The New York Times Covers “Oligarch Welfare” – Tax Breaks for Private Planes, Yachts and More…

I’m pleased to say that the topic of oligarch and corporate welfare finally seems to be getting the much needed attention it deserves. While billionaires like Sam Zell (read my open letter to him) continue to spout nonsense about how the poor just need to be more like the rich, objective folks are catching on to the joke.

Ironically, the biggest welfare queens in America are the oligarchs and multinational corporations themselves, yet many of them constantly like to blame growing inequality on the supposed character deficiencies of the lower classes.

Earlier this week, I wrote a very well received post titled, A First Look at a New Report on Crony Capitalism – Trillions in Corporate Welfare, as well as the post, Walmart Admits in its Annual Report that its Profits Depend Heavily on Corporate Welfare.

The New York Times has now thrown its hat in the arena with an article titled: A Nation of Takers?

Here are some excerpts:

In the debate about poverty, critics argue that government assistance saps initiative and is unaffordable. After exploring the issue, I must concede that the critics have a point. Here are five public welfare programs that are wasteful and turning us into a nation of “takers.”

First, welfare subsidies for private planes. The United States offers three kinds of subsidies to tycoons with private jets: accelerated tax write-offs, avoidance of personal taxes on the benefit by claiming that private aircraft are for security, and use of air traffic control paid for by chumps flying commercial.

I worry about those tycoons sponging off government. Won’t our pampering damage their character? Won’t they become addicted to the entitlement culture, demanding subsidies even for their yachts? Oh, wait …

Second, welfare subsidies for yachts. The mortgage-interest deduction was meant to encourage a home-owning middle class. But it has been extended to provide subsidies for beach homes and even yachts.

In the meantime, money was slashed last year from the public housing program for America’s neediest.

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American Feudalism – Obama Travels to Brussels with a 900 Person Entourage

Earlier this week, U.S. President Barack Obama arrived in Brussels for the E.U. summit, but he was not alone. In fact, he is reported to have traveled with an entourage of 900 people, no doubt leaving a gaping expense for U.S. taxpayers. Brussels itself also took at major hit, with the city spending over $10 million on security compared to the usual expense of roughly $700,000 for E.U. summits.

Of course feudal trips are nothing new to 21st Century American Presidents. As The Washington Post notes, George W. Bush took 700 people with him on a trip to London in 2003.

Oh, and if you think these trips don’t cost much, let’s not forget that the Obama family trip to sub-Saharan Africa was projected to cost the U.S. government anywhere from $60 million to $100 million.

From The Washington Post:

As President Obama and his entourage, which The Guardian estimated at 900 people, arrived in Brussels for the E.U. summit Tuesday, the Belgian capital braced for the significant expense of hosting him.

Brussels mayor Yvan Mayeur told The Guardian his city will spend $10.4 million to ensure Obama’s security during the president’s 24-hour visit. Hosting an E.U. summit typically costs the city about €500,000 ($690,000), the newspaper reports. “But this time round, you can multiply that figure by 20,” Mayeur said.

Obama’s security needs are not unique. When his predecessor, President George W. Bush, traveled abroad, he didn’t pack light. In November 2003, just months after the U.S. invasion of Iraq, Bush brought 700 people with him on a visit to London, which The Guardian at the time described as “worthy of a travelling medieval monarch.” The British government expected to spend around £5 million to protect Bush over his four-day London stay.

Not only do these trips require host cities to shell out considerable capital, they also come at a hefty price to American taxpayers. The Washington Post reported in June 2013 that the Obama family trip to sub-Saharan Africa was projected to cost the U.S. government anywhere from $60 million to $100 million.

Meanwhile, still barely a peep can be heard from the peasants.

Full article here

Liberty,
Michael Krieger

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Picture of the Day: Presenting the Average American Voter

A friend of mine sent this to me earlier today from a family vacation to Disney World. I had always thought that the most terrifying venue to observe your fellow Americans is the airport, but apparently Disney World takes the cake. I suppose that makes sense. In fact, my first article to ever get published on Zerohedge was titled Goodbye Disneyland, in which I compared the U.S. economy to the iconic theme park.

