Trump's support begins melting like a snowball in hell

Donald Trump's influence is melting like a snowball left on the kitchen table.

In a special election to replace a Texas congressman who died, voters rejected Donald Trump's chosen candidate, the widow Susan Wright.

Instead, Texas voters in the Sixth Congressional District located southeast of the Dallas-Ft. Worth metro area picked Jake Ellzey, a conservative state representative. Ellzey got 53.3% of the vote; Wright 46.7%, out of fewer than 40,000 ballots cast.

Unlike the widow, who ran what can barely be called a campaign and proved weak at raising money, Ellzey proved to be an effective campaigner and political fundraiser.


Ellzey never criticized Trump. Had he done that and then won, I'd tell you that snowball was melting on a hot stove.

But Ellzey did have to contend with opposition by the perfidious junior senator from the Lone Star state, Ted Cruz, and the Club for Growth, which claims to be conservative but which exists to ensure that little people are more heavily taxed than the already rich. That Cruz, a servile Trumper, backed the wrong candidate suggests that his never strong standing with Texas voters is also dwindling.

This week's election results show yet again what a terrible choice Republican leaders made after Trump's failed coup in January. The insurrection, a clown show attempted coup, gave them the option to denounce Trump, to walk away from the crazy old man from Mar-a-Lago who tried to overthrow our government.

The Republican leaders are akin to the fools who received stock options during the dot con era at the turn of the century but failed to exercise them because they foolishly believed their options would become even more valuable but instead turned to dross.

Politics, it's often noted, is the art of the possible. The current Republican leadership has pretty much made it impossible to separate itself from Trump, a decaying albatross they chose to hang around their collective necks.

True believers continue to think of Trump as a demigod, lost in denial of his delusions, lies, and incompetence in accomplishing what he promised voters in his first campaign.

At a multi-racial ice cream social on Sunday, a friend told me that one of his sisters, who has an advanced degree, says Trump is literally a god.

It was far from the first time I heard such nonsense – blasphemous to any religious believer – but it was the first time anyone told me that a person with a first-rate education embraces such craziness. That shows how much this is about emotions, not rational thinking.

Sadly, few people know that while Trump claims to be a staunch Christian who reads the Bible more than anyone, his words show that he holds Christians in utter contempt. He went on for page after page in his Think Big book, denouncing those who accept Jesus's teaching in the Sermon on the Mount as "fools," "idiots," and "schmucks."

Unless you believe most Americans are damn fools, support for Trump will continue to dwindle.

That's a good thing for democracy in America. Our Constitution embraces Enlightenment principles of freedom rooted in rationality and reason, not cultish devotion to a wannabe dictator, especially one as incompetent as Trump and his gang.

As Trump continues his descent into madness and frets about his pending indictments, we should hope that the Republican leaders hold fast in their foolish embrace of Trump. Sticking by their awful decision after the Jan. 6 insurrection establishes they are knowingly evil in submitting to Trump and his anti-American desire to become our dictator. That submissiveness should reduce their numbers in Congress.

Let us hope that actual Republicans with some principles arise to defeat the faux Republicans who put Trump ahead of their oath to defend our Constitution. Otherwise, we will continue to suffer from those who, like Cruz and the Senate and House minority leaders, show allegiance to the criminal mind of Donald J. Trump.

'Losers': Donald Trump makes a stunning confession

In an astonishing admission, Donald Trump said Thursday that instead of hiring only "the best people," as he promised voters, he hired "garbage."

Trump also complained Thursday that these former appointees didn't follow his version of omerta after a new book revealed that he wanted to execute an unidentified White House leaker. Omerta is the ancient Sicilian mob tradition of killing those who talk outside their criminal gang.

Each day America's beggar-in-chief issues "Save America" statements via email. Most are petty, many deranged, but now and then, truth inadvertently comes through because of his utter lack of self-awareness, his emotional immaturity, and his rank incompetence as a leader, which I've shown for three decades to his furious denials.

Now the people he chose for his White House team are telling their stories of Dr. Jekyll and Mr. Hyde, the White House years.

Here is what Trump declared at 12:49 on Thursday afternoon: Let's dissect this unintended confession.

First, many of the people Trump says are "all of a sudden" talking to reporters have been talking to them for months and years. Trump doesn't read books – or for that matter, his Presidential Daily Brief when he was president. Not reading more deeply than the cover of a book often leaves Trump badly, sadly — and when he was president — dangerously misinformed.

Had Trump cracked the spines of the bookshelf of tell-alls coming out now, he would know that the authors carefully cultivated these sources and won their trust while he was president.

Second, notice that people who worked with Trump and talk about him other than as he wants you to speak, then you are, in his words, "losers."

The reason Trump made oh so many people sign nondisclosure agreements, even some 2016 campaign volunteers, was that anyone who gets inside could see the truth about Trump: he is and always has been a fraud, the self-made man who blew daddy's fortune. The Don Juan was sued repeatedly for groping and allegedly raping women because he lacked the charm to seduce them. And now the billionaire beggar-in-chief reduced to pleading for alms from the people he says he loves, the "poorly educated" he did so much to hurt while in office.

Third, Trump is back to his "many say" devices, as if that lends credence to what he says.

The fact is that many say he is the worst president of all time. Many say he is a Kremlin stooge — and if the documents published in The Guardian Thursday are true, Vladimir Putin is among them. Many say he is a lousy businessman.

I could go on here with enough examples to fill three books—oh, wait, just today I finished my third Trump book, The Big Cheat, out Sept. 28.

Fourth, who conflates stars and garbage? There are great metaphors, there are mediocre metaphors, and then there are Trumpian trash metaphors.

But at least this one was honest trash in which Trump admitted, finally, that he didn't hire the best and the brightest, but a bunch of losers.

Weisselberg out in Scotland: First indication that indictment affects Trump Organization operations

Allen Weisselberg, the indicted Trump Organization executive, was removed today as a director of Donald Trump's golf resort in Aberdeen, Scotland, public records show. The move is the first to indicate how the indictment is affecting operations of the Trump Organization.

His removal comes as Scottish lawmakers and Avaaz, a global do-gooder organization, are pushing for an "unexplained wealth" inquiry into how Trump got the money to buy and refurbish both of his money-losing Scottish golf courses.

A 2018 British law lets investigators examine company and personal financial records to determine sources of money and riches that they deem suspicious. It's been called the McMafia law.

Trump's Aberdeen course lost nearly $1.5 million (£1.1 million) in 2019, up slightly from 2018. The property has lost money for seven years in a row.

The course also has an interest-free loan from the Trump Organization of $61.1 million (£44.4 million), disclosure documents show. Manipulating interest expenses is a common tax avoidance technique that can justify criminal charges of tax fraud unless executed with extreme care.

There are only two ways Weisselberg could be removed as a director of the Trump International Golf Club Scotland, Ltd. Weisselberg could have done so on his own. In that case, his lawyers may have advised him to do so for reasons not yet clear.

The other way would have been on orders from Donald Trump and executed through his sons Don Jr. and Eric, who remain as the only directors. That, too, may indicate a criminal defense strategic move. Since Weisselberg remains on the Trump Organization payroll it almost certainly does not suggest a split between the interests of Weisselberg and his boss.

The move suggests that Trump may be trying to make sure only he and his family members exercise any legal control over the Trump Organization.

Removing Weisselberg would not block or limit any Scottish inquiry or the investigation by the New York County district attorney's special grand jury, which on July 1 indicted Weisselberg and the Trump Organization.

The New York indictment detailed a calculated 15-year scheme using two sets of books to cheat the federal, state, and city governments out of more than $800,000 of taxes.

Weisselberg and the Trump Organization face 15 counts of grand larceny, tax fraud, and conspiracy. Weisselberg could get 15 years on conviction, but he also could get probation without even home confinement. None of the crimes Weisselberg is charged with come with a mandatory prison sentence upon conviction.

Weisselberg pleaded not guilty when brought in handcuffs before a state judge in Manhattan. The judge released the 73-year-old chief financial officer of the Trump Organization on his own recognizance.

The 25-page indictment is the first in what I'm sure will be multiple cases as prosecutors try to persuade insiders that they will be better off turning state's evidence than sticking with Trump.

Those who agree to help prosecutors early on get the best deals, often involving no prison time. Those who hold out may face prison even if they eventually cooperate. The indictment signals that prosecutors have solid evidence against tax cheats in the Trump Organization as well as anyone who took part in manipulating business records cold should they choose to seek their indictment.

As I read it, the indictment hints at future charges against Trump's two oldest sons, Ivanka Trump and Weisselberg's son Barry, who runs the ice rink and carousel in Central Park for Trump.

Mayor Bill de Blasio is trying to cancel that lucrative contract and another Trump has for a municipal golf course.

Ivanka was a Trump Organization vice president when she was paid more than $700,000 in consulting fees, which may be a disguised gift subject to tax.

Barry Weisselberg got a free apartment near Central Park, a car, and other perks on which his ex-wife has said no taxes were paid. Jennifer Weisselberg is cooperating with prosecutors, supplying them with extensive financial documents.

Donald Trump and his lawyers have tried to minimize the criminal charges while not disputing that Weisselberg received $1.7 million in noncash compensation that was never reported to tax authorities as required by law.

