I've been reading Alexander Cockburn since I don't remember when in "The Nation," back when Christopher Hitchens was a real progressive (OK, I'm getting really old), so I had to post this, because this is this is Alexander Cockburn at his best!!!
February 6-8, 2009
CounterPunch Diary
Obama's First Bad Week
By ALEXANDER COCKBURN
http://www.counterpunch.org/cockburn02062009.html
Barack Obama is certainly not the first president to get taken down a couple of rungs by nominees who get shipwrecked in their confirmation hearings. Bruised by thoe setbacks he has also taken serious fire for his $900 billion stimulus package, not just by Republicans but the sizable chunk of his own party who are Republicans in all but name. By the end of the week, particularly with his speech to the House Democrats at their retreat on Thursday night, there were encouraging signs that Obama was dropping the tedious nonsense about bipartisanship and beginning to fight like a man. A day later he had his deal and celebrated by adding three more corporate ghouls to his economic advisors.
But what’s been surprising in the last week is how a politician as smart as the new president could have failed to sense imminent peril concerning his nominations.
Since America’s political system is one of institutionalized bribery, overt (the legal political “donation”) and covert (the bag of cash ) and has a tax code with 50,000 pages of fine print, it stands to reason that of any ten nominees enduring scrutiny by White House investigators, by the staff of the Senate Finance Committee plus the occasional journalist probably 98 per cent will have some sort of explaining to do. Throw in infidelity and kindred offenses outlined at detail in the opening books of the Bible and maybe only Rep Ron Paul would survive.
Part of the problem is that most people reasonably think Mr Obama, who raised more money for his presidential run than anyone in history, is at the personal level an honest fellow. The last president who could be safely put in that category was Jimmy Carter. So when Obama puts up and then stands by nominees who are obviously severely compromised by corporate ties, odious enrichment or serious problems with the Internal Revenue Service they’re taken aback by such permissiveness in one so insistently high-minded in tone and so quick to announce supposedly tough new ethical guidelines for members of his administration.
On the one hand we have President Obama prohibiting individuals from working for government agencies they have lobbied in the past two years; on the other we have him nominating a defense industry lobbyist, William Lynn to be the number two man at the Pentagon, thus possibly the next Secretary of Defense. Lynn gets a waiver.
What’s amazing in the case of Tom Daschle, nominated to be Obama’s health czar, is the fact that neither the president, nor his staff, nor Daschle’s former colleagues in Congress nor the Washington press corps could see that his nomination was inherently preposterous, long before Daschle’s tax problems surfaced. Was health reform’s best advocate to be a former US senator who managed to make $5.3 million in two years trading on his former position as a rainmaker for a powerful law firm, hauling in consultancy and speaker fees from inmates of the self-same Augean stables he was charged, as Health Secretary-designate, with cleaning up? Was he going to get a waiver too, like Lynn?
It’s not entirely clear why Daschle finally threw in the towel. The New York Times editorialized against him, but that’s not an automatic death sentence. His former senatorial colleagues blubbered with dismay when he quit, so they weren’t going to vote against him. There is a theory that the White House felt Daschle couldn't be allowed to survive his tax problems once Killefer had been forced to drop out. More likely, Daschle or the White House felt another forkful of manure was about to drop out of his filing cabinet. But the net effect of his withdrawal, and that -- also for tax problems -- of Nancy Killefer, Obama’s nominee as a White House budgetary watchdog, was to rekindle public indignation about the confirmation of Treasury Secretary of Tim Geithner.
Geithner only owes his position to the fact that the White House felt that the infinitely more capable Larry Summers mightn’t survive nomination hearings, if put forward for the job he held in Clinton-time. At issue was Summers’ role as Harvard’s president in the scandal-ridden collapse of a Harvard advisory program in Russia, for which the US government levied a fine of $31 million on Harvard and other parties.
As with Daschle no one seems to have been perturbed by Geithner’s CV. Geithner had worked for the IMF. No problem. You can toil diligently for an outfit that is properly execrated as the Waffen-SS of international financial institutions and no one raises a bleat. Stiff Uncle Sam by not paying Social Security taxes for the maid who cleaned your quarters in the SS compound and you’re in trouble!
Geithner’s an obvious light-weight. As Treasury Secretary he’s in overall charge of the IRS and since tax season is gathering on its haunches to pounce, tax filers probably feel encouraged that an admitted scofflaw is in charge of the chicken coop. Anything to lower the moral tone, particularly when you’re in anxious conclave with your accountant about what precisely you think you can get away with.