Now take a look and who will be reelecting all the corrupt idiots back into Congress later this year:

DisneyWorld

In Liberty,
Michael Krieger

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Revolving Door 2014: Former Head of the Federal Communications Commission Joins Carlyle

What better way to kick off 2014 than with the first (and most certainly not last) egregious example of USA banana republic revolving door crony capitalism. In this case, the crony in question is former head of the Federal Communications Commission (FCC), Julius Genachowski, who was earlier today named Managing Director and partner in the U.S. Buyout team for private equity giant Carlyle Group. Carlyle is so giddy about its latest example of regulatory capture, they issued a glowing press release on the matter. Here are some excerpts:

Tech & Media Business Executive and Former Head of U.S. Federal Communications Commission Will Focus on Global Technology, Media and Telecom Investments

Will Help Carlyle Further Capitalize on Internet and Mobile Revolution

Washington, DC – Global alternative asset manager The Carlyle Group (NASDAQ: CG) today named Julius Genachowski a Managing Director and partner in the U.S. Buyout team. He will focus on investments in global technology, media and telecom, including Internet and mobile. Mr. Genachowski is returning to the private sector after serving as Chairman of the U.S. Federal Communications Commission for four years, departing last May. He is an accomplished leader and expert in technology, media and telecom and brings to Carlyle almost 20 years of experience in the space. Mr. Genachowski joins Carlyle today and will be based in Washington, DC.

Since leaving the FCC, Mr. Genachowski has taught a joint class at Harvard’s Business and Law Schools, and served as a Senior Fellow at the Aspen Institute, the non-partisan education and policy organization. Over the course of his career, he has been a Special Adviser at General Atlantic, a board member and advisor to several public and private companies, and a law clerk to United States Supreme Court Justice David Souter.

Since inception, Carlyle has deployed on a global basis more than $18 billion in equity in investments in the technology, media and telecom sectors. Investments include Syniverse Technologies, Nielsen, Dex Media, AMC Entertainment, Insight Communications, CommScope and SS&C Technologies.

Congrats Mr. Genachowski, this is your big payday. There is no quicker route to success in the USSA than to go into “public service” regulating a massive industry and then flip back over to engage in M&A in the exact industry you were in charge of regulating. Congrats on the several months in which you pretended to be a professor.

In the past couple of years I have highlighted several instances of revolving door cronyism including:

In Journalism.
In Defense.
In Law Enforcement.
In Finance here,herehere and here.

Thanks for playing serfs.

Full press release here.

In Liberty,
Mike

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U.S. Treasury Department Guarantees Debt Issued by the Jordanian Government

In a bizarre announcement yesterday, the U.S. Treasury Department boasted that the government of Jordan had closed on a $1.25 issuance of sovereign debt guaranteed by the U.S. government. While I am not sure how common it is for our nation to guarantee these types of issuances (comments would be appreciated), the announcement represents a gigantic slap in the face on multiple levels.

From the U.S. Treasury Department’s press release:

This guarantee marks the conclusion of a process that President Obama set in motion in March 2013 when he visited Jordan.  During his visit, President Obama noted that a U.S. guarantee, “can help deliver the results that Jordanians deserve… to see their schools better, their roads improved, healthcare, clean water all enhanced, the training that I know a lot of Jordanians seek, particularly young people, to get a job or to turn entrepreneurial skills into a business that creates even more jobs.”  That vision was further affirmed by the signing of a loan guarantee agreement in Amman on August 14, 2013.

Did you catch that? The Treasury Department expressed its preoccupation with Jordanian healthcare on the same day it is revealed that the top hospitals in America will not accept Obamacare.

Oh, and good thing we are so concerned with Jordanian infrastructure spending. Meanwhile back in the USSA:

U.S.structure spending

I’m not done yet. More from the U.S. Treasury’s press release:

The U.S. government is committed to supporting Jordan’s efforts to provide critical services to its citizens as it enacts economic reforms to increase Jordan’s macroeconomic stability and  hosts more than half a million refugees fleeing the violence inside Syria. This loan guarantee also reinforces Jordan’s work with other donors, including the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD), to implement its economic reform agenda. 

Violence inside Syria. Violence which the U.S. government has been doing its best to escalate…

Just another day in the Banana Republic.

Full press release here.

