Repealing the 20th Century: the Ryan Budget Plan. Democratic Perspective explores the Ryan budget plan, which Forbes Magazine has called a Mistake of Historic Proportions. If there’s anyone who still believes that the only responsible economic solution to the current recession is to turn the vast majority of Americans into paupers, he should have a look at what the Congressional Progressive Caucus has proposed with its Budget for All.
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That’s how Nobel Prize-winning economist, Paul Krugman, describes the Romney-Ryan budget plan. Those are strong words, yet they seem inadequate to describe the consequences of this plan if it’s ever adopted.
A study by the Joint Economic Committee shows that the Romney-Ryan plan would increase taxes by $1,300 on those who earn $50,000 to $100,000. For those who earn $100,000 to $200,000 it would increase taxes by $2,600. But those who make $500,000 to $1 million would get a check for $35,000, and those who make more than $1 million would get an average of $285,000.
Not only would this plan rob from the poor to give to the rich. It would result in lost jobs, lower salaries and dramatically higher deficits. In fact, research by the Economic Policy Institute suggests that the Romney-Ryan plan, if enacted, would result in unemployment of approximately 11.6 percent by 2014.
Moreover, the cuts intended to decrease our deficits would all come from safety nets, such as Medicaid, food stamps and Pell grants. The Congressional Budget Office found that the Romney-Ryan plan would result in non-defense discretionary spending of just 0.75 of GDP. (For comparison, since the end of World War II, that number has never been less than 8 percent!) That would make it impossible for the government to afford even the most basic functions.
There would not be enough money to maintain infrastructure, protect the environment, inspect meat, regulate pharmaceuticals, educate children, fight crime or staff air traffic control.
But there would be plenty of money for our military. Even though the defense budget now exceeds Cold War levels, the Romney-Ryan plan would actually increase it!
All of this led Forbes magazine to describe the Romney-Ryan plan as “A mistake of Historic Proportions.” In an article for The New Yorker, James Surowiecki summed up the plan this way: “The U.S. does need to get its finances in order,” he wrote. “It just doesn’t need to repeal the twentieth century to do so.”
Lest you think that it’s impossible to balance the budget without causing harm to our economy or punishing the poor, check out The Budget for All from the Democratic Progressive Caucus. To learn more, read this report comparing it with the Romney-Ryan plan.
Offshoring His Money and Our Jobs: The Cayman Islands? Bermuda? Switzerland? A 15% tax rate when most of the rest of us are paying 25-28%? Mitt Romney wants to be President, but the real question is this: does he understand what the majority of Americans are facing in these troubled times, or does his membership in the 1% blind him to what the country really needs? Democratic Perspective investigates.
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Through the Republican primaries, Gov. Mitt Romney resisted calls from other candidates to release more details of his net worth, tax returns, investments and assets. Even when he finally released his 2010 tax return, The Washington Post called them “the most opaque they have encountered.”
What little information he has released paints a picture of a man who has gamed the system to make money and avoid taxes.
For example, Mitt’s tax return shows that much of his estimated net worth of $250 million or more (he won’t reveal the exact amount) is invested in offshore tax havens such as Grand Cayman, Bermuda, Switzerland and Luxembourg.
Romney has $30 million in Bain Capital funds in the Cayman Islands alone. He’s listed as the sole owner of Sankaty High Yield Asset Investors Ltd. in Bermuda which he set up in 1997, then transferred to his wife’s newly created blind trust the day before he was inaugurated as Massachusetts’s governor. His 2010 returns show a $3 million Swiss bank account, which has been described as a bet against the U.S. dollar, and 25 investments in the catergory of “over $1 million.” Finally, Romney is known to have an unknown number and amount of investments in Luxembourg.
Of course, Romney denies that the offshore investments were intended to avoid US taxes. But there are only two reasons to stash money in offshore accounts: Secrecy and tax evasion.
