Saturday, January 24, 2015

Raising the Minimum Wage to $15.00 Will Have Huge Benefits

The Oregonian newspaper stirred up quite a controversy the past couple of days concerning a study by the state's Legislative Revenue division of the effects of increases in the minimum wage on low-wage families. The study dealt only with single parents with two children. There is a bill pending in the legislature that would raise the state's current minimum wage of $9.25 to $15.00 per hour.

The Oregonian's headline to its story was, "How much would a single parent gain under $15 minimum wage? Less than $50 a month." The newspaper published the study's chart showing a decline in tax benefits such as the Earned Income Tax Credit (EITC) and various other benefits, including food stamps, welfare and state-funded child care subsides, as the minimum wage increased. By $16.10 per hour all government benefits are gone except a small amount of the EITC. At $12.10 and $13.10 that single parent actually takes home a little less each month.

The implication of the story and of a follow-up story was that a raise in the minimum wage really would not be all that beneficial. The problem is, the group the study focused on is a very small percentage of the people who would benefit from an increase in the minimum wage in Oregon.

Today, the Executive Director of the Oregon Center for Public Policy, Chuck Sheketoff, published on and on the Center's website, a scathing critique of the newspaper story. He points out that more than 500,000 employees in Oregon would be affected by an increase in the minimum wage to $15.00, and only about 9,000 people might experience a small decrease in income - and then only if the minimum wage is only $12-$13.00. He wrote:

"The vast majority of the more than 500,000 or so workers who would benefit directly from the legislature raising the minimum wage to $15 an hour don’t have child care expenses. And even among workers those with children, many don’t benefit from state-subsidized child care. That program helps only about 10 percent of all kids in child care."

He went on to point out that small changes in the limited state child care program could eliminate the reduction in income for the small number of people who might experience it.

Republicans are fighting increases in the minimum wage at the state level, as well as at the federal level. Once again, Republicans are showing their loyalty to special interests, rather than to their constituents. In November, referendums to increase the minimum wage passed in all states where they were on the ballot, including four very Republican states, Alaska, Arkansas, Nebraska and South Dakota. 

Across the country, many state and local governments have increased their minimum wages, some much higher than the current federal rate of $7.25. Twenty-nine states now have minimum wages higher than the federal rate.

The major problem with the federal minimum wage, other than it is far too low, is that it is not indexed to inflation. If the minimum wage in 1968 had been indexed to inflation, the minimum wage today would be above $10.00.  If it were reflective of increased productivity, it would be somewhere between $18 and $23 an hour, depending on which date is used as the starting date for comparison.

The reason why $15.00 has been selected as the principal target for the minimum wage is that is the point where most people would be out of poverty. That is an annual wage of a little over $30,000, assuming the employee is working a 40-hour week. If the employee has children, there still would be some EITC, but that employee no longer would qualify for welfare or food stamps.

Raising the minimum wage to $15.00 would eliminate the scandalous situation we have today where the government is subsidizing some of the largest and wealthiest corporations, like most of the big retail chains, because their wages are so low. Employees at Walmart have been averaging less than $9.00 an hour (although the company recently announced plans to increase wages, but details have not been released). At that level fulltime employees qualify for food stamps and for EITC. Billions of taxpayer dollars are going to Walmart employees because the company has not paid a living wage. The same is true for most of the major chains. It just is a bigger scandal with Walmart because they are so profitable - one of the most profitable companies in the world.

By raising the minimum wage to $15.00, tens of billions of dollars in food stamps, EITC and welfare payments would be saved. Social Security and Medicare revenues would be increased.

Those savings then could be used to make college education free for everyone, probably without having to raise any taxes or do any deficit spending. 

So not only would we experience an economic boom from the buying power of those whose income increased to $15.00 an hour, student loans no longer would be needed for college. Without student loans hanging over them, college graduates probably would buy more houses, also driving up the GDP.

And these are just some of the positives of increasing the minimum wage to $15.00.

And, before the Republicans say raising the minimum will cost jobs and increase prices, as they will, there is no substantial evidence from previous increases in the minimum wage, or from states and cities that have increased the minimum wage above the federal level - and also from countries that have much higher minimum wages - that increasing the minimum wage causes job losses or inflation. 

And for fun, check the The Big Mac Index of The Economist, The average price for a Big Mac in January, 2015, in the United States, with a federal minimum wage of $7.25, was $4.79. In Australia, which has a $16.00 minimum wage, the average price was $4.32, taking into account the exchange rate.

Thursday, January 22, 2015

Best Governor in the Nation? A true Progressive Democrat - Guest posting.

This is a terrific piece that calls attention to a true progressive Democrat who should be getting more national attention. Reprinted from by permission.

Best Governor In The Nation?

By Joanne Boyer,

“The land may be yours. But the water belongs to all of us, and to all who will follow all of us.’’

