It Starts

Monday, January 26, 2009

It didn't take long for the GOP to try and spoil the party. People were still finding their way home from last Tuesday's Inauguration before Limbaugh unpatriotically wished for the complete failure of our new president. Then our former Governor, Robert Ehrlich, told us in Wednesday's Washington Post that we were so "caught up in the historic nature of the moment but blind to the substance of the speech" which, according to Ehrlich is a call for class warfare.

Ehrlich appeared later that evening on the CNN program "1600 Pennsylvania Avenue" where David Shuster asked him about the class warfare and how it can be possible for the middle and working class to engage in "war" on the wealthy. Ehrlich replied, in his unfortunate Baltimore accent, that the top 1% wealthiest Americans now pay 40% of the income tax, and that sounds like warfare to him.

Shuster let it go; I can't. We can't. We can no longer let them Limbaugh-logic us. We can no longer let them play fast and loose with the facts, cherry-pick data, and distort reality.
Ehrlich said "income tax." The top 1% pay 40% of "Income" tax. It's not only untrue, it is deviously deceptive and deliberately designed to make middle and low income earners feel sorry for the wealthy and guilty about not holding up our end.

Limbaugh blustered, "And, of course, when there's a tax cut that comes down, it's inevitable that the people who pay taxes get the tax cut. And I forgot the number off the top of my head, but we're up to now something like 38% of all taxes are paid by the top 1%. How can you have a tax cut and those people not get one? And if the purpose for the tax cut is to stimulate the economy the people that pay the taxes have got to get the tax cut.

"The tax cuts . . . reduced tax rates for people in all income brackets but they had a disproportionate effect on people at the very highest levels because they had already been paying a disproportionate share of total federal taxes and in part because stock dividends get a special lower rate."

Disproportionate as compared to what? Feudalism?

Factcheck.org reports "The top 1 percent of all households got 18 percent of all personal income and paid nearly 28 percent of all federal taxes in 2005, according to the Congressional Budget Office."

According to Stephen Moore of The American, the wealthiest 1% of the population earn 19% of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don't include payroll taxes for Social Security and Medicare.

That's right. But notice how Moore refers to "19% of the income but pay 37 percent of the income tax. " There are other taxes besides "income tax." The wealthy know this all-too-well. Actually, CBO calculates that the top 1 percent paid only 27.6% percent of all federal taxes.
One big tax that lower and middle income earners pay is Social Security—that and Medicare/Medicaid. Most of us pay 6.2% on our earnings for Social Security and 1.45% on our earnings for Medicare. However, that is only for the first $102,000 of yearly earnings. That means most of us (me) pay a tax of 6.2% on every dime we earn while the wealthy get a 6.2% tax cut for every dime beyond $102,000. And for the top 1%, that goes FAR beyond $102,000.
The CBO states that the top 1% pay 4% of those taxes. I think they can afford it. But, we are fighting on their ground and according to their rules. We should be looking at this differently.

Here is how we should be looking at this. Let's take it a-step-at-a-time:

• America's 112 million families had combined wealth of $50.3 trillion in 2004.
• When those families are ranked by the size of their wealth, however, the top 1% alone held $16.8 trillion in wealth.
• That is more than a third of the United States' total wealth
• It is also more than the $15.3 trillion held by the bottom 90% of U.S. families.
• The top 1% had average wealth of $15 million per family in contrast to the $22,800 average wealth of the least wealthy 50% of families or the $313,500 in wealth for families ranked between 50% and 90%.
  

You got that? According to Ehrlich and Limbaugh, we are supposed to feel sorry for and grateful to the top 1% who have an average family income of 15-million-dollars-a-year!

Put another way, does it seem fair that 5% of the people have 95% of the wealth, yet pay only 50% of the taxes? Yet, 95% of the people live on 5% of the wealth and have to come up with the other 50%.

Our new President said in his inaugural address that we "will restore science to its rightful place." After a prolonged period of anti-intellectualism in the United States, we can no longer let these conservative sophists frame the argument, set the rules for discourse, and control the language.

Let's start with this nonsense about an unfair tax burden on the obscenely wealthy.

Inauguration Photos

Richard being Richard

Ken and Richard on the Mall

So close . . .but yet so far away.

Joe takes the oath on the Jumbotron.

The crowd in front of me.

Ken and Richard on the MARC train with commemorative train tickets in hand

My view. My "Silver" ticket unusable because of long lines and too few checkpoints, I headed to the mall. You can see the Capitol Dome above the screen

Closer to what my view "would have been" had I been able to use my ticket.

The view behind me. Notice the Washington Monument in the background.
Snipers on the Museam of Natural History

Charley in the crowd with the Smithsonian Castle behind.

Charley and Richard enjoying a beer and watching the parade from inside a restaurant.

