Judge Tells Christie: Obey the Law and Fund Pensions

 A New Jersey Superior Court Judge has taken Gov. Chris Christie to task in a ruling that forces him to contribute his share to the New Jersey state pension system, just as public workers have been doing all along.

Judge Mary Jacobson ruled earlier this week in favor of the New Jersey State AFL-CIO and 16 unions who sued Christie for violating his own 2011 pension reform law by intentionally shorting the system. The judge ordered Christie to make a $1.6 billion payment to the pension system this year.

Public-sector workers accepted steep increases in their health care and pension costs in 2011 in exchange for a promise that the state would start paying what it owed. Retirees gave up cost of living adjustments in exchange for the security of knowing their benefits would continue to be there. Public workers have never skipped their contribution. The governor is the only one who has not lived up to the deal. It’s as if he is intentionally trying to bankrupt the system to force public workers into 401(k)s.

Christie’s lawyers argued that the 2011 law—which the governor initiated, promoted and signed – was unconstitutional. It was an argument that bewildered virtually everyone, including the judge, and proved beyond doubt that Christie has no credibility on the issue.

Now he’s at it again. In an otherwise empty budget address, the governor proposed … wait for it … putting the squeeze on public worker benefits again. As New Jerseyans can clearly see, the governor has been blinded by his own political ambitions and hasn’t been acting in the state’s best interest for a very long time. Christie touted the 2011 pension reform law as a landmark achievement that would ultimately save the state pension system. Instead of blaming public workers for a problem they didn’t create, we’re asking that the governor live up to the law he signed and fully fund pensions.

Charles Wowkanech is the president of the New Jersey State AFL-CIO.

Reposted from AFL-CIO NOW

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White House Moves to Close Retirement Advice Loophole

The Obama administration today took the first step to close a loophole in the rules that govern Wall Street brokers and financial firms that provide retirement investment advice. That loophole can drain away thousands, or even tens of thousands, of dollars of hard-earned savings from a single retirement account.

The “Retirement Advice Loophole“ allows Wall Street brokers and financial firms with major conflicts of interest to provide investment advice that serves their own interests instead of what’s best for their clients. Obama ordered the U.S. Department of Labor to submit a proposed rule to strengthen financial advisers’ fiduciary responsibilities and crack down on these practices.

AFL-CIO President Richard Trumka said the new rules are “long overdue” and a “good first step.” Under current rules, he said, Wall Street firms can “create and distribute investment products to elevate a financial adviser’s paycheck over the best interests of workers and retirees.”

For example, they can sell financial products that pay large commissions but hurt their clients with unnecessary fees, poor returns or excessive risks. Millions of Americans are affected by this loophole every year without even knowing it, and it is draining away their retirement savings.

Right now, some advisers are required to put their customers’ interests first while others are not—and it is often extremely difficult for workers and retirees to know which type of adviser they are dealing with.

“Americans are worried about having a secure retirement, especially as they face increasingly complicated choices about how to save and invest their hard-earned dollars,” said Trumka.

When they turn to professional financial advisers to help navigate their complex choices, they should be able to have confidence that the advice they get is in their best interest—and not driven by sales commissions and high fees that can deplete their retirement accounts like a slow leak in a tire.

Of course, Wall Street and the financial industry are adamantly opposed to reforming the rules. Two years ago, they lobbied hard for a House bill aimed at derailing any new Labor Department investment advice rule, and surely they will be spending big money to do the same thing in 2015.

Read Trumka’s full statement here and be sure to visit SaveOurRetirement.com to learn more and find out how you can help close the “Retirement Advice Loophole.”

Reposted from AFL-CIO NOW

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Time to Close Wall Street’s ‘Retirement Advice Loophole’

Alliance for Retired Americans photo

There is a loophole in the rules that govern Wall Street brokers and financial firms that provide retirement investment advice that can drain away thousands, or even tens of thousands, of dollars of hard-earned savings from a single retirement account. Today, a coalition of senior, union and consumer groups launched a new website—SaveOurRetirement.org—to mobilize support to close the “Retirement Advice Loophole” through a new rule the U.S. Department of Labor is trying to adopt.

