Death and Taxes
I don't think that this is a particularly novel idea, but the more I think about it, the more the recent bailout seems magnitudes worse than anything we've seen before.
We're likely going to see unemployment at levels that will rival those of the great depression. This is a tragedy in itself, but what might be worse, is that as a result of decades of tax cuts for corporations and the rich, working class and middle class income tax plays a disproportionate role in funding government services relative to other forms of taxes. In other words, in other countries, taxes on the wealthy and on corporations constitute a much higher percentage of total tax revenue, but here, decades of tax cuts have meant that the tax burden falls overwhelmingly on average people. That is, average Americans shoulder the burden of funding the government. Consequently, the massive loss in jobs means a huge decrease in tax revenues, because the super-rich and corporations don’t really pay taxes..
And we're already seeing the consequences across the country. In New York state, for instance, healthcare and education are facing huge cuts, while the Governor refuses to raise taxes on the super-rich, even though modest increases on the super-rich would hardly be felt by them, but would be more than enough to fund things like transit, healthcare, and education at full levels. And the story in New York is very much the norm across the country.
But perhaps most troubling is Mitch McConnell's recent statement that states and cities should contemplate declaring bankruptcy because they won't be receiving bailout funds. So, states and cities, which are disproportionately responsible for providing the services on which all of us rely, are facing huge cuts. And there’s no relief in sight, from either federal or state officials. It might not come to bankruptcy in many places, but McConnell's statement really means that states and cities need to start making massive cuts, the likes of which none of us have ever seen. Education, healthcare, transit, sanitation, parks, etc., cut, cut, cut, cut, cut.
Granted, federal Democrats might be more inclined towards state and city bailouts, but they completely caved in the last round of negotiations. And while state Democrats like Cuomo might be calling for federal bailout funds, he's also refusing to use his ample tools to ensure the state budget remains well funded. So, Republicans are calling for unprecedented levels of budget cuts, while Democrats are basically paying lip service to the need for stimulus for state and city budgets, while actively slashing those budgets to the core. And massive unemployment along with major cuts to public services is a recipe for a great depression.
As for the actual bailout, which is unprecedented in its size, individuals received a one-time check that isn't enough to cover even one month’s worth of expenses for most people (and which the most needy might have to wait 5 months to receive), and the money allocated for small businesses ran out in no time at all. In no small part this occurred because loopholes allowed massive corporations to apply for huge loans through the program, and the banks prioritized these loans, because they were responsible for administering the small business bailout and they make more in fees on these large loans. So banks and large corporations raided even the money meant for small businesses.
But despite the flawed nature of the small business and individual bailout, these together only amounted to a tiny fraction of the overall bailout. By far, the lion's share of the bailout went to large corporations directly. As a consequence, after unprecedented losses in the stock market, the market has almost fully rebounded. Granted, it hasn't returned to the historic highs of January and February, but it has rebounded to the highs (that were then historic) of maybe 6 to 8 months ago.
So, what does this all mean? First, because of decades of corporate and high-income tax cuts, the tax burden overwhelming falls in the shoulders of average Americans. Second, because of the massive job losses, tax revenue is going to take a historic hit. Third, absent a bailout for states and cities, the decrease in tax revenue means a massive decrease in government spending, and this will hit the very same people who already shoulder the lion's share of the tax burden. Fourth, in the midst of all of this, we've sent unprecedented levels of government money to large corporations.
Taken altogether, in the midst of an unprecedented crisis in public finances, rather than bailing out the public, we are instead massively indebting the public in order to artificially prop up the stock market. So, rather than supporting the average American who already shoulders the burden of funding the government, we're going to radically decrease their quality of life by massively slashing public services, while further indebting them with the cost of propping up the stock market. So, we already require that average Americans fund public services through their taxes rather than taxes on the super-rich and corporations, and this bailout is essentially a tax INCREASE for them, because they’ll have to pay for the stock market bailout for decades to come. So, one way of thinking about this is that along with your $1200 stimulus check, you should also have been sent a much larger $12,000 dollar invoice for the stock market bailout (I haven’t done the actual numbers, but you actually can’t do the numbers, because so much of the bailout lacks oversight).
So, in short, we've just seen a massive transfer of wealth. At a time when average Americans are suffering like never before, we're not bailing them out, but saddling them with massive debt so that the stock market recovers. Therefore, when someone points out how the economy is doing well because the stock market has recovered, even though you've lost your job and your healthcare has been slashed along with your children's education, remember this: you're also deeply indebted too, because the stock market recovery was paid for with government debt that you’ll be paying for in taxes until the day that you die.