But Obama isn’t in the business of promoting moral relativism, so how come Geithner survived, when Daschle and Killefer, not to mention Bill Richardson (who withdrew as nominee for Commerce Secretary over charges of favoritism in contract awards) all went down? The populist answer you hear often enough is, "What the bankers want, the bankers get, and they wanted Geithner." His designated role is to be prime exponent for their cause, which is continued government bail-out at tax-payers’ expense.
Geithner and his boss, president Obama, are all for ongoing bail-out of the banks, and – it seems – for the so-called “aggregator bank” or “bad bank” that will relieve at face value the bankers of their worthless assets. There’s talk of another $1 trillion or so for bank rescue. Senator Jim Tester of Montana said this week he thinks the bank bail-out tab will rise to $11 trillion.
As Daschle withdrew, Obama called in the networks seriatim and told them (this is from the NBC transcript) that “I've got to own up to my mistake which is that ultimately it's important for this administration to send a message that there aren't two sets of rules. You know, one for prominent people and one for ordinary folks who have to pay their taxes."
After the lunatic obduracy of Bush Jr that he’d never made a mistake, it was refreshing to hear a president admit equably he’d screwed up, though he probably shouldn’t do it again for at least a year. But people aren’t so stupid as not to realize that what nomination hearings mostly show is that there are indeed two sets of rules and Geithner’s successful confirmation and the ongoing bank bailouts confirm they are securely in place, however manifestly honest a fellow the new occupant of the White House may be.
Incidentally, there’s something distinctly sexist about the treatment according Killefer (gone) and Hilda Solis, whose confirmation hearing as Labor Secretary has now been suspended. Both these women’s supposed problems with the IRS are in a different category to Daschle’s and Geithner’s defalcations. Solis’ purported problem is that her husband has a federal tax lien against his name in the public record. Killefer’s difficulty was $900 in unpaid unemployment taxes for domestic help. Really! This is all an argument for the flat tax. Of course Solis’ real problem is that she supports the Employee Free Choice Act, a bill that would make it easier for workers to unionize. Republicans and many Democrats in Congress have been told firmly by their corporate sponsors that EFCA must not pass.
Dr Gupta’s Case Book
Of all the nominations and suggested appointments to Obama’s team, the proposed installation of CNN’s TV doc, Sanjay Gupta, as Surgeon-General is possibly the most frivolously objectionable, just as Daschle’s was one of the most arrogantly disgusting. Why not go the whole hog and put up Hugh Laurie?
I’m glad to say that CounterPunch can make available a measured dissection of Doc Gupta’s qualifications by Vicente Navarro, long recognized as an authoritative voice on genuine health reform. In the new edition of our newsletter, Navarro reviews Gupta’s services to the pharmaceutical industry, his ignorance about public health issues and his opposition to Single Payer and writes:
“I find it highly worrisome that Dr. Sanjay Gupta is likely to be appointed head of the USPHS. He is not an expert on public health and is not sufficiently knowledgeable, or competent, to do the job. Training and experience in neurosurgery do not provide the public health knowledge that the position requires. But, what is far more alarming is that he will most likely be the media spokesperson for the task force on health care reform. And this means that a person hostile to a single-payer system (the type of system that has most support among people in the U.S.); a person clearly unsympathetic to the principle of the government’s guaranteeing universality of health care coverage; a person who is part of the media that have been obfuscating, negating, and avoiding the real problems in health and medical care in this country , will be in control of selling the message of change in U.S. medical care. Is this the change we were promised by candidate Obama?”
Showing posts with label Daschle. Show all posts
Showing posts with label Daschle. Show all posts
Saturday, February 7, 2009
Friday, February 6, 2009
How Bad Will It Get?
In This Issue:
- On The Edge - Paul Krugman
- Why Geithner Was Worse Than Daschle
- Tarp Fund Is Misleading the Public
- Interesting Letter to the Herald by Doug Darlington
- Yellow-headed Blackbird, Celebrating Spring in Baker County
- Convict Bush & Cheney
_____
No Comment at this point....
_____
On The Edge By Paul Krugman
February 06, 2009 "New York Times"
http://informationclearinghouse.info/article21918.htm
--- A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.
It's as if the dismal economic failure of the last eight years never happened - yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there's a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.
Somehow, Washington has lost any sense of what's at stake - of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again.
It's hard to exaggerate how much economic trouble we're in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.
Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving - a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren't selling enough to use the capacity they have. And exports, which were one of the U.S. economy's few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.
Meanwhile, our main line of defense against recessions - the Federal Reserve's usual ability to support the economy by cutting interest rates - has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall.
