Cutting Social Security and Not Taxing Wall Street
By Dean Baker | Truthout | May 15, 2013
As we move towards the fifth anniversary of the great financial crisis of 2008, people should be outraged that cutting Social Security is now on the national agenda, while taxing Wall Street is not. After all, if we take at face value the claims made back in 2008 by Fed Chairman Ben Bernanke and former Treasury Secretaries Henry Paulson and Timothy Geithner, Wall Street excesses brought the economy to the brink of collapse.
But now the Wall Street behemoths are bigger than ever and President Obama is looking to cut the Social Security benefits of retirees. That will teach the Wall Street boys to be more responsible in the future.
Most people are now familiar with President’s Obama’s proposal to cut Social Security by reducing the annual cost of living adjustment. While the final formula is somewhat convoluted, the net effect is to reduce benefits by an average of roughly 3.0 percent.
Since Social Security benefits account for more than 70 percent of the income of a typical retiree, this cut is more than a 2.0 percent reduction in income. By comparison, a wealthy couple earning $500,000 a year would see a hit to their after-tax income of just 0.6 percent from the tax increase that President Obama put in place last year.
While President Obama is willing to make seniors pay a price for the economic crisis, his administration his unwilling to impose any burdens on Wall Street. Specifically, it has consistently opposed a Wall Street speculation tax: effectively a sales tax on trades of stock and derivatives. The Obama administration has even used its power to try to block efforts by European countries to impose their own taxes on financial speculation.
If the idea of taxing stock trades sounds strange, it shouldn’t. The United States used to impose a tax of 0.04 percent until Wall Street lobbied to eliminate it in the mid-1960s. Many countries, including the United Kingdom, Switzerland, China, and India already impose taxes on stock trades.
The tax in the UK is 0.5 percent on stock trades (0.25 percent for both the buyer and the seller). It dates back more than 3 centuries. The country raises more than 0.2 percent of GDP ($32 billion in the United States) from the tax each year. The tax has not prevented the London stock exchange from being one of the largest in the world.
There are currently two bills in Congress for a similar tax in the United States. A bill by Minnesota Representative Keith Ellison would impose the same tax as the UK on stock trades and would apply a scaled rate to options, futures, credit default swaps and other derivative instruments. It could raise more than $150 billion annually or more than $2 trillion over the ten year budget window.
A second bill has been put forward by Iowa Senator Tom Harkin and Oregon Representative Peter DeFazio. This bill would apply a 0.03 percent tax to trades of stock and a wide range of other financial assets. According to the Joint Tax Committee, the bill would raise close to $40 billion a year or over $400 billion over a ten-year budget window once it is implemented.
Unfortunately the administration has consistently opposed both bills. It claims that it is concerned about the incidence of these taxes – that ordinary investors would see large burdens from the tax. It also claims to be worried that the taxes will disrupt financial markets by making trading more costly.
Neither of these stories passes the laugh test. Ordinary investors don’t trade much, and therefore are not going to feel much impact from the tax. If someone with $100,000 in a 401(k) (this is much larger than the typical 401(k)) turns it over at the rate of 50 percent annually, they would pay $15.00 each year as a result of the Harkin-DeFazio tax.
Furthermore research shows that investors reduce their trading as costs increase. This means that if the tax increases trading costs by 20 percent, then investors will reduce their trading by roughly the same amount (in this example, turnover would fall to 40 percent annually). That means that the net cost of turnover in a 401(k) will barely change for a typical investor as a result of the tax. Wall Street would just see much less business.
So the Obama administration wants us to believe that it is willing to cut the Social Security benefits of retiree living on $15,000 a year in Social Security by $450 but it opposes a Wall Street speculation tax because it is concerned that investors with $100,000 in a 401(k) may pay a few dollars a year in additional trading costs. Only a reporter with the Washington Post would believe a story like that.
The other part of the Obama administration’s story is equally laughable. The cost of financial transactions has plummeted in the last four decades because of computers. Even the Ellison tax rate would just raise costs back to their mid-80s level. The Harkin-DeFazio tax rate would probably still leave costs lower than they were in 2000.
