November 2011, Week 3


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Mon, 21 Nov 2011 01:22:16 -0500
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America Is Not Broke
Edited by Sarah Anderson and John Cavanagh. Contributors
include Phyllis Bennis, Chuck Collins, John Feffer,
Miriam Pemberton, Daphne Wysham., 
Foreign Policy in Focus / Institute for Policy Studies
November 21, 2011

[moderator: the full report is found at the link above]

A misplaced obsession with our national debt and
austerity has overtaken the national debate on the
economy, with a resounding call to slash government
spending to balance the budget. Some lawmakers are
asserting that the country is broke, that we must
tighten our belts, and that we lack the resources to pay
for teachers, firefighters, and other vital public
servants. They argue that we can't afford the government
programs that help people in need, and claim we don't
have the funds for urgently needed job- creating

A congressional "supercommittee" has tried to identify
$1.2 trillion in new cuts over the next decade that
could have devastating consequences for our communities
and our nation. There are many excellent proposals that
should be "on the table" for debate.

This report challenges the premise that America is
broke. In fact, we argue that the current fiscal
challenge poses an opportunity to harness our country's
ample but misdirected resources in ways that will make
us stronger.

We did not attempt to develop an exhaustive list of
possible revenue-raisers or spending cuts. Rather, we
focused on 24 fiscal reforms that we believe would go
furthest to make the country more equitable, green, and
secure. These reforms amount to an estimated $824
billion in potential revenue per year - seven times the
total savings the supercommittee was tasked with

The recommendations fall into three categories:

    Revenues that advance a more equitable society: 
    New taxes on Wall Street, corporations, and
    individuals could, if rigorously enforced, raise
    more than $375 billion a year, while reducing
    reckless speculative activity and creating a
    healthier society. Between 1935 and the late 1970s,
    progressive tax rates and investments in
    infrastructure, education, and housing expanded the
    middle class and served as a foundation for decades
    of broadly shared prosperity. Today, opinion polls
    indicate widespread renewed support for proposals to
    increase taxes on millionaires, make Wall Street pay
    its fair share, and close corporate tax loopholes.

    Expenditure cuts that would make the United States
    and the world more secure: 
    The Pentagon consumes more than half of U.S. federal
    discretionary spending, much of it on things that do
    not make us safer. While some jobs rely on this
    spending, a study by economists at the University of
    Massachusetts has shown that the military budget is
    a poor job creator compared to other forms of
    federal spending. Whereas $1 billion devoted to
    military production creates approximately 11,000
    jobs, the same amount invested in clean energy
    creates about 17,000 jobs; in health care, 19,000
    jobs; and in education, 29,000 jobs. We identify
    three areas where a total of $252 billion in cuts
    can be made to free up funds for job creation
    without risk to our national security. They are:

        End the war in Afghanistan as we end the war in

	Reduce the sprawling network of overseas U.S.
	military bases; and

	Eliminate programs that are obsolete and/or
	wasteful. All three of these goals are supported
	by the majority of Americans.

    Revenue increases and subsidy cuts that will create
    a cleaner environment: 
    If all polluting industries were required to pay the
    full cost of environmentally harmful practices and
    products, they would have greater incentives to
    adopt improved green technologies and reduce our
    nation's dependence on foreign oil. The Obama
    administration has promised to eliminate fossil fuel
    subsidies and yet U.S. taxpayers are still spending
    tens of billions of dollars per year on handouts to
    giant oil and other energy firms. We recommend
    eliminating this corporate welfare and introducing
    new taxes on pollution that could generate an
    estimated $197 billion per year in revenue.

How to Make Robin Hood Proud
The push for taxing financial transactions gains steam 
in Europe - will the United States follow suit?
BY David Moberg
In These Times
November 11, 2011

"Tax Wall Street," read a simple, homemade placard high
above the crowd of thousands of members of unions,
community groups and Occupy activists protesting outside
the mid-October convention of bankers and futures
traders in downtown Chicago. Curtis Smith, president of
the local affiliate of National People's Action, a
network of community organizations focused on the
mortgage crisis and financial industry reform, seized a
microphone to detail the demand.

Among other measures, Smith proposed a tax on financial
transactions, including the sale of stock, bonds and
derivatives. The tax would make Wall Street better serve
the Main Street economy, and it would generate tens -
even several hundreds - of billions of dollars annually
in much-needed revenue for worthy projects. Governments
would collect the tax on financial transactions most
prone to harmful speculation, and wealthy individuals
and financial institutions would mainly pay. That's why
NPA and British campaigners call it the "Robin Hood

In the weeks before the Chicago protests, the European
Commission had proposed a financial transaction tax for
Europe by 2014 - reversing its earlier rejection of an
FTT. Conservative leaders of both France and Germany -
Nicolas Sarkozy and Angela Merkel - vowed to press
adoption of the tax at the G20 leaders meeting in France
in early November, despite opposition from the
conservative British government and the Obama
administration. On November 3, international union
delegations demonstrated for an FTT outside the G20

In Washington on the same day, National Nurses United
protested with other unions and allies, urging Congress
to "Heal America/Tax Wall Street," and labor-community
rallies around the country urged political leaders to
enact the tax. And in Congress, one day earlier, Sen.
Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) re-
introduced their proposal for a very modest FTT.

The idea of imposing a very small tax on some sales of
financial products is not new; British economist John
Maynard Keynes proposed a stock speculation tax in the
1930s. In recent years, the FTT has picked up support
from some prominent business leaders (including Warren
Buffett and Bill Gates) and many economists, from Nobel
Prize winners Joseph Stiglitz and Paul Krugman to the
1,000 economists from 53 nations who signed a letter
last April saying an FTT was "technically feasible" and
"morally right." The International Monetary Fund
identifies 24 countries that currently have an FTT, most
prominently a long-standing tax on stock sales in
Britain, home to one of the world's largest financial

FTT advocates think the financial trading business has
grown too big, too speculative and too parasitically
destructive of the real economy. Center for Economic and
Policy Research (CEPR) co-director Dean Baker, a pioneer
FTT proponent, notes that investment banking and trading
quintupled as a share of the U.S. economy from the 1970s
to the last decade. Banking is like trucking, Baker says
- an intermediate good. An efficient economy minimizes
the trucking or financial activity required to produce
goods and services.

Critics say an FTT would distort financial markets,
would be hard to collect and, unless enacted globally,
would drive business out of taxed countries. Ideally,
all countries would cooperate, but countries can act
individually. London's stock market has managed to pay
its tax and thrive. Experts have also developed
sophisticated designs to minimize harmful distortions.

A broad-based FTT (0.5 percent on stocks and options, or
about 50 cents per $100 trade) could yield roughly $170
billion in federal revenue annually, according to a
study by CEPR and the University of Massachusetts.
Oxfam, a leading advocate, says the money should be used
for international development. Other proponents suggest
deficit reduction, job creation, economic stabilization,
global warming prevention and other causes.

Republicans in this Congress surely will block any FTT
proposal, even if President Obama reverses his current
position to support the tax (as he once did), but
European momentum may eventually push the United States
to act. "At a minimum it appears a group of G20
countries are going to move forward with financial
transaction taxes, along with the European Commission,"
says AFL-CIO Policy Director Damon Silvers. "The U.S.
should be part of this global effort so that President
Obama is clearly with the global 99% and not the Wall
Street 1%."


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