In Liberty,
Mike

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How the CIA Enriches Warlords, Drug Dealers and the Taliban in Afghanistan

This article from the New York Times further solidifies the notion that we clearly have no idea what we are doing anywhere, whether it relates to the domestic economy or foreign policy. While the American citizenry remains unemployed and increasingly on food stamps, we are paying tens of millions of dollars to Afghan warlords and drug dealers so that they can build their “dream homes.”  My favorite line is: “the cash has fueled corruption and empowered warlords, undermining Washington’s exit strategy from Afghanistan.”   Makes sense.  We are simply exporting our domestic economic model abroad.  From the New York Times:

KABUL, Afghanistan — For more than a decade, wads of American dollars packed into suitcases, backpacks and, on occasion, plastic shopping bags have been dropped off every month or so at the offices of Afghanistan’s president — courtesy of the Central Intelligence Agency.

“We called it ‘ghost money,’ ” said Khalil Roman, who served as Mr. Karzai’s deputy chief of staff from 2002 until 2005. “It came in secret, and it left in secret.”

Kind of like Corzine at MF Global!

Moreover, there is little evidence that the payments bought the influence the C.I.A. sought. Instead, some American officials said, the cash has fueled corruption and empowered warlords, undermining Washington’s exit strategy from Afghanistan.

Payments ordinarily range from hundreds of thousands to millions of dollars, the officials said, though none could provide exact figures. The money is used to cover a slew of off-the-books expenses, like paying off lawmakers or underwriting delicate diplomatic trips or informal negotiations.

It is not clear that the United States is getting what it pays for. Mr. Karzai’s willingness to defy the United States — and the Iranians, for that matter — on an array of issues seems to have only grown as the cash has piled up. Instead of securing his good graces, the payments may well illustrate the opposite: Mr. Karzai is seemingly unable to be bought.

But the C.I.A. has continued to pay, believing it needs Mr. Karzai’s ear to run its clandestine war against Al Qaeda and its allies, according to American and Afghan officials.

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Wall Street: $474 Million, Detroit: 0

The more time passes, the more skeletons emerge from the closet.  So what’s the punishment for an industry that has literally destroyed countless communities across the American landscape?  Trillions in taxpayer bailouts and even more control over our government.  They say “it would’ve been much worse without the bailouts.”  Tell that to Detroit.  From Bloomberg:

The only winners in the financial crisis that brought Detroit to the brink of state takeover are Wall Street bankers who reaped more than $474 million from a city too poor to keep street lights working. 

The city started borrowing to plug budget holes in 2005 under former Mayor Kwame Kilpatrick, who was convicted this week on corruption charges. That year, it issued $1.4 billion in securities to fund pension payments. Last year, it added $129.5 million in debt, 9.3 percent of its general-fund budget, in part to repay loans taken to service other bonds.

“We have no lights, no buses, poor streets and now we’re paying millions of dollars a year on our debt,” said David Sole, a retired municipal worker and advocate for Moratorium Now Coalition, a Detroit group that fights foreclosures and evictions. “The banks said they need to be paid first. But there is no money.”

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In California, Lobbyists and Lawmakers Travel the World Together

Crony capitalist sightseeing tours.  Nothing like being a corrupt political oligarch in today’s America!  Great story here from the Sacramento Bee:

It’s mid-November. The election is over, and the new legislative session has not yet begun. Perfect time for a lawmaker to take vacation – or go on an “educational” trip with some of the Capitol’s most powerful interest groups.

Destinations for the talks? Hawaii, Brazil, China, Australia and New Zealand.

He said the cost of the trip – not yet determined – will be reported as a gift to the lawmakers attending: Republican state Sens. Anthony Cannella of Ceres, Bill Emmerson of Hemet and Mimi Walters of Laguna Niguel, as well as Democratic Sen. Michael Rubio of East Bakersfield and Democratic Assemblyman Steven Bradford of Gardena, who chairs the utilities and commerce committee.

“They who pay for the education have a way to decide what the legislators are going to be educated on,” said Dan Jacobson, a lobbyist for Environment California, which is not a member of CFEE. “It’s not a full education – it’s a partial education and will end up being a (biased) education trip.”

Sharing hotels, meals and exciting experiences with interest groups creates an imbalance for legislators, Jacobson said, where moneyed interests are favored over everyday constituents.

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