Moreover, the US government estimates such offshore tax havens result in the loss of $100 billion in tax revenue per year, which means that average taxpayers have to make up for it by paying an estimated $484 per year.
There are many more questions about Mitt’s investments, such as an I.R.A that mysteriously grew to $102 million, payments to Ann Romney from Bain for “services performed,” investments in offshore “blocker” corporations, and investments in feeder tax havens designed to skirt taxes and regulations.
Despite all this, Romney claims his tax consequences were “the very same” as if he’d invested his money in the US. If that’s true, the obvious question is why didn’t he?
Another question is in regard to the blind trusts and retirement accounts he created prior to being elected governor of Massachussetts in order to avoid conflicts of interest. You see, the trusts are managed by his family attorney, which affords him even more secrecy due to client-attorney privilege.
But the issue that has gained the most attention is Romney’s claim that he ended his relationship with Bain Capital in February 1999. However, he still receives money from Bain and, as recently as 2002, he was listed on SEC filings as the CEO, chairman of the board and sole owner of Bain Capital.
Oops!
This means that Romney may have filed false documents on numerous occasions that could make him guilty of one or more federal felonies.
Last, but not least, is the question of Romney’s fundraiser in London during the Olympics. It’s illegal for US political candidates to receive money from foreign interests, yet The London Telegraph has reported that donors will pay $25,000 to $75,000 to have dinner with Romney. The sponsor, Barclay’s lobbyist Patrick Durkin, has so far raised $927,160 for the campaign.
It’s not a problem that Romney is rich. But it should be a problem that he has used a combination of accounting tricks and offshore investments to avoid paying taxes…especially since his effective tax rate for 2010 was only 15 percent.
In the wake of the House vote to find Attorney General Holder in contempt of Congress, Democratic Perspective addressed the many misconceptions and lies surrounding the ATF operation known as Fast and Furious.
Of course, the Congressman Darrell Issa and the GOP would have you believe that the ATF intentionally allowed thousands of guns to “walk” across the border to be used by the Mexican drug cartels. They also want you to believe that Eric Holder was aware of the operation and that the Obama administration tried to cover it up.
With those accusations in mind, let’s look at the facts. According to an exhaustive investigative report for Fortune magazine by Katherine Eban, we have learned that:
1) No guns were intentionally allowed to “walk” across the border.
2) The ATF seized 68,000 guns from 2006 through 2011.
3) The seven-member ATF team in Phoenix that was responsible for Fast and Furious was frustrated by Arizona gun laws that allow any non-felon over the age of 18 to purchase any number of guns and re-sell them to anyone they want.
4) The ATF team had repeatedly requested indictments on obvious “straw buyers” recruited to purchase guns for the cartels, but were refused by the Assistant US Attorney.
5) The ATF team was hopelessly divided between those loyal to the by-the-book supervisor and a group of insubordinates calling themselves “Renegades.” This included the so-called whistleblower who claimed to be outraged by gun-walking.
6) The only guns that were not recovered were six guns purchsed by Agent Dodson, the whistle-blower. After giving them to a suspected gun trafficker, he left for vacation.
In the rush to break a sensational story, most of the media never interviewed any of the key players in the operation other than the whistle-blower who had an axe to grind with his supervisor.
Moreover, the House Oversight Committee, in its determination to embarrass the administration, never sought testimony from any of the ATF team other than the whistle-blower. Indeed, even before he gained the chair of the committee following the 2010 elections, Issa was quoted as saying that he was going to “make the administration play by the rules,” ostensibly his rules.
Issa was itching to “get” the administration. He held hearings on Solyndra, Fannie Mae and the FDA without any major revelations. He then turned to Fast and Furious which was easier prey given that ATF has been broadly disliked since Ruby Ridge and Waco. In addition, the National Rifle Association has long wanted to kill the agency. As a result of NRA bullying, the Senate has not confirmed a permanent director of the ATF since it was spun off from the Treasury Department in 2003.
