John Nichols: Avoid sequester cuts by taxing Wall Street

Associate Editor John Nichols has been with The Capital Times since 1993 and has become one of Wisconsin's best-known progressive voices. He is the author of seven books on politics and the media and he also writes about electoral politics and public policy for The Nation magazine.

Sequestration threatens to cut vital public services and undermines the economy in order to achieve budget priorities that benefit Wall Street while damaging Main Street.

And, of course, sequestration asks nothing of Wall Street.

That’s austerity, just as it has been practiced in Europe.

That’s austerity, just as it has failed in Europe.

Worse yet, the Simpson-Bowles “Fix the Debt” campaign seeks more austerity. They’re already trying to exploit the sequester mess that will play out this week to achieve the ultimate goals of Wall Street: the acceptance of the “principle” that the only way to balance budgets is by undermining Social Security, Medicare and Medicaid – with schemes like “chained CPI” cuts in cost-of-living increases for seniors, and an upping of the eligibility age for programs to qualify for earned benefits.

This is a critical moment for the proponents of austerity. They’ve lost at the polls, but they want to win in a moment of supposed crisis: using a new variation on the “disaster capitalism” strategies outlined in Naomi Klein’s "Shock Doctrine."

But savvy unions are pushing back, with a message challenging the austerity lie that says there is no alternative to the painful cuts that could cause a new recession. Their message is precisely right: If the CEOs who claim to be so concerned about debts and deficits really want to do something to balance the books, they can start by paying their fair share of taxes.

“Wall Street CEOs, part of the misnamed ‘Fix the Debt’ group, are pushing for cuts in lifeline benefits like Social Security, Medicare and Medicaid to reduce our national debt. But a big part of our debt comes from their refusal to pay their fair share in taxes—and they want to keep the loopholes in place so they can keep right on doing it,” argue members of National Nurses United, the union that has taken the lead in promoting implementation of a “Robin Hood tax” that, by collecting a small fee on high-stakes financial transactions, could steer hundreds of billions into the U.S. Treasury.

NNU members are taking their message to the streets in cities such as Detroit, where the Michigan Nurses Association has organized protests outside banks, arguing: “We can save money — and protect critical social insurance programs — by taking … common-sense steps to close loopholes that cost our country, threaten the middle class and enrich the already wealthy.”

This is smart economics that bets on growth rather than the fantasy that America can cut its way to prosperity. And it ought to get an equal hearing in the debate over how to address debt and deficit issues.

NNU and other unions have “found the money” where too many politicians and pundits refuse to look: on Wall Street. They propose a fair-tax strategy that raises money for the U.S. Treasury while encouraging investment in the United States. To wit:

• Eliminate the tax benefit corporations receive from sending jobs overseas ($583 billion).

• Close other corporate tax loopholes so Wall Street starts paying its fair share of taxes (hundreds of billions of dollars over 10 years).

• Tax the income of Wall Street hedge fund and private equity managers at the same rate as wage income ($21 billion).

• Collect a surtax of at least 5.6 percent on income greater than $1 million ($453 billion over 10 years) so fewer millionaires can avoid paying their fair share of taxes.

• Implement a “Buffett rule” to ensure millionaires pay an effective tax rate of at least 30 percent on all their income ($47 billion).

• Limit the extra benefit of tax deductions for the richest 2 percent of Americans ($293 billion).

• Collect that small “Robin Hood tax” on Wall Street trading of foreign currencies, derivatives, bonds and stocks to discourage harmful speculation (raising more than $350 billion).

There are members of Congress who have picked up on key elements of the NNU plan. Congressional Progressive Caucus Co-chair Keith Ellison, D-Minn., endorsed a version of the Robin Hood tax and joined other progressives -- including Michigan Congressman John Conyers, Illinois Congresswoman Jan Schakowsky and Arizona Congressman Raul Grijalva -- in advancing a “Balancing Act” proposal that rejects the austerity agenda in favor of new revenue and growth.

Ellison and his co-sponsors are right to recognize that there are alternatives that can fix the debt and renew the U.S. economy. Those alternatives aren’t being proposed by the billionaire-funded “Fix the Debt” campaign. They’re being proposed by nurses in Detroit and cities across the country, as they seek to “heal the United States” rather than to cut it apart with austerity.

John Nichols is associate editor of The Capital Times. jnichols@madison.com

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