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Banksters: You Made the Mess? Pay Up!; Leo W. Gerard – USW CEO; Progressive Democrats of America – PA 4th CD Chapter; November 14, 2011.
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Since Mr. Gerard is not a U.S. citizen (He’s a Canadian.), why should any of us care about his position on U.S. issues? Here’s why. Mr. Gerard is a foreign national running a political-advocacy business with over 600,000 members, 2010 revenue of $277 million, and that spent over $6 million in 2010 on “Political Activities and Lobbying.” The citizenship issue is not important because of what Mr. Gerard preaches; it’s important because of his position and the power of that position to affect local, state, and federal policies. You can find more about this at the bottom of a previous critique. It’s also necessary to note truth in advertising would require USW management to change its business’ name. According to “Steelworkers a minority within their own union,” as of 2005 less than one-third (about 180,000 out of about 600,000) of USW “members [are] employed in the primary and fabricated metals industries.”
This piece by USW CEO Leo Gerard is of similar quality to one rant of his I critiqued (“Greedy Corporations and the Wealthy Fatten Themselves on the Rest of Us — Join ‘We Are One’ Rallies to Stop the Freeloaders”) and one I did not (“USW’s Leo Gerard Takes Apart GOP Diversionary Tactics on Jobs”).
There’s something to critique in just about every sentence of this piece, but I’ll deal with only a subset.
Mr. Gerard wrote, “It wasn’t Fannie Mae or Freddie Mac that crashed the economy. It wasn’t the federal government. It wasn’t hapless homeowners who were sold mortgages they couldn’t afford. It was Wall Street financiers that aggressively sought and bought mortgages to package and sell as derivatives, which the banks could wager on.” For something not resembling a fairy tale, please read my critique of “Let us have some of the $700 trillion.”
The central theme of this piece is Mr. Gerard’s position “it’s time for Wall Street to pay reparations. It’s time for a crash tax, a tiny sales tax on Wall Street transactions, the revenues from which would pay for Main Street restoration. It’s time for the 1 percent to repay the 99 percent, for Wall Street to share in the sacrifices necessitated by its rogue behavior.” Below you will find Mr. Gerard’s “tiny sales tax” won’t do anything close to what he claims. Further, it’s probably not intended to do what Mr. Gerard claims in public.
To refresh your memory, the Socialist Security tax started out in 1937 as a “tiny” tax on employees of 2% on wages with a taxed earnings cap of $3,000/year. Since 1950, Congress increased the SS tax rate 20 times! Today the “tiny” SS tax rate is 12.4% (6.2 times its original “tiny” rate) and the taxed earnings cap is $106,800. Further, the taxed earnings cap increases every year by law. In constant dollars, the original earnings cap of $3,000 in 1937 should be $46,106 today, not the $106,800 it is.
Now let’s get back to Mr. Gerard’s “tiny sales tax on Wall Street transactions” and ignore it’s the wrong thing to do. First, “tiny” tax rates rarely stay “tiny.” The initial tax rate is only a foothold from which to increase the rate and the transactions covered down the road.
Second, let’s look at the math. Given the source, I doubt the claim of “rais[ing] about $350 billion over a decade” but let’s use it for argument’s sake. $35 billion/year is only 0.9% of our current federal spending of somewhere around $3.7 trillion/year. Clearly the $35 billion/year would have nearly zero effect on increasing federal tax revenue and reducing our deficit in excess of about $1.4 trillion/year. What about Mr. Gerard’s comment that “the revenues from [his ‘tiny’ tax] would pay for Main Street restoration?” At around $3.3 trillion/year for local and state government spending, again the $35 billion/year would be smaller than a drop in a bucket. Mr. Gerard wrote, “Now, in countries worldwide, including the United States, conservatives are demanding austerity to deal with deficits. They refuse to ask financial speculators to help pay for the trouble they caused. Instead, these conservatives demand that the middle class and the poor foot the bill. American conservatives insist the middle class lose Social Security benefits, accept Medicare and Medicaid cuts, subsist with fewer teachers, firefighters and police officers.” (Note: “Austerity” is leftyspeak for living within your means.) Again, even if this were true, $35 billion/year wouldn’t make a dent. Should we implement his “tiny sales tax,” Mr. Gerard and his comrades would suddenly discover the math and use it as “justification” to increase his “tiny sales tax” rate and the transactions covered.
What amount of taxation of the “1%” would it take to put a dent in our deficit and debt? Based on 2009 federal income tax data, a 100% income tax rate on the top 1% (who already pay about 37% of the total) would just about wipe out our deficit for one year. Of course, that only “works” for one year because who’s going to keep earning that amount of income if it all goes to the government? Keep this in mind when folks like Mr. Gerard assert the solution to our deficit/debt problem is to increase tax rates on “the rich.” Before you laugh at the possibility someone would propose a 100% tax rate, you should know someone did. During World War II, FDR actually wanted a 100% marginal tax rate! For individuals, he believed no one should have an income in excess of $25,000/year after taxes. This is about $347,000 in 2011 dollars.
Third, Mr. Gerard clearly would like us to believe his “tiny sales tax” would be paid by “Wall Street.” Claiming someone else will pay a tax is SOP for lefties. Business taxes are a scheme to hide true taxation from the ultimate taxpayers, you and me. In some cases, businesses are prohibited by law from itemizing taxes on their invoices. You see, businesses - like government - don’t have any money; it all belongs to the owner(s). One way or another, business taxes are paid by individuals - customers, employees, and owners, aka the 100%. According to the Tax Foundation, the average U.S. taxpayer worked eight days in 2002 to pay federal income taxes levied on corporations. In addition, we worked a fraction of a day to pay other business taxes. Business taxes are approximately seven percent of our total personal tax burden. That is, seven out of 100 tax dollars we pay are business taxes.
Of the people/groups Mr. Gerard cited as supporting his “tiny” tax, my research indicates they are all leftists to one degree or another. Mr. Gerard recognized that presented a credibility problem so he had to make us believe his new tax on the 100% has broad ideological support. As a result, Mr. Gerard wrote, “Conservative political leaders behind it include German chancellor Angela Merkel and French president Nicolas Sarkozy.” Mr. Gerard hopes we don’t know the definition of “conservative” differs among countries and across time. While Mrs. Merkel and Mr. Sarkozy may be “conservative” by today’s European standards, in the U.S. they would be to the left of so-called “Blue-dog” Democrats but not as far left as folks like U.S. Rep. Dennis Kucinich (D-OH) and self-described socialist U.S. Senator Bernie Sanders (I-VT).
Mr. Gerard wrote, “Moral leaders advocating for it include … the Pontifical Council for Justice and Peace.” This council is part of the Roman Catholic Church. In his role as CEO of a leftist political-advocacy business, I wonder how much Mr. Gerard agrees with this “moral leader” when it comes to abortion for convenience.
Mr. Gerard wrote, “Some call this levy a Robin Hood tax. But that’s not right. This is not robbing the rich to give to the poor.” There’s a problem with Mr. Gerard’s description of the Robin Hood story. As the legend goes, Robin Hood took from the ruling class and gave to the poor. What Robin Hood took from the ruling class were the confiscatory “taxes” extracted from the poor, however. Therefore, Robin Hood returned to the poor that which they earned and had been stolen by the government. Leftist actions take money from those who earned it and give it to those who didn’t. Leftist actions resemble those of the Sheriff of Nottingham, not those of Robin Hood.
In Peace, Friendship, Community, Cooperation, and Solidarity. <g>
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