entertained,” he said scornfully, urging the students to keep “asking real questions.”
The crowd then headed out the Embarcadero, scene of some of the most violent and decisive labor struggles in American history, before turning east on Broadway. Then one of the more intriguing — and funny — tactics of the young movement unfolded. When they reached Battery Street, they all sat down in front of a business owned by regent George Marcus, chairman of the Marcus and Millichap Co., a national real estate brokerage, investment and development firm, and began chanting protests.
After a few minutes they got up, walked to Montgomery and Pacific — on the edge of a historic district now filled with high-end antique stores, but where the raunchy International Settlement once trafficked in B-girls and bad booze — and did the same thing, protesting another regent’s involvement in big business. Using the now-famous “human microphone,” someone began shouting something that ended in “largest equity firm.” The phrase “largest equity firm,” amplified by a thousand voices, floated down the street in disembodied mockery as bemused office workers looked down from the roofs. It was like a modern form of Puritan shunning and shaming in the heart of the old Barbary Coast.
“No buts, no fees! Education must be free!” the crowd chanted before heading down through the Financial District. There many of them barged into a Bank of America building at California and Davis (where regent Monica Lozano is on the board), stood on desks and chairs and chanted slogans like “Banks got bailed out, we got sold out!” Many soon left, but about 75 remained, as police prepared to arrest them. The crowd moved on and ended up, its numbers diminished, at the State Building.
It remains to be seen whether students will remain engaged in the larger Occupy movement. But at least on Wednesday, it felt like reinforcements from a long-disbanded regiment had suddenly arrived.

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Gary Kamiya is a co-founder of Salon. More Gary Kamiya

Crash Tax: Wall Street Reparations / Leo W. Gerard / International President, United Steelworkers / Huff Post

Leo W. Gerard

International President, United Steelworkers

Crash Tax: Wall Street Reparations

Posted: 11/14/11 08:11 AM ET

Wall Street waged war on the American economy and middle class with its reckless gambling.

It wasn't Fannie Mae or Freddie Mac that crashed the economy. It wasn't the federal government. It wasn't hapless homeowners who were sold mortgages they couldn't afford. It was Wall Street financiers that aggressively sought and bought mortgages to package and sell as derivatives, which the banks could wager on.
Americans bailed out Wall Street, handing it a Marshall Plan for reconstruction after its bad bets blew up the world economy. Now, three years later, happy days are here again for the Wall Street banksters. They're hauling in big profits and paying outrageous bonuses. But the American middle class continues to suffer high unemployment, record foreclosures and rising poverty.
So it's time for Wall Street to pay reparations. It's time for a crash tax, a tiny sales tax on Wall Street transactions, the revenues from which would pay for Main Street restoration. It's time for the 1 percent to repay the 99 percent, for Wall Street to share in the sacrifices necessitated by its rogue behavior.
The levy, sometimes called a Tobin Tax after the American economist and Nobel Laureate James Tobin, who endorsed it in the 1970s, is far from shocking or novel. A financial transaction tax is advocated by a huge range of groups and individuals, from billionaires to conservative heads of state. Thirty nations, including Great Britain and Switzerland, already tax some financial transactions. The United States imposed a similar tax from 1914 to 1966. In addition to raising revenue in a time of government deficits worldwide, the tax would suppress the very kind of risky speculation that got the global economy into this mess.
Supporters of the tax include the expected -- the AFL-CIO, Democratic benefactor George Soros, consumer advocate Ralph Nader, and economist Dean Baker, one of the few who saw the housing bubble and predicted its bursting. The unexpected include billionaires Bill Gates and Peter G. Peterson; former Goldman Sachs chairman John Whitehead, and former chairman of the Federal Reserve Paul Volcker. Conservative political leaders behind it include German chancellor Angela Merkel and French president Nicolas Sarkozy. Experts promoting it include Nobel Laureates Joseph Stiglitz and Paul Krugman. Moral leaders advocating for it include Archbishop of Canterbury Rowan Williams and the Pontifical Council for Justice and Peace.
Here's what Archbishop Williams wrote in support of imposing the levy:

"There is still a powerful sense around - fair or not - of a whole society paying for the errors and irresponsibility of bankers; of messages not getting through; of impatience with a return to "business as usual" represented by still soaring bonuses and little visible change in banking practices."

The European Commission recommended in September that the 27 European Union member countries adopt a .1 percent tax on financial transactions beginning in 2014. It estimated that the tax would raise $78 billion a year. Europe hesitates to institute the tax without a similar levy in the United States.
Earlier this month, two U.S. lawmakers who have long supported the levy introduced legislation to impose a smaller tax -- .03 percent or 3 cents on $100 in transactions. The tax proposed by U.S. Rep. Peter DeFazio, D-Ore, and Sen. Tom Harkin, D-Iowa, would raise about $350 billion over a decade.
Here's what Sen. Harkin said about it:

"I think it's fair. I think it's just. I think it's a reasonable way of raising revenue."

That's the gist of it. It's fair. Wall Street caused the crash. It caused devastating unemployment. It exacerbated deficit problems in the United States, Greece, Ireland, Portugal, Spain and Italy. If the market hadn't crashed, sustained higher tax revenues would have prevented these difficulties from intensifying.
Now, in countries worldwide, including the United States, conservatives are demanding austerity to deal with deficits. They refuse to ask financial speculators to help pay for the trouble they caused. Instead, these conservatives demand that the middle class and the poor foot the bill. American conservatives insist the middle class lose Social Security benefits, accept Medicare and Medicaid cuts, subsist with fewer teachers, firefighters and police officers.
The 99 percent have sent a pretty clear message, however, that they're fed up and they're not going to take unshared sacrifice anymore.
They told Bank of America where it could put its proposed monthly fee on debit cards. They told Ohio governor John Kasich where he and fellow conservatives could put their law denying public workers the right to collectively bargain for a better life. And in parks across America and around the world, the 99 percent are telling the 1 percent where they can put their demand that sacrifice be suffered only by the 99 percent.
The crash tax is, essentially, a sales tax on financial transactions. The middle class pays sales tax on all the stuff it purchases. There should be no special exceptions. The 1 percent should be paying sales tax on the purchase of risky derivatives and on bets that derivatives will fail. This is equity. This is simple fairness.
Some call this levy a Robin Hood tax. But that's not right. This is not robbing the rich to give to the poor. This is charging the 1 percent a just share.
This is holding speculators accountable. This is individual responsibility, the concept the GOP claims to love. Wall Street bombed the world economy. Now it's obligated to participate in financing recovery, to pay reparations to Main Street.

Follow Leo W. Gerard on Twitter: www.twitter.com/uswblogger