What Is The New Popularism?

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And second, protest wasn’t enough. They had to invent new ideas, sweeping reforms to make the economy work for working people.

On May 22, 2014, Robert Borosage writes on Nation Of Change:

Today, in Washington, the Campaign for America’s Future is convening a major summit on The New Populism, keynoted by Sen. Elizabeth Warren. (It will be live streamed on our website). What follows are excerpts from remarks I will deliver at that meeting.

What is the new populism? The Princeton dictionary defines populism as “a political doctrine that supports the rights and powers of the common people in their struggle with the privileged elite.”

Not bad for a dictionary.

The New Populism arises from the stark truth about today’s America: Too few people control too much money and power, and they’re using that control to rig the rules to protect and extend their privileges.

This economy does not work for working people. This isn’t an accident. It isn’t an act of God. It isn’t due to forces of technology and globalization that can’t be changed. It isn’t a mistake. It is a power grab.

Decades of deregulation and top-end tax cuts, of soaring CEO pay and assaults on unions, of conservative myths and market fundamentalism have recreated Gilded Age extremes of wealth and power. Once more a new American plutocracy is emerging, doing what plutocrats always do – corrupting government to protect and expand their fortunes.

Americans don’t tolerate self-perpetuating aristocracies easily. Opposition to aristocratic wealth is as American as apple pie, dating back to the American Revolution, to Jefferson who warned about the “aristocracy of monied corporations.”

The Populist Tradition

The movement that gave populism its name swept out of the Plains states in the late 19thcentury as small farmers and steelworkers, day laborers and sharecroppers came together to take on the trusts, the railroads, the distant banks that were impoverishing them.


They railed against a government that handed public lands to the railroads, kept interest rates high, coddled monopolies and cracked the heads of workers trying to organize. 

But in challenging the corrupted government, they came to a profound realization: that in the emerging industrial economy, simply cutting back government and limiting its powers would only free monopolies and banks to gouge even more from workaday Americans.

They concluded that they had to take back the government, turning it from the arm of the privileged to the people’s ally.

This led to two other challenges. First, they had to mobilize people to counter what Roosevelt called “organized money.”

That populist movement lasted only a few years as an independent party, but the reforms it championed set the agenda for progressives for more than half a century – the minimum wage, the eight-hour workday, antitrust laws, the progressive income tax, a flat ban on subsidies to private corporations, and worker cooperatives. It mobilized millions around a new monetary policy. It pushed to expand democracy through direct elections of senators, initiatives and referenda. There’s a direct line from the Omaha Platform of the People’s Party in 1892 to FDR’s Four Freedoms and Economic Bill of Rights, to Lyndon Johnson’s Great Society, whose 50th anniversary we honor this week.

Today’s new populism stands in that tradition.

People aren’t worried that the rich have lots of money. This isn’t about envy; it is about power – that the privileged and entrenched interests rig the game, so the economy does not work for working people.

Billionaires like Sheldon Anderson toy with politicians as if they were miniature plastic puppets. Millionaires pay lower taxes than their secretaries. Multinationals stash profits abroad and pay lower taxes than mom-and-pop stores. After all, as hotel magnate Leona Helmsley famously said, “only little people pay taxes.”

Wall Street bankers – the folks whose excesses blew up the economy and cost millions their homes and their jobs – were bailed out. Now they are back, posturing as masters of the universe once more, apparently immune from prosecution for the epidemic of fraud they profited from. Jails, after all, are for little people.

The top 1 percent is capturing fully 95 percent of the nation’s income growth. CEO salaries are up and corporate profits hit record heights, while workers incomes are stagnating and insecurity is rising.

Mobilized People vs. Mobilized Money

What will it take to make this economy work for working people again? Mobilized people will need to take on organized money. Investments in areas vital to our future can be paid for with progressive taxes. But redistribution isn’t enough. Sweeping structural reforms – expanding shared security, making work pay, curbing Wall Street speculation, balancing trade and more – are essential to any new deal.

The American people get it. They don’t need to be convinced on the issues. CAF is issuing a report today at PopulistMajority.org that documents the simple fact: the majority of Americans are with us. Citizens United? Four of five Americans want it repealed, including three-fourths of Republicans. Raise the minimum wage? No question. Curb Wall Street? Lloyd Blankfein may think Goldman Sachs is doing “God’s work,” but Americans want more accountability. Protect Social Security and Medicare? Even Tea Partiers agree.

This new populism is not something we have to invent. It is already stirring. It is Occupy Wall Street putting Gilded Age inequality at the center of our political debate. It’s exploited low-wage workers protesting fast-food restaurants in over 150 cities. A left-right congressional coalition forming against continuing ruinous corporate trade policies. Moral Monday protests against the assault on voting rights and the vulnerable mobilizing thousands in North Carolina and are spreading to Georgia and South Carolina. A feisty citizen’s opposition growing in rural areas to block big oil’s effort to frack their lands.

We can see it in the culture. The new Pope condemning the modern “idolatry of money” and the “tyranny of unfettered capitalism.” Or bizarrely, a 685-page book by an obscure French economist about wealth inequality heading the best-seller lists along with Danielle Steele’s steamy new novel, “First Sight.”

Forceful leaders are emerging like senators Elizabeth Warren, Sherrod Brown and Bernie Sanders; Rep. Keith Ellison; New York Mayor Bill de Blasio. The demand for change is rising from activists in the heart of the Obama majority, the rising American electorate of millennials, people of color and single women that have fared the worst in this economy. The organized base of the Democratic Party, from unions to community and civil rights groups, women and environmentalists, are pushing an agenda far bolder and broader than that now before the public.

Democrats in the Senate have now moved to a “fair shot” agenda, calling for raising the minimum wage, pay equity, paid family leave, and lowering student loan interest rates paid for by taxing millionaires. A Forbes Magazine columnist warns the GOP that they can’t ignore the new “populist wave.” Sen. Rand Paul argues that Republicans can’t simply be the party of “fat cats, rich people and Wall Street.” It might be too late for that.

The Challenge

Washington is gridlocked by Republican obstruction, so people are driving reforms from the bottom up. The minimum wage is being hiked from Hawaii to Maryland to Seattle, where it is headed to $15 an hour. Californians voted to tax the rich to invest in schools. Cleveland uses government procurement to support locally based, worker-owned cooperatives. Over a hundred cities have joined the call for a constitutional amendment to overturn Citizens United.

Pundits suggest that Republicans have the advantage in the low-turnout 2014 elections, with the Democratic base discouraged by the lousy economy. Elites in both parties warn against a new populism, as if the old politics held any answers for people.

