Saturday, March 31, 2012

Top 1% Profits from Home Foreclosures

First they drove the housing bubble by flipping properties for quick cash, now they're cashing in again on the depressed housing market.

The Wall Street Journal reported that sales of investment and vacation homes has surged last year because investors and higher-income households are taking advantage of low home prices to scoop up bargains.

WSJ: "Also, hedge funds, private-equity firms, pension funds and university endowments are dipping into that market. The attraction is double-digit returns at a time when most bonds and other income investments yield very little. The most popular strategy is for a big investor to team up with a local company that scouts out houses and finds the renters. The hope is to flip the homes in the future when prices recover."

With many families now struggling with mortgage payments, the number of foreclosure homes for sale has increased dramatically. The housing market in recent time has seen a tremendous decrease in price, and to make the pot even sweeter, there is a huge selection of cheap homes on the market. These homes cover every price range and can be found in every part of the country. If a buyer wants a large country home in the Hamptons with lots of acreage, or just a small summer condo on the beach in Florida, this is the time to buy.

The reason the prices are so low, and a glut of houses are on the market, is because people have lost their jobs and can no longer afford their home. The owners of many of the houses have often been living on a limited budget for an extended period of time and may have not been able to properly maintain their houses. Re-financing is impossible if you're unemployed. (Obama Vs. Romney on Loan Modifications)

The $25 billion foreclosure abuse settlement between the government and five major bank promises that of the $25 billion, the banks will give $17 billion “in assistance to borrowers who have the intent and ability to stay in their homes." But more than half of that money can be used in ways that will not stop foreclosures. For example, the banks can wipe out more than $2 billion of their obligation by donating or demolishing abandoned houses.

In its annual survey of investment and vacation home sales, the National Association of Realtors found that the number of homes purchased by investors rose 65% during 2011 to 1.2 million, accounting for 27% of all home sales. While the majority of homes sold last year went to "traditional" buyers who plan to use the home as a primary residence, their presence in the market declined 61%.

During the housing boom, speculators were blamed for helping to inflate the bubble by snapping up homes, especially new homes, and then quickly reselling them as prices rose higher ("flipping") That led to overbuilding. Now investors are cashing in again by buying up excess inventory.

Real-estate agents say investors, and to a smaller extent vacation-home buyers, are outmaneuvering traditional buyers, who are less likely to have the financial means to pay cash for a home. The National Association of Realtors survey found that nearly half of all investors and 42% of vacation home buyers purchased their homes using cash. Traditional buyers, meanwhile, are seeing deals derailed because they can't qualify for a mortgage.

The Wall Street Journal reported that "unlike during the boom years, when many investors were buying properties to flip quickly for a profit, many of today's investors buy the homes with plans to rent them out and sell them when the market improves." (But isn't this also flipping?)

Amid increased demand from investors, real-estate agents say there aren't enough foreclosed homes in good condition available in some markets. Buyers are begging for properties - - there is an insatiable demand.

In another article the Wall Street Journal reported that with a large number of people losing their houses to foreclosure, more are venting their frustration by damaging and vandalizing the units before leaving. Also, some national reports show that one in seven homes are so badly damaged that they don't even qualify for mortgage financing, all because of vandals and thieves breaking in to destroy the homes. But even if the evicted depart with a smile, the abandoned houses, no matter how well boarded up, immediately attracts criminals and vandals.

A low budget house might need a substantial investment to bring it up to par. A fixer-upper is a great idea for a person who has the skills and cash to do the necessary repairs themselves. Although these problems have put a lot of first-time buyers off the idea of purchasing their first home (lack of cash, poor credit scores, job security, etc.), with the number of cheap homes coming on to the market, now is a perfect time to start buying if you have the cash.

Thirty percent of vacation-home buyers said they plan to use the property as a primary residence in the future - - the more affluent buyers can take advantage of low prices and low interest rates to buy their future retirement homes. It seems cheap homes are no longer just those that are located in the poorest locations. Due to the recession (high unemployment and the credit and housing crash) good bargains are also increasingly being found in many desirable locations.

For those looking to buy their first home, cheap homes being sold at auction, or via realtors due to foreclosure, they are becoming the affordable choice for many.

The New York Times reports that auction houses have been busy thriving with bargain hunters on foreclosed homes. People from around the world have scooped up houses that are often sold for less than half of the value of the mortgage. Compare that to a "loan modification" for current homeowners.

The recession was a godsend to the top 1%, and a "shared sacrifice" for everyone else.

Friday, March 30, 2012

The NRA's 'Dark Money' Killed Trayvon Martin

The "Stand Your Ground" law wasn't passed because the State of Florida had a crime wave and innocent people were being gunned down in the streets. It was passed for one reason only...to sell more guns.



The National Rifle Association of America (NRA) is registered as a non-profit 501(c)(4) organization, and aren’t required to disclose their donors. That’s why the contributions to these "social welfare groups" have been dubbed “dark money.”

Tax experts say it’s possible that businesses are using an aggressive interpretation of the law to wring a tax advantage out of their donations to these type of "social welfare groups" (The Koch brothers' Tea Party Patriots is also a "social welfare group".)

By law, companies are not allowed to deduct money spent on intervention in any political campaign or any attempt to influence the general public, or segments thereof, with respect to elections, legislative matters, or referendums.

But tax experts say a company could argue that money given to “social welfare groups" isn’t political spending at all, and that the donations are instead “ordinary and necessary” business expenses.

The NRA supposedly advocates for the protection of the Second Amendment of the United States Bill of Rights and the promotion of firearm ownership rights (as well as marksmanship, firearm safety, and the protection of hunting and self-defense).

But in reality, the NRA is really just a lobbyist on behalf gun manufactures seeking higher profits, and thus, the NRA can be traced directly to the death of the 17-year-old teenager in Sanford, Florida (who was, indirectly, killed for money). The gun lobby ceased to be just about hunting and hunters long ago, and makes no bones about it.

NRA lobbyist Marion Hammer successfully pushed the "Stand Your Ground" law through the Florida legislature. The NRA's chief lobbyist Chris Cox was quick to credit Hammer's lobbying effort, saying "Law-abiding Floridians may now stand their ground and defend themselves against attack by violent criminals without fear of criminal prosecution or civil lawsuit."

Was Trayvon Martin a "violent criminal"?

Over a nine-year period the NRA gave more than $73,000 in campaign donations to the 43 Florida legislators who backed the "Stand Your Ground" law in Florida. Direct campaign donations from the NRA are limited by the state, but thousands of dollars more in independent spending can be used to buy political ads (returning a politician's favor for backing legislation that will get the politician re-elected...akin to bribery).

In 1963, a man named William Zantzinger (a wealthy young tobacco farmer from Charles County, Maryland) and his wife arrived at a charity event called the Spinsters' Ball at the Emerson Hotel in Baltimore. It was on a Friday evening, February 8, 1963. Mister Zantzinger was dressed in top hat, white tie, and tails -- attire with which a cane is optional.

That night William Zantzinger killed a black barmaid named Hattie Carroll by striking her with his cane.

The lyrics of Bob Dylan's song "The Lonesome Death of Hattie Carroll" is a commentary on the racism of the 1960s. In 1963 when Hattie Carroll was killed, Charles County was still strictly segregated by race in public facilities such as restaurants, churches, theaters, doctor's offices, buses, and the county fair. Bob Dylan's song gives a generally factual account of the killing and William Devereux "Billy" Zantzinger's subsequent sentence to only six months in a county jail.

Which brings us back full circle to the lonesome death of Trayvon Martin. Will George Zimmerman ever spend six months (or more) in jail? William Zantzinger never felt threatened by Hattie Carroll, she was just too slow in delivering his drink.

George Zimmerman was working as an insurance agent when he murdered 17-year-old Trayvon Martin. Zimmerman once lost a job as a security guard for being too aggressive. A former co-worker said Zimmerman was like Dr. Jekyll and Mr.Hyde. "When the dude snapped, he snapped. He had a temper and became a liability.”