In order to comply with the Kangaroo Court-like hearings, the Attorney General testified publicly 9 times and privately several other times. He turned over more than 7,600 documents to the committee and complied in every way legally possible. In return, he was the first member of a president’s cabinet to be cited for contempt.
Holder shouldn’t feel bad. According to the polls, it would appear that most of America is contempt of this Congress.
(For more information, read Katherine Eban’s follow-up article in Fortune magazine.)
The Truth About Fast and Furious: Democratic Perspective’s co-hosts, Mike Cosentino and Steve Williamson, along with Gary LaMaster, a member of DP’s editorial board, discuss the political furor surrounding the Arizona Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives’ Fast and Furious program. Are Representative Darrell Issa and the Republicans telling the real story? Was the ATF sponsoring the purchase and shipment of guns to Mexican drug cartels without adequate oversight? Was Attorney General Holder indirectly responsible for the assassination of Border Patrol agent Brian Terry? There’s considerable evidence now, thanks to Katherine Eban’s excellent article in the June 27 issue of Fortune Magazine, that the Republican Party has been engaging in a political smear campaign rather than a search for the truth. Big surprise.
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The Verde Valley hasn’t had a representative in the legislature for a very long time; not since the Republican Party purged Tom O’Hallorhan as a RINO (Republican In Name Only) because he understood the value of improving public education.
This election cycle may be our best opportunity in more than four years to change the tenor of the legislature by electing highly qualified and dedicated candidates. Three of the best appeared together on Democratic Perspective.
They are Angela LeFevre and Doug Ballard, who are running as a team for the two House seats in the new LD-6 district, and Tom Chabin who is running for the State Senate from LD-6. Each brings a unique set of skills and strengths to the campaign.
Angela earned a degree in Economics and International Relations. She has worked as a teacher and as a senior manager for a Fortune 500 company. She also started her own small business. So she has a broad-based understanding of what it will take to improve Arizona’s economy and its struggling education system.
Doug was previously Director of Planning and Development for the City of Chandler where he successfully worked to attract industry giants like Intel and Motorola, bringing thousands of jobs to Arizona. He now lives in Parks, near Flagstaff.
Tom has served in the Arizona House of Representatives since 2007. Since moving to Arizona in 1972, he has been a small business owner, president to his parish, member of the school PTO and other committees, a volunteer for the Coconino County Planning and Zoning Commission, even as a Little League coach. In 1992, he was elected to the Coconino Board of Supervisors, which he served for 8 years.
To clarify the changes in the legislative districts, we turned to Angela. “There are two seats in LD-6. There are 30 districts in Arizona and LD-6 is the result of redistricting,” she said. “The biggest difference is the Verde Valley and Sedona. Redistricting moved us from LD-1 where we used to be, and that was dominated by Prescott, so all those who were representing us were basically from Prescott. The new district of LD-6 includes Coconino County, except for the Navajo Nation. It also includes Gila County down to Tonto Basin and Navajo County as far as Holbrook.”
Putting the size of district in perspective, it is roughly the size of Vermont with Flagstaff and the Verde Valley as the largest population centers in the district.
“I’m excited to run, because I do see an opportunity to be the voice for all of the Verde Valley, including Sedona,” said Angela. “I want to talk to everyone so I can listen and understand the issues of the area,” she continued. “It’s great that we’re in a competitive district, which means every vote will count.”
Turning to Doug, we asked him to talk more about his qualifications. “When I was in Chandler, we attracted the biggest economic locates in the history of Arizona, most specifically Intel,” he said. “I was honored to work on those. Obviously I worked on many small business issues, many medium-sized business issues, on office development – more than 6 million sq. ft. of office development and over 8 million sq. ft. of high-tech development. Collectively they represented approximately $10 billion to Arizona.”
