The financial sector, led by the banks, has always held the whip hand over its human customers. For example, in Virginia and other states, a creditor can insert a clause in a contract allowing it to get a judgment against the debtor from a court clerk, without bothering a judge with the need for a hearing. And when clever people fight their way past some provision, state legislators can be counted on to clear the way for the banks. Just look at the way the supposedly independent experts at the National Conference of Commissioners on Uniform State Laws fixed the rules on perfecting a security interest in personal property for banks, or the way the Tennessee legislature fixed the rules about deeds to help incompetent bankers. In re Akins, 87 S.W.3d 488, 492 (Tenn. 2002). Congress allows the rich and corporations to cram down their mortgages in bankruptcy, but even in the aftermath of the Great Crash and its horrific impact on millions of Americans, the parties united to deny regular people the right to do the same thing.

At the national level, we have the National Mortgage Settlement, which establishes the amount of foreclosure fraud banks can inflict on human beings in the form of the National Mortgage Settlement, as Dave Dayen shows here. President Obama allows his captured regulators to ignore national crimes committed by banks, like money laundering for drug cartels and terrorist states, manipulating LIBOR at enormous cost to millions, stealing from supposedly segregated customer funds at commodity brokerages, failure to file Suspicious Activity Reports on Ponzi Schemes like Bernie Madoff, and fraudulent sales of various forms of real estate mortgage-backed securities to pension plans, municipalities and small banks around the globe. Then, to cover the banks’ losses on these phony securities, federal and state governments rally to whip the debtors into submission and penury.

Next up, we have the overt sadists, @FixTheDebt and the entire panorama of austerity freaks, who believe that a good beating applied to the serfs will encourage them to get a job, or at least shut up about their loss of jobs, homes, pensions, 401(K)s, IRAs, job security, and their membership in the middle class. Then they tell us how much better things would be if only the rich and their mega-corporations and their off-shore money were not taxed. Congress and President Obama just love this perversion, and add the sequester, so that government workers can take huge pay cuts, kids can lose Head Start, research can go unfunded, and on and on, but heaven forbid airline travelers should be inconvenienced. This, even though there is a consensus among economists that cutting government spending will slow down the economy.

On top of that, Obama’s solution to the fake debt problem is to cut Social Security, Medicare and Medicaid. He longs to whip those old people and people who hope to get old for the benefit of the job creators, who really need tax cuts. Maybe people will die early from malnutrition or inability to obtain medical services, which will really cut those costs. That’s going to happen to those people who can’t get cancer treatments because of the sequester. Hey, if rich people can’t have their tax cuts, we need to balance that out by lashing out at the old and sick.

It isn’t only the rich and their politician servants who enjoy these sadistic perversions. Take a look at the comment section on any article about the national debt. It’s full of people ready to take a beating for their sake of their betters. Just look at the auto-tweets of the masochists who support @FixTheDebt; people apparently unable to see the connection between the plans of that astro-turf operation and their own lives.

In his excellent book, Taking It Big, Stanley Aronowitz describes the work of Wilhelm Reich in the 1930s on why people are receptive to authoritarianism:

If humans have no inner life, they can be manipulated at will by powerful external forces. Whether by design or by intuition, the fascists were extremely sensitive to those sections of the population that had already developed a sado-masochistic character but were largely apolitical, and for this reason, were prone to respond affirmatively to their reactionary appeals. P. 154.

There are way too many sadists in positions of unimaginable wealth and power holding the whip hand, too many enablers in Congress and the Obama Administration, and way too many financial masochists rushing to the front of the line for financial beatings. It’s past time for all of them to grow out of their creepy fantasies of domination and submission.

Jack Lew, the Treasury Secretary and former head of the Office of Management and Budget, testified before the Senate Budget Committee recently. His written testimony explains the priorities set by President Bipartisan, Barack Obama, who seems to think he was elected on the long-term Republican promise to balance the budget.

