Friday :: Jun 2, 2006

Following The Money

by pessimist

Ever see $500 billion dollars? Chances are, you won't. But don't think that lack isn't going to affect you!

Former FBI man Mark Felt, Watergate's "Deep Throat", once advised Washington Post reporters Bob Woodward and Carl Bernstein to 'follow the money' if they wanted to understand who was behind the break-in at the 1972 Democratic campaign headquarters.

Can it be that lightning has struck twice at the same location?

WaPo columnist Harold Meyerson wrote the other day:

The Democrats' capacity to undermine themselves has not vanished with the final days of spring. Spring has given way to summer's full-furnace heat in Washington, apparently taking with it any scintilla of sense that Congress may yet possess.

And it all has to do with money - "Your money". Meyerson and a few others are laying down the moneycrumbs for you to follow through the deep dark forest of black economic lies.

If you work for a living, you are having a tough time finding a good-paying job. Shouldn't your wages be able to take care of your needs? It isn't happening that way:

Some analysts say now is the time for workers to enjoy an overdue improvement in their living standards. On average, American paychecks are rising, as employers offer higher salaries to attract and retain staff.

At the same time, inflation has been heating up, burning a bigger hole in consumers' pockets.

"But what the [Federal Reserve] will worry about is that these wage increases will just get caught up in more price increases," says Ken Mayland, president of ClearView Economics in Pepper Pike, Ohio. Concern has risen in recent weeks.

Two gauges of inflation have edged up beyond the Federal Reserve's comfort zone
- with higher than 2 percent annual growth in "core" prices,
which exclude food and energy.

But what you are going to hear from wrong-wing pundits with an investment in the economic status quo is a whole lot of untruth about how it's all those damn greedy employees who are causing inflation with their obscene wage demands.

But don't you believe those lies!

[I]t isn't necessarily inflationary when wages rise faster than prices. Rising "real" (inflation-adjusted) wages are the norm in a healthy economy. Employers typically cover the cost of pay raises by improving productivity.

But Christian Science Monitor reporter Mark Trumbull commits economic blasphemy with his next comment:

A reduction in corporate profits,
now at record levels,
is another way to pay for wage hikes.

Horrors! How could all of those hard(ly)-working corporate owners ever face the dire prospect of having to pay what the market demands for necessary services? Can't they create a recession or something?

That may already be underway in a sub rosa manner. Trumbull points out that in his neck of Ohio, labor doesn't have many face cards to lay down:

[T]he labor market does not appear to be overly tight. The number of new jobs added each month hasn't been far in excess of the number of new workers entering the labor force, for example. A nationwide index of help-wanted ads has fallen in all nine regions tracked by the Conference Board in New York.
Ohio, where the pace of job creation is among the slowest in the nation,
has just 0.5 percent more jobs now than it did a year ago,
compared with job growth of 1.5 percent nationwide.

That's what happens when you do nothing about your corrupt Secretary of State stealing your votes, Ohio!

But this is a national situation, not one that only affects a somnulent Red State. Wage growth - or more correctly, the LACK of sufficient wage growth, affects all workers in America:

"It's been remarkable how little the wages have moved" as the current expansion has gained traction, says John Challenger, president of Challenger, Gray & Christmas.

[T]oday's workers are reaping smaller rewards from rising productivity than they did in the past:

* In the 1960s and 1970s, hourly compensation grew 1.9 percent a year, adjusted for inflation.

* From 1985-2004, real hourly compensation grew just 1.3 percent a year, even though per-hour output was rising at a similar pace of more than 2 percent.

Average hourly earnings, at $16.68 last month,
are below the peak they reached in 2003,
after adjusting for inflation.
One reason for the gap, economists say, is globalization, which has put downward pressure on American wages. Several billion workers are now part of a global labor market.
Worker output has been improving,
up to a 3.7 percent annual pace,
according to the first-quarter number
released by the Labor Department Thursday.

But our intrepid newshound loses the scent with his conclusion:

As labor has lost clout, investors have gained. More of the gains from productivity go to shareholders, in the form of higher profits, rather than to workers.

Now an important question is
how much worker clout will bounce back.

