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senate budget committee
US Wealth Gap Report Fuels Call to 'Unrig Our Tax Code'
"This report should add urgency in Congress as the Trump tax scam expires next year and we negotiate future tax legislation," said Senate Budget Committee Chair Sheldon Whitehouse.
Oct 02, 2024
As a Capitol Hill battle over the "GOP tax scam" looms, U.S. Senate Budget Committee Chair Sheldon Whitehouse on Wednesday pointed to a new nonpartisan government analysis about soaring wealth inequality as proof of the need for serious reforms.
Whitehouse (D-R.I.) sought the Congressional Budget Office (CBO) report, which details trends in the distribution of family wealth—including projected Social Security retirement and disability benefits—in the United States from 1989 to 2022.
"Adjusted for inflation, the wealth held by families in the United States almost quadrupled between 1989 and 2022, rising from $52 trillion (in 2022 dollars) to $199 trillion, at an average rate of about 4% per year," the CBO found. "Over that 33-year period, family wealth was unevenly distributed, and that inequality increased."
"In 2022, families in the top 10% of the distribution held 60% of all wealth, up from 56% in 1989, and families in the top 1% of the distribution held 27%, up from 23% in 1989," the office said. "The share of wealth held by the rest of the families in the top half of the distribution shrank from 37% to 33% over the same period. Families in the bottom half of the distribution held 6% of all wealth in both 1989 and 2022."
"By making the wealthy pay their fair share, we can protect Social Security forever and unrig our tax code."
The report comes as Congress prepares for a tax debate due to next year's expiration of policies signed into law in 2017 by then-President Donald Trump, the Republican facing Democratic Vice President Kamala Harris in this November's election.
Throughout the current election cycle, Trump and congressional Republicans have campaigned on extending policies from the Tax Cuts and Jobs Act, which slashed the corporate tax rate from 35% to 21% and also benefited wealthy individuals.
"This report should add urgency in Congress as the Trump tax scam expires next year and we negotiate future tax legislation," Whitehouse said of the CBO analysis. "Do we want to reward billionaires, who have already captured so much of the nation's wealth, or do we want to de-corrupt the tax code, ensure the wealthy and big corporations pay their fair share, and reduce the deficit, all while making necessary investments to better the lives of all Americans?"
Whitehouse noted that the report also comes amid concerns about the future of Social Security. Citing the CBO analysis, his office detailed:
- Social Security is essential to the retirement security of low middle- and lower-income families: Without this earned benefits program, the bottom half of families would hold just 3% of overall wealth, while the top 10% of families would control nearly 70%.
- If Social Security were allowed to go insolvent, families in the bottom half of the wealth distribution would lose 10% of their wealth, while the wealth of the top 1% of families would be essentially unchanged.
"Social Security is a bedrock of our retirement system and ensures millions of seniors can retire with dignity," Whitehouse said. "Seniors earned their benefits throughout their working lives, but the program is now facing a looming cash flow problem. By making the wealthy pay their fair share, we can protect Social Security forever and unrig our tax code—exactly what my Medicare and Social Security Fair Share Act would do."
Whitehouse's bill is spearheaded in the lower chamber by U.S. House Budget Committee Ranking Member Brendan Boyle (D-Pa.), who also recently requested a CBO report. That one focuses on the impact of raising the full retirement age for Social Security from 67 to 69, as various Republican groups have proposed.
The CBO's Social Security analysis, released last week, found that for workers now in their 30s and 40s, the average annual benefit cut would be around $3,500 a year—and the GOP's proposed changes wouldn't even extend the program's solvency.
"This independent, nonpartisan report shows just how devastating Republican plans to rip away hard-earned Social Security benefits would be for American workers," Boyle said last week. "Instead of saving Social Security by making the ultrarich pay their fair share, the GOP is hell-bent on gutting benefits for the middle class."
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Key Senate Panel Launches Probe of Big Oil-OPEC Collusion
Illegal coordination between oil companies and OPEC may have cost U.S. families thousands of dollars in higher costs for gas and other necessities.
Jun 27, 2024
Announcing a probe into potential efforts by fossil fuel companies to illegally coordinate with international oil producers in order to fix prices, U.S. Sen. Sheldon Whitehouse on Wednesday wrote to 18 oil giants demanding that they turn over communications with the Organization of Petroleum Exporting Countries, commonly known as OPEC.
Whitehouse (D-R.I.) wrote to companies including ExxonMobil, Chevron, and ConocoPhillips in his capacity as chairman of the Senate Budget Committee, weeks after the Federal Trade Commission (FTC) accused the former CEO of Pioneer Natural Resources Company of attempting to collude with OPEC.
Text messages, WhatsApp communications, and records from in-person meetings showed that Scott Sheffield tried to collude with representatives of OPEC countries to manipulate oil and gas production worldwide and raise oil and gas prices.
The commission made its discovery while reviewing a plan by ExxonMobil to acquire Pioneer in a $64.5 billion deal.
"The FTC's findings indicate that Sheffield and Pioneer may not have been the only individual or entity engaging in such collusive activities," wrote Whitehouse to the 18 oil giants, citing numerous examples.
"We're talking $500-1000 dollars of extra cost per year to Americans through direct and indirect effects of this conspiracy."