When asked why he decided to run, Doug replied, “It’s all about jobs and it’s all about the economy. I for one have gotten pretty tired of the hyper-partisanship down in the legislature and all of the divisive bills and divisive issues that have been brought forward; regulating women’s access to contraception; guns in schools, and all of these types of things that don’t get to the basic issues of what we need in this state to turn things around.”
“Another thing I might add is education,” Doug continued. “You can’t build a strong economy on weak education. Time and again the legislature has voted to gut our educational system – $400 million worth of cuts last year alone. I’m paraphrasing, but Craig Barrett who I know and worked with (he was the CEO of Intel) has said that Arizona will not see another high-tech locate based upon the direction it’s going relative to education. It’s so important, if we’re going to compete on a national and international stage, we have to get our act together on education.”
Turning to Tom, we asked about his 5 years in the legislature as a member of the House of Representatives. “I’ve been witness to these silly bills and the silly ideas that turn into law,” he said.
Asked how he survives down there, Tom responded, “You’d be surprised how often I get that question. Someone will approach me and say, ‘I’m a Republican, but guns on campus? Mining uranium in the Grand Canyon? How do you work with people who want to take over all the federal parks and sell them off?’ Well, I just tell them there has to be a voice there of reason and moderation.”
As for the selling off of our national parks, Tom explained, “My opponent, Chester Crandall, from Heber-Overgaard, passed a referral to the voters that would establish sovereignty over all federal lands, sovereignty over military bases, sovereignty over the Grand Canyon National Park, sovereignty over our national forests. That’s going to be on the ballot. That sounds pretty radical doesn’t it? More radical, it would undo two amendments to our state Constitution that were a condition from Congress for statehood. It’s like unstitching the Arizona star from the American flag.”
Asked if the silliness is also wasting our money, Tom stated, “For certain, here we have our legislature suing the Independent Redistricting Commission over the legislative maps which were adopted and in place. We as taxpayers are not only paying for the lawsuit against the Redistricting Commission, we as taxpayers are paying to defend the Independent Redistricting Commission.”
He continued, “Doug and Angela’s opponent, Representative Brenda Barton, was an advocate for giving Russell Pearce $267,000 because he lost his recall election. Russell Pearce would have put that money into his pocket. Ms. Barton actually spoke in favor of that.”
To learn more about the candidates, including what they consider the most important issues, please listen to the entire interview and visit their websites:
Arizona’s Legislative District 6: A Real Choice, and a Real Opportunity in 2012. Democratic Perspective’s co-hosts, Mike Cosentino and Steve Williamson, interview the three Democratic candidates for Arizona’s Legislative District 6. Doug Ballard and Angela Lefevre are running for the House, and Tom Chabin, current Representative for District 2, is running for the Senate in the new District 6. If you want to hear three candidates who are genuinely concerned with the real issues confronting Northern Arizona, and not preoccupied with idiotic ideological crusades, you’ve come to the right place.
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Democratic Perspective is fortunate to have an outstanding economist in our ranks. Chuck Williamson is a member of Verde Valley Independent Democrats and the brother of co-host, Stephen Williamson. He spent his career in the banking industry, much of it as Chief Investment Officer for First Interstate Bank of Oklahoma. He was responsible for $12 billion of investments in a seven-state region both in trust activities and the bank’s own portfolio, which was primarily mortgage-backed securities; the kind that got us all in trouble recently.
But Chuck said, “I was already retired by then, but I will admit to campaigning and lobbying for the repeal of Glass-Steagall for almost my whole career. Of course, at the time, most of these derivatives that caused the problems didn’t even exist so no one thought to regulate them.”
“When we got Glass-Steagall repealed,” he continued, “it meant bank holding companies could buy brokerage firms and vice versa, and so there was a huge consolidation in the business. The whole financial service industry ended up in the form of bank holding companies regulated by the Federal Reserve. The banks themselves were still regulated in a different way through the Comptroller of Currency.”
