[CitizensTruth] The $612 billion expenditure that no one wants to mention.

[Chuck Minne]

This is excerpted from an article that can be found in full at:
http://www.tomdispatch.com/post/174982/chalmers_johnson_the_pentagon_bailout_fraud
 
 
On Wednesday, September 24th, right in the middle of the fight over billions of taxpayer dollars slated to bail out Wall Street, the House of Representatives passed a $612 billion defense authorization bill for 2009 without a murmur of public protest or any meaningful press comment at all. (The New York Times gave the matter only three short paragraphs buried in a story about another appropriations measure.) 
 
The defense bill includes $68.6 billion to pursue the wars in Iraq and Afghanistan, which is only a down-payment on the full yearly cost of these wars. (The rest will be raised through future supplementary bills.) It also included a 3.9% pay raise for military personnel, and $5 billion in pork-barrel projects not even requested by the administration or the secretary of defense. It also fully funds the Pentagon's request for a radar site in the Czech Republic, a hare-brained scheme sure to infuriate the Russians just as much as a Russian missile base in Cuba once infuriated us. The whole bill passed by a vote of 392-39 and will fly through the Senate, where a similar bill has already been approved. And no one will even think to mention it in the same breath with the discussion of bailout funds for dying investment banks and the like. 
 
This is pure waste. Our annual spending on "national security" -- meaning the defense budget plus all military expenditures hidden in the budgets for the departments of Energy, State, Treasury, Veterans Affairs, the CIA, and numerous other places in the executive branch -- already exceeds a trillion dollars, an amount larger than that of all other national defense budgets combined. Not only was there no significant media coverage of this latest appropriation, there have been no signs of even the slightest urge to inquire into the relationship between our bloated military, our staggering weapons expenditures, our extravagantly expensive failed wars abroad, and the financial catastrophe on Wall Street. 
 
The only Congressional "commentary" on the size of our military outlay was the usual pompous drivel about how a failure to vote for the defense authorization bill would betray our troops. The aged Senator John Warner (R-Va), former chairman of the Senate Armed Services Committee, implored his Republican colleagues to vote for the bill "out of respect for military personnel." He seems to be unaware that these troops are actually volunteers, not draftees, and that they joined the armed forces as a matter of career choice, rather than because the nation demanded such a sacrifice from them. 
 
We would better respect our armed forces by bringing the futile and misbegotten wars in Iraq and Afghanistan to an end. A relative degree of peace and order has returned to Iraq not because of President Bush's belated reinforcement of our expeditionary army there (the so-called surge), but thanks to shifting internal dynamics within Iraq and in the Middle East region generally. Such shifts include a growing awareness among Iraq's Sunni population of the need to restore law and order, a growing confidence among Iraqi Shiites of their nearly unassailable position of political influence in the country, and a growing awareness among Sunni nations that the ill-informed war of aggression the Bush administration waged against Iraq has vastly increased the influence of Shiism and Iran in the region.





"They no longer believed that James Earl Ray was the killer. For their peace of mind, for an accurate record of history, and out of a sense of justice they conducted a two decade long investigation. The evidence they uncovered was put before a jury in Memphis, TN, in November 1999. 70 witnesses testified under oath, 4,000 pages of transcripts described that evidence, much of it new. It took the jury 59 minutes to come back with their decision that exonerated James Earl Ray, who had already died in prison. The jury found that Lloyd Jowers, owner of Jim’s Grill, had participated in a conspiracy to kill King. The evidence showed that the conspiracy included J. Edgar Hoover and the FBI, Richard Helms and the CIA, the military, the Memphis police department, and organized crime."

 
http://www.actofstate.org

--- On Mon, 9/29/08, Daniel Stafford <aqmstaffo at mailbag.com> wrote:

From: Daniel Stafford <aqmstaffo at mailbag.com>
Subject: [CitizensTruth] Thom Hartmann: How Wall Street Can Bail Itself Out Without Destroying The Dollar (Or repeating history even further - DS)
To: "IL Progressive Dems" <PDI at illinoisprogressives.org>, "AB_Progressives" <AB_Progressives at yahoogroups.com>, "Progressive" <progressive at yahoogroups.com>, DiehardDems at yahoogroups.com, "Citizen's Truth" <CitizensTruth at six.pairlist.net>
Date: Monday, September 29, 2008, 8:07 PM


Note from Dan: I've often found Thom Hartmann to make an awful lot of sense on economic policy. See if you agree

http://www.opednews.com/articles/How-Wall-Street-Can-Bail-I-by-Thom-Hartmann-080929-780.html


Published on Friday, September 26, 2008 by CommonDreams.org

How Wall Street Can Bail Itself Out Without Destroying The Dollar

by Thom Hartmann
For Grover "Drown Government In The Bathtub" Norquist, this bailout deal will work out very well. At a proposed cost of $4,780 per taxpayer, it'll further the David Stockman strategy of so indebting us that the next president won't have the luxury of even thinking of new social spending (expanding health care, social security, education, infrastructure, etc.); taxes will even have to be raised just to pay for the bailout. It'll debase our currency, driving up commodity prices and interest rates, which will benefit the Investor Class while further impoverishing the pesky Middle Class, rendering them less prone to protest (because they're so busy working trying to pay off their debt). It'll create stagflation for at least the next half decade, which can be blamed on Democrats who currently control Congress and, should Obama be elected, be blamed on him.

But there's another way: Create an agency to fund the bailout, loan that agency the money from the treasury, and then have that agency tax Wall Street to pay us (the treasury) back. 
It's been done before, and has several benefits.