Zimmerman had been previously arrested for battering a police officer, and whose neighbors had also complained about his aggressive behavior.

Besides losing his temper, George Zimmerman should now lose his freedom. He didn't just strike Trayvon Martin with a cane, but blasted him into eternity with a Kel-Tec PF-9 9mm semi-automatic pistol -- a "right" that the National Rifle Association had lobbied for.

All employees of Kel-Tec are members of the NRA. The pistol George Zimmerman used is “double-action only,” which means the trigger must be pulled fully in order to fire.

I can understand someone's right to defend themselves and their family, such as if someone breaks into their home (the castle doctrine); but a private citizen who is a pistol owner with a carry permit doesn't have the right to chase down a 17-year-old boy on a sidewalk (who was on his way home to watch a NBA basketball game), then shoot him point blank in the chest and claim "self defense"...no matter what color the victim is.

For all poor Trayvon Martin knew, George Zimmerman could have been a pedophile or mugger. But as it turns out, Zimmerman was just a cold-blooded murderer. Didn't Trayvon have a right to defend his ground?

If George Zimmerman had been a black man, and he had shot and killed the neighbor's dog on that sidewalk, Zimmerman would have been immediately been arrested. But either way, the gun manufacturers made their profit.

The ALEC advocates for "limited government, free markets, and federalism". A future joint seminar sponsored by ALEC and the NRA: “How to Get Away With Murder. Legally.” – The George Zimmerman Story. How to use language, the law, and dress to avoid suspicion and prosecution. (Read ALEC Exposed, and also read about the Koch brothers connection to ALEC.)

The 3 things you must know before talking to the police. Use the same language the police use for a “good shoot”:

  1. “He angrily reached into his pocket..."
  2. “I felt threatened for my life. I had no duty to retreat. It was my right to stand my ground."
  3. “This is a defensive wound…”
  • Why you MUST shoot to kill – (Avoiding the “his word against mine” problem)
  • What makes you a law-abiding citizen shooter outside your home vs. a law-breaking hood you might encounter?
  • Clothing to wear outside your home while preparing to "defend your ground".
  • Avoid “ethnic” clothing such as “bling,” hoodies, baggy pants.
  • Pro-tip: Observe what off-duty cops wear and copy them.
  • How to look like a banker out walking, not a gangster out robbing.
  • Train for split second decisions based on clothing bulges, just like the police do.
  • Use your own weapon bulge as a guideline. Scientific studies show that the odds are the bad guy is carrying too.
  • Remember, you can’t “respawn” when you get it wrong. Learn from video games why you must shoot first.
  • Why it’s better to be wrong than dead by shooting first.

* Twenty-five states have “Stand Your Ground” laws.

Major Hand Guns Manufacturers in the U.S.

These are companies that lobby congress and are "incorporated" and enjoy "limited liability", and whose executives can't be sued for their personal assets, but can profit from their company's actions.

American Derringer, Charter Arms, Hi-Point Firearms, Kel-Tec Inc, Ruger Arms, Kahr Arms, Kimber, Smith & Wesson, Calico Firearms, FMK Firearms, Colt, L.W. Seecamp Company, Inc., FNH USA, LLC, and FMK Firearms.

According to Congressional lobbying records, Thomas Moore is listed as a lobbyist for FN Herstal, the world's largest manufacturer of small arms. FN Herstal USA maintains a plant in Columbia, South Carolina, which is primarily responsible for the production of U.S. military weapons, such as M16 rifles, M249 light machine guns, M240 machine guns, and M2 machine guns.

Thomas Moore is also listed as the lobbyist for Le Mas Ltd., a Little Rock, Arkansas, distributor for armor-piercing bullets ("cop killers") designed to explode in flesh. Corporate 2006 records in the District of Columbia lists Thomas Moore as a director of the Jefferson Davis Camp No. 305 of the Sons of Confederate Veterans. (His Bio) Tea Party? A white supremacist hacker claims to have broken into Trayvon Martin's email.

* A close friend of George Zimmerman claims he is 5'8" tall and currently weighs 170 pounds. The police "estimated" (before an autopsy report) that Trayvon Martin weighed less at 160 pounds; and his family reported Trayvon's height at 6'2". But a gun in the hand of someone like George Zimmerman makes him much larger.

Thursday, March 29, 2012

Why Republicans Hate ObamaCare™

Simply put, because the Republicans represent the top 1% - - and just like Social Security and Medicare, the top 1% never wants to help fund something that they themselves will never need or benefit from - - and to hell with everyone else that isn't lucky enough to be filthy rich.

The top 1% doesn't need ObamaCare™. They have been installing full-fledged emergency rooms right inside their homes, each complete with an array of medical gear that mirrors what the White House has available for the President. The company that installs these emergency rooms charges up to $1 million per installation.

And that might also be another reason why the rich live longer than the poor.

But the GOP wants to cut taxes for the top 1%, while at the same time, cutting Medicare benefits for the elderly and raising the age for Social Security - - forcing old and feeble people to work longer, providing that they can find someone to hire them - - because the GOP claims we're all living longer.

I just received a newsletter from the Tea Party this morning. It promotes another Republican budget by Rep. Scott Garrett (R-NJ), who is the chairman of something called the Republican Study Commission (RSC). His budget proposal is called CUT, CAP, AND BALANCE: A Fiscal Year 2013. Besides repealing ObamaCare™, among many things, it also says:

  • Terminate federal programs that are unconstitutional
  • Reduce Social Security and Medicare benefits for those currently under 55 years old.
  • Medicaid would be paid for with block grants to the states, to use any way they want (so it doesn't guarantee it will be used for Medicaid).
  • Fund the military industrial complex at the current level, growing from $554 billion in 2013 to $699 billion in 2022. (Those figures were purposely understated - they are much higher.)
  • Refers to the Jobs Through Growth Act (H.R.3400), and says "The budget keeps the tax burden at its historic average, and makes the tax code simpler, flatter, and fairer."

I found the term "historic average" odd, because it really means "historically low". (Read: Historical Tax Rates on the Rich (1862 to 2011). They say this budget would "make the tax code fairer" when the top 1% already has the most disproportionate amount tax breaks already. And the right-wing advocacy group, Americans for Prosperity, supports this plan. (Contact Brad Watson at the RSC: brad.watson@mail.house.gov and Andrew Shaw with Rep. Garrett: andrew.shaw@mail.house.gov)

The GOP wants to raise early Social Security eligibility from 62 to 64 - - and the full retirement age from 65 (unless you born before 1937) to 67, or if you born after 1960, to age 70. The GOP also wants to raise Medicare's eligibility age from 65 to 67.

A 2008 study by the Congressional Budget Office found that the life expectancy gap between the rich and poor in the United States, as well as the educated and less educated, has been growing since the 1980s.

The CBO says that raising the eligibility ages for Social Security and Medicare would also reduce people's lifetime Social Security benefits, and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance and/or higher out-of-pocket costs for health care.

Now the Supreme Court is weighing in on "the constitutionality" of ObamaCare™ and the mandate requiring everyone to contribute to the cost of universal healthcare. The provisions for pre-existing conditions, insurance riders for adult children on their parent's healthcare policy, and Medicaid for single people under the age of 65 (if they are living below the poverty level) could also be eliminated as well.

Robert Reich wrote in a recent article, “The President and the Democrats could have avoided this dilemma in the first place if they’d insisted on Medicare for All. After all, Social Security and Medicare require every working American to buy them. The purchase happens automatically in the form of a deduction from everyone’s paychecks. But because Social Security and Medicare are government programs financed by payroll taxes, they don’t feel like mandatory purchases.” (I mentioned this last month)

Most working Americans pay Social Security taxes on 100% of their "earned wages", but high earners are exempt from paying this tax on income over $110,000. As it is now, the top 1% makes most of their earnings, not from regular wages, but from capital gains, interest, rents, dividends, and royalties, etc. -- so therefore, they are exempt from paying any Social Security taxes at all on this type of "passive income".