Lo que piensan (What they think)

Monday, January 19, 2009

One advantage of learning a second language is that you can find out what people think—not what the English-language newspapers tell you they think, but what the people actually tell you they think. I returned Sunday from three weeks in Buenos Aires. I visited with old friends and made new friends. Inevitable, the conversation would turn to politics.
There are two main topics to these conversations: George Bush and Barack Obama.
It is not easy to explain George Bush. Argentines are genuinely confused as to how we could have elected George Bush. They are completely baffled as to how we re-elected him. As completely as my Spanish skills allowed, I explained the questionable voting in Florida and the Gore v. Bush Supreme Court decision. That satisfied most as to the question of the first time, but how did it happen twice? I told them he took advantage of Americans' fear. The landlady of the apartment I was renting replied that in re-electing him, we made the world have fear. The words "loco" and "Diablo" often came up when talking about Bush.
Argentines think the current world financial crisis rests at Bush's feet as well. Their Peso has fallen from 3:1 against the Dollar to 3.5:1 while they have seen inflation of 30% a year. As the world's second-largest exporter of corn and soy (behind the US) the world-wide recession has seen exports drop. A prolonged drought has made a suffering agri-conomy worse with dried up fields and 300,000 dead beef cattle. The failure of huge sectors of the US financial system could not have come at a worse time.
A friend, a retired Argentine diplomat, was surprised when I told him how much I disliked the president and asked me why. I told him of Karl Rove's push polling in South Carolina that derailed McCain's 2000 bid and the arm's length endorsement of T. Boone Pickens's "Swift Boating" of Kerry's 2004 presidential candidacy. I went on with claiming mandates he did not have, eroding citizens' rights, his Oedipal-complex-inspired Iraq war financed by Chinese debt while giving tax cuts to the wealthy. At the end of my tirade, he responded, "We didn't know any of that."
At a dinner-gathering of two families in the home of another friend, I was asked if Bush has dyslexia. "Can he read?" was how bluntly they put it. These people cannot speak English, yet they got the sense that our president has a learning disability.
The Argentine impression of Barack Obama was also surprising. When I arrived at the airport and the driver was loading my luggage, he saw my "Educators for Obama" pin on my carry on. He pointed to it and said, "El Salvador." My retired diplomat friend, however, said, "I think he is a demagogue."
Argentines have a strong sense that there is racial tension in the USA. A waiter in the café said, "But many Americans don't like Obama." I asked him why he thought that and he stroked his cheek and said, "The color of his skin." He was not the only one who asked about American racial bigotry. I tried to assure them that the issue of race has gotten better in the USA, and it is not the problem it once was. I am not sure they believed me.
Many, many Argentines asked if I was afraid that Obama will be assassinated. I told them that we can't worry about that. I told them that Americans are tired of being afraid; that our fear has not helped us in these past seven years. I told them that whatever happens, Barack Obama's election says good things about the United States. "Es un buen día para los Estados Unidos," I said. A man I spoke with in the little neighborhood restaurant, El Rincon, replied, "El tiempo lo dirá."
"Time will tell."

Amigo, ¿Puedes Darme Diez Centavos? (Buddy, can you spare a dime)

The canary in the coal mine for the US economy is the image of men and women standing on street corners selling pencils and apples on the street corner. That, along with Yip Harburg, and Jay Gorney’s song, “Brother, can you spare a dime?” are icons of the Great Depression.

Last week, an Argentine business associate of mine told me as we discussed our respective economic crises, “The best day in Argentina is not as good as the worst day in the United States.” I politely nodded and dismissed it as hyperbole, but then gave it some thought.

In the last big American recession of the 1980s, we saw the emergence of squeegee men and “Will Work For Food” written on cardboard signs, and stoplight beggars. On the streets of Buenos Aires, it is common to see the modern-day equivalent. Outside the grocery store, a young woman sells cherries for $2.99 a quarter kilo. Inside, the same sell for $3.29. A few blocks later, there are the same cherries for the same price on a different corner with a different woman. On the bus, a man gets on and speaks to the driver before going into his sales pitch about an excellent quality pen with a light on its cap for two pesos, about sixty cents. He gets off after accommodating all takers only to be replaced by a man selling sewing kits for AR$5. In the subway, an old woman sits near the entrance selling small packets of facial tissue for a peso.

We see unemployment figure headlines that tell us the rate is the highest in four years, then ten years, and now sixteen years. It will not be long before we see it reach Reagan’s 1982 rate of 10+%--the highest since the Great Depression. Argentina’s unemployment rate now stands at about 8.1%. However, those working in the “informal economy” have an unemployment rate of 15%. The unemployment rate in the US was 7.2% as of December 2008.

Buenos Aires is a city with an important café/restaurant culture. Families, even those of modest means, eat in a restaurant every week. An article in La Nacion last week told of 300 restaurants closing in Buenos Aires in recent months because of falling revenues and rising rents.