– Minnesota DFL Governor Mark Dayton

It’s hard to escape headlines made by Republican governors across the country. There’s New Jersey Governor Chris Christie who always seems to be in the news, whether it’s bridges or NFL owners’ boxes. Then there’s Scott Walker of Wisconsin prowling around for his bid for the Republican presidential nomination. And Kansas Governor Sam Brownback received a spot-on Melissa Harris-Perry “letter of the week” Sunday for his announcement that he plans to continue “trickle down” economics for his state, which is now running close to a $300M deficit after his disastrous tax cuts for the wealthy in that state. And the 2014 state-level red landslide swept back into power what seems like dozens of Republican governors.

The great state of Minnesota and its governor, Mark Dayton, showing a model of leadership
The great state of Minnesota and its governor, Mark Dayton, showing a model of leadership

I would argue, however, that the governor who should receive more national attention resides in Minnesota, a “blue island” in a sea of red. Take a look at a map. Surrounded to the east by Wisconsin (Scott Walker back for 4 more years of destroying public education and unions); to the south by Iowa (Joanie Ernst off to DC); to the west by South Dakota (God bless the memory of George McGovern. Will a Democrat ever see the light of day there?); and North Dakota (can you say pipelines and fracking no matter what your political affiliation).

Minnesota DFL (Democratic Farm Labor) Governor Mark Dayton, narrowly elected in 2010 and re-elected with a resounding majority in 2014, has made huge strides in cleaning up the mess left by his predecessors: Republican Governor Tim Pawlenty, and Jessie Ventura (Green Party). As one local progressive talk show host has repeatedly stated since 2010, “Mark Dayton put on the big boy pants” and took on the needed leadership role to get the state back to prominence by recommitting to funding public education and to creating a thriving environment for jobs.

A recent editorial in a Wisconsin newspaper compared the border states and pronounced Minnesota the winner hands-down. Equating the same time in office with Scott Walker, the paper concluded this about Dayton and Minnesota:

“Dayton grappled with a $5 billion deficit and after a grueling fight with Republicans that resulted in a government shutdown in 2011, the state balanced its budget in part by borrowing against its commitment to education aid (later repaid in 2013 and Minnesota now runs a budget surplus). After the 2012 elections when Democrats took control of the Legislature, taxes were raised on the wealthiest Minnesotans and tobacco taxes were increased…Minnesota has increased its minimum wage to $9.50 an hour and has it indexed to increase with inflation…Minnesota took Medicaid money and created its own health care marketplace, reducing the number of uninsured residents. Wisconsin rejected federal money…that cost the state an estimated $206 million over the past two years…Forbes ranks Minnesota as the ninth best state for business, No. 7 in economic climate and No. 2 in quality of life. Wisconsin is ranked 32nd, 27 and 17 on the same measures. The cost of doing business in Minnesota is 0.2 percent below the national average. Wisconsin is 1.7 percent above the average. The median household income in Minnesota is about $60,000. It’s just below $52,000 in Wisconsin.”

I have always been a fan of Mark Dayton. For starters, he played hockey at Yale. College hockey — perhaps the best sport out there. But more than anything, I’ve admired his commitment to promoting and pursuing social and economic justice. For a man born into wealth (the great-grandson of one of Minnesota’s founding families; the Dayton’s Department Stores later became Target Corp.), Dayton came of age during the days of the Peace Corps and VISTA (Volunteers In Service To America) and the ideals of public service. He has been a living example of the words: Much will be asked to whom much has been given. After graduation from Yale, he taught 9th grade general science for two years in a New York City public school, and he still refers to it as the toughest job he ever had. He also credits it with providing him a first-hand knowledge of the importance of properly funding public education.

I will never forget his remarks in November 2012 when Minnesota had just beaten back a constitutional amendment (put forth by the Republican controlled legislature) on voter ID. Dayton worked tirelessly — with former Republican governor Arnie Carlson — to defeat this transparent assault on our right to vote. A somewhat shy individual who is often uncomfortable speaking to groups, Dayton’s voice boomed to a packed gathering after the election when he said, “Thank You…You saved democracy in our state.”

Yet, it was his actions this past week that profoundly illustrates this man’s commitment to leadership for the “common good.” In a day and age when Republicans in the United State Congress cannot acknowledge the science of climate change, the Minnesota governor stood before a gathering of the state’s Department of Natural Resources and proclaimed an idea that has slipped from our collective consciousness: that polluting the state’s waters with agricultural waste and runoff impacts all of us. And that water is part of the commons—that water is not for the proprietary use of one person or one industry. And that without leadership, Minnesota’s natural resources could end up destroyed now and for future generations.

His simple yet haunting comment came after he proposed a 50-foot grass or similar buffer be placed around all state waters to help with contamination of the waters. He concluded by saying:

“The land may be yours. But the water belongs to all of us, and to all who will follow all of us.’’