Alas, Watson, the game has gone to ground. Not only are the workers not going to regain what lost influence they once enjoyed, investors are in the process of losing it as well:

Vonage tells customers to pay up for IPO
By Kit R. Roane

The approximately 9,000 Vonage Holding Corp. customers who took up the company's unusual offer of participation in its $250 million IPO are now feeling some serious pain.
The stock is down more than 29 percent
since its much heralded debut a week ago.
The roller-coaster ride was apparently even worse for a few Vonage customers who say they logged into their accounts at the company's IPO website before the offer to find that they had not been allocated any shares.

They were disappointed until the stock started trading and took a dive. Then they thought they had dodged a bullet.

But when they logged into their accounts again
they found they had been allocated shares after all.

Even our numb-nosed bloodhound above should smell something unpleasant from this little fishing expedition! What would he make of this dead whale carcass littering the beach?

[T]here are the questions about the history of founder Jeffrey Citron, who stepped down as CEO to become the company's chief strategist just prior to the IPO filing. In 2002 and 2003, Citron was among a group of Datek Securities executives fined by the SEC for participation in a fraud.

There is a risk that some third parties will not do business with us, that some prospective investors will not purchase our securities, or that some customers may be wary of signing up for service with us as a result of allegations against Mr. Citron and his past SEC and NASD settlements," the prospectus noted. "We believe that some financial institutions and accounting firms have declined to enter into business relationships with us in the past, at least in part because of these matters. Other institutions and potential business associates may not be able to do business with us because of internal policies that restrict associations with individuals who have entered into SEC and NASD settlements.

But that didn't stop all of those 'investors' who thought they would become rich enough to benefit from the latest sell-out of the American working class by its selected Representatives:

In the House, Republicans who could not even raise an eyebrow at reports that the National Security Agency has been conducting warrantless wiretaps of Americans became instant civil libertarians when the FBI conducted a search of a congressman's office.

The Senate, meanwhile, is scheduled next week to take up legislation by Arizona Republican Jon Kyl that would permanently repeal the estate tax on the wealthiest Americans.

If enacted, Kyl's bill would plunge the government
another trillion dollars into the red
during the first decade (2011-2021) that it would be in effect.
A decades-long campaign by right-wing activists (brilliantly documented by Yale professors Michael Graetz and Ian Shapiro in their book Death by a Thousand Cuts) has convinced many Americans that the estate tax poses a threat to countless hardworking families. That was always nonsense.
[U]nder the estate tax revisions that almost all Democrats support -- raising the threshold for eligibility to $3.5 million for an individual and $7 million for a couple -- it becomes more nonsensical still.
Under the $3.5 million exemption, according to a study by the Congressional Budget Office, the number of family-owned small businesses required to pay any taxes in the year 2000 would have been just 94.

The number of family farms
that would have had to sell any assets to pay that tax
would have been 13.
On the other hand, according to the publicly available data on his net worth, an estate tax repeal would save the estate of Vice President Cheney between $13 million and $61 million.

* It would save the estate of Defense Secretary Donald Rumsfeld between $32 million and $101 million.

* The estate of retired Exxon Mobil chairman Lee Raymond would pocket a cozy $164 million.

* As for the late Sam Walton's kids, whose company already makes taxpayers foot the bill for the medical expenses of thousands of its employees, the cost to the government for not taxing their estates would run into the multiple billions.

This is where Harold Meyerson steps in to rake the Democrats over the smoldering embers of their ruined reputations:

The Democrats are running this year as the party of comparative fiscal sanity and greater economic equity and security. Why any Democrat would back such a [tax cut] measure, however, is a deep mystery. From the policy standpoint, it would make it vastly more difficult both to shore up programs that Democrats believe need shoring up -- better educating the nation's children, for one -- and to get the nation's fiscal house in order. Politically, backing the measure is even wackier.

And yet, Max Baucus, DINO Extraordinaire, can't seem to keep in mind that his political affiliation IS Democrat, and that he should be supporting these issues. This is what he's doing instead:

[T]he party's leadership has sought to dissuade Montana's Max Baucus, ranking Democrat on the Finance Committee, from forging a halfway-house compromise with Kyl that would deplete revenue by only $500 billion to $600 billion during that decade.