CNN: For tax years starting on or after January 1, 2013, ObamaCare™ imposes a new 3.8% Medicare tax on "net investment income" in excess of specified amounts. Also under the new law, starting in 2013, high-income individuals will pay another 0.9 percentage points on earned income over $200,000 ($250,000 if married). The GOP may want to repeal ObamaCare™ for this reason alone.

Maybe some day the Tea Party will get the Supreme Court to weigh in on "the constitutionality" of Social Security and Medicare, and repeal those programs as well, even though the Tea Party used to carry signs saying "Hands off my Medicare!"

What it really comes down to is this: the Republicans (and those on the Supreme Court who represent the top 1%), doesn't want the top 1% to help fund anything that they won't need for themselves. But if it's just a baby sitter that they need, the top 1% has plenty of extra cash on hand.

Elite New York City nannies can command around $180,000 a year (plus a Christmas bonus) and a $3,000-a-month apartment on Central Park West. It makes one wonder how much these "job creators" pay their chauffeurs, lawyers, gardeners, stock brokers, pool boys, tailors, yacht crews, chefs, pilots, accountants, valets, golf instructors, maids, and hookers.

But not to worry. If the GOP has their way, those nannies won't cost the top 1% one single shining penny, because Paul Ryan's proposed budget would provide income tax cuts for millionaires averaging at least $187,000 a year - - and millions more for others. (Source: Citizens for Tax Justice)

Five years ago, billionaire hotelier Leona Helmsley (the arrogant “queen of mean”) died at the ripe old age of 87. At one time she had gone to prison for tax evasion (33 felony counts of trying to defraud the government, including mail fraud, tax evasion and filing false tax returns.) Read: How Mitt Romney & the 1% Evades Taxes

After she died, Leona Helmsley left $12 million to a dog named Trouble, her beloved poodle.

And yet, the GOP doesn't want to tax these people for capital gains or inheritances...but the GOP does want to tax low-income Americans to help fund a $700 billion military budget - - despite their religious beliefs or their right to a moral and conscientious objection against paying for wars that kill people (as opposed to contraception, that just blocks the fertilization of new people).

But the Republicans don't want to tax the rich for universal healthcare.

The Supreme Court and the Republicans might repeal all or part of ObamaCare™, but what will the Republicans "replace" it with? More tax cuts for the rich?

Bloomberg reports that Senator Mitch McConnell (R- Kentucky) vows to repeal ObamaCare™. But when asked about a GOP counterproposal, the Senate minority leader said the GOP does not plan on offering something of the same magnitude. "We would want to more modestly approach this with more incremental fixes, not a massive Republican alternative."

The Republicans have been making similar statements for over the past 30 years, but they have never once offered any other healthcare plan, but they did pass legislation benefiting "big pharma". Which begs one to ask, when was the last time the GOP has ever offered any proposal that might help the poor and average working Americans, but that wouldn't also benefit the top 1% far much more?

Most Americans are being denied universal healthcare, while we continue to tax the top 1% less, just so they can build their own private emergency rooms, so that they might live longer to enjoy their life of luxury and privilege. Meanwhile, everyone else is left to fend for themselves, at the mercy of corporate healthcare providers and insurance companies.

The skyrocketing cost of insurance premiums (and the actual cost of healthcare and prescriptions) should have been addressed years ago - - to cover all Americans, not just the rich ones. But the Republicans have been trying to cut food stamps, so I'll assume that if they don't care if you eat, they wouldn't care about your health either.

Former congressman Alan Grayson couldn't have said it any better. He said the Republican's healthcare plan is this: Don't get sick. And if you do get sick, and you can't afford healthcare insurance, then die quickly.

The top 1% and the Republicans treat poor and working-class human beings like dogs (except for Mitt Romney)

Wednesday, March 28, 2012

The Jobs Act - - - Jumpstart Our Business Startups Act

It's a done deal. President Obama just has to sign it.

The Jumpstart Our Business Startups Act (JOBS Act - H.R. 3606) passed the House of Representatives on March 8, 2012. The U.S. Senate began consideration of the bill on March 20, 2012 and passed an amended version on March 22 on a vote of 73 to 26 -- which then went back to the House for another vote.

The Republican-led House just gave an overwhelming final approval with a vote 380 to 41, and is now ready for President Obama to sign into law. (All `no' votes in both the House and Senate came from the Democratic side.)

It's interesting to note that the last time a Democratic president voted against the wishes of the majority of his party in Congress was when Bill Clinton signed the Gramm-Leach-Bliley Act in 1999, which deregulated the banks.

The new legislation that Obama is ready to sign extends the amount of time that certain new public companies have to begin compliance with certain requirements, including certain requirements that originated with the Sarbanes–Oxley Act.

Former Governor of New York Eliot Spitzer writes, "The almost fraudulently named JOBS bill -- passed last week in a rare showing of bi-partisan fervor."

At first, the future of the bill seemed in doubt when Senate Republicans rejected Democratic attempted to add protections to the bill and link it to re-authorization of the Export-Import Bank, an agency that helps U.S. companies finance their sales abroad.

House Republicans hailed the legislation as a jobs bill that by spurring capital formation would lead to small businesses hiring more people.

Despite warnings that less government oversight might mean more investment scams, Congress sent President Barack Obama the legislation that he endorsed, making it easier for startups to raise capital without running afoul of federal regulations.

The JOBS Act would designate a new category of “emerging growth” companies called "start-ups", that could conduct initial public offerings of stock while being exempt from certain financial disclosure and governance requirements for up to five years.

It would also provide a new form of financing through crowd-funding. Through the sale of small amounts of stock to many individuals, companies could solicit equity investments through the internet or elsewhere, raising up to $1 million annually without being required to register the shares for public trading with the Securities and Exchange Commission.

But detractors worry that the measure will bring back the “boiler rooms” of the 1990s "internet stock bubble", where hucksters peddle stock tips to unwitting amateur investors. Mary Schapiro, chairwoman of the Securities Exchange Commission, had opposed aspects of the bill.

AARP senior vice president Joyce Rogers, noting that older people are disproportionately the victims of investment fraud, said the bill "lacks vital investor protections and undermines regulations that guard against fraud and abuse."

Amy Borrus, a spokeswoman for the Council of Institutional Investors (an investor watchdog group) said those small companies are particularly prone to fraud and accounting scandals.

George Canellos, director of the SEC's New York office, told a compliance industry conference sponsored by Dow Jones that he is also worried about the legislation's impact.

"I have acute concern about the fraud risk," he said, noting that his views were his own. There is "example after example of micro-cap non-reporting companies that are more vehicles for fraud than they are for entrepreneurship."

Under the JOBS bill, companies with up to $1 billion in annual revenue would be free to ignore — for their first five years as a public company — regulations that were put in place after the end of the "dot-com bubble" and the collapse of Enron.

The bill also allows some companies to advertise for investors in almost any medium, a provision that skeptical regulators contend will mainly benefit the sale of worthless securities by brokerage firms.

Congress also has a new tax plan for these small businesses. Senate Democrats offered a plan that competes with a House Republican push to give small businesses a 20 percent tax holiday. Senator Harry Reid (D-Nv.) said, "Our tax cut is targeted to help small businesses [who actually hire people], while Republican efforts are just camouflaged handouts to the wealthiest in America."

The GOP plan, sponsored by House Majority Leader Eric Cantor (R-Va.), would apply to any business that has fewer than 500 employees, including hedge funds, celebrities and, indeed, about half of the 400 richest Americans, who average some $100 million a year in business income.

Democrats estimated their overall plan would cost $26 billion for the year, while the GOP's would cost $46 billion.

Now, let's see if all these relaxed restrictions and tax breaks will create more jobs for average Americans.

Tuesday, March 27, 2012

Down and Out in Las Vegas

If you're mentally ill, addicted, homeless, and very lucky, you might find a home in Las Vegas.

