Must Read

If you don't Wall Street is destroying America, read about just one firm here.

Here's a taste:

And here's the real punch line. After playing an intimate role in four historic bubble catastrophes, after helping $5 trillion in wealth disappear from the NASDAQ, after pawning off thousands of toxic mortgages on pensioners and cities, after helping to drive the price of gas up to $4 a gallon and to push 100 million people around the world into hunger, after securing tens of billions of taxpayer dollars through a series of bailouts overseen by its former CEO, what did Goldman Sachs give back to the people of the United States in 2008?

Fourteen million dollars.

That is what the firm paid in taxes in 2008, an effective tax rate of exactly one, read it, one percent. The bank paid out $10 billion in compensation and benefits that same year and made a profit of more than $2 billion - yet it paid the Treasury less than a third of what it forked over to CEO Lloyd Blankfein, who made $42.9 million last year.

How is this possible? According to Goldman's annual report, the low taxes are due in large part to changes in the bank's "geographic earnings mix." In other words, the bank moved its money around so that most of its earnings took place in foreign countries with low tax rates. Thanks to our completely hosed corporate tax system, companies like Goldman can ship their revenues offshore and defer taxes on those revenues indefinitely, even while they claim deductions upfront on that same untaxed income. This is why any corporation with an at least occasionally sober accountant can usually find a way to zero out its taxes. A GAO report, in fact, found that between 1998 and 2005, roughly two-thirds of all corporations operating in the U.S. paid no taxes at all.

Cures Everything

Obama's Budget = Class Warfare?

Warren Buffett, who knows a thing or two about wealth, has noted that because of the way the tax code is structured, he effectively pays taxes at a lower rate than the secretaries who work for him, concluding: "There's class warfare, all right. But it's my class, the rich class, that's making war, and we're winning."

Media Matters

Mayor Berman Keeps Interesting Company

My cyber-stalker wingnut has temporarily stopped harassing me, and I imagine it is because defending Gilbert Mayor Steve "Hitman" Berman is a full-time job.

He recently sent a letter to a judge asking for leniency in a case involving a family friend. The crime? Killing a teenager in a drunk-driving accident.

One wonders what kind of dirt the defendant had on said mayor.

Berman apologizes for letter about convict

Berman initially released a statement to KNXV-TV (Channel 15) after news about the letter came out. In that statement, he wrote: "If I had to do it over again, I would have written the letter on a personal letterhead rather than town stationary."

He also added: "Before writing the letter, I checked public records and found no indication that Raymond had ever been cited previously for DUI."

But Kohan has a detailed criminal past.

Court records show that he has seven drug arrests, two other DUIs, grand theft and petty theft charges, disorderly conduct arrests, probation violation and was found driving with a suspended license.

It's not clear how Berman and Kohan know each other.

Kohan couldn't be reached, and Berman won't talk about their relationship.

But in the mayor's letter, he wrote that he has known Kohan and his family socially and professionally for a number of years.

401(K) Even Less Appealing

The sale of the 401(K) as a retirement plan has been one of the biggest scams ever sold to American workers. While I also fully participate in my own company's offering (since pensions are no longer available, there is no choice), I understand the scam. Retirement is no longer a part of employment; we now shoulder the majority of the funding ourselves -- and we all have to be semi-pro financial planners to be able to get anywhere near the benefit our pensions used to provide.

The savings generated by this move is neatly transferred to the upper-management tiers, many of whom still have actual pensions.

But my company has used the current financial crisis as an excuse to change the company match from mandatory to discretionary -- meaning, non-existent. No match for you.

While the crisis is the excuse, you can bet this move will be permanent. I've seen this game before -- when Fortune 500 companies first began phasing out pensions, it was often sold as temporary or half measures. Pensions at first were cut in half and called "portable pensions"; sold to us as a great leap forward as we could "carry" these to other companies in the form of a cash payout when terminated. The catch: less than half the money the traditional model would pay out.

Portable pensions quickly phased out to no pension at all. While I was at Motorola, they could not kill their pension, as they were one of the only companies in the US that gave employees voting rights on changes to the pension.

