Local and Michigan Headlines: Film Looks at Philanthropy in Grand Rapids; Family Research Council Candidate for Hoekstra’s Seat

Here are some interesting articles published elsewhere in the past 24 hours covering Grand Rapids and Michigan:

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Analysis: Obama Tax Proposals could be More Progressive

United for a Fair Economy has released a new report analyzing President Barack Obama’s tax proposals. In the report, the progressive organization argues that Obama’s tax proposals fall short of what is needed to implement a progressive tax structure and to reduce incentives for the kind of financial risk-taking that led to the current economic crisis.

The report compares Obama’s tax proposals–unveiled in his 2010 budget–with recommendedations from the Institute for Policy Studies (IPS). The report finds that the IPS proposals would generate significantly more revenue and curtail many of the practices that led to the financial crisis. Their proposals would increase the tax rates on the richest Americans to bring them closer to what the average taxpayer pays.

United for a Fair Economy argues that while the wealthiest taxpayers profited greatly over the past several years, their profits did not lead to greater stability and that the theory of “trickle down” economics failed:

Highly concentrated wealth did not lead to shared prosperity, higher incomes for most people, or a healthier economy. Instead it created a dangerous imbalance between investment capital and investment opportunities. An investor class had too many dollars for the legitimate investments available. Meanwhile, the consumer majority had too few dollars to buy the goods and services they required. The unbalanced distribution of our national income led to runaway debt for the majority and runaway financial speculation by the few.

As an alternative, the organization argues for a progressive tax system:

Progressive taxation – people paying taxes based on their ability to pay – is fundamental to a fair society and true democracy. Society needs some of everyone’s wealth to reproduce the infrastructure, services, public safety, education, and other public investments that support the economy and create prosperity. However, because the free market system within which we operate is both imperfect and produces harsh economic inequality, the market’s distribution of income cannot be the final word on economic justice. Progressive taxation changes the market’s distribution of income and therefore advances equality of opportunity.

The organization says that Obama’s tax proposals are moving in that direction, but they could be far better.

Obama’s tax proposals:

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IPS tax proposals:

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According to the analysis, the IPS proposals would help secure the economy and pay for public services, thereby adding much needed stability to the economy.

Trashing capitalism now in vogue, but its generation of misery is nothing new

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As the economic crisis has worsened, confidence in capitalism seems to be sinkin’ like a stone.

I wrote about a month ago that The Nation–widely considered the most influential progressive publication in the country–started a series of stories in print and online on socialism and its relevance in the midst of havoc the unfettered free market has wreaked on the country and the planet. Others have followed suit: the cover of this month’s issue of In These Times magazine features the headline “The Meltdown Goes Global: It is time to rethink capitalism.” Hell, even the New York Times–certainly no bastion of anti-capitalist thought–ran a piece at the end of February whose tone mocked conservatives’ obsession with using “socialist” and “socialism” as dirty words, entitled Socialism! Boo, Hiss, Repeat.” And shockingly, some of their coverage of the G-20 actually treated protestors who identified as anti-capitalist, with anti-capitalist demands, as legitimate!

And the shift isn’t just in the media. A recent Rasmussen Reports poll indicates that barely more than half–53%–of American adults think capitalism is a better economic system than socialism. And Republicans thought big government bailouts and stimulus packages were scary! It can’t be long before conservative pundits look at those numbers and start calling for that 53% to start arming themselves for a fight against the impending tide of Communists coming to take away their guns and plasma screen TVs in service of The Party.

Yes, all signs seem to be pointing towards a growing number of Americans realizing that maybe the free market isn’t the same as freedom, and that capitalism might actually be causing all kinds of global misery rather than economic prosperity. And that’s certainly a very good thing.

But the framing of this discussion has really been irking me lately. The recession is being called a meltdown, a catastrophe, a disaster. And it is all those things, to be sure: working- and middle-class folks’ retirements have evaporated into thin air, unemployment is at astronomical levels, foreclosures are happening left and right. And this is all quite tragic.

