A True Hero Of The Establishment

Erskine Bowles is widely known in Washington policy circles as a co-chair of President Obama’s deficit commission, along with former Senator Alan Simpson. The report that he and Simpson co-authored is widely held up as the basis for a grand bargain on the deficit.

This report has riled many people across the political spectrum in part because of its cuts to Social Security, the most immediate of which is a reduction in the annual cost of living adjustment (COLA) for Social Security. The reduced COLA would amount to a benefit cut of close to 3.0 percent for a typical retired worker. Since the median income for households of people over age 65 is just $31,000, this would be a big hit to a segment of the population that is already struggling.

By contrast, in their quest for every possible source of savings, Bowles and Simpson seem to have never seriously considered a financial speculation tax that would hit the country’s badly bloated financial sector. The United Kingdom has imposed taxes on its financial sector for centuries, and much of the European Union is considering a tax that could go into effect as early as next year. A tax comparable to the one that the UK has on stock trades applied to all financial assets could raise close to $1.5 trillion over the course of a decade.

There is evidence that a bloated financial sector is a serious drag on growth, pulling resources away from productive segments of the economy. In addition, the finance sector is also where many of the highest earners get their income.

This means that a tax on the financial speculation could be a real win/win/win. It could raise money to reduce the deficit, it could make the economy more efficient, and it could reduce inequality. That should place it on top of anyone’s list for deficit reduction.

But apparently it didn’t make it to Bowles and Simpson’s list. While we may never know why, it is worth noting that Erskine Bowles sits on the board of directors of Morgan Stanley, the huge Wall Street investment bank. Mr. Bowles has gotten paid several hundred thousand dollars a year to sit on Morgan Stanley’s board.

Interestingly, Mr. Bowles sits on many corporate boards. He has been paid millions of dollars over the last decade for his service on these boards…

http://www.counterpunch.org/2012/09/12/a-true-hero-of-the-establishment/

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