The way workers save for retirement has changed dramatically over the past decades. With the decline in traditional pensions, more and more workers depend on 401(k) plans and individual retirement accounts (IRAs), and they frequently seek investment advice from financial professionals. But the rule governing when that advice must be solely in the worker’s interest, free from conflicts of interest, has not been changed since 1975—and many loopholes exist.

The “Retirement Advice Loophole“ allows Wall Street brokers and financial firms with major conflicts of interest to provide investment advice that serves their own interests instead of what’s best for their clients.

For example, they can sell financial products that pay large commissions but hurt their clients with unnecessary fees, poor returns or excessive risks. Millions of Americans are affected by this loophole every year without even knowing it, and it is draining away their retirement savings.

Right now, some advisers are required to put their customers’ interests first while others are not—and it is often extremely difficult for workers and retirees to know which type of adviser they are dealing with.

The Labor Department rule has been under development for some time but has not been released yet. However, it is expected to require that investment advisers have no conflict of interest that might, for example, cause them to steer their clients toward investments that earn the adviser high fees but might not be in the client’s best interest. The rule should require anyone who gives retirement investment advice to act solely in their client’s best interest—a common sense standard known as the fiduciary duty.

Of course, Wall Street and the financial industry are adamantly opposed to reforming the rules. Two years ago they lobbied hard for a House bill aimed at derailing any new Labor Department investment advice rule, and surely they will be spending big money to do the same thing in 2015.

Be sure to visit SaveOurRetirement.org to learn more and find out how you can help close the “Retirement Advice Loophole.”

The groups in the coalition are the AFL-CIO, AFSCME, AARP, Americans for Financial Reform, Better Markets, Consumer Federation of America and the Pension Rights Center.

Reposted from AFL-CIO NOW

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What Are Republicans After for Social Security? Cuts

AFGE photo via Flickr

We told you how Republican House members last week went after Social Security on their very first day at work. Some 11 million people who receive Social Security disability benefits could see their benefits cut by 20% in 2016 and cuts to Social Security retirement benefits for everyone could also be in store. Here’s what some other folks have to say about that and other attacks Republicans may launch against Social Security.

The coalition Social Security Works says last week’s action barring transfer of funds from the Social Security Retirement Trust Funds to the Social Security disability program—known as reallocation—unless taxes are raised or benefits are cut is “stealth attack on America’s working families.”

Like other stealth attacks against the American people’s Social Security, the groundwork is being laid in advance. It will suddenly explode sometime in the next two years. The rule change would prohibit a simple reallocation! It will require more significant and complex changes to Social Security. In other words, the Republican rule will allow Social Security to be held hostage….Hostage-taking to force changes that the American people do not want to a vital program like Social Security is no way to run the United States of America.

Kathy Ruffing of the Center on Budget and Policy Priorities says:

By barring the House from approving a “clean” reallocation in 2016, the rule will strengthen the hand of lawmakers who seek to attach harsh conditions (such as sharp cuts in eligibility or benefit amounts) to such a measure.

Max Richtman, president of the National Committee to Preserve Social Security and Medicare, said:

It is hard to believe that there is any purpose to this unprecedented change to House rules, other than to cut benefits for Americans who have worked hard all their lives, paid into Social Security and rely on their Social Security benefits, including Disability Insurance, in order to survive.

Richard Eskow of the Campaign for America’s Future asks on Huffington Post, “Why are they doing this?”

Undoubtedly, one reason is to please campaign contributors. Wealthy individuals, like conservative billionaire hedge-funder Pete Peterson, are committed to gutting the program. Many defense contractors and Wall Street firms are involved in the campaign to cut Social Security through a group called ‘Fix the Debt,’ despite the fact that Social Security doesn’t contribute to the federal debt. (Ironically, all of these firms have benefited greatly from public expenditures.) What’s their motivation? Among other things, Social Security cuts would ensure that they’re not asked to pay more in taxes.

And then there’s this scary reminder from Eric Laursen at AlterNet, “Rep. Paul Ryan (R-Wis.) is now chair of the House Ways and Means Committee.”

This makes him an even bigger force on Social Security policy than he was as Budget Committee chair, when he repeatedly called for hobbling the program….With Ryan heading up their response, the Republicans are more likely to insist on drastic changes to the entire program.

Looks like they’ve already started.

