Time to Investigate Justice Clarence Thomas, Perhaps the Most Corrupt SCOTUS Judge In Modern History

Time to Investigate Justice Clarence Thomas, Perhaps the Most Corrupt SCOTUS Judge In Modern History

Twenty House Democrats called Thursday on the U.S. Judicial Conference to formally request that the U.S. Department of Justice investigate Justice Clarence Thomas's non-compliance with the Ethics in Government Act of 1978.

Justice Thomas indicated on his annual financial disclosure forms that his wife had received no income since he joined the bench in 1991, despite the fact that his wife had in fact earned nearly $700,000 from the Heritage Foundation from 2003 to 2007.

The Ethics in Government Act of 1978 requires Supreme Court justices to disclose their spouse's income.

"To believe that Justice Thomas didn't know how to fill out a basic disclosure form is absurd," Congresswoman Louise Slaughter (D-NY) said. "It is reasonable, in every sense of the word, to believe that a member of the highest court in the land should know how to properly disclose almost $700,000 worth of income."

"To not be able to do so is suspicious, and according to law, requires further investigation. To accept Justice Thomas's explanation without doing the required due diligence would be irresponsible."

The letter (PDF) comes a day after President Barack Obama asked the U.S. Supreme Court to rule on the Patient Protection and Affordable Care Act, his landmark health reforms.

Seventy-four Members of Congress in February signed a letter calling for Justice Thomas to recuse himself from cases involving the Patient Protection and Affordable Care Act because of his family's financial ties to groups dedicated to lobbying against it.

In response, Justice Thomas released his new financial disclosure form in May. It indicated his wife received a $150,000 salary from the group Liberty Central in 2010. The group, which she co-founded, fights to repeal health care reform, among other things.

The appearance of a conflict of interest merits recusal under federal law.

Let's count down how many seconds it takes for conservatives to start yelling witch-hunt...3....2....1. The problem with investigating conservative corruption is you have to break out a dictionary and explain what ethics are. This takes a few days to sink in. Than they're still not sure exactly what you're talking about.

Conservative Republican Media Tell Bald-faced Lie About EPA and New Bureaucrats, Than Refuse To Correct Story

Conservative Republican Media Tell Bald-faced Lie About EPA and New Bureaucrats, Than Refuse To Correct Story

We talked earlier about the Daily Caller’s massive screw-up yesterday, on an important story about the Environmental Protection Agency. I figured the conservative outlet would grudgingly bury some awkwardly-worded correction and move on. I assumed wrong.

To briefly recap, the Daily Caller reported that the EPA is eyeing new greenhouse gas measures, which would in turn ask American taxpayers “to shoulder the burden of up to 230,000 new bureaucrats — at a cost of $21 billion — to attempt to implement the rules.” The piece was quickly embraced by the conservative message machine, with Fox News, National Review, and others trumpeting the story.

The problem, of course, is that the story isn’t true. The EPA, which only has 17,000 employees, is specifically “tailoring” its rule so that it won’t have to hire 230,000 officials. It’s right there in the court filings the Daily Caller relied on to publish its bogus piece.

Instead of backing off its obviously-wrong reporting, though, Daily Caller executive editor David Martosko is doubling down.

    “The EPA is well-known for expanding its reach, especially regarding greenhouse gas emissions. What’s ‘comically wrong’ is the idea that half of Washington won’t admit it. The EPA’s own court filing speaks volumes,” Martosko said in an email.

    “What’s more likely: that the Obama administration’s EPA wants to limit its own power, or that it’s interested in dramatically increasing its reach and budget? Anyone who has spent more than a few months in Washington knows the answer,” he added. “The suggestion that the EPA — this EPA in particular — is going to court to limit its own growth is the funniest thing I’ve seen since Nancy Grace’s nipple-slip.”

Look, I realize conservative media outlets like to play fast and loose with the facts. I also realize the right’s version of reality is often, shall we say, malleable.

But this is just ridiculous. Martosko is trying to make an argument based on assumptions and evidence-free predictions, and while I’m sure that’s more fun than journalism and abiding by professional ethics, the question here is plainly empirical. The Daily Caller reported — in black and white, and without qualifiers — that the EPA agency is “asking for taxpayers to shoulder the burden of up to 230,000 new bureaucrats.” Either that’s true or it’s not. What’s “well known” or perceived as “likely” is irrelevant. The claim is either accurate or it’s inaccurate.

And in this case, what the Daily Caller reported is plainly wrong.

It happens. Media outlets get things wrong. I’ve been a professional writer for a while and I’ve made plenty of embarrassing mistakes. The responsible thing to do is correct the record and try not to do it again.

The conservative media world, though, just doesn’t seem to care. It explains a great deal about why those who rely on outlets like these seem so woefully uninformed about current events.

Conservatives have a long history of contempt for ant efforts to protect American families and children to add a few more dollars to the bottom-line of corporations like Exxon - who already make millions in profits per day. Add to their contempt for the average American's health a morally bent attitude toward the truth and no wonder the right-wing conservative press just makes things up in their ongoing propaganda. Conservatives have been accusing descent hard working Americans of being socialists for years, yet they are the ones that act most like Stalin's old Politburo.

Obama, Taxes, Spending And How to Stimulate The Economy

Obama, Taxes, Spending And How to Stimulate The Economy

Not just the U.S. but the entire world has bought into economic snake-oil. No country, including and especially the U.S. can cut spending as the road to reviving the economy. President Obama is not on a spending spree. On the contrary, as a percentage of GDP Obama is actually more conservative than G.W. Bush. Obama has offset all new spending with cuts, while Bush and a Republican Congress just spent like crazy and put it all on the national debt card.

The Crumbling Case for Cutting Spending to Stimulate the Economy, by Chad Stone, CBPP: Empirical support for the view that sharp, immediate cuts in government spending would be good for the U.S. economy was never strong, and it’s getting weaker.

    The Economist is on the case, highlighting two new studies showing that austerity and growth don’t mix in the short term. ...

    The first new study is from the International Monetary Fund.  In its 2010 World Economic Outlook, the IMF put the kibosh on the idea that deficit reduction would boost economic growth in the short run.  IMF researchers have now presented a revised and extended version of that analysis reaching the same conclusion.

    The second new study, by Roberto Perotti, backs up those of us who have been arguing for some time that these international examples have little in common with current U.S. budget and economic conditions.  What makes the Perotti study so significant is that he has been one of the leading researchers cited by advocates of sharp, immediate cuts in government spending.

    Perotti conducted detailed case studies of the four largest multi-year deficit-reduction efforts that researchers have commonly regarded as spending-based.  He found that they were actually much smaller, and much less tilted toward spending cuts, than previous studies had assumed.