It's no wonder, then, that most economic forecasts warn that in the absence of government action we're headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that "absent a change in fiscal policy ... the shortfall in the nation's output relative to potential levels will be the largest - in duration and depth - since the Depression of the 1930s." Worst of all is the possibility that the economy will, as it did in the '30s, end up stuck in a prolonged deflationary trap.
We're already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken.
As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.
And deflationary traps can go on for a long time. Japan experienced a "lost decade" of deflation and stagnation in the 1990s - and the only thing that let Japan escape from its trap was a global boom that boosted the nation's exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?
Would the Obama economic plan, if enacted, ensure that America won't have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that's why the efforts of Republicans to make the plan smaller and less effective - to turn it into little more than another round of Bush-style tax cuts - are so destructive.
So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next. It's time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation's future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.
Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. On October 13, 2008, it was announced that Mr. Krugman would receive the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics. © 2009 The New York Times
_____
Why Geithner Was Worse Than Daschle
by Donald L. Barlett & James B. Steele
February 4, 2009 | 8:44am
http://www.thedailybeast.com/blogs-and-stories/2009-02-04/why-geithner-was-worse-than-daschle
The Pulitzer Prize-winning reporting team—and authors of The Great American Tax Dodge—on the breakdown of America’s tax system—and why Timothy Geithner’s lapses were far more egregious than Tom Daschle’s.
The tax troubles of some of President Obama’s Cabinet nominees have exposed one of Washington’s dirty little secrets: Tax avoidance, error and fraud are out of control.
The terms "taxpayer error" and "taxpayer mistake" have become convenient ways to describe the complete breakdown of the American tax system. By our own rough estimate, as much as $600 billion—more than two-thirds of the government’s stimulus package—is lost each year as a result of tax fraud and avoidance.
Geithner actually acknowledged years ago that he owed the taxes—but didn’t pay them until he was nominated for
TheTreasury job. That hardly counts as a mistake.
But don’t look for Congress to order the IRS to begin collecting. For a quarter-century, lawmakers have toiled tirelessly to discourage enforcement of the Internal Revenue Code. Thomas F. Daschle and Treasury Secretary Timothy F. Geithner are the latest poster boys for the success of that campaign.
But their offenses were not equal. Despite the fact that Geithner sailed through the confirmation process—while Daschle went up in flames—Geithner’s tax troubles were actually far more egregious. People tend to give Geithner a pass, because the overall amount he owed was smaller and it just involved Social Security and Medicare, rather than income tax. But Geithner actually acknowledged years ago that he owed the taxes—but didn’t pay them until he was nominated for the Treasury job. That hardly counts as a mistake.
Daschle, for his part, failed to count as income the value of a car and driver he received from a New York private-equity firm, InterMedia Advisors, during 2005-2007. He also overstated charitable contributions and understated income from InterMedia, which paid him $1 million a year. Daschle filed amended tax returns last month reporting $128,203 in additional taxes and $11,964 in interest. The revised tax returns were submitted after President Obama announced that he intended to nominate Daschle to be secretary of Health and Human Services.
Geithner’s situation was nonetheless a bigger ethical lapse. As an employee of the International Monetary Fund in 2001 and later years, Geithner was responsible for sending a check to the IRS to cover his own payroll taxes. He didn’t do so. What he did do was submit a request to the IMF for reimbursement of those taxes. And he collected.
According to the Senate Finance Committee, Geithner “filled out, signed and submitted an annual tax-allowance request with the IMF that states, ‘I wish to apply for tax allowance of US federal and state income taxes and the difference between the ‘self-employed’ and ‘employed’ obligation of the US Social Security tax which I will pay on my Fund income.’” In other words, Geithner—now charged with making sure Americans obey the tax laws—was given money by his employer to pay his taxes, but then didn't pay them. Not until, that is, he decided to become Treasury secretary.
Geithner dismissed his actions as “careless mistakes.” Whatever the case, the “mistakes” were not detected until he was a candidate for the top job at Treasury. That’s when he paid, years late, $34,023 in self-employment taxes that he owed and $8,679 in interest, for a total of $42,702.
Tom Harkin, the Iowa senator, was one of only three Democrats disturbed enough to vote against Geithner’s confirmation. As he put it on the Senate floor: “How can Mr. Geithner speak with any credibility and authority as America’s chief tax-enforcement officer?”
