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Posts Tagged ‘labor unions’



Taxes, Class Warfare and eMeg’s Vast Fortune

Wednesday, October 20th, 2010

Faced with Jerry Brown’s intensifying attacks on her call to end California’s tax on capital gains, Meg Whitman has responded with one of the hoariest political lines in the Republican campaign play book: the Democratic nominee, she says, is engaging in “class warfare.”

Whitman argues that her capital gains proposal, which would eliminate state taxation on sales of stocks, bonds, real estate and other assets, would jump start California’s economy, by keeping the profits from such transactions in the hands of investors, who would channel the money into starting and sustaining businesses, thereby creating jobs.

Brown argues, however, that the tax cut not only would blow a $5 billion hole in a state budget already wracked with huge deficits, but also would prove beneficial only to the very wealthy, including Whitman herself.

In the days since their final debate, when Brown repeatedly charged the big winners with the tax cut would be Whitman and “her billionaire friends,” the “class warfare” meme has been sounded and echoed in quick succession by Whitman spokesmen, by the state party and by the candidate herself, at a Monday appearance in Southern California.

The fact that I would run for governor to enrich myself is ridiculous – all you have to do is to look at how much money I have spent versus how much money I would save. He is so off-base on this. It’s a political stunt. It’s class warfare.

Well and good, but inquiring minds want to know: Why does “class warfare” always only go in one direction?

For Whitman and her allies, taxing profits of investors and the wealthy, in essence, is a wrong-headed, socialist, economic redistributionist notion that strikes at the most fundamental values of American capitalism.

Yet they never portray their own, constant, fierce and unbridled attacks on unions as “class warfare,” no doubt because they are the most selfless of citizens — “I refuse to let California fail” — whose beef with labor represents nothing more than high-minded, good government reform, which they embrace solely for the most civic-minded of motives.

Whitman mocks Brown as “crazy” for even suggesting that economic self- interest might help explain the great personal favor she’s done all of us by deigning to run for governor; after all, Meg notes, she and Griff might only net $15 million a year as a result of her proposed tax cut – a mere bagatelle.

What person in their right mind would spend $140 million to run for governor to save $15 million? I mean it just shows Jerry Brown does not understand math.

How about some Calbuzz math:

According to an in-depth study by our Department of Investment Risk Management Modeling and Abacus Repair, $15 million a year on a one-time investment of $140 million works out to a 10.7% annual rate of return, most likely more than Our Meg could make anywhere outside of those early-peek IPOs she got the inside track on over at Goldman Sachs.

Qui bono capital gains: Despite eMeg’s distaste for “class warfare,” a look at the numbers clearly shows that it is precisely her economic class – the wealthiest 1% of taxpayers – who would reap the outsize benefits of her tax cut proposal. As Michael Hiltzik, the Pulitzer Prize-winning economics columnist for the by-God L.A. Times, has noted:

The real problem with this proposal is that it looks like a pure handout, and a costly one, to the wealthy, a group that includes the billionaire Whitman herself. In 2008, according to figures from the Franchise Tax Board, more than 82% of the $56 billion in capital gains earned by California residents were reported by the top 1% of income earners (those touching about $500,000 or more).

And this, from Hiltzik’s colleague, the redoubtable George Skelton:

Who pays the (capital gains) tax?

–People with adjusted gross incomes exceeding $500,000 pay 82% of the total capital gains tax. For them 38% of their earnings comes from investment profits.

–These $500,000-plus earners amount to only 1% of taxpayers – or about 150,000 returns – but provide 48% of the total personal income tax.

–-People with more than $200,000 in adjusted gross incomes – 4.4% of filers – provide 93% of the capital gains tax.

Whitman says that eliminating the tax would “spur innovation, which we have to own in California.” But, I note, many people realize investment profits merely by buying and selling stock. That hardly induces innovation.

Still, eMeg stands aghast at the shocking suggestion of “class warfare,” though she never hesitates for a second to demonize as “labor bosses” public school teachers who knock down 60 grand, or thinks twice about bashing some poor shlub living on a $25,000 pension after 30 years of mopping floors at the DMV office for “sucking up taxpayer funds.”