But this isn’t about one election or one leader. The pressure for change is only beginning. People are waking up to the fact that the game is rigged. They won’t tolerate it for long. It will take muckraking, organizing, teaching, protests and demonstrations, new ideas and new allies. It will face fierce resistance. The wealthy and entrenched interests will spend lavishly to defend their privileges. Our system is designed to clog change, not facilitate it.

But when the people speak, politicians listen. And this new populist movement has only just begun. The stakes are fundamental – whether the democracy can in fact check the power of great wealth and entrenched interests. This is the challenge facing our democracy and for each one of us privileged to be its citizens.


Bubble States Underemployment Rates Haunt Yellen – Bloomberg

Photographer: Ben Torres/Bloomberg

Job seekers wait in line to enter a job fair hosted by JobExpo.com in Dallas, Texas, U.S.

On May 21, 2014, Steve Matthews and Jeanna Smialek write on Bloomberg News:

Cliff Powell lost his job as a mechanical engineer in 2008 asFlorida’s construction industry slumped. He hasn’t landed a lasting permanent position since.

“You think about giving up, but you can’t,” said Powell, 57, who’s held four jobs and more than two dozen, mostly part-time, temporary contracts. “If you say ‘I give up,’ then that’s it, you’re over.”

Residents of the U.S. states that suffered the steepest home pricedeclines and record foreclosures face labor markets that remain impaired five years after the most severe recession since the 1930s ended.


Underemployment, including those in part-time jobs who want full-time work, remained highest in 2013 in NevadaArizonaCalifornia and Florida, with those states also seeing some of the steepest increases since 2007, an analysis of data from the U.S. Bureau of Labor Statistics shows. Oregon also has one of the highest rates.

“That tells you we still have a very weak economy with lots of slack,” said Peter Diamond, a professor at the Massachusetts Institute of Technology in Cambridge who won the 2010 Nobel Prize in economics. The labor market “has improved a lot from the depth of the Great Recession” though “in previous recessions would still be viewed as bad as it gets.”

The weakness supports Federal Reserve Chair Janet Yellen’s view that the unemployment rate decline to 6.3 percent from 10 percent in October 2009 can’t be relied on as a sole indicator of progress.

Dashboard Approach

Yellen favors a dashboard approach that also includes underemployment, the labor force participation rate and the share of unemployed out of work 27 weeks or longer — all of which remain far from levels before the start of the December 2007 recession.

Graphic: Bloomberg Visual DataGraphic: Bloomberg Visual Data

“State level data provide evidence on this point,” said Jonathan Wright, an economics professor atJohns Hopkins University in Baltimore who worked at the Fed’s division of monetary affairs from 2004 until 2008. “The labor market is in worse shape than is apparent from the unemployment rate alone, and this calls for continued accommodative policies.”

A housing recovery that began in 2010 has improved the outlook in states where construction booms and busts played a disproportionate role.

U.S. housing starts rose 67 percent from 2009 to 2013 as low mortgage rates fueled a rebound. Prices rose 44 percent in Las Vegas in the last two years, 38 percent in Phoenix, 35 percent in Los Angeles and 28 percent in Miami.

Completed Foreclosures

About 2 million foreclosures have been completed in California, Florida, Nevada and Arizona since August 2007, almost 40 percent of the 5 million nationwide, according to data firm RealtyTrac.

Houses are now going into foreclosure less often. The share of loans in foreclosure and seriously delinquent in California fell to 2.93 percent in March from 12.5 percent in December 2009, data from the Mortgage Bankers Association show. The rate has also dropped from peaks in Nevada, Florida and Arizona.

The job market is also improving, with California adding 340,200 jobs in the year ended in April and Florida creating 246,800 slots, the Labor Department reported last week. They only trailed Texas’s 348,000, bolstered by a domestic energy boom. Nevada and Arizona each added more than 40,000 jobs.

Good Job

That hasn’t made finding a good job easy. The broadest measure of unemployment — which includes part-time workers who can’t find full time jobs, discouraged laborers, and those marginally attached, who want a job but are not actively looking — averaged 18.1 percent in Nevada last year, 17.3 percent in California, 16 percent in Arizona and 14.3 percent in Florida. The U.S. rate was 13.8 percent.

“The housing crash is still having a profound negative impact on the job market,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania.

More on Protecting Your Financial Future:

Even with the housing recovery, more than 1.7 million construction jobs have been lost as of April since its peak in April 2006, Labor Department data show.

Florida’s jobless rate has fallen to 6.2 percent, just below the U.S. average. Yet the unemployed there encountered the longest job searches among the U.S.’s 50 states in 2012, the latest year available, with a median of 28 weeks.

Companies are reluctant to hire in the wake of the crisis and “scarring from the Great Recession,” said Yelena Shulyatyeva, U.S. economist at BNP Paribas in New York. “States that were hurt the most, it’s probably hardest to recover.”

Accepting Positions

To get by, the unemployed are accepting positions such as part-time retail jobs that don’t match their skills, said Linda Kurtz, 53, who worked in human resources in the San Diego area for 15 years, and started her own career advising company in November.

“There is still great competition,” she said. “When you apply for a job, there are so many people applying.”

Kurtz, who currently has eight clients and works mostly with mid-level professionals, said some people take on a “portfolio career” of part-time assignments that include consulting, while looking for a full-time job with benefits. Such arrangements avoid having to drop out of the labor market, she said.

Shrinking Workforce

Yellen has been particularly concerned about the shrinking workforce. The share of people working or looking for jobs slumped to 62.8 percent in April, matching the lowest level since 1978.

While an aging population and the retirement of baby boomers has contributed, Yellen said May 7 to the Joint Economic Committee, “the weak state of the labor market partly explains why we’ve see a decline in labor-force participation.”

Nevada suffered the single biggest drop in its labor force as a percent of its population, falling 4.7 percentage points to 57.3 percent in the five years ended January 2014.

That large declines have occurred in states hurt most in the recession, including Nevada and California, suggests the cause is “the effect of the cyclical downturn” rather than “just demographics” reflecting aging, Wright of Johns Hopkins said.

The state data provide “compelling evidence” cyclical factors “account for the bulk of the post-2007 decline” in the participation rate, Fed economists Christopher Erceg and Andrew Levin said in a paperpublished in April 2013.

Cyclical Slack

Economists worry that what appears to be slack tied to business conditions in hard-hit states could ultimately become permanent unemployment with job seekers losing needed skills.

“The distinction between structural and cyclical is not so clean,” and a “cyclical problem” can become “more structural” in time, said Amir Sufi, finance professor at the University of Chicago’s Booth School of Business.

