Coronavirus “rescue” bill sends $11 billion to develop Africa, instead of restoring huge cuts to programs for Americans

While critics of the Coronavirus Aid, Relief and Economic Security Act (CARES Act) bring up the $25 million for the John F. Kennedy Center for the Performing Arts, there is virtually no reporting of the $10.8 billion authorized for three African development banks.

African Development Bank Building

Funding for the Kennedy Center came with the stipulation it would help deal with fallout from the coronavirus pandemic. There is no such restriction connected to the huge sums for the African Development Fund (ADF), the African Development Bank (AfDB) and the International Development Association (IDA)..

The ADF and the AfDB are two related organizations that are supposed to fund development and poverty eradication efforts in Africa. The IDA is a subsidiary of the World Bank that lends money to poor countries and then forces changes in their financial and social structures to promote privatization.

These agencies have been criticized for failing to be effective. For example, the average Sub-Saharan African lives on just $1 a day, while developers of infrastructure often build projects of little value to these mostly tribal countries.

In February David Malpass told the World Bank/International Monetary Fund (IMF) forum that the Asian Development Bank (ADB), the AfDB, and the European Bank for Reconstruction and Development (EBRD) have a “tendency to lend too quickly and thereby aggravate the problem of country debt”. There are also hedge fund connections to create “securitization” of loans, including paid arrangements with Mariner Investment Group.

The President of the World Bank Group, Malpass criticized the AfDB specifically for its activities in Nigeria and South Africa. He urged “greater coordination among international financial institutions to coordinate lending and maintain high standards of transparency”.

Lawrence Summers

How did all this money become part of the virus bill?

The Center for Global Development (CGD) told Nancy Pelosi and Mitch McConnell in a letter that they must include funding for these groups, claiming that even after the virus is under control in the United States, it could come back if it surges in Africa.

Former Treasury Secretary Lawrence H. Summers heads the CGD board. A prominent member of the Trilateral Commission, Summers served as Treasury Secretary under President William Clinton. Other CGD board members include Judy Woodruff, Managing Editor of the PBS NewsHour. CGD was founded in November 2001 by another Trilateral leader, Fred Bergsten, ex-director of the Peterson Institute.

There are 115 total reported deaths from the virus thus far in the entire continent of Africa among its 1.216 billion population. That compares to 1,342 deaths in just New York State with 19.54 million residents. Africa is the last place to send aid to fight a virus which has killed 39,000 worldwide.

What else could Congress have done with that $10.8 billion that went to the international development banks?

We could have replaced the $9.2 billion cut from the budget for the Department of Education, which would allow us to:

In addition, we could restore $1.6 billion in cuts to the Department of the Interior, which eliminated 4,000 jobs, ended  funding for 49 National Historic Sites and decreased funding for land acquisition and the Cooperative Endangered Species Conservation Fund.

The following is the relevant text of the bill, which was included in the original Republican draft and approved unanimously by Congress:

‘‘SEC. 31. NINETEENTH REPLENISHMENT.

