Big capital is gaining twice from tax reductions
by system failure
According to a 2010 document under the title "Federal Debt and Interest Costs", released by the US Congressional Budget Office (CBO):
"Debt held by the public consists mostly of securities that the Treasury issues to raise cash to fund the activities of the government, including the securities sold to pay off maturing securities. The amount the Treasury borrows or redeems is determined primarily by the budget deficit or surplus in a given year. CBO projects that, under current law, debt held by the public will surpass $16 trillion by 2020, reaching nearly 70 percent of GDP. Many other outcomes are possible, however. If, for example, the tax reductions enacted earlier in the decade were continued, the alternative minimum tax was indexed for inflation, and future annual appropriations remained the same share of GDP that they were in 2010, debt held by the public would total nearly 100 percent of GDP by 2020.”
This means that, the biggest corporations earn more money by paying less taxes in social benefits, but government also borrows more money to replace tax losses and cover increasing needs. Therefore, the biggest investors also earn more money by lending government. Given that the biggest investment banks and corporations are connected through various ways, it seems that the financial elites are gaining twice by tax reductions.
Beyond this, it would be interesting to see that, for the years 2011 and 2012 the US debt held by the Federal Reserve reached record levels since 1940, (11.2% of GDP in 2011 and 10.6% of GDP in 2012). Only one time reached such levels, just after WWII (10.7% of GDP in 1946). [Table 7.1, http://www.whitehouse.gov/omb/budget/historicals]
It is also worth to notice that, for these two years, the estimated percentage share of debt held by domestic private investors in "debt held by the public", followed the percentage share of debt held by the Federal Reserve. More specifically, in 2011, the percentage share of debt held by domestic private investors was 32% while the percentage share of debt held by the Federal Reserve was 16% (http://www.gao.gov/special.pubs/longterm/pdfs/estimated-ownership2011.txt).
Next year, 2012, the estimated percentage share of debt held by domestic private investors dropped by 1% (at 31%), exactly as much as the percentage share of debt held by the Federal Reserve (15%), (http://www.gao.gov/special.pubs/longterm/pdfs/estimated-ownership2012.txt).
What is depicted here, is an increasingly dependent government on Federal Reserve's QE policies which are circulated inside the system and load government with more debt. It seems that, the government struggles to retain social benefits at a certain level while at the same time the financial elites are gaining more and more.
It is characteristic that Obama struggles to pass the plan for $10.10 per hour national minimum wage, even if this would not be enough to improve the life of millions of American workers who are working very hard to pay the bills and secure a decent life for their families, but the financial-corporate lobbyists will find the opportunity to demand more tax-cuts, exactly because they are gaining twice from tax reductions.