One day, they presented us with a nice increase in the pension benefit. But there was a couple twists. New employees would be forced into the portable (aka 50% cut) pension model, while the rest of us could choose to go portable or stay in the traditional. Immediately, I was against this plan as it screwed new employees... unsurprisingly, many folks didn't care as long as we got the increase.

But the poison pill in the changes was this: we would have to give up our voting rights, and all future changes to the plan would enacted with no input from the employees. No vote, no veto power.

If ever one were to understand the mind of Republicans, this is a perfect example. You can guess, my fellow employees had no qualms about giving away their rights. Hell, many of my fellow employees were going to voluntary switch to the 50% cut in pension benefits. They ridiculed my tales of doom for our pension plan if this vote passed.

The "free market" will not allow them to dissolve our pension plan, they exclaimed. If they did that, we'd all leave for greener pastures; couldn't I see that?

Of course, all of our competitors were also dumping their pensions or never had one in the first place. And my co-workers said the "portable" pension would be great, as they would take the cash payout if they ever left and invest it wisely, and make more money than Motorola ever would have.

So the plan passed; as I recall, it wasn't even close.

And in less than 5 years, the pension plan was dissolved for us. The board of directors were given new "savings accounts" that equaled the "loss" of their pension plan. We were given a one-time contribution to our 401(K)s.

Studies a few years back have shown that 401(K) participants, unless they are upper managers with company provided financial planners, generally do not earn the same kind of return on their money as the old pension models used to. There are several typical problems with 401(K) participation.

The employee is not trained in investing. The employee is too busy to get the training and create an investment plan to optimize returns. The plan fees are more expensive than self-directed pensions, so less profit is gained over time. The choices tend to be too limited to diversify for knowledgeable investors; or too complicated for those who have never invested before.

So corporations have set out to fix these problems by: restricting choices and removing self-direction from the employees. Put more succinctly, they are putting the old pension model back in place, with one big exception: the employees will still shoulder most or all of the funding. So at the end of the day, the 401(K) has been yet another transfer of wealth from the middle-class to the top ranks.

People hate to hear this. I, too, bought into the hype when 401(K)s first started proliferating -- how we'd all be able to retire millionaires now. I should have known the "we", as always, was the top 5%.

Fuzzy Math

Let me get this straight...

when the economy tanks, us working stiffs get to pitch in by losing our jobs in layoffs, losing benefits if we keep our jobs, and watch wages slide even further below what we made in the pre-Reagan era.

CEOs, on the other hand, get to pitch in by accepting the bonuses that are "earned" by our layoffs, loss of benefits, and wage stagnation.

Economy good? CEO pay explodes, workers stagnate. Economy bad? Same thing.

Nice kingdom we have.

Truer Words

Never spoken.

"Republicans to Detroit: if only you could figure out a way to pay your executives and not your workers, we might help you.

Do I have that right?

--Molly I."

From Eschaton

New Link

In honor of my right-wing hate stalker, I've linked "The Gilbert Report". I know nothing about the reporting, I just know Alicia hates it.

Required Reading

Republicans, even now, are desperately re-writing the history of the Bush era. Turd Blossom, in particular, will bloviate from FauxNews about the wondrous 8 years we have just experienced.

People find it ridiculous to suggest, in 10 years or less, the corporate media will be broadcasting these messages in full -- that Bush was misunderstood, and his policies (and particularly the Iraq War) -- were by and large successful.

Impossible? Just look at the Reagan years. From Iran-Contra, to union-busting, to sky-rocketing deficits and the reversal of Carter's efforts to get us off foreign oil -- it, too, was a disaster. Granted, not the epic scale of Bush, but terrible for the US nonetheless. And the media woships Reagan like a dying, rich uncle.

So too will go the Bush administration. Which is why this Vanity Fair article is required reading. To give those of us living in the reality-based world the ammunition to set the record straight when Republicans blame minorities, the poor, Dems, and labor for the coming Bush Depression.