Star-Tribune columnist Dennis Anderson captured the essence of the Governor’s unexpected announcement in his Sunday column: “Because the governor had done what no Minnesota governor has done in recent history, or perhaps in all of history: He grabbed with both hands the third rail of state politics: agriculture and its desire to be left alone, as free as possible from oversight…For now, Dayton’s initiative is reason enough to celebrate, because in the never-ending battle to sustain wild places and wild critters, leadership is everything, as Teddy Roosevelt demonstrated more than a century ago. And among state conservationists, Dayton has earned that title. Leader.”

It has been said that states provide “laboratories” for democracy. There is little doubt that with Dayton’s leadership Minnesota is providing a great lab experiment to how raising taxes on the wealthy, committing to public education, and the commons provides a winning formula.

Leadership. Mark Dayton, reminds us that public service was— and can be again—a sign of leadership; reminding us that short-term profits are not the only thing that drives our lives, and reminding us that the commons is part of what a Democratic RePUBLIC is all about.

The best governor in the country? From the viewpoint in Minnesota, the answer is easy.

Tuesday, January 20, 2015

Let's Not Cut Anyone's Taxes

President Obama's State of the Union speech tonight is supposed to include some tax cuts along with some tax increase proposals.

I am not in favor of lowering taxes on anyone. Our tax burden today, on average, is lower than it has been since the 1920s. About 43% of the people don't pay income taxes - but they do pay into Social Security and Medicare. 

The government needs revenue. The right-wing's second purpose in cutting taxes - the first being to enrich themselves and their very wealthy supporters - is to starve government so that it can't do anything. They have said that repeatedly. 

Government needs to do things but really can't do a lot with deficit spending now because the Republicans succeeded in blowing the national debt sky-high. So more revenue is needed. It doesn't have to come from the middle class. There are many ways to raise revenues. 

In my book, Let's Do What Works and Call it Capitalism, I calculated that two changes in the corporate tax law and one in the inheritance law would yield billions in annual revenue. Closing the loophole on transfers of corporate assets to subsidiaries outside the country would yield about $2 billion a year. Eliminating the deferral of income taxes on profits made overseas would yield about $80 billion a year. However, there are many issues involved and such a change may have to be phased in, along with, possibly, a reduction in the corporate tax rate of 35% (which is not that big a deal since the average paid by corporations is about half that percentage).  Elimination of the step-up basis exception in the inheritance would yield somewhere between $20 and $64 billion a year, depending on whose calculations are used - the White House in the first case and the Congressional Budget Office in the second. Obama is going to propose that change in the inheritance tax law tonight along with some other proposals that supposedly include a tax cut for the middle class. 

Then we put a tax on Wall Street transactions. It could yield many, many billions per year.

Then we restore the progressive income tax, and start raising tax rates progressively on incomes above $250,000, with a top marginal rate somewhere around 60%. I haven't calculated the revenue from this, yet, but it is substantial.

Then lift the ceiling on Social Security withholding and increase the percentage of withholding on higher incomes both for Social Security and Medicare.

All of these changes right now would yield a surplus in the hundreds of billions of dollars. That's what we need to do the things that need to be done.

Wednesday, December 31, 2014

A Proposed Statement of Purpose of the new Progressive Movement

This is a proposed statement of purpose for a new progressive movement to take over the Democratic Party and gain control of governments at all levels. It is based on the 1912 Progressive Party Platform, which contained a number of commitments that still are relevant:

- Limit political campaign contributions and expenditures.
- A “living wage” for all industrial workers.
- A social insurance program for everyone covering health, unemployment and old age.
- Government should create industrial research laboratories.
- One national health agency overseeing all aspects of health
- Federal regulation of all corporations operating in interstate commerce.
- Construction of a national highway system
- Impose a high tax on large inheritances. 

 The 2015 Commitment of a New Progressive Democratic Party

In a time of grave national problems, the people have called upon the Democratic Party to reconstitute itself into a party of the people, free of financial and corporate special interests and extremist ideologies, a progressive party, born of the nation's sense of justice, and dedicated to the restoration of government of the people, by the people, and for the people.
We hold with Thomas Jefferson and Abraham Lincoln that the people must insure that their Constitution fulfills its purposes and safeguard it from those who, by perversion of its intent, would convert it into an instrument of injustice. In accordance with the needs of each generation the people must use their sovereign powers to establish and maintain the equal opportunity and justice for all citizens, for which this Government was founded, and without which no democratic republic can endure.
Political parties exist to secure responsible government and to execute the will of the people. The Republican Party has turned aside from these great tasks to favor the rich and powerful at the expense of the people. Some elements of the Democratic Party also are too closely aligned with these special interests.
As a new progressive movement takes control of the Democratic Party, that new, reinvigorated Progressive Democratic Party then will break the corrupt alliances between government and the powerful corporate and financial interests, returning the control of their government to the people.
We hold with Abraham Lincoln that the purpose of government is to do for the people what they need to have done but which they cannot do for themselves.
We oppose the use of public institutions for private profit. Instead, we pledge to reinvigorate the core institutions of government to better serve the people.
We promise to safeguard and protect the natural resources and environment of this nation. Its resources, its business, its institutions and its laws should be utilized, maintained or altered in whatever manner will best promote the general interest of the people and their descendants.

