The Weiner Component #138 – The Current System of American Taxation: Loopholes & Special Privileges

Distribution of U.S. federal taxes for 2000 as...

English: Tim Walz, candidate for United States...

English: Tim Walz, candidate for United States Congress, at a Memorial Day picnic in Rochester, Minnesota (Photo credit: Wikipedia)

English: Grover Norquist at a political confer...

English: Grover Norquist at a political conference in Orlando, Florida. (Photo credit: Wikipedia)

In this year of 2015 the American System of Taxation is set in such a fashion to totally favor of the wealthy and the large corporations, at the expense of everyone else.  Probably not since shortly before the French Revolution in the late 19th Century has a system of taxation been so unfair as to place most of its burden upon the middle and lower classes.  If the general public became aware of the total extent of this there would be an outcry throughout most of the society.


In prerevolutionary France the nobility and church paid no taxes and wealthy members of the middle class paid a bonus one year to the government and never again had to pay taxes for themselves or their businesses.  Poorer class of society bore the burden of paying taxes.  In the United States we have lobbyists representing the wealthy and their businesses and they tend to control much of the legislation passed.


The very wealthy have somehow created the illusion that taxing the rich limits economic growth, particularly among members of the Republicans Party which they largely finance.  Their slogan is that the rich create jobs.  Of course there has never been any evidence of this.  Invariably, the former Speaker of the House of Representatives, John Boehner, has stated publically that the very rich create jobs.  He has strongly implied that taxing them would limit economic growth.


Practically all federal, state and municipal taxes are regressive.  The income taxes for a married couple filing jointly is graduated up to $457,600, but regressive for any amount above that figure.  Above that amount it becomes $127,962.50 no matter how high the earnings go, to one million, to one billion or beyond.  The maximum graduated level is slightly lower for a single filing his or her taxes.


All other taxes with the exception of federal and state income taxes up to a certain level, are regressive.  Most are usage taxes.  Here the argument for them is that they are fair because everyone pays the same amount.  The fallacy here is that if all these taxes are taken as a percentage of income then the more the individual earns the lower is the tax as a percentage of his income.  Consequently the poor and middle class, the overall majority of the population, pay a larger percentage of their incomes in these so-called fair taxes where everyone pays the same amount regardless of their actual incomes.


The United States tax code is 71,000 pages.  This document was not written all at once; it came into existence on a piecemeal basis over a large number of years.  Many bits and pieces were passed for the benefit of specific individuals and companies or special interests mostly with aid by lobbyists.  A goodly number of these taxes were sentences or even clauses added to other bills at the last minute and had no relationship to the bill in which they originally existed.


And since for the last six or so years every Republican has signed a pledge to Grover Norquist not to raise taxes.  This has made all these subsidies and loopholes sacrosanct; doing away with any of them would be raising taxes.  It could also cut political contributions to their political party.


It is important to remember that a Congressional Bill does not have to deal with just one subject.  It can deal with any number of topics.  But that bill has to be passed as one whole unit or not passed.  In addition any number of amendments on virtually any subject can be added to it.  Unlike some of the states which have a line item veto, that is any sentence or group of sentences can be individually vetoed by the governor before he signs the bill, a federal bill can only be signed and totally approved by the President or vetoed and totally rejected.


Perhaps it time to reform this practice.  Ronald Reagan, as President, had a line item veto when he was Governor of California but not as President of the United States.  He complained vociferously about this fact.  Numerous other presidents have made similar comments.  Whatever it would take to change the current practice would be a long step in the direction of reform.


Too many times a bill has to be passed and unrelated changes have been added to it.  In order to keep the government functioning the President has to sign the bill.  A line item veto would certainly make his job both easier and saner.


The tax code allows numerous deductions that are taken from the yearly income.  Some of these have definitions that have been expanded phenomenally.  For example in 1913 the home mortgage interest deduction was added.  It was added to encourage home ownership.  (Interestingly countries like Australia and Canada do not have a similar law but do have the same large amount of home ownership as the United States.)  The law was to make home ownership more affordable.


In more modern times Congress declared in a new bill that boats can be homes if they have a kitchen, bathroom, and sleeping quarters.  The luxury boating industry had been able to buy its way into home mortgages.  Three percent of the boating industry qualifies as homes and interest paid on their purchase loans is deductible.


