Labor & Employment Law

Money Managers Want to Cut Social Security to Keep Their Tax Breaks

By James Parks

Wall Streeters poured millions of dollars into Republican campaign coffers to keep their unfair tax breaks.

The Republicans and their Wall Street buddies are warning that the nation will go bankrupt unless we cut billions of dollars out of two of the most successful-ever federal programs: Social Security and Medicare.

The realities are that Social Security is sound and the system will be solvent for decades. The people who would benefit from cutting Social Security are money managers and other wealthy Wall Street types who would get to keep big, unfair tax breaks and not have to pay their fair share.

Take former Lehman Brothers chief executive and co-founder of the Blackstone Group Peter Peterson, who today launched a multimillion-dollar campaign to convince voters that without immediate cutbacks to Social Security benefits, our country faces imminent financial collapse. But that?s just not true. A recent report by the Center for Economic and Policy Research (CEPR) shows that Social Security is stable and solvent for at least the next 27 years.

Peterson became a billionaire by managing other people?s money in leveraged private equity buyouts. He received huge payments for making his investors richer. Yet because of one of the most outrageous loopholes in our nation?s tax laws, Peterson and other money managers pay capital gains taxes on millions of dollars at a lower tax rate than schoolteachers and firefighters pay on their wages. 

These money managers poured millions of dollars into 2010 political campaigns to make sure they kept their tax breaks. NBC News reports that hedge funders and other wealthy Wall Street types funneled millions of dollars to Karl Rove?s Crossroads GPS to prevent real financial reforms from taking place. These donors are bitterly opposed to a proposal by congressional Democrats?and endorsed by the Obama administration?to increase the tax rates on compensation that hedge funds pay their partners, NBC said.

Writing on TPM Café, Dean Baker says putting a fair tax on financial transactions would put a huge dent in the federal deficit:

?taxing Wall Street speculation is a far more economically desirable route than taking away the Social Security benefits that ordinary workers have already paid for. We could easily raise more than $1.5 trillion over the next decade with a broadly based financial speculation tax that would have almost no impact on anyone except the Wall Street crew.

Baker says even the International Monetary Fund (IMF) is pushing for higher taxes on the Wall Street billionaires. But, he says, the media and Congress do not respond to economic reality?they respond to money.

And Peter Peterson and the Wall Street crew are not paying for an honest discussion of the country’s fiscal and economic problems. They are financing a rigged debate that is intended to result in even more money flowing to Wall Street and less to those who work for a living.

Read Baker?s column, ?The Wall Street TARP Gang Wants to Take Away Your Social Security,? here.

Full post as published by AFL-CIO NOW BLOG on November 09, 2010 (boomark / email).