Inequality.org – Informed Comment https://www.juancole.com Thoughts on the Middle East, History and Religion Sat, 28 Nov 2020 18:09:09 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.16 The Federal Gov’t owns 92% of Student Debt. Will Biden Wipe it Out? https://www.juancole.com/2020/11/federal-student-biden.html Wed, 18 Nov 2020 05:01:39 +0000 https://www.juancole.com/?p=194487 By Sarah Anderson and Margot Rathke | –

( Inequality.org) – Washington is abuzz with ideas for actions the Biden-Harris administration could take that would not require Congressional approval. One of the buzziest: cancellation of student debts owed to the federal government.

The U.S. Department of Education owns about 92 percent of the $1.6 trillion in U.S. student loans and many legal scholars say the Department has the authority to wipe these burdens away with the stroke of a pen.

“This is the single most effective executive action available to provide massive consumer-driven stimulus,” Senator Elizabeth Warren wrote in a Washington Post op-ed.

Back in September, Warren joined with Senate Democratic Leader Chuck Schumer to call on the next president to cancel up to $50,000 in federal student debt for every borrower in the United States. That would eliminate loan obligations for more than three-quarters of the approximately 44 million Americans with student debts.

Meleiza Figueroa is one of those many millions. The first in her family to graduate from college in the United States, she worked hard and was lucky enough to receive scholarships. But as the cost of living soared and wages stagnated, she still had to take out tens of thousands of dollars in loans.

“As a working adult in this country, I’ve had to decide between daily food, medicine, shelter, and paying off this debt — and daily survival will win out every single time,” she said on a November 13 webinar organized by the Congressional Progressive Caucus Center.

Now the National Coordinator of the Student Debt Campaign, Figueroa explained that debt cancellation would help her generation “fulfill our potential and contribute not just what little we can, but the best we can to society.”

Both Figueroa and Warren point out that student debt cancellation would help narrow the racial wealth gap. On average, Black students have to take out larger loans to get through college than their White peers. A National Center for Education Statistics study reveals that Black Bachelor’s degree graduates have 13 percent more student debt and Black Associate’s degree graduates have 26 percent more than White graduates with those degrees.

Black graduates also face greater challenges in paying off their student debt because of their lower average incomes. Black Bachelor’s degree and Associate’s degree holders earn 27 percent and 14 percent lower incomes, respectively, than Whites with the same degree.

Research by the Federal Reserve and the Levy Economics Institute shows that debt cancellation would also boost the national economy. Freed up from these financial burdens, former debt holders would have more buying power to stimulate the economy — just when we need it most.

Where does President-Elect Biden stand? In March he tweeted support for a legislative proposal to cancel at least $10,000 in federal student loan debt per person, stating “young people and other student debt holders bore the brunt of the last crisis. It shouldn’t happen again.” But so far he has not committed to using executive action to avoid that historic repeat.

Rep. Ilhan Omar, who has championed proposals for universal student debt cancellation and free college, is among those pressing the Biden-Harris administration to take bold action. The mountain of student debt, she said at the CPCC event, “is the result of a two-tiered education system — one for the rich whose families can afford to pay tens of thousands of dollars for higher education and the other for poor and middle class families who have to pay off that education for the rest of their lives.”

The Biden administration will have the power to address these inequalities, Omar said. “As Americans, we are not suffering from scarcity, we are suffering from greed.”

Via Inequality.org

Sarah Anderson directs the Global Economy Project and co-edits Inequality.org at the Institute for Policy Studies. Margot Rathke is an IPS Next Leader.
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Trump Sold out Workers like Me https://www.juancole.com/2020/11/trump-sold-workers.html Tue, 03 Nov 2020 05:02:28 +0000 https://www.juancole.com/?p=194223 By Robert Morrison | –

( Inequality.org) – When I attended President Trump’s October 13 rally in Des Moines, I was disgusted by the lies I heard.

Trump likes to brag about how many jobs he’s created. He likes to claim that he’s fulfilled his promise to be the “the greatest jobs president that God had ever created.”

“Over the next four years, we will make America into the manufacturing superpower of the world. And we will end our reliance on China once and for all,” he bellowed into the wind in Des Moines. “It’s already happened.”

The truth is that Trump has done nothing to bring manufacturing jobs back to our shores. In fact, he has the worst jobs record of any modern president.

When he took office in 2017, Trump inherited an economy that had gained a net 11.6 million jobs over the Obama administration’s eight years. During the past four years, our economy has lost nearly half of those. American companies are investing more in China than ever, and our trade deficit recently hit a new record.

Under Trump’s watch nearly 1,800 factories have disappeared, including the 150-year old “Murray” in Burlington. Named for its past incarnation as the Murray Iron Works and later operated by Siemens, the Murray was the oldest, continuously operating plant west of the Mississippi.

I worked there for 31 years. Today, shuttered and abandoned, it’s the perfect symbol for Trump’s presidency.

In April 2019, Siemens’ corporate representatives spent 20 minutes telling us that they’d be closing our state-of-the-art facility and sending our jobs to the Czech Republic and India. Everything we’d spent our lives working for would be gone.

Shortly after we got the news, I wrote to the White House to ask President Trump to help us save our plant. I got a form letter back that said our factory’s demise was a state and local matter, and there was nothing the president could do.