The country certainly had a vibrant capital market and stock exchange in the 1980s, taking costs part of the way back to this level will not prevent Wall Street from serving its proper role of transferring capital from savers to borrowers. It will just clamp down on speculation.
The basic story is very simple. Wall Street bankers have a lot more political power than old and disabled people who depend on Social Security. That is why President Obama is working to protect the former and cut benefits for the latter.
Decades of Political Tyranny at the IRS
By Karl Grossman | May 16, 2013
President Barack Obama got it right and wrong Monday when he stated, “If you’ve got the IRS operating in anything less than a neutral and nonpartisan way, then that is outrageous, it is contrary to our traditions.”
He was right in declaring it was “outrageous” for the IRS to target conservative organizations for tough tax treatment. But he was incorrect in saying “it is contrary to our traditions.”
For the U.S. Internal Revenue Service has for decades gone after organizations and individuals that take stands in conflict with the federal government at the time. This has been a tradition, an outrageous tradition.
It is exposed in detail by David Burnham, longtime New York Times investigative reporter, in his 1991 book A Law Unto Itself: The IRS and the Abuse of Power. He relates how President Franklin D. Roosevelt likely “set the stage for the use of the tax agency for political purposes by most subsequent presidents.” Burnham writes about how a former U.S. Treasury Secretary, banker Andrew Mellon, was a special IRS target under FDR. During the presidencies of Lyndon Johnson and Richard Nixon, he recounts, the focus of the IRS’s efforts “at political control” were civil rights organizations and those against the U.S. engaging in the Vietnam War. Nixon’s “enemies list” and his scheme to use the IRS against those on it is what the current IRS scandal is being most compared.
History Professor John A. Andrew III in his 2002 book Power to Destroy: The Political Uses of the IRS from Kennedy to Nixon—its title drawn from U.S. Supreme Court Chief Justice John Marshall’s dictum “The power to tax is the power to destroy”—focuses further on this tradition. He tells of how John F. Kennedy administration’s “Ideological Organizations Project” investigated, intimidated and challenged the tax-exempt status of right-wing groups including the John Birch Society. Then, with a turn of the White House to the right with Nixon came investigations, he writes, of such entities as the Jerry Rubin Foundation, the Fund for Investigative Journalism and the Center for Corporate Responsibility.
During the Reagan administration, I had my own experience with the IRS—ostensibly
because of a book I wrote. Nicaragua: America’s New Vietnam? involved reporting from what was then a war zone in Nicaragua and in Florida—where I interviewed leaders of the contras who were working with the CIA to overthrow Nicaragua’s Sandinista government—and Honduras, being set up as a tarmac for U.S. intervention in Nicaragua. I visited a U.S. military base there. The book warned against a U.S. invasion of Nicaragua (subsequently decided against by the Reagan White House after the Iran-contra scandal). The book was published in 1985 and soon afterwards I was hit with an IRS audit. It would be more, I was informed, than my showing up at an IRS office. The IRS was to come to my house for a “field audit.”
The investigator sat on one side of our dining room table and on the other side was me and my accountant, Peter Berger of Shelter Island. What would be an all-day event started with the investigator asking me to detail how much my family spent on food each week and then, slowly, methodically, going through other expenses. Then he went through income. He obviously was seeking to determine on this fishing expedition whether income exceeded expenses. He went through receipts for business expenses including restaurant receipts, asking who I ate with. He sorted through receipts for office supplies. By mid-afternoon, he had gotten nowhere. At that point, having been hours together, a somewhat weird relationship had been formed. And he began to tell me how his dream in college was to become a journalist. He expanded on that, and then asked: “Have you ever faced retaliation?”
“What do you think this is?” I responded.
He was taken back—insisting my name had come up “at random.”
In the end, all he did was trim some of what was listed as business use of my home phone.
Was I being retaliated against for the book I had written? One would never know. Recently, I ran into accountant Berger, now retired, and he commented about how that day at my house was the strangest IRS audit he had ever been involved in.
The IRS has been beyond reform. Burnham writes in A Law Unto Itself: The IRS and the Abuse of Power that a “political imperative of not messing with the IRS” has become “close to being a law of nature almost as unbending as the force of gravity.” It is “rarely examined by Congress.”