I critiqued Trump's cavalier attitude in this earlier column.

The United Kingdom requires private companies, like the Trump Organization, to make more disclosures than American law requires, including total revenue (called "turnover") and profits, fees paid to directors, dividends paid to owners, and loans outstanding.

In America, only companies with publicly traded stock or bonds must make such disclosures. As Donald Trump's personal property, the Trump Organization and its more than 500 affiliated enterprises are not required to make similar public disclosures in America.

Yet another Trump scheme to cajole supporters into giving him money

America's panhandler in chief, Donald Trump, just proved beyond all doubt that he has no idea what is in the Constitution he took an oath to defend.

Trump today sent me and millions of others a text begging for money to finance federal lawsuits filed in Florida against Facebook, Google, Twitter and their chief executive officers for "UNCONSTITUTIONAL CENSORSHIP."

Trump is, at least for now, banned from their platforms for breaking their rules.

Had Trump ever read the First Amendment, he would know it applies to the government, not businesses. "Congress shall make no law" is the opening line. The amendment is only 45 words, so it shouldn't challenge even Trump's poor reading comprehension skills.

As interpreted by our Supreme Court, our Constitution prohibits only the government from censoring speech. Even that is not absolute.

Our Constitution says nothing about businesses turning away people because they violate company policies. Facebook, Google and Twitter have policies that people consent to when they click those "I agree to the terms of service" buttons to get access. On a simplistic level think of restaurants with this sign on the door: No Shoes No Shirt No Service.

Dictatorial Thinking

Trump has in the past said he would get Congress to pass laws so that no one could write or say things about him he doesn't like. That went nowhere, but it did show his Kim Jong-Un dictatorial thinking.

While Trump didn't use any North Korean firing squads to silence critics, he spent four years laying siege to the First Amendment and to the government being accountable to the people

Donald believes he should be president and that we should overturn the will of the people who rejected him out by a margin of seven million votes in favor of Joe Biden, who got more than 51% of the vote.

There are advocates for expanding the First Amendment to include businesses – many of them funded by the Koch Brothers and other super-wealthy business owners. They want to shrink our government to weaken its power to protect us, leaving them even more free to profit from polluting, paying workers less, and shifting the burden of taxes onto you. Charles Koch and his brother David, who died in 2019, sent a letter in 2012 basically instructing their more than 100,000 employees to vote for Mitt Romney. It had no legal effect. Since voting is secret, it didn't stop votes for Barack Obama, either. But the intent is clear: surrender your liberty to billionaire business owners.

Koch Brothers Ideas

Here is an excellent example of the idea that the First Amendment should apply to businesses. It comes from a Koch-funded ideological marketing organization.

The text I got today from the former president asking for a donation didn't link to any lawsuit. The people he deceives probably wouldn't read it if he did.

What's going on here is yet another Trump scheme to cajole supporters into giving him money.

Trump's misconduct has reduced him to pleading from alms, a pitch that works on the gullible and ill-informed. No wonder Donald, using the royal "we," often says, "we love the poorly educated." His schemes deceive the poorly educated with ease, helping him drain their pockets so he can keep his flailing Trump Organization afloat.

For sure, Trump needs lots of cash to pay lawyers as law enforcement finally closes in on him after decades of his successes in outmaneuvering police and prosecutors.

Two things you can count on from Trump's latest plea for alms:

One, it will raise money.

Two, the CEOs of Facebook, Google parent Alphabet, and Twitter — Mark Zuckerberg, Sundar Pichai, and Jack Dorsey – won't lose a wink of sleep over this. Indeed, their companies likely can get a court to order making Trump pay their legal costs to have the cases dismissed as frivolous.

Raw Story uncovers a huge secret tax favor for the super wealthy

Raw Story has uncovered a secret IRS tax favor for the super-rich—authorized when Donald Trump was president—that will take effect on Thursday, July 1. President Biden can stop it with one phone call. Will he?

The Biden White House was unaware of this Trump tax favor—disguised as a crackdown on wealthy tax cheaters—when Raw Story asked about it on Friday.

That's not surprising because the IRS remains under the control of Charles Rettig, a holdover from the Trump era. Before Trump named him IRS commissioner, Rettig was a Beverly Hills tax lawyer who helped the super-wealthy escape taxes and—if they got caught cheating—negotiated secret settlements that avoided public humiliation while minimizing taxes and penalties.

If Biden lets this Trump policy take effect it would be a huge benefit to clients of Rettig's old law firm and others like it. And it would make an already unfair tax system even more heavily tilted in favor of billionaires.

IRS Minimizes

Internally the IRS characterized the new favor for the rich as nothing more than a subtle change to comply with arcane civil service policy. But at least one high-level IRS manager saw through this façade and fought the plan, an email obtained by Raw Story shows.

What makes this Trumpian scheme diabolical is that on the surface, it appears to be a 50% increase in enforcement of gift and estate tax law, areas where cheating is rampant. Actually, it's the opposite.

Starting Thursday, July 1, the IRS will hire 71 new people to examine estate and gift tax returns.

The 137 IRS tax lawyers who do this work now are, in effect, highly trained colonels on the tax police force. They need sophisticated detective skills to understand the mind-numbingly complex trusts and other devices that lawyers like Rettig designed to hide money from the IRS.

Skills Downgrade

The new hires, however, won't be lawyers, only lightly trained "tax specialists." They will be equivalent of mere corporals on the tax police force, lacking the legal education required to see through the fog of confusion that tax lawyers get paid fat fees create so their clients can pay little to nothing in taxes.

Despite the severe downgrading in required skills, the new hires will get the same pay and benefits as the lawyers doing the work now. The new hires will also be eligible for promotion and to move on to other jobs in the civil service, unlike the existing auditors.

It makes no sense to pay the same wages and benefits for reduced skills. On second thought, that does make sense when the purpose is to create the appearance of increased tax law enforcement while doing the opposite.

This stealth plot to help the super-rich comes just days after Raw Story revealed a nearly total collapse of audits of super high-income Americans, those making on average $30 million each.

The IRS audited just 38 of the 26,517 households in this rarified income strata in 2018. Recommended additional taxes after audit fell 99.1% from 2010, my analysis of new IRS data tables found.

Our new expose comes after ProPublica and The New York Times published separate reports showing how many of the wealthiest Americans pay little to no taxes. Raw Story revealed how this forces everyone else to subsidize their lifestyles. All these reports dealt in part with weak enforcement of the tax laws regarding the highest income and wealthiest Americans.

Billions Become Pennies

Tax lawyers, like Rettig before Trump put him in charge of the IRS, help clients reduce or eliminate gift and estate taxes through a host of complicated legal devices. They include intentionally defective grantor trusts, split-interest arrangements, life insurance trusts, and several dozen other techniques that distort the time-value-of-money to shield dynastic wealth from taxes. Tax lawyers like Rettig reduce billions of dollars to pennies.

These devices enable dynastic wealth but at the price of inhibiting future economic growth and make it harder for new generations of wealth creators to arise, as Warren Buffett told me in 2001. Economic oppression from trying up wealth in trusts was a driving force in the bloody French Revolution of 1789.

The gift and estate tax laws are crucial backups to the income tax system, which Congress was told as far back as 1924 by Representative William R. Green, an Iowa Republican and longtime chairman of the House Ways and Means Committee.

Detecting these tax avoidance tricks and then figuring out how much tax is due requires sophisticated skills, especially in understanding legal doctrines and court decisions. The new hires need only minimal training, none of it in contract law.

So, while it appears the IRS is beefing up its auditing power, it is simultaneously moving to assign the work to employees less likely to detect cheating and when they do much easier to dupe. Imagine your local police department announcing it would no longer hire homicide detectives but instead assign future murder cases to patrol cops.

IRS Executive Fought Plan

The existing auditors are classified as "905" employees. The new hires will be classified as "901" employees.

Karen L. Sumler, the IRS executive who oversees the examination of gift and estate taxes, fought against the downgrade.

"I pushed back hard," she wrote in a June 16 email to her subordinates. "I provided documents from the decision back in 1967" to use attorneys to examine gift and estate tax returns to try and stop the plan. She said the IRS Chief Counsel "was unmoved."

After she lost that battle Sumler fell in line, writing about "a big change" as "a new opportunity.

Because of civil service rules, hiring lawyers as gift and estate tax examiners requires approval from the Treasury Department general counsel.

Treasury refused such permission when Trump was president. Biden or Treasury Secretary Janet Yellen can order that policy rescinded, which would allow the IRS to hire 71 lawyers instead of ill-trained "tax specialists" at the same pay.

If Biden lets this policy proceed, he is tacitly declaring that he supports Trump-era policy to help the wealthiest Americans pay less tax. That would be a betrayal of his campaign and White House promises to reduce unfairness in the tax system and require those making more than $400,000 per year to pay more to support the government which made their wealth and income possible.

Just stopping the plan from taking effect would give the Biden administration time to understand this scheme. The question is whether Biden will do what he promised or reveal himself to just be another politician who tells voters what he thinks they want to hear and then doesn't act.

