Smackdown! McConnell’s other plan B for the debt ceiling? [The Arena].

Mitch McConnell: Houston… we have a problem [The Arena].

With Democrats like Ben Chandler, who needs Republicans? [The Arena].

Mitch, saying the sky is green doesn’t make it so [The Arena].

McConnell has a Wile E. Coyote moment [The Arena].

Every year America’s government loses $90 billion to off shore corporate tax avoidance schemes¹ based on totally abusing transfer pricing laws. These schemes are well enough known and documented to have fancy names like the “Double Irish”.² This transaction involves three foreign subsidiaries, two of which have no employees and no office, and one of which, in finance parlance, is called the “Dutch Sandwich”.  In Healthcare debate terms that is a budget busting $900 billion tax shelter.

The downside to the companies that employ these schemes is that they end up with billions of dollars marooned outside the country. If they bring it in it gets taxed at 35% like it should have been in the first place. Well, that’s not entirely true. Companies can deduct the taxes they paid to countries like Ireland and Bermuda while they were cheating.

That 35% (less the 12% Ireland got and whatever percent Bermuda got) is why the companies that employ these swindles (Including Cisco and “Don’t Be Evil” Google) are lobbying for a tax holiday.  They would like to complete their heist so they can actually have the money they sent around the world to avoid paying their fair share of taxes on.

It’s obvious why companies would want to do this. But why should we as citizens and taxpayers?  The argument is that all this money would be like a stimulus package the government didn’t have to pay for (except for the third of it the government would give up in taxes). With all this money corporations could invest at home and create jobs.

There are two problems with this argument. The first is that when this was done in 2004, while companies brought back $315 billion they didn’t use it to invest in anything that creates jobs. Almost all of it was used to buy their own stock back. In fact, Hewlett Packard brought back $4 billion in almost tax free profit while they were laying off 14,000 employees³.

The second problem is that US corporations are sitting on a record $1.9 trillion in cash⁴ already. Access to cash is not what is keeping companies from investing at home and creating jobs. The whole reason all our supply side recession fighting programs aren’t working is because we don’t have a supply side problem. We have a demand side problem. Nobody can afford to buy the stuff that would be made with all those investments.

Meanwhile, cities and states are laying off teachers and policemen and we’re being told that unions are the source of our problems.

1. “How Offshore Tax Havens Save Companies Billions,” NPR, March 17, 2011, http://m.npr.org/news/front/134619750?singlePage=true

2. “Google Uses the ‘Double Irish’ and the ‘Dutch Sandwich’ to Avoid Billions in Taxes,” New York, October 21, 2010, http://nymag.com/daily/intel/2010/10/google_uses_the_double_irish_a.html

3. “How Offshore Tax Havens Save Companies Billions,” NPR, March 17, 2011, http://m.npr.org/news/front/134619750?singlePage=true

4. “Businesses stockpile record $1.9 trillion in cash,” Chicago Sun-Times, March 11, 2011, http://www.suntimes.com/business/4251618-418/businesses-stockpile-record-1.9-trillion-in-cash

When Republicans say that unions have abused employers, they are right. But they should admit that employers have also abused employees.

The fact of the matter is that when either employers or unions have too much power over the other… abuse ensues.

This shouldn’t be justification for getting rid of unions any more than it is justification for getting rid of employers.  What it should be justification for is FAIR regulation that is designed to maintain balance, minimize abuse, keep the playing field level, and force the parties to work toward agreements that promote the well being of businesses AND their employees rather than either one at the expense of the other.

An economic tsunami washed over the economy in 2008.  We should have all been standing in a foot of water in 2009 and 2010.  Instead, 90.4% of us are cozy and dry while 9.6% of us are drowning in water that is hundreds of feet deep.  Several million people are carrying our load for us, and it is killing them.

Of course I am speaking of those who are unemployed as a direct result of the financial collapse and ensuing recession.

To understand why, realize that unemployment is deflation in disguise.

“Huh”, you ask?

Think about it.  What happens when the overall demand for goods and services is greater than the economy’s ability to create them?  As in all shortages, the goods and services get more expensive.  There is inflation.

We hear all the time how terrible inflation is.  In reality, inflation isn’t terrible for everybody.  High rates of inflation take money from people with cash savings and fixed incomes and puts it in the pockets of people who have borrowed money or who make fixed payments.  So while inflation is terrible for people who are well off it can be quite lovely for people with mortgage payments, car payments, student loan payments, and other payments for fixed amounts.

Deflation is just the opposite.  Deflation is awesome for savers and people on fixed incomes because their money goes further as prices fall.  Deflation is terrible for borrowers who end up paying off loans of cheap money with payments of expensive money.

You might expect that as the business cycle rolls along sometimes we would have inflation and sometimes we would have deflation.  Sometimes savers would win and borrowers would lose, then later savers would lose and borrowers would win.  But it doesn’t work that way, does it?

