Small(ish) Business

So, we have $13.7 trillion in debt and we want to borrow $700 billion more to give a 4.6% tax cut to wealthy folks? Why? Because these folks are small business owners who will create jobs and dump money back into the economy, right? Let’s examine these “small business owners” a bit closer. Just who are they and why do we need to borrow tons of money to support them?

Congressman Paul Ryan (R) WI, is the ranking Republican on the House Budget Committee and a go-to guy for budget and economic ideas in the GOP. Ryan claimed that “more than half of the people who pay these higher taxes are the small businesses of America.” That’s not true, but gosh, it sure makes a good soundbite.

What is clear, however, is that we’re not talking about all that many small businesses in the first place. The vast majority of individuals who report business income or losses are not making upwards of $200,000 a year. In fact, only 2 percent of all those reporting business income in 2009 will earn enough to fall in the top two brackets.

According to FactCheck.org, the Urban-Brookings Tax Policy Center projected that 663,608 taxpayers with business income, or business losses qualified for the top two tax brackets in 2009. Who qualifies as a “small business” along side your local corner cafe? Do you consider an oil refinery a small business? Well, yes they are according to the Small Business Administration, if they have 1,500 or fewer employees. How about your local “Guided Missile and Space Vehicle Propulsion Unit and Propulsion Unit Parts Manufacturing” plant? Well, they are a small business if they have 1,000 or fewer employees. A commercial bank can have up to $175 million in assets and the SBA thinks it’s a small business. Military weapons dealers can make up to $27 million per annum as a small business.

A large majority of “small business owners” actually have no employees other than themselves. In 2005, the nonpartisan Tax Policy Center found that of the 487,000 individuals who claimed business income on Schedule C, only 15% paid any wages. Sarah Palin has made more than $12 million since skipping out on her obligations as Governor of Alaska. She gets six figures for her speaking engagements. Is she a small business? Yes, she can make up to $7 million a year from her ghost-written books and qualify as a small business. Does Sarah Palin really need a tax break? Just how many jobs do you suppose she will create with several hundred thousand dollars in tax refunds? Dick Cheney? Yep, small business. In 2003, his wife reported $44,580 in business income from her consulting business. That qualifies the Cheneys as a small business. Dick Cheney’s net worth is estimated to be between $30 and $100 million. Are they out there creating jobs? How about Barack Obama? He has a book out; Of Thee I sing, A Letter to my Daughters. Small business? Sadly no. Obama donated the profits from his book to a scholarship program thereby losing his small business status.

A report by the U.S. Treasury Department estimates that “only 27 percent of all upper-income tax filers report business income that accounts for more than half of their wages. It’s likely that a small-business owner would make most of his or her income from the small business.“

The point is, the vast majority of the people on whom we would spend $700 billion of borrowed money are not small business owners and/or do not create jobs. By far, most of the people in the top tax brackets will invest the money we give them, likely in Asian companies, since that’s where the profit is now, or spend it on foreign-made cars and virtually none of it will make it back into the economy.

Native Montanans

We make a big deal out of being a native of Montana. We stick it on the bumper of our F-250, we proclaim it as verification in our letters to the local newspaper and our politicians use it as a natural endorsement. These are images of some real Montana Natives. These are bull trout that grew up in Koocanusa reservoir, traveled up the Kootenai River through Canada and up into the Wigwam River, which originates in Lincoln County, to spawn. These fish have existed here longer than even our most revered Native Americans. They evolved in Montana waters. Their genetics are tailored to Montana.

This is what we used to have in the Flathead River watershed. These fish were the apex predator in the river for 10,000 years before we began screwing around. We thought we knew better. We knew that people would rather catch a thirty-pound lake trout in Flathead Lake, or a puny 14-inch kokanee than a  25-pound bull trout from a riffle in the Flathead River. We decided to stick lake trout, lake whitefish, kokanee salmon, opossum shrimp and other nonnatives into our watershed. The result was predictable and we have all but lost these magnificent fish from the Flathead. Some still exist in neighboring river basins and they are still an amazing natural phenomenon. They can travel up to 250 miles to spawn in their natal streams. They require very clean and very cold water and so are a good indicator of the quality of our aquatic habitats. They are almost gone because we thought we could improve on what the natural world provided to us.