How Trump’s toothless IRS let the rich off easy

The amount of additional taxes that the richest Americans owed after the IRS audited their tax returns fell more than 99% in Donald Trump's first full year in office, data tables released this week show.

Among households making on average $30 million in 2018, IRS auditors recommended less than $5.4 million in additional tax.

That's not the extra tax owed by one rich tax cheat. That's the total for all 26,517 households reporting income of at least $10 million in 2018—the first year of the huge tax giveaway Trump and the Radical Republicans in Congress engineered in the Tax Cuts and Jobs Act of 2017.

The recommended additional tax under Trump fell 99.1% from the $610.4 million that tax auditors recommended in 2010, Barack Obama's first full year as president.

In Obama's last full year in office, 2016, auditors found almost $106 million of tax owed by affluent households, 20 times as much as in 2018.

Even that 99.1% drop from 2010 to 2018 severely understates the collapse of tax law enforcement among the best off among us. That's because the number of households making $10 million or more nearly doubled during those years from 13,32 to 26,517.

Despite that huge increase in wealthy taxpayers, the number of completed audits of these very high-income Americans collapsed, from 2,605 to just 38.

Looked at another way, in round numbers, audits of wealthy Americans plummeted from 1 in 5 to just one in 700.

'Audit Roulette'

Such low risk of audit encourages the wealthiest Americans to play audit roulette. That's a tax game in which people understate income or, more often, overstate deductions figuring they have little risk of getting caught.

Those who do get caught often negotiate to pay the tax, interest and a penalty with no public record of their misconduct. This policy of settling, many times for dimes on the dollar, enables future tax cheating, especially by people in positions of trust such as financial executives and personal managers.

I calculated the numbers in this report from the IRS 2020 Data Book, which the service released Thursday after a month-long delay. Each year for decades, I have analyzed the numbers in the annual Data Book and other reports, consistently finding less and less tax law enforcement, especially at the top of the income ladder.

Charles Rettig, the Beverly Hills tax avoidance lawyer who Trump appointed IRS commissioner, told the Senate Finance Committee in April that tax cheating has become rampant. "It would not be outlandish to believe that the actual tax gap could approach, and possibly exceed, $1 trillion per year," he testified.

Individuals paid $2.8 trillion of income tax in 2020.

Trillion-Dollar Tax Gap

A trillion dollars of individual income tax owed but not paid would be well more than twice the official IRS "tax gap" estimate of $381 billion, about 70% from individual income taxes. Corporate profits, payroll and other taxes make up the rest of the gap. You can learn what the tax gap is and how it is measured here.

Rettig, in his testimony, made a point that I have made for years – the official tax gap is a low-ball estimate. I'd be surprised if the tax gap isn't at least a trillion dollars.

It relies heavily on surveys of what people say about how honestly they file their taxes. Those responses wouldn't include major league tax cheats or people advised by some of the most crafty accountants and lawyers in America and abroad, as revealed by the Panama Papers and the Paradise Papers exposes of tax cheats and their advisers.

Fewer audits among people who rely on wages and wage-like income such as pensions make sense because employers, pension plans and others verify the income people report on their income tax returns. In addition, under the Trump/Radical Republican tax law changes that took effect in 2018, only one in 13 taxpayers can even itemize deductions. In short, for most working Americans, opportunities to cheat no longer exist.

However, among the $10 million and up group, less than one dollar in five is verified as wages or pensions, my annual analysis of IRS Table 1.4 shows.

Cheating Business Owners

Congress trusts these high-income taxpayers, many of whom own businesses, to fully and honestly report their income and only take lawful deductions. Without many more audits, however, who knows.

Auditing only 38 out of more than 26,000 tax returns filed by the wealthiest Americans tells us next to nothing about their propensity to cheat.

The IRS cuts in hunting for tax cheats were far less severe for the working poor.

Among families applying for the Earned Income Tax Credit, the IRS audit rate was 1.8% in 2010, but half that level in 2018.

The amount of additional tax the working poor owed after audits fell by two-thirds under Trump, although that may reflect that about a third of these audits were still in process at the end of the federal budget year. In 2010 under Obama, that was true for just 11 out of almost a half-million audits of the working poor.

When we get the data for 2019 and 2020, it will almost certainly show an even more appalling record of favoritism to wealthy tax cheats.

Expert explains how our income tax system is a massive subsidy for the super-rich -- and white men

ProPublica scored a fantastic scoop when it obtained and meticulously analyzed 15 years of raw income tax data on the wealthiest Americans. This leak of Internal Revenue Service records is by far the biggest and most important tax news in the 55 years that I've reported on taxes.

Thanks to the leaker, we now know beyond any doubt that the endless claims that America has a progressive income tax system are bunk. A progressive system means that the more you make, the greater the share of your income you pay in taxes. Back in 2005, I got the George W. Bush administration to acknowledge that the system stops becoming progressive near the top. But, unfortunately, ProPublica shows that it's even worse than what I reported back then.

Working people pay a larger share of their income in tax than the wealthiest of the wealthy. The top marginal tax rate on labor income is almost double that of capital gains.

Jeff Bezos, currently the richest man in America, paid no income tax in 2007 and 2011. He doesn't dispute that.

Bezos was not alone. Multi-billionaires Elon Musk, Michael Bloomberg, Carl Ichan, and George Soros all pulled off the same trick at least once in recent years, ProPublica reported after analyzing the IRS data. Warren Buffet pays less in tax than millions of Americans, something he and Soros have said is wrong.

Bloomberg, the former New York City mayor and owner of the financial data and news business bearing his name, paid over five years an income tax rate lower than that of the poorest half of American taxpayers.

On his income tax returns, Bloomberg reported making $10 billion. Yet, he paid just 3%.

The bottom half of income taxpayers averaged $17,200 of income in 2017 and paid 4%.

A system in which people who gross about $330 a week pay a much higher tax rate than someone who makes billions each year is not just regressive; it's an outrage. It violates principles of taxation that date to the Old Testament and ancient Athens.

I couldn't help but notice that my wife, a charity CEO, and I pay a higher income tax rate than Bezos, Bloomberg, and Buffett.

By the grace of Congress, those billionaires get to take unlimited losses when they make losing stock investments while Jennifer and I – and you -- can deduct only $3,000 a year. So even if my wife and I live into our 90s, we will die with losses we never got to deduct. That's the kind of unfairness Professor Brown compellingly demonstrates.

Until now, the Wealth Defense Industry tricked people by pointing to posted tax rates, not actual rates paid by the super-super-super rich, and asserting with cherry-picked data that the rich pay a lot.

The granular data ProPublica obtained proves that the tax rates Congress puts in the law and the tax rates people pay only match up for working Americans in the bottom 99.5%.

Congress taxes workers much more heavily than billionaire capitalists who, ProPublica showed, can live income tax-free.

All of the people ProPublica wrote about are white men. Professor Dorothy A. Brown of Emory University, in her insightful and readable new book The Whiteness of Wealth, shows how our existing tax systems favors wealth above income and discriminates against Black Americans. The design of our tax system plays a significant role in the vast wealth disparities between white Americans and people of color.

ProPublica's reporting backs her up. It showed that for most Americans, annual income taxes far exceed yearly increases in wealth.

At the apex of American wealth you can live tax-free, as I showed many years ago, thanks to rules that favor the rich, loopholes Congress refuses to close, and the minimal enforcement of our tax laws against the plutocrat class. One simple technique is borrowing against your assets. But, unfortunately, Congress doesn't count that as income.

The IRS determines interest rates on intra-family loans. The current rates are next to zero, less than even our modest inflation rate. Given that, why would anyone sell stock and pay a 20% tax rate to buy a yacht or a new jet when they can borrow against themselves almost interest-free and watch their stocks keep rising in value?

Hunting for the Leaker

The Biden White House announced late Tuesday that law enforcement is hunting for the leaker, who faces up to a decade in prison.

Whoever dared to do this should be hailed as a national hero on a par with Darnella Frazier, the fearless teenage girl with a steady hand who last summer recorded the slow, agonizing murder of George Floyd by Minneapolis Police.

We should be building statues to honor this leaker, if he or she is ever identified, just as we should erect one to honor Remy Welling, the IRS corporate auditor whose leak to me 17 years ago proved how corrupt the Silicon Valley stock options system was.

Thanks to ProPublica and its source, maybe Americans will at long last wake up and realize that our federal income tax, as currently designed, is a massive subsidy system for the super-rich.

And the source of those subsidies for Bezos, Bloomberg, Buffett, Musk, and other multibillionaires? That would be you.

Inflation is on the rise for one very important reason -- and it's not a big deal

Lots of luck right now trying to find a bicycle for under a thousand dollars. And if you insist on building a new house right now the price of lumber will be dear, adding perhaps $4,000 to construction costs for a typical home.

But don't assume that ruinous inflation is on the way. It's not. These are just temporary bumps and those who just wait a bit will see prices fall back.

It may be hard to appreciate this given all the scary stories in the news about inflation, stories that often lack context and nuance. But don't be scared.

And don't pay attention to the brief ups and downs in the price of stocks because half of American stock trading is done not by investors but by traders whose computers move so fast they can be in and out of a stock in less than a second. Besides, stocks don't make goods or services so they aren't part of the economy that creates jobs and produces paychecks.