    Perotti also found that all four countries’ economies benefited from a rapid decline in interest rates and a moderation of wage growth, which in turn made domestic firms more competitive internationally; an expansion of exports was key to economic growth in three of the four cases. ...

    In short, the more closely you look at the evidence for the claim that cutting federal spending dramatically right now would be good for the economy, the less convincing that claim becomes.

Interest rates are already at rock bottom, and wage growth is not a problem, so the key conditions for austerity to work -- if it ever works -- are not present in the US economy.

Is Obama Phasing Out Asthma Inhalers

Conservatives Launch Bogus Attack On Obama Over FDA's Phase Out Of Certain Inhalers

The conservative media today attacked the Obama administration by attempting to link them to the Food and Drug Administration's decision to phase out "over-the-counter asthma inhalers containing chloroflouorocarbons (CFCs)." The Weekly Standard published a piece by Mark Hemingway headlined "Obama Administration Set to Ban Asthma Inhalers Over Environmental Concerns," which claimed that the "Obama administration would rather make people with Asthma cough up money than let them make a surely inconsequential contribution to depleting the ozone layer."

But it turns out that the FDA was simply following through with plans put in place when George W. Bush was president.

Hemingway reported:

    Remember how Obama recently waived new ozone regulations at the EPA because they were too costly? Well, it seems that the Obama administration would rather make people with Asthma cough up money than let them make a surely inconsequential contribution to depleting the ozone layer

Hemingway went on to cite an Associated Press article that explains some details of the inhaler ban, but Hemingway must not have read the AP article too closely. That's because the AP reported that "[t]he FDA finalized plans to phase out the products in 2008" when Bush was president, not Obama. From the AP article:

    The FDA finalized plans to phase out the products in 2008 and currently only Armstrong Pharmaceutical's Primatene mist is available in the U.S. Other manufacturers have switched to an environmentally-friendly propellant called hydrofluoroalkane. Both types of inhalers offer quick-relief to symptoms like shortness of breath and chest tightness, but the environmentally-friendly inhalers are only available via prescription.

Moreover, the FDA stated in a September 22, 2011, press release that it began "public discussions about the use of CFCs" for inhalers as early as January 2006 and that it had "finalized the phase-out date for using CFCs in these inhalers and notified the public in November 2008." From the FDA press release:

    The FDA began public discussions about the use of CFCs in epinephrine inhalers in January 2006. The FDA finalized the phase-out date for using CFCs in these inhalers and notified the public in November 2008. Many manufacturers have changed their inhalers to replace CFCs with an environmentally-friendly propellant called hydrofluoroalkane (HFA).

The United States has been committed to reducing CFCs ever since it signed The Montreal Protocol, an international agreement that was originally adopted on September 16, 1987, under the Reagan administration.

Despite the fact that The Weekly Standard's attack on Obama was refuted by the very source the Standard cited, other conservatives immediately pounced:

Among other brain-dead conservatives who regularly display a lack of respect for the facts was radio moron Tammy Bruce, little parrot Amanda Carpenter and the proto-fascist website Pajamas Media. All conservatives. America waits for the day these conservatives have something other than the values of brown-shirted thugs. Everyday these bitter right-wing misfits have a decision to make, fidelity to American values like the truth or to use lies and half-truths to attacks America loving Democrats who only want the best for the nation.

Solely For the Sake of Political Grand Standing, Republicans Are Holding The Country Hostage for The Second Time in Four Months, This Time Over Disaster Relief

Solely For the Sake of Political Grand Standing Republican Are Holding The Country Hostage for The Second Time in Four Months, This Time Over Disaster Relief

Sometime next week, the Federal Emergency Management Agency will officially run out of money if Congress doesn’t act. Unprecedented demands and gamesmanship by Republicans in the House of Representatives are threatening a funding bill for the agency, along with disaster relief for Americans affected by the recent hurricanes. Watching the spectacle unfold, it’s impossible not to marvel at short Republican memories—it wasn’t that long ago that playing politics with FEMA proved disastrous for the GOP.

By many accounts, the federal government’s failure to respond to Hurricane Katrina’s devastation of New Orleans was a turning point in George W. Bush’s presidency. His administration was shown to be incapable of even basic functions of government—helping desperate citizens in desperate need following a natural disaster. After they left the White House, several Bush aides acknowledged that this was the moment that the Bush presidency was irredeemably lost:

    Dan Bartlett, White House communications director and later counselor to the president: Politically, it was the final nail in the coffin.

    Matthew Dowd, Bush’s pollster and chief strategist for the 2004 presidential campaign: Katrina to me was the tipping point. The president broke his bond with the public. Once that bond was broken, he no longer had the capacity to talk to the American public. State of the Union addresses? It didn’t matter. Legislative initiatives? It didn’t matter. P.R.? It didn’t matter. Travel? It didn’t matter. I knew when Katrina—I was like, man, you know, this is it, man. We’re done.

    

In the weeks and months after the disaster, FEMA and Bush’s appointee to lead it, Michael Brown, quickly became the focal point of the botched administration response. Brown was the former head of the International Arabian Horse Association before coming to the agency, which needless to say didn’t give him much experience in dealing with natural disaster response. But he was a close ally to Bush during his political career, and that’s what counted.

It turned out that FEMA had been hollowed out as part of deliberate strategy—one based on the conservative philosophy that the federal government simply shouldn’t have a large role in people’s lives, even if it meant rescuing those lives from disaster. Bush’s first appointee to head FEMA, Joe Allbaugh, told the Senate during his confirmation process that “Many are concerned that federal disaster assistance may have evolved into both an oversized entitlement program and a disincentive to effective state and local risk management…. Expectations of when the federal government should be involved and the degree of involvement may have ballooned beyond what is an appropriate level.” As the years went on, career FEMA employees complained that “our professional staff are being systematically replaced by politically connected novices and contractors.” The deliberate neglect culminated in Brown’s appointment, followed by hundreds and hundreds of potentially unnecessary deaths in a major American city.

This anti–federal government philosophy led to both a human and political disaster. Yet today, Republicans in the House of Representatives are less than seventy-two hours away from leaving FEMA without any money to operate as they continue a crusade against federal spending.

When Hurricane Irene walloped twelve states in late August, FEMA took emergency measures to divert funding from many other projects to respond to the destruction. Now, the agency has only $215 million on hand, which is far below the $1 billion the agency wants to have access to at all times in case disaster should strike again. It could completely run out of money as soon as Monday.

