Tax cuts for the rich killing the middle class

The title of this article says it all, but nobody could say it better than Berkley Bedell. Berkley is a businessman and former politician that dedicated his life to making things better for other people. You have to read his own story (click here).

Yes, America is badly hurt by tax cuts for the rich. There may have been a time to reduce taxes on the wealthy, but that time is not now. The wealthy are continuing to pay a smaller and smaller percentage of tax while the middle class struggles to pay bills on a daily basis. Reaganomics has gone too far. Supply side economic theory has done nothing but make the wealthy wealthier while impoverishing the middle class. Enough is enough!

By the way; my letter to the Providence Journal in support of Governor Chafee's tax plan finally was published. I applaud the Journal for publishing my thoughts, although I must say there is a story within the story that I will not repeat here. I must say that you need a very thick skin to publish these days. Individual opinion seems to mean less in this country. It seems like you have to belong to a "tea party" or something. Offer your opinion and you get swamped by brickbats that do not have a clue about what you are saying. The comments to my opinion piece were largely attacks on my person that had no foundation. The authors of those attacks have probably listened to talk radio for far too long and have no right to question my integrity.

If you have read this blog, you will know that many of Berkley Bedell's comments have been discussed here for some time. Berkley is the age of my mother and he makes me realize that there are still great Americans in this country with the age and wisdom to guide us forward. Thank you Berkley for you service to us all. Please make sure you read Berkley's story (click here).

tomtoak

Chafee's tax plan in Rhode Island makes sense

The following article was a recent letter to the editor of the "Providence Journal" which has not yet been published. It is my hope that they will quickly print this letter as day after day Governor Chafee is taking a beating in this newspaper over his proposals to raise taxes to close a budget deficit. How the hell do the Republicans always think that they can close deficits by reducing taxes for the wealthy? It's refreshing to see a governor take an approach that includes raising revenue as well as reducing spending.

Journal misses the boat on Chafee tax plan

I must say that the “Providence Journal” misinforms when advising citizens on Chafee’s tax plan (Editorial; “Chafee tax plan’s flaws” March 13, 2011). Consider this; Governor Carcieri reduced the number of state workers by 3000, reduced state pensions for future retirees, reduced state income taxes for the wealthiest, furloughed state employees for 12 days, and the deficit grew as did the unemployment rate. Something is not working, but what?

Fewer employees means more outsourcing of government work and privatization costs may very well be playing a significant role in driving deficits. We have seen in past “Journal” reports the exorbitant costs associated with outsourcing work to private concerns by some state agencies. Right-sizing state government may lead to significant savings and assist in improving pension liabilities.

The “Journal” comments that, “state employees continue to receive annual pay increases”; this is not true. Your editorial staff is always looking to balance the budget to the detriment of state employees. This will have a limited effect, and here’s why. From previous “Journal” reports, the estimated annual cost of each state employee is just under $100,000. With approximately 14,000 employees, all salary, fringe and pension cost approximate $1.4 billion. The state budget is estimated to be $7.5 billion this year. Employees account for around 18.5% of total spending. You can’t fix the problem with a focus on only 18.5% of cost, reducing income from the wealthiest while blindly outsourcing government work.

Additionally, you attack the sales tax as being “regressive” and “not exactly what you want to expand”. On the very same day, the “Journal” reports; “Federal Reserve Chairman Ben S Bernanke, at the National Governors Association winter meeting …… advised governors that lowering their sales tax rate while broadening the variety of goods and services to which the tax applies would result in a steadier stream of revenues, better positioning states ….” (“Chafee says he’s trying to ‘share the sacrifice’” March 13, 2011).

Governor Chafee is doing exactly the right thing, managing government with his brain and not a lopsided ideology. Does Chafee get it all right? No. The Chafee administration needs to really perform the “Big Audit” of privatized service cost which may be significantly driving deficits and study “right-sizing” government strategies. I would further advise Chafee to reduce the recommended 6% tax on car repairs to 1% and tax the yachts that line Narragansett Bay at the 6% rate. Until the toys of the wealthiest among us are taxed on a par with the taxes facing the middle class, Rhode Island is missing the boat.

