wallfare - the eternally forgotten

In a blog post today, Paul Krugman deplores the ‘empathy gap’ – that is, the inability of the people at the top to have any empathy with the welfare of those on the bottom. He quotes some typically inane comment of Paul Ryan’s about welfare reform.

He received the standard mix of admiring and disparaging comments. (As an aside: one of the best things that has happened in the media scene ever is the advent of the comments section, to which I have become addicted.  to those things.) One of the disparaging comments read like this:

“I'll start by, 'disclosing,' as we all have to do today, that I'm retired after close to fifty years of work.
I did what I had to do to insure myself,did not over-spend because I wanted a car, or house, or whatever came to my mind and so lasted until today where I'm comfortable.
I'm not sorry that I'm comfortable,I'm not sorry that I have a bit more than some around me and I'm certainly not sorry for those who,today seem to feel that the government owes them something.
OK?
What I am sorry for is the fact that so many American are convinced,that the government and those who have been successful should be taking care of them
We are quickly devolving into a country that in a decade will not be recognizable to any of those who are alive today.
In other words we are done and the America that everyone knew and respected is finished as a great country.
You know why?
Because we keep putting out our hands and say gimme,gimme,and it never ends.
Have a great life you youngsters and maybe you'll get wise before it's too late
God Bless American.”

Although they are very common, I am always a little astounded by self reporting that consists solely of preening. The problem with preening is, of course, that it sounds more like self-blindness than self-assessment. The words used here – “work”, “comfort”, “I did not overspend”, etc. show that this retired gentleman has certainly not reached sannyasin, the renunciation of the material chains that bind him. One feels, sadly, that he has wasted his entire life struggling under false values and a compensatory view of himself as better than others because he preserved a spark of the miser’s instinct in his soul. A rather sad flame to warm your hands over when you become age spotted and nose heavy, but there it is. 

However, this is not about the existential delusions expressed here, only about the political ones. For both Krugman, Ryan, and the “successful” gentlemen are pretending that the U.S. government’s welfare programs are designed for the poor.

This can’t really withstand the shock of the facts. The real welfare has long gone straight to the banks and the upper 1 and 10 percent. Ryan seems never to have heard TALF, TARP, CPFF and other programs doled out 16 trillion dollars in sub sub par loans - ranging from .01 to 1 percent -between 2008 and 2010. In a fair market, those loans would actually be priced at between 4 to, in many cases, 6 to 7 percent, which means Uncle Sam gave the wealthiest (who own the hedge funds and receive the vast majority of capital gains and dividends) about 600 - 800 billion dollars - not bad, eh? Besides, of course, overlooking the massive and systematic fraud perpetrated by the entire financial system when it came to assigning title, fining and foreclosures. The gentleman who'd been 'working' for 50 years and had retired and deplored the attitude of gimme of the feckless young is just the kind of mid level exec who explains why the Government can get away with its conspiracy to defraud the citizenry for the plutocrats – for he probably depends on his mutual fund and other financial vehicles that Uncle Sam just propped up to continue living in his house and driving his car.
Get rid of welfare for the richest, abolish tax haven schenanigans, replace the IRA and 401k systems with Government Bond investment accounts for education, health and retirement accounts (taking trillions away from the Wall Street rentseekers), and we would have a fairer country without being burdened by the welfare class - that is, the welfare class of the upper 1 percent.

 ...

To my heartfelt and much repeated cry against the street, let's add this note:

 

I am reading Nicholas Shaxson’s Treasure Islands, Uncovering the Damage of Offshore Banking and Tax Havens, and noticed a reference to a very esoteric part of the Carter Administration: the Gordon Report. This was the report of an investigation by the IRS into offshore tax havens launched by the Carter administration and put in the garbage by the Reagan administration. Shaxson didn’t say much about it, so I thought I’d look it up on the Net, where all darkside materials eventually congregate. I found a copy of it with a preface by someone from the Inspired Life Center, whatever that is. The personfrom the Inspired Life Center wrote that she (or he) had received a copy of thereport from an insider at the IRS years ago, and had lately tried to find it ina library, or a federal site, to no avail. Hence, our Inspired Life frienddecided to upload her copy.

It is an interesting document of the end of the liberal era – which, as we know, ended in malaise and consumerism. I was struck by a sentence in the first part of the report:

“In 1978, 43 percent of the gross income paid to all residents of the United States was paid to claimed residents of tax havens. Forty-six percent of the gross income paid to residents of all treaty countries was paid to claimed residents of tax haven treaty countries. Nearly 80 percent of all United States gross income paid to residents of tax havens and reported to the IRS was paid to corporations. All of this indicates significant third-country use of tax haven treaties.”

Fucking A! as our daytraders like to say. Shaxon points out that, just as the U.S. was pretending to get concerned with the 20,000 hqs in the Caymen island, U.S. law was quietly being changed to bring in “foreign investors” by easing transparency and tax regulations on accounts set up in the U.S. Now, surprisingly, it turns out that foreigners can front for … Americans! So …

“In June 1981, less than six months after Reagan’s inauguration, the United States approved a new offshore possibility, the international banking facility. The United States was another step closer to becoming the tax haven imagined in the memo to Michael Hudson.

IBFs, as they are known, are kind of offshore Euromarkets-lite: They let U.S. bankers do at home what they could previously do only in places like London, Zurich, or Nassau: lend to foreigners, free from reserve requirements and from city and state taxes. The bankers would sit in the same Manhattan offices as before and simply open up a new set of books and operate as if they were a branch in Nassau. Once the IBFs were in place, the banks could dispense with the subterfuge entirely and book them openly in New York. The United States had moved closer to the British offshore model.

Bankers in New York signed on to the new possibility with gusto, followed by those in Florida, California, Illinois, and Texas. In three years almost five hundred offshore IBFs had popped up inside the United States, draining money out of other offshore markets in the Caribbean and elsewhere.¹⁸ It was a new get-out-of-regulation-free card for Wall Street and another hole in the American fortress. Not only that, but as author Tom Naylor puts it, “The US hoped to use the IBFs as a bludgeon to force other countries to relax restrictions on the entry of US banks into their domestic financial markets.”

This was the Reagan era, matched, during the Clinton era, by a Rubin-esque scheme called the Qualified Intermediary Program that was a true plutocratic joke, in which the government ‘offshored’ its responsibility to make sure that U.S. citizens (heavens) weren’t using the tax haven facilities provided under U.S. law to foreigners – which was done because if the U.S. government did it, they’d be obliged, under international laws, to give the names of those foreigners to their countries.

But there are richer veins of offshoring in the U.S. The state system is a beautiful example of crooked. In Wyoming and Nevada, you can set up a limited liability company under a fake name and, according to state law, even the Federal government can’t investigate you. “Nevada does not share tax or incorporation information with the federal government and does not require a corporation to report where it does business. The IRS has no way of knowing whether a Nevada corporation has filed a federal tax return.” Cute, eh? U.S. politicians, in campaign mode, occasionally whale on the Caribbean islands for their burgeoning fake hq industry. Obama, for instance, mocked “Ugland House, in the Cayman Islands …  for housing over twelve thousand corporations.” But Shaxon notes that good old corporate friendly Delaware beats the Cayman islands: “an office at 1209 North Orange Street, Wilmington, houses 217,000 companies.”

I should note here that Theodore Roosevelt (that is, the wing he controlled in the House while Taft was prez) tried and failed to make sure that all interstate corporations were federally registered with the Commerce Department. Since that sensible suggestion, actually passed by progressive Republicans in the House in 1911 but defeated in the Senate. One of those little moments upon which we could easily build a view of the collaboration between crime and corporations in America.