Even a paltry $500 billion, of course, is a lot of money to drain from public coffers just when boomers are going onto Social Security and Medicare and the number of employers providing health insurance, if present trends continue, might have dropped to a virtuous handful.

Let's pause a moment and see just how 'paltry' $500 billion is.

The US debt of $9 trillion dollars is equal to:

* The amount necessary to buy Buckingham Palace 9000 times.

$500 billion would only buy 500 Buckingham Palaces - or about enough customers to support one Super WalMart.

* Equates to $1,500 for every man, woman and child in the world.

$500 billion would mean that man, woman and child in the world would only equal $75 - or about equal to that spent on one shopping trip to a Super WalMart.

* Would buy all the tea in China. In fact it would buy all the tea in the world for the next 2,000 years.

$500 billion would only buy enough China tea for 100 years, so you better stock up now while supplies last! On sale now at Super WalMart!

* Would build 28 Eiffel Towers — constructed out of gold.

As gold prices have gone up so much since The Times' March 17, 2006 press date, we'll be generous and claim that $500 billion would only buy ONE Golden Eiffel Tower. (Not available at any Super WalMart)

Such would be a suitable monument to the likes of Senator Max Sieben Baucus!

But let's put this proposal of Baucus' into a taxpayer's perspective. U.S. official gold reserves are worth $160 billion, and Max wants to give away an amount roughly equal to about three times that amount.

To put it yet another way,
Baucus' proposal roughly equals the total U.S. household assets,
including real estate, equipment, and financial instruments
such as mutual funds.
Remember - "It's Your Money"!

Now, remembering Mark Felt's advice, let's see just where the money trail leads:

The Baucus split-the-difference measure wouldn't repeal the estate tax, but it would still cut the tax rates on the estates of the super-rich by 15 percent.

Congress will either plunge us deeper into debt
or increase some other levies -- payroll taxes, say --
that will come out of the pockets of the 99 percent of Americans whom the estate tax doesn't touch.

But who cares about THEM? No one would trouble their 'beautiful minds' over such refuse!

But I digress. WE need to get back to worrying about the needs of 'real' Americans - just like the Republican Party does:

The Republicans would need Baucus to bring roughly a half-dozen Democrats along with him to reach the magic number of 60 votes required to overcome any filibuster that the vast majority of Democrats would mount to block any such measure. The Montana senator spent much of last week trying to line up a handful of his Senate Democratic colleagues to support his proposal, in the hope of being able to announce an unshakable 60 votes favoring this folly when the debate begins next week.

But Max Baucus hasn't survived in the Senate this long by being unaware of the effect his actions have on his political survival:

Last Friday Baucus's staffers assured the Democratic Senate leadership's staff that their boss would back off his compromise campaign.

Considering this next assertion, one wonders why anyone would ever believe anything Baucus says. Maybe they don't:

Still, given Baucus's penchant for mischief (it was largely he who rounded up enough Democratic votes to enact Medicare Part D and its Big Pharma giveaway), those assurances have met with some skepticism on Capitol Hill.

But Baucus isn't overly oncerned by any means. While his Montana counterpart Conrad Burns is under the Abramoff cloud, Baucus is enjoying a 60% approval rating - a large enough cushion to protect him from the effects of his 'compromise'.

Myerson brings this sordid tale to a concise conclusion - one that should be heeded by all who fear for the future safety and security of our nation:

Republicans might very well attack Democratic senators up for reelection this year for failing to repeal this hideous death tax, as they call it, but any Democratic senator who can't rebut that charge in what is shaping up as a very Democratic year should probably be in another line of work.

If you can find a job! Let me help - there's a "drivers wanted" sign in the window at Zeppe's Pizzeria on the east side of Cleveland. As a restaurant manager at Zeppe's Pizzeria, Kym Costello says she's earning good money selling pizzas, subs, and some of the best French fries in Bainbridge Township, Ohio, so your tips ought to be good!

'Bone' appetit, Baucus!

Maybe some of our readers who live there will be generous! After all - It's Their Money!

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