Neil deMause

The June issue of Extra! is out, and with it my article on how coverage of state budget battles back in the spring swept under the rug the question of how much of the budget crises were caused by past tax cuts for the rich:

When protests against attempts to roll back state workers’ benefits swept across the nation in February and March, local and national media coverage largely portrayed it as the inevitable collision of generous worker benefits and tight economic times.

The Columbus Dispatch (2/20/11), for example, reported that “the protests at the Ohio and Wisconsin capitols portend what lies ahead as governors in both parties move to cut worker benefits or jobs to balance their books.” The Dispatch called employee pension and healthcare benefits “a long-term threat to state budgets,” citing economists with both the right-wing Heritage Foundation and the right-wing American Enterprise Institute as saying that worker pensions are “squeezing” state budgets…

This story is subscribers-only for now, so you’ll need to sign up (only $15 for a year’s digital subscription!) if you want to read it. Or wait a couple of months until it shows up for free on FAIR’s website, but where’s the fun in that?

The 1099 tax form mess continues, with both the House and Senate moving to pass repeal bills. Unfortunately, the Senate’s solution for filling the resulting revenue gap is to promise vaguely to find unneeded spending it can cut; the House’s is to raise low- and middle-income earners’ health insurance premium costs; and the whole thing might still fail if the two sides can’t agree on a compromise:

There’s one legislative issue lawmakers on both sides of the aisle overwhelmingly agree on: The onerous 1099 tax-reporting mandate that snuck into the health-care reform bill has to be repealed.

The Republicans promised to eliminate it in their Pledge to America, and President Obama did the same in his State of the Union address. So nearly one year after its passage, why isn’t the law dead yet?… [read more]

As part of City Limits’ series on what New York is getting itself in for with its next governor, I look at Carl Paladino and Andrew Cuomo’s job-development plans (but mostly Cuomo’s, because Paladino had to leave the story early to go to the bathroom):

If the seven-member comedy act that was the October 18 gubernatorial debate can be said to have had a serious message, it was likely this: It’s the jobs, stupid. Amid the prostitution jokes, one of the most pressing questions of the night was how New York’s next governor plans to address an economic future that looks, by anyone’s reckoning, bleak.

Neither Andrew Cuomo nor Carl Paladino returned multiple requests for comment, but both have issued statements or proposals that provide insight into their plans… [read more]

For anyone wondering whether Obama’s reported plan to give lots of investment tax breaks to businesses is really that bright an idea, Robert Reich today gives a resounding “no way, no how“:

The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.

The reason businesses aren’t investing in new plant and equipment has nothing to do with the cost of capital. It’s because they don’t need the additional capacity. There isn’t enough demand for their goods and services to justify it. Consumers aren’t buying because they’re trying to come out from under a huge debt load, including mortgage debt; they have to start saving because their nest eggs are worth substantially less; and they’ve lost or are worried about losing jobs and pay.

For those who’ve followed the world of corporate subsidies, this should be a familiar refrain: It’s the but-for question, stupid! When considering whether to subsidize economic development of any kind, the first question needs to be: Would the development happen anyway without the subsidy? Obama’s investment tax credit fails this first test, says Reich: Businesses will take the credit for investments they’d make anyway, but nobody’s going to build a factory to build crap they can’t sell just because they can get a tax credit for it.

So what we’re likely to see if this passes is the government handing out lots of money for spending that would have happened anyway, but not much else. At best, it might get some companies to shift some spending from early 2012 to late 2011 to take advantage of the tax credit, much like everyone rushed to buy houses back in April to get in under the gun for the homebuyers tax credit. And we see how well that worked out.

It always feels icky to hand out tax breaks to big businesses when tons of regular folks are losing their jobs and their homes. In this case, it’s not just ick-worthy, but lousy economics, too.

I went to a city hearing on giving tax breaks to an alleged union-busting firm for new office space, and more or less lived to tell the tale:

Meetings of the Industrial Development Agency – the city agency in charge of approving discretionary tax subsidies to local businesses – are generally sleepy affairs. Unless sports teams are involved, the monthly board meetings typically attract a handful of business executives and policy wonks but little public attention.

This morning’s monthly IDA hearing, though, was widely anticipated for a different reason: One of the items on the agenda was $24 million in sales tax breaks on office and building materials to Thomson Reuters, the news-and-information-services giant created when the Canadian firm Thomson bought the wire service Reuters in 2008… [read more]

Programming note: I’ll be on WTOP radio in Washington, D.C. this afternoon at 2:20 pm Eastern time, to talk about the Great 1099 Tax Form Mess. Tune in via webstream here.