That is simply not true. Siemens is a massive, billion-dollar corporation that does hundreds of millions of dollars worth of business with the federal government. Trump could have issued an order saying that as a federal contractor, they can’t send our jobs overseas.

Instead, he did nothing. Now, workers like me are left feeling abandoned and betrayed — not just by Siemens, but by our government.

I worked my last shift a few days before Christmas. Since then, I’ve been spending more time with my grandchildren. I’m 65 years old, so I doubt I’ll find another job. I miss my Murray family. It’s hard to wake up every morning and know that I won’t be seeing them at work.

But I refuse to turn my back on my fellow workers — those I worked with side by side, and those who are facing similar struggles across the country. That’s why I’m committed to telling the truth about Trump: He’s never stood up for working people. He’s never done anything except feed us lies and broken promises.

When I pointed that out at his rally in Des Moines, I was spit on by one of his supporters.

That’s right. During the COVID-19 pandemic, when Trump himself has been diagnosed with the virus, a supporter of the president decided that he would spit on me to keep me from telling the truth.

It’s going to take a lot more than spit to keep me from speaking out.

Together with Our Revolution activists across the Midwest, I’m organizing working people and spreading the word about Trump. We need real action to save our jobs and communities, not more lies and bluster.

Originally published at OtherWords.org.

Via Inequality.org

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Bonus Video added by Informed Comment:

The Guardian: “How Donald Trump’s broken promises failed Ohio | Anywhere but Washington”

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For First time in History Twelve US Billionaires Have a Combined $1 Trillion https://www.juancole.com/2020/08/billionaires-combined-trillion.html Sun, 23 Aug 2020 04:02:59 +0000 https://www.juancole.com/?p=192731

A disturbing milestone in the concentration of US wealth.

By Chuck Collins and Omar Ocampo | –

For the first time in U.S. history, the top twelve U.S. billionaires surpassed a combined wealth of $1 trillion. On Thursday August 13, these 12 held a combined $1.015 trillion.

This is a disturbing milestone in the U.S. history of concentrated wealth and power. This is simply too much economic and political power in the hands of twelve people. From the point of view of a democratic self-governing society, this represents an Oligarchic Twelve or a Despotic Dozen.

The Oligarchic Dozen are Jeff Bezos ($189.4b), Bill Gates ($114b), Mark Zuckerberg ($95.5b), Warren Buffett ($80b), Elon Musk ($73b), Steve Ballmer ($71b), Larry Ellison ($70.9b), Larry Page ($67.4b), Sergey Brin ($65.6b), Alice Walton ($62.5b), Jim Walton ($62.3b), and Rob Walton ($62b).

Since March 18, the beginning of the pandemic, this Oligarchic Dozen have seen their combined wealth increase $283 billion, an increase of almost 40 percent.

Elon Musk has been the biggest pandemic profiteer, seeing his wealth triple from $24.6 billion on March 18th to $73 billion on August 13, an increase of $48.5 billion or 197 percent.

Amazon co-founder Jeff Bezos was worth $189.4 billion on August 13, up $76 billion or 68 percent since March 18.

Facebook CEO Mark Zuckerberg was worth $95.5 billion on August 13, up $40.8 billion or 75 percent since March 18.

During the first stage of the pandemic, between January 1st and March 18th, the collective wealth of the Oligarchic Dozen declined by $96 billion. But their wealth quickly rebounded and surpassed their March 2019 Forbes Global Billionaire wealth level. The only exception is Warren Buffett, who is still $2 billion below his March 2019 wealth, but is currently worth $80 billion.

March 18th, 2020 marked the beginning of the Covid-19 lockdown and historic filings for unemployment — and also the intervention of the Federal Reserve with monetary actions to stabilize markets.

Philanthropy is not the answer but is becoming another extension of private power and interests. A number of the Oligarchic Dozen are members of the Giving Pledge, a group of billionaires who promised to give away at least half their wealth before their death. But as an Inequality Brief “Giving Pledge at 10,” by the Institute for Policy Studies reveals, ten years after beginning the Pledge, their combined wealth has doubled. Among the Oligarchic Dozen, five of the top seven billionaires — Gates, Buffett, Zuckerberg, Ellison, and Musk — have taken the Giving Pledge.

See our research summary here.

Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org. Omar Ocampo is a researcher for the Program on Inequality and the Common Good at the Institute for Policy Studies.

Bonus video added by Informed Comment:

Business Insider: “How Billionaires Got $637 Billion Richer During The Pandemic”

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Super-Rich making out like Bandits in Pandemic is an Argument for Basic Wealth Tax https://www.juancole.com/2020/08/bandits-pandemic-argument.html Sun, 16 Aug 2020 04:01:08 +0000 https://www.juancole.com/?p=192607 By Lee Price and Bob Lord | –

( Inequality.org) – Changes in tax policy since 1980 have been driving U.S. inequality to levels not seen since the original Gilded Age. Reversing that trajectory — and restoring a more egalitarian society — will require a complete overhaul of the changes in tax policy we’ve seen over the past four decades.

Taxes as a share of national income have now been remarkably stable for 40 years. Total federal tax revenue last year stood at 17 percent, about the average for the last half-century. Income taxes, meanwhile, have stayed steady at 8 percent of the economy.