Over the past couple of weeks, a non-controversial bill to extend government funding through mid-November suddenly heated up when Republicans refused to allow the additional FEMA funding without also including offsetting cuts from other programs, which is an unprecedented move—there has generally always been bipartisan agreement on providing immediate disaster aid. But Republicans passed a bill last night that offsets some of the disaster aid with $1.5 billion in cuts from a loan program for energy efficient vehicle production, along with rescinding $100 million in loans to the scandal-plagued company Solyndra.

The Senate has already passed—with the help of ten Republicans—a bill that provides the disaster relief with no strings attached, and majority leader Harry Reid has already pledged to kill the House bill.

House Republicans knew the Senate would not accept their bill, but are intent on catering to the hardline fiscal conservatives. “Change like this is hard,” House majority leader Eric Cantor defiantly said Wednesday. “We’ll find a way forward so that we can reflect expectations that taxpayers have that we are going to begin to start spending their money more prudently.”

Clearly, Republicans don’t find it “prudent” to ensure money for fundamental government functions like helping citizens after natural disasters. As Ben Adler has noted, the GOP candidates running for president show a similar contempt for the role of the federal government. The party was bitten badly by this philosophy once before—but clearly they drew no lessons from it.

Conservatives like to claim government can do no good. They were very hard to make sure that becomes the new reality. Americans are a proud bunch and like to do as much on their own as possible, but everyone runs into some situation eventually that is a little overwhelming. Hurricanes, floods and tornadoes are such events. They can cripple and even destroy small towns and individual lives. Conservative Republicans seem to be OK with that.

Conservative Republican Presidential Candidates Completely Out of Touch With Real America

Conservative Republican Presidential Candidates Completely Out of Touch With Real America

The GOP presidential field will trot out for yet another debate in Orlando, FL tonight. Between taking pot shots at each other, the candidates have predictably come out against President Obama’s economic plans to create jobs and reduce the deficit with infrastructure investments, more progressive tax rates, and the elimination of corporate tax loopholes. On cue, the candidates are bringing back talking points from the dead — falsely insisting that Obama’s plans will destroy small businesses and job growth.

But with all their talk, presidential candidates risk drowning out their own base. A new Gallup survey found that Americans “favor almost all proposals” in Obama’s economic plans — including a majority of Republicans. Indeed, a high majority of Republicans favor Obama’s plan to provide tax cuts for small businesses, provide additional funds to hire teachers and firefighters, and giving tax breaks to companies that hire the long-term unemployed.

And while all of the candidates have embraced corporate tax cuts as the key to job creation, it turns out that a majority of the Republican public wants to increase corporate taxes by eliminating tax deductions:

Altogether, 70 percent of the public supports eliminating these tax loopholes and 66 percent support increasing tax rates on individuals earning at least $200,000. As Gallup notes, this is the second survey that shows “the American public broadly support Obama’s jobs plan.” These candidates may win political points by bashing Obama’s economic plans, but they’ll evidently have to adopt much of his vision to win over the public.

Many political observers over the last 15 years have noted that when it comes to economics conservative leadership is utterly out of touch with working class America whether they be Republicans or Democrats. Conservatives have a destructive economic agenda based on dog-eat-dog supply-side economics i.e. make sure the wealthy get more wealth and more power as they take money from the working class and redistribute it to the rich. Why working class conservatives vote against their own best interests is one of the strangest phenomenons in American politics.

Associated Press Pushes False "fact check" of President Obama's statements on Buffett Rule

Associated Press Pushes False "fact check" of President Obama's statements on Buffett Rule

The conservative media have echoed the criticisms made by a misleading Associated Press "fact check" of President Obama's statements about taxation and the Buffett Rule he has been promoting. Progressive economists have rebutted the AP's criticisms and lent support to his proposals.
AP: Millionaires Already Taxed More Than Their Secretaries

AP: "The Data Say" Millionaires "Are Already Taxed At Higher Rates Than Their Secretaries." From an Associated Press "fact check" by Stephen Ohlemacher:

    President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are.

    "Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said as he announced his deficit-reduction plan this week. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."

    On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

    The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office. [Associated Press, 9/20/11]

Progressive Economists Back The Buffett Rule, Refute AP

Krugman: "The Obama/Buffett Claim Is Absolutely, Totally True." From Nobel laureate Paul Krugman's New York Times blog:

    Well, it seems as if a number of people in the media have decided that Obama was fibbing when he said that some millionaires pay lower tax rates than their secretaries -- because, as the usual suspects triumphantly declare, on average millionaires pay higher average taxes than middle-income Americans.

    This is, of course, stupid: the operative word is SOME.

    And we're not talking about one or two exceptional guys, either. Look at the IRS data on returns for the 400 highest incomes in America (pdf) -- specifically, Table 3. If you look at the numbers since 2004, you'll see that in a typical year between 30 and 40 percent of those super-high-income players paid an average tax rate of less than 15 percent; most of them paid less than 20 percent. Bear in mind that for the very wealthy the payroll tax -- the main burden on working-class Americans -- is trivial, because of the cap on Social Security and the fact that it only applies to earned income. And what becomes clear is that the Obama/Buffet claim is absolutely, totally true.

    So why the attack? Probably because it's such an effective line. And we can't have populism that actually strikes a chord with the public, can we? [The Conscience of a Liberal, The New York Times, 9/21/11]

CEPR's Dean Baker: Obama "Made A Simple And True Statement In His Speech On The Budget." From Dean Baker, co-director of the Center for Economic and Policy Research:
    President Obama made a simple and true statement in his speech on the budget Monday. He said that there were millionaires and billionaires who pay tax at a lower rate than middle income families.

    Many news outlets went to town to point out that on average millionaires and billionaires pay tax at a higher rate than middle income families. Of course this is not what Obama said. He was pointing out that some of the richest people in the country (Warren Buffet was his model), get most or all of their income as capital gains and therefore only pay taxes at the 15 percent capital gains rate.

    The NYT gets this right today. Other outlets could have saved a lot of trees and better served their readers if they didn't work so hard trying to refute something that President Obama did not say. [Beat the Press, Center for Economic and Policy Research, 9/21/11]

Jared Bernstein: Buffett Rule Is A "Principle," A "Guideline For Tax Reform." From Jared Bernstein, Senior Fellow at the Center on Budget and Policy Priorities:

    Actually, let's look at this principle for a moment, for "principle" it is--in fact, it doesn't factor at all in the $1.5 trillion in revenue raised in the President's budget plan.   The administration laid it out as a guideline for tax reform, a kind of tripwire in the tax code to avoid the problem identified by billionaire Warren Buffet: because much of his income gets special treatment in the tax code, he faces a smaller effective tax rate than many in the middle class.