We pledge to protect the natural rights of all our people asserted in our Declaration of Independence of life, liberty, and the pursuit of happiness, as well those rights guaranteed to all citizens under the Constitution.

Monday, December 22, 2014

Despite All the Evidence that it Doesn't Work, Trickle Down has Survived for a Long Time

There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.”

-  William Jennings Bryan, “Cross of Gold” speech at the 1896 Democratic National Convention in Chicago

Monday, December 15, 2014

Major Provisions of the Cromnibus Budget Act, Including Some Outrageous Stinkers

Here is an excellent summary of the provisions of the budget act, nicknamed "Cromnibus," passed by the Senate over the weekend and sent on to the President. However, it fails to mention the campaign finance provisions discussed below.

There is so much wrong with this budget that it is hard to find much of great significance that is good. I would not have voted for it even if it meant a government shutdown. This was the last chance to stop some of these outrages before the Republicans take control of the Senate.

But there are a few good things:

The Homeland Security budget held steady, which means nothing was done to block President Obama's immigration executive orders.

The President's budget for fighting Ebola in Africa was approved.

NASA gets a slight budget increase, including funding for the new Orion space-launch program.

Various food-aid programs, including food stamps, are funded, as is $40 billion in highway funds for the states.

No funds are provided for administration of the ban on the sale and manufacture of incandescent light bulbs, which I do not view as bad because of the extremely high cost of LED alternatives. There should have been a lower cost alternative in place before this act was passed.

Things that are wrong:

About half of the $1.1 trillion budget goes to the Defense Department, including $92 billion for procurement of new weapons systems, including another 38 F-35 fighters that we probably do not need. We maintain an active military of 1.3 million and 820,000 reserves. We really should be doing a complete re-examination of our military needs in light of the fact that we are unlikely to have a major war with a major enemy in the foreseeable future. We do have continuing conflicts of relatively small scale, and, of course, there is the situation in Syria. But we probably need to focus on a smaller, more versatile military, at considerably lower cost. We spend just about as much on our military as the total of the combined military budgets of all the other countries in the world.

Some bank regulations of the Dodd-Frank Act were lifted, including the one that prevented banks from getting FDIC protection, and thus tax-payer protection, for certain kinds of risky investments - the very kinds that went bad in 2008 and caused the Great Recession. The provision in the budget bill was written by lobbyists for City Group.  Sen. Elizabeth Warren tried to block this provision unsuccessfully because - under enormous White House pressure - a number of Democrats voted for the budget.

The EPA budget of $8.1 billion is cut by $60 million, which means that agency's budget has been cut by 21% since 2010. The assault by the Republicans continues on efforts to protect the environment and to protect American citizens from pollution and harmful chemicals. Another rider forbids the EPA to regulate lead content in ammunition or fishing tackle. Just what we need - more lead in the environment.

The IRS budget is cut by $346 million, despite the fact that it has additional responsibilities under the Affordable Care Act. It also is prevented from targeting tea party and other organizations seeking tax-exempt status for their political activities, which previously were prohibited. This combined with the increase from $65,000 to $1.5 million that individuals can contribute to political parties over a two-year period means we will see even more big money in politics.

Why would anyone want to permit truck drivers to work 82 hours and not have adequate sleep between work weeks?  Well, this budget blocks the Transportation Department from requiring two nights of sleep between work weeks and reducing the maximum work week to 70 hours.

Another stinker - and a real head-scratcher: The budget stalls rules that were to go into effect in 2017 that would have required more whole grains, and less salt, in school foods.

The budget continues to ban the transfer of prisoners from Guantanamo and prohibits construction of facilities to house them in the U.S.

There are two provisions that seem to reflect completely opposed points of view. One rider prevents the District of Columbia from proceeding with the legalization of marijuana that was approved by voters in November. Another rider forbids the Justice Department from raiding medical marijuana dispensaries in states where they have been legalized.

Friday, December 12, 2014

It is time for progressives to take over the Democratic Party.

Elizabeth Warren has set the stage. It is time for progressives to take over the Democratic Party with her in the lead. All Democrats who vote for this budget bill with its CityGroup provision should be opposed in their next primaries by progressive candidates.

President Obama no longer is the leader of the Democratic Party. He has become a Republican