Occupy Washington DC Shows
By Kevin Zeese
Information Clearing House
After holding an Occupy Super Committee Hearing on November 9, Occupy Washington DC published an evidence-based report that:
~ Raises $600 billion in annual revenues thereby achieving the deficit reduction goals in two years; shrinks the wealth divide by taxing wealth more and labor less; restores a progressive tax system; taxes speculation by investors and taxes wealth held overseas.
~ Cuts hundreds of billions in annual spending through reducing the bloated military budget and ending the wars, stopping corporate welfare and negotiating better pharmaceutical drug prices.
~ Creates millions of jobs by solving the housing crisis, creates public sector jobs for much-needed work on infrastructure, transit, education and other areas, creates health care jobs as part of improving Medicare and expanding it to cover everyone in the United States, invests in the more efficient civilian economy rather than the expensive military economy and stimulates the economy by erasing student loan debt.
~ Saves and strengthens the safety net by restoring the amount of income covered by Social Security to 90% of all income as was always intended, ends poverty retirement by expanding Social Security, reduces spending on health care by expanding Medicare to cover everyone in the United States.
~ Presents steps to creating a democratized economy, the already developing new economy that will replace the failed finance, corporate capitalism.
The report concludes that the American people will see “corruption reign supreme” and that economic and political elites should expect to see this historic American revolt of the 99% grow larger and stronger in its resolve to create a just and sustainable future.
Freedom Plaza, November 2011
CREATING A FAIR TAX SYSTEM THAT SHRINKS THE WEALTH DIVIDE
~ Tax the highest income households: From 1960 to 2004, the top 0.1 percent of U.S. taxpayers — the wealthiest one in one thousand ~ have seen the share of their income paid in total federal taxes drop from 60% to 24.3%. America’s highest income-earners ~ the top 400 people who have wealth equal to 154 million Americans ~ have seen their federal income tax drop from 51.2% in 1955 to 18.1% in 2008. If the top 400 paid as much of their incomes in personal income tax as the top 400 of 1955, the federal treasury would have collected $50 billion more in revenue from just those 400 taxpayers. If the top 0.1% of taxpayers ~ Americans with incomes that averaged $4.4 million ~ had paid total federal taxes at the same rate as the top 0.1% paid these taxes in 1960, the federal treasury would have collected an additional $250 billion in revenue.
Merely not extending the Bush tax cuts would add nearly $500 billion each year in tax revenue. Thus in just over two years the goal of the deficit committee would be met. This would be insufficient to correct the wealth divide and does not go as far as Occupy Washington, DC advocates.
~ A tax of a half of a percent or less on Wall Street speculation could raise over $800 billion in a decade. The Speculation Tax on the purchase of stocks, bonds and derivatives would be a tiny tax with a big impact. People in the U.S. pay much higher taxes on purchases of food and clothing; it is only fair that the wealthy pay taxes on purchasing wealth instruments.
~ A fair tax on capital gains, treating it as ordinary income would raise $1 trillion over a decade. Wealth-based income and work-based income should be treated equally under the law as it used to be. Warren Buffet has received a great deal of attention for pointing out that he pays a lower tax rate than his secretary or anyone who works for him. The reason for this is that investment income is taxed at a much lower rate than income from labor. The United States needs to tax wealth more and work less.
~ Congress should enact a “pure worldwide” tax system, in which all profits of U.S. corporations, whether they are generated in the U.S. or abroad, would be taxed by the U.S. This would end “deferral,” i.e. where taxes are deferred until money is brought back into the United States. U.S. corporations would continue to receive a credit against any taxes they pay to a foreign government (the foreign tax credit) so that profits are not double-taxed. Under a pure worldwide tax system, corporations would have little or no tax incentive to move jobs offshore because the U.S. would tax profits of corporations no matter where they are generated. The Treasury estimates that deferral of U.S. taxes on offshore corporate profits costs close to $50 billion each year, and many experts think this estimate is substantially understated.
