If anyone still questioned who owns Washington, the Congressional supercommittee charged with reducing projected deficits by $1.2 trillion seems determined to end any doubts. According to press accounts, both the Republicans and Democrats on the committee support a plan to reduce average Social Security benefits by 3 percent.
While whacking our parents and grandparents with a big cut in Social Security benefits apparently draws bipartisan support, the supercommittee will not even score a plan to tax Wall Street financial speculation. No committee member from either party is prepared to make a simple request to the Joint Tax Committee of Congress that would allow a speculation tax to be one of the items considered in the mix.
It's hard to know which part of this picture is worse. The plan to cut Social Security benefits at a time when seniors are more dependent than ever on them is incredibly pernicious. The people who would see their benefits cuts under this proposal paid for their benefits contributing to Social Security over their entire working career.
Most retirees have little other than Social Security to support them in their retirement. In large part, this is due to the economic mismanagement of the supercommittee types. If they or their friends, like former Federal Reserve Board Chairman Alan Greenspan, actually had been doing their jobs, we would not have had the huge housing bubble that wrecked the economy. The collapse of this bubble caused most of the wealth that retirees and near retirees had accumulated in their home to disappear, leaving them with nothing other than Social Security to sustain them in retirement. Now, they want to cut Social Security as well.
This particular cut is especially pernicious since it will hit the oldest and poorest beneficiaries hardest. A person who is in their 90s and has been getting benefits for 30 years would see a reduction in benefits of close to 9 percent under the new cost-of-living adjustment formula apparently supported by members of the committee.
The benefit cut is being justified by claiming that the current cost-of-living adjustment exceeds the true rate of inflation. In fact, the Bureau of Labor Statistics index that measures the cost of living of the elderly indicates that the current adjustment understates the rate of inflation experienced by retirees. There should be no doubt, this is a proposal for cutting Social Security benefits; it has nothing to do with making the cost-of-living adjustments accurate.
While the supercommittee has plenty of time to think of ways to make life more miserable for seniors, it won't even countenance the idea of taxing Wall Street speculation. In spite of the repeated pledges that everything is on the table, taxing Wall Street speculation is absolutely off the table.
In order for a tax bill to be considered by Congress, it must be scored by the Joint Tax Committee (JTC). While many members, including some very senior members from both houses, have requested a score from the JTC of a bill taxing financial speculation, the supercommittee has the JTC completely tied up meeting its requests. By refusing to include a financial speculation tax (FST) in its scoring request, the supercommittee is preventing this idea from even being included in the discussion.
Given the role of Wall Street in both creating the conditions for the crash and prospering at the expense of the other 99 percent, it might seem reasonable to include a tax on speculation in the mix of items to consider. This is not a radical proposal. The European Commission is currently on the edge of approving a FST. Its leading proponents are the conservative leaders of Germany and France.
It is easy to see that this could be a very substantial source of revenue. The United Kingdom already has a FST. It raises the equivalent of 0.2 to 0.3 percent of gross domestic product ($30-$40 billion a year in the United States), by just taxing stock. If options, futures, credit default swaps, and other derivative instruments were also taxed, it is easy to believe that we could raise three to four times as much money in the United States.
But the supercommittee doesn't want to think about a proposal that would impose serious costs on Wall Street. It is more interested in taking away Social Security and Medicare benefits from the old and disabled.
This contempt for the 99 percent coupled with protection for the 1 percent is the reason Congress has an approval rating of 9 percent. When both parties in Congress work against the interest of the overwhelming majority in order to protect a tiny elite, it is not surprising that most of the country would return the contempt.
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But say one writes the rules so ironclad that no financial institution wriggles out. Then the banks' income decreases, and they end up being financially impaired. We have to evaluate whether the rule could put big banks out of businesss. While it may be emotionally satisfying, it would be financially devastating for the country. Good luck getting your money out of the ATM.
What's more, a tax will result in more volatility in the stock market, as there will be less trading and smaller transaction will be able to "move the market" due to lack of depth. More big market swings doesn't seem particularly appealing to me or my 401k at this point.
The best approach to raise money equitably would be simply to increase the top tax brackets and/or get rid of most of the loopholes and deductions, especially those that you need a tax attorney and high-paid accountant to figure out. That would hit the 1%er's without all the unintended consequences.
The tax should only be on people who speculate, not invest and better breaks given for those who invest for the long term. The tax on dividends should be reduced as well, while hedge fund income needs to be taxed as regular income.
The super committee was conjured up to allow members of Congress to claim innocence of any wrong doing the super committee does .
Cutting SS benefits or raising the retirement age will create more unemployment . Instead of retiring seniors will have to keep the jobs that should be passed on to the emerging youth .
Improving the economy is NOT what Congress has in mind .
Time to think harder about who we want there.
Everyone loves to bitch about the tax code (including me!) - but here, in one simple to read, follow and understand paragraph - you have outlined what could be out last best hope to turn this country around and reawaken The American Dream which is a large part of what made this country genuinely great (worth dying for and worth dying to get here...)
What I just can't seem to fathom is why they right wing, Wall Street /1%ers /TPer's and dittoheads can't seem to remember that even when we had a healthy, thriving Middle Class, they still had it great, they were still living like 1%ers - it was just more fair and better for everyone.
I can hear all the GOPers screaming about class welfare, Marxism (I defy any of them to write even a 1500 WORD essay defining (factually) what Marxism actually IS..) but no one is asking the famous "HAVE MORES" to give up having (a lot) MORE - just to stop breaking all the rules of fairness to get and not insist on HAVING IT ALL at the expense of 99% and the viability of the plantary environment.
http://seniorjournal.com/NEWS/SeniorStats/2008/8-04-22-RichWhiteMen.htm
We have 12 months to identify candidates who will fight for all of us, not just the Rich and Super Rich.
It is a moot point if anything would be left over when their term comes.
In effect it will shortly become a ponzi scheme without intervention
Of course if we would just get smart about it, and make SS taxes not have caps...
You and they aree fooling no one.
OWS is addressing this untaxed trade/bank scheme siphon.