Can Hillary Clinton Fix America's Economy?

The title to this blog post tracks the title of an article in the British magazine, The Economist.  As I have often noted, UK publications often seem to give more thoughtful coverage to America that one can find in American publications.  The analysis in this case urges Hillary to be bolder, yet nothing as dramatic as Bernie Sander's supposed cures for America's ills.  The piece also notes that Hillary has put forward the most detailed plans of what she would do and has striven to make the numbers add up - something in short supply in Sanders' proposals and totally missing in the various GOP candidates' voodoo economic proposals. Here are some article highlights:

Mrs Clinton is experienced. In an age of extremes she has remained resolutely centrist. Yet, rather than thrilling to the promise of taking the White House or of electing  or of electing America’s first woman president, many Democrats seem joyless..

And America as a whole is seething with discontent. It may dodge putting a populist, an ideological extremist or a socialist in the White House in 2017. But, if voters’ anger remains unabated, it will not do so for much longer.

Mrs Clinton needs a bold plan to counter this popular frustration. Alas, judging by her economic policies so far, she is more inclined to tinker. 

To gauge Mrs Clinton’s programme, start with the Clintonomics that her husband pursued in the mid-1990s. Broadly, it got the big things right by transforming a tax-and-spend party into one that took deficits seriously. Under Bill Clinton, the Democrats made peace with Wall Street and free trade, and agreed to ambitious welfare reform. Thanks to these sensible policies, and the fortuitous tailwind of higher productivity growth, the economy boomed and prosperity was shared. 

America today is more divided; its economy is weaker and beset by problems. Since 2000 most workers’ incomes have stagnated, even as those of the richest have soared. Scarred by the financial crisis, battered by technological change and globalisation, less-skilled workers have fared worst. Many have left the labour force (54% of over-25s with only a high-school education are in work, down from 63% in 2000). An opioid epidemic is lowering their life expectancy. 

The Democratic Party looks different, too. 

Faced with all this, what are Mrs Clinton’s ideas? A lesser candidate would have veered to the left. Yet, even as Mr Sanders has proposed a top rate of tax of almost 70% and wants to scrap the trade pact with Canada and Mexico, Mrs Clinton has largely stood her ground. When she sets out to create “strong growth, fair growth, and long-term growth”, her rhetoric is hard to fault. In her plans to make college more affordable, grant paid leave to parents, introduce a $12 federal minimum wage and increase infrastructure spending, she has the rudiments of an agenda that does not stray too far to the left.

But next to the ills they are supposed to correct, Mrs Clinton’s solutions too often seem feeble. . . . Sometimes, her policies are fiddly. Rightly fearing that some Wall Street banks are too big to fail, Mrs Clinton wants an extra tax on their debt. Making sure banks hold enough capital and scaling back the tax-deductibility of interest on all firms’ debt would do the job better and be simpler. 

Her plans for personal income tax, which would take the top federal rate to around 45%, are equally complex, as is a proposed change to tax on the capital gains of long- and short-term investors, which looks like a solution to a non-existent problem. 

Mrs Clinton can be bold when she chooses. She has proposed reforms to criminal justice that would lead to fewer non-violent offenders ending up in jail. This has attracted criticism, because it underlines how, in the 1990s, she backed her husband’s hardline views on crime. 

In fact, she should be willing to overturn applecarts more often. . . . .Losers from globalisation and technological change need more ambitious support, from wage insurance to retraining and help to relocate for work. A big expansion of the earned-income tax credit—a kind of negative income tax—would be a start. More generally, Mrs Clinton should aim for a tax system that is efficient as well as progressive by stripping out deductions, including popular ones like mortgage-interest relief. 

To be clear, we are holding Mrs Clinton to a higher standard than other candidates. She has released more detailed plans than anyone else and made more effort to make the sums behind them add up. But she needs a compelling pitch because, if Americans concluded that the only way to bring radical change was to elect a Trump, Cruz or Sanders, it would represent a disastrous failure of the political centre. 

We are also asking her to be ambitious just when Washington has been plagued by gridlock and obstruction for its own sake. Yet the mess the Republican Party has got itself into may present Mrs Clinton with a chance to reshape the nation. What a shame if her ideas were too small to seize it.

I would like to see Hillary be bolder while still focusing on what can actually be accomplished.  In addition, she does need to formulate a bold vision  can offset the lies and disinformation of the GOP which is still peddling the same failed voodoo economics of the 1980's. 