For example someone like Microsoft CEO, Paul Allen, has a $200 million yacht that comes equipped with an indoor pool, basketball court and its own submarine.  It also has a kitchen, bathrooms, and sleeping quarters.  He is able to deduct the interest paid on his ocean going home from his yearly income taxes.


One Congressman, Tim Walz (D-Minnesota) stated that the law was passed to make home ownership more affordable for the middle class.  He wrote a bill: Ending Taxpayer Subsidies for Yacht’s Act, hoping to end the practice by the wealthy.  The chairman of the committee that handled the bill in committee is a Republican and did not even allow the bill to come up for examination.  The bill died in committee; it never even came up for a vote there.  Would it have passed if it came up on the floor of the House?  This is a tax loophole that benefits a few people at the very top, according to Walz.


The House of Representatives is composed of 19 standing committees and the Senate of 17.  The Speaker of the House and the Majority Leader of the Senate is responsible for assigning bills to the proper standing committee.


The House Rules Committee manages the flow of bills to the full House by scheduling their flow.  They can also ignore a bill if they think it appropriate.  In the Senate the majority floor leader controls the bills.  He can also ignore a bill.

The Standing Committees generally have jurisdiction over a specific set of issues such as Agriculture, Appropriations, Foreign Affairs, and Commerce.  Each has one or several functions.  They hold hearings, can amend, and report a bill under their jurisdiction.  The chairman can also remove a bill from consideration and the committee votes on whether or not to forward a bill to their entire house or remove it from consideration.

The House originates all revenue bills and the Senate has the power of “advice and consent” over the President’s appointments and treaties.  Whatever is not directly stated in the Constitution is controlled by the Ways & Means Committee, which has more representation by the majority party.  The Ethics Committee has equal representation by both parties.


Obviously the committee system is necessary because there are too many bills proposed for them to go directly to one of the Houses of Congress.  Obviously the Committee, or Subcommittee for that matter, which is made up of a small number of Congressmen and women, can more easily do everything necessary, marking up the bill and even possibly changing it.  It can kill the final version or recommend it for passage by the full body of the House or Senate.


In addition, as we’ve seen, the chairperson of the committee, who comes from the majority party of his/her particular House has almost dictatorial power in running  the committee he/she chairs.  This person does this by almost completely controlling the agenda of the committee.  They can and have ignored one or some of the bills the committee is supposed to deal with.  In this way a bill can be killed without ever having a hearing.  And this can be done to a bill that will probably pass.  It can even be done to a bill that has been passed in the other House.  Once this is done it is almost impossible to bring such a bill before the House or Senate.  And this is what has happened to every bill that has attempted to do away with any subsidy or tax loophole.


In all fairness it should also be stated that the same power exists in both Houses of Congress.  Both the Speaker of the House and the Majority Leader of the Senate have done so with and without good reason.


From 2011 on, when they took control of the House of Representatives, the Republican majority had passed a bill to do away with Affordable Health Care (Obamacare) at least 50 times.  Harry Reed, the then majority leader of the Senate never once even brought it to the floor of the Senate.  The same thing happened to a large number of bill passed by the then Democratic Senate.


Interestingly after the Republicans won control of the Senate in 2014 by a slight margin both they and the House, which has no Constitutional ability to do so, attempted to stop the President from negotiating with Iran.  The negotiations were being done by the leaders of the United Nations, which also included the U.S.  It was not an American treaty.  It did, however, include the U.S. as one of the six nations negotiating with Iran.  Both Republican Houses of Congress wanted to pass laws controlling this two year process.  Apparently the members of the House hadn’t read the Constitution or didn’t care what it said; and young Senator Tom Cotton attempted with 46 other Senate signatures to openly negotiate with Iran.


Can reform be brought about in the Committee System?  One possibility would be to change the rules on Committees requiring that all bills be examined that receiver a 40% approval rate by all the members of the committee.  This could be done once a week and would require a bit more work by the committee.  It would be following the example of the Supreme Court.  It takes four affirmative votes out of nine for them to accept a case.  Would Congress be willing be willing to bring about such a rule change?


Barak Obama, during his campaign for the presidency in 2008 promised, among other things, to end numerous loopholes and subsidies but he couldn’t get any of those bills through Congress.  He wanted to eliminate “special tax breaks for oil and gas companies, including special expensing rules, foreign tax credit benefits, and manufacturing deductions for the rich oil and gas firms.