Sincerely;

tomtoak

Public Pensions and the Fight Ahead

Governor Scott Walker, Republican ideologue from Wisconsin has done something that I did not think possible a few months ago. Walker has mobilized unions that will serve as counterweight to any Tea Party movement in this country. Governor Scott has ruined chances for Republican leadership in my estimation. Good for him; keep talking Scott Walker, Sarah Palin and Michele Bachmann, you guys are the best thing to happen to the Democratic Party since Franklin Roosevelt had to step in and clean up the Republican mess left by ideologues like you. Remember Republicans; Democrats won 5 consecutive Presidential elections and they only lost because a moderate for all of the people stepped forward to rescue the ideological bankrupt Republican Party. Dwight was a guy for all of the people.

Walker's attempt to strip employee unions of power has nothing to do with the reality of state financial burdens. Everyone needs to read the current McClatchy Report; Why employee pensions aren't bankrupting states. This is a great report that underscores the true reason why Republicans are trying to gain political capital by scapegoating public employees and attacking their pensions.

In Rhode Island, our new Democratic Treasurer, Gina Raimondo has had the nerve to say that she believes that retirees may not own their pensions nor do state employees. Oh really: Who the hell do you think put the money into the fund? Employees put 8.75% of their income and school teachers put 9.5% into the system over their careers of 30+ years, and the state matches that whenever they feel like it (this is the problem), and now you say that system is taxpayer money? Gina Raimondo, you border on delusional and do not belong in a position to speak for the citizens of a free country! You will not get my vote next time around and never will get my vote unless you apologize to all of the hard working public employees across this state.

Governor Lincoln Chafee will be proposing steps to help secure the state's financial position tomorrow. One recommendation will be to increase state employee and teacher contributions to 11.5% for an interim period until a comprehensive pension overhaul can be achieved. Rhode Island employee contributions are already the highest in the Nation and now the move is to increase that by 2% for teachers and 2.75% for state employees?

At first I was really angry at the idea, then I realized it may well be brilliant. The Congress just reduced contributions to Social Security for workers and employers by 2%. This is something that Obama should never have agreed to do. Republicans will use this loss of revenue to argue for privatization of social security. Chafee's plan will result in little change in take home income for public employees that pay into state retirement as well as social security. Money that formerly was going to the Federal Government will now accrue towards the state's retirement plan.

Union workers do not want their pensions decreased. My guess is that most union workers will see this as a step toward fully funding the promises. I must admit though, until the state of Rhode Island taxes all of the yachts in Narragansett Bay, I find it hard to take money away from the hard working middle class.

One last comment that I have already made a half dozen times before in this blog. Donald Carcieri, our past ideologue governor attacked pensions and attacked public employees every day for eight years. Carcieri took 3000 state employees out of the system and yet his final budget proposal called for a 9% increase (from $7 billion to $7.8 billion). Employees are not the problem as salary, fringe and benefits of all employees account for 17% of the entire budget on an annual basis. Public employee pensions are not bankrupting the system. Republican privatization practices are bankrupting the system (more money to their friends).

tomtoak

What Can I Say?

Let me start by saying that I am sorry for being away so long. I'm actually dizzy from the actions of the new Congress and disappointed that the voting public is so stupid. That's right; at times the voters are just amazingly stupid. You need only look to the re-election of Richard Nixon to know that.

There is so much to talk about since I've been away, I don't know where to begin. How about this new Congress that wants to cut $60 billion from this years appropriations. I have no problem with cutting $60 billion; I have a problem with where the bone heads want to make those cuts. John Boehner and crew want to cut the money from the Environmental Protection Agency, The Security and Exchange Commission, The Consumer Protection Bureau, and the Commodity Futures Trading Commission. What kind of memory do these Republicans have? Can't they remember that our economy was taken to its knees at the end of the Bush administration because of the pro Wall Street attitude? My dog has a better memory than the current Republicans in Congress.