With the Great Blizzard of 1099s still looming (if 2012 counts as “looming”), there could be a white knight riding to the rescue … would you believe the IRS?

With a new mandate looming that will require business owners to file millions more tax forms, the Internal Revenue Service has begun the daunting process of figuring out how to turn the law’s sweeping demands into actual rules for taxpayers.

The new regulations, which kick in at the start of 2012, require any taxpayer with business income to issue 1099 forms to all vendors from whom they purchased more than $600 of goods and services that year. That promises to launch a fusillade of new paperwork: An estimated 40 million taxpayers will be subject to the requirement, including 26 million who run sole proprietorships, according to a report released this week by National Taxpayer Advocate Nina Olson… [read more]

I know this title makes it sound like a Spencer Johnson sequel, but it’s actually an investigation of how the U.S. news media has largely bought the line that the growing federal deficit is a sign that Americans have been splurging too much and need to tighten their belts — or have them tightened for them via new taxes. Yet this neatly overlooks the fact that pretty much the only people benefitting have been a tiny percentage of rich people, whose tax rates even under Obama remain at historic lows:

No sooner had the unemployment rate dipped from its January high of 10 percent than the media drumbeat began: What will the Obama administration do about looming deficits?

The danger, it was made clear, was both imminent and mammoth: The federal deficit, warned the New York Times (2/2/10), was on pace by 2020 to “equal 77 percent of the gross domestic product, the highest level since 1950.” The Times (1/26/10) even alluded to “perceptions that government spending is out of control” as a cause of Obama’s falling poll ratings among independents.

The “out-of-control spending” theme, in fact, dominated news coverage of the deficit panic, with numerous news outlets drawing parallels between the government’s rising debt and individuals’ irresponsible spending. “We’re going to talk, this morning, about what happens when you put off paying the bills,” began an NPR report (3/5/10) on the deficit… [read more]

It’s not every day I get plagiarized by Glenn Beck disciples, let alone get written up in the Daily Kos for it, but apparently yesterday was my lucky day.

First, the Cincinnati 9/12 Project — part of Glenn Beck’s campaign to re-establish core American principles, which apparently require belief in a male God — posted a blog item that might seem somewhat familiar to anyone who read my May 5 article on new tax reporting requirements for CNNMoney.com.

I first got wind of this last night, around about the same time that Coleman Kane of the Daily Kos noted it on his blog. Unlike the 9/12ers, though, who apparently fell for the fiction that my article was written by a CPA named “Wayne,” Kane actually did his research, Googling me to find out my resume. As he then wrote:

Notice how, save for some superficial changes to wording, they are almost identical? Even the idea flow and paragraph breaks match up! In fact, the major changes to the article were solely to remove the citations from other sources, which include opposition to and support of the new law changes, as well as comments by a legislative aide involved in the legislation.

What’s more — Neil’s a writer for CNN and many other publications, including NYC publications such as The Village Voice and City Limits. So the Cincinnati 9/12 Project plagiarizes an east-coast Ivy League writer to make their point (badly).

For the record, I’m not Ivy League — I went to Wesleyan, where our only connection to the Ivies was that Yale kept stealing our best professors by offering them decent salaries. But it is pretty remarkable that the Beck followers can take an article on a clumsily written piece of tax legislation — one that was inserted into the health care bill, incidentally, by a conservative Democrat and a Republican — and reach the conclusion that “only a bunch of leftists could write legislation that consists entirely of thousands of poison pills and call it ‘health care.’”

Though I probably shouldn’t get too upset, given that the Cincinnati 9/12 Project is based in Ohio, which isn’t a state anyway.

UPDATE: I emailed the Cincinnati 9/12 folks to note the plagiarism, and organization president Karen Best promptly wrote back apologizing and saying the post would be edited to correctly attribute the article and link to the original story, which has now been done. So presumably the blame here goes not to them, but to the mysterious “Wayne”…

And yet another look at the Great 1099 Kerfuffle, albeit this one mostly a rehash of the first one:

An until-now unnoticed provision of the new health care overhaul law could change the way U.S. businesses—including freelance workers—prepare for tax day, causing an avalanche of additional recordkeeping and reporting… [read more]