Yes, the news is full of unsettling stories about inflation, but if you read carefully, you'll notice that the talk is about prices rising perhaps 4% this year. Not a big deal.

The highest inflation rate ever in our country was 29.8% in 1778. Since 1913, the highest rate was 19.7% in 1917. In 1946, inflation was 18.1%

Indeed, the highest inflation rate ever in our country was 29.8% in 1778. Since 1913, the highest rate was 19.7% in 1917, according to Investopedia. In 1946, inflation was 18.1%

In 1979 and 1980 combined, prices rose by a quarter. Now that would be scary today, but that is not what is happening.

Post-WWII Boom

This is more like 1946 when soldiers and sailors came home and wartime rationing left huge deficits in people's demand for goods. No cars or trucks had been built in America, other than to prosecute World War II, since 1941. People were getting married, so they needed homes and apartments and there was a boom in babies that lasted until the end of 1964. That made prices soar even though the economy fell into a brief recession as we moved from a wartime economy to a peacetime economy.

That was then; this is now. The pent-up demand from the pandemic is for only 15 months, not almost four years as in the 1940s.

Also, today, we have 8.2 million fewer jobs than before the Covid pandemic. We should have added another three million or so jobs since the coronavirus first appeared in America. That means millions of households are struggling just to pay the rent and eat. But for the social safety net spending under both Trump and Biden, we would be in a very deep recession. Instead, our economy grew 6% in the first quarter, roughly double the growth under Trump in his first three years.

Working, Spending Less

At the same time many millions of households, a large majority of them, continued working. Their spending fell, however, because they didn't have to go into work. They stopped going out to restaurants as they ate at home. Dry cleaners saw their customers evaporate. These people deferred spending on vacations and big purchases like cars and trucks.

Some of those who kept on working paid down or paid off their debt. Others added to their savings. In both cases they are primed to spend. That will mean a surge in consumption, but it won't last.

'Price Indifferent'

These folks can afford to be what economists call price indifferent. They may not be happy about it, but if the price of a bicycle doubles, they can just hand over the money. That won't go on for long. Bicycles are still being manufactured and once the surge in demand is fulfilled retailers will no longer be able to charge premium prices.

For the 12 months ending in April overall inflation, before adjusting for seasonal factors, was 4.2%, according to the government Bureau of Labor Statistics. That's the highest rate in this century, but it's not ruinous.

Used Car Prices Zoom

Prices of used cars and trucks accounted for a third of the inflation in the past 12 months. These prices were up 10% in April, the government reported. Prices surged because people who have put off buying used vehicles rushed to market as the economy and jobs began opening.

The prices of some foods are up right now because after 15 months of limited mobility, some shortages of crop workers and weather, both droughts and deluges. Trump's tariffs that savaged the price of American soybeans and enriched Brazilian soybean farmers also played a role.

These are temporary effects. We always see such temporary effects after a major shock to the economy.

We still have a shortage of money in the hands of most Americans. Purchasing by those who were able to save a great deal more during the pandemic in the short term is causing this blip of inflation.

Think Peaches vs. Plums

This is pretty much the same effect we see when bad weather ruins the peach crop and prices rise so much that many people decide to eat plums, apricots or apples instead. Likewise, when a bumper crop of peaches hits the market and prices fall, people by fewer plums, apricots and apples.

The key reason inflation is not going to turn long-term and ruinous is the huge excess cash held by those toward the top of the income and wealth ladders. They have far more cash than can be profitably invested. Just a year ago there was serious talk the banks might start charging people to hold their cash, which we have seen in a very limited fashion in Europe.

America is so awash in cash, though highly concentrated cash, that banks pay a tiny fraction of 1% on savings accounts. If you have $25,000 in your bank it may pay just 20-cents interest each month.

That's because demand for cash in the business world is extremely weak compared with the oceans of greenbacks being held in checking, savings and money-market accounts.

Every day, banks pitch mortgages to people with solid credit scores at about 2% interest. Back in the early 1980s, mortgages ran 12% to 14%.

So, if all the flowers budding in the warming Spring weather are making you desire a new bicycle, just hold off for a bit. Ride your old bike, arrange to borrow your neighbor's or take a walk. As soon as the people who are price indifferent have fulfilled their demand for new bikes, prices will fall back.

Pulitzer winner believes we should openly mock people who think vaccines are more dangerous than Covid

The arrival of effective Covid vaccines has revealed a grave failure in American education. Tens of millions of Americans, the ones who say they will never get vaccinated because there's no need or because they don't trust the vaccines somehow made it through years of mandatory schooling without learning numbers.

That they failed grammar school 'rithmetic is obvious if you ask two questions:

  1. How many unvaccinated Americans has Covid killed?
  2. How many vaccinated Americans has Covid killed?

The answers: 577,000 and 74.

That's 7,800 unvaccinated people dying for each one who was vaccinated.

And what of infectious cases? The latest Centers for Disease Control and Prevention count is 32,472,201 Americans infected of whom just 5,800 were vaccinated. Only 396 of those vaccinated yet sick required hospitalization.

The smart response to anyone who says vaccination is riskier than not is to laugh—loudly, openly and heartily. That's not taking away their free speech; it's using our free speech to respond with the derision their idiocy deserves.

No vaccine is totally effective, especially not at first. When I was a boy in the 1950s about 160,000 people a year, mostly children, contracted polio. More than a thousand died each year. Then we got the polio vaccines. First came the dead virus Salk vaccine in 1955 and then in 1961 the much more effective Sabin vaccine which used a weakened but living poliovirus.

Back then some polio cases were associated with vaccination mostly because one manufacturer had poor quality controls. That's an argument for rigorous regulation and inspection backed up by severe punishments like prison time for owners and managers who play cheapskates on safety. It's not an argument for avoiding vaccines.

The polio vaccines worked although the United States approved the Sabin vaccine only after the Soviet Union allowed it to be administered to children in then Communist Russia.

Parents today have no idea about the universal pre-1955 fear among parents that their babies would end up in iron lungs or worse. The last time a new polio case originated in America was 1979.

Few Deaths Among Vaccinated

As for the current pandemic, death is rare among people who are fully vaccinated. That means up to two shots and two weeks out from the date of the last shot. Covid deaths will become even rarer going forward, provided that vaccination becomes near-universal.

And yet 10s of millions of Americans believe—with absolutely no basis in verifiable fact—that the Covid vaccines are riskier than going without.

Rampant innumeracy helps explain the insane news that almost one in five healthcare workers doesn't plan to get vaccinated, as The Washington Post reported in March. Almost a third of Massachusetts State Police have not been vaccinated, and say they don't plan to be, either.

Ditto for thousands of healthcare workers in North Carolina hospitals. To persuade all state employees to get vaccinated, Maryland pays $100 but does not punish those who refuse.

Consider what a friend paraphrased this week: A doorman at her Manhattan apartment said he thought his risk was higher if he got vaccinated.

Here's the other side of the story if 10s of millions never get vaccinated:

The coronavirus will keep spreading to new human hosts. It randomly will mutate until a new variant proves even more infectious than the viruses circulating now, which will likely spark another pandemic, putting us all back into lockdown.

Virus Runs Rampant

Oh, wait, that's already happening with pernicious new variants in Brazil, Britain and South Africa. Look at the contagion gone wild in India where a lack of beds, supplies and oxygen means hospitals turn away people.

Sorry, you're just going to die because Prime Minister Narendra Modi failed to prepare for a pandemic even after seeing Donald Trump's lethally incompetent pandemic mismanagement in America.

Now imagine a new coronavirus variant with characteristics like MERS, the Middle East Respiratory Syndrome. In the past decade, it's only infected about 2,600 people—a third of them died. MERS is still around. It's just been contained, which is what vaccination is supposed to do with Covid.

A mutated virus that kills not fewer than 2% of those infected, as with Covid, but 33 percent of those infected, would devastate American society for decades.

It would mean death on the scale of the recurring Black Death pandemics that ravaged Europe for three centuries killing a third of the populace. Had that been the mortality rate for Covid, more than 11 million Americans would be dead.

Viruses don't respect borders, beliefs or governments. They operate on the same principle as cancer cells—growth for the sake of growth, even though they kill the host and thus their own colonies.

Thoughtless as the coronavirus is, it moves around the globe efficiently, carried to every corner of Earth by human hosts in jetliners. And that means we need universal global vaccination because people in India are dying from this virus and its variants are a threat to people in Indiana.

Wealthy Nations Need to Step Up

At two shots per person that's close to 16 billion doses, though it may well be that half as many will do the trick because we don't all live in packed modern urban areas.

That will cost a fortune and yet we as Americans have a direct interest, just as do residents of other wealthy countries, in paying to vaccinate people in poor countries because it's for our own well-being, our own protection.

This global cost brings us back to innumeracy. How did 10s of millions of our fellow Americans get high school diplomas without grasping simple issues about numbers?

Students, which of these is more? 577,000 or 74?

Aw, gee, teacher, I can't tell the difference.

How do people like the quarter of New York City cops who have not been vaccinated even get hired for a job that requires critical thinking skills, while distinguishing between 577,000 and 74 is pretty basic? (This may help explain why we have so many bad shootings by police; too little emphasis during hiring on critical mental skills.)