In the United Kingdom, for example, whenever you buy or sell a share of stock (or a credit swap or a derivative, or any other activity of that sort) you pay a small tax on the transaction. We did the same thing here in the US from 1914 to 1966 (and, before that, we did it to finance the Spanish American War and the Civil War).

For us, this Securities Turnover Excise Tax (STET) was a revenue source. For example, if we were to instate a .25 percent STET (tax) on every stock, swap, derivitive, or other trade today, it would produce - in its first year - around $150 billion in revenue. Wall Street would be generating the money to fund its own bailout. (For comparison, as best I can determine, the UK's STET is .25 percent, and Taiwan just dropped theirs from .60 to .30 percent.)

But there are other benefits.

As John Maynard Keynes pointed out in his seminal economics tome, The General Theory of Employment, Interest, and Money in 1936, such a securities transaction tax would have the effect of "mitigating the predominance of speculation over enterprise."

In other words, it would tamp down toxic speculation, while encouraging healthy investment. The reason is pretty straightforward: When there's no cost to trading, there's no cost to gambling. The current system is like going to a casino where the house never takes anything; a gambler's paradise. Without costs to the transaction, people of large means are encourage to speculate - to, for example, buy a million shares of a particular stock over a day or two purely with the goal of driving up the stock's price (because everybody else sees all the buying activity and thinks they should jump onto the bandwagon) so three days down the road they can sell all their stock at a profit and get out before it collapses as the result of their sale. (We ironically call the outcome of this "market volatility.")

Investment, on the other hand, is what happens when people buy stock because they believe the company has an underlying value. They're expecting the value will increase over time because the company has a good product or service and good management. Investment stabilizes markets, makes stock prices reflect real company values, and helps small investors securely build value over time.

Historically, from the founding of our country until the last century, most people invested rather than speculated. When rules limiting speculation were cut during the first big Republican deregulation binge during the administrations of Warren Harding, Calvin Coolidge, and Herbert Hoover (1921-1933), it created a speculative fever that led directly to the housing bubble of the early 20s (which started in Florida, where property values were going up as much as 70 percent per year, and then spread nationwide, only to burst nationally starting in 1927 as housing values began to collapse), then the falling housing market popped the stock market bubble and produced the great stock market crash of 1929. That speculation aggregated enormous wealth in a very few hands, crashed the housing and stock markets, and produced the Republican Great Depression of 1930-1942.
Franklin D. Roosevelt, as part of the New Deal, put into place a series of rules to discourage speculation and promote investment, including maintaining - and doubling - the Securities Transaction Excise Tax. Other countries followed our lead, and the UK, France, Japan, Germany, Italy, Greece, Australia, France, China, Chile, Malaysia, India, Austria, and Belgium have all had or have STETs.

Perhaps the most important benefit of immediately re-instituting a STET in the USA, however, isn't that it would raise enough money to bail out the banks and billionaires (and after that crisis is covered, could pay for a national health care system), or that it would encourage investment and calm down markets. Those are all strong benefits, and absent the current Republican Administration bailout proposal would stand-alone strongly.

But the Republican Bush Administration is currently suggesting that we borrow $700 billion (or more) from China and Saudi Arabia and other countries and investors, add that to our national debt, and repay it with interest (making the actual cost over the next 20 years over $1.4 trillion). This is what Republican Herbert Hoover tried in 1931 when he first created the Reconstruction Finance Corporation (later totally reinvented by FDR) to bail out the banks in 1931. Hoover's RFC bailed out the bankers, paid off huge salaries in the banking and investment world, bought him a few months (maybe that's the real goal of the Bush/McCain Republicans now - just hold things together until after the elections), but ultimately led to the failure within two years of virtually all the banks in the United States. The bailout failed.

Similarly, in 1998 the Japanese banks were facing a serious crisis of liquidity as the result of a bursting housing bubble in that country. The Japanese government used public funds to re-float a number of large banks that year, and it similarly failed. In one example out of dozens, in 1998 135 billion Yen were given from public tax funds to Ashikaga Financial Group, but the company limped along for a few years and in November of 2003 collapsed again, requiring a second infusion of a trillion yen from public coffers. And, as the BBC reported in a 30 November 2003 article ("Japan Bank Bail-Out 'A One-Off'"): "But experts warn that Ashikaga could be just the tip of the iceberg." Professor of Finance at Tokyo University Takehisa Hayashi said, "It will come as no surprise if we see another Ashikaga case in the near future." And they did.

Japan continues to limp along, as a result of bailing out banks rather than fixing structural problems. (At least the Japanese had enough savings to use their own money, instead of debt, to bail out their banks.)

So bailouts don't work, and never have. And they also have the side effects of damaging a nation's credit, sucking up its taxpayers resources, and (when done with debt) weakening its currency.

So let's go back to what we know works. After Hoover's 1931 bailout of the banks failed, FDR did a cold reboot of the entire system, putting into place strong rules to prevent speculative abuse. And he doubled the STET tax, both producing revenue that more than funded the Securities and Exchange Commission and further prevented a repeat of the speculative bubble of the 1920s that led directly to the Republican Great Depression.

We've done it before. We financed the Spanish American War and partially financed the Civil War, WWI, and WWII with STETs. We stabilized our stock market with a STET from the mid-30s to 1966, and other nations are doing it today. It's time to do it again, this time using the STET so tax Wall Street can pay for its own bailout.   
 
Thom Hartmann (thom at thomhartmann.com) is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network. www.thomhartmann.com His most recent books are "The Last Hours of Ancient Sunlight," "Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights," "We The People: A Call To Take Back America," "What Would Jefferson Do?," "Screwed: The Undeclared War Against the Middle Class and What We Can Do About It," and "Cracking The Code: The Art and Science of Political Persuasion."
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