Reposted from AFL-CIO NOW

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Just the Facts? Not from Rick Snyder

Just the Facts? Not from Rick Snyder

In this week’s debate between Michigan Gov. Rick Snyder (R) and Democratic challenger Mark Schauer, Snyder ignored the advice Sgt. Joe Friday in “Dragnet” always proffered to witnesses and suspects, “Just the facts” when it came to his record on education, jobs and the economy. That’s alright. The good folks at You Got Schooled 2014 have the facts that Snyder ignored.

Here’s a sample. Click here for the full story.

On charter schools:

Rick Snyder: “They are giving parents choice because we have had a lot of failing schools, and the point was to give parents the opportunity to give their kids an education, create competition.”

Mark Schauer: “The first thing I will do is put the money back [Snyder] took from public schools. It is irrefutable.…Charter schools were allowed to expand with no oversight. That was a big mistake by this governor.”

The facts:

  • Traditional public schools perform better than charter schools, even when poverty is taken into account.
    “According to the Free Press’ review, 38% of charter schools that received state academic rankings during the 2012–2013 school year fell below the 25th percentile, meaning at least 75% of all schools in the state performed better. Only 23% of traditional public schools fell below the 25th percentile.“Advocates argue that charter schools have a much higher percentage of children in poverty compared with traditional schools. But traditional schools, on average, perform slightly better on standardized tests even when poverty levels are taken into account.” —“Michigan Spends $1B on Charter Schools but Fails to Hold Them Accountable,” Detroit Free Press
  • More than 80% of Michigan charter schools are run by for-profit companies.
    “Michigan has more for-profit charter schools than any other state in the country. ‘We’re an anomaly in the nation,’ says Western Michigan University professor Gary Miron. He says over 80% of the charter schools in Michigan today are operated by for-profit companies, while the national rate is 35%.” —“Three Little-Known Facts About Charter Schools in Michigan,” Michigan Radio

On $1.7 billion business tax cut:

Snyder: He thinks business owners shouldn’t be taxed on income beyond what regular folks pay. He said, “We made a fair system to encourage job creation.”

Schauer: “Yes, I will repeal the job-killing pension tax. It is wrong, it is bad tax policy and it is breaking a promise.…Our ‘accountant governor’ is missing some columns on his spreadsheet and it is called people.”

The facts:

  • Snyder shifted the tax burden from businesses to individuals, so low-income individuals and seniors saw their taxes increase the most. 
    “A major tax shift approved by the Michigan Legislature in 2011 made the state’s tax system significantly more regressive by cutting business taxes by 83% while increasing taxes for individual taxpayers by 23%, with a net loss of state revenue. Low- and moderate-income families were hardest hit, as many of the credits and deductions  intended to reduce their income tax burden were reduced or eliminated, most notably a 70% cut in the state Earned Income Tax Credit—a refundable tax credit that has been shown to lift children and families out of poverty, increase employment and reduce the need for public assistance.” —“Losing Ground: A Call for Meaningful Tax Reform,” Michigan League for Public Policy
  • Snyder’s tax increases included a new tax on pensions.
    “A big and controversial part of that income tax increase was the taxing of public and private pension income. That change alone was expected to raise for the state, and cost pension-receiving taxpayers, about $343 million in fiscal year 2012–2013.

    “The changes are phased in, with those reaching the age of 67 in 2020 or after facing more taxes.

    “According to a House Fiscal Agency analysis, a retired couple born after 1952 with $48,000 in pension income would pay $3,130 more in taxes.” —“Foul on Snyder for Playing Word Games with Pension Tax,” Bridge magazine

For even more on Snyder, check out 5 Reasons Why Rick Snyder Is One of the Worst Candidates for Working Families in the 2014 Elections.

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Reposted from AFL-CIO NOW

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11 Reasons Why Mitch McConnell Is One of the Worst Candidates for Working Families in the 2014 Elections

It’s an election year and we are quickly approaching the time when working families will have the opportunity to go to the polls and vote against a whole host of extreme candidates who support policies that limit rights, make it even harder to afford a middle-class life and pad the pockets of their corporate buddies. One of the “Worst Candidates for Working Families in the 2014 Elections” is Senate Minority Leader Mitch McConnell (R-Ky.).

