Senator Bernie Sanders, Senate Candidate Elizabeth Warren tell America that it is the Corporate CEOs that do not pay taxes and exported the jobs overseas that created the Financial Crisis of 2008. They should not lecture shamelessly now.
Reader Supported News
Sen. Bernie Sanders: Tax Dodgers on Wall Street Have No Shame.
By Sen. Bernie Sanders, Reader Supported News
25 October 12
en. Bernie Sanders (I-Vt.) today said corporate leaders should look in the mirror before lecturing the American people on ways to tackle the deficit.
The senator’s comments came after the heads of more than 80 big companies issued a statement on deficit reduction. Sanders released a report detailing how many of the companies headed by the same CEOs have avoided taxes, sent American jobs overseas and took taxpayer bailouts. Click here for the full report.
“There really is no shame,” Sanders said. “The Wall Street leaders whose recklessness and illegal behavior caused this terrible recession are now lecturing the American people on the need for courage to deal with the nation’s finances and deficit crisis. Before telling us why we should cut Social Security, Medicare and other vitally important programs, these CEOs might want to take a hard look at their responsibility for causing the deficit and this terrible recession.
“Our Wall Street friends might also want to show some courage of their own by suggesting that the wealthiest people in this country, like them, start paying their fair share of taxes. They might work to end the outrageous corporate loopholes, tax havens and outsourcing provisions that their lobbyists have littered throughout the tax code – contributing greatly to our deficit,” Sanders added.
Many of the CEOs who signed the deficit-reduction letter run corporations that evaded, in total, at least $34.5 billion in taxes by setting up more than 600 subsidiaries in the Cayman Islands and other offshore tax havens since 2008. As a result, at least a dozen of the companies avoided paying any federal income taxes in recent years, and even received more than $6.4 billion in tax refunds from the IRS since 2008.
Several of the companies received a total taxpayer bailout of more than $2.5 trillion from the Federal Reserve and the Treasury Department.
Many of the companies also have outsourced hundreds of thousands of American jobs to China and other low wage countries, forcing their workers to rely on unemployment insurance and other federal benefits.
“In other words,” Sanders said, “these are some of the same people who have significantly caused the deficit to explode over the last four years.”
Sanders, a member of the Senate Budget Committee, said the $16 trillion national debt is a serious issue. He has proposed specific ways to lower deficits. For details, click here.
A Progressive Deficit Reduction Plan
- Repeal all of the 2001 and 2003 Bush tax breaks for the top two percent. Repealing the 2001 and 2003 tax breaks for the top two percent would reduce the deficit by about $1 trillion over the next decade. After President Clinton increased taxes on the top two percent, the economy added over 22 million jobs. After President Bush reduced taxes for the rich, the economy lost over 600,000 private sector jobs.
- Create an emergency deficit-reduction surtax on millionaires. Enacting a 5.4 percent surtax on adjusted gross income of more than $1 million would raise over $383 billion over 10 years, according to the Joint Tax Committee. According to a February 2011 NBC News/Wall Street Journal poll, 81 percent of the American people support the creation of a millionaires surtax to reduce the deficit.
- End tax breaks and subsidies for big oil, gas and coal companies. If we ended tax breaks and subsidies for big oil, gas, and coal companies, we could reduce the deficit by more than $113 billion over the next ten years. The five largest oil companies in the United States have earned about $1 trillion in profits over the past decade.
- Establish a Wall Street speculation fee of 0.03 percent on the sale of credit default swaps, derivatives, stocks, options, and futures. Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street. Establishing a speculation fee would reduce gambling on Wall Street, encourage the financial sector to invest in the productive economy, and reduce the deficit by $350 billion over 10 years without harming average Americans.
- Eliminate tax breaks for companies shipping American jobs overseas. Today, the U.S. government is actually rewarding companies that move U.S. manufacturing jobs overseas through loopholes in the tax code known as deferral and foreign source income. During the last decade, the U.S. lost about 30% of its manufacturing jobs and over 56,000 factories have been shut down. If we eliminated these tax loopholes, the Joint Tax Committee has estimated that we could raise more than $582 billion in revenue over the next ten years.