How about the idiot in Wisconsin; that would be the Governor, who does not have the guts to negotiate with any union. What a weak kneed example of America patriotism! He blames the state employees while he cuts the taxes of Wisconsin's big corporations. Then this idiot expects only the public employees to pay the bill! Outrageous!!!!

I miss Keith Olbermann! You can always connect to him at his new site, the Fok News Channel.

On the positive side of reality, Senator Lincoln Chafee is now Governor Lincoln Chafee who provided me the energy to create this web site. If you want to learn more about this, just follow all of the Chafee links. I was there on election night when this Republican turned Independent garnered enough votes to become Governor (37% in a 4 way race). Since his election, he has done nothing but impress me with his approach to leadership. While Linc is no longer a Republican, he represents what Republicans used to be. One small example of Linc's efforts to deal with the deficit in this state; instead of attacking state employees and teachers, his administration did announce the reduction in payments to outsourced law firms by 15%. What a great idea! Privatization is killing government and this is the area where real savings can be found.

Tomtoak

Privatization and Potholes

How's your car doing? I think one thing that will pick up the economy in the next six months is repairs to automobiles because of the massive number of potholes in this state. How did we get here and why? I'm back to my favorite presidential impostor, Ronald Reagan. Now Reagan really had nothing to do with the way things were run in Rhode Island, but he did set in motion the the privatization notion.

A few decades ago, the State Department of Transportation had strategically located road crews available that would fix potholes within a few days of their appearance. As the privatization craze moved forward, news crews and politicians jumped on any story of impropriety; you know, so and so fixed his own driveway on state time with state equipment; serious problems no doubt. Do you think for a moment that this does not go on with privatized services? You know; private folks fixing something that is not the state's responsibility, but charging the state anyway. Consequently, the State reduced it's contingent of DOT work crews and decided that the private sector would do it better.

Think of the bureaucracy. In days gone by, a pothole would appear and some politician would hear about it and complain to the DOT. There would be a crew out there that day fixing the road. What happens today? Well; we need time to define the problem, then we need to develop specifications for fixing the problem. Now; we need to have another agency of government approve those specifications. Now; we have to go out to bid, giving bidders ample time to prepare their bids. Now; we open the bids and hopefully go with the low bidder. Now; we have to write a contract. The contract has to be reviewed by another government entity, a group called lawyers. Now; changes to the contract have to be approved. But that's not all; today the state doesn't have enough engineers of their own to manage the projects. Now; we have to hire privatized help to watch over the privatized help. The same steps taken earlier to find a contractor need to be repeated. Eventually, contracts are awarded and by this time your car is ready for the dump. Not only that, cost overruns are considered to be a part of the game and tolerated.

Now in days gone by, we had some trained state employees that did a fairly adequate job. At least when they were employed, our potholes didn't grow to the size of a Volkswagen Beetle. This is an important consideration when managing road systems. Fix the problems when they are small. More importantly, the state had ready labor at it's fingertips to perform an untold number of additional tasks that; you guessed it, are now privatized. Snowplowing, street sweeping, road grading, bridge maintenance, brush and tree removal, line painting and the list goes on.

Now the State DOT still has crews that do some of this work, but nothing like it did 20 years ago. Have our roads gotten better? Has the state saved money? Ever notice how long it takes to complete road projects these days when the privatized crews start breaking ground. You have all seen it; projects that should take 3 months take 3 years.

The state is now throwing stimulus money on the years of neglect. The neglect can be tied directly to the reduction in state capabilities, not the weather. If you think that our roads are being maintained for less money today than 20 years ago; all things being equal, I have some land to sell you in Florida.

tomtoak

Privatization Myths - Reagan's Mistake

I want to talk about what I feel is the largest misconception regarding the operation of government. That's right, privatization is in large part a myth. Ronald Reagan's disaster of leadership can be summed up in this one word, privatization. Reagan didn't invent it. It's probably been around for centuries, at least that was one story I read. What Reagan did was to move this issue to the front burner, because he felt that government was the problem. He created a commission to study the ways that government could be downsized by turning over jobs to the private sector.

