Tuesday, September 25, 2012


Chuck Marr's "Off The Charts" blog breaks down the "47 per centers" (actually 46%) who don't pay federal income taxes.

They're a pretty hard-working bunch.

Monday, September 24, 2012

THE ELECTION THAT ISN'T (Pub Date 10/6/12)

The paradox is both familiar and bizarre. How can it be that in a congress whose approval rating is in the teens, the vast majority of seats being contested in the upcoming election will be retained by incumbents, most by wide margins?

An examination of West Virginia’s second congressional district offers an explanation.

Someone unschooled in West Virginia politics might expect incumbent congresswoman Shelley Moore Capito to be under assault from both left and right and fighting for her political life.

Capito, a Republican, represents a district in which Democrats have a 3 to 2 advantage in registrations. She’s running on the Romney/Ryan economic plan that will take far more money from West Virginia in budget cuts than it will return in tax cuts. And, at a time when many hope the administration and congress will compromise on budget and tax issues so the nation can avoid plunging from the "fiscal cliff”, Capito’s signature on Grover Norquist’s Taxpayer Protection Pledge makes her a contributor to gridlock.

Capito’s current boosterism for coal and her opposition to the Environmental Protection Agency and same-sex marriage are popular in West Virginia. But, her position on abortion is ambiguous, And, when she was elected to congress in 2000, Capito was a moderate who joined the Republican Main Street Partnership whose members were pro-choice, concerned about global warming, and supported elevating the EPA to cabinet level. Like many RMSP members, Capito sometimes crossed the aisle to vote with Democrats.

Other RMSP members of the time were denounced by conservatives as “Republicans in Name Only”. These included senators Arlen Specter (PA), Jim Jeffords (VT), John Chaffee (RI), and Gordon Smith (OR), all of whom are now gone. And many conservatives would like to dispose of remaining members such as Olympia Snowe (ME), Susan Collins (ME), and John McCain (AZ).

Capito though has flown beneath the radar, becoming an influential member of the House Financial Services committee where she is a favorite of credit card companies and banks for supporting efforts to make it more difficult for consumers to receive bankruptcy protection while opposing regulatory efforts to rein in abuses that helped lead to the 2008 economic meltdown.

In short, Capito offers would-be opponents from both the left and right much to criticize. Yet, she faces no significant primary challengers. And, after surviving well-funded Democratic opponents early in her career, she faces only nominal opposition in this election as she did in 2010.

Capito has been aided by having as opponents in her last two elections self-immolating Democrats who, as a matter of principle, refuse to accept contributions from political action committees -- not that they would have received much in PAC contributions in any case.

The reason is that neither Virginia Graf in 2010 nor Howard Swint this year, has the kind of name recognition or personal wealth that would automatically make them credible challengers. And these days the parties, like the PAC’s, concentrate their resources almost exclusively on the few races that polling indicates are competitive and on which the balance of power in the House may turn.

Like an infectious disease, this disinterest in most races has spread to institutions whose missions ostensibly include facilitating public awareness and debate.

Since last May’s primary elections, daily newspapers in Wheeling and Martinsburg, representing West Virginia’s first and second congressional districts, have devoted only a couple of articles to describing the positions of congressional challengers. And, neither of them, along with West Virginia Metro News and West Virginia Public Broadcasting, is sponsoring a debate. Even the League of Women Voters has given up trying to host debates “primarily because,” a League official explained, “the incumbent does not agree to debate.”

What’s left is an electoral information vacuum in which Capito has no incentive to engage her opponent or even acknowledge his existence. And Swint, unable to lure Capito into a debate or the press into covering his campaign, has resorted to rhetorical bomb-throwing by calling for investigations of Capito’s personal finances, alleging that she may have been involved in insider stock trading and may also have been the recipient of preferential terms for home mortgages.

This is all terrible for voters because Swint, like Graf before him, is a serious person who should be heard on the issues if only because he would force Capito to confront and address the more negative consequences of her positions and perhaps cause her to moderate the extremes to which she has been gravitating -- a trend largely unnoticed by her constituents.

And Capito isn’t alone. Many underchallenged incumbents are gravitating to extremes resulting in an unwillingness to compromise and legislative gridlock.

It’s an enigma that, while the presidential race receives suffocating coverage, congressional races, which address the same issues and represent local voices on those issues, are ignored. But, to understand why, we have only to follow the money.

Congressional races that are deemed competitive are thoroughly nationalized by the parties and PACs and are followed by the press. But, races that aren’t competitive are forgotten by all. In this way, the former are corrupted and the latter are starved, and both leave voters cheated of honest discussion of the issues.

