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AltAusterity Digest #83 January 24-30, 2019

This week in Austerity News:

Feb 01, 2019

The Canadian Supreme Court could set a precedent this week by deciding who pays for environmental clean up in the event of a bankruptcy. The case focuses on Redwater Energy, an Albertan oil and gas business that declared bankruptcy in 2015. The company wanted to sell 20 of its 80 productive wells and use the proceeds to pay off debtors. However, the case went to court when the Alberta Energy Regulator stepped in arguing the money from the sale would first have to be used to clean up and secure the abandoned wells. What is at stake is who will pay for environmental cleanup in insolvency cases – taxpayers or corporations. There is concern in the business community that if lenders are not given priority in the event of a bankruptcy, they may stop lending. Alberta currently has about 150,000 inactive or abandoned wells.

According to a recent poll from the National Association for Business Economics, the Trump administrations $1.5 trillion in tax cuts appear to have not made any major impact on capital investment or hiring plans. While some companies did report higher capital investments, 84% of respondents said they had not changed their plans. The changes made by Trump and the Republicans in January 2018 saw the largest overhaul of the U.S. tax code in more than 30 years, which brought the corporate tax rate to 21% down from 35%. A study conducted at the University of Michigan on S&P 500 companies found that only 4% of their sample respondents said they were planning on using the savings to increase worker’s pay, while 22% started plans to increase investment. While the numbers for small businesses were more favourable to workers, less than half (35%) reported increasing employee compensation.

Representative Alexandria Ocasio-Cortez made headlines earlier this month for proposing a federal tax plan that would raise taxes on incomes over $10 million to 70%. The proposal has been met with distain from both Republicans, centrist Democrats, and a wide swathe of the corporate media, many of whom seem to lack a basic understanding of how marginal tax rates work. Misinformation from political pundits and the corporate media has been widespread in an attempt to discredit the proposed plan, which would only target the super wealthy. Despite the attempts at delegitimization, a recent poll found that 59% of voters, including 71% of Democrats, 60% of independents, and 45% of Republicans said they supported the proposal.

As the U.S. Federal Government shutdown came to an end last week, the Congressional Budget Office released a report estimating a temporary economic loss of $8 billion - $11 billion, and a permanent economic loss of $3 billion. Representatives of a bipartisan conference committee are tasked with securing a funding bill that will keep the government open as the temporary funding bill expires on February 15. Trump has threatened to shut down the government again or declare a national emergency if Congress does not submit to his requests for border wall funding. The 35-week shutdown was the longest U.S. government shutdown in history.

That's it for this week's Digest! Check back next Friday morning for another edition, or subscribe to our newsletter for a weekly roundup. We'll also Tweet each time we add new content, so you can keep up with our work @AltAusterity and join the #altausterity conversation!