These stable percentages should be a cause for alarm, not satisfaction. In any tax system based on progressive tax principles, federal income tax revenue should increase as a greater share of income goes to people in the higher tax brackets. But that hasn’t happened. The big tax cuts that Ronald Reagan, George W. Bush, and Donald Trump have signed into law have tilted our tax structure in favor of those at the top.

Thanks to these cuts, our wealthy have spent the last four decades paying taxes at significantly lower rates. The taxes they pay have dropped so much that total federal revenues have remained stable only because average Americans are paying, as a share of the economy, far more in regressive payroll taxes.

Some numbers: Between 1980 and 2018, tax law changes favoring the nation’s rich left our billionaires paying 79 percent less in taxes, as measured as a share of their wealth. The country’s top .01 percent, a group consisting of households with wealth in excess of $100 million, have seen their tax payments as a share of their wealth drop by almost as much, 73 percent.

Most of us reliably consume most of any boost in income we see. Not people with massive wealth. An ultra-wealthy household that realizes $25 million in tax savings doesn’t rush out and spend that extra $25 million on food, home improvements, or new clothes. Most of those added millions just add to that ultra-wealthy household’s wealth, and that in turn increases the household’s future income — and future wealth.

In other words, wealth begets wealth, and the giant cut in the taxes our rich people pay, as a percentage of their wealth, has turbocharged how rapidly our nation’s wealth is concentrating. The share of America’s wealth that our top .01 percent hold has quadrupled, rising from 2.3 percent in 1980 to 9.6 percent in 2018. The incomes of the top .01 percent of our nation’s earners have, over the same years, jumped from 1.5 percent to 4.6 percent.

Restoring the tax structure our wealthy faced back in 1980 would certainly slow our nation’s growing inequality of wealth and income. But simply restoring what we had in 1980 isn’t going to reverse the absurd concentration of America’s wealth we have now. The billions our richest have already accumulated will continue to pile up ever higher if we merely go back to the 1980 status quo. Jeff Bezos is currently sitting on well over a $100 billion appreciation in the value of his Amazon stock. None of the value of that stock will land on his federal income tax return until he sells his Amazon shares.

So what can we do? A tax on wealth would be the most direct and rational way to address America’s obscene level of wealth concentration.

Relying solely on taxes on income or real estate property or consumption is never going to adequately reverse how concentrated our nation’s wealth has become. Yes, the wealthy should pay much higher income tax rates on their earnings from wealth. Yes, they should face property taxes and excise taxes on consumption like the rest of us. But the wealthy should also face an additional tax on their actual wealth.

Such a tax would function as a constraint on the accumulation of additional wealth and also raise significant revenue, even if some rich evaded this new levy. Household wealth in excess of $172 million, according to economists Emmanuel Saez and Gabriel Zucman, would represent a tax base of $6.3 trillion. Household wealth in excess of $31 million would represent a tax base of over $13 trillion.

Senator Elizabeth Warren last year proposed a 2 percent tax on wealth above $50 million and a 3 percent tax above $1 billion. If this tax had been in place in 1982, Saez and Zucman calculate, the Fortune 400 share of our nation’s wealth would have increased from 1 percent to 2 percent in 2018. In real life, without that tax in effect, the Fortune 400 share rose to 3.5 percent in 2018.

According to Saez and Zucman, a 10 percent tax rate on wealth in excess of $1 billion would have, if begun in 1982, kept the Forbes 400 share of the nation’s wealth at its 1982 level of 1 percent.

We can’t turn the clock back to 1982. But we can take serious steps to undo the inequality damage we’ve experienced since then. Our suggestion: Let’s add a third tier to Senator Warren’s proposal. On wealth in excess of $5 billion, let’s now impose a 10 percent tax.

Might this levy cause those fortunes well above the $5 billion mark to actually shrink over time? Perhaps, but that wouldn’t be so terrible. After all, any rich household with a mere $5 billion would still have enough wealth to cover $100,000 per day of expenses for over a century.

We would see a far worse result — for our democratic well-being — if we permitted fortunes over $5 billion to grow ever larger. So let’s err on the side of reversing America’s obscene inequality, not protecting multibillionaires.

Bob Lord practices tax law in Phoenix and serves as an Institute for Policy Studies associate fellow. Lee Price, a former chief economist at the House Appropriations Committee and several other Capitol Hill panels, also serves as an IPS associate fellow.

Via Inequality.org

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Bonus Video added by Informed Comment:

Mother Jones: “We Visualized Billionaire Wealth Gains During the Pandemic”

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The 1%’s attack on Unemployment Benefits is a Sign of our Broken Democracy https://www.juancole.com/2020/08/unemployment-benefits-democracy.html Sun, 02 Aug 2020 04:02:08 +0000 https://www.juancole.com/?p=192339 By Adam Shah | –

( Inequality.org ) – Members of the One Percent, such as former restaurateur Andrew Puzder, have urged Congress to not renew the $600 a week unemployment supplement Congress enacted as part of the CARES Act. They argue, in Puzder’s words, that “this $600 per week bonus is discouraging work” for low-wage earners.

No one receiving unemployment benefits will make themselves rich on unemployment. The $600 is not a huge incentive to stay home. Even in the states with higher base benefits, the minimum unemployment benefits plus the supplement, leave unemployed people earning less than a living wage far below the U.S. median income.

But as low as unemployment benefits are, they are higher than the U.S. paltry minimum wage of $7.25 an hour, which is tantamount to a starvation wage, leaving working families significantly food insecure. Puzder’s argument makes sense: Why would anyone risk their life and health during a pandemic for lower wages than they could receive by remaining unemployed?