The Supreme Court’s “Citizen’s United” decision declared that money in the form of political donations is a form of free speech. But, in this case, money has gone beyond that to become the only form of speech. As a result, our democracy is poorer.

Sean O’Leary can be contacted at seanoleary@citlink.net or at his blog the-state-of-my-state.com.

Tuesday, September 18, 2012


The thing about being the boss is that you become accustomed to employees politely agreeing with everything you say. You know that privately they might think you’re wrong and a jerk. But you don’t care because part of the fun of being boss is knowing that what wage slaves think doesn’t matter.

Of course, good form requires that you occasionally affect an attitude of caring. So, you briefly bottle up your contempt and conduct town hall meetings during which you plaster on a smile and listen impatiently while trying not to seem so. And afterward you’re allowed to retreat to the welcome company of your peers where, in opulent surroundings, you can say what you really think.

It’s excellent training for being a politician except for two things. In politics what you say privately tends to leak and what the proles think matters.

Such is the situation in which Mitt Romney finds himself after being filmed telling his cronies, “There are 47 percent of the people who will vote for the president no matter what. . . who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what …These are people who pay no income tax.”

Far from condemning Romney for his contempt, I commend him, because he has finally told the truth – not easy for a politician who has been pro-choice and pro-life, a conservative (excuse me, a severe conservative) and not a conservative, a supporter of bank bailouts and not a supporter of bank bailouts, a global warming believer and not a global warming believer, an opponent of coal ( “It kills people”) and a promoter of coal, and . . . well, you get the idea.

He said what he and others believe. There are makers and there are takers and, as far as the takers are concerned, forget them.

What’s the difference between makers and takers? Simple. Makers pay income taxes and takers don’t. So, let’s talk about makers and takers and who pays for government and who doesn’t.

The first thing we have to agree upon is that all levels of government count – federal, state, and local. That’s because tax revenues and expenditures are heavily shared. Second, we should agree that all taxes count – Social Security, sales taxes, and property taxes as well as the income tax. Third, we should acknowledge that income is income whether it’s the result of a paycheck or a dividend check.

On that basis, the percent of people that pay no taxes is precisely zero.

Yes, you say, but don’t people who pay income taxes pay much more than those who don’t?

According to an analysis by the Citizens for Tax Justice, in 2011, the richest 1% of Americans whose incomes averaged $1.4 million and who commanded 21% of all income, paid 21.6% of taxes.

Sounds fair, doesn’t it?

The middle fifth of taxpayers, roughly a third of whom pay no federal income tax and who had an average income of $42,000, earning 18.7% of all income, paid 19% of taxes.

Darn! Almost even again.

But, what about the bottom fifth of taxpayers, those layabouts who pay no income tax and have an average income of $13,000? They receive 3.4% of income and pay 2.1% of taxes.

That’s right. They’re undertaxed by a whopping 1.3% while the 1 percenters are overtaxed by six-tenths of one percent.

No wonder the country’s so screwed up!

The truth is that America’s tax burden as based on income is remarkably flat and no one avoids paying. And, if the tax burden is measured as a percent of net worth, then Mitt Romney and the 1 percenters are doing much better than the rest of us.

We all have skin in this game. And Romney’s attempt to demonize 47% of Americans as dependent moochers is truly class warfare because it prefaces policies that would take the most from those who have the least and give it to those who already have the most.

Under the Romney/Ryan budget plan, West Virginia, the state with the most 47 percenters, would see hundreds of millions of dollars sucked from its economy probably making us America’s biggest loser.

That’s why it’s ironic that Romney complained that the 47% are enslaved to Obama. If they were, West Virginia would be the most pro-Obama state in the nation.

But, those are facts, something to which Romney has an aversion. Was he moved when a Congressional Research Service report showed that tax cuts for the wealthy do not stimulate economic growth? Is he moved by the fact that European nations that applied his economic policies are still wallowing in recession and their recoveries are far behind ours? Not a chance.

Instead, while pretending to deplore class warfare, Romney carves America into makers and takers, encouraging one class to strike another, and offers to provide the means and leadership. Meanwhile, he accuses others of wallowing in victimhood while whining, inaccurately it turns out, that he is unfairly burdened with caring for them. But then, it’s always other peoples’ victimhood we find disgusting. Never our own.

Romney doesn’t, but hopefully we will understand that we are in this together.

Sean O’Leary can be reached at seanoleary@citlink.net or at his blog the-state-of-my-state.com.

Friday, September 7, 2012

THE LOSERS WE ADMIRE (Pub date 9/22/12)

There’s a newspaper editorial making the rounds in West Virginia. Published in Wheeling, Fairmont, Martinsburg, and Parkersburg, the editorial decries the use of federal funds to relieve financially struggling homeowners and incentivize banks to restructure underwater mortgages.

