Leaked Video: Dark Money Group Is Writing Voter Suppression Laws

The Great Climate Migration Has Begun | Amanpour and Company

California Record Revenue- Budget

Recovery, Recall and Record Revenue: What’s Driving Newsom’s Budget

Tuesday: Gov. Gavin Newsom’s $267.8 billion budget proposal reflects the wish list of a state “just flush with cash.”

https://www.nytimes.com/2021/05/18/us/california-gavin-newsom-budget.html?

 

Six-hundred-dollar checks. Universal prekindergarten. Forgiveness for back rent, traffic tickets, utility bills. Big investments in the electrical grid, broadband, wildfire prevention, drought mitigation. Tax breaks for small business and Hollywood.

Flush with a huge surplus and threatened by a campaign to recall him from office, Gov. Gavin Newsom last week proposed a state budget that was the government equivalent of that time everyone in the studio audience got a Pontiac on Oprah. This week, state legislators took up the $267.8 billion plan.

With a mid-June budget deadline and Newsom’s fellow Democrats dominating the Legislature, the broad priorities are unlikely to change much. Still, like all those free cars, it’s a lot to process. Here are a few things to know:

This budget is about both the recovery and the recall.

Newsom has been in campaign mode for months, since it became clear that the Republican-led recall effort would most likely lead to a special election. Polls show that an increasing majority of voters disapprove of the recall. But he’s still in a vulnerable position with lawmakers and lobbyists.

Last week’s budget rollout was a cavalcade of photo ops for big-ticket line items: Rebate checks of up to $1,100 on Monday for middle-income Californians; historic spending on homelessness on Tuesday; an expansion of preschool to all 4-year-olds on Wednesday; a major small-business grant program on Thursday.

For the teachers’ unions that helped elect him, the governor proposed a record $14,000 in per-pupil school funding. For parents furious that more than half of the state’s public school students remain learning remotely, that funding was contingent on an in-person return to classrooms.

Progressives who get out the vote for Democrats in California elections got repayment of billions of dollars in back rent and utility bills for low-income renters, funding for pilot universal-basic-income programs, and forgiveness of some $300 million worth of traffic tickets for low-income drivers. Newsom also proposed extending Medi-Cal to undocumented workers over 60 and significantly expanding 

Businesses have already received a $6.2 billion tax cut. But the governor also proposed hundreds of millions of dollars in incentives for companies to relocate to California, for tourism marketing and for tax credits to lure filming back from, he said, “places like Georgia whose values don’t always align with the production crews.”

 

NY Times.  May 18,2021

'Sends a Terrible, Terrible Message': Sanders Rejects Top Dems' Push for a Big Tax Break for the Rich

'Sends a Terrible, Terrible Message': Sanders Rejects Top Dems' Push for a Big Tax Break for the Rich

Financial Transaction Tax

  

MAY 5, 2021

Financial Transactions Taxes: The Perfect Way to Pay for Biden’s Infrastructure Package

BY DEAN BAKER

 

There has been a lot of silliness around President Biden’s proposed infrastructure packages and the extent to which they are affordable for the country. First and foremost, there has been tremendous confusion about the size of the package. This is because the media have engaged in a feast of really big numbers, where they give us the size of the package with no context whatsoever, leaving their audience almost completely ignorant about the actual cost.

We have been told endlessly about Biden’s “massive” or “huge” proposal to spend $4 trillion. At this point, many people probably think that Biden actually proposed a “huge infrastructure” package, with “huge” or “massive,” being part of proposal’s title.

While it would be helpful if media outlets could leave these adjectives to the opinion section, the bigger sin is using a very big number, that means almost nothing to its audience, without providing any context. In fact, much of the reporting doesn’t even bother to tell people that this spending is projected to take place over eight years, not one to two years, as was the case with Biden’s recovery package.

Over an eight-year period, Biden’s proposed spending averages $500 billion annually. This is a period in which GDP is projected to be more than $210 trillion, meaning that his package is projected to be around 1.9 percent of GDP. While that is hardly trivial, military spending to projected be around 3.3 percent of GDP over this period. This means that Biden is proposing to increase infrastructure spending by an amount that is roughly 60 percent of projected military spending.

It is infuriating that most of the reporting on these proposals make no effort to put the spending in any context that would make it meaningful for people. Reporters all know that almost no one has any idea what $4 trillion over eight years means (especially if no one tells them it is over eight years), yet they refuse to take the two minutes that would be needed to add some context to make such really big numbers meaningful. Therefore, we have a large segment of the population that just thinks the program is massive or huge.

What Paying for Spending Really Means

As our MMT friends constantly remind us, a government that prints its own money, like the United States, does not need tax revenue to pay for its spending. This distinguishes the U.S. government from a household or state and local governments. Households and state and local governments actually need money in the bank to pay their bills. For them, more spending requires more income or taxes and/or more borrowing. The federal government does not have this constraint.

