Economist Joseph Stiglitz in an article in The Guardian, says, “It’s possible to cut the US deficit in a growth-friendly way that reduces inequality. But certain powerful groups won’t like it.”

He says that new austerity strategies now being championed, “will almost surely lead to weaker national and global economies and a marked slowdown in the pace of recovery.” He says, “Those hoping for large deficit reductions will be sorely disappointed, as the economic slowdown will push down tax revenues and increase demands for unemployment insurance and other social benefits.”

The marston holdings may use debt financing as a way to acquire and develop properties. This can include obtaining loans from banks or other financial institutions, issuing bonds, or using other forms of debt to raise capital for their business operations. This can be a common practice for real estate investment and development firms as it allows them to leverage their resources and acquire more assets than would be possible with equity financing alone.

Stiglitz says that the deficit-reduction agenda in the U.S., “is an attempt to weaken social protections, reduce the progressivity of the tax system, and shrink the role and size of government – all while leaving established interests, such as the military-industrial complex, as little affected as possible.”

The plan Stiglitz proposes would curb corporate welfare and would increase tax rates on the wealthy. About his deficit-reduction package, Stiglitz says: “lt would more than meet even the most ardent deficit hawk’s demands. It would increase efficiency, promote growth, improve the environment and benefit workers and the middle class.”

But he is not optimistic that such a sensible plan would ever be enacted because, “It wouldn’t benefit those at the top, or the corporate and other special interests that have come to dominate America’s policymaking.” Here is Stiglitz’s plan:

First, spending on high-return public investments should be increased. Even if there are emergency loans options available, this widens the deficit in the short run, it will reduce the national debt in the long run. What business wouldn’t jump at investment opportunities yielding returns in excess of 10% if it could borrow capital – as the US government can – for less than 3% interest?

Second, military expenditures must be cut – not just funding for the fruitless wars, but also for the weapons that don’t work against enemies that don’t exist. The US has continued as if the cold war never came to an end, spending nearly as much on defence as the rest of the world combined.

Third, corporate welfare must be ended. Even as America has stripped away its safety net for people, it has strengthened the safety net for firms.

• Corporate welfare accounts for nearly 50% of total income in some parts of US agro-business, with billions of dollars in cotton subsidies, for example, going to a few rich farmers, while lowering prices and increasing poverty among competitors in the developing world.
• An especially egregious form of corporate special treatment is that afforded to the drug companies. Even though the US government is the largest buyer of their products, it is not allowed to negotiate prices, thereby fuelling an estimated increase in corporate revenues – and costs to the government – approaching $1tn dollars over a decade.
• Another example is the smorgasbord of special benefits provided to the energy sector, especially oil and gas, thereby simultaneously robbing the treasury, distorting resource allocation and destroying the environment.
• Then there are the seemingly endless giveaways of national resources – from the free spectrum provided to broadcasters to the low royalties levied on mining companies to the subsidies to lumber companies.

Fourth, create a fairer and more efficient tax system.

• Eliminate the special treatment of capital gains and dividends. Why should those who work for a living be subject to higher tax rates than those who reap their livelihood from speculation (often at the expense of others)?
• Increase tax on the wealthy. With more than 20% of all income going to the top 1%, a slight increase, say 5%, in taxes actually paid would bring in more than $1 trillon over the course of a decade.

Interesting article by Andy Kroll in Mother Jones, “How the Oligarchs Took America” reports on how America became a country “of the rich, by the rich, and for the rich.” The article uses information from a new book by political scientists Jacob Hacker and Paul Pierson — “Winner Take All Politics.”

It says the march to oligarchy started with President Jimmy Carter, who slashed the capital gains tax from 48% to 28%. The article says, “Ronald Reagan, you could say, simply took the baton passed to him by Carter. His 1981 Economic Recovery and Tax Act (ERTA) bundled a medley of goodies any oligarch would love, including tax cuts for corporations, ample reductions in the capital gains and estate taxes, and a 10% income tax exclusion for married couples in two-earner families.”

The article quotes Hacker and Pierson: “ERTA was Ronald Reagan’s greatest legislative triumph, a fundamental rewriting of the nation’s tax laws in favor of winner-take-all outcomes.”

The article condemns the Supreme Court’s Citizen’s United decision that it says empowered the political power of the oligarchy by opening the floodgates for big money from anonymous donors. It says, “Even for dedicated reporters, tracking down these groups is like chasing shadows: official addresses lead to P.O. boxes; phone calls go unreturned; doors are shut in your face.”