Lew tells us that Obama’s budget is based on his Grand Bargain offers to Speaker Boehner that couldn’t garner any Republican backing. Lew doesn’t explain why that should be a starting point for further capitulations. Lew mentions such balanced ideas as the Chained CPI. That’s the part where we slash at Social Security and raise taxes on the middle class by raising income tax brackets less than inflation. Lew explains the reason for this assault on the 99%: “The chained CPI is a more accurate measure of inflation in that it does a better job of reflecting the substitution of goods in response to relative price changes.” That is a lie.

The CPI is supposed to measure how much it costs to maintain your lifestyle. The Chained CPI measures the decline in your standard of living as you change your protein intake from an occasional piece of beef to Alpo. Lew thinks that’s not a problem because it’s all protein. And it’s not a problem for the administration’s rich clients, whose life-style is utterly unaffected by inflation. For the 99%, the Chained CPI assumes that you are just as happy with canned catfood as you were with fresh salmon.

Lew’s headline number is $580 billion in tax hikes. It dwarfs the impact of cutting Social Security, which is $130 billion. At the same time, we are increasing taxes by $100 billion by raising the brackets more slowly than actual inflation. So, we have an actual $680 billion in increased revenues. Let’s see what we do with those. You probably think it has something to do with helping the middle class, as Lew claims in the section labeled “Strengthening the Middle Class by Investing in the U.S. Economy”. That translates to More Trickle Down From President Bipartisan. He wants to increase funding for US agencies to promote trade, including the Trans-Pacific Partnership, and the Transatlantic Trade and Investment Partnership, the new NAFTAs, and will hurt even worse as we watch corporations erode our sovereignty. Then we recycle the money back to corporations that shift foreign production back to the US. We paid them to leave, through deductions available for moving out (which supposedly will be repealed), and now we pay them to return. But that’s not all the corporations won. Take a look at the budget, pp. 7-35, where you can see all the money going to corporations on its way to trickling into the pockets of the rich.

For the middle class there are some opportunities for training, and schools for four-year olds, an increase in the minimum wage (because the middle class now lives at the minimum wage), and help with recovery of child support. The end.

Here’s a quote from the budget:

The Administration believes in a balanced approach that cuts spending and reforms entitlements responsibly, but also raises revenue from tax reform that closes special interest loopholes and addresses deductions and exclusions ….

Let’s just skip the tax increases on the middle class and the destruction of their retirement benefits. Why do Lew and Obama think balance is a good thing? Did the people on Social Security and Medicare and Medicaid cause the Great Crash? Did they reap billions of dollars in benefits from the Reagan/Bush/Obama tax rate cuts? Did they steal from pension plans or from stock and commodities brokerage accounts? Did they manipulate LIBOR for their personal benefit? Did they launder money for drug cartels and terrorists? Did they need Get Out Of Jail Free cards from the fake prosecutors at the Department of Justice? Did anyone in the entire country vote for this guy thinking “Oh good, at last someone will make the tough decision to cut my Social Security and give the money to the rich and their corporations?”

I’m all for balancing the budget. Just do it on the backs of the oligarchs and corporations and their foundations and their offshore holdings of trillions and their professional minions who make it all possible. That’s fair and balanced.

Photo by wayne’s eye view under Creative Commons license

The Obama Budget Document includes 11 mentions of Chained CPI. Here are the first four:

In the interest of achieving a bipartisan deficit reduction agreement, beginning in 2015 the Budget would change the measure of inflation used by the Federal Government for most programs and for the Internal Revenue Code from the standard Consumer Price Index (CPI) to the alternative, more accurate chained CPI, which grows slightly more slowly. Unlike the standard CPI, the chained CPI fully accounts for a consumer’s ability to substitute between goods in response to changes in relative prices and also adjusts for small sample bias. Most economists agree that the chained CPI provides a more accurate measure of the average change in the cost of living than the standard CPI. P. 46

The first bold section tells us that Obama believes there is a bipartisan consensus that we have to cut Social Security and raise taxes on the middle class. I’m not seeing that in any segment of the political world except vicious jerks like the Club for Growth. I can’t wait to see the Hastert Rule operate in the House, forcing Speaker Boehner to admit that a majority of House Republicans thinks hiking taxes on the middle class and slashing Social Security is a terrible idea.