    [...]

    Now, it's not the case that every millionaire pays a smaller share in taxes compared to middle class families.  But, as my colleague Chuck Marr points out on the CBPP blog, if much of their income derives from non-labor earnings, like capital gains and dividend payouts from their equities, then they likely do pay less as a share of their income.

    And in fact, Chuck features a graph showing that the effective tax rate (taxes paid as a share of income) on income and payroll taxes are about 15% for a middle-class family with mostly earned income, compared to 12% for a millionaire (or higher) household with at least 2/3 investment income.

    Here's another look at the same data from the Tax Policy Center.  This figure shows the effective tax by share of investment income.  The effective rate drops by half going from left (more labor income) to right (more capital income).

    Source: Tax Policy Center, link above.

    Is there a rationale for such favorable, and potentially distortionary, tax treatment?  As noted here, I don't see it, and the research is supportive of that view.  It's just another loophole (and another victory for the winning side in the class war, but that's another issue...) [On the Economy, 9/20/11]

CBPP's Tax Policy Director Chuck Marr: "A Significant Group Of Very Wealthy People Pay A Smaller Share Of Their Incomes In Federal Income And Payroll Taxes Than Large Swaths Of The Middle Class." From Off The Charts, a blog of the Center on Budget and Policy Priorities

 Funny how conservatives suddenly decide, when convenient, that facts matter. They have lied, distorted and told half truths for fifty years to manipulate the American public into voting against their own best interests. Now that they have left president Obama with few tools to fix the economy they broke, they're lying in their tactics to once again avoid responsibility for keeping millions of Americans unemployed. Keeping Americans unemployed is their major campaign theme heading into 2012. They figure the worse the economy, the more they can shift blame.

Myth of the Month - Higher Taxes on The Rich Kills Jobs

6 Dumb Arguments Against Taxing the Rich, ExplainedDebunking the conservative case against making the rich pay their fair share

On Saturday, the Obama administration unveiled the "Buffett Rule [1]," a proposed tax on millionaires and billionaires named after celebrity investor Warren Buffett, who has long argued that the federal government should demand more of the wealthy. The millionaires tax is certain to become a major point of contention in the 2012 presidential campaign, and Republicans have wasted no time in heaping it with calumnies. Here are the six most popular conservative arguments against a progressive tax code, and why they're wrong:

It's class warfare! [2]
Yeah right. Three decades of laissez-faire economic polices have allowed the rich to double their share of the national income while paying tax rates a fifth lower than before. The result, notes Kevin Drum [3], was "wage stagnation for everyone else, a massive financial collapse that ravaged the middle class, an enormous deficits that they'll be asked to pay off eventually." If the millionaires tax is the only blowback, the wealthy should count their blessings.

It's a tax on small business [4]
"Don't forget that most small businesses file taxes as individuals," House Budget Committee Chairman Paul Ryan (R-Wis.) said on Fox News Sunday. "So when you are raising top tax rates, you are raising taxes on these job creators." Except when you aren't. ThinkProgress's Pat Garofalo points out [5] that fewer than 2 percent of the nation's small businesses fall into either of the top two tax brackets. Plus, many of the small business filers in the upper brackets are merely investors who have nothing to do with running the business. And if small businesses don't want to pay taxes as individuals, they can file always as corporations.

It reduces incentives to work and invest [6]
Experience shows otherwise. As Nancy Folbre points out [7] over at Economix, "average annual rates of growth in gross domestic product in the high tax era between 1950 and 1980 exceeded those of the last 30 years. Increases in the top tax rate under President Bill Clinton were followed by robust economic expansion."

The other reasons are at the link. Below are some links to the citations in the article.

[2] http://www.outsidethebeltway.com/obamas-millionaires-tax/

http://motherjones.com/kevin-drum/2011/09/paul-ryan-insults-our-intelligence-yet-again

5] http://thinkprogress.org/economy/2011/09/19/322193/small-business-taxes-lies/

[7] http://economix.blogs.nytimes.com/2011/04/11/taxing-the-rich/

Let's all ask ourselves a basic question - how did the wealthy get their money. The micro details may differ but the macro reasons are the same as they have always been. A big complex infrastructure such as the one the USA has makes it possible for business to do business. That infrastructure - roads, air traffic control, higher education, etc has to be paid for. Conservatives do not want the people who have become the richest to pay for their share of that complex infrastructure. The other big part of the macro picture is labor. If you're not an executive you're labor. Business cannot make money without labor. part of labor's compensation in a big free market like ours is roads, schools, firefighters, nurses, libraries, national parks and teachers. Those people and institutions must be paid for. Conservatives want it all for free. last I heard getting a lot of stuff for free was the worse kind of welfare.

This is Why We Have Broken Government, The Utterly Insane Idiot Rep. Paul Ryan (R-WI) Calls for Higher Taxes on Middle-class

This is Why We Have Broken Government, The Utterly Insane Idiot Rep. Paul Ryan (R-WI) Calls for Higher Taxes on Middle-class

Paul Ryan Calls For Increasing Taxes On Middle Class But Dismisses Millionaires Tax As ‘Class Warfare’


Rep. Paul Ryan (R-WI) resumed his attacks on President Obama’s economic policy Sunday morning, suggesting that the President’s plan to tax millionaires’ profits from capital gains in order to fund job creation efforts constitutes “class warfare”:

    RYAN: It adds further instability to our system — more uncertainty — and it punishes job creation and those people who create jobs. Class warfare, Chris, may make for really good politics but it makes for rotten economics. We don’t need to divide people and prey on people’s fear and envy and anxiety. We need to remove the barriers so entrepreneurs can hire people. These tax increases don’t work. [...]

    This is a double tax… If we tax investment and tax more you will get less of it. It looks like to me not a very good sign. It looks like the President wants to move down the class warfare path. Class warfare will simply divide this country more, will attack job creators,  divide people, and it doesn’t grow the economy.


Ironically, Ryan was simultaneously calling for an end to the current temporary tax cuts, which would raise taxes by 50 percent on those making less than $106,000. While launching accusations of “class warfare,” Ryan is the one who would prefer that people with less money pay more, while those with more money keep more.

As Warren Buffett pointed out last month, the mega-rich pay “practically nothing” in payroll taxes and instead pay far lower tax rates on passive investment income. Congress has “coddled” billionaires, Buffett argued, rather than calling on them for serious “shared sacrific

There is a warfare based on economic classes going on in America. Conservatives have declared war on people who work for a living while defending people whose income has gone up 90% in the last twenty years. If wealth alone created jobs - well where are they. If tax cuts for millionaires created jobs, where are they. Ryan is a mental basket-case. Someone so out of touch with reality he should be under observation in a psych-ward, not pretending to represent the people in Congress.