President Obama announced yesterday that the acting commissioner of the IRS was asked and agreed to tender his resignation as a result of the scandal. That’s a small start. Far more important is somehow ending the tradition of IRS political tyranny. Fundamental change in the IRS is called for.
Karl Grossman, professor of journalism at the State University of New York/College of New York, is the author of the book, The Wrong Stuff: The Space’s Program’s Nuclear Threat to Our Planet. Grossman is an associate of the media watch group Fairness and Accuracy in Reporting (FAIR).
US attorney claims no knowledge of AP phone taps
RT | May 16, 2013
US Attorney General Eric Holder has claimed he was unaware of the subpoenas for AP’s phone records, but defended them as a necessary measure. Holder recused himself from the case that has been branded as an “unprecedented intrusion” into press freedom.
US lawmakers questioned the attorney general at a House Judiciary Committee about the two months of AP phone records obtained by the Justice Department without permission. In a session that saw the attorney on the back foot amid calls for his resign, he maintained his ignorance in the “ongoing matter.”
Flatly denying any prior knowledge to the subpoenas and who had issued them, he stated that he was 99 per cent sure that deputy attorney general James Cole had issued them.
“The matter is being supervised by the deputy attorney general. I am not familiar with the reasons why the subpoena was constructed in the way that it was because I’m simply not a part of the case,” Holder told the committee, adding he was confident that the people who are involved in the investigation adhered to Justice Department regulations.
Investigators wish to discern why it was necessary to gather so much information from AP phone records. The Justice Departments claims that the records were seized as part of an investigation into leaked data on a CIA operation in Yemen to stop an airliner bombing plot on the anniversary of the death of Osama Bin Laden.
Holder stressed that the leak was very serious and had put the safety of the American people at risk and as such the Justice Department’s action was justified.
Passing the buck
The Justice Department admitted its surveillance of AP’s phone lines in a letter to the organization’s heads last Friday. AP’s Chief Gary Pruitt reacted with ire, condemning the intrusion as a gross violation of press freedom that is inexcusable. AP estimates that over 100 of its journalists were affected by the phone surveillance and has implicated the involvement of the attorney general, alleging that subpoenas require his signature to be carried out.
There was a degree of frustration at Holder’s answers during the hearing due to his inability to answer questions on the subpoenas and why the Justice Department failed to negotiate with AP prior to the subpoenas, which is usually standard practice in such situations.
“There doesn’t appear to be any acceptance of responsibility for things that have gone wrong,” Rep. James Sensenbrenner, R-Wis., told Holder. He suggested that Justice Department office should stop by Harry S Truman Presidential Library and take a photo of the famous sign, “The buck stops here.”
The White House has also claimed ignorance, stating that it had no knowledge of “any attempt by the Justice Department to seek phone records of the AP.”
US obstructing global disarmament: Iran
Press TV | May 16, 2013
Iran’s Foreign Ministry Spokesman Abbas Araqchi says the United States’ opposition and lack of commitment to various international disarmament conventions are obstacles to advancing the issue of global disarmament.
Pointing to the US’s 16-year opposition to bringing up the issue of disarmament in the UN Disarmament Conference, Araqchi said, “The US has, for all practical purposes, taken the conference hostage and is hindering its effective performance in advancing international peace and security.”
He said that the US opposition to the protocol to the Biological Weapons Convention, its non-adherence to its commitments under the Chemical Weapons Convention to eliminate its arsenal by 2012, and efforts to prevent global denuclearization as well as a nuclear-free Middle East are all part of Washington’s black record of non-compliance with international obligations and disrespect for international mechanisms on global disarmament and security.
Reacting to Washington’s recent decision to boycott the upcoming UN Conference on Disarmament because of its chairmanship by Iran, Araqchi said, “Iran is among the first founders of the [UN] Disarmament Conference, and as an independent country, it has always played an instrumental and constructive role in advancing the objectives of the conference, in particular that of nuclear disarmament.”