Nonetheless the federal government does face a limit on its spending: the ability of the economy to produce goods and services. If the federal government spends so much that it pushes the economy beyond its ability to produce goods and services, we will see inflation. If this excessive spending is sustained over a substantial period of time then we could see the sort of inflationary spiral that we had in the 1970s.[1]

If the economy is already near its capacity when President Biden’s infrastructure package starts to come on line in 2022 and 2023, an increase in spending of a bit less than 2.0 percent of GDP could be large enough to create problems with inflation. This is the reason that we have to talk about “paying for” the infrastructure package. We need not be concerned about getting the money in the bank, we have to reduce demand in the economy by enough to make room for the additional spending in Biden’s infrastructure agenda. This is where a financial transactions tax comes in.

 

The Virtue of Financial Transactions Tax as a Pay For

The Biden tax proposals have focused on increasing the amount of money that corporations and wealthy individuals pay in taxes. This makes sense, since they have been the big gainers in the economy over the last four decades.

His tax increases will just take back a fraction of the income that has been redistributed upward through a variety of government policies over this period. And, in the case of the corporate income tax, his proposal will just be partially reversing a tax cut that was put in place at the end of 2017 by Donald Trump and a Republican Congress. While taxing the economy’s big gainers is certainly fair, there is a problem with going this route to cover the cost of Biden’s program: the rich don’t spend a large share of their income.

This point is straightforward, if we give Jeff Bezos, Elon Musk, or any of the other super-wealthy another $100 million this year, it would likely not affect their consumption at all. They already have more than enough money to buy anything they could conceivably want, so even giving them a huge wad of money will not likely lead then to increase their consumption to any noticeable extent. Many of us are used to making this point when we argue that any stimulus payments in a recession should be focused on the middle class and the poor.

But this story also works in reverse, if we take $100 million away from the super-rich, it is not likely to reduce their spending to any noticeable extent. This means that Biden’s tax increases are not likely to have as much impact on reducing demand as tax increases that hit the poor and middle class. This is not an argument for hitting the people who have not fared well over the last four decades, it is just noting the impact of taxing the super-rich.

Financial transactions taxes (FTT) are qualitatively different in this respect. While the immediate impact of a financial transactions is hugely progressive, in the sense that the overwhelming majority of stock trading is done by the rich and very rich, the impact on the economy makes FTTs look even better.

Most research shows that the volume of stock trading falls roughly in proportion to the increase in the cost of trading. This means that if a FTT raises the cost of trading by 40 percent, the volume of trading will fall by roughly 40 percent. For a typical investor, that implies that they (or their fund manager) will be paying 40 percent more on each trade, but they will be doing 40 percent fewer trades. In other words, the total amount that they spend on trades with the tax in place will be roughly the same as the amount that they spent on trades before the tax is in place.

And investors will not be hurt by less trading. Every trade has a winner and loser. If I’m lucky, and dump my hundred shares of Amazon stock just before the price drops, it means that some unlucky sucker bought the stock a day too soon. Every trade is like this. The reality is that for the vast majority of investors, trades are a wash, half the time they end up as winners and half the time they end up as losers.

However, they do end up as losers by doing lots of trading, that’s because they are paying fees and commissions to the people in the financial industry carrying through the trades. This is why most financial advisers recommend that people buy and hold index funds, so that they don’t waste money on trading.

A FTT reduces the money going to the financial industry to carry through trades by reducing the volume of trading. This very directly frees up resources in the economy. The number of people employed shuffling stocks, bonds, and various derivatives back and forth will be sharply reduced.

This is comparable to a situation where we found hundreds of thousands of people digging holes and filling them up again. A financial transactions tax, coupled with Biden’s infrastructure proposals, will be a way to redeploy these people to productive work elsewhere in the economy.

There is also a substantial amount of money here. According to the Congressional Budget Office, a tax of 0.1 percent (ten cents on a hundred dollars) would raise almost $800 billion over the course of a decade. I’ve calculated that a graduated tax, with different rates on different assets (0.2 percent on stock transactions, lower on everything else) could raise an amount of revenue equal to almost 0.6 percent of GDP over the course of a decade, or $1.6 trillion. My friend, Bob Pollin has calculated that a somewhat steeper tax, along the lines proposed by Senator Bernie Sanders, could raise close to twice as much. In short, this is real money.

That doesn’t mean that we should reject President Biden’s proposals to increase corporate income taxes and taxes on the top one or two percent. (My route for taxing corporations isbetter than his.) Even if Elon Musk might not change his consumption much as a result of paying another $100 million taxes, there are many moderately rich people, earning single digit millions, who may have to forgo a third home or live-in cook, if we raise their taxes as President Biden proposed.

The bottom line is that Biden’s investment plan addresses longstanding needs in the country. We will likely have to reduce other spending in the economy to make room for it. A financial transactions tax is a great place to look for some of the offset.

Notes.

[1] People also often raise the issue of burdening our children with the debt. This is mostly an expression of extreme ignorance, since the issue of debt service is incredibly trivial compared with the quality of the economy and society that we pass onto to our children. The debt service is also dwarfed by the rents created by government-granted patent and copyright monopolies, which are also a form of government debt passed on to our children. The debt whiners literally never talk about this massive implicit debt burden, which takes the form of higher prices on everything from drugs and software to video games and computers. In the case of prescription drugs alone the rents come to close $400 billion annually, nearly twice the size of our debt service burden.