We still have a very narrow window of opportunity to save these Montana Natives in the Flathead Basin before their Montana-molded genetics disappear entirely. We now have less than 3,000 of these marvelous fish in the Flathead. We have lost nine of the twelve lakes that supported bull trout on the west side of Glacier National Park to invasion by nonnative lake trout. The Swan drainage is now imperiled by lake trout as well. FWP is charged with protecting and restoring our native fish by law, by treaty and by binding agreements and yet they have been reluctant to do what is right because they fear it may annoy some of their constituency. We need to let FWP know that there is support for saving these impressive native fish. We can’t afford to let this resource cease to exist due to our own neglect.

These striking photos were taken by Joel Sartore, a nationally known wildlife photographer, with the help of our own local endangered fish biologist, Wade Fredenberg of the US Fish and Wildlife Service. They were recently released through the USFWS National Digital Library and they give is a small glimpse of what we have lost in the Flathead and also just what we stand to gain by attempting to bring these spectacular Montana Natives back. Most of us have never seen a bull trout in the wild. Let’s hope that we don’t have to just tell our children stories about a time when 25-pound native fish used to swim in the Flathead River.

Book Report: Idiot America

Idiot America: How Stupidity Became a Virtue in the Land of the Free – Charles P. Pierce

Dinosaurs with saddles and Terri Shiavo’s brain. I know you have wondered from time to time, how we have come to a place in our history where the Republican Majority Whip can stand up on the floor of the U.S. House of Representatives and say that the 1999 Columbine school massacre occurred because, “our school systems teach the children that they are nothing but glorified apes who are evolutionized out of some primordial soup of mud.” Or, where a U.S. Senator can declare, “The Earth will end only when God declares it’s time to be over. Man will not destroy this Earth.” with a straight face and not be laughed out of his home state.

The answers to your questions are to be found in this short book by Charles Pierce, staff writer for the Boston Globe Magazine. Pierce traces the history of America’s cranks and snake oil salesmen through Ignatius Donnelly and the creation of Atlantis to Lou Dobbs and the NAFTA Superhighway. He follows the conspiracies of the Masons and Templars to the explanations of street-corner conspiracy theorists in Dealey Plaza. How did we come to believe that there are secret tunnels beneath the Denver International Airport holding clandestine bunkers for the 2012 apocalypse? Why do we decipher the cryptic Masonic murals? And don’t get me started on “Bluecipher” the evil blue mustang sculpture at the entrance to DIA.

We used to love our crackpots and zealots. John Harvey Kellog developed a large following by advocating vegetarianism, whole grains, peanut butter and yogurt enemas, but he was a crank. He was crazy as a bedbug, and we loved him for it. Today, our lovable eccentrics have morphed into the likes of Rush Limbaugh and Glenn Beck and we actually believe the insane lies they spout. Ken Ham can now build a multi-million dollar Creation Museum and Noah’s Ark theme park in Kentucky to prove that the earth is only 6,000 years old and that there were teeny, tiny dinosaurs on the Ark. And, he can get $37.5 million in tax breaks to move the project along.

In his book, Pierce postulates the Three Great Premises of Idiot America:

1. Any theory is valid if it sells books, soaks up ratings, or otherwise moves units.
2. Fact is that which enough people believe. Truth is determined by how fervently they believe it.
3. Anything can be true if someone says it loudly enough.

In today’s world, fact is no longer determined by how much data or reason is behind a theory, fact is now determined by how many people you can get to believe your rant. If enough people can be made to believe that Saddam Hussein has weapons of mass destruction, it matters little whether or not there is a factual basis for the claim. If you can get enough support for the claim that “climate change is the greatest hoax ever perpetrated on the American people“, the science is irrelevant. We can morph Creationism into Creation Science and further to Intelligent Design, and if we can garner enough support for our idiocy the theories cannot be refuted by facts. Due to the advent of teevee and the Internets, every fanatic can now become an authority. The Protocols of the Elders of Zion was a turn of the century hoax by the Russian secret police purporting to reveal a master plan by Jewish leaders to control the world. The document was debunked almost before it was released, yet a Google search today will reveal more than 200,000 hits for sites analyzing the “truthiness” of the Protocols.

In Idiot America, “Pierce asks how a country founded on intellectual curiosity has somehow deteriorated into a nation of simpletons more apt to vote for an American Idol contestant than a presidential candidate.” This is a book you will want to pick up if you have ever wondered just how we lost faith in science and became a nation of “dittoheads” who can ignore every relevant scientific fact and seriously discuss whether our president is likely a Kenyan-born Socialist bent on putting all conservatives in FEMA concentration camps.

Who’s living longer? Not you, sorry.