Geithner has plenty of company. Hundreds of thousands of other Americans—quite likely several million—also are ignoring or avoiding their payroll-tax obligations. Their ranks have swelled as a result of the government’s outsourcing of contracts for the wars in Iraq and Afghanistan. But contract employees everywhere often are paid through companies operating abroad that do not withhold the taxes deducted from the paychecks of most working Americans. For its part, Congress has made sure that the IRS lacks the resources required to collect those taxes, as well as income taxes.
Beginning with the Reagan revolution in the 1980s, Congress deliberately stymied tax-law enforcement. It refused to authorize adequate funding. It slashed enforcement efforts. It killed effective programs in place since the 1960s, like the Taxpayer Compliance Measurement Program. Under that program, IRS subjected a select number of returns to intensive audits to determine the extent of taxpayer fraud and error so as to better allocate enforcement resources. But in 1995, after three decades, lawmakers finally marshaled enough support to terminate the TCMP audits. It did so by starving the agency for funds. In a related development, when lawmakers forced the canning of thousands of IRS agents, a jubilant Senator Charles E. Grassley, Iowa Republican, said that it would mean fewer “agents looking through your files.” In other words, taxpayers who cheated could continue to do so with impunity—at the expense of law-abiding citizens who paid the taxes they owed.
How bad is it? The giant Swiss bank UBS maintains secret accounts for 19,000 Americans who have failed to report their existence as required by law. Those accounts hold $18 billion.
The Swiss are resisting efforts to force disclosure. Even if the account holders are identified it would mean little. As longtime Washington tax lawyer and analyst Martin Lobel puts it, “nothing much is going to happen.” That’s because the IRS lacks the resources to pursue that many tax cases.
Donald L. Barlett and James B. Steele are contributing editors at Vanity Fair and have been writing about taxes for nearly four decades. Barlett and Steele have won virtually every major national journalism award including two Pulitzer Prizes and two National Magazine Awards. They are the authors of The Great American Tax Dodge, How Spiraling Fraud and Avoidance Are Killing Fairness, Destroying the Income Tax, and Costing You, and six other books.
See also Democracy Now for February 6, 2009:
http://www.democracynow.org/2009/2/6/investigative_duo_jim_steele_and_don
_____
February 6, 2009
Regulator Says Bailout Fund Is Misleading the Public
http://www.nytimes.com/2009/02/06/business/economy/06tarp.html?_r=1&sq=Bank%20Bailout&st=cse&scp=1&pagewanted=print
By REUTERS
WASHINGTON (Reuters) — Watchdogs monitoring the government’s bank bailout called for an overhaul Thursday, with one accusing those running it of misleading the public, while senators slammed the program as chaotic and poorly managed.
Under the $700 billion program meant to stabilize the financial system, the Treasury Department has so far spent nearly $300 billion to bolster financial institutions and automakers in exchange for preferred shares and warrants.
But in buying those securities, Henry M. Paulson Jr., then the Treasury secretary, misled the public about how it was going to price them, said Elizabeth Warren, a Harvard law professor and head of an oversight panel for the bailout, known as the Troubled Asset Relief Program, or TARP.
“Treasury simply did not do what it said it was doing,” Ms. Warren said at a hearing before the Senate banking committee. Many members of the panel condemned management of the program, which is barely four months old.
The program proceeded “in a chaotic, unorganized and ad hoc manner,” said Daniel K. Akaka, Democrat of Hawaii.
Neil M. Barofsky, another watchdog for the program, told the Senate committee his office was turning to criminal investigations. “That’s going to be a large focus of my office,” he said.
On projections by some analysts that TARP may need more money soon, Senator Evan Bayh, Democrat of Indiana, said, “There will be no additional funding for this program without airtight assurances that it will be better managed.”
The Obama administration plans to unveil a strategy on Monday aimed at reviving the credit markets, helping struggling homeowners and lifting the economy out of recession.
Tighter TARP management is expected to be a part of that package. A preview of that came Wednesday when the White House announced a $500,000 annual cap on executive pay at companies receiving TARP money.
The Bush administration began TARP in response to an alarming slowdown in global capital markets set off by a housing slump that undermined mortgage-backed bonds carried on the books of major financial institutions.
Congress approved the $700 billion program after Mr. Paulson said it would be used to buy broken bonds and clean off banks’ balance sheets. But days after that approval, Mr. Paulson changed the focus to buying preferred shares in banks.
Ms. Warren, head of TARP’s Congressional oversight panel, told the banking committee that after three months on the job, her panel was still not getting enough answers from Treasury. She described the bailout as “an opaque process at best.”
Ms. Warren said she plans to release a report on Friday that calculates Treasury put about $254 billion into financial institutions in 2008, but got only $176 billion in value.