In the short-term, we could solve the problem Puzder raises by increasing the minimum wage to $15 an hour or more. A $15 minimum wage would provide people with, yes, $600 a week if they work a full-time job. There goes the incentive not to look for work. (Puzder, by the way, was Trump’s choice for Labor Secretary before he withdrew from the running in the face of sexual harassment and labor abuse charges at his fast food restaurants)

But a minimum wage increase, while alleviating the problem in the short-run, would do nothing to fix the long-term problems in our economy exposed by the novel coronavirus. The fact that Congress passed the CARES Act on an emergency basis with almost no debate, including both hundreds of billions of dollars of bailouts for business and $176 billion for a few months of supplemental unemployment benefits shows just how broken our economy is.

The long-term systemic reason that working people are willing to accept jobs that cannot provide enough income to cover basic needs is because they are unable to organize and demand higher wages. Unionization is clearly tied to higher and more equal wages. The real disincentive working people face is that if they try to assert their right to collective bargaining, they often are quickly fired even though such firing is technically illegal.

The threat of losing your job is backed up by real consequences — loss of income, loss of housing, loss of health insurance, and food insecurity. Unemployment benefits are so paltry, the economy cannot survive long during a period of double-digit unemployment.

But working people need more than enforced protections for union organizing, we need their voices and expertise at the center of the Coronavirus recession recovery efforts. Harvard Law School’s Clean Slate for Worker Power project and the Roosevelt Institute have put forward detailed proposals on how to include worker voices during the Covid-19 recovery. With worker solutions at the table and workplace, the economic recovery will be safer, stronger, and quicker. Working people’s voices need to be heard and followed daily, not just every four years during an election cycle. Democracy, particularly economic democracy, lives in the workplace.

Unfortunately, too many members of Congress have been listening more to voices like Puzder’s than the voices of working people. They are letting the CARES Act unemployment benefits expire as they continue to fight over the terms of the next stimulus package.

Extending the $600 unemployment supplement would not be a threat to businesses that pay living wages and support worker voices. Not extending it is a threat to every unemployed person who is trying to survive this economic crisis.

Puzder attempts to make the argument that small-business owners hiring or trying to hire reported difficulty finding qualified applicants or any applicants and blames the unemployment supplement. What he does not take into account is the volatility of the current workplace with a cycle of re-openings and closings due to Coronavirus impacting many of the minimum wage sectors. It took many people weeks to secure unemployment benefits and they are concerned that if they return to a workplace that closes a week later they will lose this temporary stability.

Puzder argues that there is no substitute for the dignity of a job but he grossly misses the mark — forcing people to risk their lives to return to work is the opposite of dignity.

The dignity of work is restored when employment leads to working people securing living wages and having their voices heard.

Originally published by Jobs with Justice.

Adam Shah is the Senior Policy Analyst at Jobs With Justice.

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Bonus Video added by Informed Comment:

CBS 8 San Diego: “The additional $600 per week unemployment benefit ends on Friday at midnight”

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As 38.6 Million File for Unemployment, Wealth of Billionaires surged $435 Bn https://www.juancole.com/2020/05/million-unemployment-billionaires.html Mon, 25 May 2020 04:03:27 +0000 https://www.juancole.com/?p=191101 By Omar Ocampo and Chuck Collins | –

Updates: Billionaire Wealth, U.S. Job Losses and Pandemic Profiteers

( Inequality.org) – The number of U.S. citizens filing for unemployment increased to 38.6 million since March 18, according to the Bureau of Labor Statistics. Over the same two months, the wealth of U.S. billionaires has surged $434 billion – an increase of 15 percent.

The combined fortunes of Jeff Bezos and Mark Zuckerberg alone grew by nearly $60 billion during these two months, according to a new analysis, jointly released by Americans for Tax Fairness and the Institute for Policy Studies, which released Billionaire Bonanza 2020 in April to examine billionaire wealth during the first month of the pandemic.

Between March 18 and May 19, the total net worth of the 600-plus U.S. billionaires rose from $2.948 trillion to $3.382 trillion. In March, there were 614 billionaires on the Forbes list. There are 630 two months later, including newcomer Kanye West at $1.3 billion.

Among other COVID-19 victims are the more than 16 million Americans who have likely lost employer-provided healthcare coverage. Low-wage workers, people of color and women have suffered disproportionately in the combined medical and economic crises. Billionaires are overwhelmingly white men.

Wealth growth of other select billionaires in the top 30 on the Forbes May 19 list are below.

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Sources: All data analyzed by ATF and IPS is from Forbes and available here.
March 18, 2020, data is from the Forbes World’s Billionaires List: The Richest in 2020.
May 19, 2020 data was taken from Forbes real-time estimates of worth that day.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Will Covid-19 Crisis bring Americans together Across Race or Will they Double down on Razing Safety Net? https://www.juancole.com/2020/05/americans-together-double.html Sun, 24 May 2020 04:02:30 +0000 https://www.juancole.com/?p=191078

New York Times reporter Eduardo Porter’s new book, ‘American Poison,’ is a scathing analysis of misguided white antagonism toward social welfare programs.