In a statement issued on Monday, Erin Pelton, the spokesperson for the US Mission to the United Nations, said that the US would not send its ambassador to the conference, adding the US believes the Islamic Republic of Iran should be barred from any formal or ceremonial positions in UN bodies.
Araqchi further noted, “Iran has also played a key role in negotiations on international treaties, including the Chemical Weapons Convention.”
Describing Iran as a victim of weapons of mass destruction (WMDs), the Iranian spokesman said the Islamic Republic of Iran along with other peace-loving nations of the world will continue to tap into all national and international potential to contribute to the creation of a WMD-free world.
Iran proposed the idea of a nuke-free Middle East and is among the flag-bearers of nuclear disarmament, he highlighted.
Iran will accede to the rotating presidency of the 65-nation UN Conference on Disarmament, based in Geneva, on May 27 and it will hand it over to another country on June 23 in an alphabetical order.
The conference seeks to reach an agreement on global nuclear disarmament and stopping the development of other weapons of mass destruction.
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Prominent Bahraini activist Nabeel Rajab goes missing
Al-Akhbar | May 16, 2013
Prominent Bahraini human rights defender Nabeel Rajab has been removed from his cell to an unknown location, losing all contact with his family and lawyer, the Bahrain Center for Human Rights reported Wednesday.
In an appeal sent out by the human rights group, Rajab had reportedly witnessed prisoners at the central Jaw prison being tortured.
Rajab’s wife had received a phonecall from Rajab testifying on what he had witnessed in the prison. Shortly after, Rajab’s wife was told that her husband had been removed from his prison cell.
His lawyer, family and fellow activists have not been in contact with him since.
On Wednesday, six Bahraini tweeters were sentenced to one year in jail each for insulting the King and “misusing the right of free expression.”
Torture in Bahraini prisons is very commonly used to force prisoners to sign confessions. In February of last year, leading political prisoners began refusing food after reporting systematic abuses in Bahrain’s jails, including beatings, torture and the use of tear gas.
Nabeel Rajab, who founded the Bahrain Center for Human Rights in 2002, has been in custody since June 6 on charges of “public insults against plaintiffs,” the prosecution said in a statement at the time of his rearrest in June 2012.
The avid Twitter user has been charged with insulting the security forces, posting comments on Twitter deemed insulting to a government body and organizing peaceful protests.
His activism has given him the largest Twitter following in Bahrain, and the fourth largest in the Arab world.
The BHCR appeal calls for the immediate release of Rajab “as it is believed that he has been targeted solely due to his legitimate and peaceful work in the defense of human rights.”
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Palestinian Nakba: The Young Will Never Forget
By Ramzy Baroud | Palestine Chronicle | May 15 2013
The Nakba must not be assigned to the shelves of history
Many Palestinians remember and reference al-Nakba, also known as the Catastrophe, on May 15 every year. The event marks the expulsion of nearly a million Palestinians, while their villages were destroyed. The destruction of Palestine in 1947-48 ushered in the birth of Israel. Older generations relay the harsh and oppressive memory of their collective experience to younger Palestinians, many of whom live their own Nakbas today.
In covering al-Nakba, sympathetic Arab and other media play sad music and show black and white footage of displaced, frightened refugees. They rightly emphasize the concept of Sumud, steadfastness, as they show Palestinian of all ages holding unto the rusty keys of their homes and insisting on their right of return. Other, less sympathetic media discuss al-Nakba, if at all, as a side note – a nuisance in the Israeli narrative of a nation’s supposedly miraculous birth and its progression to an idyllic oasis of democracy. What such reductionist representations often fail to show is that while al-Nakba started, it never truly finished.
Those who underwent the pain, harm and loss of al-Nakba are yet to receive the justice that was promised to them by the international community. UN Resolution 194 states that “the refugees wishing to return to their homes and live at peace with their neighbors should be permitted to do so at the earliest practicable date” (Article 11). Those who wrought this injustice are also yet to achieve their ultimate objectives in Palestine. After all, Israel doesn’t have defined boundaries by accident.