Recommendations from the Presidential Catfood Commission are expected on Friday. The commission is charged with finding ways to balance the federal budget and reduce the deficit. “Specifically, the Commission shall propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015.” Among the recommendations forthcoming from the committee will be to raise the Social Security retirement age to 69 by 2075 based on increased life expectancy and to reduce payments to current retirees.

Okay, Wait… Wait… Social Security is not a threat to the budget, especially by 2015. Social Security is fully funded for another 30 years. Social Security is self-funded. Any reductions in Social Security will not affect the budget deficit one iota. Savings will only extend stability of the program beyond the next 30 years. The proposal would cut benefits to young people just entering the workforce by as much as 36%. Social Security benefits now average $13,000 per year and would be reduced even further by the plan. Cuts in cost of living increases would begin next year, adversely affecting current retirees. Do we really need to make cuts to our most popular government program when it does nothing to help the debt crisis or the stability of the program?

Now, let’s address this “life expectancy” thing. There seems to be a bogus theory floating around that we are all living longer so we need to increase the retirement age. That theory is wrong. People aren’t living longer, rich people are living longer. Over the last 25 years, the life expectancy of workers in the bottom half of the wage scale has increased by only 1 year. Life expectancy for those in the upper half of the scale has increased by 5 years. According to the Social Security Administration;

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Specifically, male Social Security–covered workers born in 1941 who had average relative earnings in the top half of the earnings distribution and who lived to age 60 would be expected to live 5.8 more years than their counterparts in the bottom half. In contrast, among male Social Security–covered workers born in 1912 who survived to age 60, those in the top half of the earnings distribution would be expected to live only 1.2 years more than those in the bottom half.

This graph pretty much says it all. If you are a lawyer, lobbyist or hedge fund manager with an easy lifestyle and access to better health care, you can expect to outlive your peers by nearly 6 years. If you are a Montana farmer with a bad back from tossing hay bales around for 40 years, sorry, you can wait a while longer to retire with fewer benefits.

Share and Share Alike… or not

Bank of America took $45 billion from the federal Troubled Asset Relief Program and $118 billion in loss guarantees for its crappy investments. “Bank of America repaid its TARP loans in December 2009, escaping the compensation limits imposed on companies that had received “exceptional” government assistance.” CEO Ken Lewis retired on Dec. 31, 2009 with a tidy retirement package worth $83 million.

Thomas Montag, president of global banking and markets at BOA makes $14,400 per hour. Not renewing the Bush tax cuts for millionaires and billionaires would cost Mr. Montag $644 per hour, less than 5% of his compensation. He would still make in the very ritzy neighborhood of $13,700 per hour.

We loaned Wells Fargo $25 billion through the generous TARP  program which they have since repaid. “Wells Fargo boosted its lobbying expenses to $2.9 million in 2009, a 27 percent increase from the previous year.”

In 2009, John Stumpf, CEO of Wells Fargo pocketed $21,340,547 or about $10,260 per hour in total compensation. In 2009, Mr. Stumpf was the highest paid of any financial industry executive. Not renewing the Bush tax cuts for millionaires and billionaires would cost Mr. Stumpf $470 per hour and leave him with measly compensation of only $9,790 per hour.

Under the Bush tax cut regime, “Employment grew at an average annual rate of only 0.9 percent from November 2001 to September 2007, as compared with an average of 2.5 percent for the comparable periods of other post-World War II expansions.” Those tax cuts didn’t create jobs and they ballooned the deficit.

In 2009, the poverty rate in Montana increased from 14.8% to 15.1%. We now rank 18th among the states in poverty. More than 150,000 Montanans now live in poverty. More than 1 in 5 Montana children live below the poverty level. President Obama talks of a “shared sacrifice” if we are going to reduce the deficit and create jobs and yet, his deficit commission is recommending that we reduce the tax burden on Mr. Montag and Mr. Stumpf and on corporations by 7% while increasing the cost of gas by 15 cents per gallon, removing your home mortgage and child credit tax deductions, making you wait until age 69 to retire, freezing pay for middle-class workers,  cuttting Medicare reimbursements and defunding NPR.

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You can argue about whether it is a good idea to drastically cut government spending during a deep recession and there are good arguments either way, but if it is something we are intent on doing, the cuts should proportionally hit those who are most able to pay. If the top 10% of the population controls 70% of the nation’s wealth, doesn’t it make sense that the sacrifice share for Mr. Montag, Mr. Stumpf and their ilk should be 70% while the bottom 90% of the populace should shoulder a share of 30%? What am I missing about this whole “sharing” thing?