But the misery bred by capitalism is no new development. I was thinking about this as I read that In These Times cover: “It is time to rethink capitalism.” Now is the time, now that “average folks” are being hit by the free market’s latest temper tantrum? Everything was cool before, but now we’ve gotta rethink this capitalism business?

News flash: the majority of the world has been getting screwed by global capitalism since its inception. Pick your poison: Columbus’ landing in Americas and the subsequent slaughter of millions of indigenous peoples, slavery and present), the fact that the average CEO in this country makes 344 times that of the average worker, the fact that half of the world lives on $2 or less a day, the incredible amount of violence and environmental destruction required to keep the system a-churnin’. The list goes on and on. These things have been happening for hundreds of years but few in the mainstream media and general populace in this country have batted an eye–quite the contrary, they’ve been ardent defenders of what is supposedly the greatest and most free economic system in the world. Once folks start losing their jobs, houses, and retirement, though, they begin rethinking capitalism.

I suppose this is the way things work in this country. The Vietnam War was rotten from the get-go, but it was poor and working-class folks who were the ones fighting and dying at the outset. It wasn’t until years into the slaughter, when bright-eyed middle-class kids–you know, the ones who were supposed to become doctors and lawyers and upstanding, all-American citizens–started coming home in flag-draped coffins that popular opinion turned against the war.

The same is true of our current economic collapse: it has taken a society-wide bludgeoning for folks to rethink a fundamentally unjust economic system. It’s just a shame there had to be so much suffering before we got here.

Average CEO Earned $10.4 Million in 2008

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The AFL-CIO has launched its annual “PayWatch” website which reports that the average CEO received $10.4 million in total compensation in 2008.

According to the AFL-CIO:

Even as the U.S. economy went into a tailspin, the median salary for CEOs of 200 large corporations increased by 4.5 percent to $1.08 million. On top of that, these corporations keep plying executives with generous freebies, despite the public outcry over private jets and other executive perks.

…the perks for executives rose on average by 12.5 percent in 2008 to $336,248–or nine times the median salary of a full-time worker. Even more appalling is the practice of rewarding executives who drive their companies into the ground.

For example, the site reports that in 2007–the year the financial crisis began to unfold–the top 10 recipients of the federal government’s Troubled Asset Relief Program (TARP) collectively paid their CEOs a combined $242 million in total annual compensation. That averages nearly $25 million per CEO to run companies that might have gone bankrupt if not for billions of dollars in taxpayer assistance.

While CEO pay is down from 2007, it still dramatically outpaces earnings by workers. CEO pay has grown at an astronomical rate since 1980 when the average CEO earned 42 times what the average worker earned. In 2007, that had grown to 344 times.

The AFL-CIO also highlights a number of practices from stock options to retention bonuses that are keeping CEO pay high even as public outrage of CEO pay grows.

All of this is another reminder of why we need reforms like the Employee Free Choice Act (EFCA) to level the playing field between workers and CEOs. Strong unions and a revitalized labor movement are essential to reversing this dynamic.

NAACP Sues Charging Systemic, Institutionalized Racism in Lending Practices Leading to the Mortgage Crisis

Systematic Racism Alleged in Sub-Prime Lending

Last week, the NAACP filed a lawsuit in U.S. District Court against two of the country’s largest lenders alleging systemic, institutionalized racism in mortgage lending practices. The lawsuit alleges that Wells Fargo and HSBC purposefully steered people of color towards higher cost, risky loans.

According to the lawsuit, lenders named in this suit and a companion suit filed by the NAACP made high cost sub-prime loans to qualified African Americans 54% of the time compared to 23% for Caucasians. African-Americans were disproportionately steered into these loans even when credit scores, income, and down payment were equal to that of Caucasians.

The sub-prime crisis has led to historic wealth lost for communities of color.

