Political Debt Compromise Will Be Austerity Not Real Economic Solutions

Brandon Turbeville
Activist Post

With the recent government shutdown finally having been resolved, albeit only temporarily, the focus of Washington politicians from both parties is once again focused on the issues of “cutting spending,” “entitlement reform,” and “unfunded liabilities. This time, however, with Obamacare largely out of the debate and set to coast on to become a fact of American life, the possibilities of “compromise” and the Grand Bargain of austerity cuts coupled with the full implementation of Obamacare look more likely than ever before.

Of course, while the corporate media promotes compromise as the backbone of a free society, the fact is that any compromise between Democrats and Republicans will necessarily result in the worst of both worlds, as only the most odious elements of the potential outcomes will almost always be selected for implementation. Indeed, one would be hard pressed to think of a situation in which Democrats and Republicans “came together” and formed a compromise which did anything other than shred the Bill of Rights, implement austerity cuts, raise taxes on the working class or some other tragic farce designed to act as a solution to an entirely manufactured crisis.

As I have previously written, the entire Shutdown hysteria was nothing but political theater designed to drum up support for the inevitable “Grand Bargain” that will be attempted in the very near future – the economic worst of both worlds – the implementation of Obamacare and the implementation of austerity measures in the form of cuts to Social Security and Medicare as well as other so-called “entitlement” programs.

It is also well within reason to suspect that the “glitch” in the EBT program that occurred two weeks ago was itself nothing more than an attempt to dramatize the shutdown in order to stampede the masses into a “something must be done” mentality when the debate surrounding the “Grand Bargain” begins to take off.

Predictably, as soon as the shutdown ended, Republicans and Democrats assumed their pre-planned positions and began discussing “entitlement reform” such as Social Security and Medicare. In what should terrify every single American, both parties are now lining up behind one another for proposals regarding the nature and size of cuts to be made to the programs which, in a more logical parallel universe, should actually be expanded.

Regardless, the tired slogans of “tightening our belts,” and snide references to the “welfare state” continue as well as the common phrasings regarding the “unsustainability” of social safety net programs and the need to reduce “government dependence” also continue.

Although the Republican party has deservedly earned the reputation of a grouping of wealthy individuals who erupt with happiness at the very thought of cutting the elderly, sick, and poor off of what is probably the only support system available to them, it is important to point out that the Democratic party is nothing more than a different brand of the same corporate product as its duplicitous members are every bit as eager to destroy social safety net programs as any Republican.

Indeed, the Democrats’ enthusiasm for drastic cuts even prompted the AFL-CIO President Richard Trumka to speak out and threaten all members of Congress, especially Democrats, with political retaliation should they support the new austerity measures. Of course, Trumka and the AFL-CIO are a bit too late on the draw for such a threat, especially considering the fact that many of these Congressional bottomfeeders were elected via the money and support granted to them by the union despite numerous betrayals and utterly horrific core platforms.

Obviously, Congress is not the only source of betrayal of unions and social safety net beneficiaries. President Obama has already taken the lead in the coming Grand Bargain negotiations by enthusiastically putting both Social Security and Medicare on the table for austerity measures.

In his first remarks on the coming budget discussions, Obama has already stated that he seeks a “balanced approach” to the new budget and attempted to portray the real danger as “the long-term obligations that we have around things like Medicare and Social Security.”

Of course, Obama’s solution, as presented to the Congressional Republicans and Democrats for further tweaking, “compromise,” and “improvement,” involves the cutting of those programs even more so than the cuts which have already been implemented. These past cuts also involved Obama publicly taking the initiative.

Obama’s attempt to promote the cutting of the only means of subsistence for many American seniors is known as the Chained CPI – a twisting of the Cost of Living Adjustment and the Consumer Price Index Essentially, the Chained CPI method works on the assumption that, in the case of rising prices and plummeting living standards, one is always able to ratchet down on the poor living standards already being endured. In other words, if the price of steak rises, the chained CPI asserts that one could always buy cube steak or a cheaper brand of steak to offset the costs. If the price of butter goes up, one could always buy the cheapest form of margarine.

Sean Sullivan of the Washington Post describes the chained CPI by stating,

Using chained CPI instead of CPI-W [the method currently used] means the rate at which those [social security] benefits tick up would be slower, because the former reflects substitutions consumers would make in response to rising prices of certain items. Therein lies the “chained” part of the name. The metric utilizes a basket of goods and services that are measured changes from month to month; much like a daisy chain. If the cost of a certain form of transportation goes up, for example, people might switch to another kind. This kind of “substitution” is part of what is factored into chained CPI.

Americans have been stirred up with the recent rollout of extra police to “shutdown” public monuments and parks, as well as a convenient EBT “glitch,” in an attempt to cause them to assume that a Social Security/Medicare emergency exists right around the corner. Incredibly, it’s all being blamed on social safety net programs themselves, with the call for something drastic needed to prevent an imminent collapse.

With such memories lodged in the minds of Americans, a new theater of dunces will now begin to play out in Congress. A jockeying between Reactionary Republicans demanding the decapitation of Social Security, and Wall Street Democrats countering with their own plan that amounts to a death by a thousand cuts is set to commence. Thus, after much bickering and bantering back and forth, both sides replete with tired slogans and hateful rants, the long-planned Grand Bargain will be reached. Compromise will be seen as the only logical option if America wants to stay solvent financially.

The tired political theatre that has been set up for the spectator American public is, in fact, so blatantly obvious, that many more mainstream observers are beginning to see it. For instance, as Richard Eskow writes,

Now the posturing has begun. The position taken by Durbin, and apparently by the President as well, is that Republicans must agree to tax increases in return for entitlement cuts. As Zach Carter reported in the Huffington Post, Chris Wallace of Fox News asked Sen. Durbin why Republicans should have to agree to anything in order to get cuts which Democrats like Durbin and the President already support.

