EASTSIDER-While the establishment, including all the Republicans and a number of Dems, are freaking out that Biden’s $2 Trillion Infrastructure Bill is just too much, what about their code of silence regarding their Wall Street Owners? Why is virtually all of Congress silent about Wall Street’s bets with you and I on the hook if they tank?
As Usual, the Senate Runs the Country
With essentially a 50/50 split in the Senate, they are our current source of economic constipation, blocking almost everything.
Per normal, USA Today noted that Fox News and their Republicans are panning the deal as way too much:
“Republicans argue the package should be limited to transportation, broadband internet and other basics, not green energy like Biden has touted since he was a candidate. Biden doesn't want to just fix roads, Republicans warn, he wants to upend American life.
Biden's infrastructure plan: Biden to propose $2 trillion infrastructure, jobs plan funded by corporate tax hike.
They've also balked at raising taxes – long a sticking point for Republicans to get behind big-ticket Democratic programs. To find bipartisan support, the president will have to convince skeptical Republicans to support an increase of the corporate tax rate to pay for infrastructure and a wide-range of other spending.”
Fox News itself, of course, denounced the whole thing as Straight-up Propaganda:
"Brazen, cartoonish, straight-up propaganda. As if written by White House staff for the most gullible and easily controlled idiots in the country," Hemingway wrote.
More recently, the Washington Post debunked a major portion of all the gainsaying:
“This is a massive social welfare spending program combined with a massive tax increase on small-business job creators.”
— Sen. Roger Wicker (R-Miss.), in an interview on ABC’s “This Week,” April 11.
“The proposed tax increases in the Biden administration’s infrastructure plan could lead to 1 million fewer jobs in the first two years.”
— Sen. Roy Blunt (R-Mo.), in a tweet quoting a report from the National Association of Manufacturers, April 13”
Of course, their accuracy was bogus:
“But here’s the problem with Wicker’s statement: A relatively small percentage of small businesses file as C-corporations. Of those that do, many owe little in taxes, so Biden’s tax increase would not affect them.
Most small businesses are structured as pass-through entities — such as partnerships, S-corporations and so forth — meaning that the companies themselves pay no taxes. The owners pay tax on the business income at their individual tax rate and report the business income on their personal tax returns. For virtually all small businesses, especially profitable ones, it makes more sense to organize as pass-through entities. (C-corporations are subject to double taxation of profits, while pass-throughs are taxed only once.)”
News Blackout Over the Senate Banking Committee Hearing
Prior to all this BS, there was an important Senate Banking Committee Hearing on March 10, which was ignored by the mainstream media. Why?
“We’ve seen Wall Street treat the markets as a game for decades – a game they always win, at the expense of pretty much everyone else. Wall Street has never been friendly to the little guy. Surely this time is no different. Yes, some regular people have had success. But fundamentally, the system is set up to funnel more wealth to the already-wealthy. Just like in Las Vegas, the House always wins.”
and Elizabeth Warren was even more direct:
“Senator Elizabeth Warren sized up the current structure of Wall Street like this: “It’s riddled with conflicts of interest that allow the giants to win every single time.” Warren went on to say that Wall Street “is supposed to be about capital formation, to creating long-term value for companies, so they can grow and create jobs. This is good for the American economy and American families. But when big sharks like Citadel and Robinhood come out ahead no matter what happens, and when the information they gather isn’t disclosed, and when it’s secret how that information is used, it’s easier for these giants to skim off the top at the expense of small investors and working families.”
Still wonder why there was a news blackout? Gee, I wonder who owns corporate media outlets?
Speaking of Blackouts, What About JP Morgan’s Derivatives Exposure?
Let’s be honest. To the very rich, corporate tax rates govern how much they have to pay, not ordinary income. As New York Times’ David Leonhardt recently put it:
“The biggest tax boon for the wealthy has been the sharp fall in the corporate tax rate. . .”
“Since the mid-20th century, however, politicians of both political parties have supported cuts in the corporate-tax rate, often under intense lobbying from corporate America. The cuts have been so large — including in President Donald Trump’s 2017 tax overhaul — that at least 55 big companies paid zero federal income taxes last year, according to the Institute on Taxation and Economic Policy. Among them: Archer-Daniels-Midland, Booz Allen Hamilton, FedEx, HP, Interpublic, Nike and Xcel Energy.
“Right now, the U.S. raises less corporate tax revenue as a share of economic output than almost all other advanced economies,” Alan Rappeport and Jim Tankersley of The Times write.”
Within this context, let me share with you this little headline: JPMorgan’s Federally-Insured Bank Holds $2.65 Trillion in Stock Derivatives; How Did It Avoid the Archegos Blowup?
“In late March, the Office of the Comptroller of the Currency (OCC) released its quarterly report on “Bank Trading and Derivatives Activities.” Graph 15 of the report shows that using data submitted by banks on their form RC-R of their call reports, JPMorgan Chase’s federally insured bank had exposure to $2.65 trillion in notional equity (stock) derivatives as of December 31, 2020. (Notional means face amount.)
That’s a stunning figure for the largest federally insured bank in the United States to have in exposure to the stock market. But more stunning is the fact that according to the OCC, JPMorgan Chase’s equity derivative contracts represent 63 percent of the total $4.197 trillion of equity derivative contracts held by all federally insured banks and savings associations in the United States. To put it another way, there were 5,033 federally insured banks and savings associations in the United States as of September 30, 2020 according to the Federal Deposit Insurance Corporation (FDIC). But just one of them, JPMorgan Chase, accounts for 63 percent of all equity derivatives. (See Editor’s Note below.)
It turns out later in the WallstreetonParade article, that the bulk of these contracts are private contracts, with you and I on the hook if they blow up. Remember, these are federally insured. Well worth a read.
So maybe before we get all freaked out about Biden’s reasonable if expensive proposal to build out our crumbling and obsolete infrastructure, we should consider that it’s one heck of a better bet for you and I and employment, than Wall Street’s games.
Just sayin’. . .
(Tony Butka is an Eastside community activist, who has served on a neighborhood council, has a background in government and is a contributor to CityWatch.) Edited for CityWatch by Linda Abrams.