Very high unemployment and the highest foreclosure rate in the nation has taken it's toll on this resort vacation destination spot in the Nevada desert. And the tourists that come here are not very friendly to the homeless.

Can you imagine living in a dark and dingy tunnel underneath Sheldon Adelson's beautiful and elegant Las Vegas Sands Hotel and Casino on Las Vegas Boulevard?

ABC News - "Underneath Sin City's most famous casinos is a secret world: a labyrinth of tunnels that run for miles under the Las Vegas Valley. Built to protect the desert city from flash floods, the tunnels have become home to hundreds of Las Vegas' homeless."

Journalist Matt O'Brien wrote a book, Beneath the Neon, about this elaborate subterranean world of beds with headboards, makeshift pantries, and even art on the walls (pictured below. More here). Now O'Brien's interest has turned to advocacy — he's connected folks in the tunnels with a local non-profit group called HELP of Southern Nevada, which has since started an outreach program

But if you already have a mental or physical disability (including drug addiction), you might qualify for $637 a month in Social Security disability payments.

And if you've also been living on the streets (or under them) for a very long time (being chronically homeless), and if you get very lucky, you might also qualify for a low-cost apartment in North Las Vegas.

Horizon Crest on 13 West Owens Avenue (pictured below) has 66 low-rent apartments for the poor and 12 apartments for the chronically homeless, those who have been on the street the longest. It's a nice complex, but just a few blocks away are some very nasty neighborhoods with a lot of gang activity in the surrounding area. (I didn't bother to research the nearest food store, in case one doesn't own a car.)

The federal government defines the chronically homeless as people with a physical or mental disability who have not had permanent housing for at least a year — or four times in three years. The Las Vegas Valley’s homeless population is estimated at 12,000, but Horizon Crest only consists of 78 units (think of a lottery).

Nevada HAND, a housing developer, built the apartments for $11.5 million, using federal low-income housing tax credits as well as Las Vegas and state money.

The formerly homeless tenants have a case manager who is on-site Monday through Friday. The idea is to get people off the streets and into housing without first forcing them to jump through such hoops as getting a job, completing a de-tox program or going to church — as is common in many other programs. The hope is that the anchor of an apartment, plus on-site or nearby help for addictions, mental illness and other problems, will be enough to keep people from going back to the streets.

The formerly homeless tenants put 30 percent of their incomes toward the rent with the remainder covered by county or state money. The tenants receive a rule book of sorts on entering the program, including requirements of weekly meetings and plans to develop daily routines leading to long-term housing. (I have no idea how one might qualify if they have no source of income.)

47-year-old Michael Sumling had been on the streets or in jail most of the time since leaving his home in Charleston, Mississippi when he was 16. By his count, he has been in 40 emergency rooms and clinics in dozens of states, whenever he was overrun by depression and heard voices in his head. He gets $637 a month in Social Security Disability* checks for his mental illness.

* I've been waiting for over a year on my own Social Security Disability claim, and I'm currently waiting for a hearing date before a judge after two rejections already. I've been living with a friend and using food stamps all that time.

At first, after being on the streets in Las Vegas for several months, Michael Sumling wound up at a short-term program called New Genesis, where a caseworker from HELP of Southern Nevada told him about the Horizon Crest apartments. The main requirement was the ability to prove that he had been on the streets for a long time.

Because of his mental condition, Michael Sumling has a tote bag filled with Prozac and other pills*. Recently he made the mistake of assuming he was “better” and stopped taking those pills. Soon after, "the voices" came back.

* I assume that like myself, Sumling is using state Medicaid through the Clark County Social Services to receive his medical care. If it wasn't for my new friend, I too might have ended up homeless. But because I wasn't "chronically homeless", I would never have qualified for one of those lost-cost apartments, because living on the street was never an option for me.

A case manager at Horizon Crest says tenants like Sumling could be evicted if they don't comply with their "program", which includes having to attend sessions to help them develop skills, such as looking for a job (in a jobless city). Although there may not be many hoops to jump through for getting into the program, there are requirements for staying.

A study of this program showed that nearly 9 of 10 chronically homeless people with mental illness stayed in housing for 5 consecutive years with round-the-clock help.

(Pictured below) Michael Sumling chats with a friend in his Horizon Crest apartment. Would you be willing to live like he did before being able to qualify for one of these low-rent apartments?

Crystal Williams is case manager for HELP of Southern Nevada. The 59-year-old has worked in human services for 35 years, the last three as a case manager of chronically homeless people. Most of the 25 people on her caseload are dealing with long-standing addictions and mental health problems. She is used to meeting people at rock bottom.

Crystal will travel to every corner of the Las Vegas Valley to visit the homes of her clients, each at a different level of independence. Caseworkers like Crystal keeps extra keys to their client's apartments in case they need to check on the welfare of clients.

She took two of them grocery shopping and stopped at the pharmacy to pick up a prescription for a third.

One of Crystal Williams' clients is 33-year-old Jason McKenzie, who was homeless for about a year before joining HELP's program nine months ago. He had trouble staying sober, even with outpatient treatment. Now he's got a month's worth of sobriety under his belt.

Crystal dropped in on another client, David Matthews, 51, who lives in a tidy apartment in south Las Vegas. Matthews is a former airport screener who got hooked on opiates after injuring his back years ago. He spent three years living in a Henderson homeless encampment before outreach workers from HELP of Southern Nevada came along. He's been clean eight months.

Later Crystal dropped in on a female client who asked not to be identified. The 48-year-old former cocktail waitress is trim, her blond-gray hair thick and stylish. She has been a HELP client nearly two years.

Her next stop was Fred Beutler, 40, who is a former iron worker who has been in HELP's program just three weeks. He spent two of them in the hospital because of health problems caused by chronic alcoholism. His liver is now so damaged that drinking a single beer sends him to the hospital.

HELP caseworkers encourage clients to wait until they have achieved a long stretch of sobriety before looking for a job. "It's a bad idea to give newly sober people access to a lot of cash," Crystal says.

Crystal spent the rest of the day visiting other clients around town, most of whom are at home when they are not at doctors' appointments or attending counseling, substance abuse treatment and vocational rehabilitation.

Some clients eventually succeed, become independent and leave the program. Sometimes it takes years. Others fail, though Crystal doesn't see it that way. "On average I feel we have made a difference in one way or another," she says.

It's not until later, when Crystal arrives back at her small HELP office, on Flamingo Road just west of Maryland Parkway, that she takes a moment to breathe. It's about 4 p.m. Her day started at 7:30 a.m. She'll spend the next hour or so doing paperwork, then head home. Tomorrow is another day for her.

Programs such as HELP of Southern Nevada, Medicaid, food stamps, and Social Security are the very programs the Republicans want to cut — just to offset the cost for more tax breaks for the rich. That's why I hate Republicans.

My Related Posts:

* Excerpted and edited from the Las Vegas Review Journal - HELP of Southern Nevada gives hope to addicts, homeless and the Las Vegas Sun - First things first: For homeless, a home

Monday, March 26, 2012

Feed the Rich! Tax the Poor!

The Republican Budget Eliminates Tax Deductions for the Working Class and Reduces Taxes on the Fabulously Rich

"I could use a reduction in my taxes, after all, I'm a job creator. I employee and pay my chauffeur, my lawyers, my gardeners, my stock broker, the pool man, my tailors, my yacht crew, my chef, my pilots, my accountant, my valet, my golf coach, and my maids. And I also need to keep this sweet young lady off the streets too. Reduce my taxes and I can hire more people."

Wall Street Journal - A new congressional report by the nonpartisan Congressional Research Service detailing the value of the Republican's proposed major tax breaks show that they would amount to more than $1 trillion a year—roughly the size of the annual federal budget deficit.

House Republicans proposed to reduce or eliminate an unspecified array of tax breaks for low income and middle-class taxpayers in order to offset the costs of lowering the marginal tax rates, both for corporations and the top marginal rate for wealthy individuals - - from the current 35% to 25% - - and also, taxing capital-gains income at lower rates than ordinary income earned through regular wages.