How rich is eMeg? Fortune magazine, which just released its annual compilation of the 400 richest individuals in America, pegs Whitman as the 332nd wealthiest person in the nation, with a net worth of $1.2 billion.

Among the 400, there are 84 people who live in California – about 21% of the total – and Whitman sits near the bottom of that list, which makes the wannabe governor only the 74th richest citizen of the oh-so-Golden State.

These 400 people, who represent 0.0000012% of the country’s population,  control about 2.5 percent of its wealth – about $1.5 trillion; thus the Fortune 400 control only slightly less wealth than the $1.6 trillion held by the bottom half of the U.S. population, no doubt most of them avaricious public employees with outrageous salaries and benefits.

Of course, it must be noted that Meg’s cohort of 400 is just the crème de la crème of the upper 1% of taxpayers who have made out like bandits prospered disproportionately over the past decade. Washpost columnist Steven Pearlstein writes:

By 2007, the top 1 percent of households took home 23 percent of the national income after a 15-year run in which they captured more than half – yes, you read that right, more than half – of the country’s economic growth. As Tim Noah noted recently in a wonderful series of articles in Slate, that’s the kind of income distribution you’d associate with a banana republic or a sub-Saharan kleptocracy, not the world’s oldest democracy and wealthiest market economy.

Put another way, as the Center on Budget and Policy Priorities did in boiling down the same economic trends in a 2009 report:

Two-thirds of the nation’s total income gains from 2002 to 2007 flowed to the top 1 percent of U.S. households, and that top 1 percent held a larger share of income in 2007 than at any time since 1928, according to an analysis of newly released IRS data by economists Thomas Piketty and Emmanuel Saez.

During those years, the Piketty-Saez data also show, the inflation-adjusted income of the top 1 percent of households grew more than ten times faster than the income of the bottom 90 percent of households…

The last time such a large share of the income gain during an expansion went to the top 1 percent of households – and such a small share went to the bottom 90 percent of households – was in the 1920s.

1928 – now that was a helluva’ year.

Why it matters: All this talk of class warfare – the horror, the horror! — would be little more than fodder for Marxist whining sessions or kvetching by petty and jealous-minded souls who lack the innovative imagination, spirit and perseverance needed to make themselves fabulously wealthy in the entrepreneurial manner of, say, Calbuzz, a privately-held partnership, plenty of free parking.

Turns out, however, there are some practical reasons that this wealth concentration business is a real bummer, even for those of us who long ago left behind their obsession with dialectical materialism. Pearlstein again:

There are moral and political reasons for caring about this dramatic skewing of income, which in the real world leads to a similar skewing of opportunity, social standing and political power. But there is also an important economic reason. Too much inequality, just like too little, appears to reduce global competitiveness and long-term growth, at least in developed countries like ours…

The biggest problem with runaway inequality…is that it undermines the unity of purpose necessary for any firm, or any nation to thrive. People don’t work hard, take risks and make sacrifices if they think the rewards will all flow to others. Conservative Republicans use this argument all the time in trying to justify lower tax rates for wealth earners and investors, but they choose to ignore it when it comes to the income of everyone else.

It’s no coincidence that polarization of income distribution in the United States coincides with a polarization of the political process. Just as income inequality has eroded any sense that we are all in this together, it has also eroded the political consensus necessary for effective government…

Political candidates may not be talking about income inequality during this election, but it is the unspoken issue that underlies all the others.

And thank you for that.

Happy Labor Day: Meyer, Krusty & the Unions

Sunday, September 5th, 2010

Asked once what he wanted for trade unionists, Samuel Gompers, the founder and first president of the American Labor Federation, is said to have replied: “More.”

His terse answer serves as a one-word Rorschach test for sorting out the conflicting perspectives about unions held by the political forces now arrayed in California’s campaign for governor.

For billionaire Republican nominee Meg Whitman and her corporate allies in the California Chamber of Commerce, it is the insatiable greed for taxpayer dollars by public employee unions that is the fundamental cause of most of the dysfunction and financial distress that afflicts California and its government.