Long-time unemployed still are finding some assignments, though often settle for less pay or hours than they want.

Barbara Spaulding, 59, of New Tampa, Florida, spent the past nine years looking for full-time, permanent work before landing a job working in emergency response and recovery at the Pasco County Office of Emergency Management. She starts working May 27.

“There are more jobs, but there are also a lot of very well-qualified people applying for them,” she said. “I think of all of these talented people not working. It is a crime.”

Powell, father of three children ages 19 to 26, said his wife lost her teaching job two years ago and moved to California for a position. She comes home on holidays. He extended his search to that state, yet didn’t find work there either.

“I’ve been a roller coaster ride since 2008,” said Powell, a fire protection specialist with more than 25 years of experience. He says reports of improving job prospects and lower unemployment rates are hard to believe in construction. “Most people I deal with in the industry say it’s a joke,” he said. “Unemployment isn’t dropping, people are giving up.”

To contact the reporters on this story: Steve Matthews in Atlanta at smatthews@bloomberg.net; Jeanna Smialek in Washington at jsmialek1@bloomberg.net

To contact the editors responsible for this story: Chris Wellisz at cwellisz@bloomberg.netCarlos Torres at ctorres2@bloomberg.net Gail DeGeorge, Brendan Murray


Better Than Redistributing Income


On May 17, 2014, Richard D. Wolf writes on TruthOut:

Widening gaps between rich and poor, the top 1% and the rest, are heating up debates, struggles and recriminations over redistributing income. Should governments’ taxing, spending, and regulatory powers redistribute income from the wealthy to others, and if so, how exactly? As opinions and feelings polarize, political conflicts sharpen.

Yet should redistribution be our focus? Thomas Piketty’s recent Capital in the Twenty-first Century believes it should. He caps his analysis of how and why capitalism generates deepening economic inequality by advocating progressive income and wealth taxation. He wants to offset or reverse that inequality by redistributing income from the rich to the middle and the poor. Discussions of Piketty’s work show considerable support for redistribution

Yet history has shown both its friends and foes that redistribution has at least three negative aspects. First, redistribution mechanisms rarely last. Once established, progressive tax rates, social securities, safety nets, minimum wages, welfare states, and all the other mechanisms of redistribution can be and usually are undermined. The last 40 years, and especially the aftermath of the global crisis in 2008, starkly illustrate the undoing of redistribution.

Second, redistribution is socially divisive, often extremely. When taxes not only pay (quid pro quo) for government services rendered, but also serve to redistribute income, opposition usually grows. Some taxpayers suspect they pay more and get less in public services than others. Deteriorating economic conditions that lessen capacities to pay taxes intensify resistance. That often turns into opposition to income redistribution in principle. Lower-income people get demonized as lazy welfare-dependents. Racist and anti-immigrant oppositions get drawn into the mix, and so on. Meanwhile, advocates of redistribution make ethical appeals and/or threaten that without income redistribution, deepening income inequalities endanger capitalism and the social status quo.

Third, redistribution is costly.  Taxing, spending and regulating require large government bureaucracies funded by tax revenues. Opposition to taxes easily extends into opposition to bureaucracies like the IRS. Those bureaucracies usually intrude on privacy and quickly become objects of influence peddling, bribery, and abuse. Exposés of the latter provide further fuel to redistribution’s opponents.

A rather obvious solution is available if we put aside the presumption that redistribution is the only way to counter deepening inequality. To avoid redistribution’s insecurity, social divisiveness and wasted resources, we could instead distribute income much less unequally in the first place. Then redistribution would be unnecessary and society could avoid all its negative aspects.

The question then becomes: how might we secure a significantly less unequal original distribution of income? The answer is a transition from the current hierarchical internal organization of enterprises to an alternative cooperative organization. Key drivers of unequal distributions of income are (1) the major shareholders and (2) the boards of directors they select to run the capitalist corporations at the top of the economic pyramid. Those two groups together basically decide how to distribute their enterprises’ profits. When large shares of those profits go to shareholders as dividends and to top executives as pay packages, they widen income inequality. When these two groups reduce the demand for workers (for example, by relocating production abroad or via automation), they usually slow or stop wage growth and thereby widen income inequalities. The last several decades exhibit many of just such decisions.

Consider then the alternative organization of worker coops, or, more precisely, worker self-directed enterprises (WSDEs). In such enterprises, each worker has two job descriptions. First, he/she has assigned tasks in the enterprise’s division of labor. Second, he/she participates in the democratic decisions by all workers about what, how and where to produce and how to distribute the enterprise’s profits. In WSDEs, workers comprise their own boards of directors.

Their decisions would need to be reached together with those of the residential communities that comprise each enterprise’s geographic hosts and customers.

Workers’ pay in WSDEs would likewise have two portions. Wages for each individual’s specific labor, the first portion, could still vary based on skill level, education, the enterprise’s need to attract and retain particular job-holders and so on. On the other hand, a more egalitarian distribution of the enterprise’s profits among all employees would make the second portion of each employee’s total pay contribute far less inequality to the society-wide distribution of income than capitalist corporations now do.

Bringing democratic decision-making into the core organization of enterprises provides the best chance for a less unequal initial distribution of income than is now common in most societies. A small, partial step in that direction – Germany’s system that gives workers a significant influence on large enterprise boards, dividends and executive pay packages – shows salutary effects on income inequality. Transition to an economy where many enterprises were organized as WSDEs would likely proceed further in reducing income inequality.

Producer or worker coops have a long history in the United States and around the world. Many concrete examples exist from which to cull lessons for how to establish, operate and grow WSDEs. From small start-up enterprises to huge conglomerates like the Mondragon Cooperative Corporation in Spain (MCC operates its own university with courses on all aspects of cooperative enterprises), we have a solid basis for a transition toward more WSDEs. Imagine – alongside the Small Business Administration – a Cooperative Business Association that comparably leveled the competitive playing field between hierarchical and cooperative enterprises. After all, MCC went from 6 workers in 1956 to 100,000 today, outcompeting countless conventional capitalist enterprises along the way, even without Spain’s government leveling the playing field among competing enterprises.

We can do better than hierarchical enterprises and the resulting bitter and endless struggles over redistribution. By instituting cooperative enterprises, we can reduce the originally unequal distribution of income and thereby reduce the need for redistribution.



Thank You, Dr. Yellen—For That $1 Million Jumbo Mortgage At 100% Financing

On May 9, 2014, David Stockman writes on Contra Corner:

The Fed was forced to note in its last meeting release that the housing market has hits some head winds. Well it might have. March new home sales were down by 13% and existing home sales by 8%. But an even more troublesome sign occurred at the bottom of the market where new applications for purchase mortgages ofless than $150,000 actually dropped by 21% from last March.