Capital gains is how the top 1% makes most their money, and is taxed at only 15% (which hasn't been this low since 1921, when the preferential treatment for capital gains was first introduced at a rate of only 12.5%)

The offsets include the exclusion from taxable income for employer-provided health insurance, the biggest break, at $164.2 billion a year in 2014; the exclusion for employer-provided pensions, the second-biggest, at $162.7 billion; and the exclusions for Medicare and Social Security benefits. Other big breaks include the mortgage-interest deduction (the third-largest), the earned-income credit for the working poor; and deductions for state and local taxes.

That likely would leave little for reducing tax rates, perhaps only enough for one or two percentage points in the top individual rate, while maintaining the same level of revenue, the report said.

House Republicans dismissed the report's significance. A House GOP aide said. "Probably tomorrow there will be a report saying the Earth is round."

The top-ranking Democrat on the House Ways and Means Committee, Rep. Sander Levin of Michigan, said the report foreshadows a difficult fight over tax breaks that will pit the interests of middle-class households against those of higher earners.

"Some of the most popular tax provisions—including the exclusion for health coverage and the deduction for mortgage interest, largely benefit middle-income families," Mr. Levin said in a statement.

House Republicans point to data showing that upper-income taxpayers benefit much more per capita from tax breaks than lower earners, so reducing breaks across the board would maintain a progressive system, they say.

But what they don't say is that their new proposal would greatly benefit the top 1% much more.

Inheritance Taxes for the Spoiled Rich Kids of the Top 1%

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act was signed into law by President Obama on December 17, 2010 when the Bush tax cuts were extended for two more years because Republicans had held federal extended unemployment benefits hostage in exchange for the deal.

This new law provided sweeping changes to the rules governing federal estate taxes, gift taxes and generation-skipping transfer taxes, but only for the 2010, 2011 and 2012 tax years.

Washington continues to debate what to do with the federal estate (inheritance) tax. The top rate is now 35% and is scheduled to rise to 55% in 2013. Currently there is still a $5 million exemption on the federal estate tax and gift tax (a once-in-a-lifetime wealth transfer for the living).

2010 was "a good year to die" when the tax rate for inheritances was 0%, and the wealthy also had a reduced gift tax as well. Many believed that Congress would reinstate the federal estate tax—and impose a new Generation-Skipping Tax (tax assessed on distributions from an estate to beneficiaries two or more generations down, like for Kim Kardashian and Paris Hilton) — and raise the tax on gifts too.

Besides the federal estate taxes, the tally of states that impose a state estate and/or inheritance tax for 2012 is 22 states plus the District of Columbia. (Republicans, the top 1%, and Forbes Magazine calls this tax a "death tax").

An op-ed in the Wall Street Journal claims that polls show that roughly two of three Americans want this tax abolished, but there was no link provided, nor was a pollster named to back up that claim). The author also says that "Mister" (not "President") Obama wants a 45% federal estate tax rate next year, which in many states (with their own estate tax) might mean a more than a 50% combined rate.

Editor's Note: If this is true, then this is a GOOD thing. Dead people don't need money to live on, and their spoiled rich kids won't be left starving to death and homeless in the streets either. If $5 or $10 million a year in tax-free money from their trust fund isn't enough for people like Kim Kardashian and Paris Hilton to survive on, then they can get a damn job like everybody else, or live on the money they earn from their idiotic "reality" shows.

An Overview of Estate and Gift Tax Exemption, Rate and Portability in 2011 and 2012

  • For 2011, the federal estate tax exemption will be $5 million and the estate tax rate for estates valued over this amount will be 35%. The estate tax has also become unified with federal gift and generation-skipping transfer taxes such that in 2011 the lifetime gift tax exemption and generation-skipping transfer tax exemption will be $5 million each and the tax rate for both of these taxes will also be 35%.
  • The estate tax, gift tax and generation-skipping transfer tax exemptions have been indexed for inflation for the 2012 tax year such that each will be increased from $5 million to $5.12 million beginning on January 1, 2012.
  • Portability: Allow married couples to pass $10 million on to their heirs free from federal estate taxes.
  • Portability may be relied on in states that do not collect a separate state estate tax, AB Trust or ABC Trust planning may still be required in states that collect state estate taxes, particularly in states where the couple has a large estate.
  • Unlike the estate tax exemption, the generation-skipping transfer tax exemption has not been made portable between spouses for the 2011 and 2012 tax years

John Travolta

The IRS had sought more than $1 million from John Travolta for un-paid taxes, but he only had to pay $607,000. He got away without having to pay the $500,000 in interest and penalties. Travolta's net worth is guessed to be $200 million.

Like Tom Cruise, John Travolta is a member of Church of Scientology, a controversial organization that has long lobbied to do away with the IRS all together. (Read: Lobbyists, Special Tax Rates & Tax Evasion) The more one earns, the more inclined they are to evade taxes.

(Pictured below) John Travolta's private Boeing 707 and Gulfstream jet parked in front of the Travolta family estate, which has a 15-car garage. He uses the privately-owned Greystone Airport, located in the unincorporated community of Anthony (7 miles northeast of Ocala, Florida). A former Revlon model manages the estates.

Click here to download a small animated photo of flying over John Travolta's house

Sunday, March 25, 2012

Republican Ties to the Chinese Mafia

Sheldon Adelson: Casinos, Political Campaigns, Taxes and the Chinese Triads

Reuters (one year ago) A Hong Kong jury convicted four men of a conspiracy to commit bodily harm and a fifth of soliciting a murder. At first, the men had been ordered to break the arms and legs of a dealer at the Sands Macau (owned by Sheldon Adelson) who was suspected of helping a gambler cheat millions of dollars from Adelson's casino.

Later, a call went out to murder the dealer. But then one of the gangsters balked and reported the plans to authorities. The mastermind was a leader of one of the organized crime groups in China known as triads.

Now Sheldon Adelson is reported to be facing a federal investigation over whether his company violated the Foreign Corrupt Practices Act, which prohibits bribing foreign officials. The investigation stems from a lawsuit filed by a former executive at the Sands Macau. Steven C. Jacobs claims he was told the keep quiet about investigations of local officials and the possible presence of the triads (Chinese organized crime).

But Adelson wasn't the only Las Vegas casino tycoon tied to Chinese organized crime. Billionaire Kirk Kerkorian (a friend of Senate Majority Leader Harry Reid) is the owner of MGM and was doing business with Pansy Ho, daughter of billionaire Stanley Ho - - who was named by the Canadian Government, citing the Manila Standard newspaper, as having a link to the Kung Lok Triad (Chinese mafia) and being linked to several illegal activities during the period 1999–2002.

Stanley Ho's ties to Chinese organized crime have also been reported by the New Jersey Division of Gaming Enforcement, citing a U.S. Senate committee and several government agencies, when the state investigated his ties to MGM Mirage. The New York Times also ran an article, but it is no longer posted.

Stanley Ho built his fortune over 50 years after the Macau government granted him and his partners a gambling monopoly in 1962. The monopoly wasn’t renewed after 2001. (Why?) Then Macau granted licenses to casino rivals Sheldon Adelson’s Las Vegas Sands and Steve Wynn’s Wynn Resorts.

(Below) The son of Ukrainian Jewish immigrants, Sheldon Adelson is seen posing with his Israeli wife, Miriam. Adelson's young sons also carry Israeli passports. (So how is President Obama less American?)

Today the casino king Sheldon Adelson is up $21.5 billion in the past three years because of the shares he owns in his Las Vegas Sands. In 2011 alone, Adelson made $7 billion. Under Newt Gingrich's proposed tax plan, capital gains, dividends and interest income would not be taxable.

Sheldon Adelson met with Newt Gingrich last month at one of his casinos, The Venetian in Las Vegas, after donating $10 million to Newt's presidential campaign.

