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Democracy, Incorporated

This article was written by in Society. 27 comments.


The following is at least as much opinion as fact, but if I say something that isn’t factual, please tell me.

Our American version of democracy has never been pure or particularly representative. From women’s suffrage to civil rights to lobbyist influence to rumors that can spread around the world before truth gets up off the couch, something has always gotten in between a citizen’s wishes and her elected leaders.

I had thought things were moving in a positive direction with the proliferation of the Internet. It’s never been easier to encounter dissenting opinions or do your own research. I’ve been having some healthy (and some insipid) debates through Facebook for the last couple of years, the kind that would’ve otherwise happened only with friends or co-workers. I like having those. It’s incredibly important to be available to hear other points of view. Not to mention the continued release of government data available for analysis by anyone. Together, we can help each other get to the truth.

A giant step backward

Yesterday, our Supreme Court ruled that since money is considered a kind of free speech, and because corporations are considered a kind of people, (I’m not sure I agree with either of those assumptions), then corporations are free to spend as much as they want to promote or condemn a particular political candidate.

The problem, from my point of view, is that corporations only ever have one priority: increase profits. And especially in America, they want to increase profits in as short a time-frame as possible. We don’t take a long view in this country, as they tend to do in Europe and Asia. That’s why, for example, the electric car took an extra few decades to go into production, and why we’re still dumping toxic chemicals into otherwise useful water. We avoid doing the right thing, because that would be expensive, and shareholders would not be pleased.

You and I, as individuals, are limited to donating $2,400 to a federal candidate. Corporations can now spend as much as they want. Not in donations, exactly, but in other creative ways.

Two days ago, the Shell Corporation would’ve been unable to produce and distribute a feature-length movie explaining that oil is the obvious and only logical way to fuel your car, and therefore you should vote for Sarah Palin.

Clearly, I made up that example. But I feel confident that if Shell could spend a billion dollars to elect a candidate that would help them realize $4 billion in profit, they would.

Is this a partisan issue?

(For the record: I’m registered Independent, and always have been. I tend to vote Democratic, because Republicans push me away with their talk about abortion, civil rights, lower taxes in the face of enormous deficits, and the general idea that individuals fending for themselves is more American than people coming together to help each other out.)

The Supreme Court didn’t have to make such a large ruling. They specifically asked to review the long-standing precedent while in the middle of a much smaller case. Conservative opinion holds a majority in the Supreme Court at the moment.

In 2008, Barack Obama was able to raise more than John McCain by switching from federally-supplied election funds to private sources. The Obama campaign raised a previously-unheard-of amount through “micro-donations”, such as the $160 I donated over the course of three or four months.

But corporations, because they are almost always motivated only by profit, will want Republicans to win more than they want Democrats to win, because Republicans tend to vote to protect profits more than anything else. And corporations will always have more to spend on candidates than individuals will.

I acknowledge that some corporations, while incapable of having their own ethics, are run by ethically-minded people. Not all of them want to see America continue its dependence on foreign oil, High Fructose Corn Syrup, ammonia-laced beef and unnecessary medical tests.

But really all it comes down to is who is willing to spend the most money in an election. It could be Starbucks, it could be Walmart, it could be Sichuan Tengzhong, that previously-obscure Chinese business that recently bought the Hummer brand.

Wait, foreign-owned corporations?

Yes. There’s no difference, according to the law. Chinese, Saudi, German, Australian, it doesn’t matter. Any corporation operating in the U.S. is equally unrestricted.

What about unions?

Yes, this recent ruling also allows unions and other advocacy groups to spend as much as they want in a given election. But who has more to spend, the American Federation of Teachers, or Microsoft? There’s no contest between unions and corporations.

Is there a silver lining?

One possible silver lining to what the SCOTUS did yesterday is that the already-existing problem of “corporate personhood” will be apparent to more people. I’ve never much liked that precedent. It’s illogical to equate a business with a person. A business is a collection of contracts and bank accounts. It doesn’t have a brain with which to generate opinions, so I don’t think free speech applies to it.

Additionally, before the millions start flowing, the Federal Election Commission will have to come up with updated regulations and enforcement processes. I don’t really know what to expect here, though.

What can be done?

To begin with, I’m throwing my lot in with a group who is pursuing a Constitutional Amendment to clarify that corporations are not people. Frankly, I’m worried for my country that it’s come to that: we have to write down that a business and a person are different things. But in general, once the Supreme Court has spoken, changing the Constitution is the last thing you can try.

Here’s a pretty good video explaining what happened, what it means, and what can be done:

Landmark Supreme Court ruling allows corporate political cash, Reuters, 21 Jan. 2010

Free Speech for People

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Following Barack Obama’s proposals announced earlier, Republican candidate John McCain has outlined the steps he would take as president to help spur the economy in the United States.

1. Eliminate taxes on unemployment benefits. Like the Democratic candidate, McCain suggests eliminating taxes on unemployment insurance to make sure that those individuals out of work have a better chance of paying their rent, mortgage, or other necessities each month. He stops short of extending benefits over a longer period of time.

2. Cut the capital gains tax to 7.5% for two years. This will inspire more investment in businesses, which in theory “trickles down” to the rest of the economy. McCain would also reduce the tax rates on IRA and 401(k) withdrawals (up to $50,000) to 10%, the lowest tier.

3. The government should only buy shares in private banks until they are sound. McCain isn’t happy about the plan to partially nationalize private institutions, but he seems to agree that Bush’s plan is solid in the immediate term.

4. The Treasury Department should guarantee 100% of all savings for six months. The FDIC recently increased the insurance limits on deposits to $250,000 from $100,000, which means more of your money is “safe” in banks. I don’t know many individuals who keep this much money earning miniscule interest rates in savings.