The American Petroleum Institute stated, I imagine proudly, that none of President Obama’s proposed bills, which would be presented by a member of Congress in one or both Houses of Congress, were enacted into law; in fact, they were dead upon arrival in either House.  Is lobbying sometimes open bribery?


When a bill is presented in either House of Congress it is given a number and sent by the Ways & Means Committee to a specific Standing Committee to be examined.  Each member of Congress is generally on at least two committees.  In the case of the House of Representatives most committees are also broken into subcommittees.  The Chair of each committee sets the agenda for each meeting.  From 2011, when the Republicans gained the majority in the House of Representatives, the chairman became a Republican and, from what I understand, no tax reform bill made it to a committee for examination and recommendation.  This also occurred in the Senate from 2014 on when the Republicans received a slight majority there.


From 2009 to 2010 both the House and Senate were very busy fighting off a giant depression and Republicans were busy fighting off Affordable Health Care (Obamacare) which they failed to keep from passing.  There would have been little or any time for the Democratic Congress to do anything else.  And if such a bill came up in the Senate it could have been easily filibustered.  In the House of Representatives extended debate and amendments to the bill, which would add endlessly, to the extended debate, would have easily killed any bill.


If we ask why any loophole of subsidy bill would present a problem?  The answer is that a very large percentage of Congressmen or women are dependent upon these very companies for large political contributions.  Are they then dependent upon bribes?  The answer is legally no, but technically yes.


In order for an individual to run for either House of Congress he/she needs large amounts of money for staff, adds, mailings, television commercials, etc.  This money is supplied for Republicans and many Democrats by political contributions.  For example Ted Cruz’s current presidential campaign is currently being financed mostly by four very rich individuals.  I suspect that if he got elected he would do nothing to make any of these individuals unhappy about anything.  The same attitude would be true for any House or Senate member.


The contributors, individuals and companies, which make large contributions to political campaigns have purchased almost instant access to the people they have financially funded.  In addition many government officials also have use of company jets and free expensive vacations.  Is it bribery or an exchange among friends?  The legislators are supposed to represent their constituents who elect them.  But who is primary?  Is it the constituents or the large contributors?


Whether the legislator truly believes he is acting for the good of his state or understands that he is paying a debt by supporting his major contributor’s interests is really beside the point.  The interests of the large contributors are primary in the minds of the legislators.  To go against their interests would be an act of financial suicide.  It would cut off large portions of their funding and they could easily loose them the support of their party as well as that of the large contributor.


Why then have the Republicans, as a group, refuted the concept of climate change.  Presumably for them the planet is getting less inhabitable not because of man’s increasing pollution but probably because God is ticked off with people.


Can the current system be adjusted so that Congress can go back to the original purpose of the Founding Fathers, to serve the people of the United States?  Interesting question!  Not too long ago the Supreme Court in the Citizen’s United Case expanded the meaning of a part of the First Amendment to make the spending of money part of the Free Speech clause of the First Amendment to the Constitution.  This has led to almost unlimited spending in political elections because money is now an expression of free speech.  To limit contributions in a political election is now to limit the expression of free speech.


The political system, by the way it is set up, practically puts every politician susceptible to some level of corruption.  Can this system be changed?  Another interesting question.  Can tax reform come about?  Not by the current organization of Congress.

English: This is a chart created to demonstrat...

The Weiner Component #136 – Part 3: The Sequester

Following is perhaps one of the most important reasons for the Election of 2016.  Its results will strongly affect the future of the United States in terms of whether the country moves toward economic fulfillment for most of the population, stays where it is now, or goes further in the direction of continuing to exist mainly operated by the rich, be run by the rich, and mainly exist for their benefit.


On August 1, 2011, the House of Representatives passed the Budget Control Act of 2011, which was then approved by the Senate, and signed reluctantly by President Obama.  The Act provided that if the Joint Select Committee did not produce bipartisan legislation that made across the board spending cuts then automatic spending cuts would take effect on January 2, 2013.  Its commencement was by law delayed until March 1, 2013.  On that date, with no bipartisan deal having been reached, the initial sequestration cuts would take effect at midnight.  While President Obama signed the bill putting the cuts into effect he referred to them as being “deeply destructive.”