By Lewis M. Steel< | - ( Inequality.org) – The new book by New York Times economics reporter Eduardo Porter, American Poison: How Racial Hostility Destroyed Our Promise, is not for the faint of heart. According to Porter, America’s struggling white middle class, and especially those without college or advanced degrees who once worked in well-paying factories, see blacks as usurping their place on the employment ladder and taking their hard-earned tax dollars by pocketing government welfare “handouts” rather than earning their own keep.

This book should find a place in libraries documenting America’s virulent racial history through the present. No sugarcoating here. Porter relies on historical events, Supreme Court decisions, racist statements, and actions of major political figures (both Democratic and Republican), statistical compilations, and the results of endless public opinion polls and studies on racial attitudes to definitively reveal unrelenting nationwide white prejudice leading to rejection of broad-based welfare programs common in virtually all other industrialized states.

To anchor his powerful argument, Porter refers to other important works, such as Richard Rothstein’s The Color of Law for its detailed account of the government’s open role in expanding residential segregation after World War II and Michelle Alexander’s The New Jim Crow to establish that America’s use of harsh criminal laws and massive imprisonment, which affected blacks much more heavily than whites, was less about allaying fears of crime in the streets than a racist backlash to the loosening of Jim Crow controls.

The Butler’s Child

Porter also writes about how the Supreme Court not only ended its efforts to desegregate the nation’s public schools, with the North hardly touched and the South returning to it segregationist ways. The Court also refused to consider the large disparities in pupil expenditures between higher-income and poor San Antonio, Texas schools.

Before joining The New York Times in 2004, Eduardo Porter was the editor of the Brazilian edition of América Economía and covered the growing Hispanic population in the United States for The Wall Street Journal.

Contrary to Porter’s pessimistic opinion that meaningful changes are not in the country’s future, however, this reviewer sees some indications that white/black antagonisms are lessening, based on the author’s own evidence showing significantly increased racial intermarriage, as well as friendlier relations between whites and blacks in the nations’s younger generations. In addition, in the North and South, some cities have been voluntarily creating magnet public schools to provide children of all races and backgrounds with an integrated quality education.

By arguing that racism remains the driving force of American domestic public policy, Porter contradicts a common contention in some of the media that President Barack Obama’s election established that the nation had done enough to overcome racial discrimination to make further efforts unnecessary in what was now, they argued, a post-racial society.

Porter cites the flipping of Macomb County, Michigan from the Democratic column in 2016 to support Donald Trump, despite his racism, thereby giving him the state. Weakening that contention, however, is Obama’s win in Macomb in both the 2008 and 2012 elections, despite it being largely white during those years. Nonetheless, Porter uses Macomb to support his disheartening conclusion that racial antagonism has prevented America from developing into a well-functioning welfare state, leaving our safety net weak and undermining meaningful democracy.

When American Poison was completed, the coronavirus had not yet emerged as a real threat. Looking forward, however, Covid-19 certainly has the potential to significantly alter American public policy.

Considering the fallout optimistically, there’s reason to hope that Americans could come together to create a new New Deal based upon a shared vision of a more resilient and equitable future for us all. Bolstering this possibility (some might say fantasy) is the endless news coverage documenting the devastation and deaths caused by the virus and Americas’s lack of preparedness.

While people of color have been by far the hardest hit by both the public health and economic crises, the virus has been catastrophic for people of all colors and nationalities. From health care workers to first responders to food delivery employees, people of all races have been working — and sometimes dying — together to provide essential services.

Whichever path the country takes, American Poison will shine a searchlight on the country’s continuing racism, which will make the post-crisis reconstruction that much more challenging.

Via Inequality.org

Content licensed under a Creative Commons 3.0 License

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Bonus Video added by Informed Comment:

Coronavirus health disparities highlight race, class divides in NYC epicenter | Nightline

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The Middle East was beset by Terrorism; now it Faces Coronavirus and Economic Freefall https://www.juancole.com/2020/05/terrorism-coronavirus-economic.html Sat, 09 May 2020 04:02:38 +0000 https://www.juancole.com/?p=190783

High levels of inequality and weak public health and safety net systems make the region extremely vulnerable to the ravages of the pandemic.

By Colin Powers| –

( Inequality.org ) – As acutely as COVID-19 and related policy responses are widening inequality in the United States, the pandemic’s biased effects threaten to be even more pronounced in many parts of the global south. This certainly appears to be the case for the non-Gulf countries of the Middle East and North Africa (MENA).

Well before the onset of the current crisis, thirty years of austerity and misguided development policies had already turned this region into the most unequal on our planet. Though hollow metrics like GDP might have given a picture of relatively good health, any recent gains have accrued almost entirely to the top one and ten percent of income earners. If this narrow elite has seen its quality of life reach parity with their western counterparts, their prosperity has come at a great cost: dangerously high levels of impoverishment and unemployment have stubbornly consolidated, and the margins keeping middle class families above official poverty lines have grown ever thinner.

After decades of war and/or coerced neoliberal reform, these countries’ public health infrastructures and universalist safety nets, which once could have managed high levels of infection and cushioned families during economic downturns, are now eroded as well. Where social insurance systems are still in place, moreover, majorities or near majorities of workers are excluded because they are informally employed and therefore outside the existing benefit schemes.

With most informal economic activities shutting down due to quarantining and other public health measures over the past few weeks, critical incomes are no longer flowing to the people that depend on them in order to meet their basic needs. The preconditions for humanitarian crises are therefore ripe throughout the region, with the many people on the margins sure to suffer the worst.