The second explains that this is good because when prices go up, or incomes drop, consumers can just buy some cheaper thing than the thing they really like. You can read a paper from the Bureau of Labor Statistics explaining this in detail here. The plain fact is that this is an outright admission of the utter failure of the consumption society.

The example you get is that if beef gets more expensive, you can substitute pork, without in any way affecting your life. In other words, the selections among beef, pork, chicken and catfood you currently make are assumed to give you a certain level of pleasure, but now you can’t have that level of pleasure. Either you eat less of something you like, or you just don’t get to eat it, and have to eat something you don’t like as much.

Suppose you lose your nice watch. If the price of your ideal watch has gone up for whatever reason, you get a cheaper watch, or no watch and use your phone. That nice watch you used to be able to have is now out of the picture, but that doesn’t matter because you can still tell time. That’s the magic of substitution.

There is an unspoken connection here: that your income is constant across all these time periods. That isn’t true either. People are losing their jobs and taking lower paid jobs. If you are still getting raises, they come in tiny increments every year. If you are retired, you get nothing on your savings, and little on any equities you might hold. To maintain your standard of living, you have to eat your savings or go into debt. Most likely, you can’t have nice things, so you get to substitute less nice things. No natural fibers for you, too expensive. So what? Just substitute something you don’t like as well, or do without.

There is one other key point: this analysis ignores the effect of substitution in oligopolistic markets. What is the free market for cell phone services or cable services? They are oligopolies. Your choices have nothing to do with the amount produced.Prices are not set based on the underlying cost of service, but upon whatever these people can get away with. They raise prices to maintain their profits. Your only substitution is to buy less service, in a downward spiral. Your life gets worse.

Of course, all this is irrelevant to the feral rich. Their income goes up as they suck out the money from you for your cell phone and your cable service and every other thing you buy. They don’t substitute for anything.

The real point of the Chained CPI is that you don’t get to live nicely. You can expect a declining standard of living. That is the message of your President and the oligarchy he serves.

The fifth mention of Chained CPI in the Budget explains that the switch to chained CPI will decrease the deficit by at least $230 billion over the next 10 years. This is the number in tables S-2 and S-3. P. 184, 186. Table S-5, p. 189, gives the number for Social Security: we are cutting payments to the elderly by $130 billion. Table S-6, p. 191, tells us that over 10 years the average savings is .1% of annual projected GDP. Table S-7, p. 193, gives the annual savings adjusted for population growth and some kind of inflation accounting. In those terms the total savings drop to $107 billion.

The last mention is in Table S-9. There is a line item labeled “Chained CPI: Adjust indexing and protect vulnerable populations”, which according to the footnote includes revenue effects. The ten year total is $230 billion, which includes Social Security cuts and $100 billion in new taxes that slug the middle class resulting from adoption of Chained CPI. That’s another chunk of not having nice things: you have to pay higher taxes, so forget that chicken, and buy a fifty-fifty mix of pink slime and hamburger.

Unless, of course you are in whatever the “vulnerable population” turns out to be. But don’t worry, even if you aren’t now, as inflation eats your savings and the Chained CPI cuts your Social Security, soon enough you’ll enter the vulnerable population. That’s already happening. This study says that 46% of Americans die with less than $10,000 in assets.

The President and the oligarchy are introducing the masses to their Brave New World of not-so-nice things. Or nothing at all.

A recent post by Ellen Brown at Web of Debt claims that US bank depositors could lose some of their money if the bank failed, citing this paperfrom the FDIC and The Bank of England. She quotes from the paper, bracketed material is her addition:

An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. …

Brown doesn’t mention the National Bank Depositor Preference Act, 12 USC § 1812 (d)(11). That law says that in a bank receivership, the depositors get first call on any assets. It seems almost impossible that a bank could lose enough money to cause losses to depositors. But I have other questions about the paper.