Study Finds People of Color Bear Heaviest Burden in Recession

A new study from the Center for Social Inclusion says that people of color are bearing the heaviest burden in the recession. Looking at the New York metropolitan area as a microcosm for the nation, the authors argue infrastructure, job creation, and other services have been denied to communities of color.

Discussing the study on Democracy Now! and the sub-prime crisis, Maya Wiley said:

“…imagine if we had had a financing system where people actually fairly got the loans that they should get. Most of those are people of color. And even when you look at the expansion of the subprime industry, a lot of it was around the fact that communities of color didn’t have fair access to credit. So we’re in this mess in part because we didn’t look at the warning signs. The warning signs for our economy were in communities of color. We tend to be first–hit first and hit hardest.”

A study earlier this year backed up this assertion, finding that people of color were experiencing a recession considerably earlier than the rest of the country.

Richard and Helen DeVos Give $10 Million to Christian Schools; Media Ignores Ideological Goal

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Yesterday, a $10 million dollar donation to Grand Rapids Christian Schools from Richard and Helen DeVos made it onto the front-page of the Grand Rapids Press.

The story was covered in other Grand Rapids media as well, with WZZM 13, WOOD TV 8, and WXMI 17 all reporting on the donation.

The coverage was similar across the four media outlets. It focused on the generosity of the DeVos gift with little else of substance. The Grand Rapids Press cited Grand Rapids Christian Schools Superintendent Tom DeJonge who said that the donation was “absolutely astounding” and “incredibly generous.” WOOD TV reported that the DeVos family “was not seeking any personal glory.”

By focusing exclusively on the “altruism” and “philanthropy” of the donation, the local media missed an opportunity to address a much bigger story–how the DeVos family has used its vast fortune to undermine and delegitimize public education. Over the years, Richard and Helen DeVos have given millions of dollars to private schools and political efforts aimed at increasing state support for private schools. Their family–particularly Dick and Betsy DeVos–have also been active in this effort.

While it may be true that the two were “not seeking personal glory,” their donation is certainly motivated by a specific ideological goal. This is rarely mentioned in the media, instead we are told to see the DeVoses as simply generous and selfless billionaires. However, how they have used their money–from supporting Christian schools to Republican politicians–clearly shows that they have specific political goals.

Taxes on Wealthy Could Generate Revenue, Help Prevent Future Economic Crisis

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In the United States, the wealthiest citizens pay relatively little in taxes compared to the rest of us.

According to a recent article by the Institute for Policy Studies:

“As recent IRS data show, these elites are paying less in taxes – much less – than their deep-pocket counterparts used to pay. In 2006, the 400 highest-income Americans together reported $105 billion in income, an average of $263 million each.

Having trouble visualizing that? To pocket $263 million a year, you would have to take home over $60,000 an hour – and work 12 hours a day, seven days a week, for an entire 12 months. Sounds tiring, doesn’t it? But most of the top 400 make their fortunes buying and selling assets, everything from stocks and bonds to the exotic paper that helped inflate the housing bubble.

Uncle Sam taxes income from those assets – whether that income be capital gains or dividends – at a much lower rate than income from work.

The current top tax rate on “ordinary” work income sits at 35 percent. But dividends and capital gains from the buying and selling of most assets face only a 15 percent top rate. That’s why in 2006, America’s top 400 paid just 17.2 percent of their $263 million average incomes in federal tax.

Millions of middle-class American families, once you tally income and payroll taxes, pay far more of their incomes in tax. One particularly striking example from billionaire investor Warren Buffett: In 2006, he paid 17.7 percent of his income in total taxes. His secretary, who made $60,000, paid 30 percent of hers.

How did we end up with this sorry state of affairs? Lawmakers in Congress have spent the past several decades systematically slicing the tax rates on America’s top income brackets. Their rationale? Lower taxes on the top, free up capital for investment, and boost productivity.

In actual economic practice, those lower taxes have served instead to fuel speculation and increase budget deficits. For the ultrarich themselves, the tax savings have been nothing short of breathtaking. Back in 1955, America’s top 400 paid more than 50 percent of their incomes in federal tax, almost triple the rate of today’s top 400.”