1. He opposes wage increases, prevailing wage laws and black lung benefits. He also refuses to support legislation to secure pensions for mine workers and retirees. [Courier-Journal, 8/27/14; The Nation, 6/20/14; The Associated Press, 7/3/14; S. 468, introduced 3/6/13]

2. McConnell has voted against laws that would help stop outsourcing and has even voted for tax breaks that reward corporations for exporting America’s jobs overseas. [Senate Vote 181, 7/19/12; CNN, 7/19/12; The Wall Street Journal, 9/26/10; Senate Vote 63, 3/17/05; The Washington Post, 3/20/05]

3. He said that the government should cut Social Security, Medicare and Medicaid—programs the working class depend on. [The Wall Street Journal, 1/6/13]

4. McConnell is out of touch with Kentucky’s working families, who are seeing their incomes fall behind the cost of living. He’s worth more than $27 million but blocked and voted against legislation to raise the minimum wage. [The Washington Post, 4/30/14; Washington Post candidate wealth profile, 2010; S. 2223, Vote 117, 4/30/14]

5. He supported massive tax breaks for the wealthy while voting against funding to keep teachers in the classroom. He sponsored legislation to permanently reduce the estate tax for the wealthy and extend the Bush‐era tax breaks for the richest Americans and opposed legislation that would give aid to states facing financial trouble to keep teachers in the classroom. [The Washington Post, 9/13/10; Chicago Sun-Times, Editorial, 2/5/10; H.R. 1586, Vote 224, 8/4/10]

6. Instead of helping jobless workers get back on their feet, McConnell blocked legislation extending unemployment insurance benefits. [Politico, 2/6/14]

7. While 40 million Americans are being crushed by student loan debt, he blocked the “Bank on Students Emergency Loan Refinancing Act” that would have enabled millions of Americans with expensive student loans to refinance into more manageable payments. [S. 2432, Vote 185, 6/11/14; The Huffington Post, 6/11/14]

8. McConnell has consistently voted against laws that would make it easier for Kentucky workers to get good pay, decent benefits and real job security. [Lexington Herald-Leader, 6/21/07; Senate Vote 227, 6/27/07; Senate Vote 243, 12/28/12; Congressional Record, 12/28/12; CQ, 12/28/12]

9. McConnell blocked and voted against the Paycheck Fairness Act, a Democratic bill aimed at narrowing the pay gap between men and women. [Politico, 4/9/14; S. 2199, Vote 103, 4/9/14]

10. Many Americans believe that Washington is broken and too many politicians are playing political games instead of coming together to solve problems for working people. McConnell called himself a “Proud Guardian of Gridlock.” [Political Transcript Wire, 2/2/06]

11. According to the Washington Post, “Mitch McConnell raised the art of obstructionism to new levels. When McConnell and his united GOP troops couldn’t stop things from getting through the Senate, they made sure the Democrats paid a heavy price for winning.” [The Washington Post, 1/30/11]

Text MYVOTE to 30644 for important updates on the election. 

Reposted from AFL-CIO NOW

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Good News for All Americans in Social Security, Medicare Reports

Photo via the National Committee to Preserve Social Security and Medicare

The annual reports from the Social Security and Medicare Trustees released today “have good news for all Americans,” said AFL-CIO President Richard Trumka.

Social Security and Medicare will be there for us and our families if elected leaders listen to the American people and reject calls to cut benefits. Instead of undermining these crucial programs, we must build on their success and adopt measures to strengthen and expand them.

Richard Fiesta, executive director of the Alliance for Retired Americans, said the most important lesson from the Social Security report “is that Social Security has a large and growing surplus. Today’s report projects Social Security’s cumulative surplus to be roughly $2.8 trillion in 2014, growing to about $2.9 trillion around 2020.

Trumka noted that while “America’s most important retirement program” will remain strong for many more years to come:

It has become increasingly clear, however, that strengthening Social Security for the future must include improvements in benefits. Social Security remains the sole retirement income plan that is broadly available and that Americans can count on to provide secure lifetime benefits.

The Medicare report, Fiesta said, “reminds us once again that the Affordable Care Act is controlling health care costs.” He said:

It is great news that the life of the Medicare Trust Fund has been extended by another four years to 2030. Attempts to repeal health care reform would only undo the progress we have made in controlling health care costs.