Has Republican Conservatism Become a Cult

Has American-Style Conservatism Become a Religion?

As the American right lurches from traditional conservatism – a go-slow approach to governing that stresses the importance of continuity and social stability – to a far more reactionary brand typified by acolytes of Ayn Rand and Tea Party extremists waving misspelled signs decrying Democrats' "socialism," the time has come to ask whether modern “backlash” conservatism has become a religious faith rather than a pedestrian political ideology.

Ideology is grounded in the real world. It offers us a philosophical lens through which we can efficiently process what's happening in the world around us. Religion is different. It's a fixed belief system, based on faith, and it is immune to – or at least highly resistant to – challenges mounted by objective reality. Which better describes the belief system of a typical Rush Limbaugh fan or Tea Party activist?

Like religious faiths, the hard-right reveres an original text – the Constitution – and, like all religious fundamentalists, conservatives claim to adhere to a literalist interpretation of it while actually picking and choosing from among its tenets. Just as the vast majority of Christian fundamentalists don't actually stone their daughters to death when they're obnoxious to their fathers, the Tea Partiers conveniently ignore more or less the entirety of Article 3. Also like other fundamentalist sects, most conservatives actually have a poor understanding of what the text they revere actually means.

Like the Manicheans – adherents of one of the world's great religions at one point in history – they tend to see a world defined by a conflict between the forces of light and darkness. The forces of good are decent, conservative, "real" Americans – mostly white, married Christians, but with exceptions made for others who keep the faith. They stand opposed to a wide array of diabolical figures: liberals, gays and lesbians, Muslims, Mexicans, socialists and other foreigners, especially the French.

And like adherents of other religious faiths, they hold a special enmity for apostates. When stalwart conservatives like David Frum started talking about “epistemic closure” – “conservatives’ tendency to operate in an information bubble” – they were pilloried by their fellow travelers, accused of the worst offense: liberal heresy. Not only are moderate conservatives like Kathleen Parker or Christine Todd Whitman ripe targets, but so are red-meat Republicans who stray from the party line to any degree. Even people like former Utah Senator Bob Bennett can be painted as RINOS (Republicans in name only) if they stray from church doctrine even slightly.

Backlash conservatives also have their prophets and their saints. Just listen to Republicans talking about the Founders – a groups of liberals, moderates and conservatives of their day who agreed on very little but are assumed by the flock to have been staunch right-wingers. The faithful conveniently ignore the real-world foibles of their Holy Men. Yes, Ronald Reagan offered amnesty to undocumented immigrants, raised taxes 11 times and ran roughshod over the separation of powers enshrined in the Constitution, but to the believers, he remains as pure as the Virgin Mary is to Catholics. (Reagan would be polling right there at the bottom with Jon Huntsman if he were running for the GOP nomination today.)

Perhaps the easiest parallel to draw between conservatism and religion is the right's vilification of climate scientists, 98 percent of whom agree that human activities are changing our world with dangerous consequences. The attacks are reminiscent of the Catholic Church's running battle with “Copernicans” who believed that the Earth revolved around the sun; a theory that flew in the face of church doctrine. In that sense, Michael Mann of “climate-gate” fame is like a modern Galileo (only Mann has been completely vindicated while Galileo was handed over for trial by the Roman Inquisition and lived out the rest of his life under house arrest).

Conservatives certainly claim they represent literal interpretation of the Constitution and the Bible, but in reality they actually pick and choose. Goodness knows they seem to completely ignore Jesus Sermon on the Mount. For even a peculiar brand of Christianity it is odd how much they love the blood, guts, violence and revenge of the Old Testament. When it comes to the Constitution they also pick what they like   - free speech for them and no one else. Freedom of religion for them and no one else.

Ethics Challenged Republican of the Week - Mitt Romney Owns Boeing Stock, Takes Their Side in Labor Despite

Ethics Challenged Republican of the Week - Mitt Romney Owns Boeing Stock, Takes Their Side in Labor Despite

As Mitt Romney steps up his attacks on the National Labor Relations Board for its decision to block Boeing from retaliating against striking workers by building a new plant in South Carolina, a new report from Bloomberg notes that the former Massachusetts governor owns a significant amount of stock in the Seattle-based aerospace corporation.

According to his recently-released personal financial disclosure form, Romney owns up to $100,000 in Boeing stock. Though Romney’s personal assets, which total between $190 million and $250 million, are managed by a blind trust which he does not control, its contents are listed on the Massachusetts Republican’s disclosure forms and are easy for anyone to find with a simple Google search.

Given the potential for a conflict of interest, ThinkProgress spoke with Romney spokesman Eric Fehrnstrom about the Boeing matter. Ferhnstrom denied any possibility of impropriety, telling ThinkProgress that “[Romney's] personal investments are all in a blind trust. Those are investment decisions that are made by a trustee.” Fehrnstrom sidestepped the fact Romney doesn’t have to manage his own investments to know what’s in them, maintaining simply that there was “no” conflict of interest.

Conservatives continue to have a twisted and strange view of freedom in the USA. They think big business should have all the power to do anything they want and the workers who make corporate profits possible should have no rights at all. That is the secret code, the implied meaning when conservatives say they are "pro business". What they really mean is that we should live in an America where labor has no rights.

Thugs At Work - The Pennsylvania Republican Plan To Redistrict Their State So Democrats Cannot Win

Thugs At Work - The Pennsylvania Republican Plan To Redistrict Their State So Democrats Cannot Win

Pennsylvania has voted Democrats into the oval office every year for the past two decades.  But the Pennsylvania GOP, in control of both houses and the Governor's office (Tom Corbett), is gearing up to change that with a new way of counting PA's electoral votes. 

Maps of new congressional districts proposed by the GOP-run state show an evil-genius plan to change the electoral college system for their benefit.  If repeated, the new system could be disastrous to Obama's 2012 election and democracy in general:  Even if most Pennsylvanians vote for Obama, the redistricting rules could result in a GOP victory.

The scary part is that Democrats, and mere advocates of democracy, can do nothing at all to stop this.  The redistricting of Congressional maps falls after each new Census, the most recent of which just wrapped-up, so the changes are perfectly legal.  They are not, however, what many would consider ethical - nor democratic, for that matter.

According to Mother Jones, the GOP's changes to Congressional districts will give Republicans twelve safe seats in Congress, while Democrats will be guaranteed only six.  These numbers will come into play again during the Presidential election, when, should Obama be victorious,  the redistricting will result in 12 GOP electoral votes compared to 6 Democratic ones (so long as the Republican candidate wins Republican districts).  Obama will thus lose 12 points he could have maintained in a winner-takes-all system.  What's worse,  if the election is close and Republicans in other states follow suit, national opinion may lose out to unfair rules.

