Vol. 22, No. 5,514 - The American Reporter - September 7, 2016

by Randolph T. Holhut
American Reporter Correspondent
Dummerston, Vt.
July 23, 2010
On Native Ground

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DUMMERSTON, Vt. -- When you hear conservative politicians, Democrat and Republican alike, talk about the need for austerity, the first question to ask is "austerity for whom?"

Judging from the remarks of the Republican leadership in Congress, austerity is necessary for retirees, the unemployed and the public sector in general to pay for tax breaks for the wealthy and corporations.

Think I'm exaggerating? The tax cuts for the wealthy enacted during the Bush are set to expire soon. Democrats want to keep those tax cuts in place, but only for those earning less than $250,000 a year. This would generate as much at $678 billion in much needed revenue for the federal government over the next 10 years.

Republicans - who delayed spending $35 billion to extend unemployment benefits on the grounds that it would increase the deficit - have absolutely no problem with extending the Bush tax cuts for the richest Americans, because they believe doing so won't add to the deficit. Ponder that for a moment. Spending $35 billion on the jobless during a brutal recession is unacceptable, but $678 billion in tax breaks for the wealthy is perfectly OK.

What's worse is that conservatives are able to get away with pretending to be concerned about the deficit, while doing everything they can to prevent any kind of economic recovery in the hope that the Democrats will be blamed and the GOP will take back control of Congress in November.

But it's more than the political posturing of conservatives in Congress that is driving the austerity movement. The global financial firms are becoming more vocal in demanding that governments raise taxes, cut government spending or do both.

The threat - which began to materialize in recent months in the weaker Euro zone countries such as Greece - is that nations that fail to impose austerity will face higher interest on new and renewed loans, or will be denied loans entirely. This is pure chutzpah by the financial industry, especially when you consider government bailouts pumped enough money into their sector and the economy to avert a total collapse. Now that the bankers have their money, they want to shut down any attempts at further bailouts for the broader economy.

Nearly all the leaders of the G-20 nations seem to support the idea of austerity programs mixing both tax increases and spending cuts that would hit the working class hard while leaving the wealthy unscathed. Needless to say, the idea of making workers pay for the bankers' mistakes is not supported in Europe. Strikes and social unrest have greeted the demands for austerity, while on this side of the Atlantic, things are way too quiet.

Rick Wolff, a professor emeritus in economics at the University of Massachusetts in Amherst, put forth some compelling ideas in a piece he wrote for CommonDreams.org last week. The biggest ideas were ones that would really constitute a "reasonable" form of austerity in a time of financial crisis.

Here's what he came up with:

  • "Serious efforts to collect income taxes from U.S.-based multinational corporations, especially those who use internal pricing mechanisms to escape U.S. taxation, would generate vast new federal revenues. The same applies to wealthy individuals."
  • "The U.S. has no federal property tax on holdings of stocks, bonds, and cash accounts (states and localities levy no such property taxes either). If the federal government levied a 1 percent tax on assets between $100,000 to $499,000, and 1.5 percent on assets above $500,000, that would raise much new federal revenue (everyone's first $100,000 could be exempted, just as the existing U.S. income tax exempts the first few thousands of dollars of individual incomes)."
  • "Exiting the Iraq and Afghanistan disasters would do likewise. Ending tax exemptions for super-rich private educational institutions (Harvard, Yale, etc.) and for religious institutions (church-goers would then need to pay the costs of their churches) would be among the many other such alternative 'reasonable' austerity measures."
  • "Comparable alternatives apply - and are being struggled over - in other countries."

Wolff believes that the capitalist system that created the mess that brought the world to the brink of depression no longer has the legitimacy to demand mass austerity to overcome the current financial crisis.

"Should we not be publicly debating whether America (and the world) might be better served by going beyond capitalism?" Wolff asked. "Can we not learn from capitalism's repeated cycles (failures) and change to a new, non-capitalist system? Having learned hard lessons from the first socialist attempts during the last century in Russia, China, and beyond, can we not rise to the challenge to make a new attempt that avoids their failures and builds on their strengths? When better than now?"

The current economic system failed. Nothing has been done to punish the people who made it fail, nor was anything substantial done to prevent a repeat (and don't be fooled by the Wall Street "reform" bill just approved by Congress - it is toothless, feel-good legislation that leaves the fat cats unscathed).

What will it take to move our economy away from speculation and back to making real things again? What will it take for workers to reclaim a fair share of the wealth their labor creates?

What will it take to create a fair, just economic system that provides the kind of shared prosperity that once was the norm in the nation in the 1950s and 1960s?

These are just some of questions that Americans must start to ask their leaders.

Randolph T. Holhut has been a journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books). He can be reached at randyholhut@yahoo.com.

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