Eliz. Warren is a Democrat millionaire, so she attacks millionaires hypocritically. Senator Warrens righteous indignation boils down to 3 main concerns. We will examine each: ■Misleading Implication 1: Oil companies guzzle down billions in profits. She speaks negatively of the profits earned by oil companies, as to imply wrongdoing on their part. This is common rhetoric but inconsistent logic. Per American Progress, Big Oil’s $93 billion in profits in 2013—impressive by any standard—were nonetheless a 27 percent REDUCTION in profits compared to 2012. [a] Why, if profits are to be so disdained, has Warren not eased the worried minds of her constituents by publicly acknowledging that oil profits have actually DECLINED dramatically? Perhaps doing so isnt politically expedient? Furthermore, contrast the oil industrys ability to generate revenue with other industries and ponder why there exists selective outrage. Consider, for instance, the entertainment industry. The U.S. entertainment and media market generated $479.23 billion in 2012 with worldwide revenue of nearly $1.639 trillion. [b] By 2017, the U.S. is expected to account for $632.09 billion with a worldwide total of more than $2.152 trillion... [b] According to Statistas 2014 ranking of the global top 10 oil and gas companies, based on revenue, Royal Dutch brought in the most revenue, at $476.90 billion, and Italys Eni brought in the 10th most, which was only $158 billion. On that same list, the highest ranking U.S. firm was ExxonMobil, bringing in $390 billion, and the lowest ranking U.S. firm, ranked 8th, was Phillips 66, with $171.6 in revenue. [c] The point is, the entertainment/media industry rivals the oil industry in revenue. Why is it justified, then, to hate oil companies for THEIR annual revenues/profits but adore the entertainment industry for its revenue/profit? This is selective outrage and illogical. ■Misleading Implication 2: Billionaires pay a lower tax rate than their secretaries. An individuals tax RATE is not indicative of the tax REVENUE actually paid into the system. For instance, 1% of $100 ($1) is more than 2% of $10 ($0.20). The rate of 1% may technically be lower than 2%, but when applied to a larger figure, it actually generates more revenue. This is why millionaires and billionaires pay far more into the system than the non-wealthy, regardless of lower rates. This is confirmed on page 32 of Congress’s Joint Committee on Taxation report, which illustrates that of the 2014 federal income tax revenue, 33.5% of it was funded by tax filers with incomes over 1 million dollars. [d] In contrast, a secretarys salary, which is generally less than $100,000 a year, is among the tax filers that funded anywhere from 0 to 6.9% of 2014 federal income tax revenue. [d] Thus, despite the differing rates, millionaires and billionaires pay FAR MORE into the system than their secretaries. ■Misleading Implication 3: Wall Street CEOs destroyed millions of jobs.(Alluding to the 08 recession) This is a common misconception. The 08 recession was NOT the result of greedy CEOs, but rather the result of the failed Community Reinvestment Act, combined with an expansion of subsidized housing programs, the growing influence of GSEs (government sponsored entities) such as Fannie Mae and Freddie Mac, and the expansion of the Department of Housing and Urban Development, which severely distorted the real estate market and forced banks to abandon proper underwriting guidelines that theyd successfully adhered to for decades. Regulators, beginning in the mid-nineties, began to hold banks accountable in serious ways. Banks responded to this new accountability by increasing the CRA loans they made, a move that entailed RELAXING their LENDING STANDARDS. [e] They did this to avoid regulatory discipline, but unfortunately, complying with the regulators involved accepting credit risks from unworthy borrowers who previously wouldve been denied. Because many of these applicants were from lower income households or happened to be minorities, political will manifested to forcibly alter the banks policies under the hope that it would decrease inequality. It was this INCREASE in financial regulation that pushed the banking industry AWAY from safe practices, triggering the foreclosure problems that culminated in the following decade. A study from the National Bureau of Economic Research confirms that the Community Reinvestment Act was mostly responsible for the housing market crash in 2008. The research team sorted through numerous failed home loans and identified an alarming link between those loans which failed and those loans which were CRA mortgages. (Community Reinvestment Act - Mortgages). For instance, to satisfy CRA examiners, flexible lending by large banks rose an average 5%, and those loans defaulted about 15% more often. [f] Furthermore, to illustrate that this narrative isnt merely ideological post-diction, please see the excerpt from a NY Time article written in 1999 which foresaw EXACTLY what was to come: In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980s. ...From the perspective of many people, including me, this is another thrift industry growing up around us, said Peter Wallison a resident fellow at the American Enterprise Institute. If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry. [g] As Examiner concludes, in their review of the NBER study; No one was making bad loans to unqualified people until Democrats came along and threatened to drag banks into court and have them fined and branded as racists if they didnt go along with the lefts Affirmative Action lending policies...all while federally insuring their losses. ...Democrats continuing to force banks into lowering their standards would lead to this exact catastrophe. [h] -President Bush went to Congress repeatedly for years warning them that Fannie Mae and Freddie Mac were going to destroy the economy (17 times in 2008 alone). Democrats continuously ignored him [and] shut down his proposals along party lines. [h] The 2008 recession, therefore, was mostly the fault of progressive ideology which dismissed sound business practices as though they were merely guises to mask greed and racism. In doing so, progressives ignored the concerns of those who warned foreclosures would come in droves. This cant reasonably be blamed on Wall Street CEOs. ■Conclusion: In all of her assertions, Senator Warrens righteous indignation is unjustified. ---------------------------- Sources: [a] https://americanprogress.org/…/with-only-93-billion-in…/ [b] billboard/…/study-global-entertainment-indus… [c] statista/…/top-10-oil-and-gas-companies-wor…/ [d] https://jct.gov/publications.html… [e] businessinsider/the-cra-debate-a-users-guide… [f] news.investors/…/122012-637924-faults-community-… [g] nytimes/…/fannie-mae-eases-credit-to-aid-mor… [h] examiner/…/new-study-confirms-economy-was-de…
Posted on: Wed, 31 Dec 2014 00:11:11 +0000
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