counterpunch | The aim of financial warfare is not merely to acquire
land, natural resources and key infrastructure rents as in military
warfare; it is to centralize creditor control over society. In contrast
to the promise of democratic reform nurturing a middle class a century
ago, we are witnessing a regression to a world of special privilege in
which one must inherit wealth in order to avoid debt and job dependency.
The emerging financial oligarchy seeks to shift taxes off banks and
their major customers (real estate, natural resources and monopolies)
onto labor. Given the need to win voter acquiescence, this aim is best
achieved by rolling back everyone’s taxes. The easiest way to do this is
to shrink government spending, headed by Social Security, Medicare and
Medicaid. Yet these are the programs that enjoy the strongest voter
support. This fact has inspired what may be called the Big Lie of our
epoch: the pretense that governments can only create money to pay the
financial sector, and that the beneficiaries of social programs should
be entirely responsible for paying for Social Security, Medicare and
Medicaid, not the wealthy. This Big Lie is used to reverse the concept
of progressive taxation, turning the tax system into a ploy of the
financial sector to levy tribute on the economy at large.
Financial lobbyists quickly discovered that the easiest ploy to shift
the cost of social programs onto labor is to conceal new taxes as user
fees, using the proceeds to cut taxes for the elite 1%. This fiscal
sleight-of-hand was the aim of the 1983 Greenspan Commission. It
confused people into thinking that government budgets are like family budgets,
concealing the fact that governments can finance their spending by
creating their own money. They do not have to borrow, or even to tax (at
least, not tax mainly the 99%).
The Greenspan tax shift played on the fact that most people see the
need to save for their own retirement. The carefully crafted and
well-subsidized deception at work is that Social Security requires a
similar pre-funding – by raising wage withholding. The trick is to
convince wage earners it is fair to tax them more to pay for government
social spending, yet not also to ask the banking sector to pay similar a
user fee to pre-save for the next time it itself will need bailouts to
cover its losses. Also asymmetrical is the fact that nobody suggests
that the government set up a fund to pay for future wars, so that future
adventures such as Iraq or Afghanistan will not “run a deficit” to
burden the budget. So the first deception is to treat only Social
Security and medical care as user fees. The second is to aggravate
matters by insisting that such fees be paid long in advance, by
pre-saving.
There is no inherent need to single out any particular area of public
spending as causing a budget deficit if it is not pre-funded. It is a
travesty of progressive tax policy to only oblige workers whose wages
are less than (at present) $105,000 to pay this FICA wage withholding,
exempting higher earnings, capital gains, rental income and profits. The
raison d’être for taxing the 99% for Social Security and
Medicare is simply to avoid taxing wealth, by falling on low wage income
at a much higher rate than that of the wealthy. This is not how the
original U.S. income tax was created at its inception in 1913. During
its early years only the wealthiest 1% of the population had to file a
return. There were few loopholes, and capital gains were taxed at the
same rate as earned income.
