By Mort Malkin
The Government says “What recession?” It is a view shared broadly — by the financial community, the grandest multinational corporations, and the wealthiest 1% of Americans. The recession, for all the rich corporations and their Representatives (shills) in Washington, is over. The recovery is complete. The Dow Jones average is above 12,000, corporate profits have bounced back to pre-crisis levels, and the investment banks are giving out bonuses like free beer in Green Bay pubs after the Super Bowl.
But, if there’s such a robust recovery why aren’t all Americans flush with money and buying everything from utter frivolities to basic necessities and creating the demand for goods and services that will need more workers and reduce the unemployment rate to zero. The richest 1% of Americans add up to less than one million people, and you can’t run a recovery just on black caviar in kefir on bone china with champagne in Waterford crystal. The over 100 million rest of us — the unemployed, the part timers, those at minimum wage, the folks whose homes are in foreclosure, and the middle class who worry about losing their jobs — are spending only what we must for food, shelter, and clothing and hoping the winter won’t be too cold.
So, what is the government’s strategy? Why, bail out the too-big-to-fail banks. The banks, of course, will lend the money to small businesses. The businesses will hire more workers and produce more widgets, reducing the unemployment rate. The workers, now employed, will go out and buy more widgets, and the economy will recover.
The result: The banks used the money for stock and derivative trading and to buy (merge with) other financial companies, creating much-too-big-to-fail behemoths. As a reward for all this money juggling, they paid out huge bonuses to their executives. The small businesses of the nation did not or could not get loans to hire more workers until there was more demand for widgets. Large corporations did not bother to borrow money and hire more workers — rather, they sent the jobs overseas.
What’s a poor President Obama to do? He can make a lofty speech to the business community to plead for their patriotism in hiring more workers here in the US and stop sending jobs overseas. But he knows that corporations have only the responsibility to make the largest possible profit for their stockholders. Or, he can provide federal money for:
• Infrastructure building and maintenance
• Public transportation
• Public radio and TV
• Clean, renewable energy such as sun, wind, tide, and geothermal.
He can mandate that all government vehicle fleets be plug-in hybrids or all-electric. He cam establish an Inspector General’s Office to protect whistle blowers who will identify agency waste and fraud in government contracts (especially the private military contractors in Iraq and Afghanistan) and prosecute the profligate and greedy.
But, you say, where will a government in deficit get all the money for all the jobs that private industry is not creating? The answer is to go where the money is:
* Corporations, especially the ones that deal in finance, have been reporting record profits and then hoarding the cash or buying back their own stock. A small surtax on each would yield a couple of hundred billion dollars. The too-big-to-fail banks that were bailed out can a) have a cap placed on the bonuses for their executives and b) be compelled to split up into various divisions: regular banking, commercial banking, and investment “banking.”
* The wealthiest 1% of Americans pay a payroll tax on the first $106,000 of income, just as the rest of us do, to fund Social Security and Medicare. But they pay no tax on earnings above that amount. They should have the privilege of contributing a 12.4% tax on all their income, whether it’s from a paycheck, capital gains, dividends, or a share of profits from a hedge fund.
* Many US corporations have operations in other countries, often sending jobs abroad to fill key positions. The products they make there are then sold back in the US. If they keep the profits in that other nation, they pay no US tax on the money. A simple bill to plug this loophole would add another few billion for the US Treasury. The oil giants that operate globally routinely take advantage of these tax breaks and have a couple of slippery others besides. Given their record profits of Big Oil, in the tens of billions each one, these billions in subsidies can be better kept in the US Treasury for public services in the US.
* Then there is the money that is parked in off-shore accounts, outside of IRS scrutiny. It’s all in the illustrious tradition of the Enron Corporation, whose creative accounting moved funds mysteriously between the US mainland and Grand Cayman Island. Even the accounting firm of Arthur Anderson Inc couldn’t understand it all. Today, the multinational US corporations admit to a trillion dollars (1,000,000,000,000 — yes 13 figures) that are in off-shore accounts in Bermuda, the Bahamas, Grand Cayman Island, and Monaco. [Switzerland is too risky nowadays — just ask Hosni Mubarek.] If they admit to one trillion you can safely figure on three to four times that amount. It’s all done through bookkeeping trickery and subsidiaries which too often turn out to be Post Office boxes. Lately, there are reports that they have rented rooms in the casinos where it’s easier to hold meetings than in the Post Office. Trillions! Now we’re talking about real money. If we taxed all that cash at current rates, the money would return home. Tax havens would become an endangered species, corporate executive tourism would shrink and we would have to offer these off-shore nations a few million more in foreign aid, a small cost to reclaim the hundreds of billions in tax revenues.
* Last, recall the Bush tax cuts for the gigarich.
Voilà, a balanced budget! Without reducing funding for Head Start, libraries, the arts & music, public school teachers, libraries, NPR, PBS, Pell grants, home energy assistance, food stamps, family planning and reproductive health, food safety, air traffic controllers, fire fighters, and police officers. And, a little left over to respond to storms, floods, and droughts resulting from global heating.