And now the tax cuts just for millionaires have taken effect. Congratulations, America!
What a way to celebrate Friday the 13th: While the press is fixated on Sam Alito (he’s in) and Iran (it’s out), new reports bring disastrous financial news to Americans — even if you didn’t read all about it.
Adding up the damage: Wall Street bonuses for the securities industry are record-breaking, and so are personal bankruptcies for the rest of you.
Oh, and you just got the bill for tax cuts enacted in 2001 for the benefit of millionaires. The cuts took effect at the beginning of 2006. And by the way, “Gramps” Dick Cheney‘s Halliburton is still charging you millions of dollars for “maintaining” excess, unused Mercedes trucks that are just sitting idle in the Iraqi desert.
Jesus wept, no matter what Pat Robertson says. Dry your own eyes and keep reading:
• New York State Comptroller Alan Hevesi, nominally a Democrat, is deliriously happy about those bonuses, saying:
“The securities industry had a very good year during 2005. The industry paid record bonuses based on exceptional revenue growth and solid profits.”
I wrote about this on December 7, in the context of the Pentagon’s recruiting of poor people for its various misadventures around the globe. But now that the bonus news is official, it bears a closer look. As the New York comptroller noted January 11:
Wall Street bonuses will set a new record of $21.5 billion in 2005, surpassing the previous record of $19.5 billion set in 2000 during the peak of the last bull market, according to a forecast released today by State Comptroller Alan G. Hevesi. This translates into average bonuses of $125,500 — also a new record. …
After a disappointing first half, profits for member firms of the New York Stock Exchange improved during the third quarter and industry reports suggest an even stronger fourth quarter. Although 2005 profits could be less than last year’s level, many bonuses are tied to industry revenues, which have been exceptionally strong this year. Profits have been held down by rising interest rates, which increased the cost of doing business.
Revenues at Wall Street firms grew by 44.5 percent through the first three quarters of 2005 — reaching the highest level since the stock market peaked in 2000. Merger and acquisition activity account for most of the surge in revenues, which is expected to be up 28 percent over last year’s level and to exceed $1 trillion for the first time since 2000. Given the surge in merger and acquisition activity, investment bankers received the largest increases and bonuses just like last year.
• One out of every 53 households in the United States filed for bankruptcy protection in 2005. That’s the headline on this CNN story, released the same day as Hevesi’s statement on the bonuses.
Bankruptcy filings soared 31.6 percent in 2005. Luckily for the ruling class, new laws will severely curb that number, because it now is harder for ordinary Americans to file Chapter 7 proceedings to get a “fresh start.”
Corporate America, of course, continues to take advantage of generous bankruptcy laws. Halliburton, for example, took various thriving and profitable units through bankruptcy court to rid itself of asbestos-litigation burdens. And as I just pointed out last week, vultures like Sago coal mine owner Wilbur Ross love to take companies into bankruptcy to escape having to pay for workers’ pensions and health-care benefits.
• Tax cuts specifically benefitting millionaires — and costing the Treasury $27 billion over the next five years — just went into effect. As the indefatigable Billionaires for Bush point out:
“It’s a class war, and we’re really winning!”
The more sober people at OMBWatch summed it up well, also on January 11, which surely was a Black Wednesday for news, even if the rest of the media didn’t report it that way:
As a fitting kick-start to a year in which President Bush is expected to push hard to make his expensive and unbalanced tax cuts permanent, two new tax cuts went into effect that almost exclusively benefit high-income households. …
[B]y 2010, taxpayers earning over $1 million will see an average additional tax kickback of $19,234. Those making between $75,000 and $100,000 will see an average of $1, and those making less than $75,000 will see nothing.
To put this into perspective, OMBWatch added:
Together these tax cuts will cost $27 billion over the next five years (roughly two-thirds of the amount Republican leaders claim will be “saved” with the budget cuts bill). These tax giveaways will primarily wind up in the pockets of the rich, who have already benefited enormously under Bush — such as those with annual incomes of over $1 million who have received an average windfall of $103,000 in 2005 from the president’s first-term tax cuts.
Just wait until Bush and Congress resume their “tax-cutting.” OMBWatch adds a separate piece that is required reading. But the starkest analysis of the dread economic news that is sure to emerge this spring from Congress comes from the Center on Budget and Policy Priorities — the best antidote to the continual lying about budget matters that oozes out of Capitol Hill and the White House. CBPP’s January 9 analysis points out the heavy blows that poor people are about to receive, including “the most substantial — and controversial — changes in welfare policy since 1996.”
If the monumental Wampumgate scandal isn’t enough reason to vote in a new Congress later this year, this mishandling of your children’s and grandchildren’s futures ought to at least make you think. You might want to start acting now, before your civil liberties are further curtailed.