On March 6, 2013, the House of Representatives passed a bill to extend the continuing resolution and to enable defense and the veteran’s programs to adjust to the cuts brought on by sequestration.  Other bills were passed adjusting many of the visible cuts like those made to airport traffic control.  Suddenly most of the airports had long waits for planes taking off and landing as the number of air traffic controllers was cut by the sequester.  This and other visible cuts were adjusted; but many of the invisible ones like a decreases in school breakfasts and lunch programs for the children of the poor or, for that matter, meals on wheels for poor senior citizens, were also cut but they tended to be invisible so there was no large scale objection to these.


The cuts were divided evenly in dollar amounts between the defense and non-defense categories.  Some major programs like Social Security, Medicate, federal pensions, compensation for legislators, and veteran’s benefits were exempt.  Medicare benefits were reduced by 2% a year.  Instead of cutting some Federal pay rates a system of furloughs was set up which resulted in involuntary unpaid time off for government employees was utilized.


The sequester is supposed to lower total Federal spending by $1.1 trillion over an eight year period, from 2013 to 2021.  In 2013 it was supposed to lower non-defense discretionary spending by 7.8% or $294 billion and slightly lower in succeeding years; and it was supposed to lower defense spending by 10% or $454 billion, with slightly lower cuts in succeeding years.


In point of actual face since the application of the bill was delayed from the beginning of January of 13 to March 1, 2013 the actual savings for that year was 85 billion dollars instead of 110 billion dollars.  After two years the cuts have been devastating to both the defense and non-defense sections of the government.


This was the non-compromise compromise that the Republican legislators in both the House and Senate insisted upon to force the Democrats and their President to compromise upon lowering government spending.  Was it a good idea?


Generally, with the exception of 2013, the sequester goes into effect at the end of the year and if the required cuts have not been made in all the programs then those not made by legislation during the year automatically go into effect on January 1 of the new year unless a special bill is passed limiting one or another sequester areas of defense or non-defense spending.  Keep in mind that this process is supposed to continue until 2021 and that only the third installment will have passed by the end of 2015.  There will be an additional six years to go.


The sequester will, if no significant changes are made, lower all Federal Government spending by a total of 1-1 trillion dollars from 2013 to 2021.  It decreased non-defense spending by a range of 7.8% in 2013 and will lower it to 5.5% by 2021.  This is a total of 450 billion dollars for the first year.  Defense spending was also lowered 10% in 2014 and will drop to 8.5% by 2021.


It is also important to realize that the sequestration has significantly cut federal and non-federal employment in the many hundreds of thousands.  In late 2008, Republican President George W. Bush’s last year in the office, the total economy tanked after thirty plus years of constant and sometimes irrational growth.  Bush and his Secretary of the Treasury, Hank Paulson, during the last months of that year spent many billions of dollars bailing out the major banking houses in the country, keeping them from going bankrupt.  The pattern of governments stopping potential bank failures and saving banks became an international operation in many industrial nations.


In the United States the oncoming economic failure became obvious in 2007 when the loans to homeowners became frenzied with mortgage lending 125% of the then value of the property.  The bankers were in complete denial that ever-rising values could ever stop happening.  Most of them had spent their entire prior work life during a period of ever-increasing real estate growth.


With the 2008 Real Estate Crash there was suddenly massive economic collapse with value dropping like bombs from airplanes during wartime.  The value of the dollar dropped to about ten cents overnight.  A good percentage of homeowners, particularly those who had continually refinanced their homes suddenly found themselves owing more on the properties than they were worth.  As a last minute move before the crash some banks were frantically continuing the process.  It had become by 2008 frenzied madness.


The new President, Barak Obama, inherited this problem when he assumed office in 2009.  He spent his first two years in office with a Democratic Congress, successfully working on this problem and getting Affordable Health Care passed.  He continued the bailout of the banks and saved both the financial institutions and the American auto industry with massive loans.  By the 2010 Midterm Election a goodly percentage of the people who had voted for him and change did not vote.  Probably they felt he had not brought any or enough of the change he had promised in the 2008 Election.  Consequently the Republicans achieved a majority in the House of Representatives and thereafter would pass nothing favored by President Barak Obama.  This continued through his first term in office and largely through his second term.  In 2014 Midterm Election the Republicans all achieved a slight majority in the Senate.


Consequently during most of Obama’s presidency Congress has refused to even consider fiscal policy, spending money to create jobs and modernize the infrastructure.  The Federal Reserve has utilized monetary policy, lowering the interest rates paid by the banks to consumers to almost nothing, one tenth of one percent, for most of the money deposited into the banks.  Despite all this in August of 2015 unemployment dropped to 5.1% of the work force looking for jobs, the lowest point since the Real Estate Crash of 2008.


During Reagan’s presidency, in addition to massive military spending, the banks were deregulated.  In 1932, during the midst of the Great Depression, bank reform bills or regulation to avoid another massive depression, which mostly the banks had caused in 1929, were passed.  They had been added to over the years.  All this disappeared during the Reagan Era when the “Free Market” became dominant.  That was during the 1980s.  By 2008 the big banks had again undone the economy.  All this was strongly continued by the two Bush presidencies.


Basically the Republican position has been “No new taxes,” even though Reagan and the first Bush president both oversaw some tax increases.  With the second Bush presidency it was two wars and a large tax decrease, particularly for the wealthy.  If more money is needed for any reason the Republicans would reduce non-military spending, particularly discretionary spending, to make up the difference.  Discretionary spending is programs which aid the elderly, the poor, and the middle class.  In essence their programs have been welfare for the rich at the expense of everyone else.


The Democratic position has been that the country can increase spending by having newer and fairer taxes.  This is the means of paying for new programs and increased costs.  They will not go along with paying increasing or new costs by decreasing the money spent on the lower levels of society.


From these two positions there is no way to achieve a compromise.  Thus we have sequestration, which is in essence squishing the bulk of the population and the functioning of the government. It is an interesting act of spite perpetrated by the Republicans upon the Democrats and the rest of the country.  There is no possibility of compromise.


If the sequester were not in existence unemployment would currently be down to 2 ½ % or lower and there would be a labor shortage.  This would automatically raise the minimum wage and everyone’s standard of living would rise with the rise of wages as employers would be competing for workers.  The FED would have raised interest rates to hold down inflation and the GDP would be far higher than it is now.  The amount taken in in taxes, on all levels of state and federal governments, would have increased substantially and the Federal Government might even be slightly paying down the National Debt.  But instead the Republicans have to be “penny wise and dollar stupid,” holding down economic growth in the nation both as spite and as an economizing measure.


For the end of January 2015 President Obama had asked for an end of sequestration and an overall 7% increase in all areas of spending.  This was an opening position on the 2015 budget debate with a Republican Congress.  He got none of these.  The end of 2015 is coming up.  Both the time for the final cuts to the 2015 sequester and the 2016 Presidential Election will soon be with us.


The military is currently in worst shape than it has been since the end of World War II; when the war ended and the government overnight cancelled all war contracts and began quickly releasing a large percentage of its army back into civilian life.  This continued until the Federal Government realized there was a Cold War going on with the Soviet Union; then it reversed itself.  Currently, according to the armed services top officers another round of sequestration will have dire consequences, which will include the ability to win a ground war.  The size of the navy and air force is shrinking as these services cannot afford to replace outdated ships and air planes.  And this does not include all the other cuts that sequestration is causing.  The military is at present in a worst position of preparedness than it has been since the end of W.W.II.


On a non-military basis poor children are going to school hungry and staying hungry all day while trying to learn.  Senior citizens are doing without food and dying because of program cuts.  They often have to choose between rent, medicine, and food.  They can’t afford all of them.  Food is the first expense to go.  The country will lose a generation of scientists as research funding, which already has been cut 50% continues to decrease.  The Federal Bureau of Investigation released a report at the end of 2013 entitled, “Voices from the field,” that cites the effects of sequestration upon the F.B.I.  It states that, among other things, new intelligence investigations were not opened; criminal cases were being closed; informants couldn’t be paid; and there was not enough funding for agents to put gas in their cars.  And early Head Start programs were eliminated to balance budgets.


All these and many other programs tend to be invisible to the general public.  Also the effects of these and other unnecessary cuts bring about a significant loss of employment in the overall economy and, as we’ve seen, a noticeable drop in the GDP.   Sequestration is hurting the nation.  As it continues the damage increases.  Further cuts will have to be made at the end of 2015.