The Social Security Trustees reported once again that the Disability Trust Fund can pay full benefits until 2016, with enough revenue after that time to cover about 80% of promised benefits. Trumka said:

Congress should act soon to ensure disabled workers and their families will continue to receive the benefits they have earned.  This can be done by allocating a larger share of current payroll tax contributions to the Disability program, as has been done many times before. Congress should reject calls to misuse this opportunity to undermine the sole source of disability income protection that is working well for America’s families.

Fiesta warned:

Current and future retirees must be wary of those politicians who will use today’s Social Security and Medicare Trustees reports as political cover for radical changes that would put seniors, the disabled and the families of deceased workers at risk.

Read Trumka’s full statement here and Fiesta’s here.

Reposted from AFL-CIO NOW

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Smallest-Ever Social Security COLA Still too Big for ‘Chained’ CPI Backers

Next year, the millions of Social Security recipients will see the smallest cost-of-living adjustment ever—just 1.5% or about $19 a month. If the politicians—and their billionaire friends who don’t want to pay the same taxes workers do—who are pressing hard for the “chained” CPI benefit cut had their way, the adjustment would be even smaller than 2014’s historic low.

Edward F. Coyle, executive director of the Alliance for Retired Americans, says, “I hope this news about next year’s Social Security COLA will cause politicians in Washington to reconsider their support for the ‘chained’ CPI.”

How can anyone look at an increase of around 1.5% and think ‘That’s too big?’ Clearly, these politicians need to spend more time talking to seniors who are struggling. Next year’s increase will be 1.5%. Imagine if it were even less. Then imagine if that smaller increase were to be compounded over time. That is the ‘chained’ CPI.

The “chained” CPI proposal would reduce cost-of-living adjustments for Social Security and prevent benefits from keeping up with inflation. At age 75, a senior’s benefits would be cut by about $650 per year (on average). At age 85, those benefits would be cut by about $1,150 per year, and at age 95, by about $1,600 per year. For more on what the “chained” CPI would do, go to the Alliance “chained” CPI fact sheet.

Earlier this month, 51 Republican members of the House, led by Rep. Reid Ribble (R-Wis.) signed a letter to Speaker John Boehner supporting COLA cuts, among other unspecified proposed Social Security benefit cuts, as part of the ransom demand to lift the debt ceiling.

On the other hand, Sen. Tom Harkin (D-Iowa) and Rep. Linda Sánchez (D-Calif.) have introduced the Strengthening Social Security Act (S. 567 and H.R. 3118). The legislation would measure inflation not with the “chained” CPI, but with a more accurate measure of inflation for seniors (the CPI-E). It also would improve Social Security’s solvency by lifting the cap on earnings subject to the Social Security tax, so that all of America’s workers pay the same rate.

AFL-CIO Policy Director and Special Counsel Damon Silvers recently told Salon that the AFL-CIO opposes any benefit cuts to Social Security, Medicare and Medicaid.

The labor movement is going to fight to the death to stop cuts to Social Security and Medicare and Medicaid. Not ‘unreasonable cuts.’ Not ‘cuts without tax increases.’ Cuts period. We’re against all of them, we will fight them ferociously, and we will give no cover to any Democrat who supports them

Reposted from AFL-CIO NOW

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Raising the Medicare Eligibility Age Will Hurt Many, Help Nobody

AFL-CIO’s Damon Silvers went on CNBC last week to make it clear that the labor movement won’t give political cover to any elected official, Republican or Democrat, who seeks cuts to  Medicare, Medicaid, or Social Security.

But sometimes “cuts” hide in the form of other changes to earned benefits. Silvers gave the example of “Chained CPI,” which cuts Social Security by changing how benefits are calculated. “Chained CPI is the vampire of American politics,” Silvers told the Washington Post. “It keep  being shot through the heart and it keeps reviving.”

Here’s another vampire idea that needs to die: raising the Medicare eligibility age to 67.

The argument typically goes like this: with modern medicine, people are living longer than they did when Medicare set the retirement age at 65, so why not raise the eligibility age to keep up with the times? After all, we need to save money!