A Solution to Revenue Problems: Increase Taxes on the Wealthiest

Late last month, the Institute for Policy Studies released a report that argues that taxes should be raised for the wealthiest Americans in order to fuel the economic recovery and address major national crisis like health care and global warming. Unlike what is frequently reported in the media and in Washington, the think-tank argues that this would make the U.S. economy stronger:

“Higher taxes on the wealthy, in our current economic situation, would actually have a positive impact. Appropriately targeted, these taxes would dampen the speculative frenzy of the last several decades. Over these years, grand concentrations of private wealth have been the engines behind the high-risk, high-return speculation that fueled economic bubbles in technology, housing, and commodities. Reducing these grand concentrations of wealth will help discourage future economic bubbles.

By the same token, carefully targeting higher taxes on U.S. corporations that have hidden dollars overseas to game the tax system would also raise federal revenues and, at the same time, help strengthen our basic economic foundation.”

Moreover, the report argues that increasing taxes would not impact consumption, which it says drives employment, thus refuting common arguments that raising taxes would result in lost jobs.

Specific Tax Changes Proposed

The report recommends seven specific tax proposals that it says would raise $500 billion a year in revenue and $3 trillion over five years.

These proposals include:

  1. Repeal tax breaks for households with annual incomes over $250,000: $43 billion per year.
  2. Tax speculative financial transactions: $100 2. billion per year. A modest tax on every transaction that involves the buying and selling of stock and other financial products — a penny, for instance, on every $4 traded — would both generate substantial revenue and, if calibrated to impose a stiffer burden on rapidly flipped investments, discourage economically reckless speculation. Several European countries already tax stock trans- actions.
  3. Eliminate the high-income tax preference for capital gains and dividends: $95 billion per year. Current law subjects most dividend and capital gains income — the income that flows overwhelmingly to wealthier Americans — to a 15 percent tax rate. The tax on wage and salary income, by contrast, can run up to 35 percent.
  4. Levy a significant estate tax on grand fortunes: $60 billion per year.
  5. Establish a recovery emergency tax rate on extremely high incomes: $60-105 billion per year. High-income Americans currently face a top tax rate that runs less than half the top rate in effect over the half-century before 1981. Restoring a higher tax rate on high incomes could help finance our economic recovery.
  6. End overseas tax havens: $100 billion per year. Individual American taxpayers are now annually evading between $40 and $70 billion in U.S. taxes through offshore tax dodges. U.S. corporations use similar offshore schemes to evade another $30 billion.
  7. Eliminate subsidies for excessive executive compensation: $18 billion per year. As taxpayers, we subsidize over-the-top management pay through a host of tax loopholes. Congress should close these loopholes, starting with immediate action to deny all corporations, not just companies getting bailout dollars, tax deductions on any executive compensation that runs over $500,000, or 25 times, the pay of a company’s lowest-paid workers.

People of Color Experiencing “Silent Depression”

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United for a Fair Economy has released their annual “State of the Dream” report examining the state of racial inequality in the United States.

This year’s report looks at how people of color have been hurt more than the general population by the recent economic problems. It also argues that people of color have been experiencing a “silent depression” for five years that has been largely ignored by those in power.

The report’s executive summary provides plenty to think about and is reproduced here in its entirety:

As we celebrate the 80th birthday of Dr. Martin Luther King, Jr., we know that 2009 will be an historic year, with the inauguration of the first African American president and the deepening of what is likely to be the most serious fiscal crisis since the Great Depression.

Many American Blacks today are already experiencing a silent economic depression that, in terms of unemployment, equals or exceeds the Great Depression of 1929. Almost 12% of Blacks are unemployed; this is expected to increase to nearly 20% by 2010. Among young Black males aged 16-19, the unemployment rate is 32.8%, while their white counterparts are at 18.3%.

Overall, 24% of Blacks and 21% of Latinos are in poverty, versus 8% of whites.