Some amount of inflation is accepted as a fact of modern life but we very rarely have any deflation.  We never seem to find ourselves in a vicious cycle of going to the store week after week only to find lower prices every time.  There is a reason for this.

It is much easier to produce less than to produce more.  In order to increase supply factories need to be built, ships need to be commissioned, employees need to be trained, raw materials have to be acquired… a lot goes into growth and it takes time.  It is easy to produce less. Factories are shuttered, stores are closed, ships are docked, employees are laid off and voilà!  Overnight supply comes crashing down to meet demand.

Since supply rarely exceeds demand for very long, prices never fall very much.  We rarely experience much deflation.  We get unemployment instead.  All those laid off people, shuttered factories, and docked ships — all those unemployed resources are great holding tanks of deflation.

This is where the unfairness of unemployment rears its ugly head.  During inflationary times everybody with cash loses a little.  Almost all of us lose at least a little.  During deflationary times everybody with debt loses.  Almost all of have some debt.  But we rarely have deflation because we put it into these holding tanks called unemployment.  Instead of all of us losing a little, those few who end up unemployed lose a lot!  The rest of us just “ride it out”.

While this unfairness cannot be blamed on us as individuals, it also cannot be blamed on those who are forced to carry our burden.  We can’t believe that we, the strong, are surviving while they, the weak, are dying.  It’s not like we swam and they sank.  The water just went around us and hit them.  It could as easily have gone around them and hit us.

Some people, however, are to blame for at least some of the unfairness.

Our deflationary period that has become a period of high unemployment didn’t happen because supply suddenly zoomed out ahead of demand and had to be cut.  The financial collapse caused demand to plummet overnight. When that happened prices of everything should have collapsed, but they didn’t.  They don’t.  Instead, supply decreased to meet it the new, lower level of demand.  Millions of people lost their jobs.  Mothballed cargo ships lined both sides of some rivers for miles.  Tens of thousands of businesses ceased to exist.

It didn’t have to be this way.  Crashing supply to meet demand was not our only choice.

We can build demand up and limit unemployment by having the government buy things when no one else will.  If we choose what it buys wisely, such as having government invest heavily in infrastructure that will benefit our entire economy for a hundred years like programs such as the Tennessee Valley Authority did, we can limit the destruction caused by unemployment while getting something useful in the process.

To be fair, the Obama administration’s $780 billion stimulus package was intended to do just that.  And it did.  Without the stimulus package unemployment would have been even higher.  At the same time, the administration, fearing the reaction of conservatives, did not ask for enough money to avoid millions of people becoming unemployed and being drowned in the pain that should have been all of ours.  Then as the plan made its way through Congress, conservatives cut it by hundreds of billions of dollars more.

At the heart of both the administration’s timid request and the conservative cuts were a concern over inflation.

Remember that unemployment is a holding tank for deflation.  There are still enormous deflationary pressures out there and we know this for the very reason that we can see the unemployment!  The amount of stimulus it would take to increase demand so much that this massive deflationary pressure actually became inflationary pressure would be huge almost beyond comprehension.  More to the point… so what if it did create some inflation?

The few million people who are carrying our entire collective burden are drowning!  They are being destroyed!  They are literally dying.  Neither inflation nor deflation is fair, but converting deflation that should be shared among all of us to unemployment for a few of us and life as usual for the rest is beyond unfair.  It’s diabolical.

The thought that solving the problem might cause a hundred million of us or more to stand in that foot of water is very unpleasant.  But we should be demanding to have that unpleasantness thrust upon us to save our friends and neighbors from drowning.  A foot of water won’t kill us.  The hundreds of feet of our water the unemployed are drowning in will kill them.

There are two interesting questions in the latest poll of the Kentucky Senate race.

The first is “Which party would you rather see in control of Congress after the November election, the Democrats or the Republicans?”

The second is “If the election for U.S. Senate were held today, would you vote for Jack Conway, the Democrat, or Rand Paul, the Republican?”

51.7% of Kentucky men report wanting Republicans to take control of Congress. 50.2% of Kentucky men report that they will vote for Rand Paul. 6.5% of Kentucky men are unsure as to whether they want Republicans or Democrats in charge of Congress. 10.8% say they are not sure whether they’ll vote for Rand Paul or Jack Conway. This 10.8% is the classic “undecided.”

But look how different Kentucky women are.

First of all, only 43% of Kentucky women report wanting Republicans to control Congress. 11.3% aren’t sure whether they would prefer Republicans or Democrats. But only 37.4% of Kentucky women say they are going to vote for Rand Paul. A whopping 21.8% say they are undecided.

This is my first clue. Even though Kentucky women are less interested in a Republican Congress than the men, even among those who do want a Republican Congress… many are uncomfortable voting for Rand Paul.

I think this is an opportunity. He is scaring women who otherwise would probably want to vote for a Republican.

When I bring complex or troubling issues home with me, my principles instinctively apply themselves. In natural surroundings and familiar circumstances, I find my heart and the answers I need to work around talking points, campaign rhetoric, corporate double speak, and baseless opinions. Then, with my principles in check, it is much easier to leave the small world of home and consciously apply those same principles to the complex and troubling issues in the huge world outside.

