Friday, April 3, 2015

Another Lying Job Report  (The Rise of the Working Poor and the Non-Working Rich)  The Senate Voted 54-46 to Repeal the Estate Tax Altogether

Watch "Manufacturing Consent," which will enlighten you immeasurably, on LINK TV at 2:00 PM, Saturday, April 4, 2014; "Chris Hedges at Earth Risk 2014" on LINK TV at 1:00 PM, Saturday, April 4, 2014; and "The Emerging Left-Right Alliance" on LINK TV, which runs intermittently, if you can. It's TV the way we fantasized about it in the 50's. Brilliant programming for an engaged public.

There is an emerging consensus about how to deal with this economic/political mayhem.

Be a part of it.

March Payroll Jobs Report

April 3, 2015

With the Atlanta Fed’s GDP forecast reduced to 0.2 percent growth in the first quarter, the Bureau of Labor Statistics was unable to come up with another high payroll jobs report. Another orchestration couldn’t pass muster. Consequently March’s payroll jobs fell away to 126,000, less than half of recent reports and insufficient to maintain pace
with population growth.

I don’t believe the 126,000 jobs, but let’s take them at face value and again ask:  Where are the jobs?

One fifth of them are in retail trade. So with real retail sales declining and retail stores closing, the suffering businesses went out and hired 26,000 new employees last month.

The rest of the jobs are in the usual places:  ambulatory health care services, employment services, and waitresses and bartenders.

This is super-economy America.

Clearly there is no basis in anything real for the Dow Jones average.
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The Vast Bulk of the Unemployed Are Not Counted

April 3, 2015

The US government gets a low unemployment rate by not counting the unemployed.

Notice the collapse in the labor force participation rate since 2000

Americans Not In The Labor Force Soar To Record 93.2 Million As Participation Rate Drops To February 1978 Levels

Submitted by Tyler Durden on 04/03/2015

So much for yet another "above consensus" recovery, and what's worse it is, well, about to get even worse, because while the Fed keeps ban(g)ing some illusory drum that slack in the economy is almost non-existent, the reality is that in March the number of people who dropped out of the labor force rose by yet another 277K, up 2.1 million in the past year, and has reached a record 93.175 million.

Indicatively, this means that the labor force participation rate dropped once more, from 62.8% to 62.7%, a level seen back in February 1978, even as the BLS reported that the entire labor force actually declined for the second consecutive month, down almost 100K in March to 156,906.

Why is this important? Because as long as the true employment rate, that of the civilian employment to total population, remains at depression levels, there will be no incrases in average hourly earnings.

(21 votes)
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The Rise of the Working Poor and the Non-Working Rich


Chancellor's Professor of Public Policy, University of California at Berkeley; author, Beyond Outrage

Many believe that poor people deserve to be poor because they're lazy. As Speaker John Boehner has said, the poor have a notion that "I really don't have to work. I don't really want to do this. I think I'd rather just sit around."

In reality, a large and growing share of the nation's poor work full time -- sometimes 60 or more hours a week - yet still don't earn enough to lift themselves and their families out of poverty.

It's also commonly believed, especially among Republicans, that the rich deserve their wealth because they work harder than others.

In reality, a large and growing portion of the super-rich have never broken a sweat. Their wealth has been handed to them.

The rise of these two groups - the working poor and non-working rich - is relatively new. Both are challenging the core American assumptions that people are paid what they're worth, and work is justly rewarded.

Why are these two groups growing?

The ranks of the working poor are growing because wages at the bottom have dropped, adjusted for inflation. With increasing numbers of Americans taking low-paying jobs in retail sales, restaurants, hotels, hospitals, childcare, elder care, and other personal services, the pay of the bottom fifth is falling closer to the minimum wage.

At the same time, the real value of the federal minimum wage is lower today than it was a quarter century ago.

In addition, most recipients of public assistance must now work in order to qualify.