“That’s a shortfall of about $78 billion,” she said, adding that Mr. Paulson “was not entirely candid” in his description of TARP’s bank capital injection program.
Mr. Barofsky, the independent TARP inspector general at Treasury, raised concerns about potential fraud in one of several programs financed by bailout money, the Federal Reserve’s Term Asset-Backed Loan Facility. “Treasury should consider requiring that some baseline fraud prevention standards be imposed,” Mr. Barofsky said in his first report to Congress.
He told the committee the government had collected more than $271 million in dividends from its TARP-financed bank shares and said the department needed a strategy for administering its holdings.
A Treasury spokesman said the department would adopt many of Mr. Barofsky’s recommendations.
Treasury holds $279.2 billion in preferred shares from 319 financial institutions, paying dividends of 5 to 10 percent, according to Mr. Barofsky’s report.
The government also received common stock warrants from 230 institutions, most of which are now out of the money. The largest positions in warrants include the American International Group, Bank of America, Citigroup and General Motors.
_____
Get back to basics, America
http://www.bakercityherald.com/Letters/Letters-to-the-editor-for-February-3-2009
_____
Can Spring Be Far Away? I Hope Not. . . .
Birders are spotting tundra swans and white-fronted geese across Oregon this last week. Spring is just around the corner--well almost.
Yellow-headed Blackbird, Celebrating Spring in Baker County
_____
Convict Bush & Cheney
http://www.afterdowningstreet.org/node/39585
- On The Edge - Paul Krugman
- Why Geithner Was Worse Than Daschle
- Tarp Fund Is Misleading the Public
- Interesting Letter to the Herald by Doug Darlington
- Yellow-headed Blackbird, Celebrating Spring in Baker County
- Convict Bush & Cheney
_____
No Comment at this point....
_____
On The Edge By Paul Krugman
February 06, 2009 "New York Times"
http://informationclearinghouse.info/article21918.htm
--- A not-so-funny thing happened on the way to economic recovery. Over the last two weeks, what should have been a deadly serious debate about how to save an economy in desperate straits turned, instead, into hackneyed political theater, with Republicans spouting all the old clichés about wasteful government spending and the wonders of tax cuts.
It's as if the dismal economic failure of the last eight years never happened - yet Democrats have, incredibly, been on the defensive. Even if a major stimulus bill does pass the Senate, there's a real risk that important parts of the original plan, especially aid to state and local governments, will have been emasculated.
Somehow, Washington has lost any sense of what's at stake - of the reality that we may well be falling into an economic abyss, and that if we do, it will be very hard to get out again.
It's hard to exaggerate how much economic trouble we're in. The crisis began with housing, but the implosion of the Bush-era housing bubble has set economic dominoes falling not just in the United States, but around the world.
Consumers, their wealth decimated and their optimism shattered by collapsing home prices and a sliding stock market, have cut back their spending and sharply increased their saving - a good thing in the long run, but a huge blow to the economy right now. Developers of commercial real estate, watching rents fall and financing costs soar, are slashing their investment plans. Businesses are canceling plans to expand capacity, since they aren't selling enough to use the capacity they have. And exports, which were one of the U.S. economy's few areas of strength over the past couple of years, are now plunging as the financial crisis hits our trading partners.
Meanwhile, our main line of defense against recessions - the Federal Reserve's usual ability to support the economy by cutting interest rates - has already been overrun. The Fed has cut the rates it controls basically to zero, yet the economy is still in free fall.
It's no wonder, then, that most economic forecasts warn that in the absence of government action we're headed for a deep, prolonged slump. Some private analysts predict double-digit unemployment. The Congressional Budget Office is slightly more sanguine, but its director, nonetheless, recently warned that "absent a change in fiscal policy ... the shortfall in the nation's output relative to potential levels will be the largest - in duration and depth - since the Depression of the 1930s." Worst of all is the possibility that the economy will, as it did in the '30s, end up stuck in a prolonged deflationary trap.
We're already closer to outright deflation than at any point since the Great Depression. In particular, the private sector is experiencing widespread wage cuts for the first time since the 1930s, and there will be much more of that if the economy continues to weaken.
As the great American economist Irving Fisher pointed out almost 80 years ago, deflation, once started, tends to feed on itself. As dollar incomes fall in the face of a depressed economy, the burden of debt becomes harder to bear, while the expectation of further price declines discourages investment spending. These effects of deflation depress the economy further, which leads to more deflation, and so on.
And deflationary traps can go on for a long time. Japan experienced a "lost decade" of deflation and stagnation in the 1990s - and the only thing that let Japan escape from its trap was a global boom that boosted the nation's exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?
