By Keith Johnson
Unless working-class Americans take a stand against Wall Street’s latest tax evasion scheme, the gap between the rich and the poor could become unbridgeable. “Fix the Debt” is an insidious new media and lobbying campaign being financed to the tune of $60 million and supported by the nation’s largest corporations and financial service firms.
Though touted as a strategy to balance the U.S. budget through moderate spending cuts and minor tax increases, a report by the Institute for Policy Studies (IPS) reveals that the campaign’s true objective is to cement “a debt deal to reduce corporate taxes and shift costs onto the poor and elderly.”
According to the IPS, “the campaign is pushing for less spending on earned-benefit programs, such as Social Security and Medicare, while promoting a rash of corporate tax breaks as part of what they call ‘pro-growth tax reform.’”
The authors of the report define “pro-growth tax reform” as “Washington speak” for replacing existing corporate tax rates with a “territorial tax system” that permanently exempts U.S. companies from paying taxes on all revenue generated overseas.
In other words, if the Fix the Debt lobbyists are successful in getting Congress to back their proposal, the same companies that moved their operations oversees and replaced American workers with foreign employees would not only be allowed to continue paying slave wages, but they would also have the added benefit of not having to pay any federal income tax on profits they bring back to the U.S.
To make up for this lost tax revenue, Fix the Debt strategists propose “reforming” social-safety-net programs that most American workers pay into every day—Social Security, Medicare and Medicaid. IPS speculates that this will mean limited access to these benefits and yet another raise in the retirement age. This would have a devastating impact on many retirees, the disabled and others who are struggling to survive on a fixed income.
Those calling for austerity measures as a solution to the U.S. debt crisis are the one’s largely responsible for it. Among the executives who sit on the campaign’s CEO Fiscal Leadership Council are Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JP Morgan Chase & Co., whose predatory lending practices contributed to the financial meltdown of 2008.
“The companies represented by executives working with the Campaign to Fix the Debt have received trillions in federal war contracts, subsidies and bailouts, as well as specialized tax breaks and loopholes that virtually eliminate the companies’ tax bills,” says Christine Wilkie of The Huffington Post.
Multibillionaire Pete Peterson is the driving force behind the Fix the Debt campaign, and has spent nearly half a billion over the past five years lobbying for dramatic cuts in Social Security and Medicare.
Peterson served as U.S. secretary of commerce under Richard Nixon, chaired the Federal Reserve Bank of New York during the George W. Bush administration and was instrumental in the appointment of tax cheat Timothy Geithner to the post of Treasury secretary under Obama.
But Wall Street is where Peterson made his fortune. As founder and chairman of the Blackstone Group, he groomed the company into one of the world’s largest private equity firms by exploiting a little-known tax break that allows investment managers to pay a mere 15% tax on their incomes, compared to the 35% most top earners pay.
So far, the Fix the Debt campaign lists 86 participating CEOs on its website. Of those, IPS analyzed 63 publicly held corporations and found that they potentially stand to reap $134B in tax windfalls if Washington adopts their proposal.
According to the report: “The biggest potential winners are General Electric, which could reap a tax windfall of as much as $35.7B on its overseas earnings stash of $102B, and Microsoft, which could garner a savings of $19.4B on its $60.8B in accumulated foreign earnings.”
It is no coincidence that the Fix the Debt proposal comes just as the Bush tax cuts are set to expire at the end of this year. But, as good as they had it in the past, many of the Fix the Debt CEOs say they are willing to give up the Bush tax cuts in favor of a territorial tax system and other tax breaks.
According to the IPS: “If their companies save billions in tax dollars, corporate profits will soar—and CEO pay will skyrocket too. The small amount of additional personal income tax they might pay would be more than offset by higher bonuses.”
Keith Johnson in an investigative journalist and host of the Revolt of the Plebs radio program.