After the 2001 economic crisis, where the average Argentine lost 2/3 of his wealth, unemployment in Argentina reached US Great Depression numbers. Desperate for work, men once employed as car mechanics and laborers resorted to sorting through the garbage to scavenge for any trash of recyclable value. They became known as Los Cartoneros, the Cardboard Collectors. This army of over 100,000 scavengers descended upon the wealthier neighborhoods in a government-supplied train that the locals called, El Tren Fantasma—The Ghost Train. This was because the people ignored them as they went about their work; like ghosts, they were invisible to the world.

Cartoneros now have uniforms and official status. Their numbers have dropped to about 20,000. They have also had the serendipitous effect of reducing Buenos Aires landfill by 25% a day. The Ghost Train has been replaced by busses and trucks located at various pick-up locations.

Curiously, if one were to be blindfolded and dropped into the center of Argentina, he would, upon regaining sight, swear he was in some agricultural part of the USA. Argentina is, like the USA, a country of European immigrants. In the years just before WWII, it had the 4th highest standard of living in the world. Average wages and middle class wealth were above that of even the USA and most of Europe. Argentina’s constitution is modeled so closely to the Constitution of the United States that it could be considered plagiarism.

According to American lore, the “canary in the coalmine” served as an early warning for miners. As long as the canary kept singing, it was OK to keep on doing what we were doing. Very sensitive to methane and carbon dioxide, a dead canary signaled the need for immediate action. For the United States, perhaps the canary is Argentina.

The Ego has Landed

Tuesday, January 6, 2009

There is nothing quite as effective as traveling to help take the focus off one's own problems. We in the USA are fascinated with ourselves and our situation to the almost-complete exclusion of the remainder of the world. Traveling abroad helps us remember that it's a big world out there and other people live in it. That is not to say that the USA is not important, but there are only 3 of us for every 5,000 people on this planet. We should try and keep that in perspective.

As an American, I have to work pretty hard to overcome my own egocentrism. For example, when I return to a place a have not seen in a while, I expect it to be the same as when I left it—frozen in time like the last snapshot of the last visit.

I returned last week to Buenos Aires for the first time in 18 months. I had expected to find it just as I had left it. I had a Brigadoon-like fantasy that this city and surrounding environs of 12 million people would begin to sleep as my plane left the runway only to reawaken upon my return. Well, things changed.

While in the USA, we have been stung with inflation, Argentines have been mugged. Eighteen months ago, I enjoyed a strong dollar and low prices. I returned to a slightly stronger dollar and significantly higher prices. Even the American dollar has not kept up with Argentine inflation. The American dollar (US$) had about the same value in the USA as the Argentine peso (AR$). A moderate family income in both countries is $50,000. In 2007, US$1.00 was about AR$3.10. So, my dollars went three times as far. Today, the US$1 is worth AR$3.45. But is has hardly kept pace with Argentine prices.

I went to Balcaarce, my favorite café, and reacquainted myself with my old friend, Leo. I order my usual breakfast that once cost AR$6.90. When Leo brought the check, he warned me, "Es mas." It was more, now AR$10.90. My 12% stronger dollar did not keep pace with the 63% increase in the cost of an Argentine breakfast.

Prices for almost everything have gone up. A bus ride that cost AR$.80 now costs $AR1.00 and, it was just reported today, it will go up to AR$1.20. A coin shortage will only complicate that situation. Gasoline in the US has fallen to below $2.00 a gallon while here is has risen to over AR$4.00—and Argentina does not import oil.

Many businesses in my adopted barrio of Recoleta have closed and there are more empty storefronts that there were in June of 2007. Almost all restaurants now charge a cubierto—cover charge—of between AR$3 and 5. That keeps them from having to change the prices on menu items. Others have begun to put menu prices in pencil. A bottle beer that cost AR$8.00 in a restaurant in 2007, now costs AR$14.00. A load of laundry was AR$7.00 when we arrived in 2007, but soon went up to AR$9.00. It is now AR$11.00.

I can only imagine what would happen in the USA if our standard of living saw increases this large this fast. The only thing that has seen this level of increase in the USA is gasoline—and that has since gone down.

To be fair, many of these prices had not risen in seven years since the Argentine Financial Crisis peaked in 2001. The Kirchner administration (first Nestor and now Christina) had produced an economic miracle and Argentina's economy boomed. But so did inflation. Government economists cherry-pick data to announce an "official" inflation rate of under 10%, but independent data reveal it is closer to 20% a year. From what I have seen, it would cost me 30% more to enjoy the same standard of living today that I had in my six months here in 2007.

We can't freeze time, and we can't keep things from changing. Even if we could, we'd never know the perfect moment to hold.

When I return to the USA in two more weeks, I'll find my life exactly as I left it. If I stayed here for another 18 months, I'd also return to pretty much the same financial, social, political situation. I can't say the same for Argentina. We Americans are blessed with a remarkably stable and incredibly wealthy country. I seem to need to leave it to appreciate it, sometimes.