~ Ending deferral does not even address the hundreds of billions lost through tax havens. Tax havens should be shut down through the passage of the Stop Tax Haven Abuse Act. In fact, the U.S. Treasury estimates this costs $100 billion each year. In 2006 the U.S. Senate Permanent Subcommittee on Investigations reported that Americans now have more than $1 trillion in assets offshore and illegally evade between $40 and $70 billion in U.S. taxes each year through the use of offshore tax schemes.~ Closing corporate tax loopholes would return the fair share of taxes paid by corporations to the funding of government. Declining corporate taxation is another prime factor in increasing deficits. Corporate income taxes have fallen from roughly 4.8% of GDP in the 1950s to only 1.8% of GDP over the past decade. Ending just two large breaks, deferral of overseas revenue and accelerated depreciation would raise about $114 billion over a decade. The Treasury Department lists $365 billion in corporate tax breaks being gifted annually ~ that’s $3.65 trillion over the next 10 years. Due to tax loopholes, corporations pay record low tax rates ~ they actually pay 21% on average. Indeed, a recent report by Citizens for Tax Justice found that Wells Fargo received $18 billion in tax breaks, while both Verizon and General Electric paid negative taxes. Earlier Citizens for Tax Justice reported that 12 major companies which together made $171 billion in profits from 2008-2010 paid a negative $2.5 billion in taxes, thanks to $62 billion in tax subsidies.
CUTTING SPENDING FOR ECONOMIC SECURITY
~ Military spending, found in the Department of Defense and other departments, has increased dramatically during each year that George W. Bush and Barack Obama have been president, roughly doubling during the past decade both as measured in real dollars and as a percentage share of discretionary spending. Military and related “security” spending is now at over $1 trillion per year and comprises well over half of federal discretionary spending. It is also very nearly equal to the military spending of all other nations on earth combined. Ending our two most costly wars in Iraq and Afghanistan before the 2013 fiscal year budget would save $1.8 trillion, as compared with ending those wars on the currently planned schedule, with savings of $108 billion per year.~ The U.S. should only spend what it needs to defend itself. The military budget can be cut significantly by replacing private contractors, closing some of the more than 1,100 foreign military bases and outposts and eliminating weapons systems many of which the Pentagon says it does not need.~ The Sustainable Defense Task Force recommended modest cuts of $1 trillion over the next decade, not counting savings from ending the current wars. U.S. military spending could be cut by 80% and still be comfortably well ahead of any other nation's military spending. See Creating Jobs and Restarting the Economy below on how these funds could be used to create jobs, restart the economy and provide much-needed services and infrastructure to the country.~ Corporate tax subsidies through tax breaks and giveaways are a form of spending that needs to be cut. The U.S. needs to end corporate tax subsidies and repatriate overseas funds. According to Citizens for Tax Justice, the 280 most profitable U.S. corporations received tax subsidies amounting to $222.7 billion from 2008-2010. These companies sheltered half their profit from taxes. The result: 30 companies paid less than 0 taxes despite $160 billion in pre-tax profits; 78 of the 280 companies enjoyed at least one year in which their federal income tax was zero or less; weapons maker’s paid a mere 10.6 percent rate in 2010; financial services received the largest share (16.8 percent) of all federal tax subsidies over the last three years.~ Negotiating better prices with Big Pharma would save more than $200 billion over ten years in pharmaceutical costs. Reforms of Medicare could offer much larger savings. Expanding to an improved Medicare for all system would control the cost of health care spending while covering all in the United States reducing significant financial burdens often resulting in bankruptcy and foreclosure.