Would the Obama economic plan, if enacted, ensure that America won't have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that's why the efforts of Republicans to make the plan smaller and less effective - to turn it into little more than another round of Bush-style tax cuts - are so destructive.
So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next. It's time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation's future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.
Paul Krugman is professor of Economics and International Affairs at Princeton University and a regular columnist for The New York Times. On October 13, 2008, it was announced that Mr. Krugman would receive the Nobel Prize in Economics. He is the author of numerous books, including The Conscience of A Liberal, and his most recent, The Return of Depression Economics. © 2009 The New York Times
_____
Why Geithner Was Worse Than Daschle
by Donald L. Barlett & James B. Steele
February 4, 2009 | 8:44am
http://www.thedailybeast.com/blogs-and-stories/2009-02-04/why-geithner-was-worse-than-daschle
The Pulitzer Prize-winning reporting team—and authors of The Great American Tax Dodge—on the breakdown of America’s tax system—and why Timothy Geithner’s lapses were far more egregious than Tom Daschle’s.
The tax troubles of some of President Obama’s Cabinet nominees have exposed one of Washington’s dirty little secrets: Tax avoidance, error and fraud are out of control.
The terms "taxpayer error" and "taxpayer mistake" have become convenient ways to describe the complete breakdown of the American tax system. By our own rough estimate, as much as $600 billion—more than two-thirds of the government’s stimulus package—is lost each year as a result of tax fraud and avoidance.
Geithner actually acknowledged years ago that he owed the taxes—but didn’t pay them until he was nominated for
TheTreasury job. That hardly counts as a mistake.
But don’t look for Congress to order the IRS to begin collecting. For a quarter-century, lawmakers have toiled tirelessly to discourage enforcement of the Internal Revenue Code. Thomas F. Daschle and Treasury Secretary Timothy F. Geithner are the latest poster boys for the success of that campaign.
But their offenses were not equal. Despite the fact that Geithner sailed through the confirmation process—while Daschle went up in flames—Geithner’s tax troubles were actually far more egregious. People tend to give Geithner a pass, because the overall amount he owed was smaller and it just involved Social Security and Medicare, rather than income tax. But Geithner actually acknowledged years ago that he owed the taxes—but didn’t pay them until he was nominated for the Treasury job. That hardly counts as a mistake.
Daschle, for his part, failed to count as income the value of a car and driver he received from a New York private-equity firm, InterMedia Advisors, during 2005-2007. He also overstated charitable contributions and understated income from InterMedia, which paid him $1 million a year. Daschle filed amended tax returns last month reporting $128,203 in additional taxes and $11,964 in interest. The revised tax returns were submitted after President Obama announced that he intended to nominate Daschle to be secretary of Health and Human Services.
Geithner’s situation was nonetheless a bigger ethical lapse. As an employee of the International Monetary Fund in 2001 and later years, Geithner was responsible for sending a check to the IRS to cover his own payroll taxes. He didn’t do so. What he did do was submit a request to the IMF for reimbursement of those taxes. And he collected.
According to the Senate Finance Committee, Geithner “filled out, signed and submitted an annual tax-allowance request with the IMF that states, ‘I wish to apply for tax allowance of US federal and state income taxes and the difference between the ‘self-employed’ and ‘employed’ obligation of the US Social Security tax which I will pay on my Fund income.’” In other words, Geithner—now charged with making sure Americans obey the tax laws—was given money by his employer to pay his taxes, but then didn't pay them. Not until, that is, he decided to become Treasury secretary.
Geithner dismissed his actions as “careless mistakes.” Whatever the case, the “mistakes” were not detected until he was a candidate for the top job at Treasury. That’s when he paid, years late, $34,023 in self-employment taxes that he owed and $8,679 in interest, for a total of $42,702.
Tom Harkin, the Iowa senator, was one of only three Democrats disturbed enough to vote against Geithner’s confirmation. As he put it on the Senate floor: “How can Mr. Geithner speak with any credibility and authority as America’s chief tax-enforcement officer?”
Geithner has plenty of company. Hundreds of thousands of other Americans—quite likely several million—also are ignoring or avoiding their payroll-tax obligations. Their ranks have swelled as a result of the government’s outsourcing of contracts for the wars in Iraq and Afghanistan. But contract employees everywhere often are paid through companies operating abroad that do not withhold the taxes deducted from the paychecks of most working Americans. For its part, Congress has made sure that the IRS lacks the resources required to collect those taxes, as well as income taxes.