‘‘(a) IN GENERAL.—The United States Governor of the International Development Association is authorized to contribute on behalf of the United States $3,004,200,000 to the nineteenth replenishment of the resources of the Association, subject to obtaining the necessary appropriations.
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—In order to pay for the United States contribution provided for in subsection (a), there are authorized to be appropriated, without fiscal year limitation, $3,004,200,000 for payment by the Secretary of the Treasury.’’.
(2) INTERNATIONAL FINANCE CORPORATION AUTHORIZATION.— The International Finance Corporation Act (22 U.S.C. H. R. 748—314 282 et seq.) is amended by adding at the end the following new section:
‘‘SEC. 18. CAPITAL INCREASES AND AMENDMENT TO THE ARTICLES OF AGREEMENT.
‘‘(a) VOTES AUTHORIZED.—The United States Governor of the Corporation is authorized to vote in favor of—
‘‘(1) a resolution to increase the authorized capital stock of the Corporation by 16,999,998 shares, to implement the conversion of a portion of the retained earnings of the Corporation into paid-in capital, which will result in the United States being issued an additional 3,771,899 shares of capital stock, without any cash contribution;
‘‘(2) a resolution to increase the authorized capital stock of the Corporation on a general basis by 4,579,995 shares; and
‘‘(3) a resolution to increase the authorized capital stock of the Corporation on a selective basis by 919,998 shares.
‘‘(b) AMENDMENT OF THE ARTICLES OF AGREEMENT.—The United States Governor of the Corporation is authorized to agree to and accept an amendment to article II, section 2(c)(ii) of the Articles of Agreement of the Corporation that would increase the vote by which the Board of Governors of the Corporation may increase the capital stock of the Corporation from a four-fifths majority to an eighty-five percent majority.’’.
(3) AFRICAN DEVELOPMENT BANK.—The African Development Bank Act (22 U.S.C. 290i et seq.) is amended by adding at the end the following new section:
‘‘SEC. 1345. SEVENTH CAPITAL INCREASE.
‘‘(a) SUBSCRIPTION AUTHORIZED.—
‘‘(1) IN GENERAL.—The United States Governor of the Bank may subscribe on behalf of the United States to 532,023 additional shares of the capital stock of the Bank.
‘‘(2) LIMITATION.—Any subscription by the United States to the capital stock of the Bank shall be effective only to such extent and in such amounts as are provided in advance in appropriations Acts.
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—
‘‘(1) IN GENERAL.—In order to pay for the increase in the United States subscription to the Bank under subsection (a), there are authorized to be appropriated, without fiscal year limitation, $7,286,587,008 for payment by the Secretary of the Treasury.
‘‘(2) SHARE TYPES.—Of the amount authorized to be appropriated under paragraph (1)—
‘‘(A) $437,190,016 shall be for paid in shares of the Bank; and
‘‘(B) $6,849,396,992 shall be for callable shares of the Bank.’’.
(4) AFRICAN DEVELOPMENT FUND.—The African Development Fund Act (22 U.S.C. 290g et seq.) is amended by adding at the end the following new section:
‘‘SEC. 226. FIFTEENTH REPLENISHMENT.
‘‘(a) IN GENERAL.—The United States Governor of the Fund is authorized to contribute on behalf of the United States H.R. 748—315 $513,900,000 to the fifteenth replenishment of the resources of the Fund, subject to obtaining the necessary appropriations.
‘‘(b) AUTHORIZATION OF APPROPRIATIONS.—In order to pay for the United States contribution provided for in subsection (a), there are authorized to be appropriated, without fiscal year limitation, $513,900,000 for payment by the Secretary of the Treasury.’’.
(5) INTERNATIONAL MONETARY FUND AUTHORIZATION FOR NEW ARRANGEMENTS TO BORROW.—
(A) IN GENERAL.—Section 17 of the Bretton Woods Agreements Act (22 U.S.C. 286e–2) is amended—
(i) in subsection (a)—
(I) by redesignating paragraphs (3), (4), and
(5) as paragraphs (4), (5), and (6), respectively;
(II) by inserting after paragraph (2) the following new paragraph:
‘‘(3) In order to carry out the purposes of a one-time decision of the Executive Directors of the International Monetary Fund (the Fund) to expand the resources of the New Arrangements to Borrow, established pursuant to the decision of January 27, 1997, referred to in paragraph (1), the Secretary of the Treasury is authorized to make loans, in an amount not to exceed the dollar equivalent of 28,202,470,000 of Special Drawing Rights, in addition to any amounts previously authorized under this section, except that prior to activation of the New Arrangements to Borrow, the Secretary of the Treasury shall report to Congress whether supplementary resources are needed to forestall or cope with an impairment of the international monetary system and whether the Fund has fully explored other means of funding to the Fund.’’;
(III) in paragraph (5), as so re-designated, by striking ‘‘paragraph (3)’’ and inserting ‘‘paragraph (4)’’; and
(IV) in paragraph (6), as so re-designated, by striking ‘‘December 16, 2022’’ and inserting ‘‘December 31, 2025’’; and
(ii) in subsection (e)(1) by striking ‘‘(a)(2),’’ each place such term appears and inserting ‘‘(a)(2), (a)(3),’’.
(B) EMERGENCY DESIGNATION.—The amount provided by this paragraph is designated by the Congress as being for an emergency requirement pursuant to section
251(b)(2)(A)(i) of the Balanced Budget and Emergency Deficit Control Act of 1985.

Tulsi Gabbard is the co-sponsor of a terrific Social Security bill also endorsed by Mark Meadows – Trump’s new Chief of Staff

Talk about strange bill-fellows!

Mark Meadows

HR 860 (Social Security 2100 Act) has gained the endorsement of former Republican Congressman Mark Meadows. A founder of the House Freedom Caucus in 2015, Meadows was just named White House Chief of Staff by President Donald Trump.

This same House bill to modernize Social Security is co-sponsored by Democrat Congresswoman Tulsi Gabbard. She has hundreds of thousands of contributors in her active quest for the Democrat Party’s nomination for President in the November general election.

Unfortunately, the bill is held up in the House Ways and Means, House Education and Labor, and House Energy and Commerce committees.

Despite hundreds of supporters for passage of the bill, the Speaker of the House has not called for a vote in more than a year.

HR 860 establishes the Social Security Trust Fund to replace the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund.

  • It would provide an immediate increase for beneficiaries equal to 2% of the average benefit
  • HR 860 would set the minimum benefit at 25% above the poverty line
  • The law would change the way the annual cost-of-living adjustment is calculated to include medical and other expenses significant for seniors..
  • The plan raises the limits on non-Social Security income before benefits begin to be taxed. The new caps would go to $50,000 for individuals and $100,000 for couples, up from the current (1986 original) $25,000 and $32,000. This includes mandated RMDs, which cause double taxation for many.
Tulsi Gabbard

To pay for those changes to sustain the system through the end of the 21st century, the plan would also apply payroll taxes to wages more than $400,000, and gradually increase the contribution rate for both workers and employers to 7.4% from 6.2% of wages between 2020 and 2043.