- Prohibit abusive and illegal offshore tax shelters. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations. The 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. The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in Panama, the Cayman Islands, Bermuda, the Bahamas or other tax haven countries. Cracking down on offshore tax shelters could reduce the deficit by as much as $1 trillion over the next decade.
- Establish a currency manipulation fee on China and other countries. As almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process. If we imposed a currency manipulation fee on China and other currency manipulators, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.
- Tax capital gains and dividends the same as work. Taxing capital gains and dividends the same way that we tax work would raise more than $730 billion over the next decade. Warren Buffet has often said that he pays a lower effective tax rate than his secretary. The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work. Right now, the top marginal income tax for working is 35%, but the tax rate on corporate dividends and capital gains is only 15%.
- Establish a Progressive Estate Tax. If we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $300 billion over 10 years. Sen. Sanders introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans who lose a loved one would never see a dime of their loved one’s estate paid in federal estate taxes.
- Reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget. Much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists. Sen. Tom Coburn (R-OK) and Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, have estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.
- Require Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry. Requiring Medicare to negotiate drug prices, similarly to what the VA currently does, would save more than $157 billion over 10 years.
- Eliminate waste, fraud, and abuse within every federal government agency. Virtually everyone agrees that there is waste, fraud, and abuse in every agency of the federal government. Rooting out this waste, fraud, and abuse could save between $150 billion and $200 billion over the next 10 years.
Elizabeth Warren on the Man Made Financial Crisis
By Charles Pierce, Esquire Magazine
25 October 12
ast weekend was a good one for Elizabeth Warren, the Democratic candidate for the U.S. Senate here in Massachusetts. She’d managed to crack open a slim, but noticable, lead over incumbent Scott Brown, who seemed bound and determined to demolish his own personal favorability rating and, as a result, had slipped some three to five points behind Warren, depending on which poll you read. Senator Al Franken came to a labor event in Worcester last Thursday to stump for Warren, and then she appeared with a number of other Democratic candidates, including congressional candidate Joe Kennedy, at the Laborer’s Hall in Hopkinton, which sits in the middle of a complex of playing fields and meeting halls that various unions tucked together behind the pines years ago as kind of a general headquarters.
In fact, it is the active involvement of organized labor, which was not there in 2010 when Brown upset Martha Coakley to take over the seat held for five decades by Edward Kennedy, that has,as we’ve seen in the course of following the race on The Politics Blog, energized Warren’s campaign in the last weeks before the election. Boston mayor Thomas Menino has swung a particularly heavy bat, both with his influence within the labor community, and with this own personal political operation as well. As we rode between the Laborer’s Hall and the next event on her campaign schedule Saturday afternoon, Warren talked about the events that first brought her to public prominence – the financial collapse of 2008, the Wall Street chicanery behind it, and the ongoing repercussions that are so much a part of her basic campaign message. Oh, and the former governor up here.
CHARLES P. PIERCE: How did we get back again to too big to fail? How did that happen?
ELIZABETH WARREN: I think it happened a couple of different ways. One of them was – and I think there was a miscalculation back in 2008, 2009 – a lot of people, at least I subscribed to it, a lot of people thought, Okay, we have 30 years of trying deregulation and to cut taxes and it has brought us to the biggest financial crisis since the great depression. So I thought what would happen over the next 50 years, we’d spend one year rewriting the financial rules and we’d be tough on the banks – as a country, we would be. And then the next 50 years, we’d concentrate on rebuilding America’s working families, creating opportunity and a better middle class, creating these opportunities for kids to rise out of poverty for all of our children to be included, because that’s what we do. I just truly believe that. I looked at that in 2008, 2009 and said, We tried the experiment…. Well, it just seemed so obvious to me! We had tried it, right? Coming out of the Great Depression to basically late ’70s, early 1980s, just almost every piece of legislation that passed through Congress was through the filter of: Does it strengthen the middle class? Does it create more opportunities for working families? And that was the litmus test. That switches in the early ’80s, when the Republican party says the role of government is to protect those who’ve already made it, let them keep more of the money, let them keep more power. And so we tried that for 30 years and ended up with an economy that almost ran over a cliff and crashed into the stone age.