In an interview for Forbes, when asked about trying to personally buy the presidential election for Newt Gingrich, Sheldon Adelson rolled his eyes and said, “Those people are either jealous or professional critics. They like to trash other people. It’s unfair that I’ve been treated unfair—but it doesn’t stop me. I might give $10 million or $100 million to Gingrich.”

Paul Egerman, a Patriotic Millionaire and CEO of e-Scription says, "Some rich people think that, because they are rich, they somehow have superior knowledge, which entitles them to control our country. And what do these rich people want to do with their superior knowledge and Super Pac power? They, of course, want to reward themselves with lower tax rates, while at the same time reducing Medicare and Social Security benefits for the middle class.”

Egerman wasn't referring to Sheldon Adelson, but he might as well have been. Egerman was referring to another billionaire, Kenneth Griffin, founder of the hedge fund Citadel and a donor for Mitt Romney. In an interview with the Chicago Tribune Griffin was asked if he thought rich people had too great of an influence on politics.

"I think they actually have an insufficient influence," he responded. "Those who have enjoyed the benefits of our system more than ever now owe a duty to protect the system that has created the greatest nation on this planet."

Kenneth Griffin must have been referring to protecting a system with disproportionate tax cuts for the most wealthy. Mitt Romney's tax plan would keep the historically low taxes on capital gains, dividends and interest income the same as there are now, ever since the Bush tax cuts of 2003.

Patriotic Millionaire and CEO of NuCompass Mobility Services Frank Patitucci said, "Mr. Griffin needs to be reminded that the U.S. is a democracy, not a plutocracy. One person, one vote. Not one dollar, one vote.”

Another Patriotic Millionaire, Rochelle Kaplan, said “Due to considerable donations by the super-wealthy to members of Congress, we now have vastly lower rates on dividend income and on income tax rates for the richest Americans that we previously had. This, to me, shows plenty of influence on politics and policy.”

The 2001 tax rates were rolled back across all income categories, with the upper income earners benefiting more. But in 2003 the most significant reductions were taxes on dividends and capital gains taxes. Typically, these taxes are on investment income, and those cuts tend to give a bigger break to taxpayers with higher incomes.

The Center on Budget and Policy Priorities reported that the top 5 percent of earners (those making about $225,000 or more) received 30.5 percent of the tax benefits in 2008, according to their analysis. But zoom out to the top 20 percent, and their share is 47.8 percent, making the tax cuts very disproportionate.

Forbes started tracking America’s 400 richest on an annual basis back in 1982. Not much has changed over those 25 years (except they're much richer). The top of the list includes Bill Gates, Warren Buffett, Larry Ellison, the Koch brothers, the Waltons (of Walmart), George Soros, and Sheldon Adelson. 400 Americans now hold $4.6 trillion in combined net worth.

Last week, for instance, former U.S. secretary of labor Robert Reich noted that America’s 400 richest “have more wealth than the bottom 150 million Americans put together” and called for a new tax levy on grand fortune.

“Let Santorum and Romney duke it out for who will cut taxes the most on the wealthy - - and shred the public services everyone else depends on,” Reich urged. “The rest of us ought to be having a serious discussion about a wealth tax.”

The U.S. once did have an "excessive profits tax".

In a L.A. Times op-ed piece law professors Bruce Ackerman and Anne Alstott say," The more serious inequality problem facing the United States involves overall wealth, not just income. While the top 1% of Americans earned 21% of the nation's income, they owned a staggering 35% of the wealth...We should be taxing that wealth directly, and not merely focusing on million-dollar incomes...Rather than draconian cuts to Medicaid or Medicare, why not a wealth tax?”

In a Wall Street Journal op-ed, The Conservative Case for a Wealth Tax, Ronald McKinnon, from the Stanford University, Department of Economics, also asks for a wealth tax.

Globally (where other countries do have a wealth tax), the top 1% has also fared much better. Wealth-X has identified nearly 2,500 billionaires, more than double that of the just released Forbes Global Billionaires list. But America's billionaires pay the least amount in taxes.

What does it say about the character and humanity of a man like Sheldon Adelson, who will be 80 years old in August, is worth $25 billion, can buy 167 of America's most expensive mansions*, and might be willing to spend $100 million on a presidential candidate just to see his tax rates lower than they already are -- all while millions of Americans remain unemployed, and millions more need to rely on Social Security and Medicare.

I wouldn't call Sheldon Adelson just greedy, but evil and psychotic (like many of the ultra-wealthy that the Republicans so vehemently defend).

When Sheldon Adelson dies, who gets his money? Israel? And that's another reason why inheritance taxes should also be taxed as regular income, just like capital gains, dividends and interest income should.

* $25,000,000,000 ÷ $150,000,000 = 167 Spelling Manors in Los Angeles (pictured below). Read my post: Inequality and the Billionaire's Club

Get to know Sheldon Adelson better through some of his past controversies.

Saturday, March 24, 2012

Unemployed? Be a Repo Man!

The big-time financial institutions are paying less than ever to have vehicles repossessed in the event of a loan default.



In the movie Repo Man Otto gets fired from his boring job as a supermarket stock clerk. Depressed and broke, Otto wanders the streets until he falls in with Bud, a seasoned repossession agent (a "repo man") who is working for a small automobile repossession agency. Although Otto is initially disgusted by the concept of repossessing cars, his opinion rapidly changes when he is quickly paid in cash for his first "job". Otto soon embraces the fast life style, the drug use, the real-life car chases, the thrill of hot-wiring cars and the good pay.

But that was only a movie. And times have changed.

When the economy cratered in 2008, a record number of car owners were unable to pay their bills after borrowers had a hard time finding work. In many cases, their auto loans had been securitized and sold off to investors, à la the mortgage debacle. But recently, the number of auto repossessions has fallen due to tightening credit standards.

Tom Webb at Manheim reports that in 2011 there were 1.3 million auto repossessions, in 2010 there were 1.5 million, and in 2009 there were 1.9 million - - that's almost 5 million repos in the last 3 years after the economy collapsed in late 2008.

Compared to Repossessed Homes

RealityTrac had commented that 70% of current mortgage defaults are currently not listed in the MLS. They are kept off the books because it would impact the economy which would cause catastrophe in the stock markets and our dollar.

Recently RealtyTrac released its Year-End 2011 U.S. Foreclosure Market Report™, which shows that a total of 2.7 million foreclosure filings (default notices, scheduled auctions and bank repossessions) were reported on 1.9 million U.S. properties in 2011 alone.

Bloomberg News had reported that a record 2.87 million properties got notices of default, auction or repossession in 2010. Of those, banks have seized more than 1 million homes in 2010, according to RealtyTrac.

To postpone the pain of more foreclosures, homeowners are now being offered a chance to rent their homes before the properties are eventually sold to investors.

Meanwhile, auction houses have been busy thriving with bargain hunters on foreclosed homes. People from around the world have scooped up houses that are often sold for less than half of the value of the mortgage. (More on foreclosures, robo-signing, and the mortgage servicing settlement via the New York Times)

According to insurers, lawyers and longtime repo agents, the big-time financial institutions as a group are paying less than ever to have vehicles recovered in the event of default.

The established repo agents believe the penny-pinching banks have pitted them against one another, as reputable firms struggle to do the job on thinner margins, because those who are unemployed are willingly take on cheaper work.

Novices work on a flat-rate contingency basis: $70 for each involuntary repo, $30 for each voluntary repo, and nothing if no repo occurs. The bar to entry into the repo business is extremely low. Most states don't require special licensing or training to carry out a repossession. And they are nobody's employee, they work as an independent contractor, so are responsible for paying their own taxes.

One of the first things repo companies lost was reimbursement for mileage. Lenders used to cover the cost of travel, making long-distance repos more feasible. No more, agents say.

Lenders also used to cover the repo agency's cost of holding on to a repossessed car until it could be auctioned off. Now all too often, the agencies are storing those cars for free.