This bill is backed by groups including the AFL-CIO, the National Committee to Preserve Social Security and Medicare and Social Security Works.

Rep. John Larson, D-Conn is spearheading the effort to pass this real reform. He currently has 202 members of the House ready to vote for it. He has also talked to Ivanka Trump and others in the White House and hopes for bipartisan support.

One needed area of support to get the bill passed will be the Senate, as well as the president. There are indications that the administration is at least considering the issue, Larson said.

Sen. Susan Collins, R-Maine, has also met with the bill’s supporters several times and she likes the approach.

But the big surprise is the  support for the measure by Conservative leader Mark Meadows.

The plot thickens when you realize Meadows replaced Mick Mulvaney as Chief of Staff.

Mulvaney has publicly pushed for radical benefit cuts to Social Security and Medicare as recently as two weeks ago. He was a co-founder of Freedom Works with Meadows, and the two began with the same negative views on so-called “entitlements”, but now find themselves on opposite sides.

When Trump exiled Mulvaney to Northern Ireland last week and brought in Meadows it provided a great relief to advocates for seniors.

After hearing from his mother last year on how crucial Social Security benefits and Medicare are to her budget, Meadows changed his mind in October, last year, and said he plans to work with Larson to come up with a Social Security fix.

“It is a bipartisan issue,” Meadows said in an interview

The National Committee to Preserve Social Security and Medicare (NCPSSM) is encouraging its members to raise the issue at debates and town halls. Passing HR 860 has been a taboo subject for media reporters so far this primary season.

Meanwhile, Mulvaney’s enthusiasm to take away people’s earned benefits mirrors the motives of Mitch McConnell, who has called for Social Security and Medicare to be “adjusted” (destroyed).  However, the Senate Majority Leader has met his match with Meadows, who will wield significant power as WH Chief of Staff, dealing not only with Trump, but also the Senate and House.

Why are so many in Congress, as well as the last five Presidents, so anxious to cut senior benefits by raising the retirement age, reducing Cost of Living Adjustments, or privatizing the insurance program? Reagan and Obama used commissions to urge reductions in benefits, while Trump, Clinton and the Bush duo sought cuts in their proposed budgets.

Nancy Altman, President of Social Security Works (SSW) explained “the private sector is incapable of providing the wage and health insurance that Social Security and Medicare provide as efficiently, universally, securely or effectively as the federal government.”

Insurance works best when the greatest numbers of people are covered. The only entity that can require that everyone is covered and pays premiums as soon as they start working is the federal government. That is one of the reasons both Social Security and Medicare work so well.

And that is why Mulvaney, McConnell, and other opponents of these programs want to end them. These programs put the lie to their ideological zealotry, which insists that the private sector is always better than government.

Altman said the new crusade against Social Security uses words like “reform” and opponents pretend to like the program.

Mulvaney, McConnell, and other opponents hide their straightforward ideological opposition. Rather, these opponents subversively seek to undermine confidence in Social Security’s and Medicare’s future by asserting that both programs are not affordable.

Worse, in their efforts to end Social Security and Medicare, they seek to turn Americans against each other. They tell us that seniors are taking from children, that people with disabilities are taking from seniors.

The public should cheer now that Mulvaney has been exiled to the Green Island. When explaining to a conference that he had plans for Social Security after the 2020 election, Mulvaney predicted:

In the long term you’ll have to make more major changes. The president has asked me to fix the easy stuff first.

In defending HR 860 and other bills to improve Social Security, Altman was adamant:

These opponents will not give up. And neither must we. Expanding, not cutting, our Social Security and Medicare is profoundly wise policy and is overwhelmingly popular.

But it will only become a reality if we keep our voices loud, reminding our political leaders that it’s voters, not donors, to whom they must account next election day.

Many of America’s biggest companies paid no federal income tax last year, or had credits under new corporate-friendly tax law

The Warner Estate – fancy digs in Beverly Hills for Jeffrey Bezos, the owner of Amazon, Blue Origin and the Washington Post. The modern King Midas (or Uncle Scrooge?) just paid $165 million – a new record for California RE.

What a guy! “Jeff” Bezos, the world’s richest person, has been paid the same $81,840 salary from Amazon for two decades.

Perhaps, because he needed extra cash last year to pay grocery bills, divorce lawyers and utilities, Bezos sold $1.8 billion of his Amazon stock, and kept about $1.44 billion after 20% federal capital gains tax.

Meanwhile, Amazon wage earners were hit with up to a 37% income tax. Even a single employee making $40k pays a higher rate than 20%.

The Bezos’ $1.8 billion sale, unlike Amazon employees’ wages, was also not subject to the 7.65% FICA tax, which supports Social Security and Medicare. That exemption for the rich saved him another $138 million.

All together, he avoided about $300 million in taxes – thanks to that 2017 capital gains tax rate change, passed with the combined support of Donald Trump, Mitch McConnell, Chuck Schumer and Nancy Pelosi.

