Republicans are perpetrating a fraud. They say they’re concerned about reducing government deficits. But you don’t need to look at how they treat all of the country’s biggest corporations (which is extremely well) or even how they kowtow to its richest 400 families, who now have 6900 times as much income as the average household, to know that’s a lie.
You only need to look at the way they treat a handful of billionaires. They’re holding the entire country’s budget hostage because they don’t want to raise taxes on the wealthy, and they don’t want to eliminate a tax loophole that could be bringing in more than $4 billion each year … from only 25 people.
The top 25 hedge fund managers in the United States collectively earned $22 billion last year, and yet they have their own cushy set of tax rules. If they operated under the same rules that apply to other people – police officers, for example, or teachers – the country could reduce its national debt by as much as $44 billion in the next ten years.
We’re not talking about “raising taxes on the rich,” either – although that’s an excellent idea. (There’s an automated petition here that will encourage your representative to do just that.) This money could be raised simply by removing a tax loophole that protects hedge fund managers. And that’s not counting all the other people who run hedge funds. We’d get that $44 billion from just 25 people. They can certainly afford it, and at least one of them (George Soros, #2 on the list) undoubtedly would approve.
But they won’t do it. Instead of taking a simple step that could net as much as $4.4 billion per year, House Republicans have passed a budget that cuts $30 million for flood control and emergency funds that would help people avoid being hurt or killed in storms like the ones we’ve seen in New Orleans, Birmingham, the Midwest, and all across the country. They voted to cut $336 million from the National Oceanographic and Aeronautical Administration to track and predict violent storms.
You could call their bill the “Tony Montana budget,” too, since it cuts funds from all the law enforcement activities that Al Pacino’s character in Scarface loathed and feared: $74 million from the FBI. $256 million from “State and Local Law Enforcement Assistance.” $600 million from COPS, another program that gives grants for state and local policing. More than half a billion from the IRS, which is a giveaway to tax cheats that also reduces future collections — which will make the deficit worse.
They even want to cut $330 million from the Treasury Forfeiture Fund, a self-sustaining program that administers all the assets seized by U.S. Customs, the Secret Service, the Bureau of Alcohol, Tobacco and Firearms (ATF), the IRS Criminal Investigation unit, and the Coast Guard. Tony Montana would approve.
Oh – they want to cut the budget for “food safety and inspection services,” too. You could pay for all these cuts by just eliminating a tax loophole for these hedge fund managers – and you’d still have more than $2 billion left over. And that’s every year.
From 25 people.
Now the Republicans are going after Social Security and Medicare. Their new budget eliminates Medicare (yes, it does) and replaces it with vouchers that will only cover a fraction of their medical costs. The Congressional Budget Office reports that people who reach Medicare age in 2030 will have to pay twenty thousand dollars more per person as a result. Know how many of those people could get the old Medicare coverage if you taxed those 25 hedge fund managers the same way everybody else is taxed?
All of them.
These programs are unsustainable, they say. Well, the runaway costs in our health system are unsustainable, but controlling them would force the country to confront the greed motive in US healthcare. So that’s off the table for the Republicans, too. And Social Security doesn’t contribute to the deficit at all – they just don’t like it.
If you took away this tax loophole for hedge fund managers, you could actually increase Social Security benefits by more than $1,000 per year for every baby boomer. In 2010 dollars, that comes to an average benefit increase of nearly ten percent.
And that’s just from 25 people.
But wait, the Republicans will say. That would kill jobs, they’ll say. These people are “job creators” and “wealth creators,” they’ll say. No, they’re not. More often than not, in fact, they’re job destroyers. They make their money by betting for or against certain events – literally “hedging their bets” – and on more than one occasion they’ve been accused of creating the negative event they’re betting against. Even if they don’t do anything unscrupulous, these negative bets make it harder for certain ventures to succeed.
Here’s a simple answer to those Republicans: If these tax cuts create jobs, where are the jobs?
In many cases these hedge fund managers owe owe their wealth to us, the taxpayers who play by the rules, and not to their own business acumen. This account in the New York Times, for example, describes how one of them made billions by betting that the government would rescue banks from their own lousy judgement and bad investments. Now the Republicans are willing to shut down the entire government to protect these 25 people and a few thousand others just like them.
Yesterday we discussed the fact that most Republican voters want to raise taxes on the rich to affect the deficit, and that Democrats have been slow to push this issue. We encouraged you to express your support for this “shared” approach to reducing the deficit. That needs to happen as part of any deficit deal.
So does the closing of this “billionaire’s loophole.” If the loophole was closed and the Bush tax cuts for the wealthy were finally ended, in fact, we could cut the deficit by another $8.8 billion over the next ten years — just from these 25 people.
So don’t buy the fraud. Encourage your representatives to sign on to the “shared” approach. And imagine: If we can get 25 people to pay their fair share, we can ask everyone else who’s profited from our recent miseries to pay their fair share. That’s how we can restore the American Dream – one billionaire at a time.
 Technical comments: My estimates are based on the assumption that this year’s earnings for the top 25 hedge fund managers will hold steady for the next ten years. Their 2010 income was down significantly from previous record highs, but as the portfolios say: Past performance is not a guarantee of future results.
I have also assumed, based on previously disclosed information, that most of the money earned by these hedge fund managers falls under the “carried interest” loophole rather than as straight management fees.