Beginning with the Reagan revolution in the 1980s, Congress deliberately stymied tax-law enforcement. It refused to authorize adequate funding. It slashed enforcement efforts. It killed effective programs in place since the 1960s, like the Taxpayer Compliance Measurement Program. Under that program, IRS subjected a select number of returns to intensive audits to determine the extent of taxpayer fraud and error so as to better allocate enforcement resources. But in 1995, after three decades, lawmakers finally marshaled enough support to terminate the TCMP audits. It did so by starving the agency for funds. In a related development, when lawmakers forced the canning of thousands of IRS agents, a jubilant Senator Charles E. Grassley, Iowa Republican, said that it would mean fewer “agents looking through your files.” In other words, taxpayers who cheated could continue to do so with impunity—at the expense of law-abiding citizens who paid the taxes they owed.
How bad is it? The giant Swiss bank UBS maintains secret accounts for 19,000 Americans who have failed to report their existence as required by law. Those accounts hold $18 billion.
The Swiss are resisting efforts to force disclosure. Even if the account holders are identified it would mean little. As longtime Washington tax lawyer and analyst Martin Lobel puts it, “nothing much is going to happen.” That’s because the IRS lacks the resources to pursue that many tax cases.
Donald L. Barlett and James B. Steele are contributing editors at Vanity Fair and have been writing about taxes for nearly four decades. Barlett and Steele have won virtually every major national journalism award including two Pulitzer Prizes and two National Magazine Awards. They are the authors of The Great American Tax Dodge, How Spiraling Fraud and Avoidance Are Killing Fairness, Destroying the Income Tax, and Costing You, and six other books.
See also Democracy Now for February 6, 2009:
http://www.democracynow.org/2009/2/6/investigative_duo_jim_steele_and_don
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February 6, 2009
Regulator Says Bailout Fund Is Misleading the Public
http://www.nytimes.com/2009/02/06/business/economy/06tarp.html?_r=1&sq=Bank%20Bailout&st=cse&scp=1&pagewanted=print
By REUTERS
WASHINGTON (Reuters) — Watchdogs monitoring the government’s bank bailout called for an overhaul Thursday, with one accusing those running it of misleading the public, while senators slammed the program as chaotic and poorly managed.
Under the $700 billion program meant to stabilize the financial system, the Treasury Department has so far spent nearly $300 billion to bolster financial institutions and automakers in exchange for preferred shares and warrants.
But in buying those securities, Henry M. Paulson Jr., then the Treasury secretary, misled the public about how it was going to price them, said Elizabeth Warren, a Harvard law professor and head of an oversight panel for the bailout, known as the Troubled Asset Relief Program, or TARP.
“Treasury simply did not do what it said it was doing,” Ms. Warren said at a hearing before the Senate banking committee. Many members of the panel condemned management of the program, which is barely four months old.
The program proceeded “in a chaotic, unorganized and ad hoc manner,” said Daniel K. Akaka, Democrat of Hawaii.
Neil M. Barofsky, another watchdog for the program, told the Senate committee his office was turning to criminal investigations. “That’s going to be a large focus of my office,” he said.
On projections by some analysts that TARP may need more money soon, Senator Evan Bayh, Democrat of Indiana, said, “There will be no additional funding for this program without airtight assurances that it will be better managed.”
The Obama administration plans to unveil a strategy on Monday aimed at reviving the credit markets, helping struggling homeowners and lifting the economy out of recession.
Tighter TARP management is expected to be a part of that package. A preview of that came Wednesday when the White House announced a $500,000 annual cap on executive pay at companies receiving TARP money.
The Bush administration began TARP in response to an alarming slowdown in global capital markets set off by a housing slump that undermined mortgage-backed bonds carried on the books of major financial institutions.
Congress approved the $700 billion program after Mr. Paulson said it would be used to buy broken bonds and clean off banks’ balance sheets. But days after that approval, Mr. Paulson changed the focus to buying preferred shares in banks.
Ms. Warren, head of TARP’s Congressional oversight panel, told the banking committee that after three months on the job, her panel was still not getting enough answers from Treasury. She described the bailout as “an opaque process at best.”
Ms. Warren said she plans to release a report on Friday that calculates Treasury put about $254 billion into financial institutions in 2008, but got only $176 billion in value.
“That’s a shortfall of about $78 billion,” she said, adding that Mr. Paulson “was not entirely candid” in his description of TARP’s bank capital injection program.