Never mind that during the interim 12 months the Fed purchased nearly $1 trillion of government and GSE debt—–for the very purpose of forcing down interest rates and making mortgages cheaper. Indeed, driving the mortgage rate to lower and lower levels has been the essence of Fed policy since early 2009.

Thus, during the four years ending in May 2013, the 30-year mortgage rate was rammed down from 6.5% to a low of 3.2%. And as noted previously, that entirely artificial, Fed- engineered move did cause an outbreak of “refi madness”. Accordingly, several trillions of existing mortgages were refinanced into lower rates so that the mainly upper-middle income families who could meet current lending standards would have some additional discretionary income to buy a flat screen TV, dinner at Red Lobster or a new pair of shoes.

But the minute the Fed began to take its fat thumb off the scales—that is, buy less bonds under the “taper”—mortgages rates soared by more than 100 basis points and new originations crashed. During first quarter this year gross mortgage originations were down by 75% at the big home mortgage banks and nationwide levels were at 16 year lows.

It would be bad enough if this were merely a case of an extended “temporary” (e.g. four years!.) experiment in monetary stimulus that didn’t work. The nation’s incorrigible monetary central planners would undoubtedly just move on to some other attempt to manipulate and medicate markets in their spurious quest to cause economic growth and wealth creation by printing money.

But actually their “one size fits all” formula of interest rate repression actually does positive damage. It essentially causes economic resources and wealth to flow to the top of the nation’s economic ladder. That’s because the top 10% of households are still credit-worthy and the Fed continues to make credit ultra-cheap—thereby providing a massive incentive to borrow and a windfall gift to those upper rung households who understandably take advantage of the opportunity.

The giant windfalls obtained by Wall Street hedge funds and fast money traders playing the carry trades game with 0% repo financing is both self-evident and deplorable.  But that is not the end of the Fed’s reverse Robin Hood malefactions. It is now evident that some of the windfall is trickling down to the top 10% via a booming market in deeply subsidized “jumbo mortgages” (e.g. over $700k).

And do not think they are not “subsidized”.  Given America’s anemic savings levels, long-term interest rates on the free market would be hundreds of basis points higher than the Fed medicated rates at present. So on a $1.5 million jumbo mortgage call the subsidy about  $50,000 per year—which is to say, equivalent to the median family income.

As made clear in the Bloomberg story attached, jumbo loans are still surging and were up by 5% from last March. More importantly, as one veteran mortgage market observer notes, jumbo mortgages are the only game left. Stated differently, the Fed has monetized nearly $4 trillion of debt and what it has to show for it is a small cadre of extremely happy yuppies:

“Jumbos are growing while almost everything else is dead,” said Paul Miller, a banking analyst at FBR Capital Markets Corp. based in Arlington, Virginia. “Big banks need loan growth. If they were getting decent commercial loan growth, they wouldn’t be so aggressive on competing for jumbos.”

So, as the story below highlights, good for you, Todd Vitale. You got your subsidized loan and a dream home in part as a reward for your own enterprise. But what possible public policy purpose was served by making the financing artificially cheap at the expense of some unseen senior citizen whose savings account has been plundered by the same Fed manipulation that has fueled the jumbo loan surge:

Todd Vitale, a personal trainer who opened his own gym last year, said he was having difficulty getting a mortgage of more than $700,000 to buy a home in Greenwich, Connecticut, because his new business was untested.

Vitale then tried Wells Fargo & Co. (WFC), the biggest U.S. home lender, where he kept most of his savings in an account he opened more than a decade ago, he said. He worked with the bank’s private mortgage unit, whose clients are entitled to loans of up to $6 million and personalized service, and had the opportunity to explain that he had already run a similar business and could make the gym succeed. Wells Fargo approved his 30-year fixed-rate mortgage of more than $700,000, he said.

“I don’t think I would have gotten a loan unless Wells Fargo private mortgage gave me a shot,” said Vitale, 38, who moved in to his new 3,000 square-foot home in February. “I would have had to walk away from the home.”

Nor is this the end of the story. Desperate for business that generates a yield above the Fed dictated minimums, the giant mortgage banks are now offering 100% financing to preferred clients. Better yet, in lieu of a cash down payment, the jumbo lenders are accepting a lien on brokerage account assets—that is, upper income winners in the Fed’s stock market bubble can now double-down with a cheaper mortgage and bigger house.

Listen to Dr. Yellen’s formulaic Keynesian blather before the Congressional committees. She has no clue as to the extent of the disorder, malinvesment, mayhem and social injustice that the Eccles Building is sowing all across the land:

At Bank of New York Mellon Corp., where the average size of a mortgage is $1 million, clients can get 100 percent financing. They don’t have to put any money down and can instead pledge assets in investment accounts as collateral, said Bill Sappington, head of private banking at the New York-based firm.

Here is further information on the Fed’s Robin Hood policies are work:

……Applications for jumbo mortgages of at least $729,000 increased 4.9 percent in March from a year earlier, while requests for loans of less than $150,000 fell by 21 percent, according to the Mortgage Bankers Association

Lenders are also vying for jumbos since they don’t have to pay higher guarantee fees charged by Fannie Mae and Freddie Mac to insure the bonds, as they do with conforming loans, said Richard Lepre, an Alamo, California-based loan officer with RPM Mortgage. That means they can charge lower rates on jumbos, making them more attractive than traditional loans.

The rate at Wells Fargo for a 30-year fixed jumbo mortgage was 4.13 percent as of yesterday, compared with 4.25 percent for a conventional 30-year fixed loan.

JPMorgan modified its guidelines in the third quarter for making jumbo loans to take into account a client’s total assets at the bank. The bank made the change after seeing that customers who had long-term relationships with JPMorgan were less likely to default on their loans.

The lender created a separate process last year to review all declined loans to ensure those decisions made sense. It also set up a group that works with wealthy clients who have more complex financial situations, such as self-employed borrowers.

“We leverage relationships to let the customers know we really want to do business with them,” said Lesley Corydon, a senior vice president in the private client mortgage group at JPMorgan.

JPMorgan’s jumbo mortgage originations represented 21 percent of its total originations in the first quarter of 2014 compared with 10 percent a year earlier, according to the bank.

Customers of Chase Private Client, who have assets ranging from about $500,000 to $5 million in total wealth, increasingly are opting to use their deposits and investments as collateral when borrowing. Some clients use the credit as bridge loans or to make larger down payments….