The Rosy Assumptions of the FDIC/BOE Paper

The paper is a joint exercise between the FDIC and the Bank of England. It is designed to help with the difficulties presented by international financial entities that are too big to fail. The parties agree that the strategy for dealing with a failed TBTF should “assign losses to shareholders and unsecured creditors”, p. 2, and there is where the problem arises. When you deposit money in a bank, the money belongs to the bank, and you become an unsecured creditor. You have the right to get the money back from the bank, but if it doesn’t have enough to go around, you are just one of many creditors. In the US, we ameliorate that problem through the FDIC, which insures your deposit up to $250K, and the distribution priorities.

Prior to Dodd-Frank, the FDIC only had the ability to take over a failed bank. According to the FDIC/BOE paper, under Dodd-Frank, the FDIC would take over just the parent company of the TBTF bank, leaving the subsidiaries in full operation. The assets of the parent would include the stock it holds in its subsidiaries. Those would be transferred to a bridge financial holding company and hopefully the subsidiaries would continue their operations under new management. The shareholders of the parent and probably the unsecured creditors of the parent would be wiped out.

The FDIC would evaluate the subs to make sure they are adequately capitalized, then transfer them into private hands. The FDIC/BOE paper says “By leaving behind substantial unsecured liabilities and stockholder equity in the receivership, assets transferred to the bridge holding company will significantly exceed its liabilities, resulting in a well-capitalized holding company.” P.6. Well, maybe.

Shouldn’t We Think About Derivatives?

The FDIC/BOE paper doesn’t use the word “derivatives”, and it’s not wise to worry only about the problems we’ve seen in the past. However, derivatives retain the ability to blow a hole in the balance sheet of a TBTF bank, as we saw in the London Whale trades. As an example, let’s look at JPMorgan’s balance sheet from most recent 10-K. Total deposits are nearly $1.2 trillion, and other debt totals about $950 billion of which some may be secured. Total net worth of the consolidated enterprise is $204 billion. The balance sheet includes an entry for trading liabilities, which includes anticipated losses on derivatives (10-K, p. 214). The figure was about $132 billion, of which about $71 billion is “derivatives payable”. P. 221. We get another estimate of exposure to derivatives from the OCC call reports on derivatives. According to the most recent figures , JPMorgan bank subs had a total credit exposure to risk based capital ratio of 228%. This is a crucial number:

Suddenly it looks like we are seeing political victories for progressives, on LGBT rights, on issues important to Hispanics, even occasionally on issues important to women. At the same time, we lose every single battle over economic issues. How is it that when polls show that a huge majority oppose cuts to Social Security, Democratic politicians like President Obama and Senate Majority Leader Dick Durbin are all for it, as are the Republicans? How is it that when Obama gets elected on a pledge to hike taxes on incomes above $250K, with a huge majority and control of the Senate, and a legislative situation where all he has to do is nothing and it happens, and then it doesn’t? How is it that the same bill continued a bunch of disgusting loopholes for the richest Americans and the corporations they control, like the NASCAR loophole that essentially only benefits one enormously wealthy family? How is it that within days of hearings showing the incompetence of JPMorgan’s derivatives traders the House Agriculture Committee cleared legislation to inflict derivative losses on the FDIC?

To answer that question, we have to get outside of normal discourse in the US, and take up a new word: oligarchy. Even though our pundit class doesn’t seem to grasp the possibility, it’s easy to see that this single concept explains the apparent discrepancy between wins on social issues and utter defeat on all economic issues.

We think of the US as the Shining City on the Hill of Democracy. Maybe so. But as Jeffrey Winters and Benjamin Page say in their article Oligarchy in the United States?, kindly made available by the author, it is perfectly possible for an oligarchy to function quite nicely inside a democracy. In this paper, and this somewhat more accessible version, Winters and Page answer three questions: a) what is oligarchy? b) how can you have an oligarchy in what is ostensibly a democracy, and c) how can an oligarchy function when there is such a large number of hyper-wealthy people? As to the first, they define oligarchy to mean rule by the richest citizens, a definition that follows Aristotle. This is from Politics, IV, viii:

For polity or constitutional government may be described generally as a fusion of oligarchy and democracy; but the term is usually applied to those forms of government which incline towards democracy, and the term aristocracy to those which incline towards oligarchy, because birth and education are commonly the accompaniments of wealth.