This post first appeared on Dean Baker’s Patreon page.

Dean Baker is the senior economist at the Center for Economic and Policy Research in Washington, DC. 

 

California Economy is doing quite well

 https://www.nytimes.com/2021/04/28/business/california-budget-stock-market.html?

Republicans and Economics

 

The first thing you need to know is that while Republicans always claim that raising taxes on the rich will destroy jobs, they have never yet been right.

"Free the children - Refugee Children in Immigration Detention Protest Broadmeadows" by John Englart (Takver), licensed under CC BY-SA 2.0

Conservatives beware: If the main elements in Joe Biden’s American Family Plan become law, they’ll be very hard to repeal. Why? Because they’ll deliver huge, indeed transformational benefits to millions. I mean, just imagine trying to take away affordable child care, universal pre-K and paid leave for new parents once they’ve become part of the fabric of our society. You’d face a backlash far worse than the one that followed Republican attempts to eliminate protection for coverage of pre-existing health conditions in 2017. And that backlash quickly gave Democrats control of the House and set the stage for their current control of the Senate and White House as well. So what’s the Republican counterargument? Well, much of the party appears uninterested in debating policy, preferring to lash out at imaginary plans to ban red meat or give immigrants Kamala Harris’s children’s book. The official G.O.P. response to Biden’s speech on Wednesday, by Senator Tim Scott, seemed low-energy; Scott is still complaining about “big government” and denouncing Biden for spending money on things other than roads and bridges. The closest thing to a real argument was the claim that Biden is proposing “the biggest job-killing tax hikes in a generation” — presumably a reference to Bill Clinton’s tax increase in 1993. Indeed, Biden intends to pay for his proposals with higher taxes on corporations and high-income individuals, including a dastardly plan to give the Internal Revenue Service enough resources to crack down on wealthy tax cheats. It’s important, then, to realize that the family plan would, if enacted, be a major job creator. That is, it would increase the number of Americans — women in particular — in paid employment substantially, probably by several million. To understand why, the first thing you need to know is that while Republicans always claim that raising taxes on the rich will destroy jobs, they have never yet been right. Scott’s rejoinder to Biden appeared to suggest that the 1993 Clinton tax hike killed jobs; in reality, the United States added 23 million jobs on Clinton’s watch. People also seem to forget that Barack Obama presided over a significant hike in high-end taxes at the beginning of his second term; the economy continued to add jobs rapidly, at the rate of about 2.5 million a year. Oh, and employment in California boomed after Jerry Brown raised taxes on the wealthy in 2012, defying conservative declarations that the state was committing economic suicide. It’s also instructive to compare the United States with other advanced countries, almost all of which have higher taxes and more generous social benefits than we do. Do they pay a price for these policies in the form of reduced employment? Many Americans would, I suspect, be surprised to learn that the truth is that many high-tax, high-benefit countries are quite successful at creating jobs. Take the case of France: Adults between the ages of 25 and 54, the prime working years, are more likely to be employed in France than they are in America, mainly because Frenchwomen have a higher rate of paid employment than their American counterparts. The Nordic countries have an even larger employment advantage among women. How can employment be so high in countries with lots of “job-killing” taxes? The answer is that taxes don’t visibly kill jobs — but lack of child care does. Parents in many rich countries are able to take paid work because they have access to safe, affordable child care; in the United States such care is prohibitively expensive for many, if they can get it at all. And the reason is that our government spends almost nothing on child care and pre-K; our outlays as a percentage of G.D.P. put us somewhat below Cyprus and Romania. The American Family Plan would completely change this picture, providing free preschool for all 3- and 4-year-olds while limiting child care costs to no more than 7 percent of income for lower- and middle-income parents. If this raised employment of prime-age American women to French levels, it would add about 1.8 million jobs; if we went to Danish levels, we would add three million jobs. Just to be clear, making it possible for more women to take paid jobs isn’t the principal point of this plan — and there’s nothing wrong with parents’ choosing to stay at home and care for their kids. Instead, it’s mainly about improving the environment in which children grow up, partly as a matter of social justice, partly so that they eventually become healthier, more productive adults. But higher employment — jobs generally expand to meet the available work force — would be a significant and more immediate side benefit. And it would also offer a partial fiscal offset to the direct cost of child care and pre-K, both because newly working Americans would pay taxes and because they would be less likely to need support from safety-net programs like food stamps. No, Biden’s spending plans won’t pay for themselves. But they’ll cost taxpayers less than the headline numbers might suggest. And if these plans improve life for millions of Americans, will anyone besides professional ideologues care if they’re “big government”? Follow The New York Times Opinion  Paul Krugman has been an Opinion columnist since 2000 and is also a Distinguished Professor at the City University of New York Graduate Center. He won the 2008 Nobel Memorial Prize in Economic Sciences for his work on international trade and economic geography. @PaulKrugman