So the deregulation starts. We start pulling the threads out of the regulatory fabric and we actually do it in two ways: one is to repeal certain regulation, Glass-Steagall is amended multiple times before it is finally repealed completely in 1999. As new financial products, as new innovations come along, there’s no regulation. So the regulatory fabric, you know, they just pull one thread out after another. And what happens? So there’s the savings and loan crisis at the end of the ’80s. They keep pulling the regulatory threads out, at the end of the ’90s, there’s long-term capital management, remember? Showed us that the whole world is stitched together economically. They keep pulling the regulatory threads out and then the next big crash is 2008.
This was not a natural disaster. The crash of 2008 was manmade. And that’s important because it has both halves in it. If we’re not careful, we create more problems,and it also means though it’s within our capacity to prevent this from happening. There were no financial crashes between the 1930s and the late 1980s until the deregulation started again. The relevance of this is what I think is so interesting about this: you know, there was a financial panic. They used to call it “panic,” roughly about every 15 years from the 1790s forward, and it was the insight in the 1930s that we can do better than this. We can put some basic rules of the market: transparency, a level playing field, which were the SEC rules; the FDIC, you know, to make it safe to put money in banks. And we bought 50 years of economic peace. But it’s always the case that the financial institutions, they’re always looking for the chink in the wall. They want everyone else to follow the rules, but, you know: Can they get one little advantage? Can they get one little exception?
(Warren became a national celebrity when she was called in to assess the damage, and to conduct oversight of the Troubled Assets Relief Program, aka TARP, aka The Really Big Bank Bailout. It was in that capacity that she first ran up against the nexus of financial and political power that had camouflaged the ongoing structural thievery of the financial-services economy.)
CPP: I just remember watching this thing on NBC’s evening news one night and the guy saying the entire United States financial system is on the brink, and I say, What?
EW: Yeah. Exactly.
CPP: But if what you’re saying is true, the crisis just exploded on the general public and then it was explained in gobbledygook.
EW: And then it was explained in gobbledygook, which is a way of saying: Be helpless. Leave it to a handful of insiders to solve the problem. We’ll take care of this, you know, and the rest of you relax. Just give us seven hundred billion dollars. But that was the point – that was the battle of whether it’s gonna be all about the experts and they’re going to go behind closed doors. I mean that metaphorically, but that’s really what was happening. How much crazy language and it makes no sense and it’s gobbledygook – that’s a way of telling everybody else: Be helpless.. And that means no accountability. Nobody’s accountable, you know? And then the metaphors, you know: This is like a big hurricane.
I was in Washington about 12 minutes before I figured out, Wait a minute, the financial rules will be rewritten following this crisis, so this is a chance, you know? The door is gonna open. I don’t know how wide or how long, but let’s get in. So, everybody’s talking about, in Washington, the top of the heap, the top of the pyramid, the top of the mountain, capital-reserve requirements for the nine largest financial institutions of the Commodities Futures Trading Commission, and I’m waiving my hands saying, But the market is broken at the family level, at the household level. Remember, this crisis started one lousy mortgage at a time. So if the so-called experts just go off and fix the top and don’t do anything about what’s happening in the consumer credit market, which had changed from a market where they looked at you and said, Well, you have a credit history, you’ve lived somewhere, I can afford to lend you this much money, you’re probably going to pay it back, to a market that was based – think about this, several of the largest financial institutions in this country had a profit model based on tricking their customers.
CPP: Would you have voted for the bailout if you were in the Senate?