It’s easy enough for an oligarchy to work inside a democracy. Historically, the richest citizens had to fight to protect their wealth and power, with expensive castles and armies and alliances with other oligarchs. As the nation state evolved, the rich struck a deal: the state would take on the burdens of protecting property from foreigners, peasants and other oligarchs, and the rich agreed at least in theory to abide by the same rules as everyone else in the state. Of course, the rich played an important role in determining how those rules would be established. Winters and Page point to a number of provisions in the US Constitution that wet things up for significant control by the rich. Not least is Art. I, Section 10, which prohibits states from passing laws that impair the obligation of contracts, and the Fifth Amendment, which prohibits taking property without due process and just compensation. The Constitution protected wealthy slavers, awarding them extra votes so they could insure control in their home states.

Throughout our history, the richest among us have used their wealth to secure favorable laws. The full extent of that influence is obvious in hindsight, even if at the time other motivations may have seemed important. Laws that restricted voting may have looked like ways to enforce racial prejudice, but they also applied to poor whites as well. Poll taxes, property requirements and other requirements were designed to insure that undesirables couldn’t vote.

Turning to the question of coordination among the oligarchs, how can they work together when there are so many of them. The answer is that all of these hyper-rich people share three important interests:

1. Protecting and preserving wealth
2. Insuring the unrestricted use of wealth
3. Acquiring more wealth.

They don’t have to conspire to protect their interests. They just have to shut up and let a few of them manage the specifics. As an example, consider the Estate Tax. Its function is partly to generate revenue, but its social role is to break up large fortunes. The Walton heirs, a group which has done nothing to deserve great wealth besides belonging to the lucky sperm club, provides leadership for the rest of the oligarchy on this issue. They spend vast sums of money to insure that their children do not suffer the indignity of living on less than billions and billions of dollars of inherited money. You can count the members of the oligarchy who oppose the Walton heirs on this issue, and they do not oppose changes with the kinds of money and influence that the Walton heirs bring, only by cheap talk.

The oligarchs have armies of professionals to influence economic policy; Winters calls them the Wealth Defense Industry. These people see themselves as independent professionals, but they need patronage to maintain their positions, and they get it by providing research and advocacy for the policies and facts that support the views of their controllers. Just watch those supposedly independent lawyers espouse laughable positions in courts, and then watch those indefensible positions win in supposedly independent courts. The same is true of economists and accountants and pretty much any profession you can name.

Winters and Page have some thoughts on the makeup of the oligarchy in the US, but their attempts rely on simple measures like income and wealth alone, and are not completely convincing. Part of the problem is that it is difficult to analyze the patterns of influence with a few raw numbers and simple measures of concentration of wealth and income. There is no obvious way to measure the power of working through corporations, foundations, think tanks, and even universities, which bring a deep range of pressures to bear on government officials. But even the raw numbers show that the power and influence of the rich is enormous, and much greater than any other segment of the population.

It’s only recently that the Oligarchy has lost interest in the bargain about following the rules. Entire industries are off limits for prosecution. Rules are randomly changed to favor the interests of the rich. And worst of all, democracy itself isn’t working. We used to operate under some general form of majority rule. That is not the case in either house. In the House, under the Hastert Rule, the Speaker, John Boehner, will not present a bill that doesn’t have the support of a majority of his party. That means that a minority of the House can prevent any bill from being heard. That minority comes from small states in the most conservative parts of the country.

The Senate operates under rules that allow a single Senator to stop a bill in its tracks. A minority can prevent discussion of any bill. That’s bad enough, but the same rule applies to appointment of judges and the officials in policy positions. These require the advice and consent of the Senate, but again, a minority can prevent consideration of even routine appointments for any reason or for no reason. That means that we do not have judges in many courts, and that the President cannot govern with the people he thinks best.

These matters are largely the fault of the Republicans, who are the party of the rich, the oligarchs. But at least in the Senate, the Democrats could change these rules. They refused to do so in the face of the bad faith of the Republicans. It’s at least as much the fault of Harry Reid as it is the fault of the party of the rich.

