They're lying to us about the economy

Every time something big happens, I admit I wonder what all the turmoil is distracting our attention from this time!  During the almost-past Bush administration, we learned to pay attention to what's going on, but to pay more attention to what isn't in the headlines. 

Right now the headlines tell us it's recession! and possibly depression! with the market dropping! and high unemployment!  The financial system in a crisis!  Our economy (and the world's) is at serious risk!  Statistics are brought out to show us where we've gotten to and it's going from bad to worse with every breath we take.  Above all, we need to bail-out huge corporations and massive banking systems.  Like we haven't been donating our blood to them for years.

David Cay Johnston, former business and economy reporter for the New York Times talks about the other economy we don't get information about.  That's the real economy in which the government and corporate leadership collude in transferring money from the taxpayer to big business.  Johnston has documented this scam over the years.  We'd do well to demand more information from Congress about just how much the hidden handshake is costing us and costing us plenty. 

Some excerpts from a new interview with Johnston on New York's "Leonard Lopate Show" the other day.

Q:   You say that it's not that we live in a laissez-faire economy -- which is what people have often claimed -- but rather a rigged economy.  Who's rigging it?

David Cay Johnston:  Oh, the government!  Government has done all sorts of things.  For example:  we used to have usury laws.  For hundreds of years we've had usury laws that limit interest.  The Supreme Court in 1978 effectively undid these laws in a decision.  It said to Congress, "You need to address this."  Well, turn on the TV now and you can see Gary Coleman touting loans at 99.25% interest."  I used to know a loan shark who went to jail for 2 points a week.
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Q:  Has anyone done a calculation about how much of our tax dollars end up as business subsidies?

DCJ:  No, and that's one of the things I think is very important.  I spent a great deal of time -- and I hired a number of people --  to help me on "Free Lunch" [Johnston's book].  I can tell you to the dollar how much money the government spends on orphans and widows, but I cannot tell you how much it does in interest-free loans to Warren Buffett and give-aways to Donald Trump and the Steinbrenner family in many cases because this stuff is not systematically collected.  That's one of the very important issues going on in our economy.  It is how we mismeasure things.  I call it "economic pollution."  In the same way that a company makes a product that dumps toxic material into the river and causes environmental pollution, we have all sorts of corporations out there that are engaged in economic pollution, spewing damage on the economy from their operations.
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Q:  Later this month there'll be hearings about an additional $400 million in municipal bonds to help pay for the final construction of both new baseball stadiums here [New York].  What does the city get out of that? ...

DCJ:  Well, here's what you get for it if you're an ordinary New Yorker.  You're being taxed in part to provide additional luxury boxes -- they're going to have, I think, three times as many luxury boxes with their own private hallways so that the richest people in New York and corporations with tax deductible dollars buy their tickets to the stadium, whereas you and I have to pay with aftertax dollars to go there.  ...They go to the baseball game without having to deal with those of us who paid for that privilege.  We literally tax ourselves so that the corporate elite and the wealthy can be segregated from us at our expense.  These municipal bonds are supposed to be barred under a law ...  There should be flat prohibition against them.  The chief counsel's office of the IRS found a way to argue that there was a flaw in the regulations and therefore let them go through when all they had to do was simply not act on them!

Comments

[GreenHomeowner]

I enjoyed your latest piece on the economy and the hidden subsidies to corporations. The stadium bit caught my eye having tried to expose those subsidies in Richmond. Promoters called it a great deal for the city, practically free, until some of us started digging and finding bonds with public exposure and cost along with the commonly used trick, Tax Increment Financing (TIF), to rob the public coffers of future property tax revenue in order to pay for things like infrastructure improvements. Hardly serving the intent of the law for "public good" if TIFs are not used for transportation improvements, sewers, schools, etc., but to benefit bad public investment in private development. And this is happening all over the country, in cities with deteriorating centers, crumbling schools, and fiscal problems...they quietly add new TIF districts to help build stadiums and new condos!