Not a coup

Dilma Rousseff is facing impeachment in Brazil. Why? Well, that’s actually rather complicated. To start, it has a lot to do with the fact that she’s supposed to be a leftist, but her government hasn’t helped the poor as promised.

Not only has she presided over a faltering economy (not her fault), but the country is facing an Olympics that’s shaping up to be a huge mess (and has already been very messy and very classist), there’s Zika to contend with, and on top of all that, the machine of corruption and graft that is Petrobras was opened up and exposed.

Even worse was her reaction to the economic problems. From a BBC article:

Ms Rousseff won the election by promising to keep the stimulus in place and criticised opponents who said an adjustment – such as higher taxes and budget cuts – was needed. But once re-elected, she single-handedly opted for an aggressive fiscal adjustment, angering those who voted for the opposition and leaving her own supporters feeling betrayed.

That, however, was not criminal. Stupid, yes, but not impeachment-worthy. As is often the case, it’s not the original deed that gets the politician in trouble, it’s when they try to cover their tracks. In her case, the original deed was merely a mishandling of economic issues. Covering it up, on the other hand…

From the same BBC article:

Brazilian governments are required to meet budget surplus targets set in Congress. Ms Rousseff is accused of allowing creative accounting techniques involving loans from public banks to the treasury that artificially enhanced the budget surplus. This gave the appearance that government accounts were in better shape than they actually were. The surplus is one of the measures taken into account by investors of how sound an economy is.

And that is why she’s facing impeachment. Not because of Petrobras or the Rio Olympics or the economy or anything, but because of deceptive accounting. Now, the real reason I wanted to talk about this was her reaction to it.

She denies that this accounting scheme was wrong. She says she did nothing wrong. As if it’s supposed to be an excuse, she basically said, everybody was doing it. They’re common practice, she claims. Perhaps this is true. Regardless, that doesn’t make them legal.

So here we have a politician who has done something wrong. Her opponents in congress want to impeach her, so they’ve started the process.

Rousseff has repeatedly called the impeachment process a coup. Let us be clear- this is not a coup. There is a process in place. Impeachment is a legit function of government. Is it ugly? Sure. Is it illegal? No. No it is not.

Here’s a line from a different BBC article:

If she is impeached, Vice-President Michel Temer would take over as interim president. Ms Rousseff has accused him of being one of the ringleaders of the “coup” attempt against her.

In an interview to the New York Times, Mr Temer said: “I’m very worried about the president’s intention to say that Brazil is some minor republic where coups are carried out.”

So that’s all very unfortunate. Let’s continue on and take a detour to Venezuela. As you may know, for many years, Hugo Chavez was the popularly elected leader of Venezuela. He functioned as a dictator in many respects, yet it was all through a public mandate. He nationalized a whole lot of industries and basically made Venezuela a petrostate. Before, they actually had quite a few industries, but by the time he died, they sold oil and not much else.

When Chavez died, his handpicked successor was Nicolas Maduro. Now, Maduro was/still is a hardcore Chavista. He will never, ever change the policies of Venezuela. Unfortunately for them, oil is worth way, way less. Their currency is in free fall, yet the price controls artificially inflate the face value of the money, which fucks everything up even more. They can’t keep stores stocked with basic necessities. Everybody is suffering.

In the last election, the Chavistas were crushed. Like, they went from having a decent majority to the opposition party having a substantial majority. Before they went, however, they packed the judiciary (shady but legal). While they still control a lot of the government apparatus, they have zero mandate to govern. At this point, they’re simply trying to hold on.

Here’s a bit from a New York Times article:

Venezuela’s electoral commission on Tuesday released documents that would allow opposition politicians to collect signatures and formally begin a process aimed at removing President Nicolás Maduro from office.

The decision by the commission — which is controlled by Mr. Maduro’s Socialist government and previously resisted handing over the papers — lifted hopes of the opposition politicians, who control the National Assembly and have vowed to oust the president by the end of the year.

And what is the reaction of Maduro?

This is a coup! A terrible coup. Even though the recall process is legally enshrined. Even though this is a process that is clearly described and clearly being followed. Yet he still claims it’s a coup.

Are you noticing a bit of a pattern here? It’s insulting. It’s disgusting. This is a level of disingenuous that borders on criminal, in my opinion. This is their attempt to hijack a legit political process.

I’m not saying impeachment or a recall would be a good thing. I wouldn’t know. But I do know they aren’t illegal. These are not coups. Saying otherwise is a deplorable attempt to tear their own country apart just to stay in power.