The primary impact of this leverage in the hands of the minority is on economic issues. The oligarchy is just as divided as the rest of the population on social issues, like immigration, LGBT rights, women’s issues and similar non-financial matters. It turns out that, for example, some of the oligarchs have family or friends or are themselves LGBT. Their interests in wars and other kinds of issues are also divided. Because of that, democracy could theoretically work on those issues. It’s only those economic issues where the rich are on the same team, and they always win those battles.

And that’s exactly how things are working out. On matters of direct interest to the oligarchy, they win. You can have your silly laws about marriage or abortion as long as they get their way on money. It’s a lousy bargain, and it doesn’t have to be that way.

Cross-posted and slightly revised from Naked Capitalism.

Last week, the House Agriculture Committee voted to cut regulation of derivative transactions, and to insure that derivative transactions could take place inside FDIC insured banks. Six Democrats voted for the bill according to Gaius Publius at AmericaBlog, including Ann Kuster NH-2, one of those true progressives supported by the likes of EMILY’s List. It certainly is discouraging to see the party that claims to represent the interests of everyday Americans holding hands with the banksters.

One of the bills deletes a provision of Dodd-Frank that requires banks to put their derivative business into a separate corporation with its own capital base. That way the derivatives won’t pose a risk to the FDIC insured bank affiliate. Jim Hines, D-Goldman Sachs supported this bill. Zach Carter at HuffPo gives a good description of the money behind the vote here, which, by the way, was 31-14. In other words, this bill was so rotten that eight Republicans couldn’t stomach it.

This preposterous legislation comes the week after Senator Carl Levin ripped JPMorgan Chase and the Office of the Comptroller of the Currency to shreds over the billions of dollars lost by the London whale traders. New York Times writer Floyd Norris reminds us of one of my favorite parts of the Report issued by the Senate Permanent Subcommittee on Investigations. Bruno Iksil, the whale himself, made a presentation to senior management on January 26, 2012, offering a strategy to deal with the losses in the portfolio which at the time were about $400 million.

Mr. Iksil’s presentation then proposed executing “the trades that make sense.”
“The trades that make sense:
Specifically, it proposed:
• sell the forward spread and buy protection on the tightening move
o Use indices and add to existing position
o Go long risk on some belly tranches especially where defaults may realize
o Buy protection on HY and Xover in rallies and turn the position over to monetize volatility”

This proposal encompassed multiple, complex credit trading strategies, using jargon that even the relevant actors and regulators could not understand. Because the traders themselves declined the Subcommittee’s request for interviews and were outside of the Subcommittee’s subpoena authority, the Subcommittee asked other current and former CIO personnel to explain the proposal. Ina Drew, CIO head, told the Subcommittee that the presentation was unclear, and she could not explain exactly what it meant. Irvin Goldman, then the CIO’s Chief Risk Officer, told the Subcommittee that the presentation did not provide enough information to clarify its meaning. Peter Weiland, the CIO Market Risk Officer, offered the explanation that Mr. Iksil was basically describing a strategy of buying low and selling high. Report at 74, footnotes omitted.

Norris says he didn’t understand it either. His conclusion is that these people are out of control, their banks are too big to manage, and that they should be broken into small units that don’t threaten us all with financial annihilation. He points out that fraud flourishes when management doesn’t understand what the help is doing. I think he misses an important point. Often the help has no clue either.

In fact, one big problem is that the skills it takes to advance in management rarely have anything to do with the technical skills it takes to run a business. Can you imagine the head of an IT department writing trading algorithms? Or the head quant managing a portfolio of failed small business loans? The people who climb the greasy pole to the C-Suite have a set of skills visible in alpha males and females in baboon tribes: a drive to dominate and unwavering confidence in their intelligence. Trot one of these people out in front of a Congressional Committee consisting of beta males and females and watch the betas bow and scrape. Of course, it doesn’t hurt to have a set of cufflinks with the Presidential Seal on them.