“We are pleased to know that Mr. Vitale received assistance with his home lending needs,” said Emmanuel Vuillequez, product manager for non-conforming mortgages at Wells Fargo.

Last year, Wells Fargo created a special team of 400 underwriters spread across six U.S. locations who just focus on jumbo loans.

“Jumbo lenders are looking for ways to distinguish themselves from other jumbo lenders,” said Guy Cecala, publisher of Inside Mortgage Finance, a trade publication in Bethesda, Maryland. “Jumbo lending was the bright star of the mortgage market last year, so everyone is looking to ride that momentum into 2014.”

….Bank of America in October reduced the down payment to 15 percent from 20 percent for most jumbos of less than $1 million. Existing customers at the bank may receive discounts on their mortgages based on their level of business with the firm, said Susan Atran, a Bank of America spokeswoman.

At the Charlotte, North Carolina-based bank, nonconforming mortgage originations were 37 percent of overall loans made during the first quarter compared with 22 percent a year earlier, according to the firm.

RPM Mortgage this year began offering new jumbo adjustable-rate mortgages with initial low rates. One of their loan products provides a fixed rate for five years at a maximum of 2.63 percent, and then resets once during the next five years to no more than 4.63 percent, Lepre said…….

Today, demand for jumbos is growing as borrowers resume buying second homes or investment properties, according to Chase’s Corydon. Banks are often fighting for loans in the $1 million to $2 million range, said Mike McPartland, head of lending for Citigroup Inc.’s (C) private bank.

“If in the past, I was competing with two private banks, now it feels like I’m competing with two private banks and two regional lenders for that $2 million mortgage,” said McPartland, whose clients generally have at least $25 million in net worth. “The benefit to working with a bank that knows you is we don’t treat a mortgage like an isolated financial transaction.”

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New York Times Turns Paul Krugman Into His Opposite

On May 8, 2014, Dean Baker writes on Nation Of Change:

Remember Paul Krugman yelling that huge budget deficits will impose an enormous burden on our children and threaten to sink the economy? You probably don’t remember this because he has been strongly arguing the opposite position for the last five years.

This is why it was striking to see the NYT opinion page’s description of Krugman’s column last week which has Krugman referring to a “fiscal crisis.” Krugman absolutely does not believe there was a fiscal crisis. Krugman’s column discussed the financial crisis and the economic downturn that followed the collapse of the housing bubble.

The NYT description was surely a mistake rather than an attempt to put words in the mouth of the paper’s most prominent columnist. It is still worth asking how a mistake like this can be made, and more importantly, how it can slip by the paper’s editors and remain posted for the better part of a day.

Promoting concerns about the budget deficit is a major industry in Washington. It is centered in a number of organizations that were started and/or funded by Wall Street tycoon Peter Peterson, including the Concord Coalition, Fix the Debt, the Committee for a Responsible Federal Budget, and of course the Peter G. Peterson Foundation. These organizations can always count on respectful treatment in the media, basically because almost anyone with lots of money can count on respectful treatment from the media.

But the impact goes much deeper than can be explained simply by the billions of dollars floating out of Peterson’s pocketbook. The deficit crisis story clearly resonates with our everyday understanding of the world. We all know that we can’t continually spend more than we earn, so why should the federal government be any different?

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It is easy to tell the story of how the federal government is different and why it has to be different, as anyone who has ever been through an intro econ class should know. The government must use deficits to fill gaps in demand when the private sector does not spend enough. If the government doesn’t run large deficits in such situations, the result is high unemployment like what we see today.

Also, unlike the rest of us who expect to die at some point, the government should be around indefinitely. It doesn’t have to pay back its debt. In this sense it is like a corporation, many of which continually add to their indebtedness over time.

The CEO of GE will not get a warm reception from shareholders if he has to explain that profits have tanked, but he paid off the company’s debt. The priorities of a corporation are different than for a household, just as is the case for the government.

But, it is easy for even well-educated people to be confused on issues like this. And when you have deep-pocketed folks like the Peterson crew promoting such confusion it compounds the problem.

The situation is similar to having a group of well-funded and well-credentialed astronomers who insisted the sun goes around the earth. If this group regularly mocked the scientists who pointed to the evidence the earth goes around the sun – telling people to look at what they can see with their own two eyes – most people would likely still believe the sun orbits the earth.

This is the situation we face in economics today. Tens of millions of people are needlessly unemployed or underemployed because those with money and power are happy to use it to promote confusion on the issue. As a result, we have a budget policy that keeps unemployment high. After all, the stock market is up, the rich are happy, what seems to be the problem?

This state of affairs should argue for a paper like the NYT to be especially careful. By hosting columnists like Krugman, and also running some very good pieces on budget and economic issues in its business and new “Upshot” section, the NYT has helped to inform millions of readers on how the economy works. However it writers and editors are subject to the same prejudices on issues involving deficits and debt as anyone else. The paper needs to be aware that mistakes like this can slip into print or cyberspace if people are not alert to the problem.

At a more basic level this mistake shows the enormity of the task involved in changing public thinking and policy on the most important economic issue facing the country today. It took centuries to get people to understand the earth orbits the sun. If it takes as long to get the public to understand and our politicians to understand the economy, billions of people will suffer needlessly.



The Six Principles Of The New Populism (And The Establishment's Nightmare)

On May 7, 2014, Robert Reich writes on Nation Of Change:

More Americans than ever believe the economy is rigged in favor of Wall Street and big business and their enablers in Washington. We’re five years into a so-called recovery that’s been a bonanza for the rich but a bust for the middle class. “The game is rigged and the American people know that. They get it right down to their toes,” says Senator Elizabeth Warren.

Which is fueling a new populism on both the left and the right. While still far apart, neo-populists on both sides are bending toward one another and against the establishment.

Who made the following comments? (Hint: Not Warren, and not Bernie Sanders.)

A. We “cannot be the party of fat cats, rich people, and Wall Street.”

B. “The rich and powerful, those who walk the corridors of power, are getting fat and happy…”

C. “If you come to Washington and serve in Congress, there should be a lifetime ban on lobbying.”

D. “Washington promoted moral hazard by protecting Fannie Mae and Freddie Mac, which privatized profits and socialized losses.”

E. “When you had the chance to stand up for Americans’ privacy, did you?” 

F. “The people who wake up at night thinking of which new country they want to bomb, which new country they want to be involved in, they don’t like restraint. They don’t like reluctance to go to war.”

