What to do with the Rich

The New Mexico state legislature has been sitting in special session in the Roundhouse in Santa Fe in an effort to resolve projected budget deficits due to the Endless Recession.

The Legislature is controlled by the Democrats, and the Governor is former Clinton apparatchik Bill Richardson. So rather than simply cut the budget, as Republicans demanded, the legislature chose to both cut the budget and raise taxes to raise revenues to cushion the blow of budget cuts.

But this is how they've done it: They chose to raise the Gross Receipts Tax (Sales Tax) by 1/8th percent, to raise cigarette taxes 75 cents a pack and to reimpose a 2% sales tax on food.

These tax increases, of course, affect the poor far more than they do the rich, and New Mexico progressives have been expressing their outrage, disgust, and contempt for the Democratic legislature and the governor. Why do moms going to the grocery store have to pay an extra 2% to the state, while big-box stores and the wealthy continue to receive tax breaks they have been benefitting from since 2003? It is assumed that Richardson and the legislative leadership simply would not accept any tax increases on the big-box stores, corporations and the wealthy. Increased taxes on the poor and working classes, fine.

A minor adjustment to a loophole that allowed the wealthy to deduct their federal tax payments from their income will result in slightly higher tax payments from the very well-off, but the basic problem with the income tax in New Mexico is that it is essentially a flat tax of 4.9% for all incomes from about $25,000 to infinity. While some progressives wanted to add a higher tax bracket for those making over $200,000 a year, the Governor would have none of it, according to reports.

Those least able to afford an increase in taxes will be paying them in New Mexico, and the Democrats -- according to all reports -- will suffer for it in the fall. They will probably lose control of the legislature and the governorship.

I think we know why neo-liberals like Richardson prefer neo-liberal tax-the-poor and hold-harmless-the-rich solutions to budget problems.

The question is, when the only political alternative is worse -- ie: the Republicans -- what are the People to do?

Already, the rich in New Mexico live as nearly as possible apart from the People, behind walls, gates, and often private guards and surveillance cameras. The People have been long-suffering, but this action by the legislature -- and the Governor when he approves the budget and tax increases -- is a forthright slap in the face of the People.

They are to pay. That's all there is to it.

Just as the People are to pay off the gambling debts of the Banksters.

The rich are to be protected.

No matter what.

So it's come to this

This is in Victorville, CA; reports are that the same thing is going on or planned in Temecula. Spec homes in new developments demolished rather than completed or sold at a lower price:



The builder was Matthews Homes, a long-time California builder, the bank foreclosing on these properties was Guaranty Bank of Austin, and the destruction of these new homes shouldn't really be so surprising.

Many areas of California (and elsewhere) were vastly overbuilt during the real estate boom. There is a huge inventory of unsold and foreclosed new and nearly new homes throughout the state, and despite extraordinary efforts by the state and other interests and authorities, these homes cannot realistically be sold soon in this market. In many cases, the inflated mortgages have already been paid off on foreclosed properties through Private Mortgage Insurance, but the idle properties themselves are an expense (fines, taxes, upkeep, security, etc.) and rather than pay for the expense involved in holding these properties, owners of record demolish them. By doing so, they reduce inventory, clear the "nuisance" and the costs associated with it from the property and they make it possible to eventually rebuild if market conditions ever warrant.

And that's a big If.

Many areas of California have gone through repeated real estate booms/busts, and of course some of them have ultimately become very successful. Los Angeles itself is a prime case in point. But the outer fringes and most desert areas of California have had their occasional booms (or not as the case may be) only to see the projects ultimately abandoned and never revived. The skeletons of these projects are all over the state, if you know where to look and what to look for, some completely abandoned, others barely hanging on with a relative handful of hardy residents.

Victorville is not exactly a highly sought after location, but it is not by any means an abandoned railroad siding like many other places in the Mojave Desert. It "grew" very fast during the real estate boom, and it has suffered more than many other areas during the bust. How much of the "growth" can be sustained still remains to be seen, and one way to manage that "growth" is to prune the excess.

Demolishing houses that have already been paid for (or have already been written off as the case may be) in areas like Victorville -- where growth is not likely to return soon to the rates seen during the boom -- makes a kind of yucky economic sense, and we're liable to see more of it as the real estate market finds its bottom and stabilizes.

Still, it's shocking to witness.