So, our beta Congressionals of both parties, those who lust after bankster money, like Democrat David Scott, GA-13, who has raised more than $1.7 million from the financial sector; or like Jim Himes, completely unable to separate his own background from his public duties; or just ideological slugs; they are all happy to help their Alpha brethren, enthusiastic, even to put the taxpayer on the hook for bank derivative gambling habits.

Floyd Norris quotes Nick Leeson whose reckless trades caused the bankruptcy of Barings Bank:

“Luckily for my fraud, there were too many chiefs who would chat about it at arm’s length but never go further,” Mr. Leeson wrote in his memoir. “And they never dared ask me any basic questions, since they were afraid of looking stupid about not understanding futures and options.”

I would love to have seen Levin ask Dimon what the heck Iksil was talking about. Not that it would have made any difference to the slavish Uniparty Congressional Betas.

The Business Roundtable is an association of the CEOs of America’s biggest companies. Their total revenues are more than $7.3 trillion, and they employ nearly 16 million people somewhere in the world. Their big priority, supported by millions from their corporate treasuries, is to cut corporate taxation from 35% to 25%, which is hilarious when you realize that most of their members don’t pay anywhere near either rate. Among the members are GE, Tenet Healthcare, PG&E Corporation, and a host of other tax dodging companies. And lest you think that matters, Carter Wood, Senior Communications Advisor at Business Roundtable, will be happy to tell you that whatever they pay is way too much, and they are all moving off-shore.

Taxes are the price we pay to live in a civilized society, you know, a society that respects the legal and property rights of GE, Tenet Healthcare, PG&E and the rest of the tax haters. A society that builds ports and roads so people and goods can move in commerce or across the ocean. If someone weren’t paying taxes corporations like Carnival Cruise line wouldn’t be able to operate at all. According to David Leonhart in the New York Times, Carnival has paid only 1.1% of its cumulative 5 year earnings in taxes of any kind. Its big benefit is that it is a Panama corporation, not an American company, (ignore that corporate headquarters in Florida) so under 26 USC § 883(a)(1) it doesn’t owe taxes. That provision was inserted by the Tax Reform Act of 1986, one of many spineless caves by the Democrats to Ronald Reagan’s tax cutting mania.

Anyway, as I was saying, 99% of us human Americans are allowed to exist so we can pay the taxes and serve in the Armed Forces that enable Business Roundtable corporations to operate around the world. It’s best if those taxes are paid by poor people, and the two major parties are hell bent on creating as many poor people to pay those taxes as possible. Mammon forbid that any dribble of taxation should fall on the feral rich, their thug corporations or their merely wealthy minions. Taxes are for you and me.

And with the job creators all lined up for reducing the nominal rate, they insist on revenue neutrality, the idea that when we reduce corporate rates, we don’t somehow increase the amount of corporate tax revenue, currently at absurdly low levels. They may be in favor of cutting some tax loopholes, but their good friends in Congress must be vigilant to insure that they don’t increase their share of the burdens of civilization. Problems, problems. Someone in this crowd is going to have to pay more, depending on which loopholes get closed. Maybe Carnival is a good choice, because it has such a crappy image right now. Or maybe we just cut the rates without cutting the loopholes. Leonhart isn’t sure the Business Roundtable supports ending loopholes anyway. They sure haven’t said they do.

So what do they support? Cutting Social Security, Medicare and Medicaid. Gary Loveman, President and CEO of Caesars Entertainment Corp., a gambling company, and Chair of the Business Roundtable Committee on Health and Retirement, published an op-ed in the Wall Street Journal explaining that we, presumably including his own gold-plated butt, can’t afford our government, so we should raise the eligibility ages for Medicare and Social Security, increase private sector involvement in Medicare, and cut Medicare and Social Security for anyone who has a pittance of their own until they are reduced to abject poverty and can’t afford to go to Caesar’s anymore. “We” need to cut Social Security and raise taxes by switching to Chained CPI. That ought to be enough to give Caesars a big tax cut. Oh wait. Caesars doesn’t pay taxes. It’s been losing money for years.

I think Loveman deserves a free trip on Carnival, assuming any of its ships is ever fit to sail again.