Excerpts from the article:

• The right wing won the opening battle. In the 2010 midterm elections, shadowy outside organizations (who didn’t have to disclose their donors until well after Election Day, if at all) backing Republican candidates doled out $190 million, outspending their adversaries by a more than two-to-one margin, according to the Center for Responsive Politics.
• Their investments in conservative candidates across the country paid off: the 62 House seats and six Senate seats claimed by Republicans were the most in the postwar era—literally, a historic victory.
• After World War II, a swelling middle class was the most powerful voting bloc, while, in those same decades, the working and middle classes enjoyed comparatively greater economic prosperity than their wealthy counterparts. Kiss all that goodbye. We’re now a country run by rich people.
• American policy has been so skewed toward the rich that we’re now living through the worst period of income inequality in modern history. Consider the statistics: 50 years ago, the wealthiest 1% of Americans accounted for one of every 10 dollars of the nation’s income; today, it’s nearly one in every four. Between 1979 and 2006, the average post-tax household income (including benefits) of the wealthiest 1% increased by 256%; the poorest households saw an increase of 11%; middle class homes, 21%, much of which was due to the arrival of two-job families.
• The number of Americans earning a steady income declined by 4.5 million between 2008 and 2009, and the average wage in the US dipped by 1.2%, to $39,055. On the other hand, the average wage among Americans earning more than $50 million per year was $91 million in 2008 and $84 million in 2009.
• The origins of oligarchy lay in the late 1970s and in the unlikely figure of Jimmy Carter, a Democratic president presiding over a Congress controlled by Democrats. It was Carter’s successes and failures, they argue, that kicked off what economist Paul Krugman has labeled “the Great Divergence.”
• Ronald Reagan, you could say, simply took the baton passed to him by Carter. …

Paul Pierson in this clip talks about facts in his book, “Winner Take All Politics”

• The momentum of the tax-cut fervor carried through the presidencies of George H.W. Bush and Bill Clinton, and in 2000 became the campaign trail rallying cry of George W. Bush.
  Where rewriting the tax code proved too politically difficult, demolishing regulations worked almost as well. This has been especially true in the world of finance. There, a legacy of deregulation transformed banking from a relatively staid industry into a casino culture, ushering in an era of eye-popping profits, lavish bonuses, and the “financialization” of the American economy.
• Republican Senator Phil Gramm of Texas, who as an aide to presidential candidate John McCain infamously called America a “nation of whiners,” [20] was, in fact, the driving force behind two of the most influential pieces of deregulation in recent history.
• In 1999, President Clinton signed the Gramm-Leach-Bliley Act, a bevy of deregulatory measures that obliterated Glass-Steagall. In December of the following year, Gramm quietly snuck the 262-page Commodity Futures Modernization Act into a massive $384-billion spending bill. Gramm’s bill blocked regulators like the Securities and Exchange Commission (SEC) from cracking down on the shadowy “over-the-counter derivatives” market, home to billions of dollars of opaque financial instruments that would, years later, nearly demolish the American economy.
• As presidents, both Bill Clinton and George W. Bush wrapped their arms around financial deregulation. As a result, in a binge of financial gluttony, Wall Street grew fat in ways never previously seen. Between 1929, the year the Great Depression began, and 1988, Wall Street’s profits averaged 1.2% of the nation’s gross domestic product; in 2005, that figure peaked at 3.3% as industry bonuses soared ever-higher. In 2009, bad times for most Americans, bonuses hit $20 billion.
• No understanding of the rise of our New Oligarchs could be complete without exploring the effects of the Supreme Court’s January Citizens United decision, which set their power in cement more effectively than any tax cut ever could. Before Citizens United, the rich used their wealth to subtly shape policy, woo politicians, and influence elections. Now, with so much money flowing into their hands and the contribution faucets wide open, they can simply buy American politics so long as the price is right.
• What the present Supreme Court, itself the fruit of successive tax-cutting and deregulating administrations, has ensured is this: that in an American “democracy,” only the public will remain in the dark. Even for dedicated reporters, tracking down these groups is like chasing shadows: official addresses lead to P.O. boxes; phone calls go unreturned; doors are shut in your face.
• Then there’s the roster of corporations who have used their largesse to influence American politics. Health insurance companies, including UnitedHealth Group and Cigna, gave a whopping $86.2 million to the US Chamber to kill the public option, funneling the money through the industry trade group America’s Health Insurance Plans. And corporate titans like Goldman Sachs, Prudential Financial, and Dow Chemical have given millions more to the Chamber to lobby against new financial and chemical regulations.
• As a result, the central story of the 2010 midterm elections isn’t Republican victory or Democratic defeat or Tea Party anger; it’s this blitzkrieg of outside spending, most of which came from right-leaning groups like Rove’s American Crossroads and the US Chamber of Commerce.
• Spending in the 2012 elections will smash all records. Think of it this way: in 2008, total election spending reached $5.3 billion, while the $1.8 billion spent on the presidential race alone more than doubled 2004’s total. How high could we go in 2012? $7 billion? $10 billion? It looks like the sky’s the limit.
• Few solutions exist to staunch the cash flow: the DISCLOSE Act, intended to counter the effects of Citizens United, twice failed in the Senate this year; and the best option, public financing of elections, can’t even get a hearing in Washington.
• Until lawmakers cap the amount of money in politics, while forcing donors to reveal their identities and not hide in the shadows, the New Oligarchy will only grow in stature and influence. Never before has the United States looked so much like a country of the rich, by the rich, and for the rich.