CREATING JOBS AND RESTARTING THE ECONOMY
~ One million jobs could be created annually by writing down all underwater mortgages to market value. Correcting housing mortgages to the real value of homes would inject $71 billion per year into the economy and save families $6,500 per year on mortgage payments. This would also fix the housing crisis which is an anchor holding back any recovery, according to a new report by The New Bottom Line. One in five mortgage holders owe more on their mortgage than their home is actually worth. Banks should not continue to be able to profit from housing bubble prices – a bubble they created with their poor and unethical lending practices. Adjusting mortgages to the real value of homes is a fair way to fix the housing market.~ Failure to stop the foreclosure crisis will ensure a stalled economy. It is an essential step to economic repair. This could be done without Congress as Fannie and Freddie together hold $1.5 trillion in housing loans or mortgage-backed securities which could be directed to fix the mortgages. The Federal Reserve has just under a trillion and could unilaterally correct loans to reflect real value. And, the banks could be pressured. Last year, the nation’s top six banks paid out more than twice the cost of re-writing mortgages to make them fair ($71billion per year) in bonuses and compensation alone ($146 billion in 2010). The nation’s banks are sitting on a historically high level of cash reserves of $1.64 trillion.
~ A fundamental reason for job stagnation is relying on the private sector to create jobs and refusing to engage in direct government job creation in the public sector. According to Business Week, “Since the end of the recession, government employment--including federal, state, and local jobs--has fallen by roughly 600,000. State and local governments have particularly felt the pain, according to a report released this week by the Census Bureau, which shows that there were over 200,000 fewer state and local government jobs in 2010 than in 2009.” The most recent jobs report shows a continued downward trend in government jobs. State deficits and federal inaction ensure these job losses will continue.
~ In addition to our need to rebuild the nation’s physical infrastructure, there is an even more urgent need to rebuild its human infrastructure. The drastic rise in inequality and joblessness has torn apart the social fabric, destroying countless individual lives, families, urban neighborhoods, and rural communities across our country. For more than a generation, the major “growth industry” in impoverished communities has been the illegal drug industry. Persistent, trans-generational poverty is directly responsible for the fact that the U.S. now leads the world in imprisoning its own people: 2.5 million, by the latest count, with more than 5 million more under some form of court supervision. (China, with its 2.5 billion people, runs a poor second.) Although most of the prison population is white, people of color are disproportionately represented, leading many analysts to declare that the mass incarceration of African-Americans and Latinos has created a new caste of unemployable "untouchables." Only a massive public works, community development, and job training program can end the destruction of American communities and stop the shameful criminalization of poverty.~ As public sector jobs are created, the country must also strengthen the public sector in ways that will require new democratic reforms to put publicly owned or financed enterprises under popular control. A long-term goal should be to democratize the economy so the people of the United States share in wealth and ownership as well as influence over the economy. See below Democratizing the Economy, Shifting Economic Power, Wealth and Ownership to all in the United States. There is a desperate need for a mass public works program, not only to create jobs, but also to meet the urgent needs of the country.~ The American Society of Civil Engineers estimated that failure to fix the nation’s infrastructure has created serious damage so extensive that $2.2 trillion will be required by 2014 just to meet current demands. The ASCE gave the nation’s infrastructure an overall grade of “D.” Its report cited cracking levees, a quarter of the nation’s existing bridges sagging, leaking pipes losing billions of gallons of drinking water per day, aging sewers releasing human waste into rivers and lakes, horrendous traffic congestion and air and water pollution. This is not “make work” but urgently needed work. A public works program modeled after the depression era Works Progress Administration would create 15 million jobs and build the infrastructure needed to create a sustainable economy.
~ Spending on the military is a drag on the economy, not just because it makes up 55% of federal discretionary spending, but because more jobs would be created by spending on education, infrastructure, green energy, or even on tax cuts for non-billionaires. Converting a fraction of current military spending to other industries and tax cuts could produce 29 million new jobs, one for every unemployed or underemployed person in the United States, even after finding new employment for everyone displaced during the conversion.
~ Putting in place improved Medicare for all would provide a major stimulus for the U.S. economy not only by controlling the cost of health care and reducing deficits but by creating 2.6 million new jobs, and infusing $317 billion in new business and public revenues, with another $100 billion in wages into the U.S. economy.
~ Erasing student loan debt would have an immediate stimulating effect on the economy. As Mychal Smith writes:“[C]onsider the potential impact on the economy if all of a sudden 35 million people were able to add to their monthly budget anywhere between $400 and $1000 that they no longer needed to satisfy exorbitant student loan repayments. . . . Debt free degree holders would allow for more risk taking and innovation.”