Also gone are the payments many repo companies received for cutting keys for the cars they repossessed. Now, many lenders demand that the companies cut keys gratis -- even though modern electronic keys can run several hundred dollars apiece.

Several lenders with large auto loan portfolios, including Bank of America, Santander, Ford Motor Credit and Toyota Motor Credit declined to discuss how they carry out repossessions. In most cases, lenders don't need a court order to repossess a car, as they often do if they wanted to foreclose on a house.

Big lenders like to use what's known as "forwarding companies" (a middle man) because it's more convenient: The banks can unload all their past-due accounts to a one-stop shop that takes care of finding repo agents and, in some cases, even auction off the repossessed autos - - all at one low price. (Cars, just like homes, are usually auctioned off - - sometimes near 50% less than the outstanding balances on the loans.)

Dave Jamieson at the Huffington Post shares his own personal history in an epic story on violence in the repo industry. "Repos Gone Bad: Are Big Lenders To Blame For Driveway Violence?"

To find repo-related violence, Americans need look no further than cable television. Every Wednesday night at 9 p.m., Turner Broadcasting (on truTV ) airs a program called Operation Repo.

* Editors Note: I'm only guessing here, but I suspect that the banks are first concentrating on the new and late model cars with the least amount principle paid down. And that a 10-year-old car with a 5-year loan that's half paid off may go to the bottom of the list of proprieties for a repo. Always keep your car locked in the garage ;)

Friday, March 23, 2012

Energy Independence from Big Oil Companies

When average Americans think of nationalizing an industry (such as oil companies) they immediately think of socialism and Joseph Stalin of Russia; or they might relate it communism and Chairman Mao of China. So Americans will automatically associate the ideologies of socialism and communism with mass genocide. And the top 1% wants you to continue doing so, using all kinds of scare tactics...such as using psychology to promote fear to get people to vote against their own best interests.

But in truth, America has always had a combination of both socialism and capitalism as our form of economic government. The United States has never had a pure "free market" economy -- we have always subsidized businesses and other efforts that were vital to research, defense, transportation, space exploration, infrastructure, and national security. These things have always been financed by the taxpayers.

In the recent past, one need look no further than to the biggest banks and the auto industry. Americans once bailed out General Motors after our bombers destroyed their factories in Nazi Germany during World War II.

While depending who's running the administration, some call this crony capitalism, but both political parties have been equally involved. That's just how we've always done business in America. Look at the airlines, railroads, and savings & loan industries. Government bailouts and subsidies are nothing new.

The Tea Party's argument about "free markets" is just plain silly. Basically, members of the Tea Party are more like anarchists and advocating for no government at all. And when they say "government doesn't create jobs" and that only the private sector creates jobs, that's just plain nonsense, and is only half the truth. Government has always been America's largest employer. Wal-Mart is America's 2nd largest employer, with 1.4 million employees in the United States and another 2.1 million world-wide.

The defense industry makes up a very large piece of the federal budget, and is a collection of defense contractors in all 50 States with the most powerful lobbyists in Washington D.C. - - while companies like Boeing also makes commercial aircraft, it is not totally subsidized, but Boeing does get tax dollars - - just like the big oil companies do.

Which brings me to the point of this post. Newt Gingrich says we could have gasoline for $2.50 a gallon, and he's right. But not in the way he suggests (such as drilling more and building the Keystone XL Pipeline). China has gasoline for $2.50 a gallon because their oil industry is 100% subsidized. In other words, China's oil companies are all "nationalized". And that's how America could also have cheap energy.

"Oh no!!!! Socialism!!! The end of capitalism, free markets, and our superior exceptional way of life in America as we know it!!! Spreading the wealth around!!! Destroying America!!! Mass genocide!!! AHHHHHHHHHH!!!"

Hold on, before you panic, read on...

Over 100 years ago during the Gilded Age (the era of "robber barons" of "big trust companies"), Americans pushed back on monopolies. Since that time, America saw the greatest expansion of the middle-class ever in human history right after World War II.

Without government intervention and regulation, this country would no longer be a democratic republic, but a plutocracy. In the past 40 years, with corporate "mergers and acquisitions", and because of so much money in the political process (and for lobbyists), we have seen the days of corporate rule creep back on us again (along with the same income disparity and wealth inequality). And when many members of Congress retire, they take jobs from these same corporations.

So if oil companies support political campaigns for members of congress, and then later give them jobs, how we can we trust any politician or oil executive to do what's best for the country and its people?

Let's look at big oil, as just one example, for the sake of argument. Black gold is the blood that runs through the veins of our entire economy, influencing the price of everything we need, from food and heat to transportation and housing.

Less than a year ago on May 12, 2011 the top executives from the five biggest oil companies defended their massive profits, big tax breaks, and billions in oil subsidies in a hearing before the Senate Finance Committee. As could be expected, after the hearing Fox News rushed to big oil's defense, making false claims and comparisons.

At the hearing, ExxonMobil's CEO Rex W. Tillerson had led the defense of oil tax breaks that most Democrats had wanted to repeal. The eventual Senate vote was 52-48, and the vote broke down mostly along party lines. Moderate Republican Senators Olympia Snowe and Susan Collins of Maine split with the rest of the GOP to support the effort to repeal oil subsidies. Faux-Democratic Senators Ben Nelson (D-Neb.), Mary Landrieu (D-La.) and Mark Begich (D-Alaska) had voted against the bill because of their ties to big oil.

The reason? Louisiana has the 2nd most oil refineries after Texas (both Exxon), and Alaska produces the 2nd most oil after Texas (both Exxon) The Keystone XL Pipeline connects the north and south legs in Okalahoma, where Obama just visited to illustrate his support for expedited construction of the southern leg of the pipeline. But the Republicans are still complaining, and accusing Obama of playing politics.

The Republican-controlled House had earlier approved several measures that Republicans said would alleviate gas prices by opening up more public federal lands for oil and gas drilling. Democrats responded by arguing that oil speculation, not federal policies on drilling, is to blame.

At that Senate hearing last year, Exxon's CEO Rex Tillerson had admitted that the price of oil, based purely on supply and demand, should be in the $60 to $70 a barrel range (but even that was much too high). The reason it’s above $100 a barrel, Tillerson explained, is due to the oil majors using futures contracts to lock in current high prices, and speculation that is engineered by the high-frequency trading of quantitative hedge funds.

That was just but one of the many stunning revelations made during the Senate hearing on tax subsidies to the oil industry, which featured the five most powerful oil CEOs from BP, Shell, Chevron, Conoco-Phillips and Exxon-Mobil.

Here are some other juicy disclosures from the hearing:

  • The average cost of producing 1 barrel of oil was a mere $11
  • the average price of the oil in the marketplace was $72, some 6.5 times the cost of getting the oil out of the ground.
  • The profits for the big 5 oil companies was $36 billion in last year’s first quarter. A large part of those profits were used to buyback their stock shares, or pay dividends to shareholders, which are also the oil executives themselves*

* Share "buy-backs" increases the value of executive stock options, and after they are vested and sold, they will only have to pay a 15% capital gains tax (not the top marginal rate of 35%), which is less than Warrenn Buffett's secretary. Executives in all major corporations use this tactic, and sometimes dilute share values to raise cash.

Meanwhile, after the Senate hearing, the top four Senate Democratic leaders as well as Senator Claire McCaskill (D-Mo.) sent a letter to the Federal Trade Commission demanding an investigation into whether U.S. refineries are engaging in price fixing. Just this month, Senators Claire McCaskill and Charles Schumer (D-NY) were pushing for a quick resolution of the federal investigation into whether there is gas price fixing through oil refineries.

The deduction for intangible drilling expenses was given to the oil industry in 1960 when a barrel was worth about $15-17. So, why do they need this favor when oil is $100 a barrel? Good question. The oil execs had looked horrified during that hearing when the senators mentioned cutting off their taxpayer-paid subsidies, so the oil execs threatened that all oil exploration in the U.S. would cease and desist (scare tactics, using psychology to promote fear).

