The bailout is corporate-government on display — the corporate representatives (the Fed is the banking and finance system) go in the back room to meet with the congressional leadership of both parties — all of whom are funded and put in office by the corporations — they come out all smiles and the stock market goes up — big finance is happy. The capital-economy is being saved on the back of taxpayers. Glen Greenwald put it well:
"What is more intrinsically corrupt than allowing people to engage in high-reward/no-risk capitalism — where they reap tens of millions of dollars and more every year while their reckless gambles are paying off only to then have the Government shift their losses to the citizenry at large once their schemes collapse? We’ve retroactively created a win-only system where the wealthiest corporations and their shareholders are free to gamble for as long as they win and then force others who have no upside to pay for their losses. Watching Wall St. erupt with an orgy of celebration on Friday after it became clear the Government (i.e., you) would pay for their disaster was literally nauseating, as the very people who wreaked this havoc are now being rewarded." See here .
Essentially, the same people who made the mess, profited from the mess are now profiting from the bailout. The wealth-class profited immensely over recent decades, expanding while the middle class was stagnate. At the bottom of the income distribution, the wages of low-skilled workers, the "working poor," have been stagnant or falling through the past three decades. And at the very top, the share of income going to the richest 1 percent of Americans has nearly doubled from about 8 percent in the late ’70s to about 15 percent today and that does not even count capital gains profits. To visualize the gap see the L Curve: http://www.lcurve.org.
What is the bailout going to cost? Before the proposed $700 billion package this weekend, the government had put already put down $900 billion of taxpayer money. With the proposed $700 billion the government is suggesting be used to buy toxic mortgages, that brings the total government bailout in the last several months to 1.6 trillion or $16,000 each for every American taxpayer. And, this is all borrowed money so there will be interest to pay on top of the $1.6 trillion.
We’re not seeing a tax on the wealth-class that profited from the last decade to pay for it despite their hoarded wealth, we’re seeing it carried on the backs of the shrinking middle class and their children. If the Congress represented the people rather than the wealth class there would be legislation to pay for this bailout and shrink the wealth divide:
- A Tobin Tax on the purchase of wealth instruments, i.e.stocks, bonds, securities and derivatives. A micro tax of .1% (1/10th of 1%) would raise $1.2 trillion.
- An Income Tax Surcharge Rate on Incomes Over $5 Million. The 50,000 households with annual incomes over $5 million are the biggest winners from twenty-five years of Wall Street deregulation and the Bush tax cuts. A 50% tax rate surcharge on incomes over $5 million and a 70 percent rate on incomes over $10 million would generate $105 billion a year.
- Eliminate the Tax Preference for Capital Gains. Taxing wealth and work at the same rates would generate $95 billion a year in revenue.
- Progressive Inheritance Taxes. A progressive estate tax, effecting only extreme inheritance, could generate $50 billion a year in the short term, but much more in outlying decades.
- Eliminate Taxpayer Subsidies for Excessive CEO Pay. These loopholes include eliminating offshore deferred compensation, capping the tax deductibility of excessive pay and eliminating double standards for stock option accounting. Closing these tax loopholes would generate $20 billion a year. (Read more about this in this recent report from the Institute for Policy Studies and United for a Fair Economy.)
- Close Offshore Corporate Tax Havens. Congress should prevent corporations from playing games by claiming expenses in the United States and profits in countries that don’t collect taxes. According to the Government Accountability Office, two-thirds of US corporations paid no corporate income tax between 1998 and 2005. Closing this loophole would generate over $100 billion.
(Thanks to independent reporter Chris Bush of Baltimore for some of these ideas.)
The duopoly candidates, McCain and Obama, have surrounded themselves with Wall Street economic advisors, so don’t expect to hear any of these ideas from them.
The Bailout Proposal that will go to Congress on Monday includes a provision preventing any review of the decisions in open court: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency." See here . Whatever happened to checks and balances? The Democrats seem to be giving the authority to the Bush administration spend hundreds of billions without congressional or judicial oversight. Have they not learned anything in the last eight years? Or, is this more evidence the Dems are part of the team?
William Greider describes the bailout as a "historic swindle" where the government is still failing to oversee the banks and financial institutions. See here . He predicts this bailout could launch "a tidal wave of righteous anger and popular rebellion" that "has the potential to bring down one or both political parties." Or as Greenwald writes: "If there is any ‘pitchfork moment’ — an episode that understandably would send people into the streets in mass outrage — it would be this."
No doubt a bailout was necessary – bank runs, unemployment, a complete financial meltdown and a worldwide depression was at risk — but shouldn’t those who profited and took the risks pay for it? They have the money — decades of wealth transfer, escalating in the last decade to obscenity.