There are historical precedents for such anti-democratic measures:

    Looks as if the Republicans are inspired by the British rotten boroughs of old. Those gave the Tories disproportionately more power than a consistent nation-wide formula for representation would have done. The rotten boroughs were eliminated in the Reform Act of 1832, widely considered to have "launched the rise of modern democracy in Britain".

    In other words, the Republicans are looking to move away from "modern democracy" - which strives for proportional representation - and towards a kind of "crude democracy". Crude, in that it has the outward form of democracy - people voting - but with a representation formula that advantages one party.

    Of interest: The British rotten boroughs were eliminated due to, in part, public pressure. I suspect that in this country, public pressure will be lacking due to the miserable job the press does informing people of what's important. Especially since it involves mathematics, where journalists have shown less understanding than that of a high school algebra student. Plus you have Fox News adding to the confusion with their unique form of "journalism".

While the new rules are hugely significant to the outcome of the 2012 election, they are also a stunning reflection of our current politics.  As politicians continue to represent corporations and Wall Street, instead of their constituents on Main Street, it becomes clear that our elected officials do not work for us or democracy, but for themselves and their hard-lined parties.



by By Kristen Gwynne, AlterNet. Reprinted for educational purposes.

Conservatives have had quite the decade in trying to destroy freedom and democracy in America. They have created a false controversy over voter fraud in order to make it much more difficult for seniors, students and the poor to vote. They lied us into a war in Iraq and told America that everyone would die if they didn't vote right-wing. Who acts that way. Not real Americans. Not patriots. Conservative are just jack-booted nationalists who work everyday to make America less free.

Why Does Eric Cantor (R-VA) Hate America

Why Does Eric Cantor (R-VA) Hate America

Majority Leader Eric Cantor (R-VA) voted for over $120 billion to rebuild Iraq and Afghanistan, funds that were used to construct and repair schools, roads, bridges, and other critical infrastructure.

Now, Cantor is opposing President Obama’s proposal to spend $30 billion to modernize 35,000 American schools. Reuters has the story:

    U.S. House Republican Leader Eric Cantor said on Monday he will not support President Barack Obama’s proposal to renovate U.S. schools as part of the administration’s bill to spur job growth.

    He added that Obama should focus instead on cutting federal regulations that he says kill U.S. jobs…

The president’s proposal is a modest effort. The total maintenance and repair backlog at U.S. schools is estimated at $270 billion to $500 billion. While the funding Obama is proposing is fully offset, Cantor voted to build schools in Iraq and Afghanistan with deficit spending.

Construction and building projects generally create about 10,000 jobs per billion spent. At a time of high unemployment, the funding that Cantor opposes would create about 300,000 jobs. Economist Jared Berstein explains that funding to modernize schools is “a smart way to get a lot of people who really need jobs back to work, fix a critical part of our institutional infrastructure, save energy costs, provide kids with a better, healthier learning environment, and do so in way that everyone can see and feel good about each morning when they drop their kids at school.”

Please do not be fooled by their flag waving fake patriotism, conservative Republicans are the rot eating away at he basic values that make America a democratic republic.

Bush Has learned Nothing From His Failures. Bush Remains The Typical Arrogant Conservative

Bush Has learned Nothing From His Failures. Bush Remains The Typical Arrogant Conservative

President Bush sat down with USA Today to discuss the 10th anniversary of the 9/11 attacks and his role in shaping U.S. policy in their aftermath. During the interview, Bush thought he’d take the opportunity to pat himself on the back for Osama bin Laden’s death:

    Bush said the events that led to the death of al-Qaeda leader Osama bin Laden in May began during his administration.

    “The work that was done by intelligence communities during my presidency was part of putting together the puzzle that enabled us to see the full picture of how bin Laden was communicating and eventually where he was hiding,” he said. “It began the day after 9/11.”

The reality, of course, is that Bush’s attempts to capture or kill bin Laden were huge failures. While it’s been well documented that the Bush administration missed an opportunity to get bin Laden in Tora Bora in 2001, Bush himself subsequently stated publicly that he wasn’t spending much time thinking about getting him. “I truly am not that concerned about him. I am deeply concerned about Iraq,” Bush said in 2002, “I really just don’t spend that much time on him, to be honest with you.” Bush told reporters in 2006 that hunting the al Qaeda leader was “not a top priority use of American resources.”

And in 2005, Bush shut down the CIA’s unit dedicated to finding bin Laden in order to shift resources to Iraq. “The Central Intelligence Agency has closed a unit that for a decade had the mission of hunting Osama bin Laden and his top lieutenants,” the New York Times reported in 2006, adding that resources “had been redirected from the hunt for Mr. bin Laden to the search for Abu Musab al-Zarqawi, who was killed last month in Iraq.” When the right wing rushed to give Bush credit after bin Laden’s death in May, ThinkProgress produced this short video highlighting Bush’s failures:

Soon after he took office, President Obama steered the U.S. on a course to end the war in Iraq and put resources back into finding bin Laden. “Shortly after I got into office,” Obama said in an interview after bin Laden’s death, “I brought [then-CIA director] Leon Panetta privately into the Oval Office and I said to him, ‘We need to redouble our efforts in hunting bin Laden down. And I want us to start putting more resources, more focus, and more urgency into that mission.’”

Republican Wuss of the Week - Why is House Budget Committee Chairman Paul Ryan (R-WI) Afraid of His Constituents

Republican Wuss of the Week - Why is House Budget Committee Chairman Paul Ryan (R-WI) Afraid of His Constituents

House Budget Committee Chairman Paul Ryan (R-WI), the author of the House GOP plan to phase out Medicare, does not like it when constituents publicly challenge him. In fact, people who disagree with Ryan have a habit of getting arrested for it. A few weeks ago, several of Ryan’s unemployed constituents staged a peaceful sit-in at his Kenosha, Wisconsin office to protest his unpopular decision not to hold any free public town halls during the August recess. These constituents didn’t think they should have to pay to ask their elected representative a question. Instead of meeting with them, Ryan’s staff called the police.

So it should come as no surprise that this week, three people who paid to see Ryan speak were arrested and charged with trespassing for protesting the event. One constituent, a 71-year-old retired plumber from Kenosha, Wisconsin, was handcuffed and pushed to the ground by security:

    Video footage taken by an attendee at the event shows that one of them, Tom Nielsen, received particularly harsh treatment — he was pushed to the ground and handcuffed. Nielsen received an additional charge of resisting arrest.