(Answers: A. Rand Paul, B. Ted Cruz, C. Ted Cruz, D. House Republican Joe Hensarling, E. House Republican Justin Amash, F. Rand Paul )

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And it’s not only the rhetoric that’s converging. Populists on the right and left are also coming together around six principles:

1. Cut the biggest Wall Street banks down to a size where they’re no longer too big to fail. Left populists have been advocating this since the Street’s bailout now they’re being joined by populists on the right. David Camp, House Ways and Means Committee chair, recently proposed an extra 3.5 percent quarterly tax on the assets of the biggest Wall Street banks (giving them an incentive to trim down). Louisiana Republican Senator David Vitter wants to break up the big banks, as does conservative pundit George Will. “There is nothing conservative about bailing out Wall Street,” says Rand Paul.

2. Resurrect the Glass-Steagall Act, separating investment from commercial banking and thereby preventing companies from gambling with their depositors’ money. Elizabeth Warren has introduced such legislation, and John McCain co-sponsored it. Tea Partiers are strongly supportive, and critical of establishment Republicans for not getting behind  it. “It is disappointing that progressive collectivists are leading the effort for a return to a law that served well for decades,” writes the Tea Party Tribune. “Of course, the establishment political class would never admit that their financial donors and patrons must hinder their unbridled trading strategies.”

3. End corporate welfare – including subsidies to big oil, big agribusiness, big pharma, Wall Street, and the Ex-Im Bank. Populists on the left have long been urging this; right-wing populists are joining in. Republican David Camp’s proposed tax reforms would kill dozens of targeted tax breaks. Says Ted Cruz: “We need to eliminate corporate welfare and crony capitalism.”

4. Stop the National Security Agency from spying on Americans. Bernie Sanders and other populists on the left have led this charge but right-wing populists are close behind. House Republican Justin Amash’s amendment, that would have defunded NSA programs engaging in bulk-data collection, garnered 111 Democrats and 94 Republicans last year, highlighting the new populist divide in both parties. Rand Paul could be channeling Sanders when he warns: “Your rights, especially your right to privacy, is under assault… if you own a cellphone, you’re under surveillance.”

5. Scale back American interventions overseas. Populists on the left have long been uncomfortable with American forays overseas. Rand Paul is leaning in the same direction. Paul also tends toward conspiratorial views about American interventionism. Shortly before he took office he was caught on video claiming that former vice president Dick Cheney pushed the Iraq War because of his ties to Halliburton.

6. Oppose trade agreements crafted by big corporations. Two decades ago Democrats and Republicans enacted the North American Free Trade Agreement. Since then populists in both parties have mounted increasing opposition to such agreements. The Trans-Pacific Partnership, drafted in secret by a handful of major corporations, is facing so strong a backlash from both Democrats and tea party Republicans that it’s nearly dead. “The Tea Party movement does not support the Trans-Pacific Partnership,” says Judson Philips, president of Tea Party Nation. “Special interest and big corporations are being given a seat at the table” while average Americans are excluded.

Left and right-wing populists remain deeply divided over the role of government. Even so, the major fault line in American politics seems to be shifting, from Democrat versus Republican, to populist versus establishment — those who think the game is rigged versus those who do the rigging.

In this month’s Republican primaries, tea partiers continue their battle against establishment Republicans. But the major test will be 2016 when both parties pick their presidential candidates.

Ted Cruz and Rand Paul are already vying to take on Republican establishment favorites Jeb Bush or Chris Christie. Elizabeth Warren says she won’t run in the Democratic primaries, presumably against Hillary Clinton, but rumors abound. Bernie Sanders hints he might.

Wall Street and big business Republicans are already signaling they’d prefer a Democratic establishment candidate over a Republican populist.

Dozens of major GOP donors, Wall Street Republicans, and corporate lobbyists have told Politico that if Jeb Bush decides against running and Chris Christie doesn’t recover politically, they’ll support Hillary Clinton. “The darkest secret in the big money world of the Republican coastal elite is that the most palatable alternative to a nominee such as Senator Ted Cruz of Texas or Senator Rand Paul of Kentucky would be Clinton,”concludes Politico.

Says a top Republican-leaning Wall Street lawyer, “it’s Rand Paul or Ted Cruz versus someone like Elizabeth Warren that would be everybody’s worst nightmare.”

Everybody on Wall Street and in corporate suites, that is. And the “nightmare” may not occur in 2016. But if current trends continue, some similar “nightmare” is likely within the decade. If the American establishment wants to remain the establishment it will need to respond to the anxiety that’s fueling the new populism rather than fight it.



USA: The World's Newest Third World Nation

On May 6, 2014, Thom Hartmann writes on The Thom Hartmann Program:

And the newest third-world country is….America! That’s right. America looks a lot more like a third-world nation than the wealthiest country in the world.  As CJ Werleman points out over at Alternet, while America is the wealthiest nation in the world, and has the most billionaires in the world, not a single U.S. city ranks among the world’s most livable cities.

Meanwhile, despite our nation’s vast wealth, 14.5% of U.S. households were “food insecure” as of 2010, and as of 2011, 1.5 million American household were struggling with “extreme poverty.” If you want even more proof that America is in the steady decline to third-world status, take a look at the American middle-class today.

For over 30 years, under both Democratic and Republican leaders, we’ve been hooked on Reaganomics policies that have helped the wealthy elite and those at the top, but screwed over everyone else. Reaganomics has gutted the middle-class, and destroyed the strong and vibrant economy that we once had.

The income gap in America has widened exponentially since Reagan took office and implemented the so-called “Reagan Tax Cuts.” Between 1947 and 1980, income gains were shared fairly equally between the wealthiest Americans and everyone else. But then Reagan came to Washington and everything changed.

The wealthy elite began to take home more of our nation’s income gains, while income gains for everyone else began to stay relatively stagnant. In 1980, the top 1 percent of Americans controlled 10% of annual U.S. income. As of 2007, the top 1 percent controlled 23.5% of annual U.S. income; the highest it’s been since the Great Depression. Between 1979 and 2012, the percentage increase in salary growth for the median American worker was just 5%, while growth for millionaire and billionaire executives was off the charts. As result, the share of the nation’s income going to the middle-class has been in a near nosedive for the past three decades.

Similarly, since the Great Recession, nearly all of our nation’s economic growth has been eaten up by the wealthy elite. Incomes for the top 5 percent of American households were up just over 5% between 2010 and 2012, while those households at the bottom of the income bracket had losses in income during the same time. And, 95% of income gains during the first three years of the Great Recession recovery were taken in by the top 1 percent.

Meanwhile, as you might expect from these numbers, the American middle-class is no longer the richest in the world. An analysis done recently by The New York Times found that our neighbor to the north, Canada, actually has the wealthiest middle-class in the world, dethroning America after decades at the top of the list.  And, estimates suggest that the Chinese middle-class is now larger than the entire population of the U.S.