For the members and leaders of those unions, however, Gompers’  pronouncement is simply a guideline for social justice and equality, an effective way to ensure that working people get a fair share of wealth in a world where, as Gompers put it, “the man who has his millions will want everything he can lay his hands on and then raise his voice against the poor devil who wants ten cents more a day.”

And for Democratic candidate Jerry Brown, “more” no doubt describes his hope of what will be forthcoming for him from labor in the final two months of the campaign. As wunderkind Calbuzzer cartoonist Tom Meyer observes today, the union salad bowl (and its $10 million in lettuce) that sustained Brown’s candidacy through the summer, as Whitman bashed him with $24 million of TV ads is unfortunately empty, at least for now.

As Brown prepares to launch his campaign (finally!) with a tour of big Labor Day events around the state, however, he’s no doubt mindful that eMeg has many mega-bucks more to drop on his head before Nov. 2. So he must fervently wish there’ll be lots more green union salad coming his way before long.

This week’s Calbuzz Little Pulitzers:

The Francis Pharcellus Church Award  for Editorial Writing to the Fresno Bee for its sharp-eyed attack on Senator Dianne Feinstein’s below-the-radar  effort to stop Calbuzz redefine the First Amendment.

The Grantland Rice Award for Profound Sports Writing to law student Josh Fisher, whose Dodger Divorce blog is by far the most comprehensive, timely and intelligent reporting and commentary on the big league divorce trial of Frank and Jamie McCourt, the shameless social climbing owners of the Dodgers who have spent far more money on lawyers than on players, the outcome of which will determine the future of the franchise. Giants fans say: Go Frank!

The Walter Lippmann Award for Elite Opinion Mongering to the Washpost’s E.J. Dionne for his latest analysis of how Obama screwed the pooch through his disdain for politicking.

The Truman Capote Award for Fiction/Nonfiction – What’s the Big Difference? — Reporting to Michael Joseph Gross for his Sarah Palin profile in Vanity Fair,  which triggered a frightful journalistic row about accuracy and sourcing and led herself to accuse him of being “limp” and “impotent,” which next resulted in Palin being accused of being a gay-baiting homophobe.

The Nellie Bly Award for Investigative Blogging to Torey “Don’t Call Me Dutch” Van Oot for reporting out the efforts of legislative Democrats to throw big bucks behind their cynical and sneaky effort to take back control of reapportionment from the citizen’s commission approved by voters just two years ago.

Final word for Labor Day

The fight is never about grapes or lettuce. It is always about people.

Q&A with Mickey; Babs v Carly; Team Krusty Forming

Thursday, June 3rd, 2010

The best thing about Mickey Kaus’s hopeless bid for the U.S. Senate is that he’s the only candidate we’ve ever met who talks down expectations about his own chances. A contrarian counterintuitive (reverse those words? -ed.) Mr. Crankypants Kaus is a pioneering practitioner of online political journalism who is breaking new ground — the first Californian ever to carry the ballot designation of “blogger.” Seeing a cheap opportunity to squeeze into the footnotes of media history books, Calbuzz asked him five questions about his primary challenge to Barbara Boxer

1. What’s the over-under on your final percentage of the vote in the Dem primary?

My friend Jill Stewart of L.A. Weekly bet a friend dinner that I wouldn’t top 5%. But I don’t want to set expectations that high. I’d say anything over 3% is a startling rebuke of Barbara Boxer’s lockstep Democratic orthodoxy. Every vote for me makes that point. I don’t have to win to win.

2. What’s your beef with public employees getting good benefits and pensions?

I have no beef with good benefits and pensions. But, as Willie Brown said, the deal was always that public employees traded a bit of pay for security. Now they have the security plus more pay than the private sector. Many can retire in their 50s at more than they made working.  We need to restore a balance and not just spend more and more tax money on the same employees while cutting service to the public. Democrats are the party of government–we’re the ones who need to make it work at a price we can afford.

3. As a Senator, what specific steps would you push for the government to “secure the border”? Finish the dang fence?

Yes, I’d build the actual, physical fence–not the failed “virtual” fence promoted by those who opposed a physical fence. Physical fences work. We also need a) wide adoption of a system for verifying the legal status of new hires; b) stiff sanctions against employers who skirt the law; c) a system for tracking visa overstays; d) greater avenues for legal immigration, including immigration from Mexico. And we need to stop talking about amnesty until we’re sure all these things work.