The original increase to $250,000 was a move that would help small banks attract deposits of large corporations that spread enormous amounts of cash across many institutions. McCain’s plan to insure without limit eliminates the need for large corporations to spread their cash around to smaller banks. This might result in more money being concentrated in a smaller number of banks.

I don’t think that this side effect outweighs the psychological benefit that might be presented with the idea that you can “entrust” banks and the FDIC with more of your money.

The price tag on John McCain’s outlined plan in $52.5 billion. What do you think of McCain’s ideas?

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Each major presidential candidate is making his presence known and ensuring his name is constantly in the media as next month’s election approaches. Recently, Democratic candidate Barack Obama announced six action steps to help heal the economy in this country and across the world. Five of these are “new” ideas, and one was originally proposed by Republican candidate John McCain.

1. Allow penalty-free withdrawals from 401(k)s and IRAs. For most early withdrawals from retirement accounts, the Internal Revenue Service assesses income tax as well as a 10% penalty. Obama would like to let these withdrawals in 2008 and 2009 slide without penalty. Income taxes would still apply.

This would benefit individuals already planning to make hardship withdrawals, or since the exemption would be retroactive to January 1, 2008, individuals who have already made hardship withdrawals. It shouldn’t be much of an incentive to choose a retirement withdrawals over other options, since the account owner would still owe income taxes on the amount of the withdrawal.

2. Don’t force retirees to take distributions from IRAs and 401(k)s at age 70.5. Normally, individuals are required to draw down their retirement plans. This is a good move when the market is significantly down from last year, as it is right now.

The required withdrawal amount for 2008 is a percentage of your December 2007 balance. Unfortunately, since the market has declined since December 2007, what was 10% of your balance in 2007 may be 20% of your balance today. Removing the forced minimum distribution will allow retirement nest egg balances to recover with the market, assuming the market does in fact recover.

3. Allow the Federal Reserve and the Treasury to lend directly to state and local governments. I’ve seen the yield on the Vanguard New Jersey Tax-Exempt Money Market Fund VNJXX), which invests in state and local bonds in my state decrease since I first invested in the fund a few weeks ago. This could be indicative of the financial problems that might affect this state.

This move could help stimulate local economies through giving states the ability to meet their obligations.

4. Provide a $3,000 tax credit in 2009 and 2010 to companies for every new employee they hire. This move has the possibility of offsetting the price of expensive American labor in comparison to workers oversees. But will this help create new domestic jobs? I’m not sure that $3,000 per hire is enough as an incentive.

5. Extend unemployment benefits and exempt the benefits from income tax. By adding 13 weeks to the unemployment coverage period, Obama intends to provide help for those unemployed for more than six months. Without the IRS collecting tax on unemployment benefits, unemployed workers will have more money to spend on necessities.

Unemployment rates are still historically low, even within this economic crisis. Is Obama preparing for higher unemployment if a recession continues? If the economy does not improve and more people find themselves out of work, will this plan still be affordable?

6. Any financial institute that accepts help from the government will place a 90-day moratorium on foreclosures. This would give the lender and borrower more time to work out an agreement, as long as the borrower is acting in good faith. I have mixed feelings on this. In many cases, homeowners made bad choices when purchasing houses they could not afford, but I can’t expect people to always know the financially correct decision when there was misinformation perpetuated by the mortgage industry.

I’ll take a look at McCain’s suggestions when I receive more information about his plans.

What do you think of Obama’s ideas?

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American Presidential elections are a great big spectacle of promises, speeches, mud slinging, rumors, misinformation and debates. A lot of people make their decisions based on soft aspects like a candidate’s personality. I like to look for the hard numbers that you won’t find on the nightly news, and I found a good summary of the Republican and Democratic tax plans’ proposed effects at CNN Money.

The difference is noticeable mostly for people who earn ridiculous amounts of money: the Obama plan would increase their taxes dramatically. But for most people, it looks like either choice won’t make much of an impact. For my family, it means a difference of only a couple hundred dollars.

There are some important caveats in that CNN article that you should read in full in order to be properly informed if this issue is going to play an important part in helping you make your election decision.

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Where Did You Come From, Where Did You Go (June 2008)

by Flexo

As June comes to a close, I’d like to thank visitors, readers, and commenters who enjoyed or contributed to Consumerism Commentary over the past month. I particularly like to mention the blogs and related websites that helped sustain Consumerism Commentary by linking here and providing paths for visitors to arrive. Here are the websites, not ... Continue reading this article…

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McCain Proposes Summer Gas Tax Holiday (Again)

by Flexo

The presidential candidates are fighting hard for your vote, and the economy seems to be one of the top issues. To soothe jitters over an economically turbulent near future, Senator Barack Obama proposed a second economic stimulus payment, similar to the one proposed and passed by President Bush and Nancy Pelosi earlier this year. It’s ... Continue reading this article…

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McCain vs. Obama: Your Future Tax Bill

by Flexo

The nonpartisan Tax Policy Center released a report yesterday that explains in detail the effect that a McCain presidency and an Obama presidency would have on the tax bill for American households. The data are stratified by income range and reflect a wide difference in stated policy between the two candidates. In addition to making ... Continue reading this article…

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Will a Gas Tax Holiday or Taxing Oil Companies Help the Economy?

by Flexo

To help Americans pay for the increasing price of a gallon of gas, Hillary Clinton is suggesting a suspension of the 18.4 cent per gallon tax on gasoline and 24.4 cent per gallon tax on diesel from Memorial Day through Labor Day while enacting a “windfall profits” tax on the oil companies which have been ... Continue reading this article…

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