Big
capital is gaining twice from tax reductions
by system
failure
According to
a 2010 document under the title "Federal Debt and Interest
Costs", released by the US Congressional Budget Office (CBO):
"Debt
held by the public
consists mostly of securities that the Treasury issues to raise cash
to fund the activities of the government, including the securities
sold to pay off maturing securities. The amount the Treasury borrows
or redeems is determined primarily by the budget deficit or surplus
in a given year. CBO projects that, under current law, debt held by
the public will surpass $16 trillion by 2020, reaching nearly 70
percent of GDP. Many other outcomes are possible, however. If,
for example, the tax reductions enacted earlier in the decade were
continued, the alternative minimum tax was indexed for inflation, and
future annual appropriations remained the same share of GDP that they
were in 2010, debt held by the public would total nearly 100 percent
of GDP by 2020.”
This means that, the biggest corporations earn more
money by paying less taxes in social benefits, but government also
borrows more money to replace tax losses and cover increasing needs.
Therefore, the biggest investors also earn more money by lending
government. Given that the biggest investment banks and corporations
are connected through various ways, it seems that the financial
elites are gaining twice by tax reductions.
Beyond
this, it would be interesting to see that, for the years 2011 and
2012 the US debt held by the Federal Reserve reached record levels
since 1940, (11.2% of GDP in 2011 and 10.6% of GDP in 2012). Only one
time reached such levels, just after WWII (10.7% of GDP in 1946).
[Table 7.1,
http://www.whitehouse.gov/omb/budget/historicals]
It
is also worth to notice that, for these two years, the estimated percentage
share of debt held by domestic private investors in "debt held
by the public", followed the percentage share of debt held by
the Federal Reserve. More specifically, in 2011, the percentage share
of debt held by domestic private investors was 32% while the
percentage share of debt held by the Federal Reserve was 16%
(http://www.gao.gov/special.pubs/longterm/pdfs/estimated-ownership2011.txt).
Next year, 2012, the estimated percentage share of debt held by domestic
private investors dropped by 1% (at 31%), exactly as much as the
percentage share of debt held by the Federal Reserve (15%),
(http://www.gao.gov/special.pubs/longterm/pdfs/estimated-ownership2012.txt).
What
is depicted here, is an increasingly dependent government on Federal
Reserve's QE policies which are circulated inside the system and load
government with more debt. It seems that, the government struggles to
retain social benefits at a certain level while at the same time the
financial elites are gaining more and more.
It
is characteristic that Obama struggles to pass the plan for $10.10
per hour national minimum wage, even if this would not be enough to improve
the life of millions of American workers who are working very hard to
pay the bills and secure a decent life for their families, but the
financial-corporate lobbyists will find the opportunity to demand
more tax-cuts, exactly because they are gaining twice from tax
reductions.
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