The ability of Washington to turn everything on its head has no limits. We are in the midst of the worst economic downturn since the Great Depression. Even though the recession officially ended two years ago, there are still more than 25 million people who are unemployed, can only find part-time work or who have given up looking for work altogether. This is an outrage and a tragedy. These people's lives are being ruined due to the mismanagement of the economy.
And we know the cause of this mismanagement. The folks who get paid to manage and regulate the economy were unable to see an $8 trillion housing bubble. They weren't bothered by the doubling of house prices in many areas, nor the dodgy mortgages that were sold to finance these purchases. Somehow, people like former Federal Reserve Board Chairman Alan Greenspan and his sidekick and successor Ben Bernanke thought everything was fine as the Wall Street financers made billions selling junk mortgage and derivative instruments around the world.
When the bubble burst, one of the consequences was an increased budget deficit. This is kind of like two plus two equals four. The collapsing bubble tanked the economy. Tax revenue plummets and we spend more on programs like unemployment insurance and foods stamps. We did also have some tax cuts and stimulus spending to boost the economy. The result is a larger budget deficit.
All of this is about as clear as it can possibly be. The large deficit came about because the housing bubble, which was fueled by Wall Street excesses, crashed the economy. Yet, we are constantly being told by politicians from President Obama to Tea Party Republicans that we have a problem of out-of-control spending.
The claim of out-of-control spending is simply not true. It is an invention, a fabrication, a falsehood with no basis in reality that politicians are pushing to advance their agenda. And that agenda is not pretty.
According to numerous reports in the media, President Obama wants a "big deal" on the budget, which will involve cuts to Medicaid, Medicare and Social Security. The last is especially ironic, since Social Security is financed by its own designated tax. Therefore, it does not contribute to the deficit. If there is no money in the Social Security trust fund, then benefits will not be paid.
The plans to cut to Social Security also seem perverse since we know that the vast majority of retirees are not living especially well right now and the benefits already are not especially generous. If we exclude their Social Security income, more than 80 percent of people over the age of 65 get by on less than $20,000 per year.
The average Social Security check is about $1,100 a month. This would be less than an hour's pay for many of the Wall Street honchos whose greed and incompetence brought down the economy.
Yet, when President Obama preaches equality of sacrifice, it is the elderly and the poor who are supposed to do most of the sacrificing. His plan to change the annual cost-of-living adjustment formula for Social Security would reduce benefits for someone in their seventies by 3 percent, in their eighties by 6 percent and in their nineties by 9 percent.
These are huge cuts. The Republicans are screaming bloody murder because President Obama wants to raise the top tax rate by 4.6 percentage points. Imagine that he proposed raising taxes on the wealthy by twice as much. That is effectively what he is proposing for people in their nineties who are entirely dependent on Social Security.
And he is proposing to impose this tax on seniors who had nothing to do with the crisis, while leaving Wall Street untouched. A modest tax on financial speculation could raise more than $150 billion a year or $1.5 trillion over the course of a decade.
It is striking that a financial speculation tax (FST) has not been mentioned in the debt discussions. The European Union has been actively debating the imposition of a FST ever since the crisis. The European Parliament voted for such a tax by a margin of more than 3 to 1. The United Kingdom has had an FST for decades. It raises the equivalent, relative to the size of its economy, of almost $40 billion a year just by taxing stock trades. Even the International Monetary Fund has come out in support of increased taxes on the financial sector.
Presumably, the continuing power of the financial industry explains why few in Washington are discussing an FST. After all, a director of Morgan Stanley, Erskine Bowles, was the head of President Obama's deficit commission.
And this explains why we are looking to gut Social Security and Medicare in response to Wall Street's wreckage of the economy. The basic story is that the average worker and retiree will have to sacrifice because of the damage that the Wall Street crew did to the economy. That is what democracy in America looks like now.
And yes, I trade stocks...and yes, I'd pay it.
Enough to finance the SEC police department so that the masters of the universe couldn't melt down the world economy again.
There are about 240 days per year at about 6 million trades per day.
See http://www.nyse.com/financials/1108407157455.html
Dean Baker wants a 0.25% (1/4 of a percent) on a stock purchase or sale.
A hundred shares of Apple @386 == $38,600, gives a tax of $96.5.
With about $55 billion traded today, than would be 137 million a day, or $30.25 billion a year.
As a trader, I'd pay for better enforcement of the rules. And the 1/4 percent is better; more progressive than a flat $1 per trade. People that make money in the market should be willing to pay for its police force.
Medicare was never designed to pay for Organ Transplants, Hip/Joint Replacements and other
expensive surgury.......................General Health Care is OK, but BIG MEDICINE now makes a
living on exotic procedures sent to Medicare for payments !
Medicine is now a Monopoly with price fixing, Monopolistic actions and control every year !
The FCC needs to attack pricing in BIG Medicine !
Thanks !
semper fi
Im writting in Bernie Sanders or Alan Grayson.
They pretended long enough that the lives and rights of every day people were important. It was necessary for a while. It's time to end the charade.
This social safety net thing is annoying to them. And look at all the tea baggers who find it offensive as well. They are the ones who want real death panels. You can't pay your medical bills? Eff you! Die like a dog in the gutter with the rest of the poor dead beats!
Made it to senior years without a big, fat bank account and now you need some help? Put your hands back in your pockets because welfare is only reserved for corporations and banks.
Slavery works best for the bottom line. Debt slavery best of all.
Pliant worker bees who will undercut each other for pittance and feed their pennies into the insatiable financial maw.
Obama is a hollow man. I voted for him. I was being an idealistic fool. And I was charmed.
I will not take part in this sham any more.
Our democracy is a show. That's all.
In the words of George Carlin, "We are owned."
You should know better. The Social Security trust fund is a big IOU from Uncle Sam. It is not long-term solvent (and Medicare is even worse). Should we raise taxes on the rich and Wall Street? Sure, but at the same time, we have to realize that we need to make some long-term adjustments on our entitlements. Raising taxes on Wall Street by itself will not solve the problem.
This problem has been going on before the Wall Street bubble. The bubble has simply brought it to a head. Go ahead and blame all the problems on Wall Street, but it is more complicated than that. The problem is that people are living longer and (in the case of Medicare) using more healthcare than we ever budgeted for, with not enough workers to pay for it. That is a long-term demographics and spending problem.
Sure, it is great to have a bad guy to blame all our problems on. And they do have plenty to be blamed for. But not facing our long-term problems is surely a mistake.
http://www.socialsecurity.gov/history/Nixon72.html
If the Gipper was running the show he would take Boehner, Cantor and McConnell out to the woodshed and give them a history lesson they wouldn't forget.
Obama hasn't been representing the people as much as the interests of the financial elite and now he and the democrats are in a bad position of getting the blame for years of mismanagement and coddling wall street and the wealthy. Maybe we'd been better off with McCain at the helm, letting him crash us into the rocks and receive blame. Maybe then we would have been provided better opportunity to elect a true progressive. The democrats have taken us into a sickening turn to the right.
That's the problem, crony capitalism has devoured democracy and national sovereignty for the sake of global economic integration (read banks finding new suckers). It's called inverted totalitarianism and yes, we are in a totalitarian regime.
Ron Paul 2012 !!