Following the huge stock sale, Bezos still owned about 56,000,000 shares of Amazon  – each worth $2,135 today.

Despite a recent divorce settlement, he is still the richest person in the world with about $115 billion, and ex-wife Mackenzie is worth $38 billion, making her the third richest woman in the world.

At this point, my corporate-crony-loving friends are thinking:

Bezos may not pay much in taxes, but Amazon is still a big tax payer, even though the bipartisan tax bill also “reformed” the corporate tax rate from 35% to 21%.

Congress and the White House promised that drastically lowering the corporate tax rate also meant removing corporate loopholes in the final bill.

Guess what? The government lowered the rate, but the tax avoidance continued.

In millions of dollars, the following are what big companies earned in IRS credits, instead of paying corporate income tax last year for 2018 profits. The red percentages are the minus income tax rate they paid.

Federal Income Tax Paid in 2018*

Company Profit Credit Tax Rate
Amazon.com $10,835 -129 -1.20%
Delta Air Lines $5,073 -187 -3.70%
Starbucks $4,774 -75 -1.60%
Chevron $4,547 -181 -4.00%
General Motors $4,320 -104 -2.40%
EOG Resources $4,067 -304 -7.50%
Occidental Petroleum $3,379 -23 -0.70%
Duke Energy $3,029 -647 -21.40%
Dominion Resources $3,021 -45 -1.50%
Honeywell International $2,830 -71 -2.50%
FedEx $2,312 -107 -4.60%
Deere $2,152 -558 -25.90%
American Electric Power $1,943 -32 -1.60%
Nvidia $1,843 -32 -1.70%
Williams $1,828 -83 -4.50%
Kinder Morgan $1,784 -22 -1.20%
Public Service Enterprise $1,772 -97 -5.50%
Hartford Financial Services $1,753 -18 -1.00%
Principal Financial $1,641 -55 -3.30%
Edison International $1,600 -57 -3.60%
Ally Financial $1,587 -12 -0.80%
FirstEnergy $1,495 -16 -1.10%
McKesson $1,477 -10 -0.70%
Prudential Financial $1,440 -210 -14.60%
Xcel Energy $1,434 -34 -2.40%
PulteGroup $1,340 -44 -3.30%
Molson Coors $1,325 -23 -1.70%
Devon Energy $1,297 -14 -1.10%
DTE Energy $1,215 -17 -1.40%
WEC Energy Group $1,139 -218 -19.20%
PPL $1,110 -19 -1.70%
Halliburton $1,082 -19 -1.80%
CenturyLink $1,041 -576 -55.30%
Ameren $1,035 -10 -1.00%
Brighthouse Financial $989 -166 -16.80%
Netflix $899 -22 -2.50%
CMS Energy $774 -67 -8.70%
Darden Restaurants $760 -7 -0.90%
Rockwell Collins $722 -40 -5.50%
Whirlpool $717 -110 -15.30%
Westrock $710 -4 -0.60%
Air Products & Chemicals $671 -17 -2.50%
MGM Resorts International $648 -12 -1.80%
Atmos Energy $600 -10 -1.70%
Eli Lilly $598 -54 -9.10%
Alaska Air Group $576 -5 -0.90%
Cliffs Natural Resources $565 -1 -0.10%
First Data $559 -121 -21.60%
DXC Technology $522 -6 -1.10%
IBM $500 -342 -68.40%
Celanese $480 -142 -29.50%
Activision Blizzard $447 -243 -54.40%
UGI $446 -3 -0.60%
Goodyear Tire & Rubber $440 -23 -5.20%
United States Steel $432 -40 -9.30%
Owens Corning $405 -5 -1.20%
Penske Automotive Group $393 -13 -3.30%
Freeport-McMoRan Copper $391 -75 -19.20%
Mohawk Industries $373 -6 -1.50%
Ryder System $350 -47 -13.50%
Aramark $315 -48 -15.30%
MDU Resources $314 -16 -5.10%
Tapestry $307 -24 -7.90%
Builders FirstSource $255 -2 -0.70%
Tenet Healthcare $251 -6 -2.40%
AECOM Technology $244 -186 -76.50%
JetBlue Airways $219 -60 -27.40%
DowDuPont $217 -119 -54.80%
Realogy $199 -13 -6.50%
AK Steel Holding $169 -1 -0.30%
Levi Strauss $145 -25 -17.30%
Trinity Industries $138 -19 -13.90%
Pitney Bowes $125 -26 -21.00%
ABM Industries $88 0 -0.20%
Avis Budget Group $78 -37 -47.40%
SPX $67 -4 -6.60%
Beacon Roofing Supply $63 -4 -7.10%
Andersons $46 -1 -1.20%
SpartanNash $40 -2 -4.10%
Phillips-Van Heusen $18 -31 -168.10%
Sanmina-SCI $16 0 -0.80%
Murphy Oil $12 -10 -84.10%
INTL FCStone $9 -10 -110.30%
Gannett $7 -11 -164.20%

* Rounded to millions of dollars – Source: corporate 10-K filings

The next time you are flying Delta or JetBlue, think zero taxes and zero seat room.