Surely the public schools—as well as private and parochial schools that are supposed to meet government standards— are failing to teach about numbers and about the basics of science in a meaningful way.

Stupid Republican

We have numerous members of Congress, Republicans all it turns out, who are proudly anti-science or scientific illiterates. They are so ill-informed they don't know the difference between "climate" and "weather" and evidently don't want to learn, either.

Such ignorance is found across America. Some people moronically believe that science is just another religion.

Then there are the fools who teach the absurd notion that people and dinosaurs coexisted.

Innumeracy would be less common but for a decision by PBS more than four decades ago to cancel The Electric Company, the daily kids show about numbers and their relationships. It lasted for only 780 episodes over six seasons.

The Electric Company died because there were no puppets, toys and related merch to sell to kids, unlike Sesame Street, which lasted 51 seasons on public television before moving to HBO, making it unavailable to millions of children whose parents can't afford the pay-TV service.

If only someone had created the Sign family of puppets—Equals, Plus, Minus and all their symbolic cousins. Then maybe the total numbers from puppet sales would have multiplied into enough funds to cover production costs, adding up to a positive product, namely more Americans learning their numbers and relationships between numbers.

There are, of course, other factors influencing those saying no to vaccination.

Religious Foolishness

Some hold mystical beliefs, like the Ohio woman on CNN who said she would never get infected nor would those around her because she was "covered in the blood of Jesus Christ." Some anti-mask and anti-social distancing pastors insisted that Covid was no danger, punishment for fornication or other nonsense—only to die from the disease.

Then there are the lies posed as questions by Tucker Carlson of Fox, who falsely says officials won't answer questions about vaccination, questions that have been answered without hesitation both broadly and in fine detail. Some Trumpers see vaccination as supporting President Joe Biden, oblivious that Donald Trump and Melania got vaccinated in secret even though he had the disease and recovered.

And then there are the crazy and incoherent QAnon-type conspiracy theorists who spread the silly lie that Big Brother plants tracking agents in the vaccine. Can we recognize and discuss mass paranoia, per the many DCReport essays by Dr. Bandy X. Lee?

In California, Orange County Supervisor Don Wagner asked Dr. Clayton Chau, the county's chief public health officer, about trackers in the vaccines. Dr. Chau laughed openly.

Later Wagner said that laughing was what he wanted because he was trying to persuade some constituents that the idea of a tracker in the vaccines is loony.

Taking the supervisor at his word, I think he's on to something. The smart response to anyone who says the vaccine is riskier than not is to laugh—loudly, openly and heartily. That's not taking away their free speech; it's using our free speech to respond with the derision their idiocy deserves.

We have good reason to mock and shame these people by calling them out for what they are: stupid, uneducated, fools; children posing as adults; selfish little spirits who care only about themselves and not their neighbors.

We should make them social pariahs because they are endangering us all by needlessly increasing the risk of a new pandemic or a deadly future wave of the current Covid crisis.

Louis DeJoy strikes again: How our postal service helped Amazon win controversial Alabama union battle

After the failed union vote at an Amazon warehouse in Alabama, the critical postmortems ignored a reality that may result in another election: Amazon cheated.

And Louis DeJoy, the Trump-era holdover dismantling the U.S. Postal Service, helped.

A May 7 labor board hearing will consider a request for a new vote sought by the Retail, Wholesale and Department Store Union. Its complaint details a campaign of intimidation to pressure employees to reject the union.

The Labor Board has a long history of looking the other way when given evidence of cheating by employers in union elections. But this time may be different because of who helped cheat --- from local on up to national officials.

The Jeff Bezos company installed drop boxes to collect votes on company property. Amazon placed these boxes despite being told by the National Labor Relations Board staff not to do so.

The drop boxes were placed with the connivance of the service led by DeJoy. Former President Donald Trump installed this high-rolling donor to worsen mail delivery during the fall presidential election Trump was hellbent to win. Less mail, less votes; less votes, less competition.

Here, we use the pejorative verb connivance because the drop box installed inside Amazon's Bessemer parking lot did not carry any postal insignia.

Amazon can leverage the Postal Service because Amazon has made itself crucial to USPS finances.

The Postal Service generated nearly $4 billion in revenue from Amazon in 2019 and counted an eye-popping $1.6 billion of that in profit. The volume of business Amazon delivered grew bigly last year because of the coronavirus pandemic.

This reliance on Amazon for highly profitable business likely explains why, beyond his well-documented anti-union animus, DeJoy would help Amazon fight the union.

The struggle between American workers and the bosses has been, and continues to be, fantastically lopsided.

A pro-union worker, Jennifer Bates, told reporters last month that colleagues at the Bessemer Fulfillment Center were reluctant to deposit ballots in the mysterious drop box that suddenly appeared in the parking lot.

Workers Feared Amazon

"Some of the people are afraid to put them in there," Bates said. "The 'yes' voters feel that Amazon will probably try to steal their ballots."

Labor lawyer Brandon Magner tweeted: "If Amazon did install these mailboxes, or if they exercise control over the mailboxes, such as having a key to the ballot box, that would clearly merit setting aside the election if the union were to lose."

During the voting, which lasted from Feb. 8 to March 29, Amazon demonstrated just how crucial controlling the Bessemer warehouse parking lot — and what went on inside it — was to the company.

'Coercion and Intimidation'

The union made the following claims:

  • Amazon hired police officers to patrol the parking lot and surveil interactions between employees and union organizers. The constant presence, according to the union's protest filing, "created an atmosphere of coercion and intimidation thereby interfering with the right of employees to a free and fair election."
  • The company used local government officials to change policies governing employees exiting the workplace. Amazon got the timing on a traffic light located outside the facility changed so union organizers wouldn't have much time to approach departing workers.
  • Workers were forced to sit through hours of mandatory indoctrination meetings. These sessions, often used by companies to scare workers into believing their jobs will disappear if they vote for a union, are often effective with workers who have not yet experienced the benefits of collective bargaining.

Without a union, individual workers have no power. And while some who voted against the union told journalists after the vote that Amazon paid them well, the issue is whether it should pay them even better along with improving their benefits and work rules.

Record Profits

Last year, Amazon reported a profit of $24.2 billion before taxes, up from $13.9 billion in 2019 and almost 10 times its 2016 pretax profit.

Amazon pays little in federal income tax. In 2020 its "effective federal income tax rate of just 9.4%, less than half the statutory corporate tax of 21%." So said Mathew Gardner of the Institute on Taxation and Economic Policy earlier this year when Amazon announced its latest financial success.

Amazon has been so successful that a dollar invested when it first sold stock in 1997 has now grown to $2,300, making it one of the most fantastically profitable investments even in this era of high profits in high tech.

While the company doesn't want to share more of its gains with the blue-collar Americans whose labor makes its profits possible by quickly fulfilling orders, it does lavish money on its executives. One reason to favor the top is that the way Amazon pays executives provides a stealth financial and tax subsidy.

Costly Stock Options

The company showered so many valuable stock options on its highest-paid people that the tax savings alone came to more than $600 million last year, Gardner calculated.

Stock options save companies on corporate income tax. The companies get to deduct their value even though the cost is borne by existing stockholders. The stockholders' share of the company is diluted by the new shares given to executives. In other words, it's a tax deduction that costs the company nothing.

Options are also a form of compensation that cost the company nothing, unlike the hard cash it must pay out to rank-and-file workers like those at the Bessemer warehouse.

What's most troubling about this union election is that a federal government corporation worked with management against the workers. That's a troubling sign of authoritarianism.

Remember Amazon worked in concert with the service to install the dropbox to collect ballots on company property. The service acted after staff at the Labor Board, the federal agency tasked with protecting the rights of American workers in the private sector, told them they couldn't do it. But just as it pressured workers, Amazon pressured the service into pleasing Bezos, the richest person in America.

No Answers

Dave Partenheimer, a postal public relations manager, would not talk about who ultimately gave the go-ahead to install the dropbox in the Amazon warehouse parking lot.

Partenheimer declined to say whether the service knew that the Labor board already denied Amazon's request for such a dropbox. He also declined to identify who ultimately approved installation.

Instead, Partenheimer reiterated an earlier statement about a "Centralized Box Unit [CBU] with a collection compartment" being "suggested by the postal service as a solution to provide an efficient and secure delivery and collection point."

The Labor board isn't talking about the dropbox either, at least not while it considers the 23 separate objections filed by the Retail Store, Wholesale and Department Store Union.

The Labor board spokeswoman, Kayla Blado, declined to comment on whether the Postal Service has the authority to supersede her agency's decisions. She would not even confirm that the agency did, in fact, deny Amazon's request to have a ballot drop box installed on its property.

DeJoy Strikes Again

The persistent controversy about the dropbox and the Bessemer vote overall, however, parallels the madness that surrounded mail-in ballots during the last presidential election. DeJoy ordered the removal of mail sorting machines in the run-up to the vote, while the rest of the Trump administration whined about the supposed inability of the Postal Service to properly deliver ballots.