Global inequality

Get the facts

As bad as short-term outlooks are, the long-term fallout of COVID-19 could be even more grim. Even prior to the introduction of the coronavirus, debt burdens were impeding effective economic policymaking. In Egypt and Lebanon, for example, interest payments alone have absorbed upwards of 30 percent of total public expenditures in recent years.

Now staring down massive economic contractions, these debt burdens are bound to become even more salient as they will necessarily limit the scale of state spending during the emergency period. By consequence, subsequent recoveries can be expected to be slow, and recession-like conditions will likely extend well into the future. With the G20 excluding MENA borrowers from their recent debt moratorium deal for the world’s poorest countries — and private creditors none too inclined to offer relief either — outside partners as yet seem nonplussed by such prospects.

Lebanon, already reeling from runaway inflation and a recent default on its sovereign debt, is expected to see its GDP shrink by 12 percent in 2020. Algeria, an oil exporter suffering from the drop in global oil prices, is looking at a 5.2 percent drop, while the GDP growth forecast for Morocco is -3.7 percent, for Tunisia -4.3 percent, and for Palestine between -1.8 and -3.8 percent.

Makings matters worse — especially from the perspective of inequality — is the fact that MENA government officials have largely opted to allocate what scarce resources they do have in order to prop up currencies, buoy financial markets through liquidity injections and interest rate manipulations, and support private enterprises.

Necessary as these measures might be, their distributive effects are quite clearly biased towards the wealthy. Combined with the paltry sums being allocated for cash transfers and mass-oriented welfare (see, for example Iraq, Jordan, Palestine, and Tunisia), one is therefore likely to see the rich get richer as the poor get poorer in the months ahead. To the extent that adding to deficits for market stabilization purposes today is likely to come at the cost of austerity and state retrenchment tomorrow, the indirect effects of these biased policy choices may prove to be more severe than the direct ones.

To their credit, the IMF and World Bank have each expressed a willingness to greatly expand the lines of credit available for borrowers throughout the global south. But with the U.S. government, the largest contributor to these international financial institutions, perversely obsessed by war games with Venezuela and Iran, it remains to be seen whether such injections of capital will actually materialize in time to help the countries of the Middle East and North Africa, where time is very much of the essence.

With oil’s collapse soon to test the solvency of the Algerian, Libyan, and Iraqi states — and soon to precipitate a decline in the bilateral aid being offered up by the Gulf monarchies as well — the tempest’s work is far from over in the Middle East. However things may play out, though, poor and working people, whether in this region or in the United States, will need to steel themselves for the political battles that are to come. Huge changes are inevitably afoot, with feudalist outcomes no less likely than social democratic ones.

Colin Powers recently earned his PhD from Johns Hopkins SAIS. He studies the development and underdevelopment in the Middle East and North Africa.

Via Inequality.org

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Bonus Video added by Informed Comment:

AP: “May Day protests in Beirut despite virus measures”

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Billionaire Bonanza 2020: Wealth Windfalls, Tumbling Taxes, and Pandemic Profiteers https://www.juancole.com/2020/04/billionaire-windfalls-profiteers.html Sun, 26 Apr 2020 04:18:26 +0000 https://www.juancole.com/?p=190552 By Chuck Collins, Omar Ocampo and Sophia Paslaskiis | –

Billionaire Wealth and the Pandemic

( Inequality.org) – In its 34th annual list of global billionaires, published on April 7, 2020, Forbes reports a modest decline in the total number of billionaires from 2,153 in 2019 to 2,095in 2020. “The world’s richest are not immune to the devastating impact of the coronavirus,” noted Kerry Dolan, Forbes assistant managing editor of wealth. “The drop in the number of billionaires this year reflects the economic impact the pandemic is already having.”23The total combined net worth of the global billionaire class declined from $8.7 trillion in 2019 to $8 trillion in 2020, due both to the pandemic and to roiling global markets. A total of 267 affluents dropped off the list because their fortunes fell below $1 billion. Another 21 who made the 2019 list have since passed away.

Of the total 2,095 billionaires on the Forbes global list, 1,033,or 49 percent, have seen their wealth increase over the past year. U.S. billionaires have seen ups and downs over the same period. Their ranks increased from 607 to 614people, but their total wealth declined from $3.111 trillion in 2019 to $2.947 trillion in 2020, according to Forbes. This year’s Forbes report examines billionaire wealth as of March 18, 2020, a bit later than the February dates fixed upon in the magazine’s previous 33 annual reports. By April 5, two-plus weeks after March 18, U.S. billionaires had seen their collective wealth rise back to $3.017 trillion, and by April 10 their wealth had surged to $3.229 trillion, surpassing the 2019 level.

Between March 18 —the near bottom point of the pandemic financial swoon —and April 10, 2020, U.S. billionaire wealth rebounded by $282 billion. The Jeff Bezos Wealth Surge is an unprecedented dynamic in the history of modern markets. Tracking Bezos’ wealth requires a real-time hour-by-hour tracker. As of the publication of this report, Bezos’ wealth has increased over $25 billion since January 1, 2020 and $12 billion since February 21st, 2020, the beginning of the Covid-19 pandemic.