Your Starbucks latte may cost big bucks for fancy coffee, but remember just your single server may pay more total  income tax than the entire coffee giant with 2,818 locations – combined.

Did someone say last year was a fluke, and corporations like Amazon usually pay their fair share?

Wrong! Last year was the second year in a row that Amazon paid no income taxes. The projection for this year is they may fork over about a miserable 1% on $13 billion in profits.

One final note. That $165 million Bezos spent on his new Beverly Hills mansion was just 0.13% of his total fortune.

That means Bezos can afford 768 more $165 million estates.

And that includes setting aside dollars for the clock.

Of course, it would be a different story if he and Amazon had to pay taxes just like the rest of us…

Big business in India benefits from taxes and regulations that are forcing small competitors out of business – sound familiar?

Big business in India has adopted the tactic of eliminating competition through onerous regulations.

Many of us can remember the American corner grocery, local pharmacy, small bakery, tiny-herd dairy farm, one-person law or accountant firm. Tens of thousands of small companies have closed in recent decades, replaced by chains and their monopoly practices of poorer service and higher prices.

The three major reasons for the closings are:

  • Huge firms undercutting small firms with predatory pricing until they can no longer make a profit. Small town America has watched its main streets turn into business-dead zones as Walmart, Target, Lowe’s and other big box firms open nearby.
  • Refusal of banks to offer lines of credit or capital loans below amounts not needed by small businesses. The practice favors large firms, who might need $100 million, versus small firms that may only require $200,000. The first is approved, and the second refused.
  • Unbearable regulation and taxation that requires too large a staff for a small company to afford. The cost of accounting for a million-dollar sales operation, for example, is the same as a $100,000 firm.

Some two years ago the government of India – no doubt pressured by big business’ lobbyists – decided to “reform” its tax system by introducing the Goods and Services Tax (GST).

The GST quickly improved profits, but it has driven many small enterprises out of business and eliminated hundreds of thousands of jobs.

On Thursday, the GST Council will meet for the 36th time to revise the tax. And every time the GST is changed, businesses scramble to comply.

Chaired by Finance Minister Nirmala Sitharaman, the council may lower tax rates for electric vehicles, and is also likely to decide the valuation of goods and services in solar power generating systems and wind turbine projects. The sessions are held through video conferencing.

There are no plans to eliminate the tax, despite strong opposition in the country.

PHOTO: Ram Pratap, who lost his job as a powerloom operator earlier this year, poses for a picture inside a weaving factory where he used to work, in Panipat, India, Aug. 24, 2018.Ram Pratap, who lost his job as a power loom operator last year, because of the GST, posed for a Reuters photo inside the weaving factory in Panipat, India, where he once worked.

Nearby that abandoned plant, more than two dozen other workshops are locked from the outside, while dogs and cows roam through other abandoned factories.

Tilak Raj Bathla, who owned a tiny weaving factory in what was known the country’s “textile city”, said his neighbors, most of them unschooled, could not comply with monthly online filings required under the GST regime.

Meanwhile, some of Bathla’s customers and suppliers could not afford to hire accountants for a system, which has been amended more than 200 times already.

Others struggled to cope with delays in tax returns caused by glitches in the centralized software, Bathla said.

I have a GST registration, but I can’t work as my vendors and buyers are unable to comply with a complex tax structure, the 50-year-old explained.

His monthly sales had fallen to about 250,000 rupees ($3,511) from about 1 million rupees in the year following the GST passage.

Big firms have shaken off the effects of the change and are set to gain from a uniform tax regime.

A survey by the All India Trade Union Congress (AITUC) found that a fifth of India’s 63 million small businesses – contributing 32 percent to the economy and employing 111 million people – faced a 20 percent fall in profits since the GST rollout, and had to fire hundreds of thousands of workers.

The Centre for Monitoring Indian Economy, a Mumbai-based consultancy, said nearly five million workers lost their jobs over the year after GST was adopted. In Panipat, more than a third of the city’s 10,000 weaving units had closed or curbed production during that same period.

For Panasonic Appliances, India’s leading electric goods maker, GST has allowed cutting costs by 4 to 5 percentage points, for example. India’s consumer goods stock index has risen 26 percent in one year, outpacing the broader Mumbai market.

“GST has improved the competitiveness of the manufacturing sector,” Panasonic India CEO Manish Sharma said. Does he actually expect us to believe that fewer companies competing “improves” competitiveness.

In honor of Mr. Sharma we hereby reproduce the following from George Orwell’s 1984 Newspeak.

Appendix: The Principles of Newspeak

The Appendix of 1984 stands as Orwell’s explanation of New-speak, the official language of Oceania. Although Orwell felt that these ideas were too technical to completely integrate into the novel, they support the novel’s stance on language and thought in relation to the public’s acceptance of governmental control.