Trump also complained throughout his four years in office that the Postal Service was subsidizing Amazon. This was to advance his attacks on the aggressive reporting by The Washington Post, which Bezos owns, but whose newsroom he has never influenced according to the top editor and reporters working there.

We now know that the prices Amazon paid generated outsize profits for the Postal Service, exposing yet another Trump lie though only a few Americans, like DCReport readers, know this.

Fought Mail-in Votes, Then Didn't

At first, Amazon fought hard to block mail-in voting. It dismissed the potential dangers of in-person voting during the pandemic. Then it reversed course and challenging the ability of the Postal Service to deliver mail-in ballots in a timely fashion. Taken together it was a classic case of Amazon talking out of both sides of the company's mouth.

Lisa Y. Henderson, the Labor board's acting Region 10 director, dismissed the company's contradictory arguments in January and ordered that balloting be conducted by mail.

How the Labor board rules, and whether the long list of federal rules that hobble union organizing, will be addressed by President Joe Biden's administration. Decisions will be crucial to whether Americans as a whole prosper, or we continue to create inequality through policies that tilt heavily to the side of business owners and investors.

The struggle between American workers and the bosses has been, and continues to be, fantastically lopsided.

The Economic Policy Institute's Unequal Power Project, for instance, notes an "inherent imbalance in bargaining power between employers and employees" that creates "a lack of freedom in the workplace."

Pro-union workers at Amazon's Bessemer Fulfillment Center remained undaunted after losing the initial vote, declaring, "This battle has just begun."

"I'm not discouraged, Linda Burns told reporters after losing the vote by a more than 2-to-1 margin. "This is the beginning. [Jeff] Bezos, you misled a lot of our people. We're going to fight for our rights."

Co-worker Emitt Ashford said if the Labor board does order a new election, "We would see a change in the tide now that people have the information."

"We would win," he said.

Inside a new plan to combat international money laundering

Money laundering, both for terrorist finance and tax evasion, threatens national security. Now a private group that watchdogs the quality of anti-money laundering efforts has put forth a smart plan to modernize and upgrade our government's capacity to track illicit cross-border financial transactions—news you will be hard-pressed to find elsewhere.

Global Financial Integrity has a plan, and it's a good one, to upgrade America's Financial Crimes Enforcement Network. FinCEN, as it's known, is a critical government agency housed at Treasury and staffed heavily with IRS financial sleuths. It doesn't get nearly the respect or budget it deserves.

Global Financial Integrity is itself an underappreciated Washington nonprofit funded by a host of sources including the Ford Foundation and five governments, though not the United States. On a budget of not much more than $1 million per year, it has done solid work calling attention to the growing problem of illicit finance.

At least $40 trillion of illicit money sloshes around the globe...maybe $50 trillion.

Jim Henry, DCReport's economics correspondent, has spent decades documenting illicit money flows. He estimates from analysis of official banking and trade documents that at least $40 trillion of illicit money sloshes around the globe. The total may be $50 trillion. To get an idea of the gigantic size of that corrupt money bag consider this: Henry's lower-end estimate almost equals the combined annual economic output of the world's two largest economies, America and China.

Global Financial Integrity, in a report titled "Enhancing National Security by Re-imagining FinCEN," makes these recommendations:

  1. Give the FinCEN Director a seat on the Deputies Committee of the National Security Council (NSC) to raise the agency's stature within the national security community.
  2. Create within FinCEN a National Anti-Money Laundering Data Center for advanced data collection, synthesis, analysis and distribution to law enforcement for AML activity.
  3. Establish a "Manhattan Project" to identify, develop and use state-of-the-art technologies needed to fulfill the technology for that data center.
  4. Launch within FinCEN a National Anti-Money Laundering Training Center which will be an anti-money laundering knowledge and education hub for FinCEN staff, financial institution regulators, law enforcement at the federal, state and local levels and for state and federal prosecutors.
  5. Create a Strategic Analysis Team to examine emerging and long-term trends in money laundering methods and computer technologies to counter those threats.

Those are superb ideas all. But will Congress care?

A core problem with hunting for terrorist finance is that the tools used to sift through billions of transactions involving trillions of dollars are the financial equivalent of trawling the ocean bottom for cod. Trawlers catch plenty of cod but they also drag in many unwanted species.

Tax Cheats Off the Hook

The George W. Bush administration was so averse to a serious hunt for big-league tax cheats, it disconnected from a nascent movement by major countries to coordinate their tax policies, a boon to tax cheats. It even refused to hire 80 more IRS investigators to hunt for transactions by Al Qaeda and other terrorist groups in the wake of 9/11.

The official excuse was that taxpayers couldn't afford an extra $12 million in spending, an absurdity when trillions were being spent on the wars in Afghanistan, still underway, and Iraq. But the funding denial made perfect sense if you knew that anti-money laundering nets catch tax cheats along with terrorists. And since the political donor class is rife with tax cheating, catching tax cheats can be inconvenient for politicians in power, and fellow party members, as a Congressional staffer recently reminded me.

In writing about money laundering in casinos since 1988, in my coverage of taxes since 1995, and on terrorist finance after 9/11, I developed a deep appreciation for the unsung work of FinCEN – and recognition of its weaknesses.

More People, Better Tech

What is needed now to strengthen FinCEN: more staff, super-sophisticated computers on apar with the National Security Agency and, most of all, adding a seat for FinCEN at White House National Security Council meetings.

A FinCEN director once told me that given enough time and resources his staff could find a single $19.99 credit card transaction anywhere in the world. The 9/11 attacks were cheap, costing only about $100,000. We shouldn't forget that relatively small expenditures can cause enormous harm.

To find the little transactions behind big attacks in the future FinCEN needs enormous computer power to separate golden nuggets of fact from the overburden of routine financial transactions. FinCEN also needs to be set free to find not just terrorists, but tax cheats.

With trillions of dollars of illicit money in the hands of criminals, kleptocrats and terrorists, and hundreds of billions of dollars of federal income taxes evaded each year, it's long past time to upgrade FinCEN.

Former Yale psychiatrist sues university -- saying she was fired over her efforts to expose Trump's mental illness

As Dr. Bandy X. Lee's frequent publisher, we, the editors of DC Report.org. believe she has made vital contributions to our understanding of public mental health and the damaging effects of a deeply mentally ill individual, Donald Trump, holding the most powerful position in the world.

Trump's delusions, which are well-documented and go back decades, have resulted in the spread of baseless conspiracy theories, numerous acts of deadly violence and the failed attempt to overthrow our government on Jan 6. These assaults continue although there are indications that some Trump followers who embraced his delusions appear to be recovering from their own temporary loss of rationality and mental well-being.

Yale University fired Dr. Lee, an established professor on its medical school faculty, citing the misnamed "Goldwater Rule." That policy directs mental health professionals to hold their tongue about the mental well-being of officials, something American citizens do every day around their kitchen tables, in public forums and on national television. To deny the citizenry the insights of educated mental health professionals is more than absurd, it is an attack on the very principle of American democratic self-governance.

We believe every one of her opinion columns and interviews falls well within the boundaries of the highest standards of responsible journalism.

The "rule" is itself of dubious provenance, relevance and is outdated. And yet one of America's leading universities clings to this orthodoxy in firing Dr. Lee, after 17 years on its medical school faculty, for using her knowledge to advance and widen human understanding of public mental health and the deleterious effects of having a popular leader who suffers from delusions that are well documented.

All Americans should be deeply disturbed at Yale's implicit attack on robust public debate by punishing Dr. Lee and seeking to intimidate other well-informed mental health scholars about our elected leaders and their fitness to hold office. This is especially so for any president because his finger is on the nuclear button.

We have published more than 40 articles by Dr. Lee and expect to carry more of her work. We believe every one of her opinion columns and interviews falls well within the boundaries of the highest standards of responsible journalism. Her writing also advances our mission, which is to cover what politicians do, not what they say, and to encourage citizens to act like the owners of our government.

Lawsuit Filed

On Monday, Dr. Lee filed a lawsuit against Yale for wrongful termination, as the student-run Yale Daily News reported today, March 23.

Her complaint, filed in U.S. District Court in Connecticut, asserts that "Yale violated its contractual obligations to Dr. Lee and violated the implied covenant of good faith and fair dealing. Yale further committed the tort of negligent misrepresentation by not adhering to its policies on academic freedom, upon which Dr. Lee had relied."

We hope that the trustees and academic leaders at Yale University cease their attack and acknowledge their error and that they embrace the fundamental principle of American democracy which depends on rational and reasoned debate, not dogma like the misnamed "Goldwater Rule."

Her lawsuit notes that the American Psychiatric Association reinterpreted its "Goldwater Rule" shortly after Trump became president.

'Gag Order'

"The reinterpreted Goldwater Rule created a gag order, recommending that its members not comment on public figures… even where there is a responsibility to society to protect public health," unless these politicians have submitted to psychiatric evaluation, her complaint states, noting that the APA is a voluntary professional organization of psychiatrists, not a regulatory body with government powers. She was last a member of that organization in 2007.

