Looking back on 2010 and the Great Recession, I continue to be enraged by the lack of accountability for those who wrecked our economy and brought the U.S. to its knees. The shocking truth is that those who did the damage are still in charge. Many who ran Wall Street before and during the debacle are either still there making millions, if not billions, of dollars, or are in charge of our country’s economic policies which led to the debacle.
Yes, in the recent mid-term elections, the American people did replace 63 Democrats with a like number of Republicans, but will that really change things for the better? Time will tell, but I doubt it. Neither do I see the Obama administration, with all its good intentions, succeeding in the areas where the public has suffered the most: jobs and home values.
The stock market has recovered beautifully from a Dow low in the Great Recession which began in December 2007 and technically ended in June 2009. The current Dow hovers around 11,500. But how many millions of people out of fear, lack of market knowledge, or the need to cash in their market holdings simply to survive the years beginning in 2007 when the Great Recession began until now, didn’t receive the benefit of the market recovery?
We do know that the current unemployment figure is 9.8 percent, which represents 15 million people. But that figure does not include those who are no longer looking for a job, those who are underemployed, or those whose salaries and benefits have been slashed. Worst of all, there are millions of people in their 50s, 60s and 70s who will never be employed again.
Then there are those who lost their homes to foreclosure and those who will lose them. Why is it that when Congress adopted the current bankruptcy law in 2005, it decided to uphold the principle of moral hazard, which in the housing context means that those who purchased homes they could not afford, lured to do so by banks and the federal government, must not be helped by the federal government to keep those houses when coming out of bankruptcy proceedings.
On the other hand, rapacious banks, Wall Street investment firms, and automobile industry giants who overextended themselves financially while seeking unconscionable profits or who engaged in poor management practices, were rewarded with astronomical federal government bailouts.
The absence of accountability is also evident in state government. State legislators voted for pensions for state and city employees when they knew or should have known that these pensions were unaffordable. The expectation is that some states will not be able to pay their current bills and the interest on their general obligation bonds. There is now a fear that those states will collapse and become unable to provide basic services including Medicaid and education. Newspaper editorials are commenting and bond holders are beginning to worry about the state and municipal bonds in their portfolios which, according to a New York Times article of December 9, 2010, are valued at $2.8 trillion dollars.
Legislators running for office throughout the country were overwhelmingly reelected in the recent state and federal elections. Very few were punished with defeat. I’m aware of no law that can be used to hold them accountable for their poor decisions in administering the affairs of the states and localities they represent. But surely there are laws that could be used to pursue Wall Street operators who beggared the country and as a result of federal bailouts – remember too big to fail – are richer today than ever.
Millionaires continue to have tax loopholes available to them which allow them to take deductions reducing their tax payments to ludicrously low levels. Let me repeat what I’ve reported several times in prior commentaries:
One of the least known tax injustices was revealed by The New York Times when it pointed out that the top 400 taxpayers who earned $250 million on average in 2005 paid income taxes at a 17.2 percent rate. That rate is lower than that of a family making between $50,000 and $75,000 a year, which is 17.4 percent. It is a continuing outrage that under our tax code some of the wealthy pay a lower percentage of taxes on their income than the middle class.
As a result of President Obama’s negotiating a deal with the Republicans in the lame duck session of the Congress following the Congressional election of 2010 which will give Republicans a majority in the next House of Representatives, he gave the Republicans what they wanted – a two-year extension of the Bush tax cuts for millionaires and to the top one percent of taxpayers, 26.8 percent of the extended tax reductions.
Leona Helmsley infamously but perceptively said that only the “little people” pay taxes. We know life is unfair, but that doesn’t mean the “little people” have to allow their government to continue to oppress them.
The Honorable Edward Irving Koch served New York City as its 105th Mayor from 1978 to 1989.