What amazes me is that virtually all the Congressional Republican legislators have taken an oath/pledge in writing to Grover Norquist, a libertarian-leaning Republican lobbyist and founder of Americans for Tax Reform, who has no direct connection with the Government, that they will never raise any taxes.  These same Republicans have taken an oath to uphold the Constitution of the United States.  It would seem that the first oath here comes before the one to the Constitution.  It would also seem that a number of Republicans would like to get rid of the sequestration but they are bound by their pledge or oath to Grover Norquist.


President Obama has stated that the government can raise the tax revenue to pay for doing away with sequestration by “fixing a tax code that is riddled with loopholes for special interests.  Some of these loopholes were passed during World War II, over a half century ago, to encourage the amount of gasoline produced during the war.  They are still on the books and Norquist sees them being done away with as an increase in taxes.  The current situation and inability of the two parties goes beyond sanity.


My solution to this problem would be to have both political parties appoint a bipartisan committee and lock them in a room without access to a bathroom which they cannot leave until a solution is reached.  And if others in Congress refuse to accept the compromise then automatically appoint them to a new committee and lock them in the same room until they reach a compromise.  This process would be continued until everyone is in agreement on a compromise.  If possible Grover Norquist should be added to all the different committees.


The members of Congress are each being paid 170 thousand dollars a year and take an oath to serve the country.  Each has a budget of over a million dollars for their staffs.  It’s time they did a competent job as legislators.  The taxpayers are spending a lot of money on them and their staffs.  The Republicans seem more interested in a welfare state for the rich than in a country that functions for the benefit of all its members.  Sequestration should never have happened; it’s the type of thing children would do: spite for the sake of spite.  The oncoming 2016 Presidential Election is an opportunity for the voters in America, despite the various suppression of voting in many Republican controlled states, to get rid of a number of legislators that are serving causes other than the welfare of the United States.

The Weiner Component #122 – Jobs: A Successful United States

n the United States today we have about 5.5% known unemployment plus, at least, if not more than 5 percent hidden unemployment. That is much too much in a country as wealthy as the U.S.  The known unemployed, register and are actively looking for work; the unknown unemployed have given up, feeling ultimate defeat they are no longer looking for jobs.


The existence of both these groups is a sad comment upon this country.  For a nation as rich as ours, with all the needs it has for constantly improved infrastructure there is no excuse for this situation.  We are a modern nation that is still living largely in the last century when most of our infrastructure was created.  In a manner of speaking we are like the young man who has just acquired his first automobile and expects it to last forever without any real care or maintenance.


In late 2008, under a Republican Administration, after thirty some years of at first gradual and then accelerated economic growth in the Housing Market, the Real Estate Bubble burst and the entire economy of the United States was about to crash, beginning with the major banking houses within the country.  The Treasury Department, under a Republican Administration, extended hundreds of billions of dollars in loans to these banks to keep them solvent and functioning.

In Europe and Asia, on a smaller scale, the nations there underwent the same crisis with similar solutions.  Some of the nations of Europe like Greece and Spain, had lived richer than others on this new wealth that the banking houses had created and were far more in the red than others countries.  This was particularly true in the Eurozone.  Some of those nations underwent extreme austerity measures in order to be bailed out by the European Central Bank or the other nations in the Eurozone.  This was done in 2009. They are still in extreme economic troubles.

In the United States we went from at least 12% unemployment in 2009 to 5.5% by 2015. What saved the country from falling into a deep depression, deeper than that of 1929, was the Federal Government bailouts of the banks and the auto industries, plus innovative use of Monetary Policy by the Obama Administration.

Unemployment today, in early 2015, is still a problem in the U.S., particularly for the young and unskilled.  Another problem tends to be rates of pay.  The Federal minimum wage in the U.S. is $7.25 per hour before social security, assorted taxes, and unemployment insurance are taken out.  While many states have a higher minimum wage the Republicans in Congress refuse to raise the National minimum wage.  It has existed for several years now while prices have gradually increased.

What’s interesting or odd here is that Scott Walker, the governor of Wisconsin, is attempting to gain the Republican presidential nomination on a platform of “right to work” laws.  These laws mean that no business can have a closed union shop; no worker has to join a union where ever he works.  The object of these laws is to break the power of the unions across the U.S. and he probably would like to get rid of the minimum wage, as was suggested during the Reagan Administration.