I started preparing public budgets in the 1980s and I vividly remember the time when privatization was the answer to all of the country's ills. I used to fight for a 4 or 5% increase in my budget each year and I would be livid when I was told, you're only getting 3%. How could I make ends meet? As privatization became the rage, I noticed something quite different; now I was told you have to cut your budget 10%. That would be difficult if it happened one year; funny thing though, it kept on happening, year after year after year.

Why do people believe that private business can do it cheaper? We just went through a period when we saw story after story in the Providence Journal about the cost of the privatized work force. Some 650 employees were hired by the State through the private sector. It turns out that the overhead cost was over 100%. We were told that this was standard practice in the industry. Secretaries that could be at work for the state for half the cost were being paid by private entities, while the connected folks took off with millions. At least this story got reported.

When I retired from the State, my exit interview was focused on the costs of privatization and the sham that it is. I outlined my disgust with a system that would not hire any new employee, yet it would pay the private sector $850 thousand for a j0b that should only cost $200 thousand. Contractors being paid to watch over contractors is the way the Republican leadership sees things. In this case that I'm very familiar with, a contractor was paid $45 thousand to supervise the job site. If the state hired the construction engineers that it should have, that person could watch over a dozen construction projects. Hell, they used to! The entire project was bloated with contractor rip-offs. I had a good feel for this as I had just contracted for the building of my own home. My home was 3000 square feet and the contract was close to $200 thousand. This State contract involved a building that was a lot smaller and cost taxpayers $850 thousand.

Remember the $1million dollar lawyer the Department of Environmental Management hired for the conduct of a single case? Tell me that the Public sector can't do this cheaper and I'll call you a fool.

How about "Blackwater", remember them? They just changed their name because of their incompetence in Iraq. Iraq has to be the first outrageously privatized war in history. What do you think about paying a mercenary $500 thousand each year for a job that was formally done by our own military? This is cheaper than paying a soldier? The head of "Blackwater" could not even tell Congress how much money he made, although he said it was over $1 million per year. This compares to the $160 thousand that General Petraeus was making. What about the no-bid contracts in Iraq? You remember; "Halliburton"!

Privatization merely replaces public transparency with a profit culture that is out of our view. It's out of our view until the private sector starts asking for bailouts! Ronald Reagan got it wrong and is partially responsible for today's financial disaster. Privatization as cost savings for government is in large part a myth. If you don't believe me, just google "privatization myths". Government is not the problem, the Reagan sheep are!

Blog On

Fiscal Problems and a Governor's Approach

The following post is a letter to the editor of the Providence Journal that the paper never printed. It outlines in a few words my disgust with the Republican administration's approach to handling a state's fiscal problems. Since the letter was written, over 1100 state employees were forced to retire because of disincentives forced upon the employees by changes to the retirement system. The fiscal deficit skyrocketed following the employees departure. The Governor at present is trying to repeat this feat with further changes to the retirement system.

To the Providence Journal:

I need to take a moment to comment on Governor Carcieri’s latest attempt to solve the states fiscal problems (“Governor’s planned cuts raise concern” Oct. 5, 2007). Let’s step back to look at the big picture. The state’s annual budget is $7 billion. There are 15,000 state employees and as reported in the Providence Journal, each position costs approximately $90,000 for salary and benefits. I’ll be conservative and use $100,000 as the cost for each employee. State employee costs therefore are $1.5 billion annually, or approximately 20% of the state’s budget.

Where is the other $5.5 billion? Mr. “Big Audit” Carcieri continues to target state employees and he continues to demonize them as being the problem. Well, they are a very small part of the problem yet they are always asked to solve the state’s fiscal crisis.

Fact of the matter is privatization practices have been killing the state. Exorbitant contracting costs and contractors watching over contractors are tolerated because it is viewed as “business friendly”. Everyone needs to remember that there are a lot of people getting very rich off of taxpayer dollars but those folks are not state employees.

It’s not about “downsizing” state government, Mr. Carcieri; why don’t you try “rightsizing” state government and find your savings from the $5.5 billion that is left over after paying your state employees?

Blog on