Churches Steal $71 Billion From Taxpayers, Spend Little on Charity

As I have noted many times before, I very much support the concept of taking way tax-exempt status for all religious denominations.  By granting churches tax-exempt status, every taxpayer in the country is being forced to indirectly subsidize churches they don't belong to and which may actively oppose the civil rights of many taxpayers - e.g., the Southern Baptist Convention which is anti-gay and anti-black.  The First Amendment right of freedom of religion by no means requires tax-exempt status for houses of worship.  Indeed, by forcing taxpayers to indirectly support churches that  attack and denigrate them, I would argue that such gifts of tax-exempt status actually violate the First Amendment.  So how is this exempt status justified?  Through the myth that churches are charities.  Unfortunately, most spend a pittance on charity work as a piece here demonstrates.  Here are article highlights:

[W]hat always slips right through the cracks are the tax benefits to religious organizations, which overwhelmingly support Republicans, and are estimated to cost taxpayers nearly double those of hidden off-shore havens. The Secular Policy Institute estimates:  

“If religious organizations (ie. churches, synagogues, mosques, etc.) were taxed like for-profit agencies, it was found that this could generate upwards of $71 billion per year in tax revenue…even if churches were merely held to the standards of other non-profit agencies, this could generate $16.75 billion in tax revenue per year.”  

According to Pew, folks affiliated with ties to religious organizations also overwhelmingly support the Republican Party: “Republicans lead in leaned party identification by 48 points among Mormons and 46 points among white evangelical Protestants, with younger white evangelicals (those under age 35) having similar partisan affiliation as their older counterparts.”

What is particularly egregious about the tax benefits going to religious organizations is that they receive these benefits, ostensibly, because they are charities. Researchers at Secular Humanism have calculated:  

“The Mormon Church, for example, spends roughly .7% of its annual income on charity. Their study of 271 congregations found an average of 71% of revenues going to ‘operating expenses’…Compare this to the American Red Cross, which uses 92.1% of revenues for physical assistance and just 7.9% on operating expenses. The authors also note that Wal-Mart, for instance, gives about $1.75 billion in food aid to charities each year, or twenty-eight times all of the money allotted for charity by the United Methodist Church and almost double what the LDS Church has given in the last twenty-five years.”

Religious organizations are not non-profits, and if they conduct charitable activities, those activities should be separated out from their normal finances, which should not be financed by the government. However, we know the Republican worldview is all about distorting religion to support their bizarre vision of science and reality – supported by a tax policy that enables their wealthy constituency to support their political efforts.

 Republicans talk about tax code reform.  A starting point would be to end this rip off of taxpayers by churches.  Only true charity operations should be tax-exempt.  Let churches start paying taxes on their revenues and on their properties.  The give away that tramples on the rights of non-church goers needs to stop.

Why the IRS Targeted Conservative Groups

 

For years I have found it ridiculous that far right "family values" organizations and similar groups have been able to receive tax-exempt status as either "charities" or "educational" organizations when in reality they engage in political activities 24/7.  Here in Virginia The Family Foundation is a prime example and at the national level there are numerous hate groups such as Family Research Council, American Family Association and others which are tax exempt.  It is beyond ridiculous that taxpayers are indirectly supporting these foul organizations that are anything but charitable in any sense of the word.  They are political operations first and last.  The same holds true for many of the equally insane and vicious Tea Party organizations.  A piece at CNN looks at why the IRS would focus on some of these organizations in enforcing the tax laws and IRS Code which bars non-profits from any significant political activity.  Here are highlights:

The IRS watchdog is set to release documents this week that will reveal fresh details on why the IRS picked on conservative groups that were seeking tax-exempt status. The tax agency has apologized and given a rudimentary explanation.   Here are some questions and answers that throw light on what happened.

What does the IRS have to do with charities anyway?
 
The IRS has to make sure that charitable, education and religious groups -- that don't have to pay taxes on their operations -- are not scamming the federal government. The IRS gets 60,000 requests each year from such groups seeking tax-exempt status, according to Lois Lerner, director of the IRS's exempt organizations office.

Most charities are tax exempt under the 501(c)(3) category. The classification prevents groups from getting directly involved in politics, because donors can deduct contributions from their income taxes. Groups that want to dabble in politics can also apply for tax-exempt status under a different category called a 501(c)(4). This status allows the groups to campaign and participate in elections, as long as it's not their main purpose.

So why was the IRS digging into these groups? 

The number of 501(c)(4) applications more than doubled to over 3,400 in 2012, compared to 1,500 in 2010. The abnormally large number of applications was a red flag to the IRS.

Why so many?
 
It goes back to 2010, when a "Citizens United" Supreme Court ruling allowed unlimited spending by corporations and labor unions on political campaigns. It also said that political donors should be disclosed. That case prompted a slew of politically-affiliated groups, including Karl Rove's Crossroads GPS, to become charitable organizations under 501(c)4, which allows donors to be kept secret. 

How many groups were targeted?
 
The IRS says that 300 groups were set aside for extra review. About 75 of them had the words "tea party" or "patriot." 

Why did the IRS target conservative groups?
 
We'll find out more when the audit becomes public this week.

Among the legal work I do is at times assist groups in applying for non-profit status and filling out the applicable IRS forms and compiling the supporting documentation.   Being thus familiar with the regulations and requirements I suspect that the IRS was probably fully justified in giving higher scrutiny to groups most likely aimed at pure political activities.  I wish the IRS would audit The Family Foundation.