Mr. Barofsky, the independent TARP inspector general at Treasury, raised concerns about potential fraud in one of several programs financed by bailout money, the Federal Reserve’s Term Asset-Backed Loan Facility. “Treasury should consider requiring that some baseline fraud prevention standards be imposed,” Mr. Barofsky said in his first report to Congress.
He told the committee the government had collected more than $271 million in dividends from its TARP-financed bank shares and said the department needed a strategy for administering its holdings.
A Treasury spokesman said the department would adopt many of Mr. Barofsky’s recommendations.
Treasury holds $279.2 billion in preferred shares from 319 financial institutions, paying dividends of 5 to 10 percent, according to Mr. Barofsky’s report.
The government also received common stock warrants from 230 institutions, most of which are now out of the money. The largest positions in warrants include the American International Group, Bank of America, Citigroup and General Motors.
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Get back to basics, America
http://www.bakercityherald.com/Letters/Letters-to-the-editor-for-February-3-2009
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Can Spring Be Far Away? I Hope Not. . . .
Birders are spotting tundra swans and white-fronted geese across Oregon this last week. Spring is just around the corner--well almost.
Yellow-headed Blackbird, Celebrating Spring in Baker County
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Convict Bush & Cheney
http://www.afterdowningstreet.org/node/39585
Wednesday, February 4, 2009
Kitzhaber for National “Health Czar"
Ask Obama to appoint Governor John Kitzhaber, M.D. national “health czar"
I just asked President Obama to name former Oregon Governor John Kitzhaber, M.D. national “health czar.”
Here in Oregon, we care a lot about fixing our health care system. Thankfully, President Obama shares that passion for reform.
But the controversy surrounding Sen. Daschle has endangered the momentum of health reform. We can restore power to this mission by sending Gov. John Kitzhaber, M.D. to Washington as President Obama’s Health Czar.
Former Governor Kitzhaber is a national leader in health reform and is ideal for leading the transformation of America’s health care system.
Ask President Obama to name Governor Kitzhaber, M.D. national “health czar.” To send your message, go to:
http://OnwardOregon.org/czar
GOV. KITZHABER, M.D. IS THE PERFECT FIT FOR HEALTH CZAR
You can watch a short video of Gov. Kitzhaber on health reform here:
http://www.wecandobetter.org/what-we-seek-to-do
From his experience as an emergency-room-trained physician, state legislator and governor, John Kitzhaber understands the true nature of the broken system, and what it will take for us to address the problems at hand.
He believes we need a health system designed to maximize the health of Americans; we can’t just look for more money to finance our current broken system. He has a vision for a new health system with three simple goals:
1. Improve the overall health of the population
2. Reduce the per-person cost of health care
3. Improve the individual patient experience in terms of clinical outcome, patient safety and patient satisfaction.
Let President Obama know that Gov. Kitzhaber, M.D. is who the nation needs for health reform.
You can read John Kitzhaber’s views on health reform in his blog:
http://www.wecandobetter.org/Kitzhabers_Blog
Enceliopsis nudicaulis, The Great, Great Basin, Millard County, Utah
I just asked President Obama to name former Oregon Governor John Kitzhaber, M.D. national “health czar.”
Here in Oregon, we care a lot about fixing our health care system. Thankfully, President Obama shares that passion for reform.
But the controversy surrounding Sen. Daschle has endangered the momentum of health reform. We can restore power to this mission by sending Gov. John Kitzhaber, M.D. to Washington as President Obama’s Health Czar.
Former Governor Kitzhaber is a national leader in health reform and is ideal for leading the transformation of America’s health care system.
Ask President Obama to name Governor Kitzhaber, M.D. national “health czar.” To send your message, go to:
http://OnwardOregon.org/czar
GOV. KITZHABER, M.D. IS THE PERFECT FIT FOR HEALTH CZAR
You can watch a short video of Gov. Kitzhaber on health reform here:
http://www.wecandobetter.org/what-we-seek-to-do
From his experience as an emergency-room-trained physician, state legislator and governor, John Kitzhaber understands the true nature of the broken system, and what it will take for us to address the problems at hand.
He believes we need a health system designed to maximize the health of Americans; we can’t just look for more money to finance our current broken system. He has a vision for a new health system with three simple goals:
1. Improve the overall health of the population
2. Reduce the per-person cost of health care
3. Improve the individual patient experience in terms of clinical outcome, patient safety and patient satisfaction.
Let President Obama know that Gov. Kitzhaber, M.D. is who the nation needs for health reform.
You can read John Kitzhaber’s views on health reform in his blog:
http://www.wecandobetter.org/Kitzhabers_Blog
Enceliopsis nudicaulis, The Great, Great Basin, Millard County, Utah
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