“It’s not easy for a bank to get into trouble,” said Chuck. “They do sometimes, but most of the problems that occurred in this crisis were at the holding company level which is regulated by the Federal Reserve. Alan Greenspan really didn’t believe in regulations,” he said.
“I was on the side of arguing that case but, of course, in reality it’s nonsense,” Chuck stated. “Recently, one of the largest banks in the country fired the person, who was my counterpart when I was working, who managed the treasury activity of that bank because they took a $2 billion loss.”
“They misunderstood the risk they were taking or, I think there is an easier explanation if it becomes public, she was a profit center,” he said. “It wasn’t about managing risk. We all had stock options and things that gave us incentives that lasted over years, but the reality is if you didn’t make budget for a couple years in a row, it didn’t matter if you had options because you weren’t working there anymore.”
Of course, bank losses are nothing new. Chuck explained that the Williamson family experienced two previous crashes. Their great-grandfather’s bank went bust in 1893 along with four thousand other banks. “The reason wasn’t that they made bad loans,” said Chuck. “They had panics where people wanted to withdraw their money. No bank can survive that. They make loans; they make investments; they don’t have it.”
In 1909, there was another run on the bank where the Williamson’s grandfather worked. According to Chuck, “The manager… before the bank opened saw a line forming. He took all the empty money bags from the vault and went around to the hardware stores and bought up every washer in Oklahoma City, filled the money bags with washers and had guards arrive with a wagon to unload it. The crowds dispersed and his bank was one of the few that survived the run.”
The story shows how emotionally driven the economy can be. This is true today in the Euro Zone with the Spanish banks. “It’s a run. It’s the same thing,” said Chuck. “People have lost confidence in the banks.”
When reminded that Ron Paul blames the Federal Reserve for the crisis in 2008, Chuck replied, “Without the Fed, we would have seen credit disappear. The banks would have collapsed. There would be no loans. We would be liquidating all the banks. FDIC would have covered small depositors, but that doesn’t help big corporations…without the Fed, this crisis would have been a depression.”
“In Europe, they have a European Central Bank, but each country has its own bank and they don’t have a common strategy. So it’s a very flawed structure that they ended up creating. What’s happened recently, Andrea Merkel in Germany has opposed a lot of the bailouts and limited their size and so on and is following an austerity program. But it hasn’t worked.”
“It’s sort of like the Ryan Budget,” he continued. “If you really cut all the things in the Ryan Budget, we will slip immediately into another recession and if we don’t do anything about the cliff we created; this artificial, nonsensical thing about the tax increases and spending cuts that will go on at year end; if we don’t do anything about it we will absolutely be in a recession next year.”
Could Romney’s business experience make a difference? “He has 17 years of experience with investments at Bain Capital. I have 30 years. Does that make me more qualified?” Chuck asked. “The answer is business experience is almost irrelevant. It’s really getting things done in Washington that matters.”
As for austerity, Chuck said, “People who fully believe that markets have all the answers should realize that we don’t have to deal with deficits now,” he said. “We have the lowest interest rates in my lifetime. The markets are saying, ‘You don’t have a deficit problem today.’”
“What you need is a government that you can understand and predict,” he said.
Finally, he offered his views on healthcare. “I have to say as an economist, one thing I do believe in is supply and demand. And so if you look at the price and supply of medical services, what I would do to control the cost is to increase the supply? Let’s say double the number of positions in medical schools and nursing schools and let the government give scholarships if they’re willing to work in underserved areas for 10 years and so on. If you increase the supply of the medical business, you’ll reduce the costs.”
Banking and the Financial Crisis: Democratic Perspective’s co-hosts, Mike Cosentino and Steve Williamson, interview one of our own. Chuck Williamson, Steve’s brother, and retired Chief Investment Officer of First Interstate Bank (now part of Wells Fargo), offers some critical insights into banking and the financial services industry. What do investment banks and bank holding companies do, what part did they play in our current financial crisis, and what role should the government play in regulating their operations in the future?
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