The editorial castigates the program as a “bailout” and an attempt by President Obama to “buy votes” in California, Illinois, and Florida where one in every 350 mortgages is in foreclosure. Then it waxes indignant saying, “But, some of the mortgage bailout money is coming from West Virginians. Here, the foreclosure rate in July was one in 7,603 housing units. Here, in the Mountain State, we are more responsible in buying homes. Our reward? Helping to bail out far less conscientious borrowers and banks.”

But, are we really more responsible and conscientious?

How about, lucky? Even a cursory glance at the numbers shows that West Virginia avoided the collapse in housing prices only because our economy was so bad that we never had a housing bubble in the first place – except in one place.

Berkeley and Jefferson counties, located at the tip of the eastern panhandle in the Washington, DC metropolitan area, are West Virginia's most prosperous counties and they are also ground zero for the housing market meltdown.

In Berkeley County 45% of all mortgages are underwater down from a high of 48% a few months earlier. And in Jefferson County the number is 37% down from a high of 40%. Jefferson is in the top 20% of all US counties for the prevalence of underwater mortgages and Berkeley is in the top 10%.

As a result, foreclosures in those counties are ten times more common than in the rest of West Virginia. One has to wonder whether these figures gave the editor of Berkeley County’s Martinsburg Journal pause before running an editorial that by implication derided a substantial portion of the paper’s readership as irresponsible and less than conscientious.

But, folks with underwater mortgages are used to being called names. The trend started in 2009 when Rick Santelli, went on a rant from the floor of the Chicago Mercantile Exchange calling people with underwater mortgages “losers”, asking, “How many of you people want to pay for your neighbor's mortgage that has an extra bathroom and can't pay their bills?”

The condemnation continues to emanate from commentators, bankers, and politicians. And it reaches a fever pitch whenever someone brings up the topic of “strategic default” – the practice of intentionally defaulting on a mortgage whose balance is greater than the market value of the house.

Simply walking away from a mortgage feels unseemly, but strangely, we’re quite tolerant of the same kind of behavior in another area.

As reported by Ken Ward Jr. in the Charleston Gazette, Patriot Coal Corporation, a spinoff of Peabody Energy, is seeking Chapter 11 bankruptcy in order to reduce contractual obligations, including health and pension benefits for some 2,000 active miners in West Virginia and Kentucky and more than 10,000 retirees.

Of the 10,000 retirees, roughly 90% never worked a day for Patriot. They were Peabody employees until the day they retired. And yet, when Peabody spun off Patriot, it was able to jettison the retirees and the obligation for their pensions to a new company that was, by design, burdened with a crushing debt load that resulted in bankruptcy. Meanwhile Peabody continued running annual billion dollar-plus profits.

In short, while most of us think of bankruptcy as a last resort taken only after all hope of being able to meet obligations has vanished, Peabody was never in that position. The spinoff of Patriot was a tactical maneuver to enhance the company’s bottom line by welching on contractual obligations.

Peabody isn’t original in this kind of manipulation. Bain Capital, under Mitt Romney, made a fortune by loading up companies with debt, using bankruptcy to abrogate contractual obligations, frequently plunge the companies into bankruptcy, and then walk away with management fees that are, ironically enough, classified for tax purposes as "capital gains”.

Another example was reported last year by James Surowiecki in the New Yorker magazine. He described how American Airlines, which at the time had four billion dollars in the bank and could have kept paying its bills, opted instead to seek bankruptcy because it had recently been losing money and “its board decided that it was foolish to keep throwing good money after bad.”

In this way American trimmed its debt load by breaking union and other contracts. And, as Surowiecki pointed out, American was admired on the grounds that it’s economically irrational for a company to keep paying its debts even when it has the means of doing so, if it’s cheaper to default.

Perhaps. But let’s apply the same logic to those underwater homeowners in Berkeley and Jefferson counties. What if, under the banner of “economic rationality”, they strategically defaulted on their mortgages? How much economic chaos would ensue in the eastern panhandle? And how much moral condemnation would be rained upon them by newspaper editors, politicians, and other guardians of public (but not corporate) virtue?

The irony is that, judging by their silence, many of the people who rail against government bailouts for homeowners seem unoffended by corporations that take advantage of bankruptcy and tax laws to violate contracts and abandon retirees thereby necessitating something else they rail against -- government safety net programs.

Sean O’Leary can be reached at seanoleary@citlink.net or at his blog, the-state-of-my-state.com.

Wednesday, September 5, 2012


My newest play, based on the novel of the same name by George Fetherling, will run from September 21 to September 30 at Full Circle Theater in Shepherdstown, WV. More information can be found at fullcircletheaterco.org.