Civil War in the U.S.

It's the surviving middle class against the elite 1 percent

By Mike Krauss

Bucks Count Courier Times

The GOP appears to be a party in disarray, breaking apart over the fault lines of the culture wars it rode to power and joined at the hip to the financial and corporate elite.

But a few days ago it looked as if a civil war had broken out in the Democratic Party, as representatives of President Obama’s most ardent supporters and true believers gathered in front of the White House to hurl their outrage over the assault on Social Security built into the president’s budget proposal.

Not all the president’s base was on the barricades. Conspicuously absent were African American leaders. That’s because the president does not propose to gore their ox.

Social Security and Medicare are critical to the well being of middle class Americans, and for decades, African Americans have been largely excluded from the American middle class.

There is more in the budget that attacks what is left of middle class prosperity, like the proposal to eliminate the mortgage interest deduction in the tax code.

The White House bills this change as a “reform,” and has lined up the support of groups like the Center on Budget and Policy Priorities (CBPP), which argues that the mortgage interest deduction unfairly favors the rich more than the middle-class.

So of course, all right thinking Americans will want it eliminated.

But does the deduction favor the 1 percent?

Here is how the CBPP likes to present the facts. In 2012, 77 percent of the benefit of mortgage interest deduction went to households with incomes greater than $100,000. Some 35 percent of the benefit went to households with incomes greater than $200,000.

What the CBPP is actually saying is that the benefit is not targeted to the poor, most of whom do not own homes, or own very modest homes.

But would you say that a working  couple with children earning a combined $100,000 to $200,000 a year qualifies as “rich” in America today, or would you say they are some of the surviving middle class?

This is another assault on the middle class by a president who lives in the bubble of an elite education, gliding along a career path smoothed by the elite, guaranteed a long and very prosperous retirement among the elite.

Obama’s daughters will almost certainly finish their educations in Ivy League schools, shopping for husbands among the elite. The world will be their oyster, and good for them. But the children of the middle class, many unemployed or underemployed and saddled with massive student debt, will be lucky to find a job shucking oysters in the swell places where the elite dine.

In the 2008 campaign for president, there was a photo of Mr. Obama at a bowling alley, regarding the bowling ball in his hands as an anthropologist might regard some artifact from a lost civilization.

And that is how the president regards the middle class — a relic of no meaning in his life.

America is at war. It is a civil war, the middle class against the 1 percent. But it appears that large numbers of Democrats have finally understood this and are on the offensive. Republicans should join them in protecting Social Security and Medicare, and work to grow the middle class.

The obvious place to start is to shift the tax burden to those who have substantial wealth — the corporate and financial elite who have acquired that wealth by devouring middle class prosperity. The argument that their wealth is invested in growing the economy and building shared prosperity is patent nonsense.

Three measures would begin to turn the tide. The first is to eliminate the capital gains tax dodge, which taxes the financial gains of billionaires at 15 percent. The second is a tax on financial transactions, under consideration in Europe and being ferociously opposed by Obama’s new Treasury Secretary (a Wall Street errand boy). The third is to tax the offshore profits of American corporations.

Three things this president of the 1 percent, by the 1 percent and for the 1 percent does not propose

American Apartheid

Trapped in a Social Catastrophe

Mike Krauss

Bucks County Courier Times

The United States remains trapped in a slow moving social catastrophe.

Millions of unemployed, late middle aged Americans will never again have full-time, good paying jobs. More millions of the nation’s college educated young are unemployed or underemployed and saddled with debt. The number of children whose diet depends on food stamps is soaring. The nation’s infrastructure continues its descent to Third World status, as public education crumbles with it.

Political power flows from wealth. When wealth is concentrated, so also is political power. Wealth and political power in the United States are now so grotesquely concentrated as to threaten democracy itself.

An apartheid America is emerging: the wealthy few, served by a second tier of retainers (presidents, members of Congress, corporate media, etc), who facilitate the expropriation of what once was the greatest and most broadly shared prosperity the world had even known, as millions are reduced to poverty.

What can be done to arrest the decline?

Stop looking to Washington. Look to Main Street.

The most striking characteristic of the American people has been and remains its diversity, and the magnitude of that diversity. There is nothing to match it. If it can be enabled, that diversity will fire up the engine of American ingenuity and enterprise.

But Washington will not light that fire.

The place to enable and harness the diversity of America is in its cities, counties and states.

The key is banking.

American banking today is as concentrated and dysfunctional as Washington. Nine banks now hold 75 percent of all assets in the U.S. banking system. Yet the system fails in its most important function: the effective allocation of capital and credit into the productive economy.

The trillions of dollars pumped into the failed and bailed banks never got past Wall Street. They sit instead in the banks’ reserve accounts with the Federal Reserve, to prop up balance sheets that are more fiction than fact and make huge profits on the interest rate spread.

While American cities, schools, infrastructure and families disintegrate.

The U.S. banking system urgently needs an overhaul, and it is underway: the creation of a network of state, county and municipal “public” banks, modeled on the hugely successful Bank of North Dakota (BND).

Public banks, often referred to as “partnership” banks, are capitalized with public funds and assets, which are then leveraged as with any bank, to provide affordable and sustainable credit which is distributed into the productive economy in partnership with private, community banks.

Public banks are not retail banks (the BND has one office). They are run by professionals, paid as civil servants, receiving no mega salaries, bonuses or commissions as incentive for the kind of run-away risk taking that crashed Wall Street. Profits are reinvested in the loan portfolio or returned as non-tax revenue to the general fund of the jurisdiction that established the bank.

The BND has a current commercial loan portfolio of more than $2.9 billion and has returned an average of $30 million a year over the past decade to North Dakota taxpayers — in a state with a population of about 670,000.

Public banks eliminate the need for unproductive government “rainy day” funds, can provide disaster relief and low cost student loans, and substantially reduce debt service on municipal bonds and infrastructure projects. They do this by bidding down interest rates, or when the bank buys bonds, returning the interest paid by taxpayers to the taxpayers’ bank.

Public banks work counter-cyclically in the economy, maintaining credit flows during economic downturns, as has been amply demonstrated both in North Dakota, and nations whose economies were sustained by their public banks through the recession that devastated the U.S.

Finally, public banks can serve as the depository institutions for public funds and revenues, bringing billions of dollars back from Wall Street to Main Street, and begin to break the stranglehold the banksters have on the wealth of America.

You can learn about public banking at www.publicbankinginstitute.org