Bill Clinton's welfare reform of 1996 pushed the poor off welfare and into work. Meanwhile, the Earned Income Tax Credit, a wage subsidy, has emerged as the nation's largest anti-poverty program. Here, too, having a job is a prerequisite.

The new work requirements haven't reduced the number or percentage of Americans in poverty. They've just moved poor people from being unemployed and impoverished to being employed and impoverished.

While poverty declined in the early years of welfare reform when the economy boomed and jobs were plentiful, it began growing in 2000. By 2012 it exceeded its level in 1996, when welfare ended.

At the same time, the ranks of the non-working rich have been swelling. America's legendary "self-made" men and women are fast being replaced by wealthy heirs.

Six of today's 10 wealthiest Americans are heirs to prominent fortunes. The Walmart heirs alone have more wealth than the bottom 40 percent of Americans combined.

Americans who became enormously wealthy over the last three decades are now busily transferring that wealth to their children and grandchildren.

The nation is on the cusp of the largest inter-generational transfer of wealth in history. A study from the Boston College Center on Wealth and Philanthropy projects a total of $59 trillion passed down to heirs between 2007 and 2061.

As the French economist Thomas Piketty reminds us, this is the kind of dynastic wealth that's kept Europe's aristocracy going for centuries. It's about to become the major source of income for a new American aristocracy.

The tax code encourages all this by favoring unearned income over earned income.

The top tax rate paid by America's wealthy on their capital gains - the major source of income for the non-working rich - has dropped from 33 percent in the late 1980s to 20 percent today, putting it substantially below the top tax rate on ordinary income (36.9 percent).

If the owners of capital assets whose worth increases over their lifetime hold them until death, their heirs pay zero capital gains taxes on them. Such "unrealized" gains now account for more than half the value of assets held by estates worth more than $100 million.

At the same time, the estate tax has been slashed. Before George W. Bush was president, it applied to assets in excess of $2 million per couple at a rate of 55 percent. Now it kicks in at $10,680,000 per couple, at a 40 percent rate.

Last year only 1.4 out of every 1,000 estates owed any estate tax, and the effective rate they paid was only 17 percent.

Republicans now in control of Congress want to go even further. Last Friday the Senate voted 54-46 in favor of a non-binding resolution to repeal the estate tax altogether. Earlier in the week, the House Ways and Means Committee also voted for a repeal. The House is expected to vote in coming weeks.

Yet the specter of an entire generation doing nothing for their money other than speed-dialing their wealth management advisers is not particularly attractive.

It puts more and more responsibility for investing a substantial portion of the nation's assets into the hands of people who have never worked.

It also endangers our democracy, as dynastic wealth inevitably and invariably accumulates political influence and power.

Consider the rise of both the working poor and the non-working rich, and the meritocratic ideal on which America's growing inequality is often justified doesn't hold up.

That widening inequality - combined with the increasing numbers of people who work full time but are still impoverished and of others who have never worked and are fabulously wealthy -- is undermining the moral foundations of American capitalism.

ROBERT B. REICH's film "Inequality for All" is now available on DVD and blu-ray, and on Netflix. Watch the trailer below:

Robert Reich, former U.S. Secretary of Labor and Professor of Public Policy at the University of California at Berkeley, has a new film, "Inequality for All," to be released September 27. He blogs at

The West has become Sauron.

Indiana Toll Road:  Privatization’s Highway to Hell

The toll road was privatized in 2006 to great fanfare, but the new owner has since gone bankrupt – the victim of bad judgement, a bad swaps deal, and a struggling economy. The winning bid in 2006 was $3.8 billion, $1 billion higher than the next highest offer. The new offer is $5.72 billion. Has this property, located in an economically challenged state, really appreciated by more than 50 percent? Or is something else going on?

The Indiana Toll Road is more than a highway. It is an infinite loop through the neoliberal world order, the mirror of a recursive economy in which every step toward corporatization creates more hardship – and every increase in hardship calls for more corporatization. Indiana is winning headlines today for enshrining bigotry into law in the name of religious freedom. But its toll road fiasco deserves a headline of its own.

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