Newspeak is the official language of Oceania, scheduled for official adoption around 2050, and designed to make the ideological premises of Ingsoc … Newspeak is engineered to remove even the possibility of rebellious thoughts—the words by which such thoughts might be articulated have been eliminated from the language. Newspeak contains no negative terms. For example, the only way to express the meaning of “bad” is through the word “ungood.” Something extremely bad is called “doubleplus ungood.”

Newspeak’s grammar is arranged so that any word can serve as any part of speech, and there are three different groups of vocabulary words. The A vocabulary contains everyday words and phrases, as Orwell says, “for such things as eating, drinking, working” and so on. In comparison with modern English, these words are fewer in number but more rigid in meaning. Newspeak leaves no room for nuance, or for degrees of meaning.

The B vocabulary of Newspeak contains all words with political or ideological significance, specially tailored to engender blind acceptance of the Party’s doctrines. For example, “goodthink” means roughly the same thing as “orthodoxy.” The B vocabulary consists entirely of compound words and often compresses words into smaller forms to achieve conceptual simplicity: the English phrase “Thought Police,” for instance, is compressed into “thinkpol”; “the Ministry of Love” becomes “miniluv.”

The C vocabulary encompasses words that relate specifically to science and to technical fields and disciplines. It is designed to ensure that technical knowledge remains segmented among many fields, so that no one individual can gain access to too much knowledge. In fact, there is no word for “science”; as Orwell writes, “Ingsoc” covers any meaning that such a concept could possibly have.

The particularities of Newspeak make it impossible to translate most older English (oldspeak) texts into the language; the introduction of the Declaration of Independence, for instance, can be translated only into a single word: crimethink. Furthermore, a great many technical manuals must be translated into Newspeak; it is this bulk of translation work that explains the Party’s decision to postpone the full adoption of Newspeak to 2050.

China’s companies win the race for producing employment giants, dwarfing American firms like GM, Apple or Exxon

Longhua Subdistrict, Shenzhen

When you don’t count Walmart, the largest employers in the world, are in China, not the United States.

And the biggest firms in China are industrial and manufacturing companies, not a low-wage retailer

China National Petroleum (1,636,532), China State Grid (913,546), Foxconn (803,126) and Sninopec (667,799) together employ 4,021,003 workers.

Foxconn is well known in the U.S. for producing Apple phones in Longhua Town, Shenzhen, in the south of China.

Hundreds of thousands of workers (counts vary between 230,000 and 450,000) are employed in the walled campus of Foxconn City, one of many factory locations.

Like America’s Gilded Age company towns, Foxconn Campus includes 15 factories, worker dormitories, four swimming pools, a fire brigade, its own television network, and a city center with company grocery store, bank, restaurants, bookstore, and hospital.

Compare firms like Foxconn to the closest American industrial company – General Electric (313,000) – which has its workforce here and in China, according to a GE document:

GE China houses over 20,000 employees, 30 manufacturing bases, and more than 30 joint ventures, with a presence across 40 cities in the country. It also houses R&D teams in 8 cities in China. In 2017, GE’s orders in China amounted to US $8.1 billion.

One unfair tax advantage to America is that a firm’s China operations can help to avoid paying anything in support of our public needs. Our largest industrial employer may be a good example. The NY Times reported that between 2008 and 2015:

General Electric, International Paper, Priceline.com and PG&E, incurred a total federal income tax bill of less than zero over the entire eight-year period — meaning they received rebates.

But China’s dominance is not just in manufacturing and industrial employment, it far outpaces us in finance.

China has the largest major bank employment in the world: Agricultural Bank of China (491,578), Industrial Bank of China (433,048), China Construction Bank (370,415), Bank of China (311,133), and China State Construction (270,467).

Our largest bank, JPMorgan Chase, has 252,539 workers, many overseas.

These statistics lead to the conclusion that a socialist economic system, like China, does create jobs, even while guaranteeing healthcare and other services – benefits usually only for purchase in America. While China concentrates on increasing factories and employment in its own country, U.S. firms often do the opposite.

Meanwhile, China’s average wage is $12,000 in American dollars, compared to $6,900 in 2011, and $31,000 here. The government also requires employers to provide ten paid holidays, five to 15 paid vacation days, as well as up to 98 days of paid maternity leave, plus paternity leave that varies between 7 and 20 days. Workers must receive 30 days notice of layoffs, and sign an employer/employee contract.

China’s elected and appointed officials have the major voice in determining economic policy on a company-by-company basis. For example, products of China are free of VAT and other taxes when exported to the rest of the world. Imports are always taxed with the VAT, as well as tariffs that can often even double prices.

In the United States, the opposite is true. In recent years both political parties have allowed corporate interests to dictate public policy to government officials. And since corporations own all major media outlets, this corporate capitalism is promoted at all turns.

Most European nations have compromised on near-absolute control of government by corporations (U.S.) and absolute control of corporations by government (China). In varying degrees these countries attempt to blend the best of two economic/political systems.

Americans often cannot afford to pay for nursing homes, drugs, or childcare.

Chinese workers currently have lower pay, stricter working conditions, and face a government that controls most aspects of their lives.

Compromise, anyone, for the public good?