4. It is alleged you believe that the Democratic Party is in the thrall of labor unions. How do you respond?

Guilty as charged. Every reporter I’ve talked to thinks the unions basically own the state party. That’s why we don’t get Obama’s “race-to-the-top” education money — teachers’ unions block reform. It’s why pension costs are threatening to bankrupt us. It’s why we bailed out the UAW without asking much sacrifice, and why the party still pursues the doomed, unpopular, bad idea of letting unions organize a workplace without a secret ballot.

5. You bear a heavy responsibility as the first person in California history to carry the ballot label of “blogger.” Has running for office been everything you dreamed?

I’ll have a better perspective on June 9. The idea was to make a point, not have a great time. It’s been hard work with some big rewards. I’ve been treated fairly, so far, by all sorts of people I was worried would be underhanded. Every time I talk to actual voters, it’s been great — especially voters who argue back. Starting arguments is the idea. I learn every day, even from the annoying ”friends” who say “you’re doing this all wrong.” Mass rallies with thousands cheering … well, they haven’t really happened for anyone, have they? There’s a week left! I’m not peaking too soon.

These two teams just don’t like each other: With Tom Campbell’s campaign apparently collapsing near the finish line, GOP Senate front-runner Carly Fiorina decided to jump start the general election race Tuesday.

Hurricane Carly threw a quick right elbow with the e-blast release of a TV ad attacking Senator Barbara Boxer as soft on terrorism; just 57 minutes later, however, Team Babs hit back with a tough 2,082 word rapid response bashing Fiorina over a host of issues, including one of our personal favorites, Hewlett Packard’s controversial third-party sales to Iran during her tenure as CEO.

Cowardly Fiorina handlers refused to provide details of their purported ad buy, which they claimed was “significant and statewide.” The spot features Carly, full face to the camera, mocking a brief 2007 news clip of Boxer saying that climate change is “one of the very important national security issues we face.”

“Terrorism kills and Barbara Boxer’s worried about the weather?” sez Carly.

Not a bad line, but as Boxer World quickly noted, the CIA last fall set up a center to investigate the interlocking problems of global warming and political instability around the world, a concern sounded publicly by a pack of military, national security and spook types.

“Fiorina obviously isn’t aware that in October 2009, the CIA established a Center for the Study of Climate Change and National Security,” sniffed Boxer, in her tome-sized counter-punch.

Woo hoo! Only 153 days until the election!

Dudley still doomed: As for Campbell, the favored candidate of editorial boards everywhere, we forecast two weeks ago that the combination of Fiorina’s late-breaking move to the wallet, and the host of independent expenditure attacks he was enduring, would position Carly to crack it open down the stretch.

With the new L.A. Times poll showing she apparently has done just that, it looks like Campbell’s chronically anemic fund-raising has now gone on total life support, as he pulled all his final week TV ads and announced his determination to win the campaign with phone calls and email. Good luck with that.

UPDATE 6 AM Thursday: Politico says Campbell is going back on the air with an ad that makes his best argument: That only he among the GOP candidates for Senate, can actually beat Barbara Boxer. We’ll see how much money Dudley has scraped together to make the case on TV. He’d need a few million, at least, we suspect.

United Front for Brown Forming: California Working Families 2010 — the pro-Jerry Brown independent group that already includes the California Professional Firefighters, the State Building and Construction Trades Council of California, SEIU California State Council, the Professional Engineers in California Government — today is expected to announce that they’re being joined by the Democratic Governors Association and its California Accountability Project.

That puts Emily DeRose of the DGA on the field for Brown, along with CAWF’s Roger Salazar. Level the Playing Field, with the likes of Ace Smith and Chris Lehane,  also has been active in the pro-Jerry-anti-Meg universe> But it’s beginning to look like CAWF is the Big Dog.

Of course, we don’t know yet what heaters like the California Teachers Association and California Correctional Peace Officers Association plan to do in the governor’s race. If anything.