THIS IS WHAT ALL BILLIONAIRES WANT: AMNESTY, WIDER OPEN BORDERS AND NO LEGAL NEED APPLY!
"In contrast, Biden has promised to open the door for new wages of blue-collar migrants from Central American and white-collar migrants from India, China, and elsewhere."
New York Times: Wall Street Backs Joe Biden
ANDREW CABALLERO-REYNOLDS/AFP via Getty Images
Wall Street’s many campaign donors are lining up behind Joe Biden, not the incumbent President of the United States, according to the New York Times.
Under the August 9 headline, “The Wallets of Wall Street Are With Joe Biden, if Not the Hearts,” three reporters wrote:
While Wall Street financiers tend to be more socially liberal, they have collectively swung back and forth between parties. Data from the Center for Responsive Politics show the securities and investment community donating more to President George W. Bush in 2004, and then to Mr. Obama in 2008, and then to Mitt Romney in 2012, followed by Mrs. Clinton in 2016, than to their respective presidential rivals.
This year, it’s Mr. Biden. Financial industry cash flowing to Mr. Biden and outside groups supporting him shows him dramatically out-raising the president, with $44 million compared with Mr. Trump’s $9 million.
The donors are already pressuring Biden to pick a business-friendly candidate for vice president, and Biden is signaling a hands-off policy toward Wall Street:
In recent meetings with donors, Mr. Biden has said that while the wealthy are going to have to “do more,” the details of his tax hikes are still being hammered out … in July, the candidate spoke of the need for corporate America to “change its ways.” But the solution, he said, would not be legislative.
“I love Bernie, but I’m not Bernie Sanders. I don’t think 500 billionaires are the reason why we’re in trouble,” Biden said in 2018.
Notably, the article did not mention one of Wall Street’s greatest heartburns with Trump — his on-again, off-again popular push to reduce the immigration inflow of foreign workers, consumers, and real estate customers.
Trump’s popular lower-immigration promise could reduce the federal government’s policy of annually inflating the new labor supply by roughly 20 percent. If implemented, it would force CEOs to pay higher wages and would pressure investors to transfer some of their new investments from the coastal states to the heartland states.
In the last few months, Trump has zig-zagged on his low-immigration promises as his poll ratings stay under Joe Biden’s numbers. But on June 22, Trump blocked several visa worker pipelines and promised regulations to ensure that CEOs are forced to hire Americans first.
In contrast, Biden has promised to open the door for new wages of blue-collar migrants from Central American and white-collar migrants from India, China, and elsewhere.
Those policies are catnip for Biden’s supporters in the technology sector, including former Google chief Eric Schmidt, who is urging the federal government to let companies hire more of their professional workforce from overseas.
Wall Streeters’ resentment towards Trump was noted in one quote from a former Goldman Sach’s investor, James Atwood: “For people who are in the business of hiring and firing C.E.O.s, Donald Trump should have been fired a while ago.”
However, Trump can only be hired or fired by the voters.
Mike Lee's #S386 bill creates a Green Card Lite program for 300K Indian workers.
Lee is backed by Fortune 500, which wants to inflate the Green Card Economy (IOW, indentured foreigners working US jobs to get 140K p/a green cards).
Estb. media is silencedhttps://t.co/fcAB4CbJgk
— Neil Munro (@NeilMunroDC) August 7, 2020
THE FEDERAL RESERVE: WALL STREET'S WELFARE OFFICE
IRS data shows: US billionaires’ true tax rate far lower than that of workers
On June 8, ProPublica published the first in a projected series of articles documenting the massive scale of legally sanctioned tax evasion carried out by America’s ever-expanding class of billionaires. The article, based on an exhaustive study of leaked Internal Revenue Service (IRS) documents, focuses on the period from 2014 through 2018. It demonstrates that in the course of those five years, the 25 richest Americans paid federal taxes on their increased wealth at a far lower rate than the typical US household.
The report also cites tax data on billionaire oligarchs such as Jeff Bezos, Warren Buffett, Elon Musk and Michael Bloomberg going back to the first decade of the current century, showing that they paid little or no taxes regardless of which big business party—Democrats or Republicans—occupied the White House. It explains as well that even were the Biden administration to carry out its promised increases in income tax rates for the rich, the impact on the vast fortunes of today’s robber barons would be minimal.
The authors state that in determining the increased wealth of America’s “top 0.001 percent,” they included not simply their salaries, which in many cases comprise only a small share of their actual income, but also “investments, stock trades, gambling winnings and even the results of audits.”
The result, they note, demolishes “the cornerstone myth of the American tax system: that everyone pays their fair share and the richest Americans pay the most.” They continue: “The IRS records show that the wealthiest can—perfectly legally—pay income taxes that are only a tiny fraction of the hundreds of millions, if not billions, their fortunes grow each year.”