Dr. Lee says, and we agree, that the APA's new interpretation of the rule is "in conflict with [the] duties, responsibilities, and role in the interest of public health in light of her belief that Donald Trump posed a dangerous threat to this country and the world. For this reason, she held an ethics conference at Yale in April 2017 with some of the most respected members of her profession. This conference initially had approximately two dozen attendees and then drew national attention and led to the public-service book, The Dangerous Case of Donald Trump: 27 Psychiatrists and Mental Health Experts Assess a President."

That book became a New York Times bestseller.

While Yale did not sponsor the conference, Dr. Lee discussed the conference in advance with Yale, and Yale provided an auditorium without charge, making her firing all the more incoherent and indefensible academically, politically and morally.

Dr. Lee's more than 40 opinion pieces and interviews, some of them co-authored by other eminent authorities in mental health, can be read by clicking on this DCReport.org link.

DCReport is a reader-supported nonprofit and advertising-free public service journalism organization led by former senior and widely respected journalists from The New York Times, The Wall Street Journal, the Los Angeles Times, and other serious news organizations.

How the deep-freeze power debacle is going to cost Texans billions

The pocketbooks of electricity customers across America are under renewed assault by politicians and their friends in the electric power generation business.

Unless America restores a sound economic and legal principle that has protected both consumers and electricity companies for more than a century you can expect bigger and bigger electric bills and possibly the ruinous price gouging as Texans face right now.

Odds are you haven't heard that in the news. That's because no one announced it and most journalism is about covering official announcements while at DCReport we look at facts and decide what we think you need to know. Policies and facts affecting how much you pay for electricity each month are typically news only after a crisis, not as an ongoing news story.

Harsh as Texas is on criminals, it goes all soft and fuzzy when it comes to businesses ripping off millions of people for $550 each.

Regulation of electricity is based on the principle of "just and reasonable" rates. That means consumers pay prices they can afford while investors are assured a reasonable profit, typically a 10% or so return on their assets. Half the states still follow this principle, but half do not.

'Unjust, Unreasonable'

This principle is so thoroughly enshrined in American law that courts have held that when a utility earns a single dollar more than it is entitled to, the profit is "unjust and unreasonable."

Texas politicians last week delivered the latest blow to this sound economic principle following the winter freeze debacle that left millions without power and, eventually, water.

Texas electricity producers charged an extra $47 billion during the Feb. 14-19 freeze. Only $10 billion of extra charges were imposed in all of 2020.

It turns out that a third of these extra charges were bogus. Yet amazingly, Texas regulators plan to let power producers keep the $16 billion they improperly overcharged.

$550 for Every Texan

The overcharges average $550 per Texan. Steal that much just once in the Lone Star state and you can get a fine of up $2,000 plus a six-month stay at the local sheriff's gray-bar hotel.

Harsh as Texas is on criminals, it goes all soft and fuzzy when it comes to businesses ripping off millions of people for $550 each.

The mistake enabling the overcharges was made by the grid operator, the Energy Reliability Council of Texas. Six of the council's seven members, who are residents of other states, said they were resigning.

The $16 billion of improper overcharges took place during the final 33 hours, the company that monitors compliance with the Texas rules revealed. Not correcting this "will result in substantial and unjustified economic harm," wrote Chris Bivens, a vice president of Potomac Economics, the Texas market monitor.

$9,000 per Megawatt Hour

Ironically, about $1.5 billion of the overcharges were paid to electric generating station owners to produce electricity in freezing weather, according to Potomac Economics.

For those 33 hours producers sold power at the maximum allowable price of $9,000 per megawatt-hour. The average cost of producing each megawatt ranges from roughly $11 to $37 dollars depending on what fuel is used

During the freezing weather, the costs of generating power did not go up much or at all. But so many power plants shut down that those still running were allowed to boost their prices sky-high.

The typical residential customer in America uses electricity by the kilowatt. For a megawatt, a unit 1,000 times greater, the typical residential cost is in the range of $130. But Texas electricity generators charged almost 75 times that much. Price markups on that scale are so one-sided that the law treats them as unconscionable and judges often refuse to enforce such contracts.

Too Complicated

Correcting the overcharges would just be too complicated, Arthur C. D'Andrea, the Texas Public Utilities Commission chairman, announced. "It is impossible to unscramble this sort of egg," D'Andrea said last week.

That's nonsense. It's actually easy.

Letting the excess charges stand would also be bad for attracting digital industries to Texas, a major goal of Governor Greg Abbott. His administration is courting Silicon Valley firms because California housing prices are so high it's hard to attract young workers. But digital industries require electricity that is both reliably available and predictably priced and Texas just proved it can't deliver. Electricity shortages are almost certain to worsen in the next few years, as we reported on Feb. 19.

Evidently, PUC chairman D'Andrea didn't get the governor's memo on bringing digital firms to Texas.

Regulation is a dirty word to Abbott and other top Texas officials, Republicans all. But because of its unique nature electricity regulation is crucial because the modern world runs on it and it is created and used in the same instant.

Juice is what most distinguishes us from the ancients. People in ancient Athens, Rome and other cities had paved streets, lodging houses, restaurants, retail shops and even resorts just as we do today. What they lacked were the electrons needed for automobiles and jetliners, night lighting, elevators, refrigerators, and computers.

Texans Facing Bankruptcy

Some Texans are now faced with depleting their savings, drawing money from their retirement savings, mortgaging their homes or filing for bankruptcy even though they used the same or less power during the freeze as on other days.

The Texas rules, which I've warned about for 15 years, are clear, the failure to follow them was blatant, and the plan to let producers keep the $16 billion of overcharges is unfair, unnecessary and, if litigated, likely to be found unconscionable.

It's reasonable to wonder whether the regulators, all political appointees, made a convenient mistake, in effect subtly telling generating plant owners: "Fellas, stuff your saddlebags with all you can and ride over to the bank with your ill-got gains while we sightless sheriffs take a nap."

That may sound cynical, but utility regulation is a revolving door everywhere. Commissioners who set electricity rates and grid rules overwhelmingly come from the executive offices at utilities where they return after their stints as public officials. Consumer advocates are as rare as snow in Houston.

The Ghost of Enron

The problem with electricity overcharges extends far beyond Texas, but it began there in the mid-1990s with lobbying by Enron, the fundamentally corrupt energy price manipulator that later went bankrupt.

Enron persuaded the Texas legislature in the mid-1990s to fundamentally change the way electricity is financed and sold. The idea was that while distributing electricity is best done by a monopoly so multiple power lines are not needed everywhere, there's no natural monopoly in generating power. That's more than reasonable–on the surface.

Eventually, half the states decided to replace vertically integrated electric utilities which generated, transmitted and distributed electricity. Instead, independent firms would generate power and bid to sell it to distribution companies in so-called single-price auctions.

Enron argued that when there was more demand for power than expected prices would spike and those spikes would attract new investors who would build more power plants and in the long run prices would come down.

'Single-Price' Auctions

I've yet to meet a businessperson eager to invest in a business where it takes years to go from concept to operation with the expectation that future profits will be smaller than today.

The biggest flaw in the Enron idea, however, is that idea is that doing the opposite is faster, cheaper and comes with less risk while virtually guaranteeing fat profits. You can read our DCReport stories here and here as well as here and here.

Enron sold Texas lawmakers on "single price" electricity auctions.

Here's how a single-price electricity auction works. The grid operator, in this case, the Electric Reliability Council of Texas, calls for bids to supply power for periods that can be as long as a year and as short as a few minutes. Bidders offer to sell power at whatever price they chose.

When bidding closes, everyone whose bid is at or below the price needed to supply all the juice the market needs wins. The winning bidders also get the highest price bid. So even if the average bid was, say, $100, if the highest winning big was $9,000 then every winner gets the $9,000.

Lose-Lose Deals

That means a hydroelectric dam operator with costs of maybe $120 per megawatt-hour can bid one penny to ensure their bid is a winner and then collect thousands of dollars. So, when they throw open the floodgates to make turbines spin, it's almost as if greenbacks instead of water flow like Niagara Falls.

What Wall Street investors figured out, as I did, was another flaw in the Enron plan.

Owners of a single power plant must bid low enough to make sure their electricity is purchased, but owners with a fleet of electricity generators can bid strategically to jack up prices.

Experiments with college students, simple bots and actual bidding records showed years ago that this is exactly what happens, as explained my 2007 book, Free Lunch.

There are rules against this kind of manipulation, which is why grid operators hire independent market monitors like Potomac Economics. But some market monitors have been less than diligent while others have had their advice ignored as right now in Texas.

On top of this, in one of his first official actions in 2017 Donald Trump signaled to Wall Street that fleet owners were pretty much free to manipulate electricity markets, the subject of the second story DCReport published.

As for unscrambling that egg, the task that Texas PUC Chairman D'Andrea says is too hard, here is one way of several ways to restore fairness. The Texas PUC can reject charges that exceed the pre-crisis price during those 33 hours. The independent power producers all keep detailed time and price records and can issue revised invoices. They can also sue the state if they want, knowing they risk being tossed out for trying to enforce unconscionable contracts.

Undoing the improper excess charges involves accounting and math but since, unlike the ancients, we have electricity to power computers it's not all that hard to make the calculations necessary to uphold the just and reasonable principle.