David Ben Gurion, first Prime Minister of Israel, once prophesized that “the old (refugees) will die and the young will forget.” He spoke with the harshness of a conqueror. Ben Gurion carried out his war plans to the furthest extent possible. Every region in Palestine that was meant to be taken was captured, its people were expelled or massacred in their homes and villages. Ben Guiron ‘cleansed’ the land, but he failed to cleanse Israel’s past. Memory persists.
Ben Gurion referenced my own family’s village – Beit Daras – which witnessed three battles and a massacre. In an entry in his diaries on May 12, 1948, he wrote: “Beit Daras was mortared. Fifty Arabs (were killed). The (villages of) Bashit and Sawafir were occupied. There is mass exodus from nearby areas (neighbors in Majdal). We sustained 5 dead and 15 wounded. ” (War Diaries, 1947-1949).
More than fifty people were killed in Beit Daras that day. An old Gaza woman, Um Mohammed – who I discussed in my last book, My Father was a Freedom Fighter – refers to what is likely the same event:
“The town was under bombardment, and it was surrounded from all directions. There was no way out. The armed men (the Beit Daras fighters) said they were going to check on the road to Isdud, to see if it was open. They moved forward and shot few shots to see if someone would return fire. No one did. But they (the Zionist forces) were hiding and waiting to ambush the people. The armed men returned and told the people to evacuate the women and children. The people went out (including) those who were gathered at my huge house, the family house. There were mostly children and kids in the house. The Jewish (soldiers) let the people get out, and then they whipped them with bombs and machine guns. More people fell than those who were able to run. My sister and I…started running through the fields; we’d fall and get up. My sister and I escaped together holding each other’s hands. The people who took the main road were either killed or injured. The firing was falling on the people like sand. The bombs from one side and the machine guns from the other.”
Ben Gurion would not necessarily doubt Um Mohammed’s account. He candidly stated: “Let us not ignore the truth among ourselves…politically we are the aggressors and they defend themselves…The country is theirs, because they inhabit it, whereas we want to come here and settle down, and in their view we want to take away from them their country” (as quoted in Chomsky’s Fateful Triangle, pp. 91-2).
It is precisely for this reason that neither the old nor the young have forgotten. Every day is another manifestation of the same protracted al-Nakba that has lasted 65 years now. Young people’s hardships today are inextricably linked to the violent and horrific uprooting decades ago.
Al-Nakba has also remained an ongoing project through generations of Israeli Zionists. When Ben Gurion died in 1973, current Israeli Prime Minister Benjamin Netanyahu was in his mid-twenties. He was then serving his last year in the Israeli army, and today he rules Israel with a coalition that includes almost three quarters of the Israeli parliament. Like most Israeli leaders, he continues to contribute to the very discourse by which Palestine was conquered. He speaks of peace, while his soldiers and armed settlers take over Palestinian homes and farms. He makes repeated offers to Palestinians for ‘unconditional’ talks, as he repeats his violent rejection of every Palestinian aspiration. His lobby in Washington is much stronger than ever before. He reigns supreme, as he continues to fulfill the ‘vision’ of early Zionists.
Old keys and deeds of stolen lands attest to the intergenerational experience that is Al-Nakba. Today Palestinians continue to be herded behind military checkpoints. They are denied the right to proper medical care, and their ancient olive trees are ruthlessly bulldozed. What Israel has not been able to control, however, is the resolve of Palestinians. The prison, the checkpoint and the gun reside in our collective memory in a way that cannot be held captive, controlled, or shot.
In fact, al-Nakba is not a specific date or an estimation of time, but the entirety of those 65 years and counting. The event must not be assigned to the shelves of history, not as long as refugees are still refugees and settlers continue to rob Palestinian land. As long as Netanyahu speaks the language of Ben Gurion, other ‘catastrophic’ episodes will follow. And as long as Palestinians hold on to their keys and deeds, the old may die but the young will never forget.
– RamzyBaroud (www.ramzybaroud.net) is an internationally-syndicated columnist and the editor of PalestineChronicle.com. His latest book is My Father Was a Freedom Fighter: Gaza’s Untold Story (Pluto Press, London).
Related articles
- A Hundred Deir Yassin and Counting: Beit Daras and the Buried History of Massacres (alethonews.wordpress.com)
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