Billionaire wealth, as these numbers show, tends to rebound from market meltdowns. In the immediate aftermath of the global economic crisis of 2008, the Forbes 400 saw their combined wealth decline $300 billion from $1.57 trillion in 2008 to $1.27 trillion in 2009. Within 30 months of the September 2008 crash, most of these fortunes recovered. By 2012, billionaire wealth had reached$1.7 trillion, exceeding pre-2008 levels. Between2010 and 2020, the combined wealth of the U.S. billionaire class surged by a staggering 80.6percent, from $1.631trillion to $2.947 trillion in 2020 dollars.

We can probably expect that Wall Street and equity markets will rebound faster than the rest of the economy, including unemployment, savings, home values, and other economic indicators that measure the economic security of the bottom 80 percent of households.

Billionaire Pandemic Profiteers

Ordinary people around the globe may now be struggling to survive a ravaging public health and economic crisis, but early indicators suggest the billionaire class will maintain its wealth or even see a major surge. Since January 1, 2020, 34 of the wealthiest 170 U.S. billionaires have seen their total net worth increase by tens of millions of dollars according to the Bloomberg Billionaire Index. These include eight billionaires who, as of April 10, have seen wealth gains of over $1 billion.

1. Jeff Bezos, Amazon founder and CEO: up $10 billion ($25billion as of April 15, 2020). The stock market crash initially left Bezos’ net worth deeply damaged, down to a meager $105 billion on “Black Thursday” March 12, the stock market’s lowest point. Bezos’ wealth has been trending upward ever since, with no company better positioned to profit from the pandemic than Amazon. The closure of hundreds of thousands of small businesses is giving Amazon the opportunity to increase its market share, strengthen its place in the supply chain, and gain more pricing power over consumers. Despite Amazon’s e-commerce dominance, Bezos has been unable to protect his workforce from Covid-19: Workers in 10 different Amazon warehouses tested positive for the disease in late March. Instead, in early April, Bezos announced a donation of $100 million of his $140 billion in wealth to Feeding America.

2. Elon Musk, Tesla CEO and SpaceX founder and CEO: up $5 billion After initially dismissing the coronavirus pandemic as “dumb,” Musk is now taking the crisis much more seriously as confirmed cases continue to grow. New York City Mayor Bill DeBlasio directly reached out to Musk via Twitter and asked him to help address the shortages of critical medical equipment. SpaceX responded by partnering with Medtronic, a medical device company, to help increase the firm’s capacity to produce ventilators,33while engineers at Tesla are creating prototypes from used car parts.34As a result, Musk’s wealth has recovered since mid-March after dipping $3.1 billion below its level at the beginning of the year. This turnaround has added $8.1 billion to the Musk fortune in less than a month.

3. MacKenzie Bezos, novelist and philanthropist: up$3.5 billion (and up $8.6 billion as of April 15, 2020) MacKenzie Bezos owns a 4 percent stake in Amazon transferred to her by ex-husband Jeff Bezos and has likewise enjoyed the company’s market domination in recent weeks. She is behaving somewhat more charitably. In 2019, before the divorce and transfer of assets finalized, she signed the Giving Pledge, promising to give away the majority of her wealth. Jeff Bezos has yet to sign.

4.Eric Yuan, Zoom founder and CEO: up$2.58 billion. The Covid-19 pandemic made Yuan one of the few billionaires whose net worth increased as the markets crashed in late February, an unsurprising gain since social distancing has increased the demand for videoconferencing. More people used Zoom in the first few months of this year than in all of 2019. Zoom’s success has made Yuan a household name and earned him a spot on the Forbes world billionaires list. But the Zoom platform has of late come under much sharper scrutiny, with widespread global concern over its lax privacy practices and security breaches.

5.Steve Ballmer, Los Angeles Clippers owner and former Microsoft CEO: up$2.2 billion Ballmer, no longer in a position of leadership at Microsoft, remains a significant shareholder in the company. Microsoft has two online videoconferencing platforms, Skype and Teams. Skype daily activity has increased 70 percent, a modest gain compared to a 1,000 percent upsurge in March for Teams, a business app. Microsoft is looking to take advantage of this sudden popularity of Teams by announcing that a version for consumers will soon be appearing. Ballmer has also been active in philanthropy, pledging to donate more than $25 million —0.04 percent of his wealth—to combat the coronavirus.

6.John Albert Sobrato, Silicon Valley real estate mogul: up $2.07 billion. Sobrato is the chairman emeritus of the Sobrato Organization, whose portfolio includes the Silicon Valley office spaces of Amazon, Google, Facebook, Netflix, and Apple. It’s unclear how Sobrato has managed to grow his fortune during the pandemic, but the tech giants his company houses are all doing well in this period of social distancing.

7.Joshua Harris, Apollo Global Management cofounder and owner of multiple professional sports teams: up $1.72 billion Harris’ financial links with Jared Kushner position him to influence the Trump administration’s economic response to COVID-19. Apollo, a major private equity firm, helped ensure that Trump’s coronavirus bailout funds provided liquidity to businesses. These funds did not go to private equity firms directly, but they did shore up the firms’ portfolios by going to companies where these firms have holdings. Harris is seeking to profit further from the pandemic by asking the administration to relax rules on a loan program in a way that would directly benefit his firm.