ProPublica’s revelations provide insight into how the capitalist system and its various state institutions and rigged legal system promote a parasitic financial aristocracy that lives in a world apart from the rest of humanity. Unlike workers, who depend on their wages to survive and pay the full income tax rate, the ultra-wealthy avoid taxes by obtaining massive loans from banks, borrowing against the value of their ever growing and artificially inflated assets, such as stocks and real estate, which are not taxable until they are sold.
In order to calculate what ProPublica terms the “true tax rate” of the 25 richest Americans, the report compares how much in taxes these individuals paid over a given period to how much their wealth grew, using wealth estimates published by Forbes magazine.
Between 2014 and 2018, Forbes estimated that these 25 people saw their wealth increase collectively by $401 billion. The documents obtained by ProPublica show that these same individuals collectively paid $13.6 billion in federal income taxes over the same time period, for a true tax rate of only 3.4 percent. By contrast, ProPublica found that between 2014 and 2018, a typical US worker in his or her 40s experienced a net wealth expansion of about $65,000. That same worker’s tax bills “were almost as much, nearly $62,000, over that five-year period.”
Over that same period, according to ProPublica, Warren Buffett’s wealth increased by $24.3 billion, but the Berkshire Hathaway mogul paid only $23.7 million in taxes, resulting in a true tax rate of 0.10 percent.
Amazon boss Jeff Bezos’ wealth soared by a staggering $99 billion, but he paid just $973 million in taxes, yielding a true tax rate of less than 1 percent.
Tesla CEO Elon Musk is another “pandemic profiteer.” He saw his wealth skyrocket this past year, in part by violating a state-ordered shutdown and illegally restarting production at the Fremont, California, Tesla factory, leading to hundreds of coronavirus infections. Between 2014 and 2018 his wealth grew by $13.9 billion, while he paid $455 million in taxes, resulting in a true tax rate of 3.27 percent.
The reporting confirms the Marxist analysis of the capitalist state, described in the Communist Manifesto as “… a committee for managing the common affairs of the whole bourgeoisie.” The various loopholes and tax avoidance schemes employed by the ruling class are legal, have been for decades, and will continue to be so under Biden or any other Democratic administration.
As then-candidate Joe Biden assured wealthy donors at a Manhattan campaign fundraising event in January 2019, should he become president, “no one’s standard of living will change, nothing would fundamentally change.” Nearly six months into his presidency, Biden has kept his promises to his wealthy benefactors, as evinced by his recent retreat from his proposal to raise corporate taxes by a few percentage points.
Among other facts included in the ProPublica report:
- Bezos, the world’s richest man, did not pay a penny in federal income taxes in 2007 and 2011. In 2011, despite his overall wealth holding steady at $18 billion, Bezos filed a tax return in which he claimed to have lost money. The IRS not only approved the billionaire’s tax return, it granted him a $4,000 tax credit for his children!
- Musk, now the second richest person in the world, did not pay any federal income taxes in 2018.
- Former New York City Mayor Michael Bloomberg, as well as billionaire investors Carl Icahn and George Soros, have also had years when they paid nothing in federal income taxes. Soros, worth an estimated $8.6 billion as of March 2021, paid no federal income taxes for three years in a row.
According to the ProPublica report, when the super-rich do pay something in income taxes, their true tax rate is far lower than that of the typical working class household, with a median income of $70,000. For instance, between 2006 and 2018, while Bezos’ wealth surged by over $120 billion, he paid, on average, $1.09 in taxes for every $100 in wealth growth. But over the same period, the median American household paid $160 in taxes for every $100 in wealth growth—paying more in taxes than it gained in wealth.
Overall, ProPublica found that the richest 25 Americans pay a far lower income tax rate, an average of 15.8 percent of adjusted gross income, than do many workers, once taxes for Social Security and Medicare are included. To highlight the point, ProPublica found that by the end of 2018, the 25 richest Americans were worth $1.1 trillion and collectively paid a federal tax bill of $1.9 billion.
The $1.1 trillion in collective wealth hoarded by 25 people equals the combined annual wages of roughly 14.3 million American workers, who in 2018 paid $143 billion in federal taxes, or over 75 times more than the billionaires.
On Tuesday, in response to a reporter’s question about the ProPublica report, White House Press Secretary Jen Psaki had nothing to say about its damning content. Instead, she threatened criminal prosecution of those who leaked the IRS documents to ProPublica.
“Any unauthorized disclosure of confidential government information by a person of access is illegal and we take this very seriously,” said Psaki. She added that the IRS commissioner has referred the matter to investigators and that the FBI and Justice Department would also be investigating.
US financial system awash with Fed money
The extent of the wave of money surging through the US financial system flowing from the ongoing massive financial asset purchases by the Fed, running at an annual rate of more than $1.4 trillion, was underscored last week.
Last Thursday, it was revealed that a facility that allows money market funds to place their surplus cash with the Fed came in at $485.3 billion—an all-time record that eclipsed the previous high of $474.6 billion recorded on New Year’s Eve in 2015.
The parking of nearly half a trillion dollars with the Fed at zero interest was the result of a fall in yields on short-term Treasury bonds to below zero. The yield on short-term Treasury debt had moved into negative territory because the price of the assets has been pushed so high an investor would make a loss if they held them to maturity.
Treasury bills with a maturity of less than one month were reported to be trading at yields of between minus 0.01 and 0.02 points, making the Fed’s reverse repurchase program (RRP) paying zero the better option.
John Canavan, an analyst at Oxford Economics, told the Financial Times (FT): “The surge in demand for the Fed’s RRP operations has been incredible. It is also not over yet.”
Gennadiy Goldberg, a senior analyst at TD Securities in New York said the RRP facility was “the only safety valve” for the pressure building up in money markets and was “just holding back the flood of cash coming.”
The central role of the Fed in the operations of the money markets was highlighted by Priya Misra, the global head of rates strategy at TD Securities.
“The Fed’s role in markets is only growing,” she told the FT. “Clearly the market is not functioning on its own.”
A major component in the massive build-up of dollars in the money markets is the Fed’s asset purchasing program of $120 billion a month, comprising $80 billion of government debt and $40 billion of mortgage-backed securities, that was implemented after the market meltdown in March 2020 at the start of the COVID-19 pandemic.
There is now growing pressure on the Fed to begin winding back its asset purchases in order to try to restore some degree of “normalcy” to financial markets. The rise in inflation is adding to this pressure but at this stage the Fed is insisting that its extraordinary interventions will continue until it begins to see “substantial improvement” in the economic outlook.
Critics of this stand maintain this improvement is already visible as evidenced by the rise in inflation and a tightening in the labour market. They warn that if the Fed continues with its present policies it will be forced to slam on the monetary brakes, prompting a crisis in the financial markets and possibly triggering a recession.
While there have been calls from some Fed officials for the initiating of a discussion on winding down asset purchases—so-called “tapering”—the majority view is still that inflation effects are “transitory” and the labour market has not fully recovered with employment numbers still 8.2 million below where they were before the pandemic struck.
The fear is that, such is the dependence of financial markets on the supply of cheap money, tapering will set off significant turbulence.
Commenting on the money wave, Subadra Rajappa, a strategist at the French financial firm Société Générale, said: “I don’t think tapering is going to solve this. Tapering is only going to add to the confusion. If they taper asset purchases, it’s going to roil global markets.”
That fear is fuelled by experience. In 2013 there was major turbulence in global markets when the then Fed chair Ben Bernanke suggested that the central bank may start to “taper” the purchases of financial assets initiated after the global crisis of 2008.
More recently, at the end of 2018, the stock market experienced a major downturn—the worst December since the depths of the Depression in 1931—in response to indications from Fed chair Jerome Powell there would be further rises in the Fed’s base interest rate in 2019, following four rises in 2018, and the winding down of asset holdings would continue at the rate of $50 billion a month.
In response to the market downturn, Powell quickly reversed course. The asset wind-down was halted and the Fed began cutting rates from mid-2019, six months before COVID made its appearance.
The extent of the Fed’s intervention since March last year is highlighted by the fact that its balance sheet has doubled in size since the start of 2020 and now stands at $8 trillion. And according to estimates published by the Federal Reserve Bank of New York last week its holdings of financial assets will rise to $9 trillion by 2023, an amount equivalent to 39 percent of gross domestic product.
Comments reported in the FT from analysts and bank reports on the current situation focused on the dilemmas confronting the Fed and other central banks.
According to Matt King, a global markets strategist at Citigroup: “The paradox is that the more successful central banks are in driving up valuations of risky assets using stimulus, the harder it becomes for them to exit.”
He noted that it was “much more likely” that a rise in interest rates could prove destabilising as there was more debt outstanding.
According to some estimates, the effect of a 1 percent rise in bond rates is equivalent in effect to a 3 percent rise in previous times.
A study by Barclays Bank said the restoration of economic activity in the wake of the pandemic raised questions about the degree to which central bank support would be withdrawn and noted that “the risk of disorder seems meaningful in the US, where policy responses have been especially forceful” and “the prospect of a messy unwind could emerge for the Federal Reserve.”
If inflation started to rise after “transitory” effects had passed it would “likely involve painful trade-offs between prolonged unemployment and longer-term inflation.” In other words, bringing inflation under control would mean imposing a significant recession.
The ongoing turbulence in the money markets and the development of highly abnormal conditions are the expression of two significant developments.
First, the “free-market” mechanisms which operated in what were once considered “normal” times have completely broken down and the entire financial system is dependent on the capitalist state in the form of the central bank.
Second, that having intervened to rescue the system in response to the meltdown last year the world’s most important central bank, the Fed, is now caught in the ever-sharpening contradictions this intervention has produced.
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