The CEO of Conoco-Phillips even went as far to say that ending their taxpayer subsidies would be "un-America". WTF!?!!?

Now less than a year later, here we are again. According to a recent New York Times article, The United States reduced oil imports from OPEC by more than 20 percent in the last three years, and now the U.S. has become a net exporter of refined petroleum products like gasoline for the first time since the Truman presidency.

Less than a decade ago the natural gas industry feared running out of domestic gas, now they are suddenly dealing with a glut so vast that facilities are applying for licenses to export gas to Europe and Asia.

All cross the country, the oil and gas industry is vastly increasing production, reversing two decades of decline. But President Obama does admit, "We’re not drilling in the National Mall. We’re not drilling in your house."

Americans are pumping significantly less gasoline - - and they are driving fewer miles and replacing older cars with more fuel-efficient vehicles at a greater clip (and with millions of people unemployed, they're no longer making the round trip back and forth to a job).

Simple economics suggests that if the nation is producing more energy and using less, prices should be falling. But crude oil — and gasoline and diesel made from it — are global commodities whose prices are affected by factors around the world.

At over $100 for a barrel of crude, it's no wonder the big oil companies want the Canadian pipeline and more oil leases on federal lands...not for domestic supply-and-demand, but for big profits on the global market. Much of the industry is thrilled at the prospect. As Obama recently said, "The lead in one news story said, 'Gasoline prices are on the rise and Republicans are licking their chops.' "

The Bush administration opened large swaths of the Gulf of Mexico and the waters off Alaska to exploration, granting lease deals that required companies to pay only a tiny share of their profits to the government.

Back in 2005, with the world economy humming — and China, India and other developing nations posting astonishing growth — demand for oil began outpacing the easily accessible supplies.

By 2008, daily global oil consumption surged up nearly 20 percent from the decade before. In July of that year, the price of oil reached its highest level ever since World War II, topping out at $145 a barrel (equivalent to more than $151 a barrel in today’s dollars).

Fracking, technological advances, new imaging and seismic technology, and new drill bits made oil and gas more plentiful and profitable. In the last five years domestic oil companies have sold overseas assets and reinvested in Texas shale fields.

By decade’s end, oil executives say oil could be flowing roughly equaling the total output of Nigeria Falls, but American consumers could still be paying more at the pump.

Besides the American consumers in this oil and natural gas boom, another loser is the environment and wildlife. Water experts say aquifers could run dry if fracking continues expanding, and even oil executives concede they need to reduce water consumption.

But "energy independence" is a myth so long as oil and gas corporations are allowed to continue to exploit America's natural resources for personal financial gain. If the Keystone XL Pipeline only adds to the "world supply" at "market prices" (and what can be sold to other countries), how can it help domestic prices and supply? And how could it ever give the U.S. "energy independence" , or independence from any other energy source, if it is privatized for profit? Consumers will never be "energy independent" from the big oil companies.

That's why I proposed an idea about the Keystone XL Pipeline -- the funding of a massive non-profit public works program to build an oil company that's operated and owned by our government (the people). The American consumers, manufacturers, the airlines, and our defense department (with taxpayer funding) can buy energy AT COST, instead of just stuffing cash into the pockets of a few oil executives.

No, my plan is not socialism or communism. It's not even nationalization. As citizens, we would just be using our own tax dollars to subsidize a government-owned (people-owned) oil company that can compete with the current oil companies for our own domestic energy needs. We wouldn't have to put our oil on the world market for consumption by India or China, or any other competing economy.

According to my own poll (on the top right-hand side of this page) most people agree with my plan. Please read my related posts below (with links to sources) for a wealth of information on this subject.

Headlines in the news regarding the Senate Hearing last year:

Thursday, March 22, 2012

Paul Ryan Hates the Unemployed and Poor

"We don't want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency." - Paul Ryan

Paul Ryan's new plan, The Path to Prosperity - The Sequel, gives those making over $1 million per year an average tax cut of at least $150,000 and preserves tax breaks for oil and gas companies and hedge fund managers. These tax breaks are then paid for by ending Medicare as we know it.

Paul Ryan's plan would nullify the issue of the expiring Bush tax cuts. Robert Reich writes: "Republican Social Darwinists are determined that the Bush tax cuts of 2001 and 2003 be made permanent. Those cuts saved the richest 1 percent of taxpayers (roughly 1.4 million people) more money on their taxes last year than the rest of America's 141 million taxpayers received in total income."

Ryan's grand plan also seeks to replace the $500 billion in triggered cuts to the defense department by substituting measures that would decrease spending on food stamps, federal worker benefits and health care programs, among other items.

Ryan's blueprint says, "The Temporary Assistance for Needy Families reforms cut welfare caseloads in half as poverty rates declined. In stark contrast to critics' fears, child-poverty rates fell 1 percent per year in the five years following the passage of TANF in 1996."

But since then, the child poverty rate has gone back up, even as TANF caseloads have continued to decline. The poverty rate for Americans under 18 was 20.5 percent in 1996. Now it's 22 percent. "The success of welfare reform is way oversold because it's based on early years when the economy was booming," says LaDonna Pavetti of the Center on Budget and Policy Priorities.



Ryan's plan would turn the funding for federal programs like food stamps and housing assistance into block grants -- a fixed yearly allotment granting states greater spending flexibility. States would then set work requirements and time limits for the benefits.

Is he kidding? Work requirements and time limits for Americans who have already been unemployed for over 2 or 3 years, because no one will even hire them to shine Paul Ryan's shoes?

Paul Ryan says, "We don't want to turn the safety net into a hammock that lulls able-bodied people to lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives."

What? But what if able-bodied people can't find work? Or if they do, are only offered part-time jobs that don't pay a living wage? Let's see if Mister Ryan can live on a minimum wage. Here's a map the United States at Jared Bernstein's blog that shows how many hours one must work in each State just to pay their rent (and that doesn't even include food.)

And what's all this nonsense about "hammocks"? Many people are living in other people's basements and garages, inside their cars, in homeless shelters, or on the streets. They're not on vacation Mister Ryan, they're just trying to survive!

Robert Reich agrees: "I have news for Paul Ryan. Almost 23 million able-bodied people still can't find work. They're not being lulled into dependency. They and their families could use some help. Even if the economy continues to generate new jobs at the rate it's been going the last three months, we wouldn't see normal rates of unemployment until 2017."



New research by professors Emmanual Saez and Thomas Pikkety show that the average adjusted gross income of the bottom 90 percent was $29,840. Forty-six million people live below the poverty line. Almost half of all working Americans earn less than $27,000 a year (The poverty line for a family of four is $22,314)

Paul Ryan is paid $174,000 a year, a pension, and healthcare by the taxpayers for his "big government" part-time job.

Paul Ryan's plan includes block-grants for giving states the "flexibility" to use those funds for other things (like more tax breaks for businesses) rather than helping the poor.

Lowering spending on food stamps is a top target of Ryan's plan, which notes their cost has increased from $18 billion in 2001 to $80 billion today - - because since after the Great Recession that the Republicans caused, and the subsequent massive layoffs, now is when these people need these benefits the most.



About 1.8 million women, infants, and children who rely on the Women, Infants, and Children (WIC) program would be off this program in 2014. Similarly, by 2014 more than 400,000 low-income families would lose critically important housing vouchers.

There will also be cuts to spending on Pell Grants - - 9.6 million low-income students would see their Pell Grants fall by more than $1,000 in 2014 - - and, over the next decade, over one million students would lose support altogether.

Keep in mind: Paul Ryan's plan reduces the top individual and corporate tax rates to 25 percent. Cuts of this magnitude give Americans who make more than $1 million a year an average tax cut of at least $150,000 a year. The money would come out of programs for the elderly, lower-middle families, and the poor.

Paul Ryan must hate the poor and unemployed.

* Ten questions for Paul Ryan and his supporters

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