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Posts Tagged ‘Slate’



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.

Swap Meet: Drugs, Money & the Underwear Bandit

Saturday, July 24th, 2010

Today Calbuzzard and Chief Editorial Pen Stabber Tom Meyer buzz kills the state Democratic party which, for reasons that remain hazy, made a hash of their chance last weekend to endorse the Prop. 19 initiative to legalize pot.

Following the half-baked example of Bill Clinton, members of the party’s executive committee wasted the political advice of chairman John Burton, who suggested their support would turn on the key cohort of younger voters.

Instead they honored the joint wishes of the Dem’s geezer headliners, would-be governor Jerry Brown and Senator Barbara Boxer, who found the idea a total bummer.

Call now while supplies last: Calbuzzers interested in owning a full color print of a Meyer cartoon can email Tom at tom@meyertoons.com .

Hits and misses: If there’s one thing that makes our blood boil, it’s the legions of adolescent journalists who find it amusing to make puerile jokes about the burning issues raised by Prop. 19.

That’s why we were delighted to learn that Slate has launched “Cash Crop,” a new blog focused on the serious business and political economy issues of marijuana, written by Bay Area journalist Dan Mitchell:

Over the past few months, whenever I’ve told people about my idea for a blog covering the business and political economy of marijuana, I’ve gotten one of two responses: They either said it was a great idea or they put on their best stoner accent and said something along the lines of “Ohhh, duuuuude. That sounds bitchin’.”

… the different responses highlight what I think could be a major challenge—making people realize that neither this blog nor the subject it covers is a lark or a joke. Though I will always try to make it fun, Cash Crop is a serious blog about a serious business.

How serious? Marijuana is one of the top cash crops in the United States (by some measures it is the top cash crop). So why is there so little coverage of this business, as a business? Consider that California is veritably peppered with medical-marijuana facilities, as other states increasingly are. Or consider that marijuana sales generate about $15 billion of revenue a year in California alone—twice as much as the state’s dairy industry.

eMeg’s not a candidate, she’s a trend: When last we saw NY Timesman Michael Luo, he was exposing the $1 million sweetheart deal Mike Murphy scored with the eMeg Empire; now comes Luo, with colleague Damien Cave, to offer the first quantitative analysis of the growing trend of zillionaires running for office:

Call it the Great Recession paradox. Even as voters express outrage at the insider culture of big bailouts and bonuses, their search for political saviors has led them to this: a growing crowd of über-rich candidates, comfortable in boardrooms and country clubs, spending a fortune to remake themselves into populist insurgents…

Through just the second quarter of the year, at least 42 House and Senate candidates — 7 Democrats and 35 Republicans — in 23 states had already donated $500,000 or more of their own money to their campaigns, according to the most recent data available from the Center for Responsive Politics. That list does not even include governors’ races, and the roster promises to grow as the campaign season progresses and spending escalates.

Impressive numbers at first glance, but consider: if each of the 49 congressional candidates cited as spending at least $500K of their own cash actually spent $1 million each, it would be only half of what Our Meg has already forked out on her own, for what communications director Tucker Bounds likes to call the “movement” backing her play for governor.

All power to the people!

Press Clips: Josh Richman deserves combat pay just for staying awake – but came back with all you need to know about the Prop. 23 debate.

Eric Alterman’s door stop piece on why we can’t have a progressive president is worth the two weeks it takes to read.

Who ducked the media first – the chickens or the Meg?

Wonder how David Brooks knows so much about narcissism?

Krauthammer does too!

Jon Meacham gets his swirl on: Why Newsweek is failing, Chapter 37.

Don’t try walking home drunk alert: surrealistic sidewalks.

Today’s sign the end of civilization is near: Oklahoma, OK!

Press Clips: Lights! Action! Camera! Bribery! News?

Friday, July 16th, 2010

We don’t know if Michael Luo of the New York Times was just idly rooting around in Meg Whitman’s 19-page FPPC Form 700 financial disclosure when he just happened to stumble across an investment of more than $1 million in “Tools Down! Productions” and knew “ah ha!”  – that’s political consultant Mike Murphy’s Hollywood production company.