Name Industry Revenue
USD millions
Workers Nations
Walmart Retail $500,343 2,300,000 United States
China National Petroleum Oil and gas $326,008 1,636,532 China
State Grid Electricity $348,903 913,546 China
Foxconn Electronics $154,699 803,126 Taiwan
Tata Group Conglomerate $110,700 702,454 India
Sinopec Oil and gas $326,953 667,793 China
Volkswagen Automotive $260,028 642,292 Germany
Amazon Retail $177,866 566,000 United States
Agricultural Bank of China Financials $122,366 491,578 China
Gazprom Oil and gas $111,983 469,600 Russia
Industrial Bank of China Financials $153,021 453,048 China
Kroger Retail $122,662 449,000 United States
Berkshire Hathaway Financials $242,137 377,000 United States
China Construction Bank Financials $138,594 370,415 China
Toyota Automotive $265,172 369,124 Japan
Ping An Insurance Financials $144,197 342,550 China
Samsung Electronics $211,940 320,671 South Korea
General Electric Conglomerate $122,274 313,000 United States
Bank of China Financials $115,423 311,133 China
Exor Financials $161,677 307,637 Italy
Walgreens Boots Alliance Pharmaceuticals $118,214 290,000 United States
Daimler Automotive $185,235 289,321 Germany
China State Construction Construction $156,071 270,467 China
United Health Healthcare $201,159 260,000 United States
AT&T Telecom $160,546 254,000 United States
JPMorgan Chase Financials $113,899 252,539 United States
Japan Post Holdings Conglomerate $116,616 245,863 Japan
Honda Automotive $138,646 215,638 Japan
CVS Health Healthcare $184,765 203,000 United States
Ford Automotive $156,776 202,000 United States
BNP Paribas Financials $117,375 189,509 France
Costco Retail $129,025 182,000 United States
General Motors Automotive $157,311 180,000 United States
China Life Insurance Financials $120,224 170,517 China
Verizon Telecom. $126,034 155,400 United States
SAIC Motor Automotive $128,819 148,767 China
Allianz Financials $123,532 140,553 Germany
Apple Electronics $229,234 123,000 United States
Total Oil and gas $149,099 98,277 France
AXA Financials $149,461 95,728 France
Royal Dutch Shell Oil and gas $311,870 84,000 Netherlands United Kingdom
Glencore Mining $205,476 82,681 Switzerland
BP Oil and gas $244,582 74,000 United Kingdom
Exxon Mobil Oil and gas $244,363 71,200 United States
McKesson Healthcare $208,357 68,000 United States
Chevron Oil and gas $134,533 51,900 United States
Cardinal Health Pharmaceuticals $129,976 40,400 United States
AmerisourceBergen Pharmaceuticals $153,144 19,500 United States
Fannie Mae Financials $112,394 7,200 United States
Trafigura Commodities $136,421 3,935 Singapore
Workers line up, ready to manufacture Apple phones in China

World’s 19th largest economy – San Francisco Bay – now qualifies for Opportunity Zone status, because its median income is “only” $117,000

It’s tax season for the peons, but while you are wondering where your money is going, a few developers and bankers are chuckling.

San Francisco Bay has been designated an official Opportunity Zone – containing areas where you can invest, make a fortune and pay no taxes – income or otherwise. The IRS describes the deal this way:

Opportunity Zones are designed to spur economic development by providing tax benefits to investors.

First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.

… if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

In short, if you hold your investments and profits (could be billions!) for ten years or more, you pay no capital gains or any other tax during the ten years or when you sell.

Sea Cliff house, San Francisco

The goal of establishing Opportunity Zones is to get capital to struggling low-income census tracts.

So, how did the San Francisco Bay area qualify, considering its annual GDP is $748 billion, just behind the Netherlands’ $822 billion?

The answer – the Bay Area has many residents living below the poverty level of $118,000 for a family of four.

That’s correct. Not $11,800, but really, actually, $118,000.

The state decided that $100,000 average income would be the cutoff, resulting in these areas designated for the free tax ride:

The Bay has a median household income twice that of an average American, so the cutoff for creating a zone is twice as high. The richer the neighborhood, the more likely it will qualify.

Willard st., Philadelphia

Of course, this is nuts, so I decided to check out where I grew up (1918 E. Willard st., Philadelphia) and see if it made the cut.

No luck. The white house on right – the four-room row we rented – didn’t make it.

What’s behind this obvious ripoff of the taxpayers?

One answer is that Nancy Pelosi is the member of Congress representing San Francisco, and some of the world’s richest companies are headquartered in the Bay area.

These ultra-wealthy firms should be bottom-line happy, now that the government will boost their local economies, insulating rich shareholders from any extra expense.

This Bay Opportunity Zone area already has more investors than liver pills, and boasts the world’s richest firms. The following is a list of just the tech firms:

VAT is another big reason our factories are closed, and the good jobs have gone overseas

While the public is focused on tariffs and pundits are bemoaning the dangers of a “trade war,” our foreign competitors have the last laugh every day, watching our factories close and our colleges over-qualify future pizza delivery peons.