"In view of the findings against Sheffield, I seek to understand whether other oil producers operating in the United States may also have been coordinating with OPEC and OPEC+ representatives concerning oil production output, crude oil prices, and the relationship between the production and pricing of oil products," said Whitehouse.
Whitehouse called on the companies to provide communications between and among companies' corporate and affiliate officers and members of the OPEC Secretariat and OPEC+ concerning oil production output, crude oil prices, and the relationship between the production and pricing of oil products, dating from January 1, 2020 through the present.
The companies have until July 12 to provide the materials, the senator said.
Whitehouse noted that efforts by Sheffield and, potentially, other oil executives, to illegally coordinate oil production and prices with OPEC, may have had major, tangible effects on American families. He cited an analysis by the American Economic Liberties Project which found that "crude oil price-fixing schemes may have caused over 25% of the increase in inflation that hurt so many American families throughout 2021 in the wake of the Covid-19 pandemic."
"Since the U.S. consumes 7 billion barrels of oil annually, the amount saved by shale oil drillers during their price war with OPEC was $140 billion to $210 billion a year," wrote Matt Stoller, the group's research director.
"Once that price war ended, presumably so did the savings," Stoller continued. "The cost itself is likely a lot higher because pulling shale off the market when demand spiked probably caused prices to increase by much more than $20-30 a barrel. Anyway, we're talking $500-1000 dollars of extra cost per year to Americans through direct and indirect effects of this conspiracy. This cost shows up most obviously in the form of more expensive gas, but higher oil prices increase the price of everything right down to potato chips because of gas being a primary cost in distribution of goods and services. For a family of four, that's two to four thousand dollars a year in higher costs."
Whitehouse wrote in his letter to the oil company that he was "concerned about the possibility that oil and gas companies could be engaging in collusive, anti-competitive activities with OPEC+ that would raise crude oil prices, resulting in higher costs not only for American families, but also for the U.S. government when it acquires crude oil for the Strategic Petroleum Reserve."
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'We Should All Be Angry' That Corporations Spent Trump Tax Windfall on Buybacks: Expert
"Corporations took their tax windfalls and spent a trillion dollars of it in 2018 on stock buybacks instead of on worker wages or innovation," said Sarah Anderson of the Institute for Policy Studies.
Jun 12, 2024
An economic policy expert told the Senate Budget Committee on Wednesday that Americans should be outraged that large corporations funneled their massive gains from the 2017 Trump-GOP tax law into stock buybacks, further enriching executives and wealthy shareholders while skimping on worker pay.
"Whether you were for or against the 2017 tax cuts, I think we should all be angry that corporations took their tax windfalls and spent a trillion dollars of it in 2018 on stock buybacks instead of on worker wages or innovation," Sarah Anderson, director of the Global Economy Project at the Institute for Policy Studies, said during a Senate Budget Committee hearing titled, "Making Wall Street Pay Its Fair Share: Raising Revenue, Strengthening Our Economy."
Watch Anderson's testimony:
The Institute on Taxation and Economic Policy (ITEP) noted in an analysis earlier this year that during the first four years after former President Donald Trump's tax cuts took effect, the country's largest corporations collectively spent $2.72 trillion repurchasing their own shares—more than they spent "on investments in plants, equipment, or software that might have created new jobs and grown the economy."
In written testimony submitted to the Senate Budget Committee for Wednesday's hearing, Anderson pointed to data from the Congressional Research Service showing that U.S. corporations spent $1 trillion total on stock buybacks during the first year of the Tax Cuts and Jobs Act, which took effect in 2018. That year, U.S. billionaires paid a lower effective tax rate than working-class Americans for the first time in the country's history.
"S&P 500 firms alone spent $806 billion [on buybacks], a massive jump from the $519 billion they spent repurchasing stock in 2017," Anderson wrote. "Spending tax-cut windfalls and other profits on stock buybacks siphons resources from worker wages, R&D, and other productive investments that stimulate long-term growth. Analysts have documented the association between buybacks and worker layoffs, as well as reduced capital investment and innovation and wage stagnation."
In a Wednesday op-ed forCommon Dreams, Labor Institute executive director Les Leopold pointed out that John Deere, for example, has spent $12.2 billion on stock buybacks over the last two years alone while simultaneously slashing hundreds of jobs and offshoring production.
Leopold blasted the practice as "a blatant form of stock manipulation that was illegal until deregulated by the Reagan administration."
"For too long, Wall Street lobbyists have wielded excessive power to shape our tax code."
Wednesday's hearing was held following fresh reports that congressional Republicans are gearing up to slash taxes for the rich and large corporations even further if they seize control of the Senate in November and Trump—the presumptive GOP presidential nominee—wins another four years in the White House.
Anderson urged senators to use the looming expiration of some provisions of the 2017 tax law as an opportunity for reforms that target corporations that pay their CEOs excessively, tax Wall Street speculation, and discourage stock buybacks. In her written testimony, Anderson noted that increasing the 1% excise tax on corporate stock buybacks to 4% would generate $238 billion in new federal revenue over the next decade.
"For too long, Wall Street lobbyists have wielded excessive power to shape our tax code in ways that allow this lucrative sector to pay far less than their fair share of all the public services and infrastructure necessary for a healthy economy," Anderson wrote. "Continuing the status quo—or returning to the pre-2017 tax code—will not be acceptable if we are to meet the public investment needs of our time and reverse our country's staggering economic and racial disparities."
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