Or maybe somebody who doesn’t like Whitman and/or Murphy decided to point Luo in the right direction or slipped him the paperwork. Either way, it’s a good story and since we have a pdf of the actual document in hand (you can’t get it online), we know it’s true:

Right there on page 9, “Tools Down! Productions, Inc c/o Aaron Zimmer, Singer Burke & Co., 6345 Balboa Blvd, Building 4, Suite 375, Encino, CA 91316” a ”Partnership Stock” investment in “Entertainment Production” valued “Over $1,000,000.”

That’s MORE than $1 million, Calbuzzers. Sandwiched between investments in  Magellan Midstream Holdings LP and Abaca Technology Corp. just where you’d expect to find it.

Although some in the news media have been quick to kiss this deal off as totally legal and out of reach of scandal, there remains one question that we probably will never get a real answer to: Was this, on Whitman’s part, a political expenditure disguised as a business investment?

Sure it looks like Whitman, um, bribed Murphy to either stay away from Steve Poizner’s campaign or sign on to hers. But Murphy’s a private citizen. He can – and does – sell his services to the highest bidder. More power to him.

Whitman, on the other hand, has to follow certain rules. She can’t (ethically or legally) pay a retainer or a fee to a political consultant out of her private funds and not count that as a political expenditure made in pursuit of the office she’s seeking.

We don’t know what you might call the actual facts that could shine a light on that issue. We don’t even know how much the total “investment” was. Was it more or less, for example than the “More than $1,000,000” eMeg listed in two different Goldman Sachs Distressed Opportunities Funds?

Of course, not knowing all the facts has little effect on handlers for Whitman’s opponent, Jerry Brown. “By all accounts it was a political payoff masquerading as a so-called legitimate business investment,” said Brown campaign manager Steve Glazer after we goaded him.

“Murphy should disclose his other investors and whether the payment was reported on his income taxes . . .  It’s possible she paid it from one of her Cayman Island accounts,” Glazer added.

Murph’s only on-the-record comment to us was, “I’m absolutely not commenting on this.”

Oil spill, what oil spill? It was Hall of Fame blogger and erstwhile Senate candidate Mickey Kaus who coined the term “Feiler Faster Thesis” to describe the way that online age politics is changing as people learn to process information ever-faster, to keep up with the speed at which information now moves. Kaus in 2000 propounded the thesis based on an idea from writer Bruce Feiler to argue that the whole notion of “momentum” in campaigns is woefully out of date.

The news cycle is much faster these days, thanks to 24-hour cable, the Web, a metastasized pundit caste constantly searching for new angles, etc. As a result, politics is able to move much faster, too, as our democracy learns to process more information in a shorter period and to process it comfortably at this faster pace. Charges and countercharges fly faster, candidates’ fortunes rise and fall faster, etc.

A few years later, he boiled it down further:

The FFT, remember, doesn’t say that information moves with breathtaking speed these days. (Everyone knows that!) The FFT says that people are comfortable processing that information with what seems like breathtaking speed. [emphasis in the original]

The FFT came to mind Friday, when we read a report from the Washpost’s hypercaffeineated Chris Cillizza noting that the Deepwater Horizon oil disaster, which preoccupied TV and cable news for weeks, is quickly fading as an issue, even as the company and government continue frantic efforts to contain and cleanup the millions of gallons of oil erupting from the bottom of the Gulf of Mexico.

Asked to name the most important problem facing the country, just seven percent of respondents in the July Gallup poll said “natural disaster response/relief” — a major drop off from the 18 percent who said the same in June. (In Gallup’s May poll, just one percent named “natural disaster response” as the most important problem in the country.)

“Americans’ reduced likelihood to see the spill as the top problem could reflect the reality that the spill is no longer ‘new’ news or perhaps that Americans are becoming more confident that they spill will be fixed,” wrote Gallup poll director Frank Newport in a memo detailing the results.

Given their current sorry state, any Democrats desperate for any shred of good news may look to the FFT for hope that fast-moving, and so far unforeseen, events might yet alter the political landscape before they have to face cranky voters.

As dismal as things look for the Dems, amid the current conventional wisdom forecasting a wipe-out and possible loss of the House, cooler head prognosticators and pundits, like NBC political director Chuck Todd, don’t see how the numbers work for the Republicans to take over control.