    Ryan was speaking Tuesday afternoon at the Whitnall Park Rotary Club. Protesters gathered both outside his event and inside, standing up and disrupting the congressman’s remarks.

    According to Oak Creek Patch, as many as a dozen protesters were escorted out of the event. Another dozen or so left willingly.

Ryan seemed supremely undisturbed that a senior citizen worried about receiving the Medicare he’s paid into his whole life was treated so brutally. Indeed, Ryan made light of the arrest and quipped to the audience, “I hope he’s taking his blood pressure medication.”

Watch it, courtesy of Wisconsin Jobs Now:

Another woman was shown the door when she challenged Ryan’s claim that the jobs crisis is directly related to the debt crisis. “Our debt is out of control because of the tax cuts you’re giving,” she said. “Our unemployment in 2003 was 6.2% before the tax cuts went through. Now our unemployment rate is 9.1%. What are you doing to create jobs, Congressman?” Another woman was escorted out when she stood up while Ryan was speaking and said, “You won’t talk to us. How can we give our opinions when you refuse to talk to us?”

Ryan has consistently faced angry constituents at his events since his Medicare-killing budget became a top GOP priority. Tired of being publicly embarrassed by constituents who voice their disagreement and say his policies are hurting them, Ryan has resorted to increasingly harsh responses to deal with people who have the audacity to speak up at his events.

I do have a question for the local police. I'm sure you're good folks but why are you acting as strong-arm bullies for this wussball Congress critter. That really is not your job. If one of them tries to physically attack Ryan that is another story. This people are just trying to get straight answers.

As Usual Rick Perry is Wrong. We Can Spend Our Way Out of The Recession

As Usual Gov. Rick Perry is Wrong. We Can and Should Spend Our Way Out of The Recession

The country is — or should be — focused on jobs. Some 25 million Americans who want a full-time job can’t get one. The youth unemployment rate is as much as twice that of the already unacceptable national average.

America has always thought of itself as a land of opportunity — but where is the opportunity for our youngsters who face such bleak prospects? Historically, those who lose their jobs quickly got another, but an increasingly large fraction of the unemployed — now more than 40 percent — have been out of work for more than six months.

President Barack Obama will deliver an address tonight outlining his vision of what can be done. Others should be doing the same.

Around the country there is growing pessimism. The rhetoric will be fine. But is there anything that anyone can really do — given the country’s looming debt and deficit?

The answer from economics is: There is plenty we can do to create jobs and promote growth.

There are policies that can do this and, over the intermediate to long term, lower the ratio of debt to gross domestic product. There are even things that, if less effective in creating jobs, could also protect the deficit in the short run.

But whether politics allows us to do what we can — and should — do is another matter.

The pessimism is understandable. Monetary policy, one of the main instruments for managing the macro-economy, has proved ineffective — and will likely continue to be. It’s a delusion to think it can get us out of the mess it helped create. We need to admit it to ourselves.

Meanwhile, the large deficits and national debt apparently preclude the use of fiscal policy. Or so it is claimed. And there is no consensus on which fiscal policy might work.

Are we doomed to an extended period of Japanese-style malaise — until the excess leverage and real capacity works its way out? The answer, I have suggested, is a resounding “no.” More accurately: This outcome is not inevitable.

First, we must dispose two myths. One is that reducing the deficit will restore the economy. You don’t create jobs and growth by firing workers and cutting spending. The reason that firms with access to capital are not investing and hiring is that there is insufficient demand for their products. Weakening demand — what austerity means — only discourages investment and hiring.

As Paul Krugman emphasizes, there is no “confidence fairy” that magically inspires investors once they see the deficit go down. We’ve tried that experiment — over and over. Using the austerity formula, then-President Herbert Hoover converted the stock market crash into the Great Depression. I saw firsthand how the International Monetary Fund’s imposed austerity on East Asian countries converted downturns into recessions and recessions into depressions.
I don’t understand why, with such strong evidence, any country would impose this on itself. Even the IMF now recognizes you need fiscal support.

The second myth is that the stimulus didn’t work. The purported evidence for this belief is simple: Unemployment peaked at 10 percent — and is still more than 9 percent. (More accurate measures put the number far higher.) The administration had announced, however, that with the stimulus, it would reach only 8 percent.

The administration did make one big error, which I pointed out in my book “Freefall” — it vastly underestimated the severity of the crisis it inherited.

Without the stimulus, however, unemployment would have peaked at more than 12 percent. There is no doubt that the stimulus could have been better designed. But it did bring unemployment down significantly from what it otherwise would have been. The stimulus worked. It was just not big enough, and it didn’t last long enough: The administration underestimated the crisis’s durability as well as its depth.

Thinking about the deficit, we need to reflect back 10 years, when the country had such a large surplus at 2 percent of GDP that the Federal Reserve Bank chairman worried we would soon pay off the entire national debt — making the conduct of monetary policy difficult. Knowing how we went from that situation to this helps us think through how to solve the deficit problem.

There have been four major changes: First, tax cuts beyond the country’s ability to afford. Second, two costly wars and soaring military expenditures — contributing roughly $2.5 trillion to our debt. Third, Medicare Part D — and the provision restricting government, the largest drug buyer, from negotiating with pharmaceutical companies, at a cost of hundreds of billions of dollars over 10 years. Fourth, the recession.

Reversing these four policies would quickly put the country on the road of fiscal responsibility. The single most important thing, however, is putting America back to work: Higher incomes mean higher tax revenues.

But how do we get America back to work now? The best way is to use this opportunity — with remarkably low long-term interest rates — to make long-term investments that America so badly needs in infrastructure, technology and education.

We should focus on investments that both yield high returns and are labor intensive. These complement private investments — they increase private returns and so simultaneously encourage the private sector.

Helping states pay for education would also quickly save thousands of jobs. It makes no sense for a rich country, which recognizes education’s importance, to be laying off teachers — especially when global competition is so fierce. Countries with a better educated labor force will do better. Moreover, education and job training are essential if we are to restructure our economy for the 21st century.

The advantage of having underinvested in the public sector for so long is that we have many high-return opportunities. The increased output in the short run and increased growth in the long run can generate more than enough tax revenues to pay the low interest on the debt. The result is that our debt will decrease, our GDP will increase and the debt to GDP ratio will improve.

No analyst would ever look at just a firm’s debt — he would examine both sides of the balance sheet, assets and liabilities. What I am urging is that we do the same for the U.S. government — and get over deficit fetishism.

