The deficit hysteria is mounting over at Pete Peterson's Kill Medicare & SocSec Shoppe, and Bill Clinton's pal Erskine Bowles wants you to know that even though the commission he co-chairs with MediSocSec hater Alan Simpson is supposed to find some answers, it's just too complicated and they probably won't.
Asked about the prospect of a deadlock, Bowles, sounding reconciled to it already, declared "that won't be victory, but we will have made real progress."
The progress, Bowles said, will come in having educated the American people about the dangers of the deficit. And that, judging from the co-chairs' rhetoric, will involve scaring the heck out of people.
If the federal budget remains on autopilot, "everything you deeply love," Simpson said, muttering something about the "the children and the poor" is "not gonna be there."
Bowles warned that the United States could face actual bankruptcy.
Golly. That's sounds awful. Let's see if we can help them out, shall we?
First, we need to explain to them that the deficit is NOT the result of the Iraq war or the bank bail-out or TARP, and certainly not entitlement programs. The deficit has one cause and one cause only.
Tax evasion by big corporations and the super-rich.
"What? But that's not possible. How can tax evasion make that much difference? And if it did, wouldn't the IRS take steps to collect it?"
Let's take the first part first, and I must warn you in advance that the numbers I'm going to show you represent a tiny fraction of the money that has been lost to the Treasury through tax evasion since Reagan. A very tiny fraction. The numbers come from the govt's own stats and corporate reports and legal documents of various kinds (the estimate of the expense to the taxpayers from GE providing Jack Welch with a free plane we talked about yesterday came from papers filed in Welch's divorce, for example) through David Kay Johnston's Perfectly Legal, and though he covers in that whole book fewer than a dozen of the hundreds of ways the super-rich evade their responsibilities to the country that made them super-rich, I am going to use only a couple of those few. Keep that in mind as you read the rest of this.
Partnerships
A tax auditor specializing in partnership tax law discovered that dozens of corporations had evaded taxes by "partnering" with a tax-exempt entity. By shoveling its profits to its tax-exempt partner, a commercial corporation could effectively evade 100% of the taxes it should have paid the govt. The cost in lost revenue to the Treasury from the 2 or 3 dozen corpo's involved was estimated at $30B/yr for at least the previous 15 yrs.
Total lost from 1985-2000: $450 BILLION.
TYCO
There's a tax trick called "corporate inversion" in which instead of creating an offshore shell corporation to hide taxable income, a corpo creates a shell parent company, say in the tax-free Caymans or Bermuda. HQ stays in the states but is technically a subsidiary of the parent. This allows it to shovel all profits to the parent's tax-free on-paper HQ, evading all taxes in the US.
Tyco International (remember them?) estimated that this trick had saved them - hang onto your hat - nearly $500 MILLION. A year.
Total tax revenue lost from this single company using this single trick between 1996 and 2000: $2 BILLION.
So an accounting of only a couple of corporate partnerships and one big global corpo covers $452 BILLION, about 15% of our current $3T debt. If we extrapolate those numbers through the US Corporate Universe over the past 30 yrs it would be a very conservative estimate that we have lost $15-20 TRILLION in tax revenues between 1980 and the present. Needless to say, if that money had been collected - if a fraction of that money owed had been collected - there would now be NO DEFICIT whatsoever, Iraq war or no Iraq war.
Over and over again people ask, "How can we be the richest country in the world - which we are - and be in such bad financial shape? How can we have homeless, hungry people? How can we have sick children who can't get medical care? Why can't we afford to have National Health?"
The answer, Mr Bowles and Mr Simpson, is simple: We can. All we have to do is eliminate the Big Time tax cheats. You know, your friends. Your BFFs. The guys who paid for your campaigns and your cushy after-govt-service private sector sinecures. If they actually had to pay what they owed, we'd have enough in the Treasury to pay SocSec and Medicare for several hundred years.
But I don't expect to hear you admit that any time soon.
As for the second question, I'll give you three guesses why the IRS doesn't go after people who own the pols who make the policies the IRS has to follow. You won't need two of them.
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