Despite such terminology as “fiscal cliff” and “debt ceiling,” the great debate taking place in Washington now has relatively little to do with financial issues. It is all about ideology. It is all about economic winners and losers in American society. It is all about the power of Big Money. It is all about the soul of America.
In America today, we have the most unequal distribution of wealth and income of any major country on earth, and more inequality than at any time period since 1928. The top 1 percent owns 42 percent of the financial wealth of the nation, while, incredibly, the bottom 60 percent own only 2.3 percent. One family, the Walton family of Wal-Mart, owns more wealth than the bottom 40 percent of Americans. In terms of income distribution in 2010, the last study done on this issue, the top 1 percent earned 93 percent of all new income while the bottom 99 percent shared the remaining 7 percent.
Despite the reality that the rich are becoming much richer while the middle class collapses and the number of Americans living in poverty is at an all-time high, the Republicans and their billionaire backers want more, more, and more. The class warfare continues.
My Republican colleagues say that the deficits are a spending problem, not a revenue problem. What these deficit-hawk hypocrites won’t talk about is their spending. They won’t discuss what they did to dig the country into this $1 trillion deep deficit hole. They waged wars in Afghanistan and Iraq without paying for them. They gave away huge tax breaks for the rich. They squandered taxpayer dollars on the pharmaceutical industry by making it illegal to let Medicare bargain for lower drug prices. They also rescinded financial regulations that enabled Wall Street to operate like a gambling casino, leading to a severe recession that eroded tax revenue and left more than 14 percent of American workers unemployed or underemployed.
Now, despite the deficits their policies helped to create and despite the enormous suffering which exists in our society, the Republicans want to cut Social Security, veterans’ programs, Medicare, Medicaid, education, nutrition programs, and virtually every program which benefits low- and moderate-income Americans. They choose to turn their backs on the economic reality facing a significant part of our population: high unemployment, reduced wages, 50 million without health insurance, college graduates saddled with enormous student debt and elderly people living in desperation. And they have tried to slam the door on any further discussion about how to raise revenue by ending tax loopholes and unfair tax breaks.
Republicans like Senator Minority Leader Mitch McConnell who say the revenue debate is over don’t want you to consider these facts:
• Federal revenue today, at 15.8 percent of GDP, is lower today than it was 60 years ago. During the last year of the Clinton administration, when we had a significant federal surplus, federal revenue was 20.6 percent of GDP.
• Today corporate profits are at an all-time high, while corporate income tax revenue as a percentage of GDP is near a record low.
• In 2011, corporate revenue as a percentage of GDP was just 1.2 percent – lower than any other major country in the Organization for Economic Cooperation and Development, including Britain, Germany, France, Japan, Canada, Norway, Australia, South Korea, Switzerland, Norway, Italy, Ireland, Poland, and Iceland.
• In 2011, corporations paid just 12 percent of their profits in taxes, the lowest since 1972.
• In 2005, one out of four large corporations paid no income taxes at all while they collected $1.1 trillion in revenue over that one-year period.
We know where the Republicans are coming from. What about the Democrats? Will President Obama fulfill his campaign pledge to “protect the middle class” or will he surrender to right-wing blackmail? Will Democrats in the House and Senate stand with the vast majority of our citizens and such organizations as AARP, the National Committee to Preserve Social Security and Medicare, the AFL-CIO, the American Legion, the Veterans of Foreign Wars and every other veterans’ organization in the fight against cuts to Social Security and veterans’ programs, or will they agree to a disastrous corporate-backed “chained CPI” concept which makes major benefit cuts to those programs and raises taxes on low-income workers?
The simple truth is there are relatively easy ways to deal with the deficit crisis – without attacking the elderly, the children the sick or the poor.
For example, we have got to eliminate loopholes in the tax code that allow large corporations and the wealthy to avoid more than $100 billion in taxes every year by setting up offshore tax shelters in places like the Cayman Islands, Bermuda and the Bahamas. This situation has become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations.
Further, we must also end tax breaks for companies shipping American jobs overseas. Today, the United State government continues to reward companies that move American manufacturing jobs abroad, despite the fact that millions of American jobs have been outsourced to China, Mexico, and other low wage countries over the past decade. The Joint Committee on Taxation (the official revenue scorekeeper in Congress) has estimated that we could raise more than $582 billion in revenue over the next decade by eliminating these offshore tax loopholes.
We must also recognize that Wall Street recklessness caused the economic crisis, and it has a responsibility to reduce the deficit. Establishing a 0.03 percent Wall Street speculation fee, similar to what we had from 1914-1966, would dampen the dangerous level of speculation and gambling on Wall Street, encourage the financial sector to invest in the productive economy and reduce the deficit by more than $350 billion over 10 years.
We are entering a pivotal moment in the modern history of our country. Do the elected officials in Washington stand with ordinary Americans – working families, children, the elderly, the poor – or will the extraordinary power of billionaire campaign contributors and Big Money prevail? The American people, by the millions, must send Congress the answer to that question.