It doesn’t have to be that way. In fact, it’s easy to see a solution.

Here is one unfair trade example. Germany and the European Union charge a 10% tariff on cars they import from the U.S. We only charge 2.5% on cars imported from there into our country.

19% VAT in Germany on imports

That misses the bigger part of the story. In addition to their 10% tariff, Germany, for example, charges an additional 19% import Value Added Tax (VAT), bringing the total to 29% tax paid to the German government for expenditures that include “socialist” universal healthcare, expanded retirement benefits and subsidized higher education.

The U.S. has no VAT for public services. Business lobbyists oppose that tax system, complaining it is onerous to implement, but never explaining how they successfully do it in places like Romania, Slovenia or Turkey.

The result is an auto made and sold in the U.S.A. for $50,000 will cost $64,500 to buy in Germany. A $50,000 car made in Germany will cost $51,250 here. Surprise – not too many American cars on the Autobahn, but no shortage of dealers here for BMW, VW, Mercedes, Audi, Porsche and Opel.

Germany boasts 857,336 highly-paid workers in the truck and auto industry. That’s 3.5 times as many as the Big Three in this country. General Motors employs 97,000 people in the U.S. while Chrysler has 56,900, and Ford, 85,000 – a combined total of 239,000.

U.S. auto workers earn about $34 an hour – new hires far less. German auto workers average $67 an hour ($129,000 annually).

As an aside, while our streets seem clogged with foreign cars, did you ever wonder why there are so few foreign trucks?

The same politicians – who decry tariffs – decided decades ago to protect the American truck industry and imposed a 25% tariff (still in effect) on imported trucks. That tariff successfully keeps away foreign price competition from F-150 and Silverado pickups.

Even if we negotiate the elimination of all tariffs by all nations, the VAT will continue to strangle America’s ability to export goods.

In the EU example on this page most countries hover around 20% on imported goods from any nation outside the European Union. If we had the factories, that EU VAT would hit every tv, computer, refrigerator and espresso machine exported to them.

The Coalition for a Prosperous America (CPA) is asking Congress to improve the federal tax system to promote US trade competitiveness.

The group favors a strategic consumption tax:

…such as a Goods and Services Tax (GST), to improve America’s trade competitiveness. Currently, foreign governments charge US exporters value-added (VAT) taxes—averaging 17 percent globally—at their borders.

Most of these countries have reduced tariffs over the last 45 years—but replaced them with value added taxes. They use this new revenue to reduce other taxes and costs, and to fund national pension systems and health care.

The US is virtually alone in not collecting value added taxes on imports.

CPA said Congress should fix this foreign trade advantage “through an innovative and strategic consumption tax called a Goods and Services Tax.”

But Americans, especially the poor and working class, should not pay more taxes. Congress should therefore, at the same time, reduce or offset other domestic taxes and costs such as payroll taxes.

CPA suggested that a 13 percent GST could raise $1.4 trillion in revenue and fund “a full credit against payroll taxes, reduce personal income taxes, and provide a credit for healthcare costs.

US manufacturers would benefit from the cost reduction and receive a 13 percent GST rebate when exporting. Foreign companies would pay a 13 percent GST tax sending bringing goods into the US.

This sounds reasonable. The only folks who would oppose it are multi-national firms, who are sending our jobs and factories overseas, but those are the powers that seem to run Congress and have exerted extreme influence in the White House the past six administrations.

Click here for the text of CPA’s letter to the House Ways and Means Committee.

China also hits us with imported VAT, which could be as high as 16% standard, plus 3% National Education, 2% Local Education, 6% City Maintenance and 3% Construction services – a total of 30%.

Tariffs are hefty and additional.

Chinese VAT rates

Rate Type Which goods or services
16% Standard All other taxable goods and services since 1 May 2018
10% Standard Retail; entertainment; hotel; restaurants; catering services; real estate and construction, telephony calls; postal; transport and logistic. Since 1 May 2018
6% Standard Financial services and insurance; telephony and internet data; IT; technology; consulting.
3% Chinese National Education Tax
2% Chinese Local Education Taxes
6% City Maintance & Construction
3% Construction services

Trump keeps his enemies close, friends distant – the result confuses everyone, including his base voters

The average American could care less who is the President or which party has control of Congress, but everyone who watches the news is confused about what Donald Trump really believes.

stabbed
Trump should watch his back!

The only sure and consistent Trump initiative has been the 2018 Budget to cut taxes for big corporations – dropping their income tax support of public services from 35% to 21% of profits, and introducing a territorial system so that U.S. companies’ overseas earnings will be taxed at 0%. On the other hand, retirees will continue to pay income tax on their earned Social Security benefits.

Attribute that business subservience to the appointment of financiers Steve Mnuchin, Secretary of the Treasury, and Gary Cohn, National Economics Council Director. How could either of these fat cats promote campaign promises to rid us of Wall Street influence? Continue reading “Trump keeps his enemies close, friends distant – the result confuses everyone, including his base voters”