Argument senators using against raising the minimum wage 'is actually silly': expert

Imagine Washington announcing today that for the next three decades your pay will increase each January. You'll get a boost to cover inflation plus 10-cents more an hour. That means your real pay next year, before taxes, will be $4 more per week.

Ask yourself, would you even notice an extra $4 a week in gross pay? Would you feel like playing by the rules and being a good worker was worth it?

Well, that's what has happened to the typical American worker since 1990, but no one announced it back then. And it's happened as unions have been pretty much destroyed, representing only about one in 15 private-sector workers.

As a middle-aged widow who lost her job and took minimum-wage work at a major national retailer to feed herself and her son, who live together in a town with low-cost housing, told me:

"You can't make ends meet on the minimum wage no matter how much you try. It is just not possible."

Republicans and some Senate Democrats claim that raising the minimum wage will kill jobs and force small businesses to close. That's not what past actual experience shows, at least not on this planet.

That's the prime reason Congress and President Biden must raise the minimum wage.

As private-sector unions have faded away, wages have fallen in tandem. The numbers and the pain of people like the widow show that Congress must step in, acting as a proxy union for the lowest-paid workers by raising the floor on wages in America. If lawmakers fail then taxpayers should expect rising costs for welfare to cope with social pathologies. We should all expect popular support for our tattered democracy will wither even more, putting our liberties in danger.

Inflation Toll

The story I pulled from the official data shows things are much worse than just the awful fact that the minimum wage has been stuck since 2009 at $7.25 an hour, its value being eroded by inflation even as America grows ever richer.

Each year, I do detailed analyses of W-2 wage and salary reports that employers send to the Social Security Administration. Its computers add up every filing and then a report shows how many people make how much in broad pay categories whether they had one employer or many.

What the wage data show is disturbing. America is becoming two nations separate and unequal, one with a minority of workers who are prospering, some making each year enough for a hundred families for a lifetime. Across the income divide more than 130 million workers struggle.

Republicans and some Senate Democrats claim that raising the minimum wage will kill jobs and force small businesses to close. That's not what past actual experience shows, at least not on this planet.

Faulty Argument

That argument is actually silly because it assumes that prices never increase so if wages go up businesses must fail. Nonsense. But should you find a dealer advertising new cars today at 1990 prices please let me know.

What the facts show that since 1990 our national wage pie, adjusted for inflation, has grown much bigger. Adjusted for inflation it was $8.8 trillion in 2019, up from $5 trillion in 1990.

But the way the wage pie was cut into slices changed significantly.

Let's look first at workers who always earn only the minimum wage. Such people exist, though they are not common.

In 1990 the minimum wage was $3.80. Adjusted for inflation it would have to have risen to $7.48 in 2019 just to stay even. But the minimum wage was only $7.25, the same as today. In absolute terms these workers are worse off, their meager slice of income pie shrinking.

In 2019 half of America's 169 million workers made less than $35,000; a third made less than $20,000. Only one in three workers earn more than $1,000 per week.

$620 a Week

What about the typical worker? That's measured by examining median pay; half make more, half less. In 2019 the median wage was $34,250 or $620 a week.

That's a real increase since 1990 of $5,712. That sounds good until you realize that in round numbers it works out to that dime an hour raise every January.

How about the average wage which includes those with ginormous paychecks? Real average pay rose by $12,225 to $51,916. That's two dimes and a penny more per hour each January. How much would you notice an extra $8.40 a week – before taxes?

Now let's turn to the extremely well paid, people whose pay increases alone meant they gorged on wage pie while most everyone else got crumbs.

Let's consider all workers making $1 million or more, roughly one in every thousand workers. Their share of the national wage pie rose mightily, from 3 cents in 1990 to a nickel in 2019. That leaves everyone else with a smaller share of the pie to divvy up.

What about the super-paid workers who made $10 million or more in 1990 and 2019 using 2019 dollars.

More Super-Rich

The number of super-paid workers is for sure small. But it grew five-fold from 739 to 4,024.

Their average gross pay increased from just shy of $2 million to almost $2.5 million. Simply put in 2019 they got six days of pay for five days of 1990 work.

Also, a record 222 of these workers were paid more than $50 million in 2019, averaging $89 million each.

Even if we assume that employers pay these top earners what they are worth, a society whose rules and regulations lavish every more pay on those to the top while hardly growing wages for two-thirds or more of the workforce is neither stable nor enduring. The chasm between the super-paid and everyone else is huge and widening and can destroy support for democracy, as we saw with the failed coup on Jan. 6.

Without unions to bargain for workers pay simply is not going to improve. Indeed, our government has put downward pressure on wages through the welfare "reform" act President Bill Clinton signed, which flooded the market with women who have few job skills and little education, a stealth subsidy for many employers because they could pay less. The child tax credit for working parents has morphed over time into a subsidy for employers who now capture its benefits by not raising pay. Those are just of many anti-worker policies our government put in place during the past 40 years.

Congress can fix this. It has to step in as a proxy union for powerless workers and raise the minimum wage. If we could afford a minimum wage in the 1960s that's equal to about $12 an hour today then we can afford to raise our pay standards in today's much wealthier America.

And to those small businesses that say they will fold if they have to pay their workers more there is an answer: Raise prices.

If you can't afford to pay a living wage and you can't raise prices, your business is already failing so put it out of its misery. You can always start a new business in the future -- and with people making more money your chances of success will be much better because more customers will have more money to spend.

There's a sad truth behind some terrific new income statistics

We have stunningly good news today: Wages in 2020 grew at by far the fastest rate in the last 45 years.

The bad news: It's a statistical anomaly caused by Donald Trump's lethal mishandling of the coronavirus pandemic. The scourge wiped out almost eight million jobs held by lower-paid workers and only two million better-paying jobs.

The worse news: Two Republican senators who publicly profess their Christian faith to win over voters want to oppress millions of people trapped in poverty. With straight faces, they call their plan the Higher Wages for American Workers Act.

The good news starts out this way—in 2020, average wages grew a stunningly robust 7.2% over the previous year.

More than 80% of the 9.6 million jobs that disappeared in the pandemic paid in the bottom quarter of wages. Wipe out those jobs and the statistics on wages show an increase.

That's by far the greatest one-year growth in wages in the past 45 years. In fact, it's 80% more than the fastest previous year's wage growth, analysis of Census data shows.

Typical Pay

The better measurement, however, is the median wage. It indicates what the typical worker makes. The median marks the halfway point in wages with half of workers making more, half less. The median wage grew 6.9%, a new report by the Economic Policy Institute shows.

EPI is a nonprofit research organization that advocates for poorly paid workers and regularly issues The State of Working America report with lots of interactive graphics. I've checked its work and always find it rock solid.

The obvious question is how could wages skyrocket during a pandemic that created the worst joblessness since the Great Depression? How could wages rise at all since by the end of May more than 42 million Americans, a quarter of those with any paid labor, had filed for jobless benefits?

Just beneath the surface, we find a compelling and distorting fact: More than 80% of the 9.6 million jobs that disappeared in the pandemic paid in the bottom quarter of wages. Wipe out those jobs and the statistics on wages show an increase. What's surprising is that the increase is only about 7%.

America's low-paid jobs are disproportionately held by women, especially those with children and little education, and by minorities. In real terms, these groups have been losing ground for years even as the economy keeps growing.

But by killing their jobs, at least until the pandemic is over and recovery is complete, the data in wages paid were distorted by the fact that most of those who are out of work were in the bottom half of the pay ladder.

Forgotten Americans Forgotten

What was it that Trump promised The Forgotten Men and Women? Oh yes, "The forgotten men and women of our country will be forgotten no longer." Well, he forgot about them and in addition to a real jobless rate of about 10% plus more than a half-million Americans needlessly dead. Had Trump followed sound public health advice, as we saw South Korea do, the coronavirus butcher's bill would be only about 10,000 dead Americans.

So how to alleviate the misery of America's working poor?

Senators Mitt Romney (R-Utah) and Tom Cotton (R-Ark.) say they are coming to the rescue. In a display of chutzpah and cluelessness that is extraordinary even for rich white men in high government positions, they call their bill the Higher Wages for American Workers Act.

Their bill's provisions are at odds with their professed devotion to a religion that imposes as a core duty alleviating the suffering of the poor. Cotton is a Methodist. Romney belongs to the Church of Jesus Christ of Latter-day Saints.

Cotton and Romney say the Biden administration plan for a $15 minimum wage in 2025 is way too much money. They propose a minimum wage of $10 an hour in 2025.

How much higher would real wages rise under the Cotton-Romney plan?

$12 A Week

Given the expected rate of inflation, that $10 an hour in 2025 would mean about 30-cents more in real pay than the current federal minimum of $7.25 an hour. That's $12 a week more for a full-time week. The current minimum wage has been in place since 2009 under legislation signed by President George W. Bush. Inflation since 2009 has shaved roughly a buck off each hour's minimum wage.

Measured back to President George W. Bush, the Cotton-Romney plan leaves workers worse off in 2025 than in 2009.

Now watch the news and see if the record rise in median and average wages is reported. Where it is, pay close attention—especially in reports by Fox News and its like—whether they say the increase is a statistical anomaly or proclaim a miracle wrought by Trump.

Having read this at least you won't be fooled.

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