EW: You know, without restrictions, no. So I’m going to put it this way: It was clear something had to be done. The part that I was just beside myself over was the lack of accountability. I mean accountability in every meaning of that word: how the money would be given out, whether or not the banks would be accountable for it. Go back and look at that first report, because that’s what that first report is about. I could not believe that, that the treasurer of the United States government was shoveling money out the door to the nine largest financial institutions on a no-questions-asked basis…. And in some ways it was worse than that, because it not only had no restrictions to speak of, it had no restrictions in the statute – it was a bait-and-switch. Do you remember what TARP stood for? It was to buy up mortgages – bad mortgages – and stabilize the system by buying those mortgages and riding them down. Remember how much of that happened? Pretty much nothing…. Not much was the answer, and it was much slower and much later. Instead, Paulson started pushing that money out the door to the financial institutions. So, first report, I would describe as: What’s going on here? The second report, I would describe as Paulson – as calling Paulson out for not making that clear. And then, third report: We had brought in our own economic team to look at this – the third report was showing how, by using the same terms for all nine of the big financial institutions, what they were really doing was bailing out the four in the most trouble, the one that was in the most trouble and then the next three or four and using the rest of them for camouflage for how bad the financial system was.
Now think about this. They all got it on the same terms. Why do you do that? It was to provide a bigger subsidy for the financial institutions that were in the most trouble and to provide camouflage so no one noticed. And that was our third report, and we raised holy hell.
(Not long before this particular afternoon, Warren had received the endorsement of Sheila Bair, the Republican who’d been chairman of the FDIC through the entire financial crisis. At one point, Bair, Warren, and Mary Schapiro, the chairperson of the Securities and Exchange Commission at the time, shared the cover of Time. Bair also had come to Massachusetts to campaign for Warren.)
EW: You’re gonna laugh. Adam was driving us, and, what was it you described it as, Adam? We were dishing on the other – we sat in the back seat, Shelia and I did, dishing on the other people in the financial system. But the thing is, it’s not just like we’re sitting around like a bunch of old people saying, Back in the day…. This is still going on. The financial system is still at risk and here’s what’s interesting: The ball hasn’t stopped rolling on financial reform. Watch what you wish for, right? So Dodd-Frank is this big complex bill, but, as you know, part of the goal is to bring these large financial institutions to heel, and the financial-services industry tries to roll that out, tries to create as many loopholes as it can. The Volcker rule as been much delayed and complicated and so on, but what it means it is it has kept open the question of what the new regulation’s look like.
Then, Dan Tarullo stepped out last week. Dan Tarullo is one of the governors of the Federal Reserve, and Turullo stepped out and said maybe we should consider capping the size of financial institutions, and he had a new way to do it, rather than doing it on deposits, which was the old way of doing it. He wanted to do it on liabilities, but Tarullo put back in play the idea of the break up of the big banks. That’s gonna cause a few hearts to skip a beat on Wall Street.
(Which is pretty much how she became a candidate, to try and control the uncontrollable and unaccountable forces of financial power. And, thus, she became a politician, and, by now, she’s a pretty good one. “Six weeks ago,” said an old political strategist at her Worcester event, “I wouldn’t have given her a chance. Now, I’d say she’s probably the favorite.” She’s also running so that nobody forgets how close we really came to losing it all.)
EW: I cannot believe that. The first time I saw the videotape of Mitt Romney saying, On the first day of his presidency…, I’m not kidding you, my mouth fell open. I thought, Wait a minute, this guy, four years after the greatest crash since the Great Depression, this guy is running for office? On embracing the rule that lead to the biggest financial crash since the Great Depression! Hello?
And that’s the thing that makes it so remarkable about what the Republicans are saying. They say they want to cut taxes and reduce regulation, right? Mitt Romney says on the very first day, what will he do? He will get rid of all the Dodd-Frank regulations, and that’s a way of saying that the Republican plan is to let the rich and powerful get richer and more powerful and somehow – that that will be America’s future and that’s their vision for America’s future. I just… I don’t know how we do anything other than get up and fight.
Charlie has been a working journalist since 1976. He is the author of four books, most recently “Idiot America.” He lives near Boston with his wife but no longer his three children.