Joseph E. Stiglitz is University Professor at Columbia University. Among many books, he is the author of Globalization and Its Discontents. He received the Nobel Prize in Economics in 2001 for research on the economics of information.Reprinted for educational purposes.

Can rational Americans overcome the daily propaganda that we need cuts in spending, not more spending. This is exactly the kind of economic circumstances that call for government intervention. Just because right-wing conservatives like Perry repeat false dogmas over and over again does not make them true.

President Obama and The Economy

President Obama and The Economy

Every political failure in a democracy begins with bad storytelling. When false narratives and incoherent story lines dominate public conversation, poor decisions are sure to follow.

So it is with the presidency of Barack Obama. This brilliant orator's inability to tell a simple tale of how America has ended up mired in an economic recession blighting the lives of millions borders upon pathology.

Writing in the New York Times, psychologist Drew Westen imagines how Obama might have framed it: "I know you're scared and angry," he could have said. "Many of you have lost your jobs, your homes, your hope. This was a disaster, but it was not a natural disaster. It was made by Wall Street gamblers who speculated with your lives and futures. It was made by conservative extremists who told us that if we just eliminated regulations and rewarded greed and recklessness, it would all work out. But it didn't work out."

Ah, but that would be needlessly confrontational. It would be playing the "blame game." Every Republican commentator from sea to shining sea agrees that telling the plain story of how George W. Bush turned the balanced budgets he inherited from Bill Clinton into a $10.6 trillion National Debt, an ongoing $1.3 trillion annual deficit, and an economy in free fall is terribly rude.

They prefer a bogus tale of wild over-spending by the current administration, which the White House does little to correct. A born conciliator, Obama seemingly hates to make anybody angry, with the result that hardly anybody's happy with his leadership, while his GOP rivals treat him with open contempt.

"The real conundrum," Westen adds "is why the president seems so compelled to take both sides of every issue, encouraging voters to project whatever they want on him ... That a large section of the country views him as a socialist while many in his own party are concluding that he does not share their values speaks volumes -- but not the volumes his advisers are selling: that if you make both the right and left mad, you must be doing something right."

The failure, however, isn't Obama's alone. With a few signal exceptions, journalists aren't doing much better. Part of the problem is the lazy he said/she said convention reporters use to cover their ignorance and to avoid criticism, mainly from the right.

Economist Dean Baker, one of the few -- along with Paul Krugman -- who warned against the real estate bubble that caused Wall Street's near-collapse in 2008, regularly skewers pusillanimous reporting on his "Beat the Press" weblog.

He recently quoted a CBS News report archly chiding Obama for blaming "policies inherited from his predecessor's administration for the soaring debt." The site notes that Obama "singles out:

-- 'two wars we didn't pay for'

-- 'a prescription drug program for seniors ... we didn't pay for'

-- 'tax cuts in 2001 and 2003 that were not paid for'

[Obama] goes on to blame the recession, and its resulting decrease in tax revenue on businesses, for making fewer sales, and more employees being laid off. He says the recession also resulted in more government spending due to increased unemployment insurance payments."

But, contrary to CBS's presentation, these aren't debatable assertions by a politician seeking to deflect criticism. They are facts, and should be reported as such.

Some more facts: Total U.S. government spending under Bush rose almost 88 percent, from roughly $2 trillion in FY2002 to $3.5 trillion in FY2009. On Obama's watch, it's increased another 7.2 percent

President Obama states the truth once, maybe twice. Phone and privacy hacker Rupert Murdoch's Fox News and the AM radio right-wing hate merchants tell lies about the economy over and over again everyday. Which message do you think sinks in with the average American. Conservatives and conservative economic polices ( sometimes carried out by DINOS - democrats in name only) trashed the family car. Gee, what do you know it takes longer and more efforts to rebuild a car than it does to crash it. Not only that but conservative Republican in the House of Representatives have tied one of Obama's hands behind his back by obstructing every effort to create jobs and repair the economy. There might not be a new jobs bill because conservatives who said deficits didn't matter from 2000 to 2008 now claim we have a spending problem(see chart). Conservatives will only stop screwing up the lives of ordinary hard working Americans when those Americans put their foot down and say enough. If conservatives will not respect America they need to pack up and leave.

Welcome to Unregulated Conservative America - Banks Took $6B in Reinsurance Kickbacks

Welcome to Unregulated Conservative America - Banks Took $6B in Reinsurance Kickbacks

Many of the country's largest banks received $6 billion in kickbacks from mortgage insurers over the course of a decade, according to a previously undisclosed investigation by the Inspector General of the Department of Housing and Urban Development.

The allegations, since referred to President Obama's Department of Justice, stem from lenders' demand that insurers cut them in on the lucrative business of insuring the mortgages they produced during the housing boom.

In exchange for the their business, companies such as Citigroup Inc, Wells Fargo & Co, SunTrust Banks Inc. and Countrywide allegedly required reinsurance partnerships on generous terms that violated the Real Estate Settlement Procedures Act, a 1974 law prohibiting abusive home sales practices.

During a two-day presentation in the summer of 2009, HUD's team presented DOJ attorneys with a thick binder of evidence that major banks had engineered a decade-long kickback scheme, people familiar with the investigation say.

Documents from the investigation show that the inspector general's staff concluded that banks and insurance companies had created elaborate financial structures that had the appearance of reinsurance but failed to transfer significant amounts of risk to their bank underwriters.

Some of the deals were designed to return a 400% profit on a bank's investment during good years and remain profitable even in the event of a real estate collapse.

Making matters worse, banks allegedly forced unknowing consumers to buy more insurance than they needed and failed to properly disclose the reinsurance agreements, another RESPA violation.

HUD's acting inspector general, Michael Stephens, worked on the case before being appointed to head the inspector general's office last year. He acknowledged the investigation's existence and expressed frustration that the case had not yet produced a settlement or prosecution.

While Stephens said he was still "hopeful" that prosecutors would bring a case, "this thing has been going on for too damn long."



PUNISHING INSURERS

Market observers, analysts and ratings agencies long questioned the reinsurance deals, but banks and insurers publicly maintained they met the standard for arms-length transactions set out in a 1997 policy letter circulated by HUD. The deals, they said, were not the result of coercion.

What those companies may have believed in private is another matter.

Wells Fargo and Bank of America Corp. have settled class action cases alleging the same sort of misconduct flagged by HUD, and internal documents show that banks and insurers viewed the arrangements as a thinly veiled pay-to-play scheme.

 Conservatives  - from Rick perry to Sarah Palin - keep saying regulations are too big a burden to business. In other words they would let schemes that steal billions from consumers go unregulated and unprosecuted. An America without prudent government regulation cannot survive.