“the ‘educated poor’ are not buying homes, not starting businesses or families, not inventing, investing or innovating and otherwise engaging in economically productive activities.”And, as Cryn Johannsen of All Education Matters points out, this would be a long term stimulus because college debts are multi-decade in length. Johannsen describes a “crisis that is affecting millions of educated Americans. We are indebted for life. Most of us will never be able to pay off our loans for college.” Education is a critical building block for the economy and going forward the United States must develop a system of higher education that does not require students to go into debt just to receive an education. Rather than a loan-based system the U.S. needs a system based on grants, scholarships and public funding.
PROTECTING AND IMPROVING SOCIAL SECURITY
~ The funding of Social Security is easy to fix. Currently, the tax on wages subject to the tax is capped at $107,000. The upward redistribution of income over the last three decades has caused a large share of wage income to escape taxation. If all wage income were subject to the tax, then it would leave Social Security fully solvent for its 75-year planning period.
~ The Social Security tax has not kept up with the wealth divide. In 1983, the Social Security tax ceiling was set so the tax would hit 90% of all wages covered by Social Security. That 90% figure was built into the 1983 Greenspan Commission’s fix of Social Security. Requiring the ceiling to rise with inflation was expected to result in the Social Security tax continuing to hit 90% of total income. But, in 1983 no one predicted the extreme wealth divide that exists today. The richest 1% of Americans got 11.6% of total income in 1983. Today the top 1% takes in more than 20% of total income and as a result the Social Security payroll tax hits only about 83% of their total income. The tax should go back to covering 90% of income. That would mean the ceiling on income subject to the Social Security tax would need to be raised to $180,000.
~ Social Security should be strengthened in ways that increase the retirement security of people in middle-and working-class. Particular attention should be paid to improving the living standards in retirement of workers in poorly compensated jobs, who typically have little or no retirement savings outside of Social Security. The average Social Security benefit of $14,000 is only about 30% above the poverty line. Indeed, 21% of Social Security beneficiaries receive Social Security benefits that fall below the poverty line. In 2011, the Commission to Modernize Social Security proposed increasing benefits for all retirees by a uniform amount equal to 5% of the average benefit, about a $700 annual increase for beneficiaries today; that workers who have worked at least 30 years should receive benefits equal to 125% of the poverty threshold when they retire at the full retirement; providing at least five years of dependent care credits through Social Security as women (and some men) spend part of their working years caring for children and elderly parents; reinstating the post-secondary student benefit that existed until 1983 and allowed students who were receiving Social Security due to a parent’s death, disability, or retirement to continue until they were 22 years old if they were in college; and increasing the survivor’s benefit for widowed spouses to ensure that they receive at least 75% of the benefit amount they received when their spouse was still alive.
IMPROVING MEDICARE AND EXPANDING IT TO PROVIDE HEALTH CARE TO ALL IN THE UNITED STATES
“Medicare isn’t the nation’s budgetary problems. It’s the solution. The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles. Medicare offers a means of reducing these costs.”~ Medicare bears the burdens of existing within an insurance-based health care that fails to control costs and creates tremendous bureaucracy. While there are short-term fixes to Medicare, what is needed is an end to the current insurance-based approach. The United States spends the most per capita per year on health care yet a third of the population is either uninsured or underinsured so that they face financial ruin if a serious accident or illness occurs. Health care spending in the U.S. is rising 2.5% faster than GDP.~ Expanding and improving Medicare so it covers all in the United States is a key component to controlling health care costs and government spending; as well as ending the deficit problem of state and federal budgets. Estimates of how much would be saved on administrative costs alone by extending Medicare to cover the entire population range up to $400 billion a year. This savings plus the inherent cost-controls of a single payer health system would offset the cost of providing everyone in the United States with access to lifelong, comprehensive, quality health care. Controlling health care costs would sharply reduce the long-term budget crisis, as well as foreclosures and bankruptcy.