Henry Ford, in his early factories, discovered or realized that if you pay your workers enough they will buy the product they are producing.  The same premise holds true today: if workers earn more they will spend more.  In essence increased spending equals increased production, and consequently more profit for everybody. Growing productivity creates jobs and raises the standards of living within the country.  And conversely the lower the national income distribution the lower the productivity and the higher the unemployment.

No one can buy goods and services with money they don’t have.  Somehow the Republican understanding of the situation throughout the country is backward; their goal, regardless of what they say or believe, is actually to reduce productivity throughout the nation and increase unemployment.  This they have very effectively done since 2011 when they achieved dominance in the House of Representatives.

If we look at their current goal of keeping the minimum wage at $7.25 an hour.  Working at that rate for 40 hours a week allows an individual to earn $290.00 a week, which works out to about $1,160 a month, and $15,080.00 for a 52 week year before assorted government withholdings.  This puts this person living alone slightly above the poverty line, which is $12,300 for one adult, $15,853 for two adults is slightly below the poverty line, $19,055 for two adults and one child is well below the poverty line, and $24,008 for two adults and two children.  If that amount is doubled by both adults working full time at that rate of pay then their condition improves but who will take care of the child or children.  It’s a sad comment upon a society that will not pay a goodly percentage of its workers enough to not live in poverty or to live just above the poverty level when they are fully employed.  We are a nation with a good percentage of employed being working poor.

There is an interesting note of irony here.  The working poor person earning the $7.25 an hour is almost below the legal poverty level.  In most states this person qualifies for food stamps and government medical aid, as well as other programs.  All these aid programs are paid for by tax dollars.  Ultimately, then, the tax payers in the country are subsidizing those businesses or industries that pay the minimum legal wage.  Consequently a good percentage of these companies’ profits are being paid indirectly by the American taxpayer.

In the April 16, 2015 issue of the L.A. Times there was an article dealing with this subject which cited a UC Berkeley Center for Labor Research study.  They reported that 56% of all state and public assistance in the United States now goes to working families.  That adds up to 153 billion a year, including 25 billion in state funding.  Individually California spends 3.7 billion, New York 3.3 billion, and Texas 2 billion on public assistance programs.  These go to, among others, fast food employees, child and home care workers, and part-time college faculty.

To quote the L.A. Times: “Last week the Colorado Fiscal Institute said 600,000 Colorado employees, or a quarter of the state’s working force earned less than $12 an hour. As a result taxpayers ante up about 304 million a year to cover their healthcare costs… It’s clear these big employers are shifting their costs to the taxpayers.”


George W. Bush’s presidency ended in 2008 and Barak Obama became president in 2009.  Most of his early efforts were aimed at keeping a deep depression from happening.  Unemployment still increased but it was minor compared to what it might have been.

Today are there enough jobs in the society to keep everyone who wants to work fully employed?  There were jobs for everyone up until the end of 2008 before the Real Estate Bubble burst.  At that time the banking houses in the United States were encouraging people to use their homes as bank accounts and constantly withdraw their equity from their homes and spend it.  The society was flowing with money.  Once the Bubble Burst there was an intense shortage of funds and unemployment was well over 12% overnight.

There has been a large percentage of recovery since 2009 but the bulk of the National Income has gone to the upper echelon of society with very little going to the middle class and even less than that going to the bottom of society.  The distribution of the National Income is completely out of kilter.  It is encouraging, with Republican help, a shrinkage of economic prosperity.  If it were not for the creative Monetary Policy the Federal Reserve used this country would now be in the doldrums with everyone, all Republicans and Democrats, currently well off and otherwise, suffering considerably.


The odd part of all this is that the country could easily be well off with full employment and everybody having at least a decent standard of living.  The key here is expending money in Fiscal Policy which Congress controls.  The Republicans are loath to spend money on things other than the military.  They are very conscious of the National Debt that they have mushroomed since Reagan took office but for which they claim no credit.

Interestingly the Federal Government currently owns well over 50% of its own debt. Legally, it seems, no one, with the exception of the Federal Government, can owe itself money.


The infrastructure of the United States is still in the 20th Century.  Some of it was installed over a hundred years ago.  Underground pipes and sewers are continually breaking down and being repaired to the level where they are just usable again.  It’s currently a Band-Aid approach; barely maintaining but no really improving anything.

President Obama had a plan in 2011 to drop unemployment that the Republican House of Representatives chose to ignore for two reasons: one, He presented it and two, it cost money, which they are loath to spend on anything except the military and business expansion like the Keystone project.