Unfortunately, it’s a reasonable question. Not only do these Democrats apparently want to cut “entitlements” — some such cuts are included in the president’s current budget — but they’ve essentially conceded as much, leaving them very little negotiating leverage.

For their part, Republicans say they’re willing to give up the harmful cuts known as sequestration — and only those cuts — in return for Social Security and Medicare benefit reductions. Their defense-contractor patrons would be amply rewarded in return for sacrifices from America’s seniors and disabled.

Eskow, in the article quoted above, goes further in describing the potential scenarios that will play out in the coming weeks and months regarding the social safety net/federal budget debate. Among them, there is not one positive outcome that can be found. Total gridlock is actually the best outcome that Americans would be able to expect.

Mainstream outlets, however, are already in full propaganda mode in their attempt to reassure the American public that such “hard choices” as austerity cuts to Social Security and Medicare, higher payroll taxes, government default, or even a mix of the three is the only available solution to the current budgetary crisis.

Fortunately, these “hard choices” are not the only available choice.

Indeed, there is a very real and tangible method of funding the social safety net which virtually no member of Congress will ever publicly discuss or suggest. This is the 1% Wall Street Sales Tax.

By enacting a 1% Wall Street Sales Tax on financial market transactions such as stocks, bonds, flash trading, e-trading, high-frequency trading, debt instruments, and the notional value of derivatives, tax revenue collected by the Federal government would amount to a conservative estimate of several trillions of dollars with many other estimates suggesting a figure of tens of trillions of dollars.

Thus, even the conservative estimate of tax revenue to be collected by the 1% Wall Street Sales Tax would completely erase the $1,112,000,000.00 (1 trillion 112 billion) budget deficit of the United States and the individual states, combined with an enormous sum left over for the funding and shoring up of the social safety net at the Federal, State, and Local levels.

In order to avoid the misapplication of the tax, a reasonable exemption of $1 million per person per year should be enacted in order to prevent the placement of taxes on individuals who shift around personal financial assets or make investments for their 401(k) or other retirement accounts. The 1% tax should be paid by the seller of the instrument, not the buyer, and the proceeds accrued from the tax should be split evenly between the Federal government and the states.

According to Webster Tarpley’s estimates, world derivatives currently stand “in excess of two quadrillion dollars in notional value.” Other estimates put the notional value of derivatives in the range of six to seven quadrillion dollars due to the fact that these derivatives are constantly being bought and sold.

Thus, the revenue that would be generated from a 1% Wall Street Sales Tax could be expected to reach a figure of approximately tens of trillions of dollars.

Yet, while Congress continually debates over whether or not to cut food aid to millions of poor Americans and/or healthcare and earned subsistence payments to the elderly who depend on this assistance for survival, Wall Street banks are entirely ignored. Raising taxes on average working Americans is always considered to be an option in Washington. Cutting “government spending” and vital social safety net programs are always on the Congressional list of solutions whenever budget deficits and debt are brought up. However, the real culprit behind America’s economic woes – the beneficiaries of true government welfare (i.e. the bailout of 2008) – are left untouched.

It is time America realizes that while the average citizen pays up to 12% sales tax on each purchase – some even paying a transaction tax on food – Wall Street pays nothing. Indeed, in many cases, Wall Street receives money back from the government in the form of rebates even after paying nothing in. If every American citizen is forced to pay a sales tax on productive materials, goods, equipment and necessities, it is time to demand that Wall Street pay a sales tax on financial instruments, derivatives, and other financial transactions that contribute nothing productive to society.

In relation to the crisis of the social safety net, as well as the U.S. and State budget deficit, a clear solution exists in the form of the 1% Wall Street Sales Tax.

Most of the current American financial quagmire can be traced back to the antics and schemes of Wall Street at some point or other. The lack of adequate funding for the U.S. government can be directly related to the fact that the burden of funding falls on the backs of the poor, working, and middle class while Wall Street pays nothing. This free ride afforded to Wall Street must end.

The 1% Wall Street Sales Tax is the sole method that can attract revenue in the range of tens of trillions of dollars capable of fully funding the social safety net and the U.S. government, as well as effectively eliminating the budget deficit at the federal and state levels. All of this while discouraging dangerous forms of speculation and derivatives trading. Contrary to many other proposals being floated in the public arena by often questionable sources, the 1% Wall Street Sales Tax is entirely Constitutional.
Compromise is not always a good thing. In fact, in American political life, it almost never is.

It is time for the American people to make a choice – do we stand and fight for our own interests, or do we allow carefully crafted propaganda campaigns convince us to fight for the interests of Wall Street?

Please see my article “The Case for the 1% Wall Street Sales Tax” for a detailed explanation of the reasons why the American people should advocate for such an initiative.

Read other articles by Brandon Turbeville here.

Brandon Turbeville is an author out of Florence, South Carolina. He has a Bachelor’s Degree from Francis Marion University and is the author of six books, Codex Alimentarius — The End of Health Freedom, 7 Real Conspiracies, Five Sense Solutions and Dispatches From a Dissident, volume 1 and volume 2, and The Road to Damascus: The Anglo-American Assault on Syria. Turbeville has published over 275 articles dealing on a wide variety of subjects including health, economics, government corruption, and civil liberties. Brandon Turbeville’s podcast Truth on The Tracks can be found every Monday night 9 pm EST at UCYTV. He is available for radio and TV interviews. Please contact activistpost (at) gmail.com.

Recently by Brandon Turbeville: