Economists, Millionaires, and Elected Officials to G20: Tax Extreme Wealth
"The accumulation of extreme wealth by the world's richest individuals has become an economic, ecological, and human rights disaster."
When President-elect Joe Biden assumes office, one of his many challenges will be to rein in our out-of-control financial sector. While Wall Street’s financialization of the economy and income inequality have festered for many years, the pandemic tore the scar off the wounds caused by these companion problems.
The 2008 financial crash demonstrated that the entire economy could be cratered by the actions of one sector, namely the banking sector. Through the toxic mix of commercial and investment banking (following repeal of Glass-Steagall in 1999), bankers began writing mortgages at a pace and at prices well beyond what average Americans could afford to service.
Bankers did this to feed an insatiable bonus-generating securitization and proprietary trading machine. When government enforcers failed to combat frauds, frauds proliferated. When mega-banks faltered due to the rot of these fraud-ridden mortgage pools, Washington asked taxpayers to bail out the bank’s creditors.
Financialization, or subordinating the real economy of rural America and Main Street to the money machine of Wall Street, didn’t begin and end with mortgage fraud. As the economy and the stock market recovered after the crash, corporations chose not to reinvest their profits in expansion or fairer wages, but in buybacks to inflate the stock prices further because it benefited C-suite stock-based compensation plans. Trump and a Republican Congress supercharged the buyback binge with a corporate tax cut, and the pandemic led us back into a recession.
This year, the CARES Act intended to serve as a safety net for the pandemic-silenced sectors of the economy. Congress approved more than $500 billion in funds for corporate America in the hopes that firms would retain employees through the shutdown. These funds were necessary, proponents explained, because these companies lacked the reserves to keep workers on the payroll. Had these same firms not engaged in a spree of buybacks just in the last three years, they might not have needed taxpayer help. In the last three years, companies in the S&P 500 repurchased $2 trillion worth of their own stock.
In fact, in many ways, the necessity of the CARES Act, with its direct $1,200 individual payments, stems from the corruption of pay taken from workers and concentrated in the C-suite. Going into the pandemic, almost half of Americans lacked even $400 in savings to buy groceries beyond a few weeks during the lockdown.
While Americans have been suffering, Wall Street has been pulling in huge profits. Speculative traders are making millions off market volatility and high-speed trading has intensified market swings. Moreover, the lopsided “K shaped” nature of the recovery has further exacerbated economic inequality.
Americans understand these issues and support reform. A yearly poll since 2010 shows strong, steadfast, bipartisan support for strong Wall Street reform and regulation. Polls also show similar support for executive pay reform.
In the weeks since the election, Biden has organized an astute, experienced team of veteran advisors on Wall Street reform. He has spoken with passion on the need for policies that help average working Americans in almost every speech.
When he takes office in January, he should hit the ground running. At Public Citizen, we’ve developed an extensive list of proposed actions that Biden could take both immediately and in the short-term to realize his commitment to protect average Americans from Wall Street greed and reckless. Here I’ll mention just a few examples:
For far too long, Wall Street has used its economic clout to rig the rules in favor of the wealthy. The new administration must take swift action to transform the financial system so that it serves all Americans.
by Jake Johnson
"The accumulation of extreme wealth by the world's richest individuals has become an economic, ecological, and human rights disaster."
by Jake Johnson
More than 100 million people across the U.S. are saddled with medical debt — a product of the nation’s high-cost, for-profit healthcare system.
by Jake Johnson
"American oligarchs have used their wealth to accumulate an unprecedented level of political power, which they've used to amass even greater wealth. We must stop this cycle."
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