~ Even without improving and expanding Medicare to cover all, the program is not in crisis. The Medicare Trustees say that the program faces a modest shortfall over its 75-year planning horizon. The projected shortfall is around 0.3% of GDP or less than one-fifth of the amount that annual military spending was increased since September 11th, 2000.
~ Economist Jack Rasmus points out that all it takes to cover the Medicare shortfall is a mere 0.25% increase in the Medicare share of the payroll tax for the next ten years and another 0.25% starting in the eleventh year. The Medicare tax rate is currently 2.9% for the employee and the employer. These tiny tax increases would make Medicare secure.
~ In fact, the Congressional Budget Office (CBO) calculates that the Medicare system in its current form is far more efficient than the privatized system advocated by a bi-partisan consensus of political elites. CBO’s projections show that switching from Medicare to a privatized system would add $34 trillion to the cost of buying Medicare equivalent policies over the program’s 75-year planning period.
~ Medicare provides efficiency. Reich reports:“Medicare’s administrative costs are in the range of 3%. That’s well below the 5% to 10% costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25% to 27% of premiums). And it’s way, way lower than the administrative costs of individual insurance (40%). It’s even far below the 11% costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.”
DEMOCRATIZING THE ECONOMY, SHIFTING ECONOMIC POWER, WEALTH AND OWNERSHIP TO ALL CITIZENS IN THE UNITED STATES
~ What is the next evolution of the economy?~ What can be done to reduce economic insecurity and economic unfairness?~ How can it be reshaped so that people gain greater control of their lives and greater influence over the economy?~ What new forms of ownership can be developed to shift economic power to the people?
“Over the last three decades, for instance, more workers have become owners of their own companies than are members of unions in the private sector; indeed, 5 million more. Simultaneously, there has been increasing experimentation with unions within such firms, and with new ways to increase participation and control. There are also more than 4,500 nonprofit community development corporations that operate affordable housing and other neighborhood programs. Approximately 130 million Americans are members of co-ops.In Cleveland, an innovative group of linked cooperatives has set new standards for community-building economic change. ‘Social enterprises’ are developing in communities throughout the nation that transform the ownership of capital into businesses, the sole purpose of which is to provide community services.One form of new ownership is cooperatives. There are 130 million Americans who are members of some types of co-ops, most commonly credit unions. Another widely shared experience is joint-ownership is Employee Stock Ownership Plans (ESOPs) which give employees ownership of companies through stocks, while these do not usually include management by employees they do provide a share of the profit.There are more than 13 million people who are part of ESOPs ~ meaning there are more employee stock owners than there are members of private unions. Worker-owned co-ops go further and give workers a say in the management of the company. Worker owned co-ops are at the cutting edge of democratizing the economy and provide some of what we need to transform the economy.”
THE LESSONS OF THE SUPER COMMITTEE: CORRUPTION RULES DYSFUNCTIONAL GOVERNMENT
~ The 12 members of the super committee have received at least $41 million from the finance, insurance, and real estate (FIRE) sector during their time in Congress.~ They have received nearly $900,000 from three of the top U.S. banks ~ JPMorgan Chase, Bank of America, and Wells Fargo~ Since 2000, the industry has spent over $4 billion lobbying elected officials.~ Nearly 30 former aides to the 12 members work as lobbyists for financial industry interests.
The largest donor, the Club for Growth, opposes any new taxes on the wealthiest in the United States. As a result, despite the abhorrent wealth divide, the committee is unlikely to recommend the obvious, fair taxes on the wealthiest people who fund their campaigns.Club for Growth $990,066
Microsoft Corp. $810,100
University of California $629,495
Goldman Sachs $592,684
EMILY’s List $586,835
Citigroup Inc. $561,081
JPMorgan Chase & Co. $494,316
Bank of America $349,566
Skadden, Arps, et al. $347,356
General Electric $340,935
CONCLUSION: REVOLT AGAINST ECONOMICS FOR THE 1%
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