P.S. After leaving Slate for his quixotic challenge to Barbara Boxer, Kaus has been writing on his campaign site, but says he’s mulling several, no doubt lucrative, alternatives (better get in line!) for where his blog lands next.

But what about the little guy: As eMeg dithers about which of the countless proposals she should accept to debate Jerry Brown, both of them  should summon the courage to show up at a big August event in Ventura County where they can talk to hundreds of real people from around California who are living and working on the front lines of the recession. Timm Herdt of the VenCo Star reports that:

Organizers intend to call it a “shared prosperity forum,” but the precise name they have in mind is a little longer: The 2010 California Shared Prosperity Gubernatorial Candidates Forum.

Whether they can actually call it all that, of course, depends on the two major party candidates for governor, Democrat Jerry Brown and Republican Meg Whitman. If one or both accepts, the governor’s forum is on. If not, well, there’s a Plan B….

Executive director Marcos Vargas tells me that a broad range of groups from the San Francisco Bay Area to San Diego, groups representing low-wage workers, immigrants and seniors, have agreed to attend. A number of those groups, such as the Korean Resource Center in Los Angeles, are part of a statewide coalition called Mobilize the Immigrant Vote.

It is Vargas’ vision that the event could be a refreshing change from the sort of staged town-hall meetings that pass for dialogue between candidates and voters these days.

Refreshing indeed.

Today’s sign the end of civilization is near: Roaring Virile Fire Disturbs Social Order.

Fishwrap: This Just In from Krusty, eMeg & Babs

Friday, July 9th, 2010

We wish we’d said that: Calbuzz felt verdant with envy at reading the nice perceptual scoop that Christiana Bellantoni posted on Talking Points Memo, which drew a parallel between the strategy and tactics of Meg Whitman’s zillion dollar campaign for governor and Barack Obama’s technologically groundbreaking operation in 2008.

Yeah, yeah, we know eMeg ain’t exactly in Obama’s class when it comes to public speaking, much preferring a crisp three-bullet Power Point approach when it comes to world class oratory; nor do we see too many folks fainting or leaping from their chairs to shout “Fired up – ready to go” when Her Megness hits the closing chords of the eight millionth delivery of her somnolent stump speech.

But Bellantoni’s yarn (graphic stolen shamelessly from TPM) –  “Meg Whitman Copies ‘Obama Playbook’ in Pursuit of her California Dreams” — did a swell job of finding a story hiding in plain sight. She drew together strands of reporting about the mechanics of the Whitman operation that have been produced, variously, by Ken McLaughlin, Jack Chang and, uh, us into an analysis of the race that casts eMeg as the high-tech candidate of change and Jerry Brown as, well, John McCain.

The Democratic take on Whitman being a 2010 version of Barack Obama? “In her dreams,” they say. And of course, much of Obama’s success had to do with the candidate’s own popularity and appeal. Obama was a young, African-American senator who represented generational change and used technology to mass finance much of his campaign. Whitman is a middle-aged former tech CEO who’s already self-financed her campaign to the tune of almost $100 million. But plenty of the building blocks and strategies of the Obama ’08 effort can be copied. And Whitman seems to be trying to duplicate pretty much all of them.

Krusty McCain: Her Obama-McCain take, while flawed, certainly resonated on Thursday, when Team Whitman rolled out a big new Spanish language outdoor advertising program to keep pressing her aggressive bid for Latino voters, while Brown responded by surrounding himself with a bunch of Hispanic pols and hacks who complained that she’s shading the truth about her stance on illegal immigration.

Sample remark, from U.S. Rep Xavier Becerra: “Jerry Brown broke bread with Cesar Chavez.  His opponent breaks bread with Pete Wilson [aka in Mexico City 1999 "Hijo de Puta"]

“Leaders are quite chagrined and shocked at the way the Whitman campaign can say one thing in English which is very hostile to the Latino community and then take out billboards and ads and make it sound like she was fighting Pete Wilson and Prop. 187 when in truth she wasn’t even here in the state of California,” Brown said.

Brown does have a point about eMeg’s claim that she opposed Prop. 187, seeing as how she lived in Massachusetts when the measure was on the ballot, wasn’t even a voter and has since agreed with fundamental aspects of it, to wit: Illegal immigrants should not expect benefits from the state of California. No driver’s license and no admission to state-funded institutions of higher education.