Whether conservatives in Washington like it or not, the key to having a strong economy and a strong nation is having a strong middle class. It’s not just a coincidence that during a time when the American middle-class is the smallest it’s ever been our economy is also in the gutter. That’s because middle-class consumption is the demand engine that drives an economy.

Fortunately, while America might look more like a third-world nation today than a global power, there’s plenty of time to turn things around. And that starts by saying enough is enough to 33 years of failed Reaganomics, and putting in place the economic policies that will allow the middle-class to grow and thrive. From our trade policies to our tax policies to our labor policies and to the way that we handle big business and banksters, we need to roll back the Reagan Revolution.

Only then will we have a strong economy and a strong and developed nation.



The Four Biggest Right-Wing Lies About Inequality

On May 6, 2014, Robert Reich writes on Nation Of Change:

Even though French economist Thomas Piketty has made an air-tight case that we’re heading toward levels of inequality not seen since the days of the nineteenth-century robber barons, right-wing conservatives haven’t stopped lying about what’s happening and what to do about it.

Herewith, the four biggest right-wing lies about inequality, followed by the truth.

Lie number one: The rich and CEOs are America’s job creators. So we dare not tax them.

The truth is the middle class and poor are the job-creators through their purchases of goods and services. If they don’t have enough purchasing power because they’re not paid enough, companies won’t create more jobs and economy won’t grow.

We’ve endured the most anemic recovery on record because most Americans don’t have enough money to get the economy out of first gear. The economy is barely growing and real wages continue to drop.

We keep having false dawns. An average of 200,000 jobs were created in the United States over the last three months, but huge numbers of Americans continue to drop out of the labor force.

Lie number two: People are paid what they’re worth in the market. So we shouldn’t tamper with pay.

The facts contradict this. CEOs who got 30 times the pay of typical workers forty years ago now get 300 times their pay not because they’ve done such a great job but because they control their compensation committees and their stock options have ballooned.

Meanwhile, most American workers earn less today than they did forty years ago, adjusted for inflation, not because they’re working less hard now but because they don’t have strong unions bargaining for them.

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More than a third of all workers in the private sector were unionized forty years ago; now, fewer than 7 percent belong to a union.

Lie number three: Anyone can make it in America with enough guts, gumption, and intelligence. So we don’t need to do anything for poor and lower-middle class kids.

The truth is we do less than nothing for poor and lower-middle class  kids. Their schools don’t have enough teachers or staff, their textbooks are outdated, they lack science labs, their school buildings are falling apart.

We’re the only rich nation to spend less educating poor kids than we do educating kids from wealthy families.

All told, 42 percent of children born to poor families will still be in poverty as adults – a higher percent than in any other advanced nation.

Lie number four: Increasing the minimum wage will result in fewer jobs. So we shouldn’t raise it.

In fact, studies show that increases in the minimum wage put more money in the pockets of people who will spend it – resulting in more jobs, and counteracting any negative employment effects of an increase in the minimum.

Three of my colleagues here at the University of California at Berkeley — Arindrajit Dube, T. William Lester, and Michael Reich – have compared adjacent counties and communities across the United States, some with higher minimum wages than others but similar in every other way.

They found no loss of jobs in those with the higher minimums.

The truth is, America’s lurch toward widening inequality can be reversed. But doing so will require bold political steps.

At the least, the rich must pay higher taxes in order to pay for better-quality education for kids from poor and middle-class families. Labor unions must be strengthened, especially in lower-wage occupations, in order to give workers the bargaining power they need to get better pay. And the minimum wage must be raised.

Don’t listen to the right-wing lies about inequality. Know the truth, and act on it.

(1) Robert Reich is correct. The masses lack sufficient income to generate demand for production of products and services, which are increasingly produced by the non-human component, not labor. Without connecting the masses (individually) to the ownership of private sector wealth-creating, income-generating productive capital assets, income inequality results due to a tiny ownership class owning the vast bulk of those assets.
(2) Tectonic shifts in the technologies of production are impacting the market with job losses and the devaluation of the worth of labor due to “non-human” replacements and global competition with workers willing to work for far less pay than Americans. CEOs are definitely over-paid, and significantly they benefit from ownership (stock options) that workers are not privileged to and unions do not bargained for.
(3) Baloney! That is the reality. Relatively few will succeed as inventors and business entrepreneurs in the age of exponential growth of the non-human factor of production. Without extending equal opportunity for EVERY child, woman, and man to acquire ownership of FUTURE wealth-creating, income-generating productive capital assets financed on the basis that the investments will pay for themselves (as is the golden rule of the wealthy ownership class), economic inequality will continue to widen and the health of the American economy will continue to stagnate.
(4) Reich and conventional one-factor economists, who see a JOB as the ONLY source of income for “ordinary” Americans, exclude from their discussion and advocacy the necessity to broaden private sector  individual ownership of FUTURE wealth-creating, income-generating  productive capital assets, now narrowly owned by a tiny wealthy ownership class who own and control America’s most productive corporations.

While I am not opposed to the concept of a “minimum wage,” economic productivity is a bigger part of the story. Those arguing its support basically argue that labor is producing more value today, but working people aren’t seeing any of the gains. Who has walked away with the proceeds from all that productivity? But contrary to general belief, when looked at through the lens of two factors of production––human and non-human––labor is not becoming more productive; the non-human means of production is driving the productivity gains.

Whether or not raising the minimum wage is harmful and will cause less employment should be discussed within the larger scope of economic inequality. The proposed measures are at best a sedative to ease the pain of deteriorating livelihoods, but not the solution that is necessary to significantly address income disparities between the wealthy ownership class and the propertyless, non- and under-capitalized American majority.

Technological change makes tools, machines, structures, and processes ever more productive while leaving human productiveness largely unchanged (our human abilities are limited by physical strength and brain power––and relatively constant). The technology industry is always changing, evolving and innovating. The result is that primary distribution through the free market economy, whose distributive principle is “to each according to his production,” delivers progressively more market-sourced income to capital owners and progressively less to workers who make their contribution through labor.

People invented tools to reduce toil, enable otherwise impossible production, create new highly automated industries, and significantly change the way in which products and services are produced from labor intensive to capital intensive––the core function of technological invention. Most changes in the productive capacity of the world since the beginning of the Industrial Revolution can be attributed to technological improvements in our physical capital assets, and a relatively diminishing proportion to human labor. Physical productive capital does not “enhance” labor productivity (labor’s ability to produce economic goods). In fact, the opposite is true. It makes many forms of labor unnecessary. Because of this undeniable fact, binary economist Louis Kelso asserted that, “free-market forces no longer establish the ‘value’ of labor. Instead, the price of labor is artificially elevated by government through minimum wage legislation, overtime laws, and collective bargaining legislation or by government employment and government subsidization of private employment solely to increase consumer income.”

