I rarely repost commentaries but the following excellent contribution by Ben Leet is worthwhile reading. Ben comments on my prior post on $2 trillion in buybacks, dividends and M&A spending in the wake of the Trump tax cuts. (Now Trump is actually proposing even more tax cuts). Ben notes the CBO data on US budget deficits and debt, and how just a financial transactions tax would resolve the problem. I offer a short reply to some of his points. We both agree another serious economic recession, and perhaps even more severe crisis, is around the corner. Ben projects 2020, as even a majority of mainstream economists now do; I estimate earlier, in 2019. The data citations alone are worth reading. (Thanks Ben).
$2 Trillion in Stock Buybacks, Dividends, & M&A spending for 2018
Ben Leet
May 27, 2018 at 11:36 am | Reply
“The CBO report shows the publicly owned debt to rise from 76% of GDP to 96% by 2028. Here’s the link, see page 4 :https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/53651-outlook.pdf — an increase (from 76% to 96% of GDP) of 20% of $23 trillion (the average GDP for 2018 through 2028) is $4.6 trillion of additional debt. So new debt = $4.6 trillion. The page 4 chart shows a cumulative added debt of $12 trillion, but with growth of GDP the percent does not climb that high. They assume a 4.9% of GDP average annual deficit, that would be $1.1tr. average deficit for 10 years. And they assume no recession. ?? At the same time many Republicans are proposing a balanced budget amendment to the Constitution. My solution is to tax financial assets. I found a stat from the Tax Policy Center (Urban Institute) that said $488 billion was collected nationally in state and local property taxes. I calculate that the same tax rate applied to financial assets would generate $1.1 trillion a year. This is about equal to the amount of income taxes paid by about 80% of the lower-earning tax payers. I looked at the tax figures from the Joint Committee on Taxation. So, let the top-earning 24.4% with incomes over $100,000 pay income taxes and tax the wealth of the 1% at the real estate property tax rate, and get the same revenue. Maybe raise that wealth tax rate to 2 or 2.5%, and eliminate the deficit, and the debt, eventually. Wealth (net worth) has doubled since January 2009, from $48 trillion to $98.7 trillion (adjusted for inflation, an increase of 87%). With $50 trillion in new wealth in 9 years, it’s time for a tax on that wealth. The federal budget for 2018 is $4.1 trillion, by comparison. The Social Security Trust Fund is $2.9 trillion. It’s time for a wealth tax. My blog is http://benL8.blogspot.com, Economics Without Greed. Thank you JR.
jackrasmus
May 27, 2018 at 12:32 pm | Reply
“Excellent contribution once again, Ben. Thanks for the data. Re. the CBO estimate of the federal debt increase over the next decade, the data I saw was $9.5 trillion–and that partially accepts some of the phony growth forecasts by Trump and Ryan and, as you note, assumes no recession for another ten years which would make it nearly 20 years without recession, when the average historically between recessions is 8-9 years (which we’re now at). A majority of even mainstream economists predict recession in 2020. I am predicting 2019 and perhaps early 2019.
I’m certain the Federal debt will exceed $10trillion more by 2028 and, if recession, at least $2 trillion more. The Fed will have to raise rates even higher to fund this deficit, and perhaps even higher if the US trade war results in China, Japan, and others buying less Treasury bonds.
I can’t believe the economic stupidity of the economic and political elites in the US now determining policy–fiscal, monetary, trade…etc. The quality of their leadership compared to past US capitalists is astounding!
And you’re right about the revenue obtainable from a financial transactions tax. I’ve written about it with estimations several times in the past, including in 2016 when I challenged Democrats attacking Sanders’ call for a financial transaction tax (which he then mostly shelved talking about publicly). The Democrats leadership–the money bags that took over the party with Clinton (aka the DLC faction)–sabotaged Sanders anyway. The Democrats will never never propose such a tax. They’re too close to moneybag bankers like Goldman Sachs and others.”
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
Hello Jack. —
A correction on this: I’m Ben Leet, not David Baker. Don’t worry, you don’t have to correct anything, please just leave it as is.
Just want you to know. We have met, briefly I think. I lived in San Leandro and listened to you teach an hour at Laney College about 10 years ago.
I’ve read some of your books. I admire your work.
Recently Richard Wolfe stated on his radio show that among working “millenials” some 45% have precarious jobs, they work either part-time, partial year, or weekly hours that shift without a guarantee of how many hours. The national rate is 37%, he says. I think I’ve read at the Census that 20% work part-time and 12% work partial year, so 32%. That’s standard, but for the young, 45% is excessive. Also the Pew Research stated in some report that in 1960 the workers age 18 to 34 had a median income of $27,300 and in 2014 it had fallen to $15,000. — glaring examples of the failure of our economy.
Well, the beat goes on. Best to you, and keep it up. Ben Leet
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My apologies,Ben. (And to David Baker, whom I’ve already contacted). And it’s easy to correct, which I’ll do. Your excellent research deserves credit. Thanks again. Please continue to comment on my posts when you think relevant.
Jack