The prime example of Fiscal Policy is the New Deal that Franklin D. Roosevelt inaugurated in 1933 when he became President during the Great Depression.  While the Republican, Herbert Hoover was President when the Great Depression broke in 1929, he was incapable of such massive spending Roosevelt began in 1933.

Roosevelt was able to fund the New Deal by doubling the money supply in the nation.  He had government officials collect all the gold coins in circulation and replace them with paper money. The value of the gold was then doubled from $18 an ounce to $36. And suddenly the money supply doubled; there was twice as much money in circulation.

While this did not get the country out of the depression it did significantly improve economic conditions.  In order to end the Great Depression the Roosevelt Administration would have had to, at least, quadruple the money supply beyond that level. That situation occurred during the 1940s when World War II broke out.

The New Deal was a series of domestic programs encompassing Relief, Recovery, and Reform and enacted from 1933 on.  It included laws passed by Congress and executive orders issued by the President.  Programs like the Works Progress Administration (WPA), the Civilian Conservation Core (CCC) made the government the largest employer in the nation.  Others like Social Security, the Fair Labor Standards Act that set maximum hours and minimum wages for most categories of workers and the Tennessee Valley Authority (TVA) are with us today.  Banking reform was reconstituted after the 2008 Banking Debacle.  There were a myriad of other agencies mostly denoted by the letters; all of which created jobs, upgraded whole sections of the nation, and brought about

Did the government have to do this?  Obviously not; but in so doing the Federal Government took on the responsibility of providing for the common man (forgotten man) where he could not then provide for himself.  It was in the mind of Roosevelt and his administration necessary in order to save our free capitalistic society.

This is what the current Republican Congress seems to be incapable of doing. They feel this country cannot afford this luxury today.  I suspect they also feel that the unemployed are really themselves responsible for being in that condition.  Whether there are jobs available or not is immaterial.


Fiscal Policy is something the Federal Government is going to have to get involved with sooner or later whether they want to or not.  The infrastructure of the United States was built during our period of urbanization and industrial development, from the late 19th Century through the 20th Century.  Our growing needs then were a lot smaller than they are now.  We grew then from a country of 140 plus million to over 350 million people today.  Some of the sewerage pipes in many cities are over 100 years old.  Roads, freeways, and interstate highways have to be maintained and improved.  The electric grid that runs throughout the nation has to be upgraded.  Many schools are antiquated and should be replaced or upgraded.

All of this is mentioning only a small portion of what needs to be done.  We can take a piece-meal approach, fixing things as they break down and wait until a point comes when much of the infrastructure can no longer be repaired or the Congress can begin a process of bringing the infrastructure into the 21st Century, rebuilding for today’s population..

Money is not really the problem for the Federal Government since it owns most of its own debt.  Actually spending money would increase government tax receipts.  In fact it would significantly increase the amount of taxes received on all levels of government, city, state, and federal.

What the Republican Congress is doing by refusing to even consider fiscal policy is exacerbating unemployment, encouraging the growing wealth of the upper ten percent, working to shrink the middle class, and radically increase the lower classes.  They are working to bring back the conditions of the 1880s and 1890s when there were massive divisions between the different classes within society.

Interestingly Grover Norquist, the president of Americans for Tax Reform, who has successfully gotten the Republican members of Congress to sign a pledge that they will, under no circumstances, raise taxes, has stated that his favorite period in U.S. history was the last two decades before the 20th Century.  It would seem he has been working very hard to bring us back to that period of inequality.


More jobs are needed.  The current Congress will do nothing to alleviate the problem; instead they will by their actions increase it.  What will determine our future direction will be decided by the 2016 Presidential Election.  If we reelect a Republican Congress and also vote for a Republican President then conditions will continue as they are now, probably getting far worse.  If, on the other hand, both Houses of Congress are Democratic, then fiscal policy should bring about a radical lowering of unemployment and an overall return of prosperity for all levels of society.

It will be all in the hands of the voting public.  If they all vote their interests then the problem can be solved or, at least, move in the direction of a solution.  If enough people vote their beliefs or prejudices or stay at home and refuse to vote then the country will continue as we are now and probably go downhill economically.

To me the unemployment problem is ridiculous.  It can so easily be solved.  We can have full scale employment and solve our infrastructure problems at the same time.