8.Rocco Commisso, Mediacom Communications founder and CEO and owner of two professional soccer teams: up $1.09 billion The stock market crash originally handed Commisso a net loss of $800 million, but his net worth recovered around the time Mediacom secured a March 23 financing deal that lowered its interest payments and extended the vast majority of the company’s debt maturities. Commisso, who immigrated to the United States from Italy at the age of 12, has directed most of his COVID-19 philanthropic efforts to Italian hospitals . . .

Recommendations

Short-Term Reforms

As part of the emergency pandemic response, the nation should now: Establish a Pandemic Profiteering Oversight Committee. Congress needs to convene an oversight commission, modeled after the Truman Commission during World War II, to both monitor the stimulus package and root out corruption and profiteering in society as a whole. As part of the passage of the CARES Act in March 2020, Congress created several oversight bodies to monitor the $2 trillion in funds appropriated, including a five-member Congressional Oversight Commission and the Pandemic Response Accountability Committee. But oversight needs to go beyond just the administration of stimulus programs and look at profiteering in the economy at large. Enact an Excess Profits Tax. During the major wars of the 20th century, Congress instituted excess profits taxes to discourage speculating and profiteering around the basic needs of life. These taxes proved workable and effective.

Stop Wealth Hiding. As much as$21 trillion in wealth is now sitting hidden in offshore tax havens, shell companies, and trusts. Congress should crack down on capital flight and wealth hiding. A good start would be to pass the Corporate Transparency Act (HR2513) and require the disclosure of beneficial ownership of corporations and limited liability companies, key tools in the wealth hiding toolbox.

Set an Emergency Millionaire 10 Percent Income Tax Surtax.

Congress should signal to the wider public that the first several trillion dollars of revenue raised to help cover the nation’s bailout costs will come from the billionaires and richest 0.2 percent of taxpayers—those Americans who have seen the most enormous gains over the last several decades. Middle-and working-class families, many of whom have yet to recover from the 2008 economic meltdown, should be held harmless from additional tax liabilities until the richest households have paid their fair share. A wealth tax might be attractive as an emergency measure, but enacting a new tax regime on assets would be challenging in the short term. Using the existing income tax system, Congress could levy an emergency 10 percent millionaire surtax on the top 0.2 percent, those with incomes over $2 million. Unlike income tax rate hikes on wages and salaries, the surtax would apply equally to income from investment returns. Though only affecting the richest 0.2percent of Americans, a millionaires surtax would raise an estimated $635 billion over 10 years and hit the very wealthy who garner substantial
17revenue from capital gains —that is, from owning assets, rather than just working for a wage.

The Millionaire Surtax (S. 2809, HR. 5043) was introduced in Congress in 2019 by Senator Chris Van Hollen (D-MD) and Senator Sherrod Brown (D-OH) and Representative Don Beyer (D-VA).Create a Charity Stimulus. Billionaires have for years now been donating funds to donor-advised funds and private foundations, accepting tax breaks, and warehousing funds that ought to be distributed to charitable operations. Congress should act to mandate a timely payout of these taxpayer-subsidized charity funds to fulfill the public interest.

Donor-Advised Funds. Over $120 billion is warehoused in private donor-advised charity funds (DAFs) without any requirement for dispersal. Donors have already taken tax breaks on these dollars and have no incentive to move funds to active charities on the ground. Congress should mandate that DAFs payout funds within three years.

Foundation Payouts. Private foundations hold an estimated $1.2 trillion and are required to pay out 5 percent per year. But overhead expenses can be included toward this 5 percent. Congress should institute a three-year emergency payout mandate, temporarily increasing the pay out to 10 percent and excluding overhead, impact investments, and donations to donor-advised funds from satisfying this requirement. Such a program could raise $190 billion over three years.74

Longer-Term Revenue Raisers and Reforms

A Progressive Estate Tax. Congress should pass a series of estate tax reforms such as those introduced by Senator Bernie Sanders that would levy a top rate of 77 percent on inheritances over $1 billion. The Sanders bill, the “For the 99.8% Act, ”would also plug up loopholes and ban trusts that wealthy families use to hide and perpetuate wealth dynasties.

Wealth Tax.

Sen. Elizabeth Warren has proposed a 2 percent annual tax on household wealth over $50 million and a 3 percent rate on wealth over $1 billion. These ideas have broad public support, including among Republican voters who recognize we are living in a second Gilded Age of wealth inequality.

Shut Down the Hidden Wealth System.

For any of these tax policies to be effective, Congress must shut down the international wealth hiding apparatus by using legislation, trade negotiations, and international sanctions to require greater corporate transparency, eliminate tax dodges, and provide greater resources for tax enforcement . . .

Billionaire Bonanza 2020, published by the Institute for Policy Studies on April 23, 2020.

CO-AUTHORS

Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies, where he also co-edits Inequality.org. His most recent books include Is Inequality in America Irreversible? and Born on Third Base.

Omar Ocampo is a researcher for the Program on Inequality and the Common Good at the Institute for Policy Studies. He has a BA in political science from the University of Massachusetts and a Masters in international relations from the American University in Cairo.

Sophia Paslaskiis a researcher and writer with the Program on Inequality at the Institute for Policy Studies.She has a BA in film production from Emerson College and a MA in Comparative and International Social Policy from the University of York, UK.

Excerpted from Inequality.org

Content licensed under a Creative Commons 3.0 License

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Bonus Video added by Informed Comment:

The Hill: “AOC BLASTS “shameful” stimulus bill: ‘One of the largest corporate bailouts!””

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