The role of physical productive capital is to do ever more of the work, which produces income. Full employment is not an objective of businesses. Companies strive to keep labor input and other costs at a minimum in order to maximize profits for the owners. Private sector job creation in numbers that match the pool of people willing and able to work is constantly being eroded by physical productive capital’s ever increasing role.

Furthermore, according to Kelso, productive capital is increasingly the source of the world’s economic growth and, therefore, should become the source of added property ownership incomes for all. Kelso postulated that if both labor and capital are independent factors of production, and if capital’s proportionate contributions are increasing relative to that of labor, then equality of opportunity and economic justice demands that the right to property (and access to the means of acquiring and possessing property) must in justice be extended to all. Yet, sadly, the American people and its leaders still pretend to believe that labor is becoming more productive.

In reality, raising the minimum wage is the equivalent of taxing employers for the work done by their employees and giving the proceeds to the workers. And that works against employment, not in favor of it, and penalizes the ownership class for their “tools” of productivity. Advocates for a minimum wage should instead be advocating for ensuring that EVERY citizen benefits from income derived by the ownership of productive capital assets, and eliminate the need for government measures that redistribute income in one form or another––through coerced trickle-down. In other words, accomplished through redistribution achieved by the rigging of labor prices, by taxation to support redistribution and job “creation,” or subsidization by inflation and by all kinds of welfare, open and concealed.

For REAL solutions to economic inequality, support the Agenda of The Just Third Way Movement at http://foreconomicjustice.org/?p=5797, Monetary Justice at http://capitalhomestead.org/page/monetary-justice, and the Capital Homestead Act at http://www.cesj.org/homestead/index.htm and http://www.cesj.org/homestead/summary-cha.htm.

See “Ownership––The Minimum Wage Replacement” at http://www.nationofchange.org/ownership-minimum-wage-replacement-1392301004http://www.huffingtonpost.com/gary-reber/ownershipthe-minimum-wage_b_4770199.html and http://www.opednews.com/articles/Ownership–The-Minimum-Wa-by-Gary-Reber-Assets_Credit_Economic_Economy-140217-873.html.


Why The Super-Rich Should Pay Super Taxes[?]

On April 5, 2014, Paul Buchheit writes on Nation Of Change:

Senator Lindsey Graham (R-SC) said, “It’s really American to avoid paying taxes, legally…It’s a game we play…I see nothing wrong with playing the game because we set it up to be a game.”

It’s not a game for Americans who need jobs and education and public transportation and infrastructure repair. But public services continue to be cut, while the wealthiest Americans benefit the most from a government they say they don’t want. They need government, but they don’t want to pay for it.

Here are some reasons why the super-rich should be paying a lot more in taxes.

1. $2 of Every $5 Owned Today was Created in the Last Five Years, and Went Mostly to the Richest 10%, Mostly Untaxed

And most of it was accumulated passively, and unproductively, by just waiting out the stock market. As America’s wealth increased from $47 trillion to an incredible $80.66 trillion in just five years, the richest 1% are estimated to have added an average of $5 million each to their fortunes. They pay no wealth tax, they can defer their income taxes, and they pay a reduced capital gains tax when they decide to cash in.

2. A Beggar Saving for a Hamburger will Pay More Sales Tax than the Entire Financial Trading Industry

There is no sales tax on financial transactions, no matter how speculative, and despite the fact that total trading value is many times more than the world economy. Derivatives trading was a major factor in the economic crash that depleted middle-class homeowner wealth in 2008. The trading volume on the Chicago Mercantile Exchange reached $1 quadrillion in notional value in 2012 (that’s a thousand trillion). Yet no sales tax is paid.

3. It’s Not Possible for a Financial Person to be Worth 100,000 Teachers or Firefighters

Defenders of excessive incomes use the “meritocracy” argument. But based on merit, some of the biggest moneymakers may be among the least worthy of us. Consider hedge fund managers who profit from shortages of homes and food, pay a smaller percentage in taxes than people making thousands of times less, and have the opportunity to defer all of their taxes. Or super-wealthy stock owners, like Mark Zuckerberg or Bill Gates or the Koch brothers, who take more from society than they give, yet can make up to $10 billion in one year, enough to pay the salaries of a quarter of a million medical technicians, and all of whichcan be tax-deferred indefinitely.

4. Corporations Make Billions by Appropriating Public Research and Federal Assets

Google’s business is based on the Internet, which started as the Defense Department’s ARPANET; the National Science Foundation funded the Digital Library Initiative research at Stanford University that was adopted as the Google model; and Google Maps came from the massive geographical database of the U.S. Census Bureau.

Pfizer has thrived on government largesse, relying on basic research performed at the National Institute of Health. The company is also starting to profit from the Human Genome Project, which by one estimate will generate economic activity of about $140 for every dollar spent.

Just as our public research has been misappropriated, so has our land. The recent episode with freeloading Cliven Bundy highlighted the takeaway from the public, the sense of entitlement among the rich, and the disdain for a government that is supposed to protect the common good. Yet instead of defending the commons, our government leaders see it as a means of profit. Paul Ryan’s Path to Prosperity proposed to sell millions of acres of “unneeded federal land.” Representative Cliff Stearns even recommended that we “sell off some of our national parks.”

5. The Great Majority of Tax Breaks go to the Rich

Most of the annual $1.3 trillion in “tax expenditures” (tax subsidies from special deductions, exemptions, exclusions, credits, and loopholes) goes to the top quintile of taxpayers. One estimate of total tax expenditures is a nearly incomprehensible $900 billion a year.

For those who believe that the wealthiest Americans already pay most of the taxes, they couldn’t be more wrong. Lower-income earners pay a much higher percentage in combined state and local income, property, sales and excise taxes. When all taxes are considered, middle-income and upper-middle-income earners pay about as much as the richest 1%.

A Conservative-Inspired Summary:

Paul Ryan’s great-grandfather started a construction firm, still in operation today, which in the 1950s received government contracts to help build the Interstate Highway System. Ryan attended a public high school and a public university. Part of his tuition was paid with Social Security survivor benefits. His mother, whom he refers to as his “role model,” rode public transportation every day to earn a degree at the University of Wisconsin, a public university.

We’re all dependent on the government services that we too easily take for granted. The wealthiest Americans receive the greatest benefits, but they insult the rest of us by treating their tax responsibility like a game.