This argument conveniently ignores what happens to the millions of 65 and 66 year olds who would no longer be able to access coverage through Medicare, which they have paid into throughout their entire lives.

Many of these seniors with low enough incomes will be pushed into Medicaid, shifting costs onto that other program. Some will have incomes high enough to be ineligible for Medicaid but low enough to qualify for subsidies to purchase insurance on the health exchanges on the Affordable Care Act.

But many more seniors will lose coverage altogether, according to the Center for Budget and Policy Priorities, because while their incomes make them ineligible for Medicaid or subsidies, health insurance companies will consider them to be extremely expensive. “Because exchange plans could charge the oldest workers three times as much as the youngest, unsubsidized premiums could reach $10,000 to $12,000 (in 2014 terms) for 65- and 66-year-old individuals and twice that for couples.” Even if every state implemented ACA completely, that’s about 200,000 more uninsured seniors, according to Matt Stoller of the Roosevelt Institute.

So for increased pressure on Medicaid and more seniors unable to buy coverage at all, how much money do we save? The Congressional Budget Office has updated numbers on that front: the net savings would amount to less than $3 billion a year, a paltry sum in the context of the federal budget.

Thursday, the CBO said the overall savings wouldn’t amount to as much as it had previously estimated. Instead of saving the federal government about $113 billion over a decade, CBO now figures it’s more like $19 billion over eight years starting in 2016.

Joan McCarter wants this idea to be finally laid to rest:

It will keep people working longer, and that means it will cost their employers—and everyone with private insurance—more in insurance premiums to cover this older, sicker population. The thing is, people still need health care when they’re 65. There isn’t a magic two years between 65 and 67 when everyone is healthy and doesn’t need to go to the doctor.

If we are serious about raising revenue and dealing with our fiscal health, we ought to stop looking at seniors – who have earned Social Security and Medicare by paying into it through a lifetime of paychecks – and start looking at the complex web of tax avoidance schemes of the very billionaires and large corporations that are pushing these cuts to begin with.

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Watch This Labor Leader Crush Lies About Social Security on CNBC


Damon Silvers, Policy Director at the AFL-CIO, went on CNBC’s “Squawk Box” to talk about the labor movement’s firm stance against cuts to Social Security, Medicare, and Medicaid. Silvers detailed this position in a Washington Post interview with Greg Sargent.

“Chained CPI is like the vampire of American politics,” Silvers said. “It keeps being shot through the heart and it keeps reviving. The reason it keeps coming back is because it has billionaires behind it.”

Naturally, the network’s anchors didn’t much like the sound of that. CNBC is one of Wall Street’s main TV mouthpieces, and it is in Wall Street’s interest that Social Security and Medicare are perceived as “entitlements” instead of the earned benefits of workers. After all, they want our politicians to balance the budget and “fix the debt” on our backs, not by raising taxes on their large incomes and investments.

The exchange Silvers had with CNBC anchor Simon Hobbs crystallized this clearly.

Damon Silvers: We’re being really clear. We’re not going to give cover to Democrats who think it’s a good idea to take away economic security from our most vulnerable citizens. We’re extremely clear about that and not embarrassed about it whatsoever. We want a really clear message out there. If you cut social security benefits or medicare benefits to our seniors, to our most vulnerable people in the country, you are going to get no support on it. It only treating them fairly there will be any progress going forward.

Simon Hobbs: Are you as clear on the reality that if you have don’t cut entitlement benefits this country may well go bankrupt?

Damon Silvers: That’s frankly not true. That’s a lie put forward by billionaires who don’t want to pay higher taxes. Social Security is the best funded aspect of our retirement system today and Medicare’s long-term issues are integrated with the long-term issues of our health care system. Neither program is overgenerous. In fact both programs are undergenerous. The only people who believe what you said are people not counting on those programs and who are worried their very large incomes will be taxed.

This isn’t the first time CNBC has been called out on using fuzzy numbers to shill for Wall Street. In July, Senator Elizabeth Warren (D-MA), who actually served with Silvers on the TARP Oversight Committee, smacked down a CNBC anchor on the history of “too big too fail” banks. CNBC was so embarrassed they removed the clip from YouTube, but you can still watch it on many blogs and Upworthy.

Watch the clip and follow Damon Silvers on Twitter at @Damon Silvers.

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