In the corporate world, we are seeing the highest executive pay and the biggest bailouts in history. CEO pay is 344 times that of the average worker, not including perks like bonuses, stock options, corporate jets, and housing subsidies. The riches of the few mask the deepening recession in the working class and the depression in communities of color.

Extreme economic inequality (which the U.S. experienced in the 1920s and is again experiencing now) is often a key indicator of recession and/or depression. The Black depression of today may well foreshadow the depth and length of the recession the whole country entered in December 2007.

A deep recession would see median family income decline by 4%. Thirty-three per cent of Blacks and 41% of Latinos would drop out of the middle class. The overall national rate would be 25%.

Economically, Blacks and Latinos have suffered disproportionately because of structural racism and the web of policies that evolved from it. Eliminating the racial wealth divide is an essential step toward eliminating institutional racism. A comprehensive economic policy could deal a knockout blow to structural racism and raise awareness of individual racism. The path forward abounds with possibilities for shrinking the racial wealth divide and further healing the racism that still afflicts our nation.

If we institute systemic wealth-building programs that help everyone; if we repair and reinvigorate the decimated watchdog policies governing all aspects of home ownership; if we target 2009 economic stimulus programs to investment, not investment in tax breaks for the rich, but in the building blocks of the American dream – affordable housing, education, job creation, and savings among low- and middle-income people – we will make strides toward a more balanced economy.

Our nation’s economic policies have enabled the top 10% to accumulate 68% of the wealth, while sheltering the wealthy from sharing the nation’s risks. The children of the wealthy are not marching off to war because their economic alternatives are bleak. The rising cost of medical care does not require American millionaires and billionaires to cut back on food in order to pay medical bills. Thousands of additional layoffs will not harm the financial security of those in the owning class.

Fairer policies would share the risks of our entrepreneurial economy by helping balance the economic burdens among all of us, rather than piling them onto people of color, the poor, and the middle class. Revoking the tax deduction for expensive second and third houses, ending offshore tax havens and policies that make it profitable to ship American jobs overseas, and calling – with a united voice – for those in the upper quintile of income and wealth to participate more fully in bearing the burden of fixing the economy would spread the risks more fairly.

Fairer policies would support low-cost mortgages, better and cheaper medical care for those making less than $200,000 a year, strengthening Social Security, and freezing or raising wealth taxes like capital gains and the estate tax.

Finally, we need to recommit ourselves, via policy and our unified voices, to affirmative action. We need recognition of and apology for the U.S.’s centuries of slavery and segregation. We need a commitment by the nation and its communities to acknowledge and repudiate the institutional and individual racism – epitomized by today’s Black depression – that still pervades our society.

With such actions we can move forward. The economic path behind us is collapsing in rubble. Looking backward, we can freeze in fear, or we can turn toward a future whose economic health and fairness we jointly create.

Income Jumps by 5.8% for Wealthiest 1% of the US Population

Income has risen rapidly for the wealthiest 1% of the US population, while growth has been minimal for the rest of the country.

The Center on Budget and Policy Priorities is reporting that the income of the top 1% of households in the United States has grown by $60,000 or 5.8%. For the bottom 90% of the population, income rose only by $430 dollars. Since 2002, the average income of for the top 1% of households has increased by 42% compared to just 4.7% for the bottom 90%. The income share of the wealthiest households is now at the highest point since 1928.

New Project Measures West Michigan Representatives’ Wealth

A new project by the Sunlight Foundation called Fortune 535 estimates the net worth of members of the US House of Representatives and the Senate. The project–based on Congressional disclosure procedures that the group says are “seriously flawed”–still shows that most members of the legislature have increased their personal wealth since taking office. Here’s the information about legislators representing Grand Rapids:

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While the data makes no statement about how or why the legislators’ wealth increased, it does show that with the exception of Senator Debbie Stabenow, the three Grand Rapids area legislators have a net worth significantly higher than that of the average family living in the United States.