But hey, despite her casual relationship with true facts, at least she’s reaching out to Latinos. We’re still waiting to see Brown actually break a sweat in search of Latino votes.

He hit me, he hit me: Since the start of the World Cup, Slate has been running a terrific feature called “Dive of the Day,” which presents video of the top flop by a player who falls to the ground in fake distress,  taking the slightest hint of contact as an opportunity to roll around, grab his limbs and contort his face in horror, all in an  effort to convince the ref he’s been fouled. (Good examples are herehere and here ).

As Dave Eggers wonderfully described it, diving is:

…essentially a combination of acting, lying, begging, and cheating, and these four behaviors make for an unappealing mix. The sheer theatricality of flopping is distasteful, as is the slow-motion way the chicanery unfolds….Go and do the grocery shopping and perhaps open a new money-market account at the bank, and when you return, our flopper will still be on the ground, holding his shin, his head thrown back in mock-agony. It’s disgusting, all of it, particularly because, just as all of this fakery takes a good deal of time and melodrama to put over, the next step is so fast that special cameras are needed to capture it. Once the referees have decided either to issue a penalty or not to our Fakey McChumpland, he will jump up, suddenly and spectacularly uninjured—excelsior!—and will kick the ball over to his teammate and move on.

The melodramatic element of diving, in particular, came to mind when we received a communiqué from Her Megness, complaining that Jerry Brown and his allies were spending too much money on TV ads that are unkind to her.

Whitman media buyer Kyle Roberts sent a memo to campaign reporters whining about the sheer unfairness of it all:

Jerry Brown Incorporated continues its spending on attack ads against the Meg Whitman for Governor Campaign. To date, Jerry Brown Inc. which consists of union backed California Working Families, Level the Playing Field, the California Democratic Party and Jerry Brown 2010 have spent $6.6 million in advertising on broadcast, cable TV and radio. Of the $6.6 million, approximately $1 million has been spent on positive (pro-Jerry Brown ads) leaving $5.6 million in negative attack ads.

…it is quite clear that if Jerry Brown Inc. continues to double its spending and attack Meg Whitman at this level, it will be necessary for Meg Whitman to continue to defend herself from these attacks in order to ensure a competitive position for the General Election.

The mind boggles.

Putting aside the facts that 1) eMEg spends $5.6 million before lunch and 2) she went on the air for about 12 seconds with a positive spot before starting to air an anti-Brown ad portraying him as a cross between Jerry Rubin and Jerry Garcia, the sheer audacity of a) Team eMeg unctuously complaining about someone else’s spending on TV ads and b) gussying up their complaint to justify even more – “Well, I guess we have no choice but to throw another $100 million in the pot, Mike” – would be breathtaking, if it wasn’t so hilarious.

The refs say: No foul. Get up and keep playin’, Meg.

And don’t call me chief! Senator Barbara Boxer has been beaten up for over a year for the infamous You Tube moment when she upbraided Brigadier General Michael Walsh in the course of a hearing before her Environment and Public Works Committee for addressing her as “ma’am” rather than as “Senator.”

By now, Boxer’s huffy snit of petty arrogance has become an iconic image for her legions of political enemies, who find in the brief exchange with General Walsh personification of all the condescending,  Chardonnay liberal elitist values which they can’t abide.

Given that we’ve mentioned the episode, oh, once or twice, we thought it only sporting that, given a chance to talk to her the other night, we should ask her the key question that’s so long troubled us about the matter: WTF was that all about ?

Our query came at the end of a long  campaign day for Boxer and, when we raised it, she shot a hard look, as if calculating how quickly she could kick open the door of the van and push us out, somersaulting along the highway at a high rate of speed. To her credit, she quickly suppressed any sign of crankiness and offered this explanation:

I really wasn’t trying to make a point. We were going back and forth in the hearing, and I was calling him “General” and he was calling me “ma’am” and I just thought we should both use our formal titles.

For the record, Boxer also said she called Walsh after the hearing to check in and he told her, no worries. So there you have it, exclusive to Calbuzz.

Today’s sign the end of civilization is near: Lindsay Lohan channels Clarence Darrow.