Blood money

Cleveland is going to pay off the Rice family. That is to say, the government of the city of Cleveland is going to pay them SIX MILLION DOLLARS without admitting any wrongdoing. That is to say, a small group of people in the government of Cleveland are going to spend SIX MILLION DOLLARS of taxpayer money so they don’t have to admit they were wrong in murdering a kid. Everybody is Cleveland is paying this money, even the Rice family.

What kind of fucked up political calculus is this?

Why is it okay for this to happen? Why is this city wasting the money of its people so they can do this? Instead of fixing anything, or punishing those who did something wrong, they simply waste the money of taxpayers so they can make it go away. This shit has got to stop.

Tax cuts aren’t magic

Around this time last year, Kansas was looking at an 800 million dollar shortfall. They managed to take a pinch here and chop a bunch there to take the deficit down to 400 million. Then they robbed several segments of the budget to make up the gap, notable the schools and the highway fund, which then triggered the current fight about school funding.

Each year Kansas faces a huge budget shortfall. In spite of what Gov. Brownback promised, cutting taxes has not, in fact, increased revenue. Shocking. Now, that’s not to say that Kansas doesn’t have a low unemployment rate. Whenever Brownback supporters talk about the tax cuts, they always like to mention the unemployment rate.

The unemployment rate in Kansas peaked in 2009 at 7.3 and the US as a whole peaked a couple months later at 10 even. So that’s where it was, but where is it now? The US is at 5 and Kansas is now at 4. So, with that in hand, we can see that tax cuts were not the cause. The US rate has halved, meaning there’s a strong downward trend anyway. Proponents of Brownback and tax cuts in general like to claim that the tax cuts led to a lower unemployment rate, but that’s not exactly honest.

For about a year now, nearly every single month Kansas has collected less than the projected/required amount. They knew this budget shortfall was coming. Yet, here we are. These tax cuts took place in 2012/2013. We’ve got plenty of data at this point. We know tax cuts do not magically increase the state tax revenue. When you think about it, that’s a pretty fucking stupid idea.

Here’s a tidbit from a Wichita Eagle article:

Gov. Sam Brownback blamed the state’s financial troubles on global factors in his first interview since the state’s $290 million budget hole was announced, pointing to dropping oil and agriculture prices as the cause of the shortfall.

“I mean, we’ve got a global commodity market that’s fallen off badly. You’ve got a number of commodity-based states that are struggling now budgetarily,” Brownback said Friday.

He also said any tax increase “would have negative impacts on the state” when it already faces economic challenges.

The Kansas legislature has a weird delusional way of doing things. There’s a budget shortfall of 290 million dollars. The Kansas constitution doesn’t allow the state to have a budget deficit, so they’re required to come up with something.

Now, Brownback is not wrong about the dropping oil and agricultural prices causing problems in the state. But let’s be real, a year ago Kansas has the exact same problem. The issues they’re having now aren’t related to the ag and oil drop, they’re merely causing extra issues. In fact, I would contend that the economic outlook for the global economy means that Kansas should seriously consider temporary tax increase ANYWAY, and when paired with the super-minimal taxes they have now, it’s simply idiotic not to increase them.

So if they aren’t going to raise taxes, what are they going to do?

One option would sell off a portion of the state’s future tobacco settlement money for quick cash. Another would delay a $99 million payment to the state employee pension system.

Great idea! That sounds totally fiscally responsible.

Wow. So I’ve spent a lot of time telling you why these massive tax cuts led to stupid results. But I recently read a Slate article that actually gave a really great and really succinct explanation of why we get those results. Great article, by the way. Read it here. However, for the purpose of this, I’ve snipped out the most important bit:

A brief explanation: Companies organized as pass-through entities, such as partnerships, LLCs, or S-corporations, don’t pay corporate taxes. Instead, their profits get handed over to their owners, who then pay personal income taxes on the earnings. Brownback exempted those profits from state taxes under the theory that it would help spur more small-business growth.

The problem is that many large and successful businesses are also organized as pass-through entities. And, as the right-leaning Tax Foundation gently warned in 2012, there was nothing to stop other big companies from restructuring themselves to avoid taxes. That seems to have happened in a big way: About 70 percent more businesses have taken advantage of the loophole than expected, which has helped cripple the state’s budget projections.

And from this, we get a national effect. The Republican candidates for president aren’t talking about tax cuts. Here’s the final bit from a recent Star column:

So it’s possible the Kansas budget plan has worked, in reverse: it’s convinced politicians across the nation what not to do. It’s like the rest of the country is sticking pins in the state, trying to kill voodoo economics once and for all.

Voodoo economics comes from George H.W. Bush. That’s what he called Reagan’s tax plan. He then lost to Reagan in the primary and didn’t become president until Reagan ran into term limits.

So there you are. Tax cuts don’t create so much growth that they offset the tax cuts. They tried that, over and over, and it just doesn’t work.