For example, when someone comes to my home thirsty, hungry, cold, sleepy, or in pain, I offer drink, food, a sweater, a pillow, or an Aleve™. When I look someone in the eye, I do not wonder if he has a sandwich in his pocket that he is too lazy to pull out, or assume his pain is fake, or that it is punishment for failure to properly worship some god. I don’t smack her down and tell her to grab a bootstrap and find her own drink. I don’t begrudge a Coke, a sandwich, or an Aleve™, or cry over the hard-earned sixty-five cents I wasted on someone who isn’t me. When I bring it on home, I want everyone to be comfortable.

If I take those same principles out the door and into my community, I donate time and resources to food drives and shelters. I check the winter-help box on my utility bill and pledge a dollar toward heating a low-income home. Beyond the community, my country awaits my contributions through awareness, taxes, and action and my world provides agencies that will bring ‘me’ home to others when I can’t get to them.

At home, I open wedding invitations and mark my calendar. Sometimes, I think it might be too soon or they are too young. I have even fantasized about jumping out of my seat at that part of the ceremony where we always keep our piece, to say he surely hasn’t thought about how she will nag forever and she’s crazy if she thinks he is going to keep a job. In the end, however, I know the decision to marry belongs to them. The same principle applies to everyone out in the bigger world, regardless of any misgivings or misguided opinions I might have.

At home, I try to resolve conflict through verbal communication and compromise, understanding others, making new rules and promises, and making a rational plea for what I deserve. I would never purposely punish one child for the misdeed of another. I would not (at least willingly) allow people to take what is mine, lie to or about me, and fail to defend myself. I would not fire weapons into my neighbor’s home, kill his wife and children and destroy everything dear to them because I think he might be an abusive husband and have a gun hidden somewhere in the house. The same principles kept me from chanting bomb them back to the stone ages on September 12, put protest signs in my hand before we invaded Iraq, and made me denounce the administration that tortured in my name.

At home, I know my actions and decisions make or break my life. I thank the breadwinner and the cook for my meal. Outside my home, I thank the farmer who grew my food, the people who prepared and delivered it to me, the agencies that protect me from those who would harm me for profit. I am grateful to the doctors who keep me alive, to the people who help me physically, emotionally, and politically. In the bigger picture, I attribute the condition of our world to the humans who protect or destroy it. At home, the words I’m sorry, I love you, and how can I help mean nothing without actions to support them. I take credit or grief for my contributions and failures and expect the same actions – not prayers or promises – from humans in the bigger world, not super-beings in the sky or their imaginations.

When someone claims to like my new couch while propping his muddy shoes on the seat, I know his action speaks louder than his words. When he says he hopes I get well soon but stands between me and the doctor or medications I need, I know he wants me to believe he hopes I get well but he does not honestly wish that. When he says he prays for my safety yet decries funding the agencies and departments that keep me safe, I know he hopes I will transfer responsibility from him to his god. I recognize the same dishonesty outside the home, when Mitch McConnell claims he cares about me and then smears his muddy shoes on every bill that would prove he does.

Stuff happens at home. Sometimes it feels like everything falls apart at the same time, usually when I can least afford to replace or repair them. As much as I hate debt, I know replacing an engine costs much more than a tune-up, and if I don’t repair the brakes I could hurt others, so borrowing money to maintain is wiser than standing firm on my vow to live debt-free. Investing in education and new tools might enable me to increase my income and ease the next disaster period. At home, I realize it is necessary to reconsider and update my vows as circumstances change. Leaving home with this one gets complicated since my principles tell me it is important to maintain necessities and to stay out of debt. However, when I look at what is in the best interest of everyone concerned and for the future, going into collective debt with the people outside my door makes sense.

At home, I feel the consequences of short cuts. The first time I bought cheap toilet paper, I realized I get what you pay for. The same is true outside the home. My government gets what it pays for.

I’ve grown weary of people who talk about values but show little evidence they intend to do anything more than whip out the word or promise to pray for their god to deliver what they are too lazy to think about or do. I want my home filled with friends who appreciate intelligence and honesty, who care and share, and who are not afraid of words like liberal, social, intelligence, and taxes. I want friends who read, discuss, and care about things that matter and who would not criticize anyone for wanting facts or challenging lies, or for caring more about people than things. I want to know that the people I associate with live ethics and morals instead of preaching them. I want to be around people who know that everything in life involves politics and beliefs, so refusing to discuss these topics would only mean they don’t care about life. I want the same things in people I associate with and support outside my home.

I say it is time to stop wasting precious time and energy on the same circle-debate regardless of the issue. Until both sides bring the issues home, attach and own the principles involved, the discussion will go nowhere and will accomplish nothing. If